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 [x]
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GP STRATEGIES CORPORATION
---------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required [x]
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 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:
GP STRATEGIES CORPORATION
9 West 57th Street
Suite 4170
New York, New York 10019
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held July 11, 2002
To the Stockholders:
The Annual Meeting of Stockholders of GP Strategies Corporation (the
"Company") will be held at the Hilton Columbia Hotel, 5485 Twin Knolls Road,
Columbia, Maryland, on the 11th day of July, 2002, at 11:00 a.m., local time,
for the following purposes:
1. To elect nine Directors to serve until the next Annual Meeting and
until their respective successors are elected and qualify.
2. To approve the issuance of 510,000 shares of Common Stock to
Bedford Oak Partners, L.P.
3. To ratify the Board of Directors' appointment of KPMG LLP as the
Company's independent auditors for the fiscal year ending December 31, 2002.
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record as of the close of business on May 15, 2002
are entitled to receive notice of and to vote at the meeting. A list of such
stockholders shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
ten days prior to the meeting, at the offices of the Company's subsidiary,
General Physics Corporation, 6700 Alexander Bell Drive, Columbia, Maryland.
By Order of the Board of Directors
Lydia M. DeSantis
Secretary
New York, New York
June 10, 2002
Whether or not you plan to attend the annual meeting, please fill in, date and
sign the enclosed Proxy and return it promptly in the enclosed postage prepaid
return envelope.
GP STRATEGIES CORPORATION
9 West 57th Street
Suite 4170
New York, New York 10019
New York, New York
June 10, 2002
PROXY STATEMENT
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of GP Strategies Corporation, a Delaware corporation (the "Company"),
for use only at the Annual Meeting of Stockholders (the "Annual Meeting") to be
held at the Hilton Columbia Hotel, 5485 Twin Knolls Road, Columbia, Maryland, on
the 11th day of July, 2002, at 11:00 a.m., local time, and at any adjournments
thereof. The approximate date on which this Proxy Statement and the accompanying
Proxy were first given or sent to security holders was June 10, 2002.
Each Proxy executed and returned by a stockholder may be revoked at any
time thereafter, by written notice to that effect to the Company, attention of
the Secretary, prior to the Annual Meeting, or to the Chairman, or the
Inspectors of Election, at the Annual Meeting, or by the execution and return of
a later-dated Proxy, except as to any matter voted upon prior to such
revocation.
The Proxies in the accompanying form will be voted in accordance with
the specifications made and where no specifications are given, such Proxies will
be voted FOR the nine nominees for election as directors named herein, FOR the
approval of the issuance of 510,000 shares of Common Stock to Bedford Oak
Partners, L.P. ("Bedford Oak"), and FOR ratification of the selection of KPMG
LLP as independent auditors. In the discretion of the proxy holders, the Proxies
will also be voted FOR or AGAINST such other matters as may properly come before
the meeting. The management of the Company is not aware that any other matters
are to be presented for action at the meeting. Although it is intended that the
Proxies will be voted for the nominees named herein, the holders of the Proxies
reserve discretion to cast votes for individuals other than such nominees in the
event of the unavailability of any such nominee. The Company has no reason to
believe that any of the nominees will become unavailable for election. The
Proxies may not be voted for a greater number of persons than the number of
nominees named. The election of directors will be determined by a plurality of
the votes of the holders of shares of Common Stock and Class B Stock present in
person or represented by proxy at the Annual Meeting. Accordingly, in the case
of shares that are present or represented at the Annual Meeting for quorum
purposes, not voting such shares for a particular nominee for director,
including by withholding authority on the Proxy, will not operate to prevent the
election of such nominee if he otherwise receives a plurality of the votes. For
the approval of the issuance of shares of Common Stock to Bedford Oak and the
ratification of the selection of the Company's independent auditors and any
other item voted upon at the Annual Meeting, the affirmative vote of the holders
of shares of Common Stock and Class B Stock entitled to cast a majority of the
votes present in person or represented by proxy at the Annual Meeting will be
required for approval. Accordingly, abstentions will have the same legal effect
as a negative vote. Broker non-votes will not be counted in determining the
number of shares necessary for approval.
