SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to 14a-11(c) or 14a-12
BOSTON COMMUNICATIONS GROUP, 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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
................................................................................
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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|_| 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, JUNE 13, 2001
The Annual Meeting of Shareholders of Boston Communications Group, Inc.
(the "Company") will be held on Wednesday, June 13, 2001, at the Company, 100
Sylvan Road, Woburn, Massachusetts at 9:00 a.m., local time, to consider and act
upon the following matters:
1. To elect Jerrold D. Adams, Paul R. Gudonis and Frederick E. von
Mering, as Class II Directors, to serve for a three-year term.
2. To approve an amendment to the Company's 2000 Stock Option Plan
increasing the number of shares of Common Stock available for issuance
thereunder from 500,000 to 1,250,000 shares.
3. To approve the adoption of the Company's 2001 Employee Stock Purchase
Plan.
4. To ratify the selection of Ernst & Young LLP by the Board of Directors
as the Company's independent auditors for the current fiscal year.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has no knowledge of any other business to be
transacted at the meeting.
Shareholders of record at the close of business on May 8, 2001 will be
entitled to notice of and to vote at the meeting or any adjournment thereof. The
stock transfer books of the Company will remain open.
By Order of the Board of Directors,
Alan J. Bouffard,
Clerk
Woburn, Massachusetts
May 11, 2001
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY IS
MAILED IN THE UNITED STATES.
BOSTON COMMUNICATIONS GROUP, INC.
100 SYLVAN ROAD
WOBURN, MASSACHUSETTS 01801
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 13, 2001
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Boston Communications Group, Inc. (the
"Company") for use at the Annual Meeting of Shareholders to be held on June 13,
2001 and at any adjournments of that meeting (the "Annual Meeting"). All proxies
will be voted in accordance with the shareholders' instructions, and if no
choice is specified, the proxies will be voted in favor of the matters set forth
in the accompanying Notice of Meeting. Any proxy may be revoked by a shareholder
at any time before its exercise by delivery of written revocation or a
subsequently dated proxy to the Clerk of the Company or by voting in person at
the Annual Meeting. Attendance at the Annual Meeting will not be deemed to
revoke a proxy unless the stockholder gives affirmative notice at the Annual
Meeting that the stockholder intends to revoke the proxy and vote in person.
The Company's 2000 Annual Report to Shareholders is being mailed to
shareholders concurrently with this Proxy Statement on or about May 11, 2001.
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, as filed with the Securities and Exchange Commission,
except for exhibits, will be furnished, without charge to any shareholder upon
written request to the Company, Boston Communications Group, Inc., 100 Sylvan
Road, Woburn, Massachusetts 01801.
VOTING SECURITIES AND VOTES REQUIRED
At the close of business on May 8, 2001, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, there were outstanding and entitled to vote an aggregate of 17,051,387
shares of common stock, $.01 par value per share, of the Company (the "Common
Stock"), constituting all of the voting stock of the Company. Holders of Common
Stock are entitled to one vote per share.
The presence or representation by proxy of the holders of a majority of the
number of shares of Common Stock issued, outstanding and entitled to vote at the
Annual Meeting constitutes a quorum for the transaction of business at the
Annual Meeting. Shares of Common Stock represented in person or by proxy
(including shares which abstain or do not vote with respect to one or more of
the matters presented for shareholder approval) will be counted for purposes of
determining whether a quorum is present.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present or represented and voting at the Annual Meeting is required for
the election of directors. The affirmative vote of the holders of a majority of
the shares of Common Stock present or represented and voting at the Annual
Meeting is required for approval of the amendment to the 2000 Stock Option Plan,
the approval of the 2001 Employee Stock Purchase Plan and the ratification of
the selection of Ernst & Young LLP as the Company's independent auditors for the
current fiscal year.
Shares that abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter and will also not
be counted as votes cast or shares voting on such matter. Accordingly,
abstentions and "broker non-votes" will have no effect on the voting on matters,
such as the ones presented for shareholder approval at this Annual Meeting, that
require the affirmative vote of a certain percentage of the shares voting on the
matter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 2001,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person known by the Company to beneficially own more than 5% of the
outstanding shares of Common Stock, (ii) each director and each person nominated
to become a director of the Company, (iii) each executive officer of the Company
named in the Summary Compensation Table set forth under the caption "Executive
Compensation" below and (iv) all current directors and executive officers of the
Company as a group:
PERCENTAGE OF
NUMBER OF SHARES COMMON STOCK
BENEFICIAL OWNER BENEFICIALLYOWNED(1) OUTSTANDING(2)
---------------- -------------------- --------------
Kern Capital Management (3) 1,766,900 10.4%
114 West 47th Street, Suite 1926
New York, New York 10036
Paul J. Tobin (4) 620,831 3.6%
E.Y. Snowden (5) 350,000 2.0%
Frederick von Mering (6) 438,464 2.6%
Brian E. Boyle (7) 350,750 2.0%
Karen A. Walker (8) 62,276 *
William D. Wessman (9) 53,667 *
Rajendra Singh (10) 6,000 *
Jerrold D. Adams (11) 86,075 *
Paul R. Gudonis (12) 29,000 *
Gerald Segel (13) 37,000 *
All current directors and executive officers as a group (14) 2,034,063 11.9%
(10 persons)
- ----------------------------
* Less than 1%
(1) Each person has sole investment and voting power with respect to the
shares indicated, except as otherwise noted. The number of shares of
Common Stock beneficially owned is determined under the rules of the
Securities and Exchange Commission and is not necessarily indicative of
beneficial ownership for any other purpose. The inclusion herein of any
shares of Common Stock deemed beneficially owned does not constitute an
admission of beneficial ownership of such shares. Any reference in the
footnotes below to stock options held by the person in question relates
to stock options which are currently exercisable or exercisable within
60 days after March 31, 2001.
(2) The number of shares deemed outstanding with respect to a named person
includes 17,048,220 shares outstanding as of March 31, 2001 plus any
shares subject to options held by the person in question that are
currently exercisable or exercisable within 60 days after March 31,
2001.
(3) Based solely upon a Schedule 13G filed on February 9, 2001.
(4) Includes 20,000 shares issuable pursuant to stock options. Includes
313,831 shares held by the Paul J. Tobin 1988 Trust, 287,000 shares
held by the Margaret M. Tobin 1988 Trust. Mr. Tobin is the trustee of
the Paul J. Tobin 1988 Trust. Margaret M. Tobin, the spouse of Paul J.
Tobin, is trustee of the Margaret M. Tobin 1988 Trust.
(5) Includes 330,000 shares issuable pursuant to stock options. Of these,
144,000 are held in trust for the benefit of Mr. Snowden's children.
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(6) Includes 9,000 shares held in accounts for the benefit of Mr. von
Mering's
children, and 140,654 shares issuable pursuant to stock options.
(7) Includes 100,000 shares issuable pursuant to stock options. Also
includes 250,750 shares owned by Sand Drift, Ltd. of which Mr. Boyle is
a limited partner. Mr. Boyle disclaims beneficial ownership of these
shares, except to the extent of his direct pecuniary interest therein.
(8) Includes 35,200 shares issuable pursuant to stock options.
(9) Includes 52,467 shares issuable pursuant to stock options.
(10) Consists of 6,000 shares issuable pursuant to stock options.
(11) Includes 80,075 shares issuable pursuant to stock options.
(12) Includes 27,000 shares issuable pursuant to stock options.
(13) Includes 27,000 shares issuable pursuant to stock options.
(14) Includes 818,396 shares issuable pursuant to stock options.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, with
members of each class holding office for staggered three-year terms. The Board
currently consists of two Class I Directors, whose terms expire at the 2003
Annual Meeting of Shareholders, three Class II Directors, whose terms expire at
the 2001 Annual Meeting of Shareholders, and three Class III Directors whose
terms expire at the 2002 Annual Meeting of Shareholders (in all cases subject to
the election of their successors and to their earlier death, resignation or
removal).
The persons named in the enclosed proxy will vote to elect Jerrold D.
Adams, Paul R. Gudonis and Frederick E. von Mering as Class II Directors to
serve for a three-year term expiring at the 2004 Annual Meeting of Shareholders,
unless authority to vote for the election of the nominees is withheld by marking
the proxy to that effect. The Company has a Nominating Committee, consisting
solely of outside directors, Gerald Segel, Paul Gudonis, Jerrold Adams and
Rajendra Singh, and all nominations are made by the Nominating Committee. Each
nominee has indicated his willingness to serve, if elected, but if any nominee
should be unable to stand for election, proxies may be voted for a substitute
nominee designated by the Nominating Committee.
Set forth below are the name, age and certain other information with
respect to each director and nominee for director of the Company.
NOMINEES FOR CLASS II DIRECTORS
Jerrold D. Adams, 61, has served as a Director of the Company since April
1996. From July 1999 to March 2000, Mr. Adams was Acting General Manager of the
Company's Systems Division. From March 1997 to March 1999, Mr. Adams was
President and Chief Executive Officer of AirNet Communications Corp., which
designs, develops and manufactures wireless infrastructure for the U.S. and
international PCS markets. Previously, Mr. Adams was President and Chief
Operating Officer of Iridium, Inc., an international consortium developing a
worldwide communications system for portable hand-held telephones, from 1991
until March 1997. Prior to that, Mr. Adams served as Director of PCN Operations
in Europe for Motorola from 1990 to 1991, Senior Vice President of McCaw
Cellular, a national non-wireline cellular company, from 1988 to 1990 and
General Manager of Metro One, a New York non-wireline cellular carrier, from
1986 to 1988. Mr. Adams received his B.A. from Coe College and attended the
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Wharton School of Business and the University of Illinois. Mr. Adams currently
serves as Chairman of the Board of Trustees for Coe College. Mr. Adams is a
nominee for re-election to the Board of Directors as a Class II Director.
