<PAGE>
SCHEDULE 14A
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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
National Equipment Services, Inc.
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
NATIONAL EQUIPMENT SERVICES, INC.
NOTICE OF 2000 ANNUAL MEETING
AND PROXY STATEMENT
<PAGE>
NATIONAL EQUIPMENT SERVICES, INC.
1603 Orrington Avenue, Suite 1600
Evanston, Illinois 60201
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
National Equipment Services, Inc. (the "Company"), which will be held on
Friday, May 26, 2000, at 1:00 p.m., local time, at The Standard Club, 320
South Plymouth Court, Second Floor, Chicago, Illinois 60604.
The Notice of Meeting, Proxy Statement and Proxy Form are included with
this letter. The matters listed in the Notice of Meeting are more fully
described in the Proxy Statement.
It is important that your shares are represented and voted at the Annual
Meeting, regardless of the size of your holdings. Accordingly, please mark,
sign and date the enclosed Proxy Form and return it promptly in the enclosed
envelope. If you attend the Annual Meeting, you may, of course, withdraw your
proxy should you wish to vote in person.
Sincerely,
/s/ Paul R. Ingersoll
Senior Vice President and Secretary
<PAGE>
NATIONAL EQUIPMENT SERVICES, INC.
1603 Orrington Avenue, Suite 1600
Evanston, Illinois 60201
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of National Equipment Services, Inc.
(the "Company") will be held on Friday, May 26, 2000, at 1:00 p.m., local
time, at The Standard Club, 320 South Plymouth Court, Second Floor, Chicago,
Illinois 60604 to consider and take action with respect to the following
matters:
1. The election of two directors to hold office for a term of three years;
2. The ratification of the appointment of PricewaterhouseCoopers LLP as
the Company's independent public accountants for the fiscal year ending
December 31, 2000; and
3. The transaction of such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
Holders of record of the Company's Common Stock at the close of business on
April 14, 2000 are entitled to receive notice of and to vote on all matters
presented at the Annual Meeting and at any adjournments or postponements
thereof. A list of such stockholders will be available for examination by any
stockholder for any purpose germane to the meeting during normal business
hours at the Company's principal executive offices, 1603 Orrington Avenue,
Suite 1600, Evanston, Illinois 60201, for a period of 10 days prior to the
meeting, and at the meeting.
By Order of the Board of Directors
/s/ Paul R. Ingersoll
Senior Vice President and Secretary
April 26, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON AND REGARDLESS
OF THE NUMBER OF SHARES YOU OWN, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY
FORM AND MAIL IT PROMPTLY IN THE ENVELOPE PROVIDED TO ENSURE THAT YOUR SHARES
WILL BE REPRESENTED. YOU MAY NEVERTHELESS VOTE IN PERSON IF YOU ATTEND THE
ANNUAL MEETING. IN ADDITION, YOUR PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS
VOTED BY WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY OR BY DELIVERY OF A
LATER-DATED PROXY.
<PAGE>
NATIONAL EQUIPMENT SERVICES, INC.
1603 Orrington Avenue, Suite 1600
Evanston, Illinois 60201
----------------
PROXY STATEMENT
----------------
Annual Meeting of Stockholders
to be held on
May 26, 2000
----------------
This proxy statement (this "Proxy Statement") is being furnished to the
holders of common stock, par value $0.01 per share (the "Common Stock"), of
National Equipment Services, Inc. (the "Company") in connection with the
solicitation of proxies by and on behalf of the Board of Directors of the
Company (the "Board of Directors" or the "Board") for use at the annual
meeting of stockholders to be held on May 26, 2000 at 1:00 p.m., local time,
and at any adjournments or postponements thereof (the "Annual Meeting"). The
purpose of the Annual Meeting is to elect two directors to the Board and to
ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent public accountants for the 2000 fiscal year.
The Notice of Meeting, this Proxy Statement and the Proxy Form are being
mailed on or about April 26, 2000 to holders of record of the Common Stock at
the close of business on April 14, 2000. The Company's Annual Report to
Stockholders, which includes portions of the Company's Annual Report on Form
10-K for the Fiscal Year ended December 31, 1999, are being mailed to
stockholders with this Proxy Statement.
If the enclosed proxy form (the "Proxy Form") is properly signed, dated and
returned to the Company, the individuals identified as proxies thereon will
vote the shares represented by the Proxy Form in accordance with the
directions noted thereon. If no direction is indicated, the proxies will vote
FOR the election of the nominees named herein as directors and FOR the
ratification of the appointment of PricewaterhouseCoopers LLP as the Company's
independent public accountants for the 2000 fiscal year. The Company's
management does not know of any matters other than those discussed in this
Proxy Statement that will be presented at the Annual Meeting. If other matters
are presented, all proxies will be voted in accordance with the
recommendations of the Company's management.
Returning your completed Proxy Form will not prevent you from voting in
person at the Annual Meeting if you are present and wish to vote. In addition,
you may revoke your proxy any time before it is voted by written notice to the
Secretary of the Company prior to the Annual Meeting at the Company's
principal executive offices at the address above or by submission of a later-
dated proxy.
Each outstanding share of Common Stock entitles the holder thereof to one
vote on each matter to come before the Annual Meeting. As of April 14, 2000,
there were 21,905,887 shares of Common Stock outstanding. The presence in
person or by proxy of a majority of the shares of Common Stock outstanding
will constitute a quorum for the transaction of business. Pursuant to Delaware
law, abstentions are treated as present and entitled to vote, and therefore
are counted in determining the existence of a quorum and will have the effect
of a vote against any matter requiring the affirmative vote of a majority of
the shares present and entitled to vote at the Annual Meeting. Under Delaware
law, broker "non-votes" are considered present but not entitled to vote, and
thus will be counted in determining the existence of a quorum but will not be
counted in determining whether a matter requiring approval of a majority of
the shares present and entitled to vote has been approved or whether a
plurality of the vote of the shares present and entitled to vote has been
cast.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's by-laws provide that the size of the Board shall be fixed
from time to time by resolution of the Board and that vacancies on the Board
may be filled by the remaining directors. The Board currently consists
<PAGE>
of six directors, who are divided into three classes, each consisting of two
directors, who serve staggered three-year terms. Kevin Rodgers' and William
Kessinger's terms will expire at the 2000 Annual Meeting. Carl Thoma's and
John Grove's terms will expire at the 2001 Annual Meeting. Ronald St. Clair's
and Lawrence C. Tucker's terms will expire at the 2002 Annual Meeting. Each
director is elected to serve for the remaining term of any vacancy filled by
the director or until the third succeeding annual meeting of stockholders (if
elected at an annual meeting of stockholders) or until a successor is duly
elected.
