SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule
14(a)-12
NUCO2 INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price 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
<PAGE>
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:
-2-
<PAGE>
NUCO2 INC.
2800 SE MARKET PLACE
STUART, FLORIDA 34997
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 15, 1998
----------------------
To the Shareholders of NUCO2 INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of NUCO2
INC., a Florida corporation (the "Company"), will be held at Radisson Plaza
Hotel, 60 S. Ivanhoe Blvd., Orlando, FL 32804, on Tuesday, December 15, 1998 at
9:00 a.m., local time, for the following purposes:
1. To elect five (5) members of the Board of Directors of the
Company to serve until the next annual meeting of shareholders
and until their successors have been duly elected and shall
have qualified; and
2. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Only shareholders of record at the close of business on October 26,
1998 are entitled to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
EDWARD M. SELLIAN
Chairman of the Board and Chief Executive Officer
Stuart, Florida
November 13, 1998
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL
MEETING YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE THAT IS PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
NUCO2 INC.
2800 SE MARKET PLACE
STUART, FLORIDA 34997
-------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 15, 1998
-------------------------
INTRODUCTION
This Proxy Statement is furnished to the shareholders of NUCO2 INC., a
Florida corporation (the "Company"), in connection with the solicitation by the
Board of Directors of the Company of proxies ("Proxies") for the Annual Meeting
of Shareholders (the "Annual Meeting") to be held at Radisson Plaza Hotel, 60 S.
Ivanhoe Blvd., Orlando, FL 32804, on Tuesday, December 15, 1998 at 9:00 a.m.,
local time, or at any adjournments thereof. The approximate date on which this
Proxy Statement and the accompanying Proxy will be first sent or given to
shareholders is November 13, 1998.
RECORD DATE AND VOTING SECURITIES
The voting securities of the Company outstanding on October 26, 1998
consisted of 7,216,664 shares of common stock, $.001 par value ("Common Stock"),
entitling the holders thereof to one vote per share. Only shareholders of record
as at that date are entitled to notice of and to vote at the Annual Meeting or
any adjournments thereof. A majority of the outstanding shares of Common Stock
present in person or by proxy is required for a quorum.
PROXIES AND VOTING RIGHTS
Shares of Common Stock represented by Proxies, in the accompanying form
of Proxy, which are properly executed, duly returned and not revoked, will be
voted in accordance with the instructions contained therein. If no specification
is indicated on the Proxy, the shares represented thereby will be voted (i) for
the election as directors of the persons who have been nominated by the Board of
Directors and (ii) for any other matter that may properly come before the Annual
Meeting in accordance with the judgment of the person or persons voting the
Proxy.
The execution of a Proxy will in no way affect a shareholder's right to
attend the Annual Meeting and vote in person. Any Proxy executed and returned by
a shareholder may be revoked at any time thereafter if written notice of
revocation is given to the Secretary of the Company prior to the vote to be
taken at the Annual Meeting or by execution of a subsequent Proxy which is
presented to the Annual Meeting, or if the shareholder attends the Annual
Meeting and votes by ballot, except as to any matter or matters upon which a
vote shall have been cast pursuant to the authority conferred by such Proxy
prior to such revocation. In determining the presence of a quorum at the Annual
Meeting, abstentions are counted and broker non-votes are not counted. The
current Florida Business Corporation Act (the "Act") provides that directors are
elected by a plurality of the votes cast and all other matters are approved if
the votes cast in favor of the action exceed the votes cast against the action
(unless the matter is one for which the Act or the Company's articles of
incorporation require a greater vote). Therefore, under the Act, abstentions and
broker non- votes have no legal effect on whether a matter is approved.
All expenses in connection with this solicitation will be borne by the
Company. It is expected that solicitations will be made primarily by mail, but
officers, directors, employees or representatives of the Company may also
solicit Proxies by telephone, telegraph or in person, without additional
compensation. The Company will, upon request, reimburse brokerage houses and
persons holding shares in the names of their nominees for their reasonable
expenses in sending solicitation material to their principals.
