SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PTEK HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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):
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(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:
[LOGO] Ptek HOLDINGS
3399 Peachtree Road, N.E.
The Lenox Building
Suite 600
Atlanta, Georgia 30326
April 30, 2002
Dear Shareholder:
On behalf of the Board of Directors and management of PTEK Holdings, Inc.,
you are cordially invited to the Annual Meeting of Shareholders to be held on
Wednesday, June 5, 2002, at 10:00 a.m. at the JW Marriott Hotel at Lenox, 3300
Lenox Road, N.E., Atlanta, Georgia 30326.
At the Annual Meeting, shareholders will be asked to:
. elect three directors for three-year terms;
. approve an amendment to the Company's Associate Stock Purchase Plan to
increase the shares available for purchase by 750,000;
. approve an amendment to the Company's 2000 Directors Stock Plan to
increase the shares available for awards by 1,000,000;
. approve an amendment to the Company's 1995 Stock Plan to increase the
maximum number of options and/or stock appreciation rights and the
maximum value of restricted stock awards that may be granted during any
one calendar year under the 1995 Stock Plan to any one executive
officer, and to reapprove the current list of performance criteria under
which certain performance awards may be based in order to achieve full
deductibility of such awards under Section 162(m) of the Internal
Revenue Code; and
. transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
These matters are described in the accompanying Notice of Annual Meeting and
Proxy Statement.
It is important that your stock be represented at the Annual Meeting
regardless of the number of shares you hold. Whether or not you plan to attend
the meeting in person, please take the time to vote by mailing in your proxy
card. As explained in the Proxy Statement, you may withdraw your proxy at any
time before it is actually voted at the meeting.
If you plan to attend the Annual Meeting, please check the proxy card in the
space provided. This will assist us with meeting preparations and will enable
us to expedite your admittance. If your shares are not registered in your own
name, and you would like to attend the meeting, please ask the broker, trust,
bank or other nominee which holds the shares to provide you with evidence of
your share ownership, which will enable you to gain admission to the meeting.
Sincerely,
/s/ Boland Jones
Boland T. Jones
Chief Executive Officer and
Chairman of the Board
PTEK Holdings, Inc.
3399 Peachtree Road, N.E.
The Lenox Building
Suite 600
Atlanta, Georgia 30326
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
-----------------
To be held on June 5, 2002
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Shareholders of PTEK
Holdings, Inc. (the ''Company'') will be held at the JW Marriott Hotel at
Lenox, 3300 Lenox Road, N.E., Atlanta, Georgia, 30326, on Wednesday, June 5,
2002 at 10:00 a.m. for the purposes of:
1. electing three directors to serve until the 2005 Annual Meeting of
Shareholders;
2. approving an amendment to the Company's Associate Stock Purchase Plan to
increase the shares available for purchase by 750,000;
3. approving an amendment to the Company's 2000 Directors Stock Plan to
increase the shares available for awards by 1,000,000;
4. approving an amendment to the Company's 1995 Stock Plan to increase the
maximum number of options and/or stock appreciation rights and the
maximum value of restricted stock awards that may be granted during any
one calendar year under the 1995 Stock Plan to any one executive
officer, and to reapprove the current list of performance criteria under
which certain performance awards may be based in order to achieve full
deductibility of such awards under Section 162(m) of the Internal
Revenue Code; and
5. transacting such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Information relating to the foregoing matters is set forth in the attached
Proxy Statement. Shareholders of record at the close of business on April 22,
2002 are entitled to receive notice of and to vote at the Annual Meeting and
any adjournments thereof.
By Order of the Board of Directors.
/s/ Patrick Jones
Patrick G. Jones
Corporate Secretary
Atlanta, Georgia
April 30, 2002
PLEASE READ THE ATTACHED PROXY STATEMENT AND PROMPTLY COMPLETE, EXECUTE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. YOU
CAN SPARE YOUR COMPANY THE EXPENSE OF FURTHER PROXY SOLICITATION BY RETURNING
YOUR PROXY CARD PROMPTLY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR
PROXY AND VOTE IN PERSON IF YOU SO DESIRE.
PTEK HOLDINGS, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 5, 2002
This Proxy Statement is furnished to the shareholders of PTEK Holdings,
Inc., a Georgia corporation (''PTEK'' or the ''Company''), in connection with
the solicitation of proxies by the Board of Directors of the Company for use at
the Annual Meeting of Shareholders of the Company and at any adjournments
thereof (the ''Annual Meeting''). The Annual Meeting will be held on Wednesday,
June 5, 2002, at 10:00 a.m. at the JW Marriott Hotel at Lenox, 3300 Lenox Road,
N.E., Atlanta, Georgia 30326.
The approximate date on which PTEK is first mailing this Proxy Statement and
the accompanying proxy card to shareholders is May 3, 2002.
VOTING
General
The securities that can be voted at the Annual Meeting consist of the
Company's:
. Common Stock, $.01 par value per share (''Common Stock''); and
. Series B Voting Preferred Stock (the ''Preferred Stock'').
Holders of Common Stock are entitled to cast one vote for each share held on
the record date on each matter submitted to the shareholders at the Annual
Meeting. There is one share of Preferred Stock outstanding and entitled to
vote. The holder of the outstanding share of Preferred Stock is entitled to the
number of votes that the holders of the shares of exchangeable non-voting
shares of Voice-Tel of Canada Limited, a subsidiary of the Company (the
''Exchangeable Shares''), would be entitled to cast if all such Exchangeable
Shares were exchanged for Common Stock on a one-to-one basis.
The record date for the determination of shareholders who are entitled to
receive notice of and to vote at the Annual Meeting has been fixed by the Board
of Directors as the close of business on April 22, 2002. On the record date,
54,463,313 shares of Common Stock were outstanding and eligible to be voted at
the Annual Meeting, assuming the conversion of all the Exchangeable Shares.
Quorum and Vote Required
For each proposal to be considered at the Annual Meeting, the presence, in
person or by proxy, of a majority of the votes entitled to be cast on the
proposal is necessary to constitute a quorum for action on that matter.
Abstentions, votes withheld from any nominee and broker nonvotes (which occur
when shares held by brokers or nominees for beneficial owners are voted on some
matters but not on others) will be counted as present for purposes of
determining the presence or absence of a quorum with regard to any proposal at
the Annual Meeting.
The following shareholder votes will be required for approval of the
proposals to be submitted at the Annual Meeting.
. With regard to the proposal to elect three directors to serve until the
2005 Annual Meeting of Shareholders (Proposal 1), each director must be
elected by a plurality of the votes cast at the Annual Meeting by the
holders of shares entitled to vote. With respect to Proposal 1,
shareholders may vote ''for'' all of the director nominees, ''withhold''
authority to vote for all of the nominees or withhold authority to vote
for any individual nominee(s) but vote for all other nominees. Shares
that are withheld from voting as to any nominee and broker nonvotes will
not affect the outcome.
. Approval of the amendment to the Associate Stock Purchase Plan to
increase the shares available for purchase by 750,000 (Proposal 2) will
require the affirmative vote of a majority of the total votes cast on
the proposal in person or by proxy. With respect to Proposal 2,
shareholders may vote ''for,'' ''against'' or ''abstain'' from voting.
Abstentions and broker nonvotes will not affect the outcome.
. Approval of the amendment to the 2000 Directors Stock Plan to increase
the shares available for awards by 1,000,000 (Proposal 3) will require
the affirmative vote of a majority of the total votes cast on the
proposal in person or by proxy. With respect to Proposal 3, shareholders
may vote "for," "against" or "abstain" from voting. Abstentions and
broker nonvotes will not affect the outcome.
. Approval of the amendment to the 1995 Stock Plan to increase annual
award limits and approve performance criteria for performance-based
awards (Proposal 4) will require the affirmative vote of a majority of
the total votes cast on the proposal in person or by proxy. With respect
to Proposal 4, shareholders may vote "for," "against" or "abstain" from
voting. Abstentions and broker nonvotes will not affect the outcome.
Proxies; Other Matters That May Come Before the Annual Meeting
The accompanying proxy card is for use at the Annual Meeting if a
shareholder is unable to attend in person or is able to attend but does not
wish to vote in person. Shareholders should specify their choices with regard
to each proposal on the enclosed proxy card. All properly executed and dated
proxy cards delivered by shareholders to the Company in time to be voted at the
Annual Meeting, and not revoked, will be voted at the Annual Meeting in
accordance with the instructions given. If no specific instructions are given,
the shares represented by a signed and dated proxy card will be voted ''FOR''
the election of the three director nominees named in Proposal 1 and ''FOR''
Proposal 2, Proposal 3 and Proposal 4.
The Board of Directors is not aware of any other business to be presented to
a vote of the shareholders at the Annual Meeting. As permitted by Rule 14a-4(c)
of the Securities and Exchange Commission, the persons named as proxies on the
proxy cards will have discretionary authority to vote in their judgment on any
proposals presented by shareholders for consideration at the Annual Meeting
that are submitted to the Company after December 28, 2001. Such proxies also
will have discretionary authority to vote in their judgment upon the election
of any person as a director in place of a nominee named in Proposal 1 who is
unable to serve or for good cause or will not serve as a director, and upon
matters incident to the conduct of the Annual Meeting.
The giving of a proxy does not affect the right to vote in person should the
shareholder attend the Annual Meeting. Any shareholder who has given a proxy
has the power to revoke it at any time before it is voted by giving written
notice of revocation to the Corporate Secretary of the Company at PTEK
Holdings, Inc., 3399 Peachtree Road, N.E., The Lenox Building, Suite 600,
Atlanta, Georgia 30326, Attention: Patrick G. Jones, Corporate Secretary; by
executing and delivering a proxy card bearing a later date to the Corporate
Secretary; or by voting in person at the Annual Meeting. If a shareholder will
not be attending the Annual Meeting, any proxy or notice should be returned in
time for receipt no later than the close of business on the day preceding the
Annual Meeting.
In addition to soliciting proxies directly, the Company has requested
brokerage firms, nominees, custodians and fiduciaries to forward proxy
materials to the beneficial owners of shares held of record by them. The
Company also may solicit proxies through its directors, officers and employees
in person and by telephone and facsimile, without payment of additional
compensation to such persons. All expenses incurred in connection with the
solicitation of proxies will be borne by the Company.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth to the best of the Company's knowledge
certain information as of April 22, 2002 regarding the beneficial ownership of
the Company's voting stock by:
. each person who is known by the Company to be the beneficial owner of
more than 5% of any class of the Company's voting securities;
. each director and each nominee for director of the Company;
. each Named Executive Officer of the Company (as defined below); and
. all of the Company's executive officers, directors and each person
nominated to become a director as a group.
Shares Percent
Beneficially of Class
Name of Beneficial Owner Owned (1) Owned
- ------------------------ ------------ --------
Boland T. Jones..................................................... 4,627,606 (2) 8.50
Dimension Fund Advisors............................................. 2,907,187 (3) 5.34
George W. Baker, Sr................................................. 192,165 (4) *
Raymond H. Pirtle, Jr............................................... 80,363 (5) *
Jeffrey A. Allred................................................... 1,375,198 (6) 2.52
Jackie M. Ward...................................................... 83,333 (7) *
Jeffrey T. Arnold................................................... 74,333 (8) *
Jeffrey M. Cunningham............................................... 83,333 (9) *
Hermann Buerger..................................................... 133,333 (10) *
J. Walker Smith, Jr................................................. 34,333 (11) *
Randolph L. Booth................................................... -- 0 --
Patrick G. Jones.................................................... 438,116 (12) *
William E. Franklin................................................. 61,666 (13) *
Richard J. Buyens................................................... 1,000 (14) *
Theodore P. Schrafft................................................ 110,842 (15) *
Robert P. Mainor.................................................... -- 0 -- *
Max A. Slifer, Jr................................................... 205,809 (16) *
All current executive officers and directors as a group (15 persons) 7,501,430 13.77
- --------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission that deem shares to be beneficially
owned by any person who has or shares voting or investment power with
respect to such shares. Shares of the Company's Common Stock subject to
warrants or options that are currently exercisable or exercisable within
60 days of April 22, 2002 are deemed to be outstanding and to be
beneficially owned by the person holding such warrants or options for the
purpose of computing the percentage ownership of such person, but are not
treated as outstanding for the purpose of computing the percentage
ownership of any other person.
(2) Includes 3,132,200 shares held of record by Mr. Jones; 4,816 shares held
in the Company's 401(k) Plan for the benefit of Mr. Jones; 590 shares held
of record by Mr. Jones' wife for which Mr. Jones holds the right to vote
pursuant to an irrevocable proxy granted by Mrs. Jones to Mr. Jones;
50,000 shares held in a family trust; and 1,440,000 shares held by a
limited partnership in which Mr. and Mrs. Jones have an interest in the
general partner of the limited partnership. Does not include 450 shares
held of record by Mr. Jones' wife, as custodian for the benefit of two
unrelated minor children under the Uniform Gifts to Minors Act, or 55,427
shares held in two grantor retained annuity trusts, as to which shares Mr.
Jones disclaims beneficial ownership. The address of Mr. Jones is 3399
Peachtree Road, N.E., The Lenox Building, Suite 600, Atlanta, Georgia
30326.
3
(3) This information is based solely on a Schedule 13G filed by Dimension Fund
Advisors ("Dimension") on February 2, 2002. Such Schedule 13G states that
Dimension has sole voting and dispositive power of 2,907,187 shares of
Common Stock. Schedule 13G also states that Dimension is a registered
investment advisor whose address is 1299 Ocean Avenue, 11th Floor, Santa
Monica, CA 90401.
(4) Includes 158,832 shares held of record by Mr. Baker and 33,333 shares
subject to warrants or options currently exercisable or exercisable within
60 days. Does not include 44,000 shares held of record by Mr. Baker's
wife, as to which Mr. Baker disclaims beneficial ownership.
(5) Includes 44,000 shares held of record by Mr. Pirtle and 3,030 shares
issuable upon conversion of $100,000 of the 5 3/4% Convertible
Subordinated Notes of PTEK due 2004 (the ''Notes'') which are convertible
into Common Stock at an exercise price of $33.00 per share, all of which
are held in a 401(k) plan for the benefit of Mr. Pirtle. Also includes
33,333 shares subject to warrants or options currently exercisable or
exercisable within 60 days.
(6) Includes 1,260,490 shares held of record by Mr. Allred, 100,000 shares
held in an individual retirement account for the benefit of Mr. Allred,
5,584 shares held in the Company's 401(k) Plan for the benefit of Mr.
Allred and 9,124 shares held under the Company's Associate Stock Purchase
Plan.
(7) Includes 50,000 shares held of record by Ms. Ward and 33,333 shares
subject to options or warrants currently exercisable or exercisable within
60 days.
(8) Includes 41,000 shares held of record by Mr. Arnold and 33,333 shares
subject to options or warrants currently exercisable or exercisable within
60 days.
(9) Includes 50,000 shares held of record by Mr. Cunningham and 33,333 shares
subject to options or warrants currently exercisable or exercisable within
60 days.
(10) Includes 100,000 shares held under a Supplemental Executive Savings Plan
for the benefit of Mr. Buerger and 33,333 shares subject to options or
warrants currently exercisable or exercisable within 60 days.
(11) Includes 1,000 shares held of record by Mr. Smith and 33,333 shares
subject to options or warrants currently exercisable or exercisable within
60 days.
(12) Includes 174,873 shares held of record by Mr. Jones, 10,000 shares held in
an individual retirement account for the benefit of Mr. Jones, 4,816
shares held in the Company's 401(k) Plan for the benefit of Mr. Jones,
193,000 shares subject to options or warrants currently exercisable or
exercisable within 60 days, and 55,427 shares owned by two trusts of which
Mr. Jones is the sole trustee.
(13) Includes 45,000 shares held of record by Mr. Franklin and 16,666 shares
subject to options or warrants currently exercisable or exercisable within
60 days.
(14) Includes 1,000 shares held of record by Mr. Buyens.
(15) Includes 89,796 shares held of record by Mr. Schrafft, 5,526 shares held
in the Company's 401(k) Plan for the benefit of Mr. Schrafft and 15,520
shares held under the Company's Associate Stock Purchase Plan.
(16) Mr. Slifer retired as an executive officer effective December 31, 2001.
Includes 200,279 shares held of record by Mr. Slifer and 5,530 shares held
in the Company's 401(k) Plan for the benefit of Mr. Slifer.
4
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
Pursuant to the Company's Amended and Restated Bylaws (the ''Bylaws''), the
number of directors of the Company may not be less than three nor more than
ten, with the precise number to be determined by resolution of the Company's
Board of Directors from time to time. Currently, the Board of Directors
comprises ten directors. The Board of Directors is divided into three classes,
which are as nearly equal in number as possible. The directors in each class
are elected by the shareholders for a term of three years and until their
successors are elected and qualified or until such directors' death,
resignation or removal. The term of office of one of the classes of directors
expires each year at the Annual Meeting of Shareholders, and a new class of
directors is elected by the shareholders each year at that time.
At the Annual Meeting, the terms of four Class II directors, Raymond H.
Pirtle, Jr., Jackie M. Ward, Jeffrey M. Cunningham and Randolph L. Booth will
expire. Mr. Booth was appointed to the Board of Directors on April 26, 2002, to
fill the vacancy created in Class II when the size of the Board of Directors
was increased to ten members. Ms. Ward will retire from the Board of Directors
upon the expiration of her current term and will not stand for reelection, and
immediately after the Annual Meeting the size of the Board of Directors will be
automatically reduced from ten to nine members, which will result in there
being three directors in each class. The Board of Directors recognizes and
appreciates Ms. Ward's efforts on behalf of the Company during her years of
service on the Board. In accordance with the recommendation of the Nominating
Committee, the Board of Directors has nominated Raymond H. Pirtle, Jr., Jeffrey
M. Cunningham and Randolph L. Booth to stand for reelection as Class II
directors at the Annual Meeting.
If elected by the shareholders, each of the Class II nominees will serve a
three-year term that will expire at the 2005 Annual Meeting of Shareholders. If
any of the nominees should be unavailable to serve for any reason (which is not
anticipated), the Board of Directors may designate a substitute nominee or
nominees (in which case the persons named as proxies on the enclosed proxy card
will vote the shares represented by all valid proxy cards for the election of
such substitute nominee or nominees), allow the vacancy or vacancies to remain
open until a suitable candidate or candidates are located and nominated by
resolution of the Board of Directors, or by resolution provide for a lesser
number of directors.
The Board of Directors unanimously recommends that shareholders vote "FOR"
the proposal to elect Raymond H. Pirtle, Jr., Jeffrey M. Cunningham and
Randolph L. Booth as directors of the Company for three-year terms expiring at
the 2005 Annual Meeting of Shareholders and until their successors have been
duly elected and qualified.
5
Information Regarding Nominees and Continuing Directors and Executive Officers
The following table sets forth certain information regarding the three
nominees for director, the six incumbent directors whose terms as directors
will continue following the Annual Meeting, and the Company's current executive
officers.
Class II Directors Nominated To Serve Until the 2005 Annual Meeting of
Shareholders
Raymond H. Pirtle, Mr. Pirtle, age 60, has been a director of the Company
Jr. since June 1997. He has served as a Managing Partner of
Avondale Partners, LLC since June 2001. Mr. Pirtle served
as Managing Director and as a director of SunTrust
Equitable Securities Corporation from February 1989 to
June 2001. Prior to that time, he was a General Partner of
J.C. Bradford & Co from 1996 to 1989. Mr. Pirtle was
previously a director and chairman of the compensation
committee of Sirrom Capital Corporation, which was
acquired by Finova Group.
Jeffrey M. Mr. Cunningham, age 49, has been a director of the Company
Cunningham since November 2000. Mr. Cunningham has served as Chairman
of Cunningham Partners, Inc. and its venture subsidiary,
Corvida Holdings, since April 2001. From September 2000 to
April 2001, Mr. Cunningham served as Managing Director of
Schroder Partners, the venture capital arm of Schroders
plc, the British asset management company. From 1998 to
May 2000, Mr. Cunningham was a President of CMGI, an
Internet technology holding company. From 1980 to 1998,
Mr. Cunningham was the Group Publisher of Forbes, Inc.,
publisher of Forbes Magazine. He serves as a director of
Genuity and Countrywide Credit, and he previously served
as a director of Paging Network, Schindler Holdings and
Bankrate.
Randolph L. Booth Mr. Booth, age 49, has been a director of the Company
since April 2002. He has served as the Managing Partner of
StreetSide Developers, LLC, a retail development company
he co-founded, since November 2001. Since June 1999, he
has served as a director and has held several executive
management positions, and currently is the Chief Executive
Officer, of Peachtree Franchise Finance, LLC, a commercial
loan servicing and management company. In 1997, Mr. Booth
acquired an interest in Communications Corporation of
America where he was Vice President and a director until
he sold his interest in 1998. In 1992, he founded Capital
City Advisors, Inc., a consulting group to the
entertainment and broadcasting industry, and his firm was
an advisor to Turner Broadcasting System, Inc. and its
Board of Directors on numerous strategic initiatives,
including Turner Broadcasting's acquisitions of New Line
Cinema and Castle Rock Entertainment and the merger of
Turner Broadcasting with Time Warner. From 1986 to 1992,
Mr. Booth held several positions with Turner Broadcasting
System, Inc., including Chief Financial Officer, Vice
President of Finance and Director of Special Projects.
From 1975 to 1986, he was with Price Waterhouse.
Incumbent Class III Directors To Serve Until the 2003 Annual Meeting of
Shareholders
Boland T. Jones Mr. Jones, age 42, a founder of the Company, has served as
a director and Chief Executive Officer of the Company
since its inception in July 1991. From February 1993 until
August 1998, Mr. Jones served as President of the Company.
Since September 1993, Mr. Jones has also served as the
Chairman of the Board of Directors. From 1986 until
founding the Company, Mr. Jones served as Chairman, Chief
Executive Officer and President of American Network
Exchange, a diversified transmission provider specializing
in niche markets. Mr. Jones is the son-in-law of Mr.
Baker, a director of the Company.
6
George W. Baker,
Sr. Mr. Baker, age 66, has been a director of the Company
since its inception in July 1991. Since July 1988, Mr.
Baker has served as a director, President and Chief
Executive Officer of Taco Tico, Inc., a Wichita,
Kansas-based franchisor of Mexican restaurants. Mr.
Baker's prior experience also includes service as a
director of Kentucky Fried Chicken Corporation, as
President of Kentucky Fried Chicken Operating Company and
as President, Chief Executive Officer, founder and
shareholder of Mr. Gatti's, a pizza restaurant chain. Mr.
Baker is the father-in-law of Mr. Boland Jones, the
Chairman of the Board and Chief Executive Officer of the
Company.
Jeffrey T. Arnold Mr. Arnold, age 32, has been a director of the Company
since April 1999. Mr. Arnold is the Chief Executive
Officer of The Convex Group. From November 1999 to October
2000, Mr. Arnold served as a director and Chief Executive
Officer of WebMD Corporation (formerly Healtheon/WebMD
Corporation). Prior to that time, he was Chairman of the
Board and Chief Executive Officer of WebMD, Inc. from
October 1996 until November 1999, and he served as
President of WebMD, Inc. from October 1996 to September
1997. WebMD, Inc. was acquired by Healtheon Corp. in
November 1999. From April 1994 to March 1997, Mr. Arnold
served in various capacities, including as Chairman and
Chief Executive Officer of Endeavor Technologies, before
it was merged into WebMD, Inc. Mr. Arnold is also a
director of Scient, Inc.
Incumbent Class I Directors To Serve Until the 2004 Annual Meeting of
Shareholders
Jeffrey A. Allred Mr. Allred, age 48, has been a director of the Company
since May 1998 and has served as President and Chief
Operating Officer of the Company since January 1999. Mr.
Allred served as Executive Vice President of Strategic
Development of the Company from August 1997 until January
1999. From June 1996 until July 1997, Mr. Allred was a
partner in the Atlanta, Georgia office of the law firm of
Alston & Bird. From February 1992 until June 1996, Mr.
Allred was a partner in the Atlanta, Georgia office of the
law firm of Nelson Mullins Riley & Scarborough.
Hermann Buerger Mr. Buerger, age 58, has been a director of the Company
since June 2001. He currently serves as Regional Board
Member of Commerzbank AG, and he has held various other
management positions at Commerzbank since 1972. Mr.
Buerger serves as a director of Security Capital Group and
Commerzbank Capital Markets Corporation, and is also a
member of the Advisory Board of Wharton Real Estate
Center. He previously served as a director of Paging
Network and United Dominion Industries, as vice chairman
of the Institute of International Bankers, and as
co-chairman of the Business Council of The American
Council on Germany.
