Washington, D.C. 20549
SCHEDULE 14A
SCHEDULE 14A INFORMATION
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a Party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-12
UNITED ROAD SERVICES, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which
transaction applies:
(3) Per unit price of other underlying value of
transaction computer pursuant to Exchange
Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state
how it was determined):
(4) Proposed maximum aggregate value of
transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
UNITED ROAD SERVICES, INC.
17 COMPUTER DRIVE WEST
ALBANY, NEW YORK 12205
October 23, 2000
Dear Stockholder of United Road Services, Inc.:
You are invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of United Road Services, Inc., a Delaware corporation (the
"Company"), to be held on November 17, 2000, beginning at 10:00 a.m. Eastern
Time, at the offices of KPS Special Situations Fund, L.P., 200 Park Avenue, 58th
Floor, New York, New York. The Annual Meeting is being held for the following
purposes:
1. To elect three Class II directors of the Company; and
2. To consider and transact such other business as may
properly come before the Annual Meeting or any
adjournment thereof.
The enclosed Notice and Proxy Statement contain details concerning the
above proposal. We urge you to read and consider these documents carefully.
Whether or not you plan to be at the Annual Meeting, please be sure to sign,
date and return the enclosed proxy card as soon as possible. For your
convenience, a return envelope is enclosed that requires no postage if mailed in
the United States. If you attend the meeting in person, you may vote in person,
even if you previously returned your proxy card. Your vote is important
regardless of the number of shares you own.
Sincerely,
/s/ Gerald R. Riordan
Gerald R. Riordan
Chief Executive Officer and Secretary
UNITED ROAD SERVICES, INC.
17 COMPUTER DRIVE WEST
ALBANY, NEW YORK 12205
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
NOVEMBER 17, 2000
To the Stockholders of
UNITED ROAD SERVICES, INC.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of United Road Services, Inc., a Delaware corporation (the
"Company"), will be held at the offices of KPS Special Situations Fund, L.P.,
200 Park Avenue, 58th Floor, New York, New York, on November 17, 2000, beginning
at 10:00 a.m., Eastern Time, for the following purposes:
1. To elect three Class II directors of the Company; and
2. To consider and transact such other business as may
properly come before the Annual Meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on October 5,
2000 as the record date for determining the stockholders entitled to notice of
and to vote at the Annual Meeting.
By Order of the Board of Directors,
/s/ Gerald R. Riordan
Gerald R. Riordan
Chief Executive Officer and Secretary
October 23, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE DATE, SIGN
AND MAIL THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED (WHICH REQUIRES NO
POSTAGE FOR MAILING IN THE UNITED STATES) AS SOON AS POSSIBLE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL ATTEND THE MEETING AND VOTE IN PERSON. A PROMPT
RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED.
UNITED ROAD SERVICES, INC.
17 COMPUTER DRIVE WEST
ALBANY, NEW YORK 12205
------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD NOVEMBER 17, 2000
------------------
This proxy statement is furnished in connection with the solicitation
of proxies by the board of directors (the "Board of Directors" or the "Board")
of United Road Services, Inc., a Delaware corporation (the "Company"), for use
at the annual meeting of the Company's stockholders scheduled for November 17,
2000 (the "Annual Meeting"), beginning at 10:00 a.m. Eastern Time, at the
offices of KPS Special Situations Fund, L.P., 200 Park Avenue, 58th Floor, New
York, New York, for the following purposes:
1. To elect three Class II directors of the Company; and
3. To consider and transact such other business as may
properly come before the Annual Meeting or any
adjournment thereof.
This proxy statement and the accompanying proxy card are first being
mailed to the Company's stockholders on or about October 25, 2000.
The Annual Report to Stockholders for the fiscal year 1999 accompanies
this proxy statement. If you did not receive a copy of the report, you may
obtain one by writing to the Secretary of the Company at the Company's address
listed above.
QUORUM AND REQUIRED VOTE
A majority of the outstanding shares of the Company's common stock, par
value $0.01 per share (the "Common Stock"), represented in person or by proxy at
the Annual Meeting will constitute a quorum. Directors shall be elected as
described in the section herein entitled "Proposal No. 1: Election of
Directors." Approval of any other proposal presented at the Annual Meeting
requires the affirmative vote of a majority of the shares entitled to vote and
represented in person or by proxy at the Annual Meeting. With respect to matters
to come before the Annual Meeting, other than the election of directors, holders
of the Company's Series A Participating Convertible Preferred Stock, par value
$.001 per share (the "Series A Preferred Stock"), are entitled to vote together
with the holders of the Common Stock as a single class. Each holder of Series A
Preferred Stock is entitled to the number of votes equal to the number of full
shares of Common Stock into which such holder's shares of Series A Preferred
Stock could be converted on the record date for such vote. Each share of Common
Stock is entitled to one vote on each matter to be voted upon at the Annual
Meeting, except as otherwise described under "Proposal No. 1: Election of
Directors."
As of the record date for the determination of stockholders entitled to
vote at the Annual Meeting, Blue Truck Acquisition, LLC, a Delaware limited
liability company ("Blue Truck"), which is controlled by KPS Special Situations
Fund, L.P., a Delaware limited partnership ("KPS"), owned shares of Series A
Preferred Stock convertible into approximately 6,130,733 shares of Common Stock,
which represents approximately 70.7% of the shares eligible to vote on matters
submitted to stockholders at the Annual Meeting other than the election of
directors. Thus, KPS will be able to control the vote on all such matters.
With respect to the election of directors, shares that are entitled to
vote for any particular nominee may be voted for such nominee or withheld from
voting for such nominee. Votes that are withheld and proxies relating to "street
name" shares for which brokers have not received voting instructions from the
beneficial owner ("Broker Non-Votes") will be counted to determine whether a
quorum is present, but will have no effect on the outcome. With respect to any
other proposal, abstentions and Broker Non-Votes will be counted to determine
whether a quorum is present. In determining whether any such proposal has
received the requisite number of favorable votes, abstentions will be counted as
part of the total number of votes cast on such proposal, whereas Broker
Non-Votes will not be counted as part of the total number of votes cast on such
proposal. Thus, abstentions will have the same effect as votes "against" the
proposal, whereas Broker Non-Votes will have no effect in determining whether
any such proposal has been approved by the stockholders.
PROXIES
The enclosed proxy card provides that you may specify that your shares
be voted FOR or to WITHHOLD your vote with respect to the election of each
director nominated by the Board of
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Directors for which you are entitled to vote. All shares represented by properly
executed proxies received prior to or at the Annual Meeting and not revoked will
be voted in accordance with the instructions indicated in such proxies.
Properly executed proxies from record holders of shares that do not
contain voting instructions will be voted FOR the Board of Directors' nominees
named in this proxy statement for which such shares are entitled to vote. If the
stockholder holds the shares in street name through a broker, the shares will be
treated as described in "Quorum and Required Vote" above. Stockholders are urged
to mark the box on the proxy card to indicate how their shares are to be voted.
It is not expected that any matter other than those referred to herein will be
brought before the Annual Meeting. If, however, other matters are properly
presented, the persons named as proxies will vote in accordance with their own
judgment with respect to such matters, unless authority to do so is withheld in
the proxy.
Any stockholder who executes and returns a proxy may revoke such proxy
in writing at any time before it is voted at the Annual Meeting by: (1) filing
with the Secretary of the Company, at 17 Computer Drive West, Albany, NY 12205,
written notice of such revocation bearing a later date than the proxy or a
subsequent, later dated and signed proxy relating to the same shares; or (2)
attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute revocation of a proxy).
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In
addition to solicitations by mail, officers, directors and employees of the
Company may solicit proxies in person or by facsimile, electronic mail,
telephone or advertisements. Such individuals will not receive any extra
compensation for these activities. The Company will also make arrangements with
brokerage firms and other custodians, nominees and fiduciaries to forward proxy
solicitation material to the beneficial owners of the Common Stock. The Company
will reimburse such persons for the reasonable out-of-pocket expenses that they
incur in connection with forwarding such material.
RECORD DATE
As of October 5, 2000, the record date for determining the stockholders
entitled to notice of and to vote at the Annual Meeting (the "Record Date"), the
Company had outstanding 2,096,516 shares of its Common Stock and 662,119.13
shares of its Series A Preferred Stock. The Common Stock and the Series A
Preferred Stock are the only shares entitled to vote at the Annual Meeting.
REVERSE STOCK SPLIT
3
All per share references contained in this proxy statement have been
adjusted to give effect to the 1-for-10 reverse split of the outstanding Common
Stock effected as of May 4, 2000 (the "Reverse Stock Split").
CHANGE OF CONTROL OF THE COMPANY
On July 20, 2000, Blue Truck purchased 613,073.27 shares of the
Company's Series A Preferred Stock for $25.0 million in cash consideration and
CFE, Inc., a Delaware corporation and an affiliate of General Electric Capital
Corporation ("CFE"), purchased 49,045.86 shares of Series A Preferred Stock for
$2.0 million in cash consideration (collectively the "KPS Transaction"). The
source of consideration paid by Blue Truck in the KPS Transaction was a capital
contribution to Blue Truck by KPS, and the source of consideration paid by CFE
was its own working capital.
In accordance with the terms of the Certificate of Powers,
Designations, Preferences and Rights of the Series A Preferred Stock (the
"Certificate of Designations") and the Investors' Agreement between the Company
and Blue Truck entered into in connection with the KPS Transaction (the "KPS
Investors' Agreement"), on July 20, 2000, Richard A. Molyneux, Grace M. Hawkins,
Mark J. Henninger and Merril M. Halpern resigned from the Board of Directors of
the Company and six individuals designated by a majority of the holders of the
Series A Preferred Stock (the "Majority Holders"), consisting of Eugene J.
Keilin, Michael G. Psaros, David P. Shapiro, Stephen P. Presser, Brian J. Riley
and Raquel V. Palmer, were appointed to fill the vacancies then existing on the
Board. As a result, effective as of the closing of the KPS Transaction, the
designees of the Majority Holders comprised a majority of the Board of
Directors. As of the Record Date, Blue Truck and CFE owned shares of Series A
Preferred Stock convertible into approximately 70.7% and 5.7% of the Common
Stock, respectively.
