<PAGE> 1
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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COM-
MISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
</TABLE>
CoActive Marketing Group, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
--------------------------------------------------------------------------------
(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:
N/A
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
------------------------------------------------------------------------
(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):
N/A
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
------------------------------------------------------------------------
(5) Total fee paid:
N/A
------------------------------------------------------------------------
[ ] 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:
N/A
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
N/A
------------------------------------------------------------------------
(3) Filing Party:
N/A
------------------------------------------------------------------------
(4) Date Filed:
N/A
------------------------------------------------------------------------
<PAGE> 2
COACTIVE MARKETING GROUP, INC.
415 NORTHERN BOULEVARD
GREAT NECK, NEW YORK 11021
------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
------------------------
The Annual Meeting of the Stockholders (the "Annual Meeting") of CoActive
Marketing Group, Inc. (the "Company") will be held at the Company's principal
executive offices, 415 Northern Boulevard, Great Neck, New York 11021, at 10:00
a.m., local New York time, on September 26, 2000, to consider the following
matters:
(1) The election of seven Directors to hold office until the next Annual
Meeting of Stockholders and until their respective successors are duly
elected and qualified.
(2) The transaction of such other businesses as may properly come before
the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on July 31, 2000 as
the record date for the Annual Meeting. Only stockholders of record of the
Company's Common Stock at the close of business on July 31, 2000 will be
entitled to notice of and to vote at the Annual Meeting or any adjournments or
postponements thereof. Shares can be voted at the Annual Meeting only if the
holder is present or represented by proxy.
The accompanying form of proxy is solicited by the Board of Directors of
the Company. Reference is made to the attached Proxy Statement for further
information with respect to the business to be transacted at the Annual Meeting.
A complete list of stockholders entitled to vote at the Annual Meeting
shall be open to the examination of any stockholder, for any purpose germane to
the Annual Meeting, during ordinary business hours, for a period of at least ten
days prior to the Annual Meeting, at the Company's principal executive offices,
415 Northern Boulevard, Great Neck, New York 11021.
Stockholders are cordially invited to attend the Annual Meeting. Whether or
not you expect to attend the Annual Meeting in person, please complete, date and
sign the accompanying proxy card and return it without delay in the enclosed
postage prepaid envelope. Your proxy will not be used if you are present and
prefer to vote in person or if you revoke the proxy.
By Order of the Board of Directors
DONALD A. BERNARD
Secretary
July 31, 2000
<PAGE> 3
COACTIVE MARKETING GROUP, INC.
415 NORTHERN BOULEVARD
GREAT NECK, NEW YORK 11021
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 26, 2000
------------------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CoActive Marketing Group, Inc., a Delaware
corporation (the "Company"), for use at the 2000 Annual Meeting of Stockholders
of the Company and for any adjournments or postponements thereof (the "Annual
Meeting") to be held at the Company's principal executive offices, 415 Northern
Boulevard, Great Neck, New York 11021, at 10:00 a.m., local New York time, on
September 26, 2000, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. A Board of Directors' proxy (the "Proxy") for
the Annual Meeting is enclosed, by means of which you may vote as to the
proposals described in this Proxy Statement.
All Proxies which are properly completed, signed and returned to the
Company prior to the Annual Meeting, and which have not been revoked, will be
voted in accordance with the stockholder's instructions contained in such Proxy.
In the absence of instructions, shares represented by such Proxy will be voted
FOR the election of the nominees of the Board of Directors for Director. The
Board of Directors is not aware of any business to be presented at the Annual
Meeting except the matters set forth in the Notice and described in this Proxy
Statement. If any other matters properly come before the Annual Meeting, the
persons named in the accompanying Proxy will vote on those matters in accordance
with their best judgment. A stockholder may revoke his or her Proxy at any time
before it is exercised by filing with the Secretary of the Company at its
principal executive offices at 415 Northern Boulevard, Great Neck, New York
11021, either a written notice of revocation or a duly executed Proxy bearing a
later date, or by attending in person at the Annual Meeting and expressing a
desire to vote his or her shares in person.
This Proxy Statement and the accompanying Notice of Annual Meeting of
Stockholders, Proxy and Annual Report on Form 10-K (including financial
statements) for the fiscal year ended March 31, 2000 ("Fiscal 2000"), are being
sent to stockholders on or about July 31, 2000.
<PAGE> 4
VOTING SECURITIES
July 31, 2000 has been fixed as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof. As of that date, the Company had
outstanding 5,015,981 shares of Common Stock, $.001 par value (the "Common
Stock"), excluding treasury shares. The presence, in person or by proxy, of
stockholders entitled to cast a majority of votes which stockholders are
entitled to cast on a particular matter at the Annual Meeting will constitute a
quorum for the Annual Meeting. Holders of Common Stock are entitled to one vote
for each share owned upon all matters to be considered at the Annual Meeting.
