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
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COPART, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
COPART, INC.
October 29, 2003
Dear Shareholder:
You are cordially invited to attend the 2003 Annual Meeting of
Shareholders of Copart, Inc. to be held on Monday, December 8, 2003 at 9:00
a.m., Pacific Standard Time, at the Company's corporate headquarters located at
4665 Business Center Drive, Fairfield, CA 94534 (see directions on back of proxy
statement). The formal Notice of Annual Meeting of Shareholders and proxy
statement accompanying this letter describes the business to be acted upon.
Please submit your proxy now, according to the enclosed instructions,
whether or not you plan to attend the meeting. If you attend the meeting, you
may still vote in person even if you have previously returned a signed proxy.
Sincerely,
/s/ Willis J. Johnson
WILLIS J. JOHNSON
Chief Executive Officer
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
IN ORDER TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT THE ANNUAL
MEETING, IN THE EVENT YOU ARE NOT PERSONALLY PRESENT, PLEASE SUBMIT YOUR PROXY
BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
--------------------------------------------------------------------------------
COPART, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 8, 2003
TO THE SHAREHOLDERS OF COPART, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Copart, Inc. will be held on Monday, December 8, 2003 at 9:00 a.m., Pacific
Standard Time, at Copart's corporate headquarters located at 4665 Business
Center Drive, Fairfield, California 94534, for the following purposes:
1. To elect seven directors for the ensuing year or until their
successors have been duly elected and qualified;
2. To approve the amendment and restatement of our 1994 Employee
Stock Purchase Plan, including amendments to increase the
number of shares reserved under the plan from 1,500,000 shares
to 2,500,000 shares and to extend the term of the plan for an
additional ten years beyond its current expiration date (such
that the plan will terminate on March 31, 2014);
3. To ratify the selection of KPMG LLP as independent auditors
for the current fiscal year ending July 31, 2004; and
4. To transact such other business as may properly come before
the meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on October 13,
2003 as the record date for determining shareholders entitled to notice of, and
to vote at, the annual meeting. Only shareholders of record at the close of
business on the record date are entitled to notice of, and to vote at, the
annual meeting. The stock transfer books will not be closed between the record
date and the date of the annual meeting. A list of shareholders entitled to vote
at the meeting will be available for inspection at Copart's corporate
headquarters.
Please read carefully the following proxy statement, which describes
the matters to be voted upon at the annual meeting, and then submit your proxy
according to the enclosed instructions as promptly as possible. Should you
receive more than one proxy because your shares are registered in different
names and addresses, each proxy should be submitted to ensure that all your
shares will be voted. Any shareholder who has previously submitted a proxy may
attend the meeting and if the shareholder so chooses, vote in person by ballot,
which will result in the revocation of the prior proxy.
For the Board of Directors
COPART, INC.
/s/ Paul A. Styer
Paul A. Styer, Secretary
Fairfield, California
October 29, 2003
TABLE OF CONTENTS
Page
----
VOTING AND SOLICITATION........................................................1
General .............................................................1
Voting Rights.........................................................1
Quorum Requirement; Abstentions and Broker Non-Votes..................2
Voting Procedures.....................................................2
Revocability of Proxies...............................................3
Proxy Solicitation Costs..............................................3
Deadline for Receipt of Shareholder Proposals for 2004 Annual
Meeting......................................................3
Shareholders Sharing the Same Address.................................4
PROPOSAL ONE...................................................................6
General .............................................................6
Nominees .............................................................6
Vote Required.........................................................7
Recommendation of the Board of Directors..............................7
Board Meetings and Board Committees...................................7
Director Compensation.................................................9
Compensation Committee Interlocks and Insider Participation..........10
PROPOSAL TWO..................................................................11
General ............................................................11
Administration.......................................................11
Securities Subject to the Employee Stock Purchase Plan...............12
Eligibility..........................................................12
Offering Dates.......................................................12
Enrollment in the Plan...............................................12
Purchase Price.......................................................12
Payment of Purchase Price; Payroll Deductions........................12
Withdrawal...........................................................13
Termination of Employment............................................13
Effect of Liquidation, Dissolution, Sale of Assets or Merger.........13
Non-Assignability....................................................13
Reports ............................................................13
Amendment and Termination of the Plan................................13
Tax Information......................................................14
New Plan Benefits....................................................15
Vote Required........................................................15
Recommendation of the Board of Directors.............................15
-i-
TABLE OF CONTENTS
(continued)
Page
----
PROPOSAL THREE................................................................16
General ............................................................16
Principal Accountant Fees and Services...............................16
Policy on Audit Committee Pre-Approval of Audit and Permissible
Non-Audit Services of Independent Auditors..................17
Vote Required........................................................17
Recommendation of the Board of Directors.............................17
AUDIT COMMITTEE REPORT........................................................18
SECURITY OWNERSHIP............................................................19
EQUITY COMPENSATION PLAN INFORMATION..........................................20
EXECUTIVE COMPENSATION........................................................21
Summary Compensation Table...........................................21
Option Grants in Last Fiscal Year....................................22
Aggregated Option Exercises In Last Fiscal Year And Fiscal
Year-End Option Values......................................22
Employment Contracts and Change-in-Control Arrangements..............23
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.......................24
Part One - Existing Compensation Arrangements........................24
Part Two - Compensation of Chief Executive Officer...................24
CODE OF ETHICS................................................................25
PERFORMANCE GRAPH.............................................................26
CERTAIN TRANSACTIONS..........................................................27
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.......................27
OTHER MATTERS.................................................................28
ADJOURNMENT OF THE ANNUAL MEETING.............................................28
ANNUAL REPORT.................................................................28
ANNEX A......................................................................A-1
ANNEX B......................................................................B-1
ANNEX C......................................................................C-1
ii
COPART, INC.
4665 Business Center Drive
Fairfield, California 94534
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 8, 2003
----------------------------------------
VOTING AND SOLICITATION
General
The enclosed proxy is solicited on behalf of the board of directors of
Copart, Inc., a California corporation, for use at our annual meeting of
shareholders to be held on Monday, December 8, 2003. The annual meeting will be
held at 9:00 a.m., Pacific Standard Time, at Copart's corporate headquarters
located at 4665 Business Center Drive, Fairfield, California 94534. Our
telephone number at our headquarters is (707) 639-5000. Only shareholders of
record at the close of business on October 13, 2003 will be entitled to notice
of, and to vote at, the annual meeting.
We use several abbreviations in this proxy statement. We may refer to
our company as "Copart" or the "Company." The term "proxy materials" includes
this proxy statement as well as the enclosed proxy card and our 2003 Annual
Report to Shareholders. References to our "fiscal year" refer to our fiscal year
beginning on August 1 of the prior year and ending on July 31 of the year
stated.
This proxy statement and the accompanying proxy materials were first
mailed to the Company's shareholders on or about November 3, 2003.
On October 13, 2003, the record date for determination of shareholders
entitled to vote at our annual meeting, there were 88,916,312 shares of Common
Stock outstanding held by approximately 1,540 shareholders of record. No shares
of our authorized Preferred Stock were outstanding.
Voting Rights
Each share of our common stock outstanding on the record date is
entitled to one vote on each matter submitted for shareholder approval. In
addition, under California law in connection with the election of directors,
each shareholder may cumulate such shareholder's votes and give one candidate a
number of votes equal to the number of directors to be elected multiplied by the
number of shares held by such shareholder as of the record date, or such
shareholder may distribute such number of votes on the same principle among as
many candidates as the shareholder thinks fit. Votes cannot be cast for more
than the number of candidates to be elected. No shareholder will be entitled to
cumulate votes for a candidate unless such candidate's name has been placed in
nomination prior to the voting and the shareholder has given notice at the
meeting prior to
the commencement of voting of the shareholder's intention to cumulate votes. If
any one shareholder has given such notice, all shareholders may cumulate their
votes for candidates in nomination.
Quorum Requirement; Abstentions and Broker Non-Votes
A quorum comprising the holders of a majority of our outstanding shares
of common stock on the record date must be present or represented for the
transaction of business at the annual meeting. Your shares will be counted as
being present at the meeting if you appear in person or if you submit your proxy
either by Internet, telephone, or by a properly executed proxy card.
If your shares are held in a brokerage account or by another nominee,
you are considered the "beneficial owner" of shares held in "street name," and
these proxy materials are being forwarded to you by your broker or nominee (the
"record holder") along with a voting instruction card. As the beneficial owner,
you have the right to direct your record holder how to vote your shares, and the
record holder is required to vote your shares according to your instructions. If
you do not give instructions to your record holder, the record holder will be
entitled to vote the shares in its discretion on Proposal One (Election of
Directors) and Proposal Three (Ratification of Appointment of Independent
Auditors). Absent voting instructions from you, the record holder will not be
able to vote your shares on Proposal Two (Amendment and Restatement of 1994
Employee Stock Purchase Plan).
If you abstain from voting or if a record holder does not vote the
shares you own beneficially (known as a "broker non-vote"), either because it
lacks the discretionary authority to do so or for any other reason, your shares
will be included in the number of shares represented for purposes of determining
whether a quorum is present. Abstentions and broker non-votes will not be
counted for purposes of determining the number of votes cast regarding any
particular proposal, however. Abstentions and broker non-votes can have the
effect of preventing approval of a proposal where the number of affirmative
votes, though a majority of the votes cast, does not constitute a majority of
the required quorum. For example, if the number of abstentions or broker
non-votes resulted in the votes "FOR" a proposal not equaling at least a
majority of the quorum required for the meeting, the proposal would not be
approved. This will be the case even though the number of votes "FOR" the
proposal exceeded the number of votes "AGAINST" the proposal. Abstentions and
broker non-votes are not counted in the election of directors. The seven
nominees receiving the highest number of affirmative votes will be elected as
directors.
Votes will be tabulated by an inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions, and broker non-votes.
Voting Procedures
General. Your shares will be voted in accordance with the instructions
you indicate when you submit your proxy. If you submit a proxy, but do not
indicate your voting instructions, your shares will be voted as follows:
. FOR the election of the director nominees listed in this proxy
statement;
. FOR the ratification of our selection of KPMG LLP as independent
auditors for the fiscal year ending July 31, 2004; and
-2-
. At the discretion of the proxy holders, upon such other business as
may properly come before the annual meeting or any adjournment or
postponement thereof.
Voting by Mail. By signing and returning the enclosed proxy card
according to the instructions provided, you are enabling the individuals named
on the proxy card, known as "proxies," to vote your shares at the meeting in the
manner you indicate. We encourage you to sign and return the proxy card even if
you plan to attend the meeting. In this way your shares will be voted even if
you are unable to attend the meeting.
Voting by Telephone. You may be able to vote by telephone. If so,
instructions are included with your proxy card. If you vote by telephone, you do
not need to complete and mail your proxy card.
Voting on the Internet. You may be able to vote on the Internet. If so,
instructions are included with your proxy card. If you vote on the Internet, you
do not need to complete and mail your proxy card.
Voting in Person at the Meeting. If you plan to attend the annual
meeting and vote in person, we will provide you with a ballot at the meeting. If
your shares are registered directly in your name, you are considered the
shareholder of record, and you have the right to vote in person at the meeting.
If your shares are held in the name of your broker or other nominee, you are
considered the beneficial owner of shares held in your name. In that case, and
if you wish to vote at the meeting, you will need to bring with you to the
meeting a legal proxy from your broker or other nominee authorizing you to vote
these shares.
Revocability of Proxies
You may revoke your proxy at any time before it is voted at the annual
meeting. In order to revoke your proxy, you may either:
. Submit another proxy bearing a later date;
. Provide written notice of the revocation to our Secretary, Paul A.
Styer, c/o Copart, Inc., 4665 Business Center Drive, Fairfield,
California 94534 prior to the time we take the vote at the annual
meeting; or
. Attend the meeting and vote in person.
Proxy Solicitation Costs
We will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of proxy materials. In addition, we
may reimburse brokerage firms and other custodians for their reasonable
out-of-pocket costs in forwarding these proxy materials to you. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram, facsimile or other means by directors, officers, or
employees of Copart. No additional compensation will be paid to these
individuals for any such services.
