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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
PTEK HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[PTEK HOLDINGS LOGO]
3399 Peachtree Road, N.E.
The Lenox Building
Suite 600
Atlanta, Georgia 30326
April 28, 2000
Dear Shareholder:
On behalf of the Board of Directors and management of PTEK Holdings, Inc.,
you are cordially invited to the Annual Meeting of Shareholders to be held on
Wednesday, June 7, 2000, at 10:00 a.m. at the Sheraton Buckhead Hotel at 3405
Lenox Road, N.E., Atlanta, Georgia 30326.
At the Annual Meeting, shareholders will be asked to:
. elect three directors for three-year terms;
. approve a 2000 Directors Stock Plan; and
. transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
These matters are described in the accompanying Notice of Annual Meeting and
Proxy Statement.
It is important that your stock be represented at the meeting regardless of
the number of shares you hold. You are encouraged to specify your voting
preferences by so marking the enclosed proxy card. Please then sign and date
the proxy card and return it in the enclosed envelope whether or not you plan
to attend the meeting. If you do attend and wish to vote in person, you may
revoke your proxy at the meeting.
If you plan to attend the meeting, please check the card in the space
provided. This will assist us with meeting preparations and will enable us to
expedite your admittance. If your shares are not registered in your own name,
and you would like to attend the meeting, please ask the broker, trust, bank
or other nominee which holds the shares to provide you with evidence of your
share ownership, which will enable you to gain admission to the meeting.
Sincerely,
/s/ Boland T. Jones
Boland T. Jones
Chief Executive Officer and
Chairman of the Board
<PAGE>
PTEK Holdings, Inc.
3399 Peachtree Road, N.E.
The Lenox Building
Suite 600
Atlanta, Georgia 30326
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
To be held on June 7, 2000
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Shareholders of PTEK
Holdings, Inc. (the "Company") will be held at the Sheraton Buckhead Hotel at
3405 Lenox Road, N.E., Atlanta, Georgia, 30326, on Wednesday, June 7, 2000 at
10:00 a.m. for the purposes of:
1. Electing three directors to serve until the 2003 Annual Meeting of
Shareholders;
2. Approving the Company's 2000 Directors Stock Plan; and
3. Transacting such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Information relating to the foregoing matters is set forth in the attached
Proxy Statement. Shareholders of record at the close of business on April 25,
2000 are entitled to receive notice of and to vote at the Annual Meeting and
any adjournments thereof.
By Order of the Board of Directors.
/s/ Patrick G. Jones
Patrick G. Jones
Corporate Secretary
Atlanta, Georgia
April 28, 2000
PLEASE READ THE ATTACHED PROXY STATEMENT AND PROMPTLY COMPLETE, EXECUTE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. YOU
CAN SPARE YOUR COMPANY THE EXPENSE OF FURTHER PROXY SOLICITATION BY RETURNING
YOUR PROXY CARD PROMPTLY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE THE
PROXY AND VOTE IN PERSON IF YOU SO DESIRE.
<PAGE>
PTEK HOLDINGS, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 7, 2000
This Proxy Statement is furnished to the shareholders of PTEK Holdings,
Inc., a Georgia corporation ("PTEK" or the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at
the Annual Meeting of Shareholders of the Company and at any adjournments
thereof (the "Annual Meeting"). The Annual Meeting will be held on Wednesday,
June 7, 2000, at 10:00 a.m. at the Sheraton Buckhead Hotel at 3405 Lenox Road,
N.E., Atlanta, Georgia 30326.
The approximate date on which PTEK is first mailing this Proxy Statement and
the accompanying proxy card to shareholders is May 10, 2000.
VOTING
General
The securities that can be voted at the Annual Meeting consist of the
Company's:
. Common Stock, $.01 par value per share ("Common Stock"); and
. Series B Voting Preferred Stock (the "Preferred Stock").
Holders of Common Stock are entitled to cast one vote for each share held on
the record date on each matter submitted to the shareholders at the Annual
Meeting. There is one share of Preferred Stock outstanding and entitled to
vote. The holder of the outstanding share of Preferred Stock is entitled to
the number of votes that the holders of the shares of exchangeable non-voting
shares of Voice-Tel of Canada Limited, a subsidiary of the Company (the
"Exchangeable Shares"), would be entitled to cast if all such Exchangeable
Shares were exchanged for Common Stock on a one-to-one basis.
The record date for the determination of shareholders who are entitled to
receive notice of and to vote at the Annual Meeting has been fixed by the
Board of Directors as the close of business on April 25, 2000. On the record
date, 47,896,014 shares of Common Stock were outstanding and eligible to be
voted at the Annual Meeting, assuming the conversion of all the Exchangeable
Shares.
Quorum and Vote Required
For each proposal to be considered at the Annual Meeting, the presence, in
person or by proxy, of a majority of the votes entitled to be cast on the
proposal is necessary to constitute a quorum for action on that matter.
Abstentions, votes withheld from any nominee and broker nonvotes (which occur
when shares held by brokers or nominees for beneficial owners are voted on
some matters but not on others) will be counted as present for purposes of
determining the presence or absence of a quorum with regard to any proposal at
the Annual Meeting.
The following shareholder votes will be required for approval of the
proposals to be submitted at the Annual Meeting.
. With regard to the proposal to elect three directors to serve until the
2003 Annual Meeting of Shareholders (Proposal 1), each director must be
elected by a plurality of the votes cast at the Annual Meeting by the
holders of shares entitled to vote. With respect to Proposal 1,
shareholders may vote "for" all of the director nominees, "withhold"
authority to vote for all of the nominees or withhold authority to vote
for any individual nominee(s) but vote for all other nominees. Shares
that are withheld from voting as to any nominee and broker nonvotes will
not affect the outcome.
<PAGE>
. Approval of the proposal to adopt the Company's 2000 Directors Stock
Plan (Proposal 2) will require that votes cast in favor of the proposal
exceed the votes cast against the proposal at the Annual Meeting. With
respect to Proposal 2, shareholders may vote "for," "against" or
"abstain" from voting. As a result, abstentions and broker nonvotes will
not affect the outcome.
Proxies; Other Matters That May Come Before the Annual Meeting
The accompanying proxy card is for use at the Annual Meeting if a
shareholder is unable to attend in person or is able to attend but does not
wish to vote in person. Shareholders should specify their choices with regard
to each proposal on the enclosed proxy card. All properly executed and dated
proxy cards delivered by shareholders to the Company in time to be voted at
the Annual Meeting, and not revoked, will be voted at the Annual Meeting in
accordance with the instructions given. If no specific instructions are given,
the shares represented by a signed and dated proxy card will be voted "FOR"
the election of the three director nominees named in Proposal 1 and "FOR"
Proposal 2.
The Board of Directors is not aware of any other business to be presented to
a vote of the shareholders at the Annual Meeting. As permitted by Rule 14a-
4(c) of the Securities and Exchange Commission, the persons named as proxies
on the proxy cards will have discretionary authority to vote in their judgment
on any proposals presented by shareholders for consideration at the Annual
Meeting that are submitted to the Company after April 5, 2000. Such proxies
also will have discretionary authority to vote in their judgment upon the
election of any person as a director in place of a nominee named in Proposal 1
who is unable to serve or for good cause will not serve as a director, and
upon matters incident to the conduct of the Annual Meeting.
The giving of a proxy does not affect the right to vote in person should the
shareholder attend the Annual Meeting. Any shareholder who has given a proxy
has the power to revoke it at any time before it is voted by giving written
notice of revocation to the Secretary of the Company at PTEK Holdings, Inc.,
3399 Peachtree Road, N.E., The Lenox Building, Suite 600, Atlanta, Georgia
30326, Attention: Patrick G. Jones, Corporate Secretary, by executing and
delivering a proxy card bearing a later date to Mr. Jones, or by voting in
person at the Annual Meeting. If a shareholder will not be attending the
Annual Meeting, any proxy or notice should be returned in time for receipt no
later than the close of business on the day preceding the Annual Meeting.
In addition to soliciting proxies directly, the Company has requested
brokerage firms, nominees, custodians and fiduciaries to forward proxy
materials to the beneficial owners of shares held of record by them. The
Company also may solicit proxies through its directors, officers and employees
in person and by telephone and facsimile, without payment of additional
compensation to such persons. The Company has retained Morrow & Company to
assist with the solicitation of proxies, the estimated cost of which is
$4,500, plus expenses. All expenses incurred in connection with the
solicitation of proxies will be borne by the Company.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth to the best of the Company's knowledge
certain information as of April 25, 2000 regarding the beneficial ownership of
the Company's voting stock by:
. each person who is known by the Company to be the beneficial owner of
more than 5% of any class of the Company's voting securities;
. each director and each nominee for director of the Company;
. each Named Executive Officer of the Company (as defined below); and
. all of the Company's executive officers, directors and each person
nominated to become a director as a group.
<TABLE>
<CAPTION>
Shares Percent
Beneficially of Class
Name of Beneficial Owner Owned (1) Owned
- ------------------------ ------------ --------
<S> <C> <C>
Boland T. Jones...................................... 4,126,755(2) 8.3%
George W. Baker, Sr.................................. 230,832(3) *
Raymond H. Pirtle, Jr................................ 163,030(4) *
Roy B. Andersen, Jr.................................. 758,508(5) *
Jeffrey A. Allred.................................... 406,283(6) *
William P. Payne..................................... 606,268(7) *
Patrick G. Jones..................................... 424,196(8) *
Jackie M. Ward....................................... 50,000(9) *
Jeffrey T. Arnold.................................... 51,000(10) *
Max A. Slifer, Jr.................................... 264,747(11) *
Elizabeth W. Abernathy............................... 25,980(12) *
All current executive officers and directors as a
group (12 persons).................................. 7,494,367(13) 10.3%
</TABLE>
- --------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission that deem shares to be beneficially
owned by any person who has or shares voting or investment power with
respect to such shares. Shares of the Company's Common Stock subject to
warrants or options that are currently exercisable or exercisable within
60 days of April 25, 2000 are deemed to be outstanding and to be
beneficially owned by the person holding such warrants or options for the
purpose of computing the percentage ownership of such person, but are not
treated as outstanding for the purpose of computing the percentage
ownership of any other person.
(2) Includes 1,999,694 shares held of record by Mr. Jones, 768 shares that are
held in the Company's 401(k) Plan for the benefit of Mr. Jones, 1,981,413
shares subject to warrants or options that are currently exercisable or
exercisable within 60 days, 590 shares held of record by Mr. Jones' wife
for which Mr. Jones holds the right to vote pursuant to an irrevocable
proxy granted by Mrs. Jones to Mr. Jones, and 144,290 shares held of
record by 22 shareholders for which Mr. Jones holds the right to vote
pursuant to irrevocable proxies granted by such shareholders to Mr. Jones.
Does not include 250 shares held of record by Mr. Jones' wife, as
custodian for the benefit of two unrelated minor children under the
Uniform Gifts to Minors Act, or 90,900 shares held in four grantor
retained annuity trusts, as to which shares Mr. Jones disclaims beneficial
ownership. The address of Mr. Jones is 3399 Peachtree Road, N.E., The
Lenox Building, Suite 600, Atlanta, Georgia 30326.
(3) Includes 110,832 shares held of record by Mr. Baker and 120,000 shares
subject to warrants or options that are currently exercisable or
exercisable within 60 days. Does not include 44,000 shares held of record
by Mr. Baker's wife, as to which shares Mr. Baker disclaims beneficial
ownership.
3
<PAGE>
(4) Includes 50,000 shares held of record by Mr. Pirtle and 3,030 shares
issuable upon conversion of $100,000 of the 5 3/4% Convertible
Subordinated Notes Due 2004 of PTEK (the "Notes") which are convertible
into Common Stock at an exercise price of $33.00 per share, all of which
are held in a 401(k) plan for the benefit of Mr. Pirtle. Also includes
110,000 shares subject to warrants or options that are currently
exercisable or exercisable within 60 days.
(5) Includes 175,008 shares held of record by Mr. Andersen and 583,500 shares
subject to warrants or options that are currently exercisable or
exercisable within 60 days.
(6) Includes 50,000 shares held by Mr. Allred in an individual retirement
account, 768 shares that are held in the Company's 401(k) Plan for the
benefit of Mr. Allred, and 355,515 shares that are subject to warrants or
options that are currently exercisable or exercisable within 60 days.
(7) Includes 5,500 shares held of record by Mr. Payne and 600,000 shares
subject to options that are currently exercisable or exercisable within
60 days.
(8) Includes 19,528 shares held of record by Mr. Jones, 10,000 shares held in
an individual retirement account, 768 shares that are held in the
Company's 401(k) Plan for the benefit of Mr. Jones, 303,000 shares
subject to warrants or options that are currently exercisable or
exercisable within 60 days, and 90,900 shares owned by four trusts of
which Mr. Jones is the sole trustee.
(9) Includes 50,000 shares subject to options or warrants that are currently
exercisable within 60 days.
(10) Includes 1,000 shares held of record by Mr. Arnold and 50,000 shares
subject to options or warrants that are exercisable within 60 days.
(11) Includes 36,698 shares held of record by Mr. Slifer, 768 shares that are
held in the Company's 401(k) Plan for the benefit of Mr. Slifer, and
227,281 shares subject to options or warrants that are exercisable within
60 days.
(12) Includes 4,128 shares held of record by Ms. Abernathy, 487 shares that
are held in the Company's 401(k) Plan for the benefit of Ms. Abernathy,
and 21,365 shares subject to options or warrants that are exercisable
within 60 days.
(13) Includes 4,702,074 shares subject to warrants or options that are
currently exercisable or exercisable within 60 days, and 3,030 shares
issuable upon conversion of $100,000 of the Notes that are held in a
401(k) plan for the benefit of Mr. Pirtle.
4
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
Pursuant to the Company's Amended and Restated Bylaws (the "Bylaws"), the
number of directors of the Company may not be less than three nor more than
eight, with the precise number to be determined by resolution of the Company's
Board of Directors from time to time. Currently, the Board is comprised of
eight directors. The Company's Board of Directors is divided into three
classes, which are as nearly equal in number as possible. The directors in
each class are elected by the shareholders for a term of three years and until
their successors are elected and qualified or until such directors' death,
resignation, or removal. The term of office of one of the classes of directors
expires each year at the Annual Meeting of Shareholders, and a new class of
directors is elected by the shareholders each year at that time.
