SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-7234
GP STRATEGIES CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 13-1926739
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(State of Incorporation) (I.R.S. Employer Identification No.)
9 West 57th Street, New York, NY 10019
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 826-8500
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of each exchange on which registered:
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Common Stock, $.01 Par Value New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
As of March 22, 2002, the aggregate market value of the outstanding shares of
the Registrant's Common Stock, par value $.01 per share and Class B Capital
Stock, par value $.01 per share held by non-affiliates was approximately
$46,782,000, and $1,219,000, respectively, based on the closing price of the
Common Stock on the New York Stock Exchange on March 22, 2002. Indicate the
number of shares outstanding of each of the Registrant's classes of common
stock, as of the most recent practicable date.
Class Outstanding at March 22, 2002
- ----- -----------------------------
Common Stock, par value $.01 per share 12,780,285 shares
Class B Capital Stock, par value $.01 per share 900,000 shares
deleted paragraph
TABLE OF CONTENTS
Page
PART I
Item 1. Business 1
Item 2. Properties 14
Item 3. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security Holders 15
PART II
Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters 16
Item 6. Selected Financial Data 17
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 18
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 28
Item 8. Financial Statements and Supplementary Data 29
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 75
PART III
Item 10. Directors and Executive Officers of the Registrant 75
Item 11. Executive Compensation 75
Item 12. Security Ownership of Certain
Beneficial Owners and Management 75
Item 13. Certain Relationships and Related Transactions 75
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 76
Item 10. Directors and Executive Officers of the Registrant
Jerome I. Feldman is founder and since 1959 has been Chief Executive
Officer and a Director of the Company. He has also been Chairman of the Board of
the Company since 1999. He was President of the Company from 1959 until June
2001. He has been a Director of Five Star Products, Inc. ("Five Star"), a
wholesale distributor of home decorating, hardware and finishing products, since
1994, a Director of GSE Systems, Inc. ("GSE"), a software design and development
company, since 1994, and Chairman of the Board of GSE since 1997. Mr. Feldman is
also Chairman of the New England Colleges Fund and a Trustee of Northern
Westchester Hospital. Age 73
Scott N. Greenberg has been a Director of the Company since 1987 and
President and Chief Financial Officer since June 2001. He was Executive Vice
President and Chief Financial Officer from 1998 to June 2001, Vice President and
Chief Financial Officer from 1989 to 1998, and Vice President, Finance from 1985
to 1989. He has been a Director of Five Star since 1998 and a director of GSE
since 1999. Age 45
John C. McAuliffe has been a Director of the Company since 1997, Senior
Vice President of the Company since 1998, and President of General Physics
Corporation ("GPC"), a wholly-owned subsidiary of the Company, since 1997. He
was Executive Vice President and Chief Operating Officer of GPC from 1994 to
1997; Senior Vice President from 1993 to 1994; Chief Financial Officer and
Treasurer from 1992 to 1993; and Vice President, Finance from 1991 to 1992. Age
43
Marshall S. Geller has been a Director of the Company since February
2002. He is Co-Founder and Senior Manager of St. Cloud Capital Partners LP, a
Small Business Investment Company formed in 2001, and Chairman of the Board,
Chief Executive Officer, and Founding Partner of Geller & Friend Capital
Partners, Inc., a private merchant bank formed in November 1995. From 1991 to
October 1995, Mr. Geller was the Senior Managing Partner of Golenberg & Geller,
Inc., a merchant banking investment company. Mr. Geller has spent more than
thirty years in corporate finance and investment banking, including twenty years
as Senior Managing Director for Bear, Stearns and Company, with oversight of all
operations in Los Angeles, San Francisco, Chicago, Hong Kong and the Far East.
Mr. Geller is also a director of Hexcel Corporation, ValueVision International,
Inc., Ballantyne of Omaha, Inc., and Concepts Direct, Inc. Mr. Geller serves on
the Dean's Advisory Council for the College of Business & Economics at
California State University, Los Angeles. Age: 63.
Sheldon L. Glashow, Ph.D. has been a Director of the Company since
1997. Dr. Glashow has been the Arthur G. B. Metcalf Professor of Science and
University Professor at Boston University since 2000. Prior to that he was the
Higgins Professor of Physics and the Mellon Professor of the Sciences at Harvard
University. He was the recipient of the Nobel Prize in Physics in 1979. He has
been a Director of GSE since 1995 and a Director of Interferon Sciences, Inc., a
biopharmaceutical company, since 1991. Dr. Glashow is a foreign member of the
Russian Academy of Sciences. Age 69
Roald Hoffmann, Ph.D. has been a Director of the Company since 1988. He
has been the John Newman Professor of Physical Science at Cornell University
since 1974. Dr. Hoffmann is a member of the National Academy of Sciences and the
American Academy of Arts and Sciences. In 1981, he shared the Nobel Prize in
Chemistry with Dr. Kenichi Fukui. Age 64
Bernard M. Kauderer has been a Director of the Company since 1997. He
retired from the United States Navy in 1986 as Vice Admiral. He was Former
Commander, Submarine Force, United States Atlantic and Pacific Fleets. He has
been a consultant to industry and government since 1986. Age 70
Ogden R. Reid has been a Director of the Company since 1979. Mr. Reid
had been Editor and Publisher of the New York Herald Tribune and of its
International Edition; United States Ambassador to Israel; a six-term member of
the United States Congress and a New York State Environmental Commissioner. Age
76
Gordon Smale has been a Director of the Company since 1997. He has been
President and a Director of Atlantic Oil Corporation, a producing oil and gas
company, since 1970; President of Atmic, Inc., an oil and gas management
company, since 1983; Chairman of the Board of CamWest Inc., an oil and gas
exploration and development company, since 1992; and Manager of Cedar Ridge LLC,
a methane coal gas exploration and development company, since 1994. Age 70
Andrea D. Kantor has been Vice President and General Counsel since
2001, Vice President and Corporate Counsel from 1999 to 2001, and Associate
General Counsel from 1988 to 1999. Ms. Kantor is a member of the Association of
the Bar of the City of New York and a member of the Corporate and Securities Law
Committee of the American Corporate Counsel Association. Age 45
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's securities, to file reports of ownership and changes in ownership with
the SEC and the New York Stock Exchange. Officers, directors and greater than
10% shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by it and
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the period January
1, 2001 to April 15, 2002, all filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with.
Item 11. EXECUTIVE COMPENSATION
The following table and notes present the compensation paid by the
Company and subsidiaries to its Chief Executive Officer and the Company's other
executive officers.
