<PAGE> 1
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:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
AMERICAN CLASSIC VOYAGES CO.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
1) Amount previously paid:
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No:
- --------------------------------------------------------------------------------
3) Filing party:
- --------------------------------------------------------------------------------
4) Date filed:
- --------------------------------------------------------------------------------
- -------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
AMERICAN CLASSIC VOYAGES CO.
TWO NORTH RIVERSIDE PLAZA
SUITE 200
CHICAGO, ILLINOIS 60606
(312) 258-1890
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
ON JUNE 24, 1999
------------------------
TO: The stockholders of American Classic Voyages Co.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of American
Classic Voyages Co. (the "Company") will be held at Robin Street Wharf, 1380
Port of New Orleans Place, New Orleans, Louisiana 70130-1890, on Thursday, June
24, 1999 at 10:00 A.M., Central Daylight Time, for the following purposes:
1. To elect eight (8) directors to serve one-year terms, commencing
immediately upon their election, until their respective successors are
duly elected and qualified;
2. To approve the 1999 Stock Option Plan; and
3. To transact such other business as may properly come before the meeting
or any adjournment(s) thereof.
The board of directors has fixed the close of business on April 25, 1999,
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting. You are cordially invited to attend the
meeting. Whether you plan to attend the meeting or not, we respectfully request
that you fill in, date, sign and return the enclosed proxy at your earliest
convenience in the enclosed return envelope.
By Order of the Board of Directors
/s/ Jordan B. Allen
Jordan B. Allen
Executive Vice President, General
Counsel and Secretary
April 19, 1999
------------------------
IMPORTANT:
PLEASE FILL IN, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD IN THE
POSTPAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING. IF YOU ATTEND THE MEETING YOU MAY VOTE IN PERSON EVEN THOUGH YOU HAVE
SENT IN YOUR PROXY.
<PAGE> 3
AMERICAN CLASSIC VOYAGES CO.
TWO NORTH RIVERSIDE PLAZA
SUITE 200
CHICAGO, ILLINOIS 60606
(312) 258-1890
------------------------
PROXY STATEMENT
------------------------
INTRODUCTION
This Proxy Statement is being mailed or otherwise furnished to stockholders
of American Classic Voyages Co., a Delaware corporation (the "Company"), on or
about April 30, 1999, in connection with the solicitation by the board of
directors of the Company of proxies to be voted at the annual meeting of
stockholders of the Company (the "Annual Meeting") to be held at Robin Street
Wharf, 1380 Port of New Orleans Place, New Orleans, Louisiana 70130-1890 at
10:00 A.M., Central Daylight Time, on Thursday, June 24, 1999, and at any
adjournment(s) thereof. Stockholders who, after reading this Proxy Statement,
have any questions should contact Jordan B. Allen, Executive Vice President,
General Counsel and Secretary of the Company, in Chicago, Illinois at (312)
258-1890.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the Annual Meeting, stockholders of the Company will consider and vote
upon:
(i) the election of eight (8) directors of the Company who will serve
one-year terms commencing immediately upon their election, until their
respective successors are duly elected and qualified;
(ii) the approval of the 1999 Stock Option Plan; and
(iii) such other business as may properly come before the meeting or
any adjournment(s) thereof.
------------------------
The date of this Proxy Statement is April 19, 1999.
PROXY SOLICITATION
The enclosed proxy is solicited by the board of directors of the Company.
The cost of this proxy solicitation is anticipated to be nominal and will be
borne by the Company, including charges and expenses of brokerage firms and
others for forwarding solicitation material to beneficial owners of the
Company's common stock. The solicitation generally will be effected by mail and
such cost will include the cost of preparing and mailing these proxy materials.
In addition to the use of the mails, proxies also may be solicited by personal
interview, telephone, facsimile, or other similar means. Although solicitation
will be made primarily through the use of the mail, officers, directors or
employees of the Company may solicit proxies personally or by the
above-described means without additional remuneration for such activity.
