ScheduleSCHEDULE 14A
(Rule 14a-101)
Information Required in Proxy StatementINFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the registrant /X/[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
/ /[ ]
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
Frontline Communications Corporation
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Recipient)
Payment of Filing Fee (Check the appropriate box):
/X/[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:
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(2) Aggregate number of securities to which transaction applies:
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(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 Itit was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
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/ /- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
/ /- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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FRONTLINE COMMUNICATIONS CORPORATION
One Blue Hill Plaza
P.O. Box 1548
Pearl River, New York 10965
May 22, 20002002
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of Frontline Communications Corporation (the "Company") which will be held on
ThursdayWednesday, June 22, 200026, 2002 at 10:0011:30 A.M. at The Empire Pavilion, Holiday Inn, 3
Executive Blvd., Suffern,the Board Room of the American Stock
Exchange, 86 Trinity Place, New York, 10901.New York 10006.
The Notice of Annual Meeting and Proxy Statement which follow describe
the business to be conducted at the meeting.
Your Board of Directors unanimously believes that (i) the election of the
nominees set forth in the Proxy Statement as directors; and (ii) the approval of an amendment to the Company's
1997 Stock Option Plan to increase the number of shares reserved for issuance
thereunder aredirectors is in the best interests
of the Company and its stockholders and, accordingly, recommends a vote "FOR"
the foregoing proposalsnominees on the enclosed proxy card.
Whether or not you plan to attend the meeting in person, it is
important that your shares be represented and voted. After reading the enclosed
Notice of Annual Meeting and Proxy Statement, may I urge you to complete, sign,
date and return the enclosed proxy card in the envelope provided. If the address
on the accompanying material is incorrect, please advise our Transfer Agent,
American Stock Transfer & Trust Company in writing, at 40 Wall Street,59 Maiden Lane, New York,
New York 10005.10038.
Your vote is very important, and we will appreciate a prompt return of
your signed proxy card. We hope to see you at the meeting and appreciate your
continued support.
Sincerely yours,
Stephen J. Cole-Hatchard
Chief Executive Officer
FRONTLINE COMMUNICATIONS CORPORATION
One Blue Hill Plaza
P.O. Box 1548
Pearl River, New York 10965
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 22, 200026, 2002
--------------------
To the Stockholders of FRONTLINE COMMUNICATIONS CORPORATION.:
NOTICE IS HEREBY GIVEN that the Annual Meeting ("Annual Meeting") of
Stockholders of Frontline Communications Corporation (the "Company") will be
held on June 22, 2000,26, 2002, at 10:0011:30 A.M. local time at The Empire Pavilion, Holiday
Inn, 3 Executive Blvd., Suffern,the Board Room, American
Stock Exchange, 86 Trinity Place, New York, 10901New York 10006 for the following
purposes:
1. To elect fourfive directors to hold office until the next Annual Meeting
of Stockholders and until their respective successors have been duly elected and
qualified; 2. To consider and
vote on a proposal to approve an amendment to the
Company's 1997 Stock Option Plan to increase the number of shares of Common
Stock reserved for issuance thereunder from 1,400,000 to 2,000,000; and
3.2. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on May 18, 200020, 2002
are entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors,
Stephen J. Cole-Hatchard
Chief Executive Officer
May 22, 20002002
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IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING:
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED FOR THAT PURPOSE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE
PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND
EXERCISE THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
FRONTLINE COMMUNICATIONS CORPORATION
One Blue Hill Plaza
P.O. Box 1548
Pearl River, New York 10965
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 22, 200026, 2002
This proxy statement (the "Proxy Statement") is furnished in connection
with the solicitation of proxies by the Board of Directors of Frontline
Communications Corporation (the "Company") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Thursday,Wednesday, June 22, 2000,26, 2002,
including any adjournment or adjournments thereof, for the purposes set forth in
the accompanying Notice of Meeting. The Annual Meeting will be held at The
Empire Pavilion, Holiday Inn, 3 Executive Blvd., Suffern, New York 10901.
Management intends to mail this proxy statement and the accompanying
form of proxy to stockholders on or about May 24, 2000.2002.
Proxies in the accompanying form, duly executed and returned to the
management of the Company and not revoked, will be voted at the Annual Meeting.
Any proxy given pursuant to such solicitation may be revoked by the stockholder
at any time prior to the voting of the proxy by a subsequently dated proxy, by
written notification to the Secretary of the Company, or by personally
withdrawing the proxy at the Annual Meeting and voting in person.
The address and telephone number of the principal executive offices of
the Company are: One Blue Hill Plaza, P.O. Box 1548, Pearl River, New York
10965, Telephone No.: (914)(845) 623-8553.
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on May 18, 200020, 2002
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
As of the Record Date, there were issued and outstanding 5,666,0229,194,551 shares of the
Company's Common Stock, $.01 par value per share (the "Common Stock"). Each
share of Common Stock entitles the holder to one vote on each matter submitted
to a vote at the Annual Meeting.
VOTING PROCEDURES AND PROXY INFORMATION
The directors will be elected by the affirmative vote of a plurality of
the shares of Common Stock present in person or represented by proxy at the
Annual Meeting, provided a quorum exists. A quorum is established if, as of the
Record Date, at least a majority of the combined outstanding shares of Common Stock are
present in person or represented by proxy at the Annual Meeting.
Adoption of the amendment to the Company's 1997 Stock Option Plan requires the
affirmative vote of a majority of the shares of Common Stock present in person
or represented by proxy and entitled to vote on the matter at the Annual
Meeting, provided a quorum exists. All other
matters at the meeting will be decided by the affirmative vote of a majority of
the shares of Common Stock present in person or represented by proxy at the
meeting and entitled to vote on the subject matter, provided a quorum exists.
Votes will be counted and certified by one or more Inspectors of Election who
are expected to be employeeseither an employee of the
-1-
Company, or itsa representative of the Company's outside counsel or a representative
of American Stock Transfer & Trust Company, the Company's transfer agent.
In accordance with Delaware law, abstentions and "broker non-votes"
(i.e., proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote shares as to a matter with respect to which the brokers or nominees do not
have discretionary power to vote) will be treated as present for purposes of
determining the presence of a quorum. For purposes of determining approval of a
matter presented at the meeting, abstentions will be deemed present and entitled
to vote and will, therefore, have the same legal effect as a vote "against" a
matter presented at the meeting. Broker non-votes will be deemed not entitled to
vote on the subject matter as to which the non-vote is indicated. Abstentionsindicated and broker non-votes will,
therefore, have no effect on the election of directors.that particular matter.
