<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
X Annual report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934 (Fee Required) for the fiscal year ended December
31, 1998.
Transition report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934 (No Fee Required) for the transition period from
______________ to _______________
Commission file number: 0-14315
AEGIS COMMUNICATIONS GROUP, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-2050538
-------- ----------
(State of Incorporation) (I.R.S. Employer Identification No.)
7880 BENT BRANCH DRIVE, SUITE 150, IRVING, TEXAS 75063
------------------------------------------------------
(Address of principal executive offices, Zip Code)
Registrant's telephone number, including area code: (972) 830-1800
--------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
----------------------------
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes X No
----- -----
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of April 23, 1999 was approximately $35.0 million.
As of April 23, 1999, 52,311,450 shares of Common Stock were outstanding.
<PAGE>
AEGIS COMMUNICATIONS GROUP, INC.
AMENDMENT TO FORM 10-K
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names and ages of all directors and
executive officers of the Company as of April 23, 1999, as well as all positions
and offices held by each such person and his term in each such position or
office:
<TABLE>
<CAPTION>
Name Age Position with the Company or Subsidiaries Held Position Since
- ---------------------------- ------ ----------------------------------------------------- ------------------------
<S> <C> <C> <C>
Michael G. Santry 51 Co-Chairman of the Board February 1986
Paul G. Stern 60 Co-Chairman of the Board July 1998
Stephen A. McNeely 52 President and Chief Executive Officer July 1998
Director July 1998
Matthew S. Waller 36 Chief Financial Officer March 1997
Director October 1997
Thomas J. Flynn 47 President of Elrick & Lavidge Marketing Research October 1998
Robert B. Allen 45 Executive Vice President of Sales and Marketing January 1999
Richard M. Interdonato 50 Chief Operations Officer/Executive Vice March 1999
President of Teleservices Operations
William F. Bergeron, Jr. 38 Senior Vice President of Technology December 1996
Edward Blank 64 Director July 1998
Daniel H. Chapman 54 Director July 1998
Drew Lewis 67 Director July 1998
David L. Malcolm 44 Director July 1998
Frederic V. Malek 62 Director July 1998
Darryl D. Pounds 49 Director March 1996
</TABLE>
MICHAEL G. SANTRY has been a director of the Company since February 1986
and Chairman of the Board since September 1996. Mr. Santry previously held the
positions of President and Chief Executive Officer of the Company from February
1986 through September 1996 and October 1997 through July 1998, and was Chief
Financial Officer of the Company from February 1986 through September 1996. Mr.
Santry founded Chartwell Group, Inc., a Dallas based investment firm, in 1996
and has served as its Chairman of the Board since that time. Since 1980, Mr.
Santry has been President and a director of Lakewood Financial Consultants,
Inc., a privately held corporation providing financial consulting services.
2
<PAGE>
PAUL G. STERN has served as Chairman of the Company since November 1996 and
co-founded Thayer Equity Investors III, L.P. ("Thayer") in 1995. Prior to that,
Dr. Stern was a Special Limited Partner at Forstmann Little & Co. From 1989
until 1993, Dr. Stern served as the Chairman and CEO of Northern Telecom Ltd.
Prior to that time, Dr. Stern served as President and Chief Operating Officer of
Burroughs (later Unisys) Corporation, Corporate Vice President and later
President of Commercial Electronics Operations at Rockwell International
Corporation and Chairman and Chief Executive Officer of Braun AG in Germany.
Dr. Stern serves on the Board of Dow Chemical Company, MLC Holdings, Inc.,
Software AG Systems, Inc., and Whirlpool Corporation.
