<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 (S)240.14a-11(c) or (S)240.14a-12
CONSOLIDATION CAPITAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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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Notes:
<PAGE>
CONSOLIDATION CAPITAL CORPORATION
800 Connecticut Avenue, N.W.
Suite 1111
Washington, D.C. 20006
(202) 261-6000
August 14, 1998
To the Stockholders of Consolidation Capital Corporation:
The Annual Meeting of Stockholders of Consolidation Capital Corporation (the
"Company") will be held on Tuesday, September 15, 1998, at 10:00 a.m. in the
Crystal Room of the Willard Inter-Continental Washington Hotel located at 1401
Pennsylvania Avenue, N.W., Washington, D.C. 20004.
Details of the business to be conducted at the Annual Meeting are provided
in the enclosed Notice of Annual Meeting of Stockholders and Proxy Statement.
The Company's 1997 Annual Report, which is not part of the proxy statement, is
also enclosed and provides information regarding the financial results of the
Company during the fiscal year ended December 31, 1997. In addition to voting
on the election of directors, we are recommending that you approve an
amendment to our certificate of incorporation to change the name of the
Company to Building One Services Corporation. We believe that our new name
reflects our corporate goal of providing a single-source solution for building
owners and managers to maximize their management efficiency in building
operations and maintenance. Furthermore, we are recommending the adoption of
the Company's 1998 Long-Term Incentive Plan. If the 1998 Long-Term Incentive
Plan is adopted, no additional options will be issued under the Company's 1997
Long-Term Incentive Plan.
On behalf of the Board of Directors and employees of the Company, I
cordially invite all stockholders to attend the Annual Meeting. If you are
unable to attend in person, please sign, date and promptly return the enclosed
proxy card in the enclosed prepaid return envelope. Your shares will be voted
at the Annual Meeting in accordance with your proxy. If you plan to attend the
meeting, please mark the box where indicated on the enclosed proxy card.
Sincerely,
/s/ Jonathan J. Ledecky
JONATHAN J. LEDECKY
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 15, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Consolidation Capital Corporation, a Delaware corporation (the "Company"),
will be held in the Crystal Room of the Willard Inter-Continental Washington
Hotel, 1401 Pennsylvania Avenue, N.W., Washington, D.C. 20004 at 10:00 a.m. on
Tuesday, September 15, 1998, for the following purposes:
1. To elect eight directors of the Company to hold office until the next
succeeding annual meeting of stockholders after their election and until their
respective successors shall have been elected and qualified.
2. To consider and act upon a proposal by the Board of Directors of the
Company to (i) approve and adopt an amendment to Article One of the Company's
Restated Certificate of Incorporation (the "Certificate of Incorporation") to
change the name of the Company to Building One Services Corporation and (ii)
to restate the Certificate of Incorporation to reflect the foregoing
amendment.
3. To consider and act upon a proposal by the Board of Directors of the
Company to approve and adopt the 1998 Long-Term Incentive Plan.
4. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent accountants to audit the Company's consolidated financial
statements for the fiscal year ending December 31, 1998.
5. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The close of business on August 10, 1998 has been fixed as the record date
for determining the stockholders entitled to notice of and to vote at the
Annual Meeting. All holders of record of common stock of the Company on that
date are entitled to vote at the Annual Meeting.
By Order of the Board of Directors,
/s/ F. Traynor Beck
F. TRAYNOR BECK
SECRETARY
Washington, D.C.
August 14, 1998
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF
THE NUMBER OF SHARES YOU HOLD. PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE EVEN IF YOU INTEND TO BE PRESENT AT THE
MEETING. RETURNING THE PROXY WILL NOT LIMIT YOUR RIGHT TO VOTE IN PERSON OR TO
ATTEND THE ANNUAL MEETING, BUT WILL ENSURE YOUR REPRESENTATION IF YOU CANNOT
ATTEND. IF YOU HOLD SHARES IN MORE THAN ONE NAME, OR IF YOUR STOCK IS
REGISTERED IN MORE THAN ONE WAY, YOU MAY RECEIVE MORE THAN ONE COPY OF THE
PROXY MATERIAL. IF SO, PLEASE SIGN AND RETURN EACH OF THE PROXY CARDS THAT YOU
RECEIVE SO THAT ALL OF YOUR SHARES MAY BE VOTED. THE PROXY IS REVOCABLE AT ANY
TIME PRIOR TO ITS USE.
<PAGE>
CONSOLIDATION CAPITAL CORPORATION
800 Connecticut Avenue, N.W.
Suite 1111
Washington, D.C. 20006
(202) 261-6000
August 14, 1998
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card are being furnished in
connection with the solicitation of proxies by the Board of Directors of
Consolidation Capital Corporation (the "Company") for the Annual Meeting of
Stockholders of the Company to be held on September 15, 1998.
Stockholders of record at the close of business on August 10, 1998 (the
"Record Date") will be entitled to vote at the meeting and will receive a copy
of this Proxy Statement, which furnishes information relating to the business
to be transacted at the meeting. On the Record Date, there were issued and
outstanding 42,958,536 shares of the Company's common stock, par value $.001
per share (the "Common Stock"). There are no other outstanding classes of
voting securities of the Company. Each holder of a share of Common Stock is
entitled to one (1) vote per share on each matter presented at the meeting.
This Proxy Statement and the enclosed proxy card are being mailed to
stockholders entitled to vote at the Annual Meeting on or about August 14,
1998.
A proxy card is enclosed for your use. YOU ARE REQUESTED ON BEHALF OF THE
BOARD OF DIRECTORS TO SIGN, DATE AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE, which requires no postage if mailed in the United States.
If no instructions are specified on the proxy card, shares represented thereby
will be voted:
(i)for the election of the eight nominees for directors of the Company
listed herein;
(ii)for the adoption of an amendment to Article One of the Company's
Restated Certificate of Incorporation (the "Certificate of Incorporation") to
change the name of the Company to Building One Services Corporation and for
the restatement of the Certificate of Incorporation to reflect such name
change;
(iii)for the adoption of the 1998 Long-Term Incentive Plan (the "1998
Plan"); and
(iv)for the ratification of the appointment of PricewaterhouseCoopers LLP as
the Company's independent accountants to audit the Company's consolidated
financial statements for the year ending December 31, 1998.
The Board of Directors does not know of any other matters to be presented to
the stockholders at the Annual Meeting. If any other matters properly come
before the Annual Meeting, including any matters raised by a stockholder at
the Annual Meeting, the proxies will be voted on any such matters presented to
the stockholders in the discretion of the proxy holders.
Any stockholder who has given a proxy may revoke the proxy by executing a
proxy card bearing a later date or by delivering written notice of revocation
of the proxy to the Secretary of the Company at the Company's executive
offices at any time prior to the meeting or any postponement or adjournment
thereof. Prior to exercise thereof with respect to any matter submitted to a
vote of the stockholders, any stockholder who attends in person the Annual
Meeting or any postponement or adjournment thereof may revoke any proxy
previously given and vote by ballot.
The presence of the holders of a majority of the issued and outstanding
shares of Common Stock in person or represented by duly executed proxies at
the Annual Meeting and entitled to vote on the subject matter is necessary to
constitute a quorum for the transaction of business at the Annual Meeting.
Abstentions will be counted for purposes of determining the existence of a
quorum at the Annual Meeting. If there are not sufficient shares represented
in person or by proxy at the meeting to constitute a quorum, the meeting may
be postponed or adjourned in order to permit further solicitation of proxies
by the Company. Proxies given pursuant to this solicitation and not revoked
will be voted at any postponement or adjournment of the Annual Meeting in the
manner described above.
<PAGE>
The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or represented by duly executed proxies at the Annual
Meeting and entitled to vote on the subject matter is required for the
election of directors. Cumulative voting for the election of directors is not
permitted.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required to approve the amendment and restatement of the
Certificate of Incorporation to change the name of the Company. The approval
of all other matters will require the affirmative vote of the holders of a
majority of the shares present in person or represented by duly executed
proxies at the Annual Meeting and entitled to vote on the subject matter.
Shares represented by proxies that are marked "Withhold Authority" with
regard to the election of directors will have no effect on the outcome of the
matter. Shares represented by proxies that are marked "Abstain" with regard to
matters other than the election of directors will be treated as shares present
and entitled to vote at the Annual Meeting, but will not be counted as votes
cast for a proposal. Accordingly, an abstention will have the effect of a vote
"against" a proposal. In addition, where brokers are prohibited from
exercising discretionary authority for beneficial owners who have not provided
voting instructions (commonly referred to as "broker non-votes"), those shares
will have no effect on the outcome of the election of directors or on
proposals requiring the affirmative vote of a majority of the shares present
in person or represented by duly executed proxies at the Annual Meeting and
entitled to vote on the subject matter, and will have the effect of a vote
"against" matters requiring the affirmative vote of a majority of the
outstanding shares of Common Stock.
The expense of preparing, printing and mailing proxy solicitation materials
will be borne by the Company. The Company has engaged MacKenzie Partners, Inc.
to assist in the distribution of proxy materials and the solicitation of
proxies at a cost of approximately $5,000 plus out-of-pocket expenses. In
addition, certain directors, officers, representatives and employees of the
Company may solicit proxies by telephone and personal interview. Such
individuals will not receive additional compensation from the Company for
solicitation of proxies, but they may be reimbursed for reasonable out-of-
pocket expenses in connection with such solicitation. Banks, brokers and other
custodians, nominees and fiduciaries also will be reimbursed by the Company
for their reasonable expenses for sending proxy solicitation materials to the
beneficial owners of Common Stock.
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1997, including consolidated financial statements, is being
mailed to all stockholders entitled to vote at the Annual Meeting together
with this Proxy Statement. The Annual Report does not constitute a part of the
proxy solicitation materials.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors of the Company at
eight. The Board of Directors has nominated the eight persons named below to
serve as directors until the next succeeding annual meeting of stockholders or
until their earlier resignation or removal. Each of the eight nominees, except
for Mary K. Bush, is presently a member of the Board of Directors of the
Company and each has consented to serve as a director if elected. If any of
the nominees should be unavailable to serve for any reason (which is not
anticipated), the Board of Directors may (i) designate a substitute nominee or
nominees, in which case the persons named on the enclosed proxy card will vote
all valid proxies for the election of such substitute nominee or nominees;
(ii) allow the vacancy or vacancies to remain open until a suitable candidate
or candidates are located; or (iii) by resolution, provide for fewer
directors. Proxies for this Annual Meeting may not be voted FOR more than
eight nominees.