As long as The 1818 Fund III, L.P. ("The 1818 Fund") holds 20% of the
shares of Common Stock issued or issuable upon conversion of the 60,000 shares
of Senior Redeemable Convertible Preferred Stock, Series A ("Preferred Stock")
of the Company acquired by it in a private placement in 1999, it is entitled
to designate one director to the Board to be included in the slate of nominees
recommended by the Board and to designate such director's successor at
subsequent annual meetings at which such director's or successor's term
expires. Mr. Tucker is The 1818 Fund's designee.
Messrs. Rodgers and Kessinger have been nominated for re-election at the
Annual Meeting. See "Management--Nominees for Director" and "Management--
Continuing Directors" for information with respect to Messrs. Rodgers and
Kessinger and the continuing directors of the Company. The Company believes
that the nominees are willing to be elected and to serve. In the event that
any nominee is unable to serve or is otherwise unavailable for election, which
is not now contemplated, the incumbent Board may or may not select a
substitute nominee. If a substituted nominee is selected, all proxies will be
voted for the person selected.
Directors will be elected at the Annual Meeting by a plurality of the votes
cast at the meeting by the holders of shares represented in person or by
proxy. There is no cumulative voting as to any matter, including the election
of directors.
The Board of Directors recommends a vote "FOR" the election of the nominees.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee, has
selected the accounting firm of PricewaterhouseCoopers LLP to serve as
independent auditors of the Company with respect to the 2000 fiscal year to
examine the financial statements of the Company for the fiscal year ending
December 31, 2000 and to perform other appropriate accounting services.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting to respond to questions and to make a statement if they
desire to do so. If the stockholders do not ratify this appointment by the
affirmative vote of a majority of the shares represented in person or by proxy
at the Annual Meeting, other independent public accountants will be considered
by the Board of Directors upon recommendation by the Audit Committee.
The Board of Directors recommends a vote "FOR" ratification of the appointment
of PricewaterhouseCoopers LLP as the Company's independent public accountants
for fiscal 2000.
2
<PAGE>
MANAGEMENT
The following sets forth certain information as of April 1, 2000, with
respect to the Company's nominees for director, the Company's continuing
directors, and the executive officers of the Company. The Board has the power
to appoint the officers of the Company. Each officer will hold office for such
term as may be prescribed by the Board and until such person's successor is
chosen and qualified or until such person's death, resignation or removal.
Nominees for Director
Kevin Rodgers Age: 49
Mr. Rodgers has been President, Chief Executive Officer and a director
of the Company since he founded the Company with Golder, Thoma, Cressey,
Rauner Fund V, L.P. in June 1996. Prior thereto, Mr. Rodgers served as
Chief Executive Officer of Brambles Equipment Services, Inc. and Brambles
Records Management, Inc. from 1991 to June 1996. From 1991 to 1996, Mr.
Rodgers also held the position of Executive Director of Brambles USA, a
subsidiary of Brambles Industries Limited, an Australian public company
with worldwide revenues of over US $2.5 billion. From 1979 to 1990, Mr.
Rodgers held several positions at Morgan Equipment Company, a privately
held heavy equipment dealership with worldwide sales of approximately $300
million, including Chief Executive Officer of Morgan Equipment's Australian
operations from 1986 to 1990.
William Kessinger Age: 33
Mr. Kessinger has served as a director of the Company since its founding
in June 1996. Mr. Kessinger is a Principal of GTCR Golder Rauner, LLC, a
private equity investment company in Chicago, Illinois formed in January
1998 as a successor to Golder, Thoma, Cressey, Rauner, Inc. Mr. Kessinger
joined Golder, Thoma, Cressey, Rauner, Inc. in May 1995 and has been a
Principal since September 1997. Prior thereto, Mr. Kessinger was a
Principal with The Parthenon Group from July 1994 to May 1995. From August
1992 to June 1994, Mr. Kessinger attended Harvard Business School and
received his MBA. Prior to that time, Mr. Kessinger served as an Associate
with Prudential Asset Management Asia from August 1988 to June 1992. Mr.
Kessinger is also a director of AnswerThink Consulting Group, Inc. and
Global Imaging Systems, Inc.
Continuing Directors
Carl Thoma Age: 51
Mr. Thoma is Chairman of the Board of the Company and has served as a
director of the Company since its founding in June 1996. Mr. Thoma is the
Managing Partner of Thoma Cressey Equity Partners, a private equity
investment company in Chicago, Illinois, Denver, Colorado and San
Francisco, California formed in December 1997 as a successor to Golder,
Thoma, Cressey, Rauner, Inc. He also co-founded and has been a Managing
Director of Golder, Thoma, Cressey, Rauner, Inc., the general partner of
Golder, Thoma, Cressey, Rauner Fund V, L.P. and its predecessor funds, in
Chicago, Illinois since 1980. Mr. Thoma is also a director of Global
Imaging Systems, Inc., Outsource Partners, Inc. and Paging Network, Inc.
John Grove Age: 80
Mr. Grove has served as a director of the Company since May 1998. Mr.
Grove co-founded JLG Industries, Inc., a manufacturer of hydraulically-
operated machinery specializing in aerial work platforms, in 1969 and
served as Chairman and Chief Executive Officer until his retirement in
1993. Prior to 1969, Mr. Grove co-founded Grove Manufacturing Co. and
developed the modern hydraulic crane. Mr. Grove is also a director of
Falling Spring Corp., Truckcraft Corporation, Sentry Trust, Inc. and Zefer
Operations, Inc.
3
<PAGE>
Ronald St. Clair Age: 62
Mr. St. Clair has served as a director of the Company since October
1997. Mr. St. Clair founded High Reach Equipment, an aerial platform rental
company headquartered in Baton Rouge, Louisiana. In 1993, Mr. St. Clair
sold High Reach Equipment to Brambles Equipment Services, Inc. In 1994, Mr.
St. Clair retired from High Reach Equipment.
Lawrence C. Tucker Age: 57
Mr. Tucker has served as a director of the Company since May 1999. Mr.
Tucker has been a General Partner of Brown Brothers Harriman & Co., a
private banking firm, since 1979. Mr. Tucker is also a director of MCI
WorldCom, Inc., the MCI WorldCom Venture Fund, National Healthcare
Corporation, Riverwood Holdings, Inc., US Unwired Inc., VAALCO Energy Inc.
and World Access, Inc. Brown Brothers Harriman & Co. is the general partner
of The 1818 Fund, L.P., The 1818 Fund II, L.P., The 1818 Fund III, L.P. and
The 1818 Mezzanine Fund, L.P.
Executive Officers (Other Than Those who are Directors and Listed Above)
Dennis O'Connor Age: 50
Mr. O'Connor has been Chief Financial Officer of the Company since
August 1996. Prior thereto,
Mr. O'Connor served as Chief Financial Officer of Brambles Equipment
Services, Inc. from November 1991 to August 1996, where Mr. O'Connor
directed the financial and administrative functions for its seven operating
divisions and assisted in operations management. From May 1986 to May 1990,
Mr. O'Connor held various positions at Morgan Equipment Company, including
Chief Financial Officer and General Manager.