Paul R. Gudonis, 47, has served as a Director of the Company since April
1996. Mr. Gudonis is Chairman and Chief Executive Officer of Genuity Inc., which
provides business Internet services. Mr. Gudonis assumed this position in June,
2000 when Genuity Inc. (formerly, GTE Internetworking) became an independent
public company. He had been President of GTE Internetworking since July 1997,
when GTE acquired BBN Corporation, the parent company of BBN Planet, of which he
had been President since November 1994. Mr. Gudonis previously served from 1991
to November 1994 as General Manager of the Communications Industry Group
International division of EDS Corporation, and as Senior Vice President and
General Manager of APPEX Corp. from January 1989 until it was acquired by EDS
Corporation in October 1990. Mr. Gudonis received his B.S. from Northwestern
University and his M.B.A. from Harvard Graduate School of Business
Administration. Mr. Gudonis is a nominee for re-election to the Board of
Directors as a Class II Director.
Frederick E. von Mering, 48, has served as a Director of the Company since
1989 and as its Vice President, Corporate Development since April 1999. From
1989 until March 1999, Mr. von Mering served as the Company's Chief Financial
Officer. Prior to joining the Company, Mr. von Mering served as Regional Vice
President and General Manager for the paging division of Metromedia, Inc., a
communications company, from 1980 to 1986. From 1975 to 1979, Mr. von Mering was
employed at Coopers & Lybrand LLP. Mr. von Mering earned his B.A. in accounting
from Boston College and his M.B.A. from Babson College. Mr. von Mering is a
nominee for re-election to the Board of Directors as a Class II Director.
CLASS I DIRECTORS
Gerald Segel, 80, has served as a Director of the Company since October
1996. Mr. Segel was Chairman of Tucker Anthony Incorporated from January 1987
until his retirement in May 1990. From 1983 to January 1987, he served as
President of Tucker Anthony Incorporated. Mr. Segel is also a director of
Hologic, Inc. Mr. Segel received his B.A. from Harvard University.
Rajendra Singh, 46, has served as a Director of the Company since May 2000.
Mr. Singh has served as Chairman and Chief Executive Officer of Telcom Ventures,
L.L.C, a private investment firm focused on the wireless communications and
information technology industries, since January 1994. Dr. Singh is also on the
Board of Directors of LCC International, Inc., where he previously served as
President from 1983 until September 1994, and as Chief Executive Officer from
January 1994 until January 1995. Dr. Singh also serves on the Board of Aether
Systems, Inc. and XM Satellite Radio Holdings, Inc. Dr. Singh received his
Doctorate degree in Electrical Engineering from Southern Methodist University.
CLASS III DIRECTORS
Paul J. Tobin, 58, has served as Chairman of the Board of Directors
since February 1996 and served as the Company's President and Chief Executive
Officer from 1990 until February 1996, and from April 1997 to February 1998.
Prior to joining the Company, Mr. Tobin served as President of Cellular One
Boston/Worcester from July 1984 to January 1990 and as a Regional Marketing
Manager for Satellite Business Systems, a joint venture of IBM, Comsat Corp. and
Aetna Life & Casualty from April 1980 to June 1984. Mr. Tobin received his B.S.
in economics from Stonehill College and his M.B.A. in marketing and finance from
Northeastern University.
4
Edward H. ("E.Y.") Snowden, 46, has served as a Director of the Company and
served as its President and Chief Executive Officer since February 1998. Prior
to joining the Company, Mr. Snowden served as President and Chief Operating
Officer of American Personal Communications, L.P. d/b/a Sprint Spectrum, a
telecommunications company, from February 1994 to December 1997. From June 1990
until February 1994, Mr. Snowden was an Area Vice President at Pacific Bell,
Inc., a telecommunications company. Mr. Snowden was the Chief Executive Officer
at Universal Optical Company, Inc. from March 1986 to March 1988. Mr. Snowden
received his B.S. from Stanford University and his M.B.A. from Harvard Graduate
School of Business Administration.
Brian E. Boyle, 53, has served as a Director of the Company since February
1996, as Vice Chairman of the Company since February 1996 and served as
Chairman, New Wireless Services of the Company from January 1994 to February
1996. From July 1990 to September 1993, Mr. Boyle served as Chairman and Chief
Executive Officer of Credit Technologies, Inc., a supplier of customer
application software for the cellular telephone industry. Prior to 1990, Mr.
Boyle founded and operated a number of ventures servicing the telecommunications
industry, including APPEX Corp. (now EDS Personal Communications Division of EDS
Corporation, a global telecommunications service company) and Leasecomm Corp., a
micro-ticket leasing company. Mr. Boyle earned his B.A. in mathematics from
Amherst College and his B.S., M.S. and Ph.D. in electrical engineering and
operations research from M.I.T. Mr. Boyle is also a Director of MicroFinancial
Incorporated, as well as of several private companies.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held seven meetings during 2000. Each director
attended at least 75% of the aggregate number of Board meetings and meetings
held by all committees on which he then served. The Board of Directors has Audit
and Compensation committees each composed of three outside members. The Board of
Directors has a Nominating committee composed of four outside directors.
The Company has a standing Audit Committee of the Board of Directors
composed of independent directors. Information regarding the functions performed
by the Audit Committee, its membership, and the number of meetings held during
the fiscal year, is set forth in the "Report of the Audit Committee," included
in this proxy statement. The Audit Committee is governed by a written charter
approved by the Board of Directors. A copy of this charter is included in
Appendix A to this Proxy Statement. The current members of the Audit Committee
are Messrs. Gudonis, Segel and Singh.
The Company has a standing Compensation Committee of the Board of
Directors, which provides recommendations to the Board of Directors regarding
compensation programs of the Company. The Compensation Committee administers and
has authority to grant stock options under the Company's 1996 Stock Option Plan
(the "1996 Option Plan"), the 1998 Stock Incentive Plan (the "1998 Stock Plan"),
and the 2000 Stock Option Plan (the "2000 Option Plan) to all employees,
directors and officers of the Company, including those persons who are required
to file reports ("Reporting Persons") pursuant to Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Compensation Committee also administers the Company's 1996 Employee Stock
Purchase Plan (the "1996 Purchase Plan") and will administer the Company's 2001
Employee Stock Purchase Plan (the "2001 Purchase Plan"). The Compensation
Committee met two times during 2000. For information regarding the Company's
Compensation practices for 2000, see the "Report of the Compensation Committee,"
included in this proxy statement. The current members of the Compensation
Committee are Messrs. Gudonis, Segel and Singh.
5
DIRECTOR COMPENSATION AND STOCK OPTIONS
Non-employee directors (which consist of Messrs. Adams, Gudonis, Segel and
Singh) receive $1,000 per meeting attended for their services as members of the
Board of Directors and are reimbursed for their expenses incurred in connection
with attending Board and committee meetings. Directors who serve on the Audit
Committee, Compensation Committee or Nominating Committee receive $500 for each
such committee meeting attended.
Under the terms of the 1996 Option Plan, 1998 Option Plan, and 2000 Option
Plan, options to purchase shares of Common Stock may be granted to members of
the Board of Directors. On January 31, 2000 the Company granted to Mr. Adams an
option to purchase 15,625 shares of the Company's Common Stock at an exercise
price of $6.875 per share (the fair market value on the date of grant). On April
18, 2000, the Company granted to Mr. Adams an option to purchase 2,450 shares of
the Company's Common Stock at an exercise price of $6.00 per share (the fair
market value on the date of grant). Also on April 18, 2000, the Company granted
to Mr. Tobin an option to purchase 20,000 shares of the Company's Common Stock
at an exercise price of $6.00 per share (the fair market value on the date of
grant). On May 26, 2000 the Company granted to each of Messrs. Adams, Gudonis,
Segel and Singh an option to purchase 3,000 shares of the Company's Common Stock
at an exercise price of $9.75 per share (the fair market value on the date of
grant). On August 15, 2000 the Company granted to each of Messrs. Adams,
Gudonis, Segel and Singh an option to purchase 3,000 shares of the Company's
Common Stock at an exercise price of $15.375 per share (the fair market value on
the date of grant). On August 25, 2000, the Company granted to Mr. Tobin an
option to purchase 20,000 shares of the Company's Common Stock at an exercise
price of $13.00 per share (the fair market value on the date of grant). On
November 15, 2000 the Company granted to each of Messrs. Adams, Gudonis, Segel
and Singh an option to purchase 3,000 shares of the Company's Common Stock at an
exercise price of $27.125 per share (the fair market value on the date of
grant).
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Company's Board of Directors is composed of
three members and acts under a written charter adopted and approved on May 25,
2000. A copy of this charter is attached to this proxy statement as Appendix A.
The members of the Audit Committee are independent directors, as defined by its
charter and the rules of the Nasdaq Stock Market. The Audit Committee held three
meetings during the fiscal year ended December 31, 2000.
The Audit Committee reviewed the Company's audited financial statements for
the fiscal year ended December 31, 2000 and discussed these financial statements
with the Company's management. Management is responsible for the Company's
internal controls and the financial reporting process. The Company's independent
accountants are responsible for performing an independent audit of the Company's
financial statements in accordance with generally accepted accounting principles
and to issue a report on those financial statements. The Audit Committee is
responsible for monitoring and overseeing these processes. As appropriate, the
Audit Committee reviews and evaluates, and discusses with the Company's
management, internal accounting, financial and auditing personnel and the
independent auditors, the following:
o the plan for, and the independent auditors' report on, each audit of
the Company's financial statements;
o the Company's financial disclosure documents, including all financial
statements and reports filed with the Securities and Exchange
Commission or sent to shareholders;
o changes in the Company's accounting practices, principles, controls or
methodologies;
o significant developments or changes in accounting rules applicable to
the Company; and
o the adequacy of the Company's internal controls and accounting,
financial and auditing personnel.
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The Audit Committee also reviewed and discussed the audited financial statements
and the matters required by Statement on Auditing Standards 61 (Communication
with Audit Committees) with Ernst & Young LLP, the Company's independent
auditors. SAS 61 requires the Company's independent auditors to discuss with the
Company's Audit Committee, among other things, the following:
o methods to account for significant unusual transactions;
o the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or
consensus;
o the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors' conclusions
regarding the reasonableness of those estimates; and disagreements
with management over the application of accounting principles, the
basis for management's accounting estimates and the disclosures in the
financial statements.
The Company's independent auditors also provided the Audit Committee with the
written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). Independence
Standards Board Standard No. 1 requires auditors annually to disclose in writing
all relationships that in the auditor's professional opinion may reasonably be
thought to bear on independence, confirm their perceived independence and engage
in a discussion of independence. In addition, the Audit Committee discussed with
the independent auditors their independence from the Company.
