SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
---------------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
---------------------------------------------------
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2)
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
ACCESS WORLDWIDE COMMUNICATIONS, INC.
-------------------------------------
(Name of Registrant as Specified in Its Charter)
Not Applicable
-------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a- 6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------
(2) Aggregate number of securities to which transaction applies:
----------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined:
---------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------
(5) Total fee paid:
------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
----------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
----------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------
(3) Filing Party:
--------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------
[LOGO]
Notice of Annual Meeting of Stockholders
to be held on July 2, 2002
--------------------
Boca Raton, Florida
May 22, 2002
To the Stockholders of
ACCESS WORLDWIDE COMMUNICATIONS, INC.:
The Annual Meeting of the Stockholders of ACCESS WORLDWIDE COMMUNICATIONS,
INC. (the "Company") will be held at the executive offices of the Company at
4950 Communication Avenue, Suite 300, Boca Raton, Florida 33431, at 11:00 a.m.,
local time, on Tuesday, July 2, 2002, to consider and act upon the following
matters:
1. To elect four directors, each to serve a one year term;
2. To act upon a proposal to amend the Company's 1997 Stock Option Plan
to increase the number of shares of common stock available for grant
thereunder from 1,429,000 to 1,929,000;
3. To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent auditors; and
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The close of business on May 20, 2002, has been fixed by the Board of
Directors as the record date for the determination of stockholders entitled to
notice of, and to vote at, the annual meeting.
By Order of the Board of Directors,
Richard Lyew
Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, THE BOARD OF DIRECTORS URGES
YOU TO PROMPTLY MARK, SIGN AND DATE THE ENCLOSED FORM OF PROXY AND MAIL IT IN
THE ENCLOSED RETURN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES, SO THAT YOUR VOTE CAN BE RECORDED AT THE MEETING IF YOU DO NOT ATTEND
PERSONALLY.
ACCESS WORLDWIDE COMMUNICATIONS, INC.
----------------------
PROXY STATEMENT
----------------------
This Proxy Statement, which will be mailed commencing on or about May 22,
2002, to the persons entitled to receive the accompanying Notice of Annual
Meeting of Stockholders, is provided in connection with the solicitation of
proxies on behalf of the Board of Directors of Access Worldwide Communications,
Inc. (the "Company") for use at the 2002 Annual Meeting of Stockholders (the
"Meeting") to be held on July 2, 2002, at 11:00 a.m., local time, at the
Company's executive offices, and at any adjournment or adjournments thereof, for
the purposes set forth in such notice. The Company's executive offices are
located at 4950 Communication Avenue, Suite 300, Boca Raton, Florida 33431.
Holders of record of issued and outstanding shares of common stock, $.01
par value per share ("Common Stock"), of the Company, as of May 20, 2002 (the
"Record Date"), will be entitled to notice of, and to vote at, the Meeting as
described below. On the Record Date, there were issued and outstanding 9,740,001
shares of Common Stock. The Company has no class or series of stock outstanding
and entitled to vote at the Meeting other than the Common Stock. Each share of
Common Stock is entitled to one vote with respect to each matter to be voted on
at the Meeting.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to constitute a quorum at the Meeting or any adjournments thereof. Except as set
forth below, abstentions and broker non-votes (as described below) will be
counted as present for the purpose of determining the presence of a quorum.
Common Stock represented by a properly executed proxy, if such proxy is
received in time and not revoked, will be voted at the Meeting in accordance
with the instructions indicated in such proxy. If no instructions are indicated,
shares represented by proxy will be voted "for" the election, as directors of
the Company, of the four nominees named in the proxy to serve until the 2002
annual meeting of stockholders, "for" each of proposals 2 and 3 and in the
discretion of the proxy holders as to any other matter which may properly be
presented at the Annual Meeting.
Directors of the Company are elected by plurality vote. Adoption of
Proposals 2 and 3 requires the affirmative vote of the holders of a majority of
the shares of Common Stock entitled to vote thereon and present at the meeting
in person or by proxy. A "broker non-vote" refers to shares of Common Stock
represented at the Meeting in person or by proxy by a broker or other nominee
where such broker or other nominee (i) has not received voting instructions on a
particular matter from the beneficial owners or persons entitled to vote, and
(ii) the broker or nominee does not have discretionary voting power on such
matter. In the case of a broker non-vote or where a stockholder withholds
authority from his/her proxy to vote, such shares will not be treated as
"present" and "entitled to vote" on the matter and, thus, a broker non-vote or
the withholding of a proxy's authority will have no effect on the outcome of the
vote on the matter.
Any proxy may be revoked at any time before it is exercised by written
notice to the Secretary of the Company. The casting of a ballot at the Meeting
by a stockholder who may theretofore have given a proxy will not have the effect
of revoking that proxy unless the stockholder so notifies the Secretary of the
Company in writing at any time prior to the voting of the shares represented by
the proxy.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board has nominated four of the five current directors for re-election
at the Meeting. Randall J. Lewis, a current director, has declined to stand for
re-election, and accordingly, after the meeting, will cease to be a director,
and cease to be a member of the Board committees on which he currently serves.
Each director elected will serve until the next annual meeting of stockholders
when his or her successor has been elected and qualified or until the director's
earlier resignation or removal. It is the intention of the persons named in the
accompanying form of proxy to vote the shares represented thereby in favor of
the election of each of the nominees named above unless otherwise instructed in
such proxy. In case any of the nominees are unable or decline to serve, the
persons named in the accompanying form of proxy reserve the right to vote the
shares represented by such proxy for another person duly nominated by the Board
of Directors in his stead or, if no other person is so nominated, to vote such
shares for the remaining nominees. The Board of Directors has no reason to
believe that any person named above will be unable or will decline to serve. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES
OF THE BOARD.
In connection with our recent downsizing through the sale of our Phoenix
Marketing Group and Cultural Access Group Divisions, Michael Dinkins, Chairman
of the Board of the Company since March 2000, and President and Chief Executive
Officer since August 1999, resigned from his position as Chairman of the Board,
effective March 4, 2002. Effective March 29, 2002, the Company and Mr. Dinkins
agreed to an amicable termination of his role as President and Chief Executive
Officer.
Charles Henri Weil was appointed to the Board on August 9, 2001. Peter
Bewley resigned from the Board on December 12, 2001.
Information concerning the nominees for election as directors is set forth
below. Such information was furnished by them to the Company.
Shares of Common
Stock Owned
Beneficially as of Percent of
Name of Nominee and Biographical Information April 25, 2002 Class
- ----------------------------------------------------------------------------- ---------------------- ------------
Liam S. Donohue, 34, has been a director of the Company since December 3,700 *
1996. Since 1998, Mr. Donohue has been a partner of DHM Arcadia Partners,
a private equity fund investing in the for-profit education and training
industry. From 1995 through 1998, Mr. Donohue was a principal of Foster
Management Company, a private equity investment firm. In 1994, he was an
Associate in the Salomon Brothers Corporate Finance Group in London. From
1989 to 1993, he was an Associate with Booz, Allen and Hamilton, Inc.'s
International Environmental Management Practice and started Booz, Allen's
office in Budapest, Hungary.
2
Shares of Common
Stock Owned
Beneficially as of Percent of
Name of Nominee and Biographical Information April 25, 2002 Class
- -------------------------------------------------------------------------------- ---------------------- ------------
Lee H. Edelstein, 54, has been President and Chief Executive Officer of the 191,093 2.0%
Company's TMS Professional Markets Group ("TMS Group") since March 2002, and a
director of the Company since October 1997. Mr. Edelstein is the President of
LHE Consulting, Inc., a business consulting firm, since December 1998. From
January 1997 until December 1998, Mr. Edelstein was President of TMS Group. In
1992, he founded TeleManagement Services, Inc. ("TMS"), a pharmaceutical and
healthcare direct marketing and teleservices company acquired by the Company in
January 1997. Prior to founding TMS, Mr. Edelstein worked for Goldline
Laboratories, a division of IVAX Corp., a pharmaceutical company, for eleven
years in various management positions including Operations Manager, Director of
Marketing and Vice President of Marketing and Business Development.
Shawkat Raslan, 50, has been Chairman of the Board, President and Chief 20,000
(1) * Executive Officer of the Company since March 2002, and a director of the
Company since May 1997. Since June 1983, Mr. Raslan has served as President and
Chief Executive Officer of International Resources Holdings, Inc., an asset
management and investment advisory service for international clients. Prior
thereto, he served as Vice President of Trans Arabian Investment Bank in Bahrain
from 1980 to 1983. From 1976 to 1980, Mr. Raslan was a liaison officer and
engineer for Turner International, a construction management company. He
currently serves as a director of Tiedemann Investment Group, and Integra, Inc.,
a managed behavioral healthcare services company ("Integra"). Mr. Raslan is the
managing partner of Prima Partners LP and Links Venture Partners LP.
Charles Henri Weil, 64, has been a director of the Company since August 551,130
(2) 5.7% 2001. Mr. Weil has served as Chairman and Chief Executive Officer of
Intergestion, an investment banking company based in France since 1989. From
1990 to 2000, Mr. Weil was also a self-employed financial consultant based in
Paris, France. In addition to serving as a director of Access Worldwide, Mr.
Weil is a member of the Board of Directors of Integra. He also serves as a
director for Dawnay Day & Co. Ltd., an investment and advisory services company
based in Great Britain, and Europeenne de Distribution Luxembourg and Europeenne
des metaux Luxembourg, both industrial conglomerates located in Luxembourg.
- --------------------------
* Less than one percent.
(1) Includes 5,000 shares of Common Stock presently issuable upon exercise of
options.
(2) Mr. Weil has sole dispositive power with respect to the shares. Compania
Financiera Tassarina, a company controlled by Mr. Weil, has sole voting power
with respect thereto.
3
The Board has a Compensation Committee, an Audit Committee, a Capital and
Finance Committee and a Nominating Committee.
The Compensation Committee reviews and makes recommendations regarding the
compensation for executive officers and other key employees of the Company,
including salaries and bonuses. No member of the Compensation Committee is an
officer of the Company. The members of the Compensation Committee are Liam S.
Donohue (Chairman), Randall J. Lewis and Charles Henri Weil. The Compensation
Committee has a stock option subcommittee ("Stock Option Subcommittee") which
administers the Company's stock option plan ("Option Plan") and determines the
persons who are to receive options, the number of shares subject to each option
and the terms, including the exercise price, of such options. All members of the
Compensation Committee currently are members of the Stock Option Subcommittee.
The Compensation Committee met three times in 2001.
The members of the Audit Committee are Messrs. Lewis (Chairman), Donohue,
and Weil. The Audit Committee acts as a liaison between the Board and the
independent accountants and annually recommends to the Board the appointment of
the independent accountants. The Audit Committee reviews with the independent
accountants the scope of their examination of the Company's financial
statements, the adequacy of internal accounting controls and otherwise performs
the duties described in the Audit Committee charter. A copy of the Audit
Committee Charter, as amended by the Board of Directors in April 2002, is
attached to this Proxy Statement as Annex A. That amendment eliminated the
requirement that members of the Audit Committee meet the independence and
experience requirements of the National Association of Securities Dealers
("NASD"), in light of the fact that the Common Stock no longer trades on the
Nasdaq SmallCap Market. However, all of the members of the Audit Committee are
independent as defined in Rule 4200(a)(14) of the NASD. The Audit Committee met
seven times in 2001.
