<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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 Section240.14a-11(c) or
Section240.14a-12
ZIMMERMAN SIGN COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ZIMMERMAN SIGN COMPANY
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
ZIMMERMAN SIGN COMPANY
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1999
------------------------
To the Shareholders of
Zimmerman Sign Company:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Zimmerman
Sign Company (the "Company") will be held on May 19, 1999 at 10:00 A.M., central
time, at the Sheraton Hotel, 5701 South Broadway Avenue, Tyler, Texas for the
following purposes:
1. To elect five directors of the Company;
2. To vote upon a proposal to ratify the selection of independent auditors;
and
3. To transact such other business as may properly come before the meeting
and any adjournment thereof.
Only shareholders of record at the close of business on April 12, 1999 are
entitled to notice of, and to vote at, the Annual Meeting of Shareholders.
Your attention is directed to the Proxy Statement submitted with this
notice. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE DATE AND
SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
IN THE EVENT YOU DECIDE TO ATTEND THE MEETING, YOU MAY REVOKE SUCH PROXY AND
VOTE YOUR SHARES IN PERSON. No postage need be affixed to the enclosed envelope
if mailed in the United States.
By Order of the Board of Directors
Jeffrey P. Johnson
SECRETARY
<PAGE>
ZIMMERMAN SIGN COMPANY
9846 HIGHWAY 31 EAST
TYLER, TEXAS 75705
903-535-7400
------------------------
PROXY STATEMENT
---------------------
Your Proxy is being solicited by the Board of Directors of Zimmerman Sign
Company (the "Company" or "Zimmerman") for use at the Annual Meeting of
Shareholders to be held at the Sheraton Hotel, 5701 South Broadway Avenue,
Tyler, Texas on May 19, 1999 at 10:00 A.M., central time and at any reconvened
meeting following adjournment thereof. In addition to solicitation of Proxies by
mail, the directors, officers and employees of the Company may solicit Proxies
personally, by telephone, telefax or telegram. The expense of all such
solicitation, including the cost of preparing, printing and mailing this Proxy
Statement, will be borne by the Company. The Company will, upon request,
reimburse brokers, banks or other persons for their reasonable out-of-pocket
expenses in forwarding proxy material to beneficial owners of the Company's
shares. This Proxy Statement, the accompanying Proxy and the Company's Annual
Report to Shareholders, which contains financial statements for the year ended
December 31, 1998, will first be mailed to shareholders of the Company on or
about April 19, 1999.
A shareholder who has submitted a Proxy pursuant to this solicitation may
revoke it at any time before it is voted at the Annual Meeting of Shareholders.
A Proxy may be revoked by delivery to the Secretary of the Company, at the
Company's address set forth above, a written revocation of such Proxy or a duly
executed Proxy bearing a later date that is prior to the date of the Annual
Meeting, or by voting in person at the Annual Meeting.
Only shareholders of record as of the close of business on April 12, 1999
will be entitled to vote at the meeting. On that date, the Company had
outstanding and entitled to one vote per share, 1,269,549 shares of Common
Stock, par value $0.01 per share ("Common Stock"). A majority of the outstanding
shares will constitute a quorum at the meeting. Abstentions and broker non-votes
are counted for purposes of determining the presence or absence of a quorum for
the transaction of business. Abstentions are counted in tabulations of the votes
cast on proposals presented to shareholders, whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
If no contrary instruction is indicated, shares represented by properly
executed Proxies in the accompanying form of proxy will be voted by the persons
designated in the printed portion thereof FOR the election of the nominees named
below to serve as directors for a one-year term and FOR the ratification of the
selection of KPMG LLP ("KPMG") as independent auditors for the calendar year
1999. Each director must be elected by the affirmative vote of a plurality of
the votes cast at the meeting by the holders of shares of Common Stock
represented in person or by Proxy. Approval of KPMG as independent auditors
requires the affirmative vote of a majority of the shares of Common Stock
present or represented at the meeting.
Management does not know of any other matters to be brought before the
meeting at this time; however, if any other matters are brought before the
meeting, the proxy holder shall vote in his discretion with respect to the
matter. In the event a shareholder specifies a different choice on the Proxy,
such shareholder's shares will be voted or withheld in accordance with the
specifications so made. Should any nominee for director named herein become
unable or unwilling to accept nomination or election, it is intended that the
persons acting under proxy will vote for the election of such other person as
the Board of Directors of the Company may recommend unless the number of
directors is reduced by the Board of Directors. The Company has no reason to
believe that any nominee will be unable or unwilling to serve if elected to
office.