Based on its discussions with management and the independent auditors, and
its review of the representations and information provided by management and the
independent auditors, the Audit Committee recommended to the Company's Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2000.
By the Audit Committee of the Board of Directors of Boston Communications
Group, Inc.
AUDIT COMMITTEE MEMBERS
Paul Gudonis
Rajendra Singh
Gerald Segel
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EXECUTIVE COMPENSATION
The following table sets forth certain compensation information, for the
fiscal years indicated, of the Company's Chief Executive Officer during the year
ended December 31, 2000 and the four other most highly compensated executive
officers in 2000 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM
COMPENSATION
----------------------- --------------------------------
SECURITIES
FISCAL SALARY BONUS UNDERLYING
NAME AND PRINCIPAL OCCUPATION YEAR ($) ($) (1) OPTIONS OTHER (2)
- ----------------------------------------------- ----------- ---------- ---------- --------------- --------------
Paul J. Tobin (3) 2000 161,326 --- 40,000 ---
Chairman of the Board of Directors 1999 162,604 --- 20,000 ---
1998 160,000 --- 10,000 ---
Edward H. Snowden (4) 2000 275,000 149,500 10,000 ---
President, Chief Executive Officer, 1999 262,788 11,750 10,000 ---
Director 1998 215,385 50,000 400,000 140,770
Frederick E. von Mering 2000 156,013 74,750 20,000 ---
Vice President, Corporate Development 1999 152,476 6,750 10,000 ---
Director 1998 150,000 22,188 --- ---
William D. Wessman 2000 174,207 74,750 62,500 ---
Executive Vice President, Chief Technology
Officer
Karen A. Walker 2000 157,355 74,750 30,000 ---
Vice President, Chief Financial Officer
(1) Bonuses are reflected in the year for which they were earned.
(2) In accordance with the rules of the Securities and Exchange Commission,
except as otherwise indicated, other compensation in the form of
perquisites and other personal benefits has been omitted because such
perquisites and other personal benefits constitute less than the lesser
of $50,000 or ten percent of the total salary and bonus reported for
the executive officer during the years ended December 31, 1998, 1999
and 2000.
(3) In February 1999, Mr. Tobin surrendered his options to purchase 10,000
shares of the Company's Common Stock that were granted in 1998.
(4) Mr. Snowden was elected President and Chief Executive Officer of the
Company effective February 10, 1998. Mr. Snowden received $140,770 as
relocation payments in 1998.
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OPTION GRANTS
The following table sets forth certain information concerning option grants
during the fiscal year ended December 31, 2000 to the Named Executive Officers
and the number and value of the unexercised options held by such persons on
December 31, 2000.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO EXERCISE STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES PRICE FOR OPTION TERM (3)
OPTIONS GRANTED IN FISCAL $/SHARE EXPIRATION ----------------------------
NAME (1) YEAR (2) DATE 5% ($) 10% (4)
- -------------------------------------------------------------------------------------------------------------------------
Paul J. Tobin 20,000 2.3% $6.00 4/18/10 $75,467 $191,249
20,000 2.3% $13.00 8/25/10 $163,512 $414,373
Edward H. Snowden 10,000 1.2% $6.00 4/18/10 $37,733 $95,624
Frederick E. von Mering 10,000 1.2% $6.00 4/18/10 $37,733 $95,624
10,000 1.2% $13.00 8/25/10 $81,756 $207,186
William D. Wessman 50,000 5.8% $7.3125 2/1/10 $229,939 $582,711
10,000 1.2% $6.00 4/18/10 $37,733 $95,624
2,500 0.3% $13.00 8/25/10 $20,439 $51,796
Karen A. Walker 10,000 1.2% $6.00 4/18/10 $37,733 $95,624
20,000 2.3% $13.00 8/25/10 $163,512 $414,373
- ----------------------------------
(1) All options granted on 4/18/2000 vested on 2/28/2001. All options granted
on 8/25/2000 vest in three equal annual installments over a three year
period commencing on the first anniversary of the date of grant. Mr.
Wessman's 2/1/00 option vests in three equal annual installments over a
three year period commencing on the first anniversary of the date of grant.
(2) The exercise price is equal to the fair market value of the Company's
Common Stock on the date of grant.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date. The assumed rates of appreciation are mandated by the
rules of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of future stock prices. This table does
not take into account any appreciation or depreciation in the price of the
Common Stock to date. Actual gain, if any, on stock option exercises will
depend on future performance of the Common Stock and the date on which the
options are exercised. Values shown are net of the option exercise price,
but do not include deductions for tax or other expenses associated with the
exercise.
(4) No restricted stock or stock appreciation rights were granted in 2000.
9
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning each exercise
of a stock option during the year ended December 31, 2000 by each of the Named
Executive Officers, and the number and value of unexercised options held by each
of the Named Executive Officers on December 31, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT FISCAL
SHARES YEAR END YEAR END ($)(1)
ACQUIRED -------------------------------------------------------------------
ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCSIABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------------------
Paul J. Tobin -- -- 0 60,000 -- $1,120,000
Edward H. Snowden -- -- 240,000 180,000 $4,995,120 $3,741,330
Frederick E. von Mering -- -- 130,654 30,000 $2,890,719 $560,000
William D. Wessman 5,000 $55,545 19,000 87,300 $437,000 $1,816,962
Karen A. Walker -- -- 19,400 61,600 $431,950 $1,148,550
- ------------------------------
(1) The per share value of unexercised in-the-money options is calculated by
subtracting the per share option exercise price from the last per share
sale price of the Company's Common Stock on the Nasdaq National Market on
December 30, 2000 ($27.875).
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
On February 10, 1998, the Company entered into an employment letter
agreement with E.Y. Snowden, pursuant to which Mr. Snowden was made the
President and Chief Executive Officer and a Director of the Company. The
agreement provides for an initial base salary of $250,000 plus an annual
performance-based bonus of up to 40% of base salary. In addition, pursuant to
the agreement, Mr. Snowden was granted a non-qualified stock option to purchase
400,000 shares of Common Stock at an exercise price of $7.0625 per share,
vesting in five equal annual installments commencing on February 10, 1998. In
the event of a change in control of the Company (as defined in the agreement),
100% of the options will vest on the date of such transaction. If Mr. Snowden's
employment is terminated without cause, or if there is a change of control which
results in his demotion, diminution in responsibilities, or removal from the
Board, then the Company will pay, as severance, his base salary until such time
as he is otherwise employed, up to a maximum of twelve months.
10
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is currently composed of three non-employee directors, Paul R.
Gudonis, Gerald Segel and Rajendra Singh. The Compensation Committee is
responsible for establishing and administering the policies which govern both
annual compensation and performance-based equity ownership of the Company's
employees, including its executive officers.
This report is submitted by the Compensation Committee and addresses the
Company's policies for 2000 as they apply to the Company's executive officers.
POLICIES AND PHILOSOPHY
The Company's executive compensation program is structured and administered
to achieve three broad goals in a manner consistent with shareholder interests.
First, the Compensation Committee structures executive compensation programs and
decisions regarding individual compensation in a manner that the Compensation
Committee believes will enable the Company to attract and retain key executives.
Second, the Compensation Committee establishes compensation programs that are
designed to reward executives for the achievement of specified business
objectives of the Company. Finally, the Compensation Committee designs the
Company's executive compensation programs to provide executives with long-term
equity ownership opportunities in the Company in an attempt to align executive
and shareholder interests.
In evaluating both individual and corporate performance for purposes of
determining salary and bonus levels and stock option grants, the Compensation
Committee places significant emphasis on the extent to which strategic and
business plan goals are met, including the progress and success of the Company
with respect to matters such as achieving operating budgets, establishing
strategic marketing, distribution and development alliances, product development
and enhancement of the Company's strategic position, as well as on the Company's
overall financial performance.
EXECUTIVE COMPENSATION IN FISCAL 2000
The compensation programs for the Company's executives established by the
Compensation Committee consist of three elements based upon the foregoing
objectives: (i) base salary and benefits competitive with the marketplace, (ii)
bonus grants and (iii) stock-based equity incentives in the form of
participation in the Company's stock plans. The Compensation Committee believes
that providing a base salary and benefits to its executive officers that are
competitive with the marketplace enables the Company to attract and retain key
executives. In addition, the Compensation Committee believes that bonuses based
on both corporate and individual performance provide incentives to its executive
officers that align their interests with those of the Company as a whole. The
Compensation Committee generally provides executive officers discretionary stock
option awards to reward them for achieving specified business objectives and to
provide them with long-term ownership opportunities that are aligned with the
ownership interests of the Company's shareholders. In evaluating the salary
level, bonuses and equity incentives to award to each current executive officer,
the Compensation Committee examines the progress which the Company has made in
areas under the particular executive officer's supervision, such as development
or sales, and the overall performance of the Company.
In determining the salary and bonus targets of each executive officer,
including the Named Executive Officers, the Compensation Committee and the Board
of Directors consider numerous factors such as (i) the individual's performance,
including the expected contribution of the executive officer to the Company's
goals, (ii) the Company's long-term needs and goals, including attracting and
retaining key management personnel, and (iii) the Company's competitive
position, including the compensation of executive officers at comparable
companies that are familiar to members of the Compensation Committee. The
companies used by the Compensation Committee to compare executive compensation
are not the companies included in the Stock Performance Graph below, are
companies of which the members of the Compensation Committee have specific
knowledge and are considered as of the time those companies were at similar
stages of development as the Company. To the extent determined to be
appropriate, the
11
Compensation Committee also considers general economic conditions and the
historic compensation levels of the individual. The Compensation Committee
believes that the salary levels of its executive officers are in the middle
third when compared to the compensation levels of companies at similar stages of
development as the Company.
BENEFITS
The Company's executive officers are entitled to receive medical benefits
and life insurance benefits and to participate in the Company's 401(k) Savings
Plan on the same basis as other full-time employees of the Company. The
Company's 1996 Purchase Plan and 2001 Purchase Plan, which are available to
virtually all employees, including executive officers and directors who are
employees, allow participants to purchase shares at a discount of approximately
15% from the fair market value at the beginning or end of the applicable
purchase period.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER IN FISCAL 2000
The compensation philosophy applied by the Compensation Committee in
establishing the compensation for the Company's President and Chief Executive
Officer is the same as for the other senior management of the Company -- to
provide a competitive compensation opportunity that rewards performance.