ANNUAL REPORTS
Stockholders are concurrently being furnished with a copy of the Company's
Annual Report for 1998 which contains the Company's audited financial statements
at December 31, 1998. Additional copies of the Annual Report and of the
Company's Annual Report on Form 10-K for the year ended December 31, 1998 as
filed with the Securities and Exchange Commission (the "SEC") may be obtained by
any stockholder by contacting Karen Brown, Investor Relations Coordinator of the
Company, at Two North Riverside Plaza, Chicago, Illinois 60606, (312) 258-1890,
and such copies will be furnished promptly at no additional expense.
<PAGE> 4
VOTING SECURITIES AND PROXIES
As of April 15, 1999, 14,411,036 shares of the Company's common stock, $.01
par value per share ("Common Stock"), were issued and outstanding. The Company's
Common Stock is the only class of shares entitled to vote at the Annual Meeting.
Only stockholders of record at the close of business on April 25, 1999 (the
"Record Date"), have the right to receive notice of and to vote at the Annual
Meeting and any adjournment(s) thereof. Each share outstanding on the Record
Date entitles the holder thereof to one vote in each matter to be voted upon at
the Annual Meeting. The holders of a majority of the Company's issued and
outstanding Common Stock, present in person or represented by proxy, shall
constitute a quorum at the Annual Meeting. Abstentions and broker non-votes are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. If, however, a quorum is not present or represented at
the Annual Meeting, the stockholders entitled to vote at the Annual Meeting,
whether present in person or represented by proxy, shall only have the power to
adjourn the Annual Meeting until such time as a quorum is present or
represented. At such time as a quorum is present or represented by proxy, the
Annual Meeting will reconvene without notice to stockholders, other than an
announcement at the prior adjournment of the Annual Meeting, unless the
adjournment is for more than thirty (30) days or a new record date has been set.
Two stockholders of the Company, each of which is a wholly owned subsidiary of
Equity Group Investments, Inc., a company indirectly controlled by Samuel Zell
and Ann Lurie, can direct the vote of approximately 50.5% of the outstanding
shares of Common Stock. See "Security Ownership of Certain Beneficial Owners"
for more information about Equity and certain of its affiliates.
If a proxy in the form enclosed is duly executed and returned, the shares
of Common Stock represented thereby will be voted in accordance with the
specifications made thereon by the stockholder. If no such specifications are
made, such proxy will be voted: (i) for election of the Management Nominees (as
hereinafter defined) for directors; (ii) for approval of the 1999 Stock Option
Plan; and (iii) at the discretion of Proxy Agents (as hereinafter defined) with
respect to such other business as may properly come before the Annual Meeting or
any adjournment(s) thereof. Abstentions are counted in tabulations of the votes
cast on proposals presented to stockholders, whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved. Under
applicable Delaware law, a broker non-vote will have no effect on the outcome of
the election of directors, but will have the effect of a vote against approval
of the 1999 Stock Option Plan. A proxy is revocable prior to its exercise by
either a subsequently dated, properly executed proxy appointment or by a
stockholder giving notice of revocation to the Company in writing. The mere
presence at the Annual Meeting of a stockholder who appointed a proxy does not
itself revoke the appointment.
ELECTION OF DIRECTORS
(PROPOSAL 1)
VOTING AND THE MANAGEMENT NOMINEES
At the Annual Meeting, eight (8) directors will be elected to serve
one-year terms commencing immediately upon their election and will hold office
until the next Annual Meeting or until their respective successors are duly
elected and qualified. Management's nominees for the eight (8) director
positions to be filled by vote at the Annual Meeting are (the "Management
Nominees"):
Philip C. Calian
Arthur A. Greenberg
Jerry R. Jacob
Emanuel L. Rouvelas
Mark Slezak
Joseph P. Sullivan
Jeffrey N. Watanabe
Samuel Zell
All of the Management Nominees are currently serving as directors of the
Company. For information regarding the Management Nominees, see "Directors and
Executive Officers of the Company" in this section.
