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 Rule 14a-11(c) or Rule 14a-12
GP STRATEGIES CORPORATION
-----------------------------------------------------
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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:
GP STRATEGIES CORPORATION
777 Westchester Avenue
White Plains, New York 10604
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 26, 2005
To the Stockholders:
The Annual Meeting of Stockholders of GP Strategies Corporation (the
"Company") will be held at the Sheraton Columbia Hotel, 10207 Wincopin Circle,
Columbia, Maryland, on the 26th day of April, 2005, at 10:00 a.m., local time,
for the following purposes:
1. To elect eight Directors to serve until the next Annual Meeting and
until their respective successors are elected and qualify.
2. To ratify the Board of Directors' appointment of KPMG LLP ("KPMG"), a
registered independent public accounting firm, as the Company's independent
auditors for the fiscal year ending December 31, 2005.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record as of the close of business on March 18, 2005
are entitled to receive notice of and to vote at the meeting. A list of such
stockholders shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
ten days prior to the meeting, at the offices of the Company's subsidiary,
General Physics Corporation, 6095 Marshalee Drive, Suite 300, Elkridge,
Maryland.
By Order of the Board of Directors
Lydia M. DeSantis
Secretary
White Plains, New York
March 30, 2005
Whether or not you plan to attend the annual meeting, please fill in, date and
sign the enclosed Proxy and return it promptly in the enclosed postage prepaid
return envelope.
GP STRATEGIES CORPORATION
777 Westchester Avenue
White Plains, New York 10604
---------------
White Plains, New York
March 30, 2005
PROXY STATEMENT
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of the Company, for use only at the Annual Meeting of Stockholders
(the "Annual Meeting") to be held at the Sheraton Columbia Hotel, 10207 Wincopin
Circle, Columbia, Maryland, on the 26th day of April, 2005, at 10:00 a.m., local
time, and at any adjournments thereof. The approximate date on which this Proxy
Statement and the accompanying Proxy were first given or sent to security
holders was March 30, 2005.
Each Proxy executed and returned by a stockholder may be revoked at any time
thereafter, by written notice to that effect to the Company, attention of the
Secretary, prior to the Annual Meeting, or to the Chairman, or the Inspectors of
Election, at the Annual Meeting, or by the execution and return of a later-dated
Proxy, except as to any matter voted upon prior to such revocation.
The Proxies in the accompanying form will be voted in accordance with the
specifications made and where no specifications are given, such Proxies will be
voted FOR the eight nominees for election as directors named herein, and the
ratification of the selection of KPMG as the Company's independent auditors. In
the discretion of the proxy holders, the Proxies will also be voted FOR or
AGAINST such other matters as may properly come before the meeting. The
management of the Company is not aware that any other matters are to be
presented for action at the meeting. Although it is intended that the Proxies
will be voted for the nominees named herein, the holders of the Proxies reserve
discretion to cast votes for individuals other than such nominees in the event
of the unavailability of any such nominee. The Company has no reason to believe
that any of the nominees will become unavailable for election. The Proxies may
not be voted for a greater number of persons than the number of nominees named.
The election of directors will be determined by a plurality of the votes of the
holders of shares of Common Stock and Class B Stock present in person or
represented by proxy at the Annual Meeting. Accordingly, in the case of shares
that are present or represented at the Annual Meeting for quorum purposes, not
voting such shares for a particular nominee for director, including by
withholding authority on the Proxy, will not operate to prevent the election of
such nominee if he otherwise receives a plurality of the votes. For the
ratification of the selection of the Company's independent auditors and any
other item voted upon at the Annual Meeting, the affirmative vote of the holders
of shares of Common Stock and Class B Stock entitled to cast a majority of the
votes present in person or represented by proxy at the Annual Meeting will be
required for approval. Accordingly, abstentions will have the same legal effect
as a negative vote. Broker non-votes will not be counted in determining the
number of shares necessary for approval.
VOTING SECURITIES
The Board of Directors has fixed the close of business on March 18, 2005 as
the record date for the determination of stockholders entitled to receive notice
of and to vote at the Annual Meeting. The issued and outstanding capital stock
of the Company on March 18, 2005 consisted of 16,748,234 shares of Common Stock,
each entitled to one vote, and 1,200,000 shares of Class B Stock, each entitled
to ten votes. A quorum of the stockholders is constituted by the presence, in
person or by proxy, of holders of record of Common Stock and Class B Stock,
representing a majority of the number of votes entitled to be cast. The only
difference in the rights of the holders of Common Stock and the rights of
holders of Class B Stock is that the former class has one vote per share and the
latter class has ten votes per share. The Class B Stock is convertible at any
time into shares of Common Stock on a share for share basis at the option of the
holders thereof.
PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of Class B Stock and
Common Stock beneficially owned as of March 18, 2005 by each person who is known
by the Company to own beneficially more than 5% of the Company's outstanding
Class B Stock or Common Stock.
Amount and
Name and Address Nature of Percent of
Title of Class Of Beneficial Owner Beneficial Ownership Class(1)
------------------ ------------------------------------------ ---------------------- ---------
Class B Stock Jerome I. Feldman 568,750 shares(2) 47.4%
c/o GP Strategies Corporation
777 Westchester Avenue
White Plains, NY 10604
Class B Stock Bedford Oak Partners, L.P. 300,000 shares(3) 25.0%
100 South Bedford Road
Mt. Kisco, NY 10549
Class B Stock EGI-Fund (02-04) Investors, L.L.C. 300,000 shares(4) 25.0%
Two N. Riverside Plaza
Chicago, IL 60606
Common Stock Bedford Oak Partners, L.P. 2,431,500 shares(3)(5) 14.3%
Common Stock Gabelli Asset Management, Inc. 1,412,200 shares(6) 8.0%
One Corporate Center
Rye, NY 10580
Common Stock EGI-Fund (02-04) Investors, L.L.C. 1,390,000 shares(4)(7) 8.2%
Common Stock Caxton International Limited 1,218,950 shares(8) 7.3%
315 Enterprise Drive
Plainsboro, NJ 08536
Common Stock Dimensional Fund Advisors, Inc. 877,455 shares(9) 5.3%
1299 Ocean Avenue
Santa Monica, CA 90401
(1) The percentage of class calculation for Class B Stock assumes for each
beneficial owner that no shares of Class B Stock are converted into
Common Stock by the named beneficial owner or any other stockholder. The
percentage of class calculation for Common Stock assumes for each
beneficial owner that (i) all options are exercised in full and all
shares of Class B Stock are converted into Common Stock only by the
named beneficial owner and (ii) no other options are exercised and no
other shares of Class B Stock are converted by any other stockholder.
(2) On December 29, 1998, Martin M. Pollak granted certain rights of first
refusal with respect to his Class B Stock and options to purchase Class
B Stock to Mr. Feldman and his family, and Mr. Feldman granted certain
tag-along rights with respect to his Class B Stock and options to
purchase Class B Stock to Mr. Pollak and his family. Mr. Pollak retired
as the Executive Vice President and Treasurer of the Company on May 31,
1999.
(3) Based on a Schedule 13D filed jointly by Bedford Oak Partners, L.P.
("Bedford Oak"), Bedford Oak Advisors, LLC and Harvey P. Eisen with the
Securities and Exchange Commission ("SEC") on July 25, 2002. See
"Certain Transactions."
(4) Based on a Schedule 13D/A filed jointly by EGI-Fund (02-04) Investors,
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L.L.C. ("EGI"), EGI-Managing Member (02-04), L.L.C. ("EGI-Managing
Member"), SZ Investments, L.L.C. ("SZ Investments") and Chai Trust
Company, L.L.C. ("Chai Trust") with the SEC on November 30, 2004 and
information supplied by such entities. EGI-Managing Member is the
managing member of EGI and SZ Investments is the managing member of
EGI-Managing Member. Samuel Zell is the President of EGI, EGI-Managing
Member and SZ Investments. SZ Investments is indirectly owned by various
trusts established for the benefit of Samuel Zell and his family. The
trustee of each of those trusts is Chai Trust, an Illinois limited
liability company. See "Certain Transactions."
(5) Includes 300,000 shares of Common Stock issuable upon conversion of
Class B Stock held by Bedford Oak.
(6) Based on a Schedule 13D filed jointly by Gabelli Funds, LLC, GAMCO
Investors, Inc., MJG Associates, Inc., Gabelli Advisors, Inc., Gabelli
Group Capital Partners, Inc., Gabelli Asset Management, Inc. and Mario
J. Gabelli with the SEC on August 20, 2003. Includes 937,500 shares
issuable upon exercise of warrants to purchase shares of the Company's
Common Stock. Mario Gabelli directly or indirectly controls or acts as
chief investment officer of the aforementioned entities. See "Certain
Transactions."
(7) Includes 300,000 shares of Common Stock issuable upon conversion of
Class B Stock held by EGI.
(8) Based on a Schedule 13G filed jointly by Caxton International Limited,
Caxton Equity Growth (BVI) Ltd., Caxton Equity Growth LLC, Caxton
Associates, LLC, Bruce S. Kovner, Anthony Scolara, and Ross Taylor with
the SEC on January 20, 2005.
(9) Based on a Schedule 13G filed by Dimensional Fund Advisors Inc.
("Dimensional") with the SEC on February 9, 2005. Dimensional has
informed the Company that the shares are owned by advisory clients of
Dimensional and that Dimensional disclaims beneficial ownership of such
shares.
SECURITY OWNERSHIP OF DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table sets forth, as of March 18, 2005, the beneficial
ownership of Common Stock, Class B Stock, and voting stock by each director,
each of the named executive officers, and all directors and executive officers
as a group.
Total Number Total Number
of Shares of Percent of of Shares of Percent Percent
Common Stock Common Class B Stock of of
Beneficially Stock Beneficially Class B Voting
Owned Owned(1) Owned Stock(2) Stock(3)
Harvey P. Eisen(4)(5)(6) 2,433,693(7) 14.3 300,000(8) 25.0% 17.9
Jerome I. Feldman(6) 710,924(9) 4.1 568,750(10) 47.4% 20.2
Marshall S. Geller(4)(5) 217,326(11) 1.3 -- -- --
Scott N. Greenberg(6) 147,461(12) 1.1 -- -- --
Scott R. Peppet(4)(13) 336 * -- -- --
Richard C. Pfenniger, Jr.(13) 8,336 * -- -- --
Ogden R. Reid(13) 16,211(11) * -- -- --
Matthew Zell(4)(5)(13)(14) 336(15) * --(16) -- --
Douglas E. Sharp 114,764(11) 1.0 -- -- --
Andrea D. Kantor 59,932(11) * -- -- --
Directors and Executive Officers 3,709,319(15)(17) 21.0 868,750(16) 72.4% 38.5%
as a Group (10 persons).....
----------
* Less than one percent.
(1) The percentage of class calculation for Common Stock assumes for each
beneficial owner and directors and executive officers as a group that
(i) all options are exercised in full and all shares of Class B Stock
are converted into Common Stock only by the named beneficial owner or
members of the group and (ii) no other options are exercised and no
other shares of Class B Stock are converted by any other stockholder.
3
(2) The percentage of class calculation for Class B Stock assumes for each
beneficial owner and directors and executive officers as a group that
no shares of Class B Stock are converted into Common Stock by the named
beneficial owner, members of the group, or any other stockholder.
(3) The percentage of voting stock calculation sets forth the percentage of
the aggregate number of votes of all holders of Common Stock and Class
B Stock represented by the Common Stock and Class B Stock beneficially
owned by each beneficial owner and directors and executive officers as
a group and assumes for each beneficial owner and directors and
executive officers as a group that (i) all options are exercised in
full only by the named beneficial owner or members of the group, (ii)
no other options are exercised by any other stockholder, and (iii) no
shares of Class B Stock are converted into Common Stock by the named
beneficial owner, members of the group, or any other stockholder.
(4) Member of the Nominating/Corporate Governance Committee.
(5) Member of the Compensation Committee.
(6) Member of the Executive Committee.
(7) Includes 2,431,500 shares of Common Stock beneficially owned by Bedford
Oak. Mr. Eisen is deemed to have beneficial ownership of such shares by
virtue of his position as managing member of Bedford Oak Advisors, LLC,
the investment manager of Bedford Oak. See footnotes 3 and 5 to
Principal Stockholders Table.
(8) Includes 300,000 shares of Class B Stock beneficially owned by Bedford
Oak. Mr. Eisen is deemed to have beneficial ownership of such shares by
virtue of his position as managing member of Bedford Oak Advisors, LLC,
the investment manager of Bedford Oak. See footnote 3 to Principal
Stockholders Table.
