SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
TRANSPORTATION COMPONENTS, 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)(4) 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:
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:
[TRANSCOM USA LOGO]
TRANSPORTATION COMPONENTS, INC.
THREE RIVERWAY, SUITE 200
HOUSTON, TEXAS 77056
April 28, 2000
Dear Stockholder:
On behalf of our entire Board of Directors, I cordially invite you to
attend the Company's Annual Meeting of Stockholders to be held at The Doubletree
Hotel, 2001 Post Oak Blvd., Houston, Texas 77056 on Thursday, May 25, 2000, at
9:00 a.m., Houston time. For those of you who cannot be present at the Annual
Meeting, I urge that you participate by completing the enclosed proxy and
returning it at your earliest convenience.
I encourage you to read the enclosed Notice of Meeting and Proxy
Statement, which contains information about the Board of Directors and its
committees and personal information about each of the nominees for the Board.
The Proxy Statement also describes in detail other matters that will be voted
upon at the Annual Meeting.
It is important that your shares are represented at the Annual Meeting,
regardless of whether you are able to attend personally. Accordingly, please
take a moment now to complete, sign, date and mail promptly the enclosed proxy
in the envelope provided.
Sincerely,
/s/ T. MICHAEL YOUNG
T. MICHAEL YOUNG
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
TRANSPORTATION COMPONENTS, INC.
TO BE HELD MAY 25, 2000
To the Stockholders of
Transportation Components, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of
Transportation Components, Inc. will be held at The Doubletree Hotel, 2001 Post
Oak Blvd., Houston, Texas 77056 on Thursday, May 25, 2000, at 9:00 a.m., Houston
time, to consider and act upon the following matters:
(1) To elect five Class II directors, each for a three-year term
expiring at the annual meeting of stockholders in 2003, and until
their respective successors are elected and qualified.
(2) To approve the Company's 2000 Employee Stock Purchase Plan.
(3) To ratify the selection of Arthur Andersen LLP as the Company's
independent certified public accountants to audit our consolidated
financial statements for the year ending December 31, 2000.
(4) To transact such other business as may properly come before the
meeting or any adjournments thereof.
The close of business on April 24, 2000 has been fixed as the record date for
determining stockholders entitled to notice of and to vote at the Annual Meeting
or any adjournments thereof.
You are cordially invited and urged to attend the Annual Meeting. If,
however, you are unable to attend the Annual Meeting, YOU ARE REQUESTED TO SIGN
AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
If you attend the Annual Meeting, and wish to do so, you may vote in person
regardless of whether you have given your proxy. In any event, a proxy may be
revoked at any time before it is exercised.
By Order of the Board of Directors
/s/ MAC McCONNELL
MAC McCONNELL
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY
Houston, Texas
April 28, 2000
TRANSPORTATION COMPONENTS, INC.
THREE RIVERWAY, SUITE 200
HOUSTON, TEXAS 77056
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 2000
ANNUAL MEETING INFORMATION
This proxy statement contains information related to the annual meeting of
stockholders to be held at The Doubletree Hotel, 2001 Post Oak Blvd., Houston,
Texas 77056 at 9:00 a.m., Houston time, on Thursday, May 25, 2000, or at such
other time and place to which the meeting may be postponed or adjourned. The
proxy statement was prepared under the direction of our Board of Directors to
solicit your proxy for use at the annual meeting. It is being first mailed to
stockholders on April 28, 2000.
WHO IS ENTITLED TO VOTE?
Stockholders owning our common stock on April 24, 2000 are entitled to
vote at the annual meeting or any postponement or adjustment of the meeting. On
April 24, 2000 there were 17,718,508 shares of common stock outstanding,
including 1,912,388 shares of restricted voting common stock. Each share of
common stock, other than the restricted voting common stock, entitles the holder
to one vote on each matter presented at the meeting. Each share of restricted
voting common stock is entitled to three-fourths (.75) of one vote on all
matters submitted to a vote of the holders of the common stock, other than the
election of directors.
WHAT AM I VOTING ON?
You will be asked to elect nominees to serve on our Board of Directors,
approve the Company's 2000 Employee Stock Purchase Plan, ratify Arthur Andersen
LLP as the independent public accountants of the Company for 2000 and to vote on
any other matters properly raised at the meeting. The Board of Directors is not
aware of any other matters to be presented for action at the meeting. If any
other matters requiring a vote of the stockholders arise, your signed proxy card
gives authority to T. Michael Young, our Chairman of the Board, and Mac
McConnell, our Chief Financial Officer, to vote on such matters at their
discretion.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND I VOTE ON THE PROPOSALS?
The Board of Directors recommends a vote FOR each of the nominees and each
of the proposals listed on the proxy card.
HOW DO I VOTE?
Sign and date each proxy card you receive and return it in the prepaid
envelope. If you sign your proxy card, but do not mark your choices, your proxy
holders, Mr. Young and Mr. McConnell, will vote for the persons nominated for
election as directors and for each of the proposals. You can revoke you proxy
card at any time before it is exercised. To do so, you must either:
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o give written notice of revocation to our Corporate Secretary,
Transportation Components, Inc., Three Riverway, Suite 200, Houston,
Texas 77056;
o submit another properly signed proxy card with a more recent date; or
o vote in person at the meeting.
WHAT IS A QUORUM?
A "quorum" is the presence at the meeting, in person or by proxy, of the
holders of a majority of the outstanding voting shares. There must be a quorum
for the meeting to be held. Abstentions are counted in determining the presence
or absence of a quorum, but under Delaware law are not considered a vote. Shares
held by brokers in street name and for which the beneficial owners have withheld
from brokers the discretion to vote are called "broker non-votes." They are not
counted to determine if a quorum is present and under Delaware law are not
considered a vote. Broker non-votes will not affect the outcome of a vote on
election of directors but will have the same effect as a vote against the other
proposals.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
The director nominees will be elected by a plurality of the votes cast at
the meeting. All other matters to be considered at the meeting require the
affirmative vote of a majority of the votes cast.
WHO WILL COUNT THE VOTE?
American Stock Transfer & Trust, our transfer agent, will tabulate the
votes cast by proxy. Mr. McConnell will tabulate the votes cast in person at the
meeting.
WHAT ARE THE DEADLINES FOR SHAREHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING?
You may submit proposals on matters appropriate for stockholder action at
future annual meetings by following the rules of the Securities and Exchange
Commission. We must receive proposals intended for inclusion in next year's
proxy statement and proxy card no later than December 31, 2000. If we do not
receive notice of any matter that a shareholder wishes to raise at the annual
meeting in 2001 by March 26, 2001 and a matter is raised at that meeting, the
proxy holders for next year's meeting will have discretionary authority to vote
on the matter. All proposals and notifications should be addressed to our
Corporate Secretary.
HOW MUCH DID THIS PROXY SOLICITATION COST?
We will bear all expenses of this solicitation, including the cost of
preparing and mailing this Proxy Statement and the reimbursement of brokerage
firms, banks and other nominees for their reasonable expenses in forwarding
proxy material to beneficial owners of our common stock. We have retained
American Stock Transfer & Trust Company, our transfer agent, to assist us in the
solicitation of proxies. No additional fee will be paid to American Stock
Transfer beyond its normal $500 monthly fee to act as our transfer agent, plus
reimbursement of out-of-pocket expenses. Certain directors, officers and regular
employees of the Company and AST may also solicit proxies by facsimile or by
hand delivery without additional compensation.
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1. ELECTION OF DIRECTORS
GENERAL
Our Board of Directors currently consists of thirteen members. The members
of our Board of Directors are divided into three classes, designated Class I,
Class II and Class III, respectively, and are elected for a term of office
expiring at the third succeeding annual stockholders' meeting following their
election to office and until their successors are duly elected and qualified. At
this annual meeting, the term of office of each of the five Class II directors
expires. The term of the Class III directors expires at the annual meeting of
stockholders in 2001, and the term of the Class I directors expires at the
annual meeting of stockholders in 2002.
On October 15, 1999, the holders of restricted voting common stock placed
Steven S. Harter on the Board to fill the Class I director position previously
held by John Oren. Mr. Harter's term expires at the annual meeting of
stockholders in 2002. The holders of the restricted voting common stock, voting
as a class, are entitled to elect one member of our Board, but are not entitled
to vote on the election of any other director. In addition, each share of
restricted voting common stock is entitled to three-fourths (.75) of one vote on
all matters submitted to a vote of our stockholders, other than the election of
directors.
Maura L. Berney, Lawrence K. King, Mac McConnell, Mark E. Speese and
Thomas A. Work are each Class II directors whose terms are expiring at this
annual meeting and have been nominated by our Board of Directors for re-election
for a three-year term of office expiring at the annual meeting of stockholders
in 2003 and until their successors are duly elected and qualified. If any
nominee becomes unavailable for any reason, then the shares represented by the
proxy will be voted FOR the remainder of the listed nominees and for such other
nominees as may be designated by our Board as replacements for those who become
unavailable. Discretionary authority to do so is included in the proxy.
CLASS II DIRECTORS NOMINATED THIS YEAR FOR TERMS EXPIRING IN 2003
MAURA L. BERNEY
DIRECTOR
AGE 37
Ms. Berney has served as a director of the Company since June 1998. Since
March 2000, she has served as Chief Financial Officer of Fred Jones Auto
Collection, an automobile dealership consolidator in Oklahoma City, Oklahoma.
Ms. Berney served as Chairman of the Board and Vice President -- Finance and
Administration of Perfection Equipment Company from 1997 until March 2000 and
served in various capacities at Perfection from 1993 to 1997.
LAWRENCE K. KING(2)(3)
DIRECTOR
AGE 43
Mr. King has served as a director of the Company since June 1998. Since
March 2000, Mr. King has been a private investor. From December 1995 to March
2000, he served in various capacities for Coach USA, Inc., a publicly traded
consolidator of the motorcoach industry, including Chairman and Chief Executive
Officer from January 1999 until his resignation in March 2000, and as a
director, and as Senior Vice President and Chief Financial Officer from December
1995 to December 1998. Mr. King was Executive Vice President, Secretary,
Treasurer and Chief Financial Officer of SI Diamond Technology, Inc., a publicly
traded technology development company, from 1992 until September 1995. From 1988
to 1991, he served as Assistant Secretary and Treasurer
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of The Permian Corporation, the general partner of Permian Partners L.P., a
publicly traded crude oil, trucking, transportation and distribution master
limited partnership. Mr. King served in various capacities as a certified public
accountant with Arthur Andersen LLP from 1979 to 1988.
MAC MCCONNELL
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER, SECRETARY AND DIRECTOR
AGE 46
Mr. McConnell has served as Senior Vice President, Chief Financial Officer
and a director of the Company since February 1998. From December 1992 to
February 1998, he served as Chief Financial Officer of Sterling Electronics
Corporation, a publicly traded electronic parts distributor, which was acquired
by Marshall Industries, Inc. in January 1998. From 1990 to 1992, Mr. McConnell
was Vice President - Finance of Interpak Holdings, Inc., a publicly traded
company involved in packaging and warehousing thermoplastic resins. From 1976 to
1990, he served in various capacities, including partner, with Ernst & Young
LLP.