2
<PAGE> 5
According to the Company's Second Amended and Restated By-laws, the number of
directors of the Company shall be not less than two (2) and not more than
thirteen (13). By resolution dated March 3, 1999, the board of directors
determined that the number of directors shall be eight (8).
At the Annual Meeting, if a quorum is present, the vote by holders of a
majority of the Company's Common Stock present in person or represented by proxy
shall elect the directors. It is the present intention of Samuel Zell and Philip
C. Calian, who will serve as the Company's proxy agents at the Annual Meeting
(the "Proxy Agents"), to vote the proxies which have been duly executed, dated
and delivered and which have not been revoked in accordance with the
instructions set forth thereon or, if no instruction had been given or
indicated, to elect the Management Nominees as directors. The board of directors
does not believe that any of the Management Nominees will be unwilling or unable
to serve as a director. However, if prior to the election of directors any of
the Management Nominees becomes unavailable or unable to serve, the board of
directors reserves the right to name a substitute nominee or nominees and the
Proxy Agents expect to vote the proxies for the election of such substituted
nominee(s).
RECOMMENDATION OF BOARD OF DIRECTORS
WITH RESPECT TO THE MANAGEMENT NOMINEES:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE MANAGEMENT
NOMINEES. IF A CHOICE IS SPECIFIED ON THE PROXY BY A STOCKHOLDER, THE SHARES
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE
VOTED "FOR" THE MANAGEMENT NOMINEES.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth as of April 15, 1999 the name, age, position
and offices with the Company, present principal occupation or employment and
material occupations and employment for the past five (5) years of each person
who has been nominated for election as a director or is presently an executive
officer of the Company.
<TABLE>
<CAPTION>
PRINCIPAL POSITIONS WITH THE COMPANY;
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
---- --- --------------------------------------
<S> <C> <C>
Philip C. Calian............... 36 Director, President and Chief Executive Officer of the
Company since February 1995; Executive Vice President and
Chief Operating Officer of the Company from December 1994
until February 1995; Director, Chairman of the Board and
Chief Executive Officer of The Delta Queen Steamboat Co.
("Delta Queen") and Great Hawaiian Cruise Line, Inc., the
Company's primary operating subsidiary for American Hawaii
Cruises, ("American Hawaii") since February 1995; Chairman
of the Board of CFI Industries, Inc. ("CFI") from March 1995
until August 1996; Co-Chairman and Chief Executive Officer
of CFI from September 1994 until March 1995; Acting
President and Chief Executive Officer of CFI from January
1994 until September 1994; Vice President, Chief Financial
Officer and Treasurer of CFI from September 1993 until
September 1994; and Director of Mergers and Acquisitions of
Great American Management and Investment, Inc. from May 1990
until December 1994.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
PRINCIPAL POSITIONS WITH THE COMPANY;
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
---- --- --------------------------------------
<S> <C> <C>
Arthur A. Greenberg............ 58 Director of the Company since 1982; Vice President and
Assistant Treasurer of the Company from January 1990 until
June 1995; Vice President and Assistant Treasurer of Delta
Queen and American Hawaii from August 1993 until June 1995;
Senior Vice President of American Hawaii from June 1993
until August 1993; principal of Arthur A. Greenberg, C.P.A.
and Senior Tax Advisor of Equity Group Investments, Inc.
since 1997; President of the accounting firm of Greenberg &
Pociask, Ltd. from 1971 until 1997; and Executive Vice
President of Equity from 1986 through 1996.
Jerry R. Jacob................. 65 Director of the Company since 1991 and a private investor;
Chairman of the Board of Midway Airlines Corporation from
August 1994 until February 1997; Vice President of American
Airlines, Inc. from 1974 to June 1993; and Director of
Syratech Corp.
Emanuel L. Rouvelas............ 54 Director of the Company since June 1998; senior partner of
the law firm Preston Gates Ellis & Rouvelas Meeds in
Washington, D.C. since 1974; and Vice Chairman and Trustee
of the American College of Greece.