The members of the Capital and Finance Committee are Messrs. Lewis
(Chairman), Donohue, and Weil. The Capital and Finance Committee reviews the
financial condition of the Company so as to counsel the Board on the total
financial resources, strength and capabilities of the Company and is authorized
to explore and recommend various forms of financing and capital facilities. The
Capital and Finance Committee is authorized to approve acquisitions of
businesses having an aggregate purchase price of less than $1,000,000. The
Capital and Finance Committee met four times in 2001.
The members of the Nominating Committee are Mr. Donohue (Chairman) and Lee
Edelstein. The Nominating Committee is authorized to review, approve and
recommend to the Board persons for election as directors. In addition, the
Nominating Committee will consider written nominations by stockholders, which
are submitted to the Chairman of the Nominating Committee and addressed in care
of the Secretary, Access Worldwide Communications, Inc., 4950 Communication
Avenue, Suite 300, Boca Raton, Florida 33431. The Nominating Committee met twice
during 2001.
All of the then incumbent directors attended at least 75% of the Board of
Directors meetings and meetings of the committees on which they serve, except
that Mr. Lewis attended two of the three meetings of the Compensation Committee,
and Mr. Donohue attended three of the seven meetings of the Audit Committee.
COMPENSATION OF DIRECTORS
Non-management directors of the Company receive an annual retainer of
$15,000, excluding the Chairman. A non-management Chairman, if any, would be
entitled to receive an annual retainer of $17,500. In addition, non-management
directors of the Company receive fees of $1,000 for each meeting attended in
person, $500 for each committee meeting attended on a day other than the day of
a full Board of Directors meeting and $500 for each Board of Directors or
committee meeting attended via teleconference. New non-management directors of
the Company receive options to purchase 10,000 shares of Common Stock at the
closing price on the day they are elected while existing non-management
directors receive options to purchase 5,000 shares of Common Stock on each
annual meeting date. These stock options vest evenly over three years. Mr. Weil
received such options on August 9, 2001. In addition, in the event that the
Chief Executive Officer is
4
awarded a 100% bonus payment with respect to any fiscal year, each
non-management director receives an additional option to purchase 5,000 shares
of Common Stock on the date that bonus payment is approved. Directors who are
officers of the Company do not receive any additional compensation for serving
on the Board. Directors are reimbursed for out-of-pocket expenses related to
their duties.
In addition, as reflected under "Ten Year Options Repricing," below, during
2001, all of the directors other than Mr. Weil and Mr. Lewis participated in the
Company's option repricing program.
EXECUTIVE OFFICERS
The Company's executive officers and their ages are as follows:
Name Age Position
- ----------------------------- ------------ --------------------------------------------------------------------
Shawkat Raslan 50 Chairman of the Board, President and Chief Executive Officer
John Hamerski 51 Executive Vice President and Chief Financial Officer
Barbara Monaghan 44 Senior Vice President and Chief Operating Officer - AM Medica
Communications Group
Lee Edelstein 54 President and Chief Executive Officer - TMS Professional Markets
Group
Georges Andre 37 Senior Vice President and President of TelAc Teleservices Group
Richard Lyew 33 Senior Vice President and Corporate Controller
Set forth below is information regarding the business experience of each of
the Company's executive officers. Information with respect to Messrs. Edelstein
and Raslan appears under "Proposal One - Election of Directors," above.
John Hamerski has been Executive Vice President and Chief Financial Officer
of Access Worldwide since July 2000. He joined the Company in November 1997 as
Senior Vice President, Financial Planning and Analysis. From March 1995 until
November 1997, he worked at Cadmus Communications Corporation, a printing and
communications company, most recently as Vice President and Chief Financial
Officer for Cadmus Interactive.
Barbara Monaghan has been Senior Vice President of Access Worldwide and
Chief Operating Officer of the Company's AM Medica Communications Group since
November 2000. From October 1993 until October 1998, Ms. Monaghan was Vice
President and Client Services Director of AM Medica Communications Ltd.
("AMCL"), and continued in such position through November 2000 after the Company
purchased AMCL in October 1998.
Georges Andre has served as Senior Vice President of the Company since June
2001 and as President of the Company's TelAc Teleservices Group ("TelAc") since
April 2001. From September 1999 until April 2001, Mr. Andre served as Senior
Vice President of Client Services of TelAc. Mr. Andre was the Vice President of
Operations at Iowave, Inc., a wireless broadband solutions company, from
February 1999 through August 1999. Mr. Andre served as the Senior Vice President
of Client Services and Operations for TelAc from July 1998 until January 1999
and as an Account Manager, Senior Account Manager and Vice President, Client
Services, respectively, for TelAc, from February 1995 until July 1998, prior to
TelAc being acquired by the Company.
5
Richard Lyew has been Senior Vice President and Corporate Controller of the
Company since July 1999. He served as Assistant Corporate Controller of the
Company from May 1998 until July 1999. From November 1996 until May 1998, Mr.
Lyew was Acting Manager/Senior Associate at Price Waterhouse LLP (currently
known as PricewaterhouseCoopers LLP). From July 1996 to November 1996, Mr. Lyew
was Accounting Manager at Chase Manhattan Mortgage Corp., a division of Chase
Manhattan Bank. Previously, Mr. Lyew spent five years at Coopers & Lybrand LLP
(currently known as PricewaterhouseCoopers LLP), most recently as a Senior
Associate. Mr. Lyew is licensed as a certified public accountant in the state of
New York.
EXECUTIVE COMPENSATION
The following table sets forth information for the fiscal years ended
December 31, 2001, 2000 and 1999, concerning the compensation of the (i)
Company's Chief Executive Officer, (ii) four other most highly compensated
executive officers of the Company whose total annual salary and bonus exceeded
$100,000 during the fiscal year ended December 31, 2001 and who were executive
officers as of December 31, 2001 and (iii) individuals who would have been among
the four other most highly compensated executive officers for 2001, but they
were not serving as executive officers as of December 31, 2001 (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation Award
-------------------------------------------------- -----------------------------
Other Annual Securities All Other
Compensation Underlying Compensation
Name and Principal Position Year Salary ($) Bonus ($) ($) (1) Options (#) ($) (2)
- ------------------------------ ------- ---------- --------- -------------- ----------- -------------
Michael Dinkins, Chairman, 2001 $318,000 $100,000 $ -- 71,250 $ --
President and Chief 2000 309,000 100,000 -- 10,000 1,450
Executive Officer (3) 1999 233,333 -- 55,566 (4) 200,000 4,049
John Hamerski, Executive 2001 180,000 27,500 -- 57,250 --
Vice President and Chief 2000 147,500 50,000 -- 26,500 505
Financial Officer (5) 1999 115,000 20,000 43,541 (6) 2,000 505
Barbara Monaghan, Senior 2001 200,000 -- 230,137 3,850 --
Vice President and Chief 2000 136,300 -- 139,578 1,500 --
Operating Officer - AM 1999 114,500 -- 78,389 3,000 --
Medica Communications Group (7)
Robert Regazzi, Executive 2001 212,000 84,800 -- 38,600 5,084
Vice President and Chief 2000 206,000 63,300 -- 4,000 5,815
Operating Officer - Phoenix 1999 162,500 20,000 -- 2,000 2,878
Marketing Group (8)
Joseph Macaluso, Executive 2001 215,000 -- -- 12,000 3,753
Vice President of Sales (9) 2000 207,500 50,000 8,400 4,000 14,644
1999 200,000 -- 8,400 2,000 12,038
Bernard Tronel, Senior Vice 2001 200,000 -- -- 8,600 --
President and Chief 2000 187,500 45,000 6,000 4,000 2,430
Operating Officer - 1999 175,000 30,000 30,000 (11) 15,000 1,569
Teleservices Group (10)
Georges Andre, Senior Vice 2001 170,000 75,000 -- -- --
President and President of 2000 152,000 40,000 -- -- --
TelAc Teleservices Group (12) 1999 139,367 5,000 -- -- --
- --------------------------
(1) Except as set forth in this column, no annual compensation for the Named
Executive Officers is reflected because the aggregate values of the perquisites
and other personal benefits received by each of the Named Executive Officers for
the indicated years were less than the required threshold for disclosure (the
lesser of $50,000 or 10% of the total annual salary and bonus for such executive
officer).
(2) Includes contributions made by the Company on behalf of the Named Executive
Officers to the Company's 401(k) plan, medical and dental insurance plans, term
life/disability insurance plans and other benefits.
6
(3) In March 2002, Mr. Dinkins resigned from his position as Chairman of the
Board. In addition, the Company and Mr. Dinkins agreed to an amicable
termination of his role as President and Chief Executive Officer, effective
March 29, 2002.
(4) Mr. Dinkins received $55,566 in moving expenses in 1999.
(5) Mr. Hamerski became an executive officer in August 2000.
(6) Mr. Hamerski received $43,541 in moving expense in 1999.
(7) Ms. Monaghan was appointed Chief Operating Officer of AM Medica
Communications Group in November 2000.
(8) Mr. Regazzi resigned from the Company in February 2002.
(9) Mr. Macaluso resigned from the Company in August 2001.
(10) Mr. Tronel's employment commenced in February 2, 1999. Mr. Tronel ceased
being an executive officer in June 2001.
(11) Mr. Tronel received $25,000 in moving expenses and a $5,000 automobile
allowance in 1999.
(12) Mr. Andre became an executive officer in April 2001.
OPTION GRANTS IN 2001
The following table sets forth the grants of stock options to the Named
Executive Officers during the fiscal year ended December 31, 2001. The amounts
shown for Mr. Hamerski as potential realizable values are based on arbitrarily
assumed annualized rates of stock price appreciation of five percent and ten
percent over the exercise price of the options during the full terms of the
options. Actual gains, if any, on option exercises and holdings of Common Stock
are dependent on the future performance of the Common Stock and overall stock
market conditions.
OPTION GRANTS IN THE FISCAL YEAR ENDED
DECEMBER 31, 2001
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
--------------------------------------------------------- ------------------------
% of Total
Number of Options
Securities Granted to
Underlying Employees Exercise
Options in Fiscal Price or Base Expiration 5% 10%
Name and Principal Position Granted (#) Year ($/Sh) Date ($) ($)
- ------------------------------ ----------- ----------- ----------- ------------ ----------- ---------
Michael Dinkins, Chairman,
President and Chief -- -- $ -- -- -- --
Executive Officer (1)
John Hamerski, Executive 50,000(2) 42.0% $0.81 10/01/11 -- --
Vice President and Chief
Financial Officer
Barbara Monaghan, Senior
Vice President and Chief -- -- -- -- -- --
Operating Officer - AM
Medica Communications Group
Robert Regazzi, Executive
Vice President and Chief -- -- -- -- -- --
Operating Officer - Phoenix
Marketing Group (3)
Joseph Macaluso, Executive
Vice President of Sales (4) -- -- -- -- -- --
Bernard Tronel, Senior Vice
President and Chief -- -- -- -- -- --
Operating Officer -
Teleservices Group (5)
Georges Andre, Senior Vice
President and President of -- -- -- -- -- --
TelAc Teleservices Group
7
- --------------------------
(1) In March 2002, Mr. Dinkins resigned from his position as Chairman of the
Board. In addition, the Company and Mr. Dinkins agreed to an amicable
termination of his role as President and Chief Executive Officer, effective
March 29, 2002.
(2) The options were granted pursuant to the Option Plan (see "Proposal 2 -
Approval of An Amendment to the Company's 1997 Stock Option Plan"). All of the
options vest and become exercisable over five (5) years and have terms of ten
years.