Proxies marked "Abstain" are included in determining a quorum, but broker
proxies which have not voted in the election of Directors are not included in
determining a quorum for such matter.
Directors will be elected by a plurality of the votes cast at the Annual
Meeting by the holders of shares of Common Stock present in person or
represented by proxy and entitled to vote on the election of Directors. There is
no cumulative voting in the election of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of June 15, 2000 with
respect to stock ownership of (i) those persons or groups known to the Company
to beneficially own more than 5% of the Company's outstanding Common Stock, (ii)
each of the Directors and nominees of the Company and the Company's executive
officers named in the summary compensation table, and (iii) the Company's
Directors and executive officers as a group. Unless otherwise indicated, the
named beneficial owner has sole voting and investment power with respect to the
shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS(1)
------------------------------------ ----------------------- -----------
<C> <S> <C> <C>
(I) BENEFICIAL OWNERS OF MORE THAN 5% OF THE
COMMON STOCK (OTHER THAN DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS)
OG Holding Corporation Liquidation 706,731(2) 14.1%
Trust.....................................
9745 Mangham Drive
Cincinnati, OH 45215
Robert F. Hussey.......................... 297,843(3) 5.9%
89 White Hill Road
Lloyd Harbor, NY 11734
Special Situations Private Equity Fund, 630,375(4) 12.1%
L.P.......................................
MG Advisors, LLC
Austin W. Marxe
David Greenhouse
153 East 53rd Street
New York, NY 10022
Joseph E. Sheehan......................... 317,007(5) 6.3%
711 Fifth Avenue
New York, NY 10022
(II) DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
John P. Benfield.......................... 711,578(6) 13.1%
c/o CoActive Marketing Group, Inc.
415 Northern Boulevard
Great Neck, NY 11021
Donald A. Bernard......................... 708,498(7) 13.0%
c/o CoActive Marketing Group, Inc.
415 Northern Boulevard
Great Neck, NY 11021
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS(1)
------------------------------------ ----------------------- -----------
<C> <S> <C> <C>
Paul A. Amershadian....................... 703,748(8) 12.9%
c/o CoActive Marketing Group, Inc.
415 Northern Boulevard
Great Neck, NY 11021
Thomas E. Lachenman....................... 716,942(9) 14.3%
c/o Optimum Group, Inc.
9745 Mangham Drive
Cincinnati, OH 45215
Brian Murphy.............................. 30,000 *
c/o U.S. Concepts, Inc.
16 West 22nd Street, 2nd Floor
New York, NY 10010
Herbert M. Gardner........................ 129,532(10) 2.5%
c/o Janney Montgomery Scott LLC
26 Broadway
New York, NY 10004
Joseph S. Hellman......................... 36,063(11) *
c/o Kronish Lieb Weiner & Hellman LLP
1114 Avenue of the Americas
New York, NY 10036-7798
(III) ALL DIRECTORS AND EXECUTIVE OFFICERS AS A
GROUP
(7 PERSONS)............................... 3,036,361(6)(7)(8)(9)(10)(11) 47.5%
</TABLE>
---------------
* Less than 1%.
(1) All information is as of June 15, 2000 and was determined in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended,
based upon information furnished by the persons listed or contained in
filings made by them with the Securities and Exchange Commission.
(2) Represents shares of Common Stock registered in the name of OG Holding
Corporation Liquidation Trust. Mr. Lachenman, President of the Company's
wholly-owned subsidiary Optimum Group, Inc. ("Optimum") until May 31, 1999
and a Director of the Company, is the trustee of, and owns a 59.1% interest
in the property held by him as trustee of the OG Holding Corporation
Liquidation Trust.
(3) Includes 62,500 shares of Common Stock issuable upon exercise of
immediately exercisable warrants and 171,100 shares of Common Stock pledged
to Bear Stearns Securities Corp. as margin loan collateral in Mr. Hussey's
personal brokerage account with full recourse to Mr. Hussey.
(4) Includes 210,125 shares of Common Stock issuable upon exercise of
immediately exercisable warrants. These shares and warrants are held of
record by Special Situations Equity Fund, L.P. (The "Fund"). MG Advisers,
L.L.C. ("MG") is the general partner of the Fund. Austin W. Marxe and David
Greenhouse are the sole members of MG and are responsible for all the
Fund's investment decisions.
(5) Includes 185,524 shares of Common Stock owned directly Joseph E. Sheehan
and 131,483 shares of Common Stock held by trusts for the benefit of Mr.
Sheehan's children. Mr. Sheehan has the sole right to manage the
investments of such trusts.
(6) Includes 387,500 shares of Common Stock issuable upon exercise of
immediately exercisable options and 34,121 shares of Common Stock issuable
upon exercise of immediately exercisable warrants.