The enclosed proxies will be voted in accordance with the instructions
thereon. Unless otherwise stated, all shares represented by such proxy will be
voted as instructed. Proxies may be revoked as noted above.
The entire cost of soliciting proxies, including the costs of
preparing, assembling, printing and mailing this Proxy Statement, the proxy and
any additional soliciting material furnished to stockholders, will be borne by
the Company. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy materials to the
beneficial owners of stock, and such persons may be reimbursed for their
expenses by the Company. Proxies may also be solicited by directors, officers or
employees of the Company in person or by telephone, telegram or other means. No
additional compensation will be paid to such individuals for these services.
ELECTION OF DIRECTORS
At this year's Annual Meeting, fourfive directors will be elected to hold
office for a term expiring at the Annual Meeting of Stockholders to be held in
2001.2003. It is the intention of the Board of Directors to nominate Stephen J.
Cole-Hatchard, Nicko Feinberg, William A. Barron, Joseph V. Donahue and Ronald
C. Signore and William A. Barron as directors. Each director will be elected to serve until a
successor is elected and qualified or until the director's earlier resignation
or removal.
At this year's Annual Meeting, the proxies granted by stockholders will
be voted individually for the election, as directors of the Company, of the
persons listed below, unless a proxy specifies that it is not to be voted in
favor of a nominee for director. In the event any of the nominees listed below
shall be unable to serve, it is intended that the proxy will be voted for such
other nominees as are designated by the Board of Directors. Each of the persons
named below has indicated to the Board of Directors that he will be available to
serve.
The Board of Directors recommends that stockholders vote FOR the
election of the nominees.
Following is information with respect to the nominees for directors:
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Stephen J. Cole-Hatchard, 42,44, has been Chairman of the Board,and Chief Executive
Officer and President of the Company since August 1997.1997 and was President of the Company from
August 1997 to July 2001. Mr. Cole-Hatchard was Vice President of Finance of the
Company from February 1997 to August 1997 and has been a director of the Company
since February 1997. From
1993Prior to 1996,joining the Company, Mr. Cole-Hatchard was Chief
Financial Officer for Hudson Technologies, Inc., a refrigerant services company
engagedspecializing in the salerecovery and reclamation of
refrigerantsdecontamination services, from 1993 to 1996 and servicing of commercial air conditioning and refrigerant
systems. A 1989 cum laude graduate of Pace Law School, Mr. Cole-Hatchard ishas
been a member of the bar of the State of New York.licensed attorney since 1988.
Nicko Feinberg, 28,30, founded the Company in 1995 and has been a director
of the Company since November 1996 and President and Chief Operating Officer of
the Company since July 2001. He was Executive Vice President of Technology of
the Company sincefrom November 1996 to July 2001 and Chief Information Officer sincefrom
August 1997.1997 to July 2001. From April 1994 to October 1996, Mr. Feinberg was a
Sales Manager and, from April 1991 to April 1994, a Sales Account Executive for
Microage Computer Outlet, Inc., a company engaged in computer sales and training.
Ronald C. Signore, 39, has been a director of the Company since December
1997. Mr. Signore, a Certified Public Accountant licensed in New York and New
Jersey, has been a partner in the accounting firm of Robert Gray & Co., LLP, for
more than the past five years.sales.
William A. Barron, 50,52, has been a director of the Company since January
2000. Prior to retirement, Mr. Barron served as Vice President and Chief
Financial Officer of Hudson Technologies, Inc. from July 1996 to March 1997.
Prior to that, Mr. Barron was President and Chief Operating Officer for
Diagnostek, Inc., a pharmacy benefit management company, from May 1994 to
October 1995 and Executive Vice President and Chief Financial Officer for
Diagnostek, Inc. from March 1993 to April 1994. From February 2001 through July
2001, as part of the Company's restructuring program, Mr. Barron is currentlyserved as
interim Vice President and Chief Operating Officer of the Company.
Joseph V. Donahue, 55, has served as the President of Donahue &
Associates, a defendantcompany engaged in two related class actions, Freedman et. al. v. Value Health et. al.
and Bash et. al. v. Value Health, Inc. et. al., pendingcorporate finance services, since 1994. From
1982 to 1994, Mr. Donahue served as an Executive Vice President of Sterling &
Company, a private finance firm.
Ronald C. Signore, 41, has been a director of the Company since
December 1997. Mr. Signore has been a partner in the United States
District Court in Bridgeport, Connecticut arising fromaccounting firm of Gray,
Signore & Co., LLP, for more than the acquisitionpast five years.
All directors hold office until the next annual meeting of Diagnostek, Inc.stockholders
for the ensuing year or until their successors have been duly elected and
qualified. Officers are elected annually by Value Health, Inc. The plaintiffs' claims in these actions
include claims against certain former officersthe Board of Diagnostek, including Mr.
Barron, under Section 15Directors and serve at
the discretion of the Securities Act of 1933 and Sections 10(b) and 20
of the Securities Exchange Act of 1934, Rule 10b-5 of the Exchange Act and
certain attendant claims for common law fraud and negligent misrepresentation
and violations of state securities laws, relating to, among other things,
certain alleged inaccuracies regarding Diagnostek's financial condition
contained in the joint merger proxy statement and a joint press release relating
to the merger.Board.
Following is information with respect to certain of the Company's
officers:
Jodie L. Jackson, 46, has been our General Manager since September 1999
and our Chief Operations Officer since January 2000. From October 1996 to April
1999, Mr. Jackson served as a Chief Operating Officer at Paperless Adjudication
LLC, a developer of network solutions and proprietary software for processing
electronic transactions. From 1993 through September 1996, Mr. Jackson was the
Director of Marketing at Theratronics International Ltd., a manufacturer of
medical equipment, hardware and software.
Michael Olbermann, 43, has been Executive Vice President of Operations
since January 2000 and was a director of the Company from February 1997 until
May 2000. Mr. Olbermann was also Chief Operations Officer from September 1997
until December 1999 and Vice President of Business Development from February
1997 until September 1997. Mr. Olbermann has owned and operated Rock House
Construction Co., Inc., a company engaged in commercial and residential
construction, since 1986.