(3) Mr. Regazzi resigned from the Company in February 2002.
(4) Mr. Macaluso resigned from the Company in August 2001.
(5) Mr. Tronel ceased being an executive officer in June 2001.
8
AGGREGATE OPTION EXERCISES IN 2001 AND YEAR-END 2001 OPTION VALUES
The following table sets forth information regarding option exercises and
the number and year-end value of unexercised options to purchase Common Stock
held at December 31, 2001 by each of the Named Executive Officers.
Number of Securities Value of Unexercisable
Underlying Unexercised In-the Money Options
Options at Fiscal Year-End At Fiscal Year-End (1)
------------------------------- ---------------------------
Shares Value
Acquired on Realized
Name and Principal Position Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------- ----------- --------- ------------ -------------- ---------- -------------
Michael Dinkins, Chairman,
President and Chief
Executive Officer (2) -- -- 84,948 196,302 -- --
John Hamerski, Executive
Vice President and Chief -- -- 6,402 79,348 -- --
Financial Officer
Barbara Monaghan, Senior
Vice President and Chief -- -- -- 3,850 -- --
Operating Officer - AM
Medica Communications
Group
Robert Regazzi, Executive
Vice President and Chief -- -- 801 39,799 -- --
Operating Officer -
Phoenix Marketing Group
(3)
Joseph Macaluso, Executive
Vice President of Sales (4) -- -- 2,403 15,597 -- --
Bernard Tronel, Senior
Vice President and Chief -- -- 2,003 11,597 -- --
Operating Officer -
Teleservices Group (5)
Georges Andre, Senior
Vice President and -- -- 1,402 2,098 -- --
President, TelAc
Teleservices Group
- --------------------------
(1) In-the-money options are those options where the then fair market value of
the underlying Common Stock exceeds the exercise price thereof. The value of
in-the-money options is determined in accordance with regulations of the
Securities and Exchange Commission by subtracting the aggregate exercise price
of the options from the aggregate year-end market value of the underlying Common
Stock.
(2) In March 2002, Mr. Dinkins resigned from his position as Chairman of the
Board. In addition, the Company and Mr. Dinkins agreed to an amicable
termination of his role as President and Chief Executive Officer, effective
March 29, 2002.
(3) Mr. Regazzi resigned from the Company in February 2002.
(4) Mr. Macaluso resigned from the Company in August 2001.
(5) Mr. Tronel ceased being an executive officer in June 2001.
TEN YEAR OPTIONS REPRICING
On February 27, 2001, the Board of Directors of the Company approved a
voluntary stock option cancel and re-grant program. The program provided
employees and the Company's directors with the opportunity to cancel all or a
portion of their existing and outstanding stock options granted to them
9
before March 31, 2001, in exchange for a new grant to be awarded to them at a
future date. The new options were issued in October 2001 and the exercise price
of the new options was based on the trading price of the Common Stock on the
date the new options were granted. As a result, 558,850 options with exercise
prices ranging from $1.25 to $12.00 per share were forfeited and the Company
granted 413,250 new options at an exercise price of $0.81 per share, the fair
market value on the date of the grant. The exchange program was designed to
comply with FASB Interpretation No. 44, "Accounting for Certain Transactions
Involving Stock Compensation." The following table sets forth information
concerning the cancellation and re-grant of options to the Company's directors
and the Named Executive Officers.
MARKET ORIGINAL LENGTH OF
NUMBER PRICE OF EXERCISE ORIGINAL OPTION
NUMBER OF OF STOCK AT PRICE AT NEW TERM REMAINING
REPRICING RELINQUISHED REPRICED TIME OF TIME OF EXERCISE AT DATE OF
OPTION HOLDER DATE OPTIONS OPTIONS REPRICING REPRICING PRICE REPRICING
- -------------------- ---------- --------------- --------- ---------- ----------- --------- -----------------
Directors
- --------------------
Peter Bewley (1) 10/2/01 5,000 1,250 $0.810 $8.750 $0.810 7 years, 5 months
Liam Donohue 10/2/01 10,000 5,000 $0.810 $6.500 $0.810 7 years, 1 month
10/2/01 20,000 16,000 $0.810 $2.094 $0.810 8 years
10/2/01 5,000 4,000 $0.810 $2.375 $0.810 8 years, 5 months
Lee Edelstein 10/2/01 5,000 4,000 $0.810 $2.375 $0.810 8 years, 5 months
10/2/01 5,000 1,250 $0.810 $12.000 $0.810 6 years, 1 month
Shawkat Raslan 10/2/01 5,000 1,250 $0.810 $8.750 $0.810 7 years, 5 months
10/2/01 20,000 16,000 $0.810 $2.094 $0.810 8 years
10/2/01 5,000 4,000 $0.810 $2.375 $0.810 8 years, 5 months
Officers
- --------------------
Michael Dinkins (2) 10/2/01 50,000 25,000 $0.810 $5.000 $0.810 5 years, 10 months
10,000 2,500 $0.810 $12.000 $0.810 5 years, 10 months
25,000 6,250 $0.810 $12.000 $0.810 6 years
75,000 37,500 $0.810 $6.500 $0.810 7 years, 1 month
John Hamerski 10/2/01 7,500 3,750 $0.810 $12.000 $0.810 6 years, 5 months
10/2/01 5,000 3,500 $0.810 $6.500 $0.810 7 years, 1 month
Barbara Monaghan 10/2/01 1,000 500 $0.810 $8.750 $0.810 7 years, 5 months
10/2/01 2,000 2,000 $0.810 $1.250 $0.810 8 years
10/2/01 1,500 1,350 $0.810 $2.375 $0.810 8 years, 5 months
Bernard Tronel (3) 10/2/01 10,000 5,000 $0.810 $8.875 $0.810 7 years, 6 months
10/2/01 4,000 3,600 $0.810 $2.375 $0.810 8 years, 5 months
Robert Regazzi (4) 10/2/01 50,000 35,000 $0.810 $5.000 $0.810 6 years, 11 months
10/2/01 4,000 3,600 $0.810 $2.375 $0.810 8 years, 5 months
Joseph Macaluso(5) 10/2/01 12,000 12,000 $0.810 $11.000 $0.810 6 years, 1 month
(1) Mr. Bewley resigned from the Company in December 2001.
(2) In March 2002, Mr. Dinkins resigned from his position as Chairman of the
Board. In addition, the Company and Mr. Dinkins agreed to an amicable
termination of his role as President and Chief Executive Officer, effective
March 29, 2002.
(3) Mr. Tronel ceased being an executive officer in June 2001.
(4) Mr. Regazzi resigned from the Company in February 2002.
(5) Mr. Macaluso resigned from the Company in August 2001.
EMPLOYMENT ARRANGEMENTS
The Company entered into employment arrangements with the Named Executive
Officers, as well as with Shawkat Raslan, as described below. In March 2002,
Michael Dinkins resigned from his position as Chairman of the Board. In
addition, the Company and Mr. Dinkins agreed to an amicable termination of his
role as President and Chief
10
Executive Officer, effective March 29, 2002. Robert Regazzi resigned from the
Company in February 2002 after the sale by Company of its Phoenix Marketing
Group Division. Joseph Macaluso resigned from the Company in August 2001, and
Mr. Tronel ceased being an executive officer of the Company in June 2001.
All of those employment arrangements provide or provided, as the case may
be, for, among other things, (i) non-compete and non-disclosure agreements; and
(ii) other than in Mr. Regazzi's and Mr. Tronel's employment agreements, the
continuation of compensation payments to a disabled executive officer until such
officer has been unable to perform the services required of him for the period
of time set forth therein. Each agreement also provides for health insurance and
other benefits.
The Company entered into a four-year employment agreement, effective as of
July 29, 1999, with Michael Dinkins, who served as the Chairman of the Board,
President and Chief Executive Officer of the Company until March 2002. The
agreement, as amended on December 21, 2000, provided for, among other things,
Mr. Dinkins to receive an initial annual base salary of $300,000, plus an annual
incentive bonus of up to 50% of his then current annual base salary based upon
the achievement of certain quantitative and qualitative goals to be mutually
agreed upon by Mr. Dinkins and the Compensation Committee. In addition, Mr.
Dinkins was eligible to receive merit increases in his annual base salary as
determined by the Compensation Committee. Upon his resignation in March 2002,
Mr. Dinkins became entitled to receive severance benefits under the terms of the
agreement consisting of (i) severance pay equal to twice his then annual base
salary plus a prorated share of Mr. Dinkins' bonus earned based on the bonus
criteria set by the Board of Directors and (ii) for a period of 18 months
following the termination, on behalf of Mr. Dinkins and his dependents and
beneficiaries, such medical and dental benefits, life insurance, short-term
disability insurance and long-term disability insurance as the Company was
providing to Mr. Dinkins at the time of termination. In connection with Mr.
Dinkins' resignation from the Company, in March 2002, he agreed to receive his
severance pay in an amount equal to 1.8 times his annual base salary, instead of
twice his base salary as called for under the terms of his employment agreement,
for a period of 22 months, instead of the 24 month period called for under the
terms of his employment agreement. Mr. Dinkins' salary at the time of his
resignation was $318,000.
Following the resignation of Mr. Dinkins, the Company entered into a
two-year employment agreement, effective as of March 30, 2002, with Shawkat
Raslan as President and Chief Executive Officer of the Company. The agreement
provides for an initial annual base salary of $150,000, plus an annual incentive
bonus of up to 50% of his base salary based on the achievement of certain
quantitative and qualitative goals established by the Compensation Committee of
the Board of Directors. In addition, Mr. Raslan is eligible to receive merit
increases in his annual base salary as determined in the discretion of the Board
of Directors. The Company or Mr. Raslan may terminate his employment, without
the payment of any amount, upon 30 days' written notice.
The Company entered into a three-year employment agreement, effective as of
December 5, 2000, with John Hamerski, Executive Vice President and Chief
Financial Officer, which provides for, among other things, Mr. Hamerski to
receive an initial annual base salary of $180,000, plus an annual incentive
bonus of up to 40% of his then current annual base salary based upon the
achievement of quantitative and qualitative goals established by the Chief
Executive Officer of the Company. In addition, Mr. Hamerski is eligible to
receive merit increases in his annual base salary as determined by the Chief
Executive Officer. Mr. Hamerski's current annual base salary is $180,000. If Mr.
Hamerski's employment is terminated within two years after a change of control
(as defined therein), with specified exceptions, he is entitled to receive (i)
an amount equal to his then current annual base salary, and (ii) a bonus of 40%
of his then current annual base salary, prorated to the date of termination;
provided, that the target goals established by the Chief Executive Officer have
been met or are reasonably on track to be met. If Mr. Hamerski's employment is
terminated without cause and he is not otherwise entitled to the termination
payment described above, he is entitled to receive continuing payments of his
then current annual base salary for a period of one year.
The Company entered into a five-year employment agreement, effective as of
October 17, 1997, with Joseph Macaluso, Executive Vice President of Sales until
August 2001, which provided for, among other
11
things, Mr. Macaluso to receive an initial annual base salary of $150,000, plus
an annual incentive bonus of up to 20% of his then current annual base salary
based upon the achievement of certain financial performance goals established by
the Company's Chief Executive Officer. In addition, Mr. Macaluso was eligible
for merit increases in his annual base salary as determined by the Company's
Chief Executive Officer. Under the agreement, Mr. Macaluso was granted an option
to purchase 12,000 shares of the Common Stock, which vested equally over two
years. His annual salary at the time of his resignation was $215,000.