VOTING SECURITIES
The Board of Directors has fixed the close of business on May 15, 2002
as the record date for the determination of stockholders entitled to receive
notice of and to vote at the Annual Meeting. The issued and outstanding capital
stock of the Company on May 15, 2002 consisted of 14,616,084 shares of Common
Stock, each entitled to one vote, and 1,200,000 shares of Class B Stock, each
entitled to ten votes. A quorum of the stockholders is constituted by the
presence, in person or by proxy, of holders of record of Common Stock and Class
B Stock, representing a majority of the number of votes entitled to be cast. The
only difference in the rights of the holders of Common Stock and the rights of
holders of Class B Stock is that the former class has one vote per share and the
latter class has ten votes per share. The Class B Stock is convertible at any
time into shares of Common Stock on a share for share basis at the option of the
holders thereof.
PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of Class B Stock
and Common Stock beneficially owned as of May 23, 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) 47.4%
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) 25.0%
100 South Bedford Road
Mt. Kisco, NY 10549
Class B Stock EGI-Fund (02-04) Investors, L.L.C. 300,000 shares(4) 25.0%
Two N. Riverside Plaza
Chicago, IL 60606
Common Stock Jerome I. Feldman 636,755 shares(2)(5) 4.2%
Common Stock Bedford Oak Partners, L.P. 1,921,500 shares(3)(6) 12.9%
Common Stock EGI-Fund (02-04) Investors, L.L.C. 1,300,000 shares(4)(7) 8.7%
Common Stock Caxton International Limited 1,210,100 shares(8) 8.3%
315 Enterprise Drive
Plainsboro, NJ 08536
Common Stock Dimensional Fund Advisors, Inc. 949,355 shares(9) 6.5%
1299 Ocean Avenue
Santa Monica, CA 90401
Common Stock Liberty Wanger Asset Management L.P 820,000 shares(10) 5.6%
227 West Monroe Street
Chicago, IL 60606
Common Stock General Physics Corporation Profit 972,264 shares(11) 6.6%
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 information provided to the Company by Bedford Oak. See
"Certain Transactions."
(4) Based on a Schedule 13D filed by EGI-Fund (02-04) Investors, L.L.C.
("EGI") with the Securities and Exchange Commission ("SEC") May 13,
2002. See "Certain Transactions."
(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
General Physics Corporation Profit Investment Plan (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. Excludes 510,000 shares of Common
Stock issuable upon the approval of stockholders.
(7) Includes 300,000 shares of Common Stock issuable upon conversion of
Class B Stock held by EGI.
(8) 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.
(9) 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.
(10) 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.
(11) Shares may be voted and disposed of by participants in the GPC PIP Plan.
SECURITY OWNERSHIP OF DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table sets forth, as of May 23, 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,
nominees, 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) 4.2% 568,750(6) 47.4% 21.6%
Scott N. Greenberg(4)(7)............ 203,954(8) 1.4%
Harvey P. Eisen..................... 1,921,500(9) 12.9% 300,000(10) 25.0% 17.4%
Marshall S. Geller(7)............... 208,161(11) 1.4% -- -- --
Roald Hoffmann(4)(12)............... 16,617(11) * -- -- --
Bernard M. Kauderer(12)............. 16,796(11) * -- -- --
Mark Radzik(13)..................... -- (14) -- --(15) -- --
Ogden R. Reid(12)................... 20,046(11) * -- -- --
Gordon Smale(7)(16)................. 18,617(11) * -- -- --
John C. McAuliffe................... 146,048(11)(17) * -- -- --
Andrea D. Kantor.................... 38,404(11)(18) * -- -- --
Directors, Nominees, and Executive
Officers as a Group (11 persons). 3,226,898(9)(14)(19) 8.4% 868,750(10)(15) 72.4% 40.8%
- ------------------
*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) Member of the Corporate Governance Committee.
(8) 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.
(9) Includes 1,921,500 shares of Common Stock beneficially owned by Bedford
Oak. Mr. Eisen is deemed to have beneficial ownership of such shares by
virtue of his position as managing member of Bedford Oak Advisors, LLC,
the investment manager of Bedford Oak. See footnotes 3 and 6 to
Principal Stockholders Table.
(10) Includes 300,000 shares of Class B Stock beneficially owned by
Bedford Oak. Mr. Eisen is deemed to have beneficial ownership of such
shares by virtue of his position as managing member of Bedford Oak
Advisors, LLC, the investment manager of Bedford Oak. See footnote 3 to
Principal Stockholders Table.