MARK E. SPEESE(2)(3)
DIRECTOR
AGE 42
Mr. Speese has served as a director of the Company since November 1999. He
has served as Vice Chairman of Rent-A-Center, Inc., a publicly traded company
which is the largest operator in the rent-to-own industry in the United States,
since September 1999. Mr. Speese also served in various capacities for
Rent-A-Center, Inc. from its inception in 1986 through April 1999, including as
its President from 1990 to April 1999 and its Chief Operating Officer from
November 1994 to March 1999. Prior to joining Rent-A-Center, Mr. Speese was a
regional manager for Thorn Americas from 1979 to 1986.
THOMAS A. WORK(4)
DIRECTOR; CO-CHAIRMAN OF CHARLES W. CARTER CO.
AGE 53
Mr. Work has served as a director of the Company since June 1998. Mr. Work
served in various capacities for Charles W. Carter Co. since 1968, including as
President of Charles W. Carter Co. - Hawaii, Inc. since 1984 and as Co-Chairman
of Charles W. Carter Co. since 1993.
CONTINUING CLASS III DIRECTORS UP FOR ELECTION IN 2001
HENRY B. COOK, JR.
DIRECTOR; VICE PRESIDENT - PURCHASING
AGE 52
Mr. Cook has served as Vice President -- Purchasing and a director of the
Company since June 1998. Mr. Cook served in various capacities for The Cook
Brothers Companies, Inc. since 1972 including as its President since 1987.
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I.T. "TEX" CORLEY(1)(2)(3)
DIRECTOR
AGE 55
Mr. Corley has served as a director of the Company since June 1998. Since
August 1995, he has served as Chairman and Chief Executive Officer of Strategic
Materials, Inc., a privately held glass recycling company. From January 1997 to
January 1998, Mr. Corley was a director of MacFrugal's Bargains Close-Outs,
Inc., a publicly held retail department store company that merged with
Consolidated Stores, Inc. in January 1998. From April 1990 to July 1995, he was
employed by and a director of Allwaste, Inc., a publicly traded environmental
service company, and serving first as Chief Financial Officer, then as Chief
Operating Officer. From April 1989 to April 1990, Mr. Corley was the President
and Chief Executive Officer of Medcon, Inc., a privately held medical waste
disposal company.
RODOLFO A. DUEMICHEN
DIRECTOR; PRESIDENT OF AMPARTS INTERNATIONAL, INC.
AGE 42
Mr. Duemichen has served as a director of the Company since June 1998. Mr.
Duemichen has served as President of Amparts International, Inc. since 1990.
PETER D. LUND(1)(4)(5)
DIRECTOR; VICE PRESIDENT-CENTRAL REGION
AGE 46
Mr. Lund has served as a director of the Company since June 1998. Mr. Lund
has served as Vice President - Central Region since February 2000. Mr. Lund has
been employed by Transportation Components Company since 1974 and has served as
its President since 1987.
CONTINUING CLASS I DIRECTORS UP FOR ELECTION IN 2002
LOUIS J. BOGGEMAN, JR.(1)((5)
DIRECTOR
AGE 46
Mr. Boggeman has served as a director of the Company since June 1998.
Since April 2000, Mr. Boggeman has been a private investor. From June 1998
through March 2000, he served as our Senior Vice President and Chief Operating
Officer. Mr. Boggeman served in various capacities for Plaza Fleet Parts from
1975 until April 2000, last serving as President from 1992 until his resignation
in April 2000. Mr. Boggeman was the President of the Council of Fleet
Specialists, an independent industry association serving the heavy duty parts
industry, from March 1998 to March 1999.
RONALD G. SHORT
DIRECTOR; VICE PRESIDENT-WESTERN REGION
AGE 40
Mr. Short has served as a director of the Company since June 1998. He has
served as our Vice President-Western Region since February 2000. Mr. Short
served in various capacities at Universal Fleet Supply since 1978 and most
recently as its President since 1998.
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T. MICHAEL YOUNG(1)(4)(5)
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND PRESIDENT
AGE 55
Mr. Young has served as our Chairman of the Board, President and Chief
Executive Officer since February 1998. From October 1987 until its acquisition
by O'Reilly Automotive, Inc. in February 1998, he served as Chairman of the
Board, Chief Executive Officer and President of Hi-Lo Automotive, Inc., a
publicly traded retail and commercial auto parts company. From May 1984 to May
1987, Mr. Young was Vice Chairman of Jerold B. Katz Interests, Inc., a privately
held financial services company. From September 1980 to February 1984, he was
Senior Vice President, Chief Financial Officer and a director of Weatherford
International Incorporated, a publicly traded international oil field service
company. Prior to that, Mr. Young was with Arthur Andersen LLP, most recently as
a partner from 1976 to 1980.
CONTINUING CLASS I DIRECTOR UP FOR ELECTION IN 2002
(Elected by holders of restricted voting common stock)
STEVEN S. HARTER(1)(2)(5)
DIRECTOR
AGE 38
Mr. Harter has served as a director of the Company since October 1999 and
is the director elected by the holders of the Restricted Common Stock. Mr.
Harter is President of Notre Capital Ventures III, LLC ("Notre"), a consolidator
of highly fragmented industries. Prior to becoming President of Notre, he was
President of Notre Capital Ventures II, LLC from August 1995 to March 1999, and
Senior Vice President of Notre Capital Ventures, Ltd. from June 1993 through
July 1995. From April 1989 to June 1993, Mr. Harter was Director of Mergers and
Acquisitions for AllWaste. From May 1984 to April 1989, he was a certified
public accountant with Arthur Andersen LLP. Mr. Harter also serves as a director
of Comfort Systems USA, Inc. and Metals USA, Inc.
- -----------------------------------------
(1) Member of Executive Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
(4) Member of Nominating Committee
(5) Member of Acquisition Committee
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BOARD COMMITTEES AND MEETING ATTENDANCE
During 1999, the Board met five times. Each of the directors attended at
least 75% of the meetings of the Board and the Committees on which he or she
served. The functions of the Executive, Audit, Compensation, Nominating and
Acquisition Committees of the Board, and the number of meetings held during
1999, are described below.
The members of the Executive Committee are T. Michael Young, Louis J.
Boggeman, Jr., Steven S. Harter, Peter D. Lund and I.T. "Tex" Corley. Mr. Young
is the Chairman of the Committee. The primary function of the Executive
Committee is to exercise many of the powers of the Board in between regular
Board meetings. The Executive Committee held one meeting during 1999.
The members of the Audit Committee are Lawrence K. King, I.T. "Tex"
Corley, Steven S. Harter and Mark E. Speese. Mr. King is the Chairman of the
Committee. The Audit Committee recommends to the Board the appointment of the
Company's independent auditors, and reviews the plan, scope and results of the
audit with the auditors and the Company's officers. The Audit Committee also
reviews with the auditors the principal accounting policies and internal
accounting controls of the Company. The Audit Committee met eight times during
1999.
The members of the Compensation Committee are I.T. "Tex" Corley, Lawrence
K. King, Steven S. Harter and Mark E. Speese. Mr. Corley is the Chairman of the
Committee. The Compensation Committee reviews and makes recommendations to the
Board concerning the compensation of the Company's officers and employees,
including stock option plans, incentive compensation programs and benefit plans.
The Compensation Committee also administers, and makes grants of stock options
under, the Company's 1998 Long-Term Incentive Plan and 1998 Non-Employee
Directors' Stock Plan. During 1999, the Compensation Committee met five times.
The members of the Nominating Committee are T. Michael Young, Thomas A.
Work, and Peter D. Lund. Mr. Young is the Chairman of the Committee. The
Nominating Committee reviews the size and composition of the Board of Directors
and its committees, interviews new director candidates and makes recommendations
for nominations to the Board for the election of directors by stockholders. The
Nominating Committee held one meeting during 1999. Any stockholder who wishes to
recommend a prospective Board nominee should timely deliver written notice
containing the information required by our bylaws to Corporate Secretary, Three
Riverway, Suite 200, Houston, Texas 77056. To be timely filed, we must receive
the notice not less than 60 days or more than 90 days prior to the first
anniversary of our preceding year's annual meeting.
The members of the Acquisition Committee are Steven S. Harter, Peter D.
Lund, T. Michael Young and Louis J. Boggeman, Jr. The Acquisition Committee
reviews and approves potential acquisitions by the Company. Mr. Harter is the
Chairman of the Committee. The Acquisition Committee held no meetings in 1999.
DIRECTORS COMPENSATION
Directors who are also employees of the Company or one of its subsidiaries
do not receive additional compensation for serving as directors. Each director
who is not an employee of the Company or one of its subsidiaries receives a fee
of $2,000 for attendance at each Board of Directors' meeting and $1,000 for each
committee meeting (unless held on the same day as a Board of Directors'
meeting). Under the Company's Directors' Plan, each non-employee director also
receives an option to acquire 10,000 common shares upon that director's initial
election to our Board, and an annual option to acquire 5,000 common shares at
each annual stockholders' meeting thereafter at which that director is
re-elected or remains as a director, unless the annual meeting is held within
three months of that director's initial election. Each non-employee director
also may elect
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to receive shares of our common stock or credits representing "deferred shares"
in lieu of cash directors' fees. See " -- 1998 Non-Employee Directors' Stock
Plan" for a more complete description of the Director's Stock Plan. Directors
are also reimbursed for out-of-pocket expenses incurred in attending meetings of
the Board of Directors or committees.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth information
regarding the compensation for 1999 of our Chief Executive Officer and our four
other most highly compensated executive officers (the "Named Executive
Officers"). Compensation information is being provided for only the years 1999
and 1998 since compensation was first paid to the Named Executive Officers upon
the closing of the initial public offering in June 1998.
SUMMARY COMPENSATION TABLE LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------------- ------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(4) UNDERLYING OPTIONS COMPENSATION(5)
- --------------------------- ---- -------- ----- --------------- ------------------ ---------------
T. MICHAEL YOUNG 1999 $148,269 -- $ 8,400 -- $ 1,162
Chairman of the 1998 $ 87,500(1) -- $ 3,500 200,000 --
Board, Chief Exeutive
Officer and President
LOUIS J. BOGGEMAN, Jr.(2) 1999 $154,039 -- $ 8,400 -- $ 1,116
Senior Vice President 1998 $79,918(1) -- $ 4,550 -- --
and Chief Operating
Officer
STEVEN J. BLUM 1999 $148,269 $ 67,000 $ 8,400 -- $ 1,412
Senior Vice President - 1998 37,500(3) -- $ 2,100 100,000 --
Corporate Development
MAC McCONNELL 1999 $148,269 -- $ 8,400 -- $ 796
Senior Vice President 1998 $ 87,500(1) -- $ 3,500 100,000 --
and Chief Financial
Officer
PAUL E. PRYZANT 1999 $148,269 -- $ 8,400 -- $ 1,162
Senior Vice President 1998 $ 87,500(1) -- $ 3,500 -- --
& General Counsel
- --------------------
(1) Reflects compensation from June 1998, the date of our initial public
offering, through December 31, 1998 at the rate stated in their respective
employment agreements.