(7) Includes 387,500 shares of Common Stock issuable upon exercise of
immediately exercisable options and 34,121 shares of Common Stock issuable
upon exercise of immediately exercisable warrants. Also includes 4,750
shares held by Mr. Bernard's wife as to which Mr. Bernard disclaims
beneficial interest.
(8) Includes 387,500 shares of Common Stock issuable upon exercise of
immediately exercisable options and 34,121 shares of Common Stock issuable
upon exercise of immediately exercisable warrants. Also includes 141,063
shares of Common Stock pledged to the Company as security for loans from
the Company in the aggregate principal amount of $225,000. See "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS."
3
<PAGE> 6
(9) Includes 10,211 shares of Common Stock issuable upon exercise of
immediately exercisable options and shares of Common Stock registered in
the name of OG Holding Corporation Liquidation Trust. Mr. Lachenman is the
trustee of, and owns a 59.1% interest in the property held by him as
trustee of, the OG Holding Corporation Liquidation Trust.
(10) Includes 48,750 shares of Common Stock issuable upon exercise of
immediately exercisable warrants, 24,063 shares of Common Stock issuable
upon exercise of immediately exercisable options, and 34,000 shares of
Common Stock held in an individual retirement account for the benefit of
Mr. Gardner. Excludes (i) 20,000 shares of Common Stock and warrants to
purchase 3,750 shares of Common Stock held by Mr. Gardner's wife, as to
which Mr. Gardner disclaims any beneficial interest, and (ii) 3,625 shares
of Common Stock and warrants to purchase 1,125 shares of Common Stock owned
by the Gardner Family Foundation, a charitable organization, of which Mr.
Gardner is President and a board member.
(11) Includes 24,063 shares of Common Stock issuable upon exercise of
immediately exercisable options held by Kronish Lieb Wiener & Hellman LLP,
of which Mr. Hellman is a member.
ELECTION OF DIRECTORS
A Board of seven Directors of the Company is to be elected at the Annual
Meeting, each to serve, subject to the provisions of the Company's By-Laws,
until the next Annual Meeting of Stockholders and until his successor is duly
elected and qualified. It is management's recommendation that the accompanying
form of Proxy be voted FOR the election as Director of the seven persons named
below, all of whom are currently Directors of the Company. The Board of
Directors believes that the nominees named below are willing to serve as
Directors. However, in the event that any of the nominees should become unable
or unwilling to serve as a Director, the Proxy will be voted for the election of
such person or persons as shall be designated by the Directors.
The following table sets forth information with respect to each nominee for
Director of the Company, all of whom are currently serving as Directors of the
Company:
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND
PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR
NAME AGE DURING THE PAST FIVE YEARS SINCE
---- --- ------------------------------------------------- --------
<S> <C> <C> <C>
Paul A. Amershadian............ 52 Executive Vice President -- Marketing and Sales 1996
and Treasurer of the Company since September 29,
1995 and of the Company's respective
predecessors, SPAR Promotion & Marketing
Services, Inc. ("Spar") and R.G. Meadows, Inc.
("Meadows"), from 1986 to September 29, 1995;
Secretary of the Company from October 16, 1996 to
September 16, 1997; Director of the Company since
May 1996.
John P. Benfield............... 49 Director, President and Chief Executive Officer 1995
of the Company since September 29, 1995; Chairman
of the Board of the Company since October 16,
1996; Executive Vice President of Operations of
both Spar and Meadows from 1988 to September 29,
1995.
Donald A. Bernard.............. 67 Director, Executive Vice President and Chief 1995
Financial Officer of the Company since September
29, 1995; Secretary of the Company since
September 16, 1997; Executive Vice President of
Finance of both Spar and Meadows from 1990 to
September 29, 1995.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND
PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR
NAME AGE DURING THE PAST FIVE YEARS SINCE
---- --- ------------------------------------------------- --------
<S> <C> <C> <C>
Herbert M. Gardner............. 60 Director of the Company since May 1, 1997; Senior 1997
Vice President of Janney Montgomery Scott LLC, an
investment banking firm, since 1978; Presently
serves as Chairman of the Board of Directors of
Supreme Industries, Inc. and as a director of Nu
Horizons Electronics Corp., Transmedia Network,
Inc., TGC Industries, Inc., Hirsch International
Corp., and Rumson Fair Haven Bank and Trust
Company.
Joseph S. Hellman.............. 69 Director of the Company since May 1, 1997; 1997
Partner in the law firm of Kronish Lieb Weiner &
Hellman LLP during the past five years.
Thomas E. Lachenman............ 49 President of Optimum, a wholly-owned subsidiary 1998
of the Company, from March 31, 1998 until May 31,
1999, and of such company's predecessor from 1973
through March 31, 1998; Director of the Company
since March 31, 1998.