J. Walker Smith, Mr. Smith, age 46, has been a director of the Company
Jr. since June 2001. He has served as President of Yankelovich
Partners since May 1999, and previously served as Managing
Partner and Head of Yankelovich Monitor from September
1995 until May 1999, and as Senior Vice President and
Managing Partner of Yanklelovich's Atlanta, Georgia office
from 1991 until September 1995. Prior to that time, he was
Director of Marketing Research of DowBrands from September
1987 until 1990. Mr. Smith is a director of Yankelovich
Partners, and he serves as a member of the Board of
Advisors of PlanetJam Media Group. He previously served as
a director of Cyber
7
Dialogue and as a member of the Board of Advisors of
Screen4Me.com, and was on the Board of Advisors of A.C.
Nielsen Masters in Marketing Research Program.
Other Incumbent Executive Officers
Patrick G. Jones Mr. Jones, age 51, has served as Executive Vice President
and Chief Legal Officer of the Company since January 2000,
and also served as the Company's Chief Financial Officer
from January 2000 until October 2001. From May 1998 until
January 2000, Mr. Jones served as Senior Vice President
and Chief Legal Officer of the Company. From November 1995
until May 1998, Mr. Jones served as Senior Vice President
of Finance and Legal of the Company. Since December 1995,
Mr. Jones has also served as the Company's Corporate
Secretary. From February 1993 until November 1995, Mr.
Jones was a partner in the Atlanta, Georgia office of the
law firm of Nelson Mullins Riley & Scarborough. From
February 1989 until February 1993, Mr. Jones was a partner
in the Atlanta, Georgia law firm of Long Aldridge & Norman.
William E. Franklin Mr. Franklin, age 46, has served as Executive Vice
President and Chief Financial Officer of the Company since
October 2001, and from February 2001 to October 2001, he
served as the Chief Financial Officer of the Company's
Premiere Conferencing business unit. From May 1995 to
September 2000, Mr. Franklin served as President and Chief
Executive Officer of Clifford Electronics, which filed for
protection under Chapter 11 of the United States
Bankruptcy Code in June 2000. Prior to that time, he held
positions of Executive Vice President and Chief Financial
Officer for various oil & gas and manufacturing companies,
and was a CPA at Grant Thornton from 1977 to 1980.
Richard J. Buyens Mr. Buyens, age 45, has served as President of Global
Services of the Company since August 2001. From January
1999 to August 2001, Mr. Buyens was Senior Vice President
of Intermedia Communications, which was acquired by
WorldCom, and from June 1999 to August 2001 he was also
President of Shared Technologies Fairchild, a subsidiary
of Intermedia. Prior to that time, Mr. Buyens spent almost
18 years in various senior management positions in sales,
marketing and finance with AT&T business services.
Theodore P.
Schrafft Mr. Schrafft, age 46, has served as President of the
Company's Premiere Conferencing business unit since
January 2000, and from March 1999 until January 2000 Mr.
Schrafft was Senior Vice President and General Manager of
Premiere Conferencing. Mr. Schrafft served as President of
the Company's Voice and Data Messaging Division from
August 1998 to March 1999. From October 1997 until August
1998, Mr. Schrafft served as Vice President of Corporate
Messaging for the Company. From June 1996 until October
1997, he served as President and Chief Operating Officer
of VoiceCom Systems, Inc., an integrated messaging and
800-based services company which was acquired by PTEK in
October 1997. Mr. Schrafft served as President of EA
Systems, a subsidiary of Digital Equipment Corporation,
from 1992 to 1994, and prior to that time, he held various
sales and marketing positions with Digital.
Robert P. Mainor Mr. Mainor, age 49, has served as President of the
Company's Xpedite business unit since March 2002. From
August 1999 to March 2002, he was Managing Director and
President of COLT Telecom, Internet Division. From August
1996
8
to August 1999, Mr. Mainor held several positions with
Bell Atlantic, where he served as Vice President,
Marketing and Product Management, Data Solutions Group;
Senior Vice President, Sales and Marketing, Internet
Solutions, Inc.; and Vice President, Web Services and
Business Development. From May 1991 to August 1996, he was
with CompuServe Incorporated, where he held positions of
Vice President, Product Marketing and Business Information
Services; General Manager and Group Director, Business
Services Group and Electronic Communications; and General
Manager, Systems Integration Group. Mr. Mainor founded and
was Chief Executive Officer of SEARA Information Strategy
Corporation from September 1986 until May 1991 when he
sold the company to CompuServe. Prior to that time, he
served in various management and engineering positions
with The Marketing Institute International Corp.,
Compuware Corporation, and Electronic Data Systems, Inc.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company conducts its business through meetings
and unanimous written consents and through committees of the Board. The Company
has the following standing committees to which directors are appointed: the
Audit Committee, the Compensation Committee, the 1994 Stock Option Plan
Committee, the 1995 Stock Plan Committee, the 1998 Stock Plan Committee, the
2000 Directors Stock Plan Committee, the Nominating Committee, and the
Strategic Planning Committee. During the fiscal year ended December 31, 2001,
the Board of Directors held five meetings and the Board took action by
unanimous written consent on five occasions. Each director of the Company, with
the exception of Jackie M. Ward, attended at least 75 percent of all meetings
of the full Board of Directors and each committee of the Board of which such
director was a member.
The Audit Committee, which met eight times in 2001, is responsible for
reviewing and making recommendations regarding the Company's independent
accountants, the annual audit of the Company's financial statements and the
Company's internal accounting practices and policies. The Audit Committee
currently comprises Hermann Buerger, Raymond H. Pirtle, Jr. and Randolph L.
Booth, each of whom is "independent" under Nasdaq listing standards. For a full
discussion of Audit Committee membership see the "Report of the Audit
Committee" below. In June 2000, the Board adopted an Audit Committee Charter,
which was amended in March 2002. A copy of the Amended and Restated Audit
Committee Charter is attached as Appendix A to this Proxy Statement.
The Compensation Committee, which met two times in 2001 and took action by
unanimous written consent five times, is responsible for reviewing and
approving the compensation of executive officers of the Company. The
Compensation Committee currently comprises George W. Baker, Sr., J. Walker
Smith, Jr. and Mr. Cunningham.
The 1994 Stock Option Plan Committee, which did not meet in 2001,
administers the 1994 Stock Option Plan. The 1994 Stock Option Plan Committee
currently comprises Messrs. Boland T. Jones and Baker.
The 1995 Stock Plan Committee, which met one time in 2001 and took action by
unanimous written consent three times, administers the 1995 Stock Plan. The
1995 Stock Plan Committee currently comprises Messrs. Baker and Mr. Smith.
The 1998 Stock Plan Committee, which met one time in 2001 and took action by
unanimous written consent five times, administers the 1998 Stock Plan. The 1998
Stock Plan Committee currently comprises Messrs. Baker and Smith.
The 2000 Directors Stock Plan Committee, which did not met in 2001 and took
action by unanimous written consent one time, administers the 2000 Directors
Stock Plan. The 2000 Directors Stock Plan Committee currently comprises Messrs.
Baker and Pirtle.
9
The Nominating Committee, which did not meet in 2001 and took action by
unanimous written consent one time, is responsible for recommending nominees
for election to the Board of Directors and, in the event of a vacancy in the
office of the Chairman of the Board or Chief Executive Officer, recommending a
successor to the full Board. The Board of Directors will consider nominees
recommended by shareholders if submitted to the Board in accordance with the
procedures specified in the Company's Bylaws. The Bylaws provide that a
shareholder seeking to nominate candidates for election as directors at a
meeting of shareholders must provide notice of such nomination not less than
120 nor more than 150 days before the first anniversary of the date of the
Company's notice of annual meeting sent to shareholders in connection with the
previous year's annual meeting, and such notice must provide the Company
certain information regarding the nominees. See "Shareholder Proposals" below.
The Nominating Committee currently comprises Messrs. Pirtle and Cunningham.
The Strategic Planning Committee, which did not meet in 2001, is responsible
for the Company's strategic planning, including evaluation of potential
acquisitions. The Strategic Planning Committee currently comprises Messrs.
Cunningham, Buerger, Boland Jones and Allred.
Directors' Compensation
Directors are reimbursed for reasonable expenses incurred by them in
connection with their attendance at Board meetings, and outside directors
receive a stipend of $20,000 per year, which increases to $40,000 per year if
an outside director attends all Board meetings and all of his or her Board
committee meetings.
During 2001, each of the following directors were granted options to
purchase the Company's common stock in connection with his or her service as a
director:
. In June 2001, Messrs. Baker, Pirtle, Arnold, Buerger and Smith, and Ms.
Ward were each granted an option to purchase 100,000 shares of Common
Stock at an exercise price of $3.00 per share, which was greater than
the market value of the Common Stock on the date of grant. One-third of
these options vest and become exercisable on the date of each of the
2002, 2003 and 2004 Annual Meetings of Shareholders, provided that the
grantee is a member of the Board on those dates, subject to accelerated
vesting upon a change in control of the Company.
. In June 2001, Mr. Cunningham was granted an option to purchase 100,000
shares of Common Stock at an exercise price of $3.00 per share, which
was greater than the market value of the Common Stock on the date of the
grant. One-third of this option vests and becomes exercisable on each of
November 8, 2001, 2002 and 2003, provided that Mr. Cunningham is a
member of the Board on those dates, subject to accelerated vesting upon
a change in control of the Company.
On November 29, 2001, the Company offered a restricted stock exchange
program to its employees and directors, whereby the Company offered to purchase
certain outstanding stock options in exchange for restricted stock. Under the
program, the Company granted one restricted share of common stock in exchange
for every 2.5 options surrendered that had an exercise price of more than $3.00
per share. (See "Ten-Year Historical Information Regarding Repricing,
Replacement or Cancellation and Regrant of Options--2001 Exchange of Options
for Restricted Stock" for a more detailed discussion of the restricted stock
exchange program.) On December 28, 2001, the exchange offer was completed.
Messrs. Baker, Pirtle and Arnold, and Ms. Ward, participated in the program, as
follows:
Director Options Tendered Restricted Shares Received *
-------- ---------------- ----------------------------
George W. Baker, Sr... 120,000 48,000
Raymond H. Pirtle, Jr. 110,000 44,000
Jeffrey T. Arnold..... 100,000 40,000
Jackie M. Ward........ 100,000 40,000
- --------
* All of these restricted shares vested on December 29, 2001.
The Company has agreed to lend each of these directors upon request the
amount of taxes due with respect to the restricted shares received in the
exchange program, with each such loan to be evidenced by a 10-year recourse
promissory note bearing interest at the applicable Federal rate, and secured by
the restricted shares. Mr. Pirtle borrowed $50,000 from the Company in April
2002.
10
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE ASSOCIATE STOCK PURCHASE PLAN
TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR PURCHASE
Introduction
The Company currently maintains the Associate Stock Purchase Plan (the
"ASPP"), under which employees may purchase Common Stock from the Company at a
discount to market prices. The Board of Directors has recommended that the ASPP
be amended, subject to approval of the shareholders, to increase the number of
shares of Common Stock available for purchase under the ASPP from 1,750,000
shares to 2,500,000, an increase of 750,000 shares.
A summary of the ASPP, as proposed to be amended, is set forth below. The
summary is qualified in its entirety by reference to the full text of the ASPP,
as proposed to be amended, which is attached as Appendix B to this Proxy
Statement.
Purpose
The purpose of the ASPP is to enhance the proprietary interest, through
ownership of Common Stock of the Company, among the employees of the Company
and its subsidiaries designated by the Company as eligible to participate in
the ASPP. The Board of Directors believes that this provides incentives for
such employees to remain with the Company and to exert maximum efforts for its
success.
Eligibility
Regular full-time employees of the Company and its participating
subsidiaries are eligible to participate in the ASPP. Employees are eligible to
participate in the ASPP if they have been employed for at least two months and
are customarily scheduled to work for at least 20 hours per week and five
months per calendar year. As of April 22, 2002, there were approximately 1,571
employees eligible to participate in the ASPP.
General Operation of the ASPP
The ASPP is intended to qualify as an "employee stock purchase plan" within
the meaning of Section 423 of the Internal Revenue Code (the "Code"). Employees
who elect to participate may have up to 20 percent of their compensation from
the Company and its affiliates (including salary, bonus and commissions)
withheld pursuant to the ASPP. The amount withheld is then used to purchase
shares of Common Stock on the last day of the purchase period. The price of
Common Stock purchased under the ASPP during a purchase period is equal to 85
percent of the lower of the fair market value of the Common Stock at the
beginning of the purchase period or the last trading day of the purchase
period. Since the shares are purchased at less than market value, employees
receive a benefit from participating in the ASPP.
An employee may not be granted a purchase right for a purchase period if
immediately after the grant, he or she would own five percent or more of the
total combined voting power or value of all classes of stock of the Company or
its subsidiaries. A participant cannot receive purchase rights that, in
combination with purchase rights under other plans qualified under Section 423
of the Code, would result during any calendar year in the purchase of shares
having an aggregate fair market value of more than $25,000. Purchase rights
granted under the ASPP are not transferable except by will or by the laws of
descent and distribution and are exercisable only by the participant during his
or her lifetime.
Shares Subject to the ASPP
A total of 1,750,000 shares of Common Stock are currently reserved for
issuance upon the purchase of shares by participants under the ASPP, subject to
appropriate adjustment for stock dividends, subdivision or
11
consolidation of outstanding shares or certain corporate transactions involving
the Company. The shares issuable under the ASPP may be issued out of authorized
but unissued shares or may be shares that have been reacquired by the Company.
All cash received or held by the Company under the ASPP may be used by the
Company for any corporate purpose.
As of April 22, 2002, there were 687,762 shares of Common Stock remaining
available for purchase under the ASPP. The Board of Directors proposes that an
additional 750,000 shares of Common Stock be reserved for issuance under the
ASPP, together with such additional number of shares of Common Stock as may
from time to time be issued pursuant to the adjustment provisions contained in
the ASPP.
Federal Income Tax Consequences to the Company and to Participants
The following is a general summary of the federal income tax consequences of
participation in the ASPP, based on federal tax laws and regulations as in
effect on April 1, 2002. The tax consequences of participating in the ASPP may
vary with respect to individual situations.
The grant or exercise of purchase rights under the ASPP will have no tax
impact on the participant or the Company. If a participant disposes of Common
Stock acquired under the ASPP after at least two years from the first day of
the applicable purchase period and one year from the date of purchase of the
shares, then the participant will be deemed to have received ordinary taxable
income in the calendar year of disposition in an amount equal to the lesser of
(1) the original 15 percent discount on the shares assuming the shares had been
purchased on the offering date, or (2) the participant's actual gain (the
excess of the fair market value of the shares of Common Stock on the date of
disposition over the price paid for the shares). If a participant holds Common
Stock at the time of his or her death, the holding period requirements are
automatically deemed to have been satisfied. The Company will not be allowed a
deduction if the holding period requirements are satisfied. If a participant
disposes of Common Stock before the holding period is satisfied, then the
participant will be deemed to have received ordinary taxable income in the
calendar year of disposition in an amount per share equal to the difference
between the price paid for the share and the market value of the share on the
date it was purchased. Any additional gain will be treated as long-term or
short-term capital gain. The Company will be allowed a deduction equal to the
amount of ordinary income recognized by the participant.
12
Benefits to Named Executive Officers and Others
During 2002, the following employees and groups participated in the ASPP.
Because participation in the ASPP is voluntary, the benefits or amounts that
will be received in the future by any person or group under the ASPP cannot
presently be determined. The closing sale price of the Company's Common Stock
on the Nasdaq National Market on April 22, 2002 was $4.90 per share.
Associate Stock Purchase Plan
-------------------------------
Shares of Common
Stock Purchased
Name and Position Dollar Value under the ASPP
- ----------------- ------------ ----------------
Boland T. Jones.......................................................... $ -- 0 -- -- 0 --
Chief Executive Officer and Chairman of the Board of Directors
Jeffrey A. Allred........................................................ $ 18,225.19(1) 9,124
President and Chief Operating Officer and Director
Patrick G. Jones......................................................... $ -- 0 -- -- 0 --
Executive Vice President, Chief Legal Officer and Corporate Secretary
Theodore P. Schrafft..................................................... $ 10,090.08(2) 4,417
President, Premiere Conferencing Business Unit $ 9,570.02(1) 4,791
Max A. Slifer, Jr........................................................ $ -- 0 -- -- 0 --
Former President, Xpedite Business Unit
All Current Executive Officers as a Group (including the above).......... $ 10,090.08(2) 4,417
$ 27,795.21(1) 13,915
All Non-Executive Directors as a Group................................... $ -- 0 -- -- 0 --
All Non-Executive Employees as a Group................................... $493,180.69(2) 215,893
$492,863.44(1) 246,740
- --------
(1) Shares were purchased at a 15 percent discount to the market value of the
Common Stock on the October 31, 2001 purchase date, which was $2.35 per
share.
(2) Shares were purchased at a 15 percent discount to the market value of the
Common Stock on the April 30, 2001 purchase date, which was $2.70 per share.
Approval by Shareholders
Approval of the amendment to the ASPP will require the affirmative vote of a
majority of the total votes cast on the proposal in person or by proxy.
Abstentions and broker nonvotes will not affect the outcome.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE ''FOR'' THE
PROPOSAL TO AMEND THE ASSOCIATE STOCK PURCHASE PLAN.
13
PROPOSAL 3
APPROVAL OF AN AMENDMENT TO THE 2000 DIRECTORS STOCK PLAN TO INCREASE THE
NUMBER OF SHARES AVAILABLE FOR AWARDS
Introduction
The Company currently maintains the PTEK Holdings, Inc. 2000 Directors Stock
Plan (the "Directors Plan"). The Board of Directors has recommended that the
Directors Plan be amended, subject to approval of the shareholders, to increase
the number of shares of Common Stock available for awards under the Directors
Plan from 1,000,000 shares to 2,000,000 shares, an increase of 1,000,000
shares. As of April 22, 2002, there were 300,000 shares remaining available for
awards under the Directors Plan, seven directors eligible to participate, and
seven directors holding outstanding awards representing options to purchase
700,000 shares of Common Stock granted under the Directors Plan. The Board of
Directors believes that the proposed increase in shares is needed to provide
the Company with the ability to attract and retain highly qualified
non-employee directors.
A summary of the Directors Plan, as proposed to be amended, is set forth
below. The summary is qualified in its entirety by reference to the full text
of the Directors Plan, as proposed to be amended, which is attached as Appendix
C to this Proxy Statement.
Purpose
The Board of Directors believes that stock ownership is an important
incentive for its non-employee directors. The purpose of the Directors Plan is
to advance the interests of the Company and its shareholders by affording the
non-employee directors of the Company an opportunity to acquire or increase
their proprietary interests in the Company. The Company intends that the
Directors Plan will provide such persons with an added incentive to continue to
serve as directors and will stimulate their efforts in promoting the growth,
efficiency and profitability of the Company. The Company also intends that the
Directors Plan will afford the Company a means of attracting persons of
outstanding quality to serve on the Board. Awards are granted under the
Directors Plan in addition to cash fees paid to non-employee directors.
Shares Subject to the Directors Plan
A total of 1,000,000 shares of the Company's Common Stock have been reserved
for issuance upon the exercise of options or SARs or upon the grant of
restricted stock awards under the Directors Plan. If the number of outstanding
shares of Common Stock is increased or decreased or if the Common Stock is
changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of merger, consolidation, reorganization,
recapitalization, stock split or stock dividend or other change in corporate
structure, the number and type of shares issuable under the Directors Plan
shall be adjusted appropriately by the 2000 Directors Stock Plan Committee.
With certain exceptions, if any option terminates for any reason without having
been exercised in full, or any award is forfeited, the shares of Common Stock
not issued will then become available for additional grants under the Directors
Plan.
Administration
The Plan is administered by the 2000 Directors Stock Plan Committee, which
consists of at least two directors appointed from time to time by the Board who
are "non-employee directors," as that term is defined in Rule 16b-3 promulgated
under Section 16 of the Exchange Act. During any time that the Board is acting
as administrator of the Plan, it shall have all the powers of the 2000
Directors Stock Plan Committee under the Directors Plan.
The 2000 Directors Stock Plan Committee has complete authority to interpret
the Directors Plan, to prescribe, amend and rescind rules and regulations
relating to the Directors Plan, to determine the details and
14
provisions of each award agreement and to make all other determinations
necessary or advisable for the administration of the Directors Plan.
Notwithstanding the above, the Board of Directors shall have sole authority
under the Plan to approve grants of options or awards to members of the 2000
Directors Stock Plan Committee and to determine the terms thereof. Whenever
reference is made to the 2000 Directors Stock Plan Committee, such reference
shall mean the Board as it relates to options or awards granted to members of
the 2000 Directors Stock Plan Committee. Determinations of the 2000 Directors
Stock Plan Committee shall be binding on all persons.
Amendment of the Directors Plan
The Board may at any time and from time to time terminate, amend or modify
the Directors Plan without shareholder approval; provided, however, that the
Board may condition any amendment on shareholder approval if such approval is
necessary or advisable with respect to tax, securities or other applicable
laws. No termination, amendment or modification of the Directors Plan shall
adversely affect any previously granted awards under the Directors Plan without
the consent of the participant.
Eligibility
The 2000 Directors Stock Plan Committee may make awards only to persons who,
at the date of grant, are directors of the Company and are not employed by the
Company or any of its subsidiaries or affiliates. There are currently eight
directors eligible to participate in the Directors Plan. In selecting the
recipients of awards, as well as in determining the number of shares subject to
or granted in each award, the 2000 Directors Stock Plan Committee takes into
consideration such factors as it deems relevant to accomplish the purpose of
the Directors Plan.
Terms of Awards
The terms of each award granted under the Directors Plan, including the
exercise price of options, are determined by the 2000 Directors Stock Plan
Committee. Vested options may be exercised at any time during the term of the
option. As of April 22, 2002, 700,000 options had been granted under the
Directors Plan.
Other Types of Awards
The Directors Plan also permits the grant of restricted stock awards.
Restricted stock awards entitle the recipient to receive shares of Common
Stock, subject to forfeiture restrictions that lapse over time or upon the
occurrence of events specified by the 2000 Directors Stock Plan Committee. No
or restricted stock awards have been granted under the Directors Plan.
Federal Income Tax Consequences
The following is a general summary of the federal income tax consequences
relating to the grant and exercise of awards under the Directors Plan and the
subsequent sale of Common Stock acquired under the Directors Plan, based on
federal tax laws and regulations as in effect on April 1, 2002. The tax
consequences of participating in the Directors Plan may vary with respect to
individual situations.
Only non-qualified stock options may be granted under the Directors Plan. A
participant is not taxed on the grant of a non-qualified stock option. Upon
exercise, however, the participant recognizes ordinary income equal to the
difference between the exercise price and the fair market value of the shares
on the date of the exercise. The Company is entitled to an income tax deduction
in the year of exercise in the amount recognized by the participant as ordinary
income. Any gain on subsequent disposition of the shares is long-term capital
gain if the shares are held for at least one year following exercise. The
Company does not receive an income tax deduction for this gain.
15
Unless a recipient of a restricted stock award makes an election to
accelerate recognition of income to the grant date, the participant will not
recognize income upon the grant of the restricted stock award. When the
restrictions are deemed to have lapsed under applicable tax rules, the
participant recognizes ordinary income in an amount equal to the fair market
value of shares of Common Stock with respect to which the restrictions lapsed,
and the Company is entitled to an income tax deduction equal to such amount.
Benefits to Directors
As of April 22, 2002, awards granted under the Directors Plan were
outstanding and held by the following non-employee directors. Any future awards
will be made at the discretion of the 2000 Directors Stock Plan Committee.
Therefore, it is not presently possible to determine the benefits or amounts
that will be received by such non-employee directors pursuant to the Directors
Plan in the future.
2000 Directors Stock Plan
- ----------------------------------
Name and Position Dollar Value (1) Number of Options
----------------- ---------------- -----------------
George W. Baker, Sr................... $ 190,000 100,000
Raymond H. Pirtle, Jr................. $ 190,000 100,000
Jackie M. Ward........................ $ 190,000 100,000
Jeffrey T. Arnold..................... $ 190,000 100,000
Jeffrey M. Cunningham................. $ 190,000 100,000
Hermann Buerger....................... $ 190,000 100,000
J. Walker Smith....................... $ 190,000 100,000
All Non-Executive Directors as a Group $1,330,000 700,000
- --------
(1) The dollar value shown above for the options is based on the difference
between the weighted average exercise price of the options and the closing
price of the Company's Common Stock on April 22, 2002, which was $4.90. The
ultimate value of the options will depend upon the difference between the
exercise price and the fair market value of the underlying shares on the
date of exercise.
Approval by Shareholders
Approval of the amendment to the Directors Plan will require the affirmative
vote of a majority of the total votes on the proposal in person or by proxy.
Abstentions and broker nonvotes will not affect the outcome.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE ''FOR'' THE
PROPOSAL TO AMEND THE 2000 DIRECTORS STOCK PLAN.
