SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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CoActive Marketing Group, Inc.
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
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COACTIVE MARKETING GROUP, INC.
75 Ninth Avenue
New York, New York 10011
-----------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
-----------------------------
The Annual Meeting of the Stockholders (the "Annual Meeting") of
CoActive Marketing Group, Inc. (the "Company") will be held at the Company's
principal executive offices, 75 Ninth Avenue, New York, New York 10011, at 10:00
a.m., local New York time, on September 28, 2006, to consider the following
matters:
(1) The election of four directors to hold office until the next
Annual Meeting of Stockholders and until their respective
successors are duly elected and qualified.
(2) The transaction of such other business as may properly come
before the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on August 10,
2006 as the record date for the Annual Meeting. Only stockholders of record of
the Company's Common Stock at the close of business on August 10, 2006 will be
entitled to notice of and to vote at the Annual Meeting or any adjournments or
postponements thereof. Shares can be voted at the Annual Meeting only if the
holder is present or represented by proxy.
The accompanying form of proxy is solicited by the Board of Directors
of the Company. Reference is made to the attached Proxy Statement for further
information with respect to the business to be transacted at the Annual Meeting.
Stockholders are cordially invited to attend the Annual Meeting.
Whether or not you expect to attend the Annual Meeting in person, please
complete, date and sign the accompanying proxy card and return it without delay
in the enclosed postage prepaid envelope. Your proxy will not be used if you are
present and prefer to vote in person or if you revoke the proxy.
By Order of the Board of Directors
/s/ ERWIN I. MEVORAH
--------------------------------------
Erwin I. Mevorah
Secretary
August 21, 2006
COACTIVE MARKETING GROUP, INC.
75 Ninth Avenue
New York, New York 10011
-------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 28, 2006
-------------------------------
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of CoActive Marketing Group, Inc., a
Delaware corporation (the "Company"), for use at the 2006 Annual Meeting of
Stockholders of the Company and for any adjournments or postponements thereof
(the "Annual Meeting") to be held at the Company's principal executive offices,
75 Ninth Avenue, New York, New York 10011, at 10:00 a.m., local New York time,
on September 28, 2006, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. A Board of Directors' proxy (the "Proxy") for
the Annual Meeting is enclosed, by means of which you may vote as to the
proposal described in this Proxy Statement.
All Proxies which are properly completed, signed and returned to the
Company prior to the Annual Meeting, and which have not been revoked, will be
voted in accordance with the stockholder's instructions contained in such Proxy.
In the absence of instructions, shares represented by such Proxy will be voted
FOR the election of the nominees of the Board of Directors for Director. The
Board of Directors is not aware of any business to be presented at the Annual
Meeting except the matters set forth in the Notice and described in this Proxy
Statement. If any other matters properly come before the Annual Meeting, the
persons named in the accompanying Proxy will vote on those matters in accordance
with their best judgment. A stockholder may revoke his or her Proxy at any time
before it is exercised by filing with the Secretary of the Company at its
principal executive offices at 75 Ninth Avenue, New York, New York 10011, either
a written notice of revocation or a duly executed Proxy bearing a later date, or
by attending in person at the Annual Meeting and expressing a desire to vote his
or her shares in person.
This Proxy Statement and the accompanying Notice of Annual Meeting of
Stockholders, Proxy and Annual Report on Form 10-K (including financial
statements) for the fiscal year ended March 31, 2006 ("Fiscal 2006"), are being
sent to stockholders on or about August 21, 2006.
1
VOTING SECURITIES
August 10, 2006 has been fixed as the record date for the determination
of stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof. As of that date, the Company had
outstanding 7,084,751 shares of Common Stock, $.001 par value, excluding
treasury shares. The presence, in person or by proxy, of stockholders entitled
to cast a majority of votes which stockholders are entitled to cast on a
particular matter at the Annual Meeting will constitute a quorum for the Annual
Meeting. Holders of Common Stock are entitled to one vote for each share owned
upon all matters to be considered at the Annual Meeting. Under Delaware law,
abstentions and broker non-votes are treated as present for the purpose of
determining a quorum present at the Annual Meeting; however, broker non-votes
will be considered not to represent voting power present at the Annual Meeting,
while abstentions will be considered to represent voting power present at the
Annual Meeting.
Directors will be elected by a plurality of the votes cast at the
Annual Meeting by the holders of shares of Common Stock present in person or
represented by proxy and entitled to vote on the election of Directors. Votes
withheld from the election of directors are excluded entirely from the vote and
will have no effect. There is no cumulative voting in the election of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of August 1, 2006
with respect to stock ownership of (i) those persons or groups known to the
Company to beneficially own more than 5% of the Company's outstanding Common
Stock, (ii) each of the Directors and nominees of the Company and the Company's
executive officers named in the summary compensation table, and (iii) the
Company's Directors and executive officers as a group. Unless otherwise
indicated, the named beneficial owner has sole voting and investment power with
respect to the shares.
<TABLE>
<CAPTION>
Percent
Amount and Nature of
Name and Address of Beneficial Owner of Beneficial Ownership(1) Class(1)
------------------------------------ -------------------------- --------
<S> <C> <C>
(i) Beneficial Owners of More Than 5% of the Common
Stock (Other Than Directors, Nominees and Executive
Officers)
John P. Benfield 765,278(2) 10.5%
c/o CoActive Marketing Group, Inc.
75 Ninth Avenue
New York, NY 10011
Donald A. Bernard 742,748(3) 10.2%
c/o CoActive Marketing Group, Inc.
75 Ninth Avenue
New York, NY 1011
Rutabaga Capital Management 640,517(4) 9.0%
64 Broad Street, 3rd Floor
Boston, MA 02109
(ii) Directors, Nominees and Executive Officers
Brian Murphy 637,500(5) 8.7%
c/o CoActive Marketing Group, Inc.
75 Ninth Avenue
New York, NY 10011
</TABLE>
2
<TABLE>
<CAPTION>
Percent
Amount and Nature of
Name and Address of Beneficial Owner of Beneficial Ownership(1) Class(1)
------------------------------------ -------------------------- --------
<S> <C> <C>
Thomas E. Lachenman 488,198(6) 6.8%
c/o Optimum Group LLC
9745 Mangham Drive
Cincinnati, OH 45215
Paul A. Amershadian 403,196(7) 5.5%
c/o CoActive Marketing Group, Inc.