In connection with the KPS Transaction, the Company agreed to pay KPS
Management, LLC, a Delaware limited liability company and an affiliate of KPS
and Blue Truck ("KPS Management") a transaction fee in the amount of $2,500,000,
$1,250,000 of which was paid by the Company on the closing date of the KPS
Transaction and the balance of which the Company is required to pay upon KPS
Management's request. The Company also paid the reasonable fees and expenses
incurred by Blue Truck in connection with the KPS Transaction. In addition, in
accordance with the terms of the stock purchase agreement relating to the KPS
Transaction, the Company is required to pay KPS Management an annual management
fee of (a) $1,000,000, payable quarterly, for so long as holders of the Series A
Preferred Stock have the right under the KPS Investors' Agreement or the
Certificate of Designations to elect a majority of the Company's directors, or
(b) $500,000, payable quarterly, for so long as holders of the Series A
Preferred Stock have the right under the KPS Investors' Agreement or the
Certificate of Designations to elect at least three of the Company's directors.
No management fee will be payable in the event that holders of the Series A
Preferred Stock do not have the right under the KPS Investors' Agreement or the
Certificate of Designations to elect at least three of the Company's directors.
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FORWARD-LOOKING STATEMENTS
From time to time, in written reports and oral statements, management
may discuss its expectations regarding the Company's future performance.
Generally, these statements relate to business plans or strategies, projected or
anticipated benefits or other consequences of such plans or strategies or other
actions taken or to be taken by the Company, including the impact of such plans,
strategies or actions on the Company's results of operations or components
thereof, projected or anticipated benefits from operational changes,
acquisitions or dispositions made or to be made by the Company, or projections,
involving anticipated revenues, costs, earnings or other aspects of the
Company's results of operations. The words "expect," "believe," "anticipate,"
"project," "estimate," "intend" and similar expressions, and their opposites,
are intended to identify forward-looking statements. These forward-looking
statements are not guarantees of future performance but rather are based on
currently available competitive, financial and economic data and management's
operating plans. These forward-looking statements involve risks and
uncertainties that could render actual results materially different from
management's expectations. Such risks and uncertainties include, without
limitation, risks related to the Company's limited operating history, risks
related to the Company's ability to successfully implement its revised business
strategy, the availability of capital to fund operations, including expenditures
for new equipment, the loss of significant customers and contracts, changes in
applicable regulations, including but not limited to, various federal, state and
local laws and regulations regarding equipment, driver certification, training,
recordkeeping and workplace safety, risks related to the Company's ability to
integrate acquired companies, risks related to the adequacy, functionality,
sufficiency and cost of the Company's information systems, potential exposure to
environmental and other unknown or contingent liabilities, risks associated with
the Company's labor relations, changes in the general level of demand for
towing, recovery and transport services, price changes in response to
competitive factors, seasonal and other variations in the demand for towing,
recovery and transport services, general economic conditions, and other risk
factors (the "Risk Factors") described from time to time in the Company's
reports filed with the SEC. All statements herein that are not statements of
historical fact are forward-looking statements. Although management believes
that the expectations reflected in such forward-looking statements are
reasonable, there can be no assurance that those expectations will prove to have
been correct. Certain other important factors that could cause actual results to
differ materially from management's expectations ("Cautionary Statements") are
disclosed in this proxy statement and in the other filings of the Company with
the Commission. All written forward-looking statements by or attributable to
management in this proxy statement are expressly qualified in their entirety by
the Risk Factors and the Cautionary Statements. Investors must recognize that
events could turn out to be significantly different from what management
currently expects.
5
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The Board of Directors of the Company consists of eleven persons. The
Amended and Restated Certificate of Incorporation of the Company (the
"Certificate of Incorporation") provides that the Board of Directors of the
Company shall be divided into three classes, as nearly equal in number as
possible, with one class being elected each year for a three-year term.
CURRENT COMPOSITION OF BOARD OF DIRECTORS
Upon the closing of the KPS Transaction, in accordance with the terms
of the Certificate of Designations and the KPS Investors' Agreement, Richard A.
Molyneux, Grace M. Hawkins, Mark J. Henninger and Merril M. Halpern resigned
from the Board of Directors of the Company and the following designees of the
Majority Holders were appointed to fill the vacancies then existing on the
Board:
Director Class
-------- -----
Eugene J. Keilin III
Michael G. Psaros I
David P. Shapiro II
Stephen P. Presser I
Brian J. Riley III
Raquel V. Palmer II
The following directors that served on the Board prior to the KPS
Transaction remained on the Board after consummation of the KPS Transaction:
Director Class
-------- -----
Gerald R. Riordan I
Edward W. Morawski III
Todd Q. Smart III
Michael S. Pfeffer I
Robert L. Berner, III II
PROCEDURES FOR NOMINATION AND ELECTION
Pursuant to the terms of the KPS Investors' Agreement and the
Certificate of Designations, the Majority Holders are currently entitled to
designate and elect six of the eleven members of the Company's Board of
Directors. An independent committee of the Board, consisting of one of the
directors designated or elected to the Board by the Majority Holders and all of
the members of the Board who were not designated or elected to the Board by the
Majority Holders (the "Independent Committee"), is entitled to nominate the
remaining five members of
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the Board, provided that, as long as Charter URS, LLC ("Charterhouse") is
entitled to nominate member(s) of the Board of Directors pursuant to the Amended
and Restated Investors' Agreement between Charterhouse and the Company (the
"Charterhouse Investors' Agreement"), the Charterhouse nominee(s) must be
included among the nominees of the Independent Committee. Under the Charterhouse
Investors' Agreement, Charterhouse currently has the right to nominate two
persons for election to the Company's Board of Directors.
At the Annual Meeting, three Class II directors are to be elected to
serve until the Company's annual meeting of stockholders in 2003 or until their
successors are elected and qualified, and the remaining eight directors will
continue to serve in accordance with their prior election or appointment. Of the
Class II directors whose terms of office are scheduled to expire at the Annual
Meeting, two were appointed to the Board by the Majority Holders and one is a
Charterhouse nominee. Consistent with their right to designate and elect a
majority of the Board of Directors, the Majority Holders have the right to
designate and elect two Class II directors at the Annual Meeting. The Majority
Holders have designated David P. Shapiro and Raquel V. Palmer as their Class II
nominees for election at the Annual Meeting. The holders of Common Stock have
the right to elect one Class II director at the Annual Meeting. The Independent
Committee of the Board has nominated Robert L. Berner, the nominee of
Charterhouse, as the Class II nominee for election by the holders of Common
Stock at the Annual Meeting.
Thus, the three nominees for election to the Board of Directors at the
Annual Meeting are Mr. Shapiro, Ms. Palmer and Mr. Berner. The shares of Series
A Preferred Stock are entitled to vote only for the election of Mr. Shapiro and
Ms. Palmer and the shares of Common Stock are entitled to vote only for the
election of Mr. Berner.
The persons named on the enclosed proxy card will vote the shares
represented thereby for the election of the Board's nominee(s) for director
identified on such proxy card as described above, except where authority has
been withheld as to a particular nominee or as to all such nominees. It is
expected that each of the nominees will serve, but if any nominee declines or is
unable to serve for any unforeseen cause, the persons named on the proxy card
will vote to fill any vacancy so arising in accordance with such persons' own
judgment and consistent with the Certificate of Designations, the KPS Investors'
Agreement and the Charterhouse Investors' Agreement, as applicable, unless
authority to do so is withheld in such proxy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF
SERIES A PREFERRED STOCK VOTE FOR MR. SHAPIRO AND MS. PALMER
AND THAT THE HOLDERS OF COMMON STOCK VOTE FOR MR. BERNER.
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NOMINEES AND CONTINUING DIRECTORS
The following table sets forth certain information with respect to the
nominees and the continuing directors of the Company:
Name, Age and Principal Occupation and
Month and Year First Elected Director Other Information
------------------------------------- -----------------
CLASS II NOMINEES FOR ELECTION WITH TERMS EXPIRING IN 2003
Robert L. Berner, III, Age 38, December 1998 Mr. Berner is a Managing Director
of Charterhouse Group
International, Inc. ("Charterhouse
International") and a member of its
Investment Committee. Mr. Berner
joined Charterhouse International
in January 1997. From 1986 through
December 1996, Mr. Berner was a
Principal in the Merger and
Acquisitions Department at Morgan
Stanley & Co.
David P. Shapiro, Age 38, July 2000 Mr. Shapiro co-founded KPS, a
private equity fund focused on
constructive investing in
restructurings, turnarounds and
other special situations, in 1998.
Mr. Shapiro is currently a Managing
Principal of KPS and of Keilin &
Co. LLC ("K&Co."), an investment
banking firm specializing in
providing financial advisory
services in connection with
mergers, acquisitions,
restructurings and turnaround
transactions. Mr. Shapiro joined
K&Co. in 1991. Mr. Shapiro is
Chairman of the Board of Directors
of the Blue Heron Paper Company
("Blue Heron"), a manufacturer of
newsprint and groundwood paper
products and serves on the Boards
of Directors of Blue Ridge Paper
Products, Inc. ("Blue Ridge"), a
leading manufacturer of envelope
grade paper and board used in
liquid packaging, and DeVlieg
Bullard II, Inc. ("DeVlieg
Bullard"), a machine tool
manufacturer. Prior to joining
K&Co., Mr. Shapiro was an
investment banker at Drexel Burnham
Lambert Incorporated and Dean
Witter Reynolds, Inc.
8
Raquel V. Palmer, Age 27, July 2000 Ms. Palmer is a Vice President of
KPS and of K&Co. Ms. Palmer joined
K&Co. in 1994 and has been with KPS
since the fund's inception. Ms.
Palmer serves on the Boards of
Directors of Blue Heron, Blue Ridge
and DeVlieg Bullard. Prior to
joining K&Co., Ms. Palmer was an
investment banker with Kidder,
Peabody & Co.
CLASS III DIRECTORS WITH TERMS EXPIRING IN 2001
Edward W. Morawski, Age 51, May 1998 Mr. Morawski has served as a Vice
President of the Company since May
1998. In 1977, Mr. Morawski founded
Northland Auto Transporters, Inc.
and Northland Fleet Leasing, Inc.