16
PROPOSAL 4
APPROVAL OF AMENDMENT TO THE 1995 STOCK PLAN TO INCREASE THE ANNUAL
INDIVIDUAL LIMIT ON AWARDS AND REAPPROVAL OF THE
CURRENT PERFORMANCE CRITERIA FOR PERFORMANCE AWARDS
Introduction
The Company currently maintains the PTEK Holdings, Inc. 1995 Stock Plan (the
"1995 Plan"). As of April 22, 2002, there were 2,627,573 shares remaining
available for awards under the 1995 Stock Plan, approximately 1,992 people
eligible to participate in the 1995 Plan, 112 persons holding outstanding
options granted under the 1995 Plan, representing 3,661,088 shares of Common
Stock, and 11 persons holding 2,604,226 shares of restricted stock granted
under the 1995 Stock Plan. The Board of Directors has recommended that the 1995
Plan be amended, subject to approval of the shareholders, to increase the
maximum number of options and stock appreciation rights ("SARs") and the
maximum value of restricted stock awards that may be granted during any one
calendar year under the 1995 Plan to any one Covered Employee (as defined). No
increase in the total number of shares available for award under the 1995 Plan
is proposed. If the proposed amendments to the 1995 Plan are adopted, they will
be effective as of the date of the 2002 Annual Meeting. Otherwise the 1995 Plan
will remain in effect in its current form.
The Board of Directors has also recommended that the shareholders reapprove
the current list of performance criteria in the 1995 Plan under which certain
performance awards may be based in order to achieve full deductibility of such
awards under Section 162(m) of the Code, which requires that such criteria be
reapproved by the shareholders every five years. Such criteria were last
approved at the 1997 Annual Meeting.
A summary of the 1995 Plan, as proposed to be amended, is set forth below.
The summary is qualified in its entirety by reference to the full text of the
1995 Plan, as proposed to be amended, which is attached as Appendix D to this
Proxy Statement.
Purpose
The purpose of the 1995 Plan is to advance the interests of the Company, its
subsidiaries and shareholders by affording certain employees and directors of
and key consultants and advisors to the Company and its subsidiaries an
opportunity to acquire or increase their proprietary interests in the Company.
Shares Subject to the 1995 Plan
A total of 9,650,000 shares of the Company's Common Stock have been reserved
for awards upon the exercise of options or SARs or upon the grant of restricted
stock awards under the 1995 Plan. If the number of outstanding shares of Common
Stock is increased or decreased or if the Common Stock is changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of merger, consolidation, reorganization, recapitalization,
stock split or stock dividend or other change in corporate structure, the
number and type of shares issuable under the 1995 Plan shall be adjusted
appropriately by the 1995 Stock Plan Committee. With certain exceptions, if any
option terminates for any reason without having been exercised in full, or any
award is forfeited, the shares of Common Stock not issued will then become
available for additional grants under the 1995 Plan.
The maximum number of shares of Common Stock with respect to one or more
options or SARs that may be granted during any one calendar year under the 1995
Plan to any one Covered Employee (as that term is defined in Code Section
162(m)) is currently 500,000, and the maximum fair market value of any
restricted stock awards that may be received by a Covered Employee (less any
consideration paid by the participant for such award) during any one calendar
year under the 1995 Plan is currently $2,000,000. The proposed amendment would
increase the maximum number of shares of Common Stock with respect to one or
more options or SARs
17
that may be granted during any one calendar year under the 1995 Plan to any one
Covered Employee from 500,000 to 1,000,000, and would increase the maximum fair
market value of any restricted stock awards that may be received by a Covered
Employee (less any consideration paid by the participant for such award) during
any one calendar year under the 1995 Plan from $2,000,000 to $4,000,000.
Administration
The 1995 Plan is administered by the 1995 Stock Plan Committee, which
consists of at least two directors appointed from time to time by the Board of
Directors who are (i) "non-employee directors," as that term is defined in Rule
16b-3 promulgated under Section 16 of the Exchange Act, and (ii) "outside
directors," as that term is defined in Section 162(m) of the Code and the
regulations promulgated thereunder. During any time that the Board of Directors
is acting as administrator of the 1995 Plan, it shall have all the powers of
the 1995 Stock Plan Committee under the 1995 Plan.
The 1995 Stock Plan Committee has complete authority to interpret the 1995
Plan, to prescribe, amend and rescind rules and regulations relating to the
1995 Plan, to determine the details and provisions of each award agreement and
to make all other determinations necessary or advisable for the administration
of the 1995 Plan.
Performance Awards
The 1995 Stock Plan Committee may designate any award as a qualified
performance-based award in order to make the award fully deductible without
regard to the $1,000,000 deduction limit imposed by Code Section 162(m). If an
award is so designated, the committee must establish objectively determinable
performance goals for the award based on one or more of the following
performance criteria: (a) the achievement by the Company or a subsidiary of a
specified target return on equity or assets, (b) the Company's or subsidiary's
stock price, (c) the achievement by the Company or a business unit of the
Company or subsidiary of a specified target net income or earnings per share,
including without limitation earnings before interest, taxes, depreciation
and/or amortization, or (d) any combination of the goals set forth in (a)
through (c) above. If an award is made on such basis, the 1995 Stock Plan
Committee shall establish goals prior to the beginning of the period for which
such performance goal relates (or such later date as may be permitted under
applicable tax regulations). Any payment of an award granted with performance
goals shall be conditioned on the written certification of the 1995 Stock Plan
Committee in each case that the performance goals and any other material
conditions were satisfied.
In order to maintain the 1995 Stock Plan Committee's ability to grant
performance awards that are fully deductible under Code Section 162(m) on this
basis, the performance criteria must be reapproved by the shareholders every
five years. Therefore, the shareholders are asked to reapprove the above-listed
performance criteria for future performance awards. As of April 22, 2002, no
performance awards had been granted based on this provision of the 1995 Plan.
Amendment of the 1995 Plan
The Board of Directors may at any time and from time to time terminate,
amend or modify the 1995 Plan without shareholder approval; provided, however,
that the Board of Directors may condition any amendment on shareholder approval
if such approval is necessary or advisable with respect to tax, securities or
other applicable laws. No termination, amendment or modification of the 1995
Plan shall adversely affect any previously granted awards under the 1995 Plan
without the consent of the participant.
Eligibility
The 1995 Stock Plan Committee may make awards to those persons whose
participation in the 1995 Plan the committee determines to be in the best
interests of the Company. The class of persons eligible to receive awards
includes, but is not limited, all employees and directors of and key
consultants and advisors to the Company and its subsidiaries. In selecting the
recipients of awards, as well as in determining the number of shares subject to
or granted in each award, the 1995 Stock Plan Committee takes into
consideration such factors as it deems relevant to accomplish the purpose of
the 1995 Plan.
18
Terms of Awards
The terms of each award granted under the 1995 Plan are determined by the
1995 Stock Plan Committee. Incentive stock options ("ISOs") and nonqualified
stock options ("NSOs") may be granted under the 1995 Plan, provided that only
employees of the Company or its subsidiaries shall be eligible to receive ISOs.
The exercise price for each option will be established by the 1995 Stock Plan
Committee, provided that the exercise price of an ISO shall not be less than
the fair market value of the Common Stock on the grant date. Vested options may
be exercised at any time during the term of the option, provided that no ISO
may be exercised after 10 years from the grant date, and provided further that
no ISO granted to any person owning more than 10 percent of the total combined
voting power of all Common Stock of the Company outstanding on the grant date
may be exercised after five years from the grant date.
The 1995 Plan also permits the grant of SARs and restricted stock awards. An
SAR entitles the recipient to receive the difference between the fair market
value of the Common Stock on the date of exercise and the SAR price, in cash or
in shares of Common Stock, or a combination of both, as determined in the
discretion of the 1995 Stock Plan Committee. The SAR price will be established
by the 1995 Stock Plan Committee, provided that the SAR price must be at least
100% of the fair market value of the Common Stock on the grant date when issued
in tandem with ISOs. No SARs have been granted under the 1995 Plan. Restricted
stock awards entitle the recipient to receive shares of Common Stock, subject
to forfeiture restrictions that lapse over time or upon the occurrence of
events specified by the 1995 Stock Plan Committee.
Federal Income Tax Consequences to the Company and to Participants
The following is a general summary of the federal income tax consequences
relating to the grant and exercise of awards under the 1995 Plan and the
subsequent sale of Common Stock acquired under the 1995 Plan, based on federal
tax laws and regulations as in effect on April 1, 2002. The tax consequences of
participating in the 1995 Plan may vary with respect to individual situations.
ISOs and NSOs are treated differently for federal income tax purposes. ISOs
are intended to comply with the requirements of Section 422 and related
Sections of the Code. NSOs need not comply with such requirements.
A participant is not taxed on the grant of an NSO. Upon exercise, however,
the participant recognizes ordinary income equal to the difference between the
exercise price and the fair market value of the shares on the date of the
exercise. The Company is entitled to an income tax deduction in the year of
exercise in the amount recognized by the participant as ordinary income. Any
gain on subsequent disposition of the shares is long-term capital gain if the
shares are held for at least one year following exercise. The Company does not
receive an income tax deduction for this gain.
A participant is not taxed on the grant or exercise of an ISO. The
difference between the fair market value of the shares on the exercise date
will, however, be a preference item for purposes of the alternative minimum
tax. If a participant holds the shares acquired upon exercise of an ISO for at
least two years following grant and at least one year following exercise, the
participant's gain, if any, on a subsequent disposition of such shares will be
treated as long-term capital gain for federal income tax purposes. The measure
of the gain is the difference between the proceeds received on disposition and
the participant's basis in the shares (which generally equals the exercise
price). If the participant disposes of stock acquired pursuant to the exercise
of an ISO before satisfying the one- and two-year holding periods described
above, the participant will recognize both ordinary income and capital gain in
the year of disposition. The amount of the ordinary income will be the lesser
of: (i) the amount realized on disposition less the participant's adjusted
basis in the stock (usually the exercise price); or (ii) the difference between
the fair market value of the stock on the exercise date and the exercise price.
The balance of the consideration received on such disposition will be long-term
capital gain if the stock had been held for at least one year following
exercise of the ISO. The Company is not entitled to an income tax deduction on
the grant or the exercise of an ISO or on the participant's disposition of the
shares after satisfying the holding period requirement described above. If the
holding periods are not satisfied, the Company will be entitled to an income
tax deduction in the year the participant disposes of the shares, in an amount
equal to the ordinary income recognized by the participant.
19
Recipients of SARs do not recognize income upon the grant of such rights.
When a participant receives or is deemed under applicable tax rules to have
received payment of an SAR, the participant recognizes ordinary income in the
amount equal to the cash and/or fair market value of shares of Common Stock to
which the SAR relates, and the Company is entitled to an income tax deduction
equal to such amount, subject to applicable deduction limits.
Unless a recipient of a restricted stock award makes an election to
accelerate recognition of income to the grant date, the participant will not
recognize income upon the grant of the restricted stock award. When the
restrictions are deemed to have lapsed under applicable tax rules, the
participant recognized ordinary income in an amount equal to the fair market
value of shares of Common Stock as to which the restrictions lapsed, and the
Company is entitled to an income tax deduction equal to such amount, subject to
applicable deduction limits.
Benefits to Named Executive Officers and Others
As of April 22, 2002, awards granted under the 1995 Plan were outstanding
and held by the following persons and groups. Any future awards will be made at
the discretion of the 1995 Stock Plan Committee. Therefore, it is not presently
possible to determine the benefits or amounts that will be received by such
persons or groups pursuant to the 1995 Plan in the future.
1995 Stock Plan
-------------------------------------------
Shares of
Name and Position Dollar Value(1) Options Restricted Stock
- ----------------- --------------- --------- ----------------
Boland T. Jones................................................ $ 3,708,521 -- 756,841
Chief Executive Officer and Chairman of the Board of
Directors
Jeffrey A. Allred.............................................. $ 6,057,821 -- 1,236,290
President and Chief Operating Officer and Director
Patrick G. Jones............................................... $ 663,191 -- 135,345
Executive Vice President, Chief Legal Officer and
Corporate Secretary
Theodore P. Schrafft........................................... $ 476,309 -- 97,206
President, Premiere Conferencing Business Unit
Max A. Slifer, Jr.............................................. $ 786,666 -- 160,544
Former President, Xpedite Business Unit
All Current Executive Officers as a Group (including the above) $13,945,907 1,200,000 2,432,226
All Non-Executive Directors as a Group......................... $ 1,006,800 200,000 172,000
All Non-Executive Employees as a Group......................... $ -- 0 --(2) 2,261,008 --
- --------
(1) The dollar value of the restricted shares shown above is equal to the fair
market value of the underlying shares as of April 22, 2002, based on the
closing price per share of the Common Stock on that date of $4.90. The
dollar value of the options will be dependent on the difference between the
exercise price and the fair market value of the underlying shares on the
date of exercise (the "option spread"). The dollar value of the options
shown above represents the option spread as of April 22, 2002, based on the
weighed average exercise price of the options.
(2) The weighted average exercise price of the options in this group is less
than the closing price per share of the Common Stock on April 22, 2002.
Approval by Shareholders
Approval of the amendment to the 1995 Plan will require the affirmative vote
of a majority of the total votes on the proposal in person or by proxy.
Abstentions and broker nonvotes will not affect the outcome.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO AMEND THE 1995 STOCK PLAN AND TO REAPPROVE THE CURRENT PERFORMANCE CRITERIA
FOR PERFORMANCE AWARDS.
20
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned by (a) Boland T.
Jones, who served as the Chief Executive Officer of the Company during 2001,
and (b) the Company's four most highly compensated executive officers who were
serving as executive officers at December 31, 2001 (collectively, the ''Named
Executive Officers'').
Summary Compensation Table
Annual Compensation Long-Term Compensation
- - ----------------------------------- ----------------------------------
Restricted Securities
Other Annual Stock Underlying All Other
Salary Bonus Compensation Awards Options Compensation
Name And Principal Position Year ($) $(1) ($)(2) ($ )(3) (#) ($)(4)
--------------------------- ---- -------- -------- ------------ ---------- ---------- ------------
Boland T. Jones (5)........... 2001 $787,500 $826,875 -- $2,307,733 -- 0 -- $6,192,504
Chief Executive Officer and 2000 745,672 155,000 -- -- 0 -- 1,200,000 1,112,789
Chairman of the Board of 1999 527,271 525,000 -- 9,200,490 -- 0 -- 146,406
Directors
Jeffrey A. Allred (6)......... 2001 $525,000 $551,250 -- $3,737,530 -- 0 -- $3,033,703
President and Chief Operating 2000 497,482 103,333 -- -- 0 -- 700,000 840,562
Officer and Director 1999 369,090 367,500 -- 4,600,230 200,000 13,577
Patrick G. Jones (7).......... 2001 $393,750 $515,227 -- $ 430,853 -- 0 -- $ 14,066
Executive Vice President, 2000 373,341 78,751 -- -- 0 -- 100,000 14,045
Chief Legal Officer and 1999 289,999 188,857 -- 368,010 75,000 12,647
Corporate Secretary
Theodore P. Schrafft (8)...... 2001 $293,870 $166,821 -- $ 315,791 -- 0 -- $ 13,672
President, Premiere 2000 235,348 123,472 -- -- 75,000 1,022
Conferencing Business Unit 1999 173,077 92,000 -- -- -- 692
Max A. Slifer, Jr. (9)........ 2001 $300,000 $185,629 -- $ 533,006 -- 0 -- $ 2,006
Former President, Xpedite 2000 300,000 103,254 -- -- 0 -- -- 0 -- 45,077
Business Unit 1999 254,945 532,110 -- -- 0 -- -- 0 -- 3,514
- --------
(1) For 2001, the bonuses for Boland T. Jones and Jeffrey A. Allred were paid
in April 2002; $352,804 of the bonus for Patrick G. Jones was paid in
January 2002 and $75,797 of his bonus was paid in April 2002; $34,957 of
the bonus for Theodore P. Schrafft was paid in January 2002 and $64,752 of
his bonus was paid in April 2002; and $125,000 of the bonus for Max A.
Slifer, Jr. was paid in January 2002. The balance of the bonuses for 2001
were paid in 2001. For 2000, $48,669 of the bonus for Theodore P. Schrafft
was paid in February 2001, and all of the bonuses for Boland T. Jones and
Jeffrey A. Allred, and $42,514 of the bonus for Max A. Slifer, Jr., were
paid in March 2001. The balance of the bonuses for 2000 were paid in 2000.
For 1999, the bonuses for Boland T. Jones, Jeffrey A. Allred and Patrick G.
Jones, and $67,000 of the bonus for Theodore P. Schrafft, were paid in
March 2000, and Mr. Slifer's bonus included a $438,187 bonus payment
related to the acquisition of Xpedite Systems, Inc ("Xpedite").
(2) Excludes perquisites and other personal benefits the dollar value of which,
in the aggregate, was less than $50,000 or 10% of the executive's salary
and bonus with respect to the applicable year.
(3) For 2001, restricted stock awards for the Named Executive Officers
consisted of the following: (i) for Boland T. Jones, 756,841 shares for an
aggregate value of $2,573,259 as of December 31, 2001, of which (a) 156,125
shares vested on November 28, 2001, (b) 280,000 shares will vest on January
7, 2005, subject to accelerated vesting upon a change in control of the
Company or termination of employment without cause, and (c) 320,716 shares
were received in exchange for outstanding stock options pursuant to the
restricted stock exchange program; (ii) for Jeffrey A. Allred, 1,236,290
shares for an aggregate value of $4,203,386 as of December 31, 2001, of
which (a) 100,750 shares vested on November 28, 2001, (b) 80,000 shares
will vest on January 7, 2005, subject to accelerated vesting based upon a
change in control of the Company or termination of employment without
cause, (c) 240,000 shares vested on November 28, 2001 and 30,000
21
shares vest each quarter beginning March 31, 2002 through December 31, 2004,
subject to accelerated vesting upon a change in control of the Company or
termination without cause, and (d) 455,540 shares were received in exchange
for outstanding stock options pursuant to the restricted stock exchange
program; (iii) for Patrick G. Jones, 135,345 shares for an aggregate value
of $460,173 as of December 31, 2001 of which (a) 39,345 shares vested on
November 28, 2001, and (b) 96,000 shares were received in exchange for
outstanding stock options pursuant to the restricted stock exchange program;
(iv) for Theodore P. Schrafft, 97,206 shares for an aggregate value of
$330,500 as of December 31, 2001, of which (a) 14,750 shares vested on
November 28, 2001 and (b) 82,456 shares were received in exchange for
outstanding stock options pursuant to the restricted stock exchange program;
and (vi) for Max A. Slifer, Jr., 160,544 shares for an aggregate value of
$545,850 as of December 31, 2001, all of which shares were received in
exchange for outstanding stock options pursuant to the restricted stock
exchange program. Shares of restricted stock of the Company enjoy full
voting and dividend rights. For 1999, includes the value of grants made to
Boland T. Jones, Jeffrey A. Allred and Patrick G. Jones on May 5, 1999 in
the form of restricted stock in two companies in which the Company held
equity interests, WebMD and USA.NET.
(4) For 2001, all other compensation for the Named Executive Officers consisted
of the following: (i) for Mr. Jones, $16,740 in premiums on split dollar
life insurance, $7,875 in premiums on supplemental long-term disability
insurance, $561 in premiums on group term life insurance, $440 in premiums
on group long-term disability insurance, $54,137 for professional fees paid
related to tax and estate planning, $97,635 related to personal aircraft
usage, and $6,015,116 related to loan forgiveness; (ii) for Mr. Allred,
$1,760 in premiums on life insurance, $6,502 in premiums on supplemental
long-term disability insurance, $841 in premiums on group term life
insurance, $440 in premiums on group long-term disability insurance, $36
for professional fees paid related to tax and estate planning, $15,082
related to personal aircraft usage, and $3,009,042 related to loan
forgiveness; (iii) for Patrick Jones, $4,846 in premiums on life insurance,
$7,442 in premiums on supplemental long-term disability insurance, $1,338
in premiums on group term life insurance, and $440 in premiums on group
long-term disability insurance; (iv) for Mr. Schrafft, $3,365 in premiums
on supplemental long-term disability, $731 in premiums on group term life
insurance, $440 in premiums for group long-term disability insurance, and
$9,136 related to personal aircraft usage, and (v) for Max A Slifer, Jr.,
$1,566 in premiums on life insurance and $440 in premiums on group
long-term disability insurance.
(5) Mr. Boland Jones also served as President of the Company from February 1993
until August 1, 1998.
(6) Mr. Allred joined the Company as an executive officer in August 1997. Mr.
Allred served as Executive Vice President of Strategic Development from
August 1997 to January 1999, when he was appointed President and Chief
Operating Officer.
(7) Mr. Patrick Jones also served as Chief Financial Officer of the Company
from January 2000 to October 2001 and from November 1995 to May 1998.
(8) Mr. Schrafft became an executive officer in 2000.
(9) Mr. Slifer retired as an executive officer effective December 31, 2001.
Employment Agreements
The Company or its subsidiaries have entered into employment agreements with
the following Named Executive Officers, which in 2001 provided as follows:
Boland T. Jones. Boland Jones was paid a base annual salary of $787,500 for
2001. The term of Boland Jones' employment agreement expires on January 1,
2005. Thereafter, it renews automatically for successive one-year terms unless
either party elects not to renew at least 30 days prior to expiration of the
term. Boland Jones' employment agreement provides that he will not compete with
the Company during the term of his employment and for one year thereafter. The
Company may terminate Boland Jones' employment only for cause. Notwithstanding
such provision, if his employment is terminated for any reason, Boland Jones
will be entitled to
22
severance compensation equal to two and one-half times his base annual salary
plus target bonus in effect on the date of termination. In addition, if, during
the two-year period following a change in control of the Company, Boland Jones'
employment with the Company is terminated by him or the Company for any reason
other than cause, then Boland Jones will be entitled to severance compensation
equal to the greater of (1) an amount equal to 2.99 times the greater of (a)
his then current base annual salary plus target bonus and (b) the highest base
annual salary and bonus paid to Boland Jones during the three-year period prior
to the change in control, and (2) an amount equal to three percent of the
difference in the market value of the Company based on a stock price of $6.125
per share and the actual market value of the Company at the date of the change
in control, multiplied by .6, with the maximum amount not to exceed $25
million. In 2001 Boland Jones was eligible for bonus compensation equal to 100
percent of his base annual salary, based on the achievement of quarterly and
annual targets for revenues and EBITDA of the Company, which was subject to
increase if such targets were exceeded. Boland Jones received a $826,875 cash
bonus for 2001, which was paid in April 2002.
Under the terms of his employment agreement, in November 1995 Boland Jones
was granted options to acquire 1,440,000 shares of Common Stock at an exercise
price of $1.61 per share. One-third of these options vested on each of November
5, 1996, 1997 and 1998. Boland Jones' employment agreement also sets the terms
of certain other stock options granted to him, and permits him to borrow funds
from the Company for the exercise of all such options and the payment of taxes
related thereto. Any such borrowings must be secured by shares acquired upon
the exercise of such options, and the net proceeds from the sale of any such
shares must be applied to the outstanding principal and interest owed to the
Company.
Jeffrey A. Allred. Jeffrey Allred was paid a base annual salary of $525,000
for 2001. The term of Mr. Allred's employment agreement expires on January 1,
2005. Thereafter, it renews automatically for successive one-year terms unless
either party elects not to renew at least 30 days prior to expiration of the
term. Mr. Allred's employment agreement provides that he will not compete with
the Company during the term of his employment and for one year thereafter. The
Company may terminate Mr. Allred's employment only for cause. Notwithstanding
such provision, if Mr. Allred's employment is terminated without cause, he will
be entitled to severance compensation equal to two and one-half times his base
annual salary plus target bonus in effect on the date of termination. In
addition, if, during the two-year period following a change in control of the
Company, Mr. Allred's employment with the Company is terminated by him or the
Company for any reason other than cause, then Mr. Allred will be entitled to
severance compensation equal to the greater of (1) an amount equal to 2.99
times the greater of (a) his then current base annual salary plus target bonus
and (b) the highest base annual salary and bonus paid to Mr. Allred during the
three-year period prior to the change in control, and (2) an amount equal to
three percent of the difference in the market value of the Company based on a
stock price of $6.125 per share and the actual market value of the Company at
the date of the change in control, multiplied by .4, with the maximum amount
not to exceed $15 million. In 2001 Mr. Allred was eligible for bonus
compensation equal to 100 percent of his base annual salary, based on the
achievement of quarterly and annual targets for revenues and EBITDA of the
Company, which was subject to increase if such targets were exceeded. Mr.
Allred received a $551,250 cash bonus for 2001, which was paid in April 2002.
As a material inducement to his employment by the Company, Mr. Allred was
granted options to acquire 450,000 shares of Common Stock at an exercise price
of $23.375, which was the market value on the date of the grant. Mr. Allred's
options were subsequently repriced on July 22, 1998 and December 15, 1998 at
the per share prices of $10.25 and $5.50, respectively. One-third of these
options vested on each of August 11, 1997, 1999 and 2000. Mr. Allred's
employment agreement permits him to borrow funds from the Company for the
exercise of such options. Any such borrowings must be secured by shares
acquired upon the exercise of such options, and the net proceeds from the sale
of any such shares must be applied to the outstanding principal and interest
owed to the Company.