-1-
<PAGE>
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the
Common Stock, as at October 26, 1998, by (i) each Director, (ii) each executive
officer, (iii) all Directors and executive officers as a group and (iv) each
person known to the Company to be the beneficial owner of more than five percent
of the Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS(1) OWNERSHIP(2) CLASS(3)
- ------------------- ------------ --------
<S> <C> <C>
Edward M. Sellian............................................... 1,132,098(4) 15.6%
Robert Ranieri.................................................. 65,446(5) *
Robert L. Frome................................................. 113,822(6) 1.6
John A. Kerney.................................................. 0 -
Daniel Raynor................................................... 391,302(7) 5.4
Joann Sabatino.................................................. 68,495(8) *
Eric M. Wechsler................................................ 11,750(9) *
Jean Houghton................................................... 56,841(10) *
Craig L. Burr
William P. Egan................................................. 379,500(11) 5.3
c/o Burr, Egan, Deleage & Co.
One Post Office, Suite 3800
Boston, MA 02103
Kern Capital Management, LLC.................................... 429,000 5.9
114 West 47th Street
New York, NY 10036
Van Wagoner Capital Management, Inc............................. 387,800 5.4
One Bush Street, Suite 1150
San Francisco, CA 94104
The Kaufmann Fund............................................... 500,000 6.9
140 East 45th Street
New York, NY 10017
All Directors and Executive Officers as a Group (8 persons)..... 1,839,754(12) 24.7%
</TABLE>
- ------------------
* Less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner is c/o
the Company, 2800 SE Market Place, Stuart, FL 34997.
(2) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934 ("Rule 13d-3") and unless
otherwise indicated, represents shares for which the beneficial owner
has sole voting and investment power and for beneficial ownership
purposes includes any options or other rights to subscribe for Common
Stock which are exercisable within sixty (60) days of October 26, 1998.
(3) The percentage of class is calculated in accordance with Rule 13d-3 and
attributes, for beneficial ownership purposes, any options or other
rights to subscribe for Common Stock which are exercisable within sixty
(60) days of October 26, 1998.
-2-
<PAGE>
(4) Includes 10,450 shares held by Mr. Sellian's wife, 300 shares held by
Mr. Sellian's grandchildren and great-niece of which Mr. Sellian is
the custodian and 47,045 shares issuable upon exercise of options.
(5) Includes 54,946 shares issuable upon exercise of options.
(6) Includes 4,000 shares owned by Frome & Co., a limited partnership of
which Mr. Frome is the general partner, 2,000 shares owned by Jennifer
Frome, Mr. Frome's minor daughter with respect to which Mr. Frome
disclaims beneficial ownership, and 6,000 shares issuable upon exercise
of options.
(7) Includes 37,744 shares owned by The Argentum Group, a general
partnership of which Mr. Raynor is the president of a general partner,
256,226 shares owned by Argentum Capital Partners, L.P., a limited
partnership of which Mr. Raynor is chairman of the general partner, and
92,332 shares owned by Environmental Private Equity Fund II, a limited
partnership of which Mr. Raynor is an indirect affiliate of the general
partner.
(8) Represents 68,495 shares issuable upon exercise of options.
(9) Includes 8,750 shares issuable upon exercise of options.
(10) Includes 300 shares held jointly with Ms. Houghton's husband, 55,027
shares issuable upon exercise of options held by Ms. Houghton and 1,514
shares issuable upon exercise of options held by Ms. Houghton's
husband.
(11) Mr. Burr is the beneficial owner of 131,000 shares of Common Stock and
The Craig L. Burr 1986 Children's Trust is the beneficial owner of
131,000 shares of Common Stock. Mr. Burr is neither a trustee nor
claims any beneficial ownership of the shares of Common Stock
beneficially owned by The Craig L. Burr 1986 Children's Trust. Mr. Egan
is a trustee but disclaims all beneficial ownership of shares of Common
Stock owned by The Craig L. Burr 1986 Children's Trust. Mr. Egan is the
beneficial owner of 58,750 shares of Common Stock, The William P. Egan
1985 Children's Trust is the beneficial owner of 56,250 shares of
Common Stock and The William P. Egan 1986 Children's Trust is the
beneficial owner of 2,500 shares of Common Stock. Mr. Egan is neither a
trustee nor claims any beneficial ownership of shares of Common Stock
owned by The William P. Egan 1985 Children's Trust or The William P.
