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
May 13, 2002
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 June 6, 2002 beginning at 10:00 a.m. Eastern Time, at
the offices of McDermott, Will & Emery, 50 Rockefeller Plaza, 11th floor, New
York, New York. The Annual Meeting is being held for the following purposes:
1. To elect four Class I 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
JUNE 6, 2002
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 McDermott, Will & Emery, 50
Rockefeller Plaza, 11th Floor, New York, New York, on June 6, 2002, beginning at
10:00 a.m., Eastern Time, for the following purposes:
1. To elect four Class I 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 May 1, 2002
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
May 13, 2002
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 JUNE 6, 2002
__________________
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 June 6, 2002
(the "Annual Meeting"), beginning at 10:00 a.m. Eastern Time, at the offices of
McDermott, Will & Emery, 50 Rockefeller Plaza, 11th floor, New York, New York,
for the following purposes:
1. To elect four Class I 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.
This proxy statement and the accompanying proxy card are first being
mailed to the Company's stockholders on or about May 14, 2002.
The Company's Annual Report to Stockholders for the fiscal year 2001
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 May 1, 2002)
convertible into approximately 6,866,594 shares of Common Stock, which
represents approximately 72.3% 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.
2
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 May 1, 2002, 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 2,086,475 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").
FORWARD-LOOKING STATEMENTS
From time to time, in written reports and oral statements, management
may discuss its expectations regarding the Company's future performance.
Generally, these statements relate to business plans or strategies, projected or
anticipated benefits or other consequences of such plans or strategies or other
actions taken or to be taken by the Company, including the impact of such plans,
strategies or actions on the Company's results of operations or components
thereof, projected or anticipated benefits from operational changes,
acquisitions or dispositions made or to be made by the Company, or projections,
involving anticipated revenues, costs, earnings or other aspects of the
Company's results of operations. The words "expect," "believe," "anticipate,"
"project," "estimate," "intend" and similar expressions, and their opposites,
are intended to identify forward-looking statements. These forward-looking
statements are not guarantees of future performance but rather are based on
currently available competitive, financial and economic data and management's
operating plans. These forward-looking statements involve risks and
uncertainties that could render actual results materially different from
management's expectations. Such risks and uncertainties include, without
limitation, risks related to the Company's limited operating history and its
ability to integrate acquired companies, risks related to the Company's ability
to successfully improve the profitability of its acquired businesses, the
availability of capital to fund operations, including expenditures for new and
replacement equipment, risks related to the adequacy, functionality, sufficiency
and cost of the Company's information systems, 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, 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 loss of key personnel and the Company's ability to maintain
an adequate skilled labor force, seasonal and other event-driven variations in
the demand for towing, recovery and transport services, risks resulting from the
over-the-counter trading of the Company's Common Stock, 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 ("Forward-Looking 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 Forward-Looking Statements. Investors must recognize
that events could turn out to be significantly different from what management
currently expects.
4
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 eleven persons serving on the
Board. The Amended and Restated Certificate of Incorporation of the Company (the
"Certificate of Incorporation") provides that the Board of Directors 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
Kenneth K. Fisher III
PROCEDURES FOR NOMINATION AND ELECTION
On July 20, 2000, Blue Truck purchased 613,073 shares of Series A
Preferred Stock for $25.0 million in cash consideration (the "KPS Transaction").
Pursuant to the terms of the Investors' Agreement between the Company and Blue
Truck entered into in connection with the KPS Transaction (the "KPS Investors'
Agreement") and the Certificate of Powers, Designations, Preferences and Rights
of the Series A Preferred Stock (the "Certificate of Designations"), the holders
of a majority of the Series A Preferred Stock (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 URS, LLC ("Charterhouse") is entitled to nominate member(s) of the
Board of Directors pursuant to the Investors' Agreement between the Company and
Charterhouse (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 I directors are to be elected to
serve until the Company's annual meeting of stockholders in 2005 or until their
successors are elected and qualified, and the remaining seven directors will
continue to serve in accordance with their prior
5
election or appointment. Of the Class I directors whose terms of office are
scheduled to expire at the Annual Meeting, two were appointed to the Board by
the Majority Holders, one was a nominee of Charterhouse and one was appointed as
a director 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 I directors at the Annual
Meeting. The Majority Holders have designated Michael G. Psaros and Stephen W.