Patrick G. Jones. Patrick Jones was paid a base annual salary of $393,750
for 2001. The term of Patrick Jones' employment agreement expires on January 1,
2005. Thereafter, it renews automatically for successive one-year terms unless
either party elects not to renew at least 30 days prior to expiration of the
term. Patrick
23
Jones' employment agreement provides that he will not compete with the Company
during the term of his employment and for one year thereafter. The Company may
terminate Patrick Jones' employment only for cause. Notwithstanding such
provision, if his employment is terminated without cause, Patrick Jones will be
entitled to severance compensation equal to two and one-half times his base
annual salary plus target bonus in effect on the date of termination. In
addition, if, during the two-year period following a change in control of the
Company, Patrick Jones' employment with the Company is terminated by him or the
Company for any reason other than cause, then Patrick Jones is entitled to
severance compensation equal to two and one-half times his base annual salary
plus target bonus in effect on the date of termination. In 2001 Patrick Jones
was eligible to receive bonus compensation equal to 50 percent of his base
annual salary, based on the achievement of quarterly and annual targets for
revenues and EBITDA of the Company, which was subject to increase if such
targets were exceeded. Patrick Jones received a $204,751 cash bonus for 2001
based on such targets, of which $128,954 was paid in 2001 and $75,797 was paid
in April 2002. In addition, Patrick Jones received a discretionary cash bonus
of $310,476, which was paid in January 2002.
As a material inducement to his employment by the Company, in November 1995,
Patrick Jones was granted options to acquire 240,000 shares of Common Stock at
an exercise price of $1.61 per share. One-third of these options vested on each
of October 31, 1996, 1997 and 1998. Patrick Jones' employment agreement permits
him to borrow funds from the Company for the exercise of such options. Any such
borrowings must be secured by shares acquired upon the exercise of such
options, and the net proceeds from the sale of any such shares must be applied
to the outstanding principal and interest owed to the Company.
Theodore P. Schrafft. Theodore P. Schrafft was paid a base annual salary of
$293,870 for 2001. The term of Mr. Schrafft's employment agreement expires on
December 31, 2003. Thereafter, it renews automatically for successive one-year
terms unless either party elects not to renew at least 90 days prior to
expiration of the term. Mr. Schrafft's employment agreement provides that he
will not compete with the Company during the term of his employment and for one
year thereafter. The Company may terminate Mr. Schrafft's employment for cause.
If his employment is terminated without cause, Mr. Schrafft will be entitled to
severance compensation equal to his base annual salary in effect on the date of
termination, subject to certain adjustments. In addition, if, during the
two-year period following a change in control of American Teleconferencing
Services, Ltd. ("ATS"), Mr. Schrafft's employment with ATS is terminated by him
for adequate justification or by ATS for any reason other than cause, then Mr.
Schrafft is entitled to severance compensation equal to two times his base
annual salary in effect on the date of termination. In 2001 Mr. Schrafft was
eligible to receive bonus compensation equal to 50 percent of his base annual
salary, based on the achievement of quarterly and annual targets for revenues
and EBITDA of the Company, which was subject to increase if such targets were
exceeded. Mr. Schrafft received a $166,821 cash bonus for 2001, $67,112 of
which was paid in 2001, $34,957 of which was paid in January 2002 and $64,752
of which was paid in April 2002.
Max A. Slifer, Jr. Max Slifer was paid a base annual salary of $300,000 for
2001. In 2001 Mr. Slifer was eligible to receive bonus compensation equal to 50
percent of his base annual salary, based on the achievement of quarterly and
annual targets for revenues and EBITDA of the Xpedite business unit, which was
subject to increase if such targets were exceeded. Mr. Slifer received a
$60,629 cash bonus for 2001 based on such targets, all of which was paid in
2001. Mr. Slifer was also eligible to receive a bonus of $125,000 for each full
year of employment following the year 2000, which was paid in January 2002. The
term of Mr. Slifer's employment agreement was to expire on August 31, 2002;
however, he retired as an executive officer on December 31, 2002. The Company,
Xpedite and Mr. Slifer entered into a Separation Agreement as of December 31,
2002 which provides that Mr. Slifer will receive $330,750 in separation
payments over the twelve-month period ending December 31, 2002. Mr. Slifer will
also continue to receive health insurance benefits during 2002 at Xpedite's
cost. If Mr. Slifer is employed by a third party during the twelve-month period
following termination of his employment agreement, any salary received by Mr.
Slifer from the third party employer will be subtracted from any separation
payments due from Xpedite. In addition, Xpedite released all of its rights in a
life insurance policy owned by Mr. Slifer and forgave his obligation to repay
premium payments made by Xpedite in respect thereto in the amount of $70,885.
Mr. Slifer's employment agreement provides that he will not compete with
Xpedite during the term of his agreement and, following termination of his
agreement, for the longer of two years and what would have been the remaining
term of his agreement.
24
Option Grants in 2001
No stock options were granted to the Named Executive Officers during 2001.
Ten-Year Historical Information Regarding Repricing, Replacement or
Cancellation and Regrant of Options
The following sets forth certain information concerning the repricing,
replacement or cancellation and regrant of options or other equity securities
which has occurred over the last ten fiscal years with respect to options held
by executive officers of the Company.
1996 Repricing of Options
As a means of ensuring that the executive officers would continue to have
meaningful equity incentives to promote the growth and profitability of the
Company, on July 11, 1996, the Company canceled options that had previously
been granted to certain executive officers with exercise prices of $27.00 per
share and granted an identical number of new options with identical terms and
vesting periods to these persons with an exercise price of $18.50, which was
the market price of the Common Stock on the date such options were repriced.
1998 Repricings of Options
During 1998, sharp declines in the market price of the Common Stock again
resulted in many of the outstanding employee stock options being exercisable at
prices that exceeded the current market price, thereby substantially impairing
the effectiveness of such options as performance incentives. Consistent with
the Company's philosophy of using equity incentives to motivate and retain
management and employees, the Board of Directors determined twice during 1998
that it was in the best interests of the Company and its shareholders to
restore the performance incentives intended to be provided by employee stock
options by repricing such options. On July 22, 1998 the Board of Directors
repriced and regranted all employee stock options (other than those granted to
the Chief Executive Officer) which had exercise prices in excess of $10.25. The
new options were priced at $10.25, the closing price of the Common Stock on the
repricing date. While the vesting schedules remained unchanged, the repriced
and regranted options were subject to a 12-month blackout period, during which
the options could not be exercised. If an optionee's employment was terminated
during the blackout period, he or she forfeited any repriced or regranted
options that first vested during the 12-month period preceding his or her
termination of employment. On December 14, 1998, the Board of Directors
repriced and regranted all employee stock options (including those held by the
Chief Executive Officer) which had exercise prices in excess of $5.50. The
options were repriced to $5.50, which was above the closing price of the Common
Stock on the repricing date. Again, while the vesting schedules remained
unchanged, the new options were subject to the 12-month blackout and forfeiture
provisions described above.
2001 Exchange of Options for Restricted Stock
On November 29, 2001, the Company filed with the Securities and Exchange
Commission a Tender Offer Statement on Schedule TO relating to an offer by the
Company to purchase from its employees and directors (and one former employee
who was serving as a consultant to the Company) certain outstanding stock
options having an exercise price of more than $3.00 per share in exchange for
restricted shares of the Company's Common Stock at an exchange ratio of one
share of restricted stock for each 2.5 options surrendered. A third party
consultant was used in determining the exchange ratio. On December 28, 2001,
the exchange offer was completed, and the Company accepted for purchase options
exercisable for approximately 6.0 million shares of Common Stock, and issued
approximately 2.4 million shares of restricted stock in exchange for the
options tendered. The restricted stock is subject to the same vesting schedule
as the tendered options, and is subject to a 12-month blackout period during
which time the restricted stock may not be sold except to pay withholding taxes
or in the case of financial hardship.
25
The following table summarizes all repricings of options held of record by
the executive officers of the Company during the last ten fiscal years.
Ten-Year Option Repricings Table
New
Exercise Original
Market Exercise Price ($) or Option
Number of Price of Price at Number (#) Term
Securities Stock at Time of of Remaining
Underlying Time of Repricing Restricted at Date of
Options Repricing or or Shares Repricing or
Repriced or Exchange Exchange Received Exchange
Name Date Exchanged ($) ($) (1) (In Years)
- ---- -------- ----------- ------------ --------- ------------ ------------
Boland T. Jones..................... 7/11/96 50,000 $18.50 $ 27.00 $ 18.50 5.72
Chief Executive Officer and 7/22/98 -- -- -- -- --
Chairman of the Board of Directors 12/14/98 250,000 $4.938 $ 24.50 $ 5.50 4.05
12/14/98 50,000 $4.938 $ 18.50 $ 5.50 3.29
12/28/01 250,000 $ 3.32 $ 5.50 100,000 1.01
12/28/01 50,000 $ 3.32 $ 5.50 20,000 0.25
12/28/01 1,789 $ 3.32 $ 5.23 716 6.72
12/28/01 500,000 $ 3.32 $ 6.125 200,000 8.03
Jeffrey A. Allred................... 7/22/98 438,849 $10.25 $23.375 $ 10.25 7.01
President and Chief Operating 12/14/98 438,849 $4.938 $ 10.25 $ 5.50 6.61
Officer and Director 12/28/01 438,849 $ 3.32 $ 5.50 175,540 3.57
12/28/01 200,000 $ 3.32 $ 7.063 80,000 5.17
12/28/01 500,000 $ 3.32 $ 6.125 200,000 8.03
Patrick G. Jones.................... 7/11/96 15,000 $18.50 $ 27.00 $ 18.50 5.72
Executive Vice President, Chief 7/22/98 50,000 $10.25 $ 18.50 $ 10.25 4.45
Legal Officer and Corporate 7/22/98 15,000 $10.25 $ 24.50 $ 10.25 3.69
Secretary 12/14/98 50,000 $4.938 $ 10.25 $ 5.50 4.05
12/14/98 15,000 $4.938 $ 10.25 $ 5.50 3.29
12/28/01 50,000 $ 3.32 $ 5.50 20,000 1.01
12/28/01 15,000 $ 3.32 $ 5.50 6,000 0.25
12/28/01 75,000 $ 3.32 $ 7.063 30,000 5.17
12/28/01 100,000 $ 3.32 $ 6.125 40,000 6.03
Theodore P. Schrafft................ 7/22/98 500 $10.25 $ 22.50 $ 10.25 4.48
President, Premiere Conferencing 7/22/98 50,000 $10.25 $ 22.50 $ 10.25 7.49
Business Unit 12/14/98 250 $4.938 $ 10.25 $ 5.50 4.09
12/14/98 25,000 $4.938 $ 10.25 $ 5.50 7.09
12/28/01 250 $ 3.32 $ 5.50 100 1.05
12/28/01 933 $ 3.32 $ 6.44 374 5.15
12/28/01 25,000 $ 3.32 $ 5.50 10,000 4.05
12/28/01 4,954 $ 3.32 $ 6.44 1,982 4.70
12/28/01 100,000 $ 3.32 $ 5.50 40,000 4.97
12/28/01 75,000 $ 3.32 $ 6.125 30,000 6.03
Max A. Slifer, Jr................... 7/22/98 350,100 $10.25 $ 29.25 $ 10.25 8.62
Former President, Xpedite Business 7/22/98 34,950 $10.25 $ 12.88 $ 10.25 5.57
Unit 7/22/98 16,310 $10.25 $ 12.02 $ 10.25 6.95
12/14/98 350,100 $4.938 $ 10.25 $ 5.50 8.22
12/14/98 34,950 $4.938 $ 10.25 $ 5.50 5.17
12/14/98 16,310 $4.938 $ 10.25 $ 5.50 6.56
12/28/01 350,100 $ 3.32 $ 5.50 140,040 5.18
12/28/01 34,950 $ 3.32 $ 5.50 13,980 2.13
12/28/01 16,310 $ 3.32 $ 5.50 6,524 3.52
26
New
Exercise Original
Market Exercise Price ($) or Option
Number of Price of Price at Number (#) Term
Securities Stock at Time of of Remaining
Underlying Time of Repricing Restricted at Date of
Options Repricing or or Shares Repricing or
Repriced or Exchange Exchange Received Exchange
Name Date Exchanged ($) ($) (1) (In Years)
- ---- ---- ----------- ------------ --------- ------------ ------------
William E. Franklin.................
Executive Vice President and Chief
Financial Officer -- -- -- -- -- --
Richard J. Buyens...................
President of Global Services -- -- -- -- -- --
Robert P. Mainor....................
President, Xpedite Business Unit -- -- -- -- -- --
- --------
(1) For options repriced on December 28, 2001, each option was exchanged for a
restricted share award at an exchange ratio of one share of restricted
stock for every 2.5 options surrendered.
Option Exercises in 2001 and Year-End Option Values
The following table sets forth information regarding (a) the number of
shares of Common Stock received upon exercise of options by the Named Executive
Officers during 2001, (b) the net value realized upon such exercise, (c) the
number of unexercised options held at December 31, 2001 and (d) the aggregate
dollar value of unexercised options held at December 31, 2001.
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options At
Shares Options at FY End(#) FY-End($)(1)
Acquired On Value ------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- -------------
Boland T. Jones..... -- 0 -- -- 0 -- -- 0 -- -- 0 -- -- 0 -- -- 0 --
Jeffrey A. Allred... -- 0 -- -- 0 -- -- 0 -- -- 0 -- -- 0 -- -- 0 --
Patrick G. Jones.... -- 0 -- -- 0 -- 193,000 -- 0 -- $345,470 -- 0 --
Theodore P. Schrafft -- 0 -- -- 0 -- -- 0 -- -- 0 -- -- 0 -- -- 0 --
Max A. Slifer, Jr... -- 0 -- -- 0 -- -- 0 -- -- 0 -- -- 0 -- -- 0 --
- --------
(1) These values have been calculated by subtracting the option exercise price
from the market price of the Common Stock on The Nasdaq Stock Market's
National Market on December 31, 2001, and multiplying that figure by the
total number of exercisable/unexercisable options.
27
The following Report of the Compensation Committee and the 1995 Stock Plan
Committee, the Report of the Audit Committee, and the Stock Performance Graph
do not constitute "soliciting material" and should not be deemed to be "filed"
with the Securities and Exchange Commission or incorporated by reference into
any other filing of the Company under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates these Reports or the Stock Performance Graph by
reference in any of those filings.
REPORT OF THE COMPENSATION COMMITTEE
AND THE 1995 STOCK PLAN COMMITTEE
OF THE BOARD OF DIRECTORS
Introduction
The Compensation Committee is responsible for reviewing and approving the
compensation arrangements for the Company's executive officers and the 1995
Stock Plan Committee is responsible for determining and administering option
grants to executive officers and other employees under the 1995 Stock Plan.
From January to June 2001, the members of the Compensation Committee were
Messrs. Pirtle and Baker and Ms. Ward, and the members of the 1995 Stock Plan
Committee were Messrs. Pirtle and Baker. For the remainder of 2001, the members
of the Compensation Committee were Messrs. Baker, Smith and Cunningham and the
members of the 1995 Stock Plan Committee were Messrs. Baker and Smith.
The Company's executive compensation policy, as implemented by the
Compensation Committee and the 1995 Stock Plan Committee, is designed to
provide a competitive compensation program that will enable the Company to
attract, motivate, reward and retain executives who have the skills, experience
and talents required to promote the short- and long-term financial performance
and growth of the Company. In this manner, the Company seeks to meet its
ultimate responsibility to its shareholders.
Generally, in establishing levels of compensation for executive officers,
the Compensation Committee and the 1995 Stock Plan Committee consider all
factors they deem appropriate, which may include, among others:
. level and scope of responsibilities;
. pay levels of executive officers in comparable companies;
. experience, achievements and special expertise;
. achievement of specific business initiatives;
. appropriate inducements to initial and continued employment;
. the Company's recent financial results compared to financial results for
prior years and compared to the Company's business plan; and
. alignment of the interests of executive officers with those of
shareholders through award opportunities that can result in ownership of
Common Stock.
These factors, however, are only generally considered and all compensation
decisions involve subjectivity.
The Company has employment agreements with the following Named Executive
Officers who are still executive officers--Boland T. Jones, Jeffrey A. Allred,
Patrick G. Jones and Theodore P. Schrafft. See ''Employment Agreements'' above.
These employment agreements contain the general terms of each such executive
officer's employment and establish the minimum compensation that such officers
are entitled to receive, but do not prohibit, limit or restrict these officers'
ability to receive additional compensation from the Company, whether in the
form of base salary, bonus, stock options or otherwise. The Company also had an
employment agreement with Max A. Slifer, Jr., a Named Executive Officer who
retired as an executive officer of the Company effective December 31, 2001. See
"Employment Agreements" above.
The Company's executive compensation generally has three elements: base
salary, annual incentive compensation and long-term incentive compensation,
typically in the form of cash compensation, stock option grants, restricted
stock awards and participation in other benefits programs. The following is a
summary of the considerations underlying each element.
28
Base Salaries
The base salaries of the executive officers are initially determined
pursuant to their employment agreements. Initial salary levels are determined
based on the factors discussed above and the recommendations of the Chief
Executive Officer for salaries other than his own; however, the Compensation
Committee retains the discretion to increase the initial salary levels. The
Compensation Committee periodically evaluates the salaries of the executive
officers based upon the level and scope of the responsibilities of the office,
prior experience and achievements, the importance of each executive's
contributions to the Company and the pay levels of similarly positioned
executive officers in comparable companies.
Annual Incentive Compensation
The Company's executive officers are eligible to receive cash bonus awards.
The key components in determining the amount of such awards include the
individual growth and success of the Company as measured by revenue growth,
cash flows and other financial performance goals, as well as the financial
performance of the Company in the context of the overall industry and economic
environment. The judgment of the Compensation Committee, and of the Chief
Executive Officer in the case of other executive officers, as to the impact of
the individual on the financial performance of the Company are also considered.
Long-Term Incentive Compensation
Grants of stock options and restricted stock to executive officers are
generally made under the 1995 Stock Plan administered by the 1995 Stock Plan
Committee. The Company believes that long-term incentive compensation in the
form of stock options and restricted stock is one of the most direct ways of
making executive compensation dependent upon increases in shareholder value.
Stock options and restricted stock provide a means through which executive
officers can build an investment in the Common Stock which will align such
officers' economic interests with the interests of the shareholders. The 1995
Stock Plan Committee believes that the grant of stock options and restricted
stock has been a particularly important component of its success in attracting
and retaining talented management employees. The 1995 Stock Plan Committee
believes that stock options and restricted stock give the executive officers
greater incentives throughout the term of the options and restricted stock to
strive to operate the Company in a manner that directly affects the financial
interests of the shareholders both on a long-term, as well as a short-term,
basis.
In determining the number of option shares and shares of restricted stock to
grant executive officers, the 1995 Stock Plan Committee considers on a
subjective basis the same factors as it does in determining the other
components of compensation, with no single factor accorded special weight. The
recommendation of the Chief Executive Officer is important in determining
awards to persons other than himself.
In November 2001, Messrs. Boland Jones, Allred, Buyens, Patrick Jones and
Schrafft were granted 156,125, 100,750, 1,000, 39,345 and 14,750 shares of
restricted stock of the Company, respectively, which vested on November 28,
2001. In addition, in November 2001 Messrs. Boland Jones and Allred were
granted 280,000 and 80,000 shares of restricted stock, respectively, that vest
on January 7, 2005, subject to accelerated vesting in the event of a change in
control of the Company or termination of employment without cause; these shares
were granted in replacement of stock options that the Committees had intended
to grant to Messrs. Boland Jones and Allred in 2000, but were unable to do so
due to certain annual grant limits in the 1995 Stock Plan. In November 2001,
Mr. Allred was also granted 600,000 shares of restricted stock, of which
240,000 shares vested on November 28, 2001 and 30,000 shares vest per quarter
starting on March 31, 2002 and ending on December 31, 2004, subject to
accelerated vesting upon a change in control of the Company or termination of
employment without cause. The Company has agreed to lend to Messrs. Boland
Jones, Allred, Buyens, Patrick Jones and Schrafft upon request the amount of
taxes due with respect to the shares of restricted stock granted, with each
such loan to be evidenced by a 10-year recourse promissory note bearing
interest at the applicable Federal rate, and secured by the restricted stock.
See "Certain Transactions" below.
29
Loan Forgiveness
With the intent of rewarding and retaining key executives in a competitive
market for executive talent and more closely aligning such executives'
interests with the Company's interests, the Compensation Committee, based on
the advice by Arthur Andersen Human Capital Services that such an award was
reasonable and proper, awarded Messrs. Boland Jones, Allred and Patrick Jones
grants in the form of restricted stock in WebMD and USA.NET on May 5, 1999 (the
"Grant"). In connection with their Grants, the Company agreed to lend each of
Messrs. Boland Jones and Allred, pursuant to a recourse promissory note in
favor of the Company, an amount equal to the federal, state and local taxes
required to be paid with respect to the value of the Grants treated as
compensation (the "Grant Notes"). Interest accrued on the unpaid principal
balance of each Grant Note at the rate of 6.2% per annum, and the entire
outstanding principal balance plus all accrued interest were due and payable
for each Grant Note on December 31, 2006. In March 2000, the Company agreed to
forgive one-seventh of the principal plus accrued interest on the Grant Notes
as of December 31, 2000, provided the executives were employees of the Company
on that date. These amounts were forgiven as of December 31, 2000, resulting in
income of $841,315 and $422,651 to Messrs. Boland Jones and Allred,
respectively. In addition, the unpaid balance of each Grant Note was to be
forgiven in its entirety in the event of a change in control of the Company or
the termination of the executive's employment by the Company without cause. In
March 2001, the Company loaned Messrs. Boland Jones and Allred $384,986 and
$193,405, respectively, to pay taxes resulting from the December 31, 2000 loan
forgiveness. Such loans were evidenced by promissory notes with the same terms
as the Grant Notes except the interest rate was 4.88% per annum (the "Tax
Loans"). In May 2001, based on the advice of Buck Consultants that the
compensation arrangement was fair and reasonable and supported by good
corporate purpose and industry practice, the Company agreed to forgive
one-fourth of the outstanding principal balances of the Grant Notes and the Tax
Loans, plus all accrued interest, on each of January 1, 2002 through 2005,
provided that Messrs. Boland Jones and Allred were employees of the Company on
each of such dates. The Company also agreed to gross-up Messrs. Boland Jones
and Allred for income taxes owed with respect to the forgiveness of such Notes.
In addition, the Company agreed to pay Mr. Patrick Jones a bonus in January of
2002 through 2005 in the amount of $77,619 each, provided that he was an
employee of the Company on January 1 of each of those years; provided further,
that in the event of a change in control of the Company or Mr. Jones'
employment was terminated without cause, the full amount of the unpaid bonus
payments would be due and payable upon the occurrence of such event. In May
2001, Messrs. Boland Jones, Allred and Patrick Jones were required to return to
the Company the shares of USA.NET they received as part of their Grants. In
December 2001, the Company agreed to forgive the principal balance of the Grant
Loans and Tax Loans, plus all accrued interest thereon, as of December 31,
2001, and to gross-up Messrs. Boland Jones and Allred for income taxes owed
with respect to such forgiveness, and to accelerate the payment to Mr. Patrick
Jones of the bonuses previously payable through 2004, which was paid to Mr.
Jones in January 2002 in the amount of $310,476. The principal balance plus
accrued interest forgiven as of December 31, 2001 was $3,912,833 and
$1,957,382, respectively, for Messrs. Boland Jones and Allred, and the Company
has paid $2,729,479 and $1,365,413 to or on behalf of Messrs. Boland Jones and
Allred, respectively, in connection with the tax gross-up. See "Certain
Transactions."
Restricted Stock Exchange Program
On November 29, 2001, the Company offered a restricted stock exchange
program to its employees and directors whereby the Company offered to purchase
certain outstanding stock options which had an exercise price of more than
$3.00 per share in exchange for restricted shares of the Company's Common Stock
at an exchange ratio of one share of restricted stock in exchange for each 2.5
options surrendered. On December 28, 2001, the exchange offer was completed.
The restricted shares generally are subject to the same vesting schedules as
the tendered options, and are subject to a 12-month blackout period during
which time the restricted stock may not be sold except to pay withholding taxes
or in the case of financial hardship.
With the decline in the Company's share price over the course of the last
several years, the Company believed that the exchange program would provide
better performance incentives to align the employees' and directors' interests
with those of the shareholders. Equity incentives constitute a significant
component of the total compensation package of each of the Company's executive
officers and plays a substantial role in the Company's ability to retain the
services of the individuals essential to the Company's long-term financial
success. The Company's ability to retain these individuals would be
significantly impaired unless their out-of-the money options were replaced with
valuable equity incentives in the form of restricted stock awards for which
30
they paid no cash consideration but would be forfeited were they to leave the
Company's employ prior to the vesting of their awards.
