<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ending September 30, 1999
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-23489
ACCESS WORLDWIDE COMMUNICATIONS, INC.
----------------
(Exact Name of Registrant as specified in its Charter)
Delaware 52-1309227
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
33431
4950 Blue Lake Drive, Suite 300 Boca
Raton, Florida
(Zip Code)
(Address of Principal Executive
Offices)
Registrant's telephone number, including area code 1 (800) 522-3447
2200 Clarendon Blvd., 11th Floor
Arlington, Virginia 22201
(Former address, if changed since last year)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class. Name of each exchange on which registered.
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period as the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [_]
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
9,528,478 shares of Common Stock, $.01 par value, as of November 1, 1999
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<PAGE>
ACCESS WORLDWIDE COMMUNICATIONS, INC.
INDEX
Part I--Financial Information
<TABLE>
<S> <C>
Item 1. Financial Statements
Balance Sheets--September 30, 1999 and December 31, 1998............. 1
Statements of Operations--
Three Months Ended September 30, 1999 and September 30, 1998
Nine Months Ended September 30, 1999 and September 30, 1998.... 2
Statements of Cash Flows--Nine Months Ended September 30, 1999 and
September 30, 1998.................................................. 3
Notes to Financial Statements........................................ 4-6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 7-11
Part II--Other Information..............................................
Item 3. Default by the Company upon its Senior Securities................ 12
Item 6. Exhibits and Reports on Form 8-K................................. 12
Signature............................................................ 13
</TABLE>
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACCESS WORLDWIDE COMMUNICATIONS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
1999 December 31,
(Unaudited) 1998
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 1,470,534 $ 1,912,219
Accounts receivable, net of allowance for
doubtful accounts of $859,920 and $184,801,
respectively..................................... 20,028,723 20,046,495
Billings in excess of costs....................... 109,596 240,287
Other assets...................................... 2,373,399 1,715,035
------------ ------------
Total current assets............................ 23,982,252 23,914,036
Property and equipment, net....................... 11,744,408 8,565,188
Other assets...................................... 458,585 917,197
Intangible assets, net............................ 71,323,110 71,025,795
------------ ------------
Total assets.................................... $107,508,355 $104,422,216
============ ============
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses............. $ 5,219,615 $ 6,894,231
Accrued interest and other related party ex-
penses........................................... 102,819 8,516,293
Accrued salaries, wages and related benefits...... 1,770,827 2,007,827
Due to related parties............................ -- 42,303
Deferred revenue.................................. 3,061,915 1,998,486
Current portion of indebtedness................... 40,572,044 63,431
Current portion of indebtedness--related par-
ties............................................. 2,116,019 2,421,770
------------ ------------
Total current liabilities ...................... 52,843,239 21,944,341
Long-term portion of indebtedness.................. 30,718 25,609,170
Long-term portion of indebtedness--related par-
ties.............................................. 3,665,000 4,238,310
Mandatorily redeemable preferred stock, $.01 par
value: 8% cumulative as of February 10, 1998,
2,000,000 shares authorized, 40,000 and 65,000
shares issued and outstanding at September 30,
1999 and December 31, 1998, respectively.......... 4,000,000 6,500,000
------------ ------------
Total liabilities and mandatorily redeemable
preferred stock................................ 60,538,957 58,291,821
------------ ------------
Stockholders' equity:
Common stock, $.01 par value: voting: 20,000,000
shares authorized; 9,528,478 and 9,043,185
shares issued at September 30, 1999 and December
31, 1998, respectively; 9,528,478 and 9,027,730
shares outstanding at September 30, 1999 and
December 31, 1998, respectively.................. 95,285 90,432
Additional paid-in capital........................ 62,932,032 58,490,848
Accumulated deficit............................... (16,057,919) (12,392,763)
Less: cost of treasury stock, 15,455 shares at
December 31, 1998................................ -- (52,530)
Deferred compensation............................. -- (5,592)
------------ ------------
Total stockholders' equity ..................... 46,969,398 46,130,395
------------ ------------
Total liabilities, mandatorily redeemable pre-
ferred stock and stockholders' equity.......... $107,508,355 $104,422,216
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
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ACCESS WORLDWIDE COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------ ------------------------
September 30, September 30,
------------------------ ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues................ $16,761,284 $16,380,945 $60,198,102 $47,397,255
Cost of revenues (exclu-
sive of depreciation).. 11,090,108 8,652,020 37,745,963 26,252,491
----------- ----------- ----------- ----------- ---
Gross profit........... 5,671,176 7,728,925 22,452,139 21,144,764
Selling, general and
administrative expenses
(selling, general and
administrative expenses
paid to related parties
are $214,465 and
$237,256 and $592,404
and $732,596,
respectively).......... 7,576,558 5,507,422 21,339,514 14,925,420
Amortization expense.... 660,710 411,582 2,478,977 1,185,447
Unusual charge.......... 1,016,353 -- 1,526,351 --
----------- ----------- ----------- -----------
(Loss) income from op-
erations.............. (3,582,445) 1,809,921 (2,892,703) 5,033,897
Interest income......... 46,131 26,295 97,686 118,377
Interest (expense)
income-related
parties................ (48,562) 111,844 (184,455) (528,229)
Interest (expense)...... (1,088,621) (21,475) (2,260,925) (55,807)
----------- ----------- ----------- -----------
(Loss) income before
income tax (benefit)
expense and
extraordinary charge.. (4,673,497) 1,926,585 (5,240,397) 4,568,238
Income tax (benefit) ex-
pense.................. (1,423,523) 845,151 (1,676,927) 2,010,025
----------- ----------- ----------- -----------
(Loss) income before
extraordinary charge.. (3,249,974) 1,081,434 (3,563,470) 2,558,213
Extraordinary charge on
extinguishment of debt
(net of applicable
income taxes of
$82,195)............... -- -- (101,686) --
----------- ----------- ----------- -----------
Net (loss) income...... $(3,249,974) $ 1,081,434 $(3,665,156) $ 2,558,213
=========== =========== =========== ===========
(Loss) earnings per
share of common stock
Basic:
(Loss) income before
extraordinary
charge............... $ (0.34) $ 0.12 $ (0.38) $ 0.30
Extraordinary charge.. $ -- $ -- $ (0.01) $ --
Net (loss) income..... $ (0.34) $ 0.12 $ (0.39) $ 0.30
Diluted:
(Loss) income before
extraordinary
charge............... $ (0.34) $ 0.12 $ (0.38) $ 0.30
Extraordinary charge.. $ -- $ -- $ (0.01) $ --
Net (loss) income..... $ (0.34) $ 0.12 $ (0.39) $ 0.30
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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ACCESS WORLDWIDE COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
1999 1998
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income................................. $(3,665,156) $ 2,558,213
Adjustments to reconcile net (loss) income to net
cash used in operating activities:
Depreciation and amortization................... 4,177,031 2,046,331
Provision for doubtful accounts................. 916,805 (110,592)
Extraordinary charge, net of applicable income
taxes.......................................... 101,686 --
Income tax effect of extraordinary charge....... 82,195 --
Interest expense on mandatorily redeemable
preferred stock................................ -- 96,001
Changes in operating assets and liabilities,
excluding effects from acquisitions:
Accounts receivable............................. (899,033) (5,584,876)
Due to related parties and affiliates........... (194,909) (297,329)
Other assets.................................... (241,534) (1,388,257)
Accounts payable and accrued expenses........... (1,674,616) (334,572)
Accrued interest and related party expenses..... (8,413,476) (1,866,233)
Accrued salaries, wages and related benefits.... (237,000) 1,087,239
Deferred revenue................................ 1,063,429 174,983
----------- ------------
Net cash used in operating activities .......... (8,984,578) (3,619,092)
----------- ------------
Cash flows from investing activities:
Additions to property and equipment............... (4,877,297) (4,185,386)
Business acquisitions, net of cash acquired ...... (2,629,477) (726,241)
----------- ------------
Net cash used in investing activities........... (7,506,774) (4,911,627)
----------- ------------
Cash flows from financing activities:
Net borrowings (payments) under line of credit
facility......................................... 14,949,813 (4,030,000)
Proceeds from sale of common and preferred stock.. 4,498,567 45,335,050
Repurchase of mandatorily redeemable preferred
stock............................................ (2,500,000) --
Repayment of related party debt................... (879,061) (36,348,637)
Payments on capital lease......................... (19,652) (54,536)
Proceeds from notes payable....................... -- 5,500,000
Change in other assets related to deferred
issuance costs................................... -- (1,919,328)
Treasury stock purchases.......................... -- (362,500)
----------- ------------
Net cash provided by financing activities..... 16,049,667 8,120,049
----------- ------------
Net decrease in cash and cash equivalent...... (441,685) (410,670)
Cash and cash equivalents, beginning of period
............................................... 1,912,219 2,014,711
----------- ------------
Cash and cash equivalents, end of period........ $ 1,470,534 $ 1,604,041
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
ACCESS WORLDWIDE COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for a
complete set of financial statements. For further information, refer to the
financial statements and footnotes included in the Company's Annual Report on
Form 10-K.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts included in the financial statements.
In the opinion of management, all adjustments necessary for a fair
presentation of this interim financial information have been included. Such
adjustments consisted only of normal recurring items. The results of
operations for the three and nine months ended September 30, 1999 are not
necessarily indicative of the results to be expected for the year ending
December 31, 1999.
2. RECLASSIFICATIONS
Certain reclassifications have been made to the December 31, 1998 balance
sheet and the September 30, 1998 statement of operations and cash flows to
conform with the September 30, 1999 presentation.
3. UNUSUAL CHARGE
In the second quarter of 1999, the Company approved a Corporate Plan (the
"Plan") to strengthen revenue growth, improve performance and increase
stockholder value. The Plan included, among other things, the consolidation of
TMS Professional Markets Group ("TMS") and TelAc Teleservices Group ("TelAc").
As a result of the consolidation, an unusual charge of $62,000 was recorded
for severance accruals which were subsequently paid to approximately 22
employees. In addition, the Company engaged outside professionals to assist in
exploring strategic alternatives and incurred costs totaling $248,000. These
costs were recorded as an unusual charge and included legal and consulting
fees. Lastly, the Company determined that certain acquisitions which the
Company was evaluating would not be completed and, therefore, the Company
wrote-off costs of $200,000. These costs were recorded as an unusual charge
and included accounting, travel and legal expenses.
In the third quarter of 1999, the Company recorded an additional $867,000 in
severance accruals and $149,000 in costs relating to the restructuring of the
Company's Credit Facility.
4. EXTINGUISHMENT OF LINE OF CREDIT
On March 12, 1999, the Company received from a syndicate of financial
institutions (including Bank of America, formerly NationsBank, N.A.) (the
"Bank Group"), which was arranged by NationsBanc Montgomery Securities LLC,
(i) a revolving credit facility of $40,000,000, with a sublimit of $5,000,000
for the issuance of standby letters of credit and a sublimit of $5,000,000 for
swingline loans, and (ii) a term loan facility of $25,000,000 (collectively,
the "Credit Facility"). All of the foregoing bears interest at formula rates
ranging from either (i) the higher of (a) the Federal Funds Rate plus 0.50%
and (b) the prime lending rate charged by NationsBank, N.A. from time to time,
plus an applicable margin ranging from 0.0% to 1.0% or (ii) LIBOR, plus an
applicable margin ranging from 1.25% to 2.50%. The Company is required to pay
a commitment fee on the unused portions of the Credit Facility.
On March 12, 1999, $28,288,089 of the Credit Facility was used to extinguish
the Company's $30,000,000 committed line of credit obtained from NationsBank
on January 20, 1998. The Company recognized an extraordinary after-tax charge
of $101,686 or $0.01 per share as a result of the extinguishment of the
$30,000,000 committed line of credit obtained from NationsBank on January 20,
1998 and the related write-off of deferred financing fees. In addition,
$2,500,000 of the Credit Facility was used to redeem 25,000 shares of the
Company's mandatorily redeemable preferred stock, Series 1998, at a price of
$100 per share. No gain or loss was recorded on the redemption of shares.
4
<PAGE>
ACCESS WORLDWIDE COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The Credit Facility is collateralized by substantially all of the assets of
the Company and has certain financial covenants. Because of the operating
losses reported by the Company, the Company was not in compliance with certain
financial covenants of its Credit Facility at September 30, 1999. The Company
has been in ongoing negotiations with the Bank Group to restructure the Credit
Facility. Accordingly, the entire amount outstanding under the Credit Facility
remains classified as current portion of indebtedness as of September 30,
1999.
On September 28, 1999, the Company entered into a Forebearance Agreement
with the Bank Group. The Forebearance Agreement provides that the Bank Group
will (a) forebear exercising their right to stop making extensions of credit
and to accelerate the full outstanding balance on the Credit Facility as
allowed by the Credit Facility, (b) agree not to charge interest on the
outstanding balance on the Credit Facility at the full default rate
(approximately 11%), and (c) continue to make available to the Company draws
as provided under the Credit Facility. However, the Forebearance Agreement
limits the Company's ability to draw on its Credit Facility to $16 million
without prior consent of the Bank Group. The Forebearance Agreement expired on
November 8, 1999 and the Company is currently in negotiation with the Bank
Group to obtain an extension.
5. INCOME TAXES
The Company's effective tax rate of 32% in the first three quarters of 1999
differs from the Federal statutory rate due primarily to meals and
entertainment, officers' life insurance and non-deductible goodwill
amortization.
6. (LOSS) EARNINGS PER COMMON SHARE
(Loss) earnings per common share are calculated as follows:
<TABLE>
<CAPTION>
For the Three Months Ended
------------------------------------------------------------------------
September 30, 1999 September 30, 1998
------------------------------------ -----------------------------------
(Loss) Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic................... ($3,249,974) 9,528,478 ($0.34) $1,081,434 9,015,685 $0.12
Effect of dilutive
securities:
Stock options......... -- -- -- -- 37,346 --
Earnout contingency... -- -- -- -- 55,422 --
----------- --------- ------ ---------- --------- -----
(Loss) earnings per
share of common stock--
dilutive............... ($3,249,974) 9,528,478 ($0.34) $1,081,434 9,108,453 $0.12
=========== ========= ====== ========== ========= =====
<CAPTION>
For the Nine Months Ended
------------------------------------------------------------------------
September 30, 1999 September 30, 1998
------------------------------------ -----------------------------------
(Loss) Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic................... ($3,665,156) 9,361,562 ($0.39) $2,558,213 8,517,525 $0.30
Effect of dilutive
securities:
Stock options......... -- -- -- -- 76,308 --
Earnout contingency... -- -- -- -- 60,854 --
----------- --------- ------ ---------- --------- -----
(Loss) earnings per
share of common stock--
dilutive............... ($3,665,156) 9,361,562 ($0.39) $2,558,213 8,654,687 $0.30
=========== ========= ====== ========== ========= =====
</TABLE>
Since the effects of the stock options and earnout contingencies are anti-
dilutive for the three and nine month period ended September 30, 1999, these
effects have not been included in the calculation of dilutive EPS for 1999.
5
<PAGE>
ACCESS WORLDWIDE COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
7. SEGMENTS
In accordance with Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information, the
Company's reportable segments are strategic business units that offer different
products and services to different industries throughout the United States.