James O'Neil Age: 56
Mr. O'Neil has been Chief Operating Officer of the Company since
September 1998. Prior thereto, Mr. O'Neil served as President of the
Company's Sprintank division from the date of the Company's acquisition of
Sprintank in July 1997 to September 1998 and had also served as President
of Sprintank from January 1996 to the date of such acquisition. From
November 1992 to December 1995, Mr. O'Neil served as President and Chief
Operating Officer of Encycle/Texas, Inc., a metal concentrate and waste
recycling company. Previously, Mr. O'Neil held various senior executive
management positions with Laidlaw Environmental Services, Inc. and Tricil
Environmental Response, Inc.
Paul Ingersoll Age: 34
Mr. Ingersoll has been Senior Vice President of the Company since
February 1999 and Secretary of the Company since June 1996. From June 1996
to February 1999, Mr. Ingersoll also served as Vice President of Corporate
Development of the Company. Prior thereto, Mr. Ingersoll served as
Assistant to the Executive Director of Brambles USA from March 1992 to May
1996 and as Financial Analyst from November 1989 to March 1992.
Information About the Board of Directors
The Board of Directors met eight times during fiscal 1999. The Board of
Directors has an Audit Committee and a Compensation Committee. The Board of
Directors may also create other committees, including an executive committee
and a nominating committee. Each director attended 75% or more of the meetings
of the Board of Directors and any committees on which such director served
during fiscal 1999.
Audit Committee. The Audit Committee of the Board of Directors is composed
of three directors (currently Messrs. Thoma, Kessinger and Grove). The Audit
Committee makes recommendations to the Board of Directors
4
<PAGE>
regarding the selection of independent auditors, reviews the independence of
such auditors, approves the scope of the annual audit activities of the
independent auditors and reviews such audit results. The Audit Committee met
two times during fiscal 1999.
Compensation Committee. The Compensation Committee is composed of three
directors (currently Messrs. Thoma, St. Clair and Tucker). The Compensation
Committee makes recommendations regarding the Incentive Plan and decisions
concerning salaries and incentive compensation for executive officers, key
employees and consultants of the Company. The Compensation Committee met two
times during fiscal 1999.
Compensation of Directors
Directors of the Company currently do not receive a salary or an annual
retainer for their services, except for (i) Mr. St. Clair, who receives an
annual fee of $40,000 and (ii) Mr. Grove, who receives an annual fee of $8,000
and fees of $1,500 for each Board meeting (or $500 if such Board meeting is
telephonic) and $500 for each Board committee meeting Mr. Grove attends. The
Company expects that new non-employee directors not otherwise affiliated with
the Company or its stockholders will be paid an annual cash retainer. All
directors are reimbursed for out-of-pocket expenses related to their service
as directors, including expenses incurred in connection with attending
meetings. Directors may also be issued options pursuant to the National
Equipment Services, Inc. Long Term Incentive Plan (the "Incentive Plan").
In connection with the Company's initial public offering of Common Stock
(the "Initial Stock Offering"), the Company granted each of Mr. Grove and Mr.
St. Clair, under the Incentive Plan, options to acquire 10,000 shares of
Common Stock that will vest over a five year period. In August 1999, the
Company granted each of Mr. Grove and Mr. St. Clair, under the Incentive Plan,
options to acquire 2,000 shares of Common Stock that will vest over a five
year period. In addition, at each anniversary of the Initial Stock Offering,
the Company intends to grant each of Mr. Grove and Mr. St. Clair, under the
Incentive Plan, an option to acquire 2,000 shares of Common Stock that will
vest over a five year period commencing on the date of grant.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who beneficially own more than
ten percent of a registered class of the Company's equity securities to file
reports of securities ownership and changes in such ownership with the SEC.
Certain officers, directors and greater than ten percent beneficial owners
also are required by rules promulgated by the SEC to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Company, or written representations that no Form 5 filings were required, the
Company believes that each of its officers, directors and greater than ten
percent beneficial owners complied with all Section 16(a) filing requirements
applicable to them during fiscal 1999.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of April 1, 2000 by (i)
each stockholder known by the Company to own beneficially five percent or more
of the outstanding shares of the Company's Common Stock, (ii) each current
director and nominee for director of the Company, (iii) each Named Executive
Officer (as defined) of the Company and (iv) all directors of the Company and
executive officers of the Company as a group. As of April 1, 2000, there were
21,905,887 shares of Common Stock outstanding. To the knowledge of the
Company, each stockholder has sole voting and investment power with respect to
the shares indicated as beneficially owned, unless otherwise indicated in a
footnote. Unless otherwise indicated, the business address of each person is
the Company's corporate address. Except as otherwise expressly noted, the
percentages below do not assume the conversion into Common Stock of the
Preferred Stock.
<TABLE>
<CAPTION>
Number of
Shares(1) Percent(2)
---------- ----------
<S> <C> <C>
Golder, Thoma, Cressey, Rauner Fund V, L.P.(3)......... 13,861,142 63.3%
The 1818 Fund III, L.P.(4)............................. 4,615,385 17.4%
Co-Investment Partners, L.P.(5)........................ 1,923,077 8.1%
Kevin Rodgers(6)....................................... 1,143,975 5.2%
Dennis O'Connor(7)..................................... 307,077 1.4%
James O'Neil(8)........................................ 65,343 *
Paul Ingersoll(9)...................................... 170,952 *
Carl Thoma(10)......................................... 13,861,142 63.3%
William Kessinger(10).................................. 13,861,142 63.3%
Lawrence Tucker(11).................................... 4,615,385 17.4%
John Grove(12)......................................... 23,753 *
Ronald St. Clair(13)................................... 75,134 *
All Directors and Executive Officers as a Group (9
persons)(10)(11)...................................... 20,262,761 76.2%
</TABLE>
- --------
*Less than one percent.
(1) The number of shares includes shares of Common Stock subject to options
exercisable within 60 days of April 1, 2000 and shares of Common Stock
issuable upon conversion of shares of Preferred Stock.
(2) Shares of Common Stock subject to options exercisable within 60 days of
April 1, 2000 and shares of Common Stock issuable upon conversion of
shares of Preferred Stock are considered outstanding for the purpose of
determining the percentage of the class held by the holder of such option
or shares of Preferred Stock, as the case may be, but not for the purpose
of computing the percentage held by others.
(3) Includes 24,287 shares of Common Stock held by GTCR Associates V, a
partnership affiliated with Golder, Thoma, Cressey, Rauner Fund V, L.P.
The address of each of Golder, Thoma, Cressey, Rauner Fund V, L.P. and
GTCR Associates V is 6100 Sears Tower, Chicago, Illinois 60606.
