Securities and Exchange Commission
Washington, D.C. 20549
SCHEDULE 14A
SCHEDULE 14A INFORMATION
INFORMATION REQUIRED IN PROXY STATEMENT
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 computed pursuant to Exchange
Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how
it was determined):
(4) Proposed maximum aggregate value of
transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify
the filing for which the offsetting fee was paid
previously. Identify the previous filing by
registration statement number, or the Form or Schedule
and the date of its filing:
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
UNITED ROAD SERVICES, INC.
17 COMPUTER DRIVE WEST
ALBANY, NEW YORK 12205
November 6, 2001
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 29, 2001, 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 four Class III 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
matters to be addressed at the Annual Meeting. 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 29, 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 29, 2001, beginning
at 10:00 a.m., Eastern Time, for the following purposes:
1. To elect four Class III 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 19,
2001 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
November 6, 2001
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 29, 2001
------------------
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 29,
2001 (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 four Class III 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 November 7, 2001.
The Annual Report to Stockholders for the fiscal year 2000 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 any
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. With respect to
any such matters, 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 (including dividends accumulated thereon as of October 19, 2001)
convertible into approximately 6,638,968 shares of Common Stock, which
represents approximately 71.7% 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 any matters to come
before the Annual Meeting other than the election of directors.
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 to come before the Annual Meeting, 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 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.
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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 19, 2001, 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 2,102,197 shares of its Common Stock
and 662,119 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.
3
REVERSE STOCK SPLIT
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 ("CFE") and an affiliate of General Electric
Capital Corporation ("GE Capital"), 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 W. 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 (including dividends accumulated thereon as of October 19, 2001)
convertible into approximately 71.7% 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 at the closing of the KPS
Transaction and the remainder of which was paid on October 31, 2000. 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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RECENT EVENTS
On May 3, 2001, Robert L. Berner, III resigned as a director of the
Company. On May 14, 2001, the Board of Directors appointed Joseph S. Rhodes, the
designee of Charter URS, LLC ("Charterhouse") pursuant to the Amended and
Restated Investors' Agreement between the Company and Charterhouse (the
"Charterhouse Investors' Agreement"), as a Class II director to fill the vacancy
resulting from Mr. Berner's resignation.
On June 1, 2001, Michael S. Pfeffer resigned as a director of the
Company. On June 26, 2001, the Board of Directors appointed A. Lawrence Fagan,
the designee of Charterhouse pursuant to the Charterhouse Investors' Agreement,
as a Class I director to fill the vacancy resulting from Mr. Pfeffer's
resignation.
On June 18, 2001, Todd Q. Smart resigned as a director of the Company.
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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, the availability of capital to fund the Company's operations,
including expenditures for new and replacement equipment, risks related to the
Company's limited operating history and its ability to integrate acquired
companies, risks related to the Company's ability to successfully improve the
profitability of its acquired businesses, 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 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,
risks related to the adequacy of the Company's insurance, changes in the general
level of demand for towing, recovery and transport services, price changes in
response to competitive factors, risks related to fuel, insurance, labor and
other operating costs, risks related to the over-the-counter trading of the
Company's Common Stock, seasonal and other event driven variations in the demand
for towing, recovery and transport services, general economic conditions, and
other risk factors described from time to time in the Company's reports filed
with the Securities and Exchange Commission (the "Risk Factors"). 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 Securities and Exchange 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.
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors constituting
the entire Board at eleven. There are currently ten persons serving on the
Board, with one vacancy. 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
The following is the current composition of the Board of Directors:
Director Class
-------- -----
Michael G. Psaros I
Gerald R. Riordan I
Stephen W. Presser I
A. Lawrence Fagan I
David P. Shapiro II
Raquel V. Palmer II
Joseph S. Rhodes II
Eugene J. Keilin III
Brian J. Riley III
Edward W. Morawski III
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 the Board, provided that, as long as Charterhouse is
entitled to nominate member(s) of the Board of Directors pursuant to 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, four Class III directors are to be elected to
serve until the Company's annual meeting of stockholders in 2004 or until their
successors are elected and qualified, and the remaining seven directors will
continue to serve in accordance with their prior election or appointment. Of the
Class III 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 served
on the Board prior to the KPS Transaction. 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 III directors at the Annual
Meeting. The Majority Holders have designated Eugene J. Keilin and Brian J.
Riley as their Class III nominees for election at the Annual Meeting. The
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holders of Common Stock have the right to elect two Class III directors at the
Annual Meeting. The Independent Committee of the Board has nominated Edward W.
Morawski and Kenneth K. Fisher as the Class III nominees for election by the
holders of Common Stock at the Annual Meeting.
Thus, the four nominees for election to the Board of Directors at the
Annual Meeting are Mr. Keilin, Mr. Riley, Mr. Morawski and Mr. Fisher. The
shares of Series A Preferred Stock are entitled to vote only for the election of
Mr. Keilin and Mr. Riley and the shares of Common Stock are entitled to vote
only for the election of Mr. Morawski and Mr. Fisher.
The persons named on the enclosed proxy card will vote the shares
represented thereby for the election of the Board's nominees 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. KEILIN AND MR. RILEY AND THAT
THE HOLDERS OF COMMON STOCK VOTE FOR MR. MORAWSKI AND MR. FISHER.
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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 III NOMINEES FOR ELECTION WITH TERMS EXPIRING IN 2004
Edward W. Morawski, Age 52, 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, and served as the
President of Northland from inception until its
acquisition by the Company in May 1998.
Kenneth K. Fisher, Age 48, (1) Mr. Fisher has been an attorney in private practice
since 1978, concentrating in the areas of health care,
insurance, labor and employment and real estate
litigation. Since 1991, Mr. Fisher has been a member
of the New York City Council representing the 33rd
District (Brooklyn). Mr. Fisher is a member of the
Advisory Board of Matrix Health Services, a
privately-held healthcare services and technology
company, and serves as corporate secretary and special
counsel to Group Council Mutual Insurance Company, a
private professional liability property and casualty
company.