Vasan Thatham, 42,44, has been Vice President and Chief Financial Officer
of the Company since February 1999. Prior to joining the Company, fromFrom 1994 through 1998, Mr. Thatham was Vice
President and Chief Financial Officer of Esquire Communications Ltd., a company
engaged in providing legal support services.
From 1987 to 1993, Mr. Thatham was comptroller and ultimately Chief
Financial Officer of Strings Ltd., a specialty retail chain. From 1978 to 1987,
Mr. Thatham held various positions with Ernst & Young in Kuwait and KMPG Peat
Marwick in India. Mr. Thatham is a chartered accountant under the laws of India.
Amy Wagner-Mele, 32,34, has been Executive Vice President and General
Counsel of the Company since December 1998 and Secretary of the Company since
September 1998. She served as a Vice President and Corporate Counsel of the
Company sincefrom September 1998 and on April 28, 1999 was promoted
to
Executive Vice President, General Counsel. Prior-3-
December 1998. From September 1997 to joining the Company,August 1998, Ms. Wagner-Mele was an
associate with the New York officelaw firm of Winston & Strawn, an
international law firm, where she litigated securities actions, contract
disputes and appellate matters.Strawn. From 1993 to 1997, Ms.
Wagner-Mele was an associate with the law firm of Podvey, Sachs, Meanor,
Catenacci, Hildner & Cocoziello, P.C.
in
Newark, New Jersey, where she handled a variety of corporate litigation matters,
from filing through appeal. Ms. Wagner-Mele received her juris doctor from the
New York University School of Law in 1993. She received her bachelor's degree,
magna cum laude, from the University of Delaware in 1990. She is admitted to the
New York and New Jersey bars.
During the fiscal year ended December 31, 1999,2001, the Board of Directors
held five11 meetings. The meetings were attended by all of the directors, either
in person or by telephone. In addition, the Board took other action by unanimous written
consent in lieu of a meeting. The Company's Audit Committee, which had
twoDuring 2001, each member of the Board participated
in at least 75% of all Board and applicable committee meetings during the fiscal year ended December 31, 1999, isperiod
for which he was a director. The Company has an Audit Committee comprised of
Messrs. Barron, Crocker and Signore. Messrs Crocker and Signore are each an
"independent director" under the rules of the American Stock Exchange and Barron.the
National Association of Securities Dealers, Inc. Mr. Crocker is not standing for
re-election at this annual Meeting. It is intended that if Mr. Donahue is
elected as a director he will be appointed to serve on the Audit Committee. The
Audit Committee has a written charter that sets forth the duties and
responsibilities of its members, a copy of which was attached as Appendix A to
the Company's Definitive Proxy Statement on Schedule 14A filed with the
Securities and Exchange Commission on July 3, 2001. The Audit Committee
supervises the audit and financial procedures of the Company. The Company has a
Compensation/Stock Option committee of the Board comprised of Messrs.
Cole-Hatchard, Barron and Signore. The Company does not have a standing
nominating or compensation committeescommittee of the Board or committeesother committee performing similar
functions.
Audit Committee Report
In March 2002, the Audit Committee met with management to review and
discuss the audited financial statements. The Audit Committee also conducted
discussions with the Company's independent auditors, Goldstein Golub Kessler
LLP, regarding the matters required by the Statement on Auditing Standards No.
61. As required by Independence Standards Board Standard No. 1, "Independence
Discussion with Audit Committees," the Audit Committee has discussed with and
received the required written disclosures and confirming letter from Goldstein
Golub Kessler LLP, regarding its independence and has discussed with Goldstein
Golub Kessler LLP its independence. Based upon the review and discussions
referred to above, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2001.
The Audit Committee
William Barron
Stephen D. Crocker
Ronald Signore
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EXECUTIVE COMPENSATION
The following table sets forth compensation paid to ourthe Company's Chief
Executive Officer and ourits three other most highly compensated executive officers
(each of whom was serving at the end of ourthe fiscal year ended December 31, 1999)2001)
during the years ended December 31, 1997, 19981999, 2000 and 1999.2001. No other executive
officer of the Company received aggregate compensation which exceeded $100,000
during the year ended December 31, 1999. We refer to these2001. These four executive officers are
referred to as ourthe "Named Executives."Executives".
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------------------------- Securities
Other Annual UnderlyingCompensation Award
----------------------------- ---------------------
Name and Principal Position Year Salary Bonus Compensation(1) Options/SAR's(#)Salary($) Bonus($) Securities Underlying
- --------------------------- ---- ------ ----- --------------- ------------------------- -------- Options(#)
----------
Stephen J. Cole-Hatchard.................... 1999 $115,256 $0 $0 146,000(2)Cole-Hatchard......... 2001 114,423 67,725(1) 52,000
Chief Executive Officer 1998 34,8462000 117,692 34,500 25,000
1999 115,256 0 146,000
Nicko Feinberg................... 2001 109,518 49,175(2) 52,000
President 2000 110,000 24,500 27,000
1999 108,615 0 79,000(2)
1997 0 0 0
Nicko Feinberg.............................. 1999 $108,615 $0 $0 146,000(2)
Chief Information Officer 1998 79,500 0 0 20,000(2)
1997 29,000 0 0
Michael Olbermann........................... 1999 $108,615 $0 $0 146,000(2)
Chief Operations Officer 1998 95,100 0 0 20,000(2)
1997 49,730 0 0146,000
Amy Wagner-Mele............................. 1999 $108,615 $0 $0 26,000(2)Wagner-Mele.................. 2001 109,518 22,425(3) 52,000
Executive Vice President(3) 1998 29,169President 2000 110,000 32,000 12,000
1999 108,615 0 26,000
Vasan Thatham.................... 2001 109,518 15,051(4) 27,000
Chief Financial Officer 2000 110,000 18,500 12,000
1999 80,769 0 75,000(2)61,000
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(1) The aggregateIncludes $43,725 representing the fair market value on the date of benefits to be reportedthe
award of 291,500 shares of common stock issued under the "Other Annual
Compensation" column did not exceedCompany's 2001
Stock Incentive Plan.
(2) Includes $35,175 representing the lesser of $50,000 or 10%fair market value on the date of the
totalaward of annual salary and bonus for any named executive officer.
(2) Represents234,500 shares of common stock options grantedissued under our 1997the Company's 2001
Stock OptionIncentive Plan.
(3) Ms. Wagner-Mele joined us in September 1998.Includes $22,425 representing the fair market value on the date of the
award of 149,500 shares of common stock issued under the Company's 2001
Stock Incentive Plan.