(collectively, "Northland"), one of
the businesses acquired by the
Company in connection with its
initial public offering (all such
businesses collectively, the
"Founding Companies"), and served
as the President of Northland from
inception until its acquisition by
the Company in May 1998.
Todd Q. Smart, Age 35, May 1998 In 1987, Mr. Smart founded Absolute
Towing and Transporting, Inc.
("Absolute"), one of the Founding
Companies, and served as the
President of Absolute from
inception until its acquisition by
the Company in May 1998. Mr. Smart
provided the Company with
acquisition-related consulting
services from May 1998 though
September 1999. Since June 1998,
Mr. Smart has operated an official
police garage in Los Angeles,
California.
Eugene J. Keilin, Age 57, July 2000 Mr. Keilin founded K&Co. in 1990,
and co-founded KPS in 1998. He is
currently a Managing Principal of
KPS and of K&Co. Mr. Keilin is
Chairman of the Board of Directors
of Blue Ridge and serves on the
Boards of Directors of Blue Heron
and DeVlieg Bullard. Prior to
founding K&Co., Mr. Keilin was a
9
General Partner of Lazard Freres &
Co.
Brian J. Riley, Age 30, July 2000 Mr. Riley is a Vice President of
KPS and of K&Co. Mr. Riley joined
K&Co. in 1993 and has been with KPS
since the fund's inception. Mr.
Riley serves on the Boards of
Directors of Blue Ridge, Blue Heron
and DeVlieg Bullard. Prior to
joining K&Co., Mr. Riley was an
investment banker in the Mergers
and Acquisitions Department of
Smith Barney, Harris & Upham.
CLASS I DIRECTORS WITH TERMS EXPIRING IN 2002
Gerald R. Riordan, Age 51, October 1999 Mr. Riordan has served as the
Company's Chief Executive Officer
since October 11, 1999 and as the
Company's Secretary since November
2, 1999. Between December 1997 and
October 1999, Mr. Riordan was an
entrepreneur pursuing private
investments in real estate and
other ventures. From October 1996
to December 1997, he was President
and Chief Operating Officer of
Ryder TRS, Inc. (not owned by Ryder
System, Inc.), a truck rental
company. From 1995 to October 1996,
Mr. Riordan served as President of
Ryder Consumer Truck Rental and
Ryder Student Transportation
Services.
Mr. Pfeffer has been a Senior Vice President of Charterhouse
International since May 1998. From
September 1996 to May 1998, Mr.
Pfeffer served in executive
positions in the equity capital
group of General Electric Capital
Corporation, most recently as
Senior Vice President. From August
1993 to September 1996, Mr. Pfeffer
was Vice President of Charterhouse
Environmental Capital Group.
Michael G. Psaros, Age 33, July 2000 Mr. Psaros co-founded KPS in 1998,
and is currently a Managing
Principal of KPS and of K&Co. Mr.
Psaros joined K&Co. in 1991.
10
Mr. Psaros serves on the Boards of
Directors of Blue Ridge, Blue
Heron, DeVlieg Bullard, and Golden
Northwest Aluminum Corp., a major
producer of primary and extruded
aluminum products. Prior to joining
K&Co., Mr. Psaros was an investment
banker with Bear, Stearns & Co.,
Inc.
Stephen P. Presser, Age 40, July 2000 Mr. Presser joined KPS and K&Co. in
1998 and is currently a Principal
of KPS and of K&Co. Mr. Presser is
a member of the Boards of Directors
of Blue Ridge, Blue Heron and
DeVlieg Bullard. From 1985 to 1997,
Mr. Presser was an attorney in the
law firm of Cohen, Weiss and Simon
of New York, New York.
Messrs. Berner and Pfeffer were nominated by Charterhouse to serve as
directors of the Company pursuant to the provisions of the Charterhouse
Investors' Agreement.
Messrs. Shapiro, Keilin, Riley, Psaros and Presser and Ms. Palmer were
designated by the Majority Holders to serve as directors of the Company pursuant
to the provisions of the KPS Investors' Agreement and the Certificate of
Designations.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of the Company who are not directors of the Company:
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Name and Age Principal Occupation and Other Information
------------ ------------------------------------------
Michael A. Wysocki, Age 46 Mr. Wysocki has been President of the
Company's Transport Business Unit since
January 2000. Mr. Wysocki founded MPG
Transco, Ltd., a Livonia, Michigan based
auto transport company ("MPG") in 1973, and
served as its President and Chief Executive
Officer from inception until MPG was
acquired by the Company in January 1999.
From January 1999 until January 2000, Mr.
11
Wysocki served as general manager of the
Company's MPG division. Since July 1985, Mr.
Wysocki has been the Chief Executive Officer
of Translesco, Inc., a corporation that
leases employees to MPG ("Translesco").
Harold W. Borhauer II, Age 51 Mr. Borhauer has been President of the
Company's Towing and Recovery Business Unit
since January 2000. In 1983, Mr. Borhauer
founded Arizona's Towing Professionals,
Inc., which does business as Shamrock Towing
("Shamrock"), a Phoenix, Arizona based
towing and recovery company that was
acquired by the Company in March 1999. Mr.
Borhauer served as Shamrock's Chief
Executive Officer from 1983 until its
acquisition by the Company. From March 1999
until January 2000, Mr. Borhauer served as
general manager of the Company's Shamrock
division.
ORGANIZATION AND REMUNERATION OF BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, a Compensation Committee
and an Independent Committee.
The Audit Committee reviews with the Company's independent auditors the
scope of their annual and interim examinations and consults with the auditors
during any audit when appropriate. The Audit Committee is also responsible for
(i) making recommendations to the Board of Directors with respect to the
independent auditors who conduct the annual examination of the Company's
accounts, (ii) reviewing the scope of the annual audit and meeting periodically
with the Company's independent auditors to review their findings and
recommendations, (iii) approving major accounting policies or changes thereto,
and (iv) periodically reviewing the Company's principal internal financial
controls. The Audit Committee held three meetings during the fiscal year ended
December 31, 1999. The members of the Audit Committee during 1999 were Richard
A. Molyneux, Michael S. Pfeffer and Todd Q. Smart. The current members of the
Audit Committee are Messrs. Smart, Berner and Pfeffer.
The Board of Directors has adopted a written charter for the Audit
Committee, which is attached as Appendix A to this Proxy Statement. Two of the
members of the Audit Committee, Messrs. Berner and Pfeffer, satisfy the
requirements for independence set forth in Section 303.01(B)(2)(a) and (3) of
the listing standards of the New York Stock Exchange (the "NYSE").
12
Mr. Smart satisfies the requirements for independence set forth in Section
303.01(B)(2)(a) of the NYSE listing standards, but does not satisfy the
requirement for independence set forth in Section 303.01(B)(3)(a) of the listing
standards because he has been employed by a subsidiary of the Company within the
past three years. The Board of Directors believes that Mr. Smart possesses
special skills, knowledge and experience that have been, and will continue to
be, of particular value to the Audit Committee, and has determined, in
accordance with Section 303.02(D) of the NYSE listing standards, that it is in
the best interests of the Company and its stockholders for Mr. Smart to continue
to serve on the Audit Committee despite his failure to meet the definition of
independence set forth in Section 303.01(B)(3)(a) of the NYSE listing standards.
The Compensation Committee (i) develops and monitors compensation
arrangements for the executive officers of the Company based upon
recommendations of the Chief Executive Officer, (ii) reviews the compensation of
any employee of the Company whose compensation exceeds $100,000 per annum, (iii)
adopts amendments to all of the Company's plans intended to qualify under
Section 401 of the Internal Revenue Code of 1986, as amended, (iv) administers
the Company's 1998 Stock Option Plan (the "1998 Stock Option Plan") with respect
to option grants to executive officers of the Company, and (v) performs such
other activities and functions related to executive compensation as the Board of
Directors of the Company may from time to time direct. The Compensation
Committee did not hold any meetings during the fiscal year ended December 31,
1999, but acted from time to time by unanimous written consent. The members of
the Compensation Committee during 1999 were Richard A. Molyneux, Grace M.
Hawkins and Mark J. Henninger.
The Independent Committee selects nominees for director consistent with
the terms of the KPS Investors' Agreement. Pursuant to the KPS Investors'
Agreement, the Independent Committee consists of one of the directors designated
or elected by the Majority Holders and all of the members of the Board of
Directors who were not designated or elected by the Majority Holders. The
current members of the Independent Committee are Gerald R. Riordan, Edward W.
Morawski, Todd Q. Smart, Robert L. Berner, Michael S. Pfeffer and Michael G.
Psaros. The Independent Committee did not hold any meetings during 1999.
Pursuant to the terms of the KPS Investors' Agreement, for as long as
Blue Truck and its permitted transferees (the "Original Holders") own at least
50% of the Series A Preferred Stock acquired by Blue Truck in the KPS
Transaction, the Majority Holders will be entitled to designate and elect a
majority of the members of the Board of Directors. At lower levels of ownership
by the Original Holders, the Majority Holders will be entitled to designate and
elect three directors, one director or no directors, as set forth in the KPS
Investors' Agreement.
As described in the section entitled "Proposal No. 1: Election of
Directors," the Independent Committee is currently entitled to nominate five out
of eleven members of the Board of Directors, provided that, as long as
Charterhouse is entitled to nominate member(s) of the Board pursuant to the
Charterhouse Investors' Agreement, the Charterhouse nominees must be included
among the nominees of the Independent Committee. The Independent Committee
13
will consider candidates recommended by the Company's stockholders, if such
nominations are submitted in accordance with the Company's Amended and Restated
Bylaws. See the section herein entitled "Proposals of Security Holders." In
considering such nominees, the Independent Committee must make its nominations
in accordance with the terms of the Charterhouse Investors' Agreement, as
described above.
The Company's Board of Directors held ten meetings during the fiscal
year ended December 31, 1999 and also acted from time to time by unanimous
written consent. Each director attended at least 75% of all of the meetings held
by the Board of Directors and any committees on which said director served.