Presser as their Class I nominees for election at the Annual Meeting. The
holders of Common Stock have the right to elect two Class I directors at the
Annual Meeting. The Independent Committee of the Board has nominated A. Lawrence
Fagan, the nominee of Charterhouse, and Gerald R. Riordan as the Class I
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. Psaros, Mr. Presser, Mr. Fagan and Mr. Riordan. The
shares of Series A Preferred Stock are entitled to vote only for the election of
Mr. Psaros and Mr. Presser and the shares of Common Stock are entitled to vote
only for the election of Mr. Fagan and Mr. Riordan.
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. PSAROS AND MR. PRESSER AND THAT
THE HOLDERS OF COMMON STOCK VOTE FOR MR. FAGAN AND MR. RIORDAN.
6
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 I DIRECTORS WITH TERMS EXPIRING IN 2002/
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
Gerald R. Riordan, Age 53, 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 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, a private equity fund
focused on constructive investing in
restructurings,
7
turnarounds and other special
situations, in 1998, and is currently
a Managing Principal of KPS and of
Keilin & Co. LLC ("K&Co."), an
investment banking firm specializing
in providing financial advisory
services in connection with mergers,
acquisitions and turnaround
transactions. Mr. Psaros joined K&Co.
in 1991. Mr. Psaros serves as a
director of the following privately
held companies: Blue Ridge Paper
Products, Inc., a manufacturer of
envelope grade paper and board used
in liquid packaging ("Blue Ridge");
Blue Heron Paper Company, a
manufacturer of newsprint and
groundwood paper products ("Blue
Heron"); DeVlieg Bullard II, Inc., a
machine tool manufacturer
("DeVlieg"); Curtis Papers, Inc., a
producer of specialty and premium
papers ("Curtis"); Golden Northwest
Aluminum Corp., a privately-held
producer of primary and extruded
aluminum products; Genesis Worldwide
II, Inc. a capital goods manufacturer
servicing all segments of the metals
industry ("Genesis"); and New Flyer
Industries, a manufacturer of transit
buses ("New Flyer"). Prior to joining
K&Co., Mr. Psaros was an investment
banker with Bear, Stearns & Co., Inc.
Stephen W. Presser, Age 42, 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
director of Blue Ridge, Blue Heron,
DeVlieg, Curtis, Genesis and New
Flyer. 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 as a director of Blue
Ridge, DeVlieg, Curtis, Genesis and
New Flyer. Prior to joining K&Co.,
Mr. Shapiro was an investment banker
at Drexel Burnham Lambert
Incorporated and
8
Dean Witter Reynolds, Inc.
Raquel V. Palmer, Age 29, July 2000 Ms. Palmer is a Senior 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 as a director of Blue
Heron, Blue Ridge, DeVlieg and New
Flyer. Prior to joining K&Co., Ms.
Palmer was an investment banker with
Kidder, Peabody & Co.
CLASS III DIRECTORS WITH TERMS EXPIRING IN 2004
Edward W. Morawski, Age 53, May 1998 Mr. Morawski served as a Vice
President of the Company from May
1998 to May 2002, and currently
serves as a consultant to the
Company. 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 49, November 2001 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. He has
been a partner at the law firm of
Phillips Nizer Benjamin Krim & Ballon
LLP since January 2002. From 1991 to
2001, Mr. Fisher was a member of the
New York City Council representing
the 33rd District (Brooklyn).
Eugene J. Keilin, Age 59, July 2000 Mr. Keilin founded K&Co. in 1990 and
co-founded KPS in 1998. He is
currently a Managing Principal of KPS
and of K&Co. Mr. Keilin is Chairman
of the Board of Directors of Blue
Ridge and serves as a director of
Blue Heron, DeVlieg, Curtis, Genesis
and New Flyer. Prior to founding
K&Co., Mr. Keilin was a General
Partner of Lazard Freres & Co.
9
Brian J. Riley, Age 32, July 2000 Mr. Riley is a senior 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 as a director of Blue Ridge,
Blue Heron and DeVlieg. Prior to
joining K&Co., Mr. Riley was an
investment banker in the Mergers and
Acquisitions Department of Smith
Barney, Harris & Upham.