(4) Represents shares of Common Stock issuable upon conversion of 60,000
shares of Preferred Stock owned of record by The 1818 Fund. The general
partner of The 1818 Fund is Brown Brothers Harriman & Co. ("BBH"). The
address of The 1818 Fund and BBH is 59 Wall Street, New York, New York
10005.
(5) Represents shares of Common Stock issuable upon conversion of 25,000
shares of Preferred Stock owned of record by Co-Investment Partners, L.P.
("CIP"). The general partner of CIP is CIP Partners, LLC. The address of
each of these holders is 660 Madison Avenue, New York, New York 10021.
(6) Includes 1,112,000 shares of Common Stock owned by Mr. Rodgers' family
limited partnership, Rodgers Investment Partners, L.P., as to which he
disclaims beneficial ownership.
(7) The shares of Common Stock beneficially owned by Mr. O'Connor include
15,014 shares subject to options.
(8) The shares of Common Stock beneficially owned by Mr. O'Neil include
37,534 shares subject to options.
6
<PAGE>
(9) The shares of Common Stock beneficially owned by Mr. Ingersoll include
15,014 shares subject to options.
(10) Includes 13,836,855 shares of Common Stock held by Golder, Thoma,
Cressey, Rauner Fund V, L.P., of which GTCR V, L.P. is the general
partner, and also includes 24,287 shares of Common Stock held by GTCR
Associates V. Each of Messrs. Thoma and Kessinger is a principal of
Golder, Thoma, Cressey, Rauner, Inc., the general partner of GTCR V, L.P.
and the managing general partner of GTCR Associates V, and therefore may
be deemed to share investment and voting control over the shares of
Common Stock held by Golder, Thoma, Cressey, Rauner Fund V, L.P. and GTCR
Associates V. Each of Messrs. Thoma and Kessinger disclaims beneficial
ownership of the shares of Common Stock owned by Golder, Thoma, Cressey,
Rauner Fund V, L.P. and GTCR Associates V. The address of each of these
holders is 6100 Sears Tower, Chicago, Illinois 60606.
(11) Includes shares of Common Stock issuable upon conversion of 60,000 shares
of Preferred Stock owned of record by The 1818 Fund. Mr. Tucker, a
general partner at BBH, may be deemed to be the beneficial owner of these
shares due to his role as co-manager of The 1818 Fund. Mr. Tucker
disclaims beneficial ownership of the shares beneficially owned by The
1818 Fund, except to the extent of his pecuniary interest therein. The
address of Mr. Tucker is 59 Wall Street, New York, New York 10005.
(12) The shares of Common Stock beneficially owned by Mr. Grove include 3,753
shares subject to options.
(13) The shares of Common Stock beneficially owned by Mr. St. Clair include
3,753 shares subject to options.
7
<PAGE>
EXECUTIVE COMPENSATION
The compensation of executive officers of the Company will be determined by
the Board of Directors of the Company. The following table sets forth
information regarding the compensation paid or accrued by the Company to the
Chief Executive Officer and each of the Company's other executive officers
(the "Named Executive Officers") for services rendered to the Company in all
capacities during fiscal years 1999, 1998 and 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------- --------------------------------
Awards Payouts
----------------------- -------
Securities
Other Annual Restricted Underlying LTIP All Other
Name and Salary Bonus Compensation Stock Options/SARs Payouts Compensation
Principal Position Year ($) ($) ($) Awards (#) (#) ($) ($)
- ------------------------ ---- ------- ------- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kevin Rodgers........... 1999 350,000 131,250(1) -- -- 300,000(2) -- 8,216(3)
President, Chief 1998 250,000 150,000 -- -- -- -- 8,216(4)
Executive Officer 1997 225,000 112,500 -- -- -- -- 10,125(5)
and Director
James O'Neil(6)......... 1999 200,000 66,667 -- -- -- -- 8,216(7)
Chief Operating 1998 146,667 79,235 -- -- 100,000(8) -- 8,216(9)
Officer 1997 55,684 7,500 -- -- -- -- 1,675(10)
Dennis O'Connor......... 1999 225,000 84,378(11) -- -- 85,000(2) -- 8,216(12)
Chief Financial 1998 159,261 82,500 -- -- 40,000(8) -- 7,358(13)
Officer 1997 125,000 62,500 -- -- -- -- 4,545(14)
Paul Ingersoll.......... 1999 175,000 65,628(15) -- -- 110,000(2) -- 8,216(16)
Senior Vice 1998 113,507 62,500 -- -- 40,000(8) -- 6,192(17)
President and Secretary 1997 80,000 40,000 -- -- -- -- 3,200(18)
</TABLE>
- --------
(1) Mr. Rodgers elected to have his 1999 bonus paid in the form of the
issuance of 21,857 registered shares of Common Stock pursuant to the
Incentive Plan, and the amount shown represents the value of such shares
on the date of issuance.
(2) Options become exercisable in five equal installments on September 1,
2000, December 31, 2000, December 31, 2001, December 31, 2002 and
December 31, 2003.
(3) The amount shown includes $4,000 of Company 401(k) matching contributions
under the Savings Plan (as defined), a $4,000 profit sharing contribution
under the Savings Plan and a $216 life insurance policy premium payment.
(4) The amount shown includes $4,000 of Company 401(k) matching contributions
under the Savings Plan, a $4,000 profit sharing contribution under the
Savings Plan and a $216 life insurance policy premium payment.
(5) The amount shown includes $4,500 of Company 401(k) matching contributions
under the Savings Plan and a $5,625 profit sharing contribution under the
Savings Plan.
(6) Mr. O'Neil became an employee of the Company effective July 1, 1997 and
became an executive officer of the Company effective September 10, 1998.
(7) The amount shown includes $4,000 of Company 401(k) matching contributions
under the Savings Plan, a $4,000 profit sharing contribution under the
Savings Plan and a $216 life insurance policy premium payment.
(8) Options become exercisable in equal daily installments over the five year
period ending July 13, 2003, and were granted pursuant to the Incentive
Plan.
8
<PAGE>
(9) The amount shown includes $4,000 of Company 401(k) matching contributions
under the Savings Plan, a $4,000 profit sharing contribution under the
Savings Plan and a $216 life insurance policy premium payment.
(10) The amount shown includes $838 of Company 401(k) matching contributions
under the Savings Plan and an $837 profit sharing contribution under the
Savings Plan.
(11) Mr. O'Connor elected to have his 1999 bonus paid in the form of the
issuance of 14,063 registered shares of Common Stock pursuant to the
Incentive Plan, and the amount shown represents the value of such shares
on the date of issuance.
(12) The amount shown includes $4,000 of Company 401(k) matching contributions
under the Savings Plan, a $4,000 profit sharing contribution under the
Savings Plan and a $216 life insurance policy premium payment.