At the Annual Meeting, the terms of three Class III directors, Boland T.
Jones, George W. Baker, Sr. and Jeffrey T. Arnold will expire, and the Board
of Directors has nominated each of these individuals to stand for re-election
as directors at the Annual Meeting. In addition, Roy B. Andersen, Jr., a Class
II director, has announced that he intends to resign as a director promptly
following the Annual Meeting, although he will remain as a consultant to the
Company. The Board has determined not to fill the vacancy that will be created
by Mr. Andersen's resignation.
If elected by the shareholders, each of the Class III nominees will serve a
three-year term that will expire at the 2003 Annual Meeting. If any of the
nominees should be unavailable to serve for any reason (which is not
anticipated), the Board of Directors may designate a substitute nominee or
nominees (in which case the persons named as proxies on the enclosed proxy
card will vote the shares represented by all valid proxy cards for the
election of such substitute nominee or nominees), allow the vacancy or
vacancies to remain open until a suitable candidate or candidates are located
and nominated by resolution of the Board of Directors, or by resolution
provide for a lesser number of directors.
The Board of Directors unanimously recommends that shareholders vote "FOR"
the proposal to elect Boland T. Jones, George W. Baker, Sr. and Jeffrey T.
Arnold as directors of the Company for three-year terms expiring at the 2003
Annual Meeting of Shareholders and until their successors have been duly
elected and qualified.
5
<PAGE>
Information Regarding Nominees and Continuing Directors and Executive Officers
The following table sets forth certain information regarding the three
nominees for director, the five incumbent directors whose terms as directors
will continue following the Annual Meeting and the executive officers. Roy B.
Andersen, Jr., a Class II director, has announced that he intends to resign as
a director promptly following the Annual Meeting, although he will remain as a
consultant to the Company. The Board has determined not to fill the vacancy
that will be created by Mr. Andersen's resignation.
Class III Directors Nominated To Serve Until the 2003 Annual Meeting of
Shareholders
Boland T. Jones Mr. Jones, age 40, a founder of the Company, has served
as a director and Chief Executive Officer of the Company
since its inception in July 1991. From February 1993
until August 1998, Mr. Jones served as President of the
Company. Since September 1993, Mr. Jones has also served
as the Chairman of the Board of Directors. From 1986
until founding the Company, Mr. Jones served as Chairman,
Chief Executive Officer and President of American Network
Exchange, Inc., a diversified transmission provider
specializing in niche markets. Mr. Jones is also a
director of Derivion Corporation, Webforia, ScienceWise,
Folded Edge, ePipeline (formerly rfpexpo), i2Go.com,
Planetjam, and BuyTrek. Mr. Jones is the son-in-law of
Mr. Baker, a director of the Company.
George W. Baker, Sr. Mr. Baker, age 64, has been a director of the Company
since the Company's inception in July 1991. Since July
1988, Mr. Baker has served as a director, President and
Chief Executive Officer of Taco Tico, Inc., a Wichita,
Kansas-based franchisor of Mexican restaurants. Mr.
Baker's prior experience also includes service on the
Board of Directors of Kentucky Fried Chicken Corporation,
as President of Kentucky Fried Chicken Operating Company
and as President, Chief Executive Officer, founder and
shareholder of Mr. Gatti's, a pizza restaurant chain. Mr.
Baker is the father-in-law of Mr. Boland Jones, the
Chairman of the Board and Chief Executive Officer of the
Company.
Jeffrey T. Arnold Mr. Arnold, age 30, has served as a director of the
Company since April 1999. Mr. Arnold has been the Chief
Executive Officer of Healtheon/WebMD Corporation
(Nasdaq:HLTH), a leading end-to-end Internet healthcare
company connecting physicians and consumers to the
healthcare industry, since November 1999. Prior to that
he was Chairman of the Board and Chief Executive Officer
of WebMD from October 1996 until November 1999, and he
served as the President of WebMD from October 1996 to
September 1997. WebMD was acquired by Healtheon Corp. in
November 1999. From April 1994 to March 1997, Mr. Arnold
served in various capacities, including as Chairman and
Chief Executive Officer at Endeavor Technologies before
it was merged into WebMD. Mr. Arnold is also a director
of iXL Enterprises and M2Direct.
Incumbent Class I Directors To Serve Until the 2001 Annual Meeting of
Shareholders
Jeffrey A. Allred Mr. Allred, age 46, has served as President and Chief
Operating Officer of the Company since January 1999. Mr.
Allred served as Executive Vice President of Strategic
Development of the Company from August 1997 until January
1999 and has served as a director of the Company since
May 1998. From June 1996 until July 1997, Mr. Allred was
a partner in the Atlanta, Georgia office of the law firm
of Alston & Bird LLP. From February 1992 until June 1996,
Mr. Allred was a partner in the Atlanta, Georgia office
of the law firm of Nelson Mullins Riley & Scarborough,
L.L.P. Mr. Allred is also a director of USA.NET and
i2Go.com.
6
<PAGE>
William P. Payne Mr. Payne, age 52, has served as a director of the
Company since May 1998. Since January 1999, Mr. Payne has
served as Vice Chairman of the Board of Directors.
Mr. Payne has served as the Chairman of Orchestrate.com,
Inc., a wholly owned subsidiary of the Company, since
July 1998. Mr. Payne was a Vice Chairman of NationsBank
Corporation from 1997 until June 1998. He was President
and Chief Executive Officer of the Atlanta Committee for
the Olympic Games from 1991 to 1997. Mr. Payne is also a
director of Healtheon/WebMD Corporation, Derivion
Corporation, Cousins Properties, Jefferson-Pilot
Corporation, Anheuser-Busch Companies, ILD
Telecommunications, and ACSYS.
Incumbent Class III Directors To Serve Until the 2002 Annual Meeting of
Shareholders
Roy B. Andersen, Jr. Mr. Andersen, age 51, has been a director of the Company
since February 1998. Mr. Andersen served as the President
and Chief Executive Officer of Xpedite Systems, Inc.
("Xpedite"), a wholly owned subsidiary of the Company
from February 1998 until April 30, 1999, the effective
date of his resignation as an officer. Prior to Xpedite's
acquisition by PTEK in February 1998, Mr. Andersen served
as President and a director of Xpedite since its
formation in July 1988 and became Chief Executive Officer
in 1990. Mr. Andersen has announced that he intends to
resign as a director promptly following the Annual
Meeting, although he will continue as a consultant to the
Company.
Raymond H. Mr. Pirtle, age 58, has been a director of the Company
Pirtle, Jr. since June 1997. Mr. Pirtle has been a managing director
and a member of the Board of Directors of SunTrust
Equitable Securities Corporation since February 1989.
Prior to that date, Mr. Pirtle was a general partner of
J.C. Bradford & Co. Mr. Pirtle was previously a member of
the Board of Directors and chairman of the compensation
committee of Sirrom Capital Corporation, a publicly
traded small business investment company which was
acquired by Finova Group.
Jackie M. Ward Ms. Ward, age 61, has served as director of the Company
since December 1998. Ms. Ward is President and Chief
Executive Officer of Computer Generation Incorporated, a
privately-held, Atlanta, Georgia-based corporation
engaged in designing and producing "turnkey" computer
hardware and software systems for telecommunications and
other specialized applications, which she founded in
1968. Ms. Ward is also Regent Emeritus and former
Chairperson of the Board of Regents of the University
System of Georgia and Past Chairman of the Metro Atlanta
Chamber of Commerce, as well as a director of SCI
Systems, Trigon Healthcare, BankAmerica Corporation,
Equifax, Matria Healthcare and Flowers Industries.
Ms. Ward is a member of the compensation committees of
Matria Healthcare, Trigon Healthcare and Computer
Generation. Ms. Ward is also a member of numerous civic
and government organizations.
7
<PAGE>
Other Incumbent Executive Officers
Elizabeth W. Ms. Abernathy, age 42, has served as President of the
Abernathy Company's Voicecom business unit since January 2000. From
September 1999 until January 2000, Ms. Abernathy served
as President of the Company's Emerging Enterprise
Solutions business unit. Prior to the Company's
acquisition of Intellivoice Communications
("Intellivoice"), a leader in voice-activated dialing
technology, Ms. Abernathy served as President and Chief
Operating Officer of Intellivoice, from January 1997 to
August 1999 and as Director of Sales from August 1991 to
January 1997. Prior to that, Ms. Abernathy was National
Account Manager/Southeast for Octel Communications and
she served in various national account management
positions with ROLM.
Patrick G. Jones Mr. Jones, age 49, has served as Executive Vice
President, Chief Financial Officer and Chief Legal
Officer of the Company since January 2000. From May 1998
until January 2000, Mr. Jones served as Senior Vice
President and Chief Legal Officer of the Company. From
November 1995 until May 1998, Mr. Jones served as Senior
Vice President of Finance and Legal of the Company. Since
December 1995, Mr. Jones has also served as the Company's
Corporate Secretary. From February 1993 until November
1995, Mr. Jones was a partner in the Atlanta, Georgia
office of the law firm of Nelson Mullins Riley &
Scarborough, L.L.P. From February 1989 until February
1993, Mr. Jones was a partner in the Atlanta, Georgia law
firm of Long Aldridge & Norman LLP.
Theodore P. Schrafft Mr. Schrafft, age 44, has served as President of the
Company's Premiere Conferencing business unit since
January 2000. From March 1999 until January 2000 Mr.
Schrafft was Senior Vice President and General Manager of
Premiere Conferencing. Mr. Schrafft served as President
of the Company's Voice and Data Messaging Division from
August 1998 to March 1999. Prior to that, from 1994 until
August 1998, he served as President and Chief Operating
Officer of VoiceCom Systems, an integrated messaging and
800-based services company, which was acquired by PTEK in
October 1997. Mr. Schrafft served as President of EA
Systems, a subsidiary of Digital Equipment Corporation
from 1992 to 1994 and prior to that he held various sales
and marketing positions with Digital.
Max A. Slifer, Jr. Mr. Slifer, age 53, has served as President of the
Company's Xpedite business unit since January 2000. From
September 1999 until January 2000, Mr. Slifer served as
President of the Company's Corporate Enterprise Solutions
business unit. From February 1998 until September 1999,
Mr. Slifer served as Senior Vice President of Sales,
North America of the Company's Document Distribution
Division. Prior to the Company's acquisition by Xpedite
in February 1998, Mr. Slifer served as Xpedite's
Executive Vice President from 1995 until 1998 and as Vice
President of Sales and Marketing from 1989 until 1995.
Prior to that, Mr. Slifer served as Vice President of
Sales from 1986 until 1987, as Regional Vice President of
Sales from 1985 until 1986 and as National Vice President
of Cellular Sales from 1974 until 1985 for Western Union.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company conducts its business through meetings
and unanimous written consents and through committees of the Board, including
the Audit Committee, the Compensation Committee, the 1994 Stock Option Plan
Committee, the 1995 Stock Plan Committee, the 1998 Stock Plan Committee, and
the 2000 Directors Stock Plan Committee. During the fiscal year ended December
31, 1999, the Board of Directors held 17 meetings and the Board took action by
unanimous written consent on 13 occasions. Each director of the Company, with
the exception of Jeffrey T. Arnold, attended at least 75% of all meetings of
the full Board of Directors and each committee of the Board of which such
director was a member.
8
<PAGE>
The Audit Committee, which met five times in 1999, is responsible for
reviewing and making recommendations regarding the Company's independent
auditors, the annual audit of the Company's financial statements and the
Company's internal accounting practices and policies. The Audit Committee was
comprised of Raymond H. Pirtle, Jr. and George W. Baker, Sr. until Mr. Baker
was replaced by Jackie M. Ward in March 1999. The Audit Committee is currently
comprised of Mr. Pirtle and Ms. Ward.
The Compensation Committee, which met five times and took action by
unanimous written consent one time in 1999, is responsible for reviewing and
approving the compensation of executive officers of the Company. The
Compensation Committee was comprised of Messrs. Baker and Pirtle until Ms.
Ward joined the Compensation Committee on December 22, 1999. The Compensation
Committee is currently comprised of Messrs. Baker and Pirtle and Ms. Ward.
The 1994 Stock Option Plan Committee, which did not meet in 1999,
administers the 1994 Stock Option Plan. The 1994 Stock Option Plan Committee
is currently comprised of Messrs. Boland T. Jones and Baker.
The 1995 Stock Plan Committee, which took action by unanimous written
consent two times in 1999, administers the 1995 Stock Plan. The 1995 Stock
Plan Committee is currently comprised of Messrs. Baker and Pirtle.
The 1998 Stock Plan Committee, which took action by unanimous written
consent two times in 1999, administers the 1998 Stock Plan. The 1998 Stock
Plan Committee is currently comprised of Messrs. Baker and Pirtle.
The 2000 Directors Stock Plan Committee, which was not in existence in 1999,
will administer the 2000 Directors Stock Plan, subject to approval of such
Plan by the shareholders at the Annual Meeting. The 2000 Directors Stock Plan
Committee is currently comprised of Messrs. Baker and Pirtle.
The Board of Directors as a whole acts as a nominating committee to select
nominees for election as directors of the Company. The Board of Directors will
consider nominees recommended by shareholders if submitted to the Board in
accordance with the procedures specified in the Company's Bylaws. The Bylaws
provide that a shareholder seeking to nominate candidates for election as
directors at a meeting of shareholders must provide notice of such nomination
not less than 60 nor more than 90 days prior to the meeting, and such notice
must provide the Company certain information regarding the nominees.