NOMINEES FOR ELECTION AT THIS ANNUAL MEETING
Jonathan J. Ledecky Age 40
Jonathan Ledecky founded the predecessor of the Company
in February 1997 and serves as its Chairman and Chief
Executive Officer. Jonathan Ledecky founded U.S. Office
Products Company ("USOP"), a company engaged in
providing office products, office furniture and office
coffee and beverage services, in October 1994 and
served as its Chairman of the Board until June 10, 1998
and as its Chief Executive Officer until November 5,
1997. Prior to founding USOP, Jonathan Ledecky served
from 1989 to 1991 as the President of The Legacy Fund,
Inc., and from 1991 to September 1994 as President and
Chief Executive Officer of Legacy Dealer Capital Fund,
Inc., a wholly owned subsidiary of Steelcase Inc., the
2
<PAGE>
nation's largest manufacturer of office furniture
products. Jonathan Ledecky has also served as the Non-
Executive Chairman of the Board of U.S.A. Floral
Products, Inc. ("USA Floral") since April 1997 and
currently serves as a director of UniCapital
Corporation ("UniCapital"), U.S. Marketing Services,
Inc., Aztec Technology Partners, Inc., School
Specialty, Inc., Workflow Management, Inc., Navigant
International, Inc. and MicroStrategy Incorporated.
Jonathan Ledecky is a graduate of Harvard College and
Harvard Business School. Jonathan Ledecky is the
brother of David Ledecky.
David Ledecky Age 37 David Ledecky joined the Company as Senior Vice
President, Secretary and Treasurer in September 1997
and was appointed Executive Vice President and Chief
Administrative Officer on November 25, 1997. David
Ledecky has also served as a director since November
25, 1997. Prior thereto, he operated Ledecky Brothers
L.L.C., the Company's predecessor, as its Vice
President and sole employee since its inception in
February 1997. In that capacity, he researched and
analyzed industry consolidation and acquisition
opportunities. From 1992 to 1996, David Ledecky was an
attorney at the Washington, D.C. law firm of Comey,
Boyd & Luskin. Prior to 1992, he was an attorney with
the law firm of Shearman & Sterling, and a Vice
President of The Legacy Fund, Inc. in Washington, D.C.
He is a former consultant to the computer and
telecommunications industries. He is a graduate of
Harvard College and Yale Law School. David Ledecky is
the brother of Jonathan Ledecky.
William P. Love, Jr. William P. Love, Jr. has served as the President of the
Age 43 Electrical Contracting Services Division of the Company
and has been a director of the Company since March 11,
1998. From September 1980 to March 11, 1998, Mr. Love
served as the President and Chief Executive Officer of
SKC Electric, Inc., ("SKC"), an electrical installation
and maintenance services company that Mr. Love founded
and that has been a wholly owned subsidiary of the
Company since its acquisition by the Company in March
1998. Mr. Love is the director designee pursuant to the
acquisition agreements between the Company and each of
the seven companies acquired by the Company on March
11, 1998 (the "Founding Electrical Group").
Thomas D. Heule Age 39 Thomas D. Heule has been a director since April 27,
1998. Mr. Heule has served as a Managing Director of
BACE Capital Partners, LLC ("BACE"), an industry
consolidation buyout firm based in Denver, Colorado,
since March 1997. In addition, between November 1997
and April 1998, Mr. Heule served as a Vice President of
United Service Solutions, Inc. ("USS"), a company
acquired by the Company in April 1998. Between 1991 and
1997, Mr. Heule was a Managing Director in the
Corporate Finance Department of Dain Bosworth Inc. Mr.
Heule is a graduate of the University of Colorado, the
College of St. Thomas and the Wharton School of the
University of Pennsylvania. Mr. Heule is the director
designee of the stockholders of USS pursuant to the
acquisition agreement between the Company and USS.
Vincent Eades Age 38 Vincent W. Eades has been a director of the Company
since November 25, 1997. Mr. Eades has served as the
Chairman and Chief Executive Officer of TEC, Inc., a
company seeking to consolidate a fragmented industry,
since May 20, 1998. Between May 1995 and May 1998, Mr.
Eades served as the Senior Vice President of Sales and
Marketing for Starbucks Coffee Co. Inc. Mr. Eades was
employed by Hallmark Cards Inc. as a General Manager
from November 1985 through April 1995. Additionally, he
serves as a director of USA Floral.
3
<PAGE>
W. Russell Ramsey W. Russell Ramsey has been a director of the Company
Age 38 since November 25, 1997. Mr. Ramsey is President, co-
founder and a director of Friedman, Billings, Ramsey
Group, Inc. ("FBR Group"), a holding company engaged in
brokerage, investment banking, corporate finance and
asset management activities in the Washington, D.C.
area. He has served as President of FBR Group and its
predecessors since co-founding FBR Group in 1989.
Friedman, Billings, Ramsey & Co., Inc. ("FBR"), the
representative in the Company's initial public
offering, is a wholly owned indirect subsidiary of FBR
Group. Mr. Ramsey holds a B.A. from The George
Washington University. Mr. Ramsey is a director
designee of FBR pursuant to FBR's right to designate
two directors under an agreement between the Company
and FBR.
M. Jude Reyes Age 42 M. Jude Reyes has been a director of the Company since
November 25, 1997. Mr. Reyes has served as Chairman and
President of Premium Distributors of Virginia, L.L.C.,
a beverage distributor, since 1992. Between 1989 and
1992, Mr. Reyes served as President and Chairman of
Harbor Distributing Company in Los Angeles, California.
He also is a director and investor in three other
beverage distributors and two wholesale food service
distributors. Mr. Reyes is a director designee of FBR
pursuant to FBR's right to designate two directors
under an agreement between the Company and FBR.
Mary K. Bush Age 49 Mary K. Bush has served as the President of Bush &
Company, an international financial consulting firm,
since 1991. Prior to founding Bush & Company, she
served from 1989 to 1991 as Managing Director of the
U.S. Federal Housing Board. Prior to that position, she
was Vice President--International Finance at the
Federal National Mortgage Associate (Fannie Mae). From
1984 to 1988, she served as U.S. Alternate Executive
Director of the International Monetary Fund (IMF). She
serves on a number of boards of directors and advisory
boards, including Texaco, Inc., Mortgage Guaranty
Insurance Corporation, a number of Pioneer mutual
funds, Novacon Management Company, Washington Mutual
Investors Fund, March of Dimes, Hoover Institution,
Wilberforce University, the Folger Shakespeare Library,
Project 2000, Inc., Small Enterprise Assistance Funds
and the Bretton Woods Committee.
VOTE REQUIRED FOR APPROVAL
The vote of the holders of a plurality of the shares of Common Stock present
in person or represented by duly executed proxies at the Annual Meeting and
entitled to vote is necessary for the election of a nominee as a director of
the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF THE EIGHT PERSONS NOMINATED TO SERVE AS DIRECTORS.
BOARD ORGANIZATION AND MEETINGS
The Company's initial public offering was completed on December 2, 1998.
From December 2, 1998 through December 31, 1997, the Board of Directors did
not hold any meetings, but acted one time by unanimous consent. No member of
the Board of Directors attended fewer than 75% of the total number of meetings
of the Board of Directors and all committees of the Board of Directors on
which he served.
The Company's Board of Directors has established an Audit Committee and a
Compensation Committee.
4
<PAGE>
The responsibilities of the Audit Committee include recommending to the
Board of Directors the independent public accountants to be selected to
conduct the annual audit of the books and records of the Company, reviewing
the proposed scope of such audit and approving the audit fees to be paid,
reviewing accounting and financial controls of the Company with the
independent public accountants and the Company's financial and accounting
staff and reviewing and approving transactions between the Company and its
directors, officers and affiliates. Messrs. Eades, Ramsey and Reyes are the
members of the Audit Committee. The Audit Committee did not hold any meetings
or act by unanimous consent in fiscal 1997.
The Compensation Committee determines the amount and form of compensation
and benefits payable to the principal officers and certain other management
personnel. The responsibilities of the Compensation Committee also include
administering the Consolidation Capital Corporation 1997 Long-Term Incentive
Plan (the "1997 Plan") and the Consolidation Capital Corporation Section
162(m) Bonus Plan (the "Bonus Plan"), including selecting the officers and
salaried employees to whom awards will be granted. The Compensation Committee
will also be responsible for administering the 1998 Plan, if approved by the
stockholders at the Annual Meeting. Messrs. Eades and Reyes, independent
directors of the Company, are the members of the Compensation Committee. The
Compensation Committee acted one time by unanimous consent in fiscal 1997.
DIRECTOR COMPENSATION
Directors who are not receiving compensation as officers, employees or
consultants of the Company are entitled to receive an annual retainer fee of
$25,000. In addition, pursuant to the Consolidation Capital Corporation 1997
Non-Employee Directors' Stock Plan, each non-employee director receives an
automatic initial grant of options to purchase 20,000 shares of Common Stock
on the date of such person's initial election to the Board of Directors, and
an automatic annual grant of options to purchase 5,000 shares. Each such
option has and will have an exercise price equal to the fair market value of a
share of Common Stock on the date of grant.