(2) Mr. Boggeman resigned his executive officer position but not his director
position in April 2000.
(3) Reflects compensation from October 1, 1998 through December 31, 1998 at
the rate stated in his employment agreement.
(4) Reflects a monthly car allowance, except for Mr. Boggeman the amount
represents the estimated benefit of the use of a company provided vehicle.
(5) Reflects matching contributions under a 401(k) plan.
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STOCK OPTION GRANTS IN 1999
We have two stock option plans for our officers, directors and employees:
the 1998 Long-Term Incentive Plan (the "Incentive Plan"), and the 1998
Non-Employee Directors' Stock Plan (the "Directors' Plan").
1998 LONG-TERM INCENTIVE PLAN. In March 1998, our Board of Directors and
stockholders approved the Incentive Plan. The purpose of the Incentive Plan is
to provide directors, officers, key employees, consultants and other service
providers with additional incentives by increasing their ownership interests in
the Company. Individual awards under the Incentive Plan may take the form of one
or more of: (i) either incentive stock options or non-qualified stock options;
(ii) stock appreciation rights; (iii) restricted or deferred stock, (iv)
dividend equivalents and (v) other awards not otherwise provided for, the value
of which is based in whole or in part upon the value of our common stock.
Our Compensation Committee administers the Incentive Plan and selects the
individuals who will receive awards and establish the terms and conditions of
those awards. The maximum number of shares of Common Stock authorized under the
Incentive Plan is the greater of 2,500,000 or 15% of the aggregate number of
shares of Common Stock outstanding. Based on the common shares presently
outstanding, 2,657,000 shares are authorized to be issued under the Incentive
Plan.
1998 NON-EMPLOYEE DIRECTORS' STOCK PLAN. The Directors' Plan, which was
also approved by our Board of Directors and stockholders in March 1998, provides
for (i) the automatic grant of an option to purchase 10,000 common shares to
each non-employee director serving at the consummation of our initial public
offering in June 1998, (ii) the automatic grant of an option to purchase 10,000
common shares to each other non-employee director upon such person's initial
election as a director, and (iii) an automatic annual grant of an option to
purchase 5,000 common shares to each non-employee director at each annual
meeting of stockholders thereafter at which such director is re-elected or
remains as a director, unless such annual meeting is held within three months of
such person's initial election as a director. All options will have an exercise
price per share equal to the fair market value of the Common Stock on the date
of grant and are immediately vested and expire on the earlier of ten years from
the date of grant or one year after termination of service as a director. The
Directors' Plan also permits non-employee directors to elect to receive, in lieu
of cash, directors' fees, shares or credits representing "deferred shares" at
future settlement dates, as selected by the director. The number of shares or
deferred shares received will equal the number of shares of Common Stock which,
at the date the fees would otherwise be payable, will have an aggregate fair
market value equal to the amount of such fees.
OPTION GRANTS IN LAST FISCAL YEAR
No grants of options to acquire our shares were made to the Named
Executive Officers during 1999.
1999 OPTION EXERCISES AND YEAR-END OPTION HOLDINGS
None of the Named Executive Officers exercised any stock during 1999. The
following table sets forth information concerning the unexercised stock options
held by the Named Executive Officers as of December 31, 1999. None of the stock
options held by the Named Executive Officers are in-the-money as of the end of
our last fiscal year.
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FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED
OPTIONS HELD AT
DECEMBER 31, 1999(1)
--------------------------
NAME EXERCISABLE UNEXERCISABLE
---------------------- ----------- -------------
T. Michael Young ..... 40,000 160,000
Steven J. Blum ....... 20,000 80,000
Mac McConnell ........ 20,000 80,000
Paul E. Pryzant ...... 15,000 60,000
Louis J. Boggeman, Jr -- --
Henry B. Cook, Jr .... -- --
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(1) Options granted are for a term of ten years and vest 20% each year for five
years.
EMPLOYMENT AGREEMENTS
The Company was incorporated in 1997 and did not pay any of its executive
officers any compensation before the completion of our initial public offering
in June 1998. During 1999, the Company's five most highly compensated executive
officers were T. Michael Young, Louis J. Boggeman, Jr., Steven J. Blum, Mac
McConnell and Paul E. Pryzant.
Each of Messrs. Young, McConnell and Pryzant entered into an employment
agreement with the Company upon closing of our initial public offering which
provides for an annual base salary of $150,000. Each employment agreement is for
a term of three years (the "Initial Term"), and, unless terminated or not
renewed, the term continues thereafter on a year-to-year basis on the same terms
and conditions existing at the time of renewal. Each of these employment
agreements provides that, in the event of termination of employment by the
Company without cause, the employee is entitled to receive from the Company a
lump sum payment equal to his then current salary for one year. In the event of
a Change in Control of the Company (as defined), the employee may elect to
terminate his employment and receive in one lump sum an amount equal to two
times his annual base salary then in effect. Each employment agreement contains
a covenant not to compete with the Company for a period of two years immediately
following termination of employment or, in the case of termination by the
Company without cause or a termination after a Change in Control, for a period
of one year immediately following termination of employment.
In October 1998, Mr. Blum entered into an employment agreement with the
same terms as those entered into by Messrs. Young, McConnell and Pryzant.
Mr. Boggeman entered into an employment agreement with the Company upon
closing of our initial public offering which provides for an annual base salary
of $150,000. The employment agreement is for a term of five years, and, unless
terminated or not renewed, the term will continue thereafter on a year-to-year
basis on the same terms and conditions existing at the time of renewal. The
employment agreement provides that, in the event of termination of employment by
the Company without cause or a termination by the employee for Good Reason (as
defined) during the first three years of the employment term (the "Initial
Term"), the employee is entitled to receive from the Company an amount equal to
his then current salary for the remainder of the Initial Term or for one year,
whichever is greater. In the event of termination of employment by the Company
without cause or a termination by the employee for Good Reason (as defined)
after the Initial Term, the employee is entitled to receive from the Company an
amount equal to his then current salary for one year. In either case, payment is
due in one lump sum on the effective date of termination. In the event of a
Change in Control of the Company (as defined) during the Initial Term, if the
employee is not given notice at least five business days prior to such change in
control from the
-10-
acquiring company that such successor will assume and perform the Company's
obligations under the employment agreement, then the employee may elect to
terminate his employment and receive in one lump sum an amount equal to three
times his annual base salary then in effect. For a one year period following an
event of a Change in Control, the employee may elect to terminate his employment
for Good Reason (as defined) and receive in one lump sum an amount equal to
three times his annual base salary then in effect.
Mr. Boggeman resigned as an officer of the Company in April 2000. He will
be paid a lump sum severance payment of approximately $175,000.
-11-
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
ROLE OF THE COMMITTEE
Our Compensation Committee is responsible for recommending compensation
arrangements for senior management, making recommendations with respect to
employee benefit plans, and administering and making stock option grants under
the Incentive Plan. Each member of the Committee is a non-employee director.
EXECUTIVE COMPENSATION PROGRAM
Prior to our June 1998 initial public offering, our Board of Directors
instituted an executive compensation structure designed to attract and retain
highly qualified executives and motivate them to maximize stockholder returns.
In order to reach this goal, the compensation of our executive officers has been
heavily weighted toward equity-based compensation.
Compensation for our executive officers currently consists of two
components: annual salary and stock-based incentives. All of the current
executive officers have employment agreements that establish an annual salary.
See "Employment Agreements." Salaries were set at what we believe are relatively
modest levels for companies of similar revenues and market capitalization. These
salaries were set at the time of the initial public offering and reflect the
fact that each of the founding executive officers was a significant stockholder
of the Company. For executive officers who have joined us since the initial
public offering, we have set what we believe are appropriate salaries necessary
to attract highly qualified executives, depending on the individual's
responsibilities within our company.
At the time of the initial public offering, our executive officers were
granted stock options under the Incentive Plan. The options issued to the Named
Executive Officers were as follows: Mr. Young - 200,000; Mr. McConnell -
100,000; and Mr. Pryzant - 75,000. These options have an exercise price of $8.00
per share, a term of ten years and vest 20% per year over five years. In October
1998, Mr. Blum was granted 100,000 stock options with an exercise price of $6.50
per share, a term of ten years and vest 20% per year over five years.
We have awarded only one bonus to an executive officer since the initial
public offering. This bonus was paid in connection with a transfer of common
shares by Notre to Mr. Blum. We have been advised that this transfer of shares
results in a tax deduction to the Company. To assist Mr. Blum in paying his
personal income taxes resulting from this transfer and to make the transfer
economically neutral to the Company, Mr. Blum was paid a bonus of $67,000 during
1999.
COMPENSATION COMMITTEE
I.T. "Tex" Corley, Chairman
Lawrence K. King
Steven S. Harter
Mark E. Speese
-12-
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on our common
stock during the period from the closing of our initial public offering on June
19, 1998 to December 31, 1999 to the cumulative stockholder return of the
Standard & Poor's 500 Stock Price Index, and the Russell 2000 Stock Price Index.
This graph assumes that the value of an investment in our common stock and in
each index was $100 on June 19, 1998, and that all dividends were reinvested.
COMPARISON OF STOCKHOLDER TOTAL RETURN AMONG TRANSPORTATION COMPONENTS, INC.,
THE S&P 500 INDEX, AND THE RUSSELL 2000 INDEX
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
- --------------------------------------------------------------------------------
COMPARISON OF CUMULATIVE STOCKHOLDER RETURNS
6/19/98 12/31/98 12/31/99
- --------------------------------------------------------------------------------
Transportation
Components, Inc. $100.00 $ 57.81 $ 35.94
- --------------------------------------------------------------------------------
Russell 2000 $100.00 $112.52 $136.20
- --------------------------------------------------------------------------------
S&P 500 $100.00 $ 92.66 $ 91.28
- --------------------------------------------------------------------------------
-13-
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL
OWNERS
The following table sets forth the number of shares of our common stock
beneficially owned by each director, director nominee, Named Executive Officer,
five percent shareholder and all executive officers and directors as a group.