(9) Includes (i) 1,173 shares of Common Stock held by members of Mr.
Feldman's family, (ii) 568,750 shares of Common Stock issuable upon
conversion of Class B Stock held by Mr. Feldman, (iii) 119,716 shares
of Common Stock issuable upon exercise of currently exercisable stock
options held by Mr. Feldman and (iii) 4,385 shares of common Stock
allocated to Mr. Feldman's account pursuant to the provisions of the GP
Retirement Savings Plan (the "GP Plan"). Mr. Feldman disclaims
beneficial ownership of the 1,173 shares of Common Stock held by
members of his family.
(10) See footnote 2 to Principal Stockholders Table.
(11) Includes 11,972 shares for each of Messrs. Geller and Reid, 107,764
shares for Mr. Sharp, and 59,858 shares for Ms. Kantor, issuable upon
exercise of currently exercisable stock options, and 7,000 shares for
Mr. Sharp and 74 shares for Ms. Kantor allocated pursuant to the
provisions of the GP Plan.
(12) Includes (i) 119,716 shares of Common Stock issuable upon exercise of
currently exercisable stock options held by Mr. Greenberg, (ii) 6,027
shares of Common Stock allocated to Mr. Greenberg's account pursuant to
the provisions of the GP Plan and (iii) 4,000 shares of Common Stock
held by members of his family. Mr. Greenberg disclaims beneficial
ownership of the 4,000 shares held by members of his family.
(13) Member of the Audit Committee.
(14) Designee of EGI.
(15) Does not include 1,390,000 shares of Common Stock beneficially owned by
EGI. See footnotes 4 and 7 to Principal Stockholders Table.
(16) Does not include 300,000 shares of Class B Stock beneficially owned by
EGI. See footnote 4 to Principal Stockholders Table.
(17) Includes (i) 430,998 shares of Common Stock issuable upon exercise of
currently exercisable stock options, (ii) 868,750 shares of Common
Stock issuable upon conversion of Class B Stock, and (iii) 17,486
shares of Common Stock allocated to accounts pursuant to the provisions
of the GP Plan.
4
ELECTION OF DIRECTORS
Eight directors will be elected at the Annual Meeting to hold office until
the next Annual Meeting of Stockholders and until their respective successors
are elected and qualify. The Proxies solicited by this proxy statement may not
be voted for a greater number of persons than the number of nominees named. It
is intended that these Proxies will be voted for the following nominees, but the
holders of these Proxies reserve discretion to cast votes for individuals other
than the nominees for director named below in the event of the unavailability of
any such nominee. The Company has no reason to believe that any of the nominees
will become unavailable for election. Set forth below are the names of the
nominees, the principal occupation of each, the year in which first elected a
director of the Company and certain other information concerning each of the
nominees.
Jerome I. Feldman is founder and since 1959 has been Chief Executive Officer
and a Director of the Company. He has also been Chairman of the Board of the
Company since 1999. He was President of the Company from 1959 until 2001. He has
been Chairman of the Board of Five Star Products, Inc. ("Five Star"), a paint
and hardware distributor, since 1994; a Director of GSE Systems, Inc. ("GSE"), a
global provider of real-time simulation and training solutions, since 1994;
Chairman of the Board of GSE since 1997; Chairman of the Board and Chief
Executive Officer of National Patent Development Corporation ("NPDC"), a holding
company with interests in optical plastics, paint and hardware distribution
services since August 2004; and a director of Valera Pharmaceuticals, Inc.
("Valera"), a specialty pharmaceutical company, since January 2005. Mr. Feldman
is also Chairman of the New England Colleges Fund and a Trustee of Northern
Westchester Hospital Foundation. Age 76.
Scott N. Greenberg has been a Director of the Company since 1987 and
President and Chief Financial Officer since 2001. He was Executive Vice
President and Chief Financial Officer from 1998 to 2001, Vice President and
Chief Financial Officer from 1989 to 1998, and Vice President, Finance from 1985
to 1989. He has been a director of GSE since 1999 and was a Director of Five
Star from 1998 to 2003 and a director of Valera until January 2005. Mr.
Greenberg has also been a director and Chief Financial Officer of NPDC since
August 2004. Age 47.
Harvey P. Eisen has been a Director of the Company since 2002. He has been
Chairman and Managing Member of Bedford Oak Management, LLC since 1998. Prior
thereto, Mr. Eisen served as Senior Vice President of Travelers, Inc. and of
Primerica prior to its merger with Travelers in 1993. Mr. Eisen has over thirty
years of asset management experience, is often consulted by the national media
for his views on all phases of the investment marketplace, and is frequently
quoted in The Wall Street Journal, The New York Times, PensionWorld, U.S. News &
World Report, Financial World and Business Week, among others. Mr. Eisen also
appears regularly on such television programs as Wall Street Week, CNN, and
CNBC. Mr. Eisen is a trustee of the University of Missouri Business School where
he established the first accredited course on the Warren Buffet Principles of
Investing. Mr. Eisen has also been a director of NPDC since August 2004. He is
also a trustee of Rippowam Cisqua School in Bedford, New York and the Northern
Westchester Hospital Center. Age 62.
Mr. Geller is Senior Managing Director and Co-Founder of St. Cloud Capital
LLC, a Small Business Investment Company (SBIC) licensed by the US SBA, formed
in December 2001. He is also Chairman, CEO and Founding Partner of Geller &
Friend Capital Partners, Inc., a merchant banking firm formed in 1995. Mr.
Geller has spent more than 35 years in corporate finance and investment banking,
including 21 years as a Senior Managing Director of Bear, Stearns & Co. with
oversight of all operations in Los Angeles, San Francisco, Chicago, Hong Kong
and the Far East. Mr. Geller is currently Non-Executive Chairman of the Board of
ShopNBC-ValueVision Media, Inc. (NasdaqNM: VVTV), a director of 1st Century
Bank, Los Angeles, and is on the Board of Governors of Cedars Sinai Medical
Center, Los Angeles. He was previously the Interim Co-Chairman of Hexcel
Corporation (NYSE:HXL) and Interim President and COO of Players International,
Inc. Mr. Geller also serves on the Dean's Advisory Council for the College of
Business & Economics at California State University, Los Angeles. Age 66.
Scott R. Peppet has been a Director of the Company since January 2005. Mr.
Peppet is an Associate Professor of Law at the University of Colorado School of
Law. Mr. Peppet brings extensive experience in the areas of legal and corporate
ethics and dispute resolution. In addition, Mr. Peppet has run an active
corporate education business for ten years focused on alliance management and
negotiation training. Age 35.
Richard C. Pfenniger, Jr. has been a Director of the Company since January
2005. Mr. Pfenniger is the Chairman of the Board, President, and Chief Executive
Officer of Continucare Corporation, a provider of primary care physician
services. Mr. Pfenniger was appointed President and Chief Executive Officer in
October 2003 after having served as a member of the board of Continucare since
March 2002 and as Chairman since September 2002. Mr. Pfenniger was the Chief
Executive Officer and Vice Chairman of Whitman Education Group, Inc., a provider
of career-oriented higher education, from 1997 until June 2003. From 1994 to
5
1997, Mr. Pfenniger served as the Chief Operating Officer of IVAX Corporation,
and from 1989 to 1994 he served as the Senior Vice President-Legal Affairs and
General Counsel of IVAX Corporation, a multi-national pharmaceutical company.
Mr. Pfenniger currently serves as a director of IVAX. Age 49.
Ogden R. Reid has been a Director of the Company since 1979. Mr. Reid had
been Editor and Publisher of the New York Herald Tribune and of its
International Edition; United States Ambassador to Israel; a six-term member of
the United States Congress and a New York State Environmental Commissioner. Mr.
Reid is a director of Valera. Mr. Reid is currently Chairman of the Council of
American Ambassadors. Age 79.
Matthew Zell, a designee of EGI, has been a Director of the Company since
January 2005. Mr. Zell has served as a Managing Director of Equity Group
Investments, L.L.C. since 2001. Prior to joining Equity Group Investments
L.L.C., Mr. Zell served as the President of Prometheus Technologies, Inc. and
its predecessor, an information technology consulting firm. Mr. Zell is a
director of Anixter International, Inc. and Desarroladora Homex S.A. Mr. Zell is
the brother-in-law of Scott Peppet. Age 39.
Corporate Governance
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although it
is not involved in day-to-day operating details. Members of the Board of
Directors are kept informed of the Company's business by various reports and
documents sent to them as well as by operating and financial reports made at
Board and Committee meetings. The Board of Directors held six meetings in 2004.
All of the directors attended at least 75% of the aggregate number of meetings
of the Board of Directors and of committees of the Board on which they served.
The non-management directors meet periodically in executive session. The
executive sessions of non-management directors are to be presided over by the
director who is the Chairman of the committee responsible for the issue being
discussed. The Board intends to schedule at least two executive sessions of
non-management directors each year. However, any director may request additional
executive sessions of non-management directors to discuss any matter of concern.
The Board of Directors has provided the means by which stockholders may send
communications to the Board or to individual members of the Board. Such
communications should be directed to the Secretary of the Company, 777
Westchester Avenue, White Plains, NY 10604, or by email at
ldesantis@genphysics.com, with a copy to the General Counsel at the same
address, or by email at akantor@genphysics.com, who will forward them to the
intended recipients.
The Board of Directors reviews the independence of its members on an annual
basis. No director will be deemed to be independent unless the Board
affirmatively determines that the director in question has no material
relationship with the Company, directly or as an officer, stockholder, member or
partner of an organization that has a material relationship with the Company.
The Board has not adopted any categorical standards of director independence,
however, the Board of Directors employs the standards of independence of the
NYSE rules currently in effect in making its determination that a director
qualifies as independent. In its annual review of director independence, the
Board considers all commercial, banking, consulting, legal, accounting,
charitable or other business relationships any director may have with the
Company. As a result of its annual review, the Board of Directors has determined
that Harvey P. Eisen, Marshall S. Geller, Richard C. Pfenniger, Jr., Scott R.
Peppet, Ogden Reid and Matthew Zell are independent and that Jerome I. Feldman
and Scott N. Greenberg are not independent because they are both executive
officers of the Company. The Company has Nominating/Corporate Governance,
Compensation and Audit Committees and based on these standards, all current
members of such Committees are independent.
The Board of Directors recently established the Nominating/Corporate
Governance Committee. The Committee has acted twice since its creation. The
Nominating/Corporate Governance Committee acts under a written charter, which
may be viewed online on the Company's website at www.gpstrategies.com under the
"Corporate Governance" section. The members of the Nominating/Corporate
Governance Committee are Harvey P. Eisen, Marshall S. Geller, Matthew Zell and
Scott R. Peppet. All members satisfy the independence requirements of the NYSE
rules currently in effect. The principal functions of the Nominating/Corporate
Governance Committee are to:
(i) develop policies on the size and composition of the Board of
Directors;
(ii) identify individuals qualified to become members of the Board of
Directors;
6
(iii) recommend a slate of nominees to the Board of Directors annually;
(iv) ensure that the Audit, Compensation and Nominating/Corporate
Governance Committees of the Board of Directors have the benefit
of qualified and experienced independent directors;
(v) review and reassess the adequacy of the Board of Directors'
corporate governance principles (which principles may be viewed
online on the Company's website at www.gpstrategies.com under the
"Corporate Governance" section); and
(vi) advise the full Board of Directors on corporate governance
matters.
When the Board of Directors decides to recruit a new member it seeks strong
candidates who possess qualifications and expertise that will enhance the
composition of the Board of Directors. The criteria for selecting new directors
can be viewed online on the Company's website at www.gpstrategies.com under the
"Corporate Governance" section. The Board of Directors will consider any such
strong candidate provided he or she possesses integrity and ethical character.
If the Board of Directors does not believe that a candidate possesses the above
personal characteristics, that candidate will not be considered. In recommending
candidates for election to the Board of Directors, the Nominating/Corporate
Governance Committee considers nominees recommended by directors, officers,
employees, stockholders and others, using the same criteria to evaluate all
candidates. Upon selection of a qualified candidate, the Nominating/Corporate
Governance Committee would recommend the candidate for consideration by the full
Board of Directors.
To recommend a prospective nominee for the Nominating/Corporate Governance
Committee's consideration, stockholders should submit the candidate's name and
qualification to the Company's Secretary in writing at 777 Westchester Avenue,
White Plains, NY 10604, with a copy to the General Counsel at the same address.