(11) Includes 5,000 shares for Mr. Geller, 15,000 shares for each of
Messrs. Hoffmann, Kauderer, and Smale, 18,000 shares for Mr. Reid,
127,570 shares for Mr. McAuliffe, and 35,166 shares for Ms. Kantor
issuable upon exercise of currently exercisable stock options.
(12) Member of the Audit Committee.
(13) Designee of EGI.
(14) Does not include 1,300,000 shares of Common Stock beneficially
owned by EGI. Mr. Radzik disclaims beneficial ownership of such shares.
See footnotes 4 and 7 to Principal Stockholders Table.
(15) Does not include 300,000 shares of Class B Stock beneficially
owned by EGI. Mr. Radzik disclaims beneficial ownership of such shares.
See footnote 4 to Principal Stockholders Table.
(16) Member of the Compensation Committee.
(17) Includes 6,322 shares of Common Stock allocated to Mr. McAuliffe's
account pursuant to the provisions of the GPC PIP Plan.
(18) Includes 3,238 shares of Common Stock allocated to Ms. Kantor's account
pursuant to the provisions of the GPC PIP Plan.
(19) 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.
ELECTION OF DIRECTORS
Nine directors will be elected at the Annual Meeting to hold office
until the next Annual Meeting of Stockholders and until their respective
successors are elected and qualify. The Proxies solicited by this proxy
statement may not be voted for a greater number of persons than the number of
nominees named. It is intended that these Proxies will be voted for the
following nominees, but the holders of these Proxies reserve discretion to cast
votes for individuals other than the nominees for director named below in the
event of the unavailability of any such nominee. The Company has no reason to
believe that any of the nominees will become unavailable for election. Set forth
below are the names of the nominees, the principal occupation of each, the year
in which first elected a director of the Company and certain other information
concerning each of the nominees.
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 Center. 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
Harvey P. Eisen is being nominated as a Director for the first time.
Mr. Eisen has been Chairman and Managing Member of Bedford Oak Management, LLC
since 1998. Prior thereto, Mr. Eisen served as Senior Vice President of
Travelers, Inc. and of Primerica prior to its merger with Travelers in 1993. Mr.
Eisen has over thirty years of asset management experience, is often consulted
by the national media for his views on all phases of the investment marketplace,
and is frequently quoted in The Wall Street Journal, The New York Times,
PensionWorld, U.S. News & World Report, Financial World and Business Week, among
others. Mr. Eisen also appears regularly on such television programs as the Wall
Street Week With Louis Rukeyser, CNN, and CNBC. Mr. Eisen is a trustee of the
University of Missouri Business School where he established the first accredited
course on the Warren Buffet Principles of Investing. He is also a trustee at the
Rippowam Cisqua School in Bedford, New York and the Northern Westchester
Hospital Center. Age 59.
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.
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
Mark Radzik, the designee of EGI, is being nominated as a Director for
the first time. See "Certain Transactions." Mr. Radzik has served as a Managing
Director of EGI since1998. Prior to 1998, Mr. Radzik was a vice president of the
Merchant Banking Group of Banque Paribas and a manager at Arthur Andersen. Mr.
Radzik is also a director of Security Associates International, Inc., a
wholesale security alarm monitoring company. Age 37.
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
Board of Directors and Committees
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although it
is not involved in day-to-day operating details. Members of the Board of
Directors are kept informed of the Company's business by various reports and
documents sent to them as well as by operating and financial reports made at
Board and Committee meetings. The Board of Directors held five meetings in 2001.
All of the directors attended at least 75% of the aggregate number of meetings
of the Board of Directors and of committees of the Board on which they served.
The Board of Directors has an Executive Committee, Compensation Committee, Audit
Committee, and Corporate Governance Committee. The Company does not have a
separate nominating committee for recommending to stockholders candidates for
positions on the Board.
The Executive Committee, consisting of Jerome I. Feldman, Scott N.
Greenberg, and Roald Hoffmann, meets on call and has authority to act on most
matters during the intervals between Board meetings and acts as an advisory body
to the Board of Directors by reviewing various matters prior to submission to
the Board. The Committee formally acted eighteen times in 2001 through formal
meetings and unanimous written consents.
The Compensation Committee, consisting of Gordon Smale, has the
authority to act with respect to the executive compensation of the Company. In
2001, the Compensation Committee held one meeting.
