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:
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<PAGE>
NUCO2 INC.
2800 S.E. Market Place
Stuart, Florida 34997
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
December 2, 1999
----------------------
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 the Radisson Plaza
Hotel, 60 S. Ivanhoe Blvd., Orlando, FL 32804, on Thursday, December 2, 1999 at
9:00 a.m., local time for the following purposes:
1. To elect seven (7) 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;
2. To amend the 1995 Stock Option Plan of the Company to increase
the number of shares available for issuance thereunder from
850,000 shares to 1,550,000 shares; and
3. 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 18,
1999 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
October 29, 1999
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 S.E. Market Place
Stuart, Florida 34997
-------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
December 2, 1999
-------------------------
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 the Radisson Plaza Hotel,
60 S. Ivanhoe Blvd., Orlando, FL 32804, on Thursday, December 2, 1999 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 October 29, 1999.
RECORD DATE AND VOTING SECURITIES
The voting securities of the Company outstanding on October 18, 1999
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, (ii) to amend the 1995 Stock Option Plan of the Company (the "1995
Plan") to increase the number of shares of Common Stock available for issuance
thereunder from 850,000 shares to 1,550,000 shares and (iii) 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.
<PAGE>
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the
Common Stock, as at October 18, 1999, 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............................................... 1,180,353 (4) 16.1%
Robert Ranieri.................................................. 106,609 (5) 1.5
Craig L. Burr................................................... 319,100 (6) 4.4
Robert L. Frome. ............................................... 138,122 (7) 1.9
John A. Kerney.................................................. 2,000 (8) 0
Daniel Raynor................................................... 393,302 (9) 5.4
Richard D. Waters, Jr........................................... 0 -
Joann Sabatino ................................................. 111,658 (10) 1.5
Eric M. Wechsler................................................ 18,750 (11) *
Kern Capital Management, LLC.................................... 586,300 8.1
114 West 47th Street, Suite 1926 New York, NY 1003
William P. Egan................................................. 452,000 (12) 6.3
c/o Burr, Egan, Deleage & Co.
One Post Office Square, Suite 3800
Boston, MA 02103
Van Wagoner Capital Management, Inc............................. 387,800 5.4
One Bush Street, Suite 1150
San Francisco, CA 94104
Chase Equity Associates L.P..................................... 379,025 (13) 5.0
380 Madison Avenue
New York, NY 10017
The BOC Group, Inc.............................................. 1,000,000 (14) 12.2
575 Mountain Avenue
Murray Hill, NJ 07974
All Directors and Executive Officers as a Group (9 persons)..... 2,269,894 (15) 30.1%
</TABLE>
- ------------------
* Less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner is
c/o the Company, 2800 S.E. 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
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<PAGE>
or other rights to subscribe for Common Stock which are exercisable
within sixty (60) days of October 18, 1999.
(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 18, 1999.
(4) Includes 11,660 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 94,090 shares issuable upon exercise of
options.
(5) Includes 96,109 shares issuable upon exercise of options.
(6) Includes 26,150 shares owned by Matthew Burr and 26,150 shares owned
by Lander Burr, Mr. Burr's minor sons with respect to which Mr. Burr
disclaims beneficial ownership, 83,750 shares owned by The William
P. Egan 1985 Children's Trust of which Mr. Burr is a trustee but
disclaims beneficial ownership and 52,050 shares owned by The
William P. Egan 1986 Children's Trust of which Mr. Burr is a trustee
but disclaims beneficial ownership. Mr. Egan is neither a trustee
nor claims any beneficial ownership in shares owned by The William
P. Egan 1985 Children's Trust or The William P. Egan 1986 Children's
Trust. See (12) below.
(7) 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.
(8) Represents 2,000 shares issuable upon exercise of options.
(9) 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, 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 and 2,000 shares issuable upon
exercise of options.
(10) Represents 111,658 shares issuable upon exercise of options.
(11) Includes 15,750 shares issuable upon exercise of options.
(12) Includes 331,000 shares owned by The Craig L. Burr 1986 Children's
Trust of which Mr. Egan is a trustee but disclaims beneficial
ownership. Mr. Burr is neither a trustee nor claims any beneficial
ownership in shares owned by The Craig L. Burr 1986 Children's
Trust. See (6) above.