When submitting candidates for nomination to be elected at the Company's annual
meeting of stockholders, stockholders must also follow the notice procedures and
provide the information required by the Company's By-laws. The Company's By-laws
provide that any stockholder wishing to nominate a candidate for director or to
propose other business at an annual meeting of stockholders of the Company must
give written notice that is received by the Secretary of the Company not less
than 90 days prior to the anniversary date of the immediately preceding annual
meeting of stockholders no later than January 26, 2006 with respect to the 2006
Annual Meeting of Stockholders); provided that in the event that the annual
meeting is called for a date that is not within 30 days before or after such
anniversary date, such notice must be received not later than the close of
business on the tenth day following the day on which public disclosure of the
date of the annual meeting was first made. Such notice must provide certain
information specified in the Company's By-laws. Copies of the Company's By-laws
are available to stockholders without charge upon request to the Company's
Secretary at the Company's address set forth above.
The Compensation Committee acts under a written charter, which may be viewed
online on the Company's website at www.gpstrategies.com under the "Corporate
Governance" section. The members of the Compensation Committee are Harvey P.
Eisen, Marshall S. Geller and Matthew Zell. All members satisfy the independence
requirements of the NYSE rules currently in effect. The principal function of
the Compensation Committee is to assist the Board of Directors in discharging
its responsibilities in respect of the Company's executive officers by:
(i) evaluating the Chief Executive Officer's performance and setting
the Chief Executive Officer's compensation based on such
evaluation; and
(ii) developing guidelines and reviewing the compensation and
performance of officers of the Company.
The Compensation Committee administers the Company's Stock Option Plan and
Incentive Stock Plan. In 2004, the Compensation Committee formally acted six
times through formal meetings and unanimous written consents.
The Executive Committee meets on call and has authority to act on most
matters during the intervals between Board meetings and acts as an advisory body
to the Board of Directors by reviewing various matters prior to submission to
the Board. The members of the Executive Committee are Jerome I. Feldman, Scott
N. Greenberg and Harvey P. Eisen. The Committee formally acted three times in
2004 through formal meetings and unanimous written consents.
The current members of the Audit Committee are Ogden R. Reid, Matthew Zell,
Scott R. Peppet and Richard C. Pfeniniger, Jr. All members satisfy the
7
independence and experience requirements of the SEC and the NYSE current listing
standards. The Board of Directors has determined that Richard C. Pfenniger, Jr.
is the audit committee financial expert. The Audit Committee acts under a
written charter, which is required to be provided to stockholders every three
fiscal years, unless amended earlier. The Audit Committee charter may be viewed
online on the Company's website at www.gpstrategies.com under the "Corporate
Governance" section.
The charter sets forth the responsibilities of the Audit Committee, which
include (i) reviewing the independence, qualifications, services, fees and
performance of the independent auditors, (ii) appointing, replacing and
discharging the independent auditors, (iii) approving the professional services
provided by the independent auditors, (iv) reviewing the scope of the annual
audit and quarterly reports and recommendations submitted by the independent
auditors, and (v) reviewing the Company's financial reporting, the system of
internal financial controls, and accounting policies, including any significant
changes, with management and the independent auditors. The Committee met eight
times in 2004. In 2004 the members of the Audit Committee were: Ogden R. Reid,
Roald Hoffmann, Bernard M. Kauderer and Mark A. Radzik.
Audit Committee Report
During the year ended December 31, 2004, the Audit Committee reviewed and
discussed the Company's annual and quarterly reports on Forms 10-K and 10-Q, the
Company's earnings releases and the Company's audited financial statements with
management and the Company's independent auditors, KPMG prior to their release.
The Committee discussed with the independent auditors the matters required to be
discussed by the Statement of Auditing Standards No. 61, Communication with
Audit Committee, relating to the conduct of the audit. The Audit Committee has
received the written disclosures and the letter from KPMG required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, and has discussed with KPMG their independence and satisfied itself
as to the auditor's independence.
Based on the Audit Committee's review of the audited financial statements
and the review and discussions described in the foregoing paragraph, the Audit
Committee recommended to the Board of Directors that the audited financial
statements for the fiscal year ended December 31, 2004 be included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004
for filing with the SEC. In addition, the Audit Committee approved the KPMG as
the independent auditors for the Company for fiscal 2005.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 (the "Securities Act") or the
Securities Exchange Act of 1934 (the "Exchange Act") that might incorporate
future filings made by the Company under those statutes, in whole or in part,
this report shall not be deemed to be incorporated by reference into any such
filings, nor will this report be incorporated by reference into any future
filings made by the Company under those statutes.
Ogden R. Reid, Chairman Richard C. Pfenniger, Jr.
Scott R. Peppet Matthew Zell
Policy on Pre-Approval of Services Provided by Independent Auditors
Pursuant to the requirements of the Sarbanes-Oxley Act of 2002, the terms of
the engagement of KPMG are subject to specific pre-approval policies of the
Audit Committee. All audit and permitted non-audit services to be performed by
KPMG require pre-approval of the Audit Committee or the Chairman of the Audit
Committee in accordance with pre-approval policies established by the Audit
Committee. The procedures require all proposed engagements of KPMG for services
of any kind be directed to the Company's General Counsel and then submitted for
approval to the Audit Committee prior to the beginning of any service.
8
Independent Registered Public Accounting Firms' Fees
The following table sets forth the fees billed to the Company for the fiscal
years ended December 31, 2004 and 2003 for professional services rendered by the
Company's independent auditors, KPMG:
December 31, December 31,
2004(a) 2003(a)
------- -------
Audit Fees(b)...........................$1,020.000.. $917,750
Audit-Related Fees(c)...................$...216,200. $ 53,500
Tax Fees(d) $ 151,500 $213,530
All other Fees(e).......................$........0.. $ 0
----------
(a) The amounts for 2004 and 2003 include fees for GSE, which became a
majority-owned subsidiary of the Company effective October 23, 2003. For
2004 and 2003, respectively, KPMG's audit fees attributable to GSE were
$140,000 and $149,000, respectively, audit-related fees attributable to GSE
were $38,000 and $9,500, respectively, and tax fees attributable to GSE
were $5,000 and $118,718, respectively.
(b) Audit-fees consisted of fees for the audit of the Company's and GSE's
consolidated financial statements, including quarterly review services in
accordance with SAS No. 100, fees with respect to the audit of Internal
Control over Financial Reporting for the Company, and review of SEC
reporting matters for the Company.
(c) Audit-related fees consisted of the audit of the financial statements of
employee benefit plans, statutory audit services for subsidiaries of
General Physics Corporation ("GPC") and GSE and accounting research for the
Company.
(d) Includes fees for tax compliance services and research.
(e) There were no other fees paid to KPMG for 2004 and 2003 that do not fall
into any other specified categories.
Directors Compensation
During 2004, directors who were not employees of the Company or its
subsidiaries received an annual fee of $10,000, payable quarterly. At the option
of the director, up to one half of the annual fee could be paid in Common Stock.
In addition, the directors received $1,500 for each meeting of the Board of
Directors attended and generally do not receive any additional compensation for
service on the committees of the Board of Directors. Employees of the Company or
its subsidiaries do not receive additional compensation for serving as
directors.
9
EXECUTIVE COMPENSATION
The following table and notes present the compensation paid by the Company
and subsidiaries to its Chief Executive Officer and the Company's other
executive officers. No stock appreciation rights ("SARs") were granted during
2004 nor have any SARs been granted at any time in prior years.
Summary Compensation Table
Annual Compensation Long Term Compensation
-------------------------------- -------------------------------
Restricted Securities
Stock Underlying All Other
Salary Bonus Awards Options Compensation
Name and Principal Position Year ------------ ($) ($) (#) ($)
($)
------------------------------- ----------- ---------------- -------------- -------------- -------------
Jerome I. Feldman 2004 504,950(1) 2,000,000(2) -- -- 199,322(3)
Chairman and Chief 2003 508,583 3,000,000(2) -- -- 73,271(4)
Executive Officer 2002 436,015 -- -- 100,000(5) 32,514(6)
Scott N. Greenberg......... 2004 289,296(7) 350,000(8) 296,100(9) -- 8,491(10)
President and Chief 2003 285,500 75,000(11) -- -- 24,584(12)
Financial Officer 2002 239,393 -- -- 100,000(5) 7,455(13)
Douglas E. Sharp........... 2004 347,517(14) 50,000(15) 239,700(9) -- 6,718(16)
President, General Physics 2003 317,725(14) -- -- -- 5,384(17)
Corporation 2002 280,618(14) -- 75,100(5) 5,310(18)
Andrea D. Kantor.......... 2004 221,557 50,000(8) -- -- 8,170(19)
Vice President and 2003 218,490 -- -- -- 7,220(20)
General Counsel 2002 188,003 -- -- 50,000(5) 6,463(21)
----------
(1) Commencing October 1, 2004, Five Star has reimbursed the Company $16,666 per
month for Mr. Feldman's services to Five Star. The amount shown includes
such reimbursement amount.
(2) Bonus earned pursuant to the Incentive Compensation Agreement dated April 1,
2002, as amended. See "Certain Transactions".
(3) Includes a $4,625 matching contribution to the GP Plan and $194,697 for life
insurance premiums.
(4) Includes a $4,404 matching contribution to the GP Plan and $32,867 for life
insurance premiums. Also includes $36,000 paid to Mr. Feldman during the
year ended December 31, 2003 by GSE as compensation for serving as a
director of GSE. GSE became a majority-owned subsidiary of the Company
effective October 23, 2003.
(5) Consists of options to purchase shares of common stock granted pursuant to
the Company's 1973 Non-Qualified Stock Option Plan, as amended (the "Plan").
(6) Includes $4,489 matching contribution to the GP Plan; $23,792 for split
dollar life insurance premiums; and $4,233 for group term life insurance
premiums.
(7) Commencing July 1, 2004, Mr. Greenberg's salary has been paid by GPC.
(8) Discretionary bonus for 2004 paid in March 2005.
(9) The dollar values in the Restricted Stock Awards column are based on the
closing market price of the Common Stock on March 23, 2005, the date the
Restricted Stock was granted. The Restricted Stock Awards are subject to
final documentation of the terms and conditions, pursuant to the provisions
of the Company's 2003 Incentive Stock Plan.
(10)Includes a $6,500 matching contribution to the GP Plan and $1,991 for life
insurance premiums.
(11) Bonus for 2003 under employment agreement paid by GPC in August 2004.
10
(12)Includes a $6,056 matching contribution to the GP Plan and $1,278 for life
insurance premiums. Also includes $17,250 paid to Mr. Greenberg during the
year ended December 31, 2003 by GSE as compensation for serving as a
director of GSE. GSE became a majority-owned subsidiary of the Company
effective October 23, 2003.
(13)Includes a $6,270 matching contribution to the GP Plan $568 for split
dollar life insurance premiums; and $617 group term life insurance premiums.
(14) Paid by GPC for services rendered solely to GPC.
(15) Bonus for 2004 under employment agreement paid by GPC in March 2005.
(16)Includes a $4,570 matching contribution to the GP Plan and $2,148 for life
insurance premiums paid by GPC.
(17)Includes a $4,271 matching contribution to the GP Plan and $1,113 for life
insurance premiums paid by GPC.
(18)Includes a $4,467 matching contribution to the GP Plan; $555 for split
dollar life insurance premiums paid by GPC; and $288 for group term life
insurance premiums.
(19)Includes a $6,500 matching contribution to the GP Plan and $1,670 for life
insurance premiums.
(20)Includes a $6,076 matching contribution to the GP Plan and $1,144 for life
insurance premiums.
(21)Includes a $5,407 matching contribution to the GP Plan; $439 for split
dollar life insurance premiums; and $617 for group term life insurance
premiums.
Option Grants in 2004
No options were granted to the named executive officers in 2004.
Aggregate Option Exercises in 2004
And Fiscal Year-End Option Values
The following table and notes contain information concerning the exercise of
stock options under the Plan during 2004 and unexercised options under the Plan
held at the end of 2004 by the named executive officers. Unless otherwise
indicated, options are to purchase shares of Common Stock.
Shares Exercisable/Unexercisable Value of Unexercised
Acquired on Value Options at In-the-Money Options at
Exercise Realized December 31, 2004(#) December 31, 2004($)(1)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
------------------ --- --- ----------- -------------------------------------------
Jerome I. Feldman. 0 0 119,716 0 492,032 0
Scott N. Greenberg 0 0 119,716 0 492,032 0
Douglas E. Sharp.. 0 0 107,764 41,136 264,975 140,093
Andrea D. Kantor.. 0 0 59,858 0 246,016 0
----------
(1) Calculated based on $7.45, which was the closing price of the Common Stock
as reported by the NYSE on December 31, 2004.