The table below presents information about net (losses) earnings and segments
used by the chief operating decision-maker of the Company:
For the three months ended September 30,
<TABLE>
<CAPTION>
Pharmaceutical Consumer Other Segment Total Reconciliation Total
-------------- ----------- ---------- ------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
1999
Revenues................ $ 9,219,641 $ 6,481,332 $1,060,311 $16,761,284 $ -- $16,761,284
Gross profit............ 3,681,089 1,405,968 584,119 5,671,176 -- 5,671,176
Losses before income
taxes.................. (1,707,561) (1,251,963) (5,562) (2,965,086) (1,708,411) (4,673,497)
Depreciation expense.... 417,339 234,082 12,691 664,112 10,864 674,976
Amortization expense.... 671,909 84,641 21,795 778,345 (117,635) 660,710
1998
Revenues................ $ 7,897,305 $ 7,636,452 $ 844,188 $16,377,945 $ 3,000 $16,380,945
Gross profit............ 3,945,296 3,344,031 436,598 7,725,925 3,000 7,728,925
Earnings (losses) before
income taxes........... 1,367,992 1,391,494 12,748 2,772,234 (845,649) 1,926,585
Depreciation expense.... 196,370 134,560 9,441 340,371 7,077 347,448
Amortization expense.... 262,071 84,642 20,991 367,704 43,878 411,582
For the nine months ended September 30,
<CAPTION>
Pharmaceutical Consumer Other Segment Total Reconciliation Total
-------------- ----------- ---------- ------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
1999
Revenues................ $33,669,044 $23,327,274 $3,201,784 $60,198,102 $ -- $60,198,102
Gross profit............ 14,318,775 6,570,892 1,562,472 22,452,139 -- 22,452,139
Earnings (losses) before
income taxes........... 33,994 (1,967,884) (208,346) (2,142,236) (3,098,161) (5,240,397)
Depreciation expense.... 857,034 772,112 37,773 1,666,919 31,135 1,698,054
Amortization expense.... 2,012,877 253,924 65,385 2,332,186 146,791 2,478,977
1998
Revenues................ $22,919,176 $21,956,520 $2,518,559 $47,394,255 $ 3,000 $47,397,255
Gross profit............ 10,806,426 8,950,577 1,384,761 21,141,764 3,000 21,144,764
Earnings (losses) before
income taxes........... 3,367,786 3,608,430 160,813 7,137,029 (2,568,791) 4,568,238
Depreciation expense.... 484,167 332,767 26,400 843,334 17,550 860,884
Amortization expense.... 760,086 254,102 62,973 1,077,161 108,286 1,185,447
</TABLE>
6
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Three Months Ended September 30, 1999 Compared to the Three Months Ended
September 30, 1998
Revenues for the Company increased $0.4 million, or 2.4%, to $16.8 million
for the three months ended September 30, 1999, compared to $16.4 million for
the three months ended September 30, 1998. Revenues for the Pharmaceutical
Segment increased $1.3 million, or 16.5%, to $9.2 million for the three months
ended September 30, 1999, compared to $7.9 million for the three months ended
September 30, 1998. In October of 1998, the Company acquired AM Medica
Communications, Inc. ("AM Medica"), a medical education services company. AM
Medica contributed $3 million in revenues for the three months ended September
30, 1999. These revenues were partially offset by a decrease of $1.7 million
in pharmaceutical teleservices revenues, which was primarily caused by the
sale of computer equipment for $1 million in 1998, which did not occur in
1999. The remaining decrease was due to a restructuring of the sales force
that supports the Company's pharmaceutical teleservices efforts, and some
performance bonuses earned in 1998, that did not occur in 1999. Revenues for
the Consumer Segment decreased $1.1 million, or 14.5%, to $6.5 million for the
three months ended September 30, 1999, compared to $7.6 million for the three
months ended September 30, 1998. Approximately, $1.8 million of the decrease
was primarily attributed to an overall reduction in production hours provided
by one of the Company's major clients and the renegotiation of contract terms
with the same client. The decrease was offset by an increase in revenues of
$0.7 million from new and existing clients.
Cost of revenues for the Company increased $2.4 million, or 27.6%, to $11.1
million for the three months ended September 30, 1999, compared to $8.7
million for the three months ended September 30, 1998. Cost of revenues as a
percentage of revenues increased to 66.1% for the three months ended September
30, 1999, from 53% for the three months ended September 30, 1998. Cost of
revenues as a percentage of revenues for the Pharmaceutical Segment increased
to 59.8% for the three months ended September 30, 1999, from 50.6% for the
three months ended September 30, 1998. Excluding AM Medica, the cost of
revenues as a percentage of revenues for the Pharmaceutical Segment increased
slightly to 51.6% for the three months ended September 30, 1999. Cost of
revenues as a percentage of revenues for the Consumer Segment increased to
78.5% for the three months ended September 30, 1999, compared to 56.6% for the
three months ended September 30, 1998. The increase in cost of revenues as a
percentage of revenues was primarily attributed to higher personnel turnover
which caused higher recruiting, training and floor management costs.
Management believes that another contributor to the increase was certain
inefficiencies which occurred during the expansion of the Consumer Segment in
late 1998 and early 1999. Management has made several changes to correct these
inefficiencies.
Selling, general and administrative expenses (including unusual charge) for
the Company increased $3.1 million, or 56.4%, to $8.6 million for the three
months ended September 30, 1999, compared to $5.5 million for the three months
ended September 30, 1998. Selling, general and administrative expenses
(including unusual charge) as a percentage of revenues for the Company
increased to 51.2% for the three months ended September 30, 1999, compared to
33.5% for the three months ended September 30, 1998. Selling, general and
administrative expenses as a percentage of revenues for the Pharmaceutical
Segment increased to 39.1% for the three months ended September 30, 1999,
compared to 29.1% for the three months ended September 30, 1998. Excluding AM
Medica, selling, general and administrative expenses as a percentage of
revenues increased to 51.6% for the three months ended September 30, 1999. The
increase was primarily due to an increase in reserves for bad debts resulting
from contract disputes and an increase in headcount to support customer
service. Selling, general and administrative expenses as a percentage of
revenues for the Consumer Segment increased to 40% for the three months ended
September 30, 1999, compared to 25% for the three months ended September 30,
1998. The increase was primarily attributed to additional personnel and higher
depreciation and leasing costs associated with the Plano, Texas and Rosslyn,
Virginia expansions.
7
<PAGE>
Corporate expenses (including unusual charge) for the Company increased $1.0
million, or 111.1%, to $1.9 million for the three months ended September 30,
1999, compared to $0.9 million for the three months ended September 30, 1998.
Corporate expenses (including unusual charge) as a percentage of revenues for
the Company increased to 11.3% for the three months ended September 30, 1999,
compared to 5.5% for the three months ended September 30, 1998. The increase
was primarily attributed to $1 million in unusual charges which consisted of
$867,000 in severance costs and $149,000 in costs associated with
restructuring the Company's Credit Facility. Excluding the unusual charges
noted above, corporate expenses as a percentage of revenues for the Company
decreased slightly to 5.4%.
Amortization expense for the Company increased $0.3 million, or 75%, to $0.7
million for the three months ended September 30, 1999, compared to $0.4
million for the three months ended September 30, 1998. The increase was
primarily attributed to the amortization of goodwill related to the
acquisition of AM Medica.
Net interest expense for the Company increased $1.2 million, to $1.1 million
for the three months ended September 30, 1999, compared to ($0.1) million for
the three months ended September 30, 1998. The increase was primarily
attributed to draws made on the Credit Facility, to acquire AM Medica in
October of 1998 and to make required payments of contingent considerations
earned in 1998. In addition, interest expense increased due to the Company's
existing default on three of its loan covenants contained in its Credit
Facility agreement. The Company's interest rate increased to approximately
9.5% in the third quarter of 1999, from approximately 6.3% in the third
quarter of 1998.
Nine Months Ended September 30, 1999 Compared to the Nine Months Ended
September 30, 1998
Revenues for the Company increased $12.8 million, or 27%, to $60.2 million
for the nine months ended September 30, 1999, compared to $47.4 million for
the nine months ended September 30, 1998. Revenues for the Pharmaceutical
Segment increased $10.8 million, or 47.2%, to $33.7 million for the nine
months ended September 30, 1999, compared to $22.9 million for the nine months
ended September 30, 1998. In October 1998, the Company acquired AM Medica
Communications, Inc., a medical education services company. AM Medica
contributed revenues of $13.5 million for the nine months ended September 30,
1999. These revenues were partially offset by a decrease of $2.7 million in
pharmaceutical telemarketing services revenues, which was primarily caused by
the sale of computer equipment for $1 million in 1998, which did not occur in
1999. The remaining decrease was attributed to a large client opening its own
call center, a restructuring of the sales force that supports the Company's
pharmaceutical teleservices efforts and some performance bonuses earned in
1998 that did not occur in 1999. Revenues for the Consumer Segment increased
$1.3 million, or 5.9%, to $23.3 million for the nine months ended September
30, 1999, compared to $22 million for the nine months ended September 30,
1998. The increase was primarily attributed to the addition of several new
accounts.
Cost of revenues for the Company increased $11.4 million, or 43.3%, to $37.7
million for the nine months ended September 30, 1999, compared to $26.3
million for the nine months ended September 30, 1998. Cost of revenues as a
percentage of revenues increased to 62.6% for the nine months ended September
30, 1999, from 55.5% for the nine months ended September 30, 1998. Cost of
revenues as a percentage of revenues for the Pharmaceutical Segment increased
to 57.6% for the nine months ended September 30, 1999, compared to 52.8% for
the nine months ended September 30, 1998. Excluding AM Medica, the cost of
revenues as a percentage of revenues for the Pharmaceutical Segment increased
slightly to 53% for the nine months ended September 30, 1999. Cost of revenues
as a percentage of revenues for the Consumer Segment increased to 72.1% for
the nine months ended September 30, 1999, compared to 59.1% for the nine
months ended September 30, 1998. The increase was primarily attributed to
costs incurred relative to the realignment of the Boca Raton operation and
higher personnel turnover which caused higher recruiting, training, overtime
and floor management costs.
8
<PAGE>
Management believes that another contributor to the increase was certain
inefficiencies which occurred during the expansion of the Consumer Segment in
late 1998 and early 1999. Management has made several changes to correct these
inefficiencies.
Selling, general and administrative expenses (including unusual charge) for
the Company increased $7.9 million, or 52.7%, to $22.9 million for the nine
months ended September 30, 1999, compared to $15.0 million for the nine months
ended September 30, 1998. Selling, general and administrative expenses
(including unusual charge) as a percentage of revenues for the Company
increased to 38% for the nine months ended September 30, 1999, compared to
31.6% for the nine months ended September 30, 1998. Selling, general, and
administrative expenses (including unusual charge) as a percentage of revenues
for the Pharmaceutical Segment decreased to 26.7% for the nine months ended
September 30, 1999, compared to 28.4% for the nine months ended September 30,
1998. Excluding AM Medica, selling, general and administrative expenses as a
percentage of revenue increased to 37.6% for the nine months ended September
30, 1999. The increase was primarily attributable to an increase in reserves
for bad debts resulting from contract disputes and an increase in head count
to support customer services, sales and information technology. Selling,
general, and administrative expenses (including unusual charge) as a
percentage of revenues for the Consumer Segment increased to 35.6% for the
nine months ended September 30, 1999, compared to 23.2% for the nine months
ended September 30, 1998. The increase was primarily attributed to additional
personnel and higher depreciation and leasing costs associated with the Plano,
Texas and Rosslyn, Virginia expansions.
Corporate expenses (including unusual charge) for the Company increased $1.8
million, or 81.8%, to $4.0 million for the nine months ended September 30,
1999, compared to $2.2 million for the nine months ended September 30, 1998.
Corporate expenses (including unusual charge) as a percentage of revenues of
the Company increased to 6.6% for the nine months ended September 30, 1999,
compared to 4.6% for the nine months ended September 30, 1998. In the second
quarter of 1999, the Company engaged outside professionals to assist in
exploring strategic alternatives and incurred costs totaling $248,000 and
determined that certain acquisitions, which the Company was evaluating, would
not be completed and therefore wrote-off costs of $200,000. In the third
quarter of 1999, the Company recorded an additional $1 million of unusual
charges which consisted of $867,000 in severance costs and $149,000 in costs
associated with the restructuring of the Company's Credit Facility. Excluding
the unusual charges noted above, the corporate expenses as a percentage of
revenues for the Company decreased slightly to 4.3%.
Amortization expense for the Company increased $1.3 million, or 108%, to
$2.5 million for the nine months ended September 30, 1999, compared to $1.2
million for the nine months ended September 30, 1998. The increase was
primarily attributable to the amortization of goodwill related to the
acquisition of AM Medica and the amortization of goodwill on payments of
contingent consideration earned in 1998.
Net interest expense for the Company increased $1.8 million, to $2.3 million
for the nine months ended September 30, 1999, compared to $0.5 million for the
nine months ended September 30, 1998. The increase was primarily attributed to
draws made on the Credit Facility to acquire AM Medica in October of 1998 and
to make required payments of contingent consideration earned in 1998. In
addition, interest expense increased due to the Company's existing default on
three loan covenants contained in the Credit Facility agreement. The Company's
interest rate increased, as of June 1999, from 6.7% to 9.5%.
Liquidity and Capital Resources
The Company's working capital decreased $30.8 million, to ($28.8) million at
September 30, 1999, compared to $2.0 million at December 31, 1998. The
decrease in working capital is primarily attributed to the reclassification of
the Company's long-term portion of indebtedness to current portion of
indebtedness. Because of the operating losses reported by the Company, the
Company was not in compliance with certain financial covenants of the Credit
Facility. The Company has been in ongoing negotiations with the Bank Group,
that provided the Credit Facility, to restructure the Credit Facility. On
September 28, 1999, the Company entered into a Forebearance Agreement with the
Bank Group. The Forebearance Agreement provides that the Bank
9
<PAGE>
Group will (a) forebear exercising their right to stop making extensions of
credit and to accelerate the full outstanding balance on the Credit Facility
as allowed by the Credit Facility, (b) agree not to charge interest on the
outstanding balance on the Credit Facility at the full default rate
(approximately 11%), and (c) continue to make available to the Company draws
as provided under the Credit Facility. However, the Forebearance Agreement
limits the Company's ability to draw on its Credit Facility to $16 million
without prior consent of the Bank Group. The Forebearance Agreement expired on
November 8, 1999 and the Company is currently in negotiation with the Bank
Group to obtain an extension.
If the negotiations with the Bank Group are not successful, the Company will
need to find other sources of financing to continue to operate. The Company is
exploring further options to ensure access to adequate working capital. Since
April 1999, the Company has not made any additional draws on the Credit
Facility and has been current on all its payments on the Credit Facility. As
of September 30, 1999, the Company had cash and cash equivalents of $1.5
million, compared to $1.9 million as of December 31, 1998.
Net cash used in operating activities was $9 million for the three quarters
ended September 30, 1999, compared to $3.6 million for the three quarters
ended September 30, 1998. The increase in cash used by operating activities
was primarily attributed to payments of contingent consideration earned in
1998 and a payment of interest on the Credit Facility.
The net cash used in investing activities was $7.5 million for the three
quarters ended September 30, 1999, compared to $4.9 million for the three
quarters ended September 30, 1998. The increase in cash used in investing
activities was primarily attributed to payments of contingent consideration
earned in 1998.