(13) Represents 379,025 shares issuable upon exercise of a common stock
purchase warrant.
(14) Represents 1,000,000 shares issuable upon exercise of a common stock
purchase warrant.
(15) Includes 327,607 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, Craig L. Burr, Robert L. Frome, John A. Kerney, Daniel Raynor and
Richard D. Waters, Jr., the seven 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..................... 57 Chairman of the Board and Chief Executive
Officer
Robert Ranieri........................ 35 Chief Operating Officer, Executive Vice
President and Director
Craig L. Burr......................... 54 Director
Robert L. Frome....................... 58 Director
John A. Kerney........................ 39 Director
Daniel Raynor......................... 40 Director
Richard D. Waters, Jr................. 49 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. Mr. Ranieri has a B.A. degree from George Washington
University.
Craig L. Burr: Director since May 1999. Mr. Burr has been a
managing general partner of Burr, Egan, Deleage & Co., a venture capital firm,
since 1979. Mr. Burr has a B.A. degree from Harvard College and an M.B.A. degree
from Harvard Graduate School of Business Administration. Mr. Burr is a director
of Boston Communications Group, Inc. as well as several private companies
affiliated with Burr, Egan, Deleage & Co.
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 & Wolosky LLP. Mr.
Frome is a director of 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 November 1999,
Mr. Kerney has been chief executive officer and founder of Adbivium, LLC, a
start-up Internet retailer. From 1993 to October 1999, Mr. Kerney was 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.
-4-
<PAGE>
Richard D. Waters, Jr: Director since October 1999. Mr. Waters is
a Managing Director in the Mezzanine Group of Chase Capital Partners, the
private equity investing arm of The Chase Manhattan Corporation. Prior to
joining Chase Capital Partners in 1996, Mr. Waters had been in Chase's Merchant
Banking Group since 1986. Mr. Waters received a B.A. degree in economics from
Hamilton College and an M.B.A. degree from Columbia University.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.
Board Meetings and Committees
The Board of Directors of the Company formally met on three
occasions during the fiscal year ended June 30, 1999. 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 John A. Kerney and Daniel Raynor. The Audit Committee members are
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, 1999,
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 39. 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: General Counsel and Secretary since January
1998. Age 40. Prior to joining the Company, Mr. Wechsler, since 1990, was a
corporate associate at the law firm of Olshan Grundman Frome Rosenzweig &
Wolosky 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.
-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
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 $100,000 with respect to the fiscal year ended June 30, 1999 (the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
-------------------------------------- -------------------
Fiscal Year
Name and Principal Position Ended June 30, Salary($) Bonus($) Options (#)
- --------------------------- -------------- --------- -------- -----------
<S> <C> <C> <C> <C>
Edward M. Sellian 1999 160,615 -- --
Chairman of the Board, 1998 160,615 -- 150,000
Chief Executive Officer 1997 160,615 -- --
Robert Ranieri 1999 100,385 -- 80,000
Chief Operating Officer, 1998 100,385 -- 50,000
Executive Vice President 1997 105,463 -- 45,000
Joann Sabatino 1999 150,587 -- 40,000
Chief Financial Officer, Treasurer 1998 150,587 25,000 25,000
1997 107,313 -- 100,000
Eric M. Wechsler 1999 135,519 -- 35,000
General Counsel, Secretary 1998 73,154 -- 35,000
1997 -- -- --
Jean Houghton (1) 1999 100,385 -- --
Vice President - Administration 1998 100,385 -- 40,000
1997 105,463 -- 45,000
</TABLE>
- ------------------
(1) Ms. Houghton resigned as Vice President - Administration of the Company
on October 15, 1999.