STEPHEN A. MCNEELY has been President and Chief Executive Officer of the
Company since August 1997. Prior to joining the Company, between June 1996 and
August 1997, he was President and CEO of Keystone Communications Group, the
leading U.S. provider of worldwide broadcast services. From 1995 to 1996,
Mr. McNeely was President and CEO of PMG Equities, Inc. From 1991 to 1995, he
was President and CEO of Patrick Media Group, Inc. Mr. McNeely has held the
position of President and CEO in the automotive industry as well, with companies
such as GE Capital Resale Service (GECARS) (from 1989 to 1991) and Tenneco
Automotive Retail Services (a division of Tenneco Automotive, Inc.) (from 1987
to 1989). In addition, Mr. McNeely held a wide variety of senior management
positions with Exxon Corporation from 1968 to 1985. Mr. McNeely currently sits
on the Board of Directors of the Advertising Council and is the Campaign
Director for the Coalition of Organ and Tissue Donation.
MATTHEW S. WALLER has served as the Company's Chief Financial Officer since
March 1997. From 1993 to March 1997, Mr. Waller served in various positions
with Principal Financial Securities, Inc., most recently as Senior Vice
President and Head of Technology Investment Banking.
THOMAS J. FLYNN joined the Company as President of its Elrick & Lavidge
Marketing Research division in October 1998. Prior to joining Elrick & Lavidge,
Mr. Flynn was Senior Vice President of ICR Survey Research, Inc. from January
1998 to October. From 1996 though 1997, he was Senior Vice President and
Director of International Research for Opinion Research Corporation. Prior to
that, Mr. Flynn was Chief Operating Officer and Managing Partner of Yankelovich
Partners, Inc. from 1992 through 1996.
ROBERT B. ALLEN assumed the role of Executive Vice President of Sales and
Marketing in January 1999. From July through December 1998, Mr. Allen was the
Company's Senior Vice President of Operations for the Company's Central Region.
Mr. Allen served as ATC's Chief Operating Officer from January 1997 to July
1998. From 1980 through 1996, he held various management positions with
PepsiCo, Inc., most recently serving as Vice President of Sales and Marketing
for the $1.3 billion annual revenue single-serve business unit of PepsiCo's
Frito-Lay subsidiary.
RICHARD M. INTERDONATO joined the Company as Chief Operations
Officer/Executive Vice President of Teleservices Operations in March 1999. From
1996 through 1998, Mr. Interdonato was Principal of RMI Associates, Inc., which
provided management consulting services, including strategic planning, product
development and the expansion of business opportunities, to companies including
American Express, Fidelity Investments, PageNet and Credentials International.
From 1994 through 1996, Mr. Interdonato was Executive Vice President of Safecard
Services, Inc. From 1973 through 1992, he held variety of positions of
increasing responsibility with American Express Company including the
development of systems and operational structure to support the launch of the
Optima Card in the U.S. as well as the Gold Card in Tokyo, Japan.
WILLIAM F. BERGERON, JR. joined the Company's Advanced operating subsidiary
in February 1993 and has been Senior Vice President of Technology since December
1996. From 1992 to 1993, Mr. Bergeron served in a variety of management
positions with Tandem Telecommunications Systems Inc., most recently as Senior
Member of the Technical Staff.
EDWARD BLANK, former Vice Chairman and founder of IQI, is one of the
pioneers of the telemarketing industry. He founded IQI's predecessor company in
1968, and, under his direction, IQI grew to be one of the largest telemarketers
in the U.S. Prior to establishing IQI, Mr. Blank was associated with Litton
Industries, Benton & Bowles Advertising and NBC in senior marketing research
capacities.
3
<PAGE>
DANIEL H. CHAPMAN is currently Chairman of Northern Trust Bank of Texas and
Director of National Expansion of Northern Trust Corporation and has served in
such capacities since October 1997. From August 1985 until October 1997,
Mr. Chapman was President and Chief Executive Officer of Northern Trust Bank of
Texas and its predecessor, Concorde Bank, N.A.
DREW LEWIS served as Chairman and Chief Executive Officer of Union Pacific
Corporation from 1987 to 1997. Prior to that time, Mr. Lewis served as
President and Chief Operating Officer of Union Pacific Railroad from 1986 to
1987. Prior to his career with Union Pacific, Mr. Lewis served as Chairman and
Chief Executive Officer of Warner Amex Cable Communications and served as U.S.