Eugene J. Keilin, Age 58, July 2000 Mr. Keilin founded Keilin & Co. LLC ("K&Co."), an
investment banking firm specializing providing
financial advisory services in connection with mergers,
acquisitions, restructurings and turnaround
transactions, in 1990. He co-founded KPS, a private
equity fund focused on constructive investing in
restructurings, turnarounds and other special
situations, 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 Paper Products,
9
Inc. ("Blue Ridge"), a privately-held manufacturer of
envelope grade paper and board using liquid packaging.
Mr. Keilin also serves on the Boards of Directors of
the following privately-held companies: Blue Heron
Paper Company ("Blue Heron"), a manufacturer of
newsprint and groundwood paper products, DeVlieg
Bullard II, Inc. ("DeVlieg Bullard"), a machine tool
manufacturer and Curtis Papers, Inc. ("Curtis"), a
producer of specialty and premium papers. Prior to
founding K&Co., Mr. Keilin was a General Partner of
Lazard Freres & Co.
Brian J. Riley, Age 31, 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 52, 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 a
consultant/entrepreneur engaged in private investment
opportunities. 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 1993 to 1996, Mr. Riordan served as
President of Ryder Consumer Truck Rental, and obtained
the additional responsibility of President of Ryder
Student Transportation Services in 1995, holding both
positions until October 1996.
A. Lawrence Fagan, Age 71, June 2001 Mr. Fagan joined Charterhouse Group International,
Inc., a private equity investment firm ("Charterhouse
International"), in 1983 and currently serves as its
Vice Chairman. Mr. Fagan served as President and Chief
10
Operating Officer of Charterhouse International from
December 1996 until June 2001. Prior to joining
Charterhouse International, Mr. Fagan had over 25 years
of experience in corporate and investment banking
positions. He is a director of Cross Country, Inc., a
healthcare staffing services provider, Top Image
Systems, Ltd., a developer of automated information
collection, processing and recognition systems, and
numerous privately-held companies.
Michael G. Psaros, Age 34, July 2000 Mr. Psaros is the Chairman of the Board of Directors of
the Company. He co-founded KPS in 1998, and is
currently a Managing Principal of KPS and of K&Co. Mr.
Psaros joined K&Co. in 1991. Mr. Psaros serves on the
Boards of Directors of Blue Ridge, Blue Heron, DeVlieg
Bullard, Curtis and Golden Northwest Aluminum Corp., a
privately-held producer of primary and extruded
aluminum products. Prior to joining K&Co., Mr. Psaros
was an investment banker with Bear, Stearns & Co., Inc.
Stephen W. Presser, Age 41, 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.
CLASS II DIRECTORS WITH TERMS EXPIRING IN 2003
Joseph S. Rhodes, Age 31, May 2001 Mr. Rhodes joined Charterhouse International in 1997
and currently serves as a Vice President. From 1995 to
1997, Mr. Rhodes was employed in the Mergers &
Acquisitions Group of the Union Bank of Switzerland.
David P. Shapiro, Age 39, July 2000 Mr. Shapiro co-founded KPS and is currently a Managing
Principal of KPS and of K&Co. Mr. Shapiro joined K&Co.
in 1991. Mr. Shapiro is Chairman of the Board of
Directors of Blue Heron, and serves on the Boards of
Directors of Blue Ridge, DeVlieg Bullard and Curtis.
11
Prior to joining K&Co., Mr. Shapiro was an investment
banker at Drexel Burnham Lambert Incorporated and Dean
Witter Reynolds, Inc.
Raquel V. Palmer, Age 28, 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.
---------------------
(1) Mr. Fisher is being nominated to fill the vacancy resulting from the resignation of Todd Q. Smart from the Board.
Messrs. Fagan and Rhodes 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
------------ ------------------------------------------
Patrick J. Fodale, Age 39 Mr. Fodale has served as Vice President and Chief
Financial Officer of the Company since April 2001.
Between December 1999 and March 2001, Mr. Fodale was
the Vice President and Chief Financial Officer of
Global Technologies, Ltd., a technology incubator
investing in emerging growth companies. Prior to his
employment by Global, Mr. Fodale was a workout
specialist recruited by companies in or contemplating
bankruptcy under Chapter 11 of the U.S. Bankruptcy
Code. He served as Chief Financial Officer of
Homeplace, Inc., a housewares retailer, from March 1998
to September 1999 and as Chief Financial Officer of
12
Color Tile, Inc., a specialty retailer of floor
covering products, from November 1995 to February
1998. From 1985 to October 1995, Mr. Fodale was a
member of the corporate restructuring group of Arthur
Andersen, LLC.
Michael A. Wysocki, Age 47 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. 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 52 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.
13
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 significant accounting principles and policies
and changes thereto, (iv) periodically reviewing the Company's principal
internal financial controls and (v) recommending to the Board of Directors
whether or not the annual audited financial statements of the Company shall be
included in the Company's Annual Report on Form 10-K For the relevant fiscal
year. The Board of Directors has adopted a written charter for the Audit
Committee, which is attached as Appendix A to the Company's Proxy Statement with
respect to its Annual Meeting of Stockholders held November 17, 2000.
The Audit Committee held two meetings during the fiscal year ended
December 31, 2000 and acted from time to time by written consent. The members of
the Audit Committee in 2000 prior to the KPS Transaction were Richard A.
Molyneux, Michael S. Pfeffer and Todd Q. Smart. The members of the Audit
Committee in 2000 following the KPS Transaction were Robert L. Berner, III, and
Messrs. Pfeffer and Smart. Upon Mr. Berner's resignation from the Board of
Directors, Joseph S. Rhodes was appointed as a member of the Audit Committee.
Mr. Rhodes is currently the only member of the Audit Committee.