Egan 1986 Children's Trust. Mr. Burr is a trustee but disclaims all
beneficial ownership of shares of Common Stock owned by The William P.
Egan 1985 Children's Trust and The William P. Egan 1986 Children's
Trust. Information obtained from Schedule 13G.
(12) Includes 241,777 shares issuable upon exercise of options.
------------------
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Directors of the Company hold office until the next annual meeting of
shareholders and until their successors are duly elected and shall have
qualified. Directors shall be elected by a plurality of the votes cast, in
person or by proxy, at the Annual Meeting. If no contrary instructions are
indicated, Proxies will be voted for the election of Edward M. Sellian, Robert
Ranieri, Robert L. Frome, John A. Kerney and Daniel Raynor, the five nominees of
the Board of Directors. All of the nominees are currently Directors of the
Company. The Company does not expect that any of the nominees will be
unavailable for election, but if that should occur before the Annual Meeting,
the Proxies will be voted in favor of the remaining nominees and may also be
voted for a substitute nominee or nominees selected by the Board of Directors.
-3-
<PAGE>
The names of the nominees and certain information concerning them is
set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- -----------
<S> <C> <C>
Edward M. Sellian..................... 56 Chairman of the Board and Chief Executive
Officer
Robert Ranieri........................ 34 Chief Operating Officer, Executive Vice
President and Director
Robert L. Frome....................... 57 Director
John A. Kerney........................ 38 Director
Daniel Raynor......................... 39 Director
</TABLE>
EDWARD M. SELLIAN: Chairman of the Board and Chief Executive Officer
since 1991.
ROBERT RANIERI: Chief Operating Officer and Executive Vice President
since March 1997. Director since August 1998. Prior to joining the Company in
January 1994, Mr. Ranieri was the owner and operator of 1649 Restaurant
Corporation from 1990 to 1993. Mr. Ranieri has a B.A. degree from George
Washington University.
ROBERT L. FROME: Director since December 1995. Mr. Frome has been
engaged in the practice of law for more than the past five years as a senior
partner of the law firm of Olshan Grundman Frome & Rosenzweig LLP. Mr. Frome is
a director Healthcare Services Group, Inc., the nation's largest provider of
housekeeping services to long-term healthcare facilities and Paradigm Medical
Industries, Inc., a developer, manufacturer and seller of ophthalmic surgical
and diagnostic equipment and instruments. Mr. Frome has a B.S. degree from New
York University, an L.L.B. degree from Harvard University and an L.L.M. degree
from New York University.
JOHN A. KERNEY: Director since August 1998. Since 1993, Mr. Kerney has
been a principal of and employed by Gordon Brothers Group, LLC., a Boston-based
merchant banking and retailer advisory and consulting firm founded in 1903, in
various capacities, most recently as chief operating officer. Mr. Kerney has a
B.A. degree from Middlebury College.
DANIEL RAYNOR: Director since February 1998. Mr. Raynor has been the
president of a general partner of The Argentum Group, a private investment firm
since its founding in November 1987, chairman of the general partner of Argentum
Capital Partners, L.P., a small business investment company (SBIC), since its
organization in February 1990 and managing member of the managing member of
Argentum Capital Partners II, L.P., also an SBIC, since its organization in
March 1997. Mr. Raynor is a director of Dynamic Healthcare Technologies, Inc.
and Comforce Corporation and several private companies including Community
Corrections Corporation, Fusion Lighting, Inc. and HealthCharge Corporation. Mr.
Raynor received a B.S. in economics from The Wharton School, University of
Pennsylvania.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.
-4-
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company formally met on five occasions
during the fiscal year ended June 30, 1998. From time to time during such fiscal
year, the members of the Board of Directors acted by unanimous written consent.