<PAGE>
PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information with respect to beneficial
ownership of Common Stock as of March 16, 1999 by (i) all persons known to the
Company to be the beneficial owner of 5% or more of the Common Stock, (ii) each
director of the Company, (iii) the chief executive officer and each of the
Company's four other most highly compensated executive officers whose total
annual compensation for 1998 based on salary and bonus earned during 1998
exceeded $100,000, and (iv) all the Company directors and executive officers as
a group. To the best knowledge of the Company, all persons listed have sole
voting and investment power with respect to their shares unless otherwise
indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
- ----------------------------------------------------------------------------- ------------------ -----------------
<S> <C> <C>
Continental Illinois Venture Corporation and MIG Partners VIII............... 730,335(1) 36.52%
231 South LaSalle Street
Chicago, IL 60697
Athena Capital Management.................................................... 107,927(2) 8.50%
621 Germantown Pike Ste: 105
Plymouth Valley, PA 19401
David E. Anderson............................................................ 505,987(3) 38.24%
8150 N. Central Expressway
Suite 1801
Dallas, TX 75206
Tom E. Boner................................................................. 140,661(4) 10.43%
9846 Highway 31 East
Tyler, TX 75705
Michael W. Coppinger......................................................... 56,060(5) 4.30%
Carl A. Goldman.............................................................. 16,000(6) 1.24%
John T. Griggs............................................................... 30,906(7) 2.41%
Jeffrey P. Johnson........................................................... 36,709(8) 2.84%
Andrea P. Joselit............................................................ 730,335(9) 36.52%
Robert F. Perille............................................................ 730,335(10) 36.52%
All directors and executive officers as a group (9 persons).................. 805,742 53.50%
</TABLE>
- ------------------------
(1) Consists entirely of currently exercisable warrants to purchase Common
Stock. Based on a statement on Schedule 13D filed with the Securities and
Exchange Commission on October 9, 1998, Continental Illinois Venture
Corporation ("CIVC") was the direct beneficial owner of warrants to purchase
819,310 shares of Common Stock, and MIG Partners, VIII ("MIG") was the
direct beneficial owner of warrants to purchase 204,827 shares of Common
Stock. On January 11, 1999, CIVC surrendered to the Company, and the Company
canceled, warrants to purchase 235,042 shares of Common Stock, and MIG
surrendered to the Company, and the Company canceled, warrants to purchase
58,760 shares of Common Stock. Thus, as of March 16, 1999, to the best
knowledge of the Company, CIVC was the direct beneficial owner of warrants
to purchase 584,268 shares of Common Stock, and MIG was the direct
beneficial owner of warrants to purchase 146,067 shares of Common Stock. In
the Schedule 13D, CIVC and MIG affirmed that they are a "group" for purposes
of Section 13(d)(3) of the Exchange Act, and they share voting and
dispositive power of all shares held by each of them. Therefore, each may be
deemed to own beneficially warrants currently exercisable into 730,335
shares of Common Stock, which, when exercised would result in ownership of
approximately 36.52% of the Issuer's Common Stock as computed under Rule
13d-3. The 13D filing was also made jointly by the following: (i) Bank of
America National Trust and Savings Association, a national trust and savings
2
<PAGE>
association, ("BA Bank"), by virtue of its ownership of all of the
outstanding common stock of CIVC; (ii) BankAmerica Corporation, a Delaware
corporation, by virtue of its ownership of all of the outstanding common
stock of BA Bank; and (iii) Sheryl E. Bartol, Matthew W. Clary, Andrea P.
Joselit (a director of the Company), Jeffrey M. Mann, Dennis P. McCrary,
Jason A. Mehring and Robert F. Perille (a director of the Company), by
virtue of their each being a general partner of MIG.
(2) Based on a statement on Schedule 13G filed with the Securities and Exchange
Commission dated January 26, 1999, Athena Capital Management, Inc. was the
beneficial owner at December 31, 1998 of 107,927 shares of which it has
shared voting and dispositive power.
(3) Includes 53,564 shares of Common Stock subject to presently exercisable
warrants.
(4) Includes 41,139 shares of Common Stock subject to presently exercisable
options and 37,699 shares of Common Stock subject to presently exercisable
warrants.
(5) Includes 17,331 shares of Common Stock subject to presently exercisable
options and 15,546 shares of Common Stock subject to presently exercisable
warrants.
(6) Includes 15,000 shares of Common Stock subject to presently exercisable
options.
(7) Includes 11,603 shares of Common Stock subject to presently exercisable
options and 3,848 shares of Common Stock subject to presently exercisable
warrants.
(8) Includes 17,406 shares of Common Stock subject to presently exercisable
options and 3,848 shares of Common Stock subject to presently exercisable
warrants.
(9) To the Company's best knowledge Ms. Joselit does not directly own shares of
Common Stock. Ms. Joselit is a general partner of MIG, which is a beneficial
owner of warrants currently exercisable into 730,335 shares of Common Stock.
Ms. Joselit disclaims beneficial ownership of such shares.
(10) To the Company's best knowledge Mr. Perille does not directly own shares of
Common Stock. Mr. Perille is a general partner of MIG, which is a beneficial
owner of warrants currently exercisable into 730,335 shares of Common Stock.
Mr. Perille disclaims beneficial ownership of such shares.
The Company was a majority owned subsidiary of Independence Holding Company
("IHC") until December 31, 1996, when IHC distributed all of its investment in
the Company to holders of IHC's common stock.
PROPOSAL 1
ELECTION OF DIRECTORS
Five directors will be elected at the meeting, each to hold office until the
next Annual Meeting of Shareholders and until such director's successor shall be
elected and shall qualify or until his earlier resignation, removal from office
or death.