Mark Slezak.................... 40 Director of the Company since June 1998; Director, Chief
Financial Officer and Treasurer of Lurie Investments, Inc.,
a private investment management company, since March 1995;
Senior Vice President of Equity from January 1991 until
January 1997; Treasurer of Equity from January 1990 until
January 1996; and Director of Equity.
Joseph P. Sullivan............. 66 Director of the Company since July 1997; Director and member
of the Executive Committee of IMC Global, Inc. since March
1996; Chairman of the Board of The Vigoro Corporation from
May 1991 until March 1996; and Chief Executive Officer of
The Vigoro Corporation from May 1991 until September 1994.
Jeffrey N. Watanabe............ 56 Director of the Company since June 1998; partner and
principal of the law firm Watanabe, Ing & Kawashima since
1971; and Director of American Savings Bank, Grace Pacific
Corporation, Hawaiian Electric Industries, Inc., First
Insurance Company of Hawaii, Ltd., and The Children's
Television Workshop.
Samuel Zell.................... 57 Chairman of the Board of the Company since August 1993;
Director of the Company since 1980; previously Chairman of
the Board of the Company from 1984 through 1988; Chairman of
Equity Group Investments, L.L.C., a private investment firm,
since 1999; Chairman of the Board of Equity Group
Investments, Inc., Anixter International Inc., Capital
Trust, Inc., Chart House Enterprises, Inc., Jacor
Communications, Inc. and Manufactured Home Communities,
Inc.; Chairman of the Board of Trustees of Equity Office
Properties Trust and Equity Residential Properties Trust;
and Director of Davel Communications, Inc., Fred Meyer, Inc.
and Ramco Energy plc. See "Security Ownership of Certain
Beneficial Owners" for a discussion of Mr. Zell's
relationship with Equity.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL POSITIONS WITH THE COMPANY;
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
---- --- --------------------------------------
<S> <C> <C>
Jordan B. Allen................ 36 Executive Vice President of the Company since January 1998;
Senior Vice President of the Company from June 1995 until
January 1998; Vice President of the Company from August 1993
until June 1995; General Counsel of the Company since August
1993; Secretary of the Company since February 1997;
Executive Vice President of Delta Queen and American Hawaii
since January 1998 and Director since June 1998; Senior Vice
President of Delta Queen and American Hawaii from February
1997 until January 1998; Vice President of Delta Queen and
American Hawaii from August 1993 until January 1997; and a
member of the law firm Rosenberg & Liebentritt, P.C. from
September 1990 until December 1996.
Townsend E. Carman............. 60 Executive Vice President -- Honolulu Operations of American
Hawaii since September 1998; Senior Vice President -- Marine
Operations of American Hawaii from March 1997 until
September 1998; Vice President -- Marine Operations of Delta
Queen from September 1989 until January 1995; and Senior
Project Manager of Guido Perla & Associates, a naval
architect firm, from February 1995 until April 1996 and from
September 1996 until March 1997.
Roderick K. McLeod............. 58 Executive Vice President of the Company since February 1999;
Senior Vice President -- Marketing of Carnival Corporation
from July 1997 through February 1999; Executive Vice
President of Sales, Marketing and Passenger Services of
Royal Caribbean Cruises Ltd. from January 1972 through
August 1986 and October 1988 through June 1996; and
President and Chief Operating Officer of Norwegian Cruise
Line from August 1986 through October 1988.
Randall L. Talcott............. 38 Vice President -- Finance, Treasurer and Chief Accounting
Officer of the Company since October 1998; Vice
President -- Finance, Assistant Treasurer and Chief
Accounting Officer of Delta Queen and American Hawaii since
October 1998; Treasurer of ANTEC Corporation from July 1994
through September 1998; and consultant from January 1994
through July 1994.