From January through June 2001, Mr. Tronel's employment relationship with
the Company was governed by an employment agreement, effective March 29, 1999.
Under that agreement, Mr. Tronel received an annual base salary of $200,000,
plus an annual incentive bonus of up to 40% of his annual base salary based upon
the attainment of certain qualitative and quantitative goals established by Mr.
Tronel and the President of the Company's TMS Professional Markets Group. The
Company entered into a consulting agreement, effective July 1, 2001, with
Bernard Tronel, whereby Mr. Tronel serves as advisor to the Chief Executive
Officer of the Company on telemarketing related matters. The agreement provides
for compensation through October 11, 2002 at an annual rate of $200,000.
The Company entered into an employment arrangement, effective as of June
20, 2001, with Robert Regazzi, Executive Vice President and Chief Operating
Officer of the Company's Phoenix Marketing Group ("PMG"). The agreement provided
for an initial annual base salary of $212,000, plus an annual incentive bonus of
up to 40% of his annual base salary based upon the attainment of certain
qualitative and quantitative goals established by the Chief Executive Officer of
the Company. In addition, under that agreement, Mr. Regazzi was eligible to
receive options to purchase up to 4,000 shares of Common Stock per year. The
agreement also provided that Mr. Regazzi was entitled to receive reimbursement
of all business related expenses and benefits similar to those made available to
similarly situated employees of the Company. Prior to June 20, 2001, Mr.
Regazzi's employment relationship with the Company was governed by an employment
agreement, effective September 1, 1998. Under that agreement, Mr. Regazzi
received an annual base salary of $212,000, plus an annual incentive bonus of
between $5,000 and $10,000 based upon the attainment of certain short-term goals
established by Mr. Regazzi and the President of PMG.
The Company has entered into a five-year employment agreement effective as
of April 12, 1999, with Barbara Monaghan, Senior Vice President and Chief
Operating Officer of AM Medica, at an initial annual base salary of $200,000,
subject to annual review, plus commission payments based on gross sales in an
amount ranging from 2% to 5% of gross sales. In addition, under this
agreement, Ms. Monaghan was granted an option to purchase 1,000 shares of Common
Stock, which vests equally over five years, as well as additional options to
purchase 4,000 shares of Common Stock annually thereafter. Under the agreement,
if Ms. Monaghan's employment is terminated by the Company during the five-year
term for any reason other than cause, Ms. Monaghan will be entitled to receive
an amount equal to three months of her then current annual base salary plus an
amount equal to two months of her then current annual base salary for each year
of service with the Company, the total payments of which are not to exceed
twelve months of her then current annual base salary.
The Company entered into a two-year employment agreement with Lee Edelstein
effective March 4, 2002, pursuant to which Mr. Edelstein serves as President and
Chief Executive Officer of the Company's TMS Professional Markets Group. Under
that agreement Mr. Edelstein is required to spend, together with his obligations
under the consulting agreement with the Company described under "Certain
Relationships and Related Party Transactions," below, a total of four days per
week working for the Company. The agreement provides for an annual base salary
of $100,000 and for Mr. Edelstein to be eligible for a bonus in the discretion
of the Board of Directors of the Company. Mr. Edelstein is also entitled to an
automobile allowance of $800 per month. Under the agreement, Mr. Edelstein's
employment may be terminated by the Company or Mr. Edelstein at any time upon
thirty (30) days' written notice upon which termination Mr. Edelstein would be
entitled to receive all salary and other benefits accrued to the date of
termination and any unpaid expense reimbursements. In the event Mr. Edelstein's
employment is terminated by the Company, all options granted
12
to him by the Company would become fully vested. Mr. Edelstein also has other
arrangements with the Company as described below under "Certain Relationships
and Related Party Transactions."
The Company has an arrangement with Georges Andre, Senior Vice President
and President of the Company's TelAc Teleservices Group ("TelAc"), whereby he
receives an annual salary of $170,000 and a bonus of up to 30% of his base
salary based on the performance of TelAc. The Company has never paid any
dividends.
PERFORMANCE GRAPH
The Company's Common Stock began trading on the Nasdaq National Market
System on February 13, 1998 when its initial public offering commenced. The
following performance graph shows the total return to stockholders of an
investment in the Company's Common Stock as compared to an investment in (i) the
Nasdaq Composite Index and (ii) a peer group made up of Boron, LePore &
Associates, Inc., Catalina Marketing Corporation, Parexel International
Corporation, and Quintiles Transnational Corp. (the "Peer Group") for the period
commencing February 13, 1998 and ending December 31, 2001. The data assumes that
$100 was invested on February 13, 1998 in each of the Company's Common Stock,
the Nasdaq Composite Index and companies in the Peer Group Index (on a weighted
market value basis) and that all dividends were reinvested. The Company has
never paid any dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
THE NASDAQ COMPOSITE INDEX,
THE PEER GROUP INDEX,
AND ACCESS WORLDWIDE COMMUNICATIONS, INC.
2/13/1998 12/31/1998 12/31/1999 12/31/2000 12/31/2001
------------- ------------- ------------- ------------- -------------
AWWC $100.000 $ 69.79 $ 19.89 $ 5.21 $ 5.00
Peer Group $100.000 $103.52 $ 70.14 $ 75.91 $ 58.48
Nasdaq Composite Index $100.000 $128.20 $237.91 $144.44 $ 114.03
13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") and the Stock Option
Subcommittee are composed of three outside directors, and are responsible for
administering the Company's executive compensation program.
The Company's executive compensation program is intended to attract,
motivate and retain key executives who are capable of leading the Company
effectively and fostering its long-term growth. The compensation program for
executives is comprised of base salary, annual incentives and long-term
incentive awards. The Committee's compensation philosophy is based upon the
belief that success of the Company results from the coordinated efforts of all
Company employees working as a team to achieve objectives of providing superior
services to the Company's clients and maximizing the Company's value for the
benefit of its stockholders.
The Committee reviews significant qualitative components in evaluating the
individual performance of each executive officer. These components include such
executive officer's leadership, teambuilding and motivation skills, adaptability
to rapid change, and ability to assimilate new technical knowledge to meet the
demands of the Company's clients. In this qualitative evaluation, the Committee
exercises its collective judgment as to the executive officer's contributions to
the growth and success of the Company during the prior year and the expected
contributions of such executive officer in the future.
BASE SALARY. Base salary is determined by level of responsibility and
individual performance as well as by the need to provide a competitive package
that allows the Company to attract and retain key executives. After reviewing
individual and Company performance, the Chief Executive Officer makes
recommendations to the Committee concerning executive officer's base salary. The
Committee reviews and, with any changes it deems appropriate, approves these
recommendations. Only a limited number of executive officers received increases
in base salary for 2001 in light of the company's plans to downsize by
attempting to dispose of portions of its business.
EXECUTIVE BONUSES. Bonuses provide the opportunity for executive officers
to earn as additional compensation, a percentage of the executive officer's
annual base salary by achieving the Company's strategic and financial
performance goals. The bonuses are based on the achievement of quantitative and
qualitative goals which are established by the Chief Executive Officer and
reviewed and approved by the Committee.
The key components in determining the amount of such bonuses include the
financial performance of the Company and the progress of the Company in
achieving its long-term strategic objectives. The judgment of each member of the
Committee and the Chief Executive Officer, in the case of other executive
officers, as to the impact of the individual or the support of the individual to
his or her team on the financial performance and strategic progress of the
Company also are considered.
STOCK OPTIONS. The Option Plan is administered by the Stock Option
Subcommittee. The Stock Option Subcommittee consists of the current members of
the Compensation Committee.
The Board of Directors and Stock Option Subcommittee believe that long-term
incentive compensation in the form of stock options is the most effective way of
making executive compensation dependent upon increases in shareholder value. In
addition, the Stock Option Subcommittee believes that stock option grants are an
effective means of attracting and retaining qualified key executives, an
essential element in the Company's highly regulated and client
relationship-driven industry. The Company's
14
Option Plan provides the means through which executives can build an investment
in Common Stock, which aligns such executive officers' economic interest with
the interest of stockholders.
The exercise price of each option has been the market price of the Common
Stock on the date of grant. The grants provide for a delayed vesting period and
have a ten-year term. The Committee believes that stock options give the
executive officers incentives throughout the term of the options to strive to
operate the Company in a manner that directly affects the financial interests of
the stockholders, both on the long-term, as well as a short-term basis.
In determining the number of options to grant to executive officers, the
Committee considers the same factors as it does in determining the other
components of compensation. The recommendation of the Chief Executive Officer is
significant in determining awards to persons other than himself.
DECISIONS REGARDING 2001 COMPENSATION. During 2001, the Company worked to
position various operations for potential sale. The Company was successful in
negotiating agreements for the disposition of two divisions, Phoenix Marketing
Group and the Cultural Access Group, both of which transactions closed in the
first quarter of 2002. The Company's performance for the year 2001 included
EBITDA substantially similar to that for 2000, despite the fact that the Company
experienced a significant loss of revenues as a result of the cancellation of
medical meetings it had organized or anticipated organizing, as a result of the
tragic events of September 11, 2001, and despite the Company devoting a
substantial amount of resources in 2001 to the sale of portions of its business.
The Company was also successful in retaining its key clients in 2001. With
respect to non-financial performance, management continued to implement its
leadership model, which embodies principle-centered leadership that addresses
clients, employees and the community.
Based on the foregoing, the Committee awarded bonuses for 2001 to those of
the Named Executive Officers eligible for bonuses, which ranged from 25% to 100%
of targeted bonus amounts.
During 2001, the compensation of Mr. Dinkins, the President and Chief
Executive Officer of the Company, was based upon the Committee's assessment of
the Company's financial performance as outlined above and its non-financial
performance against criteria that were established at the beginning of fiscal
year 2001.
For 2001, Mr. Dinkins' salary was held at the prior year's level. Mr.
Dinkins was awarded a bonus of $100,000 or 64% of his targeted bonus amount, the
same amount as his bonus for 2000, as a result of the Company's results for the
year not representing increases over 2000.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), limits the deductibility of
compensation exceeding $1.0 million to the Company's Chief Executive Officer and
each of the four other most highly compensated executive officers. Qualifying
performance-based compensation meeting the requirements promulgated by the
Internal Revenue Service under section 162(m) will not be subject to the
deduction limit. The Company intends to conform its executive compensation
arrangements with such requirements.
The Committee believes that its compensation policies promote the goals of
attracting, motivating, rewarding and retaining talented executive officers who
will maximize value for the Company's stockholders.
15
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Liam S. Donohue, Chairman
Randall J. Lewis
Charles Henri Weil
REPORT OF THE AUDIT COMMITTEE
Management has the primary responsibility for the Company's internal
controls, the financial reporting process and preparation of the consolidated
financial statements of the Company. The independent auditors are responsible
for performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted accounting principles and to
issue a report thereon. The Audit Committee's responsibility is to monitor and
oversee these processes.
The Audit Committee reviewed and discussed the audited consolidated
financial statements with management and the independent auditors. Management
represented to the Audit Committee that the Company's audited consolidated
financial statements were prepared in accordance with generally accepted
accounting principles. The Audit Committee also discussed with
PricewaterhouseCoopers LLP the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees), as amended by
Statement on Auditing Standards No. 90 (Audit Committee Communications).
In fulfilling its responsibilities, the Audit Committee received from
PricewaterhouseCoopers LLP the written disclosures and letter required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), has discussed with PricewaterhouseCoopers LLP their independence
from the Company and has considered whether the provision of non-audit services
to the Company is compatible with the independence of PricewaterhouseCoopers
LLP.
