SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant |X|
Filed by a party other than the registrant | | Check the appropriate box:
|X| Preliminary proxy statement*
| | Definitive proxy statement
| | Definitive additional materials
| | Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ACCESSPOINT CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
| | Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies: N/A
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined) N/A
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction: N/A
---------------------------------------------------------------------
(5) Total fee paid: N/A
---------------------------------------------------------------------
| | Fee paid previously with preliminary materials:
------------------------------------------------------------------
| | Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid: N/A
---------------------------------------------------------------------
(2) Form, schedule or registration statement no.: N/A
---------------------------------------------------------------------
(3) Filing party: N/A
---------------------------------------------------------------------
(4) Date filed: N/A
---------------------------------------------------------------------
1
ACCESSPOINT CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 17, 2003
TO THE STOCKHOLDERS OF ACCESSPOINT CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Accesspoint Corporation, a Nevada corporation (the "Company"), will
be held on Wednesday, September 17, 2003, at 11 a.m. local time at the Green
Valley Ranch Resort located at 2300 Paseo Verde Henderson, Nevada 89052, for the
following purposes, as more fully described in the Proxy Statement accompanying
this Notice:
1. To elect three Class I Directors for a term of one year and four Class
II Directors for a term of two years or until their successors are
duly elected and qualified or until their earlier resignation or
removal;
2. To ratify the appointment of Mendoza Berger & Company, LLP as
independent accountants of the Company for the fiscal year ending
December 31, 2003;
3. To ratify the compensation arrangements of the Company's non-employee
directors;
4. To approve an amendment to the Company's Articles of Incorporation to
increase the authorized number of shares of common stock from
25,000,000 to 100,000,000 shares; and
5. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The foregoing matters are described in more detail in the enclosed proxy
statement. The Board of Directors has fixed the close of business on June 30,
2003, as the record date for the determination of the stockholders entitled to
notice of, and to vote at, the Annual Meeting and any postponement or
adjournment thereof. Only those stockholders of record of the Company as of the
close of business on that date will be entitled to vote at the Annual Meeting or
any postponement or adjournment thereof. A list of stockholders entitled to vote
at the Annual Meeting will be available for inspection at the executive offices
of the Company.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you plan to attend, please sign and return the enclosed proxy as
promptly as possible in the envelope enclosed for your convenience. Should you
receive more than one proxy because your shares are registered in different
names and addresses, each proxy should be signed and returned to assure that all
of your shares will be voted. You may revoke your proxy at any time prior to the
Annual Meeting. If you attend the Annual Meeting and vote by ballot, your proxy
will be revoked automatically and only your vote at the Annual Meeting will be
counted.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
By Order of the Board of Directors,
Becky H. Takeda
Chief Executive Officer and President
Los Angeles, California
July 18, 2003
2
ACCESSPOINT CORPORATION
6171 W. Century Blvd., Suite 200
Los Angeles, California 90045
(310) 846-2500
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 17, 2003
The enclosed proxy is solicited on behalf of the Board of Directors of
Accesspoint Corporation, a Nevada corporation (the "Company"), for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held on September
17, 2003, at 11 a.m. local time, or at any adjournment or postponement thereof,
for the purposes set forth herein and in the accompanying Notice of Annual
Meeting. The Annual Meeting will be held at the Green Valley Ranch Resort
located at 2300 Paseo Verde Henderson, Nevada 89052.
Your vote at the Annual Meeting is important to us. Please vote your shares
of common stock by completing the enclosed proxy card and returning it to us in
the enclosed envelope. This proxy statement has information about the Annual
Meeting and was prepared by our management for the board of directors. This
proxy statement and the accompanying proxy card are first being mailed to you on
or about August 1, 2003.
GENERAL INFORMATION ABOUT VOTING
Who can attend the Annual Meeting?
Attendance at the Annual Meeting is limited to the Company's stockholders.
Admission to the meeting will be on a first-come, first-served basis.
Registration will begin at 10 a.m. and each stockholder may be asked to present
valid picture identification such as a driver's license or passport. Cameras,
recording devices and other electronic devices will not be permitted at the
meeting.
Who can vote?
We have two classes of capital stock outstanding: common stock and
preferred stock. Holders of common stock are entitled to one vote for each share
held. Preferred stock holders are not entitled to voting privileges and are
convertible into common stock under certain circumstances on a share-for-share
basis. Accordingly, only record holders of our common stock are entitled to vote
at the Annual Meeting.
You can vote your shares of common stock if our records show that you owned
the shares on June 30, 2003. On June 30, 2003, the record date for determination
of stockholders entitled to notice of and to vote at the Annual Meeting,
24,163,965 shares of our common stock were issued and outstanding. There were no
other voting securities outstanding as of the record date. You get one vote for
each share of common stock. You may not cumulate votes in the election of
directors. The enclosed proxy card shows the number of shares you can vote.
How do I vote by proxy?
Follow the instructions on the enclosed proxy card to vote on each proposal
to be considered at the Annual Meeting. Sign and date the proxy card and mail it
back to us in the enclosed envelope. If the proxy card is properly signed and
returned, the proxy holders named on the proxy card will vote your shares as you
instruct. If you sign and return the proxy card but do not vote on a proposal,
the proxy holders will vote for you on that proposal. Unless you instruct
otherwise, the proxy holders will vote "FOR" each of the director nominees and
"FOR" the other proposal to be considered at the meeting.
Signing and returning the proxy card does not affect the right to vote in
person at the Annual Meeting.
3
What if other matters come up at the Annual Meeting?
The matters described in this proxy statement are the only matters we know
will be voted on at the Annual Meeting. If other matters are properly presented
at the meeting, the proxy holders will vote your shares as they see fit.
Can I change my vote after I return my proxy card?
Yes. At any time before the vote on a proposal, you can change your vote
either by filing with William R. Barber, our Corporate Secretary, at our
principal executive offices at 6171 W. Century Blvd., Suite 200, Los Angeles,
California 90045, a written notice revoking your proxy card or by signing,
dating and returning to us a new proxy card. We will honor the proxy card with
the latest date. You may also revoke your proxy by attending the Annual Meeting
and voting in person.
May I vote in person at the Annual Meeting rather than by completing the proxy
card?
Although we encourage you to complete and return the proxy card to ensure
that your vote is counted, you may attend the Annual Meeting and vote your
shares in person.
What do I do if my shares are held in "street name"?
If your shares are held in the name of your broker, a bank, or other
nominee, that party should give you instructions for voting your shares.
How are votes counted?
A "quorum," for purposes of the Annual Meeting, means a majority of the
shares of common stock outstanding on the record date. This quorum of our shares
must be present at the Annual Meeting in order for the meeting to be held. For
purposes of determining the presence of a quorum, shares will be counted if they
are present in person or by proxy. Shares present by proxy will be counted as
present for purposes of determining the presence of a quorum even if the proxy
does not have authority to vote on all matters.
Abstentions: Abstentions are not counted in the tally of votes "FOR" or
"AGAINST" a proposal. A "WITHHELD" vote is the same as an abstention.
Abstentions and withheld votes are counted as shares present at the Annual
Meeting for purposes of determining the presence of a quorum.
Broker Non-Votes: Broker non-votes occur when shares held by a broker are
not voted with respect to a proposal because (1) the broker has not received
voting instructions from the beneficial owner of the shares, and (2) the broker
lacks the authority to vote the shares at the broker's discretion. Broker
non-votes are counted as shares present and entitled to be voted for purposes of
determining the presence of a quorum.
Abstentions and broker non-votes can have the effect of preventing approval
of a proposal where the number of affirmative votes, though a majority of the
votes cast, does not constitute a majority of the required quorum. All votes
will be tabulated by the inspector of election appointed for the Annual Meeting,
who will separately tabulate affirmative and negative votes, abstentions and
broker non-votes.
Proposal No. 1: Directors are elected by the affirmative vote of a
plurality of the votes cast for the respective nominees. Accordingly the seven
candidates receiving the highest number of affirmative votes will be elected as
directors. Stockholders may not cumulate votes in the election of directors.
Proposal No. 2: BDO Seidman, LLP will be ratified as independent accountants of
the Company for the fiscal year ending December 31, 2003, if the number of votes
cast in favor of the selection exceeds the number of votes cast against the
selection. Abstentions and broker non-votes will have no effect on the outcome.
Proposal No. 3: The compensation arrangements of the Company's non-employee
directors will be ratified if the number of votes cast in favor of the
compensation arrangement exceeds the number of votes cast against the
compensation arrangement. Abstentions and broker non-votes will have no effect
on the outcome.