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 Color
Tile, Inc., a specialty retailer of
floor covering products, from
November 1995 to October 1997. From
1985 to October 1995, Mr. Fodale was
employed by Arthur Andersen, LLP.
Michael A. Wysocki, Age 48 Mr. Wysocki has been President of the
Company's Transport Business Unit
since January 2000. Mr. Wysocki
founded MPG
10
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.
11
ORGANIZATION AND REMUNERATION OF BOARD OF DIRECTORS
The organization of the Board of Directors provides for 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 adopted a written charter for the Audit Committee,
the most recently amended version of which is attached as Appendix A to this
Proxy Statement.
The Audit Committee held five meetings during the fiscal year ended
December 31, 2001. From January 1, 2001 to May 3, 2001, the members of the Audit
Committee were Todd Q. Smart, Robert L. Berner III and Michael S. Pfeffer. On
May 3, 2001, Mr. Berner resigned from the Board of Directors and on May 14,
2001, Joseph S. Rhodes was appointed a member of the Audit Committee to fill the
vacancy resulting from Mr. Berner's resignation. Messrs. Pfeffer and Smart
resigned as directors of the Company on June 1, 2001 and June 18, 2001
respectively. On November 27, 2001, Raquel V. Palmer and Brian J. Riley were
appointed as members of the Audit Committee to fill the vacancies resulting from
the resignations of Messrs. Pfeffer and Smart. On April 19, 2002, Mr. Riley
resigned as a member of the Audit Committee and Kenneth K. Fisher was appointed
to the Committee to fill the vacancy resulting from Mr. Riley's resignation.
Thus, the current members of the Audit Committee are Joseph S. Rhodes, Raquel V.
Palmer and Kenneth K. Fisher.
The operating charter of the Audit Committee provides that the
Committee will be comprised of three or more directors, each of whom shall have
been determined by the Board to qualify as an "independent director" as defined
under applicable New York Stock Exchange ("NYSE"), American Stock Exchange or
National Association of Securities Dealers rules; provided, however, that in the
event the Board of Directors determines that it is not possible to form an Audit
Committee comprised solely of "independent" directors, as defined under the
applicable listing standards, the Board may appoint to the Audit Committee one
or more directors who do not qualify as "independent" directors under such
listing standards, but who otherwise meet the qualifications for appointment to
the Audit Committee set forth in the operating charter. For purposes of
determining the independence of members of the Audit Committee, the Board has
previously adopted the definition of independence set forth in Sections
303.01(B)(2)(a) and (3) of the NYSE listing standards. Mr. Fisher is an
"independent" director under the NYSE listing standards. Mr. Rhodes is an
employee of Charterhouse International, which is affiliated with Charterhouse.
Due to Charterhouse's ownership of approximately $96.7 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
12
defined in Section 303.01(B)(3)(b) of the NYSE listing standards, and is
therefore not an "independent" director under the NYSE listing standards. See
"Certain Relationships and Related Transactions." Ms. Palmer is an employee of
KPS, which controls Blue Truck. As of May 1, 2002, Blue Truck owned 613,073
shares of Series A Preferred Stock which (including dividends accumulated
thereon as of May 1, 2002) were convertible into 6,866,594 shares of Common
Stock, or 76.7% of the Common Stock outstanding as of May 1, 2002. In addition,
in connection with the KPS Transaction, the Company agreed to pay KPS
Management, LLC, an affiliate of KPS and Blue Truck ("KPS Management"), a
transaction fee in the amount of $2,500,000 and 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. See "Certain Relationships
and Related Transactions." Due to Blue Truck's ownership of Series A Preferred
Stock and the management fee payable to KPS Management, Ms. Palmer may be deemed
to have a "business relationship" with the Company as defined under Section
303.01(B)(3)(b) of the NYSE listing standards, and is therefore not an
"independent" director under the NYSE listing standards. In accordance with the
Audit Committee's operating charter, the Board has determined that, due to the
current composition of the Board, it is not possible to form an Audit Committee
comprised solely of "independent" directors but that Ms. Palmer and Mr. Rhodes
otherwise meet the qualifications for appointment to the Committee as set forth
in the operating charter.