Deadline for Receipt of Shareholder Proposals for 2004 Annual Meeting
Requirements for Shareholder Proposals to be Considered for Inclusion
in Copart's Proxy Materials. Shareholders of Copart may submit proposals on
matters appropriate for shareholder action at annual meetings of Copart's
shareholders in accordance with Rule 14a-8 promulgated under the Securities
Exchange Act of 1934, as amended. For such proposals to be included in Copart's
proxy materials relating to its 2004
-3-
Annual Meeting of Shareholders, all applicable requirements under Rule 14a-8
must be satisfied and such proposals must be received by Copart no later than
July 6, 2004. Such proposals should be delivered to Copart, Inc., Attn: Paul A.
Styer, Secretary, 4665 Business Center Drive, Fairfield, California 94534. The
submission of a shareholder proposal does not guarantee that it will be included
in Copart's proxy statement or proxy.
Requirements for Shareholder Proposals to be Brought Before the Annual
Meeting. Copart's bylaws establish an advance notice procedure for shareholders
who wish to present certain matters before an annual meeting of shareholders
where the proposal is not intended to be included in the proxy statement
relating to that meeting. For shareholder nominations to the Board of Directors
or other proposals to be considered at an annual meeting, the shareholder must
have given timely notice thereof in writing to the secretary of Copart (at the
address noted above) such that the shareholder notice has been received by
Copart not less than ninety (90) nor more than one hundred twenty (120) days
prior to the anniversary of the date on which Copart first mailed its proxy
materials for its immediately preceding annual meeting of shareholders. To be
timely for the 2004 annual meeting, a shareholder's notice must be delivered to
or mailed and received by the secretary at the principal executive offices of
Copart between July 6, 2004 and August 5, 2004. A shareholder's notice to the
secretary must set forth, with respect to each matter the shareholder proposes
to bring before the annual meeting, the information required by Copart's bylaws.
If a shareholder fails to comply with the advance notice provision set forth in
the Bylaws, the shareholder will not be permitted to present the proposal at the
meeting.
In addition, the proxy solicited by the Board of Directors for the 2004
Annual Meeting of Shareholders will confer discretionary authority on
management's proxy holders to vote on (i) any proposal presented by a
shareholder at that meeting for which Copart has not been provided with notice
on or prior to the August 5, 2004 deadline and (ii) on any proposal made in
accordance with the bylaw provisions, if the 2004 proxy statement briefly
describes the matter and how management's proxy holders intend to vote on it,
provided that the shareholder has not complied with the requirements of Rule
14a-4(c)(2) under the Securities Exchange Act of 1934.
Shareholders Sharing the Same Address
Copart has adopted a procedure called "householding," which has been
approved by the Securities and Exchange Commission. Under this procedure, Copart
is delivering only one copy of the annual report and proxy statement to multiple
shareholders who share the same address and have the same last name, unless
Copart has received contrary instructions from an affected shareholder. This
procedure reduces Copart's printing costs, mailing costs, and fees. Shareholders
who participate in householding will continue to receive separate proxy cards.
Copart will deliver, promptly upon written or oral request, a separate
copy of the annual report and the proxy statement to any shareholder at a shared
address to which a single copy of either of those documents was delivered. To
receive a separate copy of the annual report or proxy statement, you may write
or call Copart's Investor Relations Department at 4665 Business Center Drive,
Fairfield, California 94534, telephone (707) 639-5000.
-4-
Any shareholders of record who share the same address and currently
receive multiple copies of Copart's annual report and proxy statement who wish
to receive only one copy of these materials per household in the future, please
contact Copart's Investor Relations Department at the address or telephone
number listed above to participate in the householding program.
A number of brokerage firms have instituted householding. If you hold
your shares in "street name," please contact your bank, broker, or other holder
of record to request information about householding.
-5-
PROPOSAL ONE
ELECTION OF DIRECTORS
General
One of the purposes of the annual meeting is to elect directors to hold
office until the 2004 annual meeting or until their respective successors are
elected and have been qualified. The number of authorized directors is currently
seven. Our board of directors has nominated the seven individuals listed below
for election as directors. All of the nominees are presently directors of
Copart. Each person nominated for election has agreed to serve if elected, and
we have no reason to believe that any nominee will be unavailable to serve.
Unless otherwise instructed, the proxy holders will vote all submitted proxies
FOR the nominees named below. In the event that additional persons are nominated
for election as directors, the proxy holders intend to vote all proxies received
by them in such a manner (in accordance with cumulative voting) as will ensure
the election of as many of the nominees listed below as possible. In such event,
the specific nominees to be voted for will be determined by the proxy holders.
Directors must be elected by a plurality of the votes cast at the annual
meeting. Accordingly, the seven candidates receiving the highest number of
affirmative votes of the shares entitled to vote at the annual meeting will be
elected to our board of directors.
Nominees
Set forth below is information regarding the Company's nominees, all of
whom are currently directors of the Company:
Name Age Position(s) with Copart Director Since
------------------------------------------------- ----- ----------------------------------------- --------------
Willis J. Johnson.............................. 56 Chief Executive Officer and Director 1982
A. Jayson Adair................................ 34 President and Director 1992
James E. Meeks................................. 54 Executive Vice President, Chief Operating 1996
Officer and Director
Harold Blumenstein............................. 65 Director 1994
James Grosfeld................................. 66 Director 1993
Marvin L. Schmidt.............................. 60 Director 1993
Jonathan Vannini............................... 41 Director 1993
Willis J. Johnson, co-founder of Copart, has served as our Chief
Executive Officer since 1986. Mr. Johnson also served as our President from 1986
until May 1995. Mr. Johnson was an officer and director of U-Pull-It, Inc.
("UPI") a self-service auto dismantler which he co-founded, from 1982 through
September 1994. Mr. Johnson sold his entire interest in UPI in September 1994.
Mr. Johnson has over 30 years of experience in owning and operating auto
dismantling companies.
A. Jayson Adair has served as our President since November 1996. From
April 1995 until October 1996, Mr. Adair served as our Executive Vice President.
From August 1990 until April 1995, Mr. Adair served as our Vice President of
Sales and Operations and from June 1989 to August 1990, Mr. Adair served as our
Manager of Operations.
James E. Meeks has served as our Vice President and Chief Operating
Officer since September 1992, when he joined the Company concurrent with our
purchase of South Bay Salvage Pool. Mr. Meeks has served as Executive Vice
President and director of the Company since October 1996 and as Senior Vice
President since April 1995. From April 1986 to September 1992, Mr. Meeks,
together with his family, owned
-6-
and operated the South Bay Salvage Pool. Mr. Meeks was also an officer, director
and part owner of CAS & Meeks, Inc., a towing and subhauling service company,
which he operated from 1991 to March 2001. Mr. Meeks has over 30 years of
experience in the vehicle dismantling business.
Harold Blumenstein is a general partner of Paragon Properties Company,
a real estate development, investment and management company, where he has been
employed since January 1971. Mr. Blumenstein holds a B.A. in Economics and
Accounting from Wayne State University.
James Grosfeld has been a private investor at all times during the last
five years. From November 1993 until November 1994, Mr. Grosfeld served as
chairman of our board of directors. Mr. Grosfeld is also a director of Blackrock
Inc., a public diversified investment management company.
Marvin L. Schmidt retired as our Senior Vice President of Corporate
Development on January 1, 1999, a position he had held since May 1995. Mr.
Schmidt served as Vice President of our Western Region from July 1993, when he
joined the Company concurrent with the Company's acquisition of County Salvage,
Inc., until May 1995. From January 1989 until July 1993, Mr. Schmidt owned and
operated County Salvage, Inc. in Los Angeles. Mr. Schmidt has over 25 years of
experience as an owner and operator of auto dismantling and parts businesses.
Jonathan Vannini has been a private investor since 1996. Mr. Vannini
was a general partner at HPB Associates, an investment partnership, and was
employed by HPB Associates from August 1987 until March 1996. Mr. Vannini holds
a B.A. in Economics from the University of California, Los Angeles and an M.B.A.
from Columbia University.
There are no family relationships among any of the directors or
executive officers of the Company, except that A. Jayson Adair is the son-in-law
of Willis J. Johnson.
Vote Required
The seven nominees receiving the highest number of affirmative votes
will be elected as directors.
Recommendation of the Board of Directors
Our board of directors has unanimously approved the director
nominations listed above and recommends that shareholders vote FOR the election
of each of the above-named nominees.
Board Meetings and Board Committees
During the fiscal year ended July 31, 2003, our board of directors held
six (6) meetings. Each of our directors attended at least 75% of the meetings
held during fiscal 2003 of our board or any committee on which such director
served. During fiscal 2003, the Company maintained standing audit committee and
compensation committees. In September 2003, the Board of Directors established a
nominating and governance committee.
-7-
Audit Committee
Our audit committee is primarily responsible for reviewing and
approving the services performed by our independent auditors, reviewing our
financial statements, and reviewing reports concerning our accounting practices
and systems of internal accounting procedures and controls. The purposes of the
audit committee are, among other things, to:
. Oversee our accounting and financial reporting processes and audits
of our financial statements;
. Assist the board in overseeing and monitoring: (i) the integrity of
our financial statements; (ii) our accounting policies and
procedures; (iii) our compliance with legal and regulatory
requirements; (iv) our independent auditor's qualifications,
independence, and performance; (v) our disclosure controls and
procedures; and (vi) our internal controls;
. Provide the board with the result of its monitoring and any
recommendations derived from such monitoring; and
. Provide the board with additional information and materials as the
board may determine to be necessary to make the board aware of
significant financial matters requiring board attention.
A copy of the charter for the audit committee is attached to this proxy
statement as Annex A.
The audit committee currently consists, and consisted at all times
during fiscal 2003, of directors Blumenstein, Grosfeld, and Vannini. Copart
believes that all three current members are "independent directors" as
contemplated by Rule 4200 of the Marketplace Rules of the National Association
of the Securities Dealers, Inc. The board of directors has not yet designated an
"audit committee financial expert" as defined in Item 401(h) of Regulation S-K
promulgated by the Securities and Exchange Commission. Our nominating and
governance committee, as described below, is currently seeking a candidate to
join our board of directors and serve as an audit committee financial expert.
The audit committee held twelve (12) meetings during fiscal 2003.
Compensation Committee
Our compensation committee is generally responsible for, among other
things, reviewing and approving the Company's compensation policies, setting the
compensation levels for those Company executive officers and senior managers
reporting directly to the Company's President whose compensation is not
otherwise established pursuant to employment agreements reviewed or approved by
the board of directors, and administering our equity incentive plans. The
Compensation Committee acts under a written charter adopted and approved by our
board of directors. A copy of the compensation committee charter is attached as
Annex B to this proxy statement. The compensation committee consists, and
consisted at all times during fiscal 2003, of directors Blumenstein, Grosfeld,
and Vannini. Copart believes that all three current members of the compensation
committee are "independent directors" as contemplated by Rule 4200 of the
Marketplace Rules of the National Association of Securities Dealers, Inc. and
are "outside directors" as defined in Section 162(m) of the Internal Revenue
Code. The compensation committee held two (2) meetings during fiscal 2003.
-8-
Nominating and Governance Committee
Copart's board of directors established the nominating and governance
committee in September 2003. The purpose of the nominating and governance
committee is to ensure that our board of directors is properly constituted to
meet its fiduciary obligations to shareholders and that Copart has and follows
appropriate governance standards. The committee is authorized to assist the
board by identifying prospective director nominees and to select the director
nominees for the next annual meeting of shareholders and to develop and
recommend to the board governance principles applicable to Copart. The
nominating and governance committee consists of directors Blumenstein, Grosfeld,
and Vannini. Copart believes that all three current members of the nominating
and governance committee are "independent directors" as contemplated by Rule
4200 of the Marketplace Rules of the National Association of Securities Dealers,
Inc. The committee held no meetings during fiscal 2003, as it was not
constituted until after the fiscal year-end.
Director Compensation
Each of our non-employee directors, consisting of directors
Blumenstein, Grosfeld, Schmidt, and Vannini, will receive quarterly cash
compensation during fiscal 2004 of $8,000 for services as a director and member
of any committees on which he may serve. Quarterly cash compensation for
non-employee directors during fiscal 2003 was $5,000. As described below, Mr.
Schmidt did not receive these cash payments during fiscal 2003. Non-employee
directors are reimbursed for expenses incurred with attending board or committee
meetings.
In August 2003, Copart granted directors Blumenstein, Grosfeld, and
Vannini each an option to acquire 20,000 shares of common stock under its 2001
Stock Option Plan at an exercise price of $9.03. In October 2003, Copart granted
director Schmidt an option to acquire 20,000 shares of common stock under the
2001 Stock Option Plan at an exercise price of $11.36. Each of these options
vests over two years, with one-half of the shares vesting on the first
anniversary of the date of grant and the balance vesting on a monthly basis over
the 12 months succeeding such first anniversary.