Compensation Committee Report on Executive Compensation
The Compensation Committee is responsible for administering the compensation
program for the executive officers of the Company. In fiscal 2004, the
Compensation Committee consisted of Gordon Smale and Harvey P. Eisen.
11
The Compensation Committee's executive compensation policies are designed to
offer competitive compensation opportunities for all executives which are based
on personal performance, individual initiative, and achievement, as well as
assisting the Company in attracting and retaining qualified executives. The
Compensation Committee also endorses the position that stock ownership by
management and stock-based compensation arrangements are beneficial in aligning
management's and stockholders' interests in the enhancement of stockholder
value.
Compensation paid to the Company's executive officers generally consists of
the following elements: base salary, annual bonus, and long-term compensation in
the form of incentive stock options, non-qualified stock options, restricted
stock, stock units, performance shares, performance units and other incentives
payable in cash or in shares of the Company's Common Stock. The compensation for
the executive officers of the Company is determined by a consideration of each
officer's initiative and contribution to overall corporate performance and the
officer's managerial abilities and performance in any special projects that the
officer may have undertaken. Competitive base salaries that reflect the
individual's level of responsibility are important elements of the Company's
executive compensation philosophy. Subjective considerations of individual
performance are considered by the Compensation Committee in establishing annual
bonuses and other incentive compensation.
The Company has certain broad-based employee benefit plans in which all
employees, including the named executives, are permitted to participate on the
same terms and conditions relating to eligibility and subject to the same
limitations on amounts that may be contributed. In 2004, the Company also made
matching contributions to the GP Plan for those participants.
Mr. Feldman's 2004 Compensation
Mr. Feldman's compensation in 2004 was determined principally by the terms
of his employment agreement with the Company, which was negotiated with the
Compensation Committee, and by the terms of the incentive compensation agreement
described below. Effective June 1, 1999, the Company and Mr. Feldman entered
into a five-year employment agreement, which agreement was extended until May
31, 2007, as described below. In considering Mr. Feldman's compensation and the
terms of the employment agreement and the incentive compensation agreement, the
Compensation Committee considered Mr. Feldman's significant contribution to the
strategic redirection of the Company over the last several years.
On November 3, 2004 and December 10, 2004, Mr. Feldman earned an incentive
payment of $1 million each under the terms of the incentive compensation
agreement described below.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act or the Securities Exchange Act that
might incorporate future filings made by the Company under those statutes, in
whole or in part, this report shall not be deemed to be incorporated by
reference into any such filings, nor will this report be incorporated by
reference into any future filings made by the Company under those statutes.
Harvey P. Eisen
Employment Agreements
Jerome I. Feldman. As of June 1, 1999, Jerome I. Feldman and the Company
entered into an employment agreement pursuant to which Mr. Feldman was employed
as Chief Executive Officer of the Company until May 31, 2004, unless sooner
terminated. The Employment Agreement also provides that Mr. Feldman is employed
as President of the Company, but effective June 12, 2001, Mr. Feldman resigned
as President of the Company and Scott N. Greenberg was elected to that office.
On April 1, 2002, the Compensation Committee extended Mr. Feldman's Employment
Agreement until May 31, 2007, which extension was ratified unanimously by the
Board of Directors on May 3, 2002, with Mr. Feldman abstaining.
Commencing June 1, 1999, Mr. Feldman's base annual salary is $400,000, with
annual increases of $25,000. The Company and Mr. Feldman also agreed to
negotiate in good faith to formulate an annual incentive based compensation
arrangement based on the Company's achieving certain financial milestones which
will be fair and equitable to Mr. Feldman and the Company and its stockholders.
Pursuant to such provision, the Compensation Committee approved an Incentive
Compensation Agreement (the "Incentive Agreement") with Mr. Feldman on April 1,
2002, which Incentive Agreement was ratified unanimously by the Board of
Directors on May 3, 2002, with Mr. Feldman abstaining.
12
Pursuant to the Incentive Agreement, Mr. Feldman, was eligible to receive
from the Company up to five payments in an amount of $1 million each, based on
the closing price of the Company's common stock sustaining or averaging
increasing specified levels over periods of at least 10 consecutive trading
days. On each of June 11, 2003, July 23, 2003, December 22, 2003, November 3,
2004 and December 10, 2004, Mr. Feldman earned an incentive payment of $1
million. To the extent there are any outstanding loans from the Company to Mr.
Feldman at the time an incentive payment is payable, the Company has the right
to set-off the payment of such incentive payment first against the outstanding
accrued interest under such loans and next against any outstanding principal.
Each incentive payment was payable on the date earned, except that any
incentive payment earned prior to December 31, 2003 is payable on the Company's
last payroll date in December. On October 1, 2003, the Incentive Agreement was
amended to allow Mr. Feldman to defer receipt of any incentive payment for a
period of at least six months. The deferral period will automatically renew
unless Mr. Feldman gives a termination notice at least 30 days prior to the
expiration of the deferral period. However, no deferral period may end later
than May 31, 2007. A deferral notice with respect to any incentive payment
earned prior to December 31, 2003 was required to be given prior to December 1,
2003 (which deferral notice was timely given by Mr. Feldman) and a deferral
notice with respect to any incentive payment earned on or after December 31,
2003 was required to be given at least five business days prior to the date that
such incentive payment is earned (which deferral notice was timely given by Mr.
Feldman). Pursuant to such deferral provisions, all five incentive payments are
payable in January 2006, unless further deferred. A deferral notice cannot be
given, and any deferral period will end, if any outstanding loan from the
Company to Mr. Feldman is due and payable and is not otherwise paid. Interest
accrues on each deferred amount at the prime rate minus 1%, which is 1% less
than the interest rate accrued on the Company's outstanding loans to Mr.
Feldman.
Although any set-off of the payments earned on June 11, 2003, July 23, 2003,
December 22, 2003, November 3, 2004 and December 10, 2004 will take place in
future periods when such amounts are payable, for accounting purposes, the
set-offs will be deemed to have occurred on the dates earned since the Company
possesses the right of set-off under the Incentive Agreement. As a result, for
accounting purposes only, the Company applied the first $1 million earned by Mr.
Feldman against $1 million of accrued interest, the second $1 million against
$163,000 of accrued interest and $837,000 of principal, the third $1 million
against $64,000 of accrued interest and $936,000 of principal, the fourth $1
million against $86,000 of accrued interest and $914,000 of principal, and the
fifth million against $67,000 of accrued interest and $933,000 of principal,
which resulted in the outstanding balance of the note being reduced, for
accounting purposes only, from $2,323,000 as of December 31, 2003 to
approximately $619,000 as of December 31, 2004.
Pursuant to the employment agreement entered into in 1999, the Company
granted Mr. Feldman under the Company's option plan, options to purchase 100,000
shares of the Company's Common Stock at an exercise price of $8.00 per share,
which options expired on May 31, 2004. The Company is required to provide Mr.
Feldman with an automobile, to pay for country club dues, which membership is to
be used primarily to further the Company's business, and to maintain the
existing life and disability insurance covering Mr. Feldman. The maturity date
of the Company's presently outstanding loans to Mr. Feldman was extended to May
31, 2004, and all contractual restrictions imposed by the Company on the
disposition by Mr. Feldman of shares of Class B Stock were terminated. On April
1, 2002, the Compensation Committee amended the Employment Agreement to extend
the maturity date of such loans to May 31, 2007, which amendment was ratified
unanimously by the Board of Directors on May 3, 2002, with Mr. Feldman
abstaining.
The Company may terminate the employment agreement for Cause, which is
defined as (i) the willful and continued failure by Mr. Feldman to substantially
perform his duties or obligations or (ii) the willful engaging by Mr. Feldman in
misconduct which is materially monetarily injurious to the Company. If the
employment agreement is terminated for Cause, the Company is required to pay Mr.
Feldman his full salary through the date his employment is terminated. If Mr.
Feldman's employment is terminated by his death, the Company is required to pay
to his heirs, in a lump sum, an amount equal to his full salary for the period
ending May 31, 2007. If, as a result of Mr. Feldman's incapacity due to physical
or mental illness, he is absent from his duties on a full-time basis for the
entire period of six consecutive months, and he does not return within 30 days
of notice, the Company may terminate his employment. Mr. Feldman is entitled to
receive his full salary during the disability period until his employment is
terminated.
Mr. Feldman can terminate the employment agreement for Good Reason, which is
defined to include (i) a change in control of the Company or (ii) a failure by
the Company to comply with any material provision of the employment agreement
which has not been cured within ten days after notice. A "change in control" of
the Company is defined as (i) a change in control of a nature that would be
required to be reported in response to Item 1(a) of Current Report on Form 8-K
13
("Form 8-K") pursuant to Section 13 or 15(d) of the Exchange Act, other than a
change of control resulting in control by Mr. Feldman or a group including Mr.
Feldman, (ii) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than Mr. Feldman or a group including Mr. Feldman, is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding securities,
or (iii) at any time individuals who were either nominated for election or
elected by the Board of Directors of the Company cease for any reason to
constitute at least a majority of the Board.
If the Company wrongfully terminates the employment agreement or Mr. Feldman
terminates the employment agreement for Good Reason, then (i) the Company is
required to pay Mr. Feldman his full salary through the termination date; (ii)
the Company is required to pay as severance pay to Mr. Feldman an amount equal
to (a) Mr. Feldman's average annual cash compensation received from the Company
during the three full calendar years immediately preceding the termination date,
multiplied by (b) the greater of (i) the number of years (including partial
years) that would have been remaining in the employment period if the employment
agreement had not so terminated and (ii) three, such payment to be made (c) if
termination is based on a change of control of the Company, in a lump sum or (d)
if termination results from any other cause, in substantially equal semimonthly
installments payable over the number of years (including partial years) that
would have been remaining in the employment period if the employment agreement
had not so terminated; (iii) all options to purchase the Company's Common Stock
granted to Mr. Feldman under the Company's option plan or otherwise immediately
become fully vested and terminate on such date as they would have terminated if
Mr. Feldman's employment by the Company had not terminated and, if Mr. Feldman's
termination is based on a change of control of the Company and Mr. Feldman
elects to surrender any or all of such options to the Company, the Company is
required to pay Mr. Feldman a lump sum cash payment equal to the excess of (a)
the fair market value on the termination date of the securities issuable upon
exercise of the options surrendered over (b) the aggregate exercise price of the
options surrendered; (iv) the Company is required to maintain in full force and
effect, for a number of years equal to the greater of (a) the number of years
(including partial years) that would have been remaining in the employment
period if the employment agreement had not so terminated and (b) three, all
employee benefit plans and programs in which Mr. Feldman was entitled to
participate immediately prior to the termination date; and (v) if termination of
the employment agreement arises out of a breach by the Company, the Company is
required to pay all other damages to which Mr. Feldman may be entitled as a
result of such breach.
Notwithstanding the foregoing, the Company shall not be obligated to pay any
portion of any amount otherwise payable to Mr. Feldman if the Company could not
reasonably deduct such portion solely by operation of Section 280G ("Section
280G") of the Internal Revenue Code of 1986, as amended.
Scott N. Greenberg. As of July 1, 1999, Scott N. Greenberg and the Company
entered into an employment agreement pursuant to which Mr. Greenberg is employed
as the Executive Vice President of the Company. Effective June 12, 2001, Mr.
Greenberg was elected President of the Company. Unless sooner terminated
pursuant to its terms, the employment agreement terminated on June 30, 2004,
provided that if the employment agreement has not been terminated prior to June
30, 2002, the employment agreement is extended on June 30, 2002 to June 30,
2005. On April 1, 2002, the Compensation Committee amended Mr. Greenberg's
employment agreement, which amendment was ratified unanimously by the Board of
Directors on May 3, 2002, with Mr. Greenberg abstaining, to provide that the
employment agreement now terminates on June 30, 2007, provided that if the
employment agreement has not been terminated prior to June 30, 2005, the
employment agreement is extended on June 30, 2005 to June 30, 2008. On January
21, 2005, the Compensation Committee amended Mr. Greenberg's employment
agreement, to provide that the employment agreement now terminates on June 30,
2008.