Summary Compensation Table
Annual Long Term
Compensation Compensation
Other
Annual Securities All Other
Salary Bonus Compensation Underlying Compensation
Name and Principal Position Year ($) ($) ($) Options(#) ($)
- --------------------------- ---- --- --- --- ---------- ---
Jerome I. Feldman................... 2001 413,915 -- -- -- 82,622(1)
Chairman and Chief 2000 425,000 -- -- -- 100,472(2)
Executive Officer 1999 450,899 -- -- 100,000(3) 74,067(4)
Scott N. Greenberg.................. 2001 233,158 -- -- 7,121(5)
President and Chief 2000 234,233 -- 65,560(6) -- 6,146(7)
Financial Officer 1999 235,300 -- -- 100,000(3) 28,888(8)
John C. McAuliffe................... 2001 271,541(9) -- -- -- 6,818(10)
Senior Vice President 2000 259,039(9) -- 8,906(6) 5,000(3) 6,033(11)
President, General Physics 1999 241,313(9) 410,000(9) -- 120,000(3) 26,239(12)
Corporation
Andrea D. Kantor.................... 2001 192,410 -- -- 6,841(13)
Vice President and 2000 189,920 -- 8,906(6) -- 6,012(14)
General Counsel 1999 178,113 -- -- 15,000(3) 3,961(15)
(1) Includes $50,000 for services rendered to GPC; a $4,589 matching
contribution to General Physics Corporation Profit Investment Plan (the
"GPC PIP Plan); $19,752 for split dollar life insurance premiums; and
$8,281 for group term life insurance premiums.
(2) Includes $62,500 for services rendered to GPC; a $5,250 matching
contribution to GPC PIP Plan; $24,441 for split dollar life
insurance premiums; and $8,281 for group term life insurance premiums.
(3) Consists of options to purchase shares of Common Stock granted pursuant
to the Company's 1973 Non-Qualified Stock Option Plan, as amended
(the "Plan").
(4) Includes $49,000 in cash and Common Stock received in connection with
the merger of the Company and GPC in 1997 (the "Merger"); a $4,000
matching contribution to the Company's 401(k) Savings Plan (the "401(k)
Savings Plan"); and $21,067 for split dollar life insurance premiums.
(5) Includes a $5,985 matching contribution to the GPC PIP Plan; $533 for
split dollar life insurance premiums; and $603 group term life
insurance premiums.
(6) Grant date present values of options to purchase shares of common stock
of Millennium Cell Inc. ("Millennium Cell") owned by the Company, which
options were granted on February 11, 2000 pursuant to the terms of the
GP Strategies Millennium Cell, LLC Plan. Such options have an exercise
price of $.91 per share (the Company's estimate of the fair market
value on the date of grant is $.70), were either fully exercisable on
the date of grant or 50% exercisable on the date of grant and 50%
exercisable on the first anniversary of the date of grant, and have an
expiration date of September 30, 2002. Grant date present values were
determined using the Black-Scholes option pricing model, using the
following assumptions: (a) time of exercise is May 11, 2002, (b) stock
price volatility is 75%, (c) the risk-free rate of return is 5.75%, and
(d) the dividend yield is 0%. No discount was applied to the option
values to account for the facts that the options are not freely
transferable and are subject to the risk of forfeiture. Includes
options to purchase 241,919, 32,865 and 32,865 shares of Millennium
Cell common stock ("Millennium Common Stock") owned by the Company,
granted to Mr. Greenberg, Mr. McAuliffe and Ms. Kantor, respectively.
(7) Includes a $5,250 matching contribution to the GPC PIP Plan; $494 for
split dollar life insurance premiums; and $402 group term life
insurance premiums.
(8) Includes $24,500 in cash and Common Stock received in connection with
the Merger; a $4,000 matching contribution to the 401(k) Savings
Plan; and $388 for split dollar life insurance premiums.
(9) Paid by GPC for services rendered solely to GPC.
(10) Includes a $5,985 matching contribution to the GPC PIP Plan; $533 for
split dollar life insurance premiums; and $300 for group term life
insurance premiums.
(11) Includes a $5,250 matching contribution to the GPC PIP Plan; $483
for split dollar life insurance premiums; and $300 for group term life
insurance premiums.
(12) Includes $20,134 in cash and Common Stock received in connection with
the Merger; $5,700 contributed by GPC under the GPC Plan; and $405
for split dollar life insurance premiums paid by GPC.
(13) Includes a $6,043 matching contribution to the GPC PIP Plan; $396 for
split dollar life insurance premiums; and $402 for group term life
insurance premiums.
(14) Includes a $5,250 matching contribution to the GPC PIP Plan; $360 for
split dollar life insurance premiums; and $402 for group term life
insurance premiums.
(15) Includes a $3,245 matching contribution to the 401(k) Savings Plan;
$289 for split dollar life insurance premiums; and $427 for group term
life insurance premiums.
Option Grants in 2001
No options were granted to the named executive officers in 2001.
Aggregate Option Exercises in 2001
And Fiscal Year-End Option Values
The following table and notes contain information concerning the
exercise of stock options under the Plan during 2001 and unexercised options
under the Plan held at the end of 2001 by the named executive officers. Unless
otherwise indicated, options are to purchase shares of Common Stock.
Shares Exercisable/Unexercisable Value of Unexercised
Acquired on Value Options at In-the-Money Options at
Exercise Realized December 31, 2001(#) December 31, 2001($)(1)
-------------------- -----------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --- --- ----------- ------------- ----------- -------------
Jerome I. Feldman.......... -0- -0- 13,623 40,000 -0- -0-
Scott N. Greenberg......... -0- -0- 145,875 40,000 -0- -0-
John C. McAuliffe.......... -0- -0- 122,570 72,430 -0- -0-
Andrea D. Kantor........... -0- -0- 21,500 6,000 -0- -0-
...........
(1) Calculated based on $3.80, which was the closing price of the Common
Stock as reported by the New York Stock Exchange on December 31, 2001,
which was below the exercise price of the stock options.
During 2001, Scott N. Greenberg exercised all 1,000 of his remaining
options granted under the GTS Duratek, Inc. Stock Option Plan of the Company and
realized $2,800 of value, and Andrea D. Kantor exercised all 5,000 of her
remaining options granted under the GTS Duratek, Inc. Stock Option Plan of the
Company and realized $5,655 of value, based in each case on the difference
between the exercise price of the options and the market price of Duratek common
stock on the exercise date.
During 2001, John C. McAuliffe exercised 16,433 of his options granted
under the GP Strategies Millennium Cell, LLC Plan and realized $185,360 of
value, and Andrea D. Kantor exercised 10,000 of her options granted under the GP
Strategies Millennium Cell, LLC Plan and realized $90,000 of value, based in
each case on the difference between the exercise price of the options and the
market price of Millennium Common Stock on the exercise date.
Compensation Committee Report on Executive Compensation
The Compensation Committee is responsible for administering the
compensation program for the executive officers of the Company. The Compensation
Committee consists of Gordon Smale.
The Compensation Committee's executive compensation policies are
designed to offer competitive compensation opportunities for all executives
which are based on personal performance, individual initiative, and achievement,
as well as assisting the Company in attracting and retaining qualified
executives. The Compensation Committee also endorses the position that stock
ownership by management and stock-based compensation arrangements are beneficial
in aligning management's and stockholders' interests in the enhancement of
stockholder value.