Secretary of Transportation in President Reagan's cabinet from 1981 through
1983. Mr. Lewis is a director of American Express Company, FPL Group, Inc.,
Gannett Co., Inc., Gulfstream Aerospace Corporation, Lucent Technologies and
Union Pacific Resources Group Inc. Mr. Lewis also has served as past Chairman
of The Business Roundtable.
DAVID L. MALCOLM currently serves as Chairman of Suncoast Financial
Corporation, a HUD approved mortgage banking company. Mr. Malcolm is also the
founder and President of West Coast Restaurant Enterprises, an owner and
operator of 18 restaurants. Mr. Malcolm also serves as a consultant and Senior
Vice President of Artemis Capital, a large municipal investment banking firm,
and is Chairman of the Board of San Diego United Port District, which owns and
operates San Diego's International Airport and all water rights and real
property on San Diego Bay. From 1994 to 1997, Mr. Malcolm served on the
California Commission for Judicial Performance, and from 1984 to 1995, on the
California Coastal Commission. Mr. Malcolm serves on the board of Giant Group
Ltd.
FREDERIC V. MALEK founded Thayer Capital Partners in 1991 and co-founded
Thayer Equity Investors III, L.P. in 1995. From 1989 to 1991, Mr. Malek was
President and then Vice Chairman of Northwest Airlines. Prior to that time,
Mr. Malek served as President of Marriott Hotels and Resorts from 1980 to 1988.
Mr. Malek currently serves as director of American Management Systems, Inc.,
Automatic Data Processing Corp., CB Richard Ellis Services, Inc., FPL Group,
Inc., Global Vacation Group, Inc., HCR Manor Care, Inc., Northwest Airlines
Corp., and various PaineWebber mutual funds.
DARRYL D. POUNDS is Chairman and CEO of the General Partner of G&H
Manufacturing, Ltd., a Texas limited partnership. He has been a director of the
Company since March 1996 and has been a Partner of Chartwell Group, Inc., a
Dallas based investment firm, since 1996. From 1993 until 1995, Mr. Pounds
served as Chairman and CEO of the Trust Company of Texas and, from 1972 through
1993, Mr. Pounds held a variety of positions within First City Bancorporation,
including Chairman and CEO of First City Bank of Dallas.
Each director serves until the next annual meeting of the Company's
shareholders and until the director's successor is duly elected. Officers serve
at the discretion of the Board of Directors. There is no family relationship
among any of the above named officers and directors of the Company.
4
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
Furnished below is a table containing individual compensation information
on persons serving as Chief Executive Officer of the Company during the fiscal
year ended December 31, 1998 and the five other most highly paid executive
officers of the Company and its operating subsidiaries whose total annual salary
and bonus amounts totaled $100,000 or more for services rendered in all
capacities during the fiscal year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------------ ------------------------------
Awards
Other ------------------------------
Annual Restricted Options/
Name and Fiscal Salary Bonus Compen- Stock SARs
Principal Position Year $ $ sation Awards (1)(2)
- ------------------------------ ------ ----------- ----------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
STEPHEN A. MCNEELY 1998 325,000 100,000 - - -
Chief Executive Officer 1997 110,769 (3) - - - 1,121,936
and President 1996 - - - - -
MICHAEL G. SANTRY 1998 350,000 - - - 800,000
Co-Chairman, former 1997 175,000 (4) - - - -
Chief Executive Officer 1996 156,250 (4) - - - 1,000,000
and President
MATTHEW S. WALLER 1998 225,000 121,500 - - 300,000
Chief Financial 1997 164,567 (5) 33,650 - - 300,000
Officer 1996 - - - - -
ERIC CROSON 1998 248,416 60,000 - - -
Former Chief Financial 1997 248,416 - - - -
Officer of IQI 1996 11,538 (6) - - - 237,912