The Audit Committee is responsible for reviewing and inquiring into
matters affecting financial reporting, the system of internal accounting,
financial controls and procedures and audit procedures and audit plans.
Furthermore, the Audit Committee approves the quarterly financial statements and
recommends to the Board of Directors, for approval, the annual financial
statements, the annual report, and certain other documents required by
regulatory authorities. It meets with appropriate Company financial personnel
and the Company's independent certified public accountants in connection with
these reviews. This Committee recommends to the Board of Directors the
appointment of the independent certified public accountants to serve as auditors
for the following year in examining the books and records of the Company. This
Committee met three times in 2001. In 2001 the Audit Committee consisted of
Ogden R. Reid, Roald Hoffmann, Sheldon L. Glashow (who is not standing for
re-election to the Board), and Bernard M. Kauderer.
The Audit Committee has a charter that specifies its responsibilities
and the Audit Committee believes it fulfills its charter. The Board of
Directors, upon the recommendation of the Audit Committee, approved the charter
in response to the audit committee requirements adopted by the SEC and the New
York Stock Exchange ("NYSE").
Audit Committee Report
During the year ended December 31, 2001, the Audit Committee reviewed
and discussed the audited financial statements with management and the Company's
independent accountants, KPMG LLP. The Committee discussed with the independent
accountants the matters required to be discussed by the Statement of Auditing
Standards No. 61 and reviewed the results of the independent accountants'
examination of the financial statements.
The Committee also reviewed the written disclosures and the letter from
the independent accountants required by Independence Standards Board, Standard
No. 1, discussed with the accountants the accountants' independence and
satisfied itself as to the accountants' independence.
Based on the above reviews and discussions, the Audit Committee
recommended to the Board of Directors that the financial statements be included
in the Annual Report on Form 10-K for the year ended December 31, 2001 for
filing with the SEC.
The Board of Directors has determined that the members of the Audit
Committee are independent as defined in the SEC and NYSE regulations.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933 (the "Securities
Act") or the Securities Exchange Act of 1934 (the "Exchange Act") that might
incorporate future filings made 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 made by the Company under those statutes.
Ogden R. Reid, Chairman Sheldon L. Glashow
Roald Hoffmann Bernard Kauderer
Independent Auditors Fees
The following table sets forth the aggregate fees billed to the Company
for the fiscal year ended December 31, 2001 by the Company's independent
auditors, KPMG LLP:
Audit Fees...................................................$ 450,000(a)
Financial Information System Design and Implementation Fees.. -0- (b)
All Other Fees...............................................$ 177,000(b)(c)
(a) Includes fees for the audit of the annual financial statements and
reviews of the condensed consolidated financial statements included in
the Company's quarterly reports on Form 10-Q.
(b) The Audit Committee has considered whether the provision of these
services, if any, is compatible with maintaining the independent
auditor's independence.
(c) Includes fees for accounting research of $27,000 and tax-related fees of
$150,000.
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 Common
Stock of the Company, 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,
Dr. Hoffmann, 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 is not an employee of the
Company or its subsidiaries has been granted options under the GP Strategies
Millennium Cell, LLC Plan to purchase 10,955 shares of common stock ("Millennium
Common Stock") of Millennium Cell Inc. ("Millennium Cell") 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 $13,904 of
value, in each case based on the difference between the exercise price of the
options and the market price of Millennium Common Stock on the exercise date.
Executive Compensation
The following table and notes present the compensation paid by the
Company and subsidiaries to its Chief Executive Officer and the Company's other
executive officers.
Summary Compensation Table
Annual Long Term
Compensation Compensation
Other
Annual Securities All Other
Salary Bonus Compensation Underlying Compensation
Name and Principal Position Year ($) ($) ($) 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 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 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 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 or the Exchange Act 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
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. On April 1, 2002, the Compensation Committee extended Mr. Feldman's
Employment Agreement until May 31, 2007, which extension was ratified
unanimously by the Board of Directors on May 3, 2002, with Mr. Feldman
abstaining.
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.