Net cash provided by financing activities was $16 million for the three
quarters ended September 30, 1999, compared to $8.1 million for the three
quarters ended September 30, 1998. Cash provided by financing activities
consisted of draws totalling $19.4 million as a result of proceeds from the
issuance of common stock and draws made on the Credit Facility to finance
payments of contingent consideration earned in 1998 and fund operations. This
was offset primarily by the repayments made on related party notes of $0.9
million and the redemption of 25,000 shares of the Company's mandatorily
redeemable preferred stock, Series 1998, at an aggregate price of $2.5
million. In addition, during 1998, the proceeds received from the initial
public offering were used to retire the Credit Facility and long term related
party debt.
Year 2000 Issue
The Company is dependent on computer systems and applications to conduct its
business. Some computer systems and applications include programming code in
which calendar year data is abbreviated to only two digits. As a result of
this design decision, some of these systems could fail to operate or fail to
produce correct results if "00" is interpreted to mean 1900, rather than 2000.
These problems are commonly referred to as the "Millennium Bug" or "Year 2000
Problem."
The Company has developed and has executed a comprehensive risk-based plan
designed to make its computer systems, applications and facilities Year 2000
ready. The plan covered four stages including (i) identification, (ii)
assessment, (iii) remediation, and (iv) testing.
The Company has completed the process of identifying and assessing all of
the major computers, software applications, and related equipment used in
connection with its internal operations that must be modified, upgraded, or
replaced to minimize the possibility of a material disruption to its business.
The Company has remediated and tested its critical systems that have been
identified as adversely affected.
In addition to computers and related systems, the operation of office
equipment, such as fax machines, photocopiers, telephone switches, security
systems, elevators and other common devices may be affected by the Year 2000
Problem. The Company continues to assess the potential effects of, and cost of
remediating, the Year 2000 Problem on its office equipment.
The Company has incurred costs to date of $261,000 and estimates the total
cost of any required modifications, upgrades, or replacements of its internal
systems to be $300,000. While the estimated cost of these efforts is not
expected to be material to the Company's financial position or any year's
results of operations,
10
<PAGE>
there can be no assurance to this effect. The estimated cost will be monitored
and will be revised as additional information becomes available.
The Company is continuing its communication with its major clients and
suppliers to determine the extent to which the Company's interface systems are
vulnerable to those third parties' failure to remediate their own Year 2000
Problems. There can be no assurance that these clients and suppliers will
resolve any or all Year 2000 Problems with their systems before the occurrence
of a material disruption to the business of the Company. Any failure of these
clients and suppliers to resolve Year 2000 Problems with their systems in a
timely manner could have a material adverse effect on the Company's business,
financial condition, and results of operations.
The Company has identified and resolved all known Year 2000 Problems that
could materially adversely affect its business operations. However, since the
number of devices that could be affected and the interactions among these
devices are numerous, management believes that it is not possible to determine
with complete certainty that all Year 2000 Problems affecting the Company have
been identified or corrected.
The Company is developing contingency plans to be implemented in the event
that a critical internal system should fail. Depending on the systems
affected, these plans could include accelerated replacement of affected
equipment or software, short to medium-term use of backup equipment and
software, increased work hours for Company personnel or use of contract
personnel to correct on an accelerated schedule any Year 2000 Problems that
arise or to provide manual workarounds for information systems, and similar
approaches. If the Company is required to implement any of these contingency
plans, it could have a material adverse effect on the Company's financial
condition and results of operations.
The discussion of the Company's efforts, and management's expectations,
related to Year 2000 compliance are forward-looking statements. The Company's
ability to achieve Year 2000 compliance and the level of incremental costs
associated therewith, could be adversely impacted by, among other things, the
availability and cost of programming and testing resources, vendors' ability
to modify proprietary software, and unanticipated problems identified in the
ongoing compliance review.
Risk Factors That May Affect Future Results
This report contains certain forward-looking statements which are based on
management's current views and assumptions. These statements are qualified by
reference to "Forward-Looking Statements" in the Company's Annual Report on
Form 10-K, as well as other SEC filings which list important factors that
could cause actual results to differ materially from those discussed in this
report.
11
<PAGE>
PART II OTHER INFORMATION
Item 3. Defaults by the Company upon its Senior Securities
As of September 30, 1999, the Company was in default of sections 7.9(a), (b)
and (d) of the Credit Facility's financial covenants; namely the Consolidated
Leverage Ratio, the Consolidated Fixed Charge Coverage Ratio and the
Consolidated Senior Funded Debt to Adjusted EBITA Ratio, respectively. See
Note 4 to the Notes to the Financial Statements elsewhere in this report.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.3 Employment Agreement between the Company and Michael Dinkins
10.4 Severance Arrangement/Closing Inducement between the Company and Richard Lyew
10.5 Severance Arrangement/Closing Inducement between the Company and Jack Hamerski
10.6 Severance Arrangement/Closing Inducement between the Company and Mary Sanchez
10.7 Severance Arrangement/Closing Inducement between the Company and Andrea Greenan
</TABLE>
27 Financial Data Schedule
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ACCESS WORLDWIDE COMMUNICATIONS,
INC.
Date:
/s/ Michael Dinkins
By: ________________________________
Michael Dinkins, President and
Chief Executive Officer
(principal executive officer)
Date:
/s/ Richard Lyew
By: ________________________________
Richard Lyew, Vice President and
Corporate Controller (principal
financial and accounting officer)
13
<PAGE>
Exhibit 10.3
Access Worldwide Communications, Inc.
Suite 300
4950 Blue Lake Drive
Boca Raton, Florida 33431
As of July 29, 1999
Mr. Michael Dinkins
1714 Strine Drive
McLean, Virginia 22101
Dear Michael:
This letter sets forth our agreement on matters relating to your
employment with Access Worldwide Communications, Inc., a Delaware corporation
(the "Company"), as its President and Chief Executive Officer and your service
as a Director of the Company.
1. Employment; Term. You (the "CEO") shall be employed by the
Company as President and Chief Executive Officer of the Company for an initial
term of four (4) years, commencing on July 29, 1999 (the "Effective Date"),
unless sooner terminated by you or the Company as provided herein. This
Agreement shall be automatically renewed for successive one (1) year terms upon
the expiration of the initial term of this Agreement, or any renewal term of
this Agreement, unless either the Company or the CEO gives the other party at
least six (6) months written notice prior to the scheduled expiration of the
initial term of this Agreement, or any renewal term of this Agreement, that such
party does not intend to renew the Agreement. As President and Chief Executive
Officer of the Company, the CEO shall have such responsibilities and perform
such duties as are set forth in Exhibit A hereto and such other duties and
responsibilities appropriate to such position as shall be assigned to the CEO by
the Board of Directors of the Company. The CEO shall report to the Board of
Directors of the Company. The CEO shall devote all his working time and efforts
to the business of the Company; provided, however, that it is agreed that the
CEO may continue to serve on the Board of Directors of LandAmerica and, in the
event that the CEO is not re-elected to serve on the Board of Directors of
LandAmerica, he may serve on the Board of Directors of another company. The CEO
represents that the CEO is not bound by the provisions of any non-competition,
confidentiality or similar agreement not heretofore disclosed by the CEO in
writing to the Company. It is our intention that your service as Director of the
Company will commence at the first meeting of the Board of Directors after the
Effective Date. In addition to your responsibilities as President and Chief
Executive Officer hereunder, you agree to continue to carry out the functions of
Chief Financial Officer of the Company until such time as the cash flow
situation of the Company has improved and the Company has clarified its plans
with respect to a Sale (as hereinafter defined).
<PAGE>
2
2. Compensation.
(i) The CEO's salary shall be at a rate per annum of $300,000,
payable in accordance with the normal payroll practices of the Company (the
"Base Salary"). In addition, the CEO may be entitled to receive merit increases
in salary during the term hereof in such amounts and at such times as shall be
determined by the Compensation Committee of the Board of Directors of the
Company in its sole discretion. In addition to the CEO's salary, the CEO shall
be entitled to payments pursuant to an annual bonus program. Under the bonus
program, the CEO shall have an annual bonus (the "Bonus") opportunity of up to
fifty (50%) percent of the Base Salary at the then current rate in effect. The
bonus program shall be apportioned as follows: (a) for the year ending December
31, 1999 one hundred percent (100%) based upon the achievement of quantitative
goals with respect to third and fourth quarter operating income of the Company,
excluding restructuring charges, deferred acquisition write-offs and special
charges in connection with a potential Sale and (b) for the years ending
December 31, 2000 and beyond (i) ninety percent (90%) based upon the achievement
of quantitative goals and (ii) ten percent (10%) based upon the achievement of
qualitative goals, in each case, to be mutually agreed upon between the CEO and
the Compensation Committee of the Board of Directors. In the event that the
Company exceeds the net income target agreed to between the CEO and the
Compensation Committee of the Company by at least 25% for the year ending
December 31, 2000, the CEO's bonus opportunity shall be equal to one hundred
percent (100%) of the Base Salary at the then current rate in effect. Any
amounts by which net income targets for the year ending December 31, 2000 exceed
the agreed upon target but are less than 25% above the target shall result in
the CEO's Bonus opportunity being appropriately prorated between 50% and 100% of
Base Salary. Bonus goals for years after December 31, 2000 shall be mutually
agreed upon by the CEO and the Compensation Committee of the Board of Directors
prior to January 31 of the applicable year.
(ii) Except as otherwise provided herein, the CEO must continue in
the employment of the Company through the end of the applicable year in order to
be entitled to a Bonus for such year. The Bonus award shall be paid in cash as
soon as possible as determined by the CEO following the completion of the annual
audit of the Company by the Company's independent accountants for the applicable
year and approval of the Bonus amount by the Compensation Committee of the Board
of Directors.
3. Closing Payment.
(i) In addition to the Bonus set forth in Section 2 above, the CEO
shall be entitled to receive and the Company will pay the CEO, in consideration
of the CEO's continued employment with the Company, and for the services the CEO
has provided the Company and may provide the Company in connection with a Change
of Control (as hereinafter defined), upon a Change in Control, a cash payment
(the "Closing Payment") at the closing of such transaction, subject to the
following terms and conditions:
(a) No Closing Payment shall be due and payable unless (i) the
gross price per share obtained by the Company in connection with the Change in
Control (the "Price Per Share") is equal to or in excess of $8.00 and (ii) the
CEO is employed by the Company on the date of closing.
<PAGE>
3
(b) In the event that the conditions set forth in (a) above
shall be satisfied, the Closing Payment shall be made on the following basis:
(1) If the Price Per share is equal to $8.00, the Closing
Payment shall be $250,000;
(2) If the Price Per Share is equal to or greater than
$12.00, the Closing Payment shall be $500,000; and
(3) If the Price Per Share is greater than $8.00 but less
than $12.00, the Closing Payment shall be accordingly prorated
between $250,000 and $500,000.
(ii) For purposes of this Agreement, a "Change of Control" shall be
deemed to occur (a) on the effective date of 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 (b) on the
date of closing of 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.
(iii) Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur if the Company either merges or consolidates with or into
another company or sells or disposes of all or substantially all of its assets
to another company, if such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least a majority of the combined voting power of all
outstanding classes of securities of the Company resulting from such merger or
consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition. It is specifically
understood and agreed that so long as a transaction is described in clause (a)
or clause (b) of paragraph (ii) above it will be considered a "Change in
Control" notwithstanding the name given to such transaction including if the
transaction is named or referred to as a "reorganization."
4. Options. In addition to the options to purchase 160,000 shares of
common stock, $.01 par value, of the Company ("Company Common Stock") which the
CEO currently owns (the "Existing Options"), the CEO shall be granted on August
3, 1999, options to purchase an additional 200,000 shares of Company Common
Stock (the "New Options" and together with the Existing Options, the "Options")
pursuant to the Company's 1997 Stock Option Plan (the "Plan"). The New Options
shall vest ratably in 20% increments over a five-year period commencing on the
first anniversary of the date of grant. The exercise price for the New Options
shall be the closing price of the Company Common Stock on the NASDAQ National
Market on the date of grant. The New Options, as with the Existing Options are
exercisable by the CEO any time within ten (10) years from the date of grant
thereof; provided, however, that
<PAGE>
4
the Options may not be exercised after the CEO has ceased to be in the employ of
the Company, except in the following circumstances:
(i) If the CEO's employment is terminated by action of the
Company, or by reason of disability or retirement under any
retirement plan maintained by the Company or is terminated by the
CEO in accordance with a CEO Termination (as hereinafter defined)
the Options may be exercised by the CEO within three months after
such termination, but only as to any shares exercisable on the date
the CEO's employment so terminates;
(ii) In the event of the death of the CEO 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 CEO at the time of his death; and
(iii) In the event of the death of the CEO while employed,
the Options shall thereupon become exercisable in full, and the
person or persons to whom the CEO'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 CEO's death to exercise such Options.
In accordance with the Plan, in the event of a Change of Control,
the Options shall become exercisable in full.
5. Employee Benefits. The CEO shall be entitled to participate in
the employee benefit plans and programs offered by the Company from time to time
applicable to executives of the Company, including group insurance plans,
subject to the provisions of such plans and programs from time to time in
effect. During the term hereof, the level of coverage that the CEO currently
receives under the Company's employee benefit plans shall be maintained at their
current levels; provided, however, in the event that the CEO's employee benefits
are provided through the Company's TMS division and are not consistent with the
CEO's current benefits, the Company shall provide the CEO with an allowance
necessary to obtain benefits to supplement the TMS benefits so as to provide the
CEO with benefits commensurate with those he currently receives from the
Company. The CEO shall be initially entitled to four weeks vacation per year, to
accrue and to be taken in accordance with Company policy. The CEO shall be
entitled to five weeks vacation per year commencing August 1, 2002.
6. Relocation.
(i) In the event that the CEO, in carrying out his duties hereunder,
determines that he shall need to relocate his personal residence to the Boca
Raton, Florida area (a "Relocation"), the Company shall reimburse the CEO for
the following moving expenses: (a) a brokerage commission at the standard rate
prevailing in McLean, Virginia incurred by the CEO in connection with the sale
of the CEO's current residence, (b) the travel and lodging expenses associated
with five (5) trips to the Boca Raton area incurred by the CEO's spouse to look
for a new personal residence, (c) mortgage points as customary in the Boca
Raton, Florida area paid
<PAGE>
5
by the CEO in connection with the purchase of a new personal residence resulting
from such Relocation, (d) the expenses associated with transportation of the
CEO's personal belongings from the CEO's current residence to the CEO's new
personal residence, (e) any closing costs incurred in connection with the
purchase of the CEO's personal residence resulting from such Relocation, and (f)
any other identifiable miscellaneous Relocation costs not to exceed $5,000 upon
the presentation of proper accounts therefor.
(ii) During the term of this Agreement and prior to a Relocation,
the Company shall reimburse the CEO for the reasonable and necessary
out-of-pocket costs incurred by the CEO in connection with his living
accommodations in the vicinity of his Boca Raton principal office. In the event
that the CEO determines that he should rent an apartment, the Company shall
provide the CEO with an apartment for the CEO in the vicinity of his principal
office and shall reimburse him for his reasonable rental expenses. The Company
shall reimburse the CEO for all of the expenses set forth in this Section 6 upon
the presentation of proper receipts therefor in accordance with the Company's
policies.