Compensation paid to the Company's executive officers generally
consists of the following elements: base salary, annual bonus, and long-term
compensation in the form of stock options and the GPC PIP Plan. The compensation
for the executive officers of the Company is determined by a consideration of
each officer's initiative and contribution to overall corporate performance and
the officer's managerial abilities and performance in any special projects that
the officer may have undertaken. Competitive base salaries that reflect the
individual's level of responsibility are important elements of the Company's
executive compensation philosophy. Subjective considerations of individual
performance are considered by the Compensation Committee in establishing annual
bonuses and other incentive compensation.
The Company has certain broad-based employee benefit plans in which all
employees, including the named executives, are permitted to participate on the
same terms and conditions relating to eligibility and subject to the same
limitations on amounts that may be contributed. In 2001, the Company also made
matching contributions to the GPC PIP Plan for those participants.
Mr. Feldman's 2001 Compensation
Mr. Feldman's compensation in 2001 was determined principally by the
terms of his employment agreement with the Company, which was negotiated with
the Compensation Committee of the Board of Directors. Effective June 1, 1999,
the Company and Mr. Feldman entered into a five-year employment agreement, which
is described below. In considering Mr. Feldman's compensation and the terms of
the employment agreement, the Compensation Committee considered Mr. Feldman's
significant contribution to the strategic redirection of the Company over the
last several years and his role with respect to the divestiture of the Company's
non-core assets. Mr. Feldman was instrumental in achieving a $17.2 million
reduction since December 2000 in the Company's outstanding debt under its
revolving credit facilities, primarily through the receipt of gross proceeds of
$14,624,000 in 2001 from the sale of 2,081,000 shares of the Company's
Millennium Common Stock. In addition, Mr. Feldman led management's efforts in
securing a new three-year, $40 million revolving credit agreement. However,
based on the Company's disappointing financial performance in 2001, the
Compensation Committee did not believe that a bonus for Mr. Feldman was
warranted in 2001.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that might incorporate future filings make by the Company
under those statutes, in whole or in part, this report shall not be deemed to be
incorporated by reference into any such filings, nor will this report be
incorporated by reference into any future filings make by the Company under
those statutes.
Gordon Smale
Directors Compensation
Directors who are not employees of the Company or its subsidiaries
receive an annual fee of $5,000, payable quarterly equally in cash and stock,
and $1,000 for each meeting of the Board of Directors attended, and generally do
not receive any additional compensation for service on the committees of the
Board of Directors other than the Audit Committee. Employees of the Company or
its subsidiaries do not receive additional compensation for serving as
directors. During 2001, Mr. Reid, Admiral Kauderer, and Dr. Glashow each
received $1,000 for service on the Audit Committee. Mr. Reid also received
$10,000 for his role in obtaining financing for the Company's Hydro Med
Sciences, Inc. subsidiary.
Each of the directors of the Company who are not employees of the
Company or its subsidiaries have been granted options under the GP Strategies
Millennium Cell, LLC Plan to purchase 10,955 shares of Millennium Common Stock
owned by the Company. During 2001, Mr. Reid exercised 5,000 of his options and
realized $41,203 of value, and Mr. Smale exercised 1,600 of his options and
realized $13,904 of value, in each case based on the difference between the
exercise price of the options and the market price of Millennium Common Stock on
the exercise date.
Employment Agreements
Jerome I. Feldman. As of June 1, 1999, Jerome I. Feldman and the
Company entered into an employment agreement pursuant to which Mr. Feldman is
employed as Chief Executive Officer of the Company until May 31, 2004, unless
sooner terminated. The Employment Agreement also provides that Mr. Feldman is
employed as President of the Company, but effective June 12, 2001, Mr. Feldman
resigned as President of the Company and Scott Greenberg was elected to that
office.
Commencing June 1, 1999, Mr. Feldman's base annual salary is $400,000,
with annual increases of $25,000. The Company and Mr. Feldman have agreed to
negotiate in good faith to formulate an annual incentive based compensation
arrangement based on the Company's achieving certain financial milestones which
will be fair and equitable to Mr. Feldman and the Company and its stockholders.
Each December, the Board of Directors is required to determine Mr. Feldman's
bonus for the year then ending, based upon the Company's revenues, profits or
losses, financing activities, and such other factors deemed relevant by the
Board of Directors. Mr. Feldman did not receive a bonus for the year 2001.
Pursuant to the employment agreement entered into in 1999, the Company granted
Mr. Feldman under the Company's option plan, options to purchase 100,000 shares
of the Company's Common Stock at an exercise price of $8.00 per share, the
market price on the date of grant. Such options vested 20% immediately and 20%
on each June 1 commencing June 1, 2000 and terminate on May 31, 2004. The
Company is required to provide Mr. Feldman with an automobile, to pay for
country club dues, which membership is to be used primarily to further the
Company's business, and to maintain the existing life and disability insurance
covering Mr. Feldman. The maturity date of the Company's presently outstanding
loans to Mr. Feldman was extended to May 31, 2004, and all contractual
restrictions imposed by the Company on the disposition by Mr. Feldman of shares
of Class B Stock were terminated.
The Company may terminate the employment agreement for Cause, which is
defined as (i) the willful and continued failure by Mr. Feldman to substantially
perform his duties or obligations or (ii) the willful engaging by Mr. Feldman in
misconduct which is materially monetarily injurious to the Company. If the
employment agreement is terminated for Cause, the Company is required to pay Mr.
Feldman his full salary through the date his employment is terminated. If Mr.
Feldman's employment is terminated by his death, the Company is required to pay
to his heirs, in a lump sum, an amount equal to his full salary for the period
ending May 31, 2004. If, as a result of Mr. Feldman's incapacity due to physical
or mental illness, he is absent from his duties on a full-time basis for the
entire period of six consecutive months, and he does not return within 30 days
of notice, the Company may terminate his employment. Mr. Feldman is entitled to
receive his full salary during the disability period until his employment is
terminated.
Mr. Feldman can terminate the employment agreement for Good Reason,
which is defined to include (i) a change in control of the Company or (ii) a
failure by the Company to comply with any material provision of the employment
agreement which has not been cured within ten days after notice. A "change in
control" of the Company is defined as (i) a change in control of a nature that
would be required to be reported in response to Item 1(a) of Current Report on
Form 8-K ("Form 8-K") pursuant to Section 13 or 15(d) of the Exchange Act, other
than a change of control resulting in control by Mr. Feldman or a group
including Mr. Feldman, (ii) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than Mr. Feldman or a group including Mr.
Feldman, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities, or (iii) at any time individuals who were either
nominated for election or elected by the Board of Directors of the Company cease
for any reason to constitute at least a majority of the Board.
If the Company wrongfully terminates the employment agreement or Mr.