Directors' Compensation
Directors are reimbursed for reasonable expenses incurred by them in
connection with their attendance at Board meetings, and outside directors
receive a stipend of $20,000 per year, which increases to $40,000 per year if
an outside director attends all Board meetings and all of their Board
committee meetings. During 1999, the following directors were granted options
to purchase the Company's Common Stock in connection with their services as a
director:
. In March 1999, Ms. Ward was granted options to purchase 100,000 shares
of Common Stock at an exercise price of $9.25 per share, which was the
market value of the Common Stock on the date of the grant. One-half of
these options vest and become exercisable on the date of the Annual
Meeting and one-half vest and become exercisable on the date of the 2001
Annual Meeting of Shareholders, provided that Ms. Ward is a member of
the Board on those dates.
. In March 1999, Mr. Arnold was granted options to purchase 100,000 shares
of Common Stock at an exercise price of $9.25 per share, which was the
market value of the Common Stock on the date of the grant. One-half of
those options vest and become exercisable on the date of the Annual
Meeting and one-half vest and become exercisable on the date of the 2001
Annual Meeting of Shareholders, provided that Mr. Arnold is a member of
the Board on those dates.
9
<PAGE>
PROPOSAL 2
APPROVAL OF THE
2000 DIRECTORS STOCK PLAN
Introduction
On April 26, 2000, the Board of Directors adopted, subject to shareholder
approval at the annual meeting, the 2000 Directors Stock Plan (the "Plan").
THE FOLLOWING IS A SUMMARY OF THE PRINCIPAL FEATURES OF THE PLAN, BUT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE PLAN SET FORTH
AS APPENDIX A TO THIS PROXY STATEMENT. SHAREHOLDERS ARE URGED TO READ THE
ACTUAL TEXT OF THE PLAN.
Purpose
The Board of Directors believes that stock ownership is an important
incentive for its non-employee directors. The purpose of the Plan is to
advance the interests of the Company and its shareholders by affording the
non-employee directors of the Company an opportunity to acquire or increase
their proprietary interests in the Company. The Company intends that the Plan
will provide such persons with an added incentive to continue to serve as
directors and will stimulate their efforts in promoting the growth, efficiency
and profitability of the Company. The Company also intends that the Plan will
afford the Company a means of attracting persons of outstanding quality to
service on the Board. Awards are granted under the Plan in addition to cash
fees to non-employee directors.
Shares Subject to the Plan
A total of 1,000,000 shares of the Company's Common Stock have been reserved
for issuance upon the exercise of options or upon the grant of restricted
stock awards under the Plan. If the number of outstanding shares of Common
Stock is increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company by reason of
merger, consolidation, reorganization, recapitalization, stock split or stock
dividend or other change in corporate structure, the number and type of shares
available under the Plan shall be adjusted appropriately by the committee of
the Board of Directors that administers the Plan. If any option terminates for
any reason without having been exercised in full, or any award is forfeited,
the shares of Common Stock not issued will then become available for
additional grants under the Plan.
Administration
The Plan is administered by the 2000 Directors Stock Plan Committee, which
consists of at least two directors appointed from time to time by the Board
who are "non-employee directors," as that term is defined in Rule 16b-3
promulgated under Section 16 of the Securities Exchange Act of 1934. During
any time that the Board is acting as administrator of the Plan, it shall have
all the powers of the 2000 Directors Stock Plan Committee under the Plan.
The 2000 Directors Stock Plan Committee has complete authority to interpret
the Plan, to prescribe, amend and rescind rules and regulations relating to
the Plan, to determine the details and provisions of each award agreement and
to make all other determinations necessary or advisable for the administration
of the Plan. Notwithstanding the above, the Board of Directors shall have sole
authority under the Plan to approve grants of options or awards to members of
the 2000 Directors Stock Plan Committee and to determine the terms thereof.
Whenever reference is made below to the 2000 Directors Stock Plan Committee,
such reference shall mean the Board as it relates to options or awards granted
to members of the 2000 Directors Stock Plan Committee. Determinations of the
2000 Directors Stock Plan Committee shall be binding on all persons.
10
<PAGE>
The 2000 Directors Stock Plan Committee may, but is not required to, grant
awards the benefit of which is determined solely on the basis of: (a) the
achievement by the Company or a subsidiary of a specified target return on
equity or assets, (b) the Company's or a subsidiary's stock price, (c) the
achievement by the Company or a business unit of the Company or a subsidiary
of a specified target net income or earnings per share, including without
limitation earnings before interest, taxes, depreciation and/or amortization,
or (d) any combination of the goals set forth in (a) through (c) above. The
2000 Directors Stock Plan Committee shall have the right for any reason to
reduce (but not increase) any award, notwithstanding the achievement of a
specified goal. If an award is made on such basis, the 2000 Directors Stock
Plan Committee shall establish goals prior to the beginning of the period for
which such performance goal relates. Any payment of an award granted with
performance goals shall be conditioned on the written certification of the
2000 Directors Stock Plan Committee in each case that the performance goals
and any other material conditions were satisfied.
Amendment of the Plan
The Board may at any time and from time to time terminate, amend or modify
the Plan without shareholder approval; provided, however, that the Board may
condition any amendment on shareholder approval if such approval is necessary
or advisable with respect to tax, securities or other applicable laws. No
termination, amendment or modification of the Plan shall adversely affect any
previously granted awards under the Plan without the consent of the
participant.
Eligibility
The 2000 Directors Stock Plan Committee may make awards to only to persons
who, at the date of grant, are directors of the Company and are not employed
by the Company or any of its subsidiaries or affiliates. There are currently
five directors eligible to participate in the Plan. In selecting the
recipients of awards, as well as in determining the number of shares subject
to or granted in each award, the 2000 Directors Stock Plan Committee takes
into consideration such factors as it deems relevant to accomplish the purpose
of the Plan.
Terms of Awards
The terms of each award granted under the Plan, including the exercise price
of options, are determined by the 2000 Directors Stock Plan Committee. Vested
options may be exercised at any time during the term of the option. No options
have been granted under the Plan.
Other Types of Awards
The Plan also permits the grant of restricted stock awards. Restricted stock
awards entitle the recipient to receive shares of Common Stock, subject to
forfeiture restrictions that lapse over time or upon the occurrence of events
specified by the 2000 Directors Stock Plan Committee. No restricted stock
awards have been granted under the Plan.
Federal Income Tax Consequences
THE FOLLOWING DISCUSSION OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
IS INTENDED TO BE A SUMMARY OF APPLICABLE FEDERAL INCOME TAX LAW. STATE AND
LOCAL TAX CONSEQUENCES MAY DIFFER. PARTICIPANTS ARE ADVISED TO CONSULT THEIR
TAX ADVISORS PRIOR TO THE EXERCISE OF OPTIONS, OR DISPOSITIONS OF RESTRICTED
STOCK OR STOCK ACQUIRED PURSUANT TO AN OPTION EXERCISE.
Only non-qualified stock options may be granted under the Plan. A
participant is not taxed on the grant of a non-qualified stock option. Upon
exercise, however, the participant recognizes ordinary income equal to the
difference between the exercise price and the fair market value of the shares
on the date of the exercise. The Company is entitled to an income tax
deduction in the year of exercise in the amount recognized by the participant
as ordinary income. Any gain on subsequent disposition of the shares is long-
term capital gain if the shares are held for at least one year following
exercise. The Company does not receive an income tax deduction for this gain.
11
<PAGE>
Unless a recipient of a restricted stock award makes an election to
accelerate recognition of income to the grant date, the participant will not
recognize income upon the grant of the restricted stock award. When the
restrictions are deemed to have lapsed under applicable tax rules, the
participant recognizes ordinary income in an amount equal to the fair market
value of shares of Common Stock to which the restricted stock award relates,
and the Company is entitled to an income tax deduction equal to such amount.
Benefits to Directors
No options or awards have been granted under the Plan as of April 27, 2000.
The 2000 Directors Stock Plan Committee has not yet made any determination as
to future grants under the Plan. Consequently, it is not presently possible to
determine the benefits or amounts that will be received in the future by the
non-employee directors under the Plan.
Approval by Shareholders
Approval of the Plan will require that votes cast in favor of the Plan
exceed the votes cast against the Plan at the Annual Meeting. Abstentions and
broker nonvotes will not affect the outcome.
Additional Information
The closing price of the Common Stock, as reported by the Nasdaq National
Market on April 27, 2000, was $5.06.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL
OF THE 2000 DIRECTORS STOCK PLAN.
12
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned by (a) each person
who served as the Chief Executive Officer of the Company during any part of
the year ended December 31, 1999, and (b) the Company's four most highly
compensated executive officers who served as executive officers at December
31, 1999 and whose annual compensation and bonus was $100,000 or more
(collectively, the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------- ------------------------
Other Annual Restricted Securities All Other
Bonus Compensation Stock Awards Underlying Compensation
Name And Principal Position Year Salary ($) $(1) ($)(2) ($)(3) Options (#) ($)(4)
- --------------------------- ---- ---------- --------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Boland T. Jones(5)....... 1999 527,271 525,000 -- 9,200,490 -- 0 -- 146,406
Chief Executive Officer 1998 500,000 960,615 -- -- 0 -- -- 0 -- 171,066
and Chairman of the 1997 213,429 -- 0 -- -- -- 0 -- 250,000 75,681
Board of Directors
Jeffrey A. Allred(6)..... 1999 369,090 367,500 -- 4,600,230 200,000 13,577
President and Chief 1998 350,000 1,090,000 -- -- 0 -- -- 0 -- 7,707
Operating Officer and 1997 66,667 50,000 -- -- 0 -- 450,000 -- 0 --
Director
William P. Payne(7)...... 1999 752,885 250,000 -- -- 0 -- -- 0 -- 25,440
Vice Chairman and 1998 366,826 2,250,000 -- -- 0 -- 500,000 -- 0 --
Director 1997 -- -- -- -- -- --
Max A Slifer, Jr.(8)..... 1999 254,945 532,110 -- -- 0 -- -- 0 -- 3,514
President, Xpedite 1998 244,620 394,450 -- -- 0 -- 350,100 2,904
business unit 1997 -- -- -- -- -- --
Patrick G. Jones......... 1999 289,999 188,857 -- 368,010 75,000 12,647
Executive Vice
President, 1998 275,000 296,272 -- -- 0 -- -- 0 -- 10,125
Chief Financial Officer, 1997 157,188 -- 0 -- -- -- 0 -- 50,000 2,683
Chief Legal Officer and
Secretary
</TABLE>
- --------
(1) Messrs. Boland T. Jones and Patrick G. Jones waived their rights under
their employment agreements to bonuses in 1997 and, in consideration
therefor, received a grant of certain stock options. For 1999, the bonuses
for Boland T. Jones, Jeffrey A. Allred and Patrick G. Jones were paid in
March 2000, and Max A. Slifer Jr.'s bonus includes a $438,187 bonus
payment related to the acquisition of Xpedite.
(2) In each case, other annual compensation consisted of perquisites and other
personal benefits the dollar value of which, in the aggregate, was less
than $50,000 or 10% of the executive's salary and bonus with respect to
the applicable year.
(3) Represents the value of grants made on May 5, 1999 in the form of
restricted stock in two companies in which the Company held equity
interests, WebMD and USA.NET, as more fully described in the Report of the
Compensation Committee and the 1995 Stock Plan Committee of the Board of
Directors.
(4) For 1999, all other compensation for the named executive officers
consisted of the following: (i) for Boland T. Jones, $16,860 in premiums
on split dollar life insurance, $7,875 in premiums on supplemental long-
term disability insurance, $440 in premiums on group long-term disability
insurance, $57,103 for professional fees paid related to tax and estate
planning, and $64,128 paid related to personal aircraft usage; (ii) for
Jeffrey A. Allred, $1,760 in premiums on split dollar life insurance,
$6,502 in premiums on
13
<PAGE>
supplemental long-term disability insurance, $440 in premiums on group
long-term disability insurance, $2,758 for professional fees paid related
to tax and estate planning, and $2,117 paid related to personal aircraft
usage; (iii) for William P. Payne, $25,000 in premiums on split dollar
life insurance and $440 in premiums on long term disability insurance;
(iv) for Max A Slifer, Jr., $3,074 in premiums on split dollar life
insurance and $440 in premiums on group long-term disability insurance;
and (iv) for Patrick G. Jones, $2,682 in premiums on term life insurance,
$7,442 in premiums on supplemental long-term disability insurance, $440 in
premiums on group long-term disability insurance, and $2,083 for
professional fees paid related to tax and estate planning.
(5) Mr. Jones also served as President of the Company from February 1993 until
August 1, 1998, when Peter C. Alexander joined the Company as President
and Chief Operating Officer.
(6) Mr. Allred joined the Company as an executive officer in August 1997. Mr.
Allred served as Executive Vice President of Strategic Development from
August 1997 to January 1999, when he was appointed President and Chief
Operating Officer.
(7) Mr. Payne joined the Company as an executive officer in July 1998.
Effective July 6, 1998, Mr. Payne, the Company and WebMD entered into a
Memorandum of Understanding under which (i) 60% of Mr. Payne's time is
devoted to the business of WebMD and (ii) WebMD reimburses the Company for
one-half of each of Mr. Payne's salary of $750,000 per year, his minimum
bonus of $250,000 per year, and his automobile allowance of $1,000 per
month provided under his employment agreement with the Company. WebMD was
acquired by Healtheon Corp. in November 1999.
(8) Mr. Slifer joined the Company when the Company acquired Xpedite in
February 1998.
Employment Agreements
The Company has entered into employment agreements with its Named Executive
Officers, which in 1999 provided as follows:
Boland T. Jones. Boland Jones was paid a base annual salary of $525,000 for
1999. The term of Boland Jones' employment agreement was to expire on December
31, 1999; however, the Company and Boland Jones have agreed to extend the term
of his agreement until December 31, 2004. Thereafter, it renews automatically
for successive one-year terms unless either party elects not to renew at least
30 days prior to expiration of the term. Boland Jones' employment agreement
provides that he will not compete with the Company during the term of his
employment and for one year thereafter. The Company may not terminate Boland
Jones' employment without cause. If his employment is terminated for any
reason, Boland Jones will be entitled to severance compensation equal to two
and one-half times his base salary in effect on the date of termination.
In 1999 Boland Jones was eligible for bonus compensation at the discretion
of the Board of Directors. During 1999 Boland Jones received bonus
compensation in the form of grants of restricted stock in WebMD and USA.NET.