(4) Includes $13,425 representing the fair market value on the date of the
award of 89,500 shares of common stock issued under the Company's 2001
Stock Incentive Plan.
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The following table sets forth information concerning stock options
granted in the year ended December 31, 19992001 to the Named Executive:
Option/SARExecutives:
Option Grants in Fiscal Year Ended December 31, 19992001
Individual Grants
---------------------------------
Number of
SharesSecurities
Underlying % of Total Underlying Options/SARsOptions
Options Granted to Exercise
Options/SARs Granted toEmployees Price Expiration
Name Granted Employees(#) in Fiscal Year ($/share)Share) Date
- ---- ------- -------------------- -------------- --------- ----
Stephen J. Cole-Hatchard........................ 20,000 2.18% $6.06 1/13/04
1,000 (ii) 0.11 5.65 9/20/04
25,000 2.73 4.75 9/30/04
100,000 (i) 10.91 5.25 12/22/04Cole-Hatchard 52,000 11.69% $0.22 3/31/06
Nicko Feinberg.................................. 20,000 2.18 6.06 1/13/04
1,000 (ii) 0.11 5.65 9/20/04
25,000 2.73 4.75 9/30/04
100,000 (i) 10.91 5.25 12/22/04
Michael Olbermann............................... 20,000 2.18 6.06 1/13/04
1,000 (ii) 0.11 5.65 9/20/04
25,000 2.73 4.75 9/30/04
100,000 (i) 10.91 5.25 12/22/04Feinberg 52,000 11.69% $0.22 3/31/06
Amy Wagner-Mele................................. 1,000 (ii) 0.11 5.65 9/20/04
25,000 2.73 5.25 12/22/04Wagner-Mele 52,000 11.69% $0.22 3/31/06
Vasan Thatham 27,000 6.07% $0.22 3/31/06
All of the options granted were exercisable at December 31, 1999 except for:
(i) 50,000 of the options are exercisable from 12/23/2000.
(ii) Options are exercisable from 9/21/2002.2001.
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The following table sets forth information concerning the number of
options owned by ourthe Named Executives, the value of any in-the-money unexercised
options as of December 31, 19992001 and information concerning options exercised by
ourthe Named Executives during the year ended December 31, 1999:2001:
Aggregated Option Exercises Andand Year-End Option/SAROption Values
Number of Securities
Underlying Value of Unexercised
Underlying Unexercised Options In-the-Money Options
Shares Options/SARs Options/SARs
Acquired on Value at December 31, 1999(#)2001 (#) at December 31, 1999($2001 ($)
Exercise*
Acquired on Realized -------------------------- -------------------------------------------------- ----------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---------------------------------------------------------------------------------------- ------------ --- ----------- ------------- ----------- -------------
Stephen J. Cole-Hatchard..............Cole-Hatchard 0 0 174,000 51,000 $637,762 $123,938
Nicko Feinberg........................301,000 1,000 0 0
115,000 51,000 331,670 123,938
Michael Olbermann.....................Nicko Feinberg 0 0 115,000 51,000 331,670 123,938244,000 1,000 0 0
Amy Wagner-Mele....................... 15,000 $161,250 50,000 36,000 190,650 183,618Wagner-Mele 0 0 149,000 1,000 0 0
Vasan Thatham 0 0 99,000 1,000 0 0
The*The year-end values for unexercised in-the-money options represent the
positive difference between the exercise price offor the options and the year-end
market value of ourthe Common Stock. An option is "in-the-money" if the year-end
fair market value of ourthe Common Stock exceeds the option exercise price. The
closing sale price of ourthe Common Stock on December 31, 19992001 was $7.688. The
value realized represents the positive spread between the exercise price of the
exercised options and the market price of our Common Stock on the date of
exercise.$.18.
Director Compensation
The Company does not currently pay its employeeNon-employee directors any fees for
attending Board meetings. The Company pays non-employee directors $3,000 per
annumreceived $7,500 in 2001 for attending Board
Meetings. In addition, pursuant to the Company's 2001 Stock Incentive Plan, the
Company granted awards of shares of its common stock to the following directors:
William Barron - 87,000; Steven Crocker - 50,000; Ron Signore - 120,832.
Employment Agreements
We haveThe Company has entered into three-year employment agreements with each
of Messrs. Feinberg Cole-Hatchard and OlbermannCole-Hatchard which provide for an annual base
compensation of not less than $88,000 $45,000, and $88,000,$45,000, respectively, and such
bonuses as the Board of Directors may, in its sole discretion, from time to time
determine. WeThe Company also entered into an employment agreement with Amy
Wagner-Mele pursuant to which Ms. Wagner-Mele agreed to serve as Corporate
Counsel at a salary of not less than $98,000 per annum. We also entered into an employment agreement with Jodie L.
Jackson pursuant to which Mr. Jackson agreed to serve as Chief Operations
Officer and General Manager at a salary of not less than $110,000 per annum. The employment
agreements with Messrs. Feinberg Cole-Hatchard and OlbermannCole-Hatchard expire in August 2000,2002, and
the employment agreementsagreement with Ms. Wagner-Mele and Mr.
Jackson expireexpires in September 2001 and September 2000, all2002. All are
subject to automatic successive one
-7-
year renewals unless either wethe Company or the employee givegives notice of
intention not to renew the agreement. TheWith the exception of Mr. Cole-Hatchard,
the employment agreements provide for employment on a full-time basis and
contain a provision that the employee will not compete or engage in a business
competitive with ourthe Company's current or anticipated business during the term
of the employment agreement and for a period of two years thereafter. We haveThe
Company has entered into a month-to-month employment agreement with Mr. Thatham
whichthat provides for a base salary at a rate of $95,000 per year.
All of the employment agreements provide for each of the employees to
be paid additional compensation equal to 295% of their annual base salary in the
event of a change of ownership or effective control of the Company (as defined
in the agreements).
VOTING SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of May 18,In November 2000, relating to the beneficial ownership of shares of Common Stock by: (i) each
person or entity who is knownemployment agreements with Messrs.
Olbermann and Jackson were terminated by the Company to own beneficially five percent or
more of the outstanding Common Stock; (ii) each of the Named Executives; (iii)
each of the Company's directors; and (iv) all directors and executive officers
of the Company as a group.