The Compensation Committee is responsible for (i) developing and
monitoring compensation arrangements for the executive officers of the Company
based upon recommendations of the Chief Executive Officer, (ii) reviewing the
compensation of any employee of the Company whose compensation exceeds $100,000
per annum, (iii) adopting amendments to all of the Company's plans intended to
qualify under Section 401 of the Internal Revenue Code of 1986, as amended, (iv)
administering 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) performing such other activities and functions related to executive
compensation as the Board of Directors of the Company may from time to time
direct. During 2001, the full Board of Directors performed the functions 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
Independent Committee did not hold any meetings during 2001, but acted from time
to time by written consent. From January 1, 2001 to May 3, 2001, the members of
the Independent Committee were Michael G. Psaros, Gerald R. Riordan, Edward W.
Morawski, Robert L. Berner, III, Michael S. Pfeffer and Todd Q. Smart. On May 3,
2001, Mr. Berner resigned as a director of the Company, and on May 14, 2001,
Joseph S. Rhodes was appointed to the Independent Committee to fill the vacancy
resulting from Mr. Berner's resignation. On June 1, 2001, Mr. Pfeffer resigned
as a director of the Company, and on June 26, 2001, A. Lawrence Fagan was
appointed to the Independent Committee to fill the
13
vacancy resulting from Mr. Pfeffer's resignation. On June 18, 2001, Mr. Smart
resigned as a director of the Company, and on April 19, 2002, Kenneth K. Fisher
was appointed to the Independent Committee to fill the vacancy resulting from
Mr. Smart's resignation. Thus, the current members of the Independent Committee
are Michael G. Psaros, Gerald R. Riordan, Edward W. Morawski, Joseph S. Rhodes,
A. Lawrence Fagan and Kenneth K. Fisher.
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 three meetings during the fiscal
year ended December 31, 2001 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, except that Mr. Morawski did not attend one of the three Board
of Directors meetings held during 2001.
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
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.
14
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
1999, 2000 and 2001. 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 2001. 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)..................................2001 $ 350,000 $ -- -- $ 300,000(2)
(Chief Executive Officer) 2000 319,551 -- 87,500(3) 600,000(2)
1999 61,539 100,000(4) 75,000(5) --
Patrick J. Fodale (6)..................................2001 199,927 -- -- --
(Chief Financial Officer)
Michael A. Wysocki (7).................................2001 200,000 -- -- 37,500(2)
(President, Transport Business Unit) 2000 167,290 -- 36,250(8) 75,000(2)
1999 110,000 -- -- --
Harold W. Borhauer II (9) .............................2001 160,000 -- -- 31,250(2)
(President, Towing and Recovery Business 2000 134,956 -- 34,000(10) 62,500(2)
Unit 1999 52,343 780 -- --
- ---------------
(1) Mr. Riordan's employment with the Company began as of October 11, 1999.
(2) Consists entirely of a payment in lieu of the change in control payment
due this executive officer under his former employment agreement.
(3) Includes options to purchase 37,500 shares granted in replacement of
the 37,500 cancelled options described in footnote (5) below.
(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. Fodale's employment with the Company began as of April 2, 2001.
(7) Mr. Wysocki's employment with the Company began as of January 11, 1999.
15
(8) 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.
(9) Mr. Borhauer's employment with the Company began as of March 5, 1999.
(10) 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.
16
OPTION GRANTS IN 2001
No stock options were granted to any of the Named Executive Officers during
2001.
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, 2001. 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 31, 2001 ($0.25 per share) and, therefore, the options had no value.
No options were exercised by any of the Named Executive Officers during 2001.
Mr. Fodale does not own any options. All share amounts have been adjusted to
give effect to the Reverse Stock Split.
SHARES
SHARES UNDERLYING UNDERLYING
EXERCISABLE UNEXERCISABLE
NAME OPTIONS OPTIONS
---- ------- -------
Gerald R. Riordan.................. 66,666 58,334
Michael Wysocki.................... 13,333 19,167
Harold Borhauer II................. 12,333 18,667
EMPLOYMENT AGREEMENTS
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. 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 a stay bonus of $300,000 on July 20,
2002. In the event of the termination of Mr. Riordan'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 agreement), or (ii) a
termination by Mr. Riordan other than for "good reason" (as defined in the
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
employment agreement, Mr. Riordan is also entitled to an annual bonus, which
bonus may not exceed 140%
17
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 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 were cancelled, (ii) Mr. Riordan was granted an
option to purchase 37,500 shares of Common Stock at the fair market value of the
Common Stock on July 20, 2000, which option vests in equal installments 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 of $6.12 per share (equal to
1.5 times the conversion price of the Series A Preferred Stock on July 20, 2000
(the "Conversion Price"), 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 a 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
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.