7. Confidential Information. The CEO agrees that the CEO shall not,
at any time, use any Confidential Information (as hereinafter defined) except in
the regular course of the CEO's employment hereunder, or disclose any
Confidential Information to any person or entity other than an employee or
professional adviser of the Company. "Confidential Information" means any
information of a confidential or proprietary nature relating to the business of
the Company and its clients; provided, however, that Confidential Information
shall not include information which (i) becomes generally available to the
public other than as a result of an unauthorized disclosure by the CEO, (ii) was
available to the CEO on a non-confidential basis prior to the CEO's employment
with the Company or (iii) becomes available to the CEO on a non-confidential
basis from a source other than the Company or any of its affiliates, provided
that such source is not bound by a confidentiality agreement with the Company.
8. Non-Competition Agreement.
(i) The CEO agrees that the CEO shall not, during the period of the
CEO's employment, and for a period of two (2) years following termination of the
CEO's employment, whether by the CEO or by the Company, (a) engage, whether as
principal, agent, investor (except as an owner of less than a 5% interest in a
publicly held company), distributor, representative, stockholder, employee,
consultant, volunteer or otherwise, with or without pay, in any activity or
business venture anywhere in the United States which is directly competitive
with any business of the Company or any other member of the Company Group (as
hereinafter defined) including, but not limited to, providing outsourced sales,
marketing and medical education services to clients in the pharmaceutical,
telecommunications, financial services and consumer products industries, and
related activities, (b) solicit or entice or endeavor to solicit or entice away
from the
<PAGE>
6
Company any person who was or is at the time of solicitation an employee of the
Company, either for the CEO's own account or for any individual, firm or
corporation, whether or not such person would commit any breach of his contract
of employment by reason of leaving the service of the Company, (c) employ,
directly or indirectly, any person who was an employee of the Company at the
date of termination of the CEO's employment or within six (6) months prior to
such date of termination (unless the CEO did not participate or have any role in
such employment), or (d) solicit or entice or endeavor to solicit or entice away
from the Company (1) any client or customer of the Company or (2) any
corporation, individual or firm with which the Company is, or has been during
the last six (6) months of the CEO's employment with the Company, in active
negotiations in connection with becoming a client, customer, acquisition
candidate, vendor, supplier or joint venture partner of the Company, either for
the CEO's own account or for any individual, firm or corporation.
(ii) For purposes hereof, "Company Group" shall mean, collectively,
the Company and its subsidiaries, affiliates and parent entities operating from
time to time in the same lines of business for which the CEO has been
responsible.
9. Injunctive Relief. In the event of a breach or threatened breach
by the CEO of any of the provisions of Sections 7 or 8 of this Agreement, the
CEO hereby consents and agrees that the Company shall be entitled to an
injunction or similar equitable relief from any court of competent jurisdiction
restraining the CEO from committing or continuing any such breach or threatened
breach or granting specific performance of any act required to be performed by
the CEO under any of such provisions, without the necessity of showing any
actual damage or that money damages would not afford an adequate remedy and
without the necessity of posting any bond or other security. Nothing herein
shall be construed as prohibiting the Company from pursuing any other remedies
at law or in equity which it may have.
10. Termination.
(i) Upon the CEO's death, the Company will pay the CEO's estate or
other legal representative (a) the CEO's salary accrued to the date of death and
not theretofore paid to the CEO and (b) 100% of the CEO's bonus opportunity for
the year of death, prorated through the date of death. The rights and benefits
of the CEO's estate or other legal representative under the benefit plans and
programs of the Company shall be determined by reference to the provisions of
such plans and programs of the Company at the time in effect. The estate or
other legal representative of the CEO and the Company shall have no further
rights or obligations under this Agreement.
(ii) If the CEO shall become incapacitated by reason of sickness,
accident or other physical or mental disability and shall for a period of one
hundred twenty (120) consecutive days be unable to materially perform his duties
hereunder, with reasonable accommodation, the employment of the CEO hereunder
may be terminated by the Company upon thirty (30) days' (the "Notice Period")
notice to the CEO; provided, however, that the CEO's employment by the Company
shall not be terminated pursuant to this Section 10(ii) if the CEO returns to
work and is able to materially perform his duties hereunder during the Notice
Period. In the event of such termination, the Company shall pay the CEO (a) his
salary (at the annual rate then in effect) accrued to the effective date of such
termination and not theretofore paid to the CEO and (b) 100% of the CEO's bonus
opportunity for the year of termination hereunder, prorated through the date of
termination, provided that the bonus opportunity has been earned on a pro rata
basis. The CEO's rights under the benefit plans and programs of the Company
shall remain unaffected until the CEO's employment is terminated pursuant to
this Section 10(ii). In the event of such termination, neither the CEO nor the
Company shall have any further rights or obligations under this Agreement,
except as set forth in Sections 7, 8 and 9.
<PAGE>
7
(iii) The employment of the CEO hereunder may be terminated by the
Company at any time during the term of this Agreement for Cause (as hereinafter
defined). In the event of such termination, the Company shall pay to the CEO his
salary (at the annual rate then in effect) accrued to the date of such
termination and not theretofore paid to the CEO, and, after the satisfaction of
any claim of the Company against the CEO arising as a direct and proximate
result of such Cause, neither the CEO nor the Company shall have any further
rights or obligations under this Agreement, except as provided in Sections 7, 8
and 9. Rights and benefits of the CEO under the benefit plans and programs of
the Company will be determined in accordance with the terms and provisions of
such plans and programs. For purposes hereof, a termination for "Cause" shall
mean (a) breach of any of the CEO's employment obligations in the CEO's position
as President and Chief Executive Officer of the Company and or (b) any material
act of dishonesty involving the Company or (c) repeated failure to follow the
instructions of the Board of Directors of the Company in connection with the
CEO's duties or (d) repeated significant carelessness in the performance of
duties or (e) repeated unexcused absences during normal working hours or (f)
repeated insobriety at the work place or (g) that the CEO has been charged with
committing and has been convicted of (1) a felony or (2) any crime or offense
involving moral turpitude. If the basis for cause is an act or acts described in
clause (a), (c) or (d) above, the CEO shall be given thirty (30) days to cease
or correct the performance (or non performance) giving rise to such cause.
(iv) The Company may terminate the CEO's employment at any time for
whatever reason the Company deems appropriate; provided, however, that in the
event such termination is not pursuant to Sections 10(i), 10(ii) or 10(iii), the
CEO shall be entitled to receive from the Company a Severance Benefit in the
amount provided in Section 10(vi) below. In addition, the CEO shall be entitled
to receive such Severance Benefit if there has occurred a CEO Termination (as
defined in Section 11).
(v) (a) The CEO shall also be entitled to a Severance Benefit if a
Change in Control has occurred and within two (2) years thereafter, the CEO's
employment with the Company terminates for any reason except that
notwithstanding the provisions of this paragraph (e), no Severance Benefit shall
be payable if the CEO's termination of employment is (A) for Cause, (B) by
reason of Permanent Disability (as defined below), (C) voluntarily initiated by
the CEO for other than Good Reason, or (D) by reason of the CEO's death. The
Employee shall not be entitled to the Severance Benefit if the CEO ceases to be
an employee of the Company at any time prior to a Change in Control, or if his
employment is terminated following a Change in Control under circumstances where
the Employee is not entitled to a Severance Benefit under the terms of this
Agreement; provided, however, that if the CEO ceases to be an employee during
the period commencing ninety (90) days prior to a Change in Control by reason of
termination by the Company without Cause, then the CEO shall be entitled to a
Severance Benefit.
(b) For purposes of this Section 10(v) (1) "Permanent
Disability" shall mean that the entire Board of Directors finds, upon the basis
of medical evidence received from a physician reasonably satisfactory to the
Board and the CEO, that the CEO is disabled, whether due to physical or mental
condition, so as to be prevented from performing the CEO's normal duties for the
Company with or without reasonable accommodation and (2) "Good Reason" shall
mean:
<PAGE>
8
(A) a reduction in the CEO's annual base salary or annual bonus
potential (i.e., percentage of annual salary), or (B) a change in the CEO's
responsibilities which, in the CEO's reasonable judgment, represents a
substantial reduction of responsibilities as existed immediately prior thereto
or the assignment to the CEO of any duties or responsibilities which, in the
CEO's reasonable judgment, are inconsistent with the duties or responsibilities
which existed immediately prior thereto, except in connection with the
termination of the CEO's employment for Cause, Permanent Disability, as a result
of the CEO's death or by the CEO other than for Good Reason.
In addition, if the CEO voluntarily terminates the CEO's
employment in connection with and at the time of a Change in Control, the CEO
will be considered to have terminated his employment for Good Reason, unless
effective with the Change in Control, he is offered a position which meets the
following criteria:
(w) the position is a chief executive officer position
at the Company or the parent of the Company, if any, that includes
the full responsibility of a Chief Executive Officer, including the
duties set forth in Exhibit A;
(x) there must be a least two years remaining under this
Agreement or the CEO and the Company must enter into a new two year
or more employment contract;
(y) the CEO is not required to move to a location the
CEO reasonably views as unsuitable, or to any city that is not
considered a major metropolitan area (i.e., population in excess of
one million); and
(z) the terms of employment include benefits that are
comparable to the Company's plans prior to the Change in Control,
provide an opportunity for annual stock option grants and include a
medical benefit plan which provides coverage for the CEO's spouse,
including coverage for future cancer treatments.
(vi) If the CEO's employment is terminated in circumstances
entitling the CEO to a Severance Benefit as provided in Section 10(iv) or
Section 10(v) hereof, the CEO shall be entitled to the following benefits:
(1) the Company shall pay to the CEO, as severance pay and in
lieu of any further salary or Bonus for periods subsequent to the CEO's
termination date, an amount in cash equal to the amount listed on Exhibit B;
(2) for the period specified on Exhibit B, subsequent to the
CEO's termination of employment, the Company shall at its expense continue on
behalf of the CEO and his dependents and beneficiaries, the medical and dental
benefits, life insurance, short term disability insurance and long-term
disability insurance which were being provided to the CEO at the time of
termination of employment. The benefits provided in this Subsection 10(vi)(2)
shall be no less favorable to the CEO, in terms of amounts and deductibles and
costs to the CEO, than the coverage provided the CEO under the plans providing
such benefits at the time a notice of
<PAGE>
9
termination is given either by the Company or the CEO, as the case may be. The
Company's obligation hereunder to provide the foregoing benefits shall terminate
if the CEO obtains coverage under a subsequent employer's medical and dental,
life insurance, short-term disability insurance and or long-term disability
insurance benefit plans;
(3) the amounts provided for in Section 10(vi)(1) shall be paid
in the same periodic installments as the CEO's salary has been paid prior to the
termination date commencing on the CEO's termination date; provided, however,
that the Company shall pay the balance of the CEO's Severance Benefit then
unpaid in a single lump sum payment within fifteen (15) days after the CEO's
commencement of employment with a new employer. Any pro rata Bonus due and
payable as specified in Exhibit B will be paid within thirty (30) days after the
CEO's termination of employment. No benefit payable hereunder will be reduced if
the CEO takes other employment.
Notwithstanding the foregoing, if any payment to or for the benefit
of the CEO under this Agreement either alone or together with other payments to
or for the benefit of the CEO would constitute a "parachute payment" (as defined
in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")),
the payments under this Agreement shall be reduced to the largest amount that
will eliminate both the imposition of the excise tax imposed by Section 4999 of
the Code and the disallowance of deductions to the Company under Section 280G of
the Code for any such payments. The amount and method of any reduction in the
payments under this Agreement pursuant to this paragraph shall be as reasonably
determined by the Compensation Committee of the Board.
11. Termination by CEO. This Agreement may be terminated by the CEO
upon sixty (60) days prior written notice by the CEO to the Company in the event
that the Board of Directors shall not continue to require that all of the
operating presidents of the Company's divisions and the Chief Financial Officer
of the Company report directly to the CEO who shall have direct authority and
oversight over such individuals. The CEO may not terminate this Agreement
pursuant to this Section 11 if during the aforesaid sixty (60) day notice
period, the Company shall again require the operating presidents and the Chief
Financial Officer to report directly to the CEO. In the event that the CEO
terminates this Agreement (a "CEO Termination") the Company shall pay to the CEO
the Severance Benefit as provided in Section 10(vi).
12. Integration. This Agreement contains all the understandings and
representations between the CEO and the Company pertaining to the subject matter
hereof and supersedes all undertakings and agreements, whether oral or written,
if any there be, previously entered into by the CEO and the Company with respect
thereto.
13. Amendment. No provision of this Agreement may be amended or
modified unless such amendment or modification is agreed to in writing and
signed by the CEO and by a duly authorized representative of the Company.
14. Notice. Any notice to be given hereunder shall be in writing and
delivered personally or sent by certified mail, return receipt requested,
addressed to the party concerned at
<PAGE>
10
the address indicated below or at such other address as such party may
subsequently designate by like notice:
If to the Company:
Access Worldwide Communications, Inc.
Suite 300
4950 Blue Lake Drive
Boca Raton, Florida 33431
Attention: Chairman of the Board
If to the CEO:
Mr. Michael Dinkins
c/o Access Worldwide Communications, Inc.
Suite 300
4950 Blue Lake Drive
Boca Raton, Florida 33431
15. Withholding. Anything to the contrary notwithstanding, all
payments required to be made by the Company hereunder to the CEO shall be
subject to withholding of such amounts relating to taxes as the Company may
reasonably determine it should withhold pursuant to any applicable law or
regulation.
16. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida applicable in the case of agreements made and entirely performed in such
State.
17. Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or any breach hereof, shall, except as provided in Section 8
hereof, be settled by arbitration in accordance with the rules of the American
Arbitration Association then in effect and judgment upon such award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. The
arbitration award shall include an award of attorneys' fees to the prevailing
party. The arbitration shall be held in the Boca Raton, Florida metropolitan
area.
18. Prior Agreements. Each of the parties acknowledges and agrees
that upon the execution of this Agreement by both the CEO and the Company, the
CEO's prior Employment Agreement with the Company dated August 1, 1997 and the
Severance Arrangements/Closing Inducement Agreement with the Company dated June
18, 1999 (collectively, the "Prior Agreements") shall both be terminated as of
the Effective Date and neither the CEO nor the Company shall have any further
rights or obligations under the Prior Agreements. Notwithstanding the foregoing,
nothing herein shall affect the terms and conditions of any of the Existing
Options previously granted to the CEO.
If the foregoing accurately sets forth our agreement, please
indicate the CEO's acceptance hereof on the enclosed counterpart of this letter
and return such counterpart to the Company.
<PAGE>
11
Very truly yours,
ACCESS WORLDWIDE COMMUNICATIONS, INC.