J. Scott Young................. 47 Executive Vice President -- Operations of the Company and
President of Delta Queen and American Hawaii since April
1998; Senior Vice President -- Operations of the Company
from June 1996 until April 1998; Executive Vice President of
Delta Queen from June 1992 until May 1994; Director of Delta
Queen since May 1994; Executive Vice President of Delta
Queen since August 1993; Chief Operating Officer of Delta
Queen since June 1996; and Director, Executive Vice
President and Chief Operating Officer of American Hawaii
since June 1996.
Russell Varvel................. 54 Executive Vice President and General Sales Manager of Delta
Queen and American Hawaii since June 1996; Senior Vice
President -- Sales and Marketing of Delta Queen from June
1995 through June 1996; and Senior Vice President and
General Sales Manager of Delta Queen from January 1991
through June 1995.
</TABLE>
5
<PAGE> 8
BOARD COMMITTEES AND BOARD OF DIRECTOR AND COMMITTEE MEETINGS
During 1998, the Company's board of directors held four (4) meetings. All
directors were present for at least 75% of the meetings of the board and its
committees they were eligible to attend.
The board of directors has an Executive Committee which consisted of
Messrs. Calian and Zell during 1998. The Executive Committee possesses and may
exercise the full and complete authority of the board of directors in the
management and business affairs of the Company during the intervals between the
meetings of the board of directors. All action by the Executive Committee is
reported to the board of directors at its next meeting and such actions are
subject to revision and alteration by the board of directors, provided that no
rights of third persons can be prejudicially affected by the subsequent action
of the board of directors. Vacancies on the Executive Committee are filled by
the board of directors. However, during the temporary absence of a member of the
Executive Committee, due to illness or inability to attend a meeting for other
cause, the remaining member(s) of the Executive Committee may appoint a member
of the board of directors to act in the place, and with all the authority, of
such absent member. For 1999, the Executive Committee will consist of Messrs.
Calian and Zell, who will continue in office until the Committee is dissolved,
terminated or reorganized or such members are replaced. The Executive Committee
did not hold any meetings in 1998.
The Company has an Audit Committee which consists of Messrs. Jacob and
Sullivan. The Audit Committee has the power to (i) recommend to the board of
directors the independent certified public accountants to be selected to serve
the Company, (ii) review with the independent certified public accountants the
planned scope and results of the annual audit, their reports and
recommendations, (iii) review with the independent certified public accountants
matters relating to the Company's system of internal controls, and (iv) review
all transactions between the Company and related parties. The Audit Committee
held two (2) meetings in 1998. For 1999, the Audit Committee will consist of
Messrs. Jacob, Sullivan and Greenberg.
The Company has a Compensation Committee which consisted of Messrs. Jacob
and Slezak in l998. The Compensation Committee exercises certain powers of the
board of directors in connection with compensation matters, including incentive
compensation and benefit plans. The Compensation Committee did not hold any
meetings in 1998, but did approve various actions by unanimous written consents
in lieu of a meeting. For 1999, the Compensation Committee will consist of
Messrs. Jacob and Slezak.
6
<PAGE> 9
EXECUTIVE COMPENSATION
GENERAL
The following table sets forth all compensation awarded to, earned by, or
paid to the Chief Executive Officer during 1998 and those persons who were, at
December 31, 1998, the other four most highly compensated executive officers of
the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ---------------------
--------------------- SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)(1) COMPENSATION($)(2)
--------------------------- ---- --------- -------- --------------------- ------------------
<S> <C> <C> <C> <C> <C>
Philip C. Calian 1998 243,654 0 500,000 6,400
President and Chief 1997 233,654 0 0 6,400
Executive Officer 1996 200,000 129,050 202,180 8,250
J. Scott Young 1998 235,052 0 200,000 6,400
Exec. VP - Operations; 1997 194,423 0 0 6,400
President and Chief 1996 167,077 46,817 75,000 7,500
Operating Officer of American
Hawaii and Delta Queen
Jordan B. Allen 1998 194,230 0 312,500 6,400
Exec. VP and General 1997 176,181 0 0 6,400
Counsel 1996 137,595 55,550 35,000 9,000
Russell Varvel 1998 188,392 0 19,000 6,400
Exec. VP and General 1997 174,519 0 0 6,400
Sales Manager of 1996 156,682 46,081 60,000 7,500
American Hawaii and Delta Queen
Townsend E. Carman 1998 146,843 0 17,000 6,400
Exec. VP - Honolulu 1997 105,000 29,250 10,000 10,659(3)
Operations of American 1996 -- -- -- --
Hawaii
</TABLE>
- ---------------
(1) In December 1996, the Company terminated 45,000 and 40,000 Options and Share
Appreciation Rights ("SARs") previously granted to Messrs. Young and Varvel,
respectively, and issued replacement options to these recipients for the
same number of underlying securities with vesting over the same period as
the SARs.