Mr. Jones received 105,000 shares of WebMD Series E Common Stock, 4,038 shares
of WebMD Series F Preferred Stock, and 44,183 shares of USA.NET Series C
Preferred Stock. Under the terms of the grant, one-half of the shares vested
on the date of grant, one-fourth of the shares vested on November 5, 1999, and
one-fourth of the shares will vest on May 5, 2000, provided that Boland Jones
is an employee of the Company on those dates. The Company agreed to lend
Boland Jones an amount equal to the taxes resulting from the restricted stock
grant, which loan is secured by the restricted stock. Boland Jones also
received a $525,000 cash bonus in March 2000 with respect to 1999.
Under the terms of his employment agreement, in November 1995 Boland Jones
was granted options to acquire 1,440,000 shares of Common Stock at an exercise
price of $1.61 per share, with such options being subject to accelerated
vesting upon a change in control of the Company. One-third of these options
vested on each of November 5, 1996, 1997 and 1998. Boland Jones' employment
agreement also sets the terms of certain other stock options granted to him
and permits him to borrow funds from the Company for the exercise of options
and warrants and the payment of taxes related to such options and warrants.
Any such borrowings must be
14
<PAGE>
secured by shares acquired upon the exercise of the options and warrants, and
the net proceeds from the sale of any such shares must be applied to the
outstanding principal and interest owed to the Company.
Jeffrey A. Allred. Jeffrey Allred was paid a base annual salary of $367,500
for 1999. The term of Mr. Allred's employment agreement expires on August 11,
2002; however, it renews automatically for successive one-year terms unless
either party elects not to renew at least 30 days prior to expiration of the
term. Mr. Allred's employment agreement provides that he will not compete with
the Company during the term of his employment and for one year thereafter. The
employment agreement also provides that the Company may terminate his
employment only for cause. Notwithstanding such provision, if Mr. Allred's
employment is terminated without cause, he will be entitled to severance
compensation equal to two and one-half times his base salary in effect on the
date of termination. In addition, if, during the two-year period following a
change in control of the Company, Mr. Allred's employment with the Company is
terminated by him or the Company for any reason other than cause, then Mr.
Allred is entitled to severance compensation equal to two and one-half times
his base salary in effect on the date of termination.
In 1999 Mr. Allred was eligible for bonus compensation at the discretion of
the Board of Directors. During 1999 Mr. Allred received bonus compensation in
the form of grants of restricted stock in WebMD and USA.NET. Mr. Allred
received 52,500 shares of WebMD Series E Common Stock, 2,019 shares of WebMD
Series F Preferred Stock, and 22,091 shares of USA.NET Series C Preferred
Stock. Under the terms of the grant, one-half of the shares vested on the date
of grant, one-fourth of the shares vested on November 5, 1999, and one-fourth
of the shares will vest on May 5, 2000, provided that Mr. Allred is an
employee of the Company on those dates. The Company agreed to lend Mr. Allred
an amount equal to the taxes resulting from the restricted stock grant, which
loan is secured by the restricted stock. Mr. Allred also received a $367,500
cash bonus in March 2000 with respect to 1999.
As a material inducement to his employment by the Company, Mr. Allred was
granted options to acquire 450,000 shares of Common Stock at an exercise price
of $23.375, which was the market value on the date of the grant. Mr. Allred's
option were subsequently repriced on July 22, 1998 and December 15, 1998 at
the per share prices of $10.25 and $5.50, respectively. One-third of Mr.
Allred's options vested on each of August 11, 1997 and August 11, 1999, with
the remaining one-third vesting on August 11, 2000, subject to accelerated
vesting upon a change in control of the Company. Mr. Allred's employment
agreement permits him to borrow funds from the Company for the exercise of
options and warrants. Any such borrowings must be secured by shares acquired
upon the exercise of the options and warrants, and the net proceeds from the
sale of any such shares must be applied to the outstanding principal and
interest owed to the Company.
William P. Payne. The base annual salary under William Payne's employment
agreement is $750,000. The term of Mr. Payne's employment agreement expires on
July 6, 2000; however it renews automatically for successive one-year terms
unless either party elects not to renew at least 30 days prior to expiration
of the term. The employment agreement provides that Mr. Payne will not compete
with the Company during the term of his employment and for one year
thereafter. The employment agreement also provides that the Company may
terminate Mr. Payne's employment only for cause. Notwithstanding such
provision, if his employment is terminated without cause, Mr. Payne will be
entitled to severance compensation equal to two and one-half times his base
salary on the date of termination.
As a material inducement to his employment and in recognition of his
decision to forego certain financial benefits of his prior arrangement with
NationsBank Corporation, Mr. Payne received an initial bonus in 1998 of
$2,250,000. Under his employment agreement, Mr. Payne will receive an annual
bonus of at least $250,000, which can be increased at the sole discretion of
the Chief Executive Officer of the Company. Also as a material inducement to
his employment, Mr. Payne was granted options to acquire 500,000 shares of
Common Stock at an exercise price of $7.75 per share, which was the market
value on the date of the grant. All of these options vested on August 20, 1998
and one-half became exercisable on the date of the 1999 Annual Meeting of
Shareholders and the other half become exercisable on the date of the 2000
Annual Meeting of Shareholders, subject to accelerated vesting upon a change
in control of the Company.
15
<PAGE>
Effective July 6, 1998, Mr. Payne, the Company and WebMD entered into a
Memorandum of Understanding ("MOU") which provides that Mr. Payne may devote
up to 60% of his time directly to the business of WebMD. Pursuant to the MOU,
WebMD reimburses the Company for one-half of each of Mr. Payne's annual
salary, minimum annual bonus, and monthly automobile allowance, with such
reimbursement to continue throughout the remainder of Mr. Payne's employment
agreement with the Company. WebMD was acquired by Healtheon Corp. in November
1999.
Max A. Slifer, Jr. Under the terms of his employment agreement with Xpedite,
Mr. Slifer had a base annual salary of $237,312, which was increased to
$300,000 as of September 1, 1999. In addition, his maximum annual bonus
increased to $100,000 from $98,619 as of September 1, 1999. Mr. Slifer is also
eligible to receive a bonus of $125,000 for each full year of employment
following the year 2000. The term of Mr. Slifer's employment agreement expires
on August 31, 2002; however, it renews automatically for successive one-year
terms unless either party elects not to renew at least 30 days prior to
expiration of the term. Mr. Slifer's employment agreement provides that he
will not compete with the Company during the term of his agreement and,
following termination of his agreement, for the longer of two years or what
would have been the remaining term of his agreement. In the event Mr. Slifer's
employment is terminated without cause, he will continue to receive payments
of salary, bonuses and benefits for the longer of two years or what would have
been the remaining term of his agreement. In the event of a change in control
of the Company, all of Mr. Slifer's options will vest immediately. In
addition, if, during the two-year period following a change in control, Mr.
Slifer's employment with the Company is terminated by him or the Company for
any reason other than cause, then Mr. Slifer is entitled to severance
compensation equal to two and one-half times his base salary in effect on the
date of termination.
Patrick G. Jones. Patrick Jones was paid a base annual salary of $288,750
for 1999. The term of Patrick Jones' employment agreement expires on December
31, 1999; however, the Company and Patrick Jones have agreed to extend the
term of his agreement until December 31, 2004. Thereafter, it renews
automatically for successive one-year terms unless either party elects not to
renew at least 30 days prior to expiration of the term. Patrick Jones'
employment agreement provides that he will not compete with the Company during
the term of his employment and for one year thereafter. The employment
agreement also provides that the Company may terminate his employment only for
cause. Notwithstanding such provision, if his employment is terminated without
cause, Patrick Jones will be entitled to severance compensation equal to two
and one-half times his base salary in effect on the date of termination. In
addition, if, during the two-year period following a change in control of the
Company, Patrick Jones' employment with the Company is terminated by him or
the Company for any reason other than cause, then Patrick Jones is entitled to
severance compensation equal to two and one-half times his base salary in
effect on the date of termination.
In 1999 Patrick Jones was eligible to receive bonus compensation at the
discretion of the Board of Directors. During 1999 Patrick Jones received bonus
compensation in the form of grants of restricted stock in WebMD and USA.NET.
Patrick Jones received 4,200 shares of WebMD Series E Common Stock, 162 shares
of WebMD Series F Preferred Stock, and 1,767 shares of USA.NET Series C
Preferred Stock. Under the terms of the grant, one-half of the shares vested
on the date of grant, one-fourth of the shares vested on November 5, 1999 and
one-fourth of the shares will vest on May 5, 2000, provided that Patrick Jones
is an employee of the Company on those dates. In addition, Patrick Jones
received a $188,857 cash bonus in March 2000 with respect to 1999.
As a material inducement to his employment by the Company, in November 1995,
Patrick Jones was granted options to acquire 240,000 shares of Common Stock at
an exercise price of $1.61 per share, with such options being subject to
accelerated vesting upon a change in control of the Company. One-third of
these options vested on each of October 31, 1996, 1997 and 1998. Patrick
Jones' employment agreement permits him to borrow funds from the Company for
the exercise of options and warrants. Any such borrowings must be secured by
shares acquired upon the exercise of the options and warrants, and the net
proceeds from the sale of any such shares must be applied to the outstanding
principal and interest owed to the Company.
16
<PAGE>
Option Grants In 1999
The following table provides information with regard to stock option grants
to the Named Executive Officers during 1999.
<TABLE>
<CAPTION>
Potential Realizable Value at
Number of Percent of Assumed Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted to Exercise or For Options Terms(2)
Options Employees In Base Price Expiration -----------------------------
Name Granted(#)(1) Fiscal Year(%) ($/Sh) Date 5%($) 10%($)
---- ------------- -------------- ----------- ---------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Boland T. Jones......... -- -- -- -- -- --
Jeffrey A. Allred....... 200,000 7.60 7.06 02/18/07 674,454 1,615,434
William P. Payne........ -- -- -- -- -- --
Max A. Slifer, Jr....... -- -- -- -- -- --
Patrick G. Jones........ 75,000 2.85 7.06 02/18/07 255,920 605,788
</TABLE>
- --------
(1) All options were granted at the market value on the date of grant.
(2) Amounts reported in these columns represent hypothetical amounts that may
be realized upon exercise of options immediately prior to the expiration
of their term assuming the specified compounded rates of appreciation of
the Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
growth. Actual gains, if any, on stock option exercises and Common Stock
holdings are dependent on the timing of such exercises and the future
performance of the Common Stock. There can be no assurances that the rates
of appreciation assumed in this table can be achieved or that the amounts
reflected will be received by the individuals. This table does not take
into account any appreciation of the price of the Common Stock from the
date of grant to the current date.
Report on Repricing of Options
1996 Repricing of Options
On July 11, 1996, the 1995 Stock Plan Committee canceled options that had
previously been granted to certain executive officers with exercise prices of
$27.00 per share (representing the market price of the Common Stock on the
date such options were initially granted) and granted an identical number of
new options with identical terms and vesting periods to these persons with an
exercise price of $18.50 (representing the market price of the Common Stock on
the date such options were repriced).
As set forth in the 1995 Stock Plan, options granted under that plan are
intended to provide incentives to the Company's employees, officers, directors
and key consultants and advisors. The 1995 Stock Plan Committee believed that,
at their original exercise prices, the disparity between the exercise price of
these options and recent market prices for the Company's Common Stock (at the
time of such repricing) did not provide the intended incentives to the
executive officers. The 1995 Stock Plan Committee approved the repricing of
these options as a means of ensuring that the executive officers would
continue to have meaningful equity incentives to promote the growth and
profitability of the Company.
1998 Repricings of Options
During 1998, sharp declines in the market price of the Common Stock resulted
in many of the outstanding employee stock options being exercisable at prices
that exceeded the current market price of the Common Stock, thereby
substantially impairing the effectiveness of such options as performance
incentives. Consistent with the Company's philosophy of using equity
incentives to motivate and retain management and employees, the Board of
Directors determined twice during 1998 that it was in the best interest of the
Company and its shareholders to restore the performance incentives intended to
be provided by employee stock options by repricing such options.
17
<PAGE>
On July 22, 1998 the Board of Directors repriced and regranted all employee
stock options that had previously been granted to employees and executive
officers (other than the Chief Executive Officer) which had exercise prices in
excess of the closing price on such date. The options were repriced to $10.25,
which was the closing price of the Common Stock on the repricing date. While
the vesting schedules remained unchanged, the repriced and regranted options
were generally subject to a twelve-month black-out period, during which the
options may not be exercised. If an optionee's employment terminated during
the black-out period, he or she would have forfeited any repriced or regranted
options that first vested during the twelve-month period preceding his or her
termination of employment. By imposing the black-out and forfeiture provisions
on the repriced and regranted options, the Board of Directors intended to
provide added incentive for the optionees to continue service.
On December 14, 1998, the Board of Directors repriced and regranted all
employee stock options that had previously been granted to the employees and
executive officers (including the Chief Executive Officer) which had exercise
prices in excess of $5.50. The options were repriced to $5.50, which was above
the closing price of the Common Stock on the repricing date. Again, while the
vesting schedules remained unchanged, the repriced and regranted options were
generally subject to a twelve-month black-out period during which the option
may not be exercised. If an optionee's employment terminated during the black-
out period, he or she would have forfeited any repriced or regranted options
that first vested during the twelve-month period preceding his or her
termination of employment. By imposing the black-out and forfeiture provisions
on the repriced and regranted options, the Board of Directors intended to
provide added incentive for the optionees to continue service.
18
<PAGE>
The following table summarizes all repricings of options held of record by
the executive officers of the Company during the last ten fiscal years.
Ten-Year Option Repricings Table
<TABLE>
<CAPTION>
Length of Original
Market Price Of Exercise Price Option Term
Number of Securities Stock at Time of at Time of Remaining at Date
Underlying Options Repricing or Repricing or New Exercise of Repricing or
Name Date Repriced or Amended Amendment($) Amendment($) Price($) Amendment(yrs.)