By: /s/ Stephen F. Nagy
------------------------------------
Name: Stephen F. Nagy
Title: Chairman of the Board
Accepted:
/s/ Michael Dinkins
- -----------------------------------
Michael Dinkins
<PAGE>
EXHIBIT A
Michael Dinkins Job Responsibilities
The CEO will have responsibilities appropriate to his position
including, but not limited to, the following:
(i) General management responsibility for the operations of the Company;
(ii) Managing the Company's operating units to ensure growth,
profitability and the best possible strategic positioning including
the direct oversight of, and authority over, all of the presidents
of the Company's operating units who shall report directly to the
CEO throughout the term of this Agreement;
(iii) Directly overseeing the Company's corporate management activities;
(iv) Supporting and mentoring key management staff at the corporate and
operating level;
(v) Driving growth of the Company through acquisition and internal
growth;
(vi) Monitoring and protecting the financial soundness of the Company by
directly overseeing the activities of the Chief Financial Officer of
the Company who shall report directly to the CEO throughout the term
of this Agreement;
(vii) Taking actions necessary to maximize shareholder value;
(viii) Creating and instilling a strong and highly ethical corporate
culture;
(ix) Reporting to and taking direction from the Board of Directors; and
(x) Such other duties appropriate to his position as the Board of
Directors shall assign to him from time to time.
<PAGE>
EXHIBIT B
Benefits
I. Amount of Severance Benefit:
(a) 1.0 times the CEO's Base Salary in effect immediately prior to the
termination until December 31, 2000 and then increasing to 1.1 times the
CEO's Base Salary if termination occurs anytime from January 1, 2001 to
December 31, 2001 and thereafter increasing by increments of 0.1 for each
subsequent year with a maximum severance benefit of 1.5 times the CEO's
Base Salary; and
(b) a pro rata share of the CEO's Bonus if earned based on bonus criteria
established by the Board for such year.
II. The period applicable for Section 10(vi)(2) is eighteen (18) months.
<PAGE>
Exhibit 10.4
ACCESS WORLDWIDE COMMUNICATIONS, INC
2200 Clarendon Boulevard
12th Floor
Arlington, Virginia 22201
May 19, 1999
Mr. Richard Lyew
5351 NW 41st Way
Coconut Creek, Fl 33073
Re: Severance Arrangements/Closing Inducement
Dear Richard:
Effective as of the Effective Date, Access Worldwide Communications,
Inc., a Delaware corporation and you (the "Employee"), hereby agree as set forth
below in this agreement (this "Agreement"). No amount shall be payable hereunder
unless the Employee shall have released the Company from the obligation to pay
any other severance benefit payable upon a Change in Control.
1. Section 1 -- Definitions. As used herein, the following words and
phrases shall have the following respective meanings unless the context clearly
indicates otherwise.
1.1. Base Period. The period consisting of the most recent
five (5) taxable years ending on or before the date on which a Change in Control
occurs or such portion of such period during which the Employee performed
personal services for the Company.
1.2. Base Salary. The annual amount the Employee receives as
wages or salary from the Company.
1.3 Board. The Board of Directors of the Company.
1.4 Cause. A termination for Cause is a termination evidenced
by a written notice specifying (i) that the Employee willfully and continually
failed to substantially perform the Employee's duties with the Company (other
than a failure resulting from the Employee's incapacity due to physical or
mental illness), which failure continued for a period of at least thirty (30)
days after a written notice of demand for substantial performance has been
delivered to the Employee specifying the manner in which the Employee has failed
to
<PAGE>
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substantially perform; or (ii) that the Employee, in carrying out his employment
duties, has been guilty of (A) willful or gross neglect or (B) willful or gross
misconduct, resulting in either case in material harm to the Company; or (iii)
that the Employee has been convicted of (A) a felony or (B) any offense
involving moral turpitude. No act, or failure to act, on the Employee's part
shall be considered "willful" unless the Employee has acted, or failed to act,
with an absence of good faith and without a reasonable belief that the
Employee's action or failure to act was in the best interests of the Company.
Notwithstanding anything contained in this Agreement to the contrary, no failure
to perform by the Employee after Notice of Termination is given by the Employee
shall constitute Cause.
1.5. Change in Control. A "Change in Control" shall be deemed
to occur:
(a) on the effective date of 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
(b) on the date of closing of 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.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur if the Company either merges or consolidates with or into
another company or sells or disposes of all or substantially all of its assets
to another company, if such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least a majority of the combined voting power of all
outstanding classes of securities of the Company resulting from such merger or
consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition.
1.6. Company. The Company is Access Worldwide Communications,
Inc., a Delaware corporation.
1.7. Effective Date. The date this Agreement is approved by
the Board or the Compensation Committee of the Board, or such other date as the
Board or such Committee shall designate in its resolution approving this
Agreement, or any amendment or restatement thereof.
1.8. Good Reason. "Good Reason" shall mean:
(a) a reduction in the Employee's annual base salary after
April 12, 1999;
<PAGE>
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(b) a change in the Employee's responsibilities which, in the
Employee's reasonable judgment, represents a substantial reduction of
responsibilities as existed immediately prior thereto or the assignment to the
Employee of any duties or responsibilities which, in the Employee's reasonable
judgment, are inconsistent with the duties or responsibilities which existed
immediately prior thereto, except in connection with the termination of the
Employee's employment for Cause, Permanent Disability, as a result of the
Employee's death or by the Employee other than for Good Reason;
(c) the requirement by the Company after a Change in Control
that the Employee (without the consent of the Employee) be based at any place
outside of the Employee's normal commuting distance, except for reasonably
required travel on the Company's business which is not materially greater than
such travel requests prior to the Change in Control;
(d) in connection with a Change in Control, the Employee is
only offered an internal auditor position; or
(e) an assignment or job description which includes
responsibilities of any form of internal audit function or auditing regardless
of the fact that the Employee's current responsibilities might include such
assignment or duties.
1.09 Notice of Termination. "Notice of Termination" shall mean
a notice which indicates the specific provisions in this Agreement relied upon
as the basis for any termination of employment and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Employee's employment under the provision so indicated. No purported
termination of employment shall be effective without such Notice of Termination.
1.10 Operating Companies. "Operating Companies" are the
subsidiaries of the Company.
1.11 Permanent Disability. The Employee shall be deemed to
have become permanently disabled for purposes of this Agreement if the Chief
Executive Officer of the Company finds, upon the basis of medical evidence
received from a physician reasonably satisfactory to the Chief Executive Officer
and the Employee, that the Employee is disabled, whether due to physical or
mental condition, so as to be prevented from performing the Employee's normal
duties for the Company with or without reasonable accommodation.
1.12 Severance Benefit. The benefit payable in accordance with
Section 3 of this Agreement.
2. Section 2 - Duration and Eligibility.
2.1 This Agreement shall be effective as of the Effective
Date.
2.2 Eligibility. The Employee shall not be entitled to the
Severance Benefit if the Employee ceases to be an employee at any time prior to
a Change in Control, or if his employment is terminated following a Change in
Control under circumstances where the Employee is not entitled to a Severance
Benefit under the terms of this Agreement; provided,
<PAGE>
-4-
however, that if the Employee ceases to be an employee during the period
commencing ninety (90) days prior to a Change in Control by reason of
termination by the Company without "cause", then the Employee shall be entitled
to a Severance Benefit under the terms of this Agreement. For purposes hereof,
"cause" shall mean (a) breach of any of the Employee's employment obligations or
(b) any material act of dishonesty involving the Company or (c) repeated failure
to follow the instructions of the President of the Company in connection with
the Employee's duties or (d) repeated significant carelessness in the
performance of duties or (e) repeated unexcused absences during normal working
hours or (f) repeated insobriety at the work place or (g) that the Employee has
been charged with committing and has been convicted of (i) a felony or (ii) any
crime or offense involving moral turpitude. If the basis for cause is an act or
acts described in clause (a), (c) or (d) above, you shall be given thirty (30)
days to cease or correct the performance (or non performance) giving rise to
such cause.
2.3. Six Month Transition Period. If following a Change in
Control, the Company requests in writing that the Employee remain as an employee
of the Company for a transition period, then to be eligible for a Severance
Benefit hereunder, the Employee shall be obligated to remain with the Company on
a transitional basis for up to six months following a Change in Control. In such
event, the Employee's Severance Benefit under Sections 3.2 (b) and (c) shall
commence following the end of the transition period. Notwithstanding the
foregoing, the Employee shall be entitled to terminate his employment for Good
Reason during the transition period and thereafter receive the applicable
Severance Benefit hereunder. The Company agrees to give the Employee sixty (60)
days' prior notice of the termination of transitional employment.
3. Section 3 - Severance Benefits.
3.1. Right to Severance Benefit.
(a) The Employee shall be entitled to receive from the Company a
Severance Benefit in the amount provided in Section 3.2 if (i) a Change in
Control has occurred and (ii) within one (1) year thereafter, the Employee's
employment with the Company terminates for any reason (for purposes hereof
employment shall be considered terminated if employment continues only on a
transitional basis) except that notwithstanding the provisions of this paragraph
(a), no benefits under this Agreement will be payable should the Employee's
termination of employment be (A) for Cause, (B) by reason of Permanent
Disability, (C) voluntarily initiated by the Employee for other than Good
Reason, or (D) by reason of the Employee's death.
(b) Notwithstanding any other provision of the Agreement, the sale,
divestiture or other disposition of an Operating Company (or part thereof),
shall not be deemed to be a termination of employment of employees employed by
such Operating Company, and such employees shall not be entitled to benefits
from the Company under this Agreement as a result of such sale, divestiture, or
other disposition, or as a result of any subsequent termination of employment,
provided the provisions of Section 5.2 have been satisfied.
3.2. Amount of Severance Benefit. If the Employee's employment
is terminated in circumstances entitling the Employee to a Severance Benefit as
provided in Section 3.1, the Employee shall be entitled to the following
benefits:
<PAGE>
-5-
(a) the Company shall pay to the Employee, as severance pay
and in lieu of any further salary for periods subsequent to the Termination
Date, an amount in cash equal to the amount listed on Exhibit A;
(b) for the period specified on Exhibit A, subsequent to the
Employee's termination of employment, the Company shall at its expense continue
on behalf of the Employee and his dependents and beneficiaries, the medical and
dental benefits, life insurance, short term disability insurance and long-term
disability insurance which were being provided to the Employee at the time of
termination of employment. The benefits provided in this Subsection 3.2(b) shall
be no less favorable to the Employee, in terms of amounts and deductibles and
costs to the Employee, than the coverage provided the Employee under the plans
providing such benefits at the time Notice of Termination is given. The
Company's obligation hereunder to provide the foregoing benefits shall terminate
if the Employee obtains coverage under a subsequent employer's medical and
dental, life insurance, short-term disability insurance and or long-term
disability insurance benefit plans;
(c) the amounts provided for in Section 3.2(a) shall be paid
in the same periodic installment as the Employee's salary has been paid prior to
the Termination Date commencing on the Employee's Termination Date; provided,
however that the Company shall pay the balance of the Employee's Severance
Benefit then unpaid in a single lump sum payment within fifteen (15) days after
the Employee's commencement of employment with a new employer. No benefit
payable hereunder will be reduced if the Employee takes other employment.
Notwithstanding the foregoing, if any payment to or for the benefit
of the Employee under this Agreement either alone or together with other
payments to or for the benefit of the Employee would constitute a "parachute
payment" (as defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code")), the payments under this Agreement shall be reduced to the
largest amount that will eliminate both the imposition of the excise tax imposed
by Section 4999 of the Code and the disallowance of deductions to the Company
under Section 280G of the Code for any such payments. The amount and method of
any reduction in the payments under this Agreement pursuant to this paragraph
shall be as reasonably determined by the Compensation Committee of the Board.
4. Section 4 - Termination of Employment.
4.1. Written Notice Required. Any purported termination of
employment, either by the Company or by the Employee, shall be communicated by
written Notice of Termination to the other.
4.2. Termination Date. In the case of the Employee's death,
the Employee's Termination Date shall be the Employee's date of death. In all
other cases, the Employee's Termination Date shall be the date specified in the
Notice of Termination subject to the following: (a) if the Employee's employment
is terminated by the Company due to Permanent Disability, the date specified in
the Notice of Termination shall be at least thirty (30) days from the date the
Notice of Termination is given to the Employee, provided that the Employee shall
not have returned to the full-time performance of the Employee's duties during
<PAGE>
-6-
such period of at least thirty (30) days; and (b) if the Employee terminates the
Employee's employment for Good Reason, the date specified in the Notice of
Termination shall not be more than thirty (30) days from the date the Notice of
Termination is given to the Company.
5. Section 5 - Successors to Company.
5.1. Successors. This Agreement shall bind any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, in the
same manner and to the same extent that the Company would be obligated under
this Agreement if no succession had taken place. In the case of any transaction
in which a successor would not by the foregoing provision or by operation of law
be bound by this Agreement, the Company shall require such successor expressly
and unconditionally to assume and agree to perform the Company's obligations
under this Agreement, in the same manner and to the same extent that the Company
would be required to perform if no such succession had taken place.
5.2. Sale of Operating Companies. In the event that one or
more Operating Companies (or part thereof) are sold, divested, or otherwise
disposed of by the Company subsequent to a Change in Control, the Company shall
require such purchaser or acquirer, as a condition precedent to such purchase or
acquisition, to assume, and agree to perform the Company's obligations under
this Agreement, in the same manner, and to the same extent that the Company
would be required to perform if no such acquisition or purchase had taken place.
In such circumstances, the purchaser or acquirer shall be solely responsible for
providing any benefits payable under this Agreement to such employees.
6. Section 6 - Amendment and Termination.
6.1. Amendment and Termination. This Agreement may be
terminated or amended in any respect by resolution adopted by the entire Board;
provided, however, that no such amendment or termination of this Agreement may
be made if such amendment or termination would adversely affect any benefit of
the Employee set forth herein and provided further, that this Agreement shall no
longer be subject to amendment, change, substitution, deletion, revocation or
termination in any respect whatsoever following a Change in Control.
6.2. Form of Amendment. The form of any amendment or
termination of this Agreement shall be a written instrument signed by a duly
authorized officer or officers of the Company, certifying that the amendment or
termination has been approved by the Board.
7. Section 7 - Closing Inducement. In consideration for the
Employee's continued employment with the Company, and for the services the
Employee may provide the Company in connection with a sale of all or
substantially all of the Company in a transaction closing in 1999 or pursuant to
a binding agreement executed in 1999 (a "Sale"), regardless of the form or
structure of such transaction, the Company will pay a cash payment (the "Closing
Payment") to the Employee at the closing of such transaction, according to the
following conditions:
(a) No Closing Payment shall be due and payable unless the
Employee is employed by the Company on the date of closing.
<PAGE>
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(b) In the event that the condition set forth in (a) above
shall be satisfied, the Closing Payment shall be equal to $25,000.
8. Section 8 - Miscellaneous.
8.1. Indemnification. If, after a Change in Control, the
Employee institutes any legal action in seeking to obtain or enforce, or is
required to defend in any legal action the validity or enforceability of, any
right or benefit provided by this Agreement, the Company will pay for all actual
legal fees and expenses incurred by such Employee so long as the Employee is
successful on the merits in whole or in substantial part.
8.2. Employment Status. This Agreement does not constitute a
contract of employment or impose on the Company any obligation to retain the
Employee, to change the status of the Employee's employment, or to change any
employment policies of the Company.
8.3. Validity and Severability. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect, and any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.4. Governing Law; Choice of Forum. The validity,
interpretation, construction and performance of this Agreement shall in all
respects be governed by the laws of the Commonwealth of Virginia. The Employee
shall be entitled to enforce the provisions of this Agreement in any state or
federal court located in the Commonwealth of Virginia, in addition to any other
appropriate forum.
* * *
<PAGE>
-8-
By signing this letter, you agree to by bound by all of the terms
and conditions set forth herein.