Commencing July 1, 1999, Mr. Greenberg's base annual salary is $250,000,
with annual increases to be determined by the Board of Directors of not less
than the greater of (i) 3% and (ii) the percentage increase in the Consumer
Price Index. The Company agreed to pay Mr. Greenberg a signing bonus in 1999 of
$300,000, which Mr. Greenberg waived. Mr. Greenberg is entitled to an annual
bonus based upon the percentage increase in GPC's earnings before interest,
taxes, depreciation and amortization, excluding extraordinary or unusual
nonrecurring items of income and expense ("EBITDA"), from GPC's EBITDA for the
prior year, up to 50% of his base salary. Pursuant to such provision, Mr.
Greenberg received a bonus of $75,000 in 2004 for the 2003 fiscal year. Pursuant
to the employment agreement entered into in 1999, the Company has granted Mr.
Greenberg under the Company's option plan, options to purchase 100,000 shares of
the Company's Common Stock at an exercise price of $8.00 per share, the market
price on the date of grant, which options expired on June 30, 2004. The Company
is required to provide Mr. Greenberg with an automobile and to maintain the
existing life and disability insurance covering Mr. Greenberg.
The Company may terminate the employment agreement for Cause, which is
defined as (i) the willful and continued failure by Mr. Greenberg to
substantially perform his duties or obligations or (ii) the willful engaging by
Mr. Greenberg in misconduct which is materially monetarily injurious to the
Company. If the employment agreement is terminated for Cause, the Company is
required to pay Mr. Greenberg his full salary through the date his employment is
14
terminated. If Mr. Greenberg's employment is terminated by his death, the
Company is required to pay to his spouse or estate his full salary for a period
of one year. If, as a result of Mr. Greenberg's incapacity due to physical or
mental illness, he is absent from his duties on a full-time basis for the entire
period of six consecutive months, and he does not return within 30 days of
notice, the Company may terminate his employment. Mr. Greenberg is entitled to
receive his full salary during the disability period until his employment is
terminated.
Mr. Greenberg can terminate the employment agreement for Good Reason, which
is defined to include (i) a change in control of the Company, (ii) a management
change in control of the Company, or (iii) a failure by the Company to comply
with any material provision of the employment agreement which has not been cured
within ten days after notice. A "change in control" of the Company is defined as
any of the following, but only if not approved by the Board of Directors, (i) a
change in control of a nature that would be required to be reported in response
to Item 1(a) of Form 8-K, other than a change of control resulting in control by
Mr. Feldman or Mr. Greenberg or a group including Mr. Feldman or Mr. Greenberg,
(ii) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than Mr. Feldman or Mr. Greenberg or a group including Mr.
Feldman or Mr. Greenberg, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company's
then outstanding securities, (iii) the Company and its affiliates owning less
than a majority of the voting stock of GPC, (iv) the sale of all or
substantially all of the assets of GPC, or (v) at any time when there has not
been a management change of control of the Company, individuals who were either
nominated for election or elected by the Board of Directors of the Company cease
for any reason to constitute at least a majority of the Board. A "management
change in control" of the Company is defined as (i) an event that would have
constituted a change of control of the Company if it had not been approved by
the Board of Directors or (ii) a change in control of the Company of a nature
that would be required to be reported in response to Item 1(a) of Form 8-K,
resulting in control by a buy-out group including Mr. Feldman but not Mr.
Greenberg.
If the Company wrongfully terminates the employment agreement or Mr.
Greenberg terminates the employment agreement for Good Reason (other than as a
result of a management change of control), (i) the Company is required to pay
Mr. Greenberg his full salary and provide him his benefits through the
termination date, and pay him his full annual bonus for the calendar year in
which termination occurs; (ii) the Company is required to pay as severance pay
to Mr. Greenberg an amount equal to (a) Mr. Greenberg's average annual cash
compensation received from the Company during the three full calendar years
immediately preceding the termination date, multiplied by (b) the greater of (I)
the number of years (including partial years) that would have been remaining in
the employment period if the employment agreement had not so terminated but was
not subsequently extended and (II) three, such payment to be made (c) if
termination is based on a change of control of the Company, in a lump sum or (d)
if termination results from any other cause, in substantially equal semimonthly
installments payable over the number of years (including partial years) that
would have been remaining in the employment period if the employment agreement
had not so terminated but was not subsequently extended; (iii) all options to
purchase the Company's Common Stock granted to Mr. Greenberg under the Company's
option plan or otherwise immediately become fully vested and terminate on such
date as they would have terminated if Mr. Greenberg's employment by the Company
had not terminated and, if Mr. Greenberg's termination is based on a change of
control of the Company and Mr. Greenberg elects to surrender any or all of such
options to the Company, the Company is required to pay Mr. Greenberg a lump sum
cash payment equal to the excess of (a) the fair market value on the termination
date of the securities issuable upon exercise of the options surrendered over
(b) the aggregate exercise price of the options surrendered; (iv) the Company is
required to maintain in full force and effect, for a number of years equal to
the greater of (a) the number of years (including partial years) that would have
been remaining in the employment period if the employment agreement had not so
terminated but was not subsequently extended and (b) three, all employee benefit
plans and programs in which Mr. Greenberg was entitled to participate
immediately prior to the termination date; and (v) if termination of the
employment agreement arises out of a breach by the Company, the Company is
required to pay all other damages to which Mr. Greenberg may be entitled as a
result of such breach.
If Mr. Greenberg terminates the employment agreement for Good Reason as a
result of a management change of control, (i) the Company is required to pay Mr.
Greenberg his full salary and provide him his benefits through the termination
date, and pay him his full annual bonus for the calendar year in which
termination occurs; (ii) the Company is required to pay as severance pay to Mr.
Greenberg a lump sum amount equal to twice Mr. Greenberg's average annual cash
compensation received from the Company during the three full calendar years
immediately preceding the termination date; (iii) all options to purchase the
Company's Common Stock granted to Mr. Greenberg under the Company's option plan
or otherwise immediately become fully vested and terminate on such date as they
would have terminated if Mr. Greenberg's employment by the Company had not
terminated and, if Mr. Greenberg elects to surrender any or all of such options
to the Company, the Company is required to pay Mr. Greenberg a lump sum cash
payment equal to the excess of (a) the fair market value on the termination date
of the securities issuable upon exercise of the options surrendered over (b) the
aggregate exercise price of the options surrendered; and (iv) the Company is
required to maintain in full force and effect for two years all employee benefit
plans and programs in which Mr. Greenberg was entitled to participate
immediately prior to the termination date.
Notwithstanding the foregoing, the Company shall not be obligated to pay any
portion of any amount otherwise payable to Mr. Greenberg if the Company could
not reasonably deduct such portion solely by operation of Section 280G.
15
Douglas E. Sharp. As of July 1, 1999, Douglas E. Sharp and GPC entered into
an employment agreement pursuant to which Mr. Sharp was employed as Group
President of GPC. Mr. Sharp was elected President of GPC on September 4, 2002.
Unless sooner terminated pursuant to its terms, the employment agreement
terminated on June 30, 2004, provided however, that since the employment
agreement was not terminated prior to June 30, 2002, the employment agreement
provided that it was extended on June 30, 2002 to June 30, 2005. On January 21,
2005, the Compensation Committee amended the employment agreement, to provide
that the employment agreement now terminates on June 30, 2008.
Commencing July 1, 1999, Mr. Sharp's base annual salary is $230,000, with
annual increases to be determined by the Board of Directors of GPC of not less
than 3%. GPC paid Mr. Sharp a signing bonus in 1999 of $300,000. Mr. Sharp is
entitled to an annual bonus based upon the percentage increase in GPC's EBITDA
from GPC's EBITDA for the prior year, up to 50% of his base salary. Pursuant to
such provision, Mr. Sharp received a bonus of $50,000 in 2005 for the 2004
fiscal year. Pursuant to the employment agreement entered into in 1999, the
Company has granted Mr. Sharp under the Company's option plan, options to
purchase 100,000 shares of the Company's Common Stock at an exercise price of
$8.00 per share, the market price on the date of grant, which options expired on
June 30, 2004. GPC is required to provide Mr. Sharp with an automobile.
GPC may terminate the employment agreement for Cause, which is defined as
(i) the willful and continued failure by Mr. Sharp to substantially perform his
duties or obligations or (ii) the willful engaging by Mr. Sharp in misconduct
which is materially monetarily injurious to GPC. If the employment agreement is
terminated for Cause, GPC is required to pay Mr. Sharp his full salary through
the date his employment is terminated. If Mr. Sharp's employment is terminated
by his death, GPC is required to pay to his spouse or estate his full salary for
a period of one year. If, as a result of Mr. Sharp's incapacity due to physical
or mental illness, he is absent from his duties on a full-time basis for the
entire period of six consecutive months, and he does not return within 30 days
of notice, GPC may terminate his employment. Mr. Sharp is entitled to receive
his full salary during the disability period until his employment is terminated.
Mr. Sharp can terminate the employment agreement for Good Reason, which is
defined to include (i) a change in control of the Company, (ii) a management
change in control of the Company, or (ii) a failure by GPC to comply with any
material provision of the employment agreement which has not been cured within
ten days after notice. A "change in control" of the Company is defined as any of
the following, but only if not approved by the Board of Directors, (i) a change
in control of a nature that would be required to be reported in response to Item
1(a) of Form 8-K, other than a change of control resulting in control by Mr.
Feldman or a group including Mr. Feldman (ii) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act), other than Mr. Feldman or a
group including Mr. Feldman, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company's
then outstanding securities, (iii) the Company and its affiliates owning less
than a majority of the voting stock of GPC, (iv) the sale of all or
substantially all of the assets of the Company, or (v) at any time when there
has not been a management change of control of the Company, individuals who were
either nominated for election or elected by the Board of Directors of the
Company cease for any reason to constitute at least a majority of the Board. A
"management change in control" of the Company is defined as (i) an event that
would have constituted a change of control of the Company if it had not been
approved by the Board of Directors or (ii) a change in control of the Company of
a nature that would be required to be reported in response to Item 1(a) of Form
8-K, resulting in control by a buy-out group including Mr. Feldman.
If GPC wrongfully terminates the employment agreement or Mr. Sharp
terminates the employment agreement for Good Reason, (i) GPC is required to pay
Mr. Sharp his full salary and provide him his benefits through the termination
date, and pay him his full annual bonus for the calendar year in which
termination occurs; (ii) GPC is required to pay as severance pay to Mr. Sharp an
amount equal to (a) Mr. Sharp's average annual cash compensation received from
GPC during the three full calendar years immediately preceding the termination
date, multiplied by (b) the greater of (I) the number of years (including
partial years) that would have been remaining in the employment period if the
employment agreement had not so terminated but was not subsequently extended and
(II) three, such payment to be made (c) if termination is based on a change of
control of the Company, in a lump sum or (d) if termination results from any
other cause, in substantially equal semimonthly installments payable over the
number of years (including partial years) that would have been remaining in the
employment period if the employment agreement had not so terminated but was not
subsequently extended; (iii) all options to purchase the Company's Common Stock
granted to Mr. Sharp under the Company's option plan or otherwise immediately
become fully vested and terminate on such date as they would have terminated if
Mr. Sharp's employment by GPC had not terminated and, if Mr. Sharp's termination
is based on a change of control of the Company and Mr. Sharp elects to surrender
any or all of such options to GPC, GPC is required to pay Mr. Sharp a lump sum
cash payment equal to the excess of (a) the fair market value on the termination
date of the securities issuable upon exercise of the options surrendered over
(b) the aggregate exercise price of the options surrendered; (iv) GPC is
required to maintain in full force and effect, for a number of years equal to
the greater of (a) the number of years (including partial years) that would have
been remaining in the employment period if the employment agreement had not so
terminated but was not subsequently extended and (b) three, all employee benefit
plans and programs in which Mr. Sharp was entitled to participate immediately
prior to the termination date; and (v) if termination of the employment
16
agreement arises out of a breach by GPC, GPC is required to pay all other
damages to which Mr. Sharp may be entitled as a result of such breach.
Notwithstanding the foregoing, GPC shall not be obligated to pay any portion
of any amount otherwise payable to Mr. Sharp if GPC could not reasonably deduct
such portion solely by operation of Section 280G.
The Company guaranteed the performance by GPC of its obligations under Mr.
Sharp's employment agreement.
Andrea D. Kantor. As of May 1, 2001, Andrea D. Kantor and the Company
entered into an employment agreement pursuant to which Ms. Kantor is employed as
the Vice President and General Counsel of the Company. Unless sooner terminated
pursuant to its terms, the employment agreement terminated on June 30, 2004,
provided however, that since the employment agreement was not terminated prior
to June 30, 2002, the employment agreement provided that it was extended on June
30, 2002 to June 30, 2005. On January 21, 2005, the Compensation Committee
amended Ms. Kantor's employment agreement, to provide that the employment
agreement now terminates on June 30, 2007.