4
Proposal No. 4: The affirmative vote of the holders of a majority of our
common stock present in person or represented by proxy and entitled to vote at
the Annual Meeting will be required to approve the amendment to our Articles of
Incorporation. Because approval of the amendment to our Articles of
Incorporation requires the affirmative vote of holders of a majority of the
shares of our common stock outstanding and entitled to vote on the amendment,
abstentions and broker non-votes will have the same effect as votes cast at the
Annual Meeting against the proposal.
Dissenter's Rights of Appraisal
Pursuant to applicable Nevada state law, there are no dissenter's or
appraisal rights relating to the matters to be acted upon at the Annual Meeting.
Who pays for this proxy solicitation?
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional solicitation materials furnished to the stockholders. Copies
of solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by a solicitation by
telephone, telegram or other means by directors, officers or employees of the
Company. No additional compensation will be paid to these individuals for any
such services. Except as described above, the Company does not presently intend
to solicit proxies other than by mail.
STOCKHOLDER PROPOSALS
Stockholder proposals that are intended to be presented at our 2004 annual
meeting and included in our proxy materials relating to the 2004 annual meeting
must be received by William R. Barber, Corporate Secretary, Accesspoint
Corporation, 6171 W. Century Blvd. Suite 200, Los Angeles, California 90045 no
later than April 17, 2004, which is 120 calendar days prior to the anniversary
of the mailing date for this year's proxy materials. All stockholder proposals
must be in compliance with applicable laws and regulations in order to be
considered for possible inclusion in the proxy statement and form of proxy for
the 2004 annual meeting.
If a stockholder wishes to present a proposal at our 2004 annual meeting
and the proposal is not intended to be included in our proxy statement relating
to the 2004 annual meeting, the stockholder must give advance notice to us prior
to the deadline for the annual meeting. In order to be deemed properly
presented, the notice of a proposal must be delivered to our Corporate Secretary
no later than August 3, 2004, which is 45 calendar days prior to the anniversary
of the date of the 2003 Annual Meeting. However, in the event that the 2004
annual meeting is called for a date which is not within thirty days of the
anniversary of the date of the 2003 Annual Meeting, stockholder proposals
intended for presentation at the 2004 annual meeting must be received by our
Corporate Secretary no later than the close of business on the tenth day
following the date on which public announcement of the date of the 2004 annual
meeting is first made. If a stockholder gives notice of such proposal after
August 3, 2004, then the proxy solicited by the board of directors for the 2004
annual meeting will confer discretionary authority to vote on such proposal at
that meeting, which may include a vote against such stockholder proposal.
5
PROPOSAL NO. 1
ELECTION OF DIRECTORS
General
On July 14, 2003, our board of directors, pursuant to its authority under
our certificate of incorporation and bylaws, adopted new bylaws which, among
other things, (i) increased the authorized number of directors from five (5) to
a range from a minimum of five (5) and a maximum of seven (7) directors and (ii)
classified our board of directors into two classes - Class I and Class II - with
staggered terms. Our board of directors has set the size of the board at seven
(7) directors. Our board of directors currently consists of five persons, with
two vacancies. Five positions on our board of directors are to be elected at
this meeting.
As a result of the classification of our board of directors under our new
bylaws, members of each class will be elected at the Annual Meeting. Three
directors will be designated as a "Class I Director" to be elected for a term
expiring at the 2004 annual meeting and two directors will be designated as a
"Class II Director" to be elected for a term expiring at the 2005 meeting, in
each case until their respective successors are duly elected and qualified or
until their earlier resignation or removal. Beginning with the 2004 annual
meeting, members of the class whose term expires at the meeting will be elected
each year to serve a two-year term until their successors have been elected and
qualified or until their earlier resignation or removal.
Our board of directors has nominated Messrs. Valentine, Byers and Savage
for election as Class I Directors to serve until the 2004 annual meeting and Mr.
Barber and Ms. Takeda for election as Class II Directors to serve until the 2005
annual meeting.
Holders of proxies solicited by this proxy statement will vote the proxies
received by them as directed on the proxy card or, if no direction is made, for
the election of the board of directors' five director nominees below. Proxies
cannot be voted for more than the five named director nominees.
Each director nominee for election has agreed to serve if elected, and we
have no reason to believe that any director nominee will be unavailable to
serve. If any director nominee is unable or declines to serve as a director at
the time of the Annual Meeting, the proxy holders will vote for a director
nominee designated by the present board of directors to fill the vacancy. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
"FOR" the director nominee named below.
The names of the director nominees, and certain information about them, are
set forth below.
Director
Name Age Since Position Class of Director
------ ----- --------- --------- -----------------
Gene Valentine (1)(2)........ 54 03/29/02 Chairman of the Board of Directors [Class I]
William B. Barber............ 59 10/31/02 Director [Class II]
Joseph Byers (1)(2).......... 76 03/29/02 Director [Class I]
Michael Savage............... 82 01/29/03 Director [Class I]
Becky H. Takeda.............. 40 07/03/03 Director [Class II]
----------
(1)......Member of the Audit Committee
(2)......Member of the Compensation Committee
On March 22, 2002, James Bentley ("Plaintiff"), a shareholder of the
Company, filed a shareholder derivative lawsuit against the Company, William R.
Barber and several other individual defendants for breach of contract, breach of
fiduciary duty, misappropriation of trade secrets, recovery of personal
property, imposition of a constructive trust, unfair competition in violation of
Business and Profession Code Section 17200, conversion, unfair business
practices, and usurpation of corporate opportunity. On several occasions,
Plaintiff also sought provisional remedies with the Court, including multiple
applications for preliminary injunction and the appointment of a receiver. To
date, none of Plaintiff's requests for provisional relief have been granted. On
June 26, 2002, the parties to the action executed a Settlement Agreement.
Plaintiff purported to rescind the Settlement Agreement in early December 2002.
Plaintiff thereafter filed an ex parte application for temporary restraining
order, which the court denied on December 24, 2002. The Court set a hearing for
Plaintiff's application for preliminary injunction in late January 2003.
Plaintiff thereafter continued the hearing on the application for preliminary
injunction on several occasions. Ultimately, after Defendant's opposition to the
preliminary injunction request was filed; Plaintiff took his application for
preliminary injunction off calendar completely. A number of depositions and law
and motion were conducted during January and February 2003. Trial has been set
for October 20, 2003. The Company will vigorously contest Plaintiff's
allegations and contention, including pursuing discovery in the case to obtain
all information necessary to conduct a proper defense. The Company has recorded
no liability for the potential of an adverse outcome of the action.
6
Mr. Gene C. Valentine, Chairman of the Board, Member of the Audit
Committee, Member of the Compensation Committee. Mr. Valentine joined the Board
in October 2002. Mr. Valentine is the founder and CEO of the Financial West
Group, based in Los Angeles. Mr. Valentine founded the Financial West Investment
Group, Inc. in 1985. A firm with over 300 registered sales representatives in 52
offices throughout the United States. Mr. Valentine's experiences included
serving for four years as Vice President of Marketing for Christopher Weil &
Co., a NASD registered broker/dealer, and he was director of Real Estate
Acquisitions for Windfarms, Ltd., an alternative energy subsidiary of Chevron
USA. He also served as a stockholder and officer of Horizon Realty, a real
estate brokerage firm located in San Francisco, following six years as a naval
officer. He is a NASD registered securities principal, received a BS degree from
Bethany College, and attended the University of Vienna, Austria. Mr. Valentine,
through the Financial West Group is a stockholder of Accesspoint. Mr. Valentine
is also the chairman of the Audit Committee. As an active participant in the
securities industry, we have determined that Mr. Valentine is a financial expert
and is independent as that term is used in Item 7(d)(3)(iv) of Schedule 14A
under the Exchange Act.
Mr. William R. Barber has been a Director since October 2002 and was Chief
Executive Officer and President from December 2002 to June 2003. Mr. Barber has
been actively involved with the development of a number of start-up ventures. He
has experience in a wide variety of fields of business and is an active investor
in a number of e-commerce companies. Mr. Barber is a stockholder of Accesspoint.
Mr. Joe Byers, Member of the Audit Committee, Member of the Compensation
Committee. Mr. Byers joined the Board in January 2002. Mr. Byers has more than
40 years experience in the banking business and was most recently Senior Vice
President of First National Bank based in Los Angeles. Mr. Byers focuses his
time and attention on developing additional processing platforms and financial
relationships for us. Mr. Byers is not a stockholder of Accesspoint.