75 Ninth Avenue
New York, NY 10011
Herbert M. Gardner 210,009(8) 2.9%
c/o CoActive Marketing Group, Inc.
75 Ninth Avenue
New York, NY 10011
John A. Ward, III 145,750(9) 2.0%
c/o CoActive Marketing Group, Inc.
75 Ninth Avenue
New York, NY 10011
Erwin I. Mevorah 100,000(10) 1.4%
c/o CoActive Marketing Group, Inc.
75 Ninth Avenue
New York, NY 10011
Marc C. Particelli 76,000(11) 1.1%
c/o CoActive Marketing Group, Inc.
75 Ninth Avenue
New York, NY 10011
James H. Feeney 30,000(12) *
c/o CoActive Marketing Group, Inc.
75 Ninth Avenue
New York, NY 10011
(iii) All Directors and Executive Officers as a 2,090,653(5)(6)(7)(8)(9) 26.7%
Group (8 persons) (10)(11)(12)
</TABLE>
* Less than 1%.
(1) All information was determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, based upon information
furnished by the persons listed or contained in filings made by them with
the Securities and Exchange Commission.
(2) Includes 225,000 shares of Common Stock issuable upon exercise of
immediately exercisable options.
3
(3) Includes 225,000 shares of Common Stock issuable upon exercise of
immediately exercisable options.
(4) Based solely on a Form 13F-HR/A filed with the SEC on July 27, 2006.
(5) Includes 237,500 shares of Common Stock issuable upon exercise of
immediately exercisable options.
(6) Includes 52,500 shares of Common Stock issuable upon exercise of
immediately exercisable options and 325,698 shares of Common Stock
registered in the name of OG Holding Corporation Liquidation Trust. Mr.
Lachenman is the trustee of OG Holding Corporation Liquidation Trust and
owns the entire interest of the trust in the shares of Common Stock held by
the trust.
(7) Includes 225,000 shares of Common Stock issuable upon exercise of
immediately exercisable options. Also includes 163,196 shares of Common
Stock pledged to the Company as security for loans from the Company in the
aggregate principal amount of $550,000. See "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS."
(8) Includes 40,766 shares of Common Stock issuable upon exercise of
immediately exercisable warrants, 73,125 shares of Common Stock issuable
upon exercise of immediately exercisable options, 10,000 shares of Common
Stock held in a qualified plan, and 46,299 shares of Common Stock held in
individual retirement accounts for the benefit of Mr. Gardner. Excludes (i)
23,766 shares of Common Stock held by Mr. Gardner's wife, as to which Mr.
Gardner disclaims any beneficial interest, and (ii) 4,750 shares of Common
Stock owned by the Gardner Family Foundation, a charitable organization, of
which Mr. Gardner is President and a board member.
(9) Includes 28,750 shares of Common Stock issuable upon exercise of
immediately exercisable options.
(10) Includes 100,000 shares of Common Stock which are subject to forfeiture
pursuant to a Restricted Stock Agreement.
(11) Includes 70,000 shares of Common Stock issuable upon exercise of
immediately exercisable options.
(12) Includes 30,000 shares of Common Stock issuable upon exercise of
immediately exercisable options.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
A Board of four Directors of the Company is to be elected at the Annual
Meeting, each to serve, subject to the provisions of the Company's By-Laws,
until the next Annual Meeting of Stockholders and until his successor is duly
elected and qualified. It is management's recommendation that the accompanying
form of Proxy be voted FOR the election as Director of the four persons named
below, all of whom are currently Directors of the Company. The Board of
Directors believes that the nominees named below are willing to serve as
Directors. However, in the event that any of the nominees should become unable
or unwilling to serve as a Director, the Proxy will be voted for the election of
such person or persons as shall be designated by the Directors.
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The following table sets forth information with respect to each nominee
for Director of the Company, all of whom are currently serving as Directors of
the Company, and each executive officer of the Company. Paul A. Amershadian and
Brian Murphy, each of whom is currently a Director and executive officer of the
Company, and Thomas E. Lachenman, who is currently a Director of the Company,
are not standing for re-election, and each of them will cease to be a director
of the Company effective immediately following the Annual Meeting.
NOMINEES
Marc C. Particelli Chairman of the Board, President and
Age: 61 Chief Executive Officer of the Company
Director since February 2005; since July 12, 2006. Mr. Particelli was
Chairman of the Board, President also Chief Executive Officer of Modem
and Chief Executive Officer Media, an interactive marketing services
firm, from January 1991 until its
acquisition by Digitas Inc. in October
2004, and more recently, from August 2005
until March 2006, he was the Chief
Executive Officer of TSM Corporation, a
telecommunications company serving the
Hispanic market. Earlier, Mr. Particelli
was a partner at Oak Hill Capital
Management, a private equity investment
firm, and managing director at Odyssey
Partners L.P., a hedge fund. Prior to
entering the private equity business, Mr.
Particelli spent 20 years with Booz Allen
where he helped create the Marketing
Industries Practice and led its expansion
across Europe, Asia and South America.
Mr. Particelli also currently serves as a
director of and investor in several
private companies, and as an advisor to
several private equity firms.
James H. Feeney Principal of The Feeney Group LLC, an
Age: 67 advertising and marketing consulting firm
Director since July 2004 working with companies in developing
strategic positioning, since 2000. Also
Partner of O'Neil Lifton Huffstetler
Feeney & Barry, a venture marketing,
creative development firm, since May
2003. Prior thereto, from March 1996, was
President and CEO of Trone Advertising,
an advertising agency. Mr. Feeney was
President and Chairman of the Executive
Committee of Albert Frank-Guenther Law, a
125 year old international financial
service agency from 1993 to 1996. Prior
to AFGL, he spent 13 years as Executive
Vice President of Ally&Gargano where he
led the launch of MCI at the Agency for 5
years. He was at The Ted Bates
Advertising Agency for 12 years where he
was Managing Director, Senior Vice
President.
5
Herbert M. Gardner Executive Vice President, Barrett-Gardner
Age: 66 Associates, Inc., an investment and
Director since May 1997 merchant banking firm, since October
2002. Prior thereto, Senior Vice
President of Janney Montgomery Scott LLC,
an investment banking firm, since 1978.
Presently serves as Chairman of the Board
of Directors of Supreme Industries, Inc.
and as a director of Chase Packaging
Corp., Nu Horizons Electronics Corp., TGC
Industries, Inc. and Rumson Fair Haven
Bank and Trust Company.