Commencing May 1, 2001, Ms. Kantor's base annual salary is $190,000, with
annual increases to be determined by the Board of Directors of not less than the
greater of (i) 3% and (ii) the percentage increase in the Consumer Price Index.
Ms. Kantor is entitled to an annual bonus, as determined by the Board based upon
the Company's revenues, profits or losses, financing activities, and such other
factors deemed relevant by the Board. The Company is required to provide Ms.
Kantor with an automobile and to maintain the existing life and disability
insurance covering Ms. Kantor.
The Company may terminate the employment agreement for Cause, which is
defined as (i) the willful and continued failure by Ms. Kantor to substantially
perform her duties or obligations or (ii) the willful engaging by Ms. Kantor in
misconduct which is materially monetarily injurious to the Company. If the
employment agreement is terminated for Cause, the Company is required to pay Ms.
Kantor her full salary through the date her employment is terminated. If Ms.
Kantor's employment is terminated by her death, the Company is required to pay
to her spouse or estate her full salary for a period of one year. If, as a
result of Ms. Kantor's incapacity due to physical or mental illness, she is
absent from her duties on a full-time basis for the entire period of six
consecutive months, and she does not return within 30 days of notice, the
Company may terminate her employment. Ms. Kantor is entitled to receive her full
salary during the disability period until her employment is terminated.
Ms. Kantor can terminate the employment agreement for Good Reason, which is
defined to include (i) a change in control of the Company, (ii) a management
change in control of the Company, or (iii) a failure by the Company to comply
with any material provision of the employment agreement which has not been cured
within ten days after notice. A "change in control" of the Company is defined as
any of the following, but only if not approved by the Board of Directors, (i) a
change in control of a nature that would be required to be reported in response
to Item 1(a) of Form 8-K, other than a change of control resulting in control by
Mr. Feldman or Mr. Greenberg or a group including Mr. Feldman or Mr. Greenberg,
(ii) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than Mr. Feldman or Mr. Greenberg or a group including Mr.
Feldman or Mr. Greenberg, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company's
then outstanding securities, (iii) the Company and its affiliates owning less
than a majority of the voting stock of GPC, (iv) the sale of all or
substantially all of the assets of GPC, or (v) at any time when there has not
been a management change of control of the Company, individuals who were either
nominated for election or elected by the Board of Directors of the Company cease
for any reason to constitute at least a majority of the Board. A "management
change in control" of the Company is defined as (i) an event that would have
constituted a change of control of the Company if it had not been approved by
the Board of Directors or (ii) a change in control of the Company of a nature
that would be required to be reported in response to Item 1(a) of Form 8-K,
resulting in control by a buy-out group including Mr. Feldman or Mr. Greenberg.
If the Company wrongfully terminates the employment agreement or Ms. Kantor
terminates the employment agreement for Good Reason (other than as a result of a
management change of control), (i) the Company is required to pay Ms. Kantor her
full salary and provide her benefits through the termination date, and pay her
full annual bonus for the calendar year in which termination occurs; (ii) the
Company is required to pay as severance pay to Ms. Kantor an amount equal to (a)
Ms. Kantor's average annual cash compensation received from the Company during
the three full calendar years immediately preceding the termination date,
multiplied by (b) the greater of (I) the number of years (including partial
years) that would have been remaining in the employment period if the employment
agreement had not so terminated but was not subsequently extended and (II)
three, such payment to be made (c) if termination is based on a change of
control of the Company, in a lump sum or (d) if termination results from any
other cause, in substantially equal semimonthly installments payable over the
number of years (including partial years) that would have been remaining in the
employment period if the employment agreement had not so terminated but was not
subsequently extended; (iii) all options to purchase the Company's Common Stock
granted to Ms. Kantor under the Company's option plan or otherwise immediately
become fully vested and terminate on such date as they would have terminated if
Ms. Kantor's employment by the Company had not terminated and, if Ms. Kantor's
termination is based on a change of control of the Company and Ms. Kantor elects
to surrender any or all of such options to the Company, the Company is required
to pay Ms. Kantor a lump sum cash payment equal to the excess of (a) the fair
market value on the termination date of the securities issuable upon exercise of
the options surrendered over (b) the aggregate exercise price of the options
surrendered; (iv) the Company is required to maintain in full force and effect,
for a number of years equal to the greater of (a) the number of years (including
partial years) that would have been remaining in the employment period if the
17
employment agreement had not so terminated but was not subsequently extended and
(b) three, all employee benefit plans and programs in which Ms. Kantor was
entitled to participate immediately prior to the termination date; and (v) if
termination of the employment agreement arises out of a breach by the Company,
the Company is required to pay all other damages to which Ms. Kantor may be
entitled as a result of such breach.
If Ms. Kantor terminates the employment agreement for Good Reason as a
result of a management change of control, (i) the Company is required to pay Ms.
Kantor her full salary and provide her benefits through the termination date,
and pay her full annual bonus for the calendar year in which termination occurs;
(ii) the Company is required to pay as severance pay to Ms. Kantor a lump sum
amount equal to twice Ms. Kantor's average annual cash compensation received
from the Company during the three full calendar years immediately preceding the
termination date; (iii) all options to purchase the Company's Common Stock
granted to Ms. Kantor under the Company's option plan or otherwise immediately
become fully vested and terminate on such date as they would have terminated if
Ms. Kantor's employment by the Company had not terminated and, if Ms. Kantor
elects to surrender any or all of such options to the Company, the Company is
required to pay Ms. Kantor a lump sum cash payment equal to the excess of (a)
the fair market value on the termination date of the securities issuable upon
exercise of the options surrendered over (b) the aggregate exercise price of the
options surrendered; and (iv) the Company is required to maintain in full force
and effect for two years all employee benefit plans and programs in which Ms.
Kantor was entitled to participate immediately prior to the termination date.
Notwithstanding the foregoing, the Company shall not be obligated to pay any
portion of any amount otherwise payable to Ms. Kantor if the Company could not
reasonably deduct such portion solely by operation of Section 280G.
Certain Transactions
On August 8, 2003, pursuant to a Note and Warrant Purchase Agreement, the
Company issued and sold to Gabelli Asset Management, Inc. $7,500,000 aggregate
principal amount of 6% Conditional Subordinated Notes due 2008 (the "Notes") and
937,500 warrants ("GP Warrants"), each entitling the holder thereof to purchase
(subject to adjustment) one share of the Company's Common Stock. The aggregate
purchase price for the Notes and GP Warrants was $7,500,000. Gabelli Asset
Management, Inc. beneficially owns approximately 8.0% of the Company's common
stock based on a Schedule 13D filed with the SEC on August 20, 2003. See
Principal Stockholders.
The Notes mature August 2008 with interest at the rate of 6% per annum
payable semi-annually commencing on December 31, 2003. The Notes are secured by
a mortgage on the Company's former property located in Pawling, New York that
was contributed to MXL Industries, Inc. ("MXL") in connection with the spin-off
(the "Spin-Off") of National Patent Development Corporation ("NPDC"), which
occurred on November 24, 2004. MXL, which is now a subsidiary of NPDC, assumed
the mortgage, but without liability for repayment of the Notes or any other
obligations of the Company under the Note and Warrant Purchase Agreement (other
than foreclosure on the property). If there is a foreclosure on the mortgage for
payment of the Notes, the Company has agreed to indemnify MXL for the loss of
the value of the property.
At any time that less than $1,875,000 principal amount of Notes are
outstanding, the Company may defease the obligations secured by the mortgage and
obtain a release of the lien of the mortgage by depositing with an agent for the
Noteholders bonds or government securities with an investment grade rating by a
nationally recognized rating agency which, without reinvestment, will provide
cash on the maturity date of the Notes in an amount not less than the
outstanding principal amount of the Notes.
The GP Warrants had an initial exercise price of $8.00 per share (adjusted
to $6.14 per share as a result of the Spin-Off) and are exercisable at any time
until August 2008. The exercise price of the GP Warrants was adjusted to take
into account the Spin-Off and issuance of the NPDC Warrants described below by
multiplying the exercise price of the GP Warrants in effect immediately prior to
18
the Spin-Off by a fraction, the numerator of which is the average closing price
of the Company's Common Stock over the 20 consecutive trading days commencing on
the record date of the Spin-Off, and the denominator is the sum of the average
closing prices of the Company's Common Stock and NPDC common stock over the same
period (based on the issuance in the Spin-Off of one share of NPDC common stock
for each share of the Company's Common Stock or Class B Stock held). The
exercise price may be paid in cash, by delivery of Notes, or a combination of
the two. The GP Warrants contain anti-dilution provisions for stock splits,
reorganizations, mergers, and similar transactions.
The Company filed a registration statement to register the resale of the
shares of the Common Stock issuable on exercise of the GP Warrants, and has
agreed to certain other registration rights in favor of the holders of the GP
Warrants. On December 8, 2003, a registration statement covering the resale of
the shares of common stock issuable on exercise of the GP Warrants was declared
effective by the Securities and Exchange Commission.
Pursuant to the Note and Warrant Purchase Agreement, on completion of the
Spin-Off, NPDC issued warrants ("NPDC Warrants") to the holders of the GP
Warrants. The NPDC Warrants entitle the holders to purchase, in the aggregate, a
number of shares of NPDC common stock equal to 8% of the number of shares
outstanding at completion of the Spin-Off, subject to reduction for any GP
Warrants exercised prior to the Spin-Off. An aggregate of 1,423,887 NPDC
Warrants were issued to the holders of the GP Warrants on December 4, 2004, and
allocated among them pro-rata based on the respective number of GP Warrants held
by them on such date. The exercise price of the NPDC Warrants is $3.57, which is
160% of the average closing price of the NPDC common stock over the 20
consecutive trading days commencing on the record date of the Spin-Off. The NPDC
Warrants are exercisable until August 2008. The NPDC Warrants have similar
anti-dilution provisions similar to those contained in the GP Warrants. NPDC has
agreed to provide the holders of the NPDC Warrants with registration rights
similar to those provided by the Company to the holders of the GP Warrants.
On October 19, 2001, the Company sold 300,000 shares of Class B Stock (the
"Bedford Shares") of the Company for an aggregate purchase price of $900,000 to
Bedford Oak in a private placement transaction. Upon the disposition of any of
the Bedford Shares (other than to an affiliate of Bedford Oak who agrees to be
bound by such disposition restrictions or at the request of the Board of
Directors of the Company, Bedford Oak is required to exercise the right to
convert all of the Bedford Shares then owned by Bedford Oak into an equal number
of shares of Common Stock of the Company. Harvey P. Eisen, the managing member
of Bedford Oak Advisors, LLC, the investment manager of Bedford Oak, was elected
a director of the Company in July 2002.
Pursuant to an agreement dated May 3, 2002 (the "EGI Agreement"), the
Company sold to EGI in a private placement transaction 1,000,000 shares of
Common Stock (the "EGI Common Shares") of the Company for an aggregate purchase
price of $3,500,000 and 300,000 shares of Class B Stock (the "EGI Class B
Shares") of the Company for an aggregate purchase price of $1,260,000. Until
such time as EGI has disposed of more than 50% of the aggregate number of EGI
Common Shares and EGI Class B Shares, EGI is entitled to designate one
representative to serve as a member of the Board, subject to the approval of the
Company, which approval shall not be unreasonably denied or delayed. Matthew
Zell was appointed a director of the Company in January 2005 to replace Mark
Radzik as the board designee of EGI. Upon the disposition of any of the EGI
Class B Shares (other than to an affiliate of EGI or to a transferee approved by
the Board who in each case agrees to be bound by the provisions of the EGI
Agreement), EGI is required to exercise the right to convert all of the EGI
Class B Shares then owned by EGI into an equal number of shares of Common Stock
of the Company.
The Company and EGI had entered into an advisory services agreement
providing that, to the extent requested by the Company and deemed appropriate by
EGI, EGI shall assist the Company in developing, identifying, evaluating,
negotiating, and structuring financings and business acquisitions. The Company
had agreed to pay EGI a transaction fee equal to 1% of the proceeds received by
the Company in a financing, or of the consideration paid by the Company in a
business acquisition, in respect of which EGI has provided material services.
The advisory agreement was terminated on November 18, 2004. EGI did not provide
any services to the Company pursuant to the agreement and therefore no fees were
paid to EGI by the Company.