Unless otherwise indicated, the address of each beneficial owner is care of
Frontline Communications Corporation, One Blue Hill Plaza, 7th Floor, Pearl
River, New York 10965. Unless otherwise indicated, we believe that all persons
named in the following table have sole voting and investment power with respect
to all shares of Common Stock that they beneficially own.
Number of Shares Percentage of Shares
Name and Address of Beneficial Owner Beneficially Owned Beneficially Owned
- ------------------------------------ ------------------ ------------------
Stephen J. Cole-Hatchard..................................................... 371,000 6.4%
Nicko Feinberg............................................................... 371,000 6.4
Michael Olbermann............................................................ 303,000 5.2
Amy Wagner-Mele.............................................................. 65,000 1.1
Ronald Signore............................................................... 94,864 1.6
William Barron............................................................... 10,000 0.2
All directors and executive officers as a group (seven persons).............. 1,254,864 20.4%
- ------------------
* Less than 1%.
The shares beneficially owned by Mr. Cole-Hatchard include 144,000 shares
held by the Cole-Hatchard Family Limited Partnership, of which Mr. Cole-Hatchard
is the general partner, and options to purchase 174,000 shares of Common Stock.
This does not include 20,000 shares held by Mr. Cole-Hatchard's mother and
brother and warrants to purchase 64,000 shares held by Mr. Cole-Hatchard's
mother.
The shares beneficially owned by Mr. Feinberg and Mr. Olbermann each includes
115,000 shares of Common Stock which may be purchased under immediately
exercisable options.
The shares beneficially owned by Ms. Wagner-Mele include 50,000 shares of
Common Stock which may be purchased under immediately exercisable options.
The shares beneficially owned by Mr. Signore include shares issuable upon the
exercise of (1) warrants to purchase 41,664 shares of Common Stock and (2)
immediately exercisable options to purchase 50,000 shares of Common Stock.
The shares beneficially owned by Mr. Barron are 10,000 shares of Common Stock
which may be purchased under immediately exercisable options.
The shares beneficially owned by all directors and executive officers as a
group include options and warrants to purchase an aggregate of 625,664 shares of
Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 1997, Messrs. Nicko Feinberg and Stephen J. Cole-Hatchard, two of
our current officers and directors, and Mr. Michael Char, a former officer and
director, exchanged their interests in the three predecessor companies to whose
business we succeeded for promissory notes in the principal amounts of $141,800,
$66,800 and $163,537. This indebtedness included $21,737 and $35,000 of advances
previously made to us by Messrs. Char and Cole-Hatchard. The promissory notes
were issued to Messrs. Feinberg, Char and Cole-Hatchard in partial consideration
of their efforts in founding the predecessor companies. In May 1998, we repaid
all outstanding indebtedness to Mr. Char and $20,000 of indebtedness to each of
Messrs. Cole-Hatchard and Feinberg. The balance of indebtedness owed to Messrs.
Cole-Hatchard and Feinberg of $46,800 and $121,800 bears interest at the rate of
8% per annum and is payable on demand.
In August 1997, we borrowed $60,000 from Mr. Cole-Hatchard, which
indebtedness bore interest at the rate of 9.25% per annum. We repaid $30,000 of
this indebtedness to Mr. Cole-Hatchard in December 1997 and the balance directly
to Mr. Cole-Hatchard's lender in May 1998.
In February 1997, we issued 256,000 shares of our Common Stock to each of
Messrs. Char, Feinberg and Cole-Hatchard, and 188,000 shares of our Common Stock
to Mr. Olbermann in consideration of $.01 per share. In December 1997, we issued
100,000 shares of our Common Stock to Ronald Shapss, a former director, in
consideration of $.01 per share.
Mr. Cole-Hatchard's mother and brother purchased 12,000 and 8,000 shares of
our Common Stock at $2.00 per share pursuant to our May 1997 private placement.
William A. Barron, a director, purchased 20,000 shares of Common Stock in our
May 1997 private placement. The Rough Group, a general partnership of which Mr.
Signore, a director, is a general partner, purchased 16,000 shares of Common
Stock pursuant to our May 1997 private placement. In addition, Mr.
Cole-Hatchard's mother and the Rough Group purchased $40,000 and $85,000
principal amount of promissory notes pursuant to our December 1997 private
placement, and received warrants to purchase 64,000 and 196,000 shares of our
Common Stock at an exercise price of $5.00 per share. The notes were repaid in
May 1998. These purchases were all on terms and conditions identical to those of
the other investors in these private placements.
In August 1998, Mr. Cole-Hatchard borrowed $46,800 from us, evidenced by a
demand promissory note bearing interest at the rate of 8% per annum.
In September 1998, Mr. Feinberg borrowed $55,000 from us, evidenced by a
demand promissory note bearing interest at the rate of 8% per annum. In October
1998 and January 1999, Mr. Feinberg borrowed an additional $42,000 and $24,800
from us on the same terms.
In June 1999, Amy Wagner-Mele, an officer of the Company, exercised options
to purchase 15,000 shares of our Common Stock pursuant to our stock option plan
with a secured promissory note in the principal amount of $37,500. This note
bears interest at a rate of 6%, is due on June 1, 2002 and is secured by
personal assets of Ms. Wagner-Mele and the shares of our Common Stock that she
acquired.
Prior to December 31, 1999, the Company's Board of Directors passed a
resolution whereby $168,000 of notes payable to Messrs. Cole-Hatchard and
Feinberg were offset with $168,000 of notes receivable from Messrs.
Cole-Hatchard and Feinberg. The financial statements for the year ended December
31, 1999 have been adjusted to reflect this transaction as if it had occurred on
December 31, 1999.
PROPOSAL I
AMENDMENT OF 1997 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES RESERVED FOR
ISSUANCE THEREUNDER FROM 1,400,000 TO 2,000,000
At the Annual Meeting, the Company's stockholders will be asked to
approve an amendment to the Company's 1997 Stock Option Plan to increase the
number of shares of Common Stock reserved for issuance under the plan from
1,400,000 to 2,000,000.
The Board believes that in order to enable the Company to continue to
attract and retain personnel of the highest caliber, provide incentive for
officers, directors, key employees and other key persons and continue to promote
the well-being of the Company, it is in the best interest of the Company and its
stockholders to provide to officers, directors, key employees, consultants and
other independent contractors who perform services for the Company, through the
granting of stock options, the opportunity to participate in the value and/or
appreciation in value of the Company's Common Stock. The Board has found that
the grant of options under the 1997 Stock Option Plan has proven to be a
valuable tool in attracting and retaining key employees. It believes that such
authority, in view of the substantial growth of the Company and need to continue
to grow, should be expanded to increase the number of options which may be
granted under the 1997 Stock Option Plan. The Board believes that such authority
will provide the Company with significant means to attract and retain talented
personnel and maintain current key employees.