18
In lieu of full acceleration of 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 were cancelled, 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
(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 a 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 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 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
were cancelled, 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,
19
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.
The 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 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 entered into an employment agreement with Mr. Fodale in
March 2001, pursuant to which Mr. Fodale's employment as Vice President and
Chief Financial Officer of the Company commenced on April 2, 2001. The agreement
has a one year term expiring on April 2, 2002 (the "Expiration Date"), and
provides for extension by mutual agreement of the Company and Mr. Fodale. Under
the agreement, Mr. Fodale is entitled to receive an annual salary of $275,000
and is eligible to receive a performance bonus in an amount not to exceed 50% of
his salary based upon criteria established by the Compensation Committee, or the
full Board of Directors in the absence of the Compensation Committee. The
agreement provides that at or prior to the Expiration Date, the Company and Mr.
Fodale will have negotiated in good faith an equity compensation arrangement
satisfactory to each party, provided that Mr. Fodale is not guaranteed to
receive any equity compensation. The agreement also provides that if the Company
(i) terminates the agreement without "cause " (as defined in the agreement) or
(ii) has failed to enter into a new agreement prior to the Expiration Date
providing for Mr. Fodale's continued employment subsequent to the Expiration
Date or has failed to renew the agreement on the Expiration Date, Mr. Fodale is
entitled to receive his salary for a period of six months following such event.
The agreement contains covenants that prohibit Mr. Fodale from competing with
the Company and from soliciting its employees during Mr. Fodale's employment
20
with the Company and for a period of one year thereafter. The agreement also
provides for customary perquisites and benefits. The Company and Mr. Fodale are
currently negotiating an extension of the agreement.
REPORT ON EXECUTIVE COMPENSATION
The following report describes the policies pursuant to which
compensation was paid to executive officers of the Company for performance
during 2001.
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
for 2001 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 2001. In lieu of
"change of control" payments provided under their former employment agreements,
Mr. Wysocki and Mr. Borhauer each received cash payments upon the first
anniversary of the KPS Transaction, and are each eligible to receive additional
cash payments upon the second anniversary of the KPS Transaction if they remain
employed by the Company. Upon the closing of the KPS Transaction in 2000, each
of Mr. Borhauer and Mr. Wysocki received stock options (including options
granted in replacement of options cancelled in connection with the KPS
Transaction), that vest in increments over a three year period beginning with
the first anniversary of the closing of the KPS Transaction. 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.
21
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 has an employment agreement with the Company, pursuant to
which Mr. Riordan received a base salary of $350,000 during 2001.
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 $300,000 upon the first anniversary of 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 the second anniversary of the
closing of the KPS Transaction. Mr. Riordan was not granted any stock options
during 2001. Upon the closing of the KPS Transaction, in 2000, Mr. Riordan
received stock options, (including options granted in replacement of options
cancelled in connection with the KPS Transaction) that vest in increments over a
three year period beginning with the first anniversary of the closing of the KPS
Transaction. See "Employment Agreements".
The Board of Directors believes that the overall compensation package
provided to the Company's Chief Executive Officer is 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 in connection with the KPS Transaction (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.
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.
22
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
Kenneth K. Fisher
Eugene J. Keilin
Edward W. Morawski
Raquel V. Palmer
Stephen W. Presser
Joseph S. Rhodes
Brian J. Riley
Gerald R. Riordan
David P. Shapiro
23
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, 2001 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
Raquel V. Palmer
Kenneth K. Fisher
24
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2001, the full Board of Directors performed the duties of the
Compensation Committee of the Board. 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 2001, no
executive officer of the Company served as a director or member of the
compensation committee (or other board committee performing similar functions,
or in the absence of any such committee, the entire board of directors) of
another entity, one of whose executive officers served as a director of the
Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From May 1998 to May 2002, Mr. Morawski had an employment agreement
with the Company pursuant to which he was paid an annual salary of $150,000. The
agreement contained a covenant not to compete for one year after termination of
the agreement.