Mr. Michael Savage joined the Board in January 2003. Mr. Savage has been
the founder of more than 15 successful companies, including Capital Reserve
Corporation of Los Angeles. He has extensive business experience in equipment
leasing, technology and the development of new marketplaces. Mr. Savage is
expected to focus his energies on the development of our affinity cards. Mr.
Savage is not a stockholder of Accesspoint.
Ms. Becky H. Takeda joined the Board in July 2003. Ms. Takeda is the
President of Merchants Billing Services and assumed the role of President and
Chief Executive Officer after the resignation of Mr. William R. Barber on June
23, 2003. From April 1995 to August 1999, Ms. Takeda was Vice President of
worldwide marketing and investor relations for SMART Modular, a global high tech
manufacturing and services firm. From August 1999 to December 1999, she served
as a consultant to SMART Modular. From January 2000 through May 2002 Ms. Takeda
served in a variety of positions including Chairman of the Board, President,
Director of Development and Chief Operating Officer at Digital Courier
Technologies, Inc., a credit card processor. Ms. Takeda has also held executive
management positions with several leading technology companies including IBM,
Apex Data, Inc., Asia Interactive Services and Instant Replay Corporation. Ms.
Takeda holds an M.B.A. in Finance from Santa Clara University and a B.A. in
Economics from UCLA.
7
Board of Directors
On July 14, 2003, our board of directors adopted new bylaws that, among
other things, (i) increased the authorized number of directors from five (5) to
a range from a minimum of five (5) and a maximum of seven (7) directors and (ii)
classified our board of directors into two classes with staggered terms. Our
board of directors has set the size of the board at seven (7) directors and
currently consists of five persons with two vacancies.
As a result of the classification of our board of directors under our new
bylaws, members of each class will be elected at the Annual Meeting. Two
directors are designated as a "Class I Director" to be elected for a term
expiring at the 2004 annual meeting and three directors are designated as a
"Class II Director" to be elected for a term expiring at the 2005 meeting, in
each case until their respective successors are duly elected and qualified or
until their earlier resignation or removal. Beginning with the 2004 annual
meeting, members of the class whose term expires at the meeting will be elected
each year to serve a two-year term until their successors have been elected and
qualified or until their earlier resignation or removal.
Our board of directors held 15 meetings in 2002. All of the then current
directors attended or participated in 75% or more of the aggregate of (i) the
total number of meetings of our board of directors and (ii) the total number of
meetings held by all committees of our board of directors on which such director
served during 2002.
Board Committees
Our board of directors has two standing committees: the Audit Committee and
Compensation Committee.
Audit committee - The Audit Committee is responsible for reviewing
financial information that will be provided to stockholders and others, the
systems of internal controls that management and our board of directors have
established, the performance and selection of independent accountants, our audit
and financial reporting processes, and our accounting practices. The Audit
Committee operates under a written audit committee charter adopted by our board
of directors. A copy of the charter is filed as Appendix A to this proxy
statement. Our Audit Committee met on March 26, 2003 in connection with the
audit of our financial statements for the fiscal year ended December 31, 2002,
and held 2 meetings in 2002. Our board of directors has determined that all
members of the Audit Committee are "independent" as that term is defined in Rule
4200(a)(15) of the listing standards of the National Association of Securities
Dealers. The Audit Committee currently consists of Eugene Valentine and Joseph
Byers. In addition, the Board has determined that Mr. Valentine is an "audit
committee financial expert" and is independent as that term is used in Item
7(d)(3)(iv) of Schedule 14A under the Exchange Act, as amended.
Compensation committee - The Compensation Committee is responsible for the
design, review, recommendation and approval of compensation arrangements for our
directors, executive officers and key employees, and for the administration of
our stock option plan, including the approval of grants under such plan to our
employees, consultants and directors. Our Compensation Committee held 1 meeting
in 2002. The Compensation Committee currently consists of Eugene Valentine and
Joseph Byers.
Nominating committee - We do not have a standing nominating committee.
Our board of directors may establish other committees to facilitate the
management of our business.
Compensation Committee Interlocks and Insider Participation
Our board of directors established our Compensation Committee in March
2002. Since inception our Compensation Committee has been composed exclusively
of non-employee members of our board of directors. Our Compensation Committee
currently consists of Eugene Valentine and Joseph Byers. Prior to March 2002,
the full board of directors participated in deliberations concerning executive
officer compensation.
None of the current members of our Compensation Committee was at any time
since the formation of Accesspoint an officer or employee of Accesspoint. None
of our current executive officers serve as a member of the board of directors or
Compensation Committee of any entity that has one or more of its executive
officers serving on our board of directors or our Compensation Committee.
8
Director Compensation
We do not provide cash compensation to our directors for service on the
board or for attendance at meetings of committees of the board on which they
serve. Our board members are reimbursed for reasonable travel and other
out-of-pocket expenses incurred in connection with attendance at meetings of the
board of directors and committees of the board of directors.
Resignation of Directors
On January 8, 2003, in a letter dated December 31, 2002, Marcia Allen
resigned as director of the Company. The resignation was for reasons regarding
the management's operations and practices. In Ms. Allen's letter she expressed
her frustration with the inability of the board of directors to direct
management of the Company. Ms. Allen expressed concern regarding the potential
for conflicts of interest and the number of related-party transactions that
might be perceived incorrectly by other interested parties. Ms. Allen expressed
extreme frustration with the lack of timely financial reporting. Ms. Allen also
indicated the Company has yet to develop a business plan, that the direction of
the Company has been guided by litigation and responding to problems rather than
planning. Ms. Allen finally expressed concern regarding a number of issues which
she feels there has been ongoing board inaction: stockholder communication,
stockholder meeting, proxies, conflict of legal counsel, resolution of
continuing disputes/litigation with former management, sale of the merchant
portfolio and the MBS management agreement.
The Company disagrees with the statements contained in Ms. Allen's
resignation letter in their entirety, and denies any charges of wrongdoing. As a
director, and past president of the Company, Ms. Allen had unrestricted access
to all of the Company's books, records, and employees, yet during her term as a
director of the Company never asked to be provided with any financial statement,
analyses, account reconciliations nor position papers on any transaction of the
Company. The Company continues to work with the board, stockholders and
employees to settle ongoing litigation, reduce debt, improve earnings, and
streamline its operations.
Vote Required
Directors are elected by the affirmative vote of a plurality of the votes
cast for the respective nominees, accordingly the five candidates receiving the
highest number of affirmative vote will be elected as directors. Stockholders
may not cumulate votes in the election of directors.
Recommendation of the Board of Directors
Our board of directors unanimously recommends that the stockholders vote
"FOR" the election of the director nominees named above.
9
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Ratification of Accountants
Our Audit Committee has recommended, and our board of directors has
approved, the appointment of Mendoza Berger & Company, LLP as our independent
accountants for the fiscal year ending December 31, 2003. Mendoza Berger &
Company, LLP has served as our independent accountant since May, 2003, replacing
Lichter Weil & Associates. Ratification of the independent accountant is not
required by the Company's bylaws or applicable law, but is being submitted to
the stockholders as a matter of good corporate practice. If ratification of this
selection of accountants is not approved by the stockholders, the Company will
review its future selection of accountants. Even if the selection is ratified,
our board of directors in its discretion may direct the appointment of a
different independent auditing firm at any time during the year if our board of
directors believes that such a change would be in the best interests of us and
our stockholders.
Audit Fees
a. Audit Fees. The total fees paid to Mendoza Berger & Company, LLP for
the audit of the Company's financial statements for the fiscal year
ended December 31, 2002 was $58,200. The Company also paid $38,452 to
Lichter, Weil & Associates, the Company's prior independent
accountants, for review of the financial statements included in the
Company's Form 10-QSB for the first, second and third quarters of
fiscal year 2002.
b. Financial Information Systems Design and Implementation Fees.
Neither Lichter, Weil & Associates nor Mendoza Berger & Company, LLP
performed any services in this category during the fiscal year ended
December 31, 2002.
c. All Other Fees. Lichter, Weil & Associates nor Mendoza Berger &
Company, LLP did not provide any services in this category during
fiscal year ended December 31, 2002.