(2) Reflects amounts paid under the Advantage Savings Retirement Plan, a plan
qualified under Section 401 of the Internal Revenue Code of 1986, as amended
(the "Code"), for both the discretionary profit-sharing component and
matching contribution.
(3) Includes $5,859 in reimbursable moving expenses paid by the Company.
7
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
----------------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($)(2) 10%($)(3)
---- ---------- ------------ -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Philip C. Calian......... 500,000(4) 30.9% 17.25 1/5/08 5,424,216 13,746,029
J. Scott Young........... 200,000(4) 12.4% 17.25 1/5/08 2,169,686 5,498,411
Jordan B. Allen.......... 312,500(4) 19.3% 17.25 1/5/08 3,390,135 8,591,268
Russell Varvel........... 7,000(5) .4% 17.25 1/5/08 75,939 192,444
12,000(6) .8% 16.00 12/18/08 120,748 305,999
Townsend E. Carman....... 5,000(5) .3% 17.25 1/5/08 54,242 137,460
12,000(6) .8% 16.00 12/18/08 120,748 305,999
</TABLE>
- ---------------
(1) These numbers are for presentation purposes only and are not predictions of
future stock price.
(2) Assumes a stock price of: $28.09 at the end of ten years for options granted
with an exercise price of $17.25 per share and an expiration date of January
5, 2008; and $26.06 at the end of ten years for the options granted with an
exercise price of $16.00 per share and an expiration date of December 18,
2008.
(3) Assumes a stock price of: $44.74 at the end of ten years for options granted
with an exercise price of $17.25 per share and an expiration date of January
5, 2008; and $41.50 at the end of ten years for the options granted with an
exercise price of $16.00 per share and an expiration date of December 18,
2008.
(4) Options were granted to Messrs. Calian, Young and Allen on January 5, 1998.
These options vest in five equal annual installments beginning one year
after the initial grant, subject to certain acceleration provisions based on
appreciation of the Company's Common Stock price. As the average closing
price of the Company's Common Stock exceeded 130% of the exercise price of
the granted options for a 30 calendar-day period during 1998, two-fifths of
such options vested in 1998.
(5) Options were granted to Messrs. Varvel and Carman on January 5, 1998. These
options vest in three equal annual installments beginning one year after the
initial grant.
(6) Options were granted to Messrs. Varvel and Carman on December 18, 1998.
These options vest in three equal annual installments beginning one year
after the initial grant.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- --------------------- --------------------
<S> <C> <C> <C> <C>
Philip C. Calian............... 0 0 517,180/300,000 2,362,348/112,500
J. Scott Young................. 0 0 154,999/130,001 569,783/128,342
Jordan B. Allen................ 0 0 195,833/189,167 521,856/83,857
Russell Varvel................. 15,000 86,250 45,000/25,667 322,707/77,544
Townsend E. Carman............. 0 0 3,333/23,667 14,849/51,076
</TABLE>
COMPENSATION OF DIRECTORS
The Company pays its non-employee members of the board a certain number of
stock units as an annual retainer. Each stock unit is convertible into one share
of the Company's Common Stock at a time determined in advance by each director.