The table shows ownership as of March 31, 2000. For purposes of reporting total
beneficial ownership, shares of common stock which may be acquired within 60
days following the record date through the exercise of currently available
conversion rights or options are included. The information in this section is
based on information required to be filed with the Securities and Exchange
Commission under Section 16 of the Exchange Act.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------
BENEFICIAL OWNER(1) COMMON STOCK PERCENT OF COMMON STOCK
------------------- ------------ -----------------------
Peter D. Lund(2) 1,000,009 5.7%
Steven S. Harter(3) 968,706 5.5%
Louis J. Boggeman, Jr.(4) 606,337 3.4%
Thomas A. Work(5) 501,487 2.8%
Rodolfo A. Duemichen 321,517 1.8%
Henry B. Cook, Jr.(6) 280,606 1.6%
T. Michael Young(7) 328,830 1.9%
Maura L. Berney 156,762 *
Mac McConnell(8) 121,264 *
Ronald G. Short 91,937 *
I.T. "Tex" Corley(9) 35,000 *
Lawrence K. King(9) 41,250 *
Mark E. Speese(10) 10,000 *
All directors and 4,915,469 27.8%
executive officers as
group (19 persons)
Dimensional Fund Advisors 1,240,800 7.0%
1299 Ocean Avenue, 11th fl
Santa Monica, CA 90401
- --------------------
* Indicates less than 1%
(1) The address for all 5% stockholders is Three Riverway, Suite 200, Houston,
Texas, 77056, unless otherwise indicated.
(2) Includes 11,500 shares of common stock held by Mr. Lund's spouse as
custodian for the benefit of his minor son.
(3) Includes 231,400 common shares beneficially owned by Mr. Harter and
737,306 shares of Restricted Voting Common Stock held by Notre.
(4) Includes 269,732 shares of common stock held by Mr. Boggeman as custodian
for the benefit of his minor children.
-14-
(5) Includes 334,947 shares of common stock issuable upon the exercise of
warrants to purchase our common stock which are exercisable through June
24, 2003.
(6) Includes 250 shares held by Mr. Cook's spouse as custodian for the benefit
of his two minor children.
(7) Includes 40,000 shares of common stock issuable upon exercise of currently
exercisable options granted under our 1998 Long Term Incentive Plan.
(8) Includes 20,000 shares of common stock issuable upon exercise of currently
exercisable options granted under our 1998 Long Term Incentive Plan.
(9) Includes 15,000 shares of common stock issuable upon exercise of options
granted under the 1998 Non-Employee Directors Stock Plan.
(10) Includes 10,000 shares of common stock issuable upon the exercise of
options granted under the 1998 Non-Employee Directors' Stock Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and persons who own more than 10% of a
registered class of our equity securities, to file with the Securities and
Exchange Commission reports of ownership and changes in ownership of our common
stock and our other equity securities. Executive officers, directors and greater
than 10% beneficial owners are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on a review of the copies of such reports furnished to us or
written representations that no other reports were required, we believe that all
filing requirements applicable to our executive officers, directors and greater
than 10% beneficial owners were satisfied during 1999.
-15-
CERTAIN TRANSACTIONS
LEASES OF REAL PROPERTY BY FOUNDING COMPANIES
Simultaneous with the closing of the initial public offering and the
related acquisition of nine founding companies, certain of these companies
leased facilities from their former stockholders or their affiliates, which are
described below. Each of these leases provided for an initial term of five
years, with three renewal options of five years each. The rent for each lease
will is adjusted at the end of each year during the initial term and any renewal
term based on the changes in the Consumer Price Index during the prior year,
with each yearly increase not to exceed 5%. The tenant under each lease pays for
all utilities, taxes and insurance on the leased property. The tenant also has a
right of first refusal to purchase each leased property. We believe that the
economic terms of each of these leases do not exceed fair market value.
The Cook Brothers Companies, Inc. leases the following facilities from H &
B Properties, L.L.C., a limited liability company of which Henry B. Cook, Jr.,
who is a director and executive officer of the Company, is a member: (i) 118
Brown Street, Pittston, Pennsylvania; (ii) 69 Whitney Avenue, Binghamton, New
York; (iii) 123 Philo Road West, Elmira, New York; (iv) 206 South Main Street,
Homer, New York; (v) 156 Newbury Street, Rochester, New York, and (vi) 76
Frederick Street, Binghamton, New York. The leases provide for annual rent of
$68,439, $27,735, $56,731, $21,309, $57,978 and $91,733, respectively during the
first year of the initial term.
Cook Brothers subleases its facilities at (i) 66 Oak Street, Deposit, New
York, and (ii) 67 Whitney Avenue, Binghamton, New York from H&B Properties,
L.L.C. The facility located in Deposit provides for a two year term and the
facility located in Binghamton provides for a ten year term. The subleases
provide for annual rent of $45,600, and $12,000, respectively. Neither facility
provides for a renewal option nor a purchase option under the terms of each
sublease.
Transportation Components Company leases its facility at 2006 13th Street
South East, Brainerd, Minnesota from Lund Properties, L.L.C., a limited
liability company of which Peter D. Lund, who is a director of the Company, is a
member. The lease provides for an initial term of ten years, with two renewal
options of five years each and a total annual rent of $48,000 during the first
year of the initial term.
Transportation Components Company leases the following facilities from
Lund Properties, Ltd., a limited partnership of which Peter D. Lund is a
partner: (i) 3924 12th Avenue North, Fargo, North Dakota; (ii) 4001 North Cliff
Avenue, Sioux Falls, South Dakota; (iii) 801 North Bluemound Drive, Appleton,
Wisconsin; (iv) 3900 Delaware Avenue, Des Moines, Iowa; and (v) I-94 and Highway
54, Black River Falls, Wisconsin. The leases provide for annual rent of $70,800,
$37,200, $50,400, $42,000 and $72,000, respectively during the first year of the
initial term. The leases for the properties located in Fargo and Black River
Falls provide for an initial term of 10 years, with two renewal options of five
years each. Transportation Components Company leases the following facilities
from Mr. Lund: (i) 3275 Dodd Road, Eagan, Minnesota and (ii) 4700 North 124th
Street, Wauwatosa, Wisconsin. The leases provide for annual rent of $132,000 and
$108,000, respectively during the first year of the initial term.
Plaza Fleet Parts leases the following facilities from KPPJ Partners,
L.P., a partnership in which Louis J. Boggeman, Jr., who is a director of the
Company, is the manager of the general partnership thereof: (i) 1534 & 1536
Broadway, St. Louis, MO; (ii) 311 Marion Street, St. Louis, MO; (iii) 1520
Broadway, St. Louis, MO; and (iv) 1601 West Eilerman, Litchfield, MO. The leases
provide for annual rent of $41,505, $66,062, $47,380 and $27,349, respectively,
during the first year of the initial term.
-16-
OTHER TRANSACTIONS
Five employees of Charles W. Carter Co. borrowed an aggregate of $605,782
from Carter to enable them to exercise options to purchase shares of Carter.
These shares of Carter were subsequently exchanged for shares of our common
stock. In connection with that transaction, Thomas A. Work, a director of the
Company, borrowed $250,461 from Carter, which is payable in one installment on
December 24, 2000, bears interest at the prime rate and is secured by 50,000
shares of common stock.
Plaza Fleet Parts has a deferred compensation agreement with Louis J.
Boggeman, Sr., the father of Louis J. Boggeman, Jr., who is a director of the
Company. The agreement provides for the Company to pay Mr. Boggeman, Sr.
compensation of $83,200 per year during each year of his lifetime.
At various times prior to the initial public offering, Henry B. Cook, Jr.
borrowed various amounts from Cook Brothers. At December 31, 1999, the principal
amount outstanding was $274,829. This loan bears no interest and is due in one
installment on June 30, 2003. On May 1, 1994, Cook Brothers agreed to pay an
annuity of $1,908.33 per month to Ruth Cook, the mother of Henry B. Cook, Jr., a
director of the Company.
At various times prior to the initial public offering, Cook Brothers made
loans to Heavy Duty Diesel, Inc., a company of which Henry B. Cook, Jr. is a
stockholder. As of March 31, 2000, the outstanding balance of this loan was
$229,000. This loan bears no interest, is unsecured and has no stated maturity
date.
COMPANY POLICY
Any future transactions with our directors, officers, employees or
affiliates are anticipated to be minimal and must be approved in advance by
either the Audit Committee or a majority of disinterested members of the Board
of Directors.
2. APPROVAL OF THE TRANSPORTATION COMPONENTS, INC. 2000 EMPLOYEE STOCK PURCHASE
PLAN
On December 16, 1999, the Compensation Committee of the Board of Directors
adopted the Transportation Components, Inc. 2000 Employee Stock Purchase Plan
(the "2000 Purchase Plan"), subject to stockholder approval, to become effective
September 1, 2000.
The 2000 Purchase Plan is intended to permit us to attract, retain and
motivate valued employees by providing our employees an opportunity to purchase
shares of common stock. The Board of Directors believes that adopting the 2000
Purchase Plan will benefit the Company, and the stockholders are being asked to
approve the 2000 Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 2000 PURCHASE PLAN.
-17-
DESCRIPTION OF THE 2000 PURCHASE PLAN
The following summary of the 2000 Purchase Plan is qualified by reference
to the specific language of the 2000 Purchase Plan, a copy of which is attached
to this Proxy Statement as Appendix A.
GENERAL. The 2000 Purchase Plan is intended to qualify as an "employee
stock purchase plan" under section 423 of the Code. Each participant in the 2000
Purchase Plan is granted at the beginning of each offering under the plan (an
"Offering") the right to purchase through accumulated payroll deductions up to a
certain number of shares of our common stock (a "Purchase Right") determined on
the first day of the Offering. The Purchase Right is automatically exercised on
the last day of each Offering unless the Participant has withdrawn from
participation in the 2000 Purchase Plan prior to such date.
SHARES SUBJECT TO PLAN. A maximum of 500,000 shares of our common stock
may be issued under the 2000 Purchase Plan, which amount will be increased on
September 1 of each year by an amount equal to or the lesser of (i) 500,000
shares, or (ii) the number of shares determined by the Board of Directors. The
first annual increase in the share reserve described under the preceding
sentence will occur on September 1, 2001. The number of shares issuable under
the 2000 Purchase Plan is subject to appropriate adjustment in the event of a
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in our capital structure or in the event of
any merger, sale of assets or other reorganization of the Company. If any
Purchase Right expires or terminates, the shares subject to the unexercised
portion of such Purchase Right will again be available for issuance under the
2000 Purchase Plan. On April 18, 2000, the closing price of a share of our
common stock was $1.94, as reported by the New York Stock Exchange.