5
<PAGE>
STOCK OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of August 10, 1998, by: (i) each person (or
group of affiliated persons) known by the Company to be the beneficial owner
of more than five percent of the outstanding shares of Common Stock; (ii) each
director of the Company; (iii) each executive officer of the Company; and (iv)
all of the Company's directors and executive officers as a group. Each
stockholder possesses sole voting and investment power with respect to the
shares listed, unless otherwise noted.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SHARES OF CONVERTIBLE
NUMBER OF CONVERTIBLE PERCENTAGE OF NON-VOTING
NAME AND ADDRESS OF SHARES OF NON-VOTING COMMON STOCK COMMON STOCK
BENEFICIAL OWNER COMMON STOCK COMMON STOCK OWNED OWNED
- ------------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
EXECUTIVE OFFICERS AND
DIRECTORS
Jonathan J. Ledecky..... 4,500,000(1) 0 10.5% 0%
c/o Consolidation
Capital Corporation
800 Connecticut Avenue,
N.W., Suite 1111
Washington, DC 20006
David Ledecky........... 0 0 0 0
F. Traynor Beck......... 0 0 0 0
Timothy C. Clayton...... 2,000 0 * 0
William P. Love, Jr..... 423,322(2) 0 1.0% 0
Thomas D. Heule......... 783,116(3) 0 1.8% 0
Vincent W. Eades........ 10,000(4) 0 * 0
W. Russell Ramsey....... 30,000(5) 500,000(6) * 100%
M. Jude Reyes........... 30,000(5) 0 * 0
All directors and execu-
tive officers as a
group (9 persons)...... 5,778,438 500,000 13.5% 100%
5% STOCKHOLDERS
Massachusetts Financial
Services Company....... 2,448,500(7) 0 5.7% 0
500 Boylston Street,
15th Floor
Boston, MA 02116
</TABLE>
- --------
* Less than one percent
(1) Includes: (i) 1,950,000 shares underlying a warrant issued to Jonathan
Ledecky in connection with the Company's initial public offering (the
"Ledecky Warrant") and (ii) 2,300,000 shares of Common Stock subject to a
contractual restriction on transfer until November 25, 1998. The Company
has agreed that, at Jonathan Ledecky's request, it will file a
registration statement under the Securities Act of 1933, as amended, for
an offering of the shares underlying the Ledecky Warrant during a ten-year
period beginning on November 25, 1997. In addition, the Company has agreed
to give Jonathan Ledecky the right to request that the Company include the
shares underlying the Ledecky Warrant on a registration statement filed by
the Company during a twelve-year period beginning on November 25, 1997.
(2) Includes 207,428 shares owned by Mr. Love's wife. Mr. Love serves as one
of four trustees of the SKC Electric, Inc. Profit Sharing Plan (the
"Plan"). The number of shares shown as beneficially owned by Mr. Love
excludes shares that may be deemed to be beneficially owned by the Plan.
(3) Represents shares owned by BACE. Mr. Heule is a member of BCP Partners,
LLC, an 80% member of BACE, and, in that capacity, has shared voting and
dispositive power over the shares. Mr. Heule disclaims beneficial
ownership of those securities that are in excess of his proportionate
ownership.
6
<PAGE>
(4) Represents shares which may be acquired upon the exercise of options that
are exercisable within 60 days.
(5) Includes 10,000 shares which may be acquired upon the exercise of options
that are exercisable within 60 days.
(6) Represents shares of Convertible Non-Voting Common Stock owned by FBR
Asset Investment Corporation, Inc., an affiliate of FBR Group. Mr. Ramsey
is President, co-founder and a director of FBR Group. Mr. Ramsey disclaims
beneficial ownership of such shares. Mr. Ramsey's address is c/o FBR
Group, 1001 North 19th Street, Arlington, VA 22209.
(7) Based upon a Schedule 13G filed with the Securities and Exchange
Commission on February 17, 1998.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides for fiscal 1997 certain summary information
concerning the cash and non-cash compensation earned by or awarded to (i) the
Company's Chief Executive Officer and (ii) each of the Company's other
executive officers (collectively, the "named executive officers"). The
Company's predecessor was organized in February 1997, with David Ledecky as
its sole employee. All other named executive officers were employed by the
Company as of November 25, 1997.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL SECURITIES
COMPENSATION UNDERLYING
FISCAL SALARY OPTIONS/SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($)(1) (#)(2) COMPENSATION
- --------------------------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Jonathan J. Ledecky,
Chief Executive Officer and
Chairman of the Board......... 1997 $125,000 -- --
Timothy C. Clayton,
Executive Vice President,
Chief Financial Officer and
Treasurer..................... 1997 $223,000 500,000 25,000(3)
F. Traynor Beck,
Executive Vice President,
General Counsel and Secre-
tary.......................... 1997 $223,000 500,000 --
David Ledecky,
Executive Vice President and
Chief Administrative Officer,
Director...................... 1997 $327,994(4) 500,000 --
</TABLE>
- --------
(1) Includes bonus payments of $200,000 for Mr. Clayton, Mr. Beck and David
Ledecky, which were guaranteed for the first year of employment pursuant
to their employment agreements, declared in December 1997 and paid in
January 1998.
(2) Represents options granted in 1997 with respect to the Company's Common
Stock, each option to vest ratably on November 25, 1998, 1999, 2000 and
2001, unless accelerated under certain conditions.
(3) Represents amount paid to Mr. Clayton for consulting services during
November 1997.
(4) Includes payments made to David Ledecky by the Company's predecessor.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Jonathan Ledecky.
The agreement has a one-year term and is automatically renewable for one-year
terms thereafter unless either party gives notice of non-renewal at least 90
days prior to the end of the term. Pursuant to the terms of the agreement,
Jonathan Ledecky is obligated to devote the substantial majority of his
business time, attention and efforts to his duties thereunder, with certain
exceptions. The agreement provides for an annual salary of $750,000 and a
discretionary bonus in an amount equal to up to 100% of the employee's base
salary. If the agreement is terminated by the Company other than for Cause (as
defined), Jonathan Ledecky is entitled to receive an amount equal to twice his
base salary and one times the bonus he received in the prior year. The
agreement prohibits Jonathan Ledecky from competing with the Company during
the term of his employment and for a period of one year thereafter. The
agreement also provides for certain executive perquisites.
The Company has entered into employment agreements with each of F. Traynor
Beck, Timothy C. Clayton and David Ledecky, the terms of which are
substantially identical. Each of the agreements has a two-year term and is
automatically renewable for one-year terms thereafter, unless either party
gives notice of non-renewal at least six months prior to the end of the term.
Pursuant to the terms of the agreements, each of F. Traynor Beck,
8
<PAGE>
Timothy C. Clayton and David Ledecky is obligated to devote his full business
time, attention and efforts to his duties thereunder. Each of the agreements
provides for an annual salary of $300,000, a guaranteed bonus of $200,000 for
the first year of the term and a discretionary bonus in an amount equal to up
to 100% of the employee's base salary for each year thereafter. On November
25, 1997, the effective date of the registration statement for the Company's
initial public offering (the "Effective Date"), each of these executive
officers received a grant of an option to purchase 500,000 shares of Common
Stock at an exercise price equal to the initial public offering price per
share ($20.00), which option will vest ratably on the first, second, third and
fourth anniversaries of the date of grant, unless accelerated upon a Change in
Control (as defined) or upon the termination of the employee without Cause (as
defined). If the agreement is terminated by the Company other than for Cause,
the executive officer will be entitled to receive amounts equal to twice his
base salary and one times the bonus he received in the prior year. The
agreements prohibit the executive officer from competing with the Company
during the term of his employment and for a period of one year thereafter. The
agreements also provide for certain executive benefits and perquisites,
including, in the case of Timothy C. Clayton, the purchase of an annuity
contract to be placed in a deferred compensation plan that will provide him
with an annual payout of $100,000 for each year of his life between age 55 and
age 75.
The Company has entered into an employment agreement with William P. Love,
Jr., the President of the Company's Electrical Contracting Services Division
and a director of the Company. The agreement has a two-year term and may be
extended on such terms and conditions as the Company and Mr. Love may mutually
agree. The agreement provides for an annual salary of $200,000 and a
performance-based incentive bonus payable in cash, stock options or other non-
cash awards as determined by the Compensation Committee of the Board of
Directors for each calendar year during the term of the agreement beginning on
January 1, 1999. If the agreement is terminated for other than Cause (as
defined), Mr. Love will receive his base salary and group health benefits, as
then in effect, for the longer of one year from the date of termination or
whatever time period is remaining under the term of the agreement. In
addition, a termination of Mr. Love's employment without Cause will accelerate
the payout of contingent consideration owed by the Company to Mr. Love and to
the other shareholders of the Founding Electrical Group. Mr. Love's employment
agreement also prohibits him from competing with the Company during the term
of his employment and, depending on the nature of his termination of
employment, for a period of up to two years from the date of termination.
OPTION GRANTS IN FISCAL 1997
The following table sets forth certain information concerning the grant of
options to purchase Common Stock of the Company during fiscal 1997 to each of
the named executive officers.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
-------------------------------------------- --------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED(1) FISCAL YEAR PRICE DATE 0% 5% 10%
- ---- ---------- ------------- -------- ---------- --- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Jonathan J. Ledecky..... -- -- --
Timothy C. Clayton...... 500,000 33.3% $20.00 11/25/07 0 $5,515,000 $13,580,000
F. Traynor Beck......... 500,000 33.3% $20.00 11/25/07 0 $5,515,000 $13,580,000
David Ledecky........... 500,000 33.3% $20.00 11/25/07 0 $5,515,000 $13,580,000
</TABLE>
- --------
(1) The options granted are incentive stock options, which are exercisable at
the market price on the date of grant beginning one year from the date of
grant in cumulative yearly amounts of 25% of the shares and expire ten
years from the date of grant. The options become fully exercisable upon a
Change in Control, as defined in the 1997 Plan.
(2) The dollar amounts under these columns are the results of calculations at
assumed annual rates of stock price appreciation of zero percent (0%),
five percent (5%) and ten percent (10%). These assumed rates of growth
were selected by the Securities and Exchange Commission for illustration
purposes only. They are not intended to forecast possible future
appreciation, if any, of the Company's stock price. No gain to the
optionees is possible without an increase in stock prices, which will
benefit all stockholders. A zero percent (0%) gain in stock price will
result in a zero percent (0%) benefit to optionees.
9
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors is composed
of two independent, non-employee directors. They have served as members of the
Board of Directors of the Company since the Effective Date. Accordingly, the
Compensation Committee did not negotiate or approve the terms of the
employment agreements that the Company entered into with its executive
officers effective upon the Effective Date. Nor did the members of the
Compensation Committee approve the employee benefit plans that the Company
adopted and its sole stockholder approved prior to the Effective Date.