---- -------- -------------------- ---------------- -------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Boland T. Jones......... 7/11/96 50,000 $18.50 $27.00 $18.50 5.72
7/22/98 -- -- -- -- --
12/14/98 250,000 4.938 24.50 5.50 4.05
12/14/98 50,000 4.938 18.50 5.50 3.29
Jeffrey A. Allred....... 7/22/98 438,849 10.25 23.375 10.25 7.01
12/14/98 438,849 4.938 10.25 5.50 6.61
William P. Payne........ 7/22/98 -- -- -- -- --
12/14/98 -- -- -- -- --
Patrick G. Jones........ 7/11/96 15,000 18.50 27.00 18.50 5.72
7/22/98 50,000 10.25 18.50 10.25 4.45
7/22/98 15,000 10.25 24.50 10.25 3.69
12/14/98 50,000 4.938 10.25 5.50 4.05
12/14/98 15,000 4.938 10.25 5.50 3.29
Max A. Slifer, Jr....... 7/22/98 16,310 10.25 12.02 10.25 6.95
7/22/98 34,950 10.25 12.88 10.25 5.56
7/22/98 350,100 10.25 29.25 10.25 8.61
12/15/98 16,310 4.938 10.25 5.50 6.55
12/15/98 34,950 4.938 10.25 5.50 5.16
12/15/98 350,100 4.938 10.25 5.50 8.21
Roy B. Andersen......... 7/22/98 583,500 10.25 29.25 10.25 8.62
12/14/98 583,500 4.938 10.25 5.50 8.22
Harvey A. Wagner........ 7/22/98 325,000 10.25 28.688 10.25 7.66
12/14/98 325,000 4.938 10.25 5.50 7.26
Peter C. Alexander...... 12/14/98 350,000 4.938 7.75 5.50 7.80
</TABLE>
Option Exercises in 1999 and Year-End Option Values
The following table sets forth information regarding (a) the number of
shares of Common Stock received upon exercise of options by the Named
Executive Officers during 1999, (b) the net value realized upon such exercise,
(c) the number of unexercised options held at December 31, 1999 and (d) the
aggregate dollar value of unexercised options held at December 31, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options At
Options at FY End(#) FY-End($)(2)
Shares Acquired Value Realized ------------------------- -------------------------
Name On Exercise# ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Boland T. Jones......... 24,000 159,211 1,981,413 -- 0 -- 9,766,830 -- 0 --
Jeffrey A. Allred....... -- 0 -- -- 0 -- 288,849 350,000 433,273 225,000
William P. Payne........ -- 0 -- -- 0 -- 600,000 -- 0 -- -- 0 -- -- 0 --
Max A. Slifer, Jr....... 5,825 55,644 138,785 265,973 208,178 417,649
Patrick G. Jones........ -- 0 -- -- 0 -- 278,000 75,000 1,245,570 -- 0 --
</TABLE>
- --------
(1) These values have been calculated by subtracting the option exercise price
from the market price of the Common Stock on the date of exercise and
multiplying that figure by the total number of options exercised.
(2) These values have been calculated by subtracting the option exercise price
from the market price of the Common Stock on The Nasdaq Stock Market's
National Market on December 31, 1999, and multiplying that figure by the
total number of exercisable/unexercisable options.
19
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
AND 1995 STOCK PLAN COMMITTEE
OF THE BOARD OF DIRECTORS
Introduction
The Compensation Committee is responsible for reviewing and approving the
compensation arrangements for the Company's executive officers and the 1995
Stock Plan Committee is responsible for determining and administering option
grants to executive officers and other employees under the 1995 Stock Plan.
During 1999, the 1995 Stock Plan Committee was comprised of Messrs. Baker and
Pirtle, and the Compensation Committee was comprised of Messrs. Baker and
Pirtle until Ms. Ward joined the Compensation Committee on December 22, 1999.
The Company's executive compensation policy, as implemented by the
Compensation Committee and the 1995 Stock Plan Committee, is designed to
provide a competitive compensation program that will enable the Company to
attract, motivate, reward and retain executives who have the skills,
experience and talents required to promote the short- and long-term financial
performance and growth of the Company. In this manner, the Company seeks to
meet its ultimate responsibility to its shareholders.
Generally, in establishing levels of compensation for executive officers,
the Compensation Committee and the 1995 Stock Plan Committee consider all
factors they deem appropriate, which may include, among others:
. level and scope of responsibilities;
. pay levels of executive officers in comparable companies;
. experience, achievements and special expertise;
. achievement of specific business initiatives;
. appropriate inducements to initial and continued employment;
. the Company's recent financial results compared to financial results for
prior years and compared to the Company's business plan; and
. alignment of the interests of executive officers with those of
shareholders through award opportunities that can result in ownership of
Common Stock.
These factors, however, are only generally considered and all compensation
decisions involve subjectivity.
The Company has employment agreements with its Named Executive Officers --
Boland T. Jones, Jeffrey A. Allred, William P. Payne, Max A. Slifer, Jr., and
Patrick G. Jones. See "--Employment Agreements." These employment agreements
contain the general terms of each executive officer's employment and establish
the minimum compensation that such officers are entitled to receive, but do
not prohibit, limit or restrict these officers' ability to receive additional
compensation from the Company, whether in the form of base salary, bonus,
stock options or otherwise.
The Company's executive compensation has three elements: base salary, annual
incentive compensation and long-term incentive compensation, typically in the
form of cash compensation, stock option grants, restricted stock awards and
participation in other benefit programs. In determining 1999 salary levels and
incentive compensation, the Compensation Committee and the 1995 Stock Plan
Committee took into account the Company's performance during the entire term
of the executive officer's employment with the Company. The following is a
summary of the considerations underlying each element.
Base Salaries
The base salaries of the executive officers are initially determined
pursuant to their employment agreements. Initial salary levels are determined
based on the factors discussed above and the recommendations of the Chief
Executive Officer for salaries other than his own; however, the Compensation
Committee retains the discretion to increase the initial salary levels. The
Compensation Committee periodically evaluates the salaries of the executive
officers based upon the level and scope of the responsibilities of the office,
prior experience and achievements, the importance of each executive's
contributions to the Company and the pay levels of similarly positioned
executive officers in comparable companies.
20
<PAGE>
In January 1998, the Compensation Committee reviewed the base salaries of
Messrs. Boland Jones, Allred, and Patrick Jones based on the factors described
above. As a result, their base salaries for the year ended December 31, 1998
were set by the Compensation Committee at $500,000, $350,000 and $275,000,
respectively, which amounts increased automatically by 5% in 1999 to $525,000,
$367,500 and $288,750, respectively. Mr. Payne's base salary of $750,000 was
paid pursuant to his employment agreement; provided, however, one-half of his
base salary was reimbursed by WebMD. See "Employment Agreements." Effective as
of September 1, 1999, when Mr. Slifer was named President of the Corporate
Enterprise Solutions business unit, his base salary was increased to $300,000
based on the factors described above.
Annual Incentive Compensation
The Company's executive officers are eligible to receive cash bonus awards.
The key components in determining the amount of such awards include the
individual growth and success of the Company as measured by revenue growth,
cash flows and other financial performance goals, as well as the financial
performance of the Company in the context of the overall industry and economic
environment. The judgment of the Compensation Committee, and of the Chief
Executive Officer in the case of other executive officers, as to the impact of
the individual on the financial performance of the Company are also
considered. Based in large part on the repayment of the Company's $150 million
credit facility in the fourth quarter of 1999, the major restructuring of the
Company and the successful completion of various transactions during 1999, the
Compensation Committee granted cash bonuses to Messrs. Boland Jones, Allred,
and Patrick Jones. In addition, Mr. Payne was paid a bonus in 1999 pursuant to
the terms of his employment agreement. In connection with the acquisition of
Xpedite in February 1998, the Company agreed to pay Mr. Slifer a bonus that
vested as of March 1, 1998, and was paid in March 1999. In addition, Mr.
Slifer was paid a bonus in 1999 pursuant to the terms of his employment
agreement.
The bonuses paid to Messrs. Boland Jones, Allred, Patrick Jones, Payne and
Slifer are reflected in the Summary Compensation Table above.
Restricted Stock Grants
With the intent of rewarding and retaining key executives in a competitive
market for executive talent and more closely aligning such executives'
interests with the Company's interests, the Compensation Committee, with the
participation of Mr. Payne and Ms. Ward, and based on the advice by Arthur
Andersen Human Capital Services that such an award was within levels of
competitive practice with respect to the individuals involved and in the
aggregate, awarded Messrs. Boland Jones, Allred, and Patrick Jones grants (the
"Grants") on May 5, 1999 (the "Grant Date") in the form of shares of
restricted stock (the "Shares") in two companies in which the Company held
equity interests, WebMD and USA.NET. Mr. Boland Jones received a Grant of
105,000 shares of WebMD Series E Common Stock, 4,038 shares of WebMD Series F
Preferred Stock, and 44,183 shares of USA.NET Series C Preferred Stock. Mr.
Allred received a Grant of 52,500 shares of WebMD Series E Common Stock, 2,019
shares of WebMD Series F Preferred Stock, and 22,091 shares of USA.NET Series
C Preferred Stock. Patrick Jones received a Grant of 4,200 shares of WebMD
Series E Common Stock, 162 shares of WebMD, Inc. Series F Preferred Stock, and
1,767 shares of USA.NET Series C Preferred Stock.
Each of Messrs. Boland Jones', Allred's, and Patrick Jones' Grants vest as
follows: (i) 50% of the Shares vested on the Grant Date, (ii) 25% of the
Shares vested on the six-month anniversary of the Grant Date, and (iii) 25% of
the Shares vest on the one-year anniversary of the Grant Date; provided the
executive is an employee of the Company on those dates. Each of the unvested
Shares is subject to restrictions on transfer, and an executive's right, title
and interest in and to the Shares is conditioned upon the executive's
continued employment with the Company. Such restrictions expire upon the
earliest to occur of the following (i) the date of termination of an
executive's employment with the Company due to such executive's death or
disability, (ii) the effective date of termination of an executive's
employment by the Company without cause, (iii) the effective date of
termination of an executive's employment with the Company due to any
significant change in such executive's title, powers, duties or
responsibilities, or any significant relocation of his workplace, or (iv) the
date on which a particular executive's Grant vests. Unvested Shares shall be
forfeited and cancelled upon (i) termination of the executive's employment by
the Company with cause or (ii) termination of the executive's employment by
the executive without good reason.
21
<PAGE>
Long-Term Incentive Compensation
Grants of stock options to executive officers are generally made under the
1995 Stock Plan administered by the 1995 Stock Plan Committee. The Company
believes that long-term incentive compensation in the form of stock options is
one of the most direct ways of making executive compensation dependent upon
increases in shareholder value. Stock options provide a means through which
executive officers can build an investment in the Common Stock which will
align such officers' economic interests with the interests of the
shareholders. The 1995 Stock Plan Committee believes that the grant of stock
options has been a particularly important component of its success in
attracting and retaining talented management employees. The 1995 Stock Plan
Committee believes that stock options give the executive officers greater
incentives throughout the term of the options to strive to operate the Company
in a manner that directly affects the financial interests of the shareholders
both on a long-term, as well as a short-term, basis.
In determining the number of option shares to grant executive officers, the
1995 Stock Plan Committee considers on a subjective basis the same factors as
it does in determining the other components of compensation, with no single
factor accorded special weight. The recommendation of the Chief Executive
Officer is important in determining awards to persons other than himself.
In February 1999, Messrs. Allred and Patrick Jones were granted options to
purchase 200,000 and 75,000 shares of Common Stock of the Company,
respectively, at an exercise price of $7.06 per share, which was the market
value of the Company's Common Stock on the grant date. These shares vest one-
third on each of the first, second and third anniversaries of the grant date,
provided the grantee is an employee of the Company on those dates, subject to
accelerated vesting upon a change in control of the Company.
Policy on Deductibility of Compensation
To the extent determinable and as one of the factors in its consideration of
compensation matters, the Compensation Committee and the 1995 Stock Plan
Committee consider the anticipated tax treatment to the Company and to the
executive officers of various payments and benefits. Interpretations of and
changes in the tax laws and other factors beyond the control of the committees
affect the deductibility of compensation. Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), generally limits the corporate
tax deduction for compensation paid to executive officers to $1,000,000 unless
certain requirements are met. The Compensation Committee and the 1995 Stock
Plan Committee believe that the Company's Amended and Restated 1995 Stock Plan
complies with Section 162(m) and, therefore, stock options and stock
appreciation rights granted under such plan should qualify for the corporate
tax deduction.
The Compensation Committee and the 1995 Stock Plan Committee may design
future compensation awards for the executive officers subject to the deduction
limit so the corporate tax deduction is maximized without limiting the
Company's flexibility to attract and retain qualified executives to manage the
Company. However, the Compensation Committee and the 1995 Stock Plan Committee
will not necessarily limit executive compensation to that deductible under
Section 162(m). The Compensation Committee and the 1995 Stock Plan Committee
will consider various alternatives to preserving the deductibility of
compensation payments and benefits to the extent reasonably practicable and to
the extent consistent with its other compensation objectives.
The foregoing report has been furnished by:
Compensation Committee
George W. Baker, Sr.
Raymond H. Pirtle, Jr.
Jackie M. Ward
1995 Stock Plan Committee
George W. Baker, Sr.
Raymond H. Pirtle, Jr.
22
<PAGE>
The Company has made previous filings under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, that incorporate
future filings, including this Proxy Statement, in whole or in part. However,
the Report of the Compensation Committee and the 1995 Stock Plan Committee and
the Stock Performance Graph shall not be incorporated by reference into any
such filings.
STOCK PERFORMANCE GRAPH
The following graph shows the cumulative total shareholder return on the
Company's Common Stock, the Standard & Poor's 500 Composite Stock Price Index
(the "S&P 500") and a self-determined peer group of ten companies (the "1999
Peer Group"), for the period beginning March 5, 1996 (the date that trading
first began on the Nasdaq National Market) and ending December 31, 1999. The
graph assumes an investment in the Company's Common Stock and each index of
$100 on March 5, 1996, and that all dividends were reinvested. The 1999 Peer
Group is composed of the following companies: AVT Corporation, ACT
Teleconferencing, NetMoves Corporation, Critical Path, Vialog Corporation,
General Magic, Internet Capital Group, CMGI, West Teleservices Corp., and
JFAX.COM. Total return calculations were prepared by the Center for Research in
Security Prices, The University of Chicago ("CRSP").