As compensation for service as a director of the Company, each director
who is not an employee of the Company or any of its subsidiaries is entitled to
receive (i) upon election as a director and on the date of each annual meeting
of the Board of Directors thereafter, a grant of options to purchase 2,000
shares of Common Stock at the fair market value on the date of grant, and (ii)
cash compensation of approximately $2,500 for each meeting attended in person
and $750 for each meeting in which such director participates by telephone. All
directors are reimbursed for their out-of-pocket expenses incurred in connection
with attending meetings of the Board of Directors and committees thereof.
In addition, each director who is neither an officer nor an employee of
the Company (i) is entitled to receive upon accepting the position of chairman
of a committee of the Board of Directors (or, as of September 30, 1999, with
respect to directors who were committee chairmen on that date), a grant of
options to purchase 250 shares of the Company's Common Stock pursuant to the
1998 Stock Option Plan, and (ii) who serves on a committee of the Board of
Directors is entitled to receive $500 in cash (the "Committee Fee") for each
committee meeting attended by such director; provided, however, that no
Committee Fee shall be payable to any director unless and until the closing
price of the Common Stock exceeds $50.00 per share for five consecutive trading
days following the date of the meeting to which the Committee Fee relates.
14
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table presents summary information concerning the
compensation of (i) all individuals who served as the Company's Chief Executive
Officer ("CEO") during 1999 and (ii) all other persons who were executive
officers of the Company during 1999 and who received salary and bonus payments
exceeding $100,000 in the aggregate during fiscal year 1999 (together, the
"Named Executive Officers") for services rendered to the Company and its
subsidiaries during the fiscal years 1998 and 1999. No compensation was paid by
the Company to the Named Executive Officers during fiscal year 1997.
Securities
Underlying All Other
Name Year Salary Bonus Options Compensation
- ----- ---- ------ ----- ------- ------------
Gerald R. Riordan(1) 1999 $ 61,539 $100,000(2) 75,000 $ 4,575(3)
Chief Executive Officer
Edward T. Sheehan(4) 1999 118,850 -- -- 196,539(5)
Former Chief Executive Officer 1998 141,678 -- 9,000 --
Donald J. Marr (6) 1999 140,868 15,000 5,000 --
Former Chief Financial Officer 1998 75,000 50,000 12,500 --
Allan D. Pass, Ph.D(7) 1999 222,115 -- -- --
Former Chief Operating Officer 1998 125,765 -- 15,500 8,887(3)
Robert J. Adams, Jr.(8) 1999 174,615 -- -- 7,692(9)
Former Chief Acquisition Officer 1998 110,002 -- 11,000 4,554(10)
- ------------------------
(1) Mr. Riordan's employment with the Company began as of October 11, 1999.
(2) Consists of $50,000 in cash and 3,077 shares of Common Stock with
a market value of $50,000 as of January 1, 2000.
(3) Consists of housing expenses paid by the Company on behalf of the Named
Executive Officer.
(4) Mr. Sheehan was employed by the Company from October 1997 until June
21, 1999.
(5) Consists of (i) $26,923 representing previously unpaid salary for Mr.
Sheehan's service to the Company for the period from February 26, 1998
to May 15, 1998, (ii) $17,308 representing unpaid salary for vacation
time accrued but unused by Mr. Sheehan, and (iii) $152,308 in severance
payments made pursuant to the Employment Termination and Release
Agreement between the Company and Mr. Sheehan.
15
(6) Mr. Marr's employment with the Company began as of February 2, 1998.
Mr. Marr terminated his employment agreement with the Company effective
as of September 30, 2000.
(7) Dr. Pass' employment with the Company began as of April 20, 1998. From
January 1, 1998 through April 19, 1 998, Dr. Pass provided consulting
services to the Company. Dr. Pass terminated his employment agreement
with the Company effective as of January 4, 2000.
(8) Mr. Adams' employment with the Company began as of June 1, 1998. From
February 1, 1998 through June 1, 1998, Mr. Adams provided acquisition-
related consulting services to the Company. Mr. Adams terminated his
employment agreement with the Company effective as of December 15,
1999.
(9) Consists of severance payments made to Mr. Adams pursuant to his
Amended and Restated Employment Agreement.
(10) Consists of relocation expenses paid by the Company on behalf of the
Named Executive Officer.
OPTION GRANTS IN 1999
The following table sets forth information concerning stock option
grants to Mr. Riordan and Mr. Marr during 1999. None of the other Named
Executive Officers received grants of stock options during 1999.
Potential Realizable
Value at Assumed
Number of Percentage of Annual Rates of
Shares Total Options Stock Price
Underlying Granted to Exercise Appreciation for
Options Employees in Price Expiration Option Term(1)
Name Granted Fiscal Year (per share) Date 5% 10%
- ---- ------- ----------- ----------- ---- -- ---
Gerald R. Riordan 75,000(2) 66.0% $29.06 10/11/09 $1,370,250 $3,476,250
Donald J. Marr 5,000(3) 4.4% 33.13 9/1/09 104,200 264,000
- ------------------------
(1) Represents the potential realizable value of each grant of options
assuming that the market price of the underlying securities appreciates
in value from the date of grant to the end of the option term at the
rates of 5% and 10% compounded annually.
(2) All of such options were issued at fair market value on October 11,
1999 and were scheduled to vest over a period of three years at a rate
of 33 1/3% per year beginning on October 11, 2000.
(3) All of such options were granted pursuant to the 1998 Stock Option
Plan, were issued at fair market value on September 1, 1999 and were
fully vested on the date of grant.
16
FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the number of
shares of Common Stock underlying exercisable and unexercisable options held by
the Named Executive Officers as of December 31, 1999. The exercise price for
each of these options exceeded the fair market value of such options based on
the last reported sale price of the Common Stock on December 31, 1999 ($1.625
per share, equivalent to $16.25 per share after giving effect to the Reverse
Stock Split) and, therefore, the options had no value as of such date. No
options were exercised by any of the Named Executive Officers during 1999.
Name Exercisable Options Unexercisable Options
---- ------------------- ---------------------
Gerald R. Riordan -- 75,000
Donald J. Marr 9,167 8,333
Edward T. Sheehan 3,000 6,000
Allan D. Pass, Ph.D 5,167 10,333
Robert J. Adams, Jr. 3,667 7,333
EMPLOYMENT AGREEMENTS
Below is a discussion of the existing employment agreements with each
of the Named Executive Officers.
The Company had an employment agreement with Mr. Riordan which was
effective as of October 11, 1999 and provided Mr. Riordan with an annual base
salary of $300,000. Pursuant to this employment agreement, Mr. Riordan received
a 1999 bonus consisting of $50,000 in cash and shares of the company's Common
Stock valued at $50,000 as of January 1, 2000. The agreement also provided that,
upon a change of control of the Company, Mr. Riordan was entitled to receive a
change of control payment in the amount of $1.2 million plus accelerated vesting
of all stock options then held by him. On July 20, 2000, in connection with the
KPS Transaction, the Company and Mr. Riordan entered into a new employment
agreement which replaced his former employment agreement. The new employment
agreement has a term of three years, and provides for automatic one year
extensions unless either party gives the other six months prior notice of an
intention to terminate the agreement. Under the new agreement, Mr. Riordan is
entitled to an annual base salary of $350,000, subject to increase at the
Compensation Committee's discretion. In lieu of the change of control payment
provided for under his old employment agreement, upon closing of the KPS
Transaction, Mr. Riordan received a cash payment of $600,000 and, as long as he
remains employed by the Company, he will be entitled to a stay bonus of $300,000
on each of July 20, 2001 and July 20, 2002. In the event of the termination of
Mr. Riordan's employment agreement prior to the expiration of the term thereof
17
for any reason other than (i) a termination for "cause" by the Company, or (ii)
a termination by Mr. Riordan other than for "good reason" (as defined in the new
agreement), any unpaid portion of the stay bonus as of the date of such
termination, plus interest at an annual rate of 8% computed from July 20, 2000,
will be immediately payable to Mr. Riordan. Mr. Riordan is also entitled to an
annual bonus at the discretion of the Compensation Committee, which bonus may
not exceed 140% of his base salary.
In lieu of the full acceleration of options provided for under Mr.
Riordan's old employment agreement, upon closing of the KPS Transaction and
pursuant to the new agreement, (i) unvested stock options to purchase 37,500
shares of Common Stock held by Mr. Riordan became vested and fully exercisable
on July 20, 2000, and options to purchase an additional 37,500 shares held by
Mr. Riordan expired, (ii) Mr. Riordan was granted an option to purchase 37,500
shares of Common Stock at the fair market value of the Common Stock on July 20,
2000, which option vests in equal installments over a three-year period
beginning on the first anniversary of the date of grant, and (iii) Mr. Riordan
received an option to purchase 16,666 shares of Common Stock at an exercise
price of $6.12, which was equal to 1.5 times the conversion price of the
Company's Series A Preferred Stock (the "Conversion Price") on July 20, 2000,
and which option vests fully on July 20, 2001. Under the terms of the new
agreement and subject to Mr. Riordan's continued employment, (i) on July 20,
2001, Mr. Riordan will receive an option to purchase 16,667 shares of Common
Stock at an exercise price equal to 2.5 times the Conversion Price, which option
will vest in full on July 20, 2002 and (ii) on July 20, 2002, Mr. Riordan will
receive an option to purchase 16,667 shares of Common Stock at an exercise price
equal to 3.5 times the Conversion Price, which option will vest in full on July
20, 2003.
Upon a "change of control" of the Company (as defined in the employment
agreement), Mr. Riordan has the option, exercisable for one year following such
change of control, to terminate the agreement and to continue to receive his
base salary through the later of (a) the end of the term of the new agreement
(without regard to the termination thereof) and (b) one year from the date of
such termination, and to continue to participate in all employee benefit plans
provided to him under the new agreement, to the extent permitted by such plans.