Mr. Wysocki is the majority owner of Translesco, a corporation from which
the Company leases employees to provide services to the Company's MPG division.
During the year ended December 31, 2001, the Company paid Translesco
approximately $12.5 million in connection with the lease of such employees.
During the year ended December 31, 2001, the Company was a party to two
lease agreements with Mr. Borhauer and his wife, Lynda Borhauer, pursuant to
which the Company leases property used to conduct the Shamrock business. During
2001, Mr. and Mrs. Borhauer received aggregate lease payments of $177,295 under
these leases.
As of December 31, 2001, the Company had issued approximately $94.8
million aggregate principal amount of its debentures to Charterhouse pursuant to
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. During 2001, the Company
issued to Charterhouse approximately $7.2 million aggregate principal amount of
debentures as in-kind interest payments on outstanding debentures. 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
Chairman of Charterhouse International. Mr. Rhodes serves as Vice President of
Charterhouse International.
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. As of December 31, 2001, the Company had not paid KPS Management the
2001 fee of $1.0 million. Such fee is payable to KPS upon its request. Messrs.
Shapiro, Keilin and Psaros beneficially own, in the aggregate, approximately 90%
of KPS Management indirectly through other KPS affiliated entities.
25
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the
Company's Common Stock as of May 1, 2002 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 of the Company, (iii) each Named 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
A. Lawrence Fagan(4).................................. -- --
Joseph S. Rhodes(4)................................... -- --
Stephen W. Presser(2)................................. -- --
Eugene J. Keilin(2)................................... -- --
David P. Shapiro(2)................................... -- --
Raquel V. Palmer(2)................................... -- --
Brian J. Riley(2)..................................... -- --
Kenneth K. Fisher(5).................................. -- --
Patrick J. Fodale..................................... -- --
Michael A. Wysocki.................................... 100,009(6) 4.8
Harold W. Borhauer.................................... 26,527(7) 1.3
John David Floyd(8)................................... 127,921 6.1
Charter URS LLC....................................... 828,542(9) 30.3
Blue Truck Acquisition, LLC........................... 6,866,594(10) 76.7
GE Capital CFE, Inc. ................................. 549,329(11) 20.8
All current directors and executive officers
as a group (14 persons)............................. 265,506(12) 11.2
- --------------
* Less than one percent.
26
(1) The applicable percentage of ownership is based on 2,086,475 shares of
Common Stock outstanding as of May 1, 2002.
(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 director is c/o Phillips Nizer LLP, 666 Fifth
Avenue, New York, NY 10103.
(6) Includes 13,333 shares issuable pursuant to options exercisable within
60 days and 14,841 shares held by Translesco, of which Mr. Wysocki is
the majority owner.
(7) Includes 12,333 shares issuable pursuant to options exercisable within
60 days.
(8) The address of this stockholder is 219 Granite Court, Boulder City, NV
89005.
(9) Includes 644,550 shares issuable upon conversion of the Charterhouse
debentures. According to a Schedule 13D, dated as of December 7, 1998
and amended as of March 16, 1999, Charterhouse Equity Partners III,
L.P., a Delaware limited partnership ("CEP III"), is the principal
member of Charterhouse. The general partner of CEP III is CHUSA Equity
Investors III, L.P., whose general partner is Charterhouse Equity III,
Inc., a wholly-owned subsidiary of Charterhouse International. Each of
Charterhouse and CEP III has shared voting and dispositive power over
the shares held of record by Charterhouse and may be deemed to
beneficially own these shares. Mr. 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.
(10) Consists entirely of shares issuable upon conversion of the Company's
Series A Preferred Stock (including dividends accumulated thereon as of
May 1, 2002) 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.
(11) Consists entirely of shares issuable upon conversion of the Company's
Series A Preferred Stock (including dividends accumulated thereon as of
May 1, 2002) held by GE Capital CFE, Inc, formerly known as CFE, Inc.