Change in the Company's Certifying Accountants
On April 4, 2003, Lichter, Weil & Associates resigned as the Company's
principal independent accountants. At that time we filed a Current Report on
Form 8-K with the Securities and Exchange Commission on April 9, 2003, which was
amended by Forms 8-K/A filed with the Securities and Exchange Commission on
April 21, 2003 and May 1, 2003. The text of the Form 8-K Report, as amended, is
as follows:
"On April 4, 2003, in an email addressed to the controller of the
registrant, Lichter, Weil & Associates, independent auditors to the registrant,
resigned. During the past two years the audited financial statements of the
registrant prepared by Lichter, Weil & Associates contained an adverse opinion
that expressed that certain conditions indicated the Company might be unable to
continue as a going concern. The prior principal accountant's report on the
financial statement for either of the past two years did not contain a
disclaimer of opinion, nor were the opinions qualified or modified as to
uncertainty, audit scope, or accounting principles.
During the past two years, and the interim period since the date of the
last audit, December 31, 2001, there has been no disagreement with the former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure.
In March 2003, the former accountant advised the registrant of the need to
expand the scope of its audit, that information had come to the accountant's
attention during the time period covered by the audit then under way, that if
further investigated, may have caused it to question management's
representations or the information contained within its financial statements.
Due to the accountant's resignation on April 4, 2003, concurrently with the
preliminary assessments of, and the commencement of, the additional work
required for an investigation, the accountant did not expand the scope of its
audit or conduct such further investigation beyond such preliminary steps.
Former accountant has furnished the registrant with a letter addressed to the
Commission stating that it agrees with the statements made by the registrant in
response to this Item 304(a).
10
The Audit Committee of the Board of Directors has approved the change of
the accountant and on April 25, 2003, the registrant engaged the firm of Mendoza
Berger & Company, LLP, Certified Public Accountants, as the principal accountant
to audit the registrant's financial statements. The Audit Committee of the Board
of Directors has approved the engagement of this firm as principal accountant.
During the registrant's two most recent fiscal years, or any subsequent interim
period, the registrant has not consulted the newly engaged accountant regarding
the application of accounting principles to a specified transaction, or the type
of audit opinion that might be rendered on the registrant's financial statements
nor has it consulted the newly engaged accountant regarding any matter that was
either the subject of a disagreement or a reportable event."
A copy of the letter from Lichter, Weil & Associates, dated April 30, 2003,
addressed to the Securities and Exchange Commission was filed as an exhibit to
the Company's Current Report on Form 8-K/A filed with the Securities and
Exchange Commission on May 1, 2003.
Representatives of Mendoza Berger & Company, LLP are expected to be present
at the Annual Meeting and will have the opportunity to make a statement if they
desire to do so. They are also expected to be available to respond to
appropriate questions. Representatives of Lichter, Weil & Associates are not
expected to be at the Annual Meeting. Unless marked to the contrary, proxies
received will be voted "FOR" ratification of the appointment of Mendoza Berger &
Company, LLP as the independent accountants for the fiscal year ended December
31, 2003.
Vote Required
Mendoza Berger & Company, LLP will be ratified as independent accountants
of the Company for the fiscal year ending December 31, 2003 if the number of
votes cast in favor of the selection exceeds the number of votes cast against
the selection. Abstentions and broker non-votes will have no effect on the
outcome. Unless marked to the contrary, proxies received will be voted "FOR"
ratification of the non-employee director compensation arrangement.
Recommendation of the Board of Directors
Our board of directors unanimously recommends that the stockholders vote
"FOR" ratification of the appointment of Mendoza Berger & Company, LLP, as
independent accountants for the fiscal year ending December 31, 2003.
11
PROPOSAL NO. 3
RATIFICATION OF THE COMPENSATION ARRANGEMENTS OF
THE COMPANY'S DIRECTORS
We currently do not provide cash compensation to our directors for service
on the board or for attendance at meetings of committees of the board on which
they serve. Our board of directors believes that it is in the best interests of
the Company and its stockholders for the Company to attract and retain persons
of the highest caliber to serve on the board of directors. In July, 2003 our
board of directors reviewed the current compensation arrangements for persons
serving on the board of directors and concluded that the Company's policy to not
compensate its non-employee directors was not a standard practice among
comparable companies in its industry and that, in order to continue to attract
capable independent directors in the current environment, the Company should
begin to provide compensation to its non-employee directors for service on the
board. Accordingly, our board of directors adopted the following compensation
structure to help ensure that the Company can continue to attract and retain the
services of persons capable of serving on the board of directors:
- Directors will not receive a retainer for service on the board of
directors.
- Non-employee directors will receive compensation in an amount equal to
$1,000 in stock options, under the terms of the Accesspoint
Corporation 1999 Stock Incentive Plan, based on the average share
price for the preceding three month period, for each board meeting
attended and for attendance at each meeting of committees of the board
on which they serve.
- All directors will be reimbursed for reasonable travel and other
out-of-pocket expenses incurred in connection with attendance at
meetings of the board and committees of the board.
The benefits that may be awarded under the new non-employee director
compensation arrangements for the 2003 fiscal year are currently not
determinable. We anticipate that there will be monthly regular meetings of the
board of directors and such additional special meetings as necessary for the
board of directors to fully carry out its fiduciary duties and responsibilities
to the Company and its stockholders. In addition, we anticipate that the Audit
Committee and Compensation Committee will hold at least 2 regular meetings,
respectively, per year with additional meetings as necessary to fully carry out
their responsibilities.
The following table shows the benefits that would have been received by the
individuals listed below during the 2002 fiscal year had the new non-employee
director compensation arrangements been in effect.
Name and Position Dollar Value ($) of
----------------- stock options
-------------------
Gene Valentine....................................... $10,000
Chairman of the Board
William B. Barber.................................... $2,000
Director
Joseph Byers......................................... $10,000
Director
Michael Savage....................................... $0
Director
Becky Takeda......................................... $0
Director, Chief Executive Officer, President
All Executive Officers............................... $0
All Non-Employee Directors........................... N/A
All Employees, Excluding Executive Officers.......... N/A
12
Stockholder ratification of the compensation arrangement for our
non-employee directors is not required by our bylaws, Nevada corporate law, the
rules and regulations of the Securities and Exchange Commission or otherwise.
However, the board of directors believes that the compensation arrangement is
appropriate and prudent, and is submitting the proposal to the stockholders for
ratification as a matter of good corporate practice. If ratified by the
stockholders, or otherwise effectuated by the board of directors, these director
compensation arrangements will be effective immediately. If the stockholders do
not approve ratification of the compensation arrangements of our directors, our
board of directors or compensation committee will review and, if it deems
necessary, adjust its methodology and basis for determining compensation
arrangements in the future. Even if the compensation arrangements are ratified,
our board of directors or compensation committee in their discretion may adjust
the compensation arrangements at any time if it believes that such a change
would be in the best interests of the Company and its stockholders.
Vote Required
The compensation arrangements of our directors will be ratified if the
number of votes cast in favor of the compensation arrangement exceeds the number
of votes cast against the compensation arrangement. Abstentions and broker
non-votes will have no effect on the outcome.
Board Recommendation
Our board of directors believes that the compensation arrangements for our
non-employee directors as described above are in the best interests of our
stockholders and us and unanimously recommends that the stockholders vote "FOR"
the proposal to approve the compensation arrangements.
13
PROPOSAL NO. 4
AMENDMENT OF ACCESSPOINT CORPORATION'S ARTICLES OF INCORPORATION
In July, 2003, our board of directors unanimously approved, and recommended
that our stockholders approve, an amendment to the first paragraph of Article
Fourth of the Accesspoint Corporation's Articles of Incorporation to increase
the number of authorized shares of our common stock from 25,000,000 shares to
100,000,000 shares. The proposed amendment would replace the first paragraph of
Article Fourth in its entirety as follows:
"FOURTH. Authorized Capital. The aggregate number of shares of stock
which the Corporation shall have the authority to issue is One Hundred
Five Million (105,000,000) shares, which are divided into One Hundred
Million (100,000,000) shares of Common Stock, $.001 par value per share
(the "Common Stock"), and Five Million (5,000,000) shares of Preferred
Stock, $.001 par value per share (the "Preferred Stock")."
No increase in the number of authorized shares of our preferred stock is
proposed at this time. The additional authorized shares would be part of the
existing class of common stock and would not affect the terms of the outstanding
common stock or the rights of the holders of common stock. The respective rights
and limitations applicable to our common stock will remain unchanged under the
proposed amendment. Our common stock has no associated preemptive rights. We
have no current arrangements, understandings or plans to issue a material amount
of shares of common stock.