In addition, if Mr. Riordan terminates the agreement as described in the
foregoing sentence, all of his stock options that are unvested upon the change
of control giving rise to such termination will vest as of the date of such
change of control. If the Company terminates the new agreement without "cause",
Mr. Riordan is entitled to receive his base salary through the later of (a) the
end of the term of the new agreement (without regard to the termination thereof)
and (b) one year from the date of such termination and to continue to
participate in all employee benefit plans provided to him under the new
agreement. The new agreement contains covenants which prohibit Mr. Riordan from
competing with the Company and from soliciting its employees during the
employment term and until the later of (a) the last day of the term of the new
agreement (without regard to any termination thereof) and (b) one year from the
date of termination. The agreement also provides for customary perquisites and
benefits.
18
The Company had an employment agreement with Mr. Marr, which was
terminated as of September 30, 2000. The agreement provided Mr. Marr with a base
salary of $180,000 and an annual bonus at the discretion of the Compensation
Committee. In connection with the termination of Mr. Marr's agreement pursuant
to the "change of control" provisions thereof, the Company paid Mr. Marr a lump
sum payment equal to $421,300. In addition, pursuant to the "change of control"
provisions of Mr. Marr's Agreement, all of his options that were unvested as of
the consummation of the KPS Transaction became immediately vested and
exercisable. The agreement prohibits Mr. Marr from competing with the Company
for a period of one year following its termination.
The Company had an employment agreement with Mr. Sheehan that provided
Mr. Sheehan with an annual base salary of not less than $300,000. On June 21,
1999, Mr. Sheehan's employment agreement was terminated and the Company and Mr.
Sheehan entered into an Employment Termination and Release Agreement. Under the
termination agreement, on the effective date of termination, Mr. Sheehan
received (i) a lump sum payment equal to $26,923, representing previously unpaid
salary for Mr. Sheehan's service to the Company for the period of February 26,
1998 to May 15, 1998, and (ii) a lump sum payment equal to $17,308 for unused
vacation. Pursuant to the agreement, Mr. Sheehan also is entitled to a severance
payment of $600,000, payable in equal installments over a two year period
beginning on the date of termination. In addition, the agreement provides that
all stock options granted to Mr. Sheehan pursuant to any of the Company's stock
option plans prior to the termination of Mr. Sheehan's employment will continue
to vest as if such termination had not occurred, and that Mr. Sheehan is
entitled to continue to receive medical, life, dental and disability insurance
benefits for a period of five years after termination. The agreement further
provides that all shares of Common Stock purchased by Mr. Sheehan pursuant to
the Stock Purchase and Restriction Agreement dated November 1997 between the
Company and Mr. Sheehan shall be considered fully "vested" under such agreement
as of the date of termination, and that the Company shall have no right to
repurchase such shares. The agreement contains a covenant prohibiting Mr.
Sheehan from competing with the Company for a period of two years following the
termination of his employment.
The Company had employment agreements with Dr. Pass and Mr. Adams which
were terminated by said individuals effective as of January 4, 2000 and December
15, 1999, respectively. Each of these agreements had an initial term of three
years with an evergreen extension continuing after the initial term unless
either the Company or such individual provided ten days' notice of termination.
Pursuant to these employment agreements, Dr. Pass and Mr. Adams were entitled to
receive an annual salary of not less than $250,000 and $200,000, respectively.
The terms of the agreements required the Company to pay Dr. Pass and Mr. Adams a
termination fee equal to approximately two times such individual's salary and
bonus if (i) such individual's agreement was terminated without "Cause" by the
Company, (ii) the Board of Directors determined in good faith that such
individual had been assigned duties, responsibilities or status materially
inconsistent with the duties, responsibilities and status set forth in his
employment agreement, or (iii) such individual terminated his employment with
the Company
19
within six months after any termination of Mr. Sheehan's employment with the
Company. The agreements also provided that, upon any such event, all stock
options granted to such individuals pursuant to any of the Company's stock
option plans prior to the effective date of termination would continue to vest
as if such termination had not occurred and such individuals would be entitled
to continue to receive health, life and disability insurance benefits for a
period of two years after termination. Each agreement also contained a covenant
prohibiting the executive from competing with the Company for a period of one
year following any expiration or termination of the agreement.
REPORT ON EXECUTIVE COMPENSATION
The following report describes the policies pursuant to which
compensation was paid to executive officers of the Company for performance
during 1999.
COMPENSATION PHILOSOPHY AND APPROACH
Generally, the Company seeks to attract, retain and motivate its
executive officers through a combination of base salary, incentive awards based
upon individual performance and stock option awards under the Company's 1998
Stock Option Plan and otherwise. The Board of Directors believes that a
substantial portion of the aggregate annual compensation of each executive
officer should be influenced by the performance of the Company and the
individual contribution of the executive officer.
Base Salaries
The Company's base salary levels are set in the employment agreements
entered into between the Company and each executive officer. The Board of
Directors believes that the base salaries of the Company's executive officers
for 1999 were generally below those for other comparable positions within the
motor vehicle and equipment towing, recovery and transport service industry and
similar industries. However, the Company places significant emphasis on
incentive awards and stock option grants as a means of motivating and rewarding
its management. The Board of Directors believes that this strategy provides
optimal incentives for management to create long-term shareholder value.
Incentive Compensation Payments
In addition to base pay, the Company's senior executives (including the
Company's Chief Executive Officer) are eligible to receive bonuses and stock
option awards. Bonuses and stock options are awarded based upon the individual
performance of each executive officer. Other than a cash bonus of $15,000 paid
to Mr. Marr for his performance during 1999 and contractual bonuses paid to the
Chief Executive Officer as described below, no cash bonuses were paid to the
Company's Named Executive Officers for their performance during 1999. Stock
20
option grants made to the Named Executive Officers during 1999 are described in
"Option Grants in 1999."
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation policies applicable to the Company's Chief Executive
Officer are similar to those applicable to the Company's other executive
officers. Mr. Riordan had an employment agreement with the Company effective as
of October 11, 1999, pursuant to which Mr. Riordan was paid an annual base
salary of $300,000 during 1999. Pursuant to this agreement, Mr. Riordan also
received a 1999 bonus consisting of $50,000 in cash and 3,077 shares of Common
Stock with a market value of $50,000 as of January 1, 2000. Effective as of July
20, 2000, the Company entered into a new employment agreement with Mr. Riordan,
pursuant to which he is entitled to receive an annual base salary of $350,000.
In connection with his appointment as Chief Executive Officer of the
Company, Mr. Riordan was granted a non-statutory stock option to purchase 75,000
shares of the Company's Common Stock. The option granted to Mr. Riordan was
scheduled to vest over a period of three years, at a rate of 33 1/3% each year,
beginning on October 11, 2000. The exercise price for the option was based on
the fair market value of the Common Stock on the date of the grant, and the
option expires after a term of ten years.
The Company also had an employment agreement with Mr. Sheehan effective
from January 1, 1999 through June 21, 1999, pursuant to which Mr. Sheehan was
paid an annual base salary of $300,000. Mr. Sheehan did not receive any bonus or
stock options during 1999. The only other compensation paid to Mr. Sheehan
during 1999 consisted of (i) $26,923 representing previously unpaid salary for
Mr. Sheehan's service to the Company from February 26, 1998 to May 15, 1998,
(ii) $17,308 representing unpaid salary for vacation time accrued but unused by
Mr. Sheehan, (iii) $152,308 in severance payments made pursuant to the
Employment Termination and Release Agreement between the Company and Mr.
Sheehan, and (iv) customary benefits and perquisites.
The Board of Directors believes that the overall compensation packages
provided to the Company's Chief Executive Officer have been at the lower end of
the range for similar positions in the motor vehicle and equipment towing,
recovery and transport service industry and similar industries. However, stock
option grants provide a mechanism for the Chief Executive Officer, along with
other senior executive officers of the Company, to benefit directly from strong
management performance. Thus, a substantial portion of the Chief Executive
Officer's total compensation is tied directly to the creation of stockholder
value.
DEDUCTIBILITY OF COMPENSATION IN EXCESS OF $1 MILLION PER YEAR
Under Section 162(m) of the Internal Revenue Code, no deduction is
allowed in any taxable year of the Company for compensation in excess of $1
million paid to the Company's
21
chief executive officer and each of its four most highly paid other executive
officers who are serving in such capacities as of the last day of such taxable
year, subject to certain exceptions. Options will generally qualify under one of
these exceptions if they are granted under a plan that states the maximum number
of shares with respect to which options may be granted to any employee during a
specified period, the exercise price is not less than the fair market value of
the underlying common stock at the time of grant, and the plan under which the
options are granted is approved by the company's stockholders and is
administered by a compensation committee comprised solely of outside directors.
In July 2000, the stockholders of the Company approved certain
amendments to the Company's 1998 Stock Option Plan that are required in order to
qualify options granted under the plan to covered executive officers as
performance-based compensation for purposes of the exception to the deduction
limit contained in Section 162(m) of the Code. The Company generally intends to
comply with the requirements of Section 162(m); however, it also intends to
weigh the burdens of such compliance against the benefits to be obtained by the
Company and its stockholders, and may pay compensation that is not fully
deductible if it determines that such payments are in the Company's and the
stockholders' best interests.
This Report on Executive Compensation shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended (the "Securities Act") or the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), and shall not otherwise be deemed filed under such
Acts.
Respectfully Submitted By:
THE BOARD OF DIRECTORS
Michael G. Psaros
Robert L. Berner, III
Eugene J. Keilin
Edward W. Morawski
Raquel V. Palmer
Michael S. Pfeffer
Stephen P. Presser
Brian J. Riley
Gerald R. Riordan
David P. Shapiro
Todd Q. Smart
22
AUDIT COMMITTEE REPORT
The following is a report of the Audit Committee describing the
Committee's discussions with the Company's independent auditors and the
Committee's review of the Company's audited financial statements.
Management of the Company is responsible for the Company's internal
controls and the financial reporting process. The Company's independent auditors
are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted auditing
standards and for issuing a report thereon. The Audit Committee's responsibility
is to monitor and oversee these processes.
In this context, the Audit Committee has met and held discussions with
management and the Company's independent auditors. Management has represented to
the Committee that the Company's consolidated financial statements were prepared
in accordance with generally accepted accounting principles, and the Committee
has reviewed and discussed the consolidated financial statements with management
and the independent auditors. The Committee also discussed with the independent
auditors matters required to be discussed by Statement on Auditing Standards No.