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
3/5/96 6/28/96 12/31/96 6/30/97 12/31/97 6/30/98 12/31/98 6/30/99 12/31/99
------ ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PTEK Holdings, Inc...... 100.0 120.0 95.2 99.0 105.2 31.6 28.1 43.8 26.7
S & P 500............... 100.0 103.0 115.1 138.8 153.6 181.2 198.2 222.2 239.9
Self-Determined 1999
Peer Group............. 100.0 88.5 49.0 34.5 35.3 78.3 91.9 273.2 1031.1
</TABLE>
23
<PAGE>
The composition of the Company's self-determined peer group has been
changed. The peer group used for comparison in the Company's proxy statement
for its 1999 annual meeting of Shareholders (the "1998 Peer Group") included:
APAC Teleservices, Brite Voice Systems, General Magic, West Teleservices,
Boston Communication Group, Executive Telecard, and SmarTalk Teleservices.
Since the date of the Company's proxy statement for the 1999 annual meeting of
Shareholders, the Company has adopted a business model directed at growing its
network of Internet-based service providers, including business to business
providers, in addition to the management of its operating units: Xpedite,
VoiceCom and Premiere Conferencing. As a result, the Company believes that the
new 1999 Peer Group more accurately reflects its current line-of-business.
The following graph shows the cumulative total shareholder return on the
Company's Common Stock, the S&P 500 and the 1998 Peer Group, for the period
beginning March 5, 1996 (the date that trading first began on the Nasdaq
National Market) and ending December 31, 1999. The graph assumes an investment
in the Company's Common Stock and each index of $100 on March 5, 1996, and
that all dividends were reinvested. Total return calculations were prepared by
the CRSP.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
3/5/96 6/28/96 12/31/96 6/30/97 12/31/97 6/30/98 12/31/98 6/30/99 12/31/99
------ ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PTEK Holdings, Inc...... 100.0 120.0 95.2 99.0 105.2 31.6 28.1 43.8 26.7
S & P 500............... 100.0 103.0 115.1 138.8 153.6 181.2 198.2 222.2 239.9
Self-Determined 1998
Peer Group............. 100.0 139.4 133.4 85.7 70.4 63.2 40.1 39.6 88.4
</TABLE>
24
<PAGE>
CERTAIN TRANSACTIONS
In December 1999, Boland T. Jones exercised an option to purchase 24,000
shares of the Company's Common Stock at an exercise price of $0.71 per share,
and the Company loaned Boland Jones approximately $73,000 to pay the exercise
price for the shares and the federal and state taxes associated with the
exercise of these stock options. This loan is evidenced by a recourse
promissory note bearing interest at 6.5% per annum, which is secured by a
pledge of the Common Stock acquired upon the exercise of the options. All
principal and accrued interest are due and payable in December 2009.
Roy B. Andersen, Jr. terminated his employment agreement, effective April
30, 1999. Under the terms of his employment agreement and his separation
agreement, Mr. Andersen will continue to receive his annual base salary and
the amount of his last annual bonus for a three-year period commencing on May
1, 1999. The amount of these annual payments range from $460,013 in year one
to $491,664 in year three. Mr. Andersen will also continue to receive certain
other benefits during this three-year period, including a monthly car
allowance, health insurance, death benefit plans and other employee benefits
which key employees of the Company are or become eligible to receive. If Mr.
Andersen is employed by a third party during the three-year period following
termination of his employment agreement, any salary received by Mr. Andersen
from the third party employer will be subtracted from any payments due from
the Company. All of Mr. Anderson's unvested options vested as of April 30,
1999, and Mr. Andersen is prohibited from competing with the Company until
October 31, 2001. In addition, the Company and Mr. Andersen entered into a
consulting agreement effective as of April 30, 1999, pursuant to which Mr.
Andersen will provide consulting services to the Company and its subsidiaries
and affiliates for the period beginning May 1, 1999 and ending April 30, 2001.
Mr. Andersen will be paid a consulting fee of $125,000 for the first year of
the agreement and $70,000 for the second year.
On September 17, 1999, Harvey A. Wagner and the Company entered into a
separation agreement, effective as of August 31, 1999, pursuant to which Mr.
Wagner will receive $918,750.00 over the twelve month period beginning on
August 31, 1999 and ending August 31, 2000. In May 1998, the Company loaned
Harvey A. Wagner $100,000 in connection with his transition from his previous
employer to the Company, which was evidenced by a promissory note. This
indebtedness was cancelled effective as of August 31, 1999, and the Company
agreed to pay all taxes payable by Mr. Wagner on the taxable income resulting
from this cancellation of indebtedness. During the period beginning September
1, 1999 and ending February 28, 2001, Mr. Wagner may participate in any
medical, health, dental, disability or similar programs on the same basis as
during his employment. Pursuant to the separation agreement, the Company
released all of its rights in a life insurance policy owned by Mr. Wagner and
forgave his obligation to repay premium payments made by the Company with
respect thereto in the amount of $76,382.54, and paid a gross-up tax payment
of $34,105 to cover income tax from such forgiveness of indebtedness. Mr.
Wagner's options were repriced to an exercise price of $5.50 per share in
December 1998, but none of his vested 108,334 options were cancelled, and they
continue to be exercisable in accordance with his option agreement. All
unvested options lapsed as of August 31, 1999. In addition, Mr. Wagner was
paid all unused accrued vacation pay as of August 31, 1999, and was reimbursed
for any normal business expenses accrued on or before August 31, 1999.
On September 22, 1999, Peter C. Alexander and the Company entered into a
separation agreement, effective as of August 31, 1999, pursuant to which Mr.
Alexander will receive $918,750.00 over the twelve month period beginning on
August 31, 1999 and ending August 31, 2000. During the period beginning
September 1, 1999 and ending February 28, 2001, Mr. Alexander may participate
in any medical, health, dental, disability or similar programs on the same
basis as during his employment. In addition, after February 28, 2001, Mr.
Alexander may assume the payment of the premiums on his $1,000,000 term life
insurance policy. Mr. Alexander's options were repriced to an exercise price
of $5.50 per share in December 1998, but none of his vested 116,667 options
were cancelled, and they continue to be exercisable in accordance with his
option agreement. All unvested options lapsed on August 31, 1999.
During 1999, the Company leased the use of an airplane on an hourly basis
from a limited liability company that is owned 99% by Boland T. Jones and 1%
by the Company. The amount of such lease payments totaled $956,552.50. In
connection with this lease arrangement, in 1998, the Company advanced funds to
the limited liability company to pay a portion of the expenses of maintaining
and operating the airplane. As a result of reconciliations
25
<PAGE>
between this 1998 advance and amounts owed by the Company to the limited
liability company during 1999, the limited liability company owed the Company
$39,896.20, which amount was recorded as an account receivable at December 31,
1999.
In February 1999, the Company loaned Jeffrey A. Allred $200,000 as provided
for in his employment agreement. This unsecured loan is evidenced by a
promissory note bearing interest at 4.6% per annum. The principal amount and
all accrued interest are due on December 31, 2000; provided, however, the
principal plus accrued interest will be cancelled on December 31, 2000 if Mr.
Allred is employed by the Company on such date. In addition, the Company has
agreed to pay on behalf of Mr. Allred all taxes due as a result of the
cancellation of such indebtedness.
Donald H. Turner's employment with the Company was terminated for cause
effective as of July 15, 1999. Mr. Turner was the President of the Company's
Emerging Enterprise Solutions business unit from January 1999 until his
termination. In February 1999, the Company loaned Donald H. Turner $100,000 in
connection with his transition from his previous employer to the Company. This
unsecured loan was evidenced by a promissory note bearing interest at 4.6% per
annum. The principal amount and all accrued interest are due on January 1,
2001.
With the intent of rewarding and retaining key executives in a competitive
market for executive talent and more closely aligning such executives'
interests with the Company's interests, the Compensation Committee, with the
participation of Mr. Payne and Ms. Ward, and based on the advice by Arthur
Andersen Human Capital Services that such an award was within levels of
competitive practice with respect to the individuals involved and in the
aggregate, awarded Messrs. Boland Jones, Allred, and Patrick Jones grants in
the form of restricted stock in WebMD and USA.NET on May 5, 1999. See "--
Restricted Stock Grants."
In connection with their Grants, the Company agreed to lend to each of
Messrs. Boland Jones and Allred, pursuant to a recourse promissory note in
favor of the Company, an amount equal to the federal, state and local taxes
required to be paid with respect to the value of the Shares treated as
compensation. Messrs. Boland Jones and Allred have executed promissory notes
in the principal amounts of $3,261,573.71 and $1,630,781.54, respectively,
with respect to the taxes required to be withheld. The principal amounts of
such notes will be increased following the determination of the total taxes
due with respect to the Grants. Interest accrues on the unpaid principal
balance of each note at the rate of 5.74% per annum, and the entire
outstanding principal balance plus all accrued interest are due and payable
for each note on December 31, 2006. In March 2000, the Company agreed to
forgive one-seventh of the principal plus accrued interest effective as of
December 31, 2000, provided that the executives are employees of the Company
on that date. In addition, the unpaid balance of each tax loan will be
forgiven in its entirety in the event of a change in control of the Company or
the termination of the Executive's employment by the Company without cause.
Jeffrey T. Arnold, a director of the Company, is the Chief Executive Officer
of Healtheon/WebMD. WebMD, a subsidiary of Healtheon/WebMD, subleases from a
subsidiary of PTEK the space for its corporate headquarters and call center in
Atlanta, Georgia. The original term of the sublease ended on February 1, 2000,
but was renewed for a two year term which will end on February 1, 2002
pursuant to an amendment to the sublease dated February 1, 2000. The sublease
requires monthly payments by WebMD to PTEK's subsidiary of $36,466.50 and the
payment of certain additional costs and expenses. On April 1, 2001, such
monthly payment amount shall be increased to $38,203.
WebMD also leases from a subsidiary of PTEK certain equipment and certain
other personal property necessary for the operation of WebMD's call center.
The term of this lease ended on February 1, 2000, but was renewed for a two
year term which will end on February 1, 2002. This lease requires monthly
payments by WebMD to PTEK's subsidiary of $24,311.00.
PTEK and a PTEK subsidiary (collectively "Premiere Enhanced Communications")
and WebMD, have entered into a strategic relationship involving certain Web-
integrated, telecommunications products and services of Premiere Enhanced
Communications and the Web-based healthcare products, services and customers
of WebMD. The relationship is memorialized in a Co-Marketing and Integration
Agreement, as amended (the "WebMD Agreement"). The WebMD Agreement is
effective through February 17, 2003 and details between the parties certain
exclusivity designations, product and service minimum purchase commitments,
and fee
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payment obligations. Under the WebMD Agreement, WebMD designated Premiere
Enhanced Communications as its exclusive enhanced and unified
telecommunications service provider to its professional customers and WebMD
agreed to purchase certain minimum quantities of Orchestrate(R) products and
services, and Premiere Enhanced Communications designated WebMD as its
exclusive authorized direct reseller of Orchestrate(R) products and services
through its medical portals to professional customers and agreed to pay a fee
of $4 million payable in four (4) annual installments. The minimum commitments
involve WebMD purchasing Orchestrate(R) products and services from Premiere
Enhanced Communications as follows: $10,000 per month as of September 1998,
increasing by $10,000 per month to a maximum of $80,000 per month as of April
1999 and thereafter; and, on a take-or-pay basis, $10 million during the
period of February 1999 to February 2003. The WebMD Agreement also provides
for a $100,000 technical integration fee, which was paid to Premiere Enhanced
Communications in November 1998; a $350,000 development fee, which was paid to
Premiere Enhanced Communications in January 1999; a $1 million branding fee,
which was paid to WebMD on March 1, 1999; and a $750,000 joint marketing fee
to Premiere Enhanced Communications for advertising and promotion efforts with
Premiere Enhanced Communications, which has not been used or paid to date. On
May 16, 1999, WebMD agreed to continue to be bound by the terms and conditions
of the WebMD Agreement, notwithstanding its execution of a merger agreement
(the "Merger Agreement") with Healtheon Corp. Furthermore, WebMD agreed to use
its best efforts to have Healtheon Corp. agree in writing to be bound by the
terms of the WebMD Agreement. In respect of such agreements by WebMD, PTEK
agreed to execute a voting agreement whereby, as a substantial shareholder of
WebMD, PTEK would agree to vote in favor of the Merger Agreement.
The Company, through PTEK Ventures, currently proposes making an investment
of $3,000,000 in ePipeline, Inc. a privately held company in which the
directors and executive officers of the Company, and their respective
immediate family members, as a group, hold a 29% interest in the common stock,
a 17% interest in the Series A Preferred Stock, and a 16% interest in all the
issued and outstanding shares (on a fully diluted basis).
In March 2000, the Board of Directors of the Company approved the formation
of PTEK Ventures I LLC ("PTEK Ventures") to invest in emerging Internet
service and technology companies. Messrs. Jones and Allred will have indirect
compensatory interests in PTEK Ventures. PTEK Ventures has a capital
commitment of $125 million from the Company. Messrs. Jones and Allred will
have material interests, which have yet to be determined, in the following two
entities: 1) PTEK Partners LLC, which is entitled to approximately 20% of the
cumulative net realized gains from the funds from the investments, and 2) PTEK
Investors I LLC, which is required to co-invest with PTEK Ventures.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, George W. Baker, Sr., Raymond H. Pirtle, Jr. and Jackie M. Ward
served on the Compensation Committee. Messrs. Baker and Pirtle and Ms. Ward
have never been employees of the Company. Mr. Baker is Boland T. Jones'
father-in-law.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
Officers, directors and greater than ten percent beneficial owners are
required by applicable regulations to furnish the Company with copies of all
Section 16(a) forms they file.