Our current Articles of Incorporation provides for an authorized capital
consisting of 25,000,000 shares of common stock and 5,000,000 shares of
preferred stock. As of June 30, 2003, 24,163,965 shares of common stock were
issued and outstanding, and 1,055,600 shares of our preferred stock are issued
and outstanding. In addition, as of June 30, 2003, 6,000,000 shares of common
stock were reserved for issuance under the Accesspoint Corporation 1999 Stock
Incentive Plan, of which options to purchase 1,776,445 shares of common stock
were issued and outstanding. Warrants to purchase 801,661 shares of common stock
were also issued and outstanding as of June 30, 2003. Therefore, assuming the
exercise of all options and warrants and conversion of all convertible
securities outstanding as of June 30, 2003 plus the ungranted but reserved stock
options under our 1999 Stock Incentive Plan, we would be oversubscribed by
5,163,965 common shares. As a consequence, we have no shares available for
issuance and insufficient shares to meet all of our obligations in the event of
exercise of all outstanding convertible securities.
Purpose and Effect of Amendment to Articles of Incorporation
Our board of directors is seeking to increase the total number of
authorized shares of common stock from 25,000,000 to 100,000,000 to ensure that
shares will be available both to cover currently outstanding obligations on
convertible securities and for future issuance in the event that our board of
directors determines that it is necessary or advisable to raise additional
capital through sale of securities to fund business operations, to attract
strategic partners and/or candidates for business combination who can assist us
in generating revenue streams and are capable of increasing our revenues, to
declare share dividends (when appropriate) and affect share splits (if necessary
or advisable), or for other corporate purposes.
The proposed amendment to the Articles of Incorporation should facilitate
our ability to accomplish these goals and other business and financial
objectives in the future without delaying such activities for further
stockholder approval, except as may be required in particular cases by our
charter documents, applicable law or the rules of any stock exchange or other
system on which our securities may then be listed.
Although our board of directors will authorize the issuance of additional
common shares only when it considers doing so to be in the best interests of the
Company and its stockholder, the availability for issuance of additional common
shares could also enable our board of directors to render more difficult or
discourage an attempt to obtain control of the Company through, for example, a
proposed merger, tender offer, proxy contest or unsolicited takeover attempt.
When, in the judgment of our board of directors such action would be in the best
interests of the Company and its stockholders, the issuance of common shares
could be used to create voting impediments or to discourage persons seeking to
gain control of the Company, for example, by the sale of common shares to
purchasers favorable to our board of directors. The issuance of new shares could
also be used to dilute the share ownership of a person or entity seeking to
obtain control of the Company should our board of directors consider the action
of such entity or person not to be in the best interests of the Company and its
stockholders. Future issuances of additional shares of common stock or
securities convertible into common stock, whether pursuant to an acquisition or
other corporate transaction, would have the effect of diluting the voting rights
and could have the effect of diluting earnings per share and book value per
share of existing stockholders. Neither management nor our board of directors is
aware of any planned effort on the part of any party to accumulate material
amounts of common stock or to acquire control of the Company by means of a
merger, tender offer, proxy contest or otherwise, or to change the Company's
management.
14
Our board of directors is required to make any determination to issue
common shares based upon its judgment as to the best interests of the Company
and its stockholders. Our board of directors believes that the authorization of
the additional common shares is in the best interests of the Company and its
stockholders and believes that it is advisable to authorize such additional
shares and have them available to ensure that shares will be available both to
cover currently outstanding obligations on convertible securities and for future
issuance in connection with possible funding of uses not presently determinable
and as may be deemed to be feasible and in the best interests of the Company.
If the proposed amendment to our Articles of Incorporation is approved, the
amendment will be filed promptly with the Secretary of State of the State of
Nevada. The amendment would be effective upon the date of filing.
Vote Required
The affirmative vote of the holders of a majority of our common stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting will be required to approve the amendment to our Articles of
Incorporation. Because approval of the amendment to our Articles of
Incorporation requires the affirmative vote of holders of a majority of the
shares of our common stock outstanding and entitled to vote on the amendment,
abstentions and broker non-votes will have the same effect as votes cast at the
Annual Meeting against the proposal.
Recommendation of the Board of Directors
Our board of directors believes that this proposal is in the best interest
of the Company and its stockholders and unanimously recommends that the
stockholders vote "FOR" the approval of the proposal to increase the number of
authorized shares of Accesspoint's common stock from 25,000,000 shares to
100,000,000 shares.
15
OTHER MATTERS
Our board of directors knows of no other business that will be presented at
the Annual Meeting. If any other business is properly brought before the Annual
Meeting, proxies received will be voted in respect thereof in accordance with
the recommendation of the board of directors. Discretionary authority with
respect to such other matters is granted by the execution of the enclosed proxy.
MANAGEMENT
Executive Officers, Directors and Other Key Employees
The following table sets forth certain information regarding our executive
officers, directors and other key employees as of June 30, 2003.
Name Age Position
---- --- --------
Gene Valentine (1)(2)................... 52 Chairman of the Board of Directors
Becky H. Takeda......................... 40 Chief Executive Officer and President
William R. Barber....................... 57 Director
Joseph Byers (1)(2)..................... 76 Director
Michael Savage.......................... 82 Director
Lawrence C. Early, CPA.................. 37 Controller
----------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
Eugene Valentine. See "Proposal No. 1: Election of Directors" for Mr. Valentine's biography.
Becky Takeda. See "Proposal No. 1: Election of Directors" for Ms. Takeda's biography.
William R. Barber. See "Proposal No. 1: Election of Directors" for Mr. Barber's biography.
Joseph Byers. See "Proposal No. 1: Election of Directors" for Mr. Byer's biography.
Michael Savage. See "Proposal No. 1: Election of Directors" for Mr. Savage's biography.
Lawrence Early. Mr. Early joined the Company in October 2002 in the
capacity of Controller. Mr. Early previously served as the Regional Controller
of Production Resource Group (PRG) in Las Vegas, Nevada. Prior to PRG, Mr. Early
was the Chief Financial Officer of eSat, Inc., a satellite Internet provider.
Mr. Early was a Principal at Lichter, Early & Company, LLP CPAs for nine years,
specializing in the audits of publicly-traded hi-tech companies and
broker-dealers in securities. Mr. Early holds a Master of Business
Administration in International Finance from the American Graduate School of
International Management (Thunderbird) and a Bachelor of Science in Finance from
California State University - Fresno. Mr. Early is a member of the Institute of
Management Accountants and is a Certified Managerial Accountant. Mr. Early is a
member of the California Society of Certified Public Accountants and is a
certified public accountant
Relationships Among Executive Officers and Directors
Our executive officers are elected by the board of directors on an annual basis
and serve until the next annual meeting of stockholders or until their
successors are duly elected and qualified or until their earlier resignation or
removal. Except as otherwise disclosed in their respective biography, there are
no family relationships among any of the directors or executive officers of
Accesspoint.
16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and executive officers and persons who own more than ten percent
of a registered class of our equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of Accesspoint. Officers,
directors and greater than ten percent stockholders are required by SEC
regulations to furnish us with copies of Section 16(a) forms they file.
To our knowledge, based solely on review of the copies of such reports
furnished to us, we believe that, during the year ended December 31, 2002, all
of our officers, directors and greater-than-ten percent stockholders complied
with all Section 16(a) filing requirements.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following table sets forth certain summary information concerning the
compensation earned by our chief executive officer and our other most highly
compensated executive officers (determined on the basis of their salary and
bonus for the 2002 fiscal year) for services rendered in all capacities to us
and our subsidiaries for the fiscal years ended December 31, 2002, 2001 and
2000, respectively. No other executive officer who would have otherwise been
includable in such table on the basis of salary and bonus earned for our 2002
fiscal year has been excluded by reason of his or her termination of employment
or change in executive status during that fiscal year. The individual included
in the following table are collectively referred to as the "named executive
officers."
Summary Compensation Table
Long Term Compensation
------------------------------
Annual Compensation Awards Payouts
------------------------------------ ------------------------------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Position Year Salary Bonus Compensation Award(s) Options/SARS Payouts Compensation
--------------------------- ---- ------ ----- ------------ -------- ------------ -------- ------------
($) ($) ($) ($) (#) ($) ($)
Becky H. Takeda................. 2002 N/A N/A N/A N/A N/A N/A N/A
Chief Executive Office and 2001 N/A N/A N/A N/A N/A N/A N/A
President (3) 2000 N/A N/A N/A N/A N/A N/A N/A
Marcia Allen.................. 2002 42,585 0 0 0 0 0 0
Former President (1) 2001 N/A N/A N/A N/A N/A N/A N/A
2000 N/A N/A N/A N/A N/A N/A N/A
William R. Barber............... 2002 4,000 0 0 0 0 0 0
Former Chief Executive Officer and 2001 N/A N/A N/A N/A N/A N/A N/A
President (2) 2000 N/A N/A N/A N/A N/A N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
(1) Represents Ms. Allen's period of service from January 7, 2002 through
August 15, 2002.