Summary of themutual agreement.
1997 Stock Option Plan
In February 1997 the Board of Directors and stockholders of the Company
adopted the
1997 Stock Option Plan (the "Plan"), pursuant to which 1,400,000500,000 shares of Common Stock are currentlywere
reserved for issuance upon exercise of options. In June 2000, the Board of
Directors and the stockholders approved an amendment to increase to 2,000,000
the number of shares of Common Stock available for issuance upon exercise of
options under the 1997 Stock Option Plan. The Planstock option plan is designed to
serve as an incentive for retaining qualified and competent employees, directors
and consultants.
The Company's Board of Directors or a committee thereof,of the Board administers the 1997
Stock Option Plan and is authorized, in its discretion, to grant options thereunderunder
the stock option plan to all eligible employees, of the Company, including officers, and directors
(whether or not employees) of, and consultants to, the Company.consultants. The 1997 Stock Option Plan provides
for the granting of both "incentive stock options" (as defined in Section 422 of
the Internal Revenue Code of 1986, as amended) and non-qualified stock options.
Options can be granted under the Planstock option plan on such terms and at such
prices as determined by the Board of Directors or aits committee, thereof, except that the
per share exercise price of options will not be less than the fair market value
of the Common Stock on the date of grant. In the case of an incentive stock
option granted to a stockholder who owns stock of the Company possessing more than 10% of the
total combined voting power of all of the Company's classes of stock, ("10%
stockholder"), the per
share exercise price will not be less than 110% of suchthe fair market value.value on the
date of grant. The aggregate fair market value (determined on the date of grant)
of the shares covered by incentive stock options granted under the PlanCompany's
stock option plan that becomebecomes exercisable by a grantee forof the first time in any
calendar year is subject to a $100,000 limit.
Options granted under the 1997 Stock Option Plan will be exercisable
during the period or periods specified in each option agreement. Options granted
under the Planstock option plan are not exercisable after the expiration of ten10 years
from the date of grant (five years in the case of incentive stock options
granted to a stockholder owning stock possessing more than 10% stockholder)of the total
combined voting power of all of the Company's classes of stock) and are not
transferable other than by will or by the laws of descent and distribution.
As-8-
2001 Stock Incentive Plan
In June and July 2001, the Company's Board of Directors and
stockholders, respectively, adopted the Company's 2001 Stock Incentive Plan
("Incentive Plan") pursuant to which the grant of any or all of the Record Date, the Company has granted options to purchase 1,402,568
sharesfollowing
types of Common Stock (net of forfeitures) under the Plan at an exercise price
ranging from $2.00 to $8.50 per share. The grant of 2,568 of the options are
subject to stockholder approval of the amendment to the Plan.
The closing sale price of the Company's Common Stock on May 22, 2000 was
$1.3125.
The following table sets forth certain information regarding options to
purchase Common Stock issued (net of cancelled options) since the inception of
the Plan to each of the Named Executives who participated in the Plan, all
current executive officers as a group, all current directors who are not
executive officers as a group and all employees, including employees who are not
executive officers, who participated in the Plan as a group. No associate of any
director or officer has received options under the Plan.
NUMBER OF SECURITIES
UNDERLYING OPTIONS
------------------
Stephen J. Cole-Hatchard
Chief Executive Officer 225,000
Nicko Feinberg 166,000
Chief Information Officer
Michael Olbermann 166,000
Executive Vice President of Operations
Amy Wagner-Mele 101,000
Executive Vice President
All current executive officers as a group (6 persons) 770,000
Non-employee directors as a group (2 persons) 60,000
All non-executive officer employees as a group (48 persons) 270,568
Certain Federal Income Tax Consequences of the 1997 Stock Option Plan
The following is a brief summary of the Federal income tax aspects of
grantsawards may be made under the 1997 Stock OptionIncentive Plan based upon statutes, regulations(collectively, "Awards"):
(i) stock options, (ii) restricted stock, (iii) deferred stock and interpretations(iv) other
stock-based awards. Awards may be granted singly, in effect oncombination, or in tandem,
as determined by the date hereof. This summary is not intendedadministrators of the Incentive Plan. A total of 1,800,000
shares of our common stock, subject to anti-dilution adjustment as provided in
the Incentive Plan, have been reserved for distribution pursuant to the
Incentive Plan. The maximum number of shares of common stock that may be exhaustive, and does not describe state or local tax consequences.
1. Incentive Stock Options. The participant will recognize no taxable
incomeissued
upon the grant or exercise of an Incentive Stock Option. Upon a
dispositionAward to any individual participant cannot exceed 500,000
shares during the term of the shares afterIncentive Plan.
The Incentive Plan can be administered by the laterCompany's Board of
Directors or a committee consisting of two years from the date of grant
and one year after the transferor more non-employee members of the
Board of Directors appointed by the Board. The Board or the committee will
determine, among other things, the persons to whom Awards will be granted, the
type of Awards to be granted, the number of shares subject to the participant, (i) the
participant will recognize the difference, if any, between the amount realizedeach Award and the
share price. The Board or the committee will also determine the term of each
Award, the restrictions or limitations thereon, and the manner in which each
such Award may be exercised or, if applicable, the extent and circumstances
under which common stock and other amounts payable with respect to an Award will
be deferred. Unless sooner terminated, the Incentive Plan will expire at the
close of business on June 20, 2011.
The Incentive Plan provides for the grant of both incentive stock
options and non-qualified stock options. The exercise price as long-term capital gainof an incentive
stock option or long-term capital loss (as
the case may be) if the shares are capital assets in his or her hands; and (ii)
the Companya non-qualified stock option will not qualify for any deduction in connection with the grant or
exercise of the options. The excess, if any, of the fair market value of the
shares on the date of exercise of an Incentive Stock Option over the exercise
price will be treated as an item of adjustment for his or her taxable year in
which the exercise occurs and may result in an alternative minimum tax liability
for the participant. In the case of a disposition of shares in the same taxable
year as the exercise where the amount realized on the disposition is less than the fair
market value of the shares underlying the option on the date of exercise, there will be no
adjustment since the amount treated as an item of adjustment, for alternative
minimum tax purposes,option is
limited to the excess of the amount realized on such
disposition overgranted, provided, however, that the exercise price which is the same amount included in regular
taxable income.