Set forth below is the Compensation Committee's report on executive
compensation.
Notwithstanding anything to the contrary, the following report of the
Compensation Committee shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or under the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Shortly after the Company became a publicly-held corporation in December
1997 (the "Effective Time"), the Compensation Committee (the "Committee")
reviewed the compensation and benefits provided to the Company's Executive
Officers. Based upon that review, the Committee has concluded that the
Company's compensation program has been designed in an appropriate manner to
attract, retain and reward executive officers in a manner that is consistent
with the long-term interests of stockholders.
The key components of the Company's executive compensation program consist
of salary amounts, annual incentive bonuses and stock options. The Committee
will be responsible for approving any changes to the benefits provided to the
Company's Executive Officers in their employment agreements and any award of a
bonus to Jonathan Ledecky for the 1998 fiscal year. In addition, the Committee
is responsible for administering the 1997 Plan and will decide whether to
grant stock options to the Executive Officers. The Committee will be
responsible for administering the Company's 1998 Long-Term Incentive Plan (the
"1998 Plan"), if it is adopted by the stockholders.
The employment agreements that the Company entered into with the Executive
Officers provide for specified salary amounts and, in the case of each of the
Executive Officers other than Jonathan Ledecky, a guaranteed bonus for the
first year of the term of such Executive Officer's employment agreement.
Shortly after the Effective Date, the Committee decided to pay the guaranteed
bonuses to such Executive Officers in view of the success of the initial
public offering and in order to recognize such obligations on a current basis.
The employment agreements provide for discretionary bonuses to such Executive
Officers for years after the first year of the term of the employment
agreement in amounts equal to up to 100% of their base salary amounts. The
employment agreements further state that it is contemplated that such bonuses
will be at least equal to the guaranteed bonus for the first year of the term
of the employment agreement.
The employment agreement that the Company entered into with Jonathan
Ledecky, the Chief Executive Officer, provides for a discretionary bonus in an
amount equal to up to 100% of the employee's base salary. The Committee has
recently designated performance goals under the Bonus Plan which will
determine the amount of any performance bonus payable to Jonathan Ledecky for
the 1998 fiscal year. The payment of the bonus under the Bonus Plan will
permit it to be deductible for federal income tax purposes.
10
<PAGE>
The employment agreements with each of the Executive Officers other than
Jonathan Ledecky provided for grants of options for 500,000 shares to each of
such Executive Officers at on Effective Date. The Committee will determine
whether to grant additional options to such Executive Officers and options to
Jonathan Ledecky, the Chief Executive Officer, in the future based upon its
analysis of competitive market practices and the overall performance of the
Company and each respective Executive Officer.
COMPENSATION COMMITTEE:
M. JUDE REYES
VINCENT W. EADES
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and persons holding more than 10%
of the Company's outstanding Common Stock to file with the Securities and
Exchange Commission initial reports of ownership, reports of changes in
ownership and annual reports of ownership of Common Stock and other equity
securities of the Company. Specific due dates for these reports have been
established and the Company is required to report herein any failure to file
by these dates in fiscal 1997. Timothy C. Clayton and M. Jude Reyes were late
in reporting their acquisitions of shares on November 26, 1997.
CERTAIN TRANSACTIONS
Set forth below is a description of certain transactions and relationships
between the Company and certain persons who are officers, directors and
principal stockholders of the Company.
Jonathan Ledecky, the Company's Chairman, Chief Executive Officer and
founder, is the brother of David Ledecky, Executive Vice President, Chief
Administrative Officer and a director of the Company.
Jonathan Ledecky advanced to the Company $305,000, at an annual interest
rate equal to 6.75%, to pay the expenses incurred in connection with the
initial public offering (the "IPO"). The Company repaid Jonathan Ledecky's
loans to the Company, including accrued interest of approximately $4,000,
using the proceeds of the IPO.
W. Russell Ramsey, a director of the Company, is President and a principal
stockholder of FBR Group. FBR, a wholly owned indirect subsidiary of FBR
Group, rendered investment banking services to the Company in connection with
the IPO.
Timothy C. Clayton, Executive Vice President, Chief Financial Officer and
Treasurer of the Company, was, through October 1997, a partner at Price
Waterhouse LLP, the Company's independent accountants.
F. Traynor Beck, Executive Vice President, General Counsel and Secretary of
the Company, was, until the Effective Date, a partner at Morgan, Lewis &
Bockius LLP, the Company's legal counsel.
On March 11, 1998, the Company completed the acquisition of SKC. SKC leases
office, warehouse and storage space from SKC Properties, L.L.C., a principal
member of which is William P. Love, Jr., one of the former owners of SKC and a
director of the Company and the President of the Company's Electrical
Contracting Services Division. The lease provides for lease payments in the
amount of $8,095 per month, or $97,140 annually.
Thomas D. Heule, a director of the Company, is a Managing Director of BACE,
and is a member of BCP Partners, LLC ("BCP"), which owns an 80% interest in
BACE. The Company has entered into a consulting agreement with BACE whereby
BACE will provide advisory services in connection with identifying and closing
acquisitions of building maintenance services businesses. As compensation for
its services, BACE will generally receive a fee equal to a percentage of the
consideration paid in connection with acquisitions identified by BACE. The
Company has not made any payments under this agreement to date. In addition,
the Company has agreed to pay to BACE in twelve equal monthly installments a
termination fee in the amount of $500,000 in connection with the termination
of a consulting agreement between USS and BACE that was entered into prior to
the Company's acquisition of USS. Generally, any payments to be made under
BACE's consulting agreement with the Company will be offset by payments made
pursuant to the termination fee.
11
<PAGE>
PROPOSAL 2
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO CHANGE THE COMPANY'S
NAME
On July 23, 1998, the Board of Directors unanimously approved, and
recommended for adoption by the stockholders at the Annual Meeting, an
amendment to Article One of the Company's Certificate of Incorporation to
change the Company's name to Building One Services Corporation and the
restatement of the Certificate of Incorporation to reflect the foregoing
amendment. The Board of Directors believes that it would be in the best
interests of the Company and its stockholders to change its name because such
a change will reflect the Company's focus on the facilities services industry.
The name change will become effective upon the filing of a Restated
Certificate of Incorporation with the Secretary of State of the State of
Delaware, which is anticipated to be as soon as practicable following the date
of the Annual Meeting.
At the time of the Company's inception, the Company's strategy was to raise
capital and to use that capital to consolidate one or more fragmented
industries that were attractive consolidation opportunities. On
January 9, 1998, the Company announced its intention to consolidate the
facilities services industry. Facilities services businesses provide products
and services for the routine operation and maintenance of a building. As of
the Record Date, the Company has acquired 14 electrical installation and
maintenance services businesses, 2 mechanical installation and maintenance
services businesses and 5 janitorial maintenance management services
businesses. The Board of Directors believes that changing the Company's name
is an essential component of the Company's goal to become the premier,
facilities services company. After careful consideration, the Board believes
that Building One Services Corporation more accurately communicates the
Company's focus than the Company's present name.
The proposed name change will not affect in any way the validity or
transferability of currently outstanding stock certificates or affect the
Company's capital or corporate structure. Stockholders will not be required to
surrender or exchange any stock certificates that they currently hold.
The full text of Article One of the Restated Certificate of Incorporation,
as proposed to be amended, is as follows:
"FIRST. The name of the corporation is Building One Services Corporation
(hereinafter called the "Corporation")."
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of the Company's
outstanding shares of Common Stock is necessary for the approval of the
amendment to and related restatement of the Certificate of Incorporation.
In accordance with Delaware law and notwithstanding approval of the
amendment and related restatement by the stockholders, at any time prior to
the effectiveness of the filing of the Restated Certificate of Incorporation
with the Secretary of State, the Board may abandon such proposed amendment
without further action by the stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ADOPTION OF THE AMENDMENT TO ARTICLE ONE AND THE RESTATEMENT OF THE
CERTIFICATE OF INCORPORATION.
12
<PAGE>
PROPOSAL 3
APPROVAL OF
1998 LONG-TERM INCENTIVE PLAN
The Board of Directors has adopted the 1998 Long-Term Incentive Plan (the
"1998 Plan"). The 1998 Plan is intended to replace the Company's 1997 Long-
Term Incentive Plan (the "1997 Plan"). The 1998 Plan is substantially
identical to the 1997 Plan, except that the number of shares of Common Stock
that may be subject to outstanding awards has been increased from 9% to 14% of
the total number of shares of Common Stock outstanding. The 1998 Plan will not
be effective unless and until stockholder approval is obtained. If the 1998
Plan is approved and therefore becomes effective, no further awards will be
made pursuant to the 1997 Plan. Any previously-granted awards under the 1997
Plan that remain outstanding will remain subject to the terms of the 1997 Plan
and will count against the 14% limitation under the 1998 Plan. If the 1998
Plan is not approved, the 1997 Plan will remain in effect. As of August 10,
1998, 3,866,268 shares may be the subject of awards under the 1997 Plan based
upon 9% of the shares outstanding as of August 10, 1998. As of August 10,
1998, 2,147,927 additional shares could be subject to outstanding awards under
the 1998 Plan based upon 14% of the shares outstanding as of August 10, 1998.
The purpose of the 1998 Plan is to provide officers, key employees and
consultants of the Company and it subsidiaries with additional incentives by
increasing their ownership interests in the Company. In the Board's judgment,
the 1998 Plan will provide one of the Company's most important competitive
advantages in its acquisition program, as well as a critical long-term
incentive for a broad range of employees. The Company has a policy under the
1997 Plan, which it intends to continue under the 1998 Plan, of granting stock
options to a broad base of employees. The Company believes that this policy
has provided it with a critical advantage in attracting acquisition
candidates.
For example, under the 1997 Plan, as of August 10, 1998, options for a total
of 1,581,831 shares of Common Stock had been authorized for grant to a total
of 965 employees of the Company (other than the Company's executive officers).