ADMINISTRATION. The 2000 Purchase Plan is administered by the Compensation
Committee of our Board of Directors. Subject to the provisions of the 2000
Purchase Plan, the Compensation Committee determines the terms and conditions of
the Purchase Rights granted under the Plan. The Compensation Committee will
interpret the 2000 Purchase Plan and Purchase Rights granted thereunder, and all
determinations of the Compensation Committee will be final and binding on all
persons having an interest in the 2000 Purchase Plan or any Purchase Rights. The
2000 Purchase Plan provides, subject to certain limitations, for indemnification
by the Company of any director, officer or employee against all reasonable
expenses, including attorney's fees, incurred in connection with any legal
action arising from such person's action or failure to act in administering the
2000 Purchase Plan.
ELIGIBILITY. Any of our employees or of any of our present or future
parent or subsidiary corporations designated by the Board for inclusion in the
2000 Purchase Plan is eligible to participate in an Offering under the 2000
Purchase Plan, so long as the employee is customarily employed for at least 20
hours per week and five months per calendar year. However, no employee who owns
or holds options to purchase, or as a result of participation in the 2000
Purchase Plan would own or hold options to purchase, five percent or more of the
total combined voting power or value of all classes of our capital stock or of
any of our parent or subsidiary corporations is entitled to participate in the
2000 Purchase Plan.
OFFERINGS. Generally, each Offering of common stock under the 2000
Purchase Plan is for a period of six months (an "Offering Period"). Offering
Periods under the 2000 Purchase Plan are sequential, with a new Offering Period
beginning every six months. Offering Periods will generally commence on the
first day of March and September of each year and end on the last day of the
following August and February. The first Offering Period will commence on
September 1, 2000 and will end on February 28, 2001. Shares are purchased on the
last day of each Offering Period ("Purchase Dates"). The Compensation Committee
may establish a different term for one or more Offerings or different
commencement or ending dates for an Offering.
-18-
PARTICIPATION AND PURCHASE OF SHARES. Participation in the 2000 Purchase
Plan is limited to eligible employees who authorize payroll deductions prior to
the start of an Offering Period. The amount to be deducted under the 2000
Purchase Plan from a participant's compensation on each payday during an
Offering Period will be determined by the participant's subscription agreement.
The subscription agreement will set forth the percentage of the participant's
compensation to be deducted on each payday during an Offering Period in whole
percentages of initially not less than one percent (1%) (except as a result of
an election to stop payroll deductions made effective following the first payday
during an Offering) or more than ten percent (10%); however, the Board may
change the percentage limits on payroll deductions effective as of any future
Offering Date. Once an employee becomes a participant in the 2000 Purchase Plan,
that employee will automatically participate in each successive Offering Period
until such time as that employee withdraws from the 2000 Purchase Plan, becomes
ineligible to participate in the 2000 Purchase Plan or terminates employment.
Under the 2000 Purchase Plan, no participant may purchase shares of our
common stock having a fair market value exceeding $25,000 in any calendar year
(measured by the fair market value of our common stock on the first day of the
Offering Period in which the shares are purchased).
At the end of each Offering Period, we will issue to each participant in
the Offering the number of shares of our common stock determined by dividing the
amount of payroll deductions accumulated for the participant during that
Offering Period by the purchase price, limited in any case by the number of
shares subject to the participant's Purchase Right for that Offering. The price
per share at which shares are sold at the end of an Offering Period generally
equals 85% of the lesser of the fair market value per share of our common stock
on the first day of the Offering Period or the Purchase Date. Any payroll
deductions under the 2000 Purchase Plan not applied to the purchase of shares
will be returned to the participant, unless the amount remaining is less than
the amount necessary to purchase a whole share of Common Stock, in which case
the remaining amount may be applied to the next Offering Period.
A participant may withdraw from an Offering at any time without affecting
his or her eligibility to participate in future Offerings. However, once a
participant withdraws from an Offering, that participant may not again
participate in the same Offering.
CHANGE IN CONTROL. The 2000 Purchase Plan provides that, in the event of
(i) a sale or exchange by the stockholders of more than 50% of our voting stock,
(ii) a merger or consolidation in which the Company is a party, (iii) the sale,
exchange or transfer of all or substantially all of our assets, or (iv) a
liquidation or dissolution of the Company and, upon the occurrence of any of
these events, our stockholders immediately before that event do not retain
beneficial ownership of at least 50% of the total combined voting power of our
voting stock, our successor, or the corporation to which our assets were
transferred (a "Change in Control"), the acquiring or successor corporation may
assume our rights and obligations under the 2000 Purchase Plan or substitute
substantially equivalent Purchase Rights for that corporation's stock. If the
acquiring or successor corporation elects not to assume or substitute for the
outstanding Purchase Rights, the Compensation Committee may adjust the last day
of the Offering Period to a date on or before the date of the Change in Control.
Any Purchase Rights that are not assumed, substituted for, or exercised before
the Change in Control will terminate.
TERMINATION OR AMENDMENT. The 2000 Purchase Plan will continue until
terminated by the Board or until all of the shares reserved for issuance under
the plan have been issued. The Board may at any time amend or terminate the 2000
Purchase Plan, except that the approval of our stockholders is required within
twelve months of the adoption of any amendment increasing the number of shares
authorized for issuance under the 2000 Purchase Plan, or changing the definition
of the corporations which may be designated by the Board as corporations the
employees of which may participate in the 2000 Purchase Plan.
-19-
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE 2000 PURCHASE PLAN
The following summary is intended only as a general guide as to the United
States federal income tax consequences under current law to participants in the
2000 Purchase Plan and does not attempt to describe all possible federal or
other tax consequences to those participants or tax consequences based on
particular circumstances.
A participant recognizes no taxable income either as a result of executing
a subscription agreement to participate in the 2000 Purchase Plan or purchasing
shares of our common stock under the terms of the 2000 Purchase Plan. A
participant's payroll deductions to purchase shares are withheld on an after-tax
basis.
If a participant disposes of shares purchased under the 2000 Purchase Plan
within two years from the first day of the applicable Offering Period or within
one year from the Purchase Date (a "disqualifying disposition"), the participant
will recognize ordinary income in the year of such disposition equal to the
amount by which the fair market value of the shares on the Purchase Date exceeds
the purchase price. The amount of ordinary income will be added to the
participant's basis in the shares, and any additional gain or resulting loss
recognized on the disposition of the shares will be a capital gain or loss. A
capital gain or loss will be long-term if the participant's holding period is
more than twelve months.
If no disqualifying disposition of the shares is made by the participant,
the participant will recognize in the year of disposition (or if earlier, the
year of the participant's death) ordinary income in an amount equal to the
lesser of (1) the excess of the fair market value of the shares on the date of
disposition or death over the purchase price or (2) 15% of the fair market value
of the shares on the first day of the Offering Period in which the shares were
purchased. Any further gain will be capital gain.
The Company should be entitled to a deduction in the year of a
disqualifying disposition equal to the amount of ordinary income recognized by
the participant as a result of the disposition, except to the extent such
deduction is limited by applicable provisions of the Code or the regulations
thereunder. In all other cases, no deduction is allowed to the Company.
3. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected Arthur Andersen LLP as our independent public
accountants for the year ending December 31, 2000, and has further directed that
management submit the selection of the independent accountants for ratification
by our stockholders at this meeting. Representatives of Arthur Andersen LLP are
expected to be present at the meeting and will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
Stockholder ratification of the selection of Arthur Andersen LLP as our
independent public accountants is not required by our By-laws or otherwise. If
our stockholders fail to ratify the selection, the Board will reconsider whether
to retain that firm. Even if the selection is ratified, the Board, in its
discretion may direct the appointment of a different independent accounting firm
at any time during the year if the Board feels that such a change would be in
the best interests of the Company and our stockholders. The affirmative vote of
the holders of a majority of the voting power of the shares of capital stock
present or represented by proxy at the meeting will be required to ratify the
selection of Arthur Andersen LLP.
-20-
4. OTHER BUSINESS
Management does not intend to bring any other business before the annual
meeting and has not been informed that any other matters are to be presented at
the annual meeting by others. If other matters properly come before the annual
meeting or any adjournment thereof, the persons named in the accompanying proxy
and acting thereunder will vote in accordance with their best judgment.
ADDITIONAL INFORMATION
ANNUAL REPORT
THE ANNUAL REPORT TO STOCKHOLDERS FOR 1999 IS BEING MAILED TO ALL
STOCKHOLDERS ENTITLED TO VOTE AT THE MEETING. THE ANNUAL REPORT TO STOCKHOLDERS
DOES NOT FORM ANY PART OF THE PROXY SOLICITING MATERIALS. COPIES OF OUR ANNUAL
REPORT ON FORM 10-K FOR 1999, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, ARE AVAILABLE WITHOUT CHARGE TO STOCKHOLDERS UPON REQUEST TO
TRANSPORTATION COMPONENTS, INC., THREE RIVERWAY, SUITE 200, HOUSTON, TEXAS
77056, ATTENTION: INVESTOR RELATIONS.
-21-
APPENDIX A
TRANSPORTATION COMPONENTS, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. The Transportation Components, Inc. 2000 Employee
Stock Purchase Plan (the "Plan") is hereby established effective as
of September 2000 (the "Effective Date"), provided the Plan is
approved by the stockholders of the Company within twelve (12)
months thereafter.
1.2 PURPOSE. The purpose of the Plan is to align the interests of the
Company with its stockholders by providing an incentive to attract,
retain and reward Eligible Employees of the Participating Company
Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group. The Plan provides
such Eligible Employees with an opportunity to acquire a proprietary
interest in the Company through the purchase of Stock. The Company
intends that the Plan qualify as an "employee stock purchase plan"
under Section 423 of the Code (including any amendments or
replacements of such section), and the Plan shall be so construed.
1.3 TERM OF PLAN. The Plan shall continue in effect until the earlier of
its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Any term not expressly defined in the Plan but defined
for purposes of Section 423 of the Code shall have the same
definition herein. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company. If one or
more Committees have been appointed by the Board to administer the
Plan, "Board" also means such Committee(s).
(b) "Code" means the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.
(c) "Committee" means a committee of the Board duly appointed to
administer the Plan and having such powers as shall be specified by
the Board. Unless the powers of the Committee have been specifically
limited, the Committee shall have all of the powers of the Board
granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law.
(d) "Company" means Transportation Components, Inc., a Delaware
corporation, or any successor corporation thereto.
(e) "Compensation" means, with respect to any Offering Period, base
wages or salary, commissions, overtime, bonuses, annual awards,
other incentive payments and all other compensation paid in cash
during such Offering Period before deduction for any contributions
to any plan maintained by a Participating Company and described in
Section 401(k) or Section 125 of the Code. Compensation shall not
include reimbursements of expenses, allowances, long-term
disability, workers' compensation or any amount deemed received
without the actual transfer of cash or any amounts directly or
indirectly paid pursuant to the Plan or any other stock purchase or
stock option plan.
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(f) "Eligible Employee" means an Employee who meets the requirements
set forth in Section 5 for eligibility to participate in the Plan.