ROBERT B. ALLEN 1998 220,000 80,000 - - -
Executive Vice President 1997 210,833 (7) 44,000 - - 300,000
of Sales and Marketing, 1996 - - - - -
former Senior Vice
President of Operations
CRAIG CALLAWAY (8) 1998 148,088 127,109 - - 38,000
Former Senior Vice 1997 136,168 61,165 2,758 - 103,627
President of Operations 1996 123,532 15,723 3,220 - -
WILLIAM F. BERGERON, JR. 1998 146,521 57,625 - - 50,000
Senior Vice President of 1997 112,007 25,000 - - 100,000
Technology 1996 85,926 20,000 - - -
</TABLE>
(FOOTNOTES APPEAR ON FOLLOWING PAGE)
5
<PAGE>
(1) On July 9, 1998, Aegis Communications Group, Inc. ("Aegis"), formerly known
as ATC Communications Group, Inc. ("ATC"), completed the acquisition of
IQI, Inc., a New York corporation ("IQI"). The acquisition was effected
through the merger (the "Merger") of ATC Merger Sub, Inc. ("Sub"), a New
York corporation and wholly-owned subsidiary of ATC, with and into IQI
pursuant to an Agreement and Plan of Merger dated as of April 7, 1998 (the
"Merger Agreement") by and between ATC, Sub and IQI. The acquisition has
been accounted for as a reverse purchase, meaning that for accounting
purposes, IQI is the surviving corporation and is treated as having
acquired ATC in a purchase accounting transaction. In connection with the
Merger, each share of IQI common stock was converted into 9.7513 shares of
the Company's common stock ("Common Stock").
(2) In November 1996, IQI established the 1996 Incentive Stock Option Plan (the
"IQI Plan"). The Plan provides for the award of incentive stock options to
directors, officers, key employees and members of Thayer's Advisory Board.
The IQI Plan was administered by a Compensation Committee, as established
by IQI's Board of Directors. These options are intended to qualify as
incentive stock options ("ISOs") under the Internal Revenue Code or
non-statutory stock options ("NSOs") which are not intended to qualify. In
connection with the Merger, each IQI stock option was exchanged for 9.7513
options to purchase Common Stock.
Prior to the Merger, ATC shareholders approved two stock option plans,
which provided for the granting of options to purchase up to 5,000,000
shares of Common Stock to key employees, officers and directors of ATC and
its operating subsidiary (the "ATC Plans"). At the date of the Merger,
options to purchase 4,447,000 shares of Common Stock granted pursuant to
the ATC Plans were outstanding.
In September 1998, the Company initiated the Aegis Communications Group,
Inc. 1998 Stock Option and Restricted Stock Plan (the "1998 Plan") which
provides for the granting of options to purchase up to a maximum of
7,500,000 shares of Common Stock to key employees, officers and directors
of the Company and its operating subsidiaries. Options granted pursuant to
the 1998 Plan are exercisable for 10 years from the date of the grant
subject to vesting schedules. The Company may grant additional options at
any time prior to September 2008. As a result of the adoption of the 1998
Plan, the Company will not grant any future options to purchase shares of
Common Stock pursuant to the IQI Plan and ATC plans.
(3) The amount indicated is the salary paid to Mr. McNeely from the
commencement of his employment with the Company, on August 1, 1997, through
December 31, 1997.
(4) Mr. Santry elected not to receive any salary or bonus compensation during
the period from July 1, 1996 through June 30, 1997. Effective April 1,
1996, the Compensation Committee of the Board of Directors set Mr. Santry's
annual base salary at $350,000. Mr. Santry is also entitled to receive
bonus compensation of up to $125,000 annually. Effective with the Merger,
Mr. Santry relinquished the roles of President and CEO and assumed the role
of Co-Chairman of the Board of the Company.
(5) Mr. Waller joined the Company as Chief Financial Officer on March 24, 1997.