The Board of Directors has authorized a Stock Option Committee, an Audit
Committee and a Compensation Committee. The Stock Option Committee members are
currently John A. Kerney and Daniel Raynor. The Audit Committee members are
currently Robert L. Frome and John A. Kerney. The Compensation Committee members
are currently John A. Kerney and Robert Ranieri.
The Stock Option Committee determines the term and the grant of stock
options in accordance with each of the Company's stock option plans, and
administers such plans. The Audit Committee reviews the Company's annual audit
and meets with the Company's independent accountants to review the Company's
internal controls and financial management practices. The Compensation Committee
reviews, analyzes and makes recommendations to the Board of Directors regarding
compensation of the key employees of the Company and prepares an annual report
on such policies. From time to time during the fiscal year ended June 30, 1998,
certain of the Committees of the Board of Directors acted by unanimous written
consent. The Company does not have a standing nominating committee or a
committee which serves nominating functions.
BOARD OF DIRECTORS COMPENSATION
Directors of the Company who are not executive officers do not receive
cash compensation for acting as a Director but are reimbursed for the reasonable
expenses of attending meetings. In addition, each non-employee Director is
eligible to participate in the Company's Directors' Stock Option Plan.
OTHER EXECUTIVE OFFICERS
JOANN SABATINO: Chief Financial Officer and Treasurer since October
1996. Age 38. Prior to joining the Company, Ms. Sabatino was a partner at
Cooper, Selvin & Strassberg LLP. Ms. Sabatino commenced her employment at
Cooper, Selvin & Strassberg LLP in 1984, and has over 10 years of experience
serving beverage industry clients. In November 1997, the partners and employees
of Cooper, Selvin & Strassberg LLP joined the firm of Margolin, Winer & Evens
LLP, the Company's independent auditors. Ms. Sabatino is a Certified Public
Accountant and a member of the American Institute of Certified Public
Accountants. Ms. Sabatino has a B.S. degree in Accounting from the State
University of New York at Oswego.
ERIC M. WECHSLER: Senior Vice President - Legal Affairs and Secretary
since January 1998. Age 39. Prior to joining the Company, Mr. Wechsler, since
1990, was a corporate associate at the law firm of Olshan Grundman Frome &
Rosenzweig LLP, the Company's legal counsel. Mr. Wechsler has a J.D. degree from
Fordham University, an M.B.A. degree from New York University and a B.A. degree
from Northwestern University.
JEAN HOUGHTON: Vice President - Administration since 1990. Age 48.
-5-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to the chief executive officer
("CEO") of the Company (Mr. Edward M. Sellian, the Chairman of the Board and the
Chief Executive Officer of the Company) and the four most highly compensated
executive officers of the Company other than the CEO whose salary and bonus
exceeded $100,000 with respect to the fiscal year ended June 30, 1998 (the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------- --------------------
FISCAL YEAR
NAME AND PRINCIPAL POSITION ENDED JUNE 30, SALARY($) BONUS($) OPTIONS (#)
- --------------------------- -------------- --------- -------- -----------
<S> <C> <C> <C> <C>
Edward M. Sellian 1998 160,615 -- 150,000
Chairman of the Board, 1997 160,615 -- --
Chief Executive Officer 1996 135,000 25,000 --
Joseph M. Criscuolo (1) 1998 108,814(2) -- --
President 1997 125,481 -- 75,000(3)
1996 78,381 -- --
Robert Ranieri 1998 100,385 -- 50,000
Chief Operating Officer, 1997 105,463 -- 45,000
Executive Vice President 1996 67,992 -- 14,783
Joann Sabatino 1998 150,587 25,000 25,000
Chief Financial Officer, Treasurer 1997 107,313 -- 100,000
1996 -- -- --
Jean Houghton 1998 100,385 -- 40,000
Vice President - Administration 1997 105,463 -- 45,000
1996 76,508 -- 14,783
</TABLE>
- -----------------
(1) Mr. Criscuolo resigned as President of the Company on April 13, 1998.