(13) The amount shown includes $3,571 of Company 401(k) matching contributions
under the Savings Plan, a $3,571 profit sharing contribution under the
Savings Plan and a $216 life insurance policy premium payment.
(14) The amount shown includes $2,045 of Company 401(k) matching contributions
under the Savings Plan and a $2,500 profit sharing contribution under the
Savings Plan.
(15) Mr. Ingersoll elected to have his 1999 bonus paid in the form of the
issuance of 10,938 registered shares of Common Stock pursuant to the
Incentive Plan, and the amount shown represents the value of such shares
on the date of issuance.
(16) The amount shown includes $4,000 of Company 401(k) matching contributions
under the Savings Plan, a $4,000 profit sharing contribution under the
Savings Plan and a $216 life insurance policy premium payment.
(17) The amount shown includes $2,988 of Company 401(k) matching contributions
under the Savings Plan, a $2,988 profit sharing contribution under the
Savings Plan and a $216 life insurance policy premium payment.
(18) The amount shown includes $1,600 of Company 401(k) matching contributions
under the Savings Plan and a $1,600 profit sharing contribution under the
Savings Plan.
The following tables set forth, for the Named Executive Officers,
information regarding stock options granted or exercised during, or held at
the end of, fiscal 1999.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
------------------------------------------- ---------------------
Number of % of Total
Securities Options
Underlying Granted to
Options/SARs Employees Exercise
Granted in Fiscal Price Expiration
Name (#)(1) Year ($/Sh) Date 5% ($)(2) 10% ($)(2)
- ---- ------------ ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kevin Rodgers........... 300,000 32% $8.8125 9/1/09 $1,877,960 $4,899,177
James O'Neil............ -- -- -- -- -- --
Dennis O'Connor......... 85,000 9 8.8125 9/1/09 532,089 1,388,100
Paul Ingersoll.......... 110,000 12 8.8125 9/1/09 688,585 1,796,365
</TABLE>
- --------
(1) Options to acquire these shares become exercisable in five equal
installments on September 1, 2000, December 31, 2000, December 31, 2001,
December 31, 2002 and December 31, 2003, and were granted
9
<PAGE>
pursuant to the Incentive Plan. In order to prevent dilution or enlargement
of rights under the options, in the event of a reorganization,
recapitalization, stock split, stock dividend, combinations of shares,
merger, consolidation, distribution of assets or other change in the
corporate structure of shares of the Company, the type and number of shares
available upon exercise and the exercise price will be adjusted
accordingly.
(2) Amounts reflect assumed rates of appreciation from the fair market value
on the date of grant as set forth in the SEC's executive compensation
disclosure rules. Actual gains, if any, on stock option exercises depend
on future performance of the Common Stock and overall stock market
conditions. No assurance can be made that the amounts reflected in these
columns will be achieved.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Value Options/SARs at Fiscal In-the-Money Options/SARs
Acquired Realized Year End (#) at Fiscal Year End ($)
Name on Exercise(1) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- -------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Kevin Rodgers........... -- -- 0 $0
300,000 0
James O'Neil............ -- -- 29,315 0
70,685 0
Dennis O'Connor......... -- -- 11,726 0
113,274 0
Paul Ingersoll.......... -- -- 11,726 0
138,274 0
</TABLE>
- --------
(1) As of the end of the fiscal year, none of the options held by the Named
Executive Officers had been exercised.
Management Employment Agreements
Kevin Rodgers. Mr. Rodgers is party to a senior management agreement with
the Company dated as of June 4, 1996, as amended. Under the agreement, Mr.
Rodgers will receive an annual base salary of $250,000, which amount shall be
reviewed (but not reduced) annually by the Board in its sole discretion. Mr.
Rodgers' current annual base salary is $400,000. Mr. Rodgers will be eligible
for a bonus of up to 50% of his base salary, which the Board anticipates
awarding if Mr. Rodgers meets or exceeds annual operational and financial
objectives agreed to by the Board and Mr. Rodgers. If the Company has not met
or exceeded its financial or operational objectives, the Board in its
discretion may award Mr. Rodgers a bonus of less than 50% of his base salary.
Mr. Rodgers will also be entitled to all other benefits as are approved by the
Board and made available to the Company's senior management.
Under the agreement, Mr. Rodgers purchased 96 shares of Class B Common
Stock at a price of $10 per share. In addition, under the agreement, Mr.
Rodgers agreed to purchase (upon consummation of certain additional
investments by Golder, Thoma, Cressey, Rauner Fund V, L.P. in the Company) up
to an additional 7,904 shares of Class B Common Stock at a price of $10 per
share; provided that Mr. Rodgers was entitled to purchase all or any portion
of such shares at a price of $10 per share at such earlier time as Mr. Rodgers
determined. Mr. Rodgers purchased all 7,904 of such additional shares in
January 1997. All shares of Class B Common Stock owned by Mr. Rodgers will
vest over a five-year period beginning March 1997. In connection with and
immediately prior to the consummation of the Initial Stock Offering each share
of Class B Common Stock owned by Mr. Rodgers was converted into Common Stock.
Upon completion of the Initial Stock Offering, the portions of the agreement
which restrict the transfer of the Company's securities were terminated.
Mr. Rodgers' employment with the Company will continue until terminated by
the resignation, death or disability of Mr. Rodgers or by the Board in its
good faith judgment that termination of Mr. Rodgers' employment is in the best
interests of the Company. In the event Mr. Rodgers' employment is terminated
(i) by
10
<PAGE>
the Company without cause, (ii) by Mr. Rodgers with good reason or (iii) as a
result of Mr. Rodgers' death or disability, until the end of the six-month
period commencing on the date of his termination, the Company shall pay to Mr.
Rodgers (or his estate) his annual base salary and allow Mr. Rodgers to
continue to participate in all of the Company's medical, disability and life
insurance plans to the extent permitted by the Company's insurance carriers at
a cost not materially in excess of the Company's cost for such insurance
immediately prior to the date of termination. In addition, the Company shall
have the option to extend the severance period to the second anniversary of
the date of termination, during which period the Company shall pay to Mr.
Rodgers (or his estate) his annual base salary and allow Mr. Rodgers to
continue to participate in all of the Company's medical, disability and life
insurance plans to the extent permitted by the Company's insurance carriers at
a cost not materially in excess of the Company's cost for such insurance
immediately prior to the date of termination. Mr. Rodgers has agreed not to
compete with the Company during the term of his employment and for six months
thereafter and during the extended period (if any) and has agreed not to
solicit any employees or customers of the Company during the two years
following the date of termination of his employment.
Dennis O'Connor. Mr. O'Connor is party to a senior management agreement
with the Company dated as of December 31, 1996, as amended. Under the
agreement, Mr. O'Connor will receive an annual base salary of $165,000, which
amount shall be reviewed (but not reduced) annually by the Company's Chief
Executive Officer with the approval of the Board in its sole discretion. Mr.