Mr. Rhodes is an employee of Charterhouse International, which is
affiliated with Charterhouse. Due to Charterhouse's ownership of approximately
$92.9 million aggregate principal amount of the Company's 8% Convertible
Subordinated Debentures, and its receipt of a fee consisting of 183,992 shares
of the Company's Common Stock in July 2000, Mr. Rhodes may be deemed to have a
"business relationship" with the Company as defined in Section 303.01(B)(3)(b)
of the listing standards of the New York Stock Exchange (the "NYSE"). See
"Certain Relationships and Related Transactions." Under Section 303.01(B)(3)(b)
of the NYSE listing standards, a director who has a "business relationship" with
the Company may serve on the Audit Committee only if the Board of Directors
determines in its business judgment that the relationship does not interfere
with the director's exercise of independent judgment. The Board of Directors has
not yet made this determination with respect to Mr. Rhodes. Therefore, the
Company cannot state whether Mr. Rhodes is an "independent" director under
Sections 303.01(b)(2)(a) and (3) of the NYSE listing standards. Based upon
recent changes in the composition of the Board of Directors, the Board intends
to appoint additional directors to the Audit Committee at its next Board meeting
and to make a determination at that time as to the independence of the Audit
Committee members.
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
14
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 held three meetings during the fiscal year ended December 31, 2000 and
acted from time to time by written consent. The members of the Compensation
Committee in 2000 prior to the KPS Transaction were Richard A. Molyneux, Grace
M. Hawkins and Mark J. Henninger. Following the resignations of Messrs. Molyneux
and Henninger and Ms. Hawkins, the full Board of Directors assumed the
responsibilities of the Compensation Committee.
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
members of the Independent Committee during 2000 were Michael G. Psaros, Gerald
R. Riordan, Edward W. Morawski, Robert L. Berner, III, Michael S. Pfeffer and
Todd Q. Smart. The Independent Committee did not hold any meetings during 2000,
but acted from time to time by written consent. The current members of the
Independent Committee are Michael G. Psaros, Gerald R. Riordan, Edward W.
Morawski, A. Lawrence Fagan and Joseph S. Rhodes.
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 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 thirteen meetings during the
fiscal year ended December 31, 2000 and also acted from time to time by
unanimous written consent. Each incumbent director attended at least 75% of all
of the meetings held by the Board of Directors and any committees on which such
director served.
As compensation for service as a director of the Company, each director
who is not an officer or employee of the Company is entitled to receive $2,500
in cash for each Board of Directors meeting attended by such director in person
and $750 in cash for each Board of Directors meeting lasting more than 30
minutes attended by such director by telephone. Each director who is not an
officer or employee of the Company and who serves on a committee of the Board of
Directors is also 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
15
price of the Company's Common Stock exceeds $50.00 per share for five
consecutive trading days following the date of the meeting to which the
Committee Fee relates. All directors are reimbursed for their out-of-pocket
expenses incurred in connection with attending meetings of the Board and
committees thereof.
In addition, each director who is neither an officer nor an employee of
the Company nor affiliated with KPS or Charterhouse is entitled to receive (i)
upon joining the Board and at each annual meeting of the Board thereafter, a
grant of options to purchase 2,000 shares of the Company's Common Stock with an
exercise price equal to the fair market value of the Common Stock on the date of
grant, and (ii) upon accepting the position of chairman of a committee of the
Board, a grant of options to purchase 250 shares of Common Stock with an
exercise price equal to the fair market value of the Common Stock on the date of
grant.
16
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table presents summary information concerning the
compensation of the Company's Chief Executive Officer ("CEO") and its three
other most highly compensated executive officers (together, the "Named Executive
Officers") for services rendered to the Company and its subsidiaries during
1998, 1999 and 2000. Other than the Named Executive Officers, no executive
officer of the Company received salary and bonus payments exceeding $100,000 in
the aggregate during fiscal year 2000. All share amounts have been adjusted to
give effect to the Reverse Stock Split.
SECURITIES
UNDERLYING ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
------------------------- ---- ------ ----- ------- ------------
Gerald R. Riordan(1)..................... 2000 $319,551 $ -- 87,500(2) $600,000(3)
(Chief Executive Officer) 1999 61,539 100,000(4) 75,000(5) --
Donald J. Marr 2000 155,141 -- -- 421,303(7)
(6)......................................
(Former Chief Financial Officer) 1999 74,827 81,042 5,000 --
1998 75,000 50,000 12,500 --
Michael A. Wysocki (8) .................. 2000 167,290 -- 36,250(9) 75,000(3)
(President, Transport Business Unit) 1999 110,000 -- -- --
Harold W. Borhauer II (10) .............. 2000 134,956 -- 34,000(11) 62,500(3)
(President, Towing and Recovery Business Unit) 1999 52,343 780 -- --
---------
(1) Mr. Riordan's employment with the Company began as of October 11, 1999.
(2) Includes options to purchase 37,500 shares granted in replacement of the 37,500 cancelled options
described in footnote (5) below.
(3) Consists entirely of a payment in lieu of the change in control payment due this executive officer under his
former employment agreement.
(4) 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.
(5) Includes options to purchase 37,500 shares that were cancelled as of July 20, 2000.
(6) Mr. Marr terminated his employment agreement with the Company as of September 30, 2000.
(7) Consists of a change in control payment pursuant to Mr. Marr's employment agreement.
(8) Mr. Wysocki's employment with the Company began as of January 11, 1999.
(9) Includes options to purchase 3,750 shares that were cancelled as of July 20, 2000 and options to purchase 3,750
shares granted on July 20, 2000 in replacement of such cancelled options.
(10) Mr. Borhauer's employment with the Company began as of March 5, 1999.
17
(11) Includes options to purchase 3,000 shares that were cancelled as of July 20, 2000 and options to purchase 3,000
shares granted as of July 20, 2000 in replacement of such cancelled options.