(2) Represents Mr. Barber's period of service from October 31,2002 through
December 31, 2002.
(3) Ms. Takeda receives no compensation from the company for her services.
17
Option Grants in Last Fiscal Year
There were no options granted to our named executive officers during the
fiscal year ended December 31, 2002. We did not grant any stock appreciation
rights during the year ended December 31, 2002.
During 2002, we granted no options to purchase shares of our common stock
to our employees and consultants.
Aggregated Option Exercises In Last Fiscal Year
and Fiscal Year-End Option Values
There were no option exercises by our named executive officers during the
fiscal year ended December 31, 2002. No stock appreciation rights were exercised
during the fiscal year ended December 31, 2002, and no stock appreciation rights
were outstanding at the close of such year.
Employment Contracts and Termination of Employment,
and Change-in-Control Arrangements
There are neither employment contracts nor change-in-control arrangements
in force for any employee of the Company as of June 30, 2003. On August 15,
2002, Ms. Marcia Allen resigned her duties as President of the Company, Ms.
Allen did not cite any reasons for the resignation. On June 23, 2003, Mr.
William R. Barber resigned his duties as Chief Executive Officer and President
of the Company. Mr. Barber cited the ongoing personal contentiousness of the
Bentley litigation.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2002 with
respect to the shares of our common stock that may be issued under our existing
equity compensation plans.
Number of Securities
Remaining Available for
Number of Securities to Weighted-average Future Issuance Under Equity
be Issued Upon Exercise Exercise Price of Compensation Plans
of Outstanding Options, Outstanding Options, (Excluding Securities Reflected
Plan Category Warrants and Rights Warrants and Rights in Column (a))
------------- ----------------------- ------------------- --------------------------------
(a) (b) (c)
----------------------- ------------------- --------------------------------
Equity Compensation Plans Approved 1,776,445 $0.35 4,223,555 (2)
by Stockholders (1)
Equity Compensation Plans Not 1,283,884 $0.35 ---
Approved by Stockholders
-------------------------- --------------------------
Total 3,060,329 4,223,555
========================== ==========================
----------
(1) Consists of the 1999 Stock Incentive Plan.
(2) Consists of shares available for future issuance under the 1999 Stock
Incentive Plan.
18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the shares of our common stock and preferred stock as of June 30,
2003, except as noted in the footnotes below, by:
- Each person whom we know to be the beneficial owner of 5% or more of our
outstanding common stock or preferred stock;
- Each named executive officer;
- Each of our directors; and
- All of our executive officers and directors as a group.
Holders of common stock are entitled to one vote for each share held.
Preferred stock holders are not entitled to voting privileges and are
convertible into common stock under certain circumstances on a share-for-share
basis. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage of ownership of that person,
shares of common stock or preferred stock subject to options held by that person
that are currently exercisable or that will become exercisable within 60 days
after June 30, 2003, are deemed outstanding even if they have not actually been
exercised. Those shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of any other person. As of June 30, 2003,
24,163,965 shares of our common stock were issued and outstanding and 1,055,600
shares of our preferred stock were issued and outstanding. Unless otherwise
indicated in the footnotes below, and subject to community property laws where
applicable, each of the named persons have sole voting and sole investment power
with respect to the shares shown as beneficially owned. The address of each
named executive officer and director listed below is c/o Accesspoint
Corporation, 6171 W. Century Blvd., Suite 200, Los Angeles, California 90045.
Beneficial Ownership of Shares
------------------------------------------------------------------
Percentage
Name of Beneficial Owner Number of of Number of Percentage
------------------------ Preferred Preferred Common of Common
---------------- ----------- --------------- ------------
Executive officers and directors:
Becky H. Takeda............................... ______0___ ___% 14,000 .05%
-------
William R. Barber............................. ______0___ ___% 40,000 .16%
-------
Gene Valentine...............................0 ______0___ ___% 125,000 .5%
-------
Joseph Byers.................................. ______0___ ___% 3,000 .01%
-------
Michael Savage ______0___ ___% 2,600 .01%
-------
Other 5% Beneficial Stockholders:
Net Integrated Systems (1).................... ______0___ ___% 5,192,735 22%
-------
Net Integrated Systems (2).................... ______0___ ___% 5,510,294 23%
-------
All directors and executive officers as a group ______0____ ___% 184,600 1%
(5 persons).......................................
-----------------
(1) Shares issued to Net Integrated Systems in consideration for the extension
of the Revolving Line of Credit Secured Promissory Note dated December 14,
2001. Net Integrated Systems is currently in the control of a provisional
liquidator pending the dissolution of the entity in the Supreme Court of
Bermuda.
(2) In conjunction with the Secured Loan Agreement and Pledge Agreement and the
Revolving Line of Credit Secured Promissory Note dated December 14, 2001,
Access Holdings LP, benefiting James W. Bentley and Mary Ann Bentley and
family, made and gave to Net Integrated Systems the Irrevocable Proxy and
Stock Power on Certificate No. 2450 in the amount of 1,905,037 shares, to
attend meetings of the shareholders, and to represent, vote, and otherwise
act in the same manner as they were personally present. Additionally, Tom
Djokovich gave Net Integrated Systems, the Irrevocable Proxy and Stock
Power on Certificate No. 1161 in the amount of 3,605,257 shares, to attend
meetings of the shareholders, and to represent, vote, and otherwise act in
the same manner as he were personally present. Net Integrated Systems is
currently in the control of a provisional liquidator pending the
dissolution of the entity in the Supreme Court of Bermuda.
19
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee (the "Audit Committee")
of the Board of Directors of Accesspoint Corporation (the "Company") with
respect to the Company's consolidated audited financial statements for the
fiscal year ended December 31, 2002, which include the consolidated balance
sheets of the Company as of December 31, 2002 and 2001, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the three years in the period ended December 31, 2002, and the
notes thereto. The information contained in this report shall not be deemed to
be "soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates it by reference in such filing.
Review with Management
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management.
Review and Discussions with Independent Accountants
The Audit Committee has discussed with Mendoza Berger & Company, LLP, prior
independent accountants, the matters required to be discussed by SAS 61
(Codification of Statements on Accounting Standards) which include, among other
items, matters related to the conduct of the audit of the Company's financial
statements.
The Audit Committee has also received written disclosures and the letter
from Mendoza Berger & Company, LLP, the Company's prior independent accountants,
required by Independence Standards Board Standard No. 1 (which relates to the
accountant's independence from the Company and its related entities) and has
discussed with Mendoza Berger & Company, LLP their independence from the
Company.
Conclusion
Based on the review and discussions referred to above, the Audit Committee
recommended to the Company's Board that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2002.
Submitted by the Audit Committee of
the Board of Directors,
Eugene Valentine
Joseph Byers
20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. William R. Barber, Chief Executive Officer, President, Chief Financial
Officer and Director, was appointed as an officer and director in November 2002.
The transactions described below occurred both before and after Mr. Barber
commenced to serve as an officer and director.
Mr. Barber is the principal owner of Ameropa, Inc. ("Ameropa"), a Bahamas
corporation. Ameropa owned two Bermuda corporations, Internet Online Services,
Inc. ("IOS") and Network Integrated Systems, Ltd. ("NIS"). Mr. Barber and two
colleagues agreed to provide funding to Accesspoint. Although IOS and Ameropa
advanced funds from time to time, Mr. Barber and his colleagues decided to
consolidate the funding agreements through NIS. Accordingly we entered into a
written Secured Loan Agreement and associated Revolving Line of Credit Secured
Promissory Note (together "Line of Credit") with NIS on December 14, 2001.