O'Connor's current annual base salary is $275,000. Mr. O'Connor will also be
entitled to all other benefits as are approved by the Board and made available
to the Company's senior management.
Under the agreement, Mr. O'Connor purchased 24 shares of Class B Common
Stock at a price of $10 per share. In addition, under the agreement, Mr.
O'Connor agreed to purchase (upon consummation of certain additional
investments by Golder, Thoma, Cressey, Rauner Fund V, L.P. in the Company) up
to an additional 1,976 shares of Class B Common Stock at a price of $10 per
share; provided that Mr. O'Connor was entitled to purchase all or any portion
of such shares at a price of $10 per share at such earlier time or times as
Mr. O'Connor determined. Mr. O'Connor purchased all 1,976 of such additional
shares in January 1997. All shares of Class B Common Stock owned by Mr.
O'Connor will vest over a five-year period beginning March 1997. In connection
with and immediately prior to the consummation of the Initial Stock Offering,
each share of Class B Common Stock owned by Mr. O'Connor was converted into
Common Stock. Upon completion of the Initial Stock Offering, the portions of
the agreement which restrict the transfer of the Company's securities were
terminated.
Mr. O'Connor's employment with the Company will continue until terminated
by the resignation, death or disability of Mr. O'Connor or by the Board in its
good faith judgment that termination of Mr. O'Connor's employment is in the
best interests of the Company. In the event Mr. O'Connor's employment is
terminated (i) by the Company without cause, (ii) by Mr. O'Connor with good
reason or (iii) as a result of Mr. O'Connor's death or disability, until the
end of the six-month period commencing on the date of his termination, the
Company shall pay to Mr. O'Connor (or his estate) his annual base salary and
allow Mr. O'Connor to continue to participate in all of the Company's medical,
disability and life insurance plans to the extent permitted by the Company's
insurance carriers at a cost not materially in excess of the Company's cost
for such insurance immediately prior to the date of termination. In addition,
the Company shall have the option to extend the severance period to the second
anniversary of the date of termination, during which period the Company shall
pay to Mr. O'Connor (or his estate) his annual base salary and allow Mr.
O'Connor to continue to participate in all of the Company's medical,
disability and life insurance plans to the extent permitted by the Company's
insurance carriers at a cost not materially in excess of the Company's cost
for such insurance immediately prior to the date of termination. Mr. O'Connor
has agreed not to compete with the Company during the term of his employment
and for six months thereafter and during the extended period (if any) and has
agreed not to solicit any employees or customers of the Company during the two
years following the date of termination of his employment.
11
<PAGE>
James O'Neil. Mr. O'Neil is party to an employment agreement with the
Company dated as of September 12, 1998. Under the agreement, Mr. O'Neil will
receive an annual base salary of $200,000, which amount shall be reviewed
annually. Mr. O'Neil's current annual base salary is $235,000. Mr. O'Neil will
be eligible for a bonus of up to 50% of his base salary, based on certain
annual performance targets. Mr. O'Neil will also be entitled to the same
health, profit sharing and retirement benefits as other similarly-situated
employees. Pursuant to the agreement, in 1998 Mr. O'Neil also received options
to purchase 80,000 shares of Common Stock at the Initial Stock Offering price
of $13.50 per share under the Incentive Plan. The options vest over a period
of five years and are exercisable for a period of ten years.
Each of the Company and Mr. O'Neil may terminate the agreement at any time.
If the Company terminates the agreement, the Company will pay to Mr. O'Neil
severance equal to 18 months of his then current base pay. In addition, upon
certain changes of control, Mr. O'Neil may be entitled to a payment equal to
$250,000 if he does not remain employed with the Company following the change
of control.
Paul Ingersoll. Mr. Ingersoll is party to a senior management agreement
with the Company dated as of June 4, 1996, as amended. Under the agreement,
Mr. Ingersoll will receive an annual base salary of $120,000, which amount
shall be reviewed (but not reduced) annually by the Company's Chief Executive
Officer with the approval of the Board in its sole discretion. Mr. Ingersoll's
current annual base salary is $200,000. Mr. Ingersoll will also be entitled to
all other benefits as are approved by the Board and made available to the
Company's senior management.
Under the agreement, Mr. Ingersoll purchased 12 shares of Class B Common
Stock at a price of $10 per share. In addition, under the agreement, Mr.
Ingersoll agreed to purchase (upon consummation of certain additional
investments by Golder, Thoma, Cressey, Rauner Fund V, L.P. in the Company) up
to an additional 988 shares of Class B Common Stock at a price of $10 per
share; provided that Mr. Ingersoll was entitled to purchase all or any portion
of such shares at a price of $10 per share at such earlier time or times as
Mr. Ingersoll determined. Mr. Ingersoll purchased all 988 of such additional
shares in January 1997. All shares of Class B Common Stock owned by Mr.
Ingersoll will vest over a five-year period beginning March 1997. In
connection with and immediately prior to the consummation of the Initial Stock
Offering, each share of Class B Common Stock owned by Mr. Ingersoll was
converted into Common Stock. Upon completion of the Initial Stock Offering,
the portions of the agreement which restrict the transfer of the Company's
securities were terminated.
Mr. Ingersoll's employment with the Company will continue until terminated
by the resignation, death or disability of Mr. Ingersoll or by the Board in
its good faith judgment that termination of Mr. Ingersoll's employment is in
the best interests of the Company. In the event Mr. Ingersoll's employment is
terminated (i) by the Company without cause, (ii) by Mr. Ingersoll with good
reason or (iii) as a result of Mr. Ingersoll's death or disability, until the
end of the six-month period commencing on the date of his termination, the
Company shall pay to Mr. Ingersoll (or his estate) his annual base salary and
allow Mr. Ingersoll to continue to participate in all of the Company's
medical, disability and life insurance plans to the extent permitted by the
Company's insurance carriers at a cost not materially in excess of the
Company's cost for such insurance immediately prior to the date of
termination. In addition, the Company shall have the option to extend the
severance period to the second anniversary of the date of termination, during
which period the Company shall pay to Mr. Ingersoll (or his estate) his annual
base salary and allow Mr. Ingersoll to continue to participate in all of the
Company's medical, disability and life insurance plans to the extent permitted
by the Company's insurance carriers at a cost not materially in excess of the
Company's cost for such insurance immediately prior to the date of
termination. Mr. Ingersoll has agreed not to compete with the Company during
the term of his employment and for six months thereafter and during the
extended period (if any) and has agreed not to solicit any employees or
customers of the Company during the two years following the date of
termination of his employment.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Messrs. Thoma, St. Clair and Tucker.
The Company has no Compensation Committee interlocks or insider participation
relationships of such persons with the Company to report.