Prior to fiscal 2004, each non-employee director was eligible to
receive periodic option grants for shares of common stock under the automatic
option grant program in effect under our 1994 Director Option Plan. The Board of
Directors terminated the 1994 Director Option Plan in August 2003 and no further
grants will be made under this plan. Under the terms of the plan, each
non-employee director received a nonstatutory stock option to purchase 18,000
shares of Common Stock upon initial election to the board and received a
subsequent grant to purchase 9,000 shares upon re-election to the board at each
annual meeting. The options granted under the 1994 Director Option Plan vested
ratably over three years and had a five year term of exercise. Currently
outstanding options under the 1994 Director Option Plan were not affected by
termination of the plan and will continue to vest in accordance with their
terms.
Although Mr. Schmidt retired as our Senior Vice President of Corporate
Development on January 1, 1999, he has been compensated separately from other
non-employee directors since the date of his retirement. During fiscal 2003, he
received a total of $8,000 in cash compensation, paid on a monthly basis, and
participated in our employee health care plan. Mr. Schmidt has not received any
option grants under any equity incentive programs, including the 1994 Director
Option Plan, since his retirement. Beginning in fiscal 2004, Mr. Schmidt will
receive the same cash and equity compensation as other non-employee directors
and will no longer participate in our employee health plan.
-9-
Compensation Committee Interlocks and Insider Participation
Our compensation committee consisted at all times during fiscal 2003 of
directors Blumenstein, Grosfeld, and Vannini. No member of the compensation
committee was at any time during fiscal 2003, or at any other time, an officer
or employee of Copart, and no member of the compensation committee had any
relationship requiring disclosure under Item 404 of Regulation S-K (Certain
Relationships and Related Transactions) promulgated by the Securities and
Exchange Commission. No interlocking relationship, as described by the
Securities and Exchange Commission, exists or existed during fiscal 2003 between
any member of our compensation committee and any member of any other company's
board of directors or compensation committee.
-10-
PROPOSAL TWO
APPROVAL OF THE AMENDMENT AND RESTATEMENT
OF 1994 EMPLOYEE STOCK PURCHASE PLAN
General
Copart's shareholders are being asked to approve the amendment and
restatement of our 1994 Employee Stock Purchase Plan (the "Purchase Plan"),
which will effect the following changes: (i) increase the maximum number of
shares of common stock authorized for issuance over the term of the Purchase
Plan by 1,000,000 shares to an aggregate of 2,500,000 shares; (ii) extend the
term of the Purchase Plan by ten (10) years from March 16, 2004 to March 31,
2014; and (iii) provide more flexibility with regard to the administration of
the Purchase Plan.
The Purchase Plan offers eligible employees the opportunity to acquire
a stock ownership interest in Copart through periodic payroll deductions that
will be applied towards the purchase of Copart common stock at a discount from
the then current market price. We believe that the Purchase Plan is an important
factor in attracting and retaining skilled personnel. The primary purposes of
the amendment and restatement are (i) to ensure that Copart will have a
sufficient reserve of common stock available under the Purchase Plan to provide
eligible employees of the Company with the continuing opportunity to acquire a
proprietary interest in Copart through participation in a payroll
deduction-based employee stock purchase plan and (ii) to ensure the continued
maintenance of the Purchase Plan, which would otherwise expire in March 2004.
The initial offering period under the Purchase Plan began on March 16,
1994, and from that date to July 31, 2003, 1,162,750 shares of the Company's
Common Stock have been sold to eligible employees under the Purchase Plan. As of
July 31, 2003, 1,337,250 shares would be available for future issuance under the
Purchase Plan assuming approval of the 1,000,000 share increase, which forms
part of this proposal. The number of shares sold in each offering period will
vary with the number of participants, the amount of their payroll deductions,
and the fair market value of our Common Stock.
The following is a summary of the principal features of the Purchase
Plan, as amended and restated. This summary, however, does not purport to be a
complete description of all the provisions of the Purchase Plan. Any shareholder
who wishes to obtain a copy of the plan may do so by written request to the
Secretary at the Company's headquarters in Fairfield, California. In addition, a
copy of the Purchase Plan was filed with the Securities and Exchange Commission
on November 3, 2003 as an addendum to this definitive proxy statement and is
available at the Commission's website located at http://www.sec.gov or by
visiting the "Investor Relations" portion of our website at
http://www.copart.com.
Administration
The Purchase Plan is administered by our board of directors or a
committee of members of the board appointed by the board, who receive no
separate additional compensation for such service. All questions of
interpretation or application of the Purchase Plan are determined by the board
or its appointed committee, whose decisions are final and binding upon all
participants. Members of the board who are eligible employees are permitted to
participate in the Purchase Plan.
-11-
Securities Subject to the Employee Stock Purchase Plan
Including the 1,000,000 share increase for which shareholder approval
is sought under this proposal, 2,500,000 shares of common stock have been
reserved for issuance over the term of the Purchase Plan. The shares may be made
available from authorized but unissued shares of our common stock. In the event
of any change to our outstanding common stock, such as a recapitalization, stock
split, or similar event, appropriate adjustments will be made to the Purchase
Plan and to each outstanding purchase right.
Eligibility
Any person who is customarily employed at least 20 hours per week and 5
months per calendar year by Copart, and who has completed 90 days of continuous
employment with Copart prior to the applicable offering period, is eligible to
participate in the Purchase Plan, unless the employee would own 5% or more of
the total combined voting power or value of all classes of stock of Copart or of
its subsidiaries (including stock issuable upon exercise of options held by him)
at the beginning of the offering period, or to the extent that the employee's
rights to purchase stock under all of the Company's employee stock purchase
plans or those of its subsidiaries accrues at a rate which exceeds $25,000 worth
of stock (determined at the fair market value of the shares at the beginning of
the offering period) for each calendar year. Participation in the Purchase Plan
is voluntary and is dependent on each eligible employee's election to
participate and his or her respective determination as to the level of payroll
deductions.
As of September 30, 2003, we employed approximately 2,801 people, 2,401
of whom were eligible to participate in the Purchase Plan, including 9 executive
officers. Approximately 814 employees, including 3 executive officers, were
participating in the Purchase Plan as of that date.
Offering Dates
The Purchase Plan is generally implemented by one offering during each
six-month period. Offering periods commence on or about January 1 and July 1 of
each year.
Enrollment in the Plan
Eligible employees become participants in the Purchase Plan by
delivering to our payroll office a subscription agreement authorizing payroll
deductions. Once an employee elects to participate in the Purchase Plan,
enrollment in each successive offering period occurs automatically unless the
employee withdraws from participation in the Purchase Plan.
Purchase Price
The purchase price per share under the Purchase Plan is the lower of
(i) 85% of the fair market value of a share of our common stock on the date of
commencement of the offering period or (ii) 85% of the fair market value of a
share of our common stock on the last trading day of the offering period. The
fair market value of the common stock on a given date is the closing sale price
on The NASDAQ National Market.
Payment of Purchase Price; Payroll Deductions
Contributions are accumulated through after-tax payroll deductions over
the offering period. The deductions may not exceed 10% of a participant's
compensation, and the participant may not purchase, in any offering period, more
than the total number of shares of common stock which $12,500 could purchase at
the
-12-
fair market value of a share of common stock, calculated as of the beginning of
the offering period. Unless the employee's participation is discontinued, the
accumulated deductions will automatically be applied on the last trading day of
the offering period to the purchase of shares of common stock at the purchase
price in effect for that date. No fractional shares will be issued upon the
purchase of shares. Any amounts insufficient to purchase a full share remaining
in a participant's account after exercise of the option will be returned to the
participant. No interest will accrue on the payroll deductions of a participant
in the Purchase Plan.
Withdrawal
An employee's participation in a given offering may be terminated by
signing and delivering to our payroll office a notice of withdrawal from the
Purchase Plan. Upon withdrawal from the Purchase Plan, accrued but unused
payroll deductions are returned to the employee. Such withdrawal may be elected
at any time prior to the end of the applicable six-month offering period. A
participant's withdrawal from an offering period will not have any effect upon
such participant's eligibility to participate in subsequent offering periods
under the Purchase Plan.
Termination of Employment
Termination of a participant's employment for any reason, including
retirement or death, cancels participation the Purchase Plan immediately. In
such event the payroll deductions credited to the participant's account will be
returned without interest to such participant, or, in the case of death, to the
person or persons entitled thereto as specified by the employee in the
subscription agreement.
Effect of Liquidation, Dissolution, Sale of Assets or Merger
In the event of a liquidation or dissolution of Copart, an employee's
participation in the Purchase Plan will be terminated immediately before
consummation of such event unless otherwise provided by the board. In the event
of a sale of all or substantially all of the assets of the Company or a merger
of Copart with or into another corporation, the employee's rights will be
satisfied by assumption of Copart's obligations by such acquiring or successor
corporation unless the board determines either to terminate the Purchase Plan
and refund all accumulated funds or to shorten the then-current offering period
with at least 10 business days prior notice to the participants.
Non-Assignability
No rights or accumulated payroll deductions of an employee under the
Purchase Plan may be pledged, assigned, or transferred for any reason, and any
such attempt may be treated by Copart as an election to withdraw from the
Purchase Plan.
Reports
Individual accounting will be maintained for each participant in the
Purchase Plan. Each participant receives as promptly as practicable after the
end of the six-month offering period a report showing the details of the
participant's account.
Amendment and Termination of the Plan
Unless earlier terminated by the Board, the Purchase Plan will
terminate on March 31, 2014, assuming approval of the extension of the term of
the Purchase Plan, which forms a part of this Proposal.
-13-
The board may at any time amend, alter, suspend or terminate the
Purchase Plan, but, except under certain conditions, no amendment, alteration,
suspension or termination shall be made which would impair the rights of any
participant arising out of any offering period which has already commenced
without such participant's written consent. Assuming approval of the
administrative amendments of the Purchase Plan, which form a part of this
proposal, the board is also entitled to modify the Purchase Plan, including with
respect to offering periods already underway, to reduce or eliminate unfavorable
accounting consequences. These modifications, which may be effected without
shareholder approval or the consent of plan participants, include altering the
purchase price, shortening an offering period, and allocating shares among
participants.
To the extent necessary and desirable to comply with applicable law or
regulation, including the requirements of the NASDAQ, the Company shall obtain
shareholder approval of any Purchase Plan amendment in such a manner and to such
a degree as required.
Tax Information
The Purchase Plan, and the right of participants to make purchases
thereunder, is intended to qualify under the provisions of Sections 421 and 423
of the Internal Revenue Code. Under these provisions, no income will be taxable
to a participant until the shares purchased under the Plan are sold or otherwise
disposed of.
Upon sale or other disposition of the shares, the participant will
generally be subject to tax and the amount of the tax will depend upon the
holding period. If the shares are sold or otherwise disposed of more than two
years from the first day of the offering period and more than one year after the
actual purchase of the shares, the participant will recognize ordinary income
equal to the lesser of (a) the excess of the fair market value of the shares at
the time of such sale or disposition over the purchase price, or (b) an amount
equal to 15% of the fair market value of the shares as of the first day of the
offering period. Any additional gain will be treated as long-term capital gain.
If the shares are sold or otherwise disposed of before the expiration of this
holding period, the participant will recognize ordinary income generally
measured as the excess of the fair market value of the shares on the date the
shares are purchased over the purchase price. Any additional gain or loss on
such sale or disposition will be long-term or short-term capital gain or loss,
depending on the holding period. Copart is not entitled to a deduction for
amounts taxed as ordinary income or capital gain to a participant except to the
extent of ordinary income recognized by participants upon a sale or disposition
of shares prior to the expiration of the holding period described above.
The foregoing is only a summary of the effect of United States federal
income taxation upon the participant and Copart with respect to the shares
purchased under the Purchase Plan, does not purport to be complete, and
reference should be made to the applicable provisions of the Internal Revenue
Code. In addition, this summary does not discuss the tax consequences of a
participant's death or the income tax laws of any municipality, state or foreign
country in which the participant may reside.