(g) "Employee" means a person treated as an employee of a
Participating Company for purposes of Section 423 of the Code. A
Participant shall be deemed to have ceased to be an Employee either
upon an actual termination of employment or upon the corporation
employing the Participant ceasing to be a Participating Company. For
purposes of the Plan, an individual shall not be deemed to have
ceased to be an Employee while such individual is on any military
leave, sick leave, or other bona fide leave of absence approved by
the Company of 90 days or less. In the event an individual's leave
of absence exceeds 90 days, the individual shall be deemed to have
ceased to be an Employee on the 91st day of such leave unless the
individual's right to reemployment with the Participating Company
Group is guaranteed either by statute or by contract. The Company
shall determine in good faith and in the exercise of its discretion
whether an individual has become or has ceased to be an Employee and
the effective date of such individual's employment or termination of
employment, as the case may be. For purposes of an individual's
participation in or other rights, if any, under the Plan as of the
time of the Company's determination, all such determinations by the
Company shall be final, binding and conclusive, notwithstanding that
the Company or any governmental agency subsequently makes a contrary
determination.
(h) "Fair Market Value" means, as of any date, the closing price of
a share of Stock on the principal national securities exchange on
which the Stock is then listed or admitted to trading, if the Stock
is then listed or admitted to trading on any national securities
exchange. The closing price shall be the last reported sale price,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, as reported by said exchange. If the
Stock is not then so listed on a national securities exchange, the
Fair Market Value shall be deemed to be the closing price of a share
of Stock (or the mean of the closing bid and asked prices if the
Stock is so quoted instead) as quoted on the New York Stock Exchange
or such other market system or regional securities exchange
constituting the primary market for the Stock, as reported in The
Wall Street Journal or such other source as the Company deems
reliable. If the relevant date does not fall on a day on which the
Stock has traded on such securities exchange or market system, the
date on which the Fair Market Value shall be established shall be
the last day on which the Stock was so traded prior to the relevant
date, or such other appropriate day as shall be determined by the
Board, in its sole discretion. If there is then no public market for
the Stock, the Fair Market Value on any relevant date shall be as
determined by the Board.
(i) "Offering" means an offering of Stock as provided in Section 6.
(j) "Offering Date" means, for any Offering, the first day of the
Offering Period with respect to such Offering.
(k) "Offering Period" means a period established in accordance with
Section 6.1.
(l) "Parent Corporation" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the
Code.
(m) "Participant" means an Eligible Employee who has become a
participant in an Offering Period in accordance with Section 7 and
remains a participant in accordance with the Plan.
(n) "Participating Company" means the Company or any Parent
Corporation or Subsidiary Corporation designated by the Board as a
corporation the Employees of which may, if Eligible Employees,
participate in the Plan. The Board shall have the sole and absolute
discretion to determine from time to time which Parent Corporations
or Subsidiary Corporations shall be Participating Companies.
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(o) "Participating Company Group" means, at any point in time, the
Company and all other corporations collectively which are then
Participating Companies.
(p) "Purchase Date" means, for any Offering Period (or Purchase
Period, if so determined by the Board in accordance with Section
6.2), the last day of such period.
(q) "Purchase Period" means a period, if any, established in
accordance with Section 6.2.
(r) "Purchase Price" means the price at which a share of Stock may
be purchased under the Plan, as determined in accordance with
Section 9.
(s) "Purchase Right" means an option granted to a Participant
pursuant to the Plan to purchase such shares of Stock as provided in
Section 8, which the Participant may or may not exercise during the
Offering Period in which such option is outstanding. Such option
arises from the right of a Participant to withdraw any accumulated
payroll deductions of the Participant not previously applied to the
purchase of Stock under the Plan and to terminate participation in
the Plan at any time during an Offering Period.
(t) "Stock" means the common stock of the Company, as adjusted from
time to time in accordance with Section 4.2.
(u) "Subscription Agreement" means a written agreement in such form
as specified by the Company, stating an Employee's election to
participate in the Plan and authorizing payroll deductions under the
Plan from the Employee's Compensation.
(v) "Subscription Date" means the last business day prior to the
Offering Date of an Offering Period or such earlier date as the
Company shall establish.
(w) "Subsidiary Corporation" means any present or future "subsidiary
corporation" of the Company, as defined in Section 424(f) of the
Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation
of any provision of the Plan. Except when otherwise indicated by the
context, the singular shall include the plural and the plural shall
include the singular. Use of the term "or" is not intended to be
exclusive, unless the context clearly requires otherwise.
3. ADMINISTRATION.
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board. All questions of interpretation of the Plan, of any form of
agreement or other document employed by the Company in the
administration of the Plan, or of any Purchase Right shall be
determined by the Board and shall be final and binding upon all
persons having an interest in the Plan or the Purchase Right.
Subject to the provisions of the Plan, the Board shall determine all
of the relevant terms and conditions of Purchase Rights granted
pursuant to the Plan; provided, however, that all Participants
granted Purchase Rights pursuant to the Plan shall have the same
rights and privileges within the meaning of Section 423(b)(5) of the
Code. All expenses incurred in connection with the administration of
the Plan shall be paid by the Company.
3.2 AUTHORITY OF OFFICERS. Any officer of the Company shall have the
authority to act on behalf of the Company with respect to any
matter, right, obligation, determination or election that is the
responsibility of or that is allocated to the Company herein,
provided that the officer has apparent authority with respect to
such matter, right, obligation, determination or election.
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3.3 POLICIES AND PROCEDURES ESTABLISHED BY THE COMPANY. The Company may,
from time to time, consistent with the Plan and the requirements of
Section 423 of the Code, establish, change or terminate such rules,
guidelines, policies, procedures, limitations, or adjustments as
deemed advisable by the Company, in its sole discretion, for the
proper administration of the Plan, including, without limitation,
(a) a minimum payroll deduction amount required for participation in
an Offering, (b) a limitation on the frequency or number of changes
permitted in the rate of payroll deduction during an Offering, (c)
an exchange ratio applicable to amounts withheld in a currency other
than United States dollars, (d) a payroll deduction greater than or
less than the amount designated by a Participant in order to adjust
for the Company's delay or mistake in processing a Subscription
Agreement or in otherwise effecting a Participant's election under
the Plan or as advisable to comply with the requirements of Section
423 of the Code, and (e) determination of the date and manner by
which the Fair Market Value of a share of Stock is determined for
purposes of administration of the Plan.
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as provided
in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be 500,000, CUMULATIVELY
INCREASED ON SEPTEMBER 1, 2001 AND EACH SEPTEMBER 1 THEREAFTER BY AN
AMOUNT EQUAL TO THE LESSER OF (A) 500,000 SHARES OR (b) a lesser
amount of shares determined by the Board, and shall consist of
authorized but unissued or reacquired shares of Stock, or any
combination thereof. If an outstanding Purchase Right for any reason
expires or is terminated or canceled, the shares of Stock allocable
to the unexercised portion of such Purchase Right shall again be
available for issuance under the Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital
structure of the Company, or in the event of any merger (including a
merger effected for the purpose of changing the Company's domicile),
sale of assets or other reorganization in which the Company is a
party, appropriate adjustments shall be made in the number and class
of shares subject to the Plan and each Purchase Right and in the
Purchase Price. If a majority of the shares which are of the same
class as the shares that are subject to outstanding Purchase Rights
are exchanged for, converted into, or otherwise become (whether or
not pursuant to an Ownership Change Event (as defined in Section
14)) shares of another corporation (the "New Shares"), the Board may
unilaterally amend the outstanding Purchase Rights to provide that
such Purchase Rights are exercisable for New Shares. In the event of
any such amendment, the number of shares subject to, and the
Purchase Price of, the outstanding Purchase Rights shall be adjusted
in a fair and equitable manner, as determined by the Board, in its
sole discretion. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 4.2 shall be
rounded down to the nearest whole number, and in no event may the
Purchase Price be decreased to an amount less than the par value, if
any, of the stock subject to the Purchase Right. The adjustments
determined by the Board pursuant to this Section 4.2 shall be final,
binding and conclusive.
5. ELIGIBILITY.
5.1 EMPLOYEES ELIGIBLE TO PARTICIPATE. Each Employee of a Participating
Company is eligible to participate in the Plan and shall be deemed
an Eligible Employee except the following:
(a) any Employee who is customarily employed by the Participating
Company Group for 20 hours or less per week; and
(b) any Employee who is customarily employed by the Participating
Company Group for not more than five months in any calendar year.
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5.2 EXCLUSION OF CERTAIN STOCKHOLDERS. Notwithstanding any provision of
the Plan to the contrary, no Employee shall be granted a Purchase
Right under the Plan if, immediately after such grant, such Employee
would own or hold options to purchase stock of the Company or of any
Parent Corporation or Subsidiary Corporation possessing five percent
(5%) or more of the total combined voting power or value of all
classes of stock of such corporation, as determined in accordance
with Section 423(b)(3) of the Code. For purposes of this Section
5.2, the attribution rules of Section 424(d) of the Code shall apply
in determining the stock ownership of such Employee.
6. OFFERINGS.
6.1 OFFERING PERIODS. EXCEPT AS OTHERWISE SET FORTH BELOW, THE PLAN
SHALL BE IMPLEMENTED BY SEQUENTIAL OFFERINGS OF APPROXIMATELY SIX
MONTHS DURATION (AN "OFFERING PERIOD"). THE FIRST OFFERING PERIOD
SHALL COMMENCE ON THE EFFECTIVE DATE AND END ON FEBRUARY 28, 2001.
SUBSEQUENT OFFERINGS SHALL COMMENCE ON THE FIRST DAY OF MARCH AND
SEPTEMBER OF EACH YEAR AND END ON THE LAST DAY OF THE FOLLOWING
AUGUST AND FEBRUARY, RESPECTIVELY, OCCURRING THEREAFTER.
Notwithstanding the foregoing, the Board may establish a different
duration for one or more future Offering Periods or different
commencing or ending dates for such Offering Periods; provided,
however, that no Offering Period may have a duration exceeding
twenty-seven (27) months. If the first or last day of an Offering
Period is not a day on which the national or regional securities
exchange or market system constituting the primary market for the
Stock is open for trading, the Company shall specify the trading day
that will be deemed the first or last day, as the case may be, of
the Offering Period.
6.2 PURCHASE PERIODS. If the Board so determines, in its discretion,
each Offering Period may consist of two or more consecutive Purchase
Periods having such duration as the Board shall specify, and the
last day of each Purchase Period shall be a Purchase Date. If the
first or last day of a Purchase Period is not a day on which the
national or regional securities exchange or market system
constituting the primary market for the Stock is open for trading,
the Company shall specify the trading day that will be deemed the
first or last day, as the case may be, of the Purchase Period.
7. PARTICIPATION IN THE PLAN.
7.1 INITIAL PARTICIPATION. An Eligible Employee may become a Participant
in an Offering Period by delivering a properly completed
Subscription Agreement to the office designated by the Company not
later than the close of business for such office on the Subscription
Date established by the Company for such Offering Period. An
Eligible Employee who does not deliver a properly completed
Subscription Agreement to the Company's designated office on or
before the Subscription Date for an Offering Period shall not
participate in the Plan for that Offering Period or for any
subsequent Offering Period unless such Eligible Employee
subsequently delivers a properly completed Subscription Agreement to
the appropriate office of the Company on or before the Subscription
Date for such subsequent Offering Period. An Employee who becomes an
Eligible Employee after the Offering Date of an Offering Period
shall not be eligible to participate in such Offering Period but may
participate in any subsequent Offering Period provided that Employee
is still an Eligible Employee as of the Offering Date of such
subsequent Offering Period.