On April 1, 2002, Jerome I. Feldman and the Company entered into an
incentive compensation agreement pursuant to which Mr. Feldman was eligible to
receive from the Company up to five payments in an amount of $1 million each,
based on the closing price of the Company's Common Stock sustaining or averaging
increasing specified levels over periods of at least 10 consecutive trading
days. On June 11, 2003, July 23, 2003, December 22, 2003, November 3, 2004 and
December 10, 2004, Mr. Feldman earned an incentive payment of $1 million each,
which amounts are payable in January 2006, unless further deferred. To the
extent there are any outstanding loans from the Company to Mr. Feldman at the
time an incentive payment is payable, the Company has the right to set off the
payment of such incentive payment first against the outstanding accrued interest
under such loans and next against any outstanding principal. See "Employment
Agreements - Jerome I. Feldman".
The Company has made loans to Jerome I. Feldman, the Chairman of the Board
and Chief Executive Officer of the Company. Mr. Feldman primarily utilized the
19
proceeds of such loans to exercise options to purchase Class B Stock. Such loans
bear interest at the prime rate of Fleet Bank and are secured by the purchased
Class B Stock and certain other assets. The largest aggregate amount of
indebtedness (including principal and accrued interest) outstanding from January
1, 2004 through March 18, 2005 was $2,833,701, which was the amount outstanding
on November 2, 2004. As of March 18, 2005, the aggregate amount of indebtedness
(including principal and accrued interest) outstanding under the loans, for
accounting purposes only, after giving effect to the application of the five $1
million incentive payments to Mr. Feldman as described under "Employment
Agreements - Jerome I. Feldman," was $889,892.
On July 1, 2002, the Company made a loan to Douglas Sharp, the President of
GPC, in the principal amount of $150,000 in connection with Mr. Sharp's
relocation. The loan bears interest at the prime rate of Wacovia Bank. The
largest aggregate amount outstanding under the loan from January 1, 2004 through
March 18, 2005 was approximately $68,132, which was the amount outstanding on
January 1, 2004. As of March 18, 2005, the aggregate amount of indebtedness
outstanding under the loan was $60,744.
During the fourth quarter of 2003, due to the Company's acquisition of
additional shares of GSE System, Inc. ("GSE"), bringing its ownership of the
common stock to GSE from approximately 22% to approximately 58%, GSE became a
majority-owned subsidiary of the Company. On January 1, 2004, GSE entered into a
Management Services Agreement with the Company pursuant to which the Company
agreed to provide corporate support services to GSE, including accounting,
finance, human resources, legal, network support and tax. In 2004, GSE paid the
Company an annual management fee of $685,000 ($171,250 a quarter) for these
services. The initial term of the agreement was for one year. The agreement was
renewed for 2005. In December 2003, GSE paid the Company approximately $35,000
for services performed by the Company's personnel in the fourth quarter 2003
relating to the implementation of the Management Services Agreement, described
above. In addition, GSE agreed to reimburse the Company $30,000 for coverage
under its Company's directors and officers' liability and umbrella insurance for
November and December 2003 and $144,000 for coverage under such Company policies
in 2004.
In December 2003, GSE's Board of Directors elected John Moran, who was then
an executive of the Company with experience in the power industry and simulation
technology, as its Chief Executive Officer. In 2004, Mr. Moran continued as an
employee of the Company but devoted all of his time to the performance of his
duties as CEO of GSE. For 2003, GSE reimbursed the Company $35,000 for Mr.
Moran's compensation and benefits and for 2004 GSE reimbursed the Company
$300,000 for Mr. Moran's compensation and benefits. Effective January 1, 2005,
Mr. Moran ceased to be an employee of the Company.
In March 2003, the Company extended its $1.8 million limited guarantee of
GSE's then credit facility and received 150,000 shares of GSE common stock with
a value of $180,000 in consideration of such extension. On March 30, 2004, GSE
was added as an additional borrower under the Financing and Security Agreement
between GPC and a financial institution which expires on August 23, 2005. Under
the terms of the agreement, $1.5 million of GPC's available credit facility has
been carved out for use by GSE. The line is collateralized by substantially all
of GSE's assets and provides for borrowings of up to 80% of eligible accounts
receivable and 80% of eligible unbilled receivables, up to a maximum of $1.5
million. The Company also agreed to guarantee GSE's borrowings as part of its
fee pursuant to the Management Services Agreement described above.
In 2004, Michael Feldman received a salary of $85,000 from GSE as marketing
manager of GSE and in 2003 received a salary of $16,000 from GSE. Michael
Feldman currently receives an annual salary of approximately $110,000 from GSE
as Managing Director, Marketing. Michael Feldman is the son of Jerome I.
Feldman, the Company's Chairman and Chief Executive Officer.
On March 9, 2005, GPC received the consent of its bank to permit it to lend
a maximum of $1,000,000 to GSE to enable GSE to satisfy any short-term capital
requirements (the "GSE Loan"). The GSE Loan, if made by GPC, will be due and
payable 15 months from March 9, 2005 and will be on such other terms and
conditions as are agreed upon by GPC and GSE.
Jerome I. Feldman, the Company's Chairman of the Board and Chief Executive
Officer is also Chairman of the Board of GSE. Scott N. Greenberg, the Company's
President and Chief Financial Officer and director is also a director of GSE.
Douglas Sharp, the President of GPC is a director of GSE and Andrea D. Kantor,
the Company's Vice President and General Counsel is a director of GSE.
On October 8, 2003, the Company exchanged $500,000 principal amount of the
then $3,500,000 Senior Unsecured 8% Note due June 30, 2005, as amended of Five
Star (the "Five Star Note") for 2,000,000 shares of Five Star common stock,
reducing the outstanding principal amount of the Five Star Note to $3,000,000,
and increasing the Company's ownership of Five Star common stock to
approximately 54% of the then outstanding shares (the "Five Star Acquisition").
In consideration for the Company's agreeing to exchange the debt for common
stock at a conversion price of $0.25 per share, which was more than twice the
$0.11 closing market price of Five Star's common stock on the day prior to
approval of the transaction, Five Star agreed to terminate the voting agreement
between Five Star and the Company. The voting agreement, which by its terms
would in any case have terminated on June 30, 2004, provided that the Company
20
(i) would vote its shares of Five Star common stock so that not more than 50% of
the members of Five Star's board of directors would be officers or directors of
the Company and (ii) would vote on matters other than the election of directors
in the same proportion as Five Star's other shareholders. The transaction was
approved by a Special Committee of Five Star's board of directors; the Special
Committee consisted of an independent non-management director who is
unaffiliated with the Company.
On June 20, 2003, the Company entered into an Agreement of Subordination and
Assignments (the "Subordination Agreement") with Five Star and its lenders that
permitted the annual repayment of principal on the Five Star Note. Pursuant to
the provisions of the Subordination Agreement, the Company received partial
repayments from Five Star in the aggregate amount of $1,200,000 from June 20,
2003 through December 31, 2003. As noted above, pursuant to the Five Star
Acquisition, the Company also exchanged $500,000 principal amount of the Five
Star Note for 2,000,000 shares of Five Star common stock. The Five Star Note and
all the shares of Five Star common stock owned by the Company, along with the
Company's rights under the Subordination Agreement, were transferred to NPDC on
July 30, 2004. The balance of the Five Star Note decreased from $4,500,000 as of
December 31, 2002 to $2,800,000 as of December 31, 2003 and November 24, 2004,
the date of the Spin-Off.
On February 6, 2004, Five Star announced an issuer tender offer through
which it would repurchase up to 5,000,000 shares, or approximately 30% of its
common stock currently outstanding, at $0.21 per share, originally set to expire
on March 16, 2004. On March 17, 2004, Five Star announced that it had increased
the price it was offering to pay for the shares in the tender offer to $0.25 per
share and extended the offer to March 31, 2004. Approximately 2,628,000 shares
of common stock were tendered and acquired by Five Star. The effect of the
tender offer was to increase the Company's ownership in Five Star to
approximately 64%.
If, following the tender offer, the Company were to increase its ownership
to at least 80% of Five Star's common stock, Five Star would become, for federal
tax purposes, part of the affiliated group of which the Company is the common
parent. As a member of such affiliated group, Five Star would be included in the
Company's consolidated federal income tax returns, Five Star's income or loss
would be included as part of the income or loss of the affiliated group and any
of Five Star's income so included might be offset by the consolidated net
operating losses, if any, of the affiliated group. The agreement between the
Company and Five Star also provided that, if Five Star became a member of the
affiliated group, the Company and Five Star would enter into a tax sharing
agreement pursuant to which Five Star would make tax sharing payments to the
Company equal to 80% of the amount of taxes Five Star would pay if Five Star
were to file separate consolidated tax returns but did not pay as a result of
being included in the Company affiliated group. As a result of the Spin-Off of
NPDC, which held the Company's interest in Five Star, NPDC would enter into such
tax sharing agreement in lieu of the Company.
The Company provided legal, tax, business development, insurance and
employee benefit administrative services to Five Star pursuant to a management
services agreement for a fee of up to $10,000 per month. The agreement is
automatically renewable for successive one-year terms unless one of the parties
notifies the other in writing at least six months prior to the end of the
initial term or any renewal thereof. The agreement was renewed for 2005. The
management fee was increased to $25,000 per month effective October 1, 2004. In
addition, Five Star has reimbursed the Company $16,666 per month for Mr.
Feldman's services to Five Star effective October 1, 2004. As a result of the
Spin-Off of NPDC, the Company transferred to NPDC the rights and obligations
under the management services agreement.
The Company has guaranteed the leases for Five Star's New Jersey and
Connecticut warehouses and leases for certain equipment, totaling approximately
$1,589,000 per year through the first quarter of 2007. The Company's guarantee
of such leases was in effect when the Five Star business was conducted by a
wholly-owned subsidiary of the Company. In 1998, the Company sold substantially
all of the operating assets of the Five Star business to the predecessor
corporation of Five Star. As part of this transaction, the landlord of the New
Jersey and Connecticut facilities and the lessor of the equipment did not
consent to the release of the Company' guarantee. The Company has also
guaranteed the mortgages for MXL's Illinois and Pennsylvania properties through
June 2006 and March 2011, respectively, as well as $700,000 in debt entered into
by MXL on October 1, 2003 in connection with the acquisition of certain assets
from AOtec, LLC. The Company's guarantees have continued after the Spin-Off.
In 2004, Michael Feldman received $17,000 from Five Star and in 2003
received $51,000 from Five Star. Michael Feldman is the son of Jerome I.
Feldman. Jerome I. Feldman, the Company's Chairman and Chief Executive Officer
is also the Chairman of the Board of Five Star. John Moran, the Chief Executive
Officer of GSE is a director of Five Star and Andrea D. Kantor, the Company's
Vice President and General Counsel is also the General Counsel of Five Star.
Prior to the Spin-Off, NPDC was a wholly-owned subsidiary of the Company.
The Company and NPDC have entered into contracts that will govern certain
relationships between them. The Company and NPDC believe that these agreements
are at fair market value and are on terms comparable to those that would have
been reached in arm's-length negotiations had the parties been unaffiliated at
the time of the negotiations.
21
Certain of NPDC's executive officers are also executive officers of the
Company and remained on the Company's payroll. The executive officers will not
receive any salary from NPDC; however, they will provide NPDC with management
services under a management agreement between the Company and NPDC. The Company
charges NPDC a management fee to cover an allocable portion of the compensation
of these officers, based on the time they spend providing services to NPDC, in
addition to an allocable portion of certain other corporate expenses.
In connection with the Spin-Off, NPDC also entered into a separate
management agreement with the Company pursuant to which NPDC provides certain
general corporate services to the Company. Under this management agreement, NPDC
charges the Company a management fee to cover an allocable portion of the
compensation of its employees, based on the time they spend providing services
to the Company, in addition to an allocable portion of corporate overhead
related to services performed for the Company and its subsidiaries.
Both management fees are paid quarterly. Any disagreements over the amount
of such fees are subject to arbitration. Each of the management agreements has
an initial term of three years and, after two years, is terminable by either the
Company or NPDC, upon six months' prior written notice.
NPDC was included in the Company's consolidated income tax group and NPDC's
tax liability was included in the consolidated federal income tax liability of
the Company until the time of the Spin-Off. A tax sharing agreement provides for
tax sharing payments between the Company and NPDC for periods prior to the
Spin-Off, so that NPDC is generally responsible for the taxes attributable to
its lines of business and entities comprising it and the Company is generally
responsible for the taxes attributable to its lines of business and the entities
comprising it.