(2) Includes $8,333 paid to Mr. Criscuolo pursuant to a consulting
agreement expiring on April 30, 2001.
(3) Such options were terminated on April 13, 1998.
-6-
<PAGE>
The following table sets forth certain information regarding stock
option grants made to the Named Executive Officers during the fiscal year ended
June 30, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates
Number of of Appreciation for
Securities % of Total Option Term
Underlying Options Granted ----------------------------
Options to Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date 5%($) 10%($)
- ----- --------------- ----------------- ---------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Edward M. Sellian 114,540(1) 34 10.25 12/9/07 738,783 1,871,583
35,460(2) 10 11.28 12/9/02 110,635 244,319
Robert Ranieri 50,000(3) 15 10.25 12/9/07 322,500 817,000
Joann Sabatino 25,000(4) 7 10.25 12/9/07 161,250 408,500
Jean Houghton 40,000(5) 12 10.25 12/9/07 258,000 653,600
</TABLE>
- -----------------
(1) One-third of the number of options are exercisable commencing December
9, 1998, one-third of the number of options are exercisable commencing
December 9, 1999 and the final one-third of the number of options are
exercisable commencing December 9, 2000.
(2) One-quarter of the number of options are exercisable commencing
December 9, 1998, one-quarter of the number of options are exercisable
commencing December 9, 1999, one-quarter of the number of options are
exercisable commencing December 9, 2000 and the final one-quarter of
the number of options are exercisable commencing January 1, 2001.
(3) 10,163 options are exercisable commencing December 9, 1998, 10,163
options are exercisable commencing December 9, 1999, 19,918 options are
exercisable December 9, 2000 and 9,756 options are exercisable January
1, 2001.
(4) 1,829 options are exercisable commencing December 9, 1998, 1,829
options are exercisable commencing December 9, 1999, 11,586 options are
exercisable commencing December 9, 2000 and 9,756 options are
exercisable commencing January 1, 2001.
(5) 10,244 options are exercisable commencing December 9, 1998, 10,244
options are exercisable commencing December 9, 1999, 9,756 options are
exercisable commencing December 9, 2000 and 9,756 options are
exercisable commencing January 1, 2001.
-7-
<PAGE>
The following table sets forth certain information regarding
unexercised stock options held by each of the Named Executive Officers as of
June 30, 1998. None of the Named Executive Officers exercised any stock options
during the fiscal year ended June 30, 1998.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options at
Options at June 30, 1998(#) June 30, 1998 ($)(1)
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------------------------- -------------------------
<S> <C> <C>
Edward M. Sellian 0/150,000 0/7,216
Robert Ranieri 24,855/84,928 12,940/9,620
Joann Sabatino 33,333/91,667 0/1,575
Jean Houghton 24,855/74,928 12,940/8,990
</TABLE>
-----------------
(1) On June 30, 1998, the last reported sales price of the Common Stock as
reported by the Nasdaq National Market was $10.313 per share.
LONG-TERM INCENTIVE AND PENSION PLANS
The Company does not have any long-term incentive or defined benefit
pension plans.
EMPLOYMENT AGREEMENT
Ms. Joann Sabatino is employed as Chief Financial Officer of the
Company under an employment agreement expiring on October 15, 1999 at a salary
of $150,000 per annum. In the event that Ms. Sabatino's employment is terminated
other than for cause, permanent disability or death or she voluntarily
terminates her employment during the 24 month period after a "Change in Control"
of the Company occurs, Ms. Sabatino is entitled to receive a payment equal to
300% of her highest annual compensation during the three fiscal years preceding
the date of termination and other specified benefits.
NONCOMPETITION AGREEMENT
Mr. Sellian does not have an employment agreement with the Company. The
Company has, however, entered into a noncompetition agreement with Mr. Sellian.
Mr. Sellian's agreement provides that for as long as he is Chairman of the Board
of the Company or owns at least 25% of the Company's outstanding Common Stock
and for two years thereafter, he shall not, without the prior written consent of
the Company, associate with any competing entity within the United States or
employ, or solicit the employment of any employee of the Company.