12
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee makes determinations regarding salaries,
compensation and benefits of executive officers of the Company and develops
and administers the Incentive Plan. This Compensation Committee report
documents the components of the Company's executive officer compensation
programs and describes the bases upon which compensation will be determined by
the Compensation Committee with respect to the executive officers of the
Company.
This Compensation Committee report 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 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
Compensation of Executive Officers Generally. The compensation philosophy
of the Company is to link executive compensation to continuous improvements in
corporate performance and increases in stockholder value. The goals of the
Company's executive compensation programs are as follows:
. To establish pay levels that are necessary to attract and retain highly
qualified executives in light of the overall competitiveness of the
market for high quality executive talent.
. To recognize superior individual performance, new responsibilities and
new positions within the Company.
. To balance short-term and long-term compensation to complement the
Company's annual and long-term business objectives and strategy and to
encourage executive performance in furtherance of the fulfillment of
those objectives.
. To provide variable compensation opportunities based on the Company's
performance.
. To encourage stock ownership by executives.
. To further align the interests of executives with the interests of
stockholders.
Components of Fiscal 1999 Compensation. The Compensation Committee reviews
the Company's compensation program to ensure that pay levels and incentive
opportunities are competitive with the market and reflect the performance of
the Company. The particular elements of the compensation program for executive
officers are further explained below.
Base Salary. The base pay level for each of Messrs. Rodgers, O'Connor,
O'Neil and Ingersoll is set forth in each such executive's senior management
or employment agreement. In determining and reviewing base salary levels, the
Compensation Committee considers the size and responsibility of the
individual's position, the individual's overall performance, the base salaries
paid by competitors for comparable positions and, in the case of new hires and
in order to help induce the individual to enter the employ of the Company, the
individual's compensation history.
Annual Incentives. The Company utilizes annual bonuses to focus corporate
behavior on the achievement of goals for growth, financial performance and
other items. Annual bonuses for executive officers are determined by the
Compensation Committee based on the achievement of certain operational and
financial objectives determined by it and in accordance with such executive
officer's senior management or employment agreement. See "--Management
Employment Agreements." The operational and financial objectives considered
include overall Company performance and the executive's individual
performance. Messrs. Rodgers and O'Neil are eligible for a bonus amount up to
50% of their base salary. When Mr. O'Neil was hired by the Company as Chief
Operating Officer, he was given a commitment that his bonus payment with
respect to his first year of employment as Chief Operating Officer would be
$100,000.
13
<PAGE>
Stock Ownership. The Compensation Committee believes that by providing
executive officers with an opportunity to establish a meaningful ownership
position in the Company, it can help further align the interests of those
persons who have substantial responsibility over the management and growth of
the Company with the stockholders of the Company. Under the Incentive Plan,
the Compensation Committee awarded options to acquire an aggregate of 936,725
shares of Common Stock in fiscal 1999, including a grant of 300,000 options to
Mr. Rodgers, 85,000 options to Mr. O'Connor and 110,000 options to Mr.
Ingersoll. See "--Option/SAR Grants in Last Fiscal Year."
Chief Executive Officer Compensation. The base pay level and annual
incentive bonus compensation for Mr. Rodgers, the Company's Chief Executive
Officer, are determined by the Compensation Committee based on achievement of
operational and financial objectives determined by it and in accordance with
his employment agreement. The Compensation Committee has set Mr. Rodgers' base
salary for 2000 at $400,000. Mr. Rodgers' bonus eligibility amount continues
to be 50% of base salary.
Certain Tax Considerations. Section 162(m) of the Internal Revenue Code of
1986, as amended, limits the deductibility on the Company's tax return of
compensation over $1 million to any of the Named Executive Officers unless, in
general, the compensation is paid pursuant to a plan which is performance-
based, is non-discretionary and has been approved by the Company's
stockholders. The Company's policy with respect to Section 162(m) is to make
reasonable efforts to ensure that compensation is deductible without limiting
the Company's ability to attract and retain qualified executives.
Summary. After its review of all existing programs, the Compensation
Committee believes that the total compensation program for executives of the
Company is focused on increasing values for stockholders and enhancing
corporate performance. The Compensation Committee currently believes that the
compensation of executive officers is properly tied to stock appreciation
through stock options or stock ownership. The Compensation Committee believes
that executive compensation levels at the Company are competitive with the
compensation programs provided by other corporations with which the Company
competes. The foregoing report has been approved by all members of the
Compensation Committee.
Submitted by the Compensation
Committee of the Board of Directors
Carl D. Thoma, Chairman
Ronald St. Clair
Lawrence Tucker
401(k) Profit Sharing Plan
The Company maintains a savings plan (the "Savings Plan") qualified under
Section 401(a) and 401(k) of the Internal Revenue Code. Generally, all
employees of the Company in the United States who are at least 21 years of age
and who have completed six months of service are eligible to participate in
the Savings Plan. For each employee who elects to participate in the Savings
Plan and makes a contribution thereto, the Company makes a matching
contribution of 50% of the first 5% of annual compensation contributed. In
addition, the Company may make discretionary profit sharing contributions
under the Savings Plan. The maximum contribution for any participant for any
year is the maximum amount permitted under Internal Revenue Code.
Long Term Incentive Plan
The Company has established the National Equipment Services, Inc. Long Term
Incentive Plan (the "Incentive Plan"). A maximum of 2,200,000 shares of Common
Stock, subject to adjustment, have been initially authorized for the granting
of stock options under the Incentive Plan. Options granted under the Incentive
Plan may be either "incentive stock options," which qualify for special tax
treatment under the Internal Revenue Code, or nonqualified stock options. The
purposes of the Incentive Plan are to advance the interests of the Company and
stockholders by providing Company employees with an additional incentive to
continue their efforts on behalf of the Company, as well as to attract to the
Company people of experience and ability. The Incentive Plan is intended to
comply with Rule 16b-3 of the Exchange Act.
14
<PAGE>
All officers, directors and other key employees and consultants of the
Company or its subsidiaries are eligible to participate under the Incentive
Plan, as deemed appropriate by the Compensation Committee of the Board of
Directors. Eligible employees will not pay any cash consideration to the
Company to receive the options. The Incentive Plan is administered by the
Compensation Committee of the Board of Directors. The exercise price for the
incentive stock options must be no less than the fair market value of the
Common Stock on the date of grant. The exercise price of nonqualified stock
options is not subject to any limitation based upon the then current market
value of the Common Stock. Options will expire no later than the tenth
anniversary of the date of grant. An option holder will be able to exercise
options from time to time, subject to vesting. Options will vest immediately
upon death or disability of a participant. Upon termination for cause or at
will by the Company, the unvested portion of the options will be forfeited.
Subject to the above conditions, the exercise price, duration of the options
and vesting provisions will be set by the Compensation Committee of the Board
of Directors in its discretion.