-14-
New Plan Benefits
The benefits to be received by our executive officers, directors and
employees as a result of the proposed amendment and restatement of the Purchase
Plan are not determinable because each employee's participation in the Purchase
Plan is purely voluntary. Accordingly, the following table summarizes the
participation in the Purchase Plan during the last fiscal year ended July 31,
2003 for each of the executive officers named in the summary compensation table
on page 21, for all current executive officers as a group, for all non-employee
directors, and for all other employees. The table shows (i) the number of shares
of our common stock purchased under the Purchase Plan; (ii) the aggregate dollar
value of the shares purchased on the date of purchase, less the purchase price
therefor; and (iii) the amount of payroll deductions for future purchases
accumulated through July 31, 2003.
Employee Stock Purchase Plan Transactions
Outstanding
Payroll
Deductions as
Number of Shares Dollar of Fiscal Year
Name of Individual or Identity of Group and Position Purchased (1) Value (2) End
------------------------------------------------------------------ ---------------- ---------------- ----------------
Willis J. Johnson
Chief Executive Officer and Director........................... -- $ -- $ --
A. Jayson Adair
President and Director......................................... -- -- --
James E. Meeks
Executive Vice President, Chief Operating Officer and
Director....................................................... 2,165 3,376 --
Paul A. Styer
Senior Vice President, General Counsel and Secretary........... -- -- --
Vincent W. Mitz
Senior Vice President of Marketing............................. 784 1,392 --
All current executive officers as a group (9 persons)............. 7,210 11,653 2,601
All current directors other than executive officers as a group
(4 persons).................................................... -- -- --
All other employees, including all current officers who are
not executive officers, as a group............................. 197,543 $ 318,905 $ 132,505
-------------------------
(1) Includes shares purchased on December 31, 2002 and June 30, 2003, the two
most recent purchase periods under the Purchase Plan.
(2) Market value of shares on date of purchase, minus the purchase price under
the Purchase Plan.
Vote Required
Approval of the amendment and restatement of the Purchase Plan requires
the affirmative vote of a majority of the shares present at the annual meeting,
either in person or by proxy.
Recommendation of the Board of Directors
Our board of directors unanimously recommends that the shareholders
vote FOR the amendment and restatement of the Purchase Plan.
-15-
PROPOSAL THREE
RATIFICATION OF INDEPENDENT AUDITORS
General
Our audit committee has appointed KPMG LLP as our independent auditors
to audit our financial statements for the current fiscal year ending July 31,
2004. KPMG LLP have been our independent auditors since their initial
appointment in July 1994. A representative of KPMG LLP is expected to be present
at the annual meeting, will have the opportunity to make a statement if he or
she desires to do so, and will be available to respond to appropriate questions.
Shareholder ratification of the selection of KPMG LLP is not required by our
bylaws or otherwise. Our audit committee is submitting the selection of KPMG LLP
to the shareholders for ratification as a matter of good corporate practice.
In the event the shareholders fail to ratify the appointment of KPMG
LLP, the audit committee will reconsider its selection. Even if the selection of
independent auditors is ratified by our shareholders, the audit committee may,
in its discretion, direct the appointment of a different independent accounting
firm at any time during the year if it feels that such a change would be in the
best interests of Copart and its shareholders.
Principal Accountant Fees and Services
The following table provides a summary of fees for professional
services rendered by KPMG LLP for the fiscal years ended July 31, 2003 and July
31, 2002:
Fee Category Fiscal 2003 Fees Fiscal 2002 Fees
------------ ---------------- ----------------
Audit fees, excluding audit related............................ $ 296,700 $ 385,000
Audit related fees............................................. 30,000 23,000
Tax fees....................................................... 199,000 132,700
All other fees................................................. -- --
-------------- --------------
Total fees..................................................... $ 525,700 $ 540,700
============== ==============
Audit Fees. Consists of fees billed for professional services rendered
for the audit of Copart's consolidated financial statements and review of the
interim consolidated financial statements included in quarterly reports and
services that are normally provided by KPMG LLP in connection with statutory and
regulatory filings or engagements.
Audit-Related Fees. Consists of fees billed or for assurance and
related services that are reasonably related to the performance of the audit or
review of Copart's consolidated financial statements and that are not reported
under "Audit Fees." These services include employee benefit plan audits,
accounting consultations in connection with acquisitions, attest services that
are not required by statute or regulation, and consultations concerning
financial accounting and reporting standards.
Tax Fees. Consists of fees billed for professional services for tax
compliance, tax advice and tax planning. These services include assistance
regarding federal, state, and international tax compliance, tax audit defense,
customs and duties, mergers and acquisitions, and international tax planning.
-16-
All Other Fees. Consists of fees for products and services other than
the services reported above. We did not retain KPMG LLP for any other services
in fiscal 2002 or fiscal 2003.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditors
The audit committee's policy is to pre-approve all audit and
permissible non-audit services provided by the independent auditors. These
services may include audit services, audit-related services, tax services and
other services. Pre-approval is generally provided for up to one year and any
pre-approval is detailed as to the particular service or category of services
and is generally subject to a specific budget. The independent auditors and
management are required to periodically report to the audit committee regarding
the extent of services provided by the independent auditors in accordance with
this pre-approval, and the fees for the services performed to date. The audit
committee may also pre-approve particular services on a case-by-case basis.
Vote Required
Ratification of the appointment of KPMG LLP requires the affirmative
vote of a majority of the shares present at the annual meeting, either in person
or by proxy.
Recommendation of the Board of Directors
Our board of directors unanimously recommends that shareholders vote
FOR the ratification of the selection of KPMG LLP to serve as our independent
auditors for the current fiscal year ending July 31, 2004.
-17-
AUDIT COMMITTEE REPORT
The following report of the audit committee shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall this information be incorporated by reference by any
general statement incorporating by reference this proxy into any filing under
the Securities Act of 1933, as amended, or the Securities and Exchange Act of
1934, as amended, except to the extent that we specifically incorporate this
information by reference in such filing.
The audit committee of our board of directors is comprised of the three
directors named below, none of whom are officers or employees of the Company.
Our audit committee believes that all of its current members are independent
directors as defined by applicable Nasdaq National Market rules and listing
standards. The Board of Directors has adopted a written charter for the audit
committee, which is attached to this proxy statement as Annex A.
The audit committee has reviewed and discussed with Copart's management
and KPMG LLP Copart's audited consolidated financial statements and financial
reporting process. Copart's management has the primary responsibility for the
financial statements and financial reporting processes of Copart, including the
system of internal controls. KPMG LLP, the Company's current independent
auditors are responsible for performing an independent audit of the consolidated
financial statements of the Company and for expressing an opinion on the
conformity of those financial statements with generally accepted accounting
principles. The audit committee reviews and monitors these processes and
receives reports from KPMG LLP and Company management. The audit committee also
discussed with KPMG LLP the overall scope and plans of their audits, their
evaluation of the company's internal controls, and the overall quality of the
company's financial reporting processes.
The audit committee has discussed with KPMG LLP those matters required
to be discussed by Statement of Auditing Standards No. 61 ("Communication With
Audit Committees"). KPMG LLP has provided the audit committee with the written
disclosures and the letter required by the Independence Standards Board Standard
No. 1 ("Independence Discussions with Audit Committee") and has also discussed
with the Audit Committee that firm's independence from management and the
Company. The audit committee has also considered whether KPMG LLP's provision to
the Company of non-audit services (such as tax-related services, due diligence
procedures, and services and advice related to acquisitions) that are not
otherwise prohibited by applicable law is compatible with maintaining the
independence of KPMG LLP with respect to the Company and its management.
Based upon the reviews, discussions and considerations referred to
above, the audit committee has recommended to the Board that the Company's
audited financial statements be included in our Annual Report on Form 10-K for
fiscal year 2003, and that KPMG LLP be appointed as the independent auditors for
the Company for fiscal year 2004.
Respectfully submitted by:
The Audit Committee of the Board of Directors
Harold Blumenstein
James Grosfeld
Jonathan Vannini
-18-
SECURITY OWNERSHIP
The following table sets forth certain information known to Copart
regarding the ownership of our Common Stock as of the record date (October 13,
2003) by (i) all persons known by Copart to be beneficial owners of five percent
or more of our Common Stock; (ii) each current director and nominee for
director; (iii) any other Named Officers (as said term is defined hereinafter in
"Executive Compensation - Summary Compensation Table"); and (iv) all executive
officers and directors of the Company as a group. Unless otherwise indicated,
each of the shareholders has sole voting and investment power with respect to
the shares beneficially owned, subject to community property laws where
applicable, except as otherwise indicated.
Number of Percent of Total
Five Percent Shareholders, Directors and Executive Officers (1) Shares Shares Outstanding
------------------------------------------------------------------------------ ---------- ------------------
Wasatch Advisors, Inc. (2).................................................... 7,742,879 8.71%
803 West Michigan Street, Suite A
Milwaukee, WI 53233
Kayne Anderson Rudnick Investment Management, LLC (2)......................... 5,328,505 5.99%
1800 Avenue of the Stars, Second Floor
Los Angeles, CA 90067
Willis J. Johnson (3)......................................................... 12,864,097 14.36%
James Grosfeld (4)............................................................ 5,627,417 6.33%
A. Jayson Adair (5)........................................................... 1,689,250 1.87%
Harold Blumenstein (6)........................................................ 797,617 *
James E. Meeks (7)............................................................ 497,689 *
Marvin L. Schmidt (8)......................................................... 1,562,325 1.76%
Jonathan Vannini (9).......................................................... 53,417 *
Vincent W. Mitz (10).......................................................... 142,356 *
Paul A. Styer (11)............................................................ 366,000 *
All directors and executive officers as a group (thirteen persons) (3-12)..... 23,858,487 25.92%
-------------------------
* Represents less than 1% of the Company's outstanding Common Stock.
(1) Unless otherwise set forth, the mailing address for each of the persons
listed in this table is: c/o Copart, Inc., 4665 Business Center Drive,
Fairfield, California 94534.
(2) The number of shares and other information presented is as reported in a
Schedule 13F filed by Wasatch Advisors, Inc. and Kayne Anderson Rudnick
Investment Management, LLC with the SEC and reflects stock held as of June
30, 2003. The Company has not attempted to verify independently any of the
information contained in the Schedule 13F.
(3) Includes 675,000 shares of Common Stock subject to options exercisable
within 60 days of the record date.
(4) Includes 17,417 shares of Common Stock subject to options exercisable
within 60 days of the record date.
(5) Includes 1,239,250 shares of Common Stock subject to options exercisable
within 60 days of the record date.
(6) Includes 26,417 shares of Common Stock subject to options exercisable
within 60 days of the record date.
(7) Includes 487,500 shares of Common Stock subject to options exercisable
within 60 days of the record date.
(8) Includes 50,000 shares of Common Stock subject to options exercisable
within 60 days of the record date.
(9) Includes 14,917 shares of Common Stock subject to options exercisable
within 60 days of the record date.
(10) Includes 95,000 shares of Common Stock subject to options exercisable
within 60 days of the record date.
(11) Includes 324,000 shares of Common Stock subject to options exercisable
within 60 days of the record date.
(12) Includes 3,139,875 shares of Common Stock subject to options exercisable
within 60 days of the record date.
-19-
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of July 31, 2003 about
shares of our common stock that may be issued upon the exercise of options and
similar rights under all of our existing equity compensation plans, including
our 2001 Stock Option Plan, our 1994 Employee Stock Purchase Plan, the 1994
Director Option Plan, and our 1992 Stock Option Plan. Our 1992 Stock Option Plan
was terminated in 2001, and our 1994 Director Option Plan was terminated in
August 2003. No further grants will be made under these plans although
pre-existing options remain outstanding and are subject to the terms of the
plan. All of our equity incentive plans have been approved by our shareholders.
Number of Securities
Remaining Available for
Future Issuance Under
Number of Securities to be Weighted-Average Equity Compensation Plans
Issued Upon Exercise of Exercise Price of (Excluding Securities
Outstanding Options, Outstanding Options, Reflected in the First
Plan Category Warrants and Rights (1) Warrants and Rights (1) Column)
-------------------------------- -------------------------- ----------------------- -------------------------
Equity compensation plans
approved by security
holders...................... 5,321,798(2) $ 9.03(3) 2,684,200(4)
Equity compensation plans not
approved by security
holders...................... -- -- --
------------ ------ ------------
Total........................... 5,321,798 $ 9.03 2,684,200
============ ====== ============
-------------------------
(1) We are unable to ascertain with specificity the number of securities to be
issued upon exercise of outstanding rights under the 1994 Employee Stock
Purchase Plan or the weighted average exercise price of outstanding rights
under that plan. The 1994 Employee Stock Purchase Plan provides that shares
of our common stock may be purchased at a per share price equal to 85% of
the fair market value of the common stock on the beginning of the offering
period or a purchase date applicable to such offering period, whichever is
lower.