-8-
<PAGE>
STOCK OPTION PLANS
1995 STOCK OPTION PLAN. Under the Company's 1995 Stock Option Plan (the
"1995 Plan"), 850,000 shares of Common Stock are reserved for issuance upon the
exercise of stock options. Options to purchase an aggregate of 608,576 shares of
Common Stock are presently outstanding. Options to purchase 433 shares of Common
Stock have been exercised. The 1995 Plan is designed as a means to attract,
retain and motivate key employees. The Stock Option Committee administers and
interprets the 1995 Plan.
The 1995 Plan provides for the granting of both incentive stock options
(as defined in Section 422 of the Internal Revenue Code of 1986, as amended) and
nonqualified stock options. Options are granted under the 1995 Plan on such
terms and at such prices as determined by the Stock Option Committee, except
that the per share exercise price of incentive stock options cannot be less than
the fair market value of the Common Stock on the date of grant and the per share
exercise price of nonqualified stock options cannot be less than 75% of the fair
market value of the Common Stock on the date of grant. Each option is
exercisable after the period or periods specified in the option agreement, but
no option may be exercisable after the expiration of ten years from the date of
grant. Options granted under the 1995 Plan are not transferable other than by
will or by the laws of descent and distribution.
DIRECTORS' STOCK OPTION PLAN. The Company's Directors' Stock Option
Plan (the "Directors' Plan") provides for the grant of options to purchase
Common Stock of the Company to non-employee Directors of the Company. The
Directors' Plan authorizes the issuance of a maximum of 60,000 shares of Common
Stock. Options to purchase an aggregate of 28,000 shares of Common Stock are
presently outstanding. No options have been exercised.
The Directors' Plan is administered by the Board of Directors. Under
the Directors' Plan each non-employee Director receives options for 6,000 shares
of Common Stock on the date of his or her first election to the Board of
Directors. In addition, on the third anniversary of each Director's first
election to the Board, and on each three year anniversary thereafter, each
non-employee Director will receive an additional option to purchase 6,000 shares
of Common Stock. The exercise price per share for all options granted under the
Directors' Plan will be equal to the fair market value of the Common Stock as of
the date preceding the date of grant. All options vest in three equal annual
installments beginning on the first anniversary of the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Sellian, the Chairman of the Board and Chief Executive Officer of
the Company, served as a member of the Compensation Committee of the Board of
Directors of the Company during the fiscal year ended June 30, 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General
The Compensation Committee determines the cash and other incentive
compensation, if any, to be paid to the Company's executive officers.
Compensation Philosophy
The Compensation Committee's executive compensation philosophy is to
base management's pay, in part, on achievement of the Company's annual and
long-term performance goals, to provide competitive levels of compensation, to
recognize individual initiative, achievement and length of service to the
Company, and to assist the Company in attracting and retaining qualified
management.
-9-
<PAGE>
Salaries
Base salaries for the Company's executive officers are determined
initially by evaluating the responsibilities of the position held and the
experience of the individual, and by reference to the competitive marketplace
for management talent, including a comparison of base salaries for comparable
positions within the Company's industry. Annual salary adjustments are
determined by evaluating the competitive marketplace, the performance of the
Company, the performance of the executive particularly with respect to the
ability to manage growth of the Company or to generate sales of the Company's
products, length of service to the Company and any increased responsibilities
assumed by the executive. The Company places itself in the low level in
determining salaries compared to its competitors.
Annual Bonuses
The Company from time to time considers the payment of bonuses to its
executive officers although no formal plan currently exists. Bonuses would be
determined based, first, upon the level of achievement by the Company of its
strategic and operating goals and, second, upon the level of personal
achievement by participants. The achievement of personal goals includes the
actual performance of the Company for which the executive officer has
responsibility as compared to the planned performance thereof, the level of cost
savings achieved by such executive officer, the ability to manage and motivate
employees and the achievement of assigned projects. Bonuses are determined
annually after the close of each fiscal year. Despite achievement of personal
goals, bonuses may not be given based upon the performance of the Company as a
whole. During the fiscal year ended June 30, 1998, the Company awarded a bonus
to Joann Sabatino in the amount of $25,000.