The amount indicated is the salary paid to Mr. Waller from the commencement
of his employment with the Company through June 30, 1997. Mr. Waller's
employment agreement with the Company specifies an annual base salary of
$225,000 and bonus compensation of up to $135,000 annually. See
"Employment Agreements and Termination of Employment Agreements."
(6) Mr. Croson joined the Company as Chief Financial Officer in December 2,
1996. The amount indicated is the salary paid to Mr. Croson from the
commencement of his employment through December 31, 1996. Mr. Croson is no
longer employed by the Company.
(7) Mr. Allen joined ATC as Chief Operating Officer on January 6, 1997. The
amount indicated is the salary paid to Mr. Allen from the commencement of
his employment through December 31, 1997.
6
<PAGE>
(8) Mr. Callaway is no longer employed by the Company.
OPTION GRANTS
On April 7, 1998, in connection with the ATC Board's approval of the Merger
and to be effective upon completion of the Merger, the ATC Board granted Michael
G. Santry, Chairman of the Board, President and Chief Executive Officer of ATC,
nonqualified options to purchase 450,000 shares of ATC Common Stock under the
ATC Plans at an exercise price equal to 1/16th over the closing bid price of ATC
Common Stock on the closing date of the Merger, vesting one-third on the first,
second and third anniversaries of the Effective Date, respectively, all of which
were contingent upon consummation of the Merger. In addition, ATC and IQI
agreed that the Company would, upon consummation of the Merger, grant Mr. Santry
and Matthew S. Waller, Chief Financial Officer and Director of ATC, nonqualified
options to purchase 350,000 and 300,000 shares, respectively, of Common Stock
under the 1998 Plan at an exercise price equal to 1/16th over the closing bid
price of Common Stock on the closing date of the Merger. Two-thirds of the
options to be granted to Mr. Waller vested on the date of grant and one-third
vest on the first anniversary of the Effective Date. The options granted to
Mr. Santry vest one-third on the first, second, and third anniversaries of the
Effective Date, respectively.
The following table sets forth certain information relating to stock option
grants made by the Company to the Named Executive Officers during the last
fiscal year. The Company has no plans that provide for the granting of stock
appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
Number of % of Total at Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to for Option Term
Options Employees in Exercise Expiration ---------------------------------
Name Granted Fiscal Year Price Date 5% 10%
- ---------------------------- -------------- ---------------- ----------- ------------ ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael G. Santry 800,000 46.57% $2.81 7/9/08 $1,415,013 $3,585,921
Matthew S. Waller 300,000 17.47% $2.81 7/9/08 $530,630 $1,344,720
Thomas J. Flynn 75,000 4.37% $1.25 11/5/08 $58,959 $149,413
William F. Bergeron, Jr. 50,000 2.91% $1.25 11/5/08 $39,306 $99,609
Craig Callaway 38,000 2.21% $1.25 11/5/08 $29,872 $75,703
</TABLE>
COMPENSATION OF DIRECTORS
Directors of the Company receive no fees for serving on the Board of
Directors. Upon their initial election and as compensation for their service as
a director, each outside director is granted non-qualified options to purchase
50,000 shares of Common Stock, which vest ratably over a three-year period. As
such, Messrs. Malcolm, Pounds and Lewis were granted options to purchase 50,000,
25,000 and 10,000 shares of Common Stock, respectively, with an exercise price
of $1.25. The amount of the grants to Mr. Pounds and Mr. Lewis reflected their
prior status as directors of ATC and IQI, respectively, and their existing
option grants from such service. All directors are entitled to reimbursement
for expenses incurred for attendance at each meeting.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AGREEMENTS
7
<PAGE>
MATTHEW S. WALLER entered into an employment agreement effective March 24,
1997, pursuant to which he serves as Chief Financial Officer of the Company.