Very truly yours,
ACCESS WORLDWIDE COMMUNICATIONS, INC.
By: /s/ John Fitzgerald
-------------------------------------
Name:
Title: CEO
Accepted and Agreed To:
By: /s/ Richard Lyew
--------------------------------
Richard Lyew
<PAGE>
EXHIBIT A
BENEFITS
1.0 AMOUNT OF SEVERANCE BENEFIT:
(a) One half (0.5) times the Employee's Base Salary in effect
immediately prior to the Change in Control.
2.0 The period applicable for Section 3.2(b) is six (6) months.
<PAGE>
Exhibit 10.5
ACCESS WORLDWIDE COMMUNICATIONS, INC
2200 Clarendon Boulevard
12th Floor
Arlington, Virginia 22201
May 12, 1999
Mr. Jack Hamerski
5317 Maple Valley Court
Centreville, Virginia 20120
Re: Severance Arrangements/Closing Inducement
Dear Jack:
Effective as of the Effective Date, Access Worldwide Communications,
Inc., a Delaware corporation and you (the "Employee"), hereby agree as set forth
below in this agreement (this "Agreement"). No amount shall be payable hereunder
unless the Employee shall have released the Company from the obligation to pay
any other severance benefit payable upon a Change in Control.
1. Section 1 -- Definitions. As used herein, the following words and
phrases shall have the following respective meanings unless the context clearly
indicates otherwise.
1.1. Base Period. The period consisting of the most recent
five (5) taxable years ending on or before the date on which a Change in Control
occurs or such portion of such period during which the Employee performed
personal services for the Company.
1.2. Base Salary. The annual amount the Employee receives as
wages or salary from the Company.
1.3 Board. The Board of Directors of the Company.
1.4 Bonus. The annual bonus the Employee is entitled to receive
each year.
1.5 Cause. A termination for Cause is a termination evidenced by
a written notice specifying (i) that the Employee willfully and continually
failed to substantially perform the Employee's duties with the Company (other
than a failure resulting from the Employee's incapacity due to physical or
mental illness), which failure continued for a period of
<PAGE>
-2-
at least thirty (30) days after a written notice of demand for substantial
performance has been delivered to the Employee specifying the manner in which
the Employee has failed to substantially perform; or (ii) that the Employee, in
carrying out his employment duties, has been guilty of (A) willful or gross
neglect or (B) willful or gross misconduct, resulting in either case in material
harm to the Company; or (iii) that the Employee has been convicted of (A) a
felony or (B) any offense involving moral turpitude. No act, or failure to act,
on the Employee's part shall be considered "willful" unless the Employee has
acted, or failed to act, with an absence of good faith and without a reasonable
belief that the Employee's action or failure to act was in the best interests of
the Company. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Employee after Notice of Termination is
given by the Employee shall constitute Cause.
1.6. Change in Control. A "Change in Control" shall be deemed to
occur:
(a) on the effective date of 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
(b) on the date of closing of 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.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur if the Company either merges or consolidates with or into
another company or sells or disposes of all or substantially all of its assets
to another company, if such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least a majority of the combined voting power of all
outstanding classes of securities of the Company resulting from such merger or
consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition.
1.7. Company. The Company is Access Worldwide Communications,
Inc., a Delaware corporation.
1.8. Effective Date. The date this Agreement is approved by the
Board or the Compensation Committee of the Board, or such other date as the
Board or such Committee shall designate in its resolution approving this
Agreement, or any amendment or restatement thereof.
1.9. Good Reason. "Good Reason" shall mean:
(a) a reduction in the Employee's annual base salary or annual
bonus potential (i.e., percentage of annual salary) after April 12, 1999; or
<PAGE>
-3-
(b) a change in the Employee's responsibilities which, in the
Employee's reasonable judgment, represents a substantial reduction of
responsibilities as existed immediately prior thereto or the assignment to the
Employee of any duties or responsibilities which, in the Employee's reasonable
judgment, are inconsistent with the duties or responsibilities which existed
immediately prior thereto, except in connection with the termination of the
Employee's employment for Cause, Permanent Disability, as a result of the
Employee's death or by the Employee other than for Good Reason; or
(c) the requirement by the Company after a Change in Control that
the Employee (without the consent of the Employee) be based at any place outside
of the Employee's normal commuting distance, except for reasonably required
travel on the Company's business which is not materially greater than such
travel requests prior to the Change in Control.
1.10 Notice of Termination. "Notice of Termination" shall mean a
notice which indicates the specific provisions in this Agreement relied upon as
the basis for any termination of employment and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Employee's employment under the provision so indicated. No purported
termination of employment shall be effective without such Notice of Termination.
1.11 Operating Companies. "Operating Companies" are the
subsidiaries of the Company.
1.12 Permanent Disability. The Employee shall be deemed to have
become permanently disabled for purposes of this Agreement if the Chief
Executive Officer of the Company finds, upon the basis of medical evidence
received from a physician reasonably satisfactory to the Chief Executive Officer
and the Employee, that the Employee is disabled, whether due to physical or
mental condition, so as to be prevented from performing the Employee's normal
duties for the Company with or without reasonable accommodation.
1.13 Severance Benefit. The benefit payable in accordance with
Section 3 of this Agreement.
2. Section 2 - Duration and Eligibility.
2.1 This Agreement shall be effective as of the Effective Date.
2.2 Eligibility. The Employee shall not be entitled to the
Severance Benefit if the Employee ceases to be an employee at any time prior to
a Change in Control, or if his employment is terminated following a Change in
Control under circumstances where the Employee is not entitled to a Severance
Benefit under the terms of this Agreement; provided, however, that if the
Employee ceases to be an employee during the period commencing ninety (90) days
prior to a Change in Control by reason of termination by the Company without
"cause", then the Employee shall be entitled to a Severance Benefit under the
terms of this Agreement. For purposes hereof, "cause" shall mean (a) breach of
any of the Employee's employment obligations or (b) any material act of
dishonesty involving the Company or (c) repeated failure to follow the
instructions of the President of the Company in connection with the Employee's
duties or (d) repeated significant carelessness in the performance of duties or
(e)
<PAGE>
-4-
repeated unexcused absences during normal working hours or (f) repeated
insobriety at the work place or (g) that the Employee has been charged with
committing and has been convicted of (i) a felony or (ii) any crime or offense
involving moral turpitude. If the basis for cause is an act or acts described in
clause (a), (c) or (d) above, you shall be given thirty (30) days to cease or
correct the performance (or non performance) giving rise to such cause.
2.3. Six Month Transition Period. If following a Change in
Control, the Company requests in writing that the Employee remain as an employee
of the Company for a transition period, then to be eligible for a Severance
Benefit hereunder, the Employee shall be obligated to remain with the Company on
a transitional basis for up to six months following a Change in Control. In such
event, the Employee's Severance Benefit under Sections 3.2 (b) and (c) shall
commence following the end of the transition period. Notwithstanding the
foregoing, the Employee shall be entitled to terminate his employment for Good
Reason during the transition period and thereafter receive the applicable
Severance Benefit hereunder. The Company agrees to give the Employee sixty (60)
days' prior notice of the termination of transitional employment. During the
period that the Employee is employed on a transitional basis, the Company shall
not require him to be based at a location outside his current normal commuting
distance, but the Company may require him to travel on the Company's business
several days each week.
3. Section 3 - Severance Benefits.
3.1. Right to Severance Benefit.
(a) The Employee shall be entitled to receive from the Company a
Severance Benefit in the amount provided in Section 3.2 if (i) a Change in
Control has occurred and (ii) within two (2) years thereafter, the Employee's
employment with the Company terminates for any reason (for purposes hereof
employment shall be considered terminated if employment continues only on a
transitional basis) except that notwithstanding the provisions of this paragraph
(a), no benefits under this Agreement will be payable should the Employee's
termination of employment be (A) for Cause, (B) by reason of Permanent
Disability, (C) voluntarily initiated by the Employee for other than Good
Reason, or (D) by reason of the Employee's death.
(b) Notwithstanding any other provision of the Agreement, the sale,
divestiture or other disposition of an Operating Company (or part thereof),
shall not be deemed to be a termination of employment of employees employed by
such Operating Company, and such employees shall not be entitled to benefits
from the Company under this Agreement as a result of such sale, divestiture, or
other disposition, or as a result of any subsequent termination of employment,
provided the provisions of Section 5.2 have been satisfied.
3.2. Amount of Severance Benefit. If the Employee's employment is
terminated in circumstances entitling the Employee to a Severance Benefit as
provided in Section 3.1, the Employee shall be entitled to the following
benefits:
<PAGE>
-5-
(a) the Company shall pay to the Employee, as severance pay
and in lieu of any further salary or Bonus for periods subsequent to the
Termination Date, an amount in cash equal to the amount listed on Exhibit A;
(b) for the period specified on Exhibit A, subsequent to the
Employee's termination of employment, the Company shall at its expense continue
on behalf of the Employee and his dependents and beneficiaries, the medical and
dental benefits, life insurance, short term disability insurance and long-term
disability insurance which were being provided to the Employee at the time of
termination of employment. The benefits provided in this Subsection 3.2(b) shall
be no less favorable to the Employee, in terms of amounts and deductibles and
costs to the Employee, than the coverage provided the Employee under the plans
providing such benefits at the time Notice of Termination is given. The
Company's obligation hereunder to provide the foregoing benefits shall terminate
if the Employee obtains coverage under a subsequent employer's medical and
dental, life insurance, short-term disability insurance and or long-term
disability insurance benefit plans;
(c) the amounts provided for in Section 3.2(a) shall be paid
in the same periodic installment as the Employee's salary has been paid prior to
the Termination Date commencing on the Employee's Termination Date; provided,
however that the Company shall pay the balance of the Employee's Severance
Benefit then unpaid in a single lump sum payment within fifteen (15) days after
the Employee's commencement of employment with a new employer. Any pro rata
Bonus due and payable as specified in Exhibit A will be paid within thirty (30)
days after the Employee's termination of employment. No benefit payable
hereunder will be reduced if the Employee takes other employment.
Notwithstanding the foregoing, if any payment to or for the benefit
of the Employee under this Agreement either alone or together with other
payments to or for the benefit of the Employee would constitute a "parachute
payment" (as defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code")), the payments under this Agreement shall be reduced to the
largest amount that will eliminate both the imposition of the excise tax imposed
by Section 4999 of the Code and the disallowance of deductions to the Company
under Section 280G of the Code for any such payments. The amount and method of
any reduction in the payments under this Agreement pursuant to this paragraph
shall be as reasonably determined by the Compensation Committee of the Board.
4. Section 4 - Termination of Employment.
4.1. Written Notice Required. Any purported termination of
employment, either by the Company or by the Employee, shall be communicated by
written Notice of Termination to the other.
4.2. Termination Date. In the case of the Employee's death, the
Employee's Termination Date shall be the Employee's date of death. In all other
cases, the Employee's Termination Date shall be the date specified in the Notice
of Termination subject to the following: (a) if the Employee's employment is
terminated by the Company due to Permanent Disability, the date specified in the
Notice of Termination shall be at least thirty (30) days from the date the
Notice of Termination is given to the Employee, provided that the
<PAGE>
-6-
Employee shall not have returned to the full-time performance of the Employee's
duties during such period of at least thirty (30) days; and (b) if the Employee
terminates the Employee's employment for Good Reason, the date specified in the
Notice of Termination shall not be more than thirty (30) days from the date the
Notice of Termination is given to the Company.
5. Section 5 - Successors to Company.
5.1. Successors. This Agreement shall bind any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, in the same
manner and to the same extent that the Company would be obligated under this
Agreement if no succession had taken place. In the case of any transaction in
which a successor would not by the foregoing provision or by operation of law be
bound by this Agreement, the Company shall require such successor expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Agreement, in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place.
5.2. Sale of Operating Companies. In the event that one or more
Operating Companies (or part thereof) are sold, divested, or otherwise disposed
of by the Company subsequent to a Change in Control, the Company shall require
such purchaser or acquirer, as a condition precedent to such purchase or
acquisition, to assume, and agree to perform the Company's obligations under
this Agreement, in the same manner, and to the same extent that the Company
would be required to perform if no such acquisition or purchase had taken place.
In such circumstances, the purchaser or acquirer shall be solely responsible for
providing any benefits payable under this Agreement to such employees.
6. Section 6 - Amendment and Termination.
6.1. Amendment and Termination. This Agreement may be terminated
or amended in any respect by resolution adopted by the entire Board; provided,
however, that no such amendment or termination of this Agreement may be made if
such amendment or termination would adversely affect any benefit of the Employee
set forth herein and provided further, that this Agreement shall no longer be
subject to amendment, change, substitution, deletion, revocation or termination
in any respect whatsoever following a Change in Control.
6.2. Form of Amendment. The form of any amendment or termination
of this Agreement shall be a written instrument signed by a duly authorized
officer or officers of the Company, certifying that the amendment or termination
has been approved by the Board.
7. Section 7 - Closing Inducement. In consideration for the
Employee's continued employment with the Company, and for the services the
Employee may provide the Company in connection with a sale of all or
substantially all of the Company in a transaction closing in 1999 or pursuant to
a binding agreement executed in 1999 (a "Sale"), regardless of the form or
structure of such transaction, the Company will pay a cash payment (the "Closing
Payment") to the Employee at the closing of such transaction, according to the
following conditions:
<PAGE>
-7-
(a) No Closing Payment shall be due and payable unless the
Employee is employed by the Company on the date of closing.
(b) In the event that the condition set forth in (a) above shall
be satisfied, the Closing Payment shall be equal to $50,000.
8. Section 8 - Miscellaneous.
8.1. Indemnification. If, after a Change in Control, the Employee
institutes any legal action in seeking to obtain or enforce, or is required to
defend in any legal action the validity or enforceability of, any right or
benefit provided by this Agreement, the Company will pay for all actual legal
fees and expenses incurred by such Employee so long as the Employee is
successful on the merits in whole or in substantial part.
8.2. Employment Status. This Agreement does not constitute a
contract of employment or impose on the Company any obligation to retain the
Employee, to change the status of the Employee's employment, or to change any
employment policies of the Company.
8.3. Validity and Severability. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect, and any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.4. Governing Law; Choice of Forum. The validity,
interpretation, construction and performance of this Agreement shall in all
respects be governed by the laws of the Commonwealth of Virginia. The Employee
shall be entitled to enforce the provisions of this Agreement in any state or
federal court located in the Commonwealth of Virginia, in addition to any other
appropriate forum.
* * *
<PAGE>
-8-
By signing this letter, you agree to by bound by all of the terms
and conditions set forth herein.
Very truly yours,
ACCESS WORLDWIDE COMMUNICATIONS, INC.
By: /s/ John Fitzgerald
------------------------------------
Name:
Title: CEO
Accepted and Agreed To:
By: /s/ John Hamerski (Jack)
-------------------------------
Jack Hamerski
<PAGE>
EXHIBIT A
BENEFITS
1.0 AMOUNT OF SEVERANCE BENEFIT:
(a) one (1.0) times the Employee's Base Salary in effect immediately prior
to the Change in Control; and
(b) a pro rata share of the Employee's Bonus if earned. For 1999, Bonus
will be based on bonus criteria consistent with the Chief Financial
Officer's directives. For years after 1999, Bonus will be based on
bonus criteria established by the Chief Executive Officer or the Chief
Financial Officer such subsequent year.