Compensation of Chief Executive Officer
Mr. Sellian's salary during the fiscal year ended June 30, 1998 was
based upon the factors described in the "Salaries" paragraph above. Mr.
Sellian's compensation is believed to be in the low range compared to salaries
received by other chief executive officers of other carbon dioxide suppliers.
This range represents the Company's best estimate as there is limited
information available on the salary levels of chief executive officers of the
Company's competitors.
Stock Options
During the fiscal year ended June 30, 1998, the Stock Option Committee
awarded stock options to purchase 150,000 shares of Common Stock to Mr. Sellian,
50,000 shares of Common Stock to Mr. Ranieri, 25,000 shares of Common Stock to
Ms. Sabatino and 40,000 shares of Common Stock to Ms. Houghton. The exercise
price of such options was equal to or greater than the fair market value of the
Common Stock on the date of grant. It is the philosophy of the Stock Option
Committee that stock options should be awarded only to key employees of the
Company to promote long-term interests between such employees and the Company's
shareholders and to assist in the retention of such employees.
Current Compensation Committee Members: John A. Kerney; Robert Ranieri.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). Officers, directors and greater than ten percent
shareholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on review of copies of such forms furnished to the
Company, or written representations that no Form 5's were required, the Company
believes that during the year ended June 30, 1998, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its Stuart, Florida headquarters complex from Mr.
Sellian for $19,800 per month, below fair market value for the premises
determined by an independent real estate appraisal. Rent expense for the
headquarters totaled $216,500 for the fiscal year ended June 30, 1998. The
Company also leases its Ft. Myers, Florida and Wappingers Falls, New York
storage depots from Mr. Sellian and a corporation owned by Mr. Sellian,
respectively, for $795, and $2,200 per month, respectively. Rent expense for
these storage depots totaled $27,500 for the fiscal year ended June 30, 1998.
Mr. Robert L. Frome, a Director of the Company, is a member of the law
firm of Olshan Grundman Frome & Rosenzweig LLP, which law firm has been retained
by the Company during the last fiscal year. Fees received from the Company by
such firm during the last fiscal year did not exceed 5% of such firm's revenues.
PERFORMANCE GRAPH
The following graph compares, for each of the fiscal years indicated, the yearly
percentage change in the Company's cumulative total shareholder return on its
Common Stock with the cumulative total return of (i) the Nasdaq Market Value
Index, a broad equity market index, and (ii) the Russell 2000 Index, a "small
cap" index. The Company has elected to use the Russell 2000 Index since it does
not use a published industry or line-of-business index and does not believe it
can reasonably identify a peer group.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF NUCO2 INC., RUSSELL 2000 INDEX
AND NASDAQ MARKET VALUE INDEX
FROM DECEMBER 19, 1995 TO JUNE 30, 1998
[The following table was represented by a line graph in the printed material]
-----------FISCAL YEAR ENDING-----------
COMPANY/INDEX 1995 1996 1997 1998
NuCo2 Inc. 100 341.67 191.67 114.58
Russell 2000 Index 100 110.47 128.5 149.69
Nasdaq Market Value Index 100 112.37 135.37 179.44
Assumes $100 invested on December 19, 1995 in the Company's Common
Stock, the Rusell 2000 Index and the Nasdaq Market Value Index. The calculations
in the table were made on a dividends reinvested basis.