John A. Ward, III Mr. Ward has been the Chief Executive
Age: 60 Officer of Innovative Card Technologies,
Director since July 2002 Inc. since August 15, 2006, and was the
interim Chief Executive Officer of Doral
Financial Corporation from September 15,
2005 until August 15, 2006. Previously,
Mr. Ward was the Chairman and Chief
Executive Officer of American Express
Bank from January 1996 until September
2000, and President of Travelers Cheque
Group from April 1997 until September
2000. Mr. Ward joined American Express
following a 27-year career at Chase
Manhattan Bank, during which he held
various senior posts in the United
States, Europe and Japan. His last
position at Chase was that of Chief
Executive Officer of ChaseBankCard
Services, which he held from 1993 until
1995. Presently serves as the Chairman of
the Board of Innovative Card Technologies
Inc. and Doral Financial Corporation and
as a director of Primus Guaranty, Ltd.
and Rewards Network Inc.
EXECUTIVE OFFICERS
------------------
Paul A. Amershadian Executive Vice President-Marketing and
Age: 58 Sales and Treasurer of the Company since
Director from May 1996 to September 29, 1995.
September 28, 2004,
and since February 2, 2005;
Executive Vice President-Marketing
and Sales and Treasurer
Brian Murphy Chief Executive Officer of U.S. Concepts,
Age: 49 a wholly-owned subsidiary of the Company,
Director since December 1998; since December 29, 1998, and until
Chief Executive Officer of January 6, 2000, President of such
U.S. Concepts company, and President of predecessor of
U.S. Concepts from 1992 through December
29, 1998. In addition, from May 1, 2000
until January 2001, Chief Executive
Officer of iCast Comedy Corporation, an
Internet-based content provider, and from
January 2001 to August 2002, Chief
Executive Officer of Comedy Lab
Productions, Inc., a successor to a
portion of iCast's business.
Erwin I. Mevorah Mr. Mevorah was appointed the Company's
Age: 43 Chief Financial Officer on September 29,
Chief Financial Officer 2005. Prior to his appointment as Chief
Financial Officer, from April 1, 2005,
Mr. Mevorah served as the Company's
Senior Vice President - Finance, and from
6
October 15, 2003 until that time, he
served as the Vice President - Finance of
U.S. Concepts. From November 2000 until
he joined U.S. Concepts, Mr. Mevorah was
the Chief Financial and Administrative
Officer of Cognitive Arts, a privately
held developer and publisher of on-line
training and educational courses.
Earlier, he held Chief Financial Officer
positions with Broadband Studios, Inc.
and Meigher Communications, L.P. Mr.
Mevorah, a C.P.A., has also served as a
Vice President of Accounting with Gabelli
Funds, Inc., and he began his career as
an Audit Supervisor with Coopers &
Lybrand.
Director Independence
The Board of Directors has determined that each of the following
directors is an "independent director" as defined in Rule 4200(a)(15) of the
listing standards of the National Association of Securities Dealers (the "NASD
listing standards"): Herbert M. Gardner, Thomas E. Lachenman, James H. Feeney,
and John A. Ward, III. The Board of Directors has also determined that each of
the members of the three Board committees listed below meets the independence
requirements applicable to those committees prescribed by the NASD listing
standards and the Securities and Exchange Commission, as currently in effect.
Committees of the Board of Directors
The Board of Directors has a standing Audit Committee, Compensation
Committee and Nominating Committee. The primary responsibilities of each of
these committees and their members are listed below.
Audit Committee
The Audit Committee is currently composed of Herbert M. Gardner
(Chairman), John A. Ward, III and James H. Feeney. During Fiscal 2006 and until
his appointment as the Company's President and Chief Executive Officer, Mr.
Particelli was a member of the Audit Committee. As a result of his appointment,
Mr. Particelli became ineligible to serve on that Committee and the resulting
vacancy was filled by Mr. Ward. The Audit Committee oversees the Company's
corporate accounting and financial reporting process. For this purpose, the
Audit Committee performs several functions. The Audit Committee evaluates the
performance and assesses the qualifications of the independent auditors;
determines and approves the engagement of the independent auditors; determines
whether to retain or terminate the existing independent auditors or to appoint
and engage new independent auditors; reviews and approves the retention of the
independent auditors to perform any proposed permissible non-audit services;
monitors the rotation of partners of the independent auditors on the Company's
audit engagement team as required by law; confers with management and the
independent auditors regarding the effectiveness of internal controls over
financial reporting; establishes procedures, as required under applicable law,
for the receipt, retention and treatment of complaints received by the Company
regarding accounting, internal accounting controls or auditing matters and the
confidential and anonymous submission by employees of concerns regarding
questionable accounting or auditing matters; reviews the financial statements to
be included in the Company's Annual Report on Form 10-K; and discusses with
management and the independent auditors the results of the annual audit and the
results of the Company's quarterly financial statements but is not responsible
for its content. The Board of Directors has determined that Herbert M. Gardner
is an "audit committee financial expert," as such term is defined in Item 401(h)
of Regulation S-K.
7
The Audit Committee operates pursuant to a charter which has been duly
adopted by the Board of Directors. A copy of the charter can be viewed on the
Company's website at http://www.coactivemarketing.com.
Compensation Committee
The Compensation Committee, composed of John A. Ward, III (Chairman),
Herbert M. Gardner, Thomas E. Lachenman and James H. Feeney, is responsible for
determining the compensation packages of the Company's executives. The Company,
on behalf of the Compensation Committee, from time to time retains the services
of an outside compensation consultant to review and make recommendations with
regard to executive compensation. The Compensation Committee is also responsible
for the administration of the Company's 2002 Long-Term Incentive Plan, and from
time to time approves potential levels of contribution to the Company's 401(k)
plan.
Nominating Committee
The Nominating Committee, composed of James H. Feeney (Chairman),
Herbert M. Gardner, Thomas E. Lachenman and John A. Ward, III, is responsible
for, among other things, identifying individuals qualified to become Board
members, and recommending to the Board individuals for nomination as members of
the Board. The Nominating Committee operates pursuant to a charter which can be
viewed on the Company's website at http://www.coactivemarketing.com
The Nominating Committee believes that candidates for director should
have certain minimum qualifications, including being able to read and understand
basic financial statements, being over 21 years of age and having the highest
personal integrity and ethics. The Committee also intends to consider such
factors as possessing relevant expertise upon which to be able to offer advice
and guidance to management, having sufficient time to devote to the affairs of
the Company, demonstrating excellence in his or her field, having the ability to
exercise sound business judgment and having the commitment to rigorously
represent the long-term interests of the Company's stockholders. However, the
Committee retains the right to modify these qualifications from time to time.