(2) Reflects the number of shares of common stock to be issued upon exercise of
outstanding options under the 1992 Stock Option Plan, the 1994 Director
Option Plan, and the 2001 Stock Option Plan.
(3) Reflects weighted average exercise price of outstanding options under the
1992 Stock Option Plan, the 1994 Director Option Plan, and the 2001 Stock
Option Plan.
(4) Includes securities available for future issuance under the 1994 Director
Option Plan, the 1994 Employee Stock Purchase Plan and the 2001 Stock
Option Plan. No securities are available for future issuance under the 1992
Stock Option Plan and 1994 Director Option Plan.
-20-
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides certain summary information concerning the
compensation earned for services rendered in all capacities to Copart and its
subsidiaries during each of the last three fiscal years, by our Chief Executive
Officer and each of our other four most highly compensated executive officers.
The individuals whose compensation is disclosed in the following table are
referred to in this proxy statement as the "Named Officers."
Long Term Compensation Awards
Annual Compensation -----------------------------------------
------------------------------------- Securities Underlying All Other
Name and Principal Position Fiscal Year Salary ($) Bonus ($) Options/SARs (#) Compensation ($)
----------------------------------- ----------- ---------- ---------- --------------------- ----------------
Willis J. Johnson............... 2003 450,000 500,000 -- 56,510 (1)
Chief Executive Officer 2002 400,000 500,000 100,000 54,126 (2)
2001 400,000 500,000 150,000 54,205 (3)
A. Jayson Adair................. 2003 300,000 300,000 -- 17,328 (4)
President 2002 250,000 300,000 100,000 15,715 (4)
2001 250,000 300,000 150,000 14,912 (4)
James E. Meeks.................. 2003 225,000 150,000 -- 13,604 (4)
Executive Vice President and 2002 200,000 150,000 75,000 11,778 (4)
Chief Operating Officer 2001 200,000 225,000 150,000 10,977 (4)
Paul A. Styer................... 2003 190,000 100,000 -- 6,000 (5)
Senior Vice President, 2002 185,000 100,000 30,000 6,000 (5)
General Counsel and Secretary 2001 185,000 100,000 45,000 6,000 (5)
Vincent W. Mitz................. 2003 190,000 100,000 -- 5,220 (5)
Senior Vice President 2002 190,000 100,000 50,000 5,220 (5)
of Marketing 2001 165,000 100,000 45,000 5,220 (5)
-------------------------
(1) Comprised of premiums paid on life insurance policies payable to
beneficiaries designated by Mr. Johnson in the amount of $30,657 and the
value to Mr. Johnson of the use of Copart automobiles in the amount of
$25,853.
(2) Comprised of premiums paid on life insurance policies payable to
beneficiaries designated by Mr. Johnson in the amount of $28,338 and the
value to Mr. Johnson of the use of Copart automobiles in the amount of
$25,788.
(3) Comprised of premiums paid on life insurance policies payable to
beneficiaries designated by Mr. Johnson in the amount of $28,417 and the
value to Mr. Johnson of the use of Copart automobiles in the amount of
$25,788.
(4) Comprised of the value of the use of a Copart automobile.
(5) Comprised of automobile expense allowances.
-21-
Option Grants in Last Fiscal Year
The following table provides information with respect to the stock
option grants made during the 2003 fiscal year under the Company's 2001 Stock
Option Plan (the "Option Plan") to the Named Officers. No stock appreciation
rights were granted to any of the Named Officers during fiscal 2003.
Individuals Grants Potential Realizable
------------------------------------------------------------- Value At Assumed Annual
Number of Rates of Stock Price
Securities % of Total Appreciation Over
Underlying Options Granted Exercise Option Term
Options Granted to Employees in Price Expiration -----------------------
(#)(1) Fiscal Year(2) ($/Share)(3) Date 5%($)(4) 10%($)(4)
--------------- --------------- ------------ ---------- ---------- ----------
Willis J. Johnson................ 100,000 14.68 10.99 10/21/12 691,155 1,751,523
A. Jayson Adair.................. 100,000 14.68 10.99 10/21/12 691,155 1,751,523
James E. Meeks................... 100,000 14.68 10.99 10/21/12 691,155 1,751,523
Paul A. Styer.................... 30,000 4.40 10.99 10/21/12 207,347 525,457
Vincent W. Mitz.................. 50,000 7.34 10.99 10/21/12 345,578 875,761
-------------------------
(1) Each option was granted under the Option Plan and will become exercisable
for the option shares in installments over the optionee's period of service
with the Company. Options vest over a five-year period at a rate of 20% per
year. Each option has a maximum term of ten years, subject to earlier
termination in the event of the optionee's cessation of employment with the
Company.
(2) Based upon options to purchase an aggregate of 681,000 shares granted by
the Company to employees and directors during fiscal year 2003.
(3) 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 exercise price of all option grants was determined by the fair
market value of the Company's common stock as quoted on the NASDAQ National
Market System on the date of grant.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the rules of the Securities Exchange Commission and do not
represent the Company's estimate or projection of future Common Stock
prices. There is no assurance provided to any executive officer or any
other holder of the Company's Common Stock that the actual stock price
appreciation over the option term will be at the assumed 5% or 10% levels
or at any other specific level. Assuming the specified rates of annual
compounding, the total appreciation during the term of such options results
in an increase of 62.9% (at 5% per year) and 159.4% (at 10% per year).
Aggregated Option Exercises In Last Fiscal Year And Fiscal Year-End Option
Values
The following table sets forth information concerning exercises of
options during fiscal year 2003 and the value of unexercised options held as of
the end of the 2003 fiscal year by the Named Officers.
Number of Securities
Underlying Value Of Unexercised
Unexercised Optoins At In-The-Money Options At
Shares Value Fiscal Year End Fiscal Year - End ($)(2)
Acquired on Realized --------------------------- ---------------------------
Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
------------ ------------ ------------ ------------- ------------ -------------
Willis J. Johnson.......... $ -- $ -- 662,500 187,500 $ 3,876,000 $ --
A. Jayson Adair............ -- -- 1,155,500 372,500 4,611,300 294,600
James E. Meeks............. -- -- 462,500 237,500 876,000 --
Paul A. Styer.............. 11,000 97,960 317,750 66,250 1,881,570 --
Vincent W. Mitz............ -- -- 80,750 48,250 156,490 41,420
-------------------------
(1) Represents the fair market value of underlying securities on the date of
exercise, minus the exercise price.
(2) Represents the fair market value of underlying securities at fiscal year
end (for in-the-money options only) minus the exercise price. The closing
price for the Company's Common Stock at fiscal year end as quoted on the
NASDAQ National Market System was $9.38.
-22-
Employment Contracts and Change-in-Control Arrangements
We currently do not have any formal employment agreements with any of
our executive officers and all are employed on an "at-will" basis.
All employees and consultants (including officers and directors) of the
Company are eligible for option grants under our 2001 Stock Option Plan. In
addition, until July 2003, our non-employee directors were eligible for option
grants under our 1994 Director Option Plan. The board of directors terminated
the 1994 Director Option Plan in August 2003. No further grants will be made
under the 1994 Director Option Plan although outstanding grants will remain
unaffected and will continue to vest in accordance with their terms.
Future benefits under the 2001 Stock Option Plan are not determinable,
as grants of options are at the discretion of the compensation committee.
Pursuant to the terms of such option plans and related option grant agreements,
if any, in the event of any acquisition or merger of Copart with or into another
corporation or the sale of all or substantially all of the assets of the
Company, each outstanding option and stock purchase right shall be assumed or an
equivalent option or right substituted by the successor corporation. If the
successor corporation refuses to assume the options and stock purchase rights
then outstanding or to substitute substantially equivalent options or rights,
then the optionee shall have the right to exercise the option or stock purchase
right as to all the optioned stock, including shares not otherwise vested or
exercisable. In such event, the optionee shall be notified that the option or
stock purchase right is fully exercisable for fifteen (15) days from the date of
such notice and that the option or stock purchase right shall terminate upon
expiration of such period.
In addition, in the event of a change of control in which options and
stock purchase rights are assumed by a successor corporation, pursuant to the
terms of certain option agreements under our 1992 Stock Option Plan and our 2001
Stock Option Plan as previously approved, if an employee is terminated without
cause by such successor corporation within twelve months of such change of
control, then such optionee shall vest in full and have the right to exercise
the option or stock purchase right as to all the optioned stock, including
shares not otherwise vested or exercisable.
-23-
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following Compensation Committee Report on Executive Compensation
shall not be deemed "soliciting material" or to be "filed" with the Securities
and Exchange Commission, nor shall this information be incorporated by reference
by any general statement incorporating this proxy into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent we specifically incorporate this information by
reference into such filing.
The compensation committee of our Board of Directors has general
responsibility for establishing the compensation payable to our executive
officers and other key executives. The committee has the sole and exclusive
authority to administer our equity compensation plans, including stock option
plans under which grants may be made to such individuals. During fiscal 2002,
the stock option grant committee of our board administered our equity incentive
plans. The charter of the stock option grant committee was terminated in fiscal
2003, however, and the compensation committee has assumed its responsibilities.
This report is divided into two parts. Part One is a brief description
of the compensation arrangements in effect for the 2003 fiscal year for the
executive officers of the Company, including the Named Officers in the Summary
Compensation Table. Part Two is a discussion of the factors that governed the
compensation payable to the Chief Executive Officer for the 2003 fiscal year.
Part One - Existing Compensation Arrangements
The compensation committee believes that the current salaries and
benefits of our executive officers are commensurate with our financial
performance to date and with the salaries and benefits payable by comparable
companies. During fiscal 1998, the prior employment agreement between Copart and
our Chief Executive Officer expired, and he is now employed on an "at-will"
basis. The base annual salaries of Willis J. Johnson, A. Jayson Adair, James E.
Meeks, Paul A. Styer and Vincent W. Mitz were set at $450,000, $300,000,
$225,000, $190,000 and $190,000 respectively, during fiscal year 2003. In
October 2003, the base annual salary for A. Jayson Adair was increased to
$350,000. The compensation committee intends to review these salary levels on a
regular basis and to make such adjustments to them as it sees fit based on the
performance of the Company and the employee.
Our objective in awarding options is to more closely align the
long-term interests of the executive officers with those of our shareholders.
During fiscal 2003, the committee reviewed the outstanding equity incentives of
our executive officers, including the applicable exercise shares and the extent
to which outstanding option grants were vested or unvested. Based on this
review, the committee determined that additional option grants were required. In
August 2003, the committee approved grants of 565,000 shares of common stock to
Company employees, including grants to Messrs. Johnson, Adair, Meeks, Styer and
Mitz in the amounts of 100,000, 100,000, 75,000, 30,000 and 50,000 shares,
respectively, under the Company's 2001 Stock Option Plan.
Part Two - Compensation of Chief Executive Officer
Willis J. Johnson, the co-founder of the Company, served as President
and Chief Executive Officer from 1986 until May 1995, and has continued to serve
as Chief Executive Officer since May 1995. Mr. Johnson's base annual salary was
$450,000 for fiscal year 2003, an increase of $50,000 over his base salary for
fiscal 2002. The compensation committee also approved the grant to Mr. Johnson
of an option to acquire
-24-
100,000 shares of common stock under Copart's 2001 stock option plan. Mr.
Johnson is also entitled to participate in the Company's benefit plans and is
entitled to four weeks paid vacation per year, use of Company automobiles, and a
$1 million life insurance policy with the beneficiary being designated by Mr.
Johnson.
In addition, during fiscal 2004, the compensation committee approved
standards for personal use of Copart's leased aircraft by Mr. Johnson and A.
Jayson Adair, Copart's President. The committee authorized Mr. Johnson to use
the aircraft for personal purposes for up to 50 flight hours per fiscal year and
Mr. Adair to use the aircraft for personal purposes for up to 25 flight hours
per fiscal year. Flight hours in excess of these amounts would require the
additional approval of the compensation committee. The committee intends to
value this benefit on an annual basis, and Mr. Johnson and Mr. Adair will be
responsible for taxes resulting from any deemed income arising from this
benefit.