All of the Named Executive Officers (and no other executive officers)
participated in the restricted stock exchange program, as follows:
Name Options Tendered Restricted Shares Received
---- ---------------- --------------------------
Boland T. Jones..... 801,789 320,716
Jeffrey A. Allred... 1,138,849 455,540
Patrick G. Jones.... 240,000 96,000
Theodore P. Schrafft 206,137 82,456
Max A. Slifer, Jr... 401,360 160,544
The Company has agreed to lend each of the Named Executive Officers upon
request the amount of taxes due with respect to the restricted shares received
in the exchange program, with each such loan to be evidenced by a 10-year
recourse promissory note bearing interest at the applicable Federal rate, and
secured by the restricted stock. See "Certain Transactions" below.
Policy on Deductibility of Compensation
Section 162(m) of the Code disallows the deduction for certain annual
compensation in excess of $1,000,000 paid to certain executive officers of the
Company, unless the compensation qualifies as "performance-based" as defined in
the Code and applicable regulations. The 1995 Stock Plan permits the grant of
stock options and other awards that are fully deductible under Code Section
162(m). All stock options that have been granted under the 1995 Stock Plan are
fully deductible, but restricted stock awards that have been granted under the
1995 Plan are subject to the Code Section 162(m) deduction limitation. The
Compensation Committee and the 1995 Stock Plan Committee intend to maximize the
deductibility of executive compensation while retaining the discretion
necessary to compensate executive officers in a manner commensurate with
performance and the competitive market for executive talent.
Chief Executive Officer Compensation
Boland Jones has served as the Chief Executive Officer and a director of the
Company since its inception in July 1991. The Compensation Committee considered
a variety of factors that it deemed appropriate in establishing Mr. Jones'
compensation, which included the three elements described above: base salary,
annual incentive compensation and long-term incentive compensation. The
Compensation Committee believes that the role of the Chief Executive Officer is
particularly important in reaching corporate objectives and accordingly reviews
the Chief Executive Officer's compensation package annually based on his
performance as Chief Executive Officer and the overall performance of the
Company. In establishing Mr. Jones' compensation for 2001, the Compensation
Committee recognized Mr. Jones' leadership skills in assembling and developing
a strong management team, made an overall assessment of Mr. Jones' individual
performance in achieving the Company's long-term strategic and business goals,
and relied on the advice of a nationally recognized executive compensation firm
that the loan forgiveness was fair and reasonable and supported by good
corporate purpose and industry practice.
The foregoing report has been submitted by:
Compensation Committee
J. Walker Smith, Jr.
George W. Baker, Sr.
Jeffrey M. Cunningham
Raymond H. Pirtle, Jr.
Jackie M. Ward
1995 Stock Plan Committee
J. Walker Smith, Jr.
George W. Baker, Sr.
Raymond H. Pirtle, Jr.
31
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
Pursuant to the Company's Amended and Restated Audit Committee Charter and
under applicable Nasdaq listing criteria, the Audit Committee must comprise at
least three directors, all of whom are independent, unless the Board of
Directors determines, under exceptional and limited circumstances, that
membership on the Audit Committee by one non-independent director who is not an
employee or immediate family member of an employee is required by the best
interests of the Company and its shareholders. The Audit Committee currently
comprises Hermann Buerger, Raymond H. Pirtle, Jr. and Randolph L. Booth, all of
whom are independent.
During 2001, the Audit Committee initially comprised Jackie M. Ward and Mr.
Pirtle until March, when Jeffrey M. Cunningham joined the Audit Committee. In
June 2001, Mr. Buerger replaced Mr. Pirtle as a member of the Audit Committee,
and in August 2001 Mr. Pirtle rejoined the Audit Committee upon Ms. Ward's
resignation from the Audit Committee. On March 5, 2002, in connection with Mr.
Cunningham's agreement to provide certain services to the Corporation on a
consulting basis with respect to customer development, business development and
strategic planning, the Corporation granted Mr. Cunningham an option to
purchase 200,000 shares of the Company's Common Stock and agreed to pay Mr.
Cunningham a maximum of $200,000 in cash compensation. (See "Certain
Transactions" below.) The Board considered whether Mr. Cunningham's continued
service on the Audit Committee was appropriate in light of such arrangement,
taking into account the following factors, among others: the extent of Mr.
Cunningham's knowledge of sophisticated financial and business matters; Mr.
Cunningham's familiarity with the Company's finance and accounting practices;
Mr. Cunningham's business background, including his service with other publicly
held companies as a director; Mr. Cunningham's experience in the technology
industry; and the fact that the Board anticipated the subsequent appointment to
the Board of a new independent director suitable to succeed Mr. Cunningham on
the Audit Committee. In view of the foregoing exceptional and limited
circumstances, among others, the Board determined that Mr. Cunningham's
continued membership on the Audit Committee was required by the best interests
of the Company and its shareholders, consistent with Nasdaq listing criteria.
On April 26, 2002, Mr. Cunningham resigned from the Audit Committee and the
Board appointed Randolph L. Booth as his replacement on that same date.
In June 2000, the Board adopted an Audit Committee Charter, which was
amended and restated in March 2002. A copy of the Amended and Restated Audit
Committee Charter is attached as Appendix A to this Proxy Statement. The
Charter specifies the scope of the Audit Committee's oversight role and how it
carries out its activities.
The Company's management has primary responsibility for the Company's
financial statements and reporting process, including the systems of internal
controls. The Company's independent accountants are responsible for performing
an independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and issuing a report
thereon. The Audit Committee oversees these processes and recommends annually
to the Board of Directors the selection of the Company's independent
accountants for the coming year.
The Audit Committee has reviewed and discussed the Company's December 31,
2001 audited financial statements with management and with
PricewaterhouseCoopers LLP, the Company's independent accountants. The Audit
Committee also has discussed with PricewaterhouseCoopers LLP the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees), as amended by Statement on Auditing
Standards No. 90 (Audit Committee Communications).
The Audit Committee also has received from PricewaterhouseCoopers LLP the
written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees) and has
discussed with PricewaterhouseCoopers LLP their independence from the Company.
The Audit Committee has also considered and determined that the provision of
non-audit services to the Company is compatible with the independence of
PricewaterhouseCoopers LLP.
32
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board that the December 31, 2001 audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001 that was filed with the Securities and Exchange
Commission.
The foregoing report has been submitted by the following members of the
Audit Committee of the Board:
Hermann Buerger
Jeffrey M. Cunningham
Raymond H. Pirtle, Jr.
33
STOCK PERFORMANCE GRAPH
The following graph shows the cumulative total shareholder return on the
Company's Common Stock, the Standard & Poor's 500 Composite Stock Price Index
(the ''S&P 500''), and a self-determined peer group (the "Peer Group") for the
period beginning December 31, 1996 and ending December 31, 2001. The graph
assumes an investment in the Company's Common Stock, the S&P 500 and the Peer
Group of $100 on December 31, 1996, and that all dividends were reinvested.
Total return calculations were prepared by the Center for Research in
Securities Prices, The University of Chicago.
[CHART]
D 12/96 12/97 12/98 12/99 12/00 12/01
O PTEK HOLDINGS, INC. 100.00 110.50 29.50 28.00 5.75 13.60
L S & P 500 100.00 133.36 171.47 207.56 188.66 166.24
L PEER GROUP 100.00 61.40 69.20 137.12 62.69 29.45
A
R
S
12/31/96 12/31/97 12/31/98 12/31/99 12/29/00 12/31/01
-------- -------- -------- -------- -------- --------
PTEK Holdings, Inc 100.0 110.50 29.50 28.00 5.75 13.60
S&P 500........... 100.0 133.36 171.47 207.56 188.66 166.24
Peer Group........ 100.0 61.40 69.20 137.12 62.69 29.45
The Peer Group consists of each of the companies in the "2000 Peer Group"
included in the Company's Proxy Statement for its 2001 Annual Meeting of
Shareholders, other than companies that are no longer listed or have merged
with other entities. The Peer Group includes the following companies: ACT
Teleconferencing, Inc.; Captaris, Inc.; Critical Path, Inc.; EasyLink Services
Corporation; General Magic, Inc.; J2 Global Communications, Inc.; and West
Corporation.
34
CERTAIN TRANSACTIONS
The Company has made loans to Boland T. Jones and a limited partnership in
which Mr. Jones has an indirect interest. These loans were made pursuant to Mr.
Jones' employment agreement for the exercise price of certain stock options and
the taxes related thereto. Each of these loans is evidenced by a recourse
promissory note bearing interest at the applicable Federal rate, and secured by
the Common Stock purchased. These loans mature between 2007 and 2010. The
highest aggregate amount of the loans outstanding since January 1, 2001 was
$4,853,274.
The Company made loans starting in 1999 to Boland T. Jones and Jeffrey A.
Allred in connection with the awards of restricted stock in WebMD and USA.NET
to Messrs. Jones and Allred, which loans were forgiven. See "Report of the
Compensation Committee and the 1995 Stock Plan Committee of the Board of
Directors--Loan Forgiveness."
In 2001, the Company issued restricted shares of the Company's Common Stock
to certain executive officers. (See "Report of the Compensation Committee and
the 1995 Stock Plan Committee of the Board of Directors.") The Company has
agreed to lend to the following executive officers the amount of taxes due with
respect to the shares of restricted stock granted, with each such loan
evidenced by a 10-year recourse promissory note bearing interest at the
applicable Federal rate, and secured by the restricted stock.
Name Amount
---- --------
Boland T. Jones..... $350,007
Jeffrey A. Allred... $798,291
Patrick G. Jones.... $152,366
Theodore P. Schrafft $107,097
Max A. Slifer, Jr... $196,871
In March 2002, the Board of Directors approved an arrangement with Jeffrey
M. Cunningham pursuant to which he became Vice Chairman of the Board, a
non-employee position, and in such position he will provide services to the
Company with respect to customer development, business development and
strategic planning, focusing initially on customer development at the Company's
Premiere Conferencing business unit. In connection therewith, the Company
granted to Mr. Cunningham an option to purchase 200,000 shares of the Company's
Common Stock at an exercise price of $4.08, which was the fair market value of
the Common Stock on the date of grant. These options vest and become
exercisable five years after the date of grant provided that Mr. Cunningham is
a member of the Board on that date, subject to accelerated vesting in the event
certain revenue targets are achieved and in the event of a change in control of
the Company. In addition, the Company has agreed to pay Mr. Cunningham a
maximum of $200,000 in cash compensation, comprised of $10,000 per month for
the first twelve months and up to $80,000 in the event certain revenue targets
are achieved.
During 2001, a subsidiary of the Company leased the use of an airplane from
a limited liability company that is owned 99 percent by Boland T. Jones and one
percent by a subsidiary of the Company. In connection with this lease
arrangement, the Company incurred costs of $2 million in 2001 to maintain and
operate the airplane.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2001, George W. Baker, Sr. served on the Compensation Committee the
entire year; Raymond H. Pirtle, Jr. and Jackie M. Ward served from January
until June; and J. Walker Smith, Jr. and Jeffrey M. Cunningham served from June
until December. None of these directors has ever been employees of the Company.
Mr. Baker is Boland T. Jones' father-in-law.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
Officers, directors and greater than ten percent beneficial owners are required
by applicable regulations to furnish the Company with copies of all Section
16(a) forms they file.
35
The Company is required to describe in this Proxy Statement whether it has
knowledge that any person required to file such a report may have failed to do
so in a timely manner. In this regard, all of the Company's directors, all
officers subject to the reporting requirements and each beneficial owner of
more than ten percent of any class of the Company's Common Stock satisfied all
applicable filing requirements except for the following: Hermann Buerger and J.
Walker Smith, Jr. failed to timely file an initial report upon becoming a
director in June 2001; Richard J. Buyens failed to timely file an initial
report upon becoming an officer in August 2001; William E. Franklin failed to
timely file an initial report upon becoming an officer in October 2001; and Max
A. Slifer, Jr. failed to timely file an annual statement of changes in February
2002. All of these reports have now been filed. The foregoing is based upon
reports furnished to the Company.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP as auditors
for the Company for the current fiscal year ending December 31, 2002. Arthur
Andersen LLP served as independent public accountants for the Company until
they were dismissed by the Company on October 2, 2001, at which time the
Company engaged PricewaterhouseCoopers LLP as its independent public
accountants for the remainder of the year ended December 31, 2001. The Audit
Committee of the Board of Directors participated in and approved the decision
to change independent public accountants. The audit report of Arthur Andersen
LLP on the consolidated financial statements of the Company as of December 31,
2000 and for the years ended December 31, 1999 and 2000 did not contain any
adverse opinion or disclaimer of opinion, nor was it qualified or modified as
to uncertainty, audit scope or accounting principle. In connection with the
audits for the years ended December 31, 1999 and 2000, and through October 2,
2001, there were no disagreements with Arthur Andersen LLP on any matter of
accounting principle or practice, financial statement disclosure, or auditing
scope or procedure, which disagreement if not resolved to the satisfaction of
Arthur Andersen LLP, would have caused them to make references to them in their
report on the financial statements for those years. During the years ended
December 31, 1999 and 2000, and through October 2, 2001, there were no
reportable events as defined in Item 304(a)(1)(v) of Regulation S-K. The
Company has furnished Arthur Andersen LLP with a copy of the disclosures made
in this Proxy Statement. Arthur Andersen LLP furnished a letter dated October
9, 2001 to the Company stating that it agreed with the Company's disclosures
made in a Current Report on Form 8-K which was filed with the Securities and
Exchange Commission on October 9, 2001.
Prior to the engagement of PricewaterhouseCoopers LLP as the Company's
independent public accountants on October 2, 2001, the Company did not consult
with PricewaterhouseCoopers LLP regarding (i) the application of accounting
principles to a specified transaction, either completed or proposed, (ii) the
type of audit opinion that might be rendered on the Company's financial
statements, and in no case was a written report provided to the Company nor was
oral advice provided that the Company concluded was an important factor in
reaching a decision as to an accounting, auditing or financial reporting issue,
and (iii) any matter that was either the subject of a disagreement, as that
term is defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event,
as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting and will have an opportunity to make a statement if they
desire to do so and respond to appropriate questions. Representatives of Arthur
Andersen LLP are not expected to be present at the Annual Meeting. Arthur
Andersen LLP billed the Company for audit and quarterly review fees for the
year ended December 31, 2001 of $90,495 and fees for other services of
$155,510, and PricewaterhouseCoopers LLP billed the Company for audit and
quarterly fees for the year ended December 31, 2001 of $319,000 and fees for
other services of $773,000. The Audit Committee of the Board of Directors
considered the fees billed by PricewaterhouseCoopers LLP for other services and
determined they were compatible with maintaining their independence. None of
the fees billed by Arthur Andersen LLP or PricewaterhouseCoopers LLP were for
financial information systems design and implementation.
36
SHAREHOLDER PROPOSALS
Under Rule 14a-8(e) of the Securities Exchange Act of 1934 (the "Exchange
Act"), proposals of shareholders intended to be presented at the 2003 Annual
Meeting of Shareholders must be received by the Company on or before December
31, 2002 to be eligible for inclusion in the Company's Proxy Statement and
Proxy related to that meeting. Only proper proposals under Rule 14a-8 of the
Exchange Act that are timely received will be included in the Proxy Statement
and Proxy for the 2003 Annual Meeting of Shareholders.
The Company's Bylaws provide that shareholders seeking to bring business
before a meeting of shareholders or to nominate candidates for election of
directors at a meeting of shareholders must provide notice thereof not less
than 120 nor more than 150 calendar days before the first anniversary of the
date of the Company's notice of annual meeting sent to shareholders in
connection with the previous year's annual meeting, and, in such notice,
provide to the Company certain information relating to the proposal or nominee.
Assuming the Proxy Statement for the 2003 Annual Meeting of Shareholders is
dated the same date as the Proxy Statement for the 2002 Annual Meeting of
Shareholders, notice of shareholder proposals submitted outside of Rule
14a-8(e) of the Exchange Act will be considered untimely if received by the
Company before December 1, 2002 or after December 31, 2002. If the Company does
not receive notice of any other matter that a shareholder wishes to raise at
the 2003 Annual Meeting such matters may be considered out of order and,
additionally, the proxies will have discretionary authority to vote on such
matters.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual Meeting.
If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote the shares
they represent in accordance with their judgment.
A copy of the 2001 Annual Report on Form 10-K, including financial
statements and all amendments thereto, as filed with the Securities and
Exchange Commission, may be obtained without charge upon written request to:
Corporate Secretary, PTEK Holdings, Inc., 3399 Peachtree Road, N.E., The Lenox
Building, Suite 600, Atlanta, Georgia 30326.
By Order of the Board of Directors,
/s/ Patrick Jones
Patrick G. Jones
Corporate Secretary
Atlanta, Georgia
April 30, 2002
37
APPENDIX A
PTEK HOLDINGS, INC.
AMENDED AND RESTATED AUDIT COMMITTEE CHARTER
I. PURPOSE
There shall be a committee of the Board of Directors of PTEK Holdings, Inc.
(the "Corporation") to be known as the Audit Committee. The primary function of
the Audit Committee is to assist the Board of Directors in fulfilling its
oversight responsibilities by reviewing the financial reports and other
financial information provided by the Corporation to any governmental body or
the public; the Corporation's systems of internal controls regarding finance,
accounting, legal compliance and ethics that management and the Board of
Directors have established; and the Corporation's auditing, accounting and
financial reporting processes generally. Consistent with this function, the
Audit Committee should encourage continuous improvement of, and should foster
adherence to, the Corporation's policies, procedures and practices at all
levels. The Audit Committee's primary duties and responsibilities are to:
1. Serve as an independent and objective party to monitor the Corporation's
financial reporting processes and internal control system.
2. Review and appraise the audit efforts of the Corporation's independent
accountants.
3. Provide an open avenue of communication among the independent
accountants, financial and senior management of the Board of Directors.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board of Directors, each of whom shall be an independent
director as defined in NASD Marketplace Rule 4200, and free from any
relationship that, in the opinion of the Board of Directors, would interfere
with the exercise of his or her independent judgment as a member of the Audit
Committee; provided, however, one director who is not independent, and is not a
current employee or an immediate family member of an employee, may be appointed
to the Audit Committee if the Board of Directors, under exceptional and limited
circumstances, determines that membership on the Audit Committee by the
individual is required by the best interests of the Corporation and its
shareholders. All members of the Audit Committee shall have a working
familiarity with basic finance and accounting practices and be able to read and
understand fundamental financial statements, and at least one member of the
Audit Committee shall have past employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities. Audit Committee members may enhance their familiarity with
finance and accounting by participating in educational programs conducted by
the Corporation or an outside consultant.
The members of the Audit Committee shall be elected from time to time by the
Board of Directors. Unless a Chair is elected by the full Board, the members of
the Audit Committee may designate a Chair by majority vote of the full Audit
Committee membership.
III. MEETINGS
The Audit Committee shall meet at least four times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Audit Committee should meet at least annually with
management and the independent accountants in separate executive sessions to
discuss any matters that the Audit Committee or each of these groups believe
should be discussed privately. In addition, the Audit Committee or at least its
Chair should meet with the independent accountants and management quarterly to
review the Corporation's financial statements consistent with IV.3 below.
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IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and reassess the adequacy of this Charter at least annually and
recommend revisions to the Board of Directors as conditions dictate.
2. Review the Corporation's annual financial statements and any reports or
other financial information submitted to any governmental body, or the
public, including any certification, report, opinion or review rendered
by the independent accountants.
3. Review with financial management the Corporation's quarterly financial
statements prior to the release of earnings and the Corporation's Form
10-Q prior to its filing. The Chair of the Audit Committee may represent
the entire Audit Committee for purposes of this review.
Independent Accountants
4. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants.
On an annual basis, the Audit Committee should ensure its receipt from
the independent accountants of a formal written statement delineating
all relationships between the independent accountants and the
Corporation, consistent with Independence Standards Board Standard 1,
review and discuss with the independent accountants all significant
relationships the independent accountants have with the Corporation to
determine the independent accountants' independence and objectivity, and
recommend that the Board of Directors take appropriate action to oversee
the independence of the independent accountants.
5. The independent accountants shall be ultimately accountable to the Audit
Committee and the Board of Directors, as representatives of the
shareholders of the Corporation, and the Audit Committee and the Board
of Directors shall have ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the independent accountants.
6. Periodically consult with the independent accountants out of the
presence of management about internal controls and the completeness and
accuracy of the organization's financial statements.
Financial Reporting Processes
7. In consultation with the independent accountants, review the integrity
of the Corporation's financial reporting processes, both internal and
external.
8. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in
its financial reporting.
9. Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practice as suggested by the
independent accountants or management.
Process Improvement
10. Following completion of the annual audit, review separately with each of
management and the independent accountants any significant difficulties
encountered during the course of the audit, including any restrictions
on the scope of work or access to required information.
11. Review any significant disagreement among management and the independent
accountants in connection with the preparation of the Corporation's
financial statements.
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12. Review with the independent accountants and management the extent to
which changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented.
Legal Compliance
13. Review, with the Corporation's counsel, legal compliance matters
including corporate securities trading policies.
14. Review with the Corporation's counsel, any legal matter that could have
a significant impact on the Corporation's financial statements.
General
15. Approve the report required by the rules of the Securities and Exchange
Commission to be included in the Corporation's annual proxy statement.
16. Perform any other activities consistent with this Charter, the
Corporation's Amended and Restated Bylaws, and governing law, as the
Audit Committee or the Board of Directors deems necessary or appropriate.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Corporation's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
accountants. Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between management and the
independent accountants or to assure compliance with laws and regulations.
A-3
APPENDIX B
PTEK HOLDINGS, INC.
ASSOCIATE STOCK PURCHASE PLAN
1. PURPOSE
The PTEK Holdings, Inc. Associate Stock Purchase Plan (the "Plan") is
intended to encourage the associates of PTEK Holdings, Inc. (the "Company") and
certain of its subsidiaries to acquire a proprietary interest, or to increase
their existing proprietary interest, in the Company. The Board of Directors of
the Company (the "Board") believes that associate ownership of the Company's
stock will serve as an incentive, encouraging associates to continue their
employment and to perform diligently their duties as associates. The Plan is
intended to qualify as an "employee stock purchase plan" within the meaning of
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").
2. STOCK RESERVED FOR THE PLAN
The Company will reserve Two Million Five Hundred Thousand (2,500,000)
shares of the Company's common stock, $.01 par value per share ("Stock"), for
purchase by associates under the Plan. The number of shares of Stock reserved
for the Plan may be adjusted as provided in Section 16. The shares of Stock
reserved for the Plan may be shares now or hereafter authorized but unissued
shares or shares that have been reacquired by the Company.
3. ADMINISTRATION
The Plan will be administered by a committee (the "Committee") that will
consist of those persons designated by the Board. The members of the Committee
may, but need not, be members of the Board. The Board from time to time may
remove members from, or add members to, the Committee. Vacancies on the
Committee will be filled by the Board. Subject to the express provisions of the
Plan, the Committee will have authority to interpret the Plan, to prescribe
rules and regulations for administering the Plan, and to make all other
determinations necessary or advisable in administering the Plan. The
determinations of the Committee will be final and binding upon all persons,
unless otherwise determined by the Board. A majority of the members of the
Committee will constitute a quorum, and the Committee may act by vote of a
majority of its members at a meeting at which a quorum is present, or without a
meeting by a written consent signed by all members of the Committee.
4. ELIGIBILITY
(a) Eligible Associates. Except for those persons specifically excluded
under subsection (b) hereof, (i) all employees of the Company, and (ii)
all employees of any subsidiary corporation of the Company (as defined
in Code Section 424(f), that are designated by the Board as
participating subsidiaries ("Subsidiaries"), will be eligible to
participate in the Plan. Such employees are referred to herein as
"Associates."
(b) Excluded Associates. The following Associates will not be eligible to
participate in the Plan:
(i) any Associate who, as of the Offering Date (as defined below) of a
Purchase Period, has not completed two consecutive months of
employment with the Company or a Participating Subsidiary;
(ii) any Associate whose customary employment is 19 hours or less per week
or for not more than 5 months in any calendar year; and
(iii) any Associate who, immediately after a right to purchase Stock is
granted hereunder, would own shares of Stock, or of the stock of a
Subsidiary, possessing 5 percent or more of the total combined voting
power or value of all classes of stock of the Company or a
Subsidiary. In
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determining whether an Associate owns 5 percent of such shares, (A)
the attribution of ownership rules of Code Section 424(d) will apply,
and (B) an Associate will be deemed to own the shares of stock
underlying any outstanding option which he has been granted (whether
under the Plan or any other plan or arrangement).
5. PURCHASE PERIODS
The Plan will be implemented by a continuous series of offerings. The period
for which each such offering is effective is referred to herein as a "Purchase
Period." The initial Purchase Period under the Plan will begin on June 1, 1999
and end on October 29, 1999. Subsequent Purchase Periods will each be for a
six-month period and will commence on the first business day in May and
November and end on the last business day in October and April, respectively.