Candidates for director nominees will be reviewed in the context of the current
composition of the Board, the operating requirements of the Company and the
long-term interests of stockholders. In conducting this assessment, the
Committee will consider diversity, age, skills, and such other factors as it
deems appropriate given the current needs of the Board and the Company to
maintain a balance of knowledge, experience and capability. In the case of
incumbent directors whose terms of office are set to expire, the Nominating
Committee will review such directors' overall service to the Company during
their term, including the number of meetings attended, level of participation,
quality of performance, and any other relationships and transactions that might
impair such directors' independence. In the case of new director candidates, the
Committee will also determine whether the nominee must be independent for Nasdaq
purposes, which determination will be based upon applicable Nasdaq listing
standards, applicable Securities and Exchange Commission rules and regulations
and the advice of counsel, if necessary. The Committee will use the Board's and
management's network of contacts to compile a list of potential candidates, but
may also engage, if it deems appropriate, a professional search firm. The
Committee will conduct any appropriate and necessary inquiries into the
backgrounds and qualifications of possible candidates after considering the
function and needs of the Board. The Committee will meet to discuss and consider
such candidates' qualifications and selects a nominee by majority vote.
8
The Nominating Committee will consider director candidates recommended
by stockholders. The Committee does not intend to alter the manner in which it
evaluates candidates, including the minimum criteria set forth above, based on
whether the candidate was recommended by a stockholder or not. Stockholders who
wish to recommend individuals for consideration by the Nominating Committee to
become nominees for election to the Board may do so by delivering a written
recommendation to the Nominating Committee at the following address: 75 Ninth
Avenue, New York, New York 10011, not less than six months prior to any meeting
at which directors are to be elected. Submissions must include the full name of
the proposed nominee, a description of the proposed nominee's business
experience for at least the previous five years, complete biographical
information, a description of the proposed nominee's qualifications as a
director and a representation that the nominating stockholder is a beneficial or
record owner of the Company's stock. Any such submission must be accompanied by
the written consent of the proposed nominee to be named as a nominee and to
serve as a director if elected.
Stockholders who wish to nominate a person for election as a director
(as opposed to making a recommendation to the Nominating Committee) must follow
the procedures described in Section 3.13 of the Company's by-laws.
Attendance at Board and Committee Meetings
During Fiscal 2006, the Board of Directors held six meetings and acted
by unanimous written consent five times, the Audit Committee held seven
meetings, the Nominating Committee acted by written consent twice, and the
Compensation Committee acted by unanimous written consent once. Each director
attended or participated in 75% or more of the meetings of the Board of
Directors and the meetings held by all committees of the Board of Directors on
which such director served, during Fiscal 2006.
It is the Company's policy to encourage each director to attend the
annual meeting of stockholders. The Board of Directors generally schedules a
meeting on the day of the annual meeting of stockholders and directors therefore
typically attend the annual meeting of stockholders. All of the Company's
directors then in office were present at the 2005 Annual Meeting of Stockholders
held on September 29, 2005.
Stockholder Communication with the Board of Directors
Stockholders may send communications to the Board of Directors as a
whole, any Committee or group of directors or a single director. Such
communications may be sent to the Board of Directors (or a Committee, group or
member thereof), c/o Corporate Secretary, 75 Ninth Avenue, New York, New York
10011. The Secretary will receive the correspondence and, unless such
communications are irrelevant or inappropriate (such as advertisements and
hostile communications) will forward it to the entire Board of Directors or to
any individual director or group or Committee of directors to whom the
communication is directed, as appropriate.
Code of Conduct
The Company maintains a Code of Conduct that is applicable to all of
the Company's and its subsidiaries' employees, including the Company's Chief
Executive Officer and Chief Financial Officer. The Code of Conduct, which
satisfies the requirements of a "code of ethics" under applicable Securities and
Exchange Commission rules, contains written standards that are designed to deter
wrongdoing and to promote honest and ethical conduct, including the ethical
handling of actual or apparent conflicts of interest; full, fair, accurate,
timely and understandable public disclosures and communications, including
9
financial reporting; compliance with applicable laws, rules and regulations;
prompt internal reporting of violations of the code; and accountability for
adherence to the code.
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process
on behalf of the Board of Directors, including the Company's internal controls,
the quality of its financial reporting and the independence and performance of
the Company's independent certified public accountants.
Management has primary responsibility for the Company's financial
statements and the overall reporting process, including the Company's system of
internal controls. The independent certified public accountants audit the annual
financial statements prepared by management, express an opinion as to whether
those financial statements fairly present the consolidated financial position,
results of operations and cash flows of the Company and its subsidiaries in
conformity with accounting principles generally accepted in the United States
and discuss with management any issues that they believe should be raised with
management.
The Audit Committee reviewed the Company's audited financial statements
for Fiscal 2006 which were included in the Company's Annual Report on Form 10-K
for Fiscal 2006, and met with both management and BDO Seidman, LLP ("BDO"), the
Company's independent certified public accountants, to discuss those financial
statements. Management has represented to the Audit Committee that the financial
statements were prepared in accordance with accounting principles generally
accepted in the United States.
The Audit Committee has received from BDO the written disclosures and
the letter required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and discussed with BDO their independence
from the Company and its management. The Audit Committee also discussed with BDO
any matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
Based upon these reviews and discussions, the Audit Committee
recommended to the Board of Directors of the Company that the Company's audited
financial statements for Fiscal 2006 be included in the Company's Annual Report
on Form 10-K for Fiscal 2006 for filing with the Securities and Exchange
Commission.
Herbert M. Gardner
John A. Ward, III
James H. Feeney
Compensation of Directors
For Fiscal 2006, each non-employee Director received an annual stipend
equal to $20,000 per annum, a fee of $1,500 per Board meeting attended and a fee
of $750 per Committee meeting attended. All Directors are reimbursed for
reasonable travel expenses incurred in connection with attending Board meetings.