Brian Murphy................... 43 Chief Executive Officer of U.S. Concepts, Inc. 1998
("US Concepts"), a Delaware corporation that is a
wholly-owned subsidiary of the Company, since
December 29, 1998, and until January 6, 2000,
President of such company, and President of its
predecessor from 1992 through December 29, 1998.
Director of the Company since December 29, 1998.
In addition, since May 1, 2000, Chief Executive
Officer of iCAST Comedy Corporation, a
wholly-owned subsidiary of iCAST Corporation.
</TABLE>
Thomas E. Lachenman was named a Director on March 31, 1998, immediately
following the closing under the Asset Purchase Agreement (the "Optimum
Agreement") relating to the acquisition of the assets of OG Holding Corporation,
formerly known as Optimum Group, Inc. (the "Optimum Acquisition"). The Optimum
Agreement required the Company's existing Board of Directors to nominate Mr.
Lachenman in connection with the election of Directors at the Company's first
Annual Meeting of the Stockholders following the closing under the Optimum
Agreement.
Brian Murphy was named a Director on December 29, 1998, immediately
following the closing under the Asset Purchase Agreement (the "US Concepts
Agreement") relating to the acquisition of the assets of Murphy Liquidating
Corporation, formerly known as U.S. Concepts, Inc., a New York corporation (the
"US Concepts Acquisition"). The US Concepts Agreement requires the Company to
use its reasonable best efforts to nominate and elect Mr. Murphy as a director
of the Company for so long as Mr. Murphy remains an employee of US Concepts or
any affiliate of the Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during Fiscal 2000 and acted by
unanimous written consent on five occasions. All of the directors were in
attendance at more than 75% of the meetings of the Board as well as all meetings
of each committee of the Board on which they served, except for Paul Amershadian
who attended three of the six meetings of the Board of Directors.
The Board of Directors has a standing audit committee and compensation
committee. Herbert M. Gardner and Joseph S. Hellman are the sole members of both
committees. The Company does not currently have a nominating committee.
The audit committee reviews and reports to the Board of Directors with
respect to various auditing and accounting matters, including recommendations to
the Board of Directors as to the selection of the Company's
5
<PAGE> 8
independent auditors, the scope of audit procedures, general accounting policy
matters and the performance of the Company's independent auditors. The audit
committee held four meetings during Fiscal 2000.
The compensation committee was formed to review and make recommendations to
the Board of Directors regarding all executive compensation matters. The
compensation committee held one meeting during Fiscal 2000.
COMPENSATION OF DIRECTORS
As of April 1, 1998, each non-employee Director receives an annual stipend
equal to $10,000 per annum, a fee of $1,000 per Board meeting attended and a fee
of $500 per Committee meeting attended, and all Directors are reimbursed for
reasonable travel expenses incurred in connection with attending Board meetings.
Additionally, under a "formula plan" provided for in the Company's 1992
Stock Option Plan, each of the Company's non-employee Directors is granted an
option to purchase up to 6,875 shares of Common Stock (as adjusted for the
Company's 25% stock dividend paid on or about June 14, 1998 to shareholders of
record on May 14, 1998) annually on each April 30 as long as he remains on the
Board of Directors. Each such option becomes exercisable as to 3,438 of the
shares covered thereby on the first anniversary of the date of grant and as to
the remaining 3,437 shares on the second anniversary of the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 2000, Herbert M. Gardner was a member of the Company's
Compensation Committee and participated as an investor, together with his wife
and an affiliated charitable organization, in the company's January 31, 2000
private placement of its securities (the "Private Placement"). In the Private
Placement, the Company, for an aggregate of $1,000,000, sold 500,000 newly
issued shares of its Common Stock together with five-year warrants to purchase
an additional 250,00 shares of its Common Stock at an exercise price of $2.50
per share. Mr. Gardner, his wife and the charitable organization invested
$45,000, $15,000 and $4,500 respectively, purchasing an aggregate of 32,250
shares of Common Stock and warrants to purchase an additional 16,125 shares of
Common Stock. Mr. Gardner is also an officer of Janney Montgomery Scott LLC, an
investment banking firm that performed services for the Company in connection
with the Private Placement and that may continue to perform services for the
Company during the fiscal year ending March 31, 2001 ("Fiscal 2001"). Similarly,
during Fiscal 2000, Joseph S. Hellman was a member of the Company's Compensation
Committee and was a member of Kronish Lieb Weiner & Hellman LLP, a law firm that
the Company retained as its general counsel for Fiscal 2000 and Fiscal 2001.
EXECUTIVE OFFICERS
John P. Benfield, Donald A. Bernard, Paul A. Amershadian and Brian Murphy
are the current executive officers of the Company and its subsidiaries. Each of
Messrs. Benfield, Bernard and Amershadian has an employment contract with the
Company for a term of office expiring on September 28, 2001. Mr. Murphy has an
employment contract with U.S. Concepts for a term of office expiring on January
1, 2003. Additional information regarding those individuals is provided above in
"Election of Directors" and below in "Executive Employment Contracts,
Termination of Employment and Change-in-Control Arrangements".