Feldman terminates the employment agreement for Good Reason, then (i) the
Company is required to pay Mr. Feldman his full salary through the termination
date; (ii) the Company is required to pay as severance pay to Mr. Feldman an
amount equal to (a) Mr. Feldman's average annual cash compensation received from
the Company during the three full calendar years immediately preceding the
termination date, multiplied by (b) the greater of (i) the number of years
(including partial years) that would have been remaining in the employment
period if the employment agreement had not so terminated and (ii) three, such
payment to be made (c) if termination is based on a change of control of the
Company, in a lump sum or (d) if termination results from any other cause, in
substantially equal semimonthly installments payable over the number of years
(including partial years) that would have been remaining in the employment
period if the employment agreement had not so terminated; (iii) all options to
purchase the Company's Common Stock granted to Mr. Feldman under the Company's
option plan or otherwise immediately become fully vested and terminate on such
date as they would have terminated if Mr. Feldman's employment by the Company
had not terminated and, if Mr. Feldman's termination is based on a change of
control of the Company and Mr. Feldman elects to surrender any or all of such
options to the Company, the Company is required to pay Mr. Feldman a lump sum
cash payment equal to the excess of (a) the fair market value on the termination
date of the securities issuable upon exercise of the options surrendered over
(b) the aggregate exercise price of the options surrendered; (iv) the Company is
required to maintain in full force and effect, for a number of years equal to
the greater of (a) the number of years (including partial years) that would have
been remaining in the employment period if the employment agreement had not so
terminated and (b) three, all employee benefit plans and programs in which Mr.
Feldman was entitled to participate immediately prior to the termination date;
and (v) if termination of the employment agreement arises out of a breach by the
Company, the Company is required to pay all other damages to which Mr. Feldman
may be entitled as a result of such breach.
Notwithstanding the foregoing, the Company shall not be obligated to
pay any portion of any amount otherwise payable to Mr. Feldman if the Company
could not reasonably deduct such portion solely by operation of Section 280G
("Section 280G") of the Internal Revenue Code of 1986, as amended.
Scott N. Greenberg. As of July 1, 1999, Scott N. Greenberg and the
Company entered into an employment agreement pursuant to which Mr. Greenberg is
employed as the Executive Vice President of the Company. Effective June 12, 2001
Mr. Greenberg was elected President of the Company. Unless sooner terminated
pursuant to its terms, the employment agreement terminates on June 30, 2004,
provided that if the employment agreement has not been terminated prior to June
30, 2002, the employment agreement is extended on June 30, 2002 to June 30,
2005.
Commencing July 1, 1999, Mr. Greenberg's base annual salary is
$250,000, with annual increases to be determined by the Board of Directors of
not less than the greater of (i) 3% and (ii) the percentage increase in the
Consumer Price Index. The Company agreed to pay Mr. Greenberg a signing bonus of
$300,000, which Mr. Greenberg waived. Mr. Greenberg is entitled to an annual
bonus based upon the percentage increase in GPC's earnings before interest,
taxes, depreciation and amortization, excluding extraordinary or unusual
nonrecurring items of income and expense ("EBITDA"), from GPC's EBITDA for the
prior year, up to 50% of his base salary, however Mr. Greenberg did not receive
a bonus for the year 2001 because of GPC's financial performance. Pursuant to
the employment agreement entered into in 1999, the Company has granted Mr.
Greenberg under the Company's option plan, options to purchase 100,000 shares of
the Company's Common Stock at an exercise price of $8.00 per share, the market
price on the date of grant. Such options vest 20% immediately and 20% on each
July 1 commencing July 1, 2000 and terminate on June 30, 2004. The Company is
required to provide Mr. Greenberg with an automobile and to maintain the
existing life and disability insurance covering Mr. Greenberg.
The Company may terminate the employment agreement for Cause, which is
defined as (i) the willful and continued failure by Mr. Greenberg to
substantially perform his duties or obligations or (ii) the willful engaging by
Mr. Greenberg in misconduct which is materially monetarily injurious to the
Company. If the employment agreement is terminated for Cause, the Company is
required to pay Mr. Greenberg his full salary through the date his employment is
terminated. If Mr. Greenberg's employment is terminated by his death, the
Company is required to pay to his spouse or estate his full salary for a period
of one year. If, as a result of Mr. Greenberg's incapacity due to physical or
mental illness, he is absent from his duties on a full-time basis for the entire
period of six consecutive months, and he does not return within 30 days of
notice, the Company may terminate his employment. Mr. Greenberg is entitled to
receive his full salary during the disability period until his employment is
terminated.
Mr. Greenberg can terminate the employment agreement for Good Reason,
which is defined to include (i) a change in control of the Company, (ii) a
management change in control of the Company, or (iii) a failure by the Company
to comply with any material provision of the employment agreement which has not
been cured within ten days after notice. A "change in control" of the Company is
defined as any of the following, but only if not approved by the Board of
Directors, (i) a change in control of a nature that would be required to be
reported in response to Item 1(a) of Form 8-K, other than a change of control
resulting in control by Mr. Feldman or Mr. Greenberg or a group including Mr.
Feldman or Mr. Greenberg, (ii) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than Mr. Feldman or Mr. Greenberg or
a group including Mr. Feldman or Mr. Greenberg, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities, (iii) the
Company and its affiliates owning less than a majority of the voting stock of
GPC, (iv) the sale of all or substantially all of the assets of GPC, or (v) at
any time when there has not been a management change of control of the Company,
individuals who were either nominated for election or elected by the Board of
Directors of the Company cease for any reason to constitute at least a majority
of the Board. A "management change in control" of the Company is defined as (i)
an event that would have constituted a change of control of the Company if it
had not been approved by the Board of Directors or (ii) a change in control of
the Company of a nature that would be required to be reported in response to
Item 1(a) of Form 8-K, resulting in control by a buy-out group including Mr.
Feldman but not Mr. Greenberg.
If the Company wrongfully terminates the employment agreement or Mr.
Greenberg terminates the employment agreement for Good Reason (other than as a
result of a management change of control), (i) the Company is required to pay
Mr. Greenberg his full salary and provide him his benefits through the
termination date, and pay him his full annual bonus for the calendar year in
which termination occurs; (ii) the Company is required to pay as severance pay
to Mr. Greenberg an amount equal to (a) Mr. Greenberg's average annual cash
compensation received from the Company during the three full calendar years
immediately preceding the termination date, multiplied by (b) the greater of (I)
the number of years (including partial years) that would have been remaining in
the employment period if the employment agreement had not so terminated but was
not subsequently extended and (II) three, such payment to be made (c) if
termination is based on a change of control of the Company, in a lump sum or (d)
if termination results from any other cause, in substantially equal semimonthly
installments payable over the number of years (including partial years) that
would have been remaining in the employment period if the employment agreement
had not so terminated but was not subsequently extended; (iii) all options to
purchase the Company's Common Stock granted to Mr. Greenberg under the Company's
option plan or otherwise immediately become fully vested and terminate on such
date as they would have terminated if Mr. Greenberg's employment by the Company
had not terminated and, if Mr. Greenberg's termination is based on a change of
control of the Company and Mr. Greenberg elects to surrender any or all of such
options to the Company, the Company is required to pay Mr. Greenberg a lump sum
cash payment equal to the excess of (a) the fair market value on the termination
date of the securities issuable upon exercise of the options surrendered over
(b) the aggregate exercise price of the options surrendered; (iv) the Company is
required to maintain in full force and effect, for a number of years equal to
the greater of (a) the number of years (including partial years) that would have
been remaining in the employment period if the employment agreement had not so
terminated but was not subsequently extended and (b) three, all employee benefit
plans and programs in which Mr. Greenberg was entitled to participate
immediately prior to the termination date; and (v) if termination of the
employment agreement arises out of a breach by the Company, the Company is
required to pay all other damages to which Mr. Greenberg may be entitled as a
result of such breach.