It is intended that shares represented by Proxies will be voted for the
election of the nominees named below. If at the time of the meeting any of the
nominees should be unwilling or unable to serve, the discretionary authority
provided in the Proxy will be exercised to vote for a substitute or substitutes,
as the Board of Directors recommends. The Board has no reason to believe that
any of the nominees will be unwilling or unable to serve as a director.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE ELECTION OF ALL OF THE NOMINEES.
3
<PAGE>
The persons named below have been nominated for election as directors. All
of such nominees presently serve as directors of the Company.
David E. Anderson, age 54
Chairman
David E. Anderson has been Chairman of Zimmerman since November 1996 and a
Director since 1982. Mr. Anderson was Chairman of Zimmerman Holdings, Inc.
(formerly the immediate parent company of Zimmerman) for more than five years
prior to November 1996. From 1981 until 1986, he was Executive Vice President
and a Director of IHC. Previously, Mr. Anderson was a Vice President of The
Dyson-Kissner-Moran Corporation and a Vice President of Continental Illinois
National Bank and Trust Company of Chicago.
Tom E. Boner, age 60
President
Tom E. Boner has been President, Treasurer and a Director of Zimmerman since
1984, having joined Zimmerman in 1981 as Director of Sales and Marketing. From
1970 to 1975, he was in sales with American Sign and Indicator, and from 1976
until 1981, was with American Bank Equipment Company. Mr. Boner served as a
Director of the International Sign Association from 1986 until 1995 and was
Chairman thereof in 1993.
Carl A. Goldman, age 65
Director
Carl A. Goldman is co-founder and has been President and Chief Executive Officer
of Corporate Capital Consultants, Inc. since its inception in 1974. Prior
thereto, he spent ten years in the investment banking department of three Wall
Street firms and five years as Treasurer of The Franklin Corporation, a small
business investment company. Mr. Goldman has been a consultant to Zimmerman and
IHC since February 1996. Mr. Goldman became a director of Zimmerman as of
December 31, 1996.
Andrea P. Joselit, age 32
Andrea P. Joselit has been a Director of Zimmerman since September 1998. She has
been a Principal in Bank of America Capital Investors in Chicago (formerly known
as Mezzanine Investments Group) since October 1997 and for 4 years prior to that
was an Associate in that group. Prior thereto, she spent two years as a
Financial Analyst in the Energy & Minerals Corporate Lending Group of
Continental Bank, and two years as an Accounting Analyst in the Capital Markets
Operations Group.
Robert F. Perille, age 40
Robert F. Perille has been a Director of Zimmerman since September 1998. He has
been a Managing Director of Bank of America Capital Investors in Chicago
(formerly known as the Mezzanine Investments Group) since 1992. Prior thereto,
Mr. Perille spent four years in Continental Bank's New York Structured Finance
Group, one year in the Capital Markets group in New York, and six years in the
New England regional office. Mr. Perille also serves as a director of Engineered
Glass Products LLC; ELF Machinery, LLC; Innovative Manufacturing Solutions,
Inc.; Woodcraft Industries, Inc.; and Claire-Sprayway, Inc.
The Board of Directors met four times in 1998. Each member of the Board
participated in at least 75% of all Board of Directors meetings and applicable
committee meetings held during the period for which he or she was a director.
The Audit Committee of the Board, which is responsible for the recommendation of
the Company's independent public auditors, the review of such auditor's audit
and recommendations concerning internal controls, met twice in 1998 and has met
once thus far in 1999. The Audit Committee currently consists of Mr. Goldman and
Ms. Joselit.
The Company also has a Compensation Committee, which is responsible for
reviewing and approving the compensation of executive officers, reviewing and
recommending for approval the compensation of
4
<PAGE>
directors, advising management regarding employee benefits, and administering
the Company's 1996 Stock Option Plan. The Compensation Committee currently
consists of Messrs. Anderson, Goldman and Perille. The committee met twice in
1998 and has met once thus far in 1999.
Directors of the Company who are not also employees of the Company or
employees of an affiliate of the Company receive an annual fee of $7,000 plus
$1,000 for each Board meeting and $500 for each Committee meeting attended.
Directors who are officers of the Company do not receive compensation for
serving as directors of the Company.