A significant portion of these stock options were awarded to a wide range of
employees who were not shareholders of companies acquired by the Company
("non-owner employees"). Because these stock options have ten-year terms and
generally vest at a rate of 25% per year after grant, employees at all levels
are provided with a with a strong incentive to seek increased stockholder
value over the long term. No awards other than options to purchase Common
Stock have been granted under the 1997 Plan. The Company has also registered
with the Securities and Exchange Commission 1,000,000 shares of Common Stock,
which may be issued in connection with the exchange or assumption of options
held by employees of companies that the Company has acquired or may in the
future acquire. Such options have not been and will not be issued pursuant to
the terms of the 1997 Plan or the 1998 Plan, if adopted. As of the Record
Date, the Company has issued options to purchase 403,389 shares of Common
Stock outside of the 1997 Plan.
Like the 1997 Plan, the 1998 Plan provides the Compensation Committee with
maximum flexibility to award long-term, equity-based incentives to a wide
range of employees. It is expected that such flexibility will be critical both
as a part of the Company's ongoing acquisition plan (as a unique attraction
that the Company can offer as an acquiror) and as a part of its policy to
encourage employees at all levels to focus on the long-term growth of
stockholder value.
The Board believes that this flexibility in awarding long-term compensation
is important for several reasons. First, it allows for greater use of equity-
based incentives for managers and other employees, which, in the Board's
judgment, promotes a better alignment of the interests of managers and
stockholders and also encourages key managers to remain with the Company over
an extended period. Second, by increasing the number of shares that may be
awarded under the 1998 Plan, the Board seeks to ensure that long-term
incentives can continue to be awarded to a broad range of employees and will
remain available for ongoing, strategic use as an attractive component of the
Company's acquisition program. Third, the Board believes that added
flexibility under the 1998 Plan may be necessary to attract additional senior
executives as the Company grows. Fourth, it enables the Company upon occasion
in connection with an acquisition to offer substantial option grants to
encourage the owners of businesses being acquired to remain employed by the
Company for an extended period of time (where such owners are deemed to be
particularly valuable employees).
13
<PAGE>
DESCRIPTION OF THE 1998 PLAN
The 1998 Plan is set forth as Exhibit A to this Proxy Statement, and the
description of the 1998 Plan contained herein is qualified in its entirety by
reference to Exhibit A.
Awards under the 1998 Plan may be granted by the Compensation Committee of
the Board of Directors and may include: (i) options to purchase shares of
Common Stock, including incentive stock options ("ISOs"), non-qualified stock
options or both, which options may contain automatic reload features; (ii)
stock appreciation rights ("SARs"), whether in conjunction with the grant of
stock options or independent of such grant, or stock appreciation rights that
are only exercisable in the event of a change in control of the Company or
upon other events; (iii) performance awards, consisting of a right to receive
either cash in an amount determined with reference to the value of the Common
Stock or a fixed dollar amount payable in cash, or a combination of both; (iv)
dividend equivalents, consisting of a right to receive cash, other awards, or
other property equal in value to dividends paid with respect to a specified
number of shares of Common Stock, or other periodic payments; or (v) other
awards not otherwise provided for, the value of which are based in whole or in
part upon the value of the Common Stock. The flexible terms of the 1998 Plan
are intended to, among other things, permit the Compensation Committee to
impose performance conditions with respect to any award, thereby requiring
forfeiture of all or part of any award if performance objectives are not met,
or linking the time of exercisability or settlement of an award to the
achievement of performance conditions. Awards granted under the 1998 Plan are
not assignable or transferable except by the laws of descent and distribution.
The Compensation Committee of the Board of Directors, which will administer
the 1998 Plan, will have the authority, among other things, to: (i) select the
officers and other key employees and consultants entitled to receive awards
under the 1998 Plan; (ii) determine the form of awards, or combinations
thereof, and whether such awards are to operate on a tandem basis or in
conjunction with other awards; (iii) determine the number of shares of Common
Stock or units or rights covered by an award; and (iv) determine the terms and
conditions of any awards granted under the 1998 Plan, including any
restrictions or limitations on transfer, any vesting schedules or the
acceleration thereof and any forfeiture provision or waiver thereof. The
exercise price at which shares of Common Stock may be purchased pursuant to
the grant of stock options under the 1998 Plan is to be determined by the
Compensation Committee at the time of grant in its discretion, which
discretion includes the ability to set an exercise price that is below the
fair market value of the shares of Common Stock covered by such grant at the
time of grant.
The maximum number of shares of Common Stock that may be subject to
outstanding awards (including awards that remain outstanding under the 1997
Plan), determined immediately after the grant of any award, will be equal to
14% of the aggregate number of shares of the Company's Common Stock
outstanding at such time, provided that shares of Common Stock issued pursuant
to the exercise of ISOs may not exceed 3,198,971 shares. In addition, no
individual may receive awards in any one calendar year relating to more than
1,000,000 shares of Common Stock.
The 1998 Plan may be amended, altered, suspended, discontinued, or
terminated by the Board of Directors without stockholder approval unless such
approval is required by law or regulation or under the rules of any stock
exchange or automated quotation system on which the Common Stock is then
listed or quoted. Thus, stockholder approval will not necessarily be required
for amendments which might increase the cost of the plan or broaden
eligibility. Stockholder approval will not be deemed to be required under laws
or regulations that condition favorable tax treatment on such approval,
although the Board of Directors may, in its discretion, seek stockholder
approval in any circumstances in which it deems such approval advisable.
FEDERAL TAX CONSEQUENCES
The following is a brief description of the federal income tax consequences
generally arising with respect to awards that may be granted under the 1998
Plan. This discussion is intended for the information of stockholders
considering how to vote at the Annual Meeting and not as tax guidance to
individuals who participate in the 1998 Plan.
14
<PAGE>
The grant of an option or SAR (including a stock-based award in the nature
of a purchase right) will create no tax consequences for the grantee or the
Company. A grantee will not have taxable income upon exercising an ISO (except
that the alternative minimum tax may apply) and the Company will receive no
deduction at that time. Upon exercising an option other than an ISO (including
a stock-based award in the nature of a purchase right), the participant must
generally recognize ordinary income equal to the difference between the
exercise price and fair market value of the freely transferable and
nonforfeitable stock received. In each case, the Company will generally be
entitled to a deduction equal to the amount recognized as ordinary income by
the participant.
A participant's disposition of shares acquired upon the exercise of an
option, SAR or other stock-based award in the nature of a purchase right
generally will result in short-term capital gain or loss measured by the
difference between the sale price and the participant's tax basis in such
shares (or the exercise price of the option in the case of shares acquired by
exercise of an ISO and held for the applicable ISO holding periods).
Generally, there will be no tax consequences to the Company in connection with
a disposition of shares acquired upon exercise of an option or other award,
except that the Company will generally be entitled to a deduction (and the
participant will recognize ordinary taxable income) if shares acquired upon
exercise of an ISO are disposed of before the applicable ISO holding periods
have been satisfied.
With respect to awards granted under the 1998 Plan that may be settled
either in cash or in stock or other property that is either not restricted as
to transferability or not subject to a substantial risk of forfeiture, the
participant must generally recognize ordinary income equal to the cash or the
fair market value of stock or other property received. The Company will
generally be entitled to a deduction for the same amount. With respect to
awards involving stock or other property that is restricted as to
transferability and subject to a substantial risk of forfeiture, the
participant must generally recognize ordinary income equal to the fair market
value of the shares or other property received at the first time the shares or
other property become transferable or not subject to a substantial risk of
forfeiture, whichever occurs earlier. The Company will generally be entitled
to a deduction in an amount equal to the ordinary income recognized by the
participant. A participant may elect to be taxed at the time of receipt of
shares or other property rather than upon lapse of restrictions on
transferability or substantial risk of forfeiture, but if the participant
subsequently forfeits such shares or property he would not be entitled to any
tax deduction, including a capital loss, for the value of the shares or
property on which he previously paid tax. Such election must be made and filed
with the Internal Revenue Service within thirty days of the receipt of the
shares or other property.
Different tax rules may apply with respect to participants who are subject
to Section 16 of the Securities Exchange Act of 1934, as amended, when they
acquire stock in a transaction deemed to be a nonexempt purchase under the
statute, upon exercise of a derivative security within six months after the
exempt grant of such derivative security under the 1998 Plan or in other kinds
of transactions under the 1998 Plan (such as payment of the exercise price of
an option by surrender of previously acquired Common Stock).
Section 162(m) of the Internal Revenue Code generally disallows a public
company's tax deduction for compensation to the chief executive officer and
the four other most highly compensated executive officers in excess of $1
million. Compensation that qualifies as "performance-based compensation" is
excluded from the $1 million deductibility cap, and therefore remains fully
deductible by the company that pays it. Assuming the 1998 Plan is approved at
the Annual Meeting, the Company believes that options granted with an exercise
price at least equal to 100% of the fair market value of the underlying stock
at the date of grant, and other awards the settlement of which is conditioned
upon achievement of performance goals (based on performance criteria described
above), will qualify as such "performance-based compensation," although other
awards under the 1998 Plan may not so qualify.
No awards have been granted pursuant to the 1998 Plan. Awards that may in
the future be received by or allocated to the chief executive officer, the
four other most highly compensated executive officers, or to such other groups
of persons, cannot be determined at this time.
15
<PAGE>
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by duly executed proxies at the Annual
Meeting and entitled to vote is required to approve the adoption of the 1998
Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE COMPANY'S 1998 LONG-TERM INCENTIVE PLAN.
PROPOSAL 4
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Upon recommendation of the Audit Committee of the Board of Directors, and
subject to ratification by the stockholders, the Board of Directors has
appointed PricewaterhouseCoopers LLP as the Company's independent public
accountants to examine the Company's consolidated financial statements for the
fiscal year ending December 31, 1998. PricewaterhouseCoopers LLP has served as
the Company's independent accountants since its formation in 1997.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting and will have the opportunity to make a statement, if they
so desire, and to respond to appropriate questions from those attending the
meeting.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote is required to ratify the appointment of the Company's
independent accountants.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS TO EXAMINE THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE
1998 FISCAL YEAR.
16
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DEADLINES FOR 1999 ANNUAL MEETING
Any stockholder proposal submitted to the Company pursuant to Securities and
Exchange Commission Rule 14a-8 for inclusion in the Company's Proxy Statement
and proxy card relating to the Company's 1999 Annual Meeting of Stockholders
must be received by the Company no later than April 16, 1999. If the Company
does not receive notice of any non-Rule 14a-8 matter that a stockholder wishes
to raise at the 1999 Annual Meeting of Stockholders by June 30, 1999, the
Company will retain discretionary authority to vote proxies on such matters if
they are raised at the 1999 Annual Meeting of Stockholders.