Concurrently, on December 14, 2001, we also entered into a written Management
Agreement with NIS. Under the Line of Credit NIS agreed to advance to us from
time to time as we requested advances not to exceed $5,000,000. All outstanding
balances bear interest at six percent (6%) per annum. NIS has the right to call
the loan at any time. The Line of Credit is secured by a blanket security
interest in all of our assets. Under the Line of Credit, we have granted to NIS
certain powers of attorney for the protection and perfection of NIS's security
interest in the collateral. Notwithstanding the rights that we granted to NIS,
NIS may demand payment from us and have access to our collateral only after NIS
has exhausted other sources of repayment. In connection with the Line of Credit,
three of our shareholders, Tom M. Djokovich, Access Holdings Limited
Partnership, and Alfred Urcuyo (together "Option Shareholders"), granted to NIS
an option to purchase a total of 7,131,688 shares of our common stock at $2.00
per share. If NIS elects to exercise its option, then the Option Shareholders
have the right whether to contribute the option proceeds to us for repayment of
the Line of Credit. If the Option Shareholders elect to contribute the proceeds
to us, then NIS may not have recourse to our assets as a source of repayment.
However, if we do not receive such option proceeds, then NIS may proceed against
the collateral. Further, after 18 months, the Option Shareholders have the right
to "call" the options. If NIS exercises the options, then the Option
Shareholders are obligated to contribute the proceeds to us for repayment of the
Line of Credit. If NIS refuses to exercise the options, then the options expire
and NIS would have recourse to our assets for repayment of the Line of Credit.
We also entered into a Management Agreement, dated December 14, 2001, with
NIS. We appointed NIS as our general manager, with the duty and authority
(subject to the approval of our board of directors) to manage the day-to-day
operations of the business, including our financial affairs. Under this
Management Agreement, we are obligated to pay NIS $10,000 per month, but this
"fee shall accrue and only be payable to the extent the Company shall have
current operating profits reasonably sufficient to pay such fee." In addition,
if we terminated the Management Agreement without cause, then we would have been
obligated to pay NIS all amounts then owing, plus the sum of $1.0 million.
However, we also had the right to terminate the Management Agreement for cause.
The term "cause" includes the "filing of a voluntary or involuntary application
for or appointment of a receiver" for NIS. Mr. Barber owns 50% of Net Integrated
Systems ("NIS") and serves as one of its three directors.
NIS appointed Ameropa as its agent to manage the relationship between NIS
and us under the terms of the Line of Credit. In February 2002, Ameropa began to
provide cash management services to us by sweeping our operating accounts on a
daily basis and funding the same accounts as items were presented for payment.
Through October 2002 we dealt exclusively with Ameropa for the funding of the
Line of Credit. During the year ended December 31, 2002 there were more than 300
such transactions, none of a material size, between Ameropa and our various
operating accounts. As of December 31, 2002 we were indebted to NIS under the
Line of Credit in the amount of $1,372,293. We have made no payments on this
balance. During the period in which Ameropa managed the relationship between NIS
and us, Mr. Barber did not have an operational role with us and he was not an
officer or a member of the Board of Directors.
In October 2002, Mr. Barber, as a Director of NIS and 50% owner, placed NIS
into receivership in Bermuda. Thereupon, we terminated the Management Agreement
with NIS for cause. NIS is currently in receivership in Bermuda and we have not
received any indication from the receiver on behalf of NIS, of an intention to
assert a claim against us. However we cannot guarantee that a claim will not be
asserted in the future. On February 4, 2003, the Supreme Court of Bermuda
entered an Order that NIS "be wound up". On the same day, the Supreme Court of
Bermuda entered an Order consenting to the withdrawal by the other two directors
of NIS of a challenge to the appointment of a receiver for NIS.
21
In October 2002, we entered into a Master Support Services Agreement
("Services Agreement") with Merchants Billing Services, Inc. ("MBS"). The
Agreement calls for MBS to provide underwriting, administrative support,
customer support and technical support services as well as a source of
financing, liquidity and cash management services to us. MBS is a Nevada
corporation majority owned by Mr. Barber. On November 1, 2002 MBS assumed
responsibility for the payment of all of our employees as well as the assumption
of their related accrued vacation and sick time. On November 1, 2002 MBS
established a series of control accounts for the receipt and management of our
cash. These control accounts are designated "For the Benefit Of" and are
segregated from the operating accounts of MBS. Authority to move and withdraw
funds from these accounts resides exclusively with us. For the year ended
December 31, 2002, there were more than 50 such transactions, none of a material
size, between MBS and us. As of December 31, 2002, we were indebted to MBS for
$150,990. In the meeting of the Board of Directors of March 4, 2003, we were
notified that Merchants Billing Services, Inc. was canceling its Master Support
Services Agreement with the registrant in 120 days, said cancellation was
subsequently extended through September 17, 2003. Effective July 1, 2003, the
Company resumed payments to employees and vendors. While the Agreement remains
in effect, the range of services provided by MBS no longer includes payments to
the Company's employees and vendors. There are no future minimum payments under
the Services Agreement.
22
ADDITIONAL INFORMATION
Notwithstanding anything to the contrary set forth in any of our previous
or future filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate this Proxy
Statement or future filings made by us under those statutes, the Audit Committee
Report, the Audit Committee Charter, and reference to the independence of the
Audit Committee members are not deemed filed with the Securities and Exchange
Commission and shall not be deemed incorporated by reference into any of those
prior filings or into any future filings made by us under those statutes.
We have filed an Annual Report on Form 10-KSB, as amended, for the year
ended December 31, 2002 with the Securities and Exchange Commission. You may
obtain, free of charge, a copy of the Form 10-KSB by writing to William R.
Barber, Secretary, Accesspoint Corporation, 6171 W. Century Blvd., Suite 200 Los
Angeles, California 90045.
Our board of directors knows of no other business that will be presented to
the Annual Meeting. If any other business is properly brought before the Annual
Meeting, proxies received will be voted in respect thereof in accordance with
the recommendation of the board of directors. Discretionary authority with
respect to such other matters is granted by the execution of the enclosed proxy.
It is important that the proxies be returned promptly and that your shares
be represented. You are urged to sign, date and promptly return the enclosed
proxy card in the enclosed envelope.
A copy of our Annual Report for the 2002 Fiscal Year has been mailed
concurrently with this Proxy Statement to all stockholders entitled to notice of
and to vote at the Annual Meeting. This Annual Report is not incorporated into
this Proxy Statement and is not considered proxy solicitation material.
By Order of the Board of Directors,
Becky H. Takeda,
Chief Executive Officer and President
Dated: July 18, 2003
Los Angeles, California
23
APPENDIX A
AUDIT COMMITTEE CHARTER
Accesspoint Corporation
Audit Committee Charter
As of December 31, 2002
I. Preamble:
The Board of Directors of this corporation has formed an audit
committee to promote the financial transparency of the corporation and
to ensure the integrity of the corporation's financial reporting
processes and products. This charter is meant to identify the personnel
and functions of the audit committee. These guidelines contemplate the
involvement of the outside counsel and where appropriate the
involvement of the full Board of Directors.
II. Audit Committee Membership and Function:
A. Definitions
1. Independence: A member of the audit committee and an
auditor, respectively, are independent if they have no
relationship to the corporation that may interfere with the
exercise of their independence from management and the
corporation, such as employment with the corporation or an
affiliate within five years; corporate compensation other than
fees for Board service; family relationship with a corporate
officer or employee; or relationship to a business affiliate
or partner of the corporation.
2. Financial Literacy: A member of the audit committee shall
have financial literacy, as signified by the ability to read
and understand fundamental financial statements, including a
company's balance sheet, income statement, and cash flow
statement. Directors who have limited familiarity with finance
can achieve such "literacy" through company-sponsored training
programs.
B. Prerequisites of Audit Committee Membership
1. The corporation shall have an audit committee composed
solely of independent directors.
2. The audit committee shall be comprised of a minimum of two
directors, each of whom is financially literate or becomes
financially literate within a reasonable period of time after
his or her appointment to the audit committee, and at least
one member of the audit committee shall have accounting or
related financial management experience.
C. Audit Committee Function
1. The Board and the audit committee have the ultimate
authority and responsibility to select, oversee, evaluate,
and, where appropriate, to replace the outside auditor (or
to nominate the outside auditor to be proposed for
shareholder approval in any proxy statement). Oversight
responsibilities are described further in Section III,
below.
2 The outside auditor is ultimately accountable to the board
of directors and the audit committee as the
representatives of the shareholders.
24
III. Independent Auditor Oversight:
A. Auditor Qualifications
1. The audit committee is responsible for ensuring its receipt
from the outside auditors of a formal written statement
delineating all relationships between the auditor and the
company consistent with Independent Boards Board Standard
98-1.
2. The audit committee is also responsible for actively
engaging in a dialogue with the audit with respect to any
disclosed relationships or services that may impact the
objectivity and independence of the auditor and to take or
recommend that the full Board take appropriate action to
ensure the independence of the outside auditor.