Based upon the Audit Committee's discussions with management and the
independent auditors and the Audit Committee's review of the representations of
management and the report and letter of the independent auditors provided to the
Audit Committee, the Audit Committee recommended to the Board of Directors that
the audited consolidated financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2001, for filing with
the Securities and Exchange Commission.
AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
Liam S. Donohue
Randall J. Lewis, Chairman
Charles Henri Weil
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), THAT MIGHT INCORPORATE
FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE AUDIT
COMMITTEE REPORT, ABOVE, AND THE COMPENSATION COMMITTEE REPORT AND THE
PERFORMANCE GRAPH THAT PRECEDED THAT REPORT SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS.
AUDIT FEES
PricewaterhouseCoopers LLP, advised the Audit Committee that its fees for
audit services to the Company during the Company's fiscal year ended December
31, 2001 were $202,500.
16
ALL OTHER FEES
PricewaterhouseCoopers LLP, advised the Audit Committee that its fees for
other services to the Company during the Company's fiscal year ended December
31, 2001 totaled $93,250 and included $36,750 for audits of the Company's
benefit plans, $20,000 in connection with the audit of the Company's AM Medica
subsidiary and $35,500 in connection with the proxy statement relating to the
sale of PMG. Other services include evaluating the effects of various accounting
issues and changes in professional standards on the Company's financial
statements. PricewaterhouseCoopers LLP advised the Audit Committee that it did
not believe its audit was impaired by its provision of such services,
particularly in view of the relationship of the related fees to its annual
revenues. As a result, PricewaterhouseCoopers LLP has confirmed that it was an
independent accountant with respect to the Company within the meaning of the
Exchange Act and the requirements of the Independence Standards Board.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of the Company's
Common Stock, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of Common Stock.
Officers, directors and greater than ten percent stockholders are required by
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on a review of copies of such
reports furnished and confirmations that no other reports were required during
the fiscal year ended December 31, 2001, its directors, executive officers and
greater than ten percent stockholders complied with all Section 16(a) filing
requirements, except that, through inadvertence, Lee Edelstein, John Hamerski,
David Morse, Peter Bewley, Robert Regazzi and Mary Sanchez each filed a Form 5
shortly after the filing deadline therefor.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
AGREEMENTS WITH LEE H. EDELSTEIN
TLM Holdings Corp., a wholly-owned subsidiary of the Company ("TLM
Holdings"), Lee H. Edelstein, President and Chief Executive Officer of the
Company's TMS Professional Markets Group since March 2002, and a director of the
Company, and TeleManagement Services, Inc. ("TeleManagement"), which was then
owned primarily by Mr. Edelstein, entered into an agreement dated January 1,
1997, as subsequently amended (the "TeleManagement Agreement"), whereby TLM
Holdings purchased substantially all of the assets of TeleManagement. The
purchase price for the assets was as follows: (i) $6,500,000 in cash, (ii) the
issuance by TLM Holdings of a 6% convertible subordinated promissory note
(current interest rate is 10% due to a default under such note by TLM Holdings),
in the principal amount of $1,300,000, which was subsequently assigned by
TeleManagement to Mr. Edelstein, payable in the following manner: (i) all unpaid
accrued interest is payable on January 15th of each year, commencing on January
15, 1998, until the note is paid in full, and (ii) the principal amount is
payable in three equal installments of $433,334 on January 15, 1998, January 15,
1999 and on the date which is ten days following the date of the payment in full
of all amounts owed by the Company to Bank of America, N.A. under the Company's
Credit Agreement with Bank of America, N.A.; and (iii) certain additional
contingent payments of cash and common stock of TLM Holdings payable to Mr.
Edelstein over a three-year period dependent upon the achievement of certain
financial and operational goals.
Mr. Edelstein entered into a consulting agreement, effective May 10, 1999
and amended effective March 4, 2002, with TLM Holdings, to provide consulting
services with respect to marketing and sales activities, and to support the
executive management of TMS. The agreement provides for, among other things,
17
(i) a term through February 29, 2004, (ii) Mr. Edelstein to devote 20% of his
business time (not less than four days per month) to provide the required
services, and (iii) the payment of (a) $75,000 annually (through March 3, 2002),
(b) $12,917 per month from March 4, 2002 through December 31, 2002 and (c)
$6,667 per month thereafter until the termination of the Agreement.
AGREEMENTS WITH ANN M. HOLMES
The Company, Ms. Holmes and AM Medica Communications, Ltd., which was then
owned primarily by Ms. Holmes ("AM Medica") entered into an agreement dated
October 24, 1998, ("AM Medica Agreement"), whereby the Company purchased all of
the issued and outstanding shares of AM Medica. The purchase price for the
shares was as follows: (i) $20,000,000 in cash, (ii) the issuance by the Company
of a 6.5% subordinated promissory note in the original principal amount of
$5,500,000, as amended to decrease the principal amount to $5,219,000, payable
in the following manner: (a) consecutive monthly payments of $150,000 payable on
the first day of each month, (b) two additional payments of $250,000 each,
payable on May 25, 2000 and October 25, 2000, and (c) the remaining principal
amount and any outstanding accrued and unpaid interest thereon, payable on
October 1, 2003; and (iii) certain additional contingent payments of cash and
common stock of the Company payable to Ms. Holmes over a three-year period
dependent upon the achievement of certain financial and operational goals. In
2001, Ms. Holmes received payments of $1,800,000 pursuant to the Subordinated
Promissory Note.
Additionally, effective February 14, 2001, as amended, effective April 1,
2002, the Company entered into a agreement with Ms. Holmes whereby Ms. Holmes is
to provide consulting services and support to AM Medica. The agreement provides
for, among other things, (i) a term through May 31, 2003 and (ii) a monthly
consulting fee payable to Ms. Holmes of $15,000 through December 31, 2002, and
$10,000 through May 31, 2003.
LEASE AGREEMENT
PM Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of the Company ("PM"), has entered into a 10-year triple net lease agreement
with Phoenix Realty Partners, a New Jersey Partnership ("Phoenix Realty"), which
is comprised of Joseph Macaluso and Douglas Rebak, former officers of the
Company, whereby PM is leasing an aggregate of approximately 102,000 square feet
of combined office, warehouse and other space for an aggregate base rent of
$662,860 per year during the first five years of the term, and $786,760 per year
during years six through ten. The lease on this property was assigned by the
Company in connection with the sale of the PMG in February 2002.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 25, 2002, by (i) each person
known by the Company to be the beneficial owner of more than five percent (5%)
of the outstanding shares of Common Stock (based on a review of filings with the
Securities and Exchange Commission), (ii) each Named Executive Officer; and
(iii) all of the Company's current directors and executive officers as a group.
The beneficial ownership of the Company's Common Stock with respect to the
directors appears under the caption "Proposal One - Election of Directors,"
above. Unless otherwise indicated, each shareholder has sole voting and
investment power with respect to the indicated shares.
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
- --------------------------------------------------------------- --------------------------- -------------------
Michael Dinkins, Chairman, President and Chief Executive 91,948 (2) *
Officer (1)
18
John Hamerski, Executive Vice President and Chief Financial 13,532 (3) *
Officer
Barbara Monaghan, Senior Vice President and Chief Operating --
Officer - AM Medica Communications Group
Robert Regazzi, Executive Vice President and Chief Operating 30,801 (5) *
Officer - Phoenix Marketing Group (4)
Joseph Macaluso, Executive Vice President of Sales 178,466 (7) 1.8%
(6)
Bernard Tronel, Senior Vice President and Chief Operating 4,003 (9) *
Officer - Teleservices Group (8)
Georges Andre, Senior Vice President, Access Worldwide and 7,402 (10) *
President of TelAc Teleservices Group
All directors and executive officers as a group (8 persons) 788,559 (12) 8.1%
(11)
Compania Financiera Tassarina S.A. 551,130 (13) 5.7%
8 Calle Aquilino de la Guardia
Panama City, Panama
R&R Opportunity Fund L.P. 493,500 5.1%
1250 Broadway, 14th Floor
New York, N.Y. 10001
- -----------------------
* Less than one percent.
(1) In March 2002, Mr. Dinkins resigned from his position as Chairman of the
Board. In addition, the Company and Mr. Dinkins agreed to an amicable
termination of his role as President and Chief Executive Officer, effective
March 29, 2002.
(2) Includes 84,948 shares of Common Stock issuable upon options presently
exercisable or exercisable within 60 days after April 25, 2002.
(3) Includes 6,402 shares of Common Stock issuable upon options presently
exercisable or exercisable within 60 days after April 25, 2002.
(4) Mr. Regazzi resigned from the Company in February 2002.
(5) Includes 801 shares of Common Stock issuable upon options presently
exercisable or exercisable within 60 days after April 25, 2002.
(6) Mr. Macaluso resigned from the Company in August 2001.
(7) Includes 2,403 shares of Common Stock issuable upon options presently
exercisable or exercisable within 60 days after April 25, 2002 and 10,000
shares owned by Mr. Macaluso's wife.
(8) Mr. Tronel ceased being an executive officer in June 2001.
19
(9) Includes 2,003 shares of Common Stock issuable upon options presently
exercisable or exercisable within 60 days after April 25, 2002.
(10) Includes 1,402 shares of Common Stock issuable upon options presently
exercisable or exercisable within 60 days after April 25, 2002.
(11) Only includes current executive officers and directors.
(12) Includes 14,206 shares of Common Stock issuable upon options presently
exercisable or exercisable within 60 days after April 25, 2002.
(13) According to a Schedule 13D, dated September 17, 1999, filed by Compania
Financiera Tassarina, S.A. ("Compania"), Compania has sole voting and no
dispositive power over all 551,130 shares and Charles Henri Weil has no
voting power and sole dispositive power over all 551,130 shares.
PROPOSAL 2 -- APPROVAL OF AN AMENDMENT TO THE COMPANY'S
1997 OPTION PLAN
GENERAL
In April 2002, the Board of Directors of the Company unanimously approved,
subject to stockholder approval, an amendment to the Company's 1997 Option and
Incentive Plan (the "Option Plan") to increase the number of shares of Common
Stock that may be issued under the Option Plan from 1,429,000 to 1,929,000 (the
"Plan Amendment"). A copy of the Option Plan, reflecting the Plan Amendment, is
attached hereto as Annex B. The Board of Directors recommends that the
stockholders approve the Plan Amendment.
The Option Plan was adopted in May 1997, prior to the Company's initial
public offering, by the Board of Directors and stockholders of the Company. The
Option Plan was amended in May 1999 to increase the number of shares of Common
Stock reserved for issuance thereunder from 800,000 to 1,300,000 shares. In
March 2001, the Option Plan was amended, again, to increase the number of shares
of Common Stock reserved for issuance thereunder to 1,429,000.
Under the Option Plan, the eligible participants in the Option Plan (the
"Participants") may be granted non-qualified stock options and incentive stock
options.
The Option Plan plays an important role in the Company's efforts to attract
and retain executive officers, directors, consultants and other personnel of
outstanding ability and to align the interests of these persons with those of
the stockholders of the Company.
A total of 1,429,000 shares of Common Stock are authorized for grant under
the Option Plan. Of this total, as of April 17, 2001, no shares of Common Stock
have been issued upon the exercise of previously issued options, 1,144,750
shares of Common Stock are issuable pursuant to the exercise of options
currently outstanding (excluding options that were cancelled as a result of the
termination of employment of the recipients thereof or those surrendered as
part of the Company's re-grant program) and 284,250 shares of Common Stock are
allocated for future stock option issuances under the Option Plan.