In addition, pursuant to the Company's 2002 Long-Term Incentive Plan,
each of the Company's non-employee Directors is granted an option to purchase
10,000 shares of Common Stock on April 30 of each year, exercisable at the fair
market value of the shares of Common Stock on the date of grant. Each such
option becomes exercisable as to 5,000 of the shares covered thereby on the date
of grant and as to the remaining 5,000 shares on the first anniversary of the
date of grant.
10
Compensation Committee Interlocks and Insider Participation
During Fiscal 2006, Thomas E. Lachenman was a member of the Company's
Compensation Committee. In connection with the Company's acquisition of Optimum
in 1998, the Company entered into an agreement with Mr. Lachenman, the former
owner of Optimum, for the lease of the Cincinnati principal office of Optimum.
The lease provides for annual rental payments, currently at $167,000, adjusted
annually based upon changes in the local consumer price index. The lease expires
in December 2010.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid to John
Benfield, the Company's Chief Executive Officer during Fiscal 2006, Donald A.
Bernard, who was the Company's Chief Financial Officer during Fiscal 2006 until
September 29, 2005, and to each of the Company's current executive officers
whose compensation exceeded $100,000 during Fiscal 2006 (collectively, the
"Named Executive Officers"). Mr. Benfield was replaced by Marc Particelli as the
Company's interim Chief Executive Officer subsequent to the end of Fiscal 2006.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
---------------------------------------- -------------------------
Other Securities
Annual Restricted Underlying All Other
Name and Fiscal Compen- Stock Options/ Compen-
Principal Position Year Salary($) Bonus($) sation(1) Awards($) SARs(#) sation($)
------------------ ---- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
John P. Benfield 2006 $ 300,000 $ 0 $ 6,000 -- -- $ 6,874(2)
President and Chief 2005 $ 292,708 $ 0 $ 6,000 -- -- $ 6,125(2)
Executive Officer 2004 $ 300,000 $ 0 $ 6,000 -- 70,000 $ 6,000(2)
Erwin I. Mevorah(3) 2006 $ 250,000 $ 50,000 $ 6,000 -- -- $ 6,497(2)
Chief Financial Officer 2005 $ 220,000 $ 44,319 $ 0 $ 215,000(5) -- $ 6,125(2)
2004 $ 97,500(4) $ 0 $ 0 -- -- $ 5,114(2)
Paul A. Amershadian 2006 $ 300,000 $ 0 $ 6,000 -- -- $ 2,299(2)
Executive Vice President 2005 $ 292,708 $ 0 $ 6,000 -- -- $ 1,000(2)
- Marketing and Sales 2004 $ 300,000 $ 0 $ 6,000 -- 70,000 $ 6,000(2)
Brian Murphy 2006 $ 300,000 $ 50,000 $ 12,000 -- -- $ 6,475(2)
Chief Executive Officer - 2005 $ 300,000 $ 0 $ 12,000 -- -- $ 6,125(2)
U.S. Concepts LLC 2004 $ 350,000 $ 0 $ 12,000 -- -- $ 6,150(2)
Donald Bernard 2006 $ 300,000 $ 0 $ 6,000 -- -- $ 6,024(2)
Former Chief Financial 2005 $ 292,708 $ 0 $ 6,000 -- -- $ 6,000(2)
Officer(3) 2004 $ 300,000 $ 0 $ 6,000 -- 70,000 $ 6,000(2)
</TABLE>
(1) Represents car allowance.
(2) Represents the aggregate of the executive's share of Company's matching
contribution to Company's 401(k) Retirement Plan, except for Mr.
Amershadian in Fiscal 2005, and the Company's payments for life insurance,
which amounted to approximately $1,000 for each executive in each fiscal
year.
11
(3) Mr. Mevorah became Chief Financial Officer effective September 29, 2005,
replacing Donald A. Bernard, who remained an executive vice president of
the Company until the end of Fiscal 2006.
(4) Represents salary from October 15, 2003 (date of hire) through March 31,
2004.
(5) Represents the grant of 100,000 shares of Common Stock on March 31, 2006
with a fair market value on the grant date of $2.15.
Stock Options
The following table sets forth certain information concerning stock
options exercised by the Named Executive Officers during Fiscal 2006 and
unexercised stock options held by such individuals at the end of Fiscal 2006. No
stock options were granted to any of the Named Executive Officers during Fiscal
2006.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Fiscal 2006 and FY-End Option Values
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Year Fiscal Year
Shares End (#) End ($)
Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable (1)
---- --------------- ------------ ------------- -----------------
<S> <C> <C> <C> <C>
John P. Benfield 109,121 $225,000 350,000/0 $119,000/$0
Erwin I. Mevorah -- -- 0/0 $0/$0
Paul A. Amershadian 110,241 $209,000 333,880/0 $103,000/$0
Brian Murphy -- -- 237,500/0 $0/$0
Donald A. Bernard 109,121 $216,000 350,000/0 $119,000/$0
</TABLE>
(1) The value has been determined based on the average trading price on March
31, 2006, which was $2.15.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Board of Directors believes that increasing the value of the
Company to its stockholders is the Board of Directors' most important objective
and should be the key measure of management performance. The Board of Directors
also believes that executive compensation should be objectively determined. For
this reason, the Compensation Committee, which is made up of Directors who are
not employees of the Company, is responsible for determining the compensation
packages of the Company's executives. The Company on behalf of the Compensation
Committee, from time to time, retains the services of an outside compensation
consultant to review and make recommendations with regard to the Company's
executive compensation programs. The Compensation Committee also approves the
potential levels of contribution to the Company's 401(k) plan.
The Compensation Committee's role in determining the compensation of
the executives of the Company is to assure that the Company's compensation
strategy is aligned with the Board of Directors' overall objective and that
executive compensation is structured to provide fair, reasonable and competitive
base salary levels and the opportunity for the executives to earn incentive
compensation reflecting both the Company's and the individual's performance.
12
The compensation for Fiscal 2006 for the Company's Chief Executive
Officer and other executive officers consisted of base salary, except that the
Company's Chief Financial Officer, Erwin Mevorah, was paid a bonus of $50,000 in
Fiscal 2006 and Brian Murphy, the Chief Executive Officer of U.S. Concepts, was
paid an aggregate bonus of $50,000. Mr. Murphy's bonus was paid over the course
of Fiscal 2006 in equal installments, in consideration of the US Concepts'
operating results. Base salaries are established by the employment agreements
for each person within the executive group, subject to annual adjustment by the
Compensation Committee. Factors considered in establishing salaries include the
responsibilities of the position, compensation of executives in companies of
similar size or in the same industry, external market conditions and financial
performance of the Company.