Pursuant to such provision, the Compensation Committee approved an Incentive
Compensation Agreement (the "Incentive Agreement") with Mr. Feldman on April 1,
2002, which Incentive Agreement was ratified unanimously by the Board of
Directors on May 3, 2002, with Mr. Feldman abstaining. The Incentive Agreement
provides that Mr. Feldman is eligible to receive from the Company up to five
payments in an amount equal to $1 million each on the first date that each of
the following events occurs: (1) the closing price of the Common Stock equals or
exceeds, for at least 10 consecutive trading days, $5.40; provided that if the
first payment does not become payable prior to May 3, 2004, the first payment
shall be paid on the date, if any, that the second payment is paid; (2) the
closing price of the Common Stock equals or exceeds, for at least 10 consecutive
trading days, $6.30; provided that if the second payment does not become payable
prior to May 3, 2006, the second payment shall be paid on the date, if any, that
the third payment is paid; (3) the closing price of the Common Stock equals or
exceeds, for at least 10 consecutive trading days, $7.20; (4) the closing price
of the Common Stock equals or exceeds, for at least 10 consecutive trading days,
$8.10; and (5) the closing price of the Common Stock equals or exceeds, for at
least 10 consecutive trading days, $9.00. To the extent there are any
outstanding loans from the Company to Mr. Feldman at the time an incentive
payment is payable, the Company will set off the payment of such incentive
payment against the outstanding principal and interest under such loans. The
Incentive Agreement will terminate on the earlier to occur of (a) May 3, 2007
and (b) the date of termination of Mr. Feldman's employment with the Company
(other than termination by (i) the Company in breach of Mr. Feldman's Employment
Agreement or (ii) Mr. Feldman for Good Reason).
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. On April 1, 2002, the Compensation Committee
amended the Employment Agreement to extend the maturity date of such loans to
May 31, 2007, which amended was ratified unanimously by the Board of Directors
on May 3, 2002, with Mr. Feldman abstaining.
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. On April 1, 2002, the Compensation Committee amended Mr. Greenberg's
employment agreement, which amendment was ratified unanimously by the Board of
Directors on May 3, 2002, with Mr. Greenberg abstaining, to provide that the
employment agreement terminates on June 30, 2007, provided that if the
employment agreement has not been terminated prior to June 30, 2005, the
employment agreement is extended on June 30, 2005 to June 30, 2008.
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.
Certain 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.
Pursuant to an agreement dated October 19, 2001 (the "Bedford Oak
Agreement"), the Company sold to Bedford Oak in a private placement transaction
300,000 shares of Class B Stock (the "Bedford Class B Shares") of the Company
for an aggregate purchase price of $900,000. Upon the disposition of any of the
Bedford Class B 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 Bedford Class B Shares then owned by Bedford Oak
into an equal number of shares of Common Stock of the Company (the "Bedford
Underlying Shares"). The Company is required, at its expense, to file a
registration statement (the "Bedford Registration Statement") to register under
the Securities Act the resale by Bedford Oak of the Bedford Underlying Shares,
and to use its commercially reasonable efforts to cause the Bedford 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 Bedford
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 Bedford Class B Shares and Bedford Underlying Shares then
held by Bedford Oak for a purchase price (the "Put Price") equal to the product
of (i) the number of Bedford Class B Shares and Bedford 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.
Pursuant to an agreement dated May 3, 2002, the Company agreed to sell
to Bedford Oak in a private placement transaction 1,200,000 shares of Common
Stock (the "Bedford Common Shares") of the Company for an aggregate purchase
price of $4,200,000. On May 3, 2002, the Company sold 690,000 of the Bedford
Common Shares for $2,415,000 and, promptly after the approval of stockholders
(see "Approval of the Issuance of 510,000 Shares of Common Stock to Bedford
Oak"), will sell the remaining 510,000 Bedford Common Shares for $1,785,000. The
Company is required, at its expense, to file, not later than September 30, 2002,
a registration statement to register under the Securities Act the resale by
Bedford Oak of the Bedford Common Shares, and to use its commercially reasonable
efforts to cause such registration statement to become effective under the
Securities Act on the earliest possible date. Harvey Eisen,, the managing member
of Bedford Oak Advisors, LLC, the investment manager of Bedford Oak, is being
nominated as a director of the Company.
Pursuant to an agreement dated May 3, 2002, the Company sold to
Marshall Geller, a director of the Company, in a private placement transaction
100,000 shares of Common Stock (the "Geller Common Shares") of the Company for
an aggregate purchase price of $350,000. The Company is required, at its
expense, to file, not later than September 30, 2002, a registration statement to
register under the Securities Act the resale by Mr. Geller of the Geller Common
Shares, and to use its commercially reasonable efforts to cause such
registration statement to become effective under the Securities Act on the
earliest possible date.