Mr. Snowden served in the positions of President, Chief Executive Officer
and a director of the Company during the year ended December 31, 2000 and he
received a salary of $275,000 for fiscal 2000. The Compensation Committee
established Mr. Snowden's base salary at $275,000 for fiscal 2001, considered by
the Compensation Committee to be in the middle third of the compensation of
Chief Executive Officers at other publicly-traded companies at the same stage of
development as the Company. The Company paid Mr. Snowden a bonus of $91,625 in
2000 for performance in 1999. Mr. Snowden was granted a non-qualified stock
option to purchase 10,000 shares of Common Stock at an exercise price of $6.00
per share which vested on February 28, 2001.
COMPLIANCE WITH SECTION 162(M) OF THE CODE
Section 162(m) of the Code, enacted in 1993, generally disallows tax
deductions to publicly-traded corporations for compensation over $1,000,000 paid
to the corporation's Chief Executive Officer or any of its other four most
highly compensated executive officers. Qualifying performance-based compensation
will not be subject to this disallowance if certain requirements are met. The
Company currently intends to structure the compensation arrangements of its
executive officers in a manner that will avoid disallowances under Section
162(m).
COMPENSATION COMMITTEE
Paul R. Gudonis
Gerald Segel
Rajendra Singh
12
REPORTS UNDER SECTION 16(A) OF THE EXCHANGE ACT
Based solely on its review of copies of reports filed by persons
("Reporting Persons") required to file such reports pursuant to Section 16(a) of
the Exchange Act, the Company believes that all filings required to be made by
Reporting Persons of the Company were timely made in accordance with the
requirements of the Exchange Act.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Common Stock of the Company during the period from June 18, 1996 (the date on
which the Company's Common Stock began trading on the Nasdaq National Market) to
December 31, 2000 with the cumulative total return over the same period of (i)
the Nasdaq National Market (U.S. Companies) (the "Nasdaq Composite Index") and
(ii) a Peer Group Index* selected by the Company. This comparison assumes the
investment of $100 on June 18, 1996 in the Company's Common Stock, the Nasdaq
Composite Index and the Peer Group Index and assumes dividends, if any, are
reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH]
6/18/1996 12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/31/2000
--------- ---------- ---------- ---------- ---------- ----------
Boston Communications Group, Inc. 100 37.41 70.73 84.55 34.15 181.30
NASDAQ Stock Market Index - US 100 108.65 133.32 187.34 147.12 209.9838
Peer Group 100 74.77 76.74 45.4 339.19 118.79
*The Peer Group Index reflects stock performance of Lightbridge, Inc.
Metro One Telecommunications and LCC International, Inc.
13
AMENDMENT OF 2000 STOCK OPTION PLAN
The Company's 2000 Stock Option Plan (the "2000 Option Plan") currently
provides for the issuance of up to 500,000 shares of Common Stock. On April 4,
2001, the Board of Directors of the Company voted to amend the 2000 Option Plan,
subject to shareholder approval, to increase the number of shares authorized for
issuance thereunder by 750,000 shares to 1,250,000 shares of Common Stock
(subject to adjustment in the event of stock splits and other similar events).
The Board of Directors' primary reason for adopting the amendment was to enhance
the Company's ability to attract, retain and motivate key personnel.
The 2000 Option Plan is in addition to the Company's 1996 Stock Option Plan
(the "1996 Option Plan") and the 1998 Stock Incentive Plan (the "1998 Option
Plan"). As of April 4, 2001, options have been granted for all but 62,350 shares
currently covered by the 2000 Option Plan, options have been granted for all but
15,457 shares covered by the 1998 Option Plan, and options have been granted for
all but 15,999 shares covered by the 1996 Option Plan. Any shares subject to
unexercised portions of options terminated after April 4, 2001 will again be
available for grant under the 2000 Option Plan, 1998 Option Plan or the 1996
Option Plan as applicable.
The Board of Directors believes that the continued growth and profitability
of the Company depends, in large part, upon the ability of the Company to
maintain a competitive position in attracting, retaining and motivating key
personnel, and that the approval of the amendment of the 2000 Option Plan
furthers these objectives. Accordingly, the Board of Directors believes approval
of the amendment of the 2000 Option Plan is in the best interests of the Company
and its shareholders and recommends a vote FOR this proposal.
SUMMARY OF THE 2000 OPTION PLAN
The following summary of the 2000 Option Plan, as amended by the amendment
for which shareholder approval is sought by this proxy statement, is qualified
in all respects by reference to the full text of the 2000 Option Plan, a copy of
which is attached as Appendix B to the electronic copy of this Proxy Statement
filed with the Commission and may be accessed from the Commission's home page
(www.sec.gov) In addition the 2000 Option Plan may be obtained by making a
written request to the General Counsel of the Company.
DESCRIPTION OF AWARDS
The 2000 Option Plan provides for the grant of incentive stock options
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") and nonstatutory stock options (collectively "Awards").
INCENTIVE STOCK OPTIONS AND NONSTATUTORY STOCK OPTIONS.
Optionees receive the right to purchase a specified number of shares of
Common Stock at a specified option price and subject to such other terms and
conditions as are specified in connection with the option grant. Subject to the
limitations described below, options may be granted at an exercise price which
may be less than, equal to or greater than the fair market value of the Common
Stock on the date of grant. Under present law, however, incentive stock options
and options intended to qualify as performance-based compensation under Section
162(m) of the Code may not be granted at an exercise price less than the fair
market value of the Common Stock on the date of grant or less than 110% of the
fair market value in the case of incentive stock options granted to optionees
holding more than 10% of the voting power of the Company. Options may not be
granted for a term in excess of ten years. The 2000 Option Plan permits the
Board to determine the manner of payment of the exercise price of options,
including through payment by cash, by check, in connection with a "cashless
exercise" through a broker, by surrender to the Company of shares of Common
Stock, by delivery to the Company of a promissory note, or by any other lawful
means.
14
ELIGIBILITY TO RECEIVE AWARDS
Officers, employees and directors of, and consultants and advisors to,
the Company and its subsidiaries are eligible to be granted Awards under the
2000 Option Plan. Under present law, however, incentive stock options may only
be granted to employees. The maximum number of shares with respect to which an
Award may be granted to any participant under the 2000 Option Plan may not
exceed 100,000 shares per calendar year.
As of April 4, 2001, approximately 375 persons were eligible to receive
Awards under the 2000 Option Plan, including the Company's six executive
officers and four non-employee directors. The granting of Awards under the 2000
Option Plan is discretionary, and the Company cannot now determine the number or
type of Awards to be granted in the future to any particular person or group.
However, during the fiscal year 2000 under all of the Company's plans options to
purchase 182,500 shares were granted to executive officers, options to purchase
162,500 shares were granted to named executive officers and options to purchase
479,700 shares were granted to non-officer employees.
On December 31, 2000, the last reported sale price of the Company Common
Stock on the Nasdaq National Market was $27.875.
ADMINISTRATION
The 2000 Option Plan is administered by the Board of Directors. The Board
has the authority to adopt, amend and repeal the administrative rules,
guidelines and practices relating to the 2000 Option Plan and to interpret the
provisions of the 2000 Option Plan. Pursuant to the terms of the 2000 Option
Plan, the Board of Directors may delegate authority under the 2000 Option Plan
to one or more committees of the Board, and subject to certain limitations, to
one or more executive officers of the Company. The Board has authorized the
Compensation Committee to administer certain aspects of the 2000 Option Plan,
including the granting of Awards to executive officers. Subject to any
applicable limitations contained in the 2000 Option Plan, the Board of
Directors, the Compensation Committee, or any other committee or executive
officer to whom the Board delegates authority, as the case may be, selects the
recipients of Awards and determines (i) the number of shares of Common Stock
covered by options and the dates upon which such options become exercisable,
(ii) the exercise price of options, and (iii) the duration of options.
The Board of Directors is required to make appropriate adjustments in
connection with the 2000 Option Plan and any outstanding Awards to reflect stock
dividends, stock splits and certain other events. In the event of a merger,
liquidation or other Acquisition Event (as defined in the 2000 Option Plan), the
Board of Directors is authorized to provide for outstanding Options or other
stock-based Awards to be assumed or substituted for, to accelerate the Awards to
make them fully exercisable prior to consummation of the Acquisition Event or to
provide for a cash out of the value of any outstanding options. If any Award
expires or is terminated, surrendered, canceled or forfeited, the unused shares
of Common Stock covered by such Award will again be available for grant under
the 2000 Option Plan. The 2000 Option Plan expressly prohibits repricing of
options.
AMENDMENT OR TERMINATION
No Award may be made under the 2000 Option Plan after April 4, 2011, but
Awards previously granted may extend beyond that date. The Board of Directors
may at any time amend, suspend or terminate the 2000 Option Plan, except that no
Award designated as subject to Section 162(m) of the Code by the Board of
Directors after the date of such amendment shall become exercisable, realizable
or vested (to the extent such amendment was required to grant such Award) unless
and until such amendment shall have been approved by the Company's shareholders.
15
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under the
2000 Option Plan and with respect to the sale of Common Stock acquired under the
2000 Option Plan.
INCENTIVE STOCK OPTIONS
In general, a participant will not recognize taxable income upon the grant
or exercise of an incentive stock option. Instead, a participant will recognize
taxable income with respect to an incentive stock option only upon the sale of
Common Stock acquired through the exercise of the option ("ISO Stock"). The
exercise of an incentive stock option, however, may subject the participant to
the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for more than two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior
to having owned it for more than two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
NONSTATUTORY STOCK OPTIONS
As in the case of an incentive stock option, a participant will not
recognize taxable income upon the grant of a nonstatutory stock option. Unlike
the case of an incentive stock option, however, a participant who exercises a
nonstatutory stock option generally will recognize ordinary compensation income
in an amount equal to the excess of the fair market value of the Common Stock
acquired through the exercise of the option ("NSO Stock") on the Exercise Date
over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the excess of the sale price of the NSO Stock over
the participant's tax basis in the NSO Stock. This capital gain or loss will be
a long-term gain or loss if the participant has held the NSO Stock for more than
one year prior to the date of the sale.