2.0 The period applicable for Section 3.2(b) is twelve (12) months.
<PAGE>
Exhibit 10.6
ACCESS WORLDWIDE COMMUNICATIONS, INC
2200 Clarendon Boulevard
12th Floor
Arlington, Virginia 22201
May 13, 1999
Ms. Mary Sanchez
8412 Dundee Terrace
Miami Lakes, Florida 33016
Re: Severance Arrangements/Closing Inducement/Vesting
Dear Mary:
Effective as of the Effective Date, Access Worldwide Communications,
Inc., a Delaware corporation and you (the "Employee"), hereby agree as set forth
below in this agreement (this "Agreement"). No amount shall be payable hereunder
unless the Employee shall have released the Company from the obligation to pay
any other severance benefit payable upon a Change in Control.
1. Section 1 -- Definitions. As used herein, the following words and
phrases shall have the following respective meanings unless the context clearly
indicates otherwise.
1.1. Base Period. The period consisting of the most recent five
(5) taxable years ending on or before the date on which a Change in Control
occurs or such portion of such period during which the Employee performed
personal services for the Company.
1.2. Base Salary. The annual amount the Employee receives as
wages or salary from the Company.
1.3 Board. The Board of Directors of the Company.
1.4 Bonus. The annual bonus the Employee is entitled to receive
each year.
1.5 Cause. A termination for Cause is a termination evidenced by
a written notice specifying (i) that the Employee willfully and continually
failed to substantially perform the Employee's duties with the Company (other
than a failure resulting from the Employee's incapacity due to physical or
mental illness), which failure continued for a period of
<PAGE>
-2-
at least thirty (30) days after a written notice of demand for substantial
performance has been delivered to the Employee specifying the manner in which
the Employee has failed to substantially perform; or (ii) that the Employee, in
carrying out his employment duties, has been guilty of (A) willful or gross
neglect or (B) willful or gross misconduct, resulting in either case in material
harm to the Company; or (iii) that the Employee has been convicted of (A) a
felony or (B) any offense involving moral turpitude. No act, or failure to act,
on the Employee's part shall be considered "willful" unless the Employee has
acted, or failed to act, with an absence of good faith and without a reasonable
belief that the Employee's action or failure to act was in the best interests of
the Company. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Employee after Notice of Termination is
given by the Employee shall constitute Cause.
1.6. Change in Control. A "Change in Control" shall be deemed to
occur:
(a) on the effective date of 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
(b) on the date of closing of 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.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur if the Company either merges or consolidates with or into
another company or sells or disposes of all or substantially all of its assets
to another company, if such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least a majority of the combined voting power of all
outstanding classes of securities of the Company resulting from such merger or
consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition.
1.7. Company. The Company is Access Worldwide Communications,
Inc., a Delaware corporation.
1.8. Effective Date. The date this Agreement is approved by the
Board or the Compensation Committee of the Board, or such other date as the
Board or such Committee shall designate in its resolution approving this
Agreement, or any amendment or restatement thereof.
1.9. Good Reason. "Good Reason" shall mean:
(a) a reduction in the Employee's annual base salary or annual
bonus potential (i.e., percentage of annual salary) after April 12, 1999; or
<PAGE>
-3-
(b) a change in the Employee's responsibilities which, in the
Employee's reasonable judgment, represents a substantial reduction of
responsibilities as existed immediately prior thereto or the assignment to the
Employee of any duties or responsibilities which, in the Employee's reasonable
judgment, are inconsistent with the duties or responsibilities which existed
immediately prior thereto, except in connection with the termination of the
Employee's employment for Cause, Permanent Disability, as a result of the
Employee's death or by the Employee other than for Good Reason; or
(c) the requirement by the Company after a Change in Control that
the Employee (without the consent of the Employee) be based at any place outside
of the Employee's normal commuting distance, except for reasonably required
travel on the Company's business which is not materially greater than such
travel requests prior to the Change in Control.
1.10 Notice of Termination. "Notice of Termination" shall mean a
notice which indicates the specific provisions in this Agreement relied upon as
the basis for any termination of employment and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Employee's employment under the provision so indicated. No purported
termination of employment shall be effective without such Notice of Termination.
1.11 Operating Companies. "Operating Companies" are the
subsidiaries of the Company.
1.12 Permanent Disability. The Employee shall be deemed to have
become permanently disabled for purposes of this Agreement if the Chief
Executive Officer of the Company finds, upon the basis of medical evidence
received from a physician reasonably satisfactory to the Chief Executive Officer
and the Employee, that the Employee is disabled, whether due to physical or
mental condition, so as to be prevented from performing the Employee's normal
duties for the Company with or without reasonable accommodation.
1.13 Severance Benefit. The benefit payable in accordance with
Section 3 of this Agreement.
2. Section 2 - Duration and Eligibility.
2.1 This Agreement shall be effective as of the Effective Date.
2.2 Eligibility. The Employee shall not be entitled to the
Severance Benefit if the Employee ceases to be an employee at any time prior to
a Change in Control, or if her employment is terminated following a Change in
Control under circumstances where the Employee is not entitled to a Severance
Benefit under the terms of this Agreement; provided, however, that if the
Employee ceases to be an employee during the period commencing ninety (90) days
prior to a Change in Control by reason of termination by the Company without
"cause", then the Employee shall be entitled to a Severance Benefit under the
terms of this Agreement. For purposes hereof, "cause" shall mean (a) breach of
any of the Employee's employment obligations or (b) any material act of
dishonesty involving the Company or (c) repeated failure to follow the
instructions of the President of the Company in connection with the Employee's
duties or (d) repeated significant carelessness in the performance of duties or
(e)
<PAGE>
-4-
repeated unexcused absences during normal working hours or (f) repeated
insobriety at the work place or (g) that the Employee has been charged with
committing and has been convicted of (i) a felony or (ii) any crime or offense
involving moral turpitude. If the basis for cause is an act or acts described in
clause (a), (c) or (d) above, you shall be given thirty (30) days to cease or
correct the performance (or non performance) giving rise to such cause.
2.3. Six Month Transition Period. If following a Change in
Control, the Company requests in writing that the Employee remain as an employee
of the Company for a transition period, then to be eligible for a Severance
Benefit hereunder, the Employee shall be obligated to remain with the Company on
a transitional basis for up to six months following a Change in Control. In such
event, the Employee's Severance Benefit under Sections 3.2 (b) and (c) shall
commence following the end of the transition period. Notwithstanding the
foregoing, the Employee shall be entitled to terminate his employment for Good
Reason during the transition period and thereafter receive the applicable
Severance Benefit hereunder. The Company agrees to give the Employee sixty (60)
days' prior notice of the termination of transitional employment. During the
period the Employee is employed on a transitional basis, the Company shall not
require her to be based at a location outside of her normal commuting distance,
but she may be required to travel on the Company's business as reasonably
required on a basis comparable to her current travel requirements.
3. Section 3 - Severance Benefits.
3.1. Right to Severance Benefit.
(a) The Employee shall be entitled to receive from the Company a
Severance Benefit in the amount provided in Section 3.2 if (i) a Change in
Control has occurred and (ii) within two (2) years thereafter, the Employee's
employment with the Company terminates for any reason (for purposes hereof
employment shall be considered terminated if employment continues only on a
transitional basis) except that notwithstanding the provisions of this paragraph
(a), no benefits under this Agreement will be payable should the Employee's
termination of employment be (A) for Cause, (B) by reason of Permanent
Disability, (C) voluntarily initiated by the Employee for other than Good
Reason, or (D) by reason of the Employee's death.
(b) Notwithstanding any other provision of the Agreement, the sale,
divestiture or other disposition of an Operating Company (or part thereof),
shall not be deemed to be a termination of employment of employees employed by
such Operating Company, and such employees shall not be entitled to benefits
from the Company under this Agreement as a result of such sale, divestiture, or
other disposition, or as a result of any subsequent termination of employment,
provided the provisions of Section 5.2 have been satisfied.
3.2. Amount of Severance Benefit. If the Employee's employment is
terminated in circumstances entitling the Employee to a Severance Benefit as
provided in Section 3.1, the Employee shall be entitled to the following
benefits:
<PAGE>
-5-
(a) the Company shall pay to the Employee, as severance pay and
in lieu of any further salary or Bonus for periods subsequent to the Termination
Date, an amount in cash equal to the amount listed on Exhibit A;
(b) for the period specified on Exhibit A, subsequent to the
Employee's termination of employment, the Company shall at its expense continue
on behalf of the Employee and his dependents and beneficiaries, the medical and
dental benefits, life insurance, short term disability insurance and long-term
disability insurance which were being provided to the Employee at the time of
termination of employment. The benefits provided in this Subsection 3.2(b) shall
be no less favorable to the Employee, in terms of amounts and deductibles and
costs to the Employee, than the coverage provided the Employee under the plans
providing such benefits at the time Notice of Termination is given. The
Company's obligation hereunder to provide the foregoing benefits shall terminate
if the Employee obtains coverage under a subsequent employer's medical and
dental, life insurance, short-term disability insurance and or long-term
disability insurance benefit plans;
(c) the amounts provided for in Section 3.2(a) shall be paid in
the same periodic installment as the Employee's salary has been paid prior to
the Termination Date commencing on the Employee's Termination Date; provided,
however that the Company shall pay the balance of the Employee's Severance
Benefit then unpaid in a single lump sum payment within fifteen (15) days after
the Employee's commencement of employment with a new employer. Any pro rata
Bonus due and payable as specified in Exhibit A will be paid within thirty (30)
days after the Employee's termination of employment. No benefit payable
hereunder will be reduced if the Employee takes other employment.
Notwithstanding the foregoing, if any payment to or for the benefit
of the Employee under this Agreement either alone or together with other
payments to or for the benefit of the Employee would constitute a "parachute
payment" (as defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code")), the payments under this Agreement shall be reduced to the
largest amount that will eliminate both the imposition of the excise tax imposed
by Section 4999 of the Code and the disallowance of deductions to the Company
under Section 280G of the Code for any such payments. The amount and method of
any reduction in the payments under this Agreement pursuant to this paragraph
shall be as reasonably determined by the Compensation Committee of the Board.
4. Section 4 - Termination of Employment.
4.1. Written Notice Required. Any purported termination of
employment, either by the Company or by the Employee, shall be communicated by
written Notice of Termination to the other.
4.2. Termination Date. In the case of the Employee's death, the
Employee's Termination Date shall be the Employee's date of death. In all other
cases, the Employee's Termination Date shall be the date specified in the Notice
of Termination subject to the following: (a) if the Employee's employment is
terminated by the Company due to Permanent Disability, the date specified in the
Notice of Termination shall be at least thirty (30) days from the date the
Notice of Termination is given to the Employee, provided that the
<PAGE>
-6-
Employee shall not have returned to the full-time performance of the Employee's
duties during such period of at least thirty (30) days; and (b) if the Employee
terminates the Employee's employment for Good Reason, the date specified in the
Notice of Termination shall not be more than thirty (30) days from the date the
Notice of Termination is given to the Company.
4.3. If the Employee's employment is terminated by the Company in
connection with a Change in Control, all of the Employee's Unvested Shares, as
defined in the Stock Purchase Agreement dated January 15, 1997, shall become
Vested Shares.
5. Section 5 - Successors to Company.
5.1. Successors. This Agreement shall bind any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, in the same
manner and to the same extent that the Company would be obligated under this
Agreement if no succession had taken place. In the case of any transaction in
which a successor would not by the foregoing provision or by operation of law be
bound by this Agreement, the Company shall require such successor expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Agreement, in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place.
5.2. Sale of Operating Companies. In the event that one or more
Operating Companies (or part thereof) are sold, divested, or otherwise disposed
of by the Company subsequent to a Change in Control, the Company shall require
such purchaser or acquirer, as a condition precedent to such purchase or
acquisition, to assume, and agree to perform the Company's obligations under
this Agreement, in the same manner, and to the same extent that the Company
would be required to perform if no such acquisition or purchase had taken place.
In such circumstances, the purchaser or acquirer shall be solely responsible for
providing any benefits payable under this Agreement to such employees.
6. Section 6 - Amendment and Termination.
6.1. Amendment and Termination. This Agreement may be terminated
or amended in any respect by resolution adopted by the entire Board; provided,
however, that no such amendment or termination of this Agreement may be made if
such amendment or termination would adversely affect any benefit of the Employee
set forth herein and provided further, that this Agreement shall no longer be
subject to amendment, change, substitution, deletion, revocation or termination
in any respect whatsoever following a Change in Control.
6.2. Form of Amendment. The form of any amendment or termination
of this Agreement shall be a written instrument signed by a duly authorized
officer or officers of the Company, certifying that the amendment or termination
has been approved by the Board.
7. Section 7 - Closing Inducement. In consideration for the
Employee's continued employment with the Company, and for the services the
Employee may provide the Company in connection with a sale of all or
substantially all of the Company in a transaction closing in 1999 or pursuant to
a binding agreement executed in 1999 (a "Sale"), regardless of the form or
structure of such transaction, the Company will pay a cash payment (the "Closing
<PAGE>
-7-
Payment") to the Employee at the closing of such transaction, according to the
following conditions:
(a) No Closing Payment shall be due and payable unless the
Employee is employed by the Company on the date of closing.
(b) In the event that the condition set forth in (a) above shall
be satisfied, the Closing Payment shall be equal to $50,000.
8. Section 8 - Miscellaneous.
8.1. Indemnification. If, after a Change in Control, the Employee
institutes any legal action in seeking to obtain or enforce, or is required to
defend in any legal action the validity or enforceability of, any right or
benefit provided by this Agreement, the Company will pay for all actual legal
fees and expenses incurred by such Employee so long as the Employee is
successful on the merits in whole or in substantial part.
8.2. Employment Status. This Agreement does not constitute a
contract of employment or impose on the Company any obligation to retain the
Employee, to change the status of the Employee's employment, or to change any
employment policies of the Company.
8.3. Validity and Severability. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect, and any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.4. Governing Law; Choice of Forum. The validity,
interpretation, construction and performance of this Agreement shall in all
respects be governed by the laws of the Commonwealth of Virginia. The Employee
shall be entitled to enforce the provisions of this Agreement in any state or
federal court located in the Commonwealth of Virginia, in addition to any other
appropriate forum.
* * *
<PAGE>
-8-
By signing this letter, you agree to by bound by all of the terms
and conditions set forth herein.
Very truly yours,
ACCESS WORLDWIDE COMMUNICATIONS, INC.
By: /s/ John Fitzgerald
-------------------------------------
Name:
Title: CEO
Accepted and Agreed To:
By: /s/ Mary Sanchez
--------------------------------
Mary Sanchez
<PAGE>
EXHIBIT A
BENEFITS
1.0 AMOUNT OF SEVERANCE BENEFIT:
(a) one (1.0) times the Employee's Base Salary in effect immediately prior
to the Change in Control; and
(b) a pro rata share of the Employee's Bonus if earned. For 1999, Bonus will
be based on bonus criteria consistent with the Chief Financial Officer's
directives. For years after 1999, Bonus will be based on bonus criteria
established by the Chief Executive Officer or the Chief Financial
Officer for such subsequent year.