As of April 17, 2002, approximately 900 employees of the Company were
eligible to receive grants under the Option Plan.
ADMINISTRATION
The recipients and the types, amounts and terms of awards made under the
Option Plan are determined by, and the Option Plan is administered by, the Stock
Option Subcommittee
20
of the Compensation Committee of the Board of Directors of the Company (the
"Stock Option Subcommittee"). The Stock Option Subcommittee has the authority to
take all administrative actions with respect to the Option Plan that it deems
necessary or advisable. The Stock Option Subcommittee consists of Liam Donohue,
Randall J. Lewis and Charles Henri Weil.
PURPOSE OF PLAN AMENDMENT
There is only a limited number of shares of Common Stock that remain
available for issuance under the Option Plan. Accordingly, the Board of
Directors believes that it is in the best interests of the Company to increase
the number of shares of Common Stock that may be granted under the Option Plan
so that the Company will be able to continue to (i) attract highly qualified
individuals for positions with the Company and (ii) reward and motivate
executive officers, other officers and employees, consultants and other persons
who provide services to the Company with compensation in a form allowing them to
participate in the growth of the Company.
The Option Plan is summarized below. This summary is qualified in its
entirety by the terms of the Option Plan, a copy of which, including the
proposed Plan Amendment, is attached to this Proxy Statement as Annex B.
SUMMARY OF THE OPTION PLAN
ELIGIBILITY. Options under the Option Plan may be granted to key employees
of the Company or any of its affiliates, including officers or directors, and to
consultants and other individuals providing services to the Company or any of
its affiliates (collectively the "Participants"). The maximum number of options
that may be granted to any person under the Plan during any fiscal year of the
Company shall not exceed 150,000 shares.
TYPES OF AWARDS. The types of awards that may be made under the Option Plan
are either (i) options intended to qualify as incentive stock options under the
Internal Revenue Code of 1986, as amended (the "Code"), or (ii) non-qualified
stock options.
EXERCISABILITY. Options may, in the discretion of the Stock Option
Subcommittee, be made to vest and become exercisable in specified installments.
The Stock Option Subcommittee may also accelerate the exercisability of options
issued under the Option Plan upon the occurrence of certain events, including a
merger which results in a change of control of the Company or a sale or transfer
of substantially all of the assets of the Company. Payment of the option price
upon exercise may be made by certified or bank cashier's check, or by the tender
of shares of Common Stock then owned by the Participant.
EXERCISE PRICE. The exercise price of options, as determined by the Stock
Option Subcommittee, may not be less than the fair market value of the Common
Stock on the date of grant and the term of any such option may not exceed ten
years from the date of grant. With respect to any Participant who owns shares
representing more than 10% of the total combined voting power of the outstanding
securities of the Company or of any affiliate of the Company, the exercise price
per share of any incentive stock option may not be less than 110% of the fair
market value per share of Common Stock on the date of grant. The aggregate fair
market value of the Common Stock with respect to which incentive stock options
are exercisable for the first time by a Participant during any one calendar
year, may not exceed the limitations in Section 422(d) of the Internal Revenue
Code.
TRANSFERABILITY. Options granted pursuant to the Option Plan are not
transferable, except (i) by will or the laws of descent and distribution in the
event of death, and (ii) that the Stock Option
21
Subcommittee may, in its discretion, provide that options held by a Participant
may be transferred to or for the benefit of a member of the Participant's
immediate family or to a tax-exempt charitable organization.
TERMINATION OF PARTICIPANT. Options may not be exercised by a Participant
who has ceased to be in the employ of the Company, except that (i) if the
Participant's employment is terminated by the Company or a subsidiary, or due to
disability or retirement under any retirement plan maintained by the Company or
any affiliate, then the options held by that Participant which were exercisable
at the time of termination may be exercised during the three month period
following termination (in the event of the death of the Participant during such
three month period, transferees of the Participant's rights may exercise the
options during the one year period following the date of the Participant's
death), and (ii) in the event of the death of the Participant while employed,
all options held by the participant become exercisable in full and transferees
of the Participant's rights may exercise such options during the one year period
following the date of the Participant's death.
RIGHTS PRIOR TO EXERCISE. An option holder will have no rights as a
stockholder with respect to any shares of Common Stock covered by options issued
under the Option Plan until the option holder becomes a holder of record of such
shares of Common Stock, and shall not be entitled to any dividends or
distributions or other rights in respect of such shares of Common Stock for
which the record date is prior to the date on which the option holder becomes
the holder of record thereof.
WITHHOLDING TAXES. Under the Option Plan, the Company has the right to
require that, as a condition to issuing shares of Common Stock upon the exercise
of options, the Participant pay the amount requested by the Company to satisfy
withholding of any foreign, federal, state or local taxes required by law.
TERMINATION AND AMENDMENT. Unless terminated earlier by the Board of
Directors, the Option Plan will expire on, and no awards under the Option Plan
may be made after, May 1, 2007. The Board of Directors has the right at any time
to amend the Option Plan or options outstanding thereunder without the consent
of Participants or the Company's stockholders, provided that no such action may
adversely affect the rights of a Participant under any options held by that
Participant.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion outlines certain United States federal income tax
consequences of participation in the Option Plan. Individual circumstances may
cause these results to vary. Additionally, federal income tax laws and
regulations are complex and frequently amended, and each Participant should rely
on his or her own tax counsel for advice regarding the federal income tax
consequences of participation in the Option Plan.
FEDERAL INCOME TAX TREATMENT OF INCENTIVE STOCK OPTIONS. A Participant will
not recognize taxable income on the grant or the exercise of incentive stock
options (although the exercise of an incentive stock option can increase a
Participant's alternative minimum tax liability because the difference between
the fair market value of the shares of Common Stock acquired and the exercise
price will be included in the Participant's alternative minimum taxable income).
A Participant will recognize taxable income if and when the Participant disposes
of the shares of Common Stock acquired under an incentive stock option. If the
disposition occurs more than two years after the grant of the incentive stock
option and more than one year after the shares of Common Stock are transferred
to the Participant (the "Incentive Stock Option Holding Period"), the
Participant will recognize capital gain (or loss) equal to the excess (or
deficiency) of the amount realized from the disposition of the shares of Common
Stock less the Participant's tax basis in the shares of Common Stock. A
Participant's tax basis in the Common Stock
22
generally is the amount the Participant paid upon exercise of the incentive
stock option. The capital gain (or loss) will be long-term or short-term
depending on the length of time the Participant held the shares of Common Stock.
If shares of Common Stock acquired under an incentive stock option are
disposed of before the expiration of the Incentive Stock Option Holding Period
(a "Disqualifying Disposition"), a Participant generally will recognize as
ordinary income, in the year of the Disqualifying Disposition, an amount equal
to the excess of the fair market value of the Common Stock on the date of
exercise over the exercise price paid by the Participant. Any additional gain
will be treated as long-term or short-term capital gain depending on the length
of time the Participant held the shares of Common Stock.
A special rule applies to a Disqualifying Disposition of Common Stock where
the amount realized on the disposition is less than the fair market value of the
Common Stock on the date of exercise of the incentive stock option. In that
event, the Participant generally will recognize as ordinary income the
difference between the amount realized on the disposition of the Common Stock
and the exercise price paid by the Participant.
The foregoing discussion assumes that the Participant exercises the
incentive stock option while the Participant is an employee of the Company or
within three months of termination of employment. The three-month period is
extended (i) to one year, if the Participant terminates employment as a result
of a total and permanent disability and (ii) indefinitely, if the termination is
caused by the Participant's death. If the Participant exercises an incentive
stock option outside of these time limits, the Participant's tax consequences
will be the same as described below for non-qualified stock options.
FEDERAL INCOME TAX TREATMENT OF NON-QUALIFIED STOCK OPTIONS. A Participant
will not recognize taxable income upon the grant of a non-qualified stock
option. Upon the exercise of a non-qualified stock option, a Participant will
recognize as ordinary income an amount equal to the excess of the fair market
value of the shares of Common Stock acquired over the exercise price paid by the
Participant. A Participant's tax basis in the shares of Common Stock acquired
upon the exercise of a non-qualified stock option is the amount paid for the
shares of Common Stock plus any amount included in income with respect to the
exercise. Any gain or loss that a Participant recognizes on a subsequent
disposition of shares of Common Stock acquired upon the exercise of a
non-qualified stock option generally will be long-term or short-term capital
gain or loss depending on the length of time the Participant held the shares of
Common Stock. The amount of the gain (or loss) will equal the excess (or
deficiency) of the amount realized on the subsequent disposition less the
Participant's tax basis in the shares of Common Stock.
The ordinary income a Participant is required to recognize on the exercise
of a non-qualified stock option or as the result of Disqualifying Disposition
will constitute wages for withholding and employment tax purposes. Accordingly,
depending on the terms of a particular award, the Company will be required to
either withhold from wages, or obtain payment from the Participant of, the
amount of required withholding and employment taxes.
The foregoing discussion assumes that the Participant pays the exercise
price in cash. Special rules apply to a Participant who exercises an incentive
stock option or a non-qualified share option by paying the exercise price, in
whole or in part, by the transfer of shares of Common Stock that the Participant
already owns.
The Company will generally be entitled to claim a federal income tax
deduction equal to the amount of ordinary income recognized by a Participant
upon exercise of a non-qualified stock option or as the result of Disqualifying
Disposition.
23
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF UNITED STATES FEDERAL
INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE GRANT OF
AWARDS UNDER THE OPTION PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT
DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT'S DEATH OR THE PROVISIONS OF THE
INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
PARTICIPANT MAY RESIDE.
2001 GRANTS UNDER THE OPTION PLAN
The following table sets forth the number of shares of Common Stock
underlying stock options granted under the Option Plan in 2001 to (i) each of
the Named Executive Officers; (ii) all current executive officers as a group;
(iii) each associate of any of the foregoing individuals; and (iv) all
employees, including all current officers who are not executive officers, as a
group (excluding options subsequently canceled). The table also states the
aggregate value of these options at December 31, 2001 based on the difference
between the closing price per share of the Common Stock at that date ($0.60) and
the exercise price of the corresponding options.
NUMBER OF OPTIONS AGGREGATE VALUE
NAME OF BENEFICIAL OWNER HELD (#) OF OPTIONS($) (1)
- ------------------------------------------------------------------ ---------------------- ----------------------
Michael Dinkins................................................ -- --
John Hamerski.................................................. 50,000 --
Joseph Macaluso................................................ -- --
Barbara Monaghan............................................... -- --
Robert Regazzi................................................. -- --
Bernard Tronel................................................. -- --
Georges Andre.................................................. -- --
Current executive officers as a group.......................... 50,000 --
All other employees as a group................................. 69,000 --
- ----------------
(1) Options with an exercise price greater than $0.600 (the closing price of
the Common Stock on December 31, 2001) are considered to have no value for
purposes of this table.
In addition, as described above under "Ten Year Options Repricing," on
February 27, 2001, the Company established a voluntary stock option cancel and
re-grant program.