("CFE"). According to a Schedule 13D
27
dated as of July 28, 2000 and amended as of February 14, 2002, CFE is a
wholly-owned subsidiary of GE Capital, which is a wholly-owned
subsidiary of General Electric Capital Services, Inc., a Delaware
corporation ("GECS"), which, in turn, is a wholly owned subsidiary of
General Electric Company, a New York corporation ("GE"). Each of GE
Capital, GECS and GE disclaims beneficial ownership of the shares held
by CFE. The address of CFE is 201 High Ridge Road, Stamford, CT 06927.
(12) Includes 92,322 shares issuable pursuant to options exercisable within
60 days.
28
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 OMITTED]
________________________
(1) The Transportation Index includes more than 100 railroads, trucking
companies, airlines, pipelines (except natural gas) and services such
as warehousing and travel arrangements.
(2) The Company's Common Stock began trading on the Nasdaq National Market
on May 1, 1998. Prior to May 1, 1998, the Common Stock was not publicly
traded. Comparative data is presented for the period beginning on May
1, 1998 and ending on December 31, 2000.
May 1, December 31,
------ ----------------------------------
1998 1998 1999 2000 2001
---- ---- ---- ---- ----
United Road Services, Inc. 100 141 13 .38 .20
Nasdaq Index 100 118 220 132 105
Transportation Index 100 80 76 69 82
29
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, 2001, all Section 16(a)
filing requirements applicable to the Company's officers, directors and greater
than ten percent stockholders were complied with, except that each of Mr. Rhodes
and Mr. Fagan was late in filing an initial report of ownership in connection
with his appointment as a director of the Company.
AUDITORS
KPMG LLP ("KPMG") has been selected as the Company's independent
auditors for the 2002 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 for professional
services rendered for the audit of the Company's financial statements for the
fiscal year ending December 31, 2001 and the reviews of the interim financial
statements included in the Company's Quarterly Reports on Form 10-Q for fiscal
year 2001 were $350,000.
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
2001.
ALL OTHER FEES
Fees billed to the Company by KPMG for all other non-audit professional
services for fiscal year 2001 were $124,500. 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 2003 must be received at the Company's executive
offices no later than February 6, 2003 for evaluation as to inclusion in the
proxy statement in connection with such meeting, unless
30
such meeting is held more than 30 days before or after June 6, 2003, in which
case the deadline for the receipt of such proposals will be a reasonable time
prior to the date the Company prints and mails its proxy materials for such
meeting.
Under the Company's Amended and Restated Bylaws, in order for a
stockholder to propose business (including to nominate a candidate for director)
to be considered at an annual meeting of stockholders, timely written notice of
such business must be given to the Company's Secretary. To be timely with
respect to the Company's annual meeting of stockholders to be held in 2003, such
notice must be received at the principal executive offices of the Company
between March 8, 2003 and April 6, 2003 (except in the event that the date of
such annual meeting is prior to May 7, 2003 or after August 5, 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 later of the 60th
day prior to such date and 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: May 13, 2002
31
APPENDIX A
----------
AUDIT COMMITTEE CHARTER
UNITED ROAD SERVICES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OPERATING CHARTER
-----------------
The Board of Directors of United Road Services, Inc. has appointed an Audit
Committee pursuant to authorization by the Company's bylaws. The objectives,
composition and responsibilities of the Audit Committee are as follows:
OBJECTIVES
- ----------
o The primary objective of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibility relating to the
Company's internal controls and financial reporting practices. In addition,
the Committee will maintain open lines of communication between the Board,
management, internal auditor(s) and the Company's independent accountants
on these matters.
COMPOSITION
- -----------
o The Audit Committee shall be comprised of three or more Directors, each of
whom shall have been determined by the Board to qualify as an "independent
director" as defined in Sections 303.01(B)(2)(a) and (3) of the New York
Stock Exchange's listing standards (including the instructions thereto),
Section 121(A) of the American Stock Exchange's listing standards or Rule
4200(a)(15) of the National Association of Securities Dealers listing
standards. Notwithstanding the foregoing, in the event that the Board has
determined that it is not possible to form an Audit Committee comprised
solely of "independent directors" as defined under the applicable listing
standards, the Board may appoint to the Audit Committee one or more
Directors who do not qualify as "independent" under such listing standards
but who otherwise meet the requirements relating to financial and
accounting knowledge and ability set forth below. All members of the
Committee shall have a working familiarity with basic finance and
accounting practices and shall be able to read and understand fundamental
financial statements, including a company's balance sheet, income statement
and cash flow statement. At least one member of the Committee shall have
past employment experience in finance or accounting, the requisite
professional certification in accounting or other comparable experience or
background that results in his or her financial sophistication, including
having been a chief executive officer, chief financial officer or other
senior officer with financial oversight responsibilities.