The compensation committee believes that the salary and benefits paid
to Mr. Johnson during fiscal 2003 were commensurate with the Company's financial
performance. In addition, the committee believes that the salary increase from
fiscal 2002 to fiscal 2003 was appropriate in light of Copart's financial
performance through the end of fiscal 2002. The compensation committee expects
that any bonus compensation recommended to be payable to Mr. Johnson in future
years will also be based upon the Company's growth and financial performance,
and subject to approval by the compensation committee.
Tax Limitation. As a result of federal tax legislation, a publicly-held
company such as the Company 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 fiscal year. The Company
presently intends to structure its future compensation packages in a manner to
comply with the $1 million compensation cap.
Compensation Committee
Harold Blumenstein James Grosfeld Jonathan Vannini
CODE OF ETHICS
In September 2003, our board of directors adopted the Copart, Inc. Code
of Ethics for Principal Executive and Senior Financial Officers (the "Code of
Ethics"). The Code applies to our principal executive officer, our principal
financial officer, our principal accounting officer or controller, and persons
performing similar functions and responsibilities who shall be identified by our
Audit Committee from time to time.
The Code of Ethics is available at out website, located at
http://www.copart.com. It may be found at our website as follows:
1. From our main web page, click on "Investor Relations."
2. Next, click on "Corporate Governance."
3. Finally, click on "Code of Ethics for Principal Executive and
Senior Financial Officers."
-25-
We intend to satisfy the disclosure requirement under Item 10 of Form
8-K regarding an amendment to, or waiver from, a provision of the Code of Ethics
by posting such information on our website, at the address and location
specified above.
-26-
PERFORMANCE GRAPH
The following information relating to the price performance of our
common stock shall not be deemed "soliciting material" or to be "filed" with the
Securities and Exchange Commission, nor shall this information be incorporated
by reference by any general statement incorporating this proxy into any filing
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, except to the extent we specifically incorporate such
information by reference into such filing.
The following graph shows a comparison of the cumulative total
shareholder returns for the Company, the NASDAQ Stock Market - (U.S.), and a
peer group (based on Standard Industrial Classification ("SIC") codes) for the
period of August 1, 1998 through July 31, 2003. Such returns are based on
historical results and are not intended to suggest future performance. Data for
the NASDAQ and peer group indices assume reinvestment of all dividends. We have
not declared or paid a cash dividend since becoming a public company in 1994.
The Company currently intends to retain any earnings for use in its business and
does not anticipate paying any cash dividends in the foreseeable future.
[GRAPHIC CHART OMITTED]
-27-
CERTAIN TRANSACTIONS
We employ in various non-executive positions Jason Johnson, the son of
our Chief Executive Officer, Bonnie Randall, the sister of our Chief Executive
Officer, Diane Yassa, the daughter of our Chief Operating Officer, and Rodgar
McCalmon, the son-in-law of our Chief Executive Officer. In fiscal 2003, Mr.
Johnson, Mrs. Randall, Mrs. Yassa, and Mr. McCalmon received a total of $80,000,
$134,700, $85,000, and $99,000 of cash compensation, respectively. The Company
believes that the terms of each such individual's employment, including their
cash compensation, are commensurate with other employees in comparable
positions. In August 2003, Mr. McCalmon received a grant of 10,000 stock options
under the Company's 2001 Stock Option Plan.
Willis J. and Reba J. Johnson are the owners of the real property and
improvements of the Fresno, California facility and lease said premises to
Copart for current monthly lease payments of $12,834 under a lease dated August
1, 1992, which expires, with inclusion of all extension options, in July 2004,
and contains a provision whereby we have an option to purchase the real property
and improvements. Total payments under this lease aggregated $154,008 in fiscal
2003. We believe that the terms of this lease are no less favorable to the
Company than could be obtained from unaffiliated third parties.
Under the terms of a lease agreement effective July 1, 1993 between the
Schmidt Family Trust dated September 29, 1982 and Copart, we lease property in
the Los Angeles, California area from the Schmidt Family Trust. The current term
of the Los Angeles lease expires June 30, 2008. Total payments under this lease
aggregated $60,923 in fiscal 2003. Marvin L. Schmidt, a director of the Company,
is a beneficiary of the Schmidt Family Trust.
Under the terms of the Lease Agreement dated September 1, 1992 between
James P. Meeks and Barbara D. Meeks and Copart, Inc., we lease property in San
Martin, California from James P. Meeks and Barbara D. Meeks. The San Martin
lease expires August 31, 2007. Total payments under this lease aggregated
$228,000 in fiscal 2003. James P. Meeks is the father of one of our directors,
James E. Meeks.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers, and persons who own more than ten
percent of a registered class of the Company's equity securities to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten percent shareholders are required by SEC regulations to furnish
the Company with copies of all Section 16(a) reports they file.
Based solely upon a review of the copies of such reports furnished to
the Company and written representations from such officers, directors and
greater than ten percent shareholders that no other reports were required to be
made, the Company believes that there was full compliance for the fiscal year
ended July 31, 2003 with all Section 16(a) filing requirements applicable to the
Company's officers, directors and greater-than-ten percent shareholders except
that Marvin L. Schmidt filed a late form 4 in relation to one transaction.
-28-
OTHER MATTERS
We know of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend. Discretionary authority with respect to
such other matters is granted by the execution of the enclosed Proxy.
ADJOURNMENT OF THE ANNUAL MEETING
In the event that there are not sufficient votes to approve any
proposal incorporated in this proxy statement at the time of the annual meeting,
the proposal could not be approved unless the annual meeting was adjourned in
order to permit further solicitation of proxies from holders of our Common
Stock. Proxies that are being solicited by our board grant discretionary
authority to vote for any adjournment, if necessary. If it is necessary to
adjourn the annual meeting, and the adjournment is for a period of less than 45
days, no notice of the time and place of the adjourned meeting is required to be
given to the shareholders other than an announcement of the time and place at
the annual meeting. A majority of the shares represented and voting at the
annual meeting is required to approve the adjournment, regardless of whether
there is a quorum present at the annual meeting.
ANNUAL REPORT
A copy of our annual report for the fiscal year ended July 31, 2003 has
been mailed concurrently with this proxy statement to all shareholders entitled
to notice of, and to vote at, the annual meeting. The annual report is not
incorporated into this proxy statement and is not proxy soliciting material.
For the Board of Directors
COPART, INC.
By: /s/ PAUL A. STYER
--------------------------------
Paul A. Styer, Secretary
Dated: October 29, 2003
-29-
Site of the Copart, Inc. 2003 Annual Shareholder Meeting
Directions to: Copart, Inc.
4665 Business Center Drive
Fairfield, California 94534
From: San Francisco Airport
Exit the airport on Highway 101 Northbound toward San Francisco. As you enter
San Francisco follow the signs directing you towards the Bay Bridge. This is
Interstate 80 Eastbound. Follow Interstate 80 Eastbound for approximately 40
miles. This will take you over the Bay and Carquinez Bridges. Continue east on
Interstate 80 until you reach Fairfield. Once in Fairfield you will exit at
Suisun Valley Road. Turn left onto Suisun Valley Road and go over the freeway.
At the first set of traffic lights, turn left onto Mangels. At the next set of
traffic lights, turn left onto Business Center Drive, then go to the first
building on the left at 4665 Business Center Drive.
-30-
ANNEX A
AMENDED AND RESTATED CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
COPART, INC.
(as amended December 2002)
PURPOSE:
The purpose of the Audit Committee of the Board of Directors (the "Board") of
Copart, Inc. and its subsidiaries (the "Company") shall be to:
. Oversee the accounting and financial reporting processes of the
Company and audits of the financial statements of the Company;
. Assist the Board in oversight and monitoring of (i) the integrity of
the Company's financial statements; (ii) the Company's accounting
policies and procedures; (iii) the Company's compliance with legal and
regulatory requirements; (iv) the independent auditor's
qualifications, independence and performance; (v) the Company's
disclosure controls and procedures; and (vi) the Company's internal
controls;
. Prepare the report that the Securities and Exchange Commission (the
"SEC") rules require be included in the Company's annual proxy
statement;
. Provide the Board with the results of the Audit Committee's monitoring
and recommendations derived therefrom; and
. Provide to the Board such additional information and materials as it
may deem necessary to make the Board aware of significant financial
matters that require the attention of the Board.
In addition, the Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board may from time
to time prescribe.
MEMBERSHIP:
The Audit Committee members will be appointed by, and will serve at the
discretion of, the Board. The Audit Committee will consist of at least three
members of the Board. Members of the Audit Committee must meet the following
criteria:
A-1
. Each member will be an independent director, as defined in (i) NASDAQ
Rule 4200 and (ii) the rules of the SEC, as in effect from time to
time;
. Each member will be able to read and understand fundamental financial
statements, in accordance with the NASDAQ National Market Audit
Committee requirements; and
. At least one member will have past employment experience in finance or
accounting, requisite professional certification in accounting, or
other comparable experience or background, including a current or past
position as a principal financial officer or other senior officer with
financial oversight responsibilities.
RESPONSIBILITIES:
The responsibilities of the Audit Committee shall include:
. Reviewing on a continuing basis the adequacy of the Company's system
of internal controls, including meeting periodically with the
Company's management and the independent auditors to review their
assessment of adequacy of such controls and to review, before its
release, the disclosure regarding such system of internal financial
and accounting controls required under SEC rules to be contained in
the Company's periodic filings and the attestations or reports by the
independent auditors relating to such disclosure;
. Exercising sole responsibility for appointing, compensating (including
all audit engagement fees and terms), overseeing the work of, and
terminating the services of the independent auditors (including
resolving disagreements between management and the independent
auditors regarding financial reporting) for the purpose of preparing
or issuing an audit report or related work and pre-approving audit and
non-audit services provided to the Company by the independent auditors
(or subsequently approving non-audit services in those circumstances
where a subsequent approval is necessary and permissible) in
accordance with the applicable requirements of the SEC and the Public
Company Accounting Oversight Board (the "Oversight Board");
. Reviewing the independence of the outside auditors, including (i)
obtaining on a periodic basis a formal written statement from the
independent auditors regarding relationships and services with the
Company that may impact independence, as defined by applicable
standards and SEC requirements, (ii) presenting this statement to the
Board, and (iii) to the extent there are relationships, monitoring and
investigating them;
. Reviewing and providing guidance with respect to the external audit by
(i) reviewing the independent auditors' proposed audit scope and
approach; (ii) discussing with the Company's independent auditors the
financial statements and audit findings, including any significant
adjustments, management judgments and accounting estimates,
significant new accounting policies and disagreements with management
and any other matters described in SAS No. 61, as may be modified or
supplemented; and (iii) reviewing reports submitted to the audit
committee by the independent auditors in accordance with the
applicable SEC requirements;
A-2
. Reviewing and discussing with management and the independent auditors
the annual audited financial statements and quarterly unaudited
financial statements, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," prior to filing the Company's Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q, respectively, with the
SEC (which for purposes of the annual report shall include a
recommendation as to whether the audited financial statements should
be included in the Company's Annual Report on Form 10-K);
. Directing the Company's independent auditors to review, before filing
with the SEC, the Company's interim financial statements included in
Quarterly Reports on Form 10-Q, using professional standards and
procedures for conducting such reviews;
. Conducting a post-audit review of the financial statements and audit
findings, including any significant suggestions for improvements
provided to management by the independent auditors;
. Reviewing before release the unaudited quarterly operating results in
the Company's quarterly earnings release;
. Overseeing compliance with the requirements of the SEC for disclosure
of auditors' services and audit committee members, member
qualifications and activities;
. Reviewing on a continuing basis the adequacy of the Company's system
of disclosure controls and procedures, including meeting periodically
with the Company's management, independent auditors and outside legal
counsel to review their assessment of such controls and procedures and
to review, before its release, the disclosure regarding such system of
disclosure controls and procedures required under SEC rules to be
contained in the Company's periodic filings;
. Reviewing, approving and monitoring the Company's code of ethics for
its senior financial officers;
. Reviewing management's monitoring of compliance with the Company's
standards of business conduct and with the Foreign Corrupt Practices
Act;
. Reviewing, in conjunction with counsel, any legal matters that could
have a significant impact on the Company's financial statements;
. Providing oversight and review at least annually of the Company's risk
management policies, including its investment policies;
. Overseeing and reviewing the Company's policies regarding information
technology and management information systems;
. If necessary, instituting special investigations with full access to
all books, records, facilities and personnel of the Company;
A-3
. As appropriate, obtaining advice and assistance from outside legal,
accounting or other advisors;
. Reviewing and approving in advance any proposed related party
transactions;
. Reviewing its own charter, structure, processes and membership
requirements from time to time;
. Providing a report in the Company's proxy statement in accordance with
the rules and regulations of the SEC; and
. Establishing procedures for receiving, retaining and treating
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters and procedures for the
confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters.