Pursuant to the Company's 1996 Stock Option Plan, directors of the Company
who are not also employees of the Company or employees of an affiliate of the
Company ("Independent Directors") are eligible to participate in the Company's
Stock Option Plan under terms and conditions approved by the Compensation
Committee.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid by Zimmerman to its chief
executive officer and the four other most highly compensated executive officers
(collectively the "Named Executive Officers") for the years ended December 31,
1998, 1997, and 1996.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------
ANNUAL COMPENSATION AWARDS
---------------------------------------------- ------------- SECURITIES
OTHER ANNUAL RESTR. STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($) OPTIONS(2)
- ---------------------------------- --------- ---------- ----------- --------------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
David E. Anderson................. 1998 125,000 23,150 -- -- --
Chairman 1997 125,000 0 -- -- --
1996 188,000(1) 0 -- -- --
Tom E. Boner...................... 1998 200,500 37,332 -- -- 10,000
President and Treasurer 1997 200,500 0 -- -- 38,639
1996 155,500 40,000 -- -- --
Michael W. Coppinger.............. 1998 127,500 25,882 -- -- 7,500
Vice President, Sales 1997 121,300 0 -- -- 15,456
1996 104,300 20,000 -- -- --
John T. Griggs.................... 1998 122,000 21,892 -- -- 15,500
Vice President, 1997 115,800 0 -- -- 7,728
Manufacturing 1996 104,300 20,000 -- -- --
Jeffrey P. Johnson................ 1998 122,000 23,972 -- -- 7,800
Vice President and Chief 1997 115,800 0 -- -- 15,456
Financial Officer 1996 104,300 20,000 -- -- --
<CAPTION>
PAYOUTS
--------------- ALL OTHER
NAME AND PRINCIPAL POSITION LTIP PAYOUTS($) COMPENSATION($)(3)
- ---------------------------------- --------------- -------------------
<S> <C> <C>
David E. Anderson................. -- 1,104
Chairman -- 1,104
-- 352,180
Tom E. Boner...................... -- 5,254
President and Treasurer -- 5,004
-- 331,454
Michael W. Coppinger.............. -- 4,840
Vice President, Sales -- 4,806
-- 135,854
John T. Griggs.................... -- 4,701
Vice President, -- 4,642
Manufacturing -- 70,654
Jeffrey P. Johnson................ -- 4,778
Vice President and Chief -- 4,642
Financial Officer -- 135,854
</TABLE>
- ----------------------------------
(1) Includes amounts received from Zimmerman Holdings, Inc., which was formerly
Zimmerman's majority shareholder.
(2) Reflects options to purchase shares of Common Stock.
(3) Represents dollar value of premiums paid for term life insurance,
contributions made under Zimmerman's 401(k) savings plan instituted in 1995,
and other compensation. The amounts for 1998, 1997 and 1996 term life
insurance for all executive officers were $504, $504 and $704 respectively.
1996 All Other Compensation amounts for Messrs. Boner, Coppinger, Griggs and
Johnson include payments to them by Zimmerman in November 1996 in the
amounts of $326,000, $130,400, $65,200, and $130,400 respectively in
consideration of the termination of all of their options to acquire
Zimmerman common stock; the balance of 1998, 1997 and 1996 All Other
Compensation for each executive officer represents 401(k) contributions,
except for Mr. Anderson, who in 1996 also received $350,000 as a one-time
fee as consideration for services performed in connection with the
refinancing of Zimmerman's indebtedness.
5
<PAGE>
OPTION GRANTS IN 1998
The following table provides information related to options to purchase
Common Stock granted to the Named Executive Officers during 1998. The Company
has not granted stock appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE AT ASSUMED
--------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENTAGE OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE PER --------------------
NAME GRANTED FISCAL 1998 SHARE EXPIRATION DATE 5% 10%
- ------------------------------------- ------------- --------------- ----------- ------------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Tom E. Boner......................... 10,000 15.20% $ 3.79 September 29, 2003 $ 10,471 $ 23,138
Michael W. Coppinger................. 7,500 11.40% 3.79 September 29, 2003 7,853 17,354
John T. Griggs....................... 15,500 23.56% 3.79 September 29, 2003 16,230 35,864
Jeffrey P. Johnson................... 7,800 11.85% 3.79 September 29, 2003 8,167 18,048
</TABLE>
- ------------------------------
(1) The agreements underlying such options provide that the options are
exercisable over a four year period on a ratable basis. All such options
have a five year term and are transferable by the option holder.
(2) The potential realizable value columns of the table above illustrate the
value that might be realized upon exercise of the options immediately prior
to the expiration of their terms, assuming the specified compounded rates of
appreciation of the price of the Common Stock over the terms of the options.
The use of the assumed 5% and 10% returns is established by the SEC and is
not intended by the Company to forecast possible future appreciation of the
price of the Common Stock.
OPTION EXERCISES IN 1998 AND YEAR END OPTION VALUES
The following table provides information related to options to purchase
Common Stock exercised by the Named Executive Officers during 1998 and the
number and value of such options held at December 31, 1998. The Company does not
have any outstanding appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT DECEMBER IN-THE-MONEY OPTIONS
31, 1998 AT DECEMBER 31, 1998(1)
SHARES ACQUIRED ON VALUE ---------------------------------- ----------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ------------------- ------------- ------------- ------------------- ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Tom E. Boner.......... 0 $ 0 48,639 0 $ 5,506 $ 0
Michael W. Coppinger.. 0 0 22,956 0 2,202 0
John T. Griggs........ 0 0 23,228 0 1,101 0
Jeffrey P. Johnson.... 0 0 23,256 0 2,202 0
</TABLE>
- ------------------------------
(1) The closing price of the Common Stock as reported by Nasdaq Trading and
Market Services on December 28, 1998, the last trade completed in 1998, was
$3.5625. In accordance with SEC regulations, value is calculated based on
the difference between the option exercise price and $3.5625 multiplied by
the number of shares of Common Stock underlying the options.
EMPLOYMENT AGREEMENTS
Mr. Anderson entered into an amendment and restatement of his existing
employment agreement with Zimmerman for a term of four years commencing January
1, 1997 which, at the end of such initial four-year term, is automatically
renewable for continuous one-year periods unless earlier terminated in
accordance with the terms of the agreement. Pursuant to such agreement, Mr.