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid to the Company's
Chief Executive Officer and to each of the other executive officers of the
Company whose compensation exceeded $100,000 during Fiscal 2000.
6
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------------- -------------------------------------
OTHER VALUE OF SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND FISCAL COMPEN- STOCK OPTIONS/ COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($) AWARDS($) SARS(#)* SATION($)
------------------ ------ --------- -------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
John P. Benfield................ 2000 $250,000 $ 0 -- -- -- $8,000(2)
President and Chief Executive 1999 $250,000 $ 0 -- -- -- $8,000(2)
Officer and Director 1998 $240,000(1) $60,000 -- -- 187,500 $8,000(2)
Donald A. Bernard............... 2000 $250,000 $ 0 -- -- -- $8,000(2)
Executive Vice President and 1999 $250,000 $ 0 -- -- -- $8,000(2)
Chief Financial Officer and 1998 $240,000(1) $60,000 -- -- 187,500 $8,000(2)
Director
Paul A. Amershadian............. 2000 $250,000 $ 0 -- -- -- $8,000(2)
Executive Vice President -- 1999 $250,000 $ 0 -- -- -- $8,000(2)
Marketing and Sales and 1998 $240,000(1) $60,000 -- -- 187,500 $8,000(2)
Director
Brian Murphy.................... 2000 $200,000 -- -- -- -- $8,000(2)
President -- U.S. Concepts, Inc. 1999 $200,000(4) -- -- -- 42,500 --
and Director(3) 1998 -- -- -- -- -- --
</TABLE>
---------------
* Adjusted for the Company's 25% stock dividend paid on or about June 14, 1998
to shareholders of record on May 14, 1998.
(1) Represents annual base salary, adjusted in October 1997, under employment
contracts. Actual salary paid to the named individuals during Fiscal 1998 is
as follows: Mr. Benfield -- $230,000; Mr. Bernard -- $230,000; Mr.
Amershadian -- $230,000.
(2) Represents executive's share of Company's matching contribution to Company's
401(k) Retirement Plan.
(3) Mr. Murphy commenced employment, at an annual base salary of $200,000
pursuant to an employment contract, with the Company's wholly-owned
subsidiary, U.S. Concepts, Inc. on December 29, 1998 upon consummation of
the US Concepts Acquisition. Subsequent to Fiscal 2000, in connection with
Mr. Murphy becoming Chief Executive Officer of iCAST Comedy Corporation, Mr.
Murphy's salary was reduced to $100,000 per annum. See "Executive Contracts,
Termination of Employment and Change-in-Control Arrangements."
(4) Represents annual base salary under employment contract. Actual salary paid
to Mr. Murphy during Fiscal 1998 was $50,000.
STOCK OPTIONS
During Fiscal 2000, the Company did not grant stock options to any of the
individuals named in the Summary Compensation Table. The following table sets
forth certain information concerning stock options exercised by the individuals
named in the Summary Compensation Table during Fiscal 2000 and unexercised stock
options held by such individuals at the end of Fiscal 2000.
7
<PAGE> 10
AGGREGATED OPTION EXERCISES IN FISCAL 2000
AND FY-END OPTION VALUES *
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR END(#) YEAR END($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) VALUE REALIZED($) UNEXERCISABLE UNEXERCISABLE(1)
---- --------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
John P. Benfield......... -- -- 379,955/41,666 1,116,117/122,394
Donald A. Bernard........ -- -- 379,955/41,666 1,116,117/122,394
Paul A. Amershadian...... -- -- 379,955/41,666 1,116,117/122,394
Brian Murphy............. -- -- 0/42,500 0/0
</TABLE>
---------------
* Adjusted for the Company's 25% stock dividend paid on or about June 14, 1998
to shareholders of record on May 14, 1998.
(1) The value has been determined based on an average of the closing bid and ask
price on March 31, 2000, the last trading day of Fiscal 2000.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Board of Directors believes that increasing the value of the Company to
its stockholders is the Board of Directors' most important objective and should
be the key measure of management performance. The Board of Directors also
believes that executive compensation should be objectively determined. For this
reason, the Compensation Committee, which is made up of Directors who are not
employees of the Company, is responsible for determining the compensation
packages of the Company's executives. The Compensation Committee also approves
the potential levels of contribution to the Company's 401(k) plan.
The Compensation Committee's role in determining the compensation of the
executives of the Company is to assure that the Company's compensation strategy
is aligned with the Board of Directors' overall objective and that executive
compensation is structured to provide fair, reasonable and competitive base
salary levels and the opportunity for the executives to earn incentive
compensation reflecting both the Company's and the individual's performance.