15
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder
return on an investment of $100 since July 14, 1998, the Company's initial
trading date, with that of the S&P Smallcap 600 Index and that of a peer group
of selected companies that the Company believes are most comparable to the
Company. The peer group is comprised of the following companies: NationsRent
Inc., Neff Corp. and United Rentals Inc. The Company's peer group in its 1999
proxy statement also included Rental Service Corp., which was subsequently
acquired by a third party in 1999.
[PERFORMANCE GRAPH]
S&P
NATIONAL SMALL CAP 600
EQUIPMENT SVCS INC. PEER GROUP INDEX
------------------- ---------- -------------
7/14/98 $100.00 $100.00 $100.00
9/30/98 $ 40.83 $ 53.32 $ 78.28
12/31/98 $ 76.67 $ 68.94 $ 92.04
3/31/99 $ 63.61 $ 61.67 $ 83.77
6/30/99 $ 80.00 $ 69.39 $ 96.68
9/30/99 $ 67.92 $ 55.34 $ 92.00
12/31/99 $ 41.67 $ 41.01 $103.46
16
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Loans to Executives
The Company loaned $64,000 to Mr. Rodgers, $20,000 to Mr. O'Connor and
$10,000 to Mr. Ingersoll pursuant to promissory notes (the "Executive Notes")
to finance their purchase of the Company's securities. See "Management--
Management Employment Agreements." Each of the Executive Notes is secured by a
pledge of the securities purchased with such Executive Note pursuant to an
Executive Stock Pledge Agreement between the Company and each of Messrs.
Rodgers, O'Connor and Ingersoll. The Executive Notes bear interest at a rate
per annum equal to the applicable federal rate as set forth in Section 1274(d)
of the Internal Revenue Code of 1986, as amended. The principal amount of the
Executive Notes and all interest accrued thereon mature in part on June 4,
2006, with the remainder maturing on January 6, 2007. The Executive Notes may
be prepaid in full or in part at any time.
First Registration Agreement
In connection with the formation of the Company, the Company and its
stockholders entered into a Registration Agreement dated as of June 4, 1996
(the "First Registration Agreement") pursuant to which certain stockholders
have the right in certain circumstances and, subject to certain conditions, to
require the Company to register shares of the Company's Common Stock held by
them under the Securities Act. Under the First Registration Agreement, except
in limited circumstances, the Company is obligated to pay all expenses in
connection with such registration.
Preferred Stock Offering
On May 14, 1999, the Company issued 36,000 and 15,000 shares of Preferred
Stock to The 1818 Fund and CIP, respectively, for consideration of $36.0
million and $15.0 million, respectively. In addition, the Company concurrently
issued an aggregate of 9,000 shares of Preferred Stock to other investors for
aggregate consideration of $9.0 million. On June 18, 1999, the Company issued
24,000 and 10,000 shares of Preferred Stock to The 1818 Fund and CIP,
respectively, for consideration of $24.0 million and $10.0 million,
respectively. In addition, the Company concurrently issued an aggregate of
6,000 shares of Preferred Stock to other investors for aggregate consideration
of $6.0 million.
The Company paid to each purchaser of Preferred Stock upon consummation of
each investment a facility fee equal to 5% of the purchase price paid by such
purchaser.
In connection with the investment, the Company, The 1818 Fund, CIP and
other Preferred Stock investors entered into a Registration Rights Agreement
dated as of May 14, 1999 (the "Second Registration Rights Agreement") pursuant
to which the Preferred Stock investors have the right in certain
circumstances, and subject to certain conditions, to require the Company to
register shares of the Company's Preferred Stock and Common Stock held by them
under the Securities Act. Under the Second Registration Rights Agreement,
except in limited circumstances, the Company is obligated to pay expenses in
connection with such registration.
SOLICITATION AND EXPENSES OF SOLICITATION
The solicitation of proxies will be made initially by mail. The Company's
directors, officers and employees may also solicit proxies in person or by
telephone without additional compensation. In addition, proxies may be
solicited by certain banking institutions, brokerage firms, custodians,
trustees, nominees and fiduciaries who will mail material to or otherwise
communicate with the beneficial owners of shares of the Company's Common
Stock. All expenses of solicitation of proxies will be paid by the Company.
17
<PAGE>
ANNUAL REPORT AND FORM 10-K
A copy of the Company's Annual Report to Stockholders, which includes
portions of the Company's Annual Report on Form 10-K for the Fiscal Year ended
December 31, 1999, is included with this mailing. Any stockholder entitled to
vote at the Annual Meeting who did not receive a copy of the Annual Report may
obtain one by writing or calling Mr. Paul Ingersoll, Senior Vice President and
Secretary, National Equipment Services, Inc., 1603 Orrington Avenue, Suite
1600, Evanston, Illinois 60201, telephone (847) 733-1000.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 2001 ANNUAL MEETING
Stockholder proposals for inclusion in the Proxy Statement to be issued in
connection with the 2001 Annual Meeting of Stockholders must be mailed to the
Corporate Secretary, National Equipment Services, Inc., 1603 Orrington Avenue,
Suite 1600, Evanston, Illinois 60201, and must have been received by the
Corporate Secretary on or before December 27, 2000. The Company will consider
only proposals meeting the requirements of applicable SEC rules.
The Board of Directors
April 26, 2000
18
<PAGE>
- -
- -
PROXY PROXY
NATIONAL EQUIPMENT SERVICES, INC.
1603 Orrington Avenue, Suite 1600
EVANSTON, ILLINOIS 60201
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Kevin P. Rodgers and Paul R. Ingersoll, and
each of them, proxies, with power of substitution and revocation, acting
together or, if only one is present and voting, then that one, to vote the
stock of National Equipment Services, Inc. which the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held on May 26, 2000 and at
any adjournments or postponements thereof, with all the powers the undersigned
would possess if personally present, as designated herein and authorizes the
proxies to vote in accordance with the recommendations of the Company's
management upon such other business as may properly come before the Annual
Meeting of Stockholders.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED IN ITEM 1 AND FOR ITEM 2.
New Address: ______
___________________
___________________
(Continued and to be signed on the reverse side.)
<PAGE>
NATIONAL EQUIPMENT SERVICES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
1. Election of Directors
Nominees: .01 Kevin P. Rodgers and .02 William C. Kessinger
-------------------------------------------------------------
(Except nominee(s) written above.)
For Withheld For All Except
[_] [_] [_]
2. Ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent public accountants for the fiscal year ending December
31, 2000.
For Against Abstain
[_] [_] [_]
Check here if you plan to attend the annual meeting. [_]
[_] Check here for address change.
Dated: _____________________________________________________________ , 2000
Signature(s)____________________________________________________________________
- --------------------------------------------------------------------------------
Please date and sign exactly as names appear on this Proxy. Joint owners should
each sign. Trustees, executors, etc. should indicate the capacity in which they
are signing.