Incentive compensation awards, payable in cash bonuses and stock
options, and salary increases may be awarded in recognition of the Company's
financial performance. During Fiscal 2006, the Named Executive Officers were not
awarded any bonuses, with the exception of Mr. Mevorah and Mr. Murphy, as
described above, and the award of 100,000 shares of Common Stock to Erwin
Mevorah under a Restricted Stock Agreement in recognition of his contributions
to the Company. The shares of Common Stock vest 20% on March 31, 2007, 30% on
March 31, 2008, 20% on March 31, 2009, 20% on March 31, 2010, and 10% on March
31, 2011. In addition, the shares are subject to accelerated vesting upon a
change of control of the Company (as defined in the Restricted Stock Agreement).
Upon the termination of Mr. Mevorah's employment with the Company, all shares of
Common Stock that have not vested under the Restricted Stock Agreement (if any)
will be forfeited to the Company.
Herbert M. Gardner
James H. Feeney
Thomas E. Lachenman
John A. Ward, III
Executive Employment Contracts, Termination of
Employment and Change-in-Control Arrangements
---------------------------------------------
On June 14, 2006, the Board of Directors of the Company accepted the
resignation of John Benfield, the Company's President, Chief Executive Officer
and Chairman of the Board, and appointed Marc C. Particelli, a member of the
Company's Board of Directors, to serve as President, Chief Executive Officer and
Chairman of the Board on an interim basis. Both Mr. Benfield's resignation and
Mr. Particelli's appointment were effective as of July 12, 2006. In connection
with Mr. Benfield's resignation, the Company and Mr. Benfield entered into an
Agreement pursuant to which Mr. Benfield will, until July 1, 2007, continue to
be compensated at the rate of $300,000 per annum and receive the same benefits
previously provided to him by the Company as its Chief Executive Officer. In
consideration of the foregoing, Mr. Benfield will remain employed by the Company
on a full-time basis to assist in the transition for a period of three-months.
Pursuant to the Agreement with Mr. Benfield described above, Mr. Benfield's
Employment Agreement with the Company terminated on July 12, 2006.
In connection with his appointment as interim Chief Executive Officer,
Mr. Particelli entered into an Employment Agreement with the Company pursuant to
which Mr. Particelli will be paid an annual salary of $250,000 for devoting
approximately 50% of his working time to the Company. In addition, for his
agreement to serve as interim President, Chief Executive Officer and Chairman of
the Board, the Board approved the grant to Mr. Particelli of a five-year stock
option to purchase 80,000 shares of the Company's Common Stock at a price of
$1.57 per share (the market price of the common stock on the date the grant was
authorized).
13
On September 29, 2005, Mr. Mevorah was appointed to serve as the
Company's Chief Financial Officer. Mr. Mevorah is a party to an employment
agreement, dated April 1, 2005, which provides for a base salary of $250,000
plus a $6,000 annual car allowance. The initial term of the agreement expired on
April 1, 2006 but automatically renews on a monthly basis unless and until
terminated by either party thereto upon at least thirty days notice. On August
9, 2006, the Company's Board of Directors, upon the recommendation of its
Compensation Committee, approved revised employment terms for Mr. Mevorah,
including a $50,000 increase in Mr. Mevorah's annual base salary retroactive to
July 21, 2006. Consistent with additional terms approved of by the Board and the
Compensation Committee, the Company and Mr. Mevorah intend to enter into a
three-year employment agreement in the near future which will provide for a
severance payment equal to six months' base salary in the event of the
termination of Mr. Mevorah's employment by the Company other than for cause.
Concurrent with the approval of the revised employment terms, Mr.
Mevorah was granted 100,000 shares of the Common Stock. The shares of Common
Stock vest 20% on March 31, 2007, 30% on March 31, 2008, 20% on March 31, 2009,
20% on March 31, 2010, and 10% on March 31, 2011, subject to accelerated vesting
upon a change of control of the Company.
Pursuant to an employment agreement, dated September 29, 1995, as
amended, the Company employs Mr. Amershadian as Executive Vice President -
Marketing and Sales. The agreement, as amended, currently provides for a base
salary of $300,000 and payment of such bonuses or additional compensation as the
Board of Directors may determine in its sole discretion. The term of the
agreement expires on March 31, 2007.
Pursuant to an employment agreement, dated December 29, 1998, as
amended, the Company's subsidiary, U.S. Concepts, employs Mr. Murphy as
President and Chief Executive Officer. The term of Mr. Murphy's employment
agreement expired on March 31, 2006 but automatically renews on a monthly basis
unless and until terminated by either party thereto upon at least ninety days
notice. Mr. Murphy currently receives a base salary of $362,000.
Pursuant to an employment agreement that became effective April 1,
2006, Mr. Bernard resigned as a director and executive officer of the Company,
his salary was reduced to $100,000 per annum, he is required to devote no more
than 10 working days per month to the performance of services on behalf of the
Company, and he is no longer eligible to participate in the Company's bonus and
stock option plans. The employment agreement terminates on March 31, 2009 and is
not subject to renewal.
Each employment agreement prohibits the executive officer that is a
party thereto from competing with the Company or inducing or attempting to
influence any employee of the Company or any subsidiary to terminate his
employment with the Company or any subsidiary during the term of the agreement
and for a period of two years after the termination of the officer's employment
with the Company, in the case of Mr. Amershadian, 18 months after the
termination of the officer's employment with the Company, in the case of Messrs.
Mevorah and Murphy, and six months after the termination of the officer's
employment with the Company, in the case of Mr. Particelli. Each agreement also
prohibits the executive officer from disclosing certain confidential information
of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Loans to Paul Amershadian
The Company has made loans to Paul A. Amershadian, a director of the
Company and its Executive Vice President-Marketing and Sales, aggregating
$550,000, which are evidenced by an Amended and Restated Promissory Note dated
14
May 24, 2001, which became due on May 24, 2006. The Amended and Restated
Promissory Note provides for payment of interest at a floating rate equal to the
highest rate at which the Company pays interest on its bank borrowings (8.25% at
March 31, 2006). On April 26, 2006, Mr. Amershadian surrendered to the Company
for cancellation 153,052 shares of Common Stock as payment in full of interest
in the amount of approximately $283,000 accrued through May 24, 2006. Mr.