The compensation for Fiscal 2000 for the Company's Chief Executive Officer
and other executive officers consisted of base salary. Base salaries are
established by the employment agreements for each person within the executive
group, subject to annual adjustment by the Compensation Committee. Factors
considered in establishing salaries include the responsibilities of the
position, compensation of executives in companies of similar size or in the same
industry, external market conditions and financial performance of the Company.
In addition, the salaries reflect the unique qualifications of the Company's
executive officers, who serve in a collegial manner as the "Office of the CEO"
with respect to major issues facing the Company, who are directly responsible
for the success of the Company and who would be very difficult to replace. The
Compensation Committee also utilized the services of an outside compensation
consultant to obtain information and advice about competitive levels of
compensation and particular compensation techniques of public companies of
comparable size which are engaged in comparable businesses, and to obtain
recommendations regarding and assistance in structuring bonuses and stock option
awards for Fiscal 2000 and executive compensation packages for Fiscal 2000.
8
<PAGE> 11
Incentive compensation awards, payable in cash bonuses and stock options,
and salary increases may be awarded in recognition of the Company's financial
performance. Based upon the Company's fiscal performance during Fiscal 2000, the
Chief Executive Officer and other executive officers of the Company were not
awarded any cash bonuses, stock options or salary increases.
Herbert M. Gardner
Joseph S. Hellman
EXECUTIVE EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Pursuant to employment agreements, dated September 29, 1995 and amended on
May 2, 1997 and March 24, 1998, the Company employed Messrs. Benfield, Bernard
and Amershadian as President, Executive Vice President and Chief Financial
Officer, and Executive Vice President -- Marketing and Sales, respectively. Each
agreement, as amended, currently provides for a base salary of $250,000 and
payment of such bonuses or additional compensation as the Board of Directors may
determine in its sole discretion. The term of each agreement expires on
September 28, 2001 (unless sooner terminated for cause, disability or
incapacity) and automatically renews for additional one-year terms unless
terminated by either party thereto upon at least sixty days notice before the
expiration of the then current term.
Pursuant to an employment agreement, dated December 29, 1998, the Company's
subsidiary, US Concepts, employed Mr. Murphy as President and Chief Executive
Officer. Prior to its amendment as described below, the agreement provided for a
base salary of $200,000. In addition, in the event that the pre-tax earnings of
US Concepts during any calendar year (the "Bonus Period") commencing January 1,
1999 equal or exceed the greater of (a) $600,000 or (b) 20% of the average
outstanding equity of US Concepts during such Bonus Period (calculated by
averaging the outstanding stockholder's equity of US Concepts as set forth on US
Concepts' balance sheet as of the last day of each calendar quarter during the
Bonus Period), US Concepts must, at Mr. Murphy's option, pay to Mr. Murphy and
such other officers and executives of US Concepts as Mr. Murphy determines a
bonus equal to an aggregate of 5% of the amount by which such pre-tax earnings
exceed the greater of the amounts specified in clauses (a) and (b). Mr. Murphy
has the right to allocate such bonus, if any, to and among himself and such
other officers and executives. The initial term of the agreement expires on
January 1, 2003 (unless sooner terminated for cause) but the term of the
agreement automatically continues thereafter unless terminated by either party
thereto upon at least ninety days notice of termination effective on or after
January 1, 2003.
Pursuant to certain letter agreements dated April 17, 2000, among Mr.
Murphy, the Company and iCAST Comedy Corporation, Mr. Murphy's employment
agreement was amended in connection with Mr. Murphy becoming the Chief Executive
Officer of iCAST Comedy Corporation, a wholly-owned subsidiary of iCAST
Corporation. Among other things, Mr. Murphy's salary has been reduced to
$100,000 per annum, the Company has agreed that Mr. Murphy will devote no more
than 10% of his business time to the affairs of the Company and US Concepts, and
Mr. Murphy has agreed not to be involved in any activity which directly or
indirectly competes with the Company or any of its subsidiaries. In accordance
with the terms of the letter agreement, Mr. Murphy has continued to serve as a
director and the Chief Executive Officer of US Concepts and as a director of the
Company.
Each employment agreement prohibits the executive officer that is a party
thereto from competing with the Company or inducing or attempting to influence
any employee of the Company or any subsidiary to terminate his employment with
the Company or any subsidiary during the term of the agreement and for a period
of two years after the termination of the officer's employment with the Company,
in the case of Messrs. Benfield, Bernard and Amershadian, and 18 months after
the termination of the officer's employment with U.S. Concepts or any of its
affiliates, in the case of Mr. Murphy. Each agreement also prohibits the
executive officer from disclosing certain confidential information of the
Company.