If Mr. Greenberg terminates the employment agreement for Good Reason as
a result of a management change of control, (i) the Company is required to pay
Mr. Greenberg his full salary and provide him his benefits through the
termination date, and pay him his full annual bonus for the calendar year in
which termination occurs; (ii) the Company is required to pay as severance pay
to Mr. Greenberg a lump sum amount equal to twice Mr. Greenberg's average annual
cash compensation received from the Company during the three full calendar years
immediately preceding the termination date; (iii) all options to purchase the
Company's Common Stock granted to Mr. Greenberg under the Company's option plan
or otherwise immediately become fully vested and terminate on such date as they
would have terminated if Mr. Greenberg's employment by the Company had not
terminated and, if Mr. Greenberg elects to surrender any or all of such options
to the Company, the Company is required to pay Mr. Greenberg a lump sum cash
payment equal to the excess of (a) the fair market value on the termination date
of the securities issuable upon exercise of the options surrendered over (b) the
aggregate exercise price of the options surrendered; and (iv) the Company is
required to maintain in full force and effect for two years all employee benefit
plans and programs in which Mr. Greenberg was entitled to participate
immediately prior to the termination date.
Notwithstanding the foregoing, the Company shall not be obligated to
pay any portion of any amount otherwise payable to Mr. Greenberg if the Company
could not reasonably deduct such portion solely by operation of Section 280G.
John C. McAuliffe. As of July 1, 1999, John C. McAuliffe and GPC
entered into an employment agreement pursuant to which Mr. McAuliffe is employed
as President of GPC. Unless sooner terminated pursuant to its terms, the
employment agreement terminates on June 30, 2004, provided that if the
employment agreement has not been terminated prior to June 30, 2002, the
employment agreement is extended on June 30, 2002 to June 30, 2005, and if the
employment agreement has not been terminated prior to June 30, 2003, the
employment agreement is extended on June 30, 2003 to June 30, 2006.
Commencing July 1, 1999, Mr. McAuliffe's base annual salary is
$250,000, with annual increases to be determined by the Board of Directors of
GPC of not less than 5%. GPC paid Mr. McAuliffe a signing bonus of $300,000. In
addition, Mr. McAuliffe was given the right to allocate bonuses in an aggregate
amount of up to $800,000 to other GPC employees, provided that such employees
agreed to return their bonus if their employment with GPC terminated prior to
July 1, 2002. Mr. McAuliffe is entitled to an annual bonus based upon the
percentage increase in GPC's EBITDA from GPC's EBITDA for the prior year, up to
50% of his base salary, however, Mr. McAuliffe did not receive a bonus for the
year 2001 because of GPC's financial performance. Pursuant to the employment
agreement entered into in 1999, the Company has granted Mr. McAuliffe under the
Company's option plan, options to purchase 100,000 shares of the Company's
Common Stock at an exercise price of $8.00 per share, the market price on the
date of grant. Such options vest 20% immediately and 20% on each July 1
commencing July 1, 2000 and terminate on June 30, 2004. GPC is required to
provide Mr. McAuliffe with an automobile, to pay up to $10,000 for country club
dues, which membership is to be used primarily to further GPC's business, and to
maintain the existing life and disability insurance covering Mr. McAuliffe.
GPC may terminate the employment agreement for Cause, which is defined
as (i) the willful and continued failure by Mr. McAuliffe to substantially
perform his duties or obligations or (ii) the willful engaging by Mr. McAuliffe
in misconduct which is materially monetarily injurious to GPC. If the employment
agreement is terminated for Cause, GPC is required to pay Mr. McAuliffe his full
salary through the date his employment is terminated. If Mr. McAuliffe's
employment is terminated by his death, GPC is required to pay to his spouse or
estate his full salary for a period of one year. If, as a result of Mr.
McAuliffe's incapacity due to physical or mental illness, he is absent from his
duties on a full-time basis for the entire period of six consecutive months, and
he does not return within 30 days of notice, GPC may terminate his employment.
Mr. McAuliffe is entitled to receive his full salary during the disability
period until his employment is terminated.
Mr. McAuliffe can terminate the employment agreement for Good Reason,
which is defined to include (i) a change in control of the Company or (ii) a
failure by GPC to comply with any material provision of the employment agreement
which has not been cured within ten days after notice. A "change in control" of
the Company is defined as (i) a change in control of a nature that would be
required to be reported in response to Item 1(a) of Form 8-K, other than a
change of control resulting in control by Mr. Feldman or Mr. McAuliffe or a
group including Mr. Feldman or Mr. McAuliffe, (ii) a change in control of a
nature that would be required to be reported in response to Item 1(a) of Form
8-K, resulting in control by a buy-out group including Mr. Feldman but not Mr.
McAuliffe, (iii) any "person" (as such term is used in Sections 13(d) and 4(d)
of the Exchange Act), other than Mr. Feldman or Mr. McAuliffe or a group
including Mr. Feldman or Mr. McAuliffe, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities, (iv) the Company and its
affiliates owning less than a majority of the voting stock of GPC, (v) the sale
of all or substantially all of the assets of GPC, or (vi) at any time
individuals who were either nominated for election or elected by the Board of
Directors of the Company cease for any reason to constitute at least a majority
of the Board.
If GPC wrongfully terminates the employment agreement or Mr. McAuliffe
terminates the employment agreement for Good Reason, (i) GPC is required to pay
Mr. McAuliffe his full salary and provide him his benefits through the
termination date, and pay him his full annual bonus for the calendar year in
which termination occurs; (ii) GPC is required to pay as severance pay to Mr.