OTHER MATTERS
The Board of Directors knows of no matters that are expected to be presented
for consideration at the Annual Meeting other than those described in this
Proxy Statement. Should any other matter properly come before the Annual
Meeting, however, the persons named in the proxy card accompanying this Proxy
Statement will vote all shares represented by proxies in accordance with their
best judgment on such matters.
17
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CONSOLIDATION CAPITAL CORPORATION
1998 LONG-TERM INCENTIVE PLAN
EXHIBIT A
1. Purpose. The purpose of this 1998 Long-Term Incentive Plan (the "Plan")
of Consolidation Capital Corporation, a Delaware corporation (the "Company"),
is to advance the interests of the Company and its stockholders by providing a
means to attract, retain and reward directors, officers and other key
employees and consultants of and service providers to the Company and its
subsidiaries and to enable such persons to acquire or increase a proprietary
interest in the Company, thereby promoting a closer identity of interests
between such persons and the Company's stockholders.
2. Definitions. The definitions of awards under the Plan, including Options,
SARs (including Limited SARs), Restricted Stock, Deferred Stock, Stock granted
as a bonus or in lieu of other awards, Dividend Equivalents and Other Stock-
Based Awards are set forth in Section 6 of the Plan. Such awards, together
with any other right or interest granted to a Participant under the Plan, are
termed "Awards." For purposes of the Plan, the following additional terms
shall be defined as set forth below:
(a) "Award Agreement" means any written agreement, contract, notice or other
instrument or document evidencing an Award.
(b) "Beneficiary" shall mean the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under
the Plan upon such Participant's death or, if there is no designated
Beneficiary or surviving designated Beneficiary, then the person, persons,
trust or trusts entitled by will or the laws of descent and distribution to
receive such benefits.
(c) "Board" means the Board of Directors of the Company.
(d) A "Change in Control" shall be deemed to have occurred if:
(i) the date of the acquisition by any "person" (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act), excluding the
Company or any of its subsidiaries or affiliates or any employee
benefit plan sponsored by any of the foregoing, of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of 50% or
more of either (x) the then outstanding shares of common stock of the
Company or (y) the then outstanding voting securities entitled to vote
generally in the election of directors; or
(ii) the date the individuals who constitute the Board as of the
effective date of the Plan (the "Incumbent Board") cease for any reason
to constitute at least a majority of the members of the Board, provided
that any individual becoming a director subsequent to the effective
date of this Agreement whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other
than any individual whose nomination for election to Board membership
was not endorsed by the Company's management prior to, or at the time
of, such individual's initial nomination for election) shall be, for
purposes of this Agreement, considered as though such person were a
member of the Incumbent Board; or
(iii) the consummation of a merger, consolidation, recapitalization,
reorganization, sale or disposition of all or a substantial portion of
the Company's assets, a reverse stock split of outstanding voting
securities, the issuance of shares of stock of the Company in
connection with the acquisition of the stock or assets of another
entity, provided, however, that a Change in Control shall not occur
under this clause (iii) if consummation of the transaction would result
in at least 70% of the total voting power represented by the voting
securities of the Company (or, if not the Company, the entity that
succeeds to all or substantially all of the Company's business)
outstanding immediately after such transaction being beneficially owned
(within the meaning of Rule 13d-3 promulgated pursuant to the
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Exchange Act) by at least 75% of the holders of outstanding voting
securities of the Company immediately prior to the transaction, with
the voting power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to any provision of the Code shall be deemed to include
regulations thereunder and successor provisions and regulations thereto.
(f) "Committee" means the committee appointed by the Board to administer the
Plan, or if no committee is appointed, the Board.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include rules thereunder and successor provisions and rules thereto.
(h) "Fair Market Value" means, with respect to Stock, Awards, or other
property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee, provided, however, that if the Stock is listed on a
national securities exchange or quoted in an interdealer quotation system, the
Fair Market Value of such Stock on a given date shall be based upon the last
sales price or, if unavailable, the average of the closing bid and asked
prices per share of the Stock on such date (or, if there was no trading or
quotation in the Stock on such date, on the next preceding date on which there
was trading or quotation) as provided by one of such organizations.
(i) "ISO" means any Option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.
(j) "Participant" means a person who, at a time when eligible under Section
5 hereof, has been granted an Award under the Plan.
(k) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(l) "Stock" means the Common Stock, par value $.001, of the Company and such
other securities as may be substituted for Stock or such other securities
pursuant to Section 4.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions
of the Plan:
(i) to select persons to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to each
such person;
(iii) to determine the number of Awards to be granted, the number of
shares of Stock to which an Award will relate, the terms and conditions
of any Award granted under the Plan (including, but not limited to, any
exercise price, grant price or purchase price, any restriction or
condition, any schedule for lapse of restrictions or conditions
relating to transferability or forfeiture, exercisability or settlement
of an Award, and waivers or accelerations thereof, performance
conditions relating to an Award (including performance conditions
relating to Awards not intended to be governed by Section 7(f) and
waivers and modifications thereof), based in each case on such
considerations as the Committee shall determine), and all other matters
to be determined in connection with an Award;
(iv) to determine whether, to what extent and under what
circumstances an Award may be settled, or the exercise price of an
Award may be paid, in cash, Stock, other Awards, or other property, or
an Award may be canceled, forfeited, or surrendered;
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(v) to determine whether, to what extent and under what circumstances
cash, Stock, other Awards or other property payable with respect to an
Award will be deferred either automatically, at the election of the
Committee or at the election of the Participant;
(vi) to prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(vii) to adopt, amend, suspend, waive and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary
or advisable to administer the Plan;
(viii) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and
any Award, rules and regulations, Award Agreement or other instrument
hereunder; and
(ix) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
Other provisions of the Plan notwithstanding, the Board may perform any
function of the Committee under the Plan, including without limitation for the
purpose of ensuring that transactions under the Plan by Participants who are
then subject to Section 16 of the Exchange Act in respect of the Company are
exempt under Rule 16b-3. In any case in which the Board is performing a
function of the Committee under the Plan, each reference to the Committee
herein shall be deemed to refer to the Board.
(b) Manner of Exercise of Committee Authority. Any action of the Committee
with respect to the Plan shall be final, conclusive and binding on all
persons, including the Company, subsidiaries of the Company, Participants, any
person claiming any rights under the Plan from or through any Participant and
stockholders, except to the extent the Committee may subsequently modify, or
take further action not consistent with, its prior action. If not specified in
the Plan, the time at which the Committee must or may make any determination
shall be determined by the Committee, and any such determination may
thereafter by modified by the Committee (subject to Section 8(e)). The express
grant of any specific power to the Committee, and the taking of any action by
the Committee, shall not be construed as limiting any power or authority of
the Committee. Except as provided under Section 7(f), the Committee may
delegate to officers or managers of the Company or any subsidiary of the
Company the authority, subject to such terms as the Committee shall determine,
to perform such functions as the Committee may determine, to the extent
permitted under applicable law.
(c) Limitation of Liability. Each member of the Committee shall be entitled
to, in good faith, rely or act upon any report or other information furnished
to him by any officer or other employee of the Company or any subsidiary, the
Company's independent certified public accountants or any executive
compensation consultant, legal counsel or other professional retained by the
Company to assist in the administration of the Plan. No member of the
Committee, nor any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
its behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination or
interpretation.
4. Stock Subject to Plan.
(a) Amount of Stock Reserved. The total amount of Stock that may be subject
to outstanding Awards under the Plan as well as awards outstanding under the
Consolidation Capital Corporation 1997 Long-Term Incentive Plan, determined
immediately after the grant of any Award, shall not exceed 14% of the total
number of shares of Stock outstanding at the effective time of such grant.
Notwithstanding the foregoing, the number of shares that may be delivered upon
the exercise of ISOs under the Plan shall not exceed 3,198,971 shares (subject
to adjustment as provided in Section 4(c)), provided, however, that shares
subject to ISOs shall not be deemed delivered if such ISOs are forfeited,
expire or otherwise terminate without delivery of shares to the Participant.
If an Award valued by reference to Stock may only be settled in cash, the
number of shares to which such Award
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relates shall be deemed to be Stock subject to such Award for purposes of this
Section 4(a). Any shares of Stock delivered pursuant to an Award may consist,
in whole or in part, of authorized and unissued shares, treasury shares or
shares acquired in the market for a Participant's Account.
(b) Annual Per-Participant Limitations. During any calendar year, no
Participant may be granted Awards that may be settled by delivery of more than
1,000,000 shares of Stock, subject to adjustment as provided in Section 4(c).
In addition, with respect to Awards that may be settled in cash (in whole or
in part), no Participant may be paid during any calendar year cash amounts
relating to such Awards that exceed the greater of the Fair Market Value of
the number of shares of Stock set forth in the preceding sentence at the date
of grant or the date of settlement of the Award. This provision sets forth two
separate limitations, so that Awards that may be settled solely by delivery of
Stock will not operate to reduce the amount of cash-only Awards, and vice
versa; nevertheless, Awards that may be settled in Stock or cash must not
exceed either limitation.