Finally, the employment agreements with each of Messrs. Benfield, Bernard
and Amershadian provide that if the officer's employment is terminated due to
(i) the sale or transfer of a majority of the Company's outstanding capital
stock, property or business assets, (ii) the consolidation or merger of the
Company into or
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with another entity where the Company is not the surviving entity, or (iii)
certain specified changes in the identity of the Board of Directors, the Company
must make a lump sum cash payment to the executive officer in a maximum amount
equal to two times the executive officer's then annual base salary.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 10, 1996, the Company loaned $200,000 to Paul A. Amershadian,
the Company's Executive Vice President -- Marketing and Sales and a Director.
The loan bears interest at an annual rate of 10%. Pursuant to a Pledge
Agreement, Mr. Amershadian pledged to the Company 141,063 shares of the
Company's Common Stock owned by him (as adjusted for the Company's 25% stock
dividend paid on or about June 14, 1998 to shareholders of record on May 14,
1998) to secure his obligation in connection with the loan. On April 7, 1997,
the Company loaned an additional $25,000 to Mr. Amershadian with interest at an
annual rate of 10% and amended the Pledge Agreement to secure the additional
$25,000 loan as well as the original $200,000 loan to Mr. Amershadian. The
aggregate $225,000 loan is payable in full on April 7, 2001.
Joseph S. Hellman, a Director and nominee, is a member of Kronish Lieb
Weiner & Hellman LLP, a law firm that the Company retained as its general
counsel for Fiscal 2000 and Fiscal 2001. During Fiscal 2000, the Company
retained Mr. Hellman's son, James Hellman, to provide accounting services for
fees totaling approximately $84,500.
Herbert M. Gardner, a Director and nominee, participated as an investor,
together with his wife and an affiliated charitable organization, in the
company's January 31, 2000 private placement of its securities (the "Private
Placement"). In the Private Placement, the Company, for an aggregate of
$1,000,000, sold 500,000 newly issued shares of its Common Stock together with
five-year warrants to purchase an additional 250,00 shares of Common Stock at an
exercise price of $2.50 per share. Mr. Gardner, his wife and the charitable
organization invested $45,000, $15,000 and $4,500 respectively, purchasing an
aggregate of 32,250 shares of Common Stock and warrants to purchase an
additional 16,125 shares of Common Stock.
Mr. Gardner is also an officer of Janney Montgomery Scott LLC, an
investment banking firm that performed services for the Company in connection
with the Private Placement and that may continue to perform services for the
Company during Fiscal 2001.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and Directors and persons who
own more than 10% of a registered class of the Company's equity securities
(collectively, the "Reporting Persons") to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and to furnish the
Company with copies of these reports. To the Company's knowledge, based solely
on a review of the Forms 3, 4, and 5 submitted to the Company during and with
respect to Fiscal 2000, there are no known failures to file a required Form 3, 4
or 5 and, except for a late filing of a Form 3 by Special Situations Private
Equity Fund, LP, no known late filings of a required Form 3, 4 or 5 during
Fiscal 2000 by any person required to file such forms with respect to the
Company pursuant to Section 16 of the Exchange Act.
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<PAGE> 13
COMPARISON OF CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPHS FOR
COACTIVE MARKETING GROUP, INC.
The following graph reflects a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of an
initial $100 investment on March 31, 1995 in the Company's Common Stock, the
Standard & Poor's 500 Stock Index and a peer group index consisting of those
public companies traded on an exchange and listed under the Standard Industry
Classification (S.I.C.) Code 7311 for Advertising, and other related S.I.C.
Codes. The peer group used is made up of HaLo Industries, Inc., Cyrk, Inc.,
Equity Marketing, Inc., Grey Advertising Inc., Catalina Marketing Corporation,
Valassis Communications, Inc., True North Communications, Inc., and Omnicon
Group, Inc. The comparisons in this table are required by the Securities and
Exchange Commission. The stock price performance shown on the graph is not
intended to forecast or be indicative of future price performance.
LINE GRAPH
<TABLE>
<CAPTION>
CMKG S & P 500 PEER GROUP INDEX
---- --------- ----------------
<S> <C> <C> <C>
Mar 95 100 100 100
Mar 96 216 129 162
Mar 97 471 152 180
Mar 98 694 221 337
Mar 99 542 258 526
Mar 00 358 300 613
</TABLE>
RELATIONSHIP WITH INDEPENDENT AUDITORS
KPMG LLP was the Company's auditors for Fiscal 2000, and has been selected
to serve as the auditors for the Fiscal 2001. A representative of KPMG LLP is
expected to be present at the Annual Meeting to respond to appropriate questions
from stockholders and to make a statement if he desires to do so.