Under the employment agreement, Mr. Waller is entitled to receive an annual base
salary and an incentive bonus based upon certain financial performance targets
of the Company. The employment agreement provides for the payment to Mr. Waller
of 100% of his annual compensation if the Company terminates Mr. Waller's
employment without cause (as defined in the employment agreement) or in the
event that he is terminated after a change in control (as defined in the
employment agreement) of the Company. Mr. Waller's options vest immediately in
the event of a change in control (as defined in the employment agreement) of the
Company.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
Dr. Paul G. Stern, Darryl D. Pounds, Frederic V. Malek served on Aegis'
Compensation and Stock Option Committee during the fiscal year ended December
31, 1998. None of Dr. Stern, Mr. Pounds, nor Mr. Malek is a current officer or
employee of Aegis.
8
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 23, 1999, certain information
with respect to the beneficial ownership of Common Stock by (i) each person
known by the Company to be a beneficial owner of five percent (5%) or more of
the Company's Common Stock, (ii) each director and each of the five executive
officers listed in the Summary Compensation Table above who beneficially own
Common Stock of the Company, and (iii) all officers and directors who
beneficially own Common Stock as a group:
<TABLE>
<CAPTION>
Amount
Name and and Nature
Address of of Beneficial Percent of
Beneficial Owner Ownership Class (1)(2)
- ------------------------------------------------------- ------------------- --------------
<S> <C> <C>
Thayer Equity Investors III, L.P. 30,568,233 48.58%
1445 Pennsylvania Ave., NW, Suite 350
Washington, DC 20004
Codinvest Limited 3,319,824 6.39%
Road Town
Tortola, British Virgin Islands
William H. Scott, III (3) 3,058,699 5.86%
1239 O.G. Skinner Drive
West Point, GA 31833
Paul G. Stern (4)(5) 30,568,233 48.58%
1445 Pennsylvania Ave., NW, Suite 350
Washington, DC 20004
Frederic V. Malek (4)(5) 30,568,233 48.58%
1445 Pennsylvania Ave., NW, Suite 350
Washington, DC 20004
Edward Blank (4)(6) 4,294,407 8.17%
1250 Broadway, 37th Floor
New York, NY 10001
Michael G. Santry (4)(7) 957,000 1.81%
5950 Berkshire Lane, Suite 1650
Dallas, TX 75225
Stephen A. McNeely (4)(9) 610,946 1.17%
1645 N. Vine Street, Suite 700
Los Angeles, CA 90028
Matthew S. Waller (4)(8) 504,324 0.96%
7880 Bent Branch Dr., Suite 150
Irving, TX 75063
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Amount
Name and and Nature
Address of of Beneficial Percent of
Beneficial Owner Ownership Class (1)(2)
- ------------------------------------------------------- ------------------- --------------
<S> <C> <C>
Robert B. Allen (10) 339,600 0.65%
7880 Bent Branch Dr., Suite 150
Irving, TX 75063
Eric Croson (11) 158,608 0.30%
3006 Wild Meadow Drive
Durham, NC 27705
Darryl D. Pounds (4)(12) 120,000 0.23%
5950 Berkshire Lane, Suite 1650
Dallas, TX 75225
Craig Callaway (14) 113,741 0.22%
115 Shady Ridge Court
Duluth, GA 30155
William F. Bergeron, Jr. (13) 112,700 0.22%
7880 Bent Branch Dr., Suite 150
Irving, TX 75063
Drew Lewis (4)(15) 71,789 0.14%
P.O. Box 70
Lederach, PA 19450
All directors and officers as a group (11 persons) (16) 37,240,402 56.10%
</TABLE>
(1) Reported in accordance with the beneficial ownership rules of the
Securities and Exchange Commission. Unless otherwise noted, the
shareholders listed in the table have both sole voting power and sole
dispositive power with respect to such shares, subject to community
property laws where applicable and the information contained in the other
footnotes to the table.
(2) Based on 51,950,450 shares of Common Stock outstanding at April 23, 1999.