-6-
<PAGE>
The following table sets forth certain information regarding
stock option grants made to the Named Executive Officers during the fiscal year
ended June 30, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------------------------------------------------
Potential
Number of % of Total Realizable Value
Securities Options at Assumed
Underlying Granted to Annual Rates of
Options Employees in Exercise or Base Expiration Appreciation for
Granted (#) Fiscal Year Price($/Sh) Date Option Term
----------- ------------ ---------------- ---------- -----------------
5% ($) 10%($)
------ ------
<S> <C> <C> <C> <C> <C> <C>
Robert Ranieri 80,000(1) 35 5.50 10/12/08 276,800 701,600
Joann Sabatino 40,000(1) 17 5.50 10/12/08 138,400 350,800
Eric M. Wechsler 35,000(1) 16 5.50 10/12/08 121,100 306,950
</TABLE>
(1) One-fifth of the number of options are exercisable commencing October
12, 1999, one-fifth of the number of options are exercisable commencing
October 12, 2000, one-fifth of the number of options are exercisable
commencing October 12, 2001, one-fifth of the number of options are
exercisable commencing October 12, 2002 and the final one-fifth of the
number of options are exercisable commencing October 12, 2003.
The following table sets forth certain information regarding
unexercised stock options held by each of the Named Executive Officers as of
June 30, 1999. None of the Named Executive Officers exercised any stock options
during the fiscal year ended June 30, 1999.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Options at Value of Unexercised
June 30, 1999(#) In-the-Money Options at
June 30, 1999 ($)(1)
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------------------- -------------------------
<S> <C> <C>
Edward M. Sellian 47,045/102,955 0/0
Robert Ranieri 54,946/134,837 0/260,000
Joann Sabatino 68,495/96,505 0/130,000
Eric M. Wechsler 8,750/61,250 0/113,750
Jean Houghton 55,027/44,756 0/0
</TABLE>
- -----------------
(1) On June 30, 1999, the last reported sales price of the Common Stock as
reported by the Nasdaq National Market was $8.75 per share.
-7-
<PAGE>
Long-Term Incentive and Pension Plans
The Company does not have any long-term incentive or defined
benefit pension plans.
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 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.
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. The Board of Directors has proposed an
amendment to the 1995 Plan to increase the number of shares of Common Stock
reserved for issuance thereunder from 850,000 shares to 1,550,000 shares. See
"Proposal No. 2 - Amendment to the 1995 Stock Option Plan." Options to purchase
an aggregate of 801,226 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 36,000 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. Ranieri, Chief Operating Officer and Executive Vice President
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, 1999.
-8-
<PAGE>
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.
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. No bonus was awarded to any Named Executive Officer for the fiscal year
ended June 30, 1999.
Compensation of Chief Executive Officer
Mr. Sellian's salary during the fiscal year ended June 30, 1999
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, 1999, the Stock Option
Committee awarded stock options to purchase 80,000 shares of Common Stock to Mr.
Ranieri, 40,000 shares of Common Stock to Ms. Sabatino and 35,000 shares of
Common Stock to Mr. Wechsler. 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.
-9-
<PAGE>
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, 1999, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its Stuart, Florida headquarters complex from
Mr. Sellian for $20,138 per month, below fair market value for the premises
determined by an independent real estate appraisal. Rent expense for the
headquarters totaled $240,531 for the fiscal year ended June 30, 1999. The
Company also leases its Ft. Meyers, Florida and Wappingers Falls, New York
storage depots from Mr. Sellian and a corporation owned by Mr. Sellian,
respectively, for $835 and $2,200 per month, respectively. Rent expense for
these storage depots totaled $36,417 for the fiscal year ended June 30, 1999.
Mr. Robert L. Frome, a Director of the Company, is a member of
the law firm of Olshan Grundman Frome Rosenzweig & Wolosky 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.
-10-
<PAGE>
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 Stock Market (U.S.) 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
AMONG NUCO2 INC., THE RUSSELL 2000 INDEX
AND THE NASDAQ STOCK MARKET (U.S.) INDEX
Cumulative Total Return
----------------------------------------
12/19/95 6/96 6/97 6/98 6/99
NUCO2 INC. 100 342 192 115 97
NASDAQ STOCK MARKET (U.S.) 100 116 141 186 266
RUSSELL 2000 100 113 132 156 156
Assumes $100 invested on December 19, 1995 in the Company's Common Stock,
the Russeell 2000 Index and the Nasdaq Stock Market (U.S.) Index. The
calculations in the table were made on a dividends reinvested basis.