Anderson's annual base salary is not less than $125,000, as fixed by Zimmerman's
Board of Directors from time to time. Mr. Anderson is eligible also for a bonus
of up to 60% of his base salary, the amount of such bonus earned to be based
upon quantitative and qualitative benchmarks. Prior to December 31, 1999, under
certain circumstances after (a) a change of control of Zimmerman, (b) the
termination of Mr. Anderson's employment without cause or (c) his death or
disability, Mr. Anderson is entitled to a severance payment in the amount of
four years' then-base salary plus the maximum earnable bonus. If such events
occur on or after December 31, 1999, Mr. Anderson is entitled to a severance
payment in the amount of three years'
6
<PAGE>
then-base salary plus three times the greater of 50% of the maximum earnable
bonus and the most recent bonus earned.
Mr. Boner entered into an amendment and restatement of his existing
employment agreement with Zimmerman for a term of three years commencing January
1, 1997 which, at the end of such initial three-year term, is automatically
renewable for continuous one-year periods unless earlier terminated in
accordance with the agreement. Pursuant to such agreement, Mr. Boner's annual
base salary is not less than $155,000, as fixed by Zimmerman's Board of
Directors from time to time. In addition to his annual base salary under the
agreement, Mr. Boner received supplemental salary payments of $45,000 for each
of 1997 and 1998. Additionally, Mr. Boner is eligible to receive a bonus of up
to 60% of his base salary (exclusive of the supplemental salary payments), the
amount of such bonus earned to be based upon quantitative and qualitative
benchmarks. Under certain circumstances after (a) a change of control of
Zimmerman, (b) the termination of Mr. Boner's employment without cause or (c)
his death or disability, Mr. Boner is entitled to a severance payment equal to
three years' then-base salary (exclusive of the supplemental salary payments)
plus three times the maximum earnable bonus.
Each of Messrs. Coppinger, Johnson and Griggs entered into an amendment and
restatement of his existing employment agreement with Zimmerman for a term of
two years commencing January 1, 1997 which, at the end of such initial two-year
term, is automatically renewable for continuous one-year periods unless earlier
terminated in accordance with the agreement. As of the date of this Proxy
Statement, none of the Employment Agreements of Messrs. Coppinger, Johnson and
Griggs has been terminated. Pursuant to such agreements, Messrs. Coppinger,
Johnson, and Griggs each will receive an annual base salary of not less than
$104,000, as fixed by Zimmerman's Board of Directors from time to time. In
addition to the annual base salary under his employment agreement, each of these
individuals received a supplemental salary payment for each of 1997 and 1998 of
$17,000, $11,500, and $11,500, respectively. Additionally, each of these
officers is eligible to receive a bonus of up to 50% of his base salary, the
amount of such bonus earned to be based upon quantitative and qualitative
benchmarks. Under certain circumstances after (a) a change of control of
Zimmerman, (b) the termination of such officer's employment without cause or (c)
such officer's death or disability, such officer is entitled to a severance
payment equal to two years' then-base salary (exclusive of the supplemental
salary payments) plus two times the maximum earnable bonus.
STOCK OPTION PLAN
In November 1996, Zimmerman's Board of Directors adopted, and its
shareholders approved, the Stock Option Plan. The purpose of the Stock Option
Plan is to provide employees, officers and directors with additional incentives
by increasing their proprietary interest in Zimmerman. The aggregate number of
shares of Zimmerman Common Stock with respect to which options may be granted
may not exceed 185,000 shares.
The Stock Option Plan provides for the grant of incentive stock options
("ISOs") as defined in Section 422 of the Internal Revenue Code of 1986, as
amended, and nonqualified stock options (collectively "Awards"). The Stock
Option Plan is administered by the Compensation Committee. The Compensation
Committee has, subject to the terms of the Stock Option Plan, the sole authority
to grant Awards under the Stock Option Plan, to construe and interpret the Stock
Option Plan and to make all other determinations and take any and all actions
necessary or advisable for the administration of the Stock Option Plan.
All of Zimmerman's full-time, salaried employees and members of the Board of
Directors are eligible to receive Awards under the Stock Option Plan. Options
will be exercisable during the period specified in each option agreement and
will generally be exercisable in installments pursuant to a vesting schedule to
be designated by the Compensation Committee. The provisions of option agreements
may provide for the acceleration of the exercisability in the event of certain
events including certain reorganizations and changes in control of Zimmerman. No
option will remain exercisable later than ten years after the date of
7
<PAGE>
grant. The exercise prices for ISOs granted under the Stock Option Plan may be
no less than the fair market value of the Zimmerman Common Stock on the date of
grant. The exercise prices of nonqualified stock options are set by the
Compensation Committee.
There are no federal income tax consequences upon the grant of an option
under the Stock Option Plan. Upon exercise of a nonqualified option, the
optionee generally will recognize ordinary income in the amount equal to the
difference between the fair market value of the option shares at the time of
exercise and the exercise price, and Zimmerman is generally entitled to a
corresponding tax deduction. When an optionee sells shares issued upon the
exercise of a non-qualified stock option, the optionee realizes short-term or
long-term capital gain or loss, depending on the length of the holding period,
but Zimmerman is not entitled to any tax deduction in connection with such sale.