McAuliffe an amount equal to (a) Mr. McAuliffe's average annual cash
compensation received from GPC during the three full calendar years immediately
preceding the termination date, multiplied by (b) the greater of (I) the number
of years (including partial years) that would have been remaining in the
employment period if the employment agreement had not so terminated but was not
subsequently extended and (II) three, such payment to be made (c) if termination
is based on a change of control of the Company, in a lump sum or (d) if
termination results from any other cause, in substantially equal semimonthly
installments payable over the number of years (including partial years) that
would have been remaining in the employment period if the employment agreement
had not so terminated but was not subsequently extended; (iii) all options to
purchase the Company's Common Stock granted to Mr. McAuliffe under the Company's
option plan or otherwise immediately become fully vested and terminate on such
date as they would have terminated if Mr. McAuliffe's employment by GPC had not
terminated and, if Mr. McAuliffe's termination is based on a change of control
of the Company and Mr. McAuliffe elects to surrender any or all of such options
to GPC, GPC is required to pay Mr. McAuliffe a lump sum cash payment equal to
the excess of (a) the fair market value on the termination date of the
securities issuable upon exercise of the options surrendered over (b) the
aggregate exercise price of the options surrendered; (iv) GPC is required to
maintain in full force and effect, for a number of years equal to the greater of
(a) the number of years (including partial years) that would have been remaining
in the employment period if the employment agreement had not so terminated but
was not subsequently extended and (b) three, all employee benefit plans and
programs in which Mr. McAuliffe was entitled to participate immediately prior to
the termination date; and (v) if termination of the employment agreement arises
out of a breach by GPC, GPC is required to pay all other damages to which Mr.
McAuliffe may be entitled as a result of such breach.
Notwithstanding the foregoing, GPC shall not be obligated to pay any
portion of any amount otherwise payable to Mr. McAuliffe if GPC could not
reasonably deduct such portion solely by operation of Section 280G.
The Company guaranteed the performance by GPC of its obligations under
Mr. McAuliffe's employment agreement.
Andrea D. Kantor. As of May 1, 2001, Andrea D. Kantor and the Company
entered into an employment agreement pursuant to which Ms. Kantor is employed as
the Vice President and General Counsel of the Company. Unless sooner terminated
pursuant to its terms, the employment agreement terminates on June 30, 2004,
provided that if the employment agreement has not been terminated prior to June
30, 2002, the employment agreement is extended on June 30, 2002 to June 30,
2005.
Commencing May 1, 2001, Ms. Kantor's base annual salary is $190,000,
with annual increases to be determined by the Board of Directors of not less
than the greater of (i) 3% and (ii) the percentage increase in the Consumer
Price Index. Ms. Kantor is entitled to an annual bonus, as determined by the
Board based upon the Company's revenues, profits or losses, financing
activities, and such other factors deemed relevant by the Board. Ms. Kantor did
not receive a bonus for the year 2001.
The Company may terminate the employment agreement for Cause, which is
defined as (i) the willful and continued failure by Ms. Kantor to substantially
perform her duties or obligations or (ii) the willful engaging by Ms. Kantor in
misconduct which is materially monetarily injurious to the Company. If the
employment agreement is terminated for Cause, the Company is required to pay Ms.
Kantor her full salary through the date her employment is terminated. If Ms.
Kantor's employment is terminated by her death, the Company is required to pay
to her spouse or estate her full salary for a period of one year. If, as a
result of Ms. Kantor's incapacity due to physical or mental illness, she is
absent from her duties on a full-time basis for the entire period of six
consecutive months, and she does not return within 30 days of notice, the
Company may terminate her employment. Ms. Kantor is entitled to receive her full
salary during the disability period until her employment is terminated.
Ms. Kantor can terminate the employment agreement for Good Reason,
which is defined to include (i) a change in control of the Company, (ii) a
management change in control of the Company, or (iii) a failure by the Company
to comply with any material provision of the employment agreement which has not
been cured within ten days after notice. A "change in control" of the Company is
defined as any of the following, but only if not approved by the Board of
Directors, (i) a change in control of a nature that would be required to be
reported in response to Item 1(a) of Form 8-K, other than a change of control
resulting in control by Mr. Feldman or Mr. Greenberg or a group including Mr.
Feldman or Mr. Greenberg, (ii) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than Mr. Feldman or Mr. Greenberg or
a group including Mr. Feldman or Mr. Greenberg, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities, (iii) the
Company and its affiliates owning less than a majority of the voting stock of
GPC, (iv) the sale of all or substantially all of the assets of GPC, or (v) at
any time when there has not been a management change of control of the Company,
individuals who were either nominated for election or elected by the Board of
Directors of the Company cease for any reason to constitute at least a majority
of the Board. A "management change in control" of the Company is defined as (i)
an event that would have constituted a change of control of the Company if it
had not been approved by the Board of Directors or (ii) a change in control of
the Company of a nature that would be required to be reported in response to
Item 1(a) of Form 8-K, resulting in control by a buy-out group including Mr.
Feldman but not Mr. Greenberg.
If the Company wrongfully terminates the employment agreement or Ms.
Kantor terminates the employment agreement for Good Reason (other than as a
result of a management change of control), (i) the Company is required to pay
Ms. Kantor her full salary and provide her benefits through the termination
date, and pay her full annual bonus for the calendar year in which termination
occurs; (ii) the Company is required to pay as severance pay to Ms. Kantor an
amount equal to (a) Ms. Kantor's average annual cash compensation received from
the Company during the three full calendar years immediately preceding the
termination date, multiplied by (b) the greater of (I) the number of years
(including partial years) that would have been remaining in the employment
period if the employment agreement had not so terminated but was not
subsequently extended and (II) three, such payment to be made (c) if termination
is based on a change of control of the Company, in a lump sum or (d) if
termination results from any other cause, in substantially equal semimonthly
installments payable over the number of years (including partial years) that
would have been remaining in the employment period if the employment agreement
had not so terminated but was not subsequently extended; (iii) all options to
purchase the Company's Common Stock granted to Ms. Kantor under the Company's
option plan or otherwise immediately become fully vested and terminate on such
date as they would have terminated if Ms. Kantor's employment by the Company had
not terminated and, if Ms. Kantor's termination is based on a change of control
of the Company and Ms. Kantor elects to surrender any or all of such options to
the Company, the Company is required to pay Ms. Kantor a lump sum cash payment
equal to the excess of (a) the fair market value on the termination date of the
securities issuable upon exercise of the options surrendered over (b) the
aggregate exercise price of the options surrendered; (iv) the Company is
required to maintain in full force and effect, for a number of years equal to
the greater of (a) the number of years (including partial years) that would have
been remaining in the employment period if the employment agreement had not so
terminated but was not subsequently extended and (b) three, all employee benefit
plans and programs in which Ms. Kantor was entitled to participate immediately
prior to the termination date; and (v) if termination of the employment
agreement arises out of a breach by the Company, the Company is required to pay
all other damages to which Ms. Kantor may be entitled as a result of such
breach.
If Ms. Kantor terminates the employment agreement for Good Reason as a
result of a management change of control, (i) the Company is required to pay Ms.