Pursuant to an agreement dated May 3, 2002 (the "EGI Agreement"), the
Company sold to EGI in a private placement transaction 1,000,000 shares of
Common Stock (the "EGI Common Shares") of the Company for an aggregate purchase
price of $3,500,000 and 300,000 shares of Class B Stock (the "EGI Class B
Shares") of the Company for an aggregate purchase price of $1,260,000.
Until such time as EGI has disposed of more than 50% of the aggregate
number of EGI Common Shares and EGI Class B Shares, EGI is entitled to designate
one representative to serve as a member of the Board, subject to the approval of
the Company, which approval shall not be unreasonably denied or delayed. The
initial designee of EGI is Mark Radzik.
Upon the disposition of any of the EGI Class B Shares (other than to an
affiliate of EGI or to a transferee approved by the Board who in each case
agrees to be bound by the provisions of the EGI Agreement), EGI is required to
exercise the right to convert all of the EGI Class B Shares then owned by EGI
into an equal number of shares of Common Stock (the "EGI Underlying Shares") of
the Company. Until May 3, 2003, the Company has the right to purchase all, but
not less than all, of the EGI Class B Shares then owned by EGI at a price per
share equal to the greater of (i) the 90 day trailing average of the closing
prices of the Common Stock and (ii) $5.25. If the Company exercises such right,
EGI has the right to sell to the Company all or part of the EGI Common Shares
then owned by EGI at a price per share of $3.50. If EGI exercises such right and
the Company does not then have adequate liquidity, the repurchase of such EGI
Common Shares may take place over a period of 21 months.
The Company is required, at its expense, to file, not later than August
1, 2002, a registration statement to register under the Securities Act the
resale by EGI of the EGI Common Shares and the EGI Underlying Shares, and to use
its reasonable efforts to cause such registration statement to become effective
under the Securities Act.
The Company and EGI have entered into an advisory services agreement
providing that, to the extent requested by the Company and deemed appropriate by
EGI, EGI shall assist the Company in developing, identifying, evaluating,
negotiating, and structuring financings and business acquisitions. The Company
has agreed to pay EGI a transaction fee equal to 1% of the proceeds received by
the Company in a financing, or of the consideration paid by the Company in a
business acquisition, in respect of which EGI has provided material services.
Until November 3, 2003, EGI has agreed not to (a) effect, propose to
effect, or participate in (i) any acquisition of any assets of the Company or
any of its subsidiaries; (ii) any tender or exchange offer, merger, or other
business combination involving the Company or any of its subsidiaries not
approved by the Board; (iii) any recapitalization, restructuring, liquidation,
dissolution, reverse stock split, or other extraordinary transaction with
respect to the Company or any of its subsidiaries not approved by the Board; or
(iv) any solicitation of a proxy to vote any voting securities of the Company;
(b) form, join, or participate in a group with non-affiliates; (c) otherwise
seek to control or influence the management, Board, or policies of the Company,
except through EGI's designee on the Board in his or her capacity as a member of
the Board; (d) take any action which might obligate the Company to make a public
announcement regarding any of the types of matters set forth in (a) above; or
(e) enter into any discussions or arrangements with any third party with respect
to any of the foregoing.
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.
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
- ----------------------------- ---------------- ------------- --------------- -------------- -------------- -------------
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 NYSE. 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.
APPROVAL OF THE ISSUANCE OF 510,000 SHARES
OF COMMON STOCK TO BEDFORD OAK
The Common Stock of the Company is listed on the NYSE and the Company
is therefore subject to the NYSE's rules. One of those rules requires
stockholder approval prior to the issuance of more than 5% of the outstanding
shares of Common Stock to a substantial security holder of the Company. Since
the Company issued 690,000 shares of Common Stock, constituting approximately 5%
of the outstanding shares of Common Stock, to Bedford Oak on May 3, 2002, the
issuance of an additional 510,000 shares for $1,785,000 requires the approval of
the stockholders of the Company under the NYSE rules. See "Certain
Transactions." Stockholder approval of such issuance is not required pursuant to
Delaware law, the law under which the Company is incorporated.
The proceeds of the issuance will be used to reduce the Company's bank
debt. Although the issuance of additional shares will have a dilutive effect on
the Company's existing stockholders, the Board of Directors believes that this
issuance is in the best interest of the Company and its stockholders and
unanimously recommends that the stockholders of the Company vote FOR this
proposal.