(c) Adjustments. In the event that the Committee shall determine that any
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or exchange of Stock or other
securities, Stock dividend or other special, large and non-recurring dividend
or distribution (whether in the form of cash, securities or other property),
liquidation, dissolution, or other similar corporate transaction or event,
affects the Stock such that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of Participants under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Stock reserved and available for Awards
under Section 4(a), including shares reserved for ISOs, (ii) the number and
kind of shares of Stock specified in the annual per-participant limitations
under Section 4(b), (iii) the number and kind of shares of outstanding
Restricted Stock or other outstanding Award in connection with which shares
have been issued, (iv) the number and kind of shares that may be issued in
respect of other outstanding Awards and (v) the exercise price, grant price or
purchase price relating to any Award. (or, if deemed appropriate, the
Committee may make provision for a cash payment with respect to any
outstanding Award). In addition, the Committee is authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards (including, without limitation, cancellation of unexercised or
outstanding Awards, or substitution of Awards using stock of a successor or
other entity) in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence and events
constituting a Change in Control) affecting the Company or any subsidiary or
the financial statements of the Company or any subsidiary, or in response to
changes in applicable laws, regulations, or accounting principles.
5. Eligibility. Executive officers and other employees of the Company and
its subsidiaries, including any officer or member of the Board who is also
such an employee, and persons who provide consulting or other services to the
Company deemed by the Committee to be of substantial value to the Company, are
eligible to be granted Awards under the Plan. In addition, persons who have
been offered employment by the Company or its subsidiaries, and persons
employed by an entity that the Committee reasonably expects to become a
subsidiary of the Company, are eligible to be granted an Award under the Plan.
6. Specific Terms of Awards.
(a)General. Awards may be granted on the terms and conditions set forth in
this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment or
service of the Participant. Except as provided in Section 6(f), 6(h), or 7(a),
or to the extent required to comply with requirements of applicable law, only
services may be required as consideration for the grant (but not the exercise)
of any Award.
(b) Options. The Committee is authorized to grant Options (including
"reload" options automatically granted to offset specified exercises of
Options) on the following terms and conditions ("Options"):
(i) Exercise Price. The exercise price per share of Stock purchasable
under an Option shall be determined by the Committee.
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(ii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part,
the methods by which such exercise price may be paid or deemed to be
paid, the form of such payment, including, without limitation, cash,
Stock, other Awards or awards granted under other Company plans or
other property (including notes or other contractual obligations of
Participants to make payment on a deferred basis, such as through
"cashless exercise" arrangements, to the extent permitted by applicable
law), and the methods by which Stock will be delivered or deemed to be
delivered to Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall comply
in all respects with the provisions of Section 422 of the Code,
including but not limited to the requirement that no ISO shall be
granted with an exercise price less than 100% (110% for an individual
described in Section 422(b)(6) of the Code) of the Fair Market Value of
a share of Stock on the date of grant and granted no more than ten
years after the effective date of the Plan. Anything in the Plan to the
contrary notwithstanding, no term of the Plan relating to ISOs shall be
interpreted, amended, or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify either the
Plan or any ISO under Section 422 of the Code, unless requested by the
affected Participant.
(iv) Termination of Employment. Unless otherwise determined by the
Committee, upon termination of a Participant's employment with the
Company and its subsidiaries, such Participant may exercise any Options
during the three-month period following such termination of employment,
but only to the extent such Option was exercisable as of such
termination of employment. Notwithstanding the foregoing, if the
Committee determines that such termination is for cause, all Options
held by the Participant shall terminate as of the termination of
employment.
(c) Stock Appreciation Rights. The Committee is authorized to grant SARs on
the following terms and conditions ("SARs"):
(i) Right to Payment. An SAR shall confer on the Participant to whom
it is granted a right to receive, upon exercise thereof, the excess of
(A) the Fair Market Value of one share of Stock on the date of exercise
(or, if the Committee shall so determine in the case of any such right
other than one related to an ISO, the Fair Market Value of one share at
any time during a specified period before or after the date of
exercise), over (B) the grant price of the SAR as determined by the
Committee as of the date of grant of the SAR, which, except as provided
in Section 7(a), shall be not less than the Fair Market Value of one
share of Stock on the date of grant.
(ii) Other Terms. The Committee shall determine the time or times at
which an SAR may be exercised in whole or in part, the method of
exercise, method of settlement, form of consideration payable in
settlement, method by which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem
with any other Award, and any other terms and conditions of any SAR.
Limited SARs that may only be exercised upon the occurrence of a Change
in Control may be granted on such terms, not inconsistent with this
Section 6(c), as the Committee may determine. Limited SARs may be
either freestanding or in tandem with other Awards.
(d) Restricted Stock. The Committee is authorized to grant Restricted Stock
on the following terms and conditions ("Restricted Stock"):
(i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions, if any, as the
Committee may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee may determine. Except to
the extent restricted under the terms of the Plan and any Award
Agreement relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a stockholder
including, without limitation, the right to vote Restricted Stock or
the right to receive dividends thereon.
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(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment or service (as determined under criteria
established by the Committee) during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be
forfeited and reacquired by the Company; provided, however, that the
Committee may provide, by rule or regulation or in any Award Agreement,
or may determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock will be waived in
whole or in part in the event of termination resulting from specified
causes.
(iii) Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name
of the Participant, such certificates may bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, the Company may retain physical possession of the
certificate, and the Participant shall have delivered a stock power to
the Company, endorsed in blank, relating to the Restricted Stock.
(iv) Dividends. Dividends paid on Restricted Stock shall be either
paid at the dividend payment date in cash or in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends,
or the payment of such dividends shall be deferred and/or the amount or
value thereof automatically reinvested in additional Restricted Stock,
other Awards, or other investment vehicles, as the Committee shall
determine or permit the Participant to elect. Stock distributed in
connection with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with respect
to which such Stock or other property has been distributed, unless
otherwise determined by the Committee.
(e) Deferred Stock. The Committee is authorized to grant Deferred Stock
subject to the following terms and conditions ("Deferred Stock"):
(i) Award and Restrictions. Delivery of Stock will occur upon
expiration of the deferral period specified for an Award of Deferred
Stock by the Committee (or, if permitted by the Committee, as elected
by the Participant). In addition, Deferred Stock shall be subject to
such restrictions as the Committee may impose, if any, which
restrictions may lapse at the expiration of the deferral period or at
earlier specified times, separately or in combination, in installments
or otherwise, as the Committee may determine.
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment or service (as determined under criteria
established by the Committee) during the applicable deferral period or
portion thereof to which forfeiture conditions apply (as provided in
the Award Agreement evidencing the Deferred Stock), all Deferred Stock
that is at that time subject to such forfeiture conditions shall be
forfeited; provided, however, that the Committee may provide, by rule
or regulation or in any Award Agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating to
Deferred Stock will be waived in whole or in part in the event of
termination resulting from specified causes.
(f) Bonus Stock and Awards in Lieu of Cash Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in
lieu of Company obligations to pay cash under other plans or compensatory
arrangements.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents entitling the Participant to receive cash, Stock, other Awards or
other property equal in value to dividends paid with respect to a specified
number of shares of Stock ("Dividend Equivalents"). Dividend Equivalents may
be awarded on a free-standing basis or in connection with another Award. The
Committee may provide that Dividend Equivalents
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shall be paid or distributed when accrued or shall be deemed to have been
reinvested in additional Stock, Awards or other investment vehicles, and
subject to such restrictions on transferability and risks of forfeiture, as
the Committee may specify.
(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock and factors that may influence the
value of Stock, as deemed by the Committee to be consistent with the purposes
of the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase
rights for Stock, Awards with value and payment contingent upon performance of
the Company or any other factors designated by the Committee and Awards valued
by reference to the book value of Stock or the value of securities of or the
performance of specified subsidiaries ("Other Stock Based Awards"). The
Committee shall determine the terms and conditions of such Awards. Stock
issued pursuant to an Award in the nature of a purchase right granted under
this Section 6(h) shall be purchased for such consideration, paid for at such
times, by such methods, and in such forms, including, without limitation,
cash, Stock, other Awards, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other Award
under the Plan, may be granted pursuant to this Section 6(h).
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted either
alone or in addition to, in tandem with or in substitution for any other Award
granted under the Plan or any award granted under any other plan of the
Company, any subsidiary or any business entity to be acquired by the Company
or a subsidiary, or any other right of a Participant to receive payment from
the Company or any subsidiary. Awards granted in addition to or in tandem with
other Awards or awards may be granted either as of the same time as or a
different time from the grant of such other Awards or awards.
(b) Term of Awards. The term of each Award shall be for such period as may
be determined by the Committee; provided, however, that in no event shall the
term of any ISO or an SAR granted in tandem therewith exceed a period of ten
years from the date of its grant (or such shorter period as may be applicable
under Section 422 of the Code).
(c) Form of Payment Under Awards. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a subsidiary
upon the grant, exercise or settlement of an Award may be made in such forms
as the Committee shall determine, including, without limitation, cash, Stock,
other Awards or other property, and may be made in a single payment or
transfer, in installments or on a deferred basis. Such payments may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents in respect of installment or deferred payments
denominated in Stock.
(d) Rule 16b-3 Compliance.
(i) Six-Month Holding Period. Unless a Participant could otherwise
dispose of equity securities, including derivative securities,
acquired under the Plan without incurring liability under Section
16(b) of the Exchange Act, equity securities acquired under the Plan
must be held for a period of six months following the date of such
acquisition, provided that this condition shall be satisfied with
respect to a derivative security if at least six months elapse from
the date of acquisition of the derivative security to the date of
disposition of the derivative security (other than upon exercise or
conversion) or its underlying equity security.
(ii) Other Compliance Provisions. With respect to a Participant who is
then subject to Section 16 of the Exchange Act in respect of the
Company, the Committee shall implement transactions under the Plan
and administer the Plan in a manner that will ensure that each
transaction by such a
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Participant is exempt from liability under Rule 16b-3, except that
such a Participant may be permitted to engage in a non-exempt
transaction under the Plan if written notice has been given to the
Participant regarding the non-exempt nature of such transaction. The
Committee may authorize the Company to repurchase any Award or shares
of Stock resulting from any Award in order to prevent a Participant
who is subject to Section 16 of the Exchange Act from incurring
liability under Section 16(b). Unless otherwise specified by the
Participant, equity securities, including derivative securities,
acquired under the Plan which are disposed of by a Participant shall
be deemed to be disposed of in the order acquired by the Participant.