Kantor her full salary and provide her benefits through the termination date,
and pay her full annual bonus for the calendar year in which termination occurs;
(ii) the Company is required to pay as severance pay to Ms. Kantor a lump sum
amount equal to twice Ms. Kantor's average annual cash compensation received
from the Company during the three full calendar years immediately preceding the
termination date; (iii) all options to purchase the Company's Common Stock
granted to Ms. Kantor under the Company's option plan or otherwise immediately
become fully vested and terminate on such date as they would have terminated if
Ms. Kantor's employment by the Company had not terminated and, if Ms. Kantor
elects to surrender any or all of such options to the Company, the Company is
required to pay Ms. Kantor a lump sum cash payment equal to the excess of (a)
the fair market value on the termination date of the securities issuable upon
exercise of the options surrendered over (b) the aggregate exercise price of the
options surrendered; and (iv) the Company is required to maintain in full force
and effect for two years all employee benefit plans and programs in which Ms.
Kantor was entitled to participate immediately prior to the termination date.
Notwithstanding the foregoing, the Company shall not be obligated to
pay any portion of any amount otherwise payable to Ms. Kantor if the Company
could not reasonably deduct such portion solely by operation of Section 280G.
Performance Graph
The following table compares the performance of the Common Stock for
the periods indicated with the performance of the NYSE Market Index and the MG
Group Index/Education and Training Services assuming $100 were invested on
December 31, 1996 in the Common Stock, the NYSE Market Index and the MG Group
Index/Education and Training Services. Values are as of December 31 of the
specified year assuming that all dividends were reinvested:
- ----------------------------- ---------------- ------------- --------------- -------------- -------------- -------------
Company/Index Name Base Period
Dec 1996 Dec 1997 Dec 1998 Dec 1999 Dec 2000 Dec 2001
- ----------------------------- ---------------- ------------- --------------- -------------- -------------- -------------
- ----------------------------- ---------------- ------------- --------------- -------------- -------------- -------------
GP Strategies $100.00 $180.49 $195.12 $ 79.67 $ 56.10 $ 49.43
- ----------------------------- ---------------- ------------- --------------- -------------- -------------- -------------
- ----------------------------- ---------------- ------------- --------------- -------------- -------------- -------------
NYSE Market Index 100.00 132.37 148.86 95.90 152.64 167.56
- ----------------------------- ---------------- ------------- --------------- -------------- -------------- -------------
- ----------------------------- ---------------- ------------- --------------- -------------- -------------- -------------
MG Group Index/Education 100.00 131.56 156.55 171.42 175.51 159.87
and Training Services
- ----------------------------- ---------------- ------------- --------------- -------------- -------------- -------------
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of Class B Stock
and Common Stock beneficially owned as of April 15, 2002, by each person who is
known by the Company to own beneficially more than 5% of the Company's
outstanding Class B Stock or Common Stock.
Amount and
Name and Address Nature of Percent of
Title of Class of Beneficial Owner Beneficial Ownership Class(1)
- -------------- ------------------- -------------------- --------
Class B Stock Jerome I. Feldman 568,750 shares(2) 63.2%
c/o GP Strategies Corporation
9 West 57th Street
Suite 4170
New York, NY 10019
Class B Stock Bedford Oak Partners, L.P. 300,000 shares(3)(4) 33.3%
100 South Bedford Road
Mt. Kisco, NY 10549
Common Stock Jerome I. Feldman 636,755 shares(2)(5) 4.8%
Common Stock Bedford Oak Partners, L.P. 1,231,500 shares(3)(6) 9.4%
100 South Bedford Road
Mt. Kisco, NY 10549
Common Stock Caxton International Limited 1,210,100 shares(7) 9.5%
315 Enterprise Drive
Plainsboro, NJ 08536
Common Stock Dimensional Fund Advisors, Inc. 949,355 shares(8) 7.4%
1299 Ocean Avenue
Santa Monica, CA 90401
Common Stock Liberty Wanger Asset Management L.P. 820,000 shares(9) 6.4%
227 West Monroe Street
Chicago, IL 60606
Common Stock General Physics Corporation Profit 972,264 shares(10) 7.6%
Investment Plan
6700 Alexander Bell Drive
Columbia, Maryland 21046
(1) The percentage of class calculation for Class B Stock assumes for each
beneficial owner that no shares of Class B Stock are converted into
Common Stock by the named beneficial owner or any other stockholder.
The percentage of class calculation for Common Stock assumes for each
beneficial owner that (i) all options are exercised in full and all
shares of Class B Stock are converted into Common Stock only by the
named beneficial owner and (ii) no other options are exercised and no
other shares of Class B Stock are converted by any other stockholder.
(2) On December 29, 1998, Martin M. Pollak granted certain rights of first
refusal with respect to his Class B Stock and options to purchase Class
B Stock to Mr. Feldman and his family, and Mr. Feldman granted certain
tag-along rights with respect to Class B Stock and options to purchase
Class B Stock to Mr. Pollak and his family. In addition, Mr. Pollak
agreed that, until May 31, 2004, during any period commencing on the
date any person or group commences or enters into, or publicly
announces an intention to commence or enter into, and ending on the
date such person abandons a tender offer, proxy fight, or other
transaction that may result in a change in control of the Company, he
will vote his shares of Common Stock and Class B Stock on any matter in
accordance with the recommendation of the Board of Directors. Mr.
Pollak retired as the Executive Vice President and Treasurer of the
Company on May 31, 1999.
(3) Based on a information provided to the Company by Bedford Oak Partners,
L.P. ("Bedford Oak").
(4) Pursuant to an agreement, dated October 19, 2001 (the "Bedford Oak
Agreement"), between the Company and Bedford Oak, Bedford Oak is
required to exercise its right to convert its shares of Class B Stock
into Common Stock (i) upon the transfer of such shares to an unrelated
party and (ii) at the request of the Board of Directors of the Company.
(5) Includes (i) 1,173 shares of Common Stock held by members of Mr.
Feldman's family, (ii) 568,750 shares of Common Stock issuable upon
conversion of Class B Stock held by Mr. Feldman, (iii) 46,956 shares of
Common Stock issuable upon exercise of currently exercisable stock
options held by Mr. Feldman and (iii) 2,976 shares of Common Stock
allocated to Mr. Feldman's account pursuant to the provisions of the
GPC PIP Plan. Mr. Feldman disclaims beneficial ownership of the 1,173
shares of Common Stock held by members of his family.
(6) Includes 300,000 shares of Common Stock issuable upon conversion of
Class B Stock held by Bedford Oak.
(7) Based on a Schedule 13D/A filed jointly by Caxton International
Limited, Caxton Equity Growth (BVI) Ltd., Caxton Equity Growth, LLC,
and Caxton Associates, L.L.C. with the SEC on June 22, 2001.
(8) Based on a Schedule 13G filed by Dimensional Fund Advisors Inc.
("Dimensional") with the SEC on January 30, 2002. Dimensional has
informed the Company that the shares are owned by advisory clients of
Dimensional and that Dimensional disclaims beneficial ownership of such
shares.