BENEFITS OF THE PLAN AMENDMENT
The Company is unable to determine the dollar value or number of any stock
options or other awards that will be received as a result of the Plan Amendment
by the Company's executive officers or other officers, directors, employees or
consultants who are not executive officers, because awards under the Option Plan
are made by the Stock Option Subcommittee on a discretionary basis.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" APPROVAL
OF THE PLAN AMENDMENT TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE
FOR ISSUANCE UNDER THE OPTION PLAN FROM 1,429,000 TO 1,929,000. IF THE
STOCKHOLDERS DO NOT APPROVE THE PLAN AMENDMENT, THE
24
PLAN AMENDMENT WILL NOT GO INTO EFFECT AND THE BOARD OF DIRECTORS WILL CONSIDER
WHETHER TO ADOPT AN ALTERNATIVE ARRANGEMENT BASED ON THE NEEDS OF THE COMPANY.
25
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected PricewaterhouseCoopers
LLP to serve as independent accountants for the Company for the fiscal year
ending December 31, 2002. Such firm has examined the financial statements of the
Company since prior to the Company's initial public offering on February 13,
1998.
Although it is not required to do so, the Board of Directors is submitting
its selection of the Company's accountants for ratification at the Meeting in
order to ascertain the views of stockholders regarding such selection. If the
selection is not ratified, the Board of Directors will reconsider its selection.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE
"FOR" RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP TO EXAMINE THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND ITS SUBSIDIARIES FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2002.
It is the intention of the persons named in the accompanying form of proxy
to vote the shares represented thereby in favor of such ratification unless
otherwise instructed in such proxy.
A representative of PricewaterhouseCoopers LLP will be present at the
Meeting and will have the opportunity to make a statement if such representative
desires to do so, and will be available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any other matters which may be
brought before the Meeting. However, if any such other matters are properly
presented for action, it is the intention of the persons named in the
accompanying form of proxy to vote the shares represented thereby in accordance
with their judgment on such matters.
SOLICITATION OF PROXY
The proxy accompanying this Proxy Statement is being solicited on behalf of
the Company's Board of Directors. Officers, directors and certain employees of
the Company, none of whom will receive any additional compensation for their
services, may solicit proxies. Also, the Company has retained Georgeson
Shareholder Communications, Inc., a proxy solicitation firm, to solicit proxies
at an estimated cost of $5,000, plus reasonable expenses. Such solicitations may
be made personally, or by mail, facsimile, telephone, telegraph, messenger or
via the Internet. The Company will pay all of the cost of solicitation of
proxies. The Company also will pay persons holding shares of Common Stock in
their names or in the name of nominees, but not owning such shares beneficially,
such as brokerage houses, banks, and other fiduciaries, for the expense of
forwarding solicitation materials to their principals.
MISCELLANEOUS
It is important that proxies be returned promptly. Whether or not you
expect to attend the meeting in person, the Board of Directors urges you to
mark, sign and date the accompanying form of proxy and mail it in the enclosed
return envelope, which requires no postage if mailed in the United States, so
that your votes can be recorded.
26
STOCKHOLDER PROPOSALS
The deadline for submission of stockholder proposals pursuant to Rule 14a-8
of the Exchange Act for inclusion in our proxy statement for the 2003 annual
meeting of stockholders is January 22, 2003. Additionally, the Company must
receive notice of any stockholder proposal to be submitted at the 2003 annual
meeting of stockholders (but not required to be included in our proxy statement)
by April 7, 2003, or such proposal will be considered untimely pursuant to Rule
14a-4 and 14a-5(e) under the Exchange Act and the persons named in the proxies
solicited by management may exercise discretionary voting authority with respect
to such proposal.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K, including the financial
statements for the fiscal year ended December 31, 2001, which has been filed
with the Securities and Exchange Commission, is included in the Annual Report
accompanying this Proxy Statement.
May 22, 2002
27
ANNEX A
AUDIT COMMITTEE CHARTER
-----------------------
STATEMENT OF GENERAL POLICY
---------------------------
The primary purpose of the Audit Committee (the "Committee") is to assist
the Board of Directors (the "Board") in fulfilling its responsibilities to
oversee management activities related to internal control, accounting and
financial reporting policies and auditing practices; to review the independence
of the outside auditors and the objectivity of the internal auditors and to
review the adequacy and reliability of disclosures to stockholders.
The Committee shall comprise of a minimum of three members all of which are
appointed by the Board on the recommendation of the Nominating Committee.
The Committee will meet at least twice a year with the Chief Financial
Officer, the Director of Internal Audits and the outside auditors in separate
executive sessions. The outside auditors are ultimately accountable to the Board
and the Committee.
The Committee recognizes that management, internal auditors, and the
outside auditors have more time, knowledge and detailed information on the
Company than do Committee members. Consequently, in carrying out its oversight
responsibilities, the Committee is not providing any expert or special
assurances as to the Company's financial statements, internal controls or any
professional certification as to the outside auditors' work.
In carrying out its oversight role, the Committee shall have the authority
to retain special legal, accounting or other consultants at its discretion and
at the Company's expense without permission of the Board or management.
The Committee is responsible for conducting the following recurring
activities:
1. Review and reassess the adequacy of the Charter annually. At any time, the
Committee may recommend amendments to this charter and submit amendments
for Board approval.
2. Review and discuss the annual audited and quarterly unaudited financial
statements with management and the outside auditors. Discuss with the
outside auditors their judgment about the quality, not just the
acceptability, of the Company's accounting principles as applied to its
financial reporting as required by SAS 61, as modified or supplemented.
3. Recommend to the Board whether to include the audited financial statements
in the Company's Form 10-K.
4. Review the report required by the Securities and Exchange Commission to be
included in the Company's annual proxy statement.
5. Review significant changes in the Company's policies related to risk
management, internal controls, accounting and financial reporting and
ethical behavior of employees.
6. Review internal reports to remain appraised of material financial exposures
and management actions to address issues related to:
o Internal audit activities and internal and outside auditors'
evaluation of internal control;
o Exposures, uninsured risks, insurance coverages and premiums;
o Compliance with Company policies, including the Code of Ethics and
Business Conduct, and with federal and state laws; and
o Legal actions brought against the Company and any liabilities and
contingencies, which would jeopardize its financial condition.
7. Select and evaluate the outside auditors' performance and where
appropriate, replace the outside auditors subject to approval by the Board
and ratified by the stockholders; and review the appointment and
replacement of the Director of Internal Audits.
8. Confirm annually the outside auditors' independence from the Company.
9. Review with the outside auditors the scope of their examination for the
succeeding year subsequent to the close of the current year.
10. Approve fees charged by the outside auditors.
11. Report minutes of the Audit Committee meetings to the full Board.
12. Review the Company's activities with respect to minimizing any adverse
environmental impact of its operations, products and product packaging.
2
ANNEX B
ACCESS WORLDWIDE COMMUNICATIONS, INC.
1997 STOCK OPTION PLAN
1. PURPOSES OF PLAN. The purposes of this Plan, which shall be known as
the Access Worldwide Communications, Inc. 1997 Stock Option Plan and is
hereinafter referred to as the "Plan", are (i) to provide incentives for key
employees, directors, consultants and other individuals providing services to
Access Worldwide Communications, Inc. (the "Company") and its subsidiary or
parent corporations (within the respective meanings of Sections 424(f) and
424(e) of the Internal Revenue Code of 1986, as amended (the "Code"), and
referred to herein as "Subsidiary" and "Parent", respectively, and such Parent
and each Subsidiary are referred to herein individually as an "Affiliate" and
collectively as "Affiliates") by encouraging their ownership of the common
stock, $.01 par value, of the Company (the "Stock") and (ii) to aid the Company
in retaining such key employees, directors, consultants and other individuals
upon whose efforts the Company's success and future growth depends and in
attracting other such employees, directors, consultants and individuals.
2. ADMINISTRATION. The Plan shall be administered by the Compensation
Committee of the Board of Directors or a subcommittee of the Compensation
Committee appointed by the Compensation Committee, as hereinafter provided (the
committee or subcommittee administering the Plan is hereinafter referred to as
the "Committee"). For purposes of administration, the Committee, subject to the
terms of the Plan, shall have plenary authority to establish such rules and
regulations, to make such determinations and interpretations, and to take such
other administrative actions as it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be final,
conclusive and binding on all persons, including Optionees (as hereinafter
defined) and their legal representatives and beneficiaries.
The Committee shall consist of not fewer than two members of the Board of
Directors. Unless otherwise determined by the Board of Directors, all members of
the Board of Directors who serve on the Committee shall be "Non- Employee
Directors" (as defined in Rule 16b-3 under the Securities Exchange Act of 1934,
as amended) and "outside directors" as defined in Treasury Regulation (S)
1.162-27(e)(3). The Compensation Committee shall designate one of the members of
the Committee as its Chairman. The Committee shall hold its meetings at such
times and places as it may determine. A majority of its members shall constitute
a quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by all
members shall be as effective as if it had been made by a majority vote at a
meeting duly called and held. The Committee may appoint a secretary (who need
not be a member of the Committee). No member of the Committee shall be liable
for any act or omission with respect to his service on the Committee if he acts
in good faith and in a manner he reasonably believes to be in or not opposed to
the best interests of the Company.
3. STOCK AVAILABLE FOR OPTIONS. There shall be available for options
under the Plan a total of 1,929,000 shares of Stock, subject to any adjustments
which may be made pursuant to Section 5(f) hereof. Shares of Stock used for
purposes of the Plan may be either authorized and unissued shares, or previously
issued shares held in the treasury of the Company, or both. Shares of Stock
covered by options which have terminated or expired prior to exercise shall be
available for further options hereunder. The maximum number of options which may
be granted to any person under the Plan during any fiscal year of the Company
shall not exceed 150,000 shares.
4. ELIGIBILITY. Options under the Plan may be granted to key employees
of the Company or any Affiliate, including officers or directors of the Company
or any Affiliate, and to consultants and other
individuals providing services to the Company or any Affiliate (each such
grantee, an "Optionee"). Options may be granted to eligible individuals whether
or not they hold or have held options previously granted under the Plan or
otherwise granted or assumed by the Company. In selecting individuals for
options, the Committee may take into consideration any factors it may deem
relevant, including its estimate of the individual's present and potential
contributions to the success of the Company and its Affiliates. Service as an
employee, director, officer or consultant of or to the Company or any Affiliate
shall be considered employment for purposes of the Plan (and the period of such
service shall be considered the period of employment for purposes of Section
5(d) of this Plan); provided, however, that incentive stock options may be
granted under the Plan only to an individual who is an "employee" (as such term
is used in Section 422 of the Code) of the Company or any Affiliate.
5. TERMS AND CONDITIONS OF OPTIONS. The Committee shall, in its
discretion, prescribe the terms and conditions of the options to be granted
hereunder, which terms and conditions need not be the same in each case, subject
to the following:
(a) OPTION PRICE. The price at which each share of Stock covered
by an option granted under the Plan may be purchased shall not be less than the
Market Value (as defined in Section 5(c) hereof) per share of Stock on the date
of grant of the option. The date of the grant of an option shall be the date
specified by the Committee in its grant of the option.
(b) OPTION PERIOD. The period for exercise of an option shall in
no event be more than ten years from the date of grant, or in the case of any
option intended to be an incentive stock option granted to an individual owning,
on the date of grant, stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any Parent or Subsidiary,
more than five years from the date of grant. Options may, in the discretion of
the Committee, be made exercisable in installments during the option period. Any
shares not purchased on any applicable installment date may be purchased
thereafter at any time before the expiration of the option period.