7.2 CONTINUED PARTICIPATION. A Participant shall automatically
participate in the next Offering Period commencing immediately after
the Purchase Date of each Offering Period in which the Participant
participates provided that such Participant remains an Eligible
Employee on the Offering Date of the new Offering Period and has not
either (a) withdrawn from the Plan pursuant to Section 12.1 or (b)
terminated employment as provided in Section 13. A Participant who
may automatically participate in a subsequent Offering Period, as
provided in this Section, is not required to deliver any additional
Subscription Agreement for the subsequent Offering Period in order
to continue participation in the Plan. However, a Participant may
deliver a new Subscription Agreement for a
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subsequent Offering Period in accordance with the procedures set
forth in Section 7.1 if the Participant desires to change any of the
elections contained in the Participant's then effective Subscription
Agreement.
8. RIGHT TO PURCHASE SHARES.
8.1 GRANT OF PURCHASE RIGHT. Except as set forth below, on the Offering
Date of each Offering Period, each Participant in such Offering
Period shall be granted automatically a Purchase Right consisting of
an option to purchase that number of shares equal to the quotient of
(i) the aggregate payroll deductions withheld on behalf of such
Participant during the Offering Period, divided by (ii) the Purchase
Price for that Offering Period. No Purchase Right shall be granted
on an Offering Date to any person who is not, on such Offering Date,
an Eligible Employee.
8.2 CALENDAR YEAR PURCHASE LIMITATION. Notwithstanding any provision of
the Plan to the contrary, no Participant shall be granted a Purchase
Right which permits his or her right to purchase shares of Stock
under the Plan to accrue at a rate which, when aggregated with such
Participant's rights to purchase shares under all other employee
stock purchase plans of a Participating Company intended to meet the
requirements of Section 423 of the Code, exceeds $25,000 in Fair
Market Value (or such other limit, if any, as may be imposed by the
Code) for each calendar year in which such Purchase Right is
outstanding at any time. For purposes of the preceding sentence, the
Fair Market Value of shares purchased during a given Offering Period
shall be determined as of the Offering Date for such Offering
Period. The limitation described in this Section 8.3 shall be
applied in conformance with applicable regulations under Section
423(b)(8) of the Code.
9. PURCHASE PRICE.
The Purchase Price at which each share of Stock may be acquired in
an Offering Period upon the exercise of all or any portion of a
Purchase Right shall be established by the Board; provided, however,
that the Purchase Right shall not be less than eighty-five percent
(85%) of the lesser of (a) the Fair Market Value of a share of Stock
on the Offering Date of the Offering Period or (b) the Fair Market
Value of a share of Stock on the Purchase Date. Unless otherwise
provided by the Board prior to the commencement of an Offering
Period, the Purchase Price for that Offering Period shall be
eighty-five percent (85%) of the lesser of (a) the Fair Market Value
of a share of Stock on the Offering Date of the Offering Period, or
(b) the Fair Market Value of a share of Stock on the Purchase Date.
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10. ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL
DEDUCTION.
Shares of Stock acquired pursuant to the exercise of all or any
portion of a Purchase Right may be paid for only by means of payroll
deductions from the Participant's Compensation accumulated during
the Offering Period for which such Purchase Right was granted,
subject to the following:
10.1 AMOUNT OF PAYROLL DEDUCTIONS. Except as otherwise provided herein,
the amount to be deducted under the Plan from a Participant's
Compensation on each payday during an Offering Period shall be
determined by the Participant's Subscription Agreement. The
Subscription Agreement shall set forth the percentage of the
Participant's Compensation to be deducted on each payday during an
Offering Period in whole percentages of not less than one percent
(1%) (except as a result of an election pursuant to Section 10.3 to
stop payroll deductions made effective following the first payday
during an Offering) or more than ten percent (10%). Notwithstanding
the foregoing, the Board may change the limits on payroll deductions
effective as of any future Offering Date.
10.2 COMMENCEMENT OF PAYROLL DEDUCTIONS. Payroll deductions shall
commence on the first payday following the Offering Date and shall
continue to the end of the Offering Period unless sooner altered or
terminated as provided herein.
10.3 ELECTION TO CHANGE OR STOP PAYROLL DEDUCTIONS. During an Offering
Period, a Participant may elect to increase or decrease the rate of
or to stop deductions from his or her Compensation by delivering to
the Company's designated office an amended Subscription Agreement
authorizing such change on or before the "Change Notice Date." The
"Change Notice Date" shall be a date prior to the beginning of the
first pay period for which such election is to be effective as
established by the Company from time to time and announced to the
Participants. Unless otherwise established by the Company, the
Change Notice Date shall be the seventh day prior to the end of the
first pay period for which such election is to be effective. A
Participant who elects to decrease the rate of his or her payroll
deductions to zero percent (0%) shall nevertheless remain a
Participant in the current Offering Period unless such Participant
withdraws from the Plan as provided in Section 12.1.
10.4 ADMINISTRATIVE SUSPENSION OF PAYROLL DEDUCTIONS. The Company may, in
its sole discretion, suspend a Participant's payroll deductions
under the Plan as the Company deems advisable to avoid accumulating
payroll deductions in excess of the amount that could reasonably be
anticipated to purchase the maximum number of shares of Stock
permitted during a calendar year under the limit set forth in
Section 8.3. Payroll deductions shall be resumed at the rate
specified in the Participant's then effective Subscription Agreement
at the beginning of the next Offering Period the Purchase Date of
which falls in the following calendar year.
10.5 PARTICIPANT ACCOUNTS. Individual bookkeeping accounts shall be
maintained for each Participant. All payroll deductions from a
Participant's Compensation shall be credited to such Participant's
Plan account and shall be deposited with the general funds of the
Company. All payroll deductions received or held by the Company may
be used by the Company for any corporate purpose.
10.6 NO INTEREST PAID. Interest shall not be paid on sums deducted from a
Participant's Compensation pursuant to the Plan.
10.7 VOLUNTARY WITHDRAWAL FROM PLAN ACCOUNT. A Participant may withdraw
all or any portion of the payroll deductions credited to his or her
Plan account and not previously applied toward the purchase of Stock
by delivering to the Company's designated office a written notice on
a form provided by the Company for such purpose. A Participant who
withdraws the entire
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remaining balance credited to his or her Plan account shall be
deemed to have withdrawn from the Plan in accordance with Section
12.1. Amounts withdrawn shall be returned to the Participant as soon
as practicable after the withdrawal and Company may from time to
time establish or change limitations on the frequency of withdrawals
permitted under this Section, establish a minimum dollar amount that
must be retained in the Participant's Plan account, or terminate the
withdrawal right provided by this Section.
11. PURCHASE OF SHARES.
11.1 EXERCISE OF PURCHASE RIGHT. On each Purchase Date of an Offering
Period, each Participant who has not withdrawn from the Plan and
whose participation in the Offering has not terminated before such
Purchase Date shall automatically acquire pursuant to the exercise
of the Participant's Purchase Right the number of whole shares of
Stock determined by dividing (a) the total amount of the
Participant's payroll deductions accumulated in the Participant's
Plan account during the Offering Period and not previously applied
toward the purchase of Stock by (b) the Purchase Price. However, in
no event shall the number of shares purchased by the Participant
during an Offering Period exceed the number of shares subject to the
Participant's Purchase Right. No shares of Stock shall be purchased
on a Purchase Date on behalf of a Participant whose participation in
the Offering or the Plan has terminated before the Purchase Date.
11.2 PRO RATA ALLOCATION OF SHARES. In the event that the number of
shares of Stock which might be purchased by all Participants in the
Plan on a Purchase Date exceeds the number of shares of Stock
available in the Plan as provided in Section 4.1, the Company shall
make a pro rata allocation of the remaining shares in as uniform a
manner as shall be practicable and as the Company shall determine to
be equitable. Any fractional share resulting from such pro rata
allocation to any Participant shall be disregarded.
11.3 DELIVERY OF CERTIFICATES. As soon as practicable after each Purchase
Date, the Company shall arrange the delivery to each Participant, as
appropriate, of a certificate representing the shares acquired by
the Participant on such Purchase Date; provided that the Company may
deliver such shares to a broker that holds such shares in street
name for the benefit of the Participant. Shares to be delivered to a
Participant under the Plan shall be registered in the name of the
Participant, or, if requested by the Participant, in the name of the
Participant and his or her spouse, or, if applicable in, the names
of the heirs of the Participant.
11.4 RETURN OF CASH BALANCE. Any cash balance remaining in a
Participant's Plan account following any Purchase Date shall be
refunded to the Participant as soon as practicable after such
Purchase Date. However, if the cash to be returned to a Participant
pursuant to the preceding sentence is an amount less than the amount
that would have been necessary to purchase an additional whole share
of Stock on such Purchase Date, the Company may retain such amount
in the Participant's Plan account to be applied toward the purchase
of shares of Stock in the subsequent Purchase Period or Offering
Period, as the case may be.
11.5 TAX WITHHOLDING. At the time a Participant's Purchase Right is
exercised, in whole or in part, or at the time a Participant
disposes of some or all of the shares of Stock he or she acquires
under the Plan, the Participant shall make adequate provisions for
the foreign, federal, state and local tax withholding obligations of
the Participating Company Group, if any, which arise upon exercise
of the Purchase Right or upon such disposition of shares,
respectively. The Participating Company Group may, but shall not be
obligated to, withhold from the Participant's compensation the
amount necessary to meet such withholding obligations.
11.6 EXPIRATION OF PURCHASE RIGHT. Any portion of a Participant's
Purchase Right remaining unexercised after the end of the Offering
Period to which the Purchase Right relates shall expire immediately
upon the end of the Offering Period.
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11.7 REPORTS TO PARTICIPANTS. Each Participant who has exercised all or
part of his or her Purchase Right shall receive, as soon as
practicable after the Purchase Date, a report of such Participant's
Plan account setting forth the total payroll deductions accumulated
prior to such exercise, the number of shares of Stock purchased, the
Purchase Price for such shares, the date of purchase and the cash
balance, if any, remaining immediately after such purchase that is
to be refunded or retained in the Participant's Plan account
pursuant to Section 11.4. The report required by this Section may be
delivered in such form and by such means, including by electronic
transmission, as the Company may determine.