OPTION GRANTS IN 2000
The following table sets forth information concerning stock option
grants to Mr. Riordan, Mr. Wysocki and Mr. Borhauer during 2000. No stock
options were granted to Mr. Marr during 2000. All share amounts and per share
exercise prices have been adjusted to give effect to the Reverse Stock Split.
PERCENTAGE
OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL
SHARES GRANTED TO RATES OF STOCK PRICE
UNDERLYING EMPLOYEES EXERCISE APPRECIATION FOR
OPTIONS IN FISCAL PRICE EXPIRATION OPTION
GRANTED YEAR (PER SHARE) DATE TERM(1)
------- ---- ----------- ---- ----------------------
NAME 5% 10%
---- -------- ---------
Gerald R. Riordan............... 37,500 (3) 14.49 $ 3.00 7/20/2010 $ 70,751 $ 179,296
16,666 (4) 6.44 6.12 7/20/2010 (2) 27,686
16,667 (5) 6.44 10.20 7/20/2010 (2) (2)
16,667 (6) 6.44 14.28 7/20/2010 (2) (2)
Michael Wysocki................. 3,750 (7) 1.45 20.00 1/17/2010 47,167 119,531
3,750 (8) 1.45 20.00 -- -- --
3,750 (9) 1.45 3.00 7/20/2010 7,075 17,923
8,333 (4) 3.22 6.12 7/20/2010 (2) 13,843
8,333 (5) 3.22 10.20 7/20/2010 (2) (2)
8,334 (6) 3.22 14.28 7/20/2010 (2) (2)
Harold Borhauer II.............. 3,000 (10) 1.16 23.75 1/21/2010 44,809 113,554
3,000 (11) 1.16 23.75 -- -- --
3,000 (12) 1.16 3.00 7/20/2010 5,660 14,344
8,333 (4) 3.22 6.12 7/20/2010 (2) 13,843
8,333 (5) 3.22 10.20 7/20/2010 (2) (2)
8,334 (6) 3.22 14.28 7/20/2010 (2) (2)
(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) Negative value at assumed rate of stock price appreciation.
18
(3) All of these options were issued at fair market value on July 20, 2000
pursuant to the Company's 1998 Stock Option Plan (the "1998 Plan") and
vest over a period of three years at a rate of 33-1/3% per year
beginning on July 20, 2001.
(4) These options were issued pursuant to the Company's 1998 Stock Option
Plan and vest on July 20, 2001. The exercise price of these options is
equal to 1.5 times the conversion price of the Series A Preferred Stock
on July 20, 2000.
(5) These options were issued pursuant to the Company's 1998 Stock Option
Plan and vest on July 20, 2002. The exercise price of these options is
equal to 2.5 times the conversion price of the Series A Preferred Stock
on July 20, 2000.
(6) These options were issued pursuant to the Company's 1998 Stock Option
Plan and vest on July 20, 2003. The exercise price of these options is
equal to 3.5 times the conversion price of the Series A Preferred Stock
on July 20, 2000.
(7) These options were issued at fair market value on January 17, 2000
pursuant to the Company's 1998 Stock Option Plan. On July 20, 2000, all
of these options became fully vested pursuant to the terms of Mr.
Wysocki's employment agreement.
(8) These options were issued at fair market value on January 17, 2000
pursuant to the Company's 1998 Stock Option Plan. All of these options
were cancelled on July 20, 2000 pursuant to the terms of Mr. Wysocki's
employment agreement.
(9) These options were issued at fair market value on July 20, 2000
pursuant to the Company's 1998 Stock Option Plan and vest over a period
of three years at a rate of 33-1/3% per year beginning on July 20,
2000. These options were issued in replacement of the 3,750 cancelled
options described in footnote (7) above.
(10) These options were issued at fair market value on January 21, 2000
pursuant to the Company's 1998 Stock Option Plan. On July 20, 2000, all
of these options became fully vested pursuant to the terms of Mr.
Borhauer's employment agreement.
(11) These options were issued at fair market value on January 21, 2000
pursuant to the Company's 1998 Stock Option Plan. All of these options
were cancelled on July 20, 2000 pursuant to the terms of Mr. Borhauer's
employment agreement.
(12) These options were issued at fair market value on July 20, 2000
pursuant to the Company's 1998 Stock Option Plan and vest over a period
of three years at a rate of 33-1/3% per year beginning on July 20,
2001. These options were issued in replacement of the 3,000 cancelled
options described in footnote (10) above.
FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the number of
shares of the Company's Common Stock underlying exercisable and unexercisable
options held by the Named Executive Officers as of December 31, 2000. As of such
date, 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 29, 2000 ($0.50 per share) and, therefore, the options had no value.
No options were exercised by any of the Named Executive Officers during 2000.
All share amounts have been adjusted to give effect to the Reverse Stock Split.
19
SHARES SHARES
UNDERLYING UNDERLYING
NAME EXERCISABLE UNEXERCISABLE
---- OPTIONS OPTIONS
----------------------- -----------------
Gerald R. Riordan................................ 37,500 87,500
Michael Wysocki.................................. 3,750 28,750
Harold Borhauer II............................... 3,000 28,000
Donald J. Marr................................... 12,500 0
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, effective as
of October 11, 1999, that provided Mr. Riordan with an annual base salary of
$300,000. The agreement also provided that, upon a "change of control" of the
Company (as defined in the agreement), 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 receive an annual base salary of $350,000, subject to increase at
the discretion of the Compensation Committee of the Board of Directors (the
"Compensation Committee"). In lieu of the change of control payment provided for
under his former employment agreement, Mr. Riordan received a cash payment of
$600,000 at the closing of the KPS Transaction, a stay bonus of $300,000 on July
20, 2001 and, as long as he remains employed by the Company, Mr. Riordan will be
entitled to receive an additional stay bonus of $300,000 on July 20, 2002. In
the event of the termination of Mr. Riordan's new employment agreement prior to
the expiration of the term thereof for any reason other than (i) a termination
for "cause" by the Company (as defined in the new agreement), 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 due and payable to Mr. Riordan. Under the terms of the new
employment agreement, Mr. Riordan is also entitled to an annual bonus, which
bonus may not exceed 140% of his base salary, upon the Company's achievement of
certain target earnings established by the Compensation Committee.