Amershadian is currently in default in respect of the principal amount due under
the Amended and Restated Promissory Note. The loans are secured by a first lien
and security interest in 163,196 shares of Common Stock owned by Mr. Amershadian
and a second mortgage on Mr. Amershadian's home.
Lease of Optimum Office
In connection with the Company's acquisition of Optimum, the Company
entered into an agreement with Thomas Lachenman, a director of the Company and
former owner of Optimum, for the lease of the Cincinnati principal office of
Optimum, which is owned by Mr. Lachenman. The agreement provides for annual
rental payments, currently $167,000, adjusted annually based upon changes in the
local consumer price index. The lease expires in December 2010.
Equity Compensation Plan Information
The following table sets forth information with respect to equity
compensation plans (including individual compensation arrangements) of the
Company as of March 31, 2006.
<TABLE>
<CAPTION>
(a) (b) (c)
Number of securities
Number of securities remaining available for
to be issued upon Weighted average future issuance under
exercise of outstanding exercise price of equity compensation plans
options, warrants outstanding options, (excluding securities
Plan category and rights warrants and rights reflected in column (a))
------------- ----------------- ------------------- -----------------------
<S> <C> <C> <C>
Equity compensation
plans approved by
security holders(1) 1,766,305 $2.65 237,500
Equity compensation
plans not approved
by security holders(2) 81,533 $3.68 -
----------------- ------------------ -----------------------
Total 1,847,838 $2.69 237,500
================= ================== =======================
</TABLE>
(1) Includes options to purchase 802,500 shares of Common Stock granted under
our 2002 Long-Term Incentive Plan, options to purchase 375,000 shares
Common Stock granted under our 1997 Executive Officer Stock Option Plan and
options to purchase 588,805 shares of Common Stock granted under our 1992
Stock Option Plan.
(2) Consists of warrants to purchase shares of Common Stock issued in 1997 to
two persons, one of whom is a director of ours, in connection with our
entry into a financial advisory services agreement.
15
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and Directors and persons who
own more than 10% of a registered class of the Company's equity securities
(collectively, the "Reporting Persons") to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and to furnish the
Company with copies of these reports. To the Company's knowledge, based solely
on a review of the Forms 3, 4, and 5 submitted to the Company during and with
respect to Fiscal 2006, there were no known failures to file a required Form 3,
4 or 5 and no known late filings of a required Form 3, 4 or 5 during Fiscal 2006
by any person required to file such forms with respect to the Company pursuant
to Section 16 of the Exchange Act, other than one late filing of a Form 4 by Mr.
Amershadian.
COMPARISON OF CUMULATIVE TOTAL RETURNS
Performance Graphs for
COACTIVE MARKETING GROUP, INC.
The following graph reflects a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of an
initial $100 investment on March 31, 2001 in the Company's Common Stock, the
Standard & Poor's 500 Stock Index and a peer group index consisting of those
public companies traded on an exchange and listed under the Standard Industry
Classification (S.I.C.) Code 7311 for Advertising, and other related S.I.C.
Codes. The peer group is made up of Equity Marketing, Inc., Valassis
Communications, Inc., The Interpublic Group of Companies, Inc., Omnicom Group,
Inc., Alloy, Inc., and MDC Partners, Inc. Catalina Marketing Corporation and
Havas, which were included in the peer group for prior years, are no longer
included. As a result, the graph has been restated for all prior years to
exclude Catalina and Havas. The comparisons in this table are required by the
Securities and Exchange Commission. The stock price performance shown on the
graph is not intended to forecast or be indicative of future price performance.
[GRAPHIC CHART OMITTED]
Measurement Period (Fiscal Year Covered)
----------------------------------------
<TABLE>
<CAPTION>
--------------------------- ------------ ------------ ------------ ------------- ------------ ------------
3/31/01 3/31/02 3/31/03 3/31/04 3/31/05 3/31/06
--------------------------- ------------ ------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CMKG 100 148 236 244 324 189
S & P 500 100 99 73 97 102 112
Peer Group Index 100 111 59 83 92 85
</TABLE>
16
RELATIONSHIP WITH INDEPENDENT AUDITORS
BDO Seidman, LLP served as the Company's auditors for Fiscal 2006. On
July 26, 2006, the Company was informed by BDO of BDO's resignation effective
upon the completion of their review of the Company's financial statements for
its first fiscal quarter ended June 30, 2006. BDO's review of the Company's
first quarter financial statements was completed on August 14, 2006.
Accordingly, BDO's resignation became effective on that date. Due to BDO's
resignation, the Company does not expect a representative of BDO to be present
at the Annual Meeting.
The audit reports of BDO on the financial statements of the Company as
of March 31, 2006 and 2005 and for the years then ended did not contain any
adverse opinion or disclaimer of opinion, nor were such reports qualified or
modified as to uncertainty, audit scope or accounting principles. During the two
most recent fiscal years of the Company and the subsequent interim period
through August 14, 2006, there were no disagreements between the Company and BDO
as to any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of BDO would have caused BDO to make reference in their
reports on the financial statements for such years to the subject matter of the
disagreement. Additionally, during the fiscal years ended March 31, 2006 and
2005, and through August 14, 2006, there were no "reportable events" as that
term is defined in Item 304(a)(1)(v) of Regulation S-K. BDO was previously
provided with a copy of this paragraph of the Proxy Statement (which was filed
with the SEC in a form 8-K/A on August 18, 2006), and was requested to furnish a
letter stating whether or not it agrees with the foregoing statements. BDO's
letter in response is attached to this Proxy Statement as Exhibit A.
The Company has commenced the process of selecting new auditors and
anticipates that the replacement of BDO will not result in any delay in its
periodic filings with the SEC.
Principal Accounting Firm Fees
The following table sets forth the aggregate fees billed to the Company
for Fiscal 2006 and Fiscal 2005, by BDO Seidman, LLP:
<TABLE>
<CAPTION>
Fiscal 2006(1) Fiscal 2005
------------ ------------
<S> <C> <C>
Audit Fees (for audit of annual financial statements and review of
quarterly financial statements) $ 273,800 $ 267,000
Audit-Related Fees -- --
Tax Fees (for federal, State and local tax compliance and planning) 30,000 31,100
All Other Fees (in connection with restatement of financial statements for
prior periods) 21,000 --
------------ ------------
Total $ 324,800 $ 298,100
============ ============
</TABLE>
(1) Represents aggregate of amounts billed and accrued for services rendered
with respect to Fiscal 2006.