An optionee will not be subject to federal income taxation upon the exercise
of ISOs granted under the Stock Option Plan, and Zimmerman will not be entitled
to a federal income tax deduction by reason of such exercise. A sale of shares
of Zimmerman Common Stock acquired upon exercise of an ISO that does not occur
within one year after the exercise or within two years after the grant of the
option generally will result in the recognition of long-term capital gain or
loss by the optionee in the amount of the difference between the amount realized
on the sale and the exercise price, and Zimmerman is not entitled to any tax
deduction in connection therewith. If a sale of the shares acquired upon
exercise of the option occurs within two years from the date of the option grant
(a "disqualifying disposition"), the optionee generally will recognize ordinary
income equal to the lesser of (i) the excess of the fair market value of the
shares on the date of exercise of the options over the exercise price or (ii)
the excess of the amount realized on the sale of the shares over the exercise
price. Any amount realized on a disqualifying disposition in excess of the
amount treated as ordinary income will be long-term or short-term capital gain,
depending upon the length of time the shares were held. Zimmerman generally will
be entitled to a tax deduction on a disqualifying disposition corresponding to
the ordinary income recognized by the optionee.
As of April 15, 1997, Zimmerman granted options under the Stock Option Plan
to Mr. Goldman to purchase 10,000 shares. Zimmerman has granted, as of January
1, 1997, options under the Stock Option Plan to purchase 38,639 shares, 7,728
shares, 15,456 shares and 15,456 shares to Messrs. Boner, Griggs, Johnson and
Coppinger, respectively. Additionally, Zimmerman has granted, as of September
30, 1998, options under the Stock Option Plan to purchase 5,000 shares, 10,000
shares, 15,500 shares, 7,800 shares and 7,500 shares to Messrs. Goldman, Boner,
Griggs, Johnson and Coppinger, respectively.
401(k) SAVINGS PLAN
Zimmerman has a defined contribution savings plan (the "Savings Plan")
covering all full-time employees who have at least one year of service and who
are not members of a collective bargaining unit. Messrs. Anderson, Boner and
Johnson are the Savings Plan trustees. Participants in the Savings Plan may make
salary-reduction contributions pursuant to Section 401(k) of the Code. Zimmerman
makes matching contributions to each participant's account (not to exceed 50% of
a participant's contribution), up to a maximum of 3% of a participant's monthly
compensation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No directors have interlocking or other relationships with other boards or
Zimmerman that require disclosure under Item 402(j) or Item 404 of Regulation
S-K, except as disclosed herein under "Certain Relationships and Related
Transactions."
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Prior to December 31, 1996, Zimmerman did not have a Compensation Committee,
and executive compensation was set by the Board of Directors. Under the guidance
of the Board, compensation policies have been designed which align executive
compensation to performance in areas key to Zimmerman's
8
<PAGE>
long-term success. Zimmerman's compensation objective is to maximize shareholder
value by attracting, rewarding, and retaining highly qualified and productive
individuals and by motivating executives and key employees toward achieving
Zimmerman's strategic goals and plans. The key components of Zimmerman's
executive compensation are base salary and annual incentive awards.
The Board annually reviews and establishes base salaries, which are at
levels that the Board believes are competitive with industry and regional pay
practices and economic conditions. In determining appropriate salary levels, the
Board considers criteria including the individual's level and scope of
responsibility and performance contributions, as well as internal and market
comparisons. Zimmerman awards annual cash incentive bonuses to reward executive
officers and other key employees based upon individual performance and the
achievement of specific financial and operational goals determined for the year.
Payments of incentive bonus awards are also contingent upon the Company
attaining certain levels of annual operating profitability.
In regard to Mr. Anderson, in 1998, he participated in Zimmerman's profit
incentive plan under which he was entitled to earn a cash incentive bonus of up
to 60% of base salary. The plan had an escalating schedule under which profit
incentive awards were linked to year-to-year improvement in Zimmerman's earnings
before interest expense, taxes, depreciation and amortization. Through this
mechanism, approximately two-thirds of Mr. Anderson's achievable bonus in 1998
was directly tied to profit improvement. The remaining one-third of Mr.
Anderson's maximum earnable bonus was based upon the completion of other
specific corporate objectives established for such year.
Messrs. Boner, Coppinger, Griggs and Johnson also participate in Zimmerman's
profit incentive plan. As in the case of Mr. Anderson, the bonus awards listed
in the Summary Compensation Table for Messrs. Boner, Coppinger, Griggs and
Johnson reflect cash incentive awards under such plan.
Under the Stock Option Plan, Zimmerman's executive officers will be eligible
to receive stock option grants at the discretion of the Compensation Committee.