The first day of each Purchase Period is referred to herein as the "Offering
Date", and the last day of each Purchase Period is referred to herein as the
"Purchase Date." The Board may provide for Purchase Periods having different
durations, provided that no Purchase Period may exceed 27 months.
6. ELECTION TO PARTICIPATE
(a) Initial Election. Each Associate who is eligible to participate in the
Plan may become a participant (a "Participant") by making an election,
prior to any Offering Date and in the accordance with procedures
established by the Committee, authorizing specified payroll deductions
over the next succeeding Purchase Period (an "Election Form"). Each
election will be expressed as a full percentage of the Associate's
Compensation (as defined below), which may not exceed 20 percent of the
Associate's Compensation for any payroll period or be less than 1
percent of the Associate's Compensation for any payroll period (or such
other maximum and minimum percentages as the Committee may determine). A
Participant's "Compensation" is his total cash compensation payable from
the Company and its affiliates, including commissions and bonuses.
Payroll deductions for a participant will be made regularly during the
Purchase Period by the Company, and will be credited to a bookkeeping
account established by the Company in the name of the Participant (the
"Cash Account"). No interest will be paid on or credited to Cash
Accounts.
(b) Change in Rate of Payroll Deduction. A participant may discontinue
making payroll deductions in accordance with Section 6(c), but may not
otherwise increase or decrease the amount of payroll deductions elected
for a Purchase Period.
(c) Discontinuance of Contributions. At any time prior to the 10th calendar
day preceding the Purchase Date of a Purchase Period (or such other
deadline as may be established by the Committee), a Participant may
discontinue participation in the Plan for the current Purchase Period by
providing notice in accordance with procedures established by the
Committee. Upon such discontinuance, at the Participant's election, the
balance of his Cash Account will be (i) returned to the Participant as
soon as administratively possible, or (ii) held in the Cash Account
until the end of the Purchase Period and applied to purchase Stock in
accordance with Section 10. A Participant who discontinues payroll
deductions may recommence his participation in the Plan as of the
Offering Date for any other succeeding Purchase Period, provided he
otherwise is eligible to participate and timely files a new Election
Form with the Committee or its designate.
7. RIGHTS TO PURCHASE STOCK
For each Purchase Period, each Participant will have the right to purchase
that number of shares of stock determined by dividing (i) $25,000 by (ii) the
Fair Market Value of one share of Stock (as defined in Section 9(b) on the
Offering Date for the Purchase Period; provided, however, that no Participant
will have the right to purchase Stock in excess of the annual limit in Section
8. If the number of shares of the Stock available for purchase under the Plan
is insufficient to grant to each participant the right to purchase the full
number of shares to which he otherwise would be entitled, then each Participant
will have the right to purchase that number of
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available shares of Stock that is equal to the total number of available shares
of stock multiplied by a fraction, the numerator of which is the amount of
Compensation credited to the Participant's Cash Account for the Purchase
Period, and the denominator of which is the total amount of Compensation
credited to the Cash Accounts of all Participants for the Purchase Period.
8. ANNUAL LIMIT
No right to purchase shares of Stock under the Plan will be granted to an
Associate if such right, when combined with all other rights and options
granted under all of the Code Section 423 employee stock purchase plans of the
Company, its Subsidiaries or any parent corporation (within the meaning of Code
Section 424(e)), would permit his rights to purchase shares of Stock to accrue
at a rate which exceeds $25,000 in Fair Market Value (determined at the time
the right or option is granted) for each calendar year in which the right or
option is outstanding at any time, determined in accordance with Code Section
423(b)(8).
9. PURCHASE PRICE
(a) Price. The purchase price of each share of stock will be the lesser of
(i) 85 percent of the Fair Market Value of the Stock on the Offering
Date, or (ii) 85 percent of the Fair Market Value of the Stock on the
Purchase Date.
(b) Fair Market Value. The Fair Market Value of the Stock, as of any date,
will be equal to the closing price of the Stock on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"),
as reported in The Wall Street Journal for such date, or if no closing
price is reported on such date, on the closest date preceding the date
at issue. If the Stock is not traded on NASDAQ, Fair Market Value will
be determined using the method established by the Committee.
10. PURCHASE OF STOCK
(a) Funds in Cash Account Used to Purchase Whole Shares of Stock. Subject
to the share limitations set forth in Sections 7 and 8 above, as of each
Purchase Date, the Committee will purchase from the Company using the
funds in each Cash Account on such date, on behalf of each Participant
having funds in his Cash Account, the number of whole shares of Stock
determined by dividing the amount in such Cash Account on such date by
the purchase price determined under Section 9.
(b) Return of Excess Contributions. Any additional amounts remaining in a
Participant's Cash Account following the purchase of shares of Stock on
any Purchase Date that are equal to or in excess of the amount required
under Section 10(a) to purchase at least one full share of Stock shall
be returned to the Participant as soon as reasonably practicable
following the Purchase Date.
11. STOCK ACCOUNTS
(a) Establishment of Accounts. As soon as practicable after each Purchase
Date, the company will deliver to a custodian selected by the Committee
(the "Custodian") a certificate or certificates representing the total
number of shares purchased by all Participants in the Purchase Period.
The Custodian will maintain a separate "Stock Account" for each
Participant, which will be credited with the number of shares of Stock
purchased by the participant under the Plan.
(b) Withdrawal from Stock Accounts. A Participant may withdraw any shares
of Stock credited to his Stock Account after such shares have been held
in the Stock Account for a period of at least 18 months (or such other
holding period as may be established by the Committee). As soon as
practicable after such request by a Participant, the Committee will
cause a certificate representing such Shares to be delivered to the
Participant.
(c) Sales from Stock Accounts. A Participant may at any time direct the
Custodian to effect the sale of some or all of the shares of Stock
credited to the Participant's Stock Account, provided that the Committee
may impose limitations on resales as it deems necessary for the proper
administration of the
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Plan. All such sales shall be effected on the open market, and the
Participant shall be responsible for all brokerage commissions and other
costs associated with such transaction.
(d) Rights as Shareholders. A Participant will have all of the rights of a
shareholder of the Company with respect to all of the shares of stock
credited to his Stock Account, including the right to vote and receive
dividends on such Shares.
12. TERMINATION OF EMPLOYMENT
If a Participant terminates employment with the Company and its Subsidiaries
during a Purchase Period for any reason, including death or disability, then
the Participant's participation in the Plan will immediately terminate and the
balance of the Participant's Cash Account will be returned to the Participant
as soon as administratively possible. For purposes of the Plan, a participant
who is on an approved leave of absence shall not be considered to have
terminated employment until the 91st day of such leave of absence or such
longer period as the participant's right to re-employment is guaranteed by law
or contract.
13. DESIGNATION OF BENEFICIARY
In accordance with procedures established by the Committee, a Participant
may designate one or more beneficiaries to receive benefits in the event of the
Participant's death. If a Participant fails to properly designate a
beneficiary, the Participant's estate will be considered the Participant's
beneficiary for purposes of the Plan.
14. COMPLIANCE WITH SECURITIES LAW
All shares of Stock issued under the Plan will be subject to such
restrictions as the Committee may deem advisable under any applicable federal
or state securities laws, and the Committee may cause a legend or legends
making reference to such restrictions to be placed on the certificates
representing such shares.
15. RIGHTS NOT TRANSFERABLE
Rights under the Plan are not transferable by a Participant other than by
will or the laws of descent and distribution and are exercisable during his
lifetime only by the Participants.
16. ADJUSTMENT IN CASE OF CHANGES AFFECTING THE COMPANY'S STOCK
In the event of a subdivision or consolidation of outstanding shares of
Stock, or the payment of a stock dividend thereon, or in the event of any
"corporate transaction" as defined in Treasury Regulations Section
1.425-1(a)(1)(ii)(now relating to Code Section 424), the number of shares
reserved or authorized to be reserved under the Plan and the number and price
of such shares subject to purchase pursuant to rights outstanding hereunder,
and the number of shares credited to Participant's Stock Accounts, will be
adjusted in such manner as may be deemed necessary or equitable by the Board to
give proper effect to such event, subject to the limitations of Code Section
424.
17. AMENDMENT OF THE PLAN
The Board shall have the right to amend or modify the Plan, in full or in
part, at any time and from time to time; provided, however, that no amendment
or modification shall
(a) affect any right or obligation with respect to any grant previously
made, unless required by law, or
(b) unless previously approved by the stockholders of the Company, where
such approval is necessary to satisfy federal securities laws, the
Internal Revenue Code of 1986, as amended, or rules of any stock
exchange on which the Company's common stock is listed:
(1) in any manner materially affect the eligibility requirements set
forth in Sections 4, or change the definition of Company as set forth
in Section 1,
B-4
(2) increase the number of shares of Stock subject to any options issued
to participants (except as provided in Section 16), or
(3) materially increase the benefits to participants under the plan.
18. TERMINATION OF THE PLAN
The Plan and all rights of Associates hereunder will terminate:
(i) as of the Purchase Date on which Participants purchase a number of
shares of Stock that substantially exhausts the number of shares
available for issuance under the Plan, to such an extent that the
Committee determines that no subsequent offerings are practicable; or
(ii) at any time upon action of the Board; provided however, that if the Plan
is terminated during any Purchase Period, any amounts in a Participant's
Cash Account will be returned to the Participant.
19. EFFECTIVE DATE OF PLAN
The Plan originally became effective as of June 1, 1999, as approved by the
Company's shareholders on June 22, 1999. The Plan was amended as of November 2,
1999, October 27, 2000 and March 2, 2000, and amended and restated on April 27,
2001, and further amended on April 26, 2002, subject to approval of the
Company's shareholders on June 5, 2002.
20. GOVERNMENT AND OTHER REGULATIONS
The Plan, and the grant and exercise of the rights to purchase shares of
stock hereunder, and the Company's obligation to sell and deliver shares of
Stock, will be subject to all applicable federal, state and foreign laws, rules
and regulations, and to such approvals by any regulatory or government agency
as may, in the opinion of counsel for the Company, be required.
21. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they have as
directors or as members of the Committee, the members of the Committee will be
indemnified by the Company against reasonable expenses (including, without
limitation, attorney's fees) actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or in connection with any
appeal, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved to the extent required by and in the
manner provided by the Bylaws of the Company relating to indemnification of
directors) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it will be
adjudged in such action, suit or proceeding that such Committee member did not
act in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company.
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APPENDIX C
PTEK HOLDINGS, INC.
2000 DIRECTORS STOCK PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the following meanings unless the
context clearly indicates to the contrary:
"Award" shall mean a grant of Restricted Stock under this Plan.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean theft or destruction of property of the Company or any of
its subsidiaries, disregard of the rules or policies of the Company or any of
its subsidiaries, or conduct evincing willful or wanton disregard of the
interests of the Company or any of its subsidiaries. Such determination shall
be made by the Committee based on information presented by the Company and the
Director (if the Director chooses to present information), and shall be final
and binding on the Company and the Director.
"Change in Control" shall mean the occurrence of either of the following
events:
(a) A change in the composition of the Board as a result of which fewer than
one-half of the incumbent Directors are Directors who either:
(i) were Directors of the Company twenty-four (24) months prior to such
change, or
(ii) were elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Directors who had been
Directors of the Company twenty-four (24) months prior to such change
and who were still in office at the time of the election or nomination;
or
(b) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than any person who is a shareholder of the Company on or
before the effective date of this Plan, by the acquisition or aggregation of
securities is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding securities ordinarily
(and apart from rights accruing under special circumstances) having the right
to vote at elections of directors (the "Base Capital Stock"); except that any
change in the relative beneficial ownership of the Company's securities by any
person resulting solely from a reduction in the aggregate number of outstanding
shares of Base Capital Stock shall be disregarded until such person increases
in any manner, directly or indirectly, such person's beneficial ownership of
any securities of the Company.
"Code" shall mean the Internal Revenue Code of 1986, including effective
date and transition rules (whether or not codified). Any reference herein to a
specific section of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"Committee" shall mean a committee of at least two Directors appointed from
time to time by the Board, having the duties and authority set forth herein in
addition to any other authority granted by the Board. The Committee shall
consist of at least two members of the Board who are Non-Employee Directors (as
that term is defined in Rule 16b-3 under the Exchange Act). At any time that
the Board shall not have appointed a committee as described above, any
reference herein to the Committee shall mean the Board.
"Company" shall mean PTEK Holdings, Inc., a Georgia corporation.
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"Director" shall mean a member of the Board and any person who is an
advisory or honorary director of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934. Any reference
herein to a specific section of the Exchange Act shall be deemed to include a
reference to any corresponding provision of future law.
"Exercise Price" shall mean the price at which an Optionee may purchase a
share of Stock under a Stock Option Agreement.
"Fair Market Value" on any date shall mean (i) the closing sales price of
the Stock, regular way, on such date on the national securities exchange having
the greatest volume of trading in the Stock during the thirty (30) day period
preceding such date or, if such exchange was not open for trading on such date,
the next preceding date on which it was open; (ii) if the Stock is not traded
on any national securities exchange, the average of the closing high bid and
low asked prices of the Stock on the over-the-counter market on the date such
value is to be determined, or in the absence of closing bids on such date, the
closing bids on the next preceding date on which there were bids; or (iii) if
the Stock also is not traded on the over-the-counter market, the fair market
value as determined in good faith by the Committee based on such relevant facts
as may be available, which may include opinions of independent experts, the
price at which recent sales of Stock have been made, the book value of the
Stock, and the Company's past, current and future earnings.
"Grantee" shall mean a person who is an Optionee or a person who has
received an Award of Restricted Stock.
"Nonqualified Stock Option" shall mean an Option that is not intended to be
an incentive stock option as described in Code Section 422 and the regulations
promulgated thereunder.
"Option" shall mean an option to purchase Stock granted pursuant to the
provisions of Article VI hereof.
"Optionee" shall mean a person to whom an Option has been granted hereunder.
"Permanent and Total Disability" shall have the meaning set forth in Code
Section 22(e)(3) and the regulations promulgated thereunder.
"Plan" shall mean the PTEK Holdings, Inc. 2000 Directors Stock Plan, the
terms of which are set forth herein.
"Purchasable" shall refer to Stock that may be purchased by an Optionee
under the terms of this Plan on or after a certain date specified in the
applicable Stock Option Agreement.
"Qualified Domestic Relations Order" shall have the meaning set forth in
Code Section 414(p)(1)(A) and the regulations promulgated thereunder.
"Restricted Stock" shall mean Stock issued to a Grantee pursuant to Article
VII hereof.
"Restriction Agreement" shall mean a written agreement setting forth the
terms of an Award of Restricted Stock, as provided in Section 7.1 hereof.
"Stock" shall mean the Common Stock, par value $.01 per share, of the
Company or, in the event that the outstanding shares of Stock are hereafter
changed into or exchanged for shares of a different stock or securities of the
Company or some other entity, such other stock or securities.
"Stock Option Agreement" shall mean a written agreement between the Company
and an Optionee under which the Optionee may purchase Stock hereunder, as
provided in Article VI hereof.
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ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as the "PTEK Holdings, Inc. 2000
Directors Stock Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company and its shareholders by affording the non-employee Directors of the
Company an opportunity to acquire or increase their proprietary interests in
the Company. The objective of the Options and Awards is to promote the growth
and profitability of the Company by providing the Grantees with an additional
incentive to achieve the Company's objectives through participation in its
success and growth and by encouraging their continued association with or
service to the Company.
2.3 Effective Date. The Plan originally became effective as of April 26,
2000, as approved by the shareholders on June 7, 2000. The Plan was amended on
April 26, 2002, subject to approval of the shareholders on June 5, 2002.
ARTICLE III
PARTICIPANTS
The class of persons eligible to participate in this Plan shall consist
solely of persons who, at the date of grant of Options hereunder, are Directors
of the Company and are not employed by the Company or any of its subsidiaries
or affiliates.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. This Plan shall be administered by
the Committee; provided, however, that any decision with respect to an Option
or Award granted under the Plan to a member of the Committee, including without
limitation the decision to grant such option or Award and the terms thereof,
shall be made by the Board of Directors, and any reference therein to the
Committee shall be deemed to mean the Board as it relates to an Option or Award
granted to a member of the Committee. The Committee shall select one of its
members as its Chairman and shall hold its meetings at such times and places as
it may determine. The Committee shall keep minutes of its meetings and shall
make such rules and regulations for the conduct of its business as it may deem
necessary. The Committee shall have the power to act by unanimous written
consent in lieu of a meeting, and to meet telephonically. In administering this
Plan, the Committee's actions and determinations shall be binding on all
interested parties. The Committee shall have the power to grant Options or
Awards in accordance with the provisions of this Plan and may grant Options and
Awards singly, in combination, or in tandem. Subject to the provisions of this
Plan, the Committee shall have the discretion and authority to determine those
Directors to whom Options or Awards will be granted, the number of shares of
Stock subject to each Option or Award, such other matters as are specified
herein, and any other terms and conditions of a Stock Option Agreement or
Restriction Agreement. To the extent not inconsistent with the provisions of
this Plan, the Committee shall have the authority to amend or modify an
outstanding Stock Option Agreement or Restriction Agreement, or to waive any
provision thereof, provided that the Grantee consents to such action.
4.2 Interpretation; Rules. Subject to the express provisions of this Plan,
the Committee shall have complete authority to interpret this Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement and Restriction
Agreement, and to make all other determinations necessary or advisable for the
administration of this Plan, including, without limitation, the amending or
altering of this Plan and any Options or Awards granted hereunder as may be
required to comply with or to conform to any federal, state or local laws or
regulations.
4.3 No Liability. Neither any Director nor any member of the Committee
shall be liable to any person or entity for any act or determination made in
good faith with respect to this Plan or any Option or Award granted hereunder.
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4.4 Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority at a meeting at which a
quorum is present, or any action taken without a meeting evidenced by a writing
executed by all the members of the Committee, shall constitute the action of
the Committee.
4.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all pertinent facts as the Committee may
require. The Company shall furnish the Committee with such clerical and other
assistance as is necessary in the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to any antidilution adjustment pursuant to the
provisions of Section 5.2, the maximum number of shares of Stock that may be
issued hereunder shall be 2,000,000, of which not more than 10% shall be
granted in the form of Restricted Stock Awards. Any or all shares of Stock
subject to the Plan may be issued in any combination of Nonqualified Stock
Options and Restricted Stock, and the amount of Stock subject to the Plan may
be increased from time to time in accordance with Article IX hereof.
Shares subject to an Option or issued as an Award may be either authorized
and unissued shares or shares issued and later acquired by the Company. The
shares covered by any unexercised portion of an Option that has terminated for
any reason (except as set forth in the following paragraph), or any forfeited
portion of an Award, may again be optioned or Awarded under this Plan, and such
shares shall not be considered as having been optioned or issued in computing
the number of shares of Stock remaining available for Options or Awards
hereunder.
If Options are issued in respect of options to acquire stock of any entity
acquired, by merger or otherwise, by the Company, the aggregate number of
shares of Stock for which Options may be granted hereunder shall automatically
be increased by the number of shares subject to the Options so issued;
provided, however, that the aggregate number of shares of Stock for which
Options may be granted hereunder shall automatically be decreased by the number
of shares covered by any unexercised portion of an Option so issued that has
terminated for any reason, and the shares subject to any such unexercised
portion may not be optioned to any other person.
5.2 Antidilution.
(a) If (i) the Outstanding shares of Stock are increased, decreased, or
changed into or exchanged for a different number or kind of shares or other
securities of the Company, by reason of merger, consolidation, reorganization,
recapitalization, reclassification, combination or exchange of shares, or stock
split or stock dividend, (ii) any spin-off, split-off or other distribution of
assets materially affects the price of the Company's stock, or (iii) there is
any assumption and conversion to this Plan by the Company of an acquired
company's outstanding option grants, then:
(A) the aggregate number and kind of shares of Stock for which Options or
Awards may be granted hereunder shall be adjusted appropriately by the
Committee, and
(B) the rights of Optionees (concerning the number of shares subject to
Options and the Exercise Price) under outstanding Options and the rights
of the holders of Awards (concerning the terms and conditions of the
lapse of any then remaining restrictions), shall be adjusted
appropriately by the Committee.
(b) If the Company is a party to any reorganization in which it does not
survive (or in which it survives as the subsidiary of a previously unaffiliated
entity), involving merger, consolidation, or acquisition of the stock or
substantially all the assets of the Company, the Committee, in its discretion,
may:
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(i) notwithstanding other provisions hereof, declare that all Options
granted under this Plan shall become exercisable immediately
notwithstanding the provisions of the respective Stock Option Agreements
regarding exercisability, that all such Options shall terminate thirty
(30) days after the Committee gives written notice of the immediate
right to exercise all such Options and of the decision to terminate all
Options not exercised within such 30-day period, and that all
then-remaining restrictions pertaining to Awards under this Plan shall
immediately lapse; and/or
(ii) notify all Grantees that all Options and Awards granted under this Plan
shall be assumed by the successor corporation or substituted on an
equitable basis with options or restricted stock issued by such
successor corporation.
(c) If the Company is to be liquidated or dissolved in connection with a
reorganization described in Section 5.2(b), the provisions of that Section
shall apply. In all other instances, the adoption of a plan of dissolution or
liquidation of the Company shall, notwithstanding other provisions hereof,
cause all then-remaining restrictions pertaining to Options and Awards under
the Plan to lapse, and shall cause every Option outstanding under the Plan to
terminate to the extent not exercised prior to the adoption of the plan of
dissolution or liquidation by the shareholders; provided that, notwithstanding
any other provisions hereof, the Committee may declare all Options granted
under the Plan to be exercisable at any time on or before the fifth (5th)
business day following such adoption, notwithstanding the provisions of the
respective Stock Option Agreements regarding exercisability.
(d) The adjustments described in paragraphs (a) through (c) of this Section
5.2, and the manner of their application, shall be determined solely by the
Committee, and any such adjustment may provide for the elimination of
fractional share interests. The adjustments required under this Article V shall
apply to any successors of the Company and shall be made regardless of the
number or type of successive events requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 Type of Options Granted. The Committee may, under this Plan, grant
Nonqualified Stock Options only. Such Options may be granted subject to
conditions based on the satisfaction of performance goals or any other factor
the Committee deems relevant.
6.2 Option Grant and Agreement. Each Option granted hereunder shall be
evidenced by minutes of a meeting or the written consent of the Committee and
by a written Stock Option Agreement executed by the Company and the Optionee.
The terms of the Option, including the Option's duration, time or times of
exercise, and exercise price, shall be stated in the Stock Option Agreement.
6.3 Exercise Price. The Exercise Price of the Stock subject to each Option
shall be determined by the Committee.
6.4 Exercise Period. The period for the exercise of each Option granted
hereunder shall be determined by the Committee.
6.5 Option Exercise.
(a) Unless otherwise provided in the Stock Option Agreement or Section 6.6
hereof, an Option may be exercised at any time or from time to time during the
term of the Option as to any or all full shares which have become Purchasable
under the provisions of the Option, but not at any time as to less than one
hundred (100) shares unless the remaining shares that have become so
Purchasable are less than one hundred (100) shares. The Committee shall have
the authority to prescribe in any Stock Option Agreement that the Option may be
exercised only in accordance with a vesting schedule during the term of the
Option.
(b) An Option shall be exercised by (i) delivery to the Company at its
principal office a written notice of exercise with respect to a specified
number of shares of Stock and (ii) payment to the Company at that office of the
full amount of the Exercise Price for such number of shares in accordance with
Section 6.5(c). If requested by
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an Optionee, an Option may be exercised with the involvement of a stockbroker
in accordance with the federal margin rules set forth in Regulation T (in which
case the certificates representing the underlying shares will be delivered by
the Company directly to the stockbroker).
(c) The Exercise Price is to be paid in full in cash upon the exercise of
the Option and the Company shall not be required to deliver certificates for
the shares purchased until such payment has been made; provided, however, the
Committee may provide in a Stock Option Agreement (or may otherwise determine
in its sole discretion at the time of exercise) that in lieu of cash, all or
any portion of the Exercise Price may be paid by tendering to the Company
shares of Stock duly endorsed for transfer and owned by the Optionee for at
least six (6) months, to be credited against the Exercise Price at the Fair
Market Value of such shares on the date of exercise (however, no fractional
shares may be so transferred, and the Company shall not be obligated to make
any cash payments in consideration of any excess of the aggregate Fair Market
Value of shares transferred over the aggregate Exercise Price); provided
further, the Committee may provide in a Stock Option Agreement (or may
otherwise determine in its sole discretion at the time of exercise) that, in
lieu of cash or shares, all or a portion of the Exercise Price may be paid by
the Optionee's execution of a recourse note equal to the Exercise Price or
relevant portion thereof, subject to compliance with applicable state and
federal laws, rules and regulations. In addition to the above methods of
exercise, to the extent permitted under Regulation T of the Federal Reserve
Board, and subject to applicable securities laws, an Option may be exercised
through a broker in a so-called "cashless exercise" whereby the broker sells
the Option shares and delivers cash sales proceeds to the Company in payment of
the exercise price.