17
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy requiring pre-approval by the
Audit Committee of all services (audit and non-audit) to be provided to the
Company by its independent auditor. In accordance with that policy, the Audit
Committee approved all services rendered to the Company by BDO in Fiscal 2006
and has determined that the provision of non-audit services by BDO to the
Company was compatible with maintaining the independence of BDO.
EXPENSES
The entire cost of preparing, assembling, printing and mailing this
Proxy Statement, the enclosed Proxy, Annual Report on Form 10-K and other
materials, and the cost of soliciting Proxies with respect to the Annual
Meeting, will be borne by the Company. The Company will request banks and
brokers to solicit their customers who beneficially own shares listed of record
in names of nominees, and will reimburse those banks and brokers for the
reasonable out-of-pocket expenses of such solicitations. The solicitation of
Proxies by mail may be supplemented by telephone by officers and other regular
employees of the Company, but no additional compensation will be paid to such
individuals.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present
proper proposals for inclusion in the Company's proxy statement and for
consideration at the next annual meeting of its stockholders by submitting their
proposals to the Company in a timely manner. To be included in the proxy
statement for the Company's Annual Meeting of Stockholders in 2007, stockholder
proposals must be received by the Company at its principal executive office no
later than April 23, 2006 and must otherwise comply with the requirements of
Rule 14a-8. In addition, the Company's By-laws establish an advance notice
procedure with regard to certain matters, including stockholder proposals not
included in the Company's proxy statement, to be brought before an annual
meeting of stockholders. In general, notice must be received by the Secretary of
the Company not less than 60 days nor more than 90 days prior to the anniversary
date of the immediately preceding annual meeting and must contain specified
information concerning the matters to be brought before such meeting and
concerning the stockholder proposing such matters. Therefore, to be presented at
the Company's Annual Meeting of Stockholders in 2007, such a proposal must be
received by the Company after July 1, 2007 but no later than July 31, 2007.
However, if the date of the Company's Annual Meeting of Stockholders in 2007 is
more than 30 days earlier or more than 30 days later than the date of the
immediately preceding Annual Meeting (i.e., prior to August 31, 2007 or after
October 29, 2007), then notice must be received not later than the close of
business on the earlier of the 10th day following the day on which notice of the
date of the meeting is mailed or public disclosure of the date of such meeting
is made. If a stockholder who has notified the Company of his intention to
present a proposal at an annual meeting does not appear or send a qualified
representative to present his proposal at such meeting, the Company need not
present the proposal for a vote at such meeting. All notices of proposals by
stockholders, whether or not to be included in the Company's proxy materials,
should be sent to the Secretary of the Company at 75 Ninth Avenue, New York
10011.
By Order of the Board of Directors
Erwin I. Mevorah
Secretary
New York, New York
August 21, 2006
18
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31,
2006, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, BUT EXCLUDING EXHIBITS), IS
BEING MAILED WITH THIS PROXY STATEMENT. THE COMPANY WILL PROVIDE TO EACH PERSON
SOLICITED BY THIS PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON AND
UPON PAYMENT OF A FEE OF $3.00 PER EXHIBIT, A COPY OF ANY EXHIBIT TO THE
ENCLOSED ANNUAL REPORT ON FORM 10-K. A LIST OF EXHIBITS IS SET FORTH IN SECTION
IV OF THE ANNUAL REPORT ON FORM 10-K. REQUESTS FOR COPIES OF EXHIBITS SHOULD BE
DIRECTED TO ERWIN I. MEVORAH, CHIEF FINANCIAL OFFICER, COACTIVE MARKETING GROUP,
INC., 75 NINTH AVENUE, NEW YORK, NEW YORK 10011 (TELEPHONE: (212) 660-3800).
19
EXHIBIT A
[GRAPHIC OMITTED]
BDO
BDO Seidman LLP 401 Broadhollow Road, 2nd Floor
Accountants and Consultants Melville, New York 11747
Telephone: (631) 501-9600
Fax: (631) 501-1885
August 17, 2006
Securities and Exchange Commission
100 F Street N.E.
Washington, DC 20549
We have been furnished with a copy of the response to Item 4.01 of Form 8-K/A
for the event that occurred on August 15, 2006, to be filed by our former
client, CoActive Marketing Group, Inc. We agree with the statements made in
response to that Item insofar as they relate to our Firm.
Yours truly,
/s/ BDO Seidman LLP
20
PROXY
COACTIVE MARKETING GROUP, INC.
75 Ninth Avenue, New York, New York 10011
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 28, 2006
The undersigned hereby appoints Marc C. Particelli and Erwin I.
Mevorah, or either of them, as Proxy or Proxies of the undersigned with full
power of substitution to attend and to represent the undersigned at the Annual
Meeting of Stockholders of CoActive Marketing Group, Inc. (the "Company") to be
held on September 28, 2006, and at any adjournments thereof, and to vote thereat
the number of shares of stock of the Company the undersigned would be entitled
to vote if personally present, in accordance with the instructions set forth on
this proxy card. Any proxy heretofore given by the undersigned with respect to
such stock is hereby revoked.
(Continued and to be signed on reverse side)
1
<TABLE>
<CAPTION>
ANNUAL MEETING OF STOCKHOLDERS OF
COACTIVE MARKETING GROUP, INC.
SEPTEMBER 28, 2006
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
- Please detach along perforated line and mail in the envelope provided. -
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
---------------------------------------------------------------- -------------------------------------------------------------
<C> <C>
1. Election Of Directors: 2. On such other matters as may properly come before
the meeting.
[ ] FOR ALL NOMINEES NOMINEES:
[ ] James H. Feeney
[ ] WITHHOLD AUTHORITY [ ] Herbert M. Gardner
FOR ALL NOMINEES [ ] Marc C. Particelli
[ ] John A. Ward, III
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any If no specification is made, this proxy will be voted FOR
individual nominee(s), mark "FOR ALL EXCEPT" and Proposal 1 listed above.
fill in the circle next to each nominee you wish to
withhold, as shown here: [X]
----------------------------------------------------------------
----------------------------------------------------------------
To change the address on your account, please check the box
at right and indicate your new address in the address space [ ]
above. Please note that changes to the registered name(s)
on the account may not be submitted via this method.
----------------------------------------------------------------
Signature of Stockholder: ____________________ Date:_________ Signature of Stockholder: ____________________ Date:_________
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
</TABLE>
2