3. The audit committee shall also with respect to the outside
auditor
a) Review the audit firm's proposed executive partner
and auditing personnel background and experience.
b) Determine auditor firm's registration with the
AICPA's SEC practice division and participation in
the voluntary peer review professional practice
programs.
c) Review CPA's firm's litigation history and
professional liability insurance.
B. Auditor Engagement Letter.
1. Auditor's letter should define nature and scope of audit
engagement and provide contract for professional services of
the auditing firm.
C. Annual Audit Planning and Supervision
1. Inquire regarding audit scope, timing and conduct.
2. Ascertain that audit team has requisite industry and
corporate knowledge, appropriate ratio of staff assistants to
supervisors, and supervisory review procedures.
3. Confirm that auditor's written audit plan give sufficient
consideration to (a) financial disclosures; (b) operational
efficiency; (c) corporate compliance; (d) compliance with
laws.
D. Annual Audit Review. In connection with the annual audit, the audit
committee shall:
1. Ascertain any disagreements among audit personnel or
between audit personnel and company management.
2. Review corporate accounting policies and practices
regarding:
a) Revenue recognition;
b) Reserving;
c) Asset capitalization; and
d) Extraordinary charges or write-offs.
3. Affirm that accounting policies are consistent with
industry practices, that correct requirements are reflected in
accounting policies and the accounting policies are consistent
with a fair presentation of the financial statement in
conformity with generally accepted accounting principles.
E. Quarterly Review
1. Prior to the time that the company files its Quarterly
Report on Form 10-Q, the auditor will conduct an SAS 71
Interim Financial Review.
2. Prior to the filing of the Form 10-QSB and prior to the
public announcement of the company's quarterly results, the
auditor will discuss with the audit committee, or at least its
chairman, and a representative of financial management, in
person, or by telephone conference call, the matters described
in AU Section 380, Communications with Audit Committee,
including significant adjustments, significant new accounting
policies, and disagreements with management.
25
F. Annual Report
1. Review corporate annual report to evaluate whether it
contains a fair and meaningful presentation of financial
statements, footnotes, and supplementary information.
2. Affirm that the annual report discusses changes in
corporate reporting or accounting practices (for example,
departures from generally accepted accounting principles,
exceptions to the consistent application of accounting
principles, etc.)
3. Review disclosure and ensure that practices are fully and
fairly disclosed.
4. Affirm appropriate use of statutory "safe harbor"
disclosure if report contains forward looking information.
5. Prepare for the annual report to shareholders and for
inclusion in the Company's annual filing on Form 10-KSB a
letter to shareholders stating whether with respect to the
prior fiscal year:
a) management has reviewed the audited financial
statements with the audit committee, including a
discussion of the quality of the accounting
principles as applied and significant judgments
affecting the company's financial statements;
b) the outside auditors have discussed with the audit
committee the outside auditors' judgments of the
quality of those principles as applied;
c) the members have discussed among themselves,
without management or the outside auditors present,
the information disclosed to the audit committee
described in a) and b) above;
d) the audit committee, in reliance on the review and
discussions conducted with management and the outside
auditors believe that the company's financial
statements are fairly presented in conformity with
Generally Accepted Accounting Principles (GAAP) in
all material respects.
G. Additional Matters for Review. The audit committee shall also:
1. Review outside counsel's letter regarding litigation,
claims and assessments and review accounting treatment
concerning contingency losses and effect on financial
statement
2. Confer with Outside Auditor or counsel to ascertain
corporation's compliance regarding:
a. securities statutes;
b. antitrust laws;
c. income tax laws;
d. labor laws;
e. industry regulation.
3. Ascertain the existence of and review any material
non-arm's length transactions.
IV. Internal Auditors:
A. Audit Staff Qualifications. The audit committee shall:
1. Review background of internal auditing directors and groups
and confer with outside auditor regarding competence of
internal audit staff.
2. Ascertain internal audit staff's participation in programs
of the Institute of Internal Auditors or other professional
societies.
B. Audit Function. The audit committee shall also: 1. Review
internal audit charter or plan.
26
2. Review internal audit reporting responsibilities.
C. Internal Audit Review.
1. Review internal audit staff work to ensure proper planning, supervision
and review.
2. Review reports regarding compliance audits, operational audits,
financial audits.
3. Review reports on internal accounting and administrative controls, to
determine objectivity of recommendations.
4. Ascertain implementation of prior years' audit recommendations.
5. Ascertain any management disagreements with internal auditors.
6. Review audit staff relationship and interaction with other departments
and outside auditors.
V. Audit Committee Report:
A. Annual Report. The audit committee shall report at least annually
to the Board, setting forth:
1. the audit committee's function and responsibilities;
2. a chronological review of committee's activities,
particularly auditing and accounting cycle activities;
3. a summary of the committee's recommendations, particularly
with respect to the selection of the auditing firm and the
review of the auditor's report;
4. attach critical audit reports and management letters.
B. Committee Charter. The audit committee shall:
1. At least annually, affirm in the proxy statement the
existence of an audit committee charter and compliance with
the charter;
2. At least annually, review charter for any necessary
revisions and refer all revisions to the Board;
3. At least triennially attach audit committee charter to the
annual proxy statement.
27
ACCESSPOINT CORPORATION
PROXY
Annual Meeting of Stockholders, September 17, 2003
This Proxy is Solicited on Behalf of the Board of Directors of
Accesspoint Corporation
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders to be held September 17, 2003 and
the Proxy Statement and appoints Gene Valentine and William R. Barber, and each
of them, the Proxy of the undersigned, with full power of substitution, to vote
all shares of Common Stock of Accesspoint Corporation (the "Company") which the
undersigned is entitled to vote, either on his or her own behalf or on behalf of
any entity or entities, at the Annual Meeting of Stockholders of the Company to
be held at the Green Valley Ranch Resort located at 2300 Paseo Verde Henderson,
Nevada 89052, on Wednesday, September 17, 2003 at 11 a.m. local time (the
"Annual Meeting"), and at any adjournment or postponement thereof, with the same
force and effect as the undersigned might or could do if personally present
thereat. The shares represented by this Proxy shall be voted in the manner set
forth on the reverse side.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
Please detach and return in the envelope provided
--------------------------------------------------------------------------------
28
|X| Please mark as in this example
The Board of Directors recommends a vote IN FAVOR OF the directors listed
below and a vote IN FAVOR OF each of the listed proposals. This proxy, when
properly executed, will be voted as specified below. If no specification is
made, this Proxy will be voted IN FAVOR OF the election of the directors listed
below and IN FAVOR OF the other proposals.
1. To elect two Class I Directors for a term of one year and
three Class II Directors for a term of two years or until
their successors are duly elected and qualified or until
their earlier resignation or removal.
To withhold authority to vote, mark "FOR ALL EXCEPT" and
FOR ALL EXCEPT write the nominee's name on the line below:
FOR ALL WITHHOLD ALL
(a) Eugene Valentine |_| |_| |_|
(b) William B. Barber __________________________________________________________
(c) Joseph Byers
(d) Michael Savage __________________________________________________________
(e) Becky H. Takeda
__________________________________________________________
2. FOR AGAINST ABSTAIN To ratify the appointment of Mendoza Berger & Company, LLP as independent
|_| |_| |_| accountants of the Company for the fiscal year ending December 31, 2003.
3. FOR AGAINST ABSTAIN To ratify the compensation arrangements of the Company's non-employee
|_| |_| |_| directors.
4. FOR AGAINST ABSTAIN To approve a proposal to amend the Company's Articles of Incorporation to
|_| |_| |_| increase the authorized number of shares of common stock from 25,000,000 to
100,000,000 shares.
6. To transaction such other business as may properly come before the meeting
or any adjournment or meeting or any adjournment or adjournments thereof.
Mark if you plan to Mark here for change of address and provide your current
attend the Annual address on the lines below
Meeting
|-| _______________________________________________________
_______________________________________________________
_______________________________________________________
Please print the name(s) appearing on each share certificate(s)
over which you have voting authority:-------------------------------------------------------------------------------------------
(Print name(s) on certificate)
Please sign your
name: Date:
-------------------------------------------------- -----------------------
(Authorized Signature(s))
Note: Please sign, date and return promptly in the accompanying
envelope. Please sign exactly as your name appears on this proxy card.
If shares are held jointly, each person 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.
WHETHER OR NOT YOU ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO
SIGN AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT YOUR
STOCK MAY BE REPRESENTED AT THE ANNUAL MEETING.
29