The Company is required to describe in this proxy statement whether it has
knowledge that any person required to file such a report may have failed to do
so in a timely manner. In this regard, all of the Company's directors, all
officers subject to the reporting requirements and each beneficial owner of
more than ten percent of
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any class of the Company's Common Stock satisfied all applicable filing
requirements except for the following: Max A. Slifer, Jr. failed to timely
file an initial report upon becoming an officer in August 1999; Elizabeth W.
Abernathy failed to timely file an initial report upon becoming an officer in
August 1999; Robert S. Vaters failed to timely file an initial report upon
becoming an officer in August 1999; and Boland T. Jones failed to timely file
a statement of changes in beneficial ownership in December 1999. All of these
reports have now been filed. The foregoing is based upon reports furnished to
the Company.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP as auditors for the
Company for the current fiscal year ending December 31, 2000. Arthur Andersen
LLP served as independent auditors for the Company for the fiscal year ended
December 31, 1999, and representatives of that firm of independent accountants
are expected to be present at the Annual Meeting. Arthur Andersen LLP will
have an opportunity to make a statement if they desire to do so and respond to
appropriate questions.
SHAREHOLDER PROPOSALS
Under Rule 14a-8(e) of the Securities Exchange Act of 1934 (the "Exchange
Act") proposals of shareholders intended to be presented at the 2001 annual
meeting of shareholders must be received by the Company on or before January
11, 2001 to be eligible for inclusion in the Company's Proxy Statement and
Proxy related to that meeting. Only proper proposals under rule 14a-8 of the
Exchange Act which are timely received will be included in the Proxy Statement
and Proxy for the 2001 annual meeting of shareholders. Notice of shareholder
proposals submitted outside of Rule 14a-8(e) of the Exchange Act will be
considered untimely if received by the Company after March 26, 2001. If the
Company does not receive notice of any other matter that a shareholder wishes
to raise at the 2001 annual meeting by March 26, 2001 and a matter is properly
raised at such meeting, the proxies will have discretionary authority to vote
on the matter.
The Company's Bylaws provide that shareholders seeking to bring business
before a meeting of shareholders or to nominate candidates for election of
directors at a meeting of shareholders must provide notice thereof not less
than 60 nor more than 90 days prior to the meeting, and, in such notice,
provide to the Company certain information relating to the proposal or
nominee.
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OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual Meeting.
If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote the
shares they represent in accordance with their judgment.
A copy of the 1999 annual report on form 10-K, including financial
statements and all amendments thereto, as filed with the Securities and
Exchange Commission, may be obtained without charge upon written request to:
Corporate Secretary, PTEK Holdings, Inc., 3399 Peachtree Road, N.E., The Lenox
Building, Suite 600, Atlanta, Georgia 30326.
By Order of the Board of Directors,
/s/ Patrick G. Jones
Patrick G. Jones
Corporate Secretary
Atlanta, Georgia
April 28, 2000
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Appendix A
PTEK HOLDINGS, INC.
2000 DIRECTORS STOCK PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the following meanings unless the
context clearly indicates to the contrary:
"Award" shall mean a grant of Restricted Stock under this Plan.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean theft or destruction of property of the Company or any of
its subsidiaries, disregard of the rules or policies of the Company or any of
its subsidiaries, or conduct evincing willful or wanton disregard of the
interests of the Company or any of its subsidiaries. Such determination shall
be made by the Committee based on information presented by the Company and the
Director (if the Director chooses to present information), and shall be final
and binding on the Company and the Director.
"Change in Control" shall mean the occurrence of either of the following
events:
(a) A change in the composition of the Board as a result of which fewer than
one-half of the incumbent Directors are Directors who either:
(i) were Directors of the Company twenty-four (24) months prior to such
change, or
(ii) were elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Directors who had
been Directors of the Company twenty-four (24) months prior to
such change and who were still in office at the time of the
election or nomination; or
(b) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than any person who is a shareholder of the Company on or
before the effective date of this Plan, by the acquisition or aggregation of
securities is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding securities ordinarily
(and apart from rights accruing under special circumstances) having the right
to vote at elections of directors (the "Base Capital Stock"); except that any
change in the relative beneficial ownership of the Company's securities by any
person resulting solely from a reduction in the aggregate number of
outstanding shares of Base Capital Stock shall be disregarded until such
person increases in any manner, directly or indirectly, such person's
beneficial ownership of any securities of the Company.
"Code" shall mean the Internal Revenue Code of 1986, including effective date
and transition rules (whether or not codified). Any reference herein to a
specific section of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"Committee" shall mean a committee of at least two Directors appointed from
time to time by the Board, having the duties and authority set forth herein in
addition to any other authority granted by the Board The Committee shall
consist of at least two members of the Board who are Non-Employee Directors
(as that term is defined in Rule 16b-3 under the Exchange Act). At any time
that the Board shall not have appointed a committee as described above, any
reference herein to the Committee shall mean the Board.
"Company" shall mean PTEK Holdings, Inc., a Georgia corporation.
"Director" shall mean a member of the Board and any person who is an advisory
or honorary director of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934. Any reference
herein to a specific section of the Exchange Act shall be deemed to include a
reference to any corresponding provision of future law.
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"Exercise Price" shall mean the price at which an Optionee may purchase a
share of Stock under a Stock Option Agreement.
"Fair Market Value" on any date shall mean (i) the closing sales price of the
Stock, regular way, on such date on the national securities exchange having
the greatest volume of trading in the Stock during the thirty (30) day period
preceding such date or, if such exchange was not open for trading on such
date, the next preceding date on which it was open; (ii) if the Stock is not
traded on any national securities exchange, the average of the closing high
bid and low asked prices of the Stock on the over-the-counter market on the
date such value is to be determined, or in the absence of closing bids on such
date, the closing bids on the next preceding date on which there were bids; or
(iii) if the Stock also is not traded on the over-the-counter market, the fair
market value as determined in good faith by the Committee based on such
relevant facts as may be available, which may include opinions of independent
experts, the price at which recent sales of Stock have been made, the book
value of the Stock, and the Company's past, current and future earnings.
"Grantee" shall mean a person who is an Optionee or a person who has received
an Award of Restricted Stock.
"Nonqualified Stock Option" shall mean an Option that is not intended to be an
incentive stock option as described in Code Section 422 and the regulations
promulgated thereunder.
"Option" shall mean an option to purchase Stock granted pursuant to the
provisions of Article VI hereof.
"Optionee" shall mean a person to whom an Option has been granted hereunder.
"Permanent and Total Disability" shall have the meaning set forth in Code
Section 22(e)(3) and the regulations promulgated thereunder.
"Plan" shall mean the PTEK Holdings, Inc. 2000 Directors Stock Plan, the terms
of which are set forth herein.
"Purchasable" shall refer to Stock that may be purchased by an Optionee under
the terms of this Plan on or after a certain date specified in the applicable
Stock Option Agreement.
"Qualified Domestic Relations Order" shall have the meaning set forth in Code
Section 414(p)(1)(A) and the regulations promulgated thereunder.
"Restricted Stock" shall mean Stock issued to a Grantee pursuant to Article
VII hereof.
"Restriction Agreement" shall mean a written agreement setting forth the terms
of an Award of Restricted Stock, as provided in Section 7.1 hereof.
"Stock" shall mean the Common Stock, par value $.0l per share, of the Company
or, in the event that the outstanding shares of Stock are hereafter changed
into or exchanged for shares of a different stock or securities of the Company
or some other entity, such other stock or securities.
"Stock Option Agreement" shall mean a written agreement between the Company
and an Optionee under which the Optionee may purchase Stock hereunder, as
provided in Article VI hereof.
ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as the "PTEK Holdings, Inc. 2000
Directors Stock Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company and its shareholders by affording the non-employee Directors of the
Company an opportunity to acquire or increase their proprietary interests in
the Company. The objective of the Options and Awards is to promote the growth
and profitability of the Company by providing the Grantees with an additional
incentive to achieve the Company's objectives through participation in its
success and growth and by encouraging their continued association with or
service to the Company.
2.3 Effective Date. The effective date of this Plan is April 26, 2000,
subject to shareholder approval of the shareholders no later than April 26,
2001.
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ARTICLE III
PARTICIPANTS
The class of persons eligible to participate in this Plan shall consist
solely of persons who, at the date of grant of Options hereunder, are
Directors of the Company and are not employed by the Company or any of its
subsidiaries or affiliates.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. This Plan shall be administered by
the Committee; provided, however, that any decision with respect to an Option
or Award granted under the Plan to a member of the Committee, including
without limitation the decision to grant such Option or Award and the terms
thereof, shall be made by the Board of Directors, and any reference herein to
the Committee shall be deemed to mean the Board as it relates to an Option or
Award granted to a member of the Committee. The Committee shall select one of
its members as its Chairman and shall hold its meetings at such times and
places as it may determine. The Committee shall keep minutes of its meetings
and shall make such rules and regulations for the conduct of its business as
it may deem necessary. The Committee shall have the power to act by unanimous
written consent in lieu of a meeting, and to meet telephonically. In
administering this Plan, the Committee's actions and determinations shall be
binding on all interested parties. The Committee shall have the power to grant
Options or Awards in accordance with the provisions of this Plan and may grant
Options and Awards singly, in combination, or in tandem. Subject to the
provisions of this Plan, the Committee shall have the discretion and authority
to determine those Directors to whom Options or Awards will be granted, the
number of shares of Stock subject to each Option or Award, such other matters
as are specified herein, and any other terms and conditions of a Stock Option
Agreement or Restriction Agreement. To the extent not inconsistent with the
provisions of this Plan, the Committee shall have the authority to amend or
modify an outstanding Stock Option Agreement or Restriction Agreement, or to
waive any provision thereof, provided that the Grantee consents to such
action.
4.2 Interpretation; Rules. Subject to the express provisions of this Plan,
the Committee shall have complete authority to interpret this Plan, to
prescribe, amend and rescind rules and regulations relating to it, to
determine the details and provisions of each Stock Option Agreement and
Restriction Agreement, and to make all other determinations necessary or
advisable for the administration of this Plan, including, without limitation,
the amending or altering of this Plan and any Options or Awards granted
hereunder as may be required to comply with or to conform to any federal,
state or local laws or regulations.
4.3 No Liability. Neither any Director nor any member of the Committee shall
be liable to any person or entity for any act or determination made in good
faith with respect to this Plan or any Option or Award granted hereunder.
4.4 Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority at a meeting at which
a quorum is present, or any action taken without a meeting evidenced by a
writing executed by all the members of the Committee, shall constitute the
action of the Committee.
4.5 Company Assistance. The Company shall supply full and timely information
to the Committee on all pertinent facts as the Committee may require. The
Company shall furnish the Committee with such clerical and other assistance as
is necessary in the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to any antidilution adjustment pursuant to the
provisions of Section 5.2, the maximum number of shares of Stock that may be
issued hereunder shall be 1,000,000, of which not more than 10% shall be
granted in the form of Restricted Stock Awards. Any or all shares of Stock
subject to the Plan may be issued in any combination of Nonqualified Stock
Options and Restricted Stock, and the amount of Stock subject to the Plan may
be increased from time to time in accordance with Article IX hereof.
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Shares subject to an Option or issued as an Award may be either authorized
and unissued shares or shares issued and later acquired by the Company. The
shares covered by any unexercised portion of an Option that has terminated for
any reason (except as set forth in the following paragraph), or any forfeited
portion of an Award, may again be optioned or Awarded under this Plan, and
such shares shall not be considered as having been optioned or issued in
computing the number of shares of Stock remaining available for Options or
Awards hereunder.
If Options are issued in respect of options to acquire stock of any entity
acquired, by merger or otherwise, by the Company, the aggregate number of
shares of Stock for which Options may be granted hereunder shall automatically
be increased by the number of shares subject to the Options so issued;
provided, however, that the aggregate number of shares of Stock for which
Options may be granted hereunder shall automatically be decreased by the
number of shares covered by any unexercised portion of an Option so issued
that has terminated for any reason, and the shares subject to any such
unexercised portion may not be optioned to any other person.
5.2 Antidilution.
(a) If (i) the Outstanding shares of Stock are increased, decreased, or
changed into or exchanged for a different number or kind of shares or other
securities of the Company, by reason of merger, consolidation, reorganization,
recapitalization, reclassification, combination or exchange of shares, or
stock split or stock dividend, (ii) any spin-off, split-off or other
distribution of assets materially affects the price of the Company's stock, or
(iii) there is any assumption and conversion to this Plan by the Company of an
acquired company's outstanding option grants, then:
(A) the aggregate number and kind of shares of Stock for which Options
or Awards may be granted hereunder shall be adjusted appropriately
by the Committee, and
(B) the rights of Optionees (concerning the number of shares subject to
Options and the Exercise Price) under outstanding Options and the
rights of the holders of Awards (concerning the terms and
conditions of the lapse of any then remaining restrictions), shall
be adjusted appropriately by the Committee.
(b) If the Company is a party to any reorganization in which it does not
survive (or in which it survives as the subsidiary of a previously
unaffiliated entity), involving merger, consolidation, or acquisition of the
stock or substantially all the assets of the Company, the Committee, in its
discretion, may:
(i) notwithstanding other provisions hereof, declare that all Options
granted under this Plan shall become exercisable immediately
notwithstanding the provisions of the respective Stock Option
Agreements regarding exercisability, that all such Options shall
terminate thirty (30) days after the Committee gives written notice
of the immediate right to exercise all such Options and of the
decision to terminate all Options not exercised within such 30-day
period, and that all then-remaining restrictions pertaining to
Awards under this Plan shall immediately lapse; and/or
(ii) notify all Grantees that all Options and Awards granted under this
Plan shall be assumed by the successor corporation or substituted
on an equitable basis with options or restricted stock issued by
such successor corporation.
(c) If the Company is to be liquidated or dissolved in connection with a
reorganization described in Section 5.2(b), the provisions of that Section
shall apply. In all other instances, the adoption of a plan of dissolution or
liquidation of the Company shall, notwithstanding other provisions hereof,
cause all then-remaining restrictions pertaining to Options and Awards under
the Plan to lapse, and shall cause every Option outstanding under the Plan to
terminate to the extent not exercised prior to the adoption of the plan of
dissolution or liquidation by the shareholders; provided that, notwithstanding
any other provisions hereof, the Committee may declare all Options granted
under the Plan to be exercisable at any time on or before the fifth (5th)
business day following such adoption, notwithstanding the provisions of the
respective Stock Option Agreements regarding exercisability.