The holder of an Option shall not have any of the rights of a shareholder
with respect to the shares of Stock subject to the Option until such shares
have been issued and transferred to the Optionee upon the exercise of the
Option.
6.6 Nontransferability. No Option shall be transferable by an Optionee
other than by will or the laws of descent and distribution or pursuant to a
Qualified Domestic Relations Order; provided, however, that the Committee may
(but need not) permit other transfers where the Committee concludes that such
transferability is appropriate and desirable, taking into account any factors
deemed relevant, including without limitation, state or federal tax or
securities laws applicable to transferable options. During the lifetime of an
Optionee, Options shall be exercisable only by such Optionee (or by such
Optionee's guardian or legal representative, should one be appointed, or by a
permitted transferee).
6.7 Termination of Service. The Committee shall have the power to specify,
with respect to the Options granted to a particular Optionee, the effect upon
such Optionee's right to exercise an Option upon termination of such Optionee's
service as a Director under various circumstances, which effect may include
immediate or deferred termination of such Optionee's rights under an Option, or
acceleration of the date at which an Option may be exercised in full.
6.8 Effect of Change in Control. The Committee may determine, at the time
of granting an Option or thereafter, that such Option shall become exercisable
on an accelerated basis in the event that a Change in Control occurs with
respect to the Company (and the Committee shall have the discretion to modify
the definition of Change in Control in a particular Option Agreement). If the
Committee finds that there is a reasonable possibility that, within the
succeeding six (6) months, a Change in Control will occur with respect to the
Company, then the Committee may determine that all outstanding Options shall be
exercisable on an accelerated basis.
ARTICLE VII
RESTRICTED STOCK
7.1 Awards of Restricted Stock. The Committee may grant Awards of
Restricted Stock, which shall be governed by a Restriction Agreement between
the Company and the Grantee. Each Restriction Agreement shall contain such
restrictions, terms and conditions (including, without limitation, the
satisfaction of stated
C-6
performance goals) as the Committee may, in its discretion, determine, and may
require that an appropriate legend be placed on the certificates evidencing the
subject Restricted Stock. Shares of Restricted Stock granted pursuant to an
Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted, provided that the Grantee
has executed the Restriction Agreement governing the Award, the appropriate
blank stock powers and, in the discretion of the Committee, an escrow agreement
and any other documents which the Committee may require as a condition to the
issuance of such Shares. If a Grantee shall fail to execute the foregoing
documents within the time period prescribed by the Committee, if any, the Award
shall be void. At the discretion of the Committee, Shares issued in connection
with an Award shall be deposited together with the stock powers with an escrow
agent designated by the Committee. Unless the Committee determines otherwise
and as set forth in the Restriction Agreement, upon delivery of the Shares to
the escrow agent, the Grantee shall have all of the rights of a shareholder
with respect to such Shares, including the right to vote the Shares and to
receive all dividends or other distributions paid or made with respect to the
Shares.
7.2 Nontransferability. Until any restrictions upon Restricted Stock
awarded to a Grantee shall have lapsed in a manner set forth in Section 7.3,
such shares of Restricted Stock shall not be transferable other than by will or
the laws of descent and distribution, or pursuant to a Qualified Domestic
Relations Order, nor shall they be delivered to the Grantee.
7.3 Lapse of Restrictions. Restrictions upon Restricted Stock awarded
hereunder shall lapse at such time or times and on such terms and conditions as
the Committee may, in its discretion, determine at the time the Award is
granted or thereafter.
7.4 Termination of Service as a Director. The Committee shall have the
power to specify, with respect to each Award granted to any particular Grantee,
the effect upon such Grantee's rights with respect to such Restricted Stock of
the termination of such Grantee's service as a Director under various
circumstances, which effect may include immediate or deferred forfeiture of
such Restricted Stock or acceleration of the date on which any then remaining
restrictions shall lapse.
7.5 Treatment of Dividends. At the time an Award of Restricted Stock is
made the Committee may, in its discretion, determine that the payment to the
Grantee of any dividends, or a specified portion thereof, declared or paid on
such Restricted Stock shall be (a) deferred until the lapsing of the relevant
restrictions and (b) held by the Company for the account of the Grantee until
such lapsing. In the event of such deferral, there shall be credited at the end
of each year (or portion thereof) interest on the amount of the account
outstanding during such year at a rate per annum determined by the Committee.
Payment of deferred dividends, together with interest thereon, shall be made
upon the lapsing of restrictions imposed on such Restricted Stock, and any
dividends deferred (together with any interest thereon) in respect of
Restricted Stock shall be forfeited upon any forfeiture of such Restricted
Stock.
7.6 Delivery of Shares. Except as provided otherwise in Article VIII
below, within a reasonable period of time following the lapse of the
restrictions on shares of Restricted Stock, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such shares and such
shares shall be free of all restrictions hereunder.
ARTICLE VIII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof, or deliver any certificate for shares of Restricted Stock
granted hereunder, prior to fulfillment of all of the following conditions:
(a) the admission of such shares to listing on all stock exchanges on which
the Stock is then listed;
(b) the completion of any registration or other qualification of such shares
which the Committee shall deem necessary or advisable under any federal
or state law or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body;
C-7
(c) the obtaining of any approval or other clearance from any federal or
state governmental agency or body which the Committee shall determine to
be necessary or advisable; and the lapse of such reasonable period of
time following the exercise of the Option as the Board from time to time
may establish for reasons of administrative convenience.
Stock certificates issued and delivered to Grantees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant
to applicable federal and state securities laws.
ARTICLE IX
TERMINATION AND AMENDMENT
Termination and Amendment. The Board at any time may amend or terminate the
Plan without shareholder approval; provided, however, that the Board may
condition any amendment on the approval of shareholders of the Company if such
approval is necessary or advisable with respect to tax, securities or other
applicable laws.
Effect on Grantee's Rights. No termination, amendment or modification of
this Plan shall adversely affect a Grantee's rights under a Stock Option
Agreement or Restriction Agreement without the consent of the Grantee or his
legal representative.
ARTICLE X
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of this Plan shall not affect any other stock option, incentive
or other compensation plans in effect for the Company or any of its
subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its subsidiaries from establishing any other form of incentive or other
compensation plan for Directors.
ARTICLE XI
MISCELLANEOUS
11.1 Performance Goals. The Committee may, but need not, determine that
any Award granted pursuant to this Plan to a participant shall be determined
solely on the basis of (a) the achievement by the Company or a Subsidiary of a
specified target return on equity or assets, (b) the Company's or Subsidiary's
stock price, (c) the achievement by the Company or a business unit of the
Company or Subsidiary of a specified target net income or earnings per share,
including without limitation earnings before interest, taxes, depreciation
and/or amortization, or (d) any combination of the goals set forth in (a)
through (c) above. Furthermore, in such case, the Committee shall have the
right for any reason to reduce (but not increase) any Award, notwithstanding
the achievement of a specified goal. If an Award is made on such basis, the
Committee shall establish goals prior to the beginning of the period for which
such performance goal relates. Any payment of an Award granted with performance
goals shall be conditioned on the written certification of the Committee in
each case that the performance goals and any other material conditions were
satisfied.
11.2 Replacement or Amended Grants. At the sole discretion of the
Committee, and subject to the terms of this Plan, the Committee may modify
outstanding Options or Awards or accept the surrender of outstanding Options or
Awards and grant new Options or Awards in substitution thereof. However, no
modification of an Option or Award shall adversely affect a Grantee's rights
under a Stock Option Agreement or Restriction Agreement without the consent of
the Grantee or his legal representative.
11.3 Plan Binding on Successors. This Plan shall be binding upon the
successors and assigns of the Company.
11.4 Singular, Plural, Gender. Whenever used herein, nouns in the singular
shall include the plural, and the masculine pronoun shall include the feminine
gender and vice versa.
11.5 Headings Not Part of Plan. Headings of Articles and Sections hereof
are inserted for convenience and reference, and they do not constitute part of
this Plan.
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APPENDIX D
PTEK HOLDINGS, INC.
1995 STOCK PLAN
PTEK HOLDINGS, INC.
1995 STOCK PLAN
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS......................... D-3
ARTICLE II THE PLAN............................ D-5
2.1 Name................................ D-5
2.2 Purpose............................. D-5
2.3 Effective Date...................... D-6
ARTICLE III PARTICIPANTS........................ D-6
ARTICLE IV ADMINISTRATION...................... D-6
4.1 Duties and Powers of the Committee.. D-6
4.2 Interpretation; Rules............... D-6
4.3 No Liability........................ D-6
4.4 Majority Rule....................... D-7
4.5 Company Assistance.................. D-7
ARTICLE V SHARES OF STOCK SUBJECT TO PLAN..... D-7
5.1 Limitations......................... D-7
5.2 Antidilution........................ D-7
ARTICLE VI OPTIONS............................. D-8
6.1 Types of Options Granted............ D-8
6.2 Option Grant and Agreement.......... D-8
6.3 Optionee Limitations................ D-9
6.4 $100,000 Limitation................. D-9
6.5 Exercise Price...................... D-9
6.6 Exercise Period..................... D-9
6.7 Option Exercise..................... D-9
6.8 Reload Options...................... D-10
6.9 Nontransferability.................. D-11
6.10 Termination of Employment or Service D-11
6.11 Employment Rights................... D-11
6.12 Certain Successor Options........... D-11
6.13 Effect of Change in Control......... D-11
ARTICLE VII RESTRICTED STOCK.................... D-11
7.1 Awards of Restricted Stock.......... D-11
7.2 Nontransferability.................. D-11
7.3 Lapse of Restrictions............... D-12
7.4 Termination of Employment........... D-12
7.5 Treatment of Dividends.............. D-12
7.6 Delivery of Shares.................. D-12
D-1
Page
----
ARTICLE VIII STOCK APPRECIATION RIGHTS............... D-12
8.1 SAR Awards.............................. D-12
8.2 Determination of Price.................. D-12
8.3 Exercise of an SAR...................... D-12
8.4 Payment for an SAR...................... D-12
8.5 Status of SAR Shares.................... D-12
8.6 Termination of SARs..................... D-13
8.7 No Shareholder Rights................... D-13
ARTICLE IX STOCK CERTIFICATES...................... D-13
ARTICLE X TERMINATION AND AMENDMENT............... D-14
10.1 Termination and Amendment............... D-14
10.2 Effect on Grantee's Rights.............. D-14
ARTICLE XI RELATIONSHIP TO OTHER COMPENSATION PLANS D-14
ARTICLE XII MISCELLANEOUS........................... D-14
12.1 Performance Goals....................... D-14
12.2 Replacement or Amended Grants........... D-14
12.3 Forfeiture for Competition.............. D-14
12.4 Plan Binding on Successors.............. D-15
12.5 Singular, Plural, Gender................ D-15
12.6 Headings Not Part of Plan............... D-15
12.7 Interpretation.......................... D-15
D-2
PTEK HOLDINGS, INC.
1995 STOCK PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the following meanings unless the
context clearly indicates to the contrary:
"Award" shall mean a grant of Restricted Stock or an SAR under this Plan.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean theft or destruction of property of the Company or any
Subsidiary, disregard of the rules or policies of the Company or any
Subsidiary, or conduct evincing willful or wanton disregard of the interests of
the Company or any Subsidiary. Such determination shall be made by the
Committee based on information presented by the Company and the Employee (if
the Employee chooses to present information), and shall be final and binding on
the Company and the Employee.
"Change in Control" shall mean the occurrence of either of the following events:
(a) A change in the composition of the Board as a result of which fewer than
one-half of the incumbent Directors are Directors who either:
(i) were Directors of the Company twenty-four (24) months prior to such
change, or
(ii) were elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Directors who had been
Directors of the Company twenty-four (24) months prior to such change
and who were still in office at the time of the election or nomination;
or
(b) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than any person who is a shareholder of the Company on or
before the effective date of this Plan, by the acquisition or aggregation of
securities is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding securities ordinarily
(and apart from rights accruing under special circumstances) having the right
to vote at elections of directors (the "Base Capital Stock"); except that any
change in the relative beneficial ownership of the Company's securities by any
person resulting solely from a reduction in the aggregate number of outstanding
shares of Base Capital Stock shall be disregarded until such person increases
in any manner, directly or indirectly, such person's beneficial ownership of
any securities of the Company.
"Code" shall mean the Internal Revenue Code of 1986, including effective date
and transition rules (whether or not codified). Any reference herein to a
specific section of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"Committee" shall mean a committee of at least two Directors appointed from
time to time by the Board, having the duties and authority set forth herein in
addition to any other authority granted by the Board; provided, however, that
(i) with respect to any Options or Awards granted to an individual who is also
a Section 16 Insider, the Committee shall consist of at least two members of
the Board (who need not be members of the Committee with respect to Options or
Awards granted to any other individuals) who are Non-Employee Directors, and
(ii) with respect to any Options or Awards granted to an individual who is also
a Covered Employee, the Committee shall consist of at least two members of the
Board (who need not be members of the Committee with respect to Options or
Awards granted to any other individuals) who are Outside Directors, and all
authority and discretion shall be exercised by such Non-Employee Directors or
Outside Directors, as the case may be. References herein
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to the "Committee" shall mean such Non-Employee Directors or Outside Directors
insofar as any actions or determinations of the Committee shall relate to or
affect Options or Awards made to or held by any Section 16 Insider or Covered
Employee, as the case may be. At any time that the Board shall not have
appointed a committee as described above, any reference herein to the Committee
shall mean a reference to the Board.
"Company" shall mean PTEK Holdings, Inc., a Georgia corporation.
"Covered Employee" shall have the meaning assigned such term in Code Section
162(m)(3) and the regulations promulgated thereunder.
"Director" shall mean a member of the Board and any person who is an advisory
or honorary director of the Company if such person is considered a director for
the purposes of Section 16 of the Exchange Act, as determined by reference to
such Section 16 and to the rules, regulations, judicial decisions and
interpretative or "no-action" positions with respect thereto of the Securities
and Exchange Commission, as the same may be in effect or set forth from time to
time.
"Exchange Act" shall mean the Securities Exchange Act of 1934. Any reference
herein to a specific section of the Exchange Act shall be deemed to include a
reference to any corresponding provision of future law.
"Exercise Price" shall mean the price at which an Optionee may purchase a share
of Stock under a Stock Option Agreement.
"Fair Market Value" on any date shall mean (i) the closing sales price of the
Stock, regular way, on such date on the national securities exchange having the
greatest volume of trading in the Stock during the thirty (30) day period
preceding such date or, if such exchange was not open for trading on such date,
the next preceding date on which it was open; (ii) if the Stock is not traded
on any national securities exchange, the average of the closing high bid and
low asked prices of the Stock on the over-the-counter market on the date such
value is to be determined, or in the absence of closing bids on such date, the
closing bids on the next preceding date on which there were bids; or (iii) if
the Stock also is not traded on the over-the-counter market, the fair market
value as determined in good faith by the Committee based on such relevant facts
as may be available, which may include opinions of independent experts, the
price at which recent sales of Stock have been made, the book value of the
Stock, and the Company's past, current and future earnings.
"Grantee" shall mean a person who is an Optionee or a person who has received
an Award of Restricted Stock or an SAR.
"Incentive Stock Option" shall mean an Option that complies with and is subject
to the terms, limitations and conditions of Code Section 422 and the
regulations promulgated thereunder.
"Non-Employee Director" shall have the meaning assigned such term in Rule 16b-3
promulgated under Section 16 of the Exchange Act.
"Officer" shall mean a person who constitutes an officer of the Company for the
purposes of Section 16 of the Exchange Act, as determined by reference to such
Section 16 and to the rules, regulations, judicial decisions, and
interpretative or "no-action" positions with respect thereto of the Securities
and Exchange Commission, as the same may be in effect or set forth from time to
time.
"Option" shall mean an option, including an Incentive Stock Option, to purchase
Stock granted pursuant to the provisions of Article VI hereof.
"Optionee" shall mean a person to whom an Option has been granted hereunder.
"Outside Director" shall have the meaning assigned such term in Code Section
162 and the regulations promulgated thereunder.
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"Permanent and Total Disability" shall have the meaning set forth in Code
Section 22(e)(3) and the regulations promulgated thereunder.
"Plan" shall mean the PTEK Holdings, Inc. 1995 Stock Plan, the terms of which
are set forth herein.
"Purchasable" shall refer to Stock that may be purchased by an Optionee under
the terms of this Plan on or after a certain date specified in the applicable
Stock Option Agreement.
"Qualified Domestic Relations Order" shall have the meaning set forth in Code
Section 414(p)(1)(A) and the regulations promulgated thereunder.
"Reload Option" shall have the meaning set forth in Section 6.8 hereof.
"Restricted Stock" shall mean Stock issued to a Grantee pursuant to Article VII
hereof.
"Restriction Agreement" shall mean a written agreement setting forth the terms
of an Award of Restricted Stock, as provided in Section 7.1 hereof.
"SAR" means a stock appreciation right, which is the right to receive an amount
equal to the appreciation, if any, in the Fair Market Value of a share of Stock
from the date of the grant of the right to the date of its payment, as provided
in Article VIII hereof.
"SAR Agreement" shall mean a written agreement setting forth the terms of an
Award of an SAR, as provided in Section 8.1 hereof.
"SAR Price" shall mean the base value established by the Committee for an SAR
on the date the SAR is granted and which is used in determining the amount of
benefit, if any, paid to a Grantee.
"Section 16 Insider" shall mean any person who is subject to the provisions of
Section 16 of the Exchange Act, as provided in Rule 16a-2 promulgated pursuant
to the Exchange Act.
"Stock" shall mean the Common Stock, par value $.01 per share, of the Company
or, in the event that the outstanding shares of Stock are hereafter changed
into or exchanged for shares of a different stock or securities of the Company
or some other entity, such other stock or securities.
"Stock Option Agreement" shall mean a written agreement between the Company and
an Optionee under which the Optionee may purchase Stock hereunder, as provided
in Article VI hereof.
"Subsidiary" shall mean any corporation, limited liability company, partnership
or other entity in which the Company directly or indirectly controls fifty
percent (50%) or more of the total combined voting power of such entity.
ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as the "PTEK Holdings, Inc. 1995 Stock
Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, its Subsidiaries and its shareholders by affording certain employees
of the Company and its Subsidiaries, as well as key consultants and advisors to
the Company or any Subsidiary, an opportunity to acquire or increase their
proprietary interests in the Company. The objective of the Options and Awards
is to promote the growth and profitability of the Company
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and its Subsidiaries by providing the Grantees with an additional incentive to
achieve the Company's objectives through participation in its success and
growth and by encouraging their continued association with or service to the
Company and its Subsidiaries.
2.3 Effective Date. The original effective date of this Plan was December
6, 1995. The Plan was amended as of September 12, 1996, March 18, 1997,
February 27, 1998, and April 27, 2001, all of which amendments were approved by
the Company's shareholders. The Plan was amended and restated on April 27, 2001
by the Board to change the name of the Plan from "Premiere Technologies, Inc.
Second Amended and Restated 1995 Stock Plan" to "PTEK Holdings, Inc. 1995 Stock
Plan" to correspond to the Company's new corporate name.
ARTICLE III
PARTICIPANTS
The class of persons eligible to participate in this Plan shall consist of
all persons whose participation in the Plan the Committee determines to be in
the best interests of the Company which shall include, but not be limited to,
all employees of the Company or any Subsidiary, as well as directors, key
consultants and advisors to the Company or any Subsidiary.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. This Plan shall be administered by
the Committee. The Committee shall select one of its members as its Chairman
and shall hold its meetings at such times and places as it may determine. The
Committee shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it may deem necessary. The
Committee shall have the power to act by unanimous written consent in lieu of a
meeting, and to meet telephonically. In administering this Plan, the
Committee's actions and determinations shall be binding on all interested
parties. The Committee shall have the power to grant Options or Awards in
accordance with the provisions of this Plan and may grant Options and Awards
singly, in combination, or in tandem. Subject to the provisions of this Plan,
the Committee shall have the discretion and authority to determine those
persons to whom Options or Awards will be granted and whether such Options will
be accompanied by the right to receive Reload Options, the number of shares of
Stock subject to each Option or Award, such other matters as are specified
herein, and any other terms and conditions of a Stock Option Agreement,
Restriction Agreement and an SAR Agreement. The Committee shall also have the
discretion and authority to delegate to any Officer its powers to grant Options
or Awards under this Plan to any person who is an employee of the Company or
any Subsidiary but not an Officer or Director. To the extent not inconsistent
with the provisions of this Plan, the Committee may give a Grantee an election
to surrender an Option or Award in exchange for the grant of a new Option or
Award, and shall have the authority to amend or modify an outstanding Stock
Option Agreement, Restriction Agreement or SAR Agreement, or to waive any
provision thereof, provided that the Grantee consents to such action.
4.2 Interpretation; Rules. Subject to the express provisions of this Plan,
the Committee shall have complete authority to interpret this Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement, Restriction
Agreement and SAR Agreement, and to make all other determinations necessary or
advisable for the administration of this Plan, including, without limitation,
the amending or altering of this Plan and any Options or Awards granted
hereunder as may be required to comply with or to conform to any federal, state
or local laws or regulations.
4.3 No Liability. Neither any Director nor any member of the Committee
shall be liable to any person or entity for any act or determination made in
good faith with respect to this Plan or any Option or Award granted hereunder.
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4.4 Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority at a meeting at which a
quorum is present, or any action taken without a meeting evidenced by a writing
executed by all the members of the Committee, shall constitute the action of
the Committee.
4.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary
in the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to any antidilution adjustment pursuant to the
provisions of Section 5.2, the maximum number of shares of Stock that may be
issued hereunder shall be 9,650,000; provided, that the stock dividend declared
shortly prior to the Company's initial public offering did not and shall not
affect the maximum number of shares of Stock that may be issued hereunder. Any
or all shares of Stock subject to the Plan may be issued in any combination of
Incentive Stock Options, non-Incentive Stock Options, Restricted Stock and
SARs, and the amount of Stock subject to the Plan may be increased from time to
time in accordance with Article X hereof. Notwithstanding any provision in the
Plan to the contrary, the maximum number of shares of Stock with respect to one
or more Options and/or SARs that may be granted during any one calendar year
under the Plan to any one Covered Employee shall be 1,000,000. The maximum fair
market value of any Restricted Stock Awards that may be received by a Covered
Employee (less any consideration paid by the participant for such Award) during
any one calendar year under the Plan shall be $4,000,000.
Shares subject to an Option or issued as an Award may be either authorized
and unissued shares or shares issued and later acquired by the Company. The
shares covered by any unexercised portion of an Option that has terminated for
any reason (except as set forth in the following paragraph), or any forfeited
portion of an Award, may again be optioned or Awarded under this Plan, and such
shares shall not be considered as having been optioned or issued in computing
the number of shares of Stock remaining available for Options or Awards
hereunder.
If Options are issued in respect of options to acquire stock of any entity
acquired, by merger or otherwise, by the Company or any Subsidiary, to the
extent that such issuance shall not be inconsistent with the terms, limitations
and conditions of Code Section 422 or Rule 16b-3 under the Exchange Act, the
aggregate number of shares of Stock for which Options may be granted hereunder
shall automatically be increased by the number of shares subject to the Options
so issued; provided, however, that the aggregate number of shares of Stock for
which Options may be granted hereunder shall automatically be decreased by the
number of shares covered by any unexercised portion of an Option so issued that
has terminated for any reason, and the shares subject to any such unexercised
portion may not be optioned to any other person.
5.2 Antidilution.
(a) If (i) the Outstanding shares of Stock are increased, decreased, or
changed into or exchanged for a different number or kind of shares or other
securities of the Company, by reason of merger, consolidation, reorganization,
recapitalization, reclassification, combination or exchange of shares, or stock
split or stock dividend (excluding the Stock dividend referred to in Section
5.1), (ii) any spin-off, split-off or other distribution of assets materially
affects the price of the Company's stock, or (iii) there is any assumption and
conversion to this Plan by the Company of an acquired company's outstanding
option grants, then:
(A) the aggregate number and kind of shares of Stock for which Options or
Awards may be granted hereunder shall be adjusted appropriately by the
Committee, and
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(B) the rights of Optionees (concerning the number of shares subject to
Options and the Exercise Price) under outstanding Options and the rights
of the holders of Awards (concerning the terms and conditions of the
lapse of any then remaining restrictions), shall be adjusted
appropriately by the Committee.
(b) If the Company is a party to any reorganization in which it does not
survive, involving merger, consolidation, or acquisition of the stock or
substantially all the assets of the Company, the Committee, in its discretion,
may:
(i) notwithstanding other provisions hereof, declare that all Options
granted under this Plan shall become exercisable immediately
notwithstanding the provisions of the respective Stock Option Agreements
regarding exercisability, that all such Options shall terminate thirty
(30) days after the Committee gives written notice of the immediate
right to exercise all such Options and of the decision to terminate all
Options not exercised within such 30-day period, and that all
then-remaining restrictions pertaining to Awards under this Plan shall
immediately lapse; and/or
(ii) notify all Grantees that all Options and Awards granted under this Plan
shall be assumed by the successor corporation or substituted on an
equitable basis with options or restricted stock issued by such
successor corporation.