MEETINGS:
The Audit Committee will meet at least four times each year. The Audit Committee
may establish its own schedule, which it will provide to the Board in advance.
The Audit Committee will meet separately with the Chief Executive Officer and
separately with the Chief Financial Officer of the Company at such times as are
appropriate to review the financial affairs of the Company. The Audit Committee
will meet separately with the independent auditors of the Company, at such times
as it deems appropriate, to fulfill the responsibilities of the Audit Committee
under this charter.
MINUTES:
The Audit Committee will maintain written minutes of its meetings, which minutes
will be filed with the minutes of the meetings of the Board.
REPORTS:
In addition to preparing the report in the Company's proxy statement in
accordance with the rules and regulations of the SEC, the Audit Committee will
summarize its examinations and recommendations to the Board as may be
appropriate, consistent with the Committee's charter.
A-4
COMPENSATION:
Members of the Audit Committee shall receive such fees, if any, for their
service as Audit Committee members as may be determined by the Board in its sole
discretion. Such fees may include retainers or per meeting fees. Fees may be
paid in such form of consideration as is determined by the Board.
Members of the Audit Committee may not receive any compensation from the Company
except the fees that they receive for service as a member of the Board or any
committee thereof.
DELEGATION OF AUTHORITY:
The Audit Committee may delegate to one or more designated members of the Audit
Committee the authority to pre-approve audit and permissible non-audit services,
provided such pre-approval decision is presented to the full Audit Committee at
its scheduled meetings.
A-5
ANNEX B
AMENDED AND RESTATED CHARTER FOR THE
COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS OF
COPART, INC.
(as amended December 2002)
PURPOSE:
The purpose of the Compensation Committee established pursuant to this
charter is to review and approve, and, where appropriate, to and make
recommendations to the Board of Directors (the "Board") regarding all forms of
compensation to be provided to the employees and directors of, and consultants
to Copart, Inc., a California corporation, and its subsidiaries (the "Company"),
including stock compensation and loans, and all bonus and stock compensation to
all employees.
The Compensation Committee has the authority to undertake the specific
duties and responsibilities listed below and will have the authority to
undertake such other specific duties as the Board from time to time prescribes.
STATEMENT OF PHILOSOPHY:
The policy of the Compensation Committee is to maximize stockholder
value over time. The primary goal of the Company's Compensation Committee and
its executive compensation program is therefore to closely align the interests
of the officers with those of the Company's stockholders. To achieve this goal
the Committee attempts to (i) offer compensation opportunities that attract and
retain executives whose abilities are critical to the long-term success of the
Company; (ii) motivate individuals to perform at their highest level and reward
outstanding achievement; (iii) maintain a significant portion of the executive's
total compensation at risk, tied to achievement of financial, organizational and
management performance goals; and (iv) encourage executives to manage from the
perspective of owners with an equity stake in the Company.
MEMBERSHIP:
The Compensation Committee shall consist of a minimum of two (2)
non-employee directors of the Company as is determined by the Board. The members
of the Compensation Committee are appointed by and serve at the discretion of
the Board.
Each member of the Compensation Committee will be (i) an independent
director as defined by the rules of The NASDAQ Stock Market, (ii) an "Outside
Director" as such term is defined with respect to Section 162(m) of the Internal
Revenue Code of 1986, as amended, and (iii) a "non-employee" director as defined
under Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
B-1
RESPONSIBILITIES:
The responsibilities of the Compensation Committee include:
1. Unless otherwise determined by a majority of the independent
directors of the Board meeting in executive session, review and approve
decisions regarding the compensation of the Chief Executive Officer of the
Company (the "CEO")(for purposes of this Compensation Committee Charter, the
compensation of the CEO and the other officers of the Company to be approved by
the Compensation Committee hereunder shall include all "plan" compensation as
such term is defined in Item 402(a)(7) of Regulation S-K promulgated under the
Securities Act of 1933, as amended);
2. Unless otherwise determined by a majority of the independent
directors of the Board, review and approve decisions regarding all forms of
compensation to be provided to the officers of the Company;
3. Review and make recommendations to the Board regarding general
compensation goals and guidelines for the Company's employees and the criteria
by which bonuses to the Company's employees are determined;
4. Review and make recommendations to the Board regarding the
compensation policy for the directors of and consultants to the Company;
5. Act as the Administrator (as defined under each plan) and
administer, within the authority delegated by the Board, the Company's equity
compensation plans adopted by the Board (the "Plans"). In its administration of
the Plans, the Compensation Committee may, pursuant to authority delegated by
the Board, (a) grant stock options or stock purchase rights to individuals
eligible for such grants (including grants to individuals subject to Section 16
of the Exchange Act in compliance with Rule 16b-3 promulgated thereunder), (b)
amend such stock options or stock purchase rights, and (c) take all other
actions permitted under the Plans. The Compensation Committee shall also make
recommendations to the Board with respect to amendments to the plans and changes
in the number of shares reserved for issuance thereunder;
6. Prepare a report (to be included in the Company's proxy
statement) which describes: (a) the criteria on which compensation paid to the
CEO for the last completed fiscal year is based; (b) the relationship of such
compensation to the Company's performance; (c) the Compensation Committee's
executive compensation policies applicable to officers; and (d) the Company's
policies with respect to the $1 million deduction limit for certain executive
compensation imposed by Section 162(m) of the IRC;
7. Review its own charter, structure, processes and membership
requirements from time to time;
8. As appropriate, obtain advice and assistance from outside
legal, accounting or other advisors, including, without limitation, any
compensation consultant to be used by the Company or the Compensation Committee
in the evaluation of CEO, executive officer, employee or director compensation;
and
B-2
9. Authorize the repurchase of shares from terminated employees
pursuant to applicable law.
MEETINGS:
The Compensation Committee will meet at such times that it deems
appropriate to fulfill its responsibilities of the Compensation Committee under
this charter. The Compensation Committee shall establish its own schedule, which
it will provide to the Board in advance. The members of the Compensation
Committee may invite the Chief Executive Officer, the executive officer
responsible for the Company's human resources activities or any other person to
attend meetings as appropriate.
MINUTES:
The Compensation Committee will maintain written minutes of its
meetings, which minutes will be filed with the minutes of the meetings of the
Board.
REPORTS:
The Compensation Committee will provide written reports to the Board of
the Company regarding recommendations of the Compensation Committee submitted to
the Board for action and copies of the written minutes of its meetings.
DELEGATION OF AUTHORITY:
The Compensation Committee may form and delegate authority to
subcommittees when appropriate.
B-3
ANNEX C
COPART, INC.
1994 EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED DECEMBER ___, 2003)
The following constitute the provisions of the 1994 Employee Stock
Purchase Plan of Copart, Inc.
1. Purpose. The purpose of the Plan is to provide employees of
the Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
-----------
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(c) "Common Stock" shall mean the Common Stock of the
Company.
(d) "Company" shall mean Copart, Inc. and any Designated
Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time
gross earnings and sales commissions, exclusive of payments for overtime, shift
premium, incentive compensation, incentive payments, bonuses and other
compensation.
(f) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an
employee of the Company or any Designated Subsidiary for tax purposes whose
customary employment with the Company is at least twenty (20) hours per week and
more than five (5) months in any calendar year, and who has completed 90 days of
continuous employment with the Company prior to a given Enrollment Date. For
purposes of the Plan, the employment relationship shall be treated as continuing
intact while the individual is on sick leave or other leave of absence approved
by the Company. Where the period of leave exceeds 90 days and the individual's
right to reemployment is not guaranteed either by statute or by contract, the
employment relationship will be deemed to have terminated on the 91st day of
such leave.
C-1
(h) "Enrollment Date" shall mean the first day of each
Offering Period.
(i) "Exercise Date" shall mean the last day of each
Offering Period.
(j) "Fair Market Value" shall mean, as of any date, the
value of Common Stock determined as follows:
(1) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market Value shall
be the closing sale price for the Common Stock (or the mean of the closing bid
and asked prices, if no sales were reported), as quoted on such exchange (or the
exchange with the greatest volume of trading in Common Stock) or system on the
date of such determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable; provided, however that for the first
Offering Period, Fair Market Value shall mean the price at which the Company's
Common Stock is initially offered to the public, or;
(2) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or is regularly quoted by
a recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or
(3) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Board.
(k) "Offering Period" shall mean a period of
approximately six (6) months, commencing on the first Trading Day on or after
July 1 and terminating on the last Trading Day in the period ending the
following December 31, or commencing on the first Trading Day on or after
January 1 and terminating on the last Trading Day in the period ending the
following June 30, during which an option granted pursuant to the Plan may be
exercised. The duration of Offering Periods may be changed pursuant to Section 4
of this Plan.
(l) "Parent" shall mean a "parent corporation," whether
now or hereafter existing, as defined in Section 424(e) of the Code.
(m) "Plan" shall mean this 1994 Employee Stock Purchase
Plan.
(n) "Purchase Price" shall mean an amount equal to 85% of
the Fair Market Value of a share of Common Stock on the Enrollment Date or on
the Exercise Date, whichever is lower; provided, however, that the Purchase
Price during the first Offering Period shall not be less than the price at which
the Company's Common Stock is initially offered to the public.
C-2
(o) "Reserves" shall mean the number of shares of Common
Stock covered by each option under the Plan which have not yet been exercised
and the number of shares of Common Stock which have been authorized for issuance
under the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national
stock exchanges and the NASDAQ System are open for trading.
3. Eligibility.
-----------
(a) Any Employee (as defined in Section 2(g)), who shall
be employed by the Company on a given Enrollment Date shall be eligible to
participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company and/or hold outstanding options
to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Parent or Subsidiary of the Company, or (ii) to the extent his
or her rights to purchase stock under all employee stock purchase plans of the
Company and its subsidiaries to accrue at a rate which exceeds Twenty-Five
Thousand Dollars ($25,000) worth of stock (determined at the fair market value
of the shares at the time such option is granted) for each calendar year in
which such option is outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive
Offering Periods with a new Offering Period commencing on the first Trading Day
on or after July 1 and January 1 each year, or on such other date as the Board
shall determine, and continuing thereafter until terminated in accordance with
Section 19 hereof. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without shareholder approval if such change is announced prior
to the scheduled beginning of the first Offering Period to be affected
thereafter.
5. Participation.
-------------
(a) An eligible Employee may become a participant in the
Plan by completing a subscription agreement authorizing payroll deductions in
the form of Exhibit A to this Plan and filing it with the Company's Personnel
Administrator at its principal executive offices prior to the applicable
Enrollment Date.
(b) Payroll deductions for a participant shall commence
on the first payroll following the Enrollment Date and shall end on the last
payroll in the Offering Period to which such
C-3
authorization is applicable, unless sooner terminated by the participant as
provided in Section 10 hereof.
6. Payroll Deductions.
------------------
(a) At the time a participant files his or her
subscription agreement, he or she shall elect to have payroll deductions made on
each pay day during the Offering Period in an amount not exceeding ten percent
(10%) of the Compensation which he or she receives on each pay day during the
Offering Period.