TAX CONSEQUENCES TO THE COMPANY
The grant of an Award under the 2000 Option Plan will have no tax
consequences to the Company. Moreover, in general, neither the exercise of an
incentive stock option nor the sale of any Common Stock acquired under the 2000
Option Plan will have any tax consequences to the Company. The Company generally
will be entitled to a business-expense deduction, however, with respect to any
ordinary compensation income recognized by a participant under the 2000 Option
Plan, including as a result of the exercise of a nonstatutory stock option or a
Disqualifying Disposition. Any such deduction will be subject to the limitations
of Section 162(m) of the Code. The Company will have a withholding obligation
with respect to any ordinary compensation income recognized by participants
under the 2000 Option Plan who are employees or otherwise subject to withholding
in connection with the exercise of a nonstatutory stock option.
16
APPROVAL OF 2001 EMPLOYEE STOCK PURCHASE PLAN
On April 4, 2001, the Board of Directors of the Company adopted, subject to
shareholder approval, the 2001 Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan"). Up to 225,000 shares of Common Stock (subject to adjustment in
the event of stock splits and other similar events) are available for future
sale under the Employee Stock Purchase Plan.
In the opinion of the Company's Board of Directors, the continued growth
and profitability of the Company depends, in large part, on its ability to
maintain a competitive position in attracting, retaining and motivating our
employees and that the adoption of the Employee Stock Purchase Plan furthers
these objectives. Accordingly, the Board of Directors believes adoption of the
Employee Stock Purchase Plan is in the best interests of the Company and its
shareholders and recommends a vote FOR this proposal.
SUMMARY OF THE EMPLOYEE STOCK PURCHASE PLAN
The following summary of the Employee Stock Purchase Plan is qualified in
its entirety by reference to the full text of the Employee Stock Purchase Plan,
a copy of which is attached as Appendix C the electronic copy of this Proxy
Statement filed with the Commission and may be accessed from the Commission's
home page (www.sec.gov). In addition, a copy of the Employee Stock Purchase Plan
may be obtained by making a written request to the General Counsel of the
Company.
DESCRIPTION OF THE PLAN
The Employee Stock Purchase Plan permits employees of the Company and our
designated subsidiaries to purchase shares of common stock from the Company
through a series of offerings. Generally, each offering may last up to six (6)
months. Offerings under the Employee Stock Purchase Plan commence every six
months, so at any given point in time, the Company will be conducting one
offering. Each eligible employee may elect to have amounts withheld from his or
her compensation, which amounts will accrue in an account for such employee
during the period of an offering. On the last business day of each offering
period, funds that have accrued in this account will be used to purchase common
stock, subject to certain limitations, at a purchase price that is generally 85%
of the fair market value of the common stock on either the initial date of each
offering, or on the last trading day prior to the date of purchase, whichever is
less.
ELIGIBILITY
Persons eligible to participate in an offering under the Employee Stock
Purchase Plan are generally those employees who (i) are employed by the Company
for at least three (3) months prior to enrolling in the Employee Stock Purchase
Plan and (ii) are employed by the Company on the first day of the applicable
plan period.
OFFERING PERIODS
The Employee Stock Purchase Plan consists of consecutive offering periods
with a new offering period commencing on the first trading day on or after
September 1 and March 1 of each year. The Board may, at its discretion, choose a
different plan period of twelve (12) months or less.
PAYROLL DEDUCTIONS
Eligible participants in the Employee Stock Purchase Plan may request that
the Company withhold up to ten percent (10%) of their compensation. Payroll
deductions are then credited to the participant's accounts. An employee may not
make any additional payments into such account. An employee may discontinue
participation in the Employee Stock Purchase Plan or decrease the rate of
payroll deductions not more than once during each offering period. An employee
may not increase the rate of payroll deductions during an offering period.
17
GRANT OF OPTION
On the first day of each offering period, each eligible employee
participating in such offering period will be granted an option to purchase up
to the largest number of whole shares of Common Stock of the Company as does not
exceed the number of shares determined by dividing $12,498 by the fair market
value of a share of common stock on that day. The option shall be exercisable as
to the total number of shares on the last trading day of each offering period.
The option shall expire on the last day of the offering period.
EXERCISE OF OPTION
A participant's option for the purchase of shares is exercised
automatically on the last trading day of each purchase period. Upon exercise,
the participant will purchase the maximum number of full shares subject to the
option which vested on such date and can be purchased based upon the applicable
purchase price and the accumulated payroll deductions in his or her account. Any
money left over in a participant's account after the last trading day of each
purchase period will be returned to the participant, except that any balance
which is less than the purchase price of one share of Common Stock will be
carried forward into the participant's payroll deduction account for the
following offering, unless the participant elects not to participate in the
following offering under the Employee Stock Purchase Plan, in which case the
balance in the participant's account shall be refunded.
PURCHASE PRICE
The purchase price of the shares of common stock to be sold pursuant to any
given offering is equal to the lesser of (i) 85% of the fair market value of the
shares on the first day of the offering period, or (ii) 85% of the fair market
value of the shares on the last trading day of the purchase period. For so long
as the common stock is traded on the Nasdaq National Market System, the fair
market value of a share of common stock on any given date shall be the last
reported sale price.
CHANGES IN CAPITALIZATION
In the event of a stock split, reverse stock split, stock dividend,
combination or reclassification of the common stock, or any other increase or
decrease in the number of shares of common stock effected without receipt of
consideration by the Company, the maximum number of shares each participant may
purchase during a purchase period and the price per share and the number of
shares of common stock covered by each option under the Employee Stock Purchase
Plan which has not yet been exercised shall be proportionately adjusted.
MERGER OR ASSET SALE
In the event of a sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, each
outstanding option will be assumed or an equivalent option substituted by the
successor corporation. In the event that the successor corporation refuses to
assume or provide a substitute for the option, any purchase periods then in
progress shall be shortened by setting a new exercise date and any offering
periods then in progress shall end on the new exercise date. The new exercise
date shall be before the date of the Company's proposed sale or merger.
18
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to participation in the
Employee Stock Purchase Plan and with respect to the sale of common stock
acquired under the Employee Stock Purchase Plan. The Employee Stock Purchase
Plan is intended to qualify as an "Employee Stock Purchase Plan" within the
meaning of Section 423 of the Code and is not a qualified plan under Section
401(a) of the Code.
TAX CONSEQUENCES TO PARTICIPANTS
In general, a participant will not recognize taxable income upon enrolling
in the Employee Stock Purchase Plan or upon purchasing shares of common stock
under the Employee Stock Purchase Plan. Instead, if a participant sells common
stock acquired under the Employee Stock Purchase Plan at a sale price that
exceeds the price at which the participant purchased the common stock, then the
participant will recognize taxable income in an amount equal to the excess of
the sale price of the common stock over the price at which the participant
purchased the common stock. As described below, a portion of that taxable income
will be ordinary income, and a portion may be capital gain.
If the participant sells the common stock for more than the purchase price
more than one year after acquiring it and more than two years after the date on
which the offering commenced, which the Company refers to as the grant date,
then the participant will recognize ordinary compensation income in an amount
equal to the lesser of (i) fifteen percent of the fair market value of the
common stock on the grant date and (ii) the excess of the sale price of the
common stock over the price at which the participant purchased the common stock.
Any further income will be long-term capital gain.
If the participant sells the common stock for more than the purchase price
within one year after acquiring it or within two years after the grant date,
which sale we refer to as a disqualifying disposition, then the participant will
recognize ordinary compensation income in an amount equal to the excess of the
fair market value of the common stock on the date that it was purchased over the
price at which the participant purchased the common stock. The participant will
also recognize capital gain in an amount equal to the excess of the sale price
of the common stock over the fair market value of the common stock on the date
that it was purchased. This capital gain will be a long-term capital gain if the
participant has held the common stock for more than one year prior to the date
of the sale and will be a short-term capital gain if the participant has held
the common stock for a shorter period.
TAX CONSEQUENCES TO THE COMPANY
The offering of common stock under the Employee Stock Purchase Plan will
have no immediate tax consequences to the Company. In general, neither the
purchase nor the sale of common stock acquired under the Employee Stock Purchase
Plan will have any tax consequences to the Company except that the Company will
be entitled to a business-expense deduction with respect to any ordinary
compensation income recognized by a participant upon making a sale of common
stock prior to having owned it for at least two years from the date of grant of
the option and one year from the date of exercise of the option. Any such
deduction will be subject to the limitations of Section 162(m) of the Code.
WITHHOLDING
The amount that a participant elects to have deducted from his or her pay
for the purchase of common stock under the Employee Stock Purchase Plan
constitutes taxable wages and is subject to withholding.
19
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, at the recommendation of the Audit Committee, has
selected the firm of Ernst & Young LLP as the Company's independent auditors for
the current fiscal year. Ernst & Young LLP has served as the Company's
independent auditors since 1988.
Although shareholder ratification of the Board of Directors' selection of
Ernst & Young LLP is not required by law, the Board of Directors believes that
it is advisable to give shareholders the opportunity to ratify this selection.
If this proposal is not approved at the Annual Meeting, the Board of Directors
may reconsider its selection of Ernst & Young LLP.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from shareholders.
Audit Fees
- ----------
Ernst & Young LLP billed the Company an aggregate of $143,870 in fees for
professional services rendered in connection with the audit of the Company's
financial statements for the most recent fiscal year and the reviews of the
financial statements included in each of the Company's Quarterly Reports on Form
10-Q during the fiscal year ended December 31, 2000.
Financial Information Systems Design and Implementation Fees
- ------------------------------------------------------------
Ernst & Young LLP did not bill the Company for any professional services
rendered to the Company and its affiliates for the fiscal year ended December
31, 2000 in connection with financial information systems design or
implementation, the operation of the Company's information system or the
management of its local area network.
All Other Fees
- --------------
Ernst & Young LLP did not bill the Company for any other services rendered
for the most recent fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S AUDITORS FOR THE YEAR
ENDING DECEMBER 31, 2001.
20
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews, and the Company reserves the right to retain
outside agencies for the purpose of soliciting proxies. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of shares held in their names, and the Company will reimburse them for
out-of-pocket expenses incurred on behalf of the Company.
Proposals of shareholders intended to be presented at the 2002 Annual
Meeting of Shareholders must be received by the Company at its principal office
in Woburn, Massachusetts not later than January 11, 2002 for inclusion in the
proxy statement for that meeting.