In lieu of the full acceleration of the options provided for under Mr.
Riordan's former employment agreement, upon the closing of the KPS Transaction
and pursuant to the new employment 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
20
Stock on July 20, 2000, which option vests in equal installments on each of the
first, second and third anniversaries of July 20, 2000, provided that such
option will vest and become fully exercisable upon Mr. Riordan's death or
disability or a termination of Mr. Riordan's employment (a) by the Company other
than for "cause," or (b) by Mr. Riordan for "good reason." In addition, under
the new employment agreement, Mr. Riordan received (i) an option to purchase
16,666 shares of Common Stock at an exercise price (the "Conversion Price") of
$6.12 per share (equal to 1.5 times the conversion price of the Series A
Preferred Stock (the "Conversion Price") on July 20, 2000, which option vested
in full on July 20, 2001, (ii) an option to purchase 16,667 shares of Common
Stock at an exercise price of $10.20 per share (equal to 2.5 times the
Conversion Price), which option will vest in full on July 20, 2002 and (iii) an
option to purchase 16,667 shares of Common Stock at an exercise price of $14.28
per share (equal to 3.5 times the Conversion Price), which option will vest in
full on July 20, 2003.
The Company entered into an employment agreement with Mr. Wysocki in
January 2000, pursuant to which Mr. Wysocki served as President of the Transport
Business Unit at an annual salary of $150,000. In connection with this
employment agreement, the Company granted Mr. Wysocki an option to purchase
7,500 shares of Common Stock at an exercise price equal to 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 options then held by him. On July 20,
2000, in connection with the KPS Transaction, Mr. Wysocki entered into a new
employment agreement with the Company that replaced his former employment
agreement. The new employment agreement has a term of three years. Under the new
agreement, Mr. Wysocki is entitled to receive an annual base salary of $200,000,
subject to increase at the Compensation Committee's discretion. In lieu of the
change of control payment provided for under his former employment agreement,
Mr. Wysocki received a cash payment of $75,000 at the closing of the KPS
Transaction, a stay bonus of $37,500 on July 20, 2001 and, as long as he remains
employed by the Company, Mr. Wysocki will be entitled to an additional stay
bonus of $37,500 on July 20, 2002. In the event of the termination of Mr.
Wysocki's employment agreement prior to the expiration of the term thereof for
any reason other than (i) a termination for "cause" by the Company (as defined
in the new agreement), or (ii) a termination by Mr. Wysocki 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 due and payable to Mr. Wysocki.
Under the terms of the new employment agreement, Mr. Wysocki is also entitled to
an annual bonus, which bonus may not exceed 100% of his base salary, upon the
Company's achievement of certain target earnings established by the Compensation
Committee.
In lieu of full acceleration of the options provided for under Mr.
Wysocki's old employment agreement, upon the closing of the KPS Transaction and
pursuant to the new agreement (i) unvested stock options to purchase 3,750
shares of Common Stock became vested and fully exercisable on July 20, 2000, and
options to purchase an additional 3,750 shares expired, and (ii) Mr. Wysocki was
granted an option to purchase 3,750 shares of Common Stock at the fair market
value of the Common Stock on July 20, 2000, which option vests in equal
installments on each of the first, second and third anniversaries of July 20,
2000, provided that such option will vest and become fully exercisable upon Mr.
Wysocki's death or disability or a termination of Mr. Wysocki's employment (a)
by the Company other than for "cause," or (b) by Mr. Wysocki for "good reason."
In addition, under the new agreement, Mr. Wysocki received (i) an option to
purchase 8,333 shares of Common Stock at an exercise price of $6.12 per share
21
(equal to 1.5 times the Conversion Price), which option vested in full on July
20, 2001, (ii) an option to purchase 8,333 shares of Common Stock at an exercise
price of $10.20 per share (equal to 2.5 times the Conversion Price), which
option will vest in full on July 20, 2002 and (iii) an option to purchase 8,334
shares of Common Stock at an exercise price of $14.28 per share (equal to 3.5
times the Conversion Price), which option will vest in full on July 20, 2003.
The Company entered into an employment agreement with Mr. Borhauer in
January 2000, 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 employment agreement, the Company granted Mr. Borhauer an
option to purchase 6,000 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. 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. On July 20, 2000, in connection with the KPS Transaction, Mr. Borhauer
entered into a new employment agreement that replaced his former agreement. The
new employment agreement has a term of two years. Under the new agreement, Mr.
Borhauer is entitled to receive an annual base salary of $160,000, subject to
increase at the Compensation Committee's discretion. In lieu of the change of
control payment provided for under his former agreement, Mr. Borhauer received a
cash payment of $62,500 at the closing of the KPS Transaction, a stay bonus of
$31,250 on July 20, 2001 and, as long as he remains employed by the Company, Mr.
Borhauer will be entitled to an additional stay bonus of $31,250 on July 20,
2002. In the event of the termination of Mr. Borhauer's employment agreement
prior to the expiration of the term thereof for any reason other than (i) a
termination for "cause" by the Company (as defined in the new agreement), or
(ii) a termination by Mr. Borhauer 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. Borhauer. Under the terms of the new
employment agreement, Mr. Borhauer is also entitled to an annual bonus, which
bonus may not exceed 100% of his base salary, upon the Company's achievement of
certain target earnings established by the Compensation Committee.
In lieu of full acceleration of the options provided for under Mr.