-11-
<PAGE>
-------------------
INDEPENDENT PUBLIC ACCOUNTANTS
On July 2, 1996, the Audit Committee of the Board of Directors of the
Company dismissed KPMG Peat Marwick LLP ("KPMG") as independent accountants to
the Company and appointed Cooper, Selvin & Strassberg LLP as the new independent
accountants to the Company. KPMG's accountant's report on the financial
statements of the Company for the fiscal year ended June 30, 1995 (the period
for which KPMG was engaged as independent accountants) did not contain any
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope, or accounting principles. In November 1997, the
partners and employees of Cooper, Selvin & Strassberg LLP joined the firm of
Margolin, Winer & Evens LLP ("MWE"). A representative of MWE is expected to be
present at the Annual Meeting to answer any appropriate shareholder questions,
and will, if he so desires, have the opportunity to make a statement. The
Company has not selected independent accountants for the current fiscal year
ending June 30, 1999 and will solicit bids from appropriate candidates.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended for inclusion in the Company's proxy
statement and form of proxy for next year's annual shareholders' meeting must be
received at the Company's principal executive offices prior to July 16, 1999.
Management of the Company is allowed to use its discretionary proxy voting
authority in connection with any shareholder proposal received by the Company
after September 30, 1999 intended for presentation from the floor at next year's
annual shareholders' meeting.
OTHER MATTERS
So far as it is known, there is no business other than that described
above to be presented for action by the shareholders at the forthcoming Annual
Meeting, but it is intended that Proxies will be voted upon any other matters
and proposals that may legally come before the Annual Meeting, or any
adjustments thereof, in accordance with the discretion of the persons named
therein.
The Company will furnish, without charge, a copy of its Annual Report
on Form 10-K (without exhibits) for the fiscal year ended June 30, 1998 as filed
with the Securities and Exchange Commission to shareholders of record as of
October 26, 1998 who make written request to Eric M. Wechsler, Secretary, NuCo2
Inc., 2800 SE Market Place, Stuart, Florida 34997.
By Order of the Board of Directors
EDWARD M. SELLIAN
Chairman of the Board and Chief Executive Officer
Stuart, Florida
November 13, 1998
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<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
NUCO2 INC.
PROXY--ANNUAL MEETING OF SHAREHOLDERS, DECEMBER 15, 1998
The undersigned, a shareholder of NuCo2 Inc., a Florida corporation (the
"Company"), does hereby constitute and appoint Edward M. Sellian and Robert
Ranieri and each of them, the true and lawful attorneys and proxies with full
power of substitution, for and in the name, place and stead of the undersigned,
to vote all of the shares of Common Stock of the Company that the undersigned
would be entitled to vote if personally present at the 1998 Annual Meeting of
Shareholders of the Company to be held at Radisson Plaza Hotel, 60 S. Ivanhoe
Blvd., Orlando, FL 32804 on Tuesday, December 15, 1998 at 9:00 a.m., local time,
or at any adjournment or adjournments thereof.
The undersigned hereby instructs said proxies or their substitutes as
set forth below.
1. ELECTION OF DIRECTORS:
The election of Edward M. Sellian, Robert Ranieri, Robert L.
Frome, John A. Kerney and Daniel Raynor.
/ / FOR / / TO WITHHOLD AUTHORITY to vote for all nominees.
TO WITHHOLD AUTHORITY to vote for any individual nominee(s), print
name(s) below:
------------------------------------------------------------------
2. DISCRETIONARY AUTHORITY
(Continued on the reverse side)
<PAGE>
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE
GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO ELECT THE
NOMINEES AS DIRECTORS AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES OR
PROXY WITH RESPECT TO ANY OTHER BUSINESS TRANSACTED AT THE ANNUAL MEETING.
The undersigned hereby revokes any proxy or proxies heretofore given and
acknowledges receipt of a copy of the Notice of Annual Meeting and Proxy
Statement, both dated November 13, 1998, and a copy of the Company's Annual
Report for the fiscal year ended June 30, 1998.
PLEASE MARK, DATE, SIGN AND MAIL
THIS PROXY IN THE ENVELOPE PROVIDED FOR
THIS PURPOSE. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES.
________________________________, 1998
________________________________ (L.S.)
________________________________ (L.S.)
Signature(s)
NOTE: Please sign exactly as your
name or names appear hereon. When
signing as attorney, executor,
administrator, trustee or guardian,
please indicate the capacity in which
signing. When signing as joint tenants,
all parties in the joint tenancy must
sign. When a proxy is given by a
corporation, it should be signed with
full corporate name by a duly authorized
officer.