-11-
<PAGE>
PROPOSAL NO. 2
AMENDMENT TO THE 1995 STOCK OPTION PLAN
The Board of Directors proposes the amendment of the 1995 Plan to
increase the number of shares of Common Stock reserved for issuance thereunder
from 850,000 shares to 1,550,000 shares (the "Amendment"). The 1995 Plan is
designed as a means to attract, retain and motivate key employees. On October
19, 1999, the Board of Directors voted to approve the Amendment, subject to
shareholder approval.
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.
As of the date hereof, stock options to purchase 801,226 shares
of Common Stock, at exercise prices ranging from $5.50 to $11.28 per share, have
been granted and are outstanding under the 1995 Plan. Options to purchase 433
shares of Common Stock have been exercised through the date hereof. The 1995
Plan will terminate on November 7, 2005, but may be terminated by the Board of
Directors at any time prior to such date. The following table sets forth certain
information regarding stock options held by employees of the Company.
<TABLE>
<CAPTION>
Name and Position Number of Options (1)(2)
- ----------------- ------------------------
<S> <C>
Edward M. Sellian, 150,000
Chairman of the Board, Chief Executive Officer
Robert Ranieri, 189,783
Chief Operating Officer, Executive Vice President
Joann Sabatino, 165,000
Chief Financial Officer, Treasurer
Eric M. Wechsler, 70,000
General Counsel, Secretary
Executive Group (3) 574,783
Non-Executive Officer Employee Group(4) 226,443
</TABLE>
- ---------------------------
(1) On October 18, 1999, the last reported sales price of the Company's
Common Stock as reported by the Nasdaq National Market was $7.25 per
share.
(2) Information contained in this table is duplicative of information
contained in "Executive Compensation" and does not signify additional
grants of options to purchase shares of Common Stock.
(3) All current executive officers as a group.
(4) All employees, including all current officers who are not executive
officers, as a group.
-12-
<PAGE>
Only 48,341 shares of Common Stock remain available for the grant of
options under the 1995 Plan. The Board of Directors believes it is in the
Company's best interests to approve the Amendment which would allow the Company
to continue to grant options under the 1995 Plan to secure for the Company the
benefits of the additional incentive inherent in the ownership of shares of
Common Stock by key employees of the Company and to help the Company secure and
retain the services of key employees. The 1995 Plan is an important factor in
accomplishing these goals, especially in companies like the Company that utilize
stock options as a portion of the compensation and incentives of employees and
for aligning the interests of its employees with the interests of its
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT.
INDEPENDENT PUBLIC ACCOUNTANTS
In November 1997, the partners and employees of Cooper, Selvin &
Strassberg LLP, the Company's independent public accountants for the fiscal year
ended June 30, 1996, joined the firm of Margolin, Winer & Evens LLP ("MWE"). MWE
were the Company's independent public accountants for the fiscal years ended
June 30, 1998 and 1999. 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,
2000 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 1, 2000.
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 15, 2000 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
adjournments 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, 1999 as filed
with the Securities and Exchange Commission to shareholders of record as of
October 18, 1999 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
October 29, 1999
-13-
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
NUCO2 INC.
PROXY--ANNUAL MEETING OF SHAREHOLDERS, DECEMBER 2, 1999
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 1999 Annual Meeting of
Shareholders of the Company to be held at the Radisson Plaza Hotel, 60 S.
Ivanhoe Blvd., Orlando, FL 32804 on Thursday, December 2, 1999 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, Craig L. Burr,
Robert L. Frome, John A. Kerney, Daniel Raynor, and Richard D.
Waters, Jr.
/ / FOR / / TO WITHHOLD AUTHORITY to vote for all nominees.
TO WITHHOLD AUTHORITY to vote for any individual nominee(s), print
name(s) below:
------------------------------------------------------------------
2. TO AMEND THE COMPANY'S 1995 STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. 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, TO APPROVE THE AMENDMENT TO THE COMPANY'S 1995 STOCK
OPTION PLAN 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 October 29, 1999, and a copy of the Company's Annual
Report for the fiscal year ended June 30, 1999.
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.
________________________________, 1999
________________________________ (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.