This report submitted by the 1998 Compensation Committee:
David E. Anderson Carl A. Goldman Robert F. Perille
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's directors, executive officers, and any person holding more
than ten percent of Zimmerman's Common Stock are required under the federal
securities laws to report their initial ownership of Zimmerman's Common Stock
and any subsequent changes in that ownership to the Securities and Exchange
Commission ("SEC"). Zimmerman is required to disclose in this proxy statement
any late filings of those reports. During the fiscal year ended December 31,
1998, the Company believes that no directors, executive officers or greater than
ten percent beneficial owners failed to timely file reports required by Section
16(a) of the Securities Exchange Act of 1934, except for one Form 4 filed one
day late by Mr. Goldman. In making this disclosure, the Company has relied
solely on the representations of its directors, executive officers and its ten
percent holders and copies of the reports furnished to the Company.
9
<PAGE>
STOCK PERFORMANCE CHART
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1/22/97 3/31/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ZIMMERMAN SIGN CO. 100.00 140.00 145.00 147.52 150.00 147.50 157.50 150.00
NASDAQ NON-FINANCIAL INDEX 100.00 86.57 102.61 120.21 108.92 130.08 134.50 121.62
RUSSELL 2000 INDEX 100.00 92.97 108.04 124.10 119.94 132.01 125.85 100.50
<CAPTION>
12/31/98
<S> <C> <C> <C> <C> <C> <C> <C>
ZIMMERMAN SIGN CO. 142.50
NASDAQ NON-FINANCIAL INDEX 159.48
RUSSELL 2000 INDEX 116.58
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 30, 1998, the Company, Continental Illinois Venture
Corporation, a Delaware corporation ("CIVC"), MIG Partners VIII, a Delaware
partnership ("MIG"), and David E. Anderson, Tom E. Boner, Michael W. Coppinger,
John T. Griggs, Jeffrey P. Johnson and Michael St. Onge (all of whom are
executive officers and/or directors of the Company) (the "Management
Purchasers"), entered into that certain Senior Subordinated Note, Preferred
Stock and Warrant Purchase Agreement (the "Securities Purchase Agreement"). Two
of the Company's directors, Mr. Perille and Ms. Joselit, are general partners of
MIG, and Mr. Perille is an officer of CIVC.
Under the Securities Purchase Agreement, the Company issued to CIVC, MIG and
the Management Purchasers 12% Senior Subordinated Notes (the "Notes") in the
aggregate principal amount of $4 million and issued to CIVC, MIG and certain of
the Management Purchasers an aggregate of 52,500 shares of the Company's Series
A Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"),
which has a liquidation and redemption value of $5.25 million and is mandatorily
redeemable on September 30, 2006. The Series A Preferred Stock is also
redeemable at the option of the Company and if redeemed prior to September 30,
2003, the redemption value would increase between 1% and 5%. In connection with
the issuance of the Notes and Series A Preferred Stock under the Purchase
Agreement, the Company issued immediately exercisable warrants representing the
right to purchase shares of the Company's Common Stock (161,880 warrants related
to the Notes and 1,036,034 warrants related to the Preferred Stock) at an
exercise price of $3.79 per share, the approximate market price of the Common
Stock at the transaction date.
10
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The table below sets forth the name of each purchaser and the specific
amounts of Notes, Preferred Stock and Warrants purchased pursuant to the
Securities Purchase Agreement:
<TABLE>
<CAPTION>
FACE AMOUNT OF
NOTE SERIES A
PRINCIPAL SERIES A PREFERRED
PURCHASERS AMOUNT PREFERRED STOCK STOCK WARRANTS
- --------------------------------------------------- ------------ --------------- -------------- --------------
<S> <C> <C> <C> <C>
CIVC............................................... $ 2,898,700 40,763 $ 4,076,300 819,310
MIG................................................ $ 322,100 4,529 $ 452,900 204,827
David Anderson..................................... $ 236,133 3,322 $ 332,200 75,113
Tom Boner.......................................... $ 166,200 2,338 $ 233,800 52,864
Mike Coppinger..................................... $ 68,600 964 $ 96,400 21,800
Mike St. Onge...................................... $ 41,600 584 $ 58,400 13,208
Jeff Johnson....................................... $ 133,333 0 $ 0 5,396
John Griggs........................................ $ 133,333 0 $ 0 5,396
------------ ------ -------------- --------------
Total.............................................. $ 4,000,000 52,500 $ 5,250,000 1,197,914(1)
</TABLE>
- ------------------------
(1) Purchasers surrendered without consideration 343,655 warrants on January 8,
1999 as described below.
On September 30, 1998, Mr. Anderson entered into a Share Option Purchase
Agreement with the Company and certain of the Company's shareholders that are
affiliates of Geneve Holdings, Inc. (collectively, the "Geneve Affiliates")
pursuant to which, in consideration of $0.25 cash per share, the Geneve
Affiliates granted to (i) the Company an option to purchase an aggregate of
357,143 shares of Common Stock at a price per share equal to (a) $1.50 in cash
and (b) .0175 shares of Series C Preferred Stock, par value $0.01 per share, of
the Company; and (ii) Anderson an option to purchase an aggregate of 428,000
shares of Common Stock at a price per share equal to $3.25 in cash. The options
were exercisable only between the open of business on January 4, 1999 and the
close of business on January 8, 1999. Mr. Anderson and the Company entered into
a Purchase Agreement (the "Anderson Purchase Agreement") on September 30, 1998,
pursuant to which, promptly upon consummation of the transactions contemplated
by the Share Option Purchase Agreement, Mr. Anderson agreed to sell and the
Company agreed to buy 228,000 shares of Common Stock in exchange for $98,000 in
cash and 7,000 shares of the Company's Series B Preferred Stock, par value $0.01
per share.