(c) EXERCISE OF OPTIONS. In order to exercise an option, the
Optionee shall deliver to the Company written notice specifying the number of
shares of Stock to be purchased, together with cash or a certified or bank
cashier's check payable to the order of the Company in the full amount of the
purchase price therefor; provided that, for the purpose of assisting an Optionee
to exercise an option, the Company may make loans to the Optionee or guarantee
loans made by third parties to the Optionee, on such terms and conditions as the
Board of Directors may authorize; and provided further that such purchase price
may be paid in shares of Stock owned by the Optionee having an aggregate Market
Value on the date of exercise equal to the aggregate purchase price, or in a
combination of cash and Stock. For purposes of the Plan, the Market Value per
share of Stock shall be the last sale price regular way on the date of
reference, or, in case no sale takes place on such date, the average of the
closing high bid and low asked prices regular way, in either case on the
principal national securities exchange on which the Stock is listed or admitted
to trading, or if the Stock is not listed or admitted to trading on any national
securities exchange, the last sale price reported on the National Market System
of the National Association of Securities Dealers Automated Quotation System
("NASDAQ") on such date, or the last sale price reported on the NASDAQ SmallCap
Market on such date, or the average of the closing high bid and low asked prices
in the over-the-counter market on such date, whichever is applicable, or if
there are no such prices reported on NASDAQ or in the over-the-counter market on
such date, as furnished to the Committee by any New York Stock Exchange member
selected from time to time by the Committee for such purpose. If there is no bid
or asked price reported on any such date, the Market Value shall be determined
by the Committee in accordance with the regulations promulgated under Section
2031 of the Code, or by any other appropriate method selected by the Committee.
If the Optionee so requests, shares of Stock purchased upon exercise of an
option may be issued in the name of the Optionee or another
2
person. An Optionee shall have none of the rights of a stockholder until the
shares of Stock are issued to him.
(d) EFFECT OF TERMINATION OF EMPLOYMENT. An option may not be
exercised after the Optionee has ceased to be in the employ of the Company or
any Affiliate, except in the following circumstances:
(i) If the Optionee's employment is terminated by action
of the Company or an Affiliate, or by reason of disability or retirement
under any retirement plan maintained by the Company or any Affiliate, the
option may be exercised by the Optionee within three months after such
termination, but only as to any shares exercisable on the date the
Optionee's employment so terminates;
(ii) In the event of the death of the Optionee during the
three month period after termination of employment covered by (i) above,
the person or persons to whom his rights are transferred by will or the
laws of descent and distribution shall have a period of one year from the
date of his death to exercise any options which were exercisable by the
Optionee at the time of his death; and
(iii) In the event of the death of the Optionee while
employed, the option shall thereupon become exercisable in full, and the
person or persons to whom the Optionee's rights are transferred by will or
the laws of descent and distribution shall have a period of one year from
the date of the Optionee's death to exercise such option. The provisions of
the foregoing sentence shall apply to any outstanding options which are
incentive stock options to the extent permitted by Section 422(d) of the
Code and such outstanding options in excess thereof shall, immediately upon
the occurrence of the event described in the preceding sentence, be treated
for all purposes of the Plan as nonstatutory stock options and shall be
immediately exercisable as such as provided in the foregoing sentence.
In no event shall any option be exercisable more than ten years from the
date of grant thereof. Nothing in the Plan or in any option granted pursuant to
the Plan (in the absence of an express provision to the contrary) shall confer
on any individual any right to continue in the employ of the Company or any
Affiliate or interfere in any way with the right of the Company or any Affiliate
to terminate his employment at any time.
(e) LIMITATION ON TRANSFERABILITY OF OPTIONS. Except as provided
in this Section 5(e), during the lifetime of an Optionee, options held by such
Optionee shall be exercisable only by him and no option shall be transferable
other than by will or the laws of descent and distribution. The Committee may,
in its discretion, provide that during the lifetime of an Optionee, options held
by such Optionee may be transferred to or for the benefit of a member of his
immediate family or to a charitable organization exempt from income tax under
Section 501(c)(3) of the Code. For purposes hereof, the term "immediate family"
of an Optionee shall mean such Optionee's spouse and children (both natural and
adoptive), and the direct lineal descendants of his children.
(f) ADJUSTMENTS FOR CHANGE IN STOCK SUBJECT TO PLAN. In the
event of a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure or shares of the Company, the Committee shall
make such adjustments, if any, as it deems appropriate in the number and kind of
shares subject to the Plan, in the number and kind of shares covered by
outstanding options, or in the option price per share, or both, and, in the case
of a merger, consolidation or other transaction pursuant to which the Company is
not the surviving corporation or pursuant to which the holders of outstanding
Stock shall
3
receive in exchange therefor shares of capital stock of the surviving
corporation or another corporation, the Committee may require an Optionee to
exchange options granted under the Plan for options issued by the surviving
corporation or such other corporation.
(g) ACCELERATION OF EXERCISABILITY OF OPTIONS UPON OCCURRENCE OF
CERTAIN EVENTS. The Committee may, in its discretion, provide in the case of any
option granted under the Plan that, in connection with any merger or
consolidation which results in the holders of the outstanding voting securities
of the Company (determined immediately prior to such merger or consolidation)
owning less than a majority of the outstanding voting securities of the
surviving corporation (determined immediately following such merger or
consolidation), or any sale or transfer by the Company of all or substantially
all its assets or any tender offer or exchange offer for or the acquisition,
directly or indirectly, by any person or group of all or a majority of the then
outstanding voting securities of the Company, such option shall become
exercisable in full or part, notwithstanding any other provision of the Plan or
of any outstanding options granted thereunder, on and after (i) the fifteenth
day prior to the effective date of such merger, consolidation, sale, transfer or
acquisition or (ii) the date of commencement of such tender offer or exchange
offer, as the case may be. The provisions of the foregoing sentence shall apply
to any outstanding options which are incentive stock options to the extent
permitted by Section 422(d) of the Code and such outstanding options in excess
thereof shall, immediately upon the occurrence of the event described in clause
(i) or (ii) of the foregoing sentence, be treated for all purposes of the plan
as nonstatutory stock options and shall be immediately exercisable as such as
provided in the foregoing sentence. Notwithstanding the foregoing, in no event
shall any option be exercisable after the date of termination of the exercise
period of such option specified in Sections 5(b) and 5(d).
(h) REGISTRATION, LISTING AND QUALIFICATION OF SHARES OF STOCK.
Each option shall be subject to the requirement that if at any time the Board of
Directors shall determine that the registration, listing or qualification of the
shares of Stock covered thereby upon any securities exchange or under any
federal or state law, or the consent or approval of any governmental regulatory
body is necessary or desirable as a condition of, or in connection with, the
granting of such option or the purchase of shares of Stock thereunder, no such
option may be exercised unless and until such registration, listing,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors. The Company may require
that any person exercising an option shall make such representations and
agreements and furnish such information as it deems appropriate to assure
compliance with the foregoing or any other applicable legal requirement.
(i) OTHER TERMS AND CONDITIONS. The Committee may impose such
other terms and conditions, not inconsistent with the terms hereof, on the grant
or exercise of options, as it deems advisable.
6. ADDITIONAL PROVISIONS APPLICABLE TO INCENTIVE STOCK OPTIONS. The
Committee may, in its discretion, grant options under the Plan to eligible
employees which constitute "incentive stock options" within the meaning of
Section 422 of the Code; provided, however, that (a) the aggregate Market Value
of the Stock with respect to which incentive stock options are exercisable for
the first time by the Optionee during any calendar year shall not exceed the
limitation set forth in Section 422(d) of the Code; (b) if the Optionee owns on
the date of grant securities possessing more than 10% of the total combined
voting power of all classes of securities of the Company or of any Affiliate,
the price per share shall not be less than 110% of the Market Value per share on
the date of grant and (c) Section 5(d)(ii) hereof shall not apply to any
incentive stock option.
7. AMENDMENT AND TERMINATION. Unless the Plan shall theretofore have
been terminated as hereinafter provided, the Plan shall terminate on, and no
option shall be granted hereunder after May 1, 2007; provided, however, that the
Board of Directors may at any time prior to that date terminate the
4
Plan. The Board of Directors may at any time amend the Plan or any outstanding
options. No termination or amendment of the Plan may, without the consent of an
Optionee, adversely affect the rights of such Optionee under any option held by
such Optionee.
8. STOCKHOLDER APPROVAL OF PLAN. The establishment of the Plan shall be
subject to approval by a majority of the votes cast thereon by the stockholders
of the Company at a meeting of stockholders duly called and held for such
purpose or by a method and in a degree that would be treated as adequate under
the applicable law of the Company's state of incorporation, and no option
granted hereunder shall be exercisable prior to such approval.
9. WITHHOLDING. It shall be a condition to the obligation of the
Company to issue shares of Stock upon exercise of an option, that the Optionee
(or any beneficiary, transferee or person entitled to act under Sections 5(d) or
5(e) hereof) pay to the Company, upon its demand, such amount as may be
requested by the Company for the purpose of satisfying any liability to withhold
federal, state or local income or other taxes. If the amount requested is not
paid, the Company may refuse to issue such shares of Stock.
10. ISSUANCE OF CERTIFICATES; LEGENDS. The Company may endorse such
legend or legends upon the certificates for shares of Stock issued upon the
exercise of an option granted hereunder and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as, in its absolute
discretion, it determines to be necessary or appropriate.
11. OTHER ACTIONS. Nothing contained in this Plan shall be construed to
limit the authority of the Company to exercise its corporate rights and powers,
including but not by way of limitation, the right of the Company to grant or
assume options for proper corporate purposes other than under the Plan with
respect to any employee or other person, firm, corporation or association.
5
- --------------------------------------------------------------------------------
ACCESS WORLDWIDE COMMUNICATIONS, INC.
PROXY - ANNUAL MEETING OF STOCKHOLDERS - JULY 2, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, a stockholder of ACCESS WORLDWIDE COMMUNICATIONS, INC., does
hereby appoint John Hamerski and Richard Lyew, or either of them, with full
power of substitution, the undersigned's proxies, to appear and vote at the
Annual Meeting of Stockholders to be held July 2, 2002, at 11:00 a.m., local
time, or at any adjournments thereof, upon such matters as may properly come
before the Meeting.
(Continued and to be Completed on Reverse Side.)
- --------------------------------------------------------------------------------
ACCESS WORLDWIDE COMMUNICATIONS, INC.
ANNUAL MEETING OF STOCKHOLDERS
JULY 2, 2002
PLEASE MARK, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
| Please Detach and Mail in the Envelope Provided |
A [X] Please mark your
votes as in this
example.
WITHHOLD
AUTHORITY
to vote for
FOR nominees listed
Nominees: Liam S. Donohue
1. Election of [ ] [ ] Lee H. Edelstein
Directors. Shawkat Raslan
Charles Henri Weil
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE
FOR AN INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
2. Approve an Amendment to the Company's 1997 Stock Option Plan to increase
the number of shares of common stock available for grant thereunder from
1,429,000 to 1,929,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of appointment of PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending December 31, 2002.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The Board of Directors recommends a vote "FOR" each Item.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS INDICATED. IF NO DIRECTION
IS INDICATED, SUCH SHARES WILL BE VOTED IN FAVOR OF THE ITEM(S) FOR WHICH NO
DIRECTION IS INDICATED AND AT THE DISCRETION OF THE PERSON NAMED IN THIS PROXY
AS TO OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Stockholder(s) Sign Here (L.S.) Dated
------------------------- ---------- -----
NOTE: Please sign exactly as your name appears on this proxy. If your stock is
jointly owned, both parties must sign. Fiduciaries and corporate and other
representatives should so indicate when signing and when more than one is named,
a majority should sign.
2