If a shareholder of the Company wishes to present a proposal before the
2002 Annual Meeting of Shareholders and the Company has not received notice of
such matter prior to March 27, 2002, the Company shall have discretionary
authority to vote on such matter, if the Company includes a specific statement
in the proxy statement or form of proxy, to the effect that it has not received
such notice in a timely fashion.
By Order of the Board of Directors,
Alan J. Bouffard,
CLERK
May 11, 2001
THE BOARD OF DIRECTORS HOPES THAT SHAREHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT SHAREHOLDERS PLAN TO ATTEND, SHAREHOLDERS ARE URGED TO COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
SHAREHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR SHARES PERSONALLY EVEN THOUGH
THEY HAVE SENT IN THEIR PROXIES.
21
APPENDIX A
AUDIT COMMITTEE CHARTER
ORGANIZATION
The Audit Committee (the "Committee") shall be appointed by the Board of
Directors of the Company and shall consist of at least three directors, each of
whom shall be independent of management of the Company. A member of the
Committee shall be considered independent if he or she has no relationship that
may interfere with the exercise of his or her independent judgment as a
Committee member, and otherwise meets the requirements of the NASD rules. All
Committee members must be able to read and understand fundamental financial
statements, including a company's balance sheet, income statement and cash flow
statement. In addition, at least one member shall have past employment
experience in finance or accounting, requisite professional certification in
accounting, or other comparable experience or background which results in such
person's financial sophistication, including being or having been a chief
executive officer, chief financial officer or other senior officer with
financial oversight responsibilities.
GOVERNANCE
This charter governs the operations of the Committee. The Committee shall
review and reassess the charter annually, and shall report the results of such
review to, and receive the approval of, the Board of Directors.
STATEMENT OF POLICY
The Committee shall assist the Board of Directors to fulfill their
oversight responsibilities to the shareholders and the investment community,
relating to the Company's financial statements, the financial reporting process,
the systems of internal accounting and financial controls, the internal audit
function, the annual independent audit of the Company's financial statements,
and Company policies established by management and the Board of Directors. The
Committee shall maintain free and open communication with the independent
auditors, the internal auditors and management of the Company. The Committee is
authorized to investigate any matter brought to its attention, and shall have
full access to all books, records, facilities and personnel of the Company. The
Committee shall have the power to retain outside counsel or other experts for
this purpose.
RESPONSIBILITIES
The Committee has the responsibility for overseeing the Company's financial
reporting process on behalf of the Board of Directors and reporting the results
of the Committee's activities to the Board of Directors. Management of the
Company is responsible for preparing the Company's financial statements. The
independent auditors are responsible for auditing those statements. The
independent auditors shall be ultimately accountable to the Board of Directors
and the Committee, as representatives of the shareholders. As shareholder
representatives, they shall have ultimate authority and responsibility to
select, evaluate, and, where appropriate, replace the independent auditors, or
nominate independent auditors for approval at the next meeting of shareholders.
The Committee shall receive from the independent auditors a formal written
statement delineating all relationships between the independent auditors and the
Company, consistent with the requirements of the Independence Standards Board.
The Committee shall discuss with the independent auditors any disclosed
relationships or services that may impact the objectivity or independence of the
independent auditors, and shall take, or recommend that the full board take,
appropriate action to oversee the independence of the outside auditors.
22
PROCESSES
The following are the principal recurring processes of the Committee in
carrying out its oversight responsibilities.
o The Committee shall review and recommend annually to the Board of Directors
the selection of the Company's independent auditors, subject to the
shareholders' approval.
o The Committee shall discuss with the independent auditors their
independence from management and the Company and the matters included in
the written disclosures required by the Independence Standards Board.
o The Committee shall discuss with the internal auditors and the independent
auditors the overall scope and plans for their respective audits, including
the adequacy of staffing and compensation.
o The Committee shall discuss with management, the internal auditors, and the
independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor and manage
business risk, and legal and ethical compliance programs.
o The Committee shall meet separately with the internal auditors and the
independent auditors, with and without management present, to discuss the
results of their examinations.
o The Committee shall review the quarterly financial statements prior to the
filing of the Company's Quarterly Report on Form 10-Q. The Committee shall
discuss the results of the quarterly review and any other matters required
to be communicated to the Committee by the independent auditors under
generally accepted auditing standards.
o The Committee shall review with management and the independent auditors the
financial statements to be included in the Company's Annual Report on Form
10-K (or the annual report to shareholders if distributed prior to the
filing of the Form 10-K), including their judgment about the quality, as
well as the acceptability, of the Company's accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in
the financial statements. The Committee shall discuss the results of the
annual audit and any other matters required to be communicated to the
Committee by the independent auditors under generally accepted auditing
standards.
o The Committee shall prepare a report to be included in the Company's annual
proxy statement. The report shall state whether (1) the Committee has
reviewed and discussed the annual audited financial statements with
management; (2) the Committee has discussed with the independent auditors
the matters required to be discussed by SAS No. 61; (3) the Committee has
received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1, and has
discussed with the independent auditors the independent auditors'
independence; and (4) based upon the foregoing reviews and discussions, the
Committee has recommended to the Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form
10-K, for filing with the Securities and Exchange Commission.
Adopted May 25, 2000
23
APPENDIX B
BOSTON COMMUNICATIONS GROUP, INC.
2000 STOCK OPTION PLAN
1. PURPOSE
The purpose of this 2000 Stock Option Plan (the "Plan") of Boston
Communications Group, Inc., a Massachusetts corporation (the "Company"), is to
advance the interests of the Company's stockholders by enhancing the Company's
ability to attract, retain and motivate persons who make (or are expected to
make) important contributions to the Company by providing such persons with
equity ownership opportunities and performance-based incentives and thereby
better aligning the interests of such persons with those of the Company's
stockholders. Except where the context otherwise requires, the term "Company"
shall include any of the Company's present or future subsidiary corporations as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder (the "Code") and any other business
venture (including, without limitation, joint venture or limited liability
company) in which the Company has a significant interest, as determined by the
Board of Directors of the Company (the "Board").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options (each, an "Option") under the Plan. Each person
who has been granted an Option under the Plan shall be deemed a "Participant".
3. ADMINISTRATION, DELEGATION
(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Options and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Option. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
(b) DELEGATION TO COMMITTEES. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"), each member of which
shall be an "outside director" within the meaning of Section 162(m) of the Code
and a "non-employee director" as defined in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act"). All references in the Plan
to the "Board" shall mean the Board or a Committee of the Board to the extent
that the Board's powers or authority under the Plan have been delegated to such
Committee.
(c) MINISTERIAL. The Board may delegate to any officer or officers of the
Company the authority, subject to such limitations as the Board may prescribe,
to allocate Option awards among persons who at the time are neither executive
officers of the Company nor persons who are reasonably anticipated to become
executive officers of the Company, all as determined by the officer or officers
so acting. Nothing in the preceding sentence shall be construed as limiting the
right of the Board in its discretion to delegate to other persons the
responsibility and authority to carry out administrative or ministerial tasks
under the Plan.
24
4. STOCK AVAILABLE FOR OPTIONS
(a) NUMBER OF SHARES. Subject to adjustment under Section 8, Options may be
made under the Plan for up to 1,250,000 shares of common stock, $.01 par value
per share, of the Company (the "Common Stock"). If any Option expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not being issued,
the unused Common Stock covered by such Option shall again be available for the
grant of Options under the Plan, subject, however, in the case of Incentive
Stock Options (as hereinafter defined), to any limitation required under the
Code. Shares issued under the Plan may consist in whole or in part of authorized
but unissued shares or treasury shares.
(b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 8, the
maximum number of shares of Common Stock with respect to which Options may be
granted to any Participant under the Plan shall be 100,000 per calendar year.
The per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code ("Section 162(m)").
5. STOCK OPTIONS
(a) GENERAL. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
(c) EXERCISE PRICE. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement,
provided, however, that the exercise price shall be not less than 100% of the
fair market value of the Common Stock, as determined by the Board, at the time
the Option is granted. An option may not be repriced following its grant.
(d) DURATION OF OPTIONS. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement, provided, however, that no Option will be granted for a term
in excess of ten (10) years.
(e) EXERCISE OF OPTION. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form
of notice (including electronic notice) approved by the Board together with
payment in full as specified in Section 5(f) for the number of shares for which
the Option is exercised.
(f) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
i) in cash or by check, payable to the order of the Company;
ii) except as the Board may, in its sole discretion, otherwise provide in
an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly
to the Company sufficient funds to pay the exercise price or (ii)
delivery by the Participant to the Company of a copy of irrevocable
and unconditional instructions to a
25
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price;
iii) by delivery of shares of Common Stock owned by the Participant valued
at their fair market value as determined by (or in a manner approved
by) the Board in good faith ("Fair Market Value"), provided (i) such
method of payment is then permitted under applicable law and (ii) such
Common Stock was owned by the Participant at least six months prior to
such delivery;
iv) to the extent permitted by the Board, in its sole discretion by (i)
delivery of a promissory note of the Participant to the Company on
terms determined by the Board, or (ii) payment of such other lawful
consideration as the Board may determine; or
v) by any combination of the above permitted forms of payment.
(g) SUBSTITUTE OPTIONS. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5.
6. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS
(a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), and (iii) the number
and class of securities and exercise price per share subject to each outstanding
Option, shall be appropriately adjusted by the Company (or substituted Options
may be made, if applicable) to the extent the Board shall determine, in good
faith, that such an adjustment (or substitution) is necessary and appropriate.
If this Section 6(a) applies and Section 6(c) also applies to any event, Section
6(c) shall be applicable to such event, and this Section 6a) shall not be
applicable.
(b) LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date.
(c) ACQUISITION EVENTS
(i) DEFINITION. An "Acquisition Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of
which the Common Stock is converted into or exchanged for the right to
receive cash, securities or other property or (b) any exchange of shares of
the Company for cash, securities or other property pursuant to a statutory
share exchange transaction.