This number excludes 361,000 unretired treasury shares held by the Company.
Each owner's percentage is calculated by dividing the number of shares
beneficially held by the sum of 51,950,450 and the number of shares such
owner has the right to acquire within 60 days.
(3) Includes (a) 2,835,123 shares owned by ITC Service Company, for which
William H. Scott, III serves as President, (b) 38,535 shares subject to
warrants exercisable within 60 days, and (c) 185,042 shares issuable upon
conversion of convertible subordinated debt. Mr. Scott disclaims any and
all beneficial ownership associated with such shares owned by ITC Service
Company.
(4) Director.
(5) Includes (a) 19,224,493 shares owned by Thayer Equity Investors III, L.P.
("Thayer"), (b) 1,361,240 shares subject to warrants exercisable within 60
days, (c) 9,618,241 shares issuable upon conversion of convertible
subordinated debt, and (d) 210,900 shares owned by investors in Thayer who
may be deemed to be affiliates of Thayer. Each of Dr. Stern and Mr. Malek
are members of the general
10
<PAGE>
partner of this fund, and may be deemed to be the beneficial owner of its
shares and those of its affiliates. Dr. Stern and Mr. Malek disclaim such
beneficial ownership. Also includes 153,359 shares owned by TC
Co-Investors, LLC. Each of Dr. Stern and Mr. Malek are managers of this
fund, and may be deemed to be the beneficial owners of its shares.
Dr. Stern and Mr. Malek disclaim such beneficial ownership.
(6) Includes 288,312 shares subject to warrants exercisable within 60 days and
194,957 shares issuable upon conversion of convertible subordinated debt.
Also includes (a) 707,525 shares owned by the Edward Blank 1995 Grantor
Retained Annuity Trust (the "Blank Trust"), (b) 68,260 shares subject to
warrants exercisable within 60 days held by the Blank Trust, and (c) 46,218
shares issuable upon conversion of convertible subordinated debt held by
the Blank Trust. Mr. Blank is the trustee of the Blank Trust and therefore
may be deemed to beneficially own its shares.
(7) 7,000 of Mr. Santry's shares are owned of record by Lakewood Financial
Consultants, Inc. which is 99% owned by Mr. Santry. Includes beneficial
ownership of 950,000 shares of Common Stock issuable upon exercise of
stock options granted pursuant to the ATC Plans.
(8) Includes beneficial ownership of 300,000 shares of Common Stock issuable
upon exercise of stock options granted pursuant to the ATC Plans and
200,000 shares of Common Stock issuable upon exercise of stock options
granted pursuant to the 1998 Plan.
(9) Includes 373,979 shares subject to options exercisable within 60 days and
236,967 shares subject to a purchase option agreement with Thayer for
shares of Common Stock held by this fund.
(10) Includes beneficial ownership of 300,000 shares of Common Stock issuable
upon exercise of stock options granted pursuant to the ATC Plans.
(11) Includes 158,608 shares subject to options exercisable within 60 days.
These options expire on September 15, 1999.
(12) Includes beneficial ownership of 120,000 shares of Common Stock issuable
upon exercise of stock options granted pursuant to the ATC Plans.
(13) Includes beneficial ownership of 100,000 shares of Common Stock issuable
upon exercise of stock options granted pursuant to the ATC Plans.
(14) Includes 82,624 shares subject to options exercisable within 60 days.
These options expire on June 22, 1999.
(15) Includes 47,860 shares subject to options exercisable within 60 days.
(16) Includes beneficial ownership of 14,483,876 shares subject to warrants or
options exercisable within 60 days and shares issuable upon conversion of
convertible subordinated debt as set forth in footnotes (3), (5), (6), (7),
(8), (9), (10), (11), (12), (13), (14) and (15) above.
11
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At December 31, 1998, Michael G. Santry, the Co-Chairman of the Company,
had outstanding borrowings and accrued interest of approximately $1.9 million.