On September 30, 1998, the Company, CIVC, MIG, the Geneve Affiliates and the
Management Purchasers entered into a letter agreement pursuant to which CIVC,
MIG and the Management Purchasers agreed to surrender, without consideration, to
the Company a portion of the warrants issued under the Securities Purchase
Agreement upon consummation of the transactions contemplated by the Share Option
Purchase Agreement and the Anderson Purchase Agreement.
On January 8, 1999, the Company and Mr. Anderson exercised the purchase
options granted by the Geneve Affiliates under the Share Option Purchase
Agreement as described above. On January 11, 1999, in accordance with the
Anderson Purchase Agreement, the Company purchased 228,000 shares of Common
Stock from Mr. Anderson, and in accordance with the letter agreement, CIVC, MIG
and the Management Purchasers surrendered to the Company a portion of their
Warrants without consideration as follows: CIVC surrendered Warrants for 235,042
shares of Common Stock, MIG surrendered Warrants for 58,760 shares of Common
Stock, Mr. Anderson surrendered Warrants for 21,548 shares of Common Stock, Mr.
Boner surrendered Warrants for 15,166 shares of Common Stock, Mr. Coppinger
surrendered Warrants for 6,254 shares of Common Stock, Mr. St. Onge surrendered
Warrants for 3,789 shares of Common Stock, Mr. Johnson surrendered Warrants for
1,548 shares of Common Stock, and Mr. Griggs surrendered Warrants for 1,548
shares of Common Stock.
11
<PAGE>
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has selected KPMG LLP ("KPMG") as the independent
auditors of the Company for the year ended December 31, 1999. It is anticipated
that representatives of KPMG, who also served as the Company's independent
auditors for the year ended December 31, 1998, will be present at the Annual
Meeting of Shareholders and will have an opportunity to make a statement if they
so desire and to answer any appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2
SHAREHOLDER PROPOSALS
Any proposal which a stockholder intends to present at next year's Annual
Meeting of Shareholders must be received at the Company's principal executive
office not later than December 17, 1999 in order to be included in the proxy
material for such meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows of no other
business to be presented for action at the meeting. As to any business which
would properly come before the meeting, the Proxies confer discretionary
authority in the persons named therein and those persons will vote or act in
accordance with their best judgment with respect thereto.
By Order of the Board of Directors
Jeffrey P. Johnson
SECRETARY
April 12, 1999
12
<PAGE>
4912-PS-99
<PAGE>
ZIM79 B DETACH HERE
- --------------------------------------------------------------------------------
PROXY
ZIMMERMAN SIGN COMPANY
ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints David E. Anderson and Jeffrey P. Johnson,
each with power to act without the other and full power of substitution, as
Proxies to represent and to vote, as designated on the reverse, all Common
Stock of Zimmerman Sign Company owned by the undersigned, at the Annual
Meeting of Stockholders to be held at the Sheraton Hotel, 5701 S. Broadway
Avenue, Tyler, TX 75703 on May 19, 1999 at 10:00 a.m. central time, upon such
other business as may properly come before the meeting or any adjournment
thereof including the following:
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE>
ZIMMERMAN SIGN COMPANY
C/O EQUISERVE
P.O. BOX 8040
BOSTON, MA 02266-8040
ZIM79 B DETACH HERE
- --------------------------------------------------------------------------------
/x/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED (i) FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR, (ii) FOR THE
RATIFICATION OF THE SELECTION OF KPMG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
TO AUDIT THE COMPANY'S FINANCIAL STATEMENTS FOR THE 1999 FISCAL YEAR AND
(iii) AT THE DISCRETION OF THE PROXY HOLDERS WITH REGARD TO ANY OTHER MATTER
THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
1. Election of Directors.
NOMINEES: David E. Anderson, Tom E. Boner, Carl A. Goldman,
Andrea P. Joselit, Robert F. Perille
FOR WITHHELD
ALL / / / / FROM ALL
NOMINEES NOMINEES
MARK HERE
FOR ADDRESS / /
/ / CHANGE AND
--------------------------------------- NOTE BELOW
For all nominees except as noted above.
FOR AGAINST ABSTAIN
2. Ratification of the selection of KPMG / / / / / /
LLP as Independent public accountants
to audit the Company's financial
statements for the 1999 fiscal year.
3. In their discretion, on any other matter that may properly come before
the meeting or any adjournment thereof.
<TABLE>
<S> <C>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE DATE, SIGN EXACTLY AS SHOWN HEREON AND MAIL PROMPTLY THIS
PROXY IN THE ENCLOSED ENVELOPE.
Note: When there is more than one owner, each should sign. When
signing as an attorney, administrator, executor, guardian or
trustee, please add your title as such. If executed by a
corporation, the proxy should be signed by a duly authorized
officer. If executed by a partnership, please sign in the
partnership name by an authorized person.
Signature: Date: Signature: Date:
----------------------------------- ------------- ----------------------------------- -------------
</TABLE>