If Common Stock acquired upon the exercise of an Incentive Stockincentive stock Option
is disposed of priorgranted to the expirationa stockholder who possesses more than 10% of the holding periods described above,
(i) the participant will recognize ordinary compensation income in the taxable
yearcombined voting
power of disposition in an amount equal to the excess, if any,all classes of the lesserour stock may not be less than 110% of thesuch fair market
value. The aggregate fair market value of(determined at the shares on the date of exercise or the amount
realized on the disposition of the shares, over the exercise price paid for such
shares; and (ii) the Company will qualify for a deduction equal to any such
amount recognized, subject to the
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requirements of Section 162(m) of the Code and that the compensation be
reasonable. The participant will recognize the excess, if any, of the amount
realized over the fair market value of the shares on the date of exercise, if
the shares are capital assets in his or her hands, as short-term or long-term
capital gain, depending on the length of time that the participant held the
shares, and the Company will not qualify for a deduction with respect to such
excess.
Subject to certain exceptions for disability or death, if an Incentive
Stock Option is exercised more than three months following the termination of
the participant's employment, the option will generally be taxed as a
Non-Qualified Stock Option. See "Non-Qualified Stock Options."
2. Non-Qualified Stock Options. With respect to Non-Qualified Stock
Options (i) upon grant of the option, the participant will recognize no income;
(ii) upon exercise of the option (if the shares are not subject to a substantial
risk of forfeiture), the participant will recognize ordinary compensation income
in an amount equal to the excess, if any, of the fair market value of the shares
on the date of exercise over the exercise price, and the Company will qualify
for a deduction in the same amount, subject to the requirements of Section
162(m) of the Code and that the compensation be reasonable; (iii) the Company
will be required to comply with applicable Federal income tax withholding
requirements with respect to the amount of ordinary compensation income
recognized by the participant; and (iv) on a sale of the shares, the participant
will recognize gain or loss equal to the difference, if any, between the amount
realized and the sum of the exercise price and the ordinary compensation income
recognized. Such gain or loss will be treated as short-term or long-term capital
gain or loss if the shares are capital assets in the participant's hands
depending upon the length of time that the participant held the shares.
The approval of the proposed amendment to the Company's 1997 Stock Option
Plan requires the affirmative vote of a majorityis
granted) of the shares of common stock covered by an incentive stock option
granted under the Incentive Plan that become exercisable by a grantee for the
first time in any calendar year cannot exceed $100,000.
The Incentive Plan contains anti-dilution provisions authorizing
appropriate adjustments in certain circumstances. Shares of Common Stock presentsubject
to Awards which expire without being exercised or which are cancelled as a
result of the cessation of employment are available for further grants. Options
become exercisable in personsuch amounts, at such intervals and upon such terms and
conditions as the Board of Directors or representedthe committee provides.
Under the Incentive Plan, the Board or the committee may grant shares
of restricted Common Stock either alone or in tandem with other Awards.
Restricted and Deferred Stock awards give the recipient the right to receive a
specified number of shares of common stock, subject to such terms, conditions
and restrictions as the Board or the committee deems appropriate.
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Other Stock-Based Awards, which may include performance shares and
shares valued by proxy and entitled to vote on the matter at
the Annual Meeting, provided a quorum exists.
The Board believes that the Proposed Amendmentreference to the 1997 Stock Option
Plan will help the Company attract and retain qualified officers, directors and
key employees. Accordingly, the Board believes that the Amendment to the 1997
Stock Option Plan is in the best interestperformance of the Company or any parent or
subsidiary of the Company, may be granted under the Incentive Plan either alone
or in tandem with other awards.
VOTING SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record
Date, relating to the beneficial ownership of shares of Common Stock by (i) each
person or entity who is known by the Company to own beneficially 5% or more of
the outstanding Common Stock, (ii) each of the Company's directors, (iii) each
of the Named Executives, and unanimously
recommends(iv) all directors and executive officers of the
Company as a vote FOR its approval.
-15-group.
Number of Shares
Of Common Stock Percentage of Outstanding
Beneficially Common Stock
Name of Beneficial Owner Owned(1) Beneficially Owned
- ------------------------ -------- ------------------
Nicko Feinberg............................... 740,500(2) 7.8%
Stephen J. Cole-Hatchard..................... 1,065,718(3) 11.0%
Ronald Signore............................... 265,696(4) 2.8%
William Barron............................... 178,972(5) 1.9%
Stephen Crocker.............................. 100,000(6) 1.1%
Amy Wagner-Mele.............................. 304,500(7) 3.3%
Vasan Thatham................................ 194,500(8) 2.1%
All directors and executive officers as a group
(seven persons).............................. 2,849,886(9) 27.3%
- ------------
(1) The Company believes that all persons named in the table have sole voting
and investment power with respect to all shares of Common Stock
beneficially owned by them.
(2) Includes options to purchase 244,000 shares of Common Stock.
(3) Includes 159,650 shares held by the Cole-Hatchard Family Limited
Partnership, of which Mr. Cole-Hatchard is the general partner, options to
purchase 301,000 shares of Common Stock and 171,530 shares of Common Stock
issuable upon exercise of 50,450 shares of the Company's Series B Preferred
Stock.
(4) Includes warrants to purchase 41,664 shares of Common Stock and options to
purchase 100,000 shares of Common Stock.
-10-
(5) Includes options to purchase 87,000 shares of Common Stock and 680 shares
of Common Stock issuable upon conversion of 200 shares of the Company's
Series B Preferred Stock.
(6) Includes options to purchase 50,000 shares of Common Stock.
(7) Includes options to purchase 149,000 shares of Common Stock.
(8) Includes options to purchase 99,000 shares of Common Stock.