o The members of the Committee shall be elected, from time to time, by the
Board and shall hold office until their successors shall be duly elected
and qualified or their earlier
resignation or removal. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
RESPONSIBILITIES
- ----------------
o The Committee shall meet a minimum of two times per year and hold special
meetings as circumstances require. In addition, the Committee shall meet
privately with the Company's independent accountants to review their
findings and recommendations.
o The Committee shall report its activities to the full Board of Directors on
a regular basis.
o The Committee shall recommend to the Board of Directors the selection of
the independent accountants to audit the financial statements of the
Company, considering independence and effectiveness, and approve the fees
and other compensation to be paid to the independent accountants. On an
annual basis, the Committee shall ensure that it has received from the
independent accountants a formal, written statement delineating all
relationships between the accountants and the Company, consistent with
Independent Standards Board Standard 1, and shall review and discuss with
the accountants any disclosed relationships or services that may impact the
objectivity and independence of the accountants and take, or recommend that
the full Board take, appropriate action to oversee the independence of the
outside accountants. The independent accountants shall be ultimately
accountable to the Board of Directors and the Committee, as representatives
of the stockholders, and the Board of Directors and the Committee shall
have ultimate authority and responsibility to select, evaluate, and, where
appropriate, replace the independent accountants.
o The Committee shall review, annually, the audit plan of the Company's
independent accountants.
o The Committee shall monitor the adequacy of the Company's internal controls
by reviewing audit recommendations and management's response to actions to
correct the identified deficiencies.
o The Committee shall review the Company's significant accounting principles
and policies and any changes thereto.
o The Committee shall review and assess the adequacy of this Operating
Charter on an annual basis.
o The Committee shall review the Company's annual audited financial
statements and discuss such financial statements with management, and based
upon such review and the discussions with management and the independent
accountants referred to above, the Committee shall recommend to the Board
of Directors whether or not the annual audited financial statements of the
Company shall be included in the Company's Annual Report on Form 10-K for
the relevant fiscal year.
- --------------------------------------------------------------------------------
COMMON STOCKHOLDERS' PROXY CARD
UNITED ROAD SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 6, 2002
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 June 6, 2002, at 10:00 a.m. Eastern
Time at the offices of McDermott, Will & Emery, 50 Rockefeller Plaza, 11th
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.
JUNE 6, 2002
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A |X| Please mark your
votes as in this
example
FOR the nominees WITHHOLD
listed as right (except AUTHORITY
as directed to the to vote for the nominees
contrary below) listed at right
|_| |_|
NOMINEES:
1. ELECTIONS OF Gerald R. Riordan
DIRECTOR. Two A. Lawrence Fagan
Class I directors
are to be elected by
the holders of the common
stock, par value $.01 per
share, to serve until the
Company's annual meeting in 2005.
If any other matters
properly come before the
Meeting or any
adjournment thereof, this
proxy will be voted
according to the judgment
of the persons named on
the reverse side as
Proxies.
THIS PROXY WILL BE
VOTED AS SPECIFIED AT
LEFT WITH RESPECT TO THE
ACTIONS TO BE TAKEN ON
THE PROPOSAL. IN THE
ABSENCE OF ANY
SPECIFICATION, THIS PROXY
WILL BE VOTED FOR THE
NOMINEES SPECIFIED AT
LEFT.
THE UNDERSIGNED HEREBY
ACKNOWLEDGES RECEIPT OF
THE NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS
OF THE COMPANY AND THE
PROXY STATEMENT DATED MAY
13, 2002.
INSTRUCTIONS: TO WITHHOLD VOTE FOR ANY
INDIVIDUAL NOMINEE(S), WRITE THAT
NOMINEE'S NAME ON THE SPACE PROVIDED
BELOW.
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.
- --------------------------------------------------------------------------------