Borhauer's former employment agreement, upon the closing of the KPS Transaction
and pursuant to the new employment agreement, (i) unvested stock options to
purchase 3,000 shares of the Company's Common Stock became vested and fully
exercisable on July 20, 2000, and options to purchase an additional 3,000 shares
expired, and (ii) Mr. Borhauer was granted an option to purchase 3,000 shares of
Common Stock at the fair market value of the Common Stock on July 20, 2000,
which option vests in equal installments on each of the first, second and third
anniversaries of July 20, 2000, provided that such option will vest and become
fully exercisable upon Mr. Borhauer's death or disability or a termination of
Mr. Borhauer's employment (a) by the Company other than for "cause," or (b) by
Mr. Borhauer for "good reason." In addition, under the new agreement, Mr.
Borhauer received (i) an option to purchase 8,333 shares of Common Stock at an
exercise price of $6.12 per share (equal to 1.5 times the Conversion Price),
which option vested in full on July 20, 2001, (ii) an option to purchase 8,333
shares of Common Stock at an exercise price of $10.20 per share (equal to 2.5
times the Conversion Price), which option will vest in full on July 20, 2002 and
(iii) an option to purchase 8,334 shares of Common Stock at an exercise price of
$14.28 per share (equal to 3.5 times the Conversion Price), which option will
vest in full on July 20, 2003.
22
The new employment agreements between the Company and Messrs. Riordan,
Wysocki and Borhauer each provide that upon a "change of control" of the Company
(as defined in the new employment agreement), the executive has the option,
exercisable for one year following such change of control, to terminate the
agreement and to continue to receive his base salary and to participate in all
employee benefit plans, to the extent permitted by such plans, through the later
of (a) the end of the term of the agreement (without regard to the termination
thereof) and (b) one year from the date of such termination. In addition, if the
executive terminates the new 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", the executive is
entitled to continue to receive his base salary and to participate in all
employee benefit plans, to the extent permitted by such plans, 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. The new
agreement contains covenants that prohibit the executive 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 agreement (without regard to
any termination thereof) and (b) one year from the date of termination. The new
employment agreements also provide for customary perquisites and benefits.
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 and
pursuant to the "change of control" provisions thereof, the Company paid Mr.
Marr a lump sum payment equal to approximately $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 prohibited Mr. Marr from
competing with the Company for a period of one year following its termination.
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 2000.
COMPENSATION PHILOSOPHY AND APPROACH
Generally, the Company seeks to attract, retain and motivate its
executive officers through a combination of base salary, cash incentive awards
based upon individual performance and stock option awards under the Company's
1998 Stock Option Plan and otherwise. Use of these three different tools
provides incentives to reach short-term goals through the cash incentives and
long-term goals through the stock option grants. 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
23
for 2000 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 stockholder 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. No cash bonuses were paid to the
Company's Named Executive Officers for their performance during 2000. In
connection with the KPS Transaction, certain options previously granted to Mr.
Wysocki and Mr. Borhauer were cancelled and replaced with new options, and Mr.
Wysocki and Mr. Borhauer were granted additional options. See "Option Grants in
2000" "--Repricing of Stock Options" and "Employment Agreements". In lieu of
"change of control" payments provided under their former employment agreements,
Mr. Wysocki and Mr. Borhauer each received cash payments upon the closing of the
KPS Transaction and are eligible to receive stay bonuses in 2001 and 2002 if
they remain employed by the Company. See "Employment Agreements". The Board of
Directors believes that these option grants and stay bonuses provide proper
incentives to these executive officers to improve the Company's operating
performance and profitability and to increase stockholder value.
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, that provided Mr. Riordan with an annual base salary of
$300,000. Effective as of July 20, 2000, in connection with the KPS Transaction,
Mr. Riordan entered into a new employment agreement, pursuant to which Mr.
Riordan is entitled to an annual base salary of $350,000. Pursuant to these two
agreements, Mr. Riordan was paid a total base salary of $319,551 in 2000.
In lieu of the "change of control" payment otherwise due to him under
the terms of his former employment agreement, Mr. Riordan received a cash
payment of $600,000 upon the closing of the KPS Transaction, and, as long he
remains employed by the Company, Mr. Riordan is entitled to receive a stay bonus
of $300,000 on each of the first and second anniversaries of the closing of the
KPS Transaction. Upon the closing of the KPS Transaction, unvested options to
purchase 37,500 shares of Common Stock held by Mr. Riordan became vested and
fully exercisable, options to purchase an additional 37,500 shares held by Mr.
Riordan expired and Mr. Riordan received an option to purchase 37,500 shares of
Common Stock at an exercise price of $3.00 (equal to the fair market value of
the Common Stock on July 20, 2000), which option vests in equal installments on
each of the first, second and third anniversaries of July 20, 2000. In addition,
under his new employment agreement, Mr. Riordan received (i) an option to
purchase 16,666 shares of Common Stock at an exercise price of $6.12 per share,
which option vests in full on July 20, 2001, (ii) an option to purchase 16,667
shares of Common Stock at an exercise price of $10.20 per share, which option
vests in full on July 20, 2002 and (iii) an option to purchase 16,667 shares of
Common Stock at an exercise price of $14.28 per share, which option vests in
full on July 20, 2003. All of the options granted to Mr. Riordan in connection
with the KPS Transaction are non-statutory options granted under the Company's
24
1998 Stock Option Plan and each option has term of ten years.
The Board of Directors believes that the overall compensation package
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 services 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. Each of the options granted to the Chief Executive
Officer during 2000 (including options granted in replacement of cancelled
options) has an exercise price equal to or greater than the fair market value of
the Company's Common Stock on the date of grant. Thus, a substantial portion of
the Chief Executive Officer's total compensation is tied directly to the
creation of stockholder value.
STOCK OPTION REPRICING
On July 20, 2000, in connection with the KPS Transaction, the Company
cancelled outstanding options to purchase stock issued to Mr. Riordan, Mr.