(c) If the Company is to be liquidated or dissolved in connection with a
reorganization described in Section 5.2(b), the provisions of that Section
shall apply. In all other instances, the adoption of a plan of dissolution or
liquidation of the Company shall, notwithstanding other provisions hereof,
cause all then-remaining restrictions pertaining to Options and Awards under
the Plan to lapse, and shall cause every Option outstanding under the Plan to
terminate to the extent not exercised prior to the adoption of the plan of
dissolution or liquidation by the shareholders; provided that, notwithstanding
any other provisions hereof, the Committee may declare all Options granted
under the Plan to be exercisable at any time on or before the fifth (5th)
business day following such adoption, notwithstanding the provisions of the
respective Stock Option Agreements regarding exercisability.
(d) The adjustments described in paragraphs (a) through (c) of this Section
5.2, and the manner of their application, shall be determined solely by the
Committee, and any such adjustment may provide for the elimination of
fractional share interests; provided, however, that any adjustment made by the
Committee shall be made in a manner that will not cause an Incentive Stock
Option to be other than an Incentive Stock Option under applicable statutory
and regulatory provisions. The adjustments required under this Article V shall
apply to any successors of the Company and shall be made regardless of the
number or type of successive events requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 Types of Options Granted. The Committee may, under this Plan, grant
either Incentive Stock Options or Options which do not qualify as Incentive
Stock Options. Within the limitations provided in this Plan, both types of
Options may be granted to the same person at the same time, or at different
times, under different terms and conditions, as long as the terms and
conditions of each Option are consistent with the provisions of this Plan.
Without limitation of the foregoing, Options may be granted subject to
conditions based on the satisfaction of performance goals or any other factor
the Committee deems relevant.
6.2 Option Grant and Agreement. Each Option granted hereunder shall be
evidenced by minutes of a meeting or the written consent of the Committee and
by a written Stock Option Agreement executed by the Company and the Optionee.
The terms of the Option, including the Option's duration, time or times of
exercise, exercise price, whether the Option is intended to be an Incentive
Stock Option, and whether the Option is to be accompanied by the right to
receive a Reload Option, shall be stated in the Stock Option Agreement. No
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Incentive Stock Option may be granted more than ten (10) years after the
effective date of this Plan. Separate Stock Option Agreements may be used for
Options intended to be Incentive Stock Options and those not so intended, but
any failure to use such separate agreements shall not invalidate, or otherwise
adversely affect the Optionee's interest in, the Options evidenced thereby.
6.3 Optionee Limitations. The Committee shall not grant an Incentive Stock
Option to any person who, at the time the Incentive Stock Option is granted:
(a) is not an employee of the Company or any of its Subsidiaries; or
(b) owns or is considered to own stock possessing at least ten percent (10%)
of the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries; provided, however, that this
limitation shall not apply if at the time an Incentive Stock Option is
granted the Exercise Price is at least one hundred ten percent (110%) of
the Fair Market Value of the Stock subject to such Option and such
Option by its terms is not exercisable after five (5) years from the
date on which the Option is granted. For the purpose of this subsection
(b), a person shall be considered to own: (i) the stock owned, directly
or indirectly, by or for his or her brothers and sisters (whether by
whole or half blood), spouse, ancestors and lineal descendants; (ii) the
stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust in proportion to such person's stock
interest, partnership interest or beneficial interest therein; and (iii)
the stock which such person may purchase under any outstanding options
of the Company or any Subsidiary.
6.4 $100,000 Limitation. Except as provided below, the Committee shall not
grant an Incentive Stock Option to, or modify the exercise provisions of any
outstanding Incentive Stock Option held by, any person who, at the time the
Incentive Stock Option is granted (or modified), would thereby receive or hold
any Incentive Stock Options of the Company and any Subsidiary, such that the
aggregate Fair Market Value (determined as of the respective dates of grant or
modification of each Option) of the Stock with respect to which such Incentive
Stock Options are exercisable for the first time during any calendar year is in
excess of $100,000 (or such other limit as may be prescribed by the Code from
time to time); provided, that the foregoing restriction on modification of
outstanding Incentive Stock Options shall not preclude the Committee from
modifying an outstanding Incentive Stock Option if, as a result of such
modification and with the consent of the Optionee, such Option no longer
constitutes an Incentive Stock Option; and provided further that, if the
$100,000 limitation (or such other limitation prescribed by the Code) described
in this Section 6.4 is exceeded, the Incentive Stock Option, the granting or
modification of which resulted in the exceeding of such limit, shall be treated
as an Incentive Stock Option up to the limitation and the excess shall be
treated as an Option not qualifying as an Incentive Stock Option.
6.5 Exercise Price. The Exercise Price of the Stock subject to each Option
shall be determined by the Committee. Subject to the provisions of Section
6.3(b) hereof, the Exercise Price of an Incentive Stock Option shall not be
less than the Fair Market Value of the Stock as of the date the Option is
granted (or in the case of an Incentive Stock Option that is subsequently
modified, on the date of such modification).
6.6 Exercise Period. The period for the exercise of each Option granted
hereunder shall be determined by the Committee, but the Stock Option Agreement
with respect to each Option intended to be an Incentive Stock Option shall
provide that such Option shall not be exercisable after the expiration of ten
(10) years from the date of grant (or modification) of the Option.
6.7 Option Exercise.
(a) Unless otherwise provided in the Stock Option Agreement or Section 6.6
hereof, an Option may be exercised at any time or from time to time during the
term of the Option as to any or all full shares which have become Purchasable
under the provisions of the Option, but not at any time as to less than one
hundred (100) shares unless the remaining shares that have become so
Purchasable are less than one hundred (100) shares. The
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Committee shall have the authority to prescribe in any Stock Option Agreement
that the Option may be exercised only in accordance with a vesting schedule
during the term of the Option.
(b) An Option shall be exercised by (i) delivery to the Company at its
principal office a written notice of exercise with respect to a specified
number of shares of Stock and (ii) payment to the Company at that office of the
full amount of the Exercise Price for such number of shares in accordance with
Section 6.7(c). If requested by an Optionee, an Option may be exercised with
the involvement of a stockbroker in accordance with the federal margin rules
set forth in Regulation T (in which case the certificates representing the
underlying shares will be delivered by the Company directly to the stockbroker).
(c) The Exercise Price is to be paid in full in cash upon the exercise of
the Option and the Company shall not be required to deliver certificates for
the shares purchased until such payment has been made; provided, however, the
Committee may provide in a Stock Option Agreement (or may otherwise determine
in Its sole discretion at the time of exercise) that in lieu of cash, all or
any portion of the Exercise Price may be paid by tendering to the Company
shares of Stock duly endorsed for transfer and owned by the Optionee, or by
authorization to the Company to withhold shares of Stock otherwise issuable
upon exercise of the Option, in each case to be credited against the Exercise
Price at the Fair Market Value of such shares on the date of exercise (however,
no fractional shares may be so transferred, and the Company shall not be
obligated to make any cash payments in consideration of any excess of the
aggregate Fair Market Value of shares transferred over the aggregate Exercise
Price); provided further, the Committee may provide in a Stock Option Agreement
(or may otherwise determine in its sole discretion at the time of exercise)
that, in lieu of cash or shares, all or a portion of the Exercise Price may be
paid by the Optionee's execution of a recourse note equal to the Exercise Price
or relevant portion thereof, subject to compliance with applicable state and
federal laws, rules and regulations.
(d) In addition to and at the time of payment of the Exercise Price, the
Company may withhold, or require the Optionee to pay to the Company in cash,
the amount of any federal, state and local income, employment or other
withholding taxes which the Committee determines are required to be withheld
under federal, state or local law in connection with the exercise of an Option;
provided, however, the Committee may provide in a Stock Option Agreement (or
may otherwise determine in its sole discretion at the time of exercise) that
all or any portion of such tax obligations may, upon the election of the
Optionee, be paid by tendering to the Company whole shares of Stock duly
endorsed for transfer and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise issuable upon exercise of the
Option, in either case in that number of shares having a Fair Market Value on
the date of exercise equal to the amount of such taxes thereby being paid.
(e) The holder of an Option shall not have any of the rights of a
shareholder with respect to the shares of Stock subject to the Option until
such shares have been issued and transferred to the Optionee upon the exercise
of the Option.
6.8 Reload Options.
(a) The Committee may specify in a Stock Option Agreement (or may otherwise
determine in its sole discretion) that a Reload Option shall be granted,
without further action of the Committee, (i) to an Optionee who exercises an
Option (including a Reload Option) by surrendering shares of Stock in payment
of amounts specified in Sections 6.7(c) or 6.7(d) hereof, (ii) for the same
number of shares as are surrendered to pay such amounts, (iii) as of the date
of such payment and at an Exercise Price equal to the Fair Market Value of the
Stock on such date, and (iv) otherwise on the same terms and conditions as the
Option whose exercise has occasioned such payment, except as provided below and
subject to such other contingencies, conditions, or other terms as the
Committee shall specify at the time such exercised Option is granted.
(b) Unless provided otherwise in the Stock Option Agreement, a Reload Option
may not be exercised by an Optionee (i) prior to the end of a one (1) year
period from the date that the Reload Option is granted, and (ii) unless the
Optionee retains beneficial ownership of the shares of Stock issued to such
Optionee upon exercise of the Option referred to above in Section 6.8(a)(i),
for a period of one (1) year from the date of such exercise.
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6.9 Nontransferability. No Option shall be transferable by an Optionee
other than by will or the laws of descent and distribution or, in the case of
non-Incentive Stock Options, pursuant to a Qualified Domestic Relations Order.
During the lifetime of an Optionee, Options shall be exercisable only by such
Optionee (or by such Optionee's guardian or legal representative, should one be
appointed).
6.10 Termination of Employment or Service. The Committee shall have the
power to specify, with respect to the Options granted to a particular Optionee,
the effect upon such Optionee's right to exercise an Option upon termination of
such Optionee's employment or service under various circumstances, which effect
may include immediate or deferred termination of such Optionee's rights under
an Option, or acceleration of the date at which an Option may be exercised in
full; provided, however, that in no event may an Incentive Stock Option be
exercised after the expiration of ten (10) years from the date of grant thereof.
6.11 Employment Rights. Nothing in this Plan or in any Stock Option
Agreement shall confer on any person any right to continue in the employ of the
Company or any of its Subsidiaries, or shall interfere in any way with the
right of the Company or any of its Subsidiaries to terminate such person's
employment at any time.
6.12 Certain Successor Options. To the extent not inconsistent with the
terms, limitations and conditions of Code Section 422 and any regulations
promulgated thereunder, an Option issued in respect of an option held by an
employee to acquire stock of any entity acquired, by merger or otherwise, by
the Company or any Subsidiary, may contain terms that differ from those stated
in this Article VI, but solely to the extent necessary to preserve for any such
employee the rights and benefits contained in such predecessor option, or to
satisfy the requirements of Code Section 424(a).
6.13 Effect of Change in Control. The Committee may determine, at the time
of granting an Option or thereafter, that such Option shall become exercisable
on an accelerated basis in the event that a Change in Control occurs with
respect to the Company (and the Committee shall have the discretion to modify
the definition of Change in Control in a particular Option Agreement). If the
Committee finds that there is a reasonable possibility that, within the
succeeding six (6) months, a Change in Control will occur with respect to the
Company, then the Committee may determine that all outstanding Options shall be
exercisable on an accelerated basis.
ARTICLE VII
RESTRICTED STOCK
7.1 Awards of Restricted Stock. The Committee may grant Awards of
Restricted Stock, which shall be governed by a Restriction Agreement between
the Company and the Grantee. Each Restriction Agreement shall contain such
restrictions, terms and conditions (including, without limitation, the
satisfaction of stated performance goals) as the Committee may, in its
discretion, determine, and may require that an appropriate legend be placed on
the certificates evidencing the subject Restricted Stock. Shares of Restricted
Stock granted pursuant to an Award hereunder shall be issued in the name of the
Grantee as soon as reasonably practicable after the Award is granted, provided
that the Grantee has executed the Restriction Agreement governing the Award,
the appropriate blank stock powers and, in the discretion of the Committee, an
escrow agreement and any other documents which the Committee may require as a
condition to the issuance of such Shares. If a Grantee shall fail to execute
the foregoing documents within the time period prescribed by the Committee, if
any, the Award shall be void. At the discretion of the Committee, Shares issued
in connection with an Award shall be deposited together with the stock powers
with an escrow agent designated by the Committee. Unless the Committee
determines otherwise and as set forth in the Restriction Agreement, upon
delivery of the Shares to the escrow agent, the Grantee shall have all of the
rights of a shareholder with respect to such Shares, including the right to
vote the Shares and to receive all dividends or other distributions paid or
made with respect to the Shares.
7.2 Nontransferability. Until any restrictions upon Restricted Stock
awarded to a Grantee shall have lapsed in a manner set forth in Section 7.3,
such shares of Restricted Stock shall not be transferable other than by
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will or the laws of descent and distribution, or pursuant to a Qualified
Domestic Relations Order, nor shall they be delivered to the Grantee.
7.3 Lapse of Restrictions. Restrictions upon Restricted Stock awarded
hereunder shall lapse at such time or times and on such terms and conditions as
the Committee may, in its discretion, determine at the time the Award is
granted or thereafter.
7.4 Termination of Employment. The Committee shall have the power to
specify, with respect to each Award granted to any particular Grantee, the
effect upon such Grantee's rights with respect to such Restricted Stock of the
termination of such Grantee's employment under various circumstances, which
effect may include immediate or deferred forfeiture of such Restricted Stock or
acceleration of the date on which any then remaining restrictions shall lapse.
7.5 Treatment of Dividends. At the time an Award of Restricted Stock is
made the Committee may, in its discretion, determine that the payment to the
Grantee of any dividends, or a specified portion thereof, declared or paid on
such Restricted Stock shall be (a) deferred until the lapsing of the relevant
restrictions and (b) held by the Company for the account of the Grantee until
such lapsing. In the event of such deferral, there shall be credited at the end
of each year (or portion thereof) interest on the amount of the account
outstanding during such year at a rate per annum determined by the Committee.
Payment of deferred dividends, together with interest thereon, shall be made
upon the lapsing of restrictions imposed on such Restricted Stock, and any
dividends deferred (together with any interest thereon) in respect of
Restricted Stock shall be forfeited upon any forfeiture of such Restricted
Stock.
7.6 Delivery of Shares. Except as provided otherwise in Article IX below,
within a reasonable period of time following the lapse of the restrictions on
shares of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such shares and such shares shall be
free of all restrictions hereunder.
ARTICLE VIII
STOCK APPRECIATION RIGHTS
8.1 SAR Awards. The Committee may grant Awards of SARs, which shall be
governed by an SAR Agreement between the Company and the Grantee. Each SAR
Agreement shall contain such restrictions, terms and conditions (including,
without limitation, the satisfaction of stated performance goals) as the
Committee may, in its discretion, determine.
8.2 Determination of Price. The SAR Price shall be established by the
Committee in its sole discretion. The SAR Price shall not be less than one
hundred percent (100%) of the Fair Market Value of the Stock on the date the
SAR is granted for an SAR issued in tandem with an Incentive Stock Option.
8.3 Exercise of an SAR. Upon exercise of an SAR, the Grantee shall be
entitled, subject to the terms and conditions of this Plan and the SAR
Agreement, to receive for each share of Stock being exercised under the SAR,
the excess of (a) the Fair Market Value of such share of Stock on the date of
exercise over (b) the SAR Price for such share of Stock.
8.4 Payment for an SAR. At the sole discretion of the Committee, the
payment of such excess shall be made in (a) cash, (b) shares of Stock, or (c) a
combination of both. Shares of Stock used for this payment shall be valued at
their Fair Market Value on the date of exercise of the applicable SAR.
8.5 Status of SAR Shares. Shares of Stock subject to an Award of an SAR
shall be considered shares of Stock which may be issued under this Plan for
purposes of Section 5.1 hereof, unless the SAR Agreement making the Award of
the SAR provides that the exercise of such SAR results in the termination of an
unexercised Option for the same number of shares of Stock.
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8.6 Termination of SARs. An SAR may be terminated as follows:
(a) During the period of a Grantee's continuous employment with the Company
or a Subsidiary, an SAR will be terminated only if it has been fully
exercised or it has expired by its terms.
(b) Upon termination of a Grantee's employment with the Company or a
Subsidiary, the SAR will terminate upon the earliest of (1) the full
exercise of the SAR, (ii) the expiration of the SAR by its terms, and
(iii) not more than three (3) months following the date of employment
termination; provided, however, should termination of employment (A)
result from the death or Permanent and Total Disability of the Grantee,
the period referenced in clause (iii) hereof shall be one (1) year, or
(B) be for Cause, the SAR will terminate on the date of employment
termination. For purposes of this Plan, a leave of absence approved by
the Company shall not be deemed to be termination of employment unless
otherwise provided in the SAR Agreement or by the Company on the date of
the leave of absence.
(c) Subject to the terms of the SAR Agreement with the Grantee, if a Grantee
should die or become Subject to a Permanent and Total Disability prior
to the termination of employment with the Company or any Subsidiary and
prior to the termination of an SAR, such SAR may be exercised to the
extent that the Grantee shall have been entitled to exercise it at the
time of death or Permanent and Total Disability, as the case may be, by
the Grantee, the estate of the Grantee or the person or persons to whom
the SAR shall have been transferred by will or by the laws of descent
and distribution.
(d) Except as otherwise expressly provided in the SAR Agreement with the
Grantee, in no event will the continuation of the term of an SAR beyond
the date of termination of employment allow the Employee, or his
beneficiaries or heirs, to accrue additional rights under this Plan,
have additional SARs available for exercise, or receive a higher benefit
than the benefit payable as if the SAR had been exercised on the date of
employment termination.
8.7 No Shareholder Rights. The Grantee of an SAR shall have no rights as a
shareholder with respect to such SAR. In addition, no adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or rights except as provided in Section 5.2 hereof.
ARTICLE IX
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof, or deliver any certificate for shares of Restricted Stock
granted hereunder, prior to fulfillment of all of the following conditions:
(a) the admission of such shares to listing on all stock exchanges on which
the Stock is then listed;
(b) the completion of any registration or other qualification of such shares
which the Committee shall deem necessary or advisable under any federal
or state law or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body;
(c) the obtaining of any approval or other clearance from any federal or
state governmental agency or body which the Committee shall determine to
be necessary or advisable; and
(d) the lapse of such reasonable period of time following the exercise of
the Option as the Board from time to time may establish for reasons of
administrative convenience.
Stock certificates issued and delivered to Grantees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant
to applicable federal and state securities laws.
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ARTICLE X
TERMINATION AND AMENDMENT
10.1 Termination and Amendment. The Board at any time may amend or
terminate the Plan without shareholder approval; provided, however, that the
Board may condition any amendment on the approval of shareholders of the
Company if such approval is necessary or advisable with respect to tax,
securities or other applicable laws.
10.2 Effect on Grantee's Rights. No termination, amendment or modification
of this Plan shall adversely affect a Grantee's rights under a Stock Option
Agreement, Restriction Agreement or an SAR Agreement without the consent of the
Grantee or his legal representative.
ARTICLE XI
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of this Plan shall not affect any other stock option, incentive
or other compensation plans in effect for the Company or any of its
Subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its Subsidiaries from establishing any other form of incentive or other
compensation plan for employees or Directors of the Company or any of its
Subsidiaries.
ARTICLE XII
MISCELLANEOUS
12.1 Performance Goals. The Committee may determine that any Award granted
pursuant to this Plan to a participant (including, but not limited to,
participants who are Covered Employees) shall be determined solely on the basis
of (a) the achievement by the Company or a Subsidiary of a specified target
return on equity or assets, (b) the Company's or Subsidiary's stock price, (c)
the achievement by the Company or a business unit of the Company or Subsidiary
of a specified target net income or earnings per share, including without
limitation earnings before interest and taxes, or (d) any combination of the
goals set forth in (a) through (c) above. Furthermore, the Committee reserves
the right for any reason to reduce (but not increase) any Award,
notwithstanding the achievement of a specified goal. If an Award is made on
such basis, the Committee shall establish goals prior to the beginning of the
period for which such performance goal relates (or such later date as may be
permitted under Code Section 162(m)). Any payment of an Award granted with
performance goals shall be conditioned on the written certification of the
Committee in each case that the performance goals and any other material
conditions were satisfied.
12.2 Replacement or Amended Grants. At the sole discretion of the
Committee, and subject to the terms of this Plan, the Committee may modify
outstanding Options or Awards or accept the surrender of outstanding Options or
Awards and grant new Options or Awards in substitution thereof. However, no
modification of an Option or Award shall adversely affect a Grantee's rights
under a Stock Option Agreement, Restriction Agreement or an SAR Agreement
without the consent of the Grantee or his legal representative.
12.3 Forfeiture for Competition. If a Grantee provides services to a
competitor of the Company or any of its Subsidiaries, whether as an employee,
officer, director, independent contractor, consultant, agent or otherwise,
which services are of a nature that can reasonably be expected to involve the
skills and experience used or developed by the Grantee while an employee,
consultant or advisor of the Company or any Subsidiary, then that Grantee's
rights under any Options outstanding hereunder shall be forfeited and
terminated, and any shares of Restricted Stock held by such Grantee subject to
remaining restrictions shall be forfeited, subject in each case to a
determination to the contrary by the Committee.
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12.4 Plan Binding on Successors. This Plan shall be binding upon the
successors and assigns of the Company.
12.5 Singular, Plural, Gender. Whenever used herein, nouns in the singular
shall include the plural, and the masculine pronoun shall include the feminine
gender and vice versa.
12.6 Headings Not Part of Plan. Headings of Articles and Sections hereof
are inserted for convenience and reference, and they do not constitute part of
this Plan.
12.7 Interpretation. With respect to Section 16 Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act, and shall be interpreted
consistent therewith.
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APPENDIX E
PROXY
PTEK HOLDINGS, INC.
The undersigned hereby appoints Boland T. Jones and Patrick G. Jones, each
with full power of substitution, acting jointly or by either of them if only
one be present and acting, attorneys and proxies to vote in the manner
specified below (according to the number of shares which the undersigned would
be entitled to cast if then personally present), all the shares of common
stock, par value $.01 per share, or all the Series B voting preferred stock,
par value $.01 per share, of PTEK Holdings, Inc. held of record by the
undersigned at the close of business on April 22, 2002, at the Annual Meeting
of Shareholders to be held at 10:00 a.m., local time, on June 5, 2002, at the
JW Marriott Hotel at Lenox, 3300 Lenox Road, N.E., Atlanta, Georgia, 30326,
including any adjournments thereof.
1. Election of the following nominees:
Nominees: Raymond H. Pirtle, Jr., Jeffrey M. Cunningham and Randolph L.
Booth to serve as Class II directors for terms expiring at the annual
meeting of shareholders in 2005:
FOR all nominees listed above [_]
WITHHOLD authority to vote for nominees listed above [_]
(Instruction: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. Approval of an amendment to the Company's Associate Stock Purchase Plan to
increase the shares available for purchase by 750,000:
FOR [_]
AGAINST [_]
ABSTAIN [_]
3. Approval of an amendment to the 2000 Directors Stock Plan to increase the
shares available for awards by 1,000,000:
FOR [_]
AGAINST [_]
ABSTAIN [_]
4. Approval of an amendment to the 1995 Stock Plan to increase annual award
limits and approve performance criteria for performance based awards:
FOR [_]
AGAINST [_]
ABSTAIN [_]
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[_] Please check this box if you plan to attend the Annual Meeting of
Shareholders despite submission of this Proxy.
This Proxy, when properly executed, will be voted in the manner directed by
the undersigned shareholder. If no direction is made, this Proxy will be voted
"FOR" the election of the three director nominees name in Proposal 1 and "FOR"
Proposal 2, Proposal 3 and Proposal 4, and with discretionary authority as
permitted by Rule 14a-4(c) of the Securities and Exchange Commission on all
other matters that may properly come before the Meeting or any adjournment
thereof of which the Company had notice on or after December 28, 2001.
Please sign exactly as your name appears on your stock certificate and date
as of the date of signature. Where shares are held jointly, each shareholder
must sign. When signing as executor, administrator, trustee, or guardian,
please give full title as such. If 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.
Signature of Shareholder
Signatures of Other Shareholder
(if held jointly)
Dated: __________, 2002
THIS PROXY IS SOLICITED ON BEHALF OF PTEK HOLDINGS, INC.'S BOARD OF DIRECTORS
AND MAY BE REVOKED BY THE SHAREHOLDER PRIOR TO ITS EXERCISE.
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