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(d) The adjustments described in paragraphs (a) through (c) of this Section
5.2, and the manner of their application, shall be determined solely by the
Committee, and any such adjustment may provide for the elimination of
fractional share interests. The adjustments required under this Article V
shall apply to any successors of the Company and shall be made regardless of
the number or type of successive events requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 Type of Options Granted. The Committee may, under this Plan, grant
Nonqualified Stock Options only. Such Options may be granted subject to
conditions based on the satisfaction of performance goals or any other factor
the Committee deems relevant.
6.2 Option Grant and Agreement. Each Option granted hereunder shall be
evidenced by minutes of a meeting or the written consent of the Committee and
by a written Stock Option Agreement executed by the Company and the Optionee.
The terms of the Option, including the Option's duration, time or times of
exercise, and exercise price, shall be stated in the Stock Option Agreement.
6.3 Exercise Price. The Exercise Price of the Stock subject to each Option
shall be determined by the Committee.
6.4 Exercise Period. The period for the exercise of each Option granted
hereunder shall be determined by the Committee.
6.5 Option Exercise.
(a) Unless otherwise provided in the Stock Option Agreement or Section 6.6
hereof, an Option may be exercised at any time or from time to time during the
term of the Option as to any or all full shares which have become Purchasable
under the provisions of the Option, but not at any time as to less than one
hundred (100) shares unless the remaining shares that have become so
Purchasable are less than one hundred (100) shares. The Committee shall have
the authority to prescribe in any Stock Option Agreement that the Option may
be exercised only in accordance with a vesting schedule during the term of the
Option.
(b) An Option shall be exercised by (i) delivery to the Company at its
principal office a written notice of exercise with respect to a specified
number of shares of Stock and (ii) payment to the Company at that office of
the full amount of the Exercise Price for such number of shares in accordance
with Section 6.5(c). If requested by an Optionee, an Option may be exercised
with the involvement of a stockbroker in accordance with the federal margin
rules set forth in Regulation T (in which case the certificates representing
the underlying shares will be delivered by the Company directly to the
stockbroker).
(c) The Exercise Price is to be paid in full in cash upon the exercise of
the Option and the Company shall not be required to deliver certificates for
the shares purchased until such payment has been made; provided, however, the
Committee may provide in a Stock Option Agreement (or may otherwise determine
in its sole discretion at the time of exercise) that in lieu of cash, all or
any portion of the Exercise Price may be paid by tendering to the Company
shares of Stock duly endorsed for transfer and owned by the Optionee for at
least six (6) months, to be credited against the Exercise Price at the Fair
Market Value of such shares on the date of exercise (however, no fractional
shares may be so transferred, and the Company shall not be obligated to make
any cash payments in consideration of any excess of the aggregate Fair Market
Value of shares transferred over the aggregate Exercise Price); provided
further, the Committee may provide in a Stock Option Agreement (or may
otherwise determine in its sole discretion at the time of exercise) that, in
lieu of cash or shares, all or a portion of the Exercise Price may be paid by
the Optionee's execution of a recourse note equal to the Exercise Price or
relevant portion thereof, subject to compliance with applicable state and
federal laws, rules and regulations. In addition to the above methods of
exercise, to the extent permitted under Regulation T of the Federal Reserve
Board, and subject to applicable securities laws, an Option may be exercised
through a broker in a so-called "cashless exercise" whereby the broker sells
the Option shares and delivers cash sales proceeds to the Company in payment
of the exercise price.
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(d) The holder of an Option shall not have any of the rights of a
shareholder with respect to the shares of Stock subject to the Option until
such shares have been issued and transferred to the Optionee upon the exercise
of the Option.
6.6 Nontransferability. No Option shall be transferable by an Optionee other
than by will or the laws of descent and distribution or pursuant to a
Qualified Domestic Relations Order; provided, however, that the Committee may
(but need not) permit other transfers where the Committee concludes that such
transferability is appropriate and desirable, taking into account any factors
deemed relevant, including without limitation, state or federal tax or
securities laws applicable to transferable options. During the lifetime of an
Optionee, Options shall be exercisable only by such Optionee (or by such
Optionee's guardian or legal representative, should one be appointed, or by a
permitted transferee).
6.7 Termination of Service. The Committee shall have the power to specify,
with respect to the Options granted to a particular Optionee, the effect upon
such Optionee's right to exercise an Option upon termination of such
Optionee's service as a Director under various circumstances, which effect may
include immediate or deferred termination of such Optionee's rights under an
Option, or acceleration of the date at which an Option may be exercised in
full.
6.8 Effect of Change in Control. The Committee may determine, at the time of
granting an Option or thereafter, that such Option shall become exercisable on
an accelerated basis in the event that a Change in Control occurs with respect
to the Company (and the Committee shall have the discretion to modify the
definition of Change in Control in a particular Option Agreement). If the
Committee finds that there is a reasonable possibility that, within the
succeeding six (6) months, a Change in Control will occur with respect to the
Company, then the Committee may determine that all outstanding Options shall
be exercisable on an accelerated basis.
ARTICLE VII
RESTRICTED STOCK
7.1 Awards of Restricted Stock. The Committee may grant Awards of Restricted
Stock, which shall be governed by a Restriction Agreement between the Company
and the Grantee. Each Restriction Agreement shall contain such restrictions,
terms and conditions (including, without limitation, the satisfaction of
stated performance goals) as the Committee may, in its discretion, determine,
and may require that an appropriate legend be placed on the certificates
evidencing the subject Restricted Stock. Shares of Restricted Stock granted
pursuant to an Award hereunder shall be issued in the name of the Grantee as
soon as reasonably practicable after the Award is granted, provided that the
Grantee has executed the Restriction Agreement governing the Award, the
appropriate blank stock powers and, in the discretion of the Committee, an
escrow agreement and any other documents which the Committee may require as a
condition to the issuance of such Shares. If a Grantee shall fail to execute
the foregoing documents within the time period prescribed by the Committee, if
any, the Award shall be void. At the discretion of the Committee, Shares
issued in connection with an Award shall be deposited together with the stock
powers with an escrow agent designated by the Committee. Unless the Committee
determines otherwise and as set forth in the Restriction Agreement, upon
delivery of the Shares to the escrow agent, the Grantee shall have all of the
rights of a shareholder with respect to such Shares, including the right to
vote the Shares and to receive all dividends or other distributions paid or
made with respect to the Shares.
7.2 Nontransferability. Until any restrictions upon Restricted Stock awarded
to a Grantee shall have lapsed in a manner set forth in Section 7.3, such
shares of Restricted Stock shall not be transferable other than by will or the
laws of descent and distribution, or pursuant to a Qualified Domestic
Relations Order, nor shall they be delivered to the Grantee.
7.3 Lapse of Restrictions. Restrictions upon Restricted Stock awarded
hereunder shall lapse at such time or times and on such terms and conditions
as the Committee may, in its discretion, determine at the time the Award is
granted or thereafter.
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7.4 Termination of Service as a Director. The Committee shall have the power
to specify, with respect to each Award granted to any particular Grantee, the
effect upon such Grantee's rights with respect to such Restricted Stock of the
termination of such Grantee's service as a Director under various
circumstances, which effect may include immediate or deferred forfeiture of
such Restricted Stock or acceleration of the date on which any then remaining
restrictions shall lapse.
7.5 Treatment of Dividends. At the time an Award of Restricted Stock is made
the Committee may, in its discretion, determine that the payment to the
Grantee of any dividends, or a specified portion thereof, declared or paid on
such Restricted Stock shall be (a) deferred until the lapsing of the relevant
restrictions and (b) held by the Company for the account of the Grantee until
such lapsing. In the event of such deferral, there shall be credited at the
end of each year (or portion thereof) interest on the amount of the account
outstanding during such year at a rate per annum determined by the Committee.
Payment of deferred dividends, together with interest thereon, shall be made
upon the lapsing of restrictions imposed on such Restricted Stock, and any
dividends deferred (together with any interest thereon) in respect of
Restricted Stock shall be forfeited upon any forfeiture of such Restricted
Stock.
7.6 Delivery of Shares. Except as provided otherwise in Article VIII below,
within a reasonable period of time following the lapse of the restrictions on
shares of Restricted Stock, the Committee shall cause a stock certificate to
be delivered to the Grantee with respect to such shares and such shares shall
be free of all restrictions hereunder.
ARTICLE VIII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof, or deliver any certificate for shares of Restricted Stock
granted hereunder, prior to fulfillment of all of the following conditions:
(a) the admission of such shares to listing on all stock exchanges on which
the Stock is then listed;
(b) the completion of any registration or other qualification of such shares
which the Committee shall deem necessary or advisable under any federal or
state law or under the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body;
(c) the obtaining of any approval or other clearance from any federal or
state governmental agency or body which the Committee shall determine to be
necessary or advisable; and
(d) the lapse of such reasonable period of time following the exercise of
the Option as the Board from time to time may establish for reasons of
administrative convenience.
Stock certificates issued and delivered to Grantees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant
to applicable federal and state securities laws.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination and Amendment. The Board at any time may amend or terminate
the Plan without shareholder approval; provided, however, that the Board may
condition any amendment on the approval of shareholders of the Company if such
approval is necessary or advisable with respect to tax, securities or other
applicable laws.
9.2 Effect on Grantee's Rights. No termination, amendment or modification of
this Plan shall adversely affect a Grantee's rights under a Stock Option
Agreement or Restriction Agreement without the consent of the Grantee or his
legal representative.
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ARTICLE X
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of this Plan shall not affect any other stock option, incentive
or other compensation plans in effect for the Company or any of its
subsidiaries; nor shall the adoption of the Plan preclude the Company or any
of its subsidiaries from establishing any other form of incentive or other
compensation plan for Directors.
ARTICLE XI
MISCELLANEOUS
11.1. Performance Goals. The Committee may, but need not, determine that any
Award granted pursuant to this Plan to a participant shall be determined
solely on the basis of (a) the achievement by the Company or a Subsidiary of a
specified target return on equity or assets, (b) the Company's or Subsidiary's
stock price, (c) the achievement by the Company or a business unit of the
Company or Subsidiary of a specified target net income or earnings per share,
including without limitation earnings before interest, taxes, depreciation
and/or amortization, or (d) any combination of the goals set forth in (a)
through (c) above. Furthermore, in such case, the Committee shall have the
right for any reason to reduce (but not increase) any Award, notwithstanding
the achievement of a specified goal. If an Award is made on such basis, the
Committee shall establish goals prior to the beginning of the period for which
such performance goal relates. Any payment of an Award granted with
performance goals shall be conditioned on the written certification of the
Committee in each case that the performance goals and any other material
conditions were satisfied.
11.2 Replacement or Amended Grants. At the sole discretion of the Committee,
and subject to the terms of this Plan, the Committee may modify outstanding
Options or Awards or accept the surrender of outstanding Options or Awards and
grant new Options or Awards in substitution thereof. However, no modification
of an Option or Award shall adversely affect a Grantee's rights under a Stock
Option Agreement or Restriction Agreement without the consent of the Grantee
or his legal representative.
112.3 Plan Binding on Successors. This Plan shall be binding upon the
successors and assigns of the Company.
11.4 Singular, Plural, Gender. Whenever used herein, nouns in the singular
shall include the plural, and the masculine pronoun shall include the feminine
gender and vice versa.
11.5 Headings Not Part of Plan. Headings of Articles and Sections hereof are
inserted for convenience and reference, and they do not constitute part of
this Plan.
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PROXY
PTEK HOLDINGS, INC.
The undersigned hereby appoints Boland T. Jones and Patrick G. Jones, each
with full power of substitution, acting jointly or by any of them if only one
be present and acting, attorneys and proxies to vote in the manner specified
below (according to the number of shares which the undersigned would be
entitled to cast if then personally present), all the shares of common stock,
par value $.01 per share, or all the Series B voting preferred stock, par value
$.01 per share, of PTEK Holdings, Inc. held of record by the undersigned at the
close of business on April 21, 2000 at the Annual Meeting of Shareholders to be
held at 10:00 a.m., local time, on June 7, 2000, at the Sheraton Buckhead Hotel
at 3405 Lenox Road, N.E., Atlanta, Georgia, 30326, including any adjournments
thereof.
1. Election of the following nominees:
Nominees: Boland T. Jones, George W. Baker, Sr. and Jeffrey T. Arnold to
serve as Class III directors for terms expiring at the annual meeting of
shareholders in 2003.
FOR all nominees listed above [_] WITHHOLD authority to vote for nominees
listed [_]
(Instruction: To withhold authority to vote for any individual nominee,
write the nominee's name in the space provided below.)
FOR nominee listed above [_] WITHHOLD authority to vote for nominee
listed [_]
2. Adoption of the PTEK Holdings, Inc. 2000 Directors Stock Plan:
FOR [_] AGAINST [_] ABSTAIN [_]
[_] Please check this box if you plan to attend the Annual Meeting of
Shareholders despite submission of this proxy.
This Proxy, when properly executed, will be voted in the manner directed by
the undersigned shareholder. If no direction is made, this Proxy will be voted
FOR Proposals 1 and 2, and with discretionary authority on all other matters
that may properly come before the Meeting or any adjournment thereof of which
the Company did not have notice on or before April 5, 2000.
Please sign exactly as your name appears on your stock certificate and date
as of the date of signature. Where shares are held jointly, each shareholder
must sign. When signing as executor, administrator, trustee, or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
_________________________________
Signature of Shareholder
_________________________________
Signatures of Other Shareholder
(if held jointly)
Dated:_____________________, 2000
THIS PROXY IS SOLICITED ON BEHALF OF PTEK HOLDINGS, INC.'S BOARD OF DIRECTORS
AND MAY BE REVOKED BY THE SHAREHOLDER PRIOR TO ITS EXERCISE.