Wysocki, and Mr. Borhauer with exercise prices ranging from $20.00 to $29.06 per
share. The Company replaced each of these cancelled options with new options
with an exercise price of $3.00 per share.
The Board of Directors believes that stock options are an important
component of the compensation packages of key employees and that such equity
incentives are a significant factor in the Company's ability to retain and
motivate these key employees. At their original exercise prices, the Company
believed that the disparity between the exercise price of the options previously
held by Messrs. Riordan, Wysocki and Borhauer and the market prices for the
Company's Common Stock at the time of the KPS Transaction did not provide
meaningful incentives to such executives. Thus, as a part of the KPS
Transaction, the existing options were cancelled and replaced with new options
at obtainable exercise prices. Information concerning the repricing of options
held by executive officers is set forth in the "Option Repricings" table below.
25
OPTION REPRICINGS
The following table provides certain information with respect to the
repricing of stock options of the Company's executive officers:
LENGTH OF
NUMBER OF MARKET ORIGINAL
SECURITIES PRICE OF EXERCISE OPTION TERM
UNDERLYING STOCK AT PRICE AT NEW REMAINING
NAME AND PRINCIPLE DATE OF OPTIONS TIME OF TIME OF EXERCISE AT DATE OF
POSITION REPRICING REPRICED REPRICING REPRICING PRICE REPRICING
-------- --------- ------------ --------- --------- --------- ----------
Gerald R. Riordan, July 20, 2000 37,500 $3.00 $29.06 $3.00 9 years,
Chief Executive 3 Months
Officer and Secretary
Michael A. Wysocki, July 20, 2000 3,750 $3.00 $20.00 $3.00 9 years,
President of 6 Months
Transport Business
Unit
Harold W. Borhauer, July 20, 2000 3,000 $3.00 $23.75 $3.00 9 years,
President of Towing 6 Months
Business Unit
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 a company for compensation in excess of $1
million paid to a company's 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.
26
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
A. Lawrence Fagan
Eugene J. Keilin
Edward W. Morawski
Raquel V. Palmer
Stephen W. Presser
Joseph S. Rhodes
Brian J. Riley
Gerald R. Riordan
David P. Shapiro
27
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 (Codification of Statements on Auditing Standards).
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 and
considered whether the non-audit services provided by the independent auditors
are compatible with maintaining its 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, 2000 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
Joseph S. Rhodes
28
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to consummation of the KPS Transaction, the members of the
Compensation Committee were Grace M. Hawkins, Richard A. Molyneux and Mark J.
Henninger. None of such individuals was an officer or employee of the Company or
any of its subsidiaries during 2000. Neither Mr. Molyneux nor Ms. Hawkins was an
officer of the Company or any of its subsidiaries at any time prior to 2000. Mr.
Henninger was an officer of one of the Company's subsidiaries prior to its
acquisition by the Company in 1998. Except for Mr. Riordan with respect to
deliberations concerning the compensation of executive officers of the Company
other than himself, between the date of consummation of the KPS Transaction and
December 31, 2000, no current or former officer or employee of the Company or
any of its subsidiaries participated in deliberations of the Board of Directors
concerning executive officer compensation. During 2000, no executive officer of
the company 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
The Company has an employment agreement with Mr. Morawski pursuant to
which he serves as one of the Company's vice presidents and the general manager
of the Company's Northland division. The agreement provides for an annual base
salary of $150,000 and expires in May 2002. Mr. Morawski's employment agreement
contains a covenant not to compete for one year after termination of the
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 the year ended December 31, 2000, the Company paid Translesco
approximately $11.2 million in connection with the lease of such employees.
During the year ended December 31, 2000, the Company was a party to
three lease agreements with Mr. Borhauer and his wife, Lynda Borhauer, pursuant
to which the Company leases property used to conduct the Shamrock business. One
of these lease agreements was terminated in October 2000. During 2000, Mr. and
Mrs. Borhauer received aggregate lease payments of $183,186 under these leases.
As of September 30, 2001, the Company had issued approximately $92.9
million aggregate principal amount of 8% Convertible Subordinated Debentures due
2008 (the "Debentures") to Charterhouse pursuant to the Amended and Restated
Purchase Agreement between the Company and Charterhouse (the "Amended
Charterhouse Purchase Agreement"). 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. In connection with the closing of the
transactions under the Amended Charterhouse Purchase Agreement, the Company paid
Charterhouse a fee of 183,992 shares of the Company's Common Stock, and
reimbursed Charterhouse for its fees and expenses incurred in connection with
the transactions, which totaled approximately $200,000. 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. Fagan serves as Vice
29
Chairman of Charterhouse International. Mr. Rhodes serves as 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 remainder of which was
paid in October 2000. The Company also reimbursed KPS for its fees and expenses
incurred in connection with the KPS Transaction, which totaled approximately
$750,000. 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, 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. Psaros, Keilin and Shapiro beneficially own, in the
aggregate, approximately 90% of KPS Management indirectly through other KPS
affiliated entities.
30
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the
Company's Common Stock as of October 19, 2001 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 and nominee for director of the Company,
(iii) each executive officer named in the Summary Compensation Table and one
other current executive officer, 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 PERCENT
OWNED OF
NAME SHARES CLASS(1)
-------------------- ------------------
Michael G. Psaros (2)............................................ -- --
Gerald R. Riordan ............................................... 69,743(3) 3.2
Edward W. Morawski .............................................. 69,227 3.3
Joseph S. Rhodes (4) ............................................ -- --
A. Lawrence Fagan (4) ........................................... -- --
Stephen P. Presser (2) .......................................... -- --
Eugene J. Keilin (2) ............................................ -- --
David P. Shapiro (2) ............................................ -- --
Raquel V. Palmer (2) ............................................ -- --
Brian J. Riley (2) .............................................. -- --
Kenneth K. Fisher (5)............................................ __ *
Donald J. Marr (6) .............................................. 9,167 (7) *
Michael A. Wysocki .............................................. 100,009 (8) 4.7
Harold W. Borhauer .............................................. 26,527 (9) 1.3
John David Floyd (10) ........................................... 127,921 6.1
Patrick J. Fodale................................................ -- *
Charter URS LLC ................................................. 806,059 (11) 29.6
Blue Truck Acquisition, LLC ..................................... 6,638,968 (12) 76.0
CFE, Inc. ....................................................... 531,119 (13) 20.2
All current directors and executive officers as a group (13 persons) 265,506 (14) 12.1
31
(1) The applicable percentage of ownership is based on 2,102,197 shares of
Common Stock outstanding as of October 19, 2001.