RATIFICATION OF THE APPOINTMENT OF THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has recommended, and the Board of Directors has
selected, the firm of KPMG LLP to serve as independent auditors for the Company
for the year ending December 31, 2002. KPMG LLP has audited the Company's books
since 1970. The Board considers KPMG LLP to be well qualified for the function
of serving as the Company's auditors.
If the stockholders fail to ratify this selection, the matter of the
selection of independent auditors will be reconsidered by the Board of
Directors.
A representative of KPMG LLP is expected to be present at the Annual
Meeting, will have the opportunity to make a statement if he so desires and is
expected to be available to respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the Company's 2003
proxy statement provided they are received by the Company no later than February
10, 2003 and are otherwise in compliance with applicable SEC regulations. In
addition to the above requirements, the Company's By-laws provide that any
stockholder wishing to nominate a candidate for director or to propose other
business at an annual meeting of stockholders of the Company must give written
notice that is received by the Secretary of the Company not less than 90 days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders (no later than April 12, 2003 with respect to the 2003 Annual
Meeting of Stockholders); provided that in the event that the annual meeting is
called for a date that is not within 30 days before or after such anniversary
date, such notice must be received not later than the close of business on the
tenth day following the day on which public disclosure of the date of the annual
meeting was first made. Such notice must provide certain information specified
in the Company's By-laws. Copies of the Company's By-laws are available to
stockholders without charge upon request to the Company's Secretary at the
Company's address set forth above.
GENERAL
So far as is now known, there is no business other than that described
above to be presented for action by the stockholders at the meeting, but it is
intended that the proxies will be voted upon any other matters and proposals
that may legally come before the meeting and any adjournments thereof in
accordance with the discretion of the persons named therein.
COST OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. It is
expected that the solicitations will be made primarily by mail, but employees or
representatives of the Company may also solicit proxies by telephone or
telegraph and in person, and arrange for brokerage houses and other custodians,
nominees and fiduciaries to send proxy material to their principals at the
expense of the Company.
Lydia M. DeSantis
Secretary
GP STRATEGIES CORPORATION
COMMON STOCK Annual Meeting of Stockholders PROXY
To Be Held July 11, 2002
This proxy is solicited on behalf of the Board of Directors
Revoking any such prior appointment, the undersigned, a stockholder of
GP Strategies Corporation, hereby appoints Jerome I. Feldman and Scott N.
Greenberg, and each of them, attorneys and agents of the undersigned, with full
power of substitution, to vote all shares of the Common Stock of the undersigned
in said Company at the Annual Meeting of Stockholders of said Company to be held
at the Hilton Columbia Hotel, 5485 Twin Knolls Road, Columbia, Maryland on July
11, 2002, at 11:00 a.m., local time, and at any adjournments thereof, as fully
and effectually as the undersigned could do if personally present and voting,
hereby approving, ratifying and confirming all that said attorneys and agents or
their substitutes may lawfully do in place of the undersigned as indicated
below.
This proxy when properly executed will be voted as directed. If no
direction is indicated, this proxy will be voted For proposals (1) , (2) and
(3).
1. Election for Directors: Harvey P. Eisen, Jerome I. Feldman,
Marshall S. Geller, Scott N. Greenberg, Roald Hoffmann,
Bernard M. Kauderer, Mark Radzik, Ogden R. Reid, and Gordon Smale.
/ / For / / Withhold / / For All Except
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below)
2. To approve the issuance of 510,000 shares of Common Stock to Bedford
Oak Partners, L.P.
/ / For / / Against / / Abstain
3. To ratify the Board of Directors' appointment of KPMG LLP as the
Company's independent public accountants for fiscal year ending
December 31, 2002.
/ / For / / Against / / Abstain
4. Upon any other matters which may properly come before the meeting or
any adjournments thereof.
Please sign exactly as name appears below.
Dated , 2002
-------------------------------------
Signature
Signature if held jointly
Please mark, sign, date and return the proxy card promptly
using the enclosed envelope. When shares are held by joint
tenants both should sign. When signing as attorney, as
executor, administrator, trustee or guardian, please give
full title as such. If signer is a corporation, please sign
in full corporate name by President or other authorized
officer. If a partnership please sign in partnership name by
authorized person.