(b) All payroll deductions made for a participant shall
be credited to his or her account under the Plan and will be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her
participation in the Plan as provided in Section 10 hereof, or may increase or
decrease the rate of his or her payroll deductions during the Offering Period by
completing or filing with the Company a new subscription agreement authorizing a
change in payroll deduction rate. The Board may, in its discretion, limit the
number of participation rate changes during any Offering Period. The change in
rate shall be effective with the first full payroll period following five (5)
business days after the Company's receipt of the new subscription agreement
unless the Company elects to process a given change in participation more
quickly. A participant's subscription agreement shall remain in effect for
successive Offering Periods unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent
necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof,
a participant's payroll deductions may be decreased to 0% at such time during
any Offering Period which is scheduled to end during the current calendar year
(the "Current Offering Period") that the aggregate of all payroll deductions
which were previously used to purchase stock under the Plan in a prior Offering
Period which ended during that calendar year plus all payroll deductions
accumulated with respect to the Current Offering Period equal $21,250. Payroll
deductions shall recommence at the rate provided in such participant's
subscription agreement at the beginning of the first Offering Period which is
scheduled to end in the following calendar year, unless terminated by the
participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in
part, or at the time some or all of the Company's Common Stock issued under the
Plan is disposed of, the participant must make adequate provision for the
Company's federal, state, or other tax withholding obligations, if any, which
arise upon the exercise of the option or the disposition of the Common Stock. At
any time, the Company may, but will not be obligated to, withhold from the
participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering
Period, each eligible Employee participating in such Offering Period shall be
granted an option to purchase on the
C-4
Exercise Date of such Offering Period (at the applicable Purchase Price) up to a
number of shares of the Company's Common Stock determined by dividing such
Employee's payroll deductions accumulated prior to such Exercise Date and
retained in the Participant's account as of the Exercise Date by the applicable
Purchase Price; provided that in no event shall an Employee be permitted to
purchase during each Offering Period more than a number of Shares determined by
dividing $12,500 by the Fair Market Value of a share of the Company's Common
Stock on the Enrollment Date, and provided further that such purchase shall be
subject to the limitations set forth in Sections 3(b) and 12 hereof. Exercise of
the option shall occur as provided in Section 8 hereof, unless the participant
has withdrawn pursuant to Section 10 hereof, and shall expire on the last day of
the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the
Plan as provided in Section 10 hereof, his or her option for the purchase of
shares will be exercised automatically on the Exercise Date, and the maximum
number of full shares subject to option shall be purchased for such participant
at the applicable Purchase Price with the accumulated payroll deductions in his
or her account. No fractional shares will be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 10 hereof. Any other monies left over in a participant's account after
the Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date
on which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
10. Withdrawal; Termination of Employment.
-------------------------------------
(a) A participant may withdraw all but not less than all
the payroll deductions credited to his or her account and not yet used to
exercise his or her option under the Plan at any time by giving written notice
to the Company in the form of Exhibit B to this Plan. All of the participant's
payroll deductions credited to his or her account will be paid to such
participant promptly after receipt of notice of withdrawal and such
participant's option for the Offering Period will be automatically terminated,
and no further payroll deductions for the purchase of shares will be made during
the Offering Period. If a participant withdraws from an Offering Period, payroll
deductions will not resume at the beginning of the succeeding Offering Period
unless the participant delivers to the Company a new subscription agreement.
(b) Upon a participant's ceasing to be an Employee (as
defined in Section 2(g) hereof), for any reason, he or she will be deemed to
have elected to withdraw from the Plan and the payroll deductions credited to
such participant's account during the Offering Period but not yet used to
exercise the option will be returned to such participant or, in the case of his
or her death, to the person or persons entitled thereto under Section 14 hereof,
and such participant's option will be automatically terminated.
C-5
(c) A participant's withdrawal from an Offering Period
will not have any effect upon his or her eligibility to participate in any
similar plan which may hereafter be adopted by the Company or in succeeding
Offering Periods which commence after the termination of the Offering Period
from which the participant withdraws.
11. Interest. No interest shall accrue on the payroll deductions
of a participant in the Plan.
12. Stock.
-----
(a) The maximum number of shares of the Company's Common
Stock which shall be made available for sale under the Plan shall be 2,500,000
shares, subject to adjustment upon changes in capitalization of the Company as
provided in Section 18 hereof. If on a given Exercise Date the number of shares
with respect to which options are to be exercised exceeds the number of shares
then available under the Plan, the Company shall make a pro rata allocation of
the shares remaining available for purchase in as uniform a manner as shall be
practicable and as it shall determine to be equitable.
(b) The participant will have no interest or voting right
in shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the
Plan will be registered in the name of the participant or in the name of the
participant and his or her spouse.
13. Administration. The Plan shall be administered by the Board or
a committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
14. Designation of Beneficiary.
--------------------------
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
C-6
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees at least annually, which statements will set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization.
------------------------------------------
(a) Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the Reserves as well as the price per
share of Common Stock covered by each option under the Plan which has not yet
been exercised shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration". Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Offering Period will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board.
(c) Merger or Asset Sale. In the event of a proposed sale
of all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each option under the Plan shall be
assumed or an equivalent option shall be substituted by such successor
C-7
corporation or a parent or subsidiary of such successor corporation, unless the
Board determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering Period then in progress by
setting a new Exercise Date (the "New Exercise Date") or to cancel each
outstanding right to purchase and refund all sums collected from participants
during the Offering Period then in progress. If the Board shortens the Offering
Period then in progress in lieu of assumption or substitution in the event of a
merger or sale of assets, the Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for his option has been changed to the New Exercise Date and that his
option will be exercised automatically on the New Exercise Date, unless prior to
such date he has withdrawn from the Offering Period as provided in Section 10
hereof. For purposes of this paragraph, an option granted under the Plan shall
be deemed to be assumed if, following the sale of assets or merger, the option
confers the right to purchase, for each share of option stock subject to the
option immediately prior to the sale of assets or merger, the consideration
(whether stock, cash or other securities or property) received in the sale of
assets or merger by holders of Common Stock for each share of Common Stock held
on the effective date of the transaction (and if such holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided, however, that if
such consideration received in the sale of assets or merger was not solely
common stock of the successor corporation or its parent (as defined in Section
424(e) of the Code), the Board may, with the consent of the successor
corporation, provide for the consideration to be received upon exercise of the
option to be solely common stock of the successor corporation or its parent
equal in fair market value to the per share consideration received by holders of
Common Stock and the sale of assets or merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event the
Company effects one or more reorganizations, recapitalization, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.
19. Amendment or Termination.
------------------------
(a) The Board of Directors of the Company may at any time
and for any reason terminate, suspend or amend the Plan. Except as provided in
Section 18 hereof, no such termination or suspension can affect options
previously granted, provided that an Offering Period may be terminated or
suspended by the Board of Directors on any Exercise Date if the Board determines
that the termination or suspension of the Plan is in the best interests of the
Company and its shareholders. Except as provided in Section 18 hereof or this
Section 19, no amendment may make any change in any option theretofore granted
which adversely affects the rights of any participant. To the extent necessary
to comply with Rule 16b-3 or under Section 423 of the Code (or any successor
rule or provision or any other applicable law or regulation or stock exchange
rule), the Company shall obtain shareholder approval in such a manner and to
such a degree as required.
(b) Without shareholder consent and without regard to
whether any participant rights may be considered to have been "adversely
affected," the Board (or its committee) shall be entitled to change the Offering
Periods, limit the frequency and/or number of changes in the amount
C-8
withheld during an Offering Period, establish the exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, permit payroll
withholding in excess of the amount designated by a participant in order to
adjust for delays or mistakes in the Company's processing of properly completed
withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied toward
the purchase of Common Stock for each participant properly correspond with
amounts withheld from the participant's Compensation, and establish such other
limitations or procedures as the Board (or its committee) determines in its sole
discretion advisable which are consistent with the Plan.
(c) In the event the Board of Directors determines that
the ongoing operation of the Plan may result in unfavorable financial accounting
consequences, the Board may, in its discretion and, to the extent necessary or
desirable, modify or amend the Plan to reduce or eliminate such accounting
consequence including, but not limited to:
(1) altering the Purchase Price for any Offering
Period including an Offering Period underway at the time of the change in
Purchase Price;
(2) shortening any Offering Period so that
Offering Period ends on a new Exercise Date, including an Offering Period
underway at the time of the Board action; and
(3) allocating shares.
Such modifications or amendments shall not require stockholder approval or the
consent of any Plan participants.
20. Notices. All notices or other communications by a participant
to the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
C-9
22. Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of twenty
(20) years unless sooner terminated under Section 19 hereof.
C-10
Exhibit A
---------
COPART, INC.
1994 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
___ Original Application Enrollment Date:___________
___ Change in Payroll Deduction Rate
___ Change of Beneficiary(ies)
1. _______________________________ hereby elects to participate in the
Copart, Inc. 1994 Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan") and subscribes to purchase shares of the Company's
Common Stock in accordance with this Subscription Agreement and the
Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ___% (not to exceed 10%) of my Compensation on each payday during
the Offering Period in accordance with the Employee Stock Purchase
Plan. (Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete "Employee Stock Purchase Plan."
I understand that my participation in the Employee Stock Purchase Plan
is in all respects subject to the terms of the Plan. I understand that
the grant of the option by the Company under this Subscription
Agreement is subject to obtaining shareholder approval of the Employee
Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and Spouse
Only):____________________________
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares), I will be
treated for federal income tax purposes as having received ordinary
income at the time of such disposition in an amount equal to the excess
of the fair market value of the shares at the time such shares were
purchased by me over the price which I paid for the shares. I hereby
agree to notify the Company in writing within 30 days after the date of
any disposition of shares and I will make adequate provision for
Federal, state or other tax
withholding obligations, if any, which arise upon disposition of the
Common Stock. The Company may, but will not be obligated to, withhold
from my compensation the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make
available to the Company any tax deductions or benefits attributable to
sale or early disposition of Common Stock by me. If I dispose of such
shares at any time after the expiration of the two-year holding period,
I understand that I will be treated for federal income tax purposes as
having received income only at the time of such disposition, and that
such income will be taxed as ordinary income only to the extent of an
amount equal to the lesser of (1) the excess of the fair market value
of the shares at the time of such disposition over the purchase price
which I paid for the shares, or (2) 15% of the fair market value of the
shares on the first day of the Offering Period. The remainder of the
gain, if any, recognized on such disposition will be taxed as capital
gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print) ______________________________________
(First) (Middle) (Last)
____________________ ______________________________
Relationship
______________________________
(Address)
NAME: (Please print) ______________________________________
(First) (Middle) (Last)
____________________ ______________________________
Relationship
______________________________
(Address)
-2-
Employee's Social
Security Number:
______________________
Employee's Address:
______________________
______________________
______________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated: ________________ _______________________________
Signature of Employee
_______________________________
Spouse's Signature (If beneficiary
other than spouse)
-3-
Exhibit B
---------
COPART, INC.
1994 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Copart, Inc.
1994 Employee Stock Purchase Plan which began on _________________ ____, _____
(the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
________________________________
________________________________
________________________________
Signature:
________________________________
Date: __________________________
DETACH HERE
PROXY
COPART, INC.
Proxy for 2003 Annual Meeting of Shareholders
December 8, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Copart, Inc. (the "Company") hereby revokes all
previous proxies and appoints Willis J. Johnson or Paul A. Styer or either of
them, each with full power of substitution, as the proxy and attorney-in-fact of
the undersigned to vote and otherwise represent all of the shares registered in
the name of the undersigned at the 2003 Annual Meeting of Shareholders of the
Company to be held on Monday, December 8, 2003, at 9:00 a.m., at the Company's
corporate headquarters located at 4665 Business Center Drive, Fairfield,
California, and any adjournment thereof, with the same effect as if the
undersigned were present and voting such shares on the following matters and in
the following manner set forth on the reverse side.
------------- -------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
------------- -------------
COPART
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
--------------------------------------------------------------------------------
DETACH HERE
[X] Please mark
votes as in
this example
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 BELOW.
1. Election of Directors 2. To approve the amendment and restatement of our
Nominees: (01) Willis J. Johnson; 1994 Employee Stock Purchase Plan, including FOR AGAINST ABSTAIN
(02) A. Jayson Adair; (03) Harold amendments to increase the number of shares [ ] [ ] [ ]
Blumenstein; (04) James Grosfeld; reserved under the plan from 1,500,000 shares to
(05) James E. Meeks; (06) Marvin 2,500,000 shares and to extend the term of the plan
L. Schmidt; (07) Jonathan Vannini for an additional ten years beyond its current
expiration date (such that the plan will terminate
FOR WITHHELD on March 31, 2014);
ALL [ ] [ ] FROM
NOMINEES NOMINEES 3. Ratify the selection of KPMG LLP as independent FOR AGAINST ABSTAIN
auditors for the Company for the current fiscal [ ] [ ] [ ]
year ending July 31, 2004.
[ ]__________________________________
To withhold authority to vote
for an individual nominee or 4. In their discretion, the proxies are authorized to vote upon such other
nominees, write his name or names business as may properly come before the meeting.
above.
MARK HERE IF YOU [ ] MARK HERE FOR [ ]
PLAN TO ATTEND THE ADDRESS CHANGE AND
MEETING NOTE AT LEFT
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING,
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
Sign exactly as your name(s) appears on your stock certificate.
A corporation is requested to sign its name by its President or other
authorized officer, with the office held designated. Executors,
administrators, trustees, etc. are requested to so indicate when
signing. If stock is registered in two names, both should sign.
Signature:_________________________ Date:__________ Signature:_________________________ Date:__________