(2) The address of this director is c/o KPS Special Situations Fund, L.P.,
200 Park Avenue, 58th Floor, New York, NY 10166.
(3) Includes 66,666 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 individual is 7 Willow Street, Brooklyn NY 11201.
(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 13,333 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 12,333 shares issuable pursuant to options exercisable within 60
days.
(10) The address of this stockholder is 219 Granite Court, Boulder City, NV
89005.
(11) Includes 622,137 shares issuable upon conversion of the Debentures.
According to a Schedule 13D, dated as of December 7, 1998 and amended as
of March 16, 1999, 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. Fagan serves as Vice Chairman of Charterhouse International.
Mr. Rhodes serves as Vice President of Charterhouse International.
Messrs. Fagan and Rhodes 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,
New York 10022.
(12) Consists entirely of shares issuable upon conversion of the Company's
Series A Preferred Stock (including dividends accumulated thereon as of
October 19, 2001) 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.
(13) Consists entirely of shares issuable upon conversion of the Company's
Series A Preferred Stock (including dividends accumulated thereon as of
October 19, 2001) held by CFE. According to a Schedule 13D dated as of
July 28, 2000, CFE is a wholly-owned subsidiary of GE Capital, which is a
wholly-owned subsidiary of General Electric Capital Services, Inc., a
32
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.
(14) Includes 92,332 shares issuable pursuant to options exercisable within 60
days.
33
COMMON STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's
cumulative total stockholder 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]
--------------------------------
(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, 2000.
May 1, 1998 December 31, 1998 December 31, 1999 December 29, 2000
----------- ----------------- ----------------- -----------------
United Road Services, Inc. 100 141 13 .38
Nasdaq Index 100 118 220 132
Transportation Index 100 81 82 96
34
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who beneficially own
more than ten percent of the Company's Common Stock, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and stockholders
beneficially holding greater than ten percent of the Common Stock 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, 2000, all Section 16(a)
filing requirements applicable to the Company's officers, directors and greater
than ten percent stockholders were complied with.
AUDITORS
KPMG, LLP ("KPMG") has been selected as the Company's independent
auditors for the 2001 fiscal year. KPMG has acted as principal accountant to the
Company since the Company's inception. Representatives of KPMG 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.
AUDIT FEES
The aggregate fees paid by the Company to KPMG, LLP for professional
services rendered for the audit of the Company's financial statements for the
fiscal year ending December 31, 2000 and the reviews of the interim financial
statements included in the Company's Quarterly Reports on Form 10-Q for fiscal
year 2000 were $424,500.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed by KPMG for professional services rendered
for financial information systems design and implementation for fiscal year
2000.
ALL OTHER FEES
Fees billed to the Company by KPMG for all other non-audit professional
services for fiscal year 2000 were $590,061. The Audit Committee discussed with
KPMG that firm's independence and considered whether the non-audit services
provided by KPMG are compatible with maintaining its independence.
PROPOSALS OF SECURITY HOLDERS
A stockholder proposal relating to the Company's Annual Meeting of
Stockholders to be held in 2002 must be received at the Company's executive
offices no later than July 23, 2002 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 29, 2002, 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.
35
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 2002, such
notice must be received at the principal executive offices of the Company
between August 31 and September 30, 2002 (except in the event that the date of
such annual meeting is prior to October 30, 2002 or after January 28, 2003, 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 must provide certain information as specified in the Company's Amended
and Restated Bylaws 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: November 6, 2001
36
--------------------------------------------------------------------------------
COMMON STOCKHOLDERS' PROXY CARD
UNITED ROAD SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 29, 2001
The undersigned hereby appoints Gerald R. Riordan and Michael A. Wysocki
(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 29, 2001, 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 29, 2001
Please Detach and Mail in the Envelope Provided
--------------------------------------------------------------------------------
-----
A |X| PLEASE
MARK YOUR
VOTES AS
IN THIS
EXAMPLE
========
FOR the
nominees
listed as
right WITHHOLD
(except AUTHORITY
as to vote
directed for the
to the nominees
contrary listed at
below) right
| | | | NOMINEES: If any other matters
1. ELECTIONS | | | | Edward properly come before the
OF DIRECTOR. |_| |_| W. Morawski Meeting or any adjournment
Two Class III Kenneth K. thereof, this proxy will be
directors are to be Fisher voted according to the
elected by the holders of judgment of the persons named
the common stock, par value on the reverse side as
$.01 per share, to serve Proxies.
until the Company's annual
meeting in 2004. THIS PROXY WILL BE VOTED
AS SPECIFIED AT LEFT WITH
INSTRUCTIONS: TO WITHHOLD RESPECT TO THE ACTIONS TO BE
VOTE FOR ANY INDIVIDUAL TAKEN ON THE PROPOSAL. IN
NOMINEE(S), WRITE THAT THE ABSENCE OF ANY
NOMINEE'S NAME ON THE SPACE SPECIFICATION, THIS PROXY
PROVIDED BELOW. WILL BE VOTED FOR THE
--------------------------- NOMINEES SPECIFIED AT LEFT.
THE UNDERSIGNED HEREBY
ACKNOWLEDGES RECEIPT OF THE
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS OF THE COMPANY
AND THE PROXY STATEMENT DATED
NOVEMBER 6, 2001.
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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