(ii) CONSEQUENCES OF AN ACQUISITION EVENT ON OPTIONS. Upon the occurrence
of an Acquisition Event, or the execution by the Company of any agreement
with respect to an Acquisition Event, the Board shall provide that all
outstanding Options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof). For purposes hereof, an Option shall be considered to be assumed
if, following consummation of the Acquisition Event, the Option confers the
right to purchase, for each share of Common Stock subject to the Option
immediately prior to the consummation of the Acquisition Event, the
consideration (whether cash, securities or other property) received as a
result of the Acquisition Event by holders of Common Stock for each share
of Common Stock held immediately prior to the consummation of the
Acquisition Event (and if holders were offered a
26
choice of consideration, the type of consideration chosen by the holders of
a majority of the outstanding shares of Common Stock); provided, however,
that if the consideration received as a result of the Acquisition Event is
not solely common stock of the acquiring or succeeding corporation (or an
affiliate thereof), the Company may, with the consent of the acquiring or
succeeding corporation, provide for the consideration to be received upon
the exercise of Options to consist solely of common stock of the acquiring
or succeeding corporation (or an affiliate thereof) equivalent in fair
market value to the per share consideration received by holders of
outstanding shares of Common Stock as a result of the Acquisition Event.
Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume, or
substitute for, such Options, then the Board shall, upon written notice to
the Participants, provide that all then unexercised Options will become
exercisable in full as of a specified time prior to the Acquisition Event
and will terminate immediately prior to the consummation of such
Acquisition Event, except to the extent exercised by the Participants
before the consummation of such Acquisition Event; provided, however, that
in the event of an Acquisition Event under the terms of which holders of
Common Stock will receive upon consummation thereof a cash payment for each
share of Common Stock surrendered pursuant to such Acquisition Event (the
"Acquisition Price"), then the Board may instead provide that all
outstanding Options shall terminate upon consummation of such Acquisition
Event and that each Participant shall receive, in exchange therefor, a cash
payment equal to the amount (if any) by which (A) the Acquisition Price
multiplied by the number of shares of Common Stock subject to such
outstanding Options (whether or not then exercisable), exceeds (B) the
aggregate exercise price of such Options.
7. GENERAL PROVISIONS APPLICABLE TO OPTIONS
(a) TRANSFERABILITY OF OPTIONS. Except as the Board may otherwise determine
or provide in an Option, Options shall not be sold, assigned, transferred,
pledged or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.
(b) DOCUMENTATION. Each Option shall be evidenced by a written instrument
in such form as the Board shall determine, such written instrument may be in the
form of an agreement signed by the Company and the Participant or a written
confirming memorandum to the Participant from the Company. Each Option may
contain terms and conditions in addition to those set forth in the Plan.
(c) BOARD DISCRETION. Except as otherwise provided by the Plan, each Option
may be made alone or in addition or in relation to any other Option. The terms
of each Option need not be identical, and the Board need not treat Participants
uniformly.
(d) TERMINATION OF STATUS. The Board shall determine the effect on an
Option of the disability, death, retirement, authorized leave of absence or
other change in the employment or other status of a Participant and the extent
to which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the OPTION.
(e) WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Options to such Participant no later than the
date of the event creating the tax liability. Except as the Board may otherwise
provide in an Option, when the Common Stock is registered under the Exchange
Act, Participants may, to the extent then permitted under applicable law,
satisfy such tax obligations in whole or in part by delivery of shares of Common
Stock, including shares retained from the Option creating the tax obligation,
valued at their Fair Market Value. The Company may, to the extent permitted by
law, deduct any such tax obligations from any payment of any kind otherwise due
to a Participant.
27
(f) AMENDMENT OF OPTION. The Board may amend, modify or terminate any
outstanding Option, including but not limited to, substituting therefor another
Option of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(g) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Option have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(h) ACCELERATION. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part.
8. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Option, and the grant of an Option shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Option.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Option, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Option until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on the
date on which it is adopted by the Board, but no Option granted to a Participant
that is intended to comply with Section 162(m) shall become exercisable, vested
or realizable, as applicable to such Option, unless and until the Plan has been
approved by the Company's stockholders to the extent stockholder approval is
required by Section 162(m) in the manner required under Section 162(m)
(including the vote required under Section 162(m)). No Options shall be granted
under the Plan after the completion of ten years from the earlier of (i) the
date on which the Plan was adopted by the Board or (ii) the date the Plan was
approved by the Company's stockholders, but Options previously granted may
extend beyond that date.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that to the extent required by
Section 162(m), no Option granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Option, unless and until such
amendment shall have been approved by the Company's stockholders as required by
Section 162(m) (including the vote required under Section 162(m)).
28
(e) GOVERNING LAW. The provisions of the Plan and all Options made
hereunder shall be governed by and interpreted in accordance with the laws of
the Commonwealth of Massachusetts, without regard to any applicable conflicts of
law.
29
APPENDIX C
BOSTON COMMUNICATIONS GROUP, INC.
2001 STOCK PURCHASE PLAN
JUNE 13, 2001
The purpose of this Plan is to provide eligible employees of Boston
Communications Group, Inc. (the "Company") and certain of its subsidiaries with
opportunities to purchase shares of the Company's common stock, $0.01 par value
(the "Common Stock"), commencing on September 1,2001.
Two-hundred-twenty-five-thousand (225,000) shares of Common Stock in the
aggregate have been approved for this purpose. This Plan is intended to qualify
as an "employee stock purchase plan" as defined in Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated
thereunder, and shall be interpreted consistent therewith.
1. ADMINISTRATION. The Plan will be administered by the Company's Board of
Directors (the "Board") or by a Committee appointed by the Board (the
"Committee"). The Board or the Committee has authority to make rules and
regulations for the administration of the Plan and its interpretation and
decisions with regard thereto shall be final and conclusive.
2. ELIGIBILITY. All employees of the Company, including Directors who are
employees, and all employees of any subsidiary of the Company (as defined in
Section 424(f) of the Code) designated by the Board or the Committee from time
to time (a "Designated Subsidiary"), are eligible to participate in any one or
more of the offerings of Options (as defined in Section 9) to purchase Common
Stock under the Plan provided that:
(a) they have been employed by the Company or a Designated Subsidiary
for at least three (3) months prior to enrolling in the Plan; and
(b) they are employees of the Company or a Designated Subsidiary on
the first day of the applicable Plan Period (as defined below).
No employee may be granted an option hereunder if such employee,
immediately after the option is granted, owns 5% or more of the total combined
voting power or value of the stock of the Company or any subsidiary. For
purposes of the preceding sentence, the attribution rules of Section 424(d) of
the Code shall apply in determining the stock ownership of an employee, and all
stock which the employee has a contractual right to purchase shall be treated as
stock owned by the employee.
3. OFFERINGS. The Company will make one or more offerings ("Offerings") to
employees to purchase stock under this Plan. Offerings will begin each September
1 and March 1, or the first business day thereafter (the "Offering Commencement
Dates"). Each Offering Commencement Date will begin a six (6) month period (a
"Plan Period") during which payroll deductions will be made and held for the
purchase of Common Stock at the end of the Plan Period. The Board or the
Committee may, at its discretion, choose a different Plan Period of twelve (12)
months or less for subsequent Offerings.
4. PARTICIPATION. An employee eligible on the Offering Commencement Date of
any Offering may participate in such Offering by completing and forwarding a
payroll deduction authorization form to the employee's appropriate payroll
office at least 10 days prior to the applicable Offering Commencement Date. The
form will authorize a regular payroll deduction from the Compensation received
by the employee during the Plan Period. Unless an employee files a new form or
withdraws from the Plan, his deductions and purchases will continue at the same
rate for future Offerings under the Plan as long as the Plan remains in effect.
The term "Compensation" means the amount of money reportable on the employee's
Federal Income Tax Withholding Statement, excluding overtime, shift premium,
incentive or bonus awards, allowances and reimbursements for expenses such as
relocation allowances for travel expenses, income or gains on the exercise of
Company stock options or stock appreciation rights, and similar items, whether
or not shown on the employee's Federal Income Tax Withholding Statement, but
including, in the case of salespersons, sales commissions to the extent
determined by the Board or the Committee.
30
5. DEDUCTIONS. The Company will maintain payroll deduction accounts for all
participating employees. With respect to any Offering made under this Plan, an
employee may authorize a payroll deduction in any dollar amount up to a maximum
of 10% of the Compensation he or she receives during the Plan Period or such
shorter period during which deductions from payroll are made. The minimum
payroll deduction is such percentage of compensation as may be established from
time to time by the Board or the Committee.
No employee may be granted an Option (as defined in Section 9) which
permits his rights to purchase Common Stock under this Plan and any other
employee stock purchase plan (as defined in Section 423(b) of the Code) of the
Company and its subsidiaries, to accrue at a rate which exceeds $25,000 of the
fair market value of such Common Stock (determined at the Offering Commencement
Date of the Plan Period) for each calendar year in which the Option is
outstanding at any time.
6. DEDUCTION CHANGES. An employee may decrease or discontinue his payroll
deduction once during any Plan Period, by filing a new payroll deduction
authorization form. However, an employee may not increase his payroll deduction
during a Plan Period. If an employee elects to discontinue his payroll
deductions during a Plan Period, but does not elect to withdraw his funds
pursuant to Section 8 hereof, funds deducted prior to his election to
discontinue will be applied to the purchase of Common Stock on the Exercise Date
(as defined below).
7. INTEREST. Interest will not be paid on any employee accounts, except to
the extent that the Board or the Committee, in its sole discretion, elects to
credit employee accounts with interest at such per annum rate as it may from
time to time determine.
8. WITHDRAWAL OF FUNDS. An employee may at any time prior to the close of
business on the last business day in a Plan Period and for any reason
permanently draw out the balance accumulated in the employee's account and
thereby withdraw from participation in an Offering. Partial withdrawals are not
permitted. The employee may not begin participation again during the remainder
of the Plan Period. The employee may participate in any subsequent Offering in
accordance with terms and conditions established by the Board or the Committee.
9. PURCHASE OF SHARES. On the Offering Commencement Date of each Plan
Period, the Company will grant to each eligible employee who is then a
participant in the Plan an option ("Option") to purchase on the last business
day of such Plan Period (the "Exercise Date"), at the Option Price hereinafter
provided for, the largest number of whole shares of Common Stock of the Company
as does not exceed the number of shares determined by multiplying $2,083 by the
number of full months in the Offering Period and dividing the result by the
closing price (as defined below) on the Offering Commencement Date of such Plan
Period.