The borrowing bears 6% annual interest and was due in full on March 31, 1999.
In connection with the Merger discussed in "Note 3. Mergers and Acquisitions",
Mr. Santry paid one-half of the principal amount of the note. The remaining
balance on the note is secured by shares of the Company's Common Stock and
options to purchase shares of the Company's Common Stock held by Mr. Santry.
Reported interest income from the receivable amounted to approximately $58,000
in 1998. As of April 23, 1999, the Company and Mr. Santry were discussing a
further extension of the maturity date of such amount, including terms relating
to Mr. Santry delivering additional security sufficient to adequately securing
repayment of the note.
The Company provides services to certain clients, including its most
significant client, who, directly or through affiliates, have an ownership
interest in Thayer.
During the year ended December 31, 1998, the Company paid J. Frank Mermoud,
a former director of ATC, $80,000, in monthly installments, in consideration for
consulting services performed. These payments terminated at the end of 1998.
In connection with the Merger, Thayer provided the Company with $6.8
million in subordinated indebtedness (the "Subordinated Indebtedness") as well
as a guarantee for $2.0 million in bridge financing to assist in funding the
Company's working capital needs. In connection with the guarantee, and for
additional consideration of $110,000, the Company issued to Thayer warrants to
purchase 1,100,000 shares of the Company's Common Stock at an exercise price of
$1.96 (110% of the average of the high and low prices of ATC Common Stock on
April 7, 1998, the day before the announcement of the proposed Merger).
Prior to the Merger, on July 6, 1998, the Company received an additional
financing commitment from Thayer and certain other shareholders of IQI. Under
the commitment, the Thayer-led group agreed to lend the Company, at its
election, up to an additional $4.0 million in subordinated indebtedness at any
time within 90 days after the Merger. As of October 23, 1998, the Company had
drawn the full commitment amount of $4.0 million. In connection with this
commitment and effective upon the Merger, the Company issued the Thayer-led
group additional warrants to purchase up to 350,000 shares of the Company's
Common Stock at an exercise price of $2.375 per share and provided certain
anti-dilution protection. This indebtedness is convertible into the Company's
Common Stock at a conversion price of $2.375 per share, the closing price of
such stock on July 2, 1998, the date the Thayer-led group committed to provide
this financing. This debt is in addition to, and on the same basic terms as,
the subordinated debt that Thayer had previously loaned to the Company.
Subsequent to the end of the fiscal year, on March 30, 1999, Thayer
provided approximately $5.7 million in additional subordinated indebtedness to
assist in funding the Company's working capital needs. The additional
indebtedness is convertible into the Company's Common Stock at a conversion
price of $1.15 per share, which represents a 26.9% premium to the closing price
of Aegis Common Stock on March 25, 1999, the date that Thayer committed to
provide the financing.
Paul G. Stern, Drew Lewis, and Frederic V. Malek, each directors of the
Company, are partners in and/or advisors to Thayer.
Thayer, ITC Services Company, Edward Blank and The Edward Blank 1995
Grantor Retained Annuity Trust (the "IQI Parties") and Michael G. Santry, Darryl
D. Pounds and Codinvest Limited (the "ATC Parties"), are parties to a
Stockholders' Agreement with the Company whereby, for a period of two years from
the date of the Merger Agreement, each such stockholder has agreed to vote its
shares of Company Common Stock, if any, in favor of the nominees to the board of
directors selected by the other party's stockholder group. Messrs. Stern, Lewis
and Malek, by virtue of their positions with Thayer, may be viewed as indirect
beneficiaries of this voting arrangement, and Messrs. Santry and Pounds may be
viewed as direct beneficiaries of this voting arrangement.
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, hereunto duly authorized.
AEGIS COMMUNICATIONS GROUP, INC.
(The Registrant)
Dated: April 30, 1999 By: /s/ Matthew S. Waller
----------------------------
Matthew S. Waller
Chief Financial Officer
13