(e) Loan Provisions. With the consent of the Committee, and subject at all
times to, and only to the extent, if any, permitted under and in accordance
with, laws and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee or arrange for a
loan or loans to a Participant with respect to the exercise of any Option or
other payment in connection with any Award, including the payment by a
Participant of any or all federal, state or local income or other taxes due in
connection with any Award. Subject to such limitations, the Committee shall
have full authority to decide whether to make a loan or loans hereunder and to
determine the amount, terms and provisions of any such loan or loans,
including the interest rate to be charged in respect of any such loan or
loans, whether the loan or loans are to be with or without recourse against
the borrower, the terms on which the loan is to be repaid and conditions, if
any, under which the loan or loans may be forgiven.
(f) Performance-Based Awards. The Committee may, in its discretion,
designate any Award the exercisability or settlement of which is subject to
the achievement of performance conditions as a performance-based Award subject
to this Section 7(f), in order to qualify such Award as "qualified
performance-based compensation" within the meaning of Code Section 162(m) and
regulations thereunder. The performance objectives for an Award subject to
this Section 7(f) shall consist of one or more business criteria and a
targeted level or levels of performance with respect to such criteria, as
specified by the Committee but subject to this Section 7(f). Performance
objectives shall be objective and shall otherwise meet the requirements of
Section 162(m)(4)(C) of the Code. Business criteria used by the Committee in
establishing performance objectives for Awards subject to this Section 7(f)
shall be selected from among the following:
(1) Annual return on capital;
(2) Annual earnings or earnings per share;
(3) Annual cash flow provided by operations;
(4) Changes in annual revenues; and/or
(5) Strategic business criteria, consisting of one or more objectives
based on meeting specified revenue, market penetration, geographic
business expansion goals, cost targets, and goals relating to
acquisitions or divestitures.
The levels of performance required with respect to such business criteria
may be expressed in absolute or relative levels. Achievement of performance
objectives with respect to such Awards shall be measured over a period of not
less than one year nor more than five years, as the Committee may specify.
Performance objectives may differ for such Awards to different Participants.
The Committee shall specify the weighting to be given to each performance
objective for purposes of determining the final amount payable with respect to
any such Award. The Committee may, in its discretion, reduce the amount of a
payout otherwise to be made in connection with an Award subject to this
Section 7(f), but may not exercise discretion to increase such amount, and the
Committee may consider other performance criteria in exercising such
discretion. All determinations by the Committee as to the achievement of
performance objectives shall be in writing. The Committee may not delegate any
responsibility with respect to an Award subject to this Section 7(f).
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(g) Acceleration upon a Change of Control. Notwithstanding anything
contained herein to the contrary, all conditions and/or restrictions relating
to the continued performance of services and/or the achievement of performance
objectives with respect to the exercisability or full enjoyment of an Award
shall immediately lapse upon a Change in Control, provided, however, that such
lapse shall not occur if (i) it is intended that the transaction constituting
such Change in Control be accounted for as a pooling of interests under
Accounting Principles Board Option No. 16 (or any successor thereto), and
operation of this Section 7(g) would otherwise violate Paragraph 47(c)
thereof, or (ii) the Committee, in its discretion, determines that such lapse
shall not occur, provided, further, that the Committee shall not have the
discretion granted in clause (ii) if it is intended that the transaction
constituting such Change in Control be accounted for as a pooling of interests
under Accounting Principles Board Option No. 16 (or any successor thereto),
and such discretion would otherwise violate Paragraph 47(c) thereof.
8. General Provisions.
(a) Compliance With Laws and Obligations. The Company shall not be obligated
to issue or deliver Stock in connection with any Award or take any other
action under the Plan in a transaction subject to the requirements of any
applicable securities law, any requirement under any listing agreement between
the Company and any national securities exchange or automated quotation system
or any other law, regulation or contractual obligation of the Company until
the Company is satisfied that such laws, regulations, and other obligations of
the Company have been complied with in full. Certificates representing shares
of Stock issued under the Plan will be subject to such stop-transfer orders
and other restrictions as may be applicable under such laws, regulations and
other obligations of the Company, including any requirement that a legend or
legends be placed thereon.
(b) Limitations on Transferability. Awards and other rights under the Plan
will not be transferable by a Participant except by will or the laws of
descent and distribution or to a Beneficiary in the event of the Participant's
death, shall not be pledged, mortgaged, hypothecated or otherwise encumbered,
or otherwise subject to the claims of creditors, and, in the case of ISOs and
SARs in tandem therewith, shall be exercisable during the lifetime of a
Participant only by such Participant or his guardian or legal representative;
provided, however, that such Awards and other rights (other than ISOs and SARs
in tandem therewith) may be transferred to one or more transferees during the
lifetime of the Participant to the extent and on such terms as then may be
permitted by the Committee.
(c) No Right to Continued Employment or Service. Neither the Plan nor any
action taken hereunder shall be construed as giving any employee or other
person the right to be retained in the employ or service of the Company or any
of its subsidiaries, nor shall it interfere in any way with the right of the
Company or any of its subsidiaries to terminate any employee's employment or
other person's service at any time.
(d) Taxes. The Company and any subsidiary is authorized to withhold from any
Award granted or to be settled, any delivery of Stock in connection with an
Award, any other payment relating to an Award or any payroll or other payment
to a Participant amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Award, and to take
such other action as the Committee may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes
and other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax
obligations.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of stockholders or Participants, except
that any such action shall be subject to the approval of the Company's
stockholders at or before the next annual meeting of stockholders for which
the record date is after such Board action if such stockholder approval is
required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Stock may then be listed
or quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to stockholders for approval; provided,
9
<PAGE>
however, that, without the consent of an affected Participant, no such action
may materially impair the rights of such Participant under any Award
theretofore granted to him (as such rights are set forth in the Plan and the
Award Agreement). The Committee may waive any conditions or rights under, or
amend, alter, suspend, discontinue, or terminate, any Award theretofore
granted and any Award Agreement relating thereto; provided, however, that,
without the consent of an affected Participant, no such action may materially
impair the rights of such Participant under such Award (as such rights are set
forth in the Plan and the Award Agreement) except to the extent necessary for
a business combination in which the Company is a party to be accounted for
under the pooling-of-interests method of accounting.
(f) No Rights to Awards; No Stockholder Rights. No Participant or employee
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Participants and employees. No Award
shall confer on any Participant any of the rights of a stockholder of the
Company unless and until Stock is duly issued or transferred and delivered to
the Participant in accordance with the terms of the Award or, in the case of
an Option, the Option is duly exercised.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company's obligations under the Plan to
deliver cash, Stock, other Awards, or other property pursuant to any Award,
which trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan unless the Committee otherwise determines with the consent
of each affected Participant.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt
such other compensatory arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.
(i) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu
of such fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.
(j) Compliance with Code Section 162(m). It is the intent of the Company
that employee Options, SARs and other Awards designated as Awards subject to
Section 7(f) shall constitute "qualified performance-based compensation"
within the meaning of Code Section 162(m). Accordingly, if any provision of
the Plan or any Award Agreement relating to such an Award does not comply or
is inconsistent with the requirements of Code Section 162(m), such provision
shall be construed or deemed amended to the extent necessary to conform to
such requirements, and no provision shall be deemed to confer upon the
Committee or any other person discretion to increase the amount of
compensation otherwise payable in connection with any such Award upon
attainment of the performance objectives.
(k) Governing Law. The validity, construction and effect of the Plan, any
rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware, without
giving effect to principles of conflicts of laws, and applicable federal law.
(l) Effective Date; Plan Termination. The Plan shall become effective as of
the date of its adoption by the Board and approval of the Company's
stockholders, and shall continue in effect until terminated by the Board.
10
<PAGE>
PROXY
CONSOLIDATION CAPITAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders
To Be Held SEPTEMBER 15, 1998
Revoking all prior proxies, the undersigned, a stockholder of CONSOLIDATION
CAPITAL CORPORATION (the "Company"), hereby appoints Jonathan J. Ledecky and
F. Traynor Beck, and each of them, attorneys and agents of the undersigned,
with full power of substitution, to vote all shares of the common stock, par
value $.001 per share (the "Common Stock"), of the undersigned in the Company
at the Annual Meeting of Stockholders of the Company to be held in the Crystal
Room of the Willard Inter-Continental Washington Hotel, 1401 Pennsylvania
Avenue, N.W., Washington, D.C. 20004 on September 15, 1998 at 10:00 a.m.,
local time, and at any adjournment thereof, as fully and effectively as the
undersigned could do if personally present and voting, hereby approving,
ratifying and confirming all that said attorneys and agents or their
substitutes may lawfully do in place of the undersigned as indicated below.
(TO BE SIGNED ON REVERSE SIDE)
SEE REVERSE SIDE
<PAGE>
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<S> <C> <C> <C>
FOR
all nominees listed WITHHOLD AUTHORITY
at right (Except as to vote for all
marked to the nominees listed
contrary below) at right
1. Election of [_] [_] Nominees: Jonathan J. Ledecky,
Directors: David Ledecky, William P.
Love, Jr., Thomas D. Heule,
Vincent W. Eades, W. Russell
Ramsey, M. Jude Reyes and
Mary K. Bush
</TABLE>
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of amendment to the Company's [_] [_] [_]
Restated Certificate of Incorporation
to change the name of the Company to
Building One Services Corporation and
the restatement of the Restated
Certificate of Incorporation to
reflect the same.
3. Approval of the Consolidation Capital [_] [_] [_]
Corporation 1998 Long-Term Incentive
Plan.
4. Ratification of the appointment of [_] [_] [_]
PricewaterhouseCoopers LLP as the
independent public accountants to
audit the Company's consolidated
financial statements for the fiscal
year ending December 31, 1998.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND
THE ANNUAL MEETING: [_]
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
SIGNATURE(S) ___________________________DATE
----------
NOTE: Please sign exactly as your name(s) appear(s) hereon. If the shares are
held jointly each party must sign. If the shareholder named is a corpora-
tion, partnership or other association, please sign its name and add your
own name and title. When signing as an attorney, executor, administrator,
trustee, guardian or in any other representative capacity, please also
give your full title or capacity.