(9) Includes options and warrants to purchase 1,071,664 shares of Common Stock
and 172,210 shares of Common Stock issuable upon exercise of 50,650 shares
of the Company's Series B Preferred Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not Applicable
INDEPENDENT AUDITORS
On January 10, 2001, the Company dismissed BDO Seidman, LLP ("BDO") as
its principal independent accountant. Neither of BDO's reports on the financial
statements of the Company for the fiscal years ended December 31, 1998 or
December 31, 1999 contained an adverse opinion or a disclaimer of opinion, nor
was qualified or modified as to uncertainty, audit scope or accounting
principles. The decision to change accountants was recommended and approved by
the Audit Committee of the Company's Board of Directors, and approved by the
Company's Board of Directors. During the fiscal years ended December 31, 1998
and December 31, 1999 and during the period from January 1, 2000 through January
10, 2001, there were no disagreements with BDO on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure or any reportable event. On January 10, 2001 the Company engaged
Goldstein Golub Kessler LLP as the Company's principal independent accountant to
audit the financial statements of the Company for the year ended December 31,
2000.
Goldstein, Golub Kessler LLP are the Company's independent auditors who
reported on the financial statements of the Company for the fiscal year ended
December 31, 1999. It is currently anticipated that BDO Seidman2001. Goldstein Golub Kessler LLP will behas been selected by the Board of
Directors to examine and report on the financial statements of the Company for
the fiscal year ending December 31, 2000. Representatives2002. A representative of BDO
SeidmanGoldstein Golub Kessler
LLP areis expected to be present at the Annual Meeting. TheyMeeting and will have the
opportunity to make a statement if they desirehe desires to do so, and areis expected to be
available to respond to appropriate questions.
Audit Fees. The aggregate fees billed by Goldstein Golub Kessler LLP
for professional services rendered for the audit of the Company's annual
financial statements for the fiscal year ended December 31, 2001 (the "2001
fiscal year") and other services related to review of the
-11-
quarterly reports filed with the Securities and Exchange Commission totaled
approximately $60,000.
Goldstein Golub Kessler LLP has a continuing relationship with American
Express Tax and Business Services, Inc. ("TBS") from which it leases auditing
staff who are fulltime, permanent employees of TBS and through which its
partners provide non-audit services. As a result of this arrangement, Goldstein
Golub Kessler LLP has no full time employees and therefore, none of the audit
services performed were provided by permanent full-time employees of Goldstein
Golub Kessler LLP. Goldstein Golub Kessler LLP manages and supervises the audit
and audit staff, and is exclusively responsible for the opinion rendered in
connection with its examination.
Financial Information Systems Design and Implementation Fees. There
were no fees billed to the Company by Goldstein Golub Kessler LLP for
professional services related to financial information systems design and
implementation by Goldstein Golub Kessler LLP for the 2001 fiscal year.
All Other Fees. Other fees billed for services rendered by Goldstein
Golub Kessler LLP to the Company were $4,000 relating to services performed in
connection with certain SEC filings other than the Company's Annual and
Quarterly Reports . Fees of $9,400 were billed to the Company for tax
preparation services rendered to the Company by TBS.
The Audit Committee has considered whether the provision of these
non-audit services by Goldstein Golub Kessler LLP and TBS is compatible with the
maintaining of Goldstein Golub Kessler LLP's independence.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Stockholders who wish to present proposals appropriate for
consideration at the Company's Annual Meeting of Stockholders to be held in 20012003
must (i) submit the proposal in proper form and in accordance with applicable SEC
regulations to the Company at its address set forth on the first page of this
Proxy Statement not later than January 22, 2001 and (ii)
satisfy the conditions established by The Securities Exchange Commission and the
Company's by-laws for stockholder proposals2003 in order for the proposition to
be considered for inclusion in the Company's proxy statement and form of proxy
relating to such annual meeting. Any such proposals, as well as any questions
related thereto, should be directed to the Secretary of the Company.
After the January 22, 20012003 deadline, a stockholder may present a
proposal at the Company's 2001 Annual Meeting2003 annual meeting if it is submitted to the
Company's Secretary at the address set forth above no later than April 9, 2001.2003.
If timely submitted, in proper form, the stockholder may present the proposal at
the 2001 Annual Meeting2003 annual meeting, but the Company is not obligated to presentincluded the matter
in its proxy statement.
-12-
OTHER INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31,
19992001 IS BEING FURNISHED HEREWITH TO EACH STOCKHOLDER OF RECORD AS OF THE CLOSE
OF BUSINESS ON MAY 18, 2000.20, 2002. COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM
10-KSB WILL BE PROVIDED WITHOUTFOR A NOMINAL CHARGE UPON WRITTEN REQUEST TO:
FRONTLINE COMMUNICATIONS CORPORATION
ONE BLUE HILL PLAZA
P.O. BOX 1548
PEARL RIVER, NEW YORK 10965
ATTENTION: AMY WAGNER-MELE
The Board of Directors is aware of no other matters, except for those
incident to the conduct of the Annual Meeting, that are to be presented to
stockholders for formal action at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournments thereof, it
is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment.
By order of the Board of Directors,
Stephen J. Cole-Hatchard
Chief Executive Officer
May 22, 20002002
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FRONTLINE COMMUNICATIONS CORPORATION
One Blue Hill Plaza
P.O. Box 1548
Pearl River, New York 10965
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 22, 200026, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints STEPHEN J. COLE-HATCHARD and AMY
WAGNER-MELE and each of them, Proxies, with full power of substitution in each
of them, in the name, place and stead of the undersigned, to vote at the Annual
Meeting of Stockholders of Frontline Communications Corporation (the "Company")
on June 22, 200026, 2002, at The Empire Pavilion, Holiday Inn, 3 Executive Blvd.,
Suffern,the Board Room of the American Stock Exchange, 86 Trinity
Place, New York, 10901New York 10006 or at any adjournment or adjournments thereof,
according to the number of votes that the undersigned would be entitled to vote
if personally present, upon the following matters:
ELECTION OF DIRECTORS:
/ /
ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below).
/ / WITHHOLD AUTHORITY to vote for all nominees listed below.
Stephen J. Cole-Hatchard, Nicko Feinberg, William A. Barron, Joseph V. Donahue
and Ronald C. Signore
and William
A. Barron.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.)
- --------------------------------------------------------------------------------
(Continued and to be signed on reverse side)
1. Approval of Amendment to the Company's 1997 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE.
IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THOSE NOMINEES
AND THE
PROPOSALS LISTED ABOVE.
DATED: ________________________________, 20002002
Please sign exactly as name appears
hereon. When shares are held by
joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
a corporation, please sign in full
corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
---------------------------------------------------------------------
Signature
---------------------------------------------------------------------
Signature if held jointly
Please mark, sign, date and return this proxy card using the enclosed envelope.
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