(9) Based on a Schedule 13G filed by Liberty Wanger Asset Management, L.P.
("LWAM") with the SEC on February 14, 2002. LWAM has informed the
Company that the shares have been acquired by LWAM on behalf of its
discretionary clients.
(10) Shares may be voted and disposed of by Plan participants.
SECURITY OWNERSHIP OF DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table sets forth, as of April 15, 2002, the beneficial
ownership of Common Stock, Class B Stock, and voting stock by each director and
nominee for director, each of the named executive officers, and all directors
and executive officers as a group.
Total Number of Total Number of
Shares of Percent of Shares of Percent of Percent of
Common Stock Common Stock Class B Stock Class B Voting
Beneficially Owned Owned(1) Beneficially Owned Stock(2) Stock(3)
Jerome I. Feldman(4)................ 636,755(5) 4.8% 568,750(6) 63.2% 26.4%
Scott N. Greenberg(4)............... 203,954(7) 1.6%
John C. McAuliffe................... 146,048(8)(9) 1.1% -- -- --
Marshall S. Geller.................. 108,161(8) * -- -- --
Sheldon L. Glashow(10).............. 16,796(8) * -- -- --
Roald Hoffmann(4)(10)............... 16,617(8) * -- -- --
Bernard M. Kauderer(10)............. 16,796(8) * -- -- --
Ogden R. Reid(10)................... 20,046(8) * -- -- --
Gordon Smale(11).................... 18,617(8) * -- -- --
Andrea D. Kantor.................... 38,404(8)(12) * -- -- --
Directors and Executive Officers as
a Group (10 persons)........... 1,222,194(13) 8.9% 568,750 63.2% 28.5%
*The number of shares owned is less than one percent of the outstanding shares
or voting stock.
(1) The percentage of class calculation for Common Stock assumes for each
beneficial owner and directors and executive officers as a group that
(i) all options are exercised in full and all shares of Class B Stock
are converted into Common Stock only by the named beneficial owner or
members of the group and (ii) no other options are exercised and no
other shares of Class B Stock are converted by any other stockholder.
(2) The percentage of class calculation for Class B Stock assumes for each
beneficial owner and directors and executive officers as a group that
no shares of Class B Stock are converted into Common Stock by the named
beneficial owner, members of the group, or any other stockholder.
(3) The percentage of voting stock calculation sets forth the percentage of
the aggregate number of votes of all holders of Common Stock and Class
B Stock represented by the Common Stock and Class B Stock beneficially
owned by each beneficial owner and directors and executive officers as
a group and assumes for each beneficial owner and directors and
executive officers as a group that (i) all options are exercised in
full only by the named beneficial owner or members of the group, (ii)
no other options are exercised by any other stockholder, and (iii) no
shares of Class B Stock are converted into Common Stock by the named
beneficial owner, members of the group, or any other stockholder.
(4) Member of the Executive Committee.
(5) See footnotes 2 and 5 to Principal Stockholders Table.
(6) See footnote 2 to Principal Stockholders Table.
(7) Includes (i) 179,208 shares of Common Stock issuable upon exercise of
currently exercisable stock options held by Mr. Greenberg, (ii) 3,028
shares of Common Stock allocated to Mr. Greenberg's account pursuant to
the provisions of the GPC PIP Plan and (iii) 4,000 shares of Common
Stock held by members of his family. Mr. Greenberg disclaims beneficial
ownership of the 4,000 shares held by members of his family.
(8) Includes 127,570 shares for Mr. McAuliffe, 15,000 shares for each
of Messrs. Glashow, Hoffmann, Kauderer and Smale, 5,000 shares for Mr.
Geller, 18,000 shares for Mr. Reid, and 35,166 shares for Ms. Kantor
issuable upon exercise of currently exercisable stock options.
(9) Includes 6,322 shares of Common Stock allocated to Mr. McAuliffe's
account pursuant to the provisions of the GPC PIP Plan.
(10) Member of the Audit Committee.
(11) Member of the Compensation Committee.
(12) Includes 3,238 shares of Common Stock allocated to Ms. Kantor's
account pursuant to the provisions of the GPC PIP Plan.
(13) Includes (i) 471,900 shares of Common Stock issuable upon exercise of
currently exercisable stock options, (ii) 568,750 shares of Common
Stock issuable upon conversion of Class B Stock, and (iii) 15,564
shares of Common Stock allocated to accounts pursuant to the provisions
of the GPC PIP Plan.
Item 13. Certain Relationships and Related Transactions
On May 16, 2001, the Company sold 200,000 shares of its Millennium
Common Stock at $8.50 per share, and on September 28, 2001, the Company sold
300,000 shares of its Millennium Common Stock at $3.50 per share, to affiliated
entities of LWAM in private placement transactions.
On October 19, 2001, the Company sold 300,000 shares of Class B Stock
(the "Shares") of the Company for an aggregate purchase price of $900,000 to
Bedford Oak in a private placement transaction pursuant to the Bedford Oak
Agreement. Upon the disposition of any of the Shares (other than to an affiliate
of Bedford Oak who agrees to be bound by the provisions of the Bedford Oak
Agreement) or at the request of the Board of Directors of the Company, Bedford
Oak is required to exercise the right to convert all of the Shares then owned by
Bedford Oak into an equal number of shares of Common Stock of the Company (the
"Underlying Shares"). The Company is required, at its expense, to file a
registration statement (the "Registration Statement") to register under the
Securities Act of 1933 (the "Securities Act") the resale by Bedford Oak of the
Underlying Shares, and to use its commercially reasonable efforts to cause the
Registration Statement to become effective under the Securities Act on the
earliest possible date. On any date prior to October 19, 2003 during which the
Registration Statement is not effective under the Securities Act, Bedford Oak
has the right to require the Company to purchase from Bedford Oak all, but not
less than all, of the Shares and Underlying Shares then held by Bedford Oak for
a purchase price (the "Put Price") equal to the product of (i) the number of
Shares and Underlying Shares owned by Bedford Oak and (ii) the current market
price per share of Common Stock of the Company. The Company may pay the Put
Price by delivering to the Investor, at the option of the Company, (i) cash,
(ii) shares of Millennium Common Stock owned by the Company with a current
market price equal to the Put Price, or (iii) a combination of cash and
Millennium Common Stock.
The Company has made loans to Jerome I. Feldman, the Chairman of the
Board and Chief Executive Officer of the Company. Mr. Feldman primarily utilized
the proceeds of such loans to exercise options to purchase Class B Stock. Such
loans bear interest at the prime rate of Fleet Bank and are secured by the
purchased Class B Stock and certain other assets. As of March 31, 2002, the
aggregate amount of indebtedness outstanding was $5,442,158, which was the
largest aggregate amount of indebtedness outstanding since January 1, 2001.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GP STRATEGIES CORPORATION
Jerome I. Feldman
Chief Executive Officer
Dated: April 30, 2002