12. WITHDRAWAL FROM THE PLAN.
12.1 VOLUNTARY WITHDRAWAL FROM THE PLAN. A Participant may withdraw from
the Plan by signing and delivering to the Company's designated
office a written notice of withdrawal on a form provided by the
Company for such purpose. Such withdrawal may be elected at any time
prior to the end of an Offering Period. A Participant who
voluntarily withdraws from the Plan is prohibited from resuming
participation in the Plan in the same Offering from which he or she
withdrew, but may participate in any subsequent Offering by again
satisfying the requirements of Sections 5 and 7.1. The Company may
impose, from time to time, a requirement that the notice of
withdrawal from the Plan be on file with the Company's designated
office for a reasonable period prior to the effectiveness of the
Participant's withdrawal.
12.2 RETURN OF PAYROLL DEDUCTIONS. Upon a Participant's voluntary
withdrawal from the Plan pursuant to Section 12.1, the Participant's
accumulated payroll deductions which have not been applied toward
the purchase of shares of Stock shall be refunded to the Participant
as soon as practicable after the withdrawal, without the payment of
any interest, and the Participant's interest in the Plan shall
terminate. Such accumulated payroll deductions to be refunded in
accordance with this Section may not be applied to any other
Offering under the Plan.
13. TERMINATION OF EMPLOYMENT OR ELIGIBILITY.
Upon a Participant's ceasing, prior to a Purchase Date, to be an
Employee of the Participating Company Group for any reason, including
retirement, disability or death, or the failure of a Participant to remain
an Eligible Employee, the Participant's participation in the Plan shall
terminate immediately. In such event, the payroll deductions credited to
the Participant's Plan account since the last Purchase Date shall, as soon
as practicable, be returned to the Participant or, in the case of the
Participant's death, to the Participant's legal representative, and all of
the Participant's rights under the Plan shall terminate. Interest shall
not be paid on sums returned pursuant to this Section 13. A Participant
whose participation has been so terminated may again become eligible to
participate in the Plan by again satisfying the requirements of Sections 5
and 7.1.
14. CHANGE IN CONTROL.
14.1 DEFINITIONS.
(a) An "Ownership Change Event" shall be deemed to have occurred if
any of the following occurs with respect to the Company: (i) the direct or
indirect sale or exchange in a single or series of related transactions by
the stockholders of the Company of more than fifty percent (50%) of the
voting stock of the Company; (ii) a merger or consolidation in which the
Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.
(b) A "Change in Control" shall mean an Ownership Change Event or a
series of related Ownership Change Events (collectively, the
"Transaction") wherein the stockholders of the Company immediately before
the Transaction do not retain immediately after the Transaction, in
substantially the same proportions as their ownership of shares of the
Company's voting stock immediately before the Transaction,
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direct or indirect beneficial ownership of more than fifty percent (50%)
of the total combined voting power of the outstanding voting stock of the
Company or the corporation or corporations to which the assets of the
Company were transferred (the "Transferee Corporation(s)"), as the case
may be. For purposes of the preceding sentence, indirect beneficial
ownership shall include, without limitation, an interest resulting from
ownership of the voting stock of one or more corporations which, as a
result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine
whether multiple sales or exchanges of the voting stock of the Company or
multiple Ownership Change Events are related, and its determination shall
be final, binding and conclusive.
14.2 EFFECT OF CHANGE IN CONTROL ON PURCHASE RIGHTS. In the event of a
Change in Control, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case
may be (the "Acquiring Corporation"), may assume the Company's
rights and obligations under the Plan. If the Acquiring Corporation
elects not to assume the Company's rights and obligations under
outstanding Purchase Rights, the Purchase Date of the then current
Offering Period (or Purchase Price) shall be accelerated to a date
before the date of the Change in Control specified by the Board, but
the number of shares of Stock subject to outstanding Purchase Rights
shall not be adjusted. All Purchase Rights which are neither assumed
by the Acquiring Corporation in connection with the Change in
Control nor exercised as of the date of the Change in Control shall
terminate and cease to be outstanding effective as of the date of
the Change in Control.
15. NONTRANSFERABILITY OF PURCHASE RIGHTS.
A Purchase Right may not be transferred in any manner otherwise than
by will or the laws of descent and distribution and shall be exercisable
during the lifetime of the Participant only by the Participant.
16. COMPLIANCE WITH SECURITIES LAW.
The issuance of shares under the Plan shall be subject to compliance
with all applicable requirements of federal, state and foreign law with
respect to such securities. A Purchase Right may not be exercised if the
issuance of shares upon such exercise would constitute a violation of any
applicable federal, state or foreign securities laws or other law or
regulations or the requirements of any securities exchange or market
system upon which the Stock may then be listed. In addition, no Purchase
Right may be exercised unless (a) a registration statement under the
Securities Act of 1933, as amended, shall at the time of exercise of the
Purchase Right be in effect with respect to the shares issuable upon
exercise of the Purchase Right, or (b) in the opinion of legal counsel to
the Company, the shares issuable upon exercise of the Purchase Right may
be issued in accordance with the terms of an applicable exemption from the
registration requirements of said Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful
issuance and sale of any shares under the Plan shall relieve the Company
of any liability in respect of the failure to issue or sell such shares as
to which such requisite authority shall not have been obtained. As a
condition to the exercise of a Purchase Right, the Company may require the
Participant to satisfy any qualifications that may be necessary or
appropriate, to evidence compliance with any applicable law or regulation,
and to make any representation or warranty with respect thereto as may be
requested by the Company.
17. RIGHTS AS A STOCKHOLDER AND EMPLOYEE.
A Participant shall have no rights as a stockholder by virtue of the
Participant's participation in the Plan until the date of the issuance of
a certificate for the shares purchased pursuant to the exercise of the
Participant's Purchase Right (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the
Company). No adjustment shall be made for dividends, distributions or
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other rights for which the record date is prior to the date such
certificate is issued, except as provided in Section 4.2. Nothing herein
shall confer upon a Participant any right to continue in the employ of the
Participating Company Group or interfere in any way with any right of the
Participating Company Group to terminate the Participant's employment at
any time.
18. LEGENDS.
The Company may at any time place legends or other identifying
symbols referencing any applicable federal, state or foreign securities
law restrictions or any provision convenient in the administration of the
Plan on some or all of the certificates representing shares of Stock
issued under the Plan. The Participant shall, at the request of the
Company, promptly present to the Company any and all certificates
representing shares acquired pursuant to a Purchase Right in the
possession of the Participant in order to carry out the provisions of this
Section.
19. NOTIFICATION OF SALE OF SHARES.
The Company may require the Participant to give the Company prompt
notice of any disposition of shares acquired by exercise of a Purchase
Right within two years from the date of granting such Purchase Right or
one year from the date of exercise of such Purchase Right. The Company may
require that until such time as a Participant disposes of shares acquired
upon exercise of a Purchase Right, the Participant shall hold all such
shares in the Participant's name (or, if elected by the Participant, in
the name of the Participant and his or her spouse but not in the name of
any nominee) until the lapse of the time periods with respect to such
Purchase Right referred to in the preceding sentence. The Company may
direct that the certificates evidencing shares acquired by exercise of a
Purchase Right refer to such requirement to give prompt notice of
disposition.
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. INDEMNIFICATION.
In addition to such other rights of indemnification as they may have
as members of the Board or officers or employees of the Participating
Company Group, members of the Board and any officers or employees of the
Participating Company Group to whom authority to act for the Board or the
Company is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding,
or in connection with any appeal therein, to which they or any of them may
be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such person is liable for gross
negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action,
suit or proceeding, such person shall offer to the Company, in writing,
the opportunity at its own expense to handle and defend the same.
22. AMENDMENT OR TERMINATION OF THE PLAN.
The Board may at any time amend or terminate the Plan, except that
(a) such termination shall not affect Purchase Rights previously granted
under the Plan, except as permitted under the Plan, and (b) no amendment
may adversely affect a Purchase Right previously granted under the Plan
(except to the extent permitted by the Plan or as may be necessary to
qualify the Plan as an employee stock purchase plan
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pursuant to Section 423 of the Code or to obtain qualification or
registration of the shares of Stock under applicable federal, state for
foreign securities laws). In addition, an amendment to the Plan must be
approved by the stockholders of the Company within 12 months of the
adoption of such amendment if such amendment would authorize the sale of
more shares than are authorized for issuance under the Plan or would
change the definition of the corporations that may be designated by the
Board as Participating Companies. In the event that the Board approves an
amendment to increase the number of shares authorized for issuance under
the Plan (the "Additional Shares"), the Board, in its sole discretion, may
specify that such Additional Shares may only be issued pursuant to
Purchase Rights granted after the date on which the stockholders of the
Company approve such amendment, and such designation by the Board shall
not be deemed to have adversely affected any Purchase Right granted prior
to the date on which the stockholders approve the amendment.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing Transportation Components, Inc. 2000 Employee Stock Purchase
Plan was duly adopted by the Compensation Committee of the Board of Directors of
the Company on December 16, 1999.
/S/ MAC MCCONNELL
--------------------------------------
Mac McConnell, Secretary
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TRANSPORTATION COMPONENTS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 25, 2000
The undersigned, hereby revoking all prior proxies, hereby appoints Mac
McConnell and T. Michael Young, and each of them individually, as proxies with
full power of substitution, to vote all shares of Common Stock of TRANSPORTATION
COMPONENTS, INC. standing in the name of the undersigned, at the Annual Meeting
of Stockholders of TRANSPORTATION COMPONENTS, INC. to be held at 9:00 a.m.,
Houston time, on May 25, 2000 at the DoubleTree Hotel, 2001 Post Oak Blvd.,
Houston, Texas, or at any adjournment(s) or postponement(s) thereof, on all
matters coming before said meeting
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS AS
STATED BELOW AND, UNLESS A CONTRARY CHOICE IS SPECIFIED, THIS PROXY WILL BE
VOTED FOR EACH OF SUCH PROPOSALS.
1. ELECTION OF FIVE CLASS II DIRECTORS FOR A THREE YEAR TERM ENDING AT THE
2003 ANNUAL MEETING OF STOCKHOLDERS.
NOMINEES: Maura L. Berney, Lawrence K. King, Mac McConnell, Mark E.
Speese and Thomas A. Work
[ ] VOTE FOR all nominees listed above, except vote withheld from the
following nominees (if any): _____________________________________________
[ ] VOTE WITHHELD from all nominees
2. PROPOSAL TO APPROVE THE TRANSPORTATION COMPONENTS, INC. 2000 EMPLOYEE
STOCK PURCHASE PLAN.
[ ] For [ ] Against [ ] Abstain
3. PROPOSAL TO RATIFY ARTHUR ANDERSEN LLP AS THE INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY FOR 2000.
[ ] For [ ] Against [ ] Abstain
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT(S)
THEREOF.
Dated:__________________, 2000 Signature: _________________________________
Print Name: ________________________________
(Please sign exactly as your name appears on
this card. For joint accounts, each joint
owner should sign. Executors,
administrators, trustees, etc., should also
so indicate when signing.)
PLEASE COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY BY USING THE ENCLOSED ENVELOPE.