61 (Communication with Audit Committees).
The Company's independent auditors also provided to the Committee the
written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the
Committee discussed with the independent auditors that firm's independence.
Based on the Committee's discussions with management and the
independent auditors and the Committee's review of the representations of
management and the report of the independent auditors to the Committee, the
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999 filed with the Securities and Exchange
Commission.
This report by the Audit Committee shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act or the Exchange
Act, and shall not otherwise be deemed filed under such Acts.
Respectfully Submitted By:
THE AUDIT COMMITTEE
Robert L. Berner, III
Michael J. Pfeffer
23
Todd Q. Smart
24
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of December 31, 1999, the Compensation Committee of the Board of
Directors consisted of Ms. Hawkins and Messrs. Molyneux and Henninger. Mr.
Henninger was appointed to the Compensation Committee after the resignation of
Donald J. Moorehead, Jr. from the Board of Directors as of September 30, 1999.
No member of the Compensation Committee was an officer or employee of the
Company or its subsidiaries during 1999. Neither Mr. Molyneux nor Ms. Hawkins
was an officer of the Company or its subsidiaries at any time prior to 1999. Mr.
Henninger was an officer of one of the Company's subsidiaries prior to its
acquisition by the Company in May 1998. During 1999, none of the Named Executive
Officers served as a director or member of the Compensation Committee of another
entity, one of whose executive officers served as a director or member of the
Compensation Committee of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Company's acquisition of Northland, the
Company entered into an employment agreement with Mr. Morawski pursuant to which
he serves as one of the Company's vice presidents. The agreement has a term of
three years expiring on May 5, 2001, and provides for an annual base salary of
$150,000. Mr. Morawski's employment agreement contains a covenant not to compete
for one year after termination of the agreement.
In June 1998, Mr. Smart was awarded a contract for police towing in a
police district in Los Angeles. Mr. Smart conducts these operations through a
business that he controls. The Company has the option, exercisable until May 1,
2001, to buy Mr. Smart's business. The purchase price under this option is equal
to 13 times the after-tax income of the business for the 12 month period prior
to the exercise of the option.
In January 1999, the Company paid approximately $5.4 million in cash
and issued approximately 50,835 shares of Common Stock to Michael A. Wysocki in
consideration of the Company's acquisition of MPG. In connection with this
acquisition, the Company entered into an employment agreement with Mr. Wysocki
pursuant to which he served as general manager of the Company's MPG division
from January 1999 until January 2000. Mr. Wysocki received a salary of $110,000
for his services under this agreement. Mr. Wysocki is the majority owner of
Translesco, Inc., a corporation from which the Company leases employees to
provide services to the Company's MPG division. During 1999, the Company paid
Translesco approximately $10.5 million in connection with the lease of such
employees. In January 2000, the Company entered into an employment agreement
with Mr. Wysocki pursuant to which Mr. Wysocki served as President of the
Company's Transport Business Unit at an annual salary of $150,000. In connection
with this employment agreement, the Company granted Mr. Wysocki options to
purchase 7,500 shares of Common Stock at an exercise price equal to the fair
market value of the Common Stock on the date of grant. The agreement also
provided that, upon a "change of control" of the Company (as defined in the
agreement), Mr. Wysocki was entitled to receive a change of control payment in
the amount of $150,000, plus accelerated vesting of all stock
25
options then held by him. In connection with the KPS Transaction, Mr. Wysocki
entered into a new agreement with the Company that was effective as of July 20,
2000 and has a term of three years. Under the new agreement, Mr. Wysocki is
entitled to a base salary of $200,000, subject to increase at the discretion of
the Compensation Committee, and an annual bonus not to exceed 100% of his base
salary, also subject to the discretion of the Compensation Committee. In lieu of
the change of control payment provided for under his old employment agreement,
upon closing of the KPS Transaction, Mr. Wysocki received a cash payment of
$75,000 and, as long as he remains employed by the Company, he will be entitled
to a stay bonus in the amount of $37,500 on each of July 20, 2001 and July 20,
2002. In lieu of the full acceleration of options provided for under Mr.
Wysocki's old employment agreement, upon closing of the KPS Transaction, and
pursuant to the new agreement, (i) unvested options to purchase 3,750 shares of
Common Stock held by Mr. Wysocki became fully vested and exercisable on July 20,
2000, and options to purchase an additional 3,750 shares of Common Stock held by
Mr. Wysocki expired, (ii) Mr. Wysocki was granted an option to purchase 3,750
shares of Common Stock at an exercise price equal to the fair market value of
the Common Stock on July 20, 2000, which option vests in equal installments over
a three-year period beginning on the first anniversary of the date of grant, and
(iii) Mr. Wysocki was granted an option to purchase 8,333 shares of Common Stock
at an exercise price of $6.12, which was equal to 1.5 times the Conversion Price
on July 20, 2000, and which option vests in full on July 20, 2001. Under the new
agreement and subject to Mr. Wysocki's continued employment, (i) on July 20,
2001, Mr. Wysocki will receive an option to purchase 8,333 shares of Common
Stock at an exercise price equal to 2.5 times the Conversion Price, which option
will vest in full on July 20, 2002, and (ii) on July 20, 2002, Mr. Wysocki will
receive an option to purchase 8,334 shares of Common Stock at an exercise price
equal to 3.5 times the Conversion Price, which option will vest in full on July
20, 2003.
In March 1999, the Company paid approximately $785,000 in cash and
issued approximately 8,194 shares of Common Stock to Harold W. Borhauer II and
his wife, Lynda A. Borhauer, in connection with the Company's acquisition of
Shamrock. In consideration for this acquisition, the Company entered into two
lease agreements with Mr. and Mrs. Borhauer pursuant to which the Company leases
property used to conduct the Shamrock business. Mr. and Mrs. Borhauer received
aggregate lease payments of $91,903 under these lease agreements in 1999. In
January 2000, the Company entered into an employment agreement with Mr. Borhauer
pursuant to which Mr. Borhauer served as President of the Company's Towing and
Recovery Business Unit at an annual salary of $125,000. In connection with this
agreement, the Company granted Mr. Borhauer options to purchase 6,000 shares of
Common Stock at an exercise price equal to the fair market value of the
Company's common stock on the date of grant. The agreement also provided that,
upon a "change of control" of the Company (as defined in the agreement), Mr.
Borhauer was entitled to receive a change of control payment in the amount of
$125,000, plus accelerated vesting of all stock options then held by him. In
connection with the KPS Transaction, Mr. Borhauer entered into a new agreement
with the Company that was effective as of July 20, 2000 and has a term of two
years. Under the new agreement, Mr. Borhauer is entitled to a base salary of
$160,000, subject to increase at the discretion of the
26
Compensation Committee, and an annual bonus not to exceed 100% of his base
salary, also subject to the discretion of the Compensation Committee. In lieu of
the change of control payment provided for under his old employment agreement,
upon closing of the KPS Transaction, Mr. Borhauer received a cash payment of
$62,500 and, as long as he remains employed by the Company, he will be entitled
to a stay bonus in the amount of $31,250 on each of July 20, 2001 and July 20,
2002. In lieu of the full acceleration of options provided for under Mr.
Borhauer's old employment agreement, upon closing of the KPS Transaction and
pursuant to the new agreement, (i) unvested options to purchase 3,000 shares of
Common Stock held by Mr. Borhauer became fully vested on July 20, 2000, and
options to purchase an additional 3,000 shares of Common Stock held by Mr.
Borhauer expired, (ii) Mr. Borhauer was granted an option to purchase 3,000
shares of Common Stock at an exercise price equal to the fair market value of
the Common Stock on July 20, 2000, which option will vest in equal installments
over a three-year period beginning on the first anniversary of the date of
grant, and (iii) Mr. Borhauer was granted an option to purchase 8,333 shares of
Common Stock at an exercise price of $6.12, which was equal to 1.5 times the
Conversion Price on July 20, 2000, and which option vests in full on July 20,
2001. Under the new agreement and subject to Mr. Borhauer's continued
employment, (i) on July 20, 2001, Mr. Borhauer will receive an option to
purchase 8,333 shares of Common Stock at an exercise price equal to 2.5 times
the Conversion Price, which option vests in full on July 20, 2002, and (ii) on
July 20, 2002, Mr. Borhauer will receive an option to purchase 8,334 shares of
Common Stock at an exercise price equal to 3.5 times the Conversion Price, which
option vests in full on July 20, 2003.
The Company has issued approximately $85.9 million aggregate principal
amount of its 8% Convertible Subordinated Debentures due 2008 (the "Debentures")
to Charterhouse pursuant to the Purchase Agreement between the Company and
Charterhouse dated as of November 18, 1998, as amended and restated as of April
14, 2000 and as further amended as of May 26, 2000. The Debentures bear interest
at a rate of 8% annually, payable in kind in the form of additional Debentures
for the first five years following the closing of the KPS Transaction, and
thereafter in kind or in cash, at the Company's option. Charterhouse Equity
Partners III, L.P., a Delaware limited partnership ("CEP III"), is the principal
member of Charterhouse. The general partner of CEP III is CHUSA Equity Investors
III, L.P., whose general partner is Charterhouse Equity III, Inc., a
wholly-owned subsidiary of Charterhouse International. Mr. Berner serves as
Managing Director of Charterhouse International. Mr. Pfeffer serves as Senior
Vice President of Charterhouse International.
In connection with the KPS Transaction, the Company agreed to pay KPS
Management a transaction fee in the amount of $2.5 million, $1.25 million of
which was paid at closing of the KPS Transaction and the balance of which the
Company is required to pay upon the request of KPS Management. In addition, in
accordance with the terms of the stock purchase agreement relating to the KPS
Transaction, the Company is required to pay KPS Management an annual management
fee of (a) $1 million, payable quarterly, for so long as holders of the Series A
Preferred Stock have the right under the KPS Investors' Agreement or the
Certificate of Designations to elect a majority of the Company's directors, or
(b) $500,000, payable quarterly,
27
for so long as holders of the Series A Preferred Stock have the right under the
KPS Investors' Agreement or the Certificate of Designations to elect at least
three of the Company's directors. Messrs. Shapiro, Keilin and Psaros
beneficially own, in the aggregate, approximately 90% of KPS Management
indirectly through other KPS affiliated entities.