EXPENSES
The entire cost of preparing, assembling, printing and mailing this Proxy
Statement, the enclosed Proxy, Annual Report on Form 10-K and other materials,
and the cost of soliciting Proxies with respect to the Annual Meeting, will be
borne by the Company. The Company will request banks and brokers to solicit
their
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<PAGE> 14
customers who beneficially own shares listed of record in names of nominees, and
will reimburse those banks and brokers for the reasonable out-of-pocket expenses
of such solicitations. The solicitation of Proxies by mail may be supplemented
by telephone and telegram by officers and other regular employees of the
Company, but no additional compensation will be paid to such individuals.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present
proper proposals for inclusion in the Company's proxy statement and for
consideration at the next annual meeting of its stockholders by submitting their
proposals to the Company in a timely manner. To be included in the proxy
statement for the Company's Annual Meeting of Stockholders in 2001, stockholder
proposals must be received by the Company at its principal executive office no
later than March 30, 2001 and must otherwise comply with the requirements of
Rule 14a-8. In addition, the Company's By-laws establish an advance notice
procedure with regard to certain matters, including stockholder proposals not
included in the Company's proxy statement, to be brought before an annual
meeting of stockholders. In general, notice must be received by the Secretary of
the Company not less than 60 days nor more than 90 days prior to the anniversary
date of the immediately preceding annual meeting and must contain specified
information concerning the matters to be brought before such meeting and
concerning the stockholder proposing such matters. Therefore, to be presented at
the Company's Annual Meeting of Stockholders in 2001, such a proposal must be
received by the Company after June 26, 2001 but no later than July 26, 2001.
However, if the date of the Company's Annual Meeting of Stockholders in 2001 is
more than 30 days earlier or more than 30 days later than the date of the
immediately preceding Annual Meeting (i.e., prior to August 27, 2001 or after
October 26, 2000), then notice must be received not later than the close of
business on the earlier of the 10th day following the day on which notice of the
date of the meeting is mailed or public disclosure of the date of such meeting
is made. If a stockholder who has notified the Company of his intention to
present a proposal at an annual meeting does not appear or send a qualified
representative to present his proposal at such meeting, the Company need not
present the proposal for a vote at such meeting. All notices of proposals by
stockholders, whether or not to be included in the Company's proxy materials,
should be sent to the Secretary of the Company at 415 Northern Boulevard, Great
Neck, New York 11021.
By Order of the Board of Directors
DONALD A. BERNARD
Secretary
Great Neck, New York
July 31, 2000
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31,
2000, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, BUT EXCLUDING EXHIBITS), IS
BEING MAILED WITH THIS PROXY STATEMENT. THE COMPANY WILL PROVIDE TO EACH PERSON
SOLICITED BY THIS PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON AND
UPON PAYMENT OF A FEE OF $3.00 PER EXHIBIT, A COPY OF ANY EXHIBIT TO THE
ENCLOSED ANNUAL REPORT ON FORM 10-K. A LIST OF EXHIBITS IS SET FORTH IN SECTION
IV OF THE ANNUAL REPORT ON FORM 10-K. REQUESTS FOR COPIES OF EXHIBITS SHOULD BE
DIRECTED TO DONALD A. BERNARD, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER, COACTIVE MARKETING GROUP, INC., 415 NORTHERN BOULEVARD, GREAT NECK, NEW
YORK 11021 (TELEPHONE: (516) 622-2800).
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<PAGE> 15
PROXY
COACTIVE MARKETING GROUP, INC.
415 NORTHERN BOULEVARD, GREAT NECK, NEW YORK 11021
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 26, 2000
The undersigned hereby appoints John P. Benfield and Donald A. Bernard,
or either of them, as Proxy or Proxies of the undersigned with full power of
substitution to attend and to represent the undersigned at the Annual Meeting of
Stockholders of CoActive Marketing Group, Inc. (the "Company") to be held on
September 26, 2000, and at any adjournments thereof, and to vote thereat the
number of shares of stock of the Company the undersigned would be entitled to
vote if personally present, in accordance with the instructions set forth on
this proxy card. Any proxy heretofore given by the undersigned with respect to
such stock is hereby revoked.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE> 16
PLEASE DATE, SIGN AND MAIL YOUR PROXY
CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
COACTIVE MARKETING GROUP, INC.
SEPTEMBER 26, 2000
- Please Detach and Mail in the Envelope Provided -
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
WITHHOLD
FOR AUTHORITY
all nominees to vote for all nominees
listed at right listed at right
1. ELECTION
OF [ ] [ ] NOMINEES: Paul A. Amershadian
DIRECTORS John P. Benfield
Donald A. Bernard
(INSTRUCTION: To withhold authority to vote on any Herbert M. Gardner
individual nominee, write the name below.) Joseph S. Hellman
Thomas E. Lachenman
Brian Murphy
2. ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 LISTED
ABOVE.
SIGNATURE__________________ DATE______ SIGNATURE__________________ DATE______
NOTE: Please sign exactly as name appears above. For joint accounts, each
joint owner must sign. Please give full title if signing in a
representative capacity.