The Company and NPDC agreed that taxes related to intercompany transactions
that were triggered by the Spin-Off are generally allocated to the Company. The
Company and NPDC agreed that joint non-income tax liabilities are generally
allocated between the Company and NPDC based on the amount of such taxes
attributable to each group's line of business. If the line of business with
respect to which the liability is appropriately associated cannot be readily
determined, the tax liability is allocated to the Company.
Under the distribution agreement relating to the Spin-Off, the Company and
NPDC each agreed that neither would take any action that might cause the
Spin-Off of NPDC to not qualify as a tax-free distribution. Should one party
take an action which causes the Spin-Off not to so qualify, then that party
would be liable to the other for any taxes incurred by the other from the
failure of the Spin-Off to qualify as a tax-free distribution.
In the second quarter of 2003, Valera completed a private placement offering
pursuant to which Valera raised approximately $12.0 million in gross proceeds
from the sale of Series B convertible preferred stock. As part of such
transaction, the Company was granted an option until March 31, 2004 (with a
closing by June 30, 2004), to purchase up $5 million of the Series B convertible
preferred stock at the offering price of $0.725 per share, which was
subsequently verbally extended to June 30, 2004. On June 30, 2004, the Company
transferred a portion of its option to certain funds of Pequot Capital
Management ("Pequot"), which exercised such option and purchased from Valera
3,448,276 shares of Series B convertible preferred stock for $0.725 per share,
and the balance of the option expired unexercised. At the time of such
transaction, Pequot owned approximately 5.2% of the Company's common stock based
on its then most recent Schedule 13G. Pequot currently owns less than 5% of the
Company's common stock based on its most recent 13G. In consideration of such
transfer, Pequot granted the Company an option until October 28, 2004 to
purchase up to 2,068,966 shares of Series B convertible preferred stock owned by
them for prices ranging from $0.725 to $0.7685 per share. This option was
transferred to NPDC in the Spin-Off. NPDC exercised such option on October 28,
2004 at a price of $0.7685 per share, for an aggregate exercise price of
$1,590,000.
On November 12, 2004, NPDC entered into an agreement to borrow approximately
$1,022,000 from Bedford Oak Partners, which is controlled by Harvey P. Eisen, a
director of the Company, and approximately $568,000 from Jerome I. Feldman, who
is Chairman and Chief Executive Officer of the Company, to exercise NPDC's
option to purchase Series B Convertible Preferred shares of Valera. The loans
bore interest at 6% per annum, matured on October 31, 2009, and were secured by
all shares of Valera owned by NPDC, including the purchased shares. The loans
were required to be prepaid out of the proceeds received from the sale of the
purchased shares or from any additional capital contribution received by NPDC
from the Company out of proceeds received by the Company from its claims
relating to the Learning Technologies acquisition. Bedford Oak Partners and
Jerome I. Feldman are entitled to receive 50% of any profit received by NPDC
from the sale of the Valera purchased shares.
22
In connection with the Spin-off, the Company agreed to make an additional
capital contribution to NPDC in an amount equal to the first $5 million of any
proceeds (net of litigation expenses and taxes incurred, if any), and 50% of any
proceeds (net of litigation expenses and taxes incurred, if any) in excess of
$15 million, received by the Company from its claims relating to the Learning
Technologies acquisition. The Company has received $13.7 million of net proceeds
from such claims and, pursuant to such agreement, the Company made a $5 million
additional capital contribution to NPDC. On January 11, 2005, NPDC prepaid the
loans, including accrued interest, to Bedford Oak Partners and Jerome I. Feldman
out of such proceeds.
Jerome I. Feldman, the Company's Chairman and Chief Executive Officer is
also Chairman and Chief Executive Officer of NPDC. Scott N. Greenberg, the
Company's President and Chief Financial Officer is a director and the Chief
Financial Officer of NPDC. Andrea D. Kantor, the Company's Vice President and
General Counsel, is the Vice President and General Counsel of NPDC. Harvey P.
Eisen, a director of the Company is also a director of NPDC.
EQUITY COMPENSATION PLAN INFORMATION
The following is information as of December 31, 2004 about shares of Company
Common Stock that may be issued upon the exercise of options, warrants and
rights under the Company's Non-Qualified Stock Option Plan, which were not
approved by security holders, and 2003 Incentive Stock Plan, which was approved
by security holders. For a description of the material terms of the Company's
Non-Qualified Stock Option Plan and the Company's 2003 Incentive Stock Plan, see
Note 14 to the Notes to the Consolidated Financial Statements included in the
Company's Annual Report for the year ended December 31, 2004.
Number of securities Weighted average Number of securities
Plan category to be issued upon exercise price of remaining available for
exercise of outstanding options, future issuance under
outstanding options, warrants and rights equity compensation
warrants and rights plans (excluding
securities reflected in
column (a))
(a) (b) (c)
--------------------------- -- ---------------------- -- ----------------------- -- -------------------------
--------------------------- -- ---------------------- -- ----------------------- -- -------------------------
Equity compensation plans
approved by security
holders 0 - 2,000,000
--------------------------- -- ---------------------- -- ----------------------- -- -------------------------
--------------------------- -- ---------------------- -- ----------------------- -- -------------------------
Equity compensation plans
not approved by security
holders 1,821,829(i) $4.73(i) 1,366,297(ii)
--------------------------- -- ---------------------- -- ----------------------- -- -------------------------
--------------------------- -- ---------------------- -- ----------------------- -- -------------------------
Total 1,821,829 $4.73 3,366,297
--------------------------- -- ---------------------- -- ----------------------- -- -------------------------
(i) Does not include warrants to purchase 300,000 shares of Common Stock issued
to a financial consulting firm at an exercise price of $3.21 per share and
warrants to purchase 937,500 shares of Common Stock issued and sold to four
Gabelli funds in conjunction with the Company's 6% Conditional Subordinated
Notes due 2008 at an exercise price of $6.14 per share. (ii) Does not include
shares of Common Stock that may be issued to directors of the Company as
director's fees. See "Election of Directors - Directors Compensation."
23
PERFORMANCE GRAPH
The following table compares the performance of the Common Stock for the
periods indicated with the performance of the Education and Training Services
and the NYSE Market Index assuming $100 were invested on December 31, 1999 in
the Common Stock, the Education and Training Services and the NYSE Market Index.
Values are as of December 31 of the specified year assuming that all dividends
were reinvested:
[OBJECT OMITTED]
Base Period
Company/Index Name Dec 1999 Dec 2000 Dec 2001 Dec 2002 Dec 2003 Dec 2004
------------------------------------ --------------- ----------- ----------- ----------- ----------- -----------
GP Strategies $100.00 $ 70.42 $ 62.04 $ 82.45 $130.61 $121.63
------------------------------------ --------------- ----------- ----------- ----------- ----------- -----------
Education & Training Services 100.00 159.16 174.72 186.06 306.99 324.28
------------------------------------ --------------- ----------- ----------- ----------- ----------- -----------
NYSE Market Index 100.00 102.38 93.26 76.18 98.69 111.45
------------------------------------ --------------- ----------- ----------- ----------- ----------- -----------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of 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 securities, to file reports of ownership and changes in ownership with
the SEC and the NYSE, and to furnish such reports to the Company.
Based solely on a review of copies of such reports for 2004, the Company
believes that during 2004, all reports applicable to its officers, directors and
greater than 10% beneficial owners were filed on a timely basis.
CODE OF BUSINESS CONDUCT AND ETHICS
The Company has adopted a Code of Ethics for Senior Financial Officers of
the Company and its subsidiaries and a Conduct of Business Policy for directors,
officers and employees of the Company and its subsidiaries. The Code of Ethics
and Conduct of Business Policy is available on the Company's website at
www.gpstrategies.com under Corporate Governance. It is the Company's intention
to disclose any waivers of such Code or Ethics or Conduct of Business Policy on
24
the Company's website at www.gpstrategies.com. The Company will also provide a
copy of such Code of Ethics and Conduct of Business Policy to any person upon
written request made to the Company's Secretary in writing to the following
address: GP Strategies Corporation, Attn: Secretary, 777 Westchester Avenue,
White Plains, NY 10604, with a copy to GP Strategies Corporation, General
Counsel at the same address.
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has recommended, and the Board of Directors has
selected, the firm of KPMG, an independent registered public accounting firm, to
serve as independent auditors for the Company and its subsidiaries for the year
ending December 31, 2005. KPMG has audited the accounts of the Company since
1970. KPMG has no financial interest in the Company and neither it nor any
member or employee of the firm has had any connection with the Company in the
capacity of promoter, underwriter, voting trustee, director, officer or
employee. The stockholder's ratification of the appointment of KPMG will not
impact the Audit Committee's responsibility pursuant to its charter, to appoint,
replace and discharge the independent auditors. In the event the stockholders
fail to ratify this selection, the matter of the selection of independent
auditors will be reconsidered by the Board of Directors.
A representative of KPMG is expected to be present at the Annual Meeting,
will have the opportunity to make a statement if he so desires and is expected
to be available to respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the Company's proxy
statement for the 2006 Annual Meeting of Stockholders provided they are received
by the Company no later than November 30, 2005 (or, if the date of the 2006
Annual Meeting of Stockholders is changed by more then 30 days from the date of
the 2005 Annual Meeting of Stockholders, a reasonable time before the Company
begins to print and mail its proxy materials for the 2006 Annual Meeting of
Stockholders) and are otherwise in compliance with applicable SEC regulations.
In addition to the above requirements, the Company's By-laws provide that any
stockholder wishing to nominate a candidate for director or to propose other
business at an annual meeting of stockholders of the Company must give written
notice that is received by the Secretary of the Company not less than 90 days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders (no later than January 26, 2006 with respect to the 2006 Annual
Meeting of Stockholders); provided that in the event that the annual meeting is
called for a date that is not within 30 days before or after such anniversary
date, such notice must be received not later than the close of business on the
tenth day following the day on which public disclosure of the date of the annual
meeting was first made. Such notice must provide certain information specified
in the Company's By-laws. Copies of the Company's By-laws are available to
stockholders without charge upon request to the Company's Secretary at the
Company's address set forth above.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31, 2004,
which is not a part of the proxy soliciting materials, is being mailed to the
Company's stockholders together with this Proxy Statement.
GENERAL
So far as is now known, there is no business other than that described above
to be presented for action by the stockholders at the meeting, but it is
intended that the proxies will be voted upon any other matters and proposals
that may legally come before the meeting and any adjournments thereof in
accordance with the discretion of the persons named therein.
COST OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. It is
expected that the solicitations will be made primarily by mail, but employees or
representatives of the Company may also solicit proxies by telephone and in
person, and arrange for brokerage houses and other custodians, nominees and
fiduciaries to send proxy material to their principals at the expense of the
Company.
Lydia M. DeSantis
Secretary
25
GP STRATEGIES CORPORATION
COMMON STOCK Annual Meeting of Stockholders PROXY
To Be Held April 26, 2005
This proxy is solicited on behalf of the Board of Directors
Revoking any such prior appointment, the undersigned, a stockholder of
GP Strategies Corporation, hereby appoints Jerome I. Feldman and Scott N.
Greenberg, and each of them, attorneys and agents of the undersigned, with full
power of substitution, to vote all shares of the Common Stock and Class B Stock
of the undersigned in said Company at the Annual Meeting of Stockholders of said
Company to be held at the Sheraton Columbia Hotel, 10207 Wincopin Circle,
Columbia, Maryland on April 26, 2005, at 10:00 a.m., local time, and at any
adjournments thereof, as fully and effectually as the undersigned could do if
personally present and voting, hereby approving, ratifying and confirming all
that said attorneys and agents or their substitutes may lawfully do in place of
the undersigned as indicated below.
This proxy when properly executed will be voted as directed. If no
direction is indicated, this proxy will be voted For proposals (1) and (2).
1. Election for Directors: Harvey P. Eisen, Jerome I. Feldman, Marshall S.
Geller, Scott N. Greenberg, Scott R. Peppet, Richard C. Pfenniger, Jr.,
Ogden R. Reid and Matthew Zell.
For Withhold For All Except
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below)
2. To ratify the Board of Directors' appointment of KPMG LLP, an
independent registered public accounting firm, as the Company's
independent auditors for the fiscal year ending December 31, 2005.
For Against Abstain
3. Upon any other matters which may properly come before the meeting or any
adjournments thereof.
Please sign exactly as name appears below.
Dated , 2005
-------------------------------------
Signature
Signature if held jointly
Please mark, sign, date and return the proxy card promptly using the
enclosed envelope. When shares are held by joint tenants both should
sign. When signing as attorney, as executor, administrator, trustee or
guardian, please give full title as such. If signer is 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.