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock as of October 5, 2000 by (i) each stockholder known by the Company to be
the beneficial owner of more than 5% of the outstanding shares of Common Stock,
(ii) each director, (iii) each named executive officer (as defined in Item
402(a)(3) of Regulation S-K under the Exchange Act) and two other current
executive officers, and (iv) all current directors and executive officers as a
group. Unless otherwise indicated, each such person (alone or with family
members) has sole voting and dispositive power with respect to the shares listed
opposite such person's name. Except as otherwise indicated, the address of each
such person is c/o United Road Services, Inc., 17 Computer Drive West, Albany,
New York 12205.
NUMBER OF
BENEFICIALLY-OWNED PERCENT OF
NAME SHARES CLASS(1)
- ---- ------ --------
Gerald R. Riordan 40,577(2) 1.9%
Edward W. Morawski 69,227 3.3
Todd Q. Smart 34,511(3) 1.6
Robert L. Berner, III(4) -- --
Michael S. Pfeffer(4) -- --
Eugene J. Keilin(5) -- --
Michael G. Psaros(5) -- --
David Shapiro(5) -- --
Stephen Presser(5) -- --
Brian Riley(5) -- --
Raquel Palmer(5) -- --
Donald J. Marr(6) 17,500(7) *
Michael A. Wysocki 90,426(8) 4.5
Harold W. Borhauer II 17,194(9) *
Edward T. Sheehan(10) 77,523(11) 3.7
28
NUMBER OF
BENEFICIALLY-OWNED PERCENT OF
NAME SHARES CLASS(1)
- ---- ------ --------
Allan D. Pass, Ph.D(12) 10,334(7) *
Robert J. Adams, Jr.(13) 7,334(7) *
John David Floyd(14) 130,004(15) 6.2
Blue Truck Acquisition, LLC 6,213,437(16) 75.0
Charter URS LLC 756,264(17) 28.3
CFE, Inc. 497,075 (18) 19.3
All current directors and executive
officers as a group (13 persons) 273,185(19) 11.7
- ------------------------
* Less than one percent.
(1) The applicable percentage of ownership is based upon 2,096,516 shares
of Common Stock outstanding as of October 5, 2000.
(2) Includes 37,500 shares issuable pursuant to options exercisable within
60 days.
(3) Includes 4,250 shares issuable pursuant to options exercisable within
60 days.
(4) The address of this director is c/o Charterhouse Group International,
Inc., 535 Madison Avenue, New York, NY 10022.
(5) The address of this director is c/o KPS Special Situations Fund, L.P.,
200 Park Avenue, 58th Floor, New York, NY 10166.
(6) The address of this stockholder is 5B Saratoga Court, Albany, NY 12110.
(7) Consists entirely of shares issuable pursuant to options exercisable
within 60 days.
(8) Includes 3,750 shares issuable pursuant to options exercisable within
60 days and 14,841 shares held by Translesco, Inc., of which Mr.
Wysocki is the majority owner.
(9) Includes 3,000 shares issuable pursuant to options exercisable within
60 days.
(10) The address of this stockholder is 6 East Ridge Road, Loudonville, NY
12211.
(11) Includes 1,123 shares held by children of Mr. Sheehan. Mr. Sheehan
disclaims beneficial ownership of such shares. Also includes 70,400
shares held of record by the Edward T. Sheehan 1992 Revocable Trust
and 6,000 shares issuable pursuant to options exercisable within 60
days.
29
(12) The address of this stockholder is 10775 Babcock Blvd., Gibsonia, PA
15044.
(13) The address of this stockholder is 885 Beaverbrook Drive, Atlanta, GA
30318.
(14) The address of this stockholder is 219 Granite Court, Boulder City, NV
89005.
(15) Includes 633 shares issuable pursuant to options exercisable within 60
days.
(16) Consists entirely of shares issuable upon conversion of the Company's
Series A Preferred Stock (including dividends accumulated thereon as of
the Record Date) held by Blue Truck. According to a Schedule 13D dated
as of July 28, 2000, KPS is the controlling member of Blue Truck. The
general partner of KPS is KPS Investors, LLC, a Delaware limited
liability company ("KPS Investors"). KPS has shared voting and
dispositive power over the shares held of record by Blue Truck and may
be deemed to beneficially own those shares. Mr. Psaros is the President
of Blue Truck, a Principal of KPS and a member and manager of KPS
Investors. Mr. Keilin is a Vice President of Blue Truck, a Principal of
KPS and a member and manager of KPS Investors. Mr. Shapiro is the
Treasurer of Blue Truck, a Principal of KPS and a member and manager of
KPS Investors. Each of KPS Investors and Messrs. Psaros, Keilin and
Shapiro disclaim beneficial ownership with respect to the shares held
of record by Blue Truck. The address of Blue Truck is c/o KPS Special
Situations Fund, L.P., 200 Park Avenue, 58th Floor, New York, NY 10166.
(17) Includes 572,342 shares issuable upon conversion of the Debentures
held by Charterhouse. According to a Schedule 13D, dated as of December
7, 1998 and amended as of March 16, 1999, Charterhouse Equity Partners
III, L.P., a Delaware limited partnership ("CEP III"), is the principal
member of Charterhouse. The general partner of CEP III is CHUSA Equity
Investors III, L.P., whose general partner is Charterhouse Equity III,
Inc., a wholly-owned subsidiary of Charterhouse International. Each of
Charterhouse and CEP III has shared voting and dispositive power over
the shares held of record by Charterhouse and may be deemed to
beneficially own these shares. Mr. Berner serves as Managing Director
of Charterhouse International and Mr. Pfeffer serves as Senior Vice
President of Charterhouse International. Messrs. Berner and Pfeffer
disclaim beneficial ownership with respect to the shares held of record
by Charterhouse. The address of Charterhouse is c/o Charterhouse Group
International, Inc., 535 Madison Avenue, New York, NY 10022.
(18) Consists entirely of shares issuable upon conversion of the Company's
Series A Preferred Stock (including dividends accumulated thereon as of
the Record Date) held by CFE, Inc., a Delaware corporation ("CFE").
According to a Schedule 13D dated as of July 28, 2000, CFE is a
wholly-owned subsidiary of General Electric Capital Corporation, a New
York corporation ("GE Capital"), which is a wholly-owned subsidiary of
General Electric Capital Services, Inc., a Delaware corporation
("GECS"), which, in turn, is a wholly owned subsidiary of General
Electric Company, a New York corporation ("GE"). Each of GE Capital,
GECS and GE disclaims beneficial ownership of the shares held by CFE.
The address of CFE is 201 High Ridge Road, Stamford, CT 06927.
(19) Includes 48,500 shares issuable pursuant to options exercisable within
60 days.
30
COMMON STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's
cumulative total shareholder return on its Common Stock for the period during
which the Common Stock has been registered under Section 12 of the Exchange Act
against the cumulative total return of the Nasdaq Total Return (U.S.) Index (the
"Nasdaq Index") and the cumulative total return of the Nasdaq Transportation
Index(1) (the "Transportation Index") for the same period. The graph assumes an
investment of $100 on May 1, 1998(2) in the Common Stock and in the stocks
comprising the Nasdaq Index and the Transportation Index, and assumes
reinvestment of dividends, if any.
[GRAPH OMITTED]
- ------------------------
(1) The Transportation Index includes more than 100 railroads, trucking
companies, airlines, pipelines (except natural gas) and services such
as warehousing and travel arrangements.
(2) The Company's Common Stock began trading on the Nasdaq National Market
on May 1, 1998. Prior to May 1, 1998, the Common Stock was not publicly
traded. Comparative data is presented for the period beginning on May
1, 1998 and ending on December 31, 1999.
May 1, 1998 December 31, 1998 December 31, 1999
----------- ----------------- -----------------
United Road Services, Inc. 100 141 13
Nasdaq Index 100 119 221
Transportation Index 100 81 82
31
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Company's directors
and executive officers, and persons who own more than ten percent of the
Company's Common Stock, file with the SEC initial reports of ownership and
reports of changes in ownership of the Common Stock and other equity securities
of the Company. Officers, directors and greater than ten percent stockholders
are also required by SEC regulations to furnish the Company with copies of all
Section 16(a) reports that they file with the SEC.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and representations that no other reports
were required, during the fiscal year ended December 31, 1999, all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with, except that Mr. Riordan was late
in filing a Form 3 in connection with his commencement of employment with the
Company.
AUDITORS
KPMG LLP has been selected as the Company's independent auditors for
the 2000 fiscal year. KPMG LLP has acted as principal accountant to the Company
since the Company's inception. Representatives of KPMG LLP will be present at
the Annual Meeting and will have the opportunity to make a statement if they
desire to do so. They also will be available to respond to appropriate questions
of the stockholders.
PROPOSALS OF SECURITY HOLDERS
A stockholder proposal relating to the Company's Annual Meeting of
Stockholders to be held in 2001 must be received at the Company's executive
offices no later than June 26, 2001 for evaluation as to inclusion in the proxy
statement in connection with such meeting, unless such meeting is held more than
30 days before or after November 17, 2001 in which case the deadline for the
receipt of such proposals will be a reasonable time prior to the date the
Company prints and mails its proxy materials for such meeting.
Under the Company's Amended and Restated Bylaws, in order for a
stockholder to propose business (including to nominate a candidate for director)
to be considered at an annual meeting of stockholders, timely written notice of
such business must be given to the Company's Secretary. To be timely with
respect to the Company's Annual Meeting of Stockholders to be held in 2001, such
notice must be received at the principal executive offices of the Company
between August 19 and September 18, 2001 (except in the event that the date of
such annual meeting is prior to October 18, 2001 or after January 22, 2002, in
which event a stockholder's notice must be so delivered not earlier than the
90th day prior to the date of the annual meeting and not later than the 60th day
prior to such date or the 10th day following the day on which public
announcement of the date of such meeting is first made by the Company). Such
notice
32
must provide certain information as specified in the By-Laws regarding the
stockholder giving the notice and the nature of the business to be proposed or
the candidate to be nominated. Such notice is separate from and in addition to
the requirements a stockholder must meet to have a proposal included in the
Company's proxy statement.
OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING
The Board of Directors does not intend to present any business at the
Annual Meeting other than the matters specifically set forth in this proxy
statement, and knows of no other business scheduled to come before the Annual
Meeting. However, if any other matters are properly presented to the Annual
Meeting or any adjournment thereof, the persons named in the proxies will vote
upon them in accordance with their best judgment.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE SIGN THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors
/s/ Gerald R. Riordan
Gerald R. Riordan
Chief Executive Officer
Date: October 23, 2000
33
APPENDIX A
AUDIT COMMITTEE CHARTER
UNITED ROAD SERVICES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OPERATING CHARTER
-----------------
The Board of Directors of United Road Services, Inc. has appointed an Audit
Committee pursuant to authorization by the Company's bylaws. The objectives,
composition and responsibilities of the Audit Committee are as follows:
OBJECTIVES
- ----------
o The primary objective of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibility relating to the
Company's internal controls and financial reporting practices. In
addition, the Committee will maintain open lines of communication
between the Board, management, internal auditor(s) and the Company's
independent accountants on these matters.
COMPOSITION
- -----------
o The Audit Committee shall be comprised of three or more Directors, each
of whom shall have been determined by the Board to qualify as an
"independent director" as defined in Sections 303.01(B)(2)(a) and (3)
of the New York Stock Exchange's listing standards (including the
instructions thereto), Section 121(A) of the American Stock Exchange's
listing standards or Rule 4200(a)(15) of the National Association of
Securities Dealers listing standards. All members of the Committee
shall have a working familiarity with basic finance and accounting
practices and shall be able to read and understand fundamental
financial statements, including a company's balance sheet, income
statement and cash flow statement. At least one member of the Committee
shall have past employment experience in finance or accounting, the
requisite professional certification in accounting or other comparable
experience or background that results in his or her financial
sophistication, including having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.
o The members of the Committee shall be elected, from time to time, by
the Board and shall hold office until their successors shall be duly
elected and qualified or their earlier
A-1
resignation or removal. Unless a Chair is elected by the full Board,
the members of the Committee may designate a Chair by majority vote of
the full Committee membership.
RESPONSIBILITIES
- ----------------
o The Committee shall meet a minimum of two times per year and hold
special meetings as circumstances require. In addition, the Committee
shall meet privately with the Company's independent accountants to
review their findings and recommendations.
o The Committee shall report its activities to the full Board of
Directors on a regular basis.
o The Committee shall recommend to the Board of Directors the selection
of the independent accountants to audit the financial statements of the
Company, considering independence and effectiveness, and approve the
fees and other compensation to be paid to the independent accountants.
On an annual basis, the Committee shall ensure that it has received
from the independent accountants a formal, written statement
delineating all relationships between the accountants and the Company,
consistent with Independent Standards Board Standard 1, and shall
review and discuss with the accountants any disclosed relationships or
services that may impact the objectivity and independence of the
accountants and take, or recommend that the full Board take,
appropriate action to oversee the independence of the outside
accountants. The independent accountants shall be ultimately
accountable to the Board of Directors and the Committee, as
representatives of the stockholders, and the Board of Directors and the
Committee shall have ultimate authority and responsibility to select,
evaluate, and, where appropriate, replace the independent accountants.
o The Committee shall review, annually, the audit plan of the Company's
independent accountants.
o The Committee shall monitor the adequacy of the Company's internal
controls by reviewing audit recommendations and management's response
to actions to correct the identified deficiencies.
o The Committee shall review the Company's significant accounting
principles and policies and any changes thereto.
o The Committee shall review and assess the adequacy of this Operating
Charter on an annual basis.
o The Committee shall review the Company's annual audited financial
statements and discuss such financial statements with management, and
based upon such review and the discussions with management and the
independent accountants referred to above, the Committee shall
recommend to the Board of Directors whether or not the annual audited
A-2
financial statements of the Company shall be included in the Company's
Annual Report on Form 10-K for the relevant fiscal year.
A-3
- --------------------------------------------------------------------------------
COMMON STOCKHOLDERS' PROXY CARD
UNITED ROAD SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 17, 2000
The undersigned hereby appoints Gerald R. Riordan and Michael T. Moscinski (the
"Proxies), and each of them, attorneys and proxies of the undersigned, each with
power of substitution and resubstitution, to attend, vote and act for the
undersigned at the Annual Meeting of Stockholders (the "Meeting") of United Road
Services, Inc. (the "Company") to be held on November 17, 2000, at 10:00 a.m.
Eastern Time at the offices of KPS Special Situations Fund, L.P., 200 Park
Avenue, 58th Floor, New York, New York. The Proxies shall cast votes according
to the number of shares of the Company which the undersigned may be entitled to
vote with respect to the proposal set forth on the reverse, in accordance with
the specification indicated, if any, and shall have all the powers which the
undersigned would possess if personally present. The undersigned hereby revokes
any prior proxy to vote at the Meeting, and hereby ratifies and confirms all
that said Proxies, or any of them, may lawfully do by virtue hereof or thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
- --------------------------------------------------------------------------------
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
UNITED ROAD SERVICES, INC.
NOVEMBER 17, 2000
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A |X| PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR the nominee WITHHOLD
listed as right (except AUTHORITY
as directed to the to vote for the nominee
contrary below) listed at right
1. ELECTIONS OF |_| |_| NOMINEE:
DIRECTOR. Robert L. Berner, III
One Class II
director is to
be elected by the holders of the
Company's common stock, par value If any other matters properly
$.01 per share, to serve until the come before the Meeting or any
Company's annual meeting in 2003. adjournment thereof, this
proxy will be voted according
to the judgment of the persons
named on the reverse side as
Proxies.
INSTRUCTIONS: TO WITHHOLD VOTE FOR ANY
INDIVIDUAL NOMINEE(S) WRITE THAT THIS PROXY WILL BE VOTED AS
NOMINEE'S NAME ON THE SPACE PROVIDED SPECIFIED AT LEFT WITH RESPECT
BELOW. TO THE ACTIONS TO BE TAKEN ON
THE PROPOSAL. IN THE ABSENCE
- --------------------------------------- OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED FOR THE
NOMINEES SPECIFIED AT LEFT.
THE UNDERSIGNED HEREBY
ACKNOWLEDGES RCEIPT OF THE
NOTICE OF ANNUAL MEETING OF
STOCKHOLDER SOF THE COMPANY
AND THE PROXY STATEMENT DATED
OCTOBER 23, 2000.
THIS PROXY IS SOLICITED AND
THE MATTERS HEREIN PROPOSED BY
THE BOARD OF DIRECTORS OF THE
COMPANY, WHICH UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR
THE NOMINEES SPECIFIED AT
LEFT.
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD
PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
Signature_________________ Signature_____________________ Dated:______________
IF HELD JOINTLY
NOTE: For shares held jointly, each joint owner shall personally sign. If
signing as executor, or in any other representative capacity, or as an
officer of a corporation, please indicate your full title as such.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SERIES A PARTICIPATING CONVERTIBLE PREFERRED
STOCKHOLDERS' PROXY CARD
UNITED ROAD SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 17, 2000
The undersigned hereby appoints Gerald R. Riordan and Michael T. Moscinski
(the "Proxies), and each of them, attorneys and proxies of the undersigned, each
with power of substitution and resubstitution, to attend, vote and act for the
undersigned at the Annual Meeting of Stockholders (the "Meeting") of United Road
Services, Inc. (the "Company") to be held on November 17, 2000, at 10:00 a.m.
Eastern Time at the offices of KPS Special Situations Fund, L.P., 200 Park
Avenue, 58th Floor, New York, New York. The Proxies shall cast votes according
to the number of shares of the Company which the undersigned may be entitled to
vote with respect to the proposal set forth on the reverse, in accordance with
the specification indicated, if any, and shall have all the powers which the
undersigned would possess if personally present. The undersigned hereby revokes
any prior proxy to vote at the Meeting, and hereby ratifies and confirms all
that said Proxies, or any of them, may lawfully do by virtue hereof or thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
- --------------------------------------------------------------------------------
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
UNITED ROAD SERVICES, INC.
NOVEMBER 17, 2000
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A |X| PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR the nominee WITHHOLD
listed as right (except AUTHORITY
as directed to the to vote for the nominee
contrary below) listed at right
1. ELECTIONS OF |_| |_| NOMINEE:
DIRECTOR. Two David P. Shapiro
Class II Raquel V. Palmer
directors are to
be elected by the holders of the
Company's Series A Participating If any other matters properly
Convertible Preferred Stock, par value come before the Meeting or any
$.001 per share until the Company's adjournment thereof, this
annual meeting in 2003. proxy will be voted according
to the judgment of the persons
named on the reverse side as
Proxies.
INSTRUCTIONS: TO WITHHOLD VOTE FOR ANY
INDIVIDUAL NOMINEE(S) WRITE THAT THIS PROXY WILL BE VOTED AS
NOMINEE'S NAME ON THE SPACE PROVIDED SPECIFIED AT LEFT WITH RESPECT
BELOW. TO THE ACTIONS TO BE TAKEN ON
THE PROPOSAL. IN THE ABSENCE
- --------------------------------------- OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED FOR THE
NOMINEES SPECIFIED AT LEFT.
THE UNDERSIGNED HEREBY
ACKNOWLEDGES RCEIPT OF THE
NOTICE OF ANNUAL MEETING OF
STOCKHOLDER SOF THE COMPANY
AND THE PROXY STATEMENT DATED
OCTOBER 23, 2000.
THIS PROXY IS SOLICITED AND
THE MATTERS HEREIN PROPOSED BY
THE BOARD OF DIRECTORS OF THE
COMPANY, WHICH UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR
THE NOMINEES SPECIFIED AT
LEFT.
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD
PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
Signature_________________ Signature_____________________ Dated:______________
IF HELD JOINTLY
NOTE: For shares held jointly, each joint owner shall personally sign. If
signing as executor, or in any other representative capacity, or as an
officer of a corporation, please indicate your full title as such.
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