2.0 The period applicable for Section 3.2(b) is twelve (12) months.
<PAGE>
EXHIBIT 10.7
ACCESS WORLDWIDE COMMUNICATIONS, INC
2200 Clarendon Boulevard
12th Floor
Arlington, Virginia 22201
June 1, 1999
Ms. Andrea Greenan
Re: Severance Arrangements
Dear Andrea:
Effective as of the Effective Date, Access Worldwide Communications,
Inc., a Delaware corporation and you (the "Employee"), hereby agree as set forth
below in this agreement (this "Agreement"). No amount shall be payable
hereunder unless the Employee shall have released the Company from the
obligation to pay any other severance benefit payable upon a Change in Control.
1. Section 1 -- Definitions. As used herein, the following words and
phrases shall have the following respective meanings unless the context clearly
indicates otherwise.
1.1. Base Period. The period consisting of the most recent five (5)
taxable years ending on or before the date on which a Change in Control occurs
or such portion of such period during which the Employee performed personal
services for the Company.
1.2. Base Salary. The annual amount the Employee receives as wages or
salary from the Company.
1.3 Board. The Board of Directors of the Company.
1.4 Cause. A termination for Cause is a termination evidenced by a
written notice specifying (i) that the Employee willfully and continually failed
to substantially perform the Employee's duties with the Company (other than a
failure resulting from the Employee's incapacity due to physical or mental
illness), which failure continued for a period of at least thirty (30) days
after a written notice of demand for substantial performance has been delivered
to the Employee specifying the manner in which the Employee has failed to
substantially perform; or (ii) that the Employee, in carrying out his employment
duties, has been
<PAGE>
-2-
guilty of (A) willful or gross neglect or (B) willful or gross misconduct,
resulting in either case in material harm to the Company; or (iii) that the
Employee has been convicted of (A) a felony or (B) any offense involving moral
turpitude. No act, or failure to act, on the Employee's part shall be considered
"willful" unless the Employee has acted, or failed to act, with an absence of
good faith and without a reasonable belief that the Employee's action or failure
to act was in the best interests of the Company. Notwithstanding anything
contained in this Agreement to the contrary, no failure to perform by the
Employee after Notice of Termination is given by the Employee shall constitute
Cause.
1.5. Change in Control. A "Change in Control" shall be deemed to occur:
(a) on the effective date of 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
(b) on the date of closing of 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.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur if the Company either merges or consolidates with or into another
company or sells or disposes of all or substantially all of its assets to
another company, if such merger, consolidation, sale or disposition is in
connection with a corporate restructuring wherein the stockholders of the
Company immediately before such merger, consolidation, sale or disposition own,
directly or indirectly, immediately following such merger, consolidation, sale
or disposition at least a majority of the combined voting power of all
outstanding classes of securities of the Company resulting from such merger or
consolidation, or to which the Company sells or disposes of its assets, in
substantially the same proportion as their ownership in the Company immediately
before such merger, consolidation, sale or disposition.
1.6. Company. The Company is Access Worldwide Communications,
Inc., a Delaware corporation.
1.7. Effective Date. The date this Agreement is approved by the
Board or the Compensation Committee of the Board, or such other date as the
Board or such Committee shall designate in its resolution approving this
Agreement, or any amendment or restatement thereof.
1.8. Good Reason. "Good Reason" shall mean:
(a) a reduction in the Employee's annual base salary after April
12, 1999; or
(b) a change in the Employee's responsibilities which, in the
Employee's reasonable judgment, represents a substantial reduction of
responsibilities as existed
<PAGE>
-3-
immediately prior thereto or the assignment to the Employee of any duties or
responsibilities which, in the Employee's reasonable judgment, are inconsistent
with the duties or responsibilities which existed immediately prior thereto,
except in connection with the termination of the Employee's employment for
Cause, Permanent Disability, as a result of the Employee's death or by the
Employee other than for Good Reason; or
(c) the requirement by the Company after a Change in Control that the
Employee (without the consent of the Employee) be based at any place outside of
the Employee's normal commuting distance, except for reasonably required travel
on the Company's business which is not materially greater than such travel
requests prior to the Change in Control.
In addition, if the Employee voluntarily terminates the Employee's
employment in connection with and at the time of a Change in Control, the
Employee will be considered to have terminated the Employee's employment for
Good Reason, if the Employee will be required to accept a position with the
TelAc Teleservices Group of the Company effective with the Change in Control.
1.09 Notice of Termination. "Notice of Termination" shall mean a
notice which indicates the specific provisions in this Agreement relied upon as
the basis for any termination of employment and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Employee's employment under the provision so indicated. No purported
termination of employment shall be effective without such Notice of Termination.
1.10 Operating Companies. "Operating Companies" are the
subsidiaries of the Company.
1.11 Permanent Disability. The Employee shall be deemed to have
become permanently disabled for purposes of this Agreement if the Chief
Executive Officer of the Company finds, upon the basis of medical evidence
received from a physician reasonably satisfactory to the Chief Executive Officer
and the Employee, that the Employee is disabled, whether due to physical or
mental condition, so as to be prevented from performing the Employee's normal
duties for the Company with or without reasonable accommodation.
1.12 Severance Benefit. The benefit payable in accordance with
Section 3 of this Agreement.
2. Section 2 - Duration and Eligibility.
2.1 This Agreement shall be effective as of the Effective Date.
2.2 Eligibility. The Employee shall not be entitled to the
Severance Benefit if the Employee ceases to be an employee at any time prior to
a Change in Control, or if his employment is terminated following a Change in
Control under circumstances where the Employee is not entitled to a Severance
Benefit under the terms of this Agreement; provided, however, that if the
Employee ceases to be an employee during the period commencing ninety (90) days
prior to a Change in Control by reason of termination by the Company without
"cause", then the Employee shall be entitled to a Severance Benefit under the
terms of this
<PAGE>
-4-
Agreement. For purposes hereof, "cause" shall mean (a) breach of any of the
Employee's employment obligations or (b) any material act of dishonesty
involving the Company or (c) repeated failure to follow the instructions of the
President of the Company in connection with the Employee's duties or (d)
repeated significant carelessness in the performance of duties or (e) repeated
unexcused absences during normal working hours or (f) repeated insobriety at the
work place or (g) that the Employee has been charged with committing and has
been convicted of (i) a felony or (ii) any crime or offense involving moral
turpitude. If the basis for cause is an act or acts described in clause (a), (c)
or (d) above, you shall be given thirty (30) days to cease or correct the
performance (or non performance) giving rise to such cause.
2.3. Three Month Transition Period. If following a Change in
Control, the Company requests in writing that the Employee remain as an employee
of the Company for a transition period, then to be eligible for a Severance
Benefit hereunder, the Employee shall be obligated to remain with the Company on
a transitional basis for up to three months following a Change in Control. In
such event, the Employee's Severance Benefit under Sections 3.2 (b) and (c)
shall commence following the end of the transition period. Notwithstanding the
foregoing, the Employee shall be entitled to terminate his employment for Good
Reason during the transition period and thereafter receive the applicable
Severance Benefit hereunder. The Company agrees to give the Employee sixty (60)
days' prior notice of the termination of transitional employment.
3. Section 3 - Severance Benefits.
3.1. Right to Severance Benefit.
(a) The Employee shall be entitled to receive from the Company a
Severance Benefit in the amount provided in Section 3.2 if (i) a Change in
Control has occurred and (ii) within one (1) year thereafter, the Employee's
employment with the Company terminates for any reason (for purposes hereof
employment shall be considered terminated if employment continues only on a
transitional basis) except that notwithstanding the provisions of this paragraph
(a), no benefits under this Agreement will be payable should the Employee's
termination of employment be (A) for Cause, (B) by reason of Permanent
Disability, (C) voluntarily initiated by the Employee for other than Good
Reason, or (D) by reason of the Employee's death.
(b) Notwithstanding any other provision of the Agreement, the sale,
divestiture or other disposition of an Operating Company (or part thereof),
shall not be deemed to be a termination of employment of employees employed by
such Operating Company, and such employees shall not be entitled to benefits
from the Company under this Agreement as a result of such sale, divestiture, or
other disposition, or as a result of any subsequent termination of employment,
provided the provisions of Section 5.2 have been satisfied.
3.2. Amount of Severance Benefit. If the Employee's employment is
terminated in circumstances entitling the Employee to a Severance Benefit as
provided in Section 3.1, the Employee shall be entitled to the following
benefits:
<PAGE>
-5-
(a) the Company shall pay to the Employee, as severance pay and in
lieu of any further salary for periods subsequent to the Termination Date, an
amount in cash equal to the amount listed on Exhibit A;
(b) for the period specified on Exhibit A, subsequent to the Employee's
termination of employment, the Company shall at its expense continue on behalf
of the Employee and his dependents and beneficiaries, the medical and dental
benefits, life insurance, short term disability insurance and long-term
disability insurance which were being provided to the Employee at the time of
termination of employment. The benefits provided in this Subsection 3.2(b) shall
be no less favorable to the Employee, in terms of amounts and deductibles and
costs to the Employee, than the coverage provided the Employee under the plans
providing such benefits at the time Notice of Termination is given. The
Company's obligation hereunder to provide the foregoing benefits shall terminate
if the Employee obtains coverage under a subsequent employer's medical and
dental, life insurance, short-term disability insurance and or long-term
disability insurance benefit plans;
(c) the amounts provided for in Section 3.2(a) shall be paid in the
same periodic installment as the Employee's salary has been paid prior to the
Termination Date commencing on the Employee's Termination Date; provided,
however that the Company shall pay the balance of the Employee's Severance
Benefit then unpaid in a single lump sum payment within fifteen (15) days after
the Employee's commencement of employment with a new employer. No benefit
payable hereunder will be reduced if the Employee takes other employment.
Notwithstanding the foregoing, if any payment to or for the benefit of
the Employee under this Agreement either alone or together with other payments
to or for the benefit of the Employee would constitute a "parachute payment" (as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code")), the payments under this Agreement shall be reduced to the largest
amount that will eliminate both the imposition of the excise tax imposed by
Section 4999 of the Code and the disallowance of deductions to the Company under
Section 280G of the Code for any such payments. The amount and method of any
reduction in the payments under this Agreement pursuant to this paragraph shall
be as reasonably determined by the Compensation Committee of the Board.
4. Section 4 - Termination of Employment.
4.1. Written Notice Required. Any purported termination of
employment, either by the Company or by the Employee, shall be communicated by
written Notice of Termination to the other.
4.2. Termination Date. In the case of the Employee's death, the
Employee's Termination Date shall be the Employee's date of death. In all other
cases, the Employee's Termination Date shall be the date specified in the Notice
of Termination subject to the following: (a) if the Employee's employment is
terminated by the Company due to Permanent Disability, the date specified in the
Notice of Termination shall be at least thirty (30) days from the date the
Notice of Termination is given to the Employee, provided that the Employee shall
not have returned to the full-time performance of the Employee's duties during
<PAGE>
-6-
such period of at least thirty (30) days; and (b) if the Employee terminates the
Employee's employment for Good Reason, the date specified in the Notice of
Termination shall not be more than thirty (30) days from the date the Notice of
Termination is given to the Company.
5. Section 5 - Successors to Company.
5.1. Successors. This Agreement shall bind any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, in the
same manner and to the same extent that the Company would be obligated under
this Agreement if no succession had taken place. In the case of any transaction
in which a successor would not by the foregoing provision or by operation of law
be bound by this Agreement, the Company shall require such successor expressly
and unconditionally to assume and agree to perform the Company's obligations
under this Agreement, in the same manner and to the same extent that the Company
would be required to perform if no such succession had taken place.
5.2. Sale of Operating Companies. In the event that one or
more Operating Companies (or part thereof) are sold, divested, or otherwise
disposed of by the Company subsequent to a Change in Control, the Company shall
require such purchaser or acquirer, as a condition precedent to such purchase or
acquisition, to assume, and agree to perform the Company's obligations under
this Agreement, in the same manner, and to the same extent that the Company
would be required to perform if no such acquisition or purchase had taken place.
In such circumstances, the purchaser or acquirer shall be solely responsible for
providing any benefits payable under this Agreement to such employees.
6. Section 6 - Amendment and Termination.
6.1. Amendment and Termination. This Agreement may be
terminated or amended in any respect by resolution adopted by the entire Board;
provided, however, that no such amendment or termination of this Agreement may
be made if such amendment or termination would adversely affect any benefit of
the Employee set forth herein and provided further, that this Agreement shall no
longer be subject to amendment, change, substitution, deletion, revocation or
termination in any respect whatsoever following a Change in Control.
6.2. Form of Amendment. The form of any amendment or
termination of this Agreement shall be a written instrument signed by a duly
authorized officer or officers of the Company, certifying that the amendment or
termination has been approved by the Board.
7. Section 7 - Miscellaneous.
7.1. Indemnification. If, after a Change in Control, the
Employee institutes any legal action in seeking to obtain or enforce, or is
required to defend in any legal action the validity or enforceability of, any
right or benefit provided by this Agreement, the Company will pay for all actual
legal fees and expenses incurred by such Employee so long as the Employee is
successful on the merits in whole or in substantial part.
<PAGE>
-7-
7.2. Employment Status. This Agreement does not constitute a contract of
employment or impose on the Company any obligation to retain the Employee, to
change the status of the Employee's employment, or to change any employment
policies of the Company.
7.3. Validity and Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect, and any prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
7.4. Governing Law; Choice of Forum. The validity, interpretation,
construction and performance of this Agreement shall in all respects be
governed by the laws of the Commonwealth of Virginia. The Employee shall be
entitled to enforce the provisions of this Agreement in any state or federal
court located in the Commonwealth of Virginia, in addition to any other
appropriate forum.
* * *
<PAGE>
-8-
By signing this letter, you agree to by bound by all of the terms and
conditions set forth herein.
Very truly yours,
ACCESS WORLDWIDE COMMUNICATIONS, INC.
By: /s/ John Fitzgerald
-------------------------------------
Name:
Title: CEO
Accepted and Agreed To:
By: /s/ Andrea Greenan
-----------------------------------------
Andrea Greenan
<PAGE>
EXHIBIT A
BENEFITS
--------
1.0 AMOUNT OF SEVERANCE BENEFIT:
(a) one half (0.5) times the Employee's Base Salary in effect immediately prior
to the Change in Control.
2.0 The period applicable for Section 3.2(b) is six (6) months.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,470,534
<SECURITIES> 0
<RECEIVABLES> 20,888,643
<ALLOWANCES> 859,920
<INVENTORY> 0
<CURRENT-ASSETS> 23,982,252
<PP&E> 11,744,408
<DEPRECIATION> 0
<TOTAL-ASSETS> 107,508,355
<CURRENT-LIABILITIES> 52,843,239
<BONDS> 0
4,000,000
0
<COMMON> 95,285
<OTHER-SE> 46,874,113
<TOTAL-LIABILITY-AND-EQUITY> 107,508,355
<SALES> 60,198,102
<TOTAL-REVENUES> 60,198,102
<CGS> 37,745,963
<TOTAL-COSTS> 37,745,963
<OTHER-EXPENSES> 25,344,842
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,347,694
<INCOME-PRETAX> (5,240,397)
<INCOME-TAX> (1,676,927)
<INCOME-CONTINUING> (3,563,470)
<DISCONTINUED> 0
<EXTRAORDINARY> 101,686
<CHANGES> 0
<NET-INCOME> (3,665,156)
<EPS-BASIC> ($0.39)
<EPS-DILUTED> ($0.39)
</TABLE>