The purchase price for each share purchased will be 85% of the closing
price of the Common Stock on (i) the first business day of such Plan Period or
(ii) the Exercise Date, whichever closing price shall be less. Such closing
price shall be (a) the closing price on any national securities exchange on
which the Common Stock is listed, (b) the closing price of the Common Stock on
the Nasdaq National Market or (c) the average of the closing bid and asked
prices in the over-the-counter-market, whichever is applicable, as published in
THE WALL STREET JOURNAL. If no sales of Common Stock were made on such a day,
the price of the Common Stock for purposes of clauses (a) and (b) above shall be
the reported price for the next preceding day on which sales were made.
Each employee who continues to be a participant in the Plan on the Exercise
Date shall be deemed to have exercised his Option at the Option Price on such
date and shall be deemed to have purchased from the Company the number of full
shares of Common Stock reserved for the purpose of the Plan that his accumulated
payroll deductions on such date will pay for, but not in excess of the maximum
number determined in the manner set forth above.
31
Any balance remaining in an employee's payroll deduction account at the end
of a Plan Period will be automatically refunded to the employee, except that any
balance which is less than the purchase price of one share of Common Stock will
be carried forward into the employee's payroll deduction account for the
following Offering, unless the employee elects not to participate in the
following Offering under the Plan, in which case the balance in the employee's
account shall be refunded.
10. ISSUANCE OF CERTIFICATES. Certificates representing shares of Common
Stock purchased under the Plan may be issued only in the name of the employee,
in the name of the employee and another person of legal age as joint tenants
with rights of survivorship, or (in the Company's sole discretion) in the name
of a brokerage firm, bank or other nominee holder designated by the employee.
The Company may, in its sole discretion and in compliance with applicable laws,
authorize the use of book entry registration of shares in lieu of issuing stock
certificates.
11. RIGHTS ON RETIREMENT, DEATH OR TERMINATION OF EMPLOYMENT. In the event
of a participating employee's termination of employment prior to the last
business day of a Plan Period, no payroll deduction shall be taken from any pay
due and owing to an employee and the balance in the employee's account shall be
paid to the employee or, in the event of the employee's death, (a) to a
beneficiary previously designated in a revocable notice signed by the employee
(with any spousal consent required under state law) or (b) in the absence of
such a designated beneficiary, to the executor or administrator of the
employee's estate or (c) if no such executor or administrator has been appointed
to the knowledge of the Company, to such other person(s) as the Company may, in
its discretion, designate. If, prior to the last business day of the Plan
Period, the Designated Subsidiary by which an employee is employed shall cease
to be a subsidiary of the Company, or if the employee is transferred to a
subsidiary of the Company that is not a Designated Subsidiary, the employee
shall be deemed to have terminated employment for the purposes of this Plan.
12. OPTIONEES NOT STOCKHOLDERS. Neither the granting of an Option to an
employee nor the deductions from his pay shall constitute such employee a
stockholder of the shares of Common Stock covered by an Option under this Plan
until such shares have been purchased by and issued to him.
13. RIGHTS NOT TRANSFERABLE. Rights under this Plan are not transferable by
a participating employee other than by will or the laws of descent and
distribution, and are exercisable during the employee's lifetime only by the
employee.
14. APPLICATION OF FUNDS. All funds received or held by the Company under
this Plan may be combined with other corporate funds and may be used for any
corporate purpose.
15. ADJUSTMENT IN CASE OF CHANGES AFFECTING COMMON STOCK. In the event of a
subdivision of outstanding shares of Common Stock, or the payment of a dividend
in Common Stock, the number of shares approved for this Plan, and the share
limitation set forth in Section 9, shall be increased proportionately, and such
other adjustment shall be made as may be deemed equitable by the Board or the
Committee. In the event of any other change affecting the Common Stock, such
adjustment shall be made as may be deemed equitable by the Board or the
Committee to give proper effect to such event.
32
16. MERGER. If the Company shall at any time merge or consolidate with
another corporation and the holders of the capital stock of the Company
immediately prior to such merger or consolidation continue to hold at least 80%
by voting power of the capital stock of the surviving corporation ("Continuity
of Control"), the holder of each Option then outstanding will thereafter be
entitled to receive at the next Exercise Date upon the exercise of such Option
for each share as to which such Option shall be exercised the securities or
property which a holder of one share of the Common Stock was entitled to upon
and at the time of such merger or consolidation, and the Board or the Committee
shall take such steps in connection with such merger or consolidation as the
Board or the Committee shall deem necessary to assure that the provisions of
Section 15 shall thereafter be applicable, as nearly as reasonably may be, in
relation to the said securities or property as to which such holder of such
Option might thereafter be entitled to receive thereunder.
In the event of a merger or consolidation of the Company with or into
another corporation which does not involve Continuity of Control, or of a sale
of all or substantially all of the assets of the Company while unexercised
Options remain outstanding under the Plan, (a) subject to the provisions of
clauses (b) and (c), after the effective date of such transaction, each holder
of an outstanding Option shall be entitled, upon exercise of such Option, to
receive in lieu of shares of Common Stock, shares of such stock or other
securities as the holders of shares of Common Stock received pursuant to the
terms of such transaction; or (b) all outstanding Options may be cancelled by
the Board or the Committee as of a date prior to the effective date of any such
transaction and all payroll deductions shall be paid out to the participating
employees; or (c) all outstanding Options may be cancelled by the Board or the
Committee as of the effective date of any such transaction, provided that notice
of such cancellation shall be given to each holder of an Option, and each holder
of an Option shall have the right to exercise such Option in full based on
payroll deductions then credited to his account as of a date determined by the
Board or the Committee, which date shall not be less than ten (10) days
preceding the effective date of such transaction.
17. AMENDMENT OF THE PLAN. The Board may at any time, and from time to
time, amend this Plan in any respect, except that (a) if the approval of any
such amendment by the shareholders of the Company is required by Section 423 of
the Code, such amendment shall not be effected without such approval, and (b) in
no event may any amendment be made which would cause the Plan to fail to comply
with Section 423 of the Code.
18. INSUFFICIENT SHARES. In the event that the total number of shares of
Common Stock specified in elections to be purchased under any Offering plus the
number of shares purchased under previous Offerings under this Plan exceeds the
maximum number of shares issuable under this Plan, the Board or the Committee
will allot the shares then available on a pro rata basis.
19. TERMINATION OF THE PLAN. This Plan may be terminated at any time by the
Board. Upon termination of this Plan all amounts in the accounts of
participating employees shall be promptly refunded.
20. GOVERNMENTAL REGULATIONS. The Company's obligation to sell and deliver
Common Stock under this Plan is subject to listing on a national stock exchange
or quotation on the Nasdaq National Market (to the extent the Common Stock is
then so listed or quoted) and the approval of all governmental authorities
required in connection with the authorization, issuance or sale of such stock.
21. GOVERNING LAW. The Plan shall be governed by Massachusetts law except
to the extent that such law is preempted by federal law.
22. ISSUANCE OF SHARES. Shares may be issued upon exercise of an Option
from authorized but unissued Common Stock, from shares held in the treasury of
the Company, or from any other proper source.
33
23. NOTIFICATION UPON SALE OF SHARES. Each employee agrees, by entering the
Plan, to promptly give the Company notice of any disposition of shares purchased
under the Plan where such disposition occurs within two years after the date of
grant of the Option pursuant to which such shares were purchased.
24. EFFECTIVE DATE AND APPROVAL OF SHAREHOLDERS. The Plan shall take effect
on June 13, 2001 subject to approval by the shareholders of the Company as
required by Section 423 of the Code, which approval must occur within twelve
months of the adoption of the Plan by the Board.
Adopted by the Board of Directors
on April 4, 2001
Approved by the stockholders on
June 13, 2001
34
DETACH HERE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
BOSTON COMMUNICATIONS GROUP, INC.
2001 ANNUAL MEETING OF SHAREHOLDERS
JUNE 13, 2001
The undersigned shareholder of BOSTON COMMUNICATIONS GROUP, INC. hereby
acknowledges receipt of the Notice of Annual Meeting of Sharholders and Proxy
Statement, dated May 11, 2001, and hereby appoints Alan J. Bouffard and
Frederick von Mering, and each of them, proxies and attorney-in-fact, with full
power of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the 2001 Annual Meeting of Shareholders of BOSTON
COMMUNICATIONS GROUP, INC., to be held on June 13, 2001 at 9:00 a.m., local
time, at the Company at 100 Sylvan Road, Woburn, Massachusetts, and at any
adjustments therof, and to vote all shares of Common Stock which the undersigned
would be entitled to vote if then and there personally present, on the matters
set forth on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE
VOTED FOR SUCH PROPOSAL. WITH RESPECT TO ANY OTHER MATTERS WHICH MAY ARISE, THIS
PROXY WILL BE VOTED IN THE DISCRETION OF THE PERSON(S) NAMED ABOVE.
PLEASE MARK, DATE, SIGN, AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
- ------------- -------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE SEE REVERSE
SIDE SIDE
- ------------- -------------
DETACH HERE
- --- PLEASE MARK
X VOTES AS IN
- --- THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1, AND
"FOR" ITEMS 2, 3 AND 4.
1. Election of Directors.
Nominees: (01) Jerrold D. Adams (02) Paul R. Gudonis
(03) Frederick E. von Mering
FOR WITHHELD
--- ---
--- ---
---
--- --------------------------------------
For all nominees except as noted above
2. To approve an amendment to the Company's FOR AGAINST ABSTAIN
2000 Stock Option Plan, increasing the ------- ------- -------
number of shares of Common Stock
available for issuance thereunder from ------- ------- -------
500,000 to 1,250,000 shares.
3. To approve the adoption of the Company's FOR AGAINST ABSTAIN
2001 Employee Stock Purchase Plan. ------- ------- -------
------- ------- -------
4. To ratify the selection of Ernst & Young ------- ------- -------
LLP by the Board of Directors as the
Company's independent auditors for the ------- ------- --------
current year.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
-------
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
-------
Please sign exactly as name appears hereon. Joint owners should each sign.
Executors, administrators, trustees, guardians or other fiduciaries should
give full title as such. If signing for a corporation, please sign in full
corporate name by a duly authorized officer.
Signature: Date: Signature: Date:
------------------- ------ ------------------- ------