As set forth in the Company's 1992 Stock Option Plan, as amended, on an annual
basis commencing July 1, 1997, non-employee directors have received stock units
with a market value equal to
8
<PAGE> 11
$30,000, based on the average closing price of the Company's Common Stock for
the five (5) trading days preceding the grant date. One-quarter (1/4) of such
stock units vest on the first day of each calendar quarter.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the 1998 year, the members of the Compensation Committee of the board
of directors were Messrs. Jacob and Slezak. During 1998, no interlocking
relationships existed.
Messrs. Zell and Slezak served as members of the board of directors of
numerous non-public companies owned in whole or in part by Mr. Zell or his
affiliates which did not have compensation committees, and in many cases the
executive officers of those companies included Messrs. Zell and Slezak.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate future filings, including the
Proxy Statement, in whole or in part, the Compensation Committee Report
presented below and the Performance Graph following shall not be incorporated by
reference into any such filings.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's board of directors is
responsible for recommending to the board of directors the Company's
compensation policy for executive officers. As a rule, the Company's policy is
to pay base salaries and bonuses that are both competitive in the marketplace
and which will attract and retain highly qualified personnel. In addition,
through grants of stock options, the Company provides meaningful incentives
intended to reward both individual and corporate performance as well as linking
its executive officers' interests with those of the Company's stockholders. To
the extent consistent with its compensation policy, it is the Company's intent
to structure its compensation in a manner which will comply with the limitations
imposed by the Omnibus Budget Reconciliation Act of 1993 regarding the
deductibility of executive compensation under Section 162(m) of the Code.
ANNUAL COMPENSATION
The Company has adopted a competitive salary and bonus structure for its
executive officers based on a review of local and national peer group salary
surveys. Base salaries for executive officers are reviewed annually and are
designed to be competitive with other well-managed companies in the travel,
leisure and entertainment industry, as adjusted by sales volume and
profitability. This group includes, but is not limited to, the companies
contained in the Peer Group Index selected by the Company for purposes of the
Performance Graph set forth below. Annual increases are based, in part, on an
executive officer's responsibilities, performance evaluations and expected
future contributions. Factors considered in evaluating the performance of an
executive officer include the achievement of pre-established quantitative goals
that are specific to an individual's and the Company's performance.
Incentive compensation, in the form of annual bonuses, is closely tied to
the Company's performance, provided that certain overall corporate goals are
met. This form of compensation, available to the Company's managers, including
its executive officers, is structured in a manner that is intended to encourage
continued profitability and to enhance stockholder value. The Company has two
bonus plans, the Performance Management Objectives ("PMO") Bonus Plan and the
Executive Bonus Plan, which are available to employees based on their position
within the Company. Under the Company's bonus plans, each participant receives
an annual review to determine what, if any, bonus should be paid, and awards are
based on the Company's performance during the year as compared to budgeted
operating income approved by the board. For 1998, the Company did not achieve
stated financial objectives to qualify executive officers for bonus payments
and, accordingly, no bonus payments were made to executive officers for the
year.
9
<PAGE> 12
LONG-TERM COMPENSATION
The Compensation Committee believes that whereas bonus programs provide
rewards for positive short-term individual and corporate performance, the
interests of stockholders are best served by giving executive officers the
opportunity to participate in the appreciation of the Company's stock through
the granting of stock options. The Compensation Committee believes that over an
extended period of time, stock performance will, to a meaningful extent, reflect
individual performance, and that such arrangements further reinforce management
goals and incentives to achieve stockholder objectives. Under the Company's 1992
Stock Option Plan, the Compensation Committee determines those officers to whom,
and the time or times at which, stock options will be awarded as well as the
number of shares. The number of shares granted to an individual is based upon
established guidelines relating to the recipient's position, salary and the
Company's stock price. During 1998, the Company granted options to purchase
1,618,000 shares to officers and management employees of the Company and its
subsidiaries.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Compensation Committee believes that the compensation of the Company's
Chief Executive Officer should be both competitive and based on Company
performance. In 1998, Mr. Calian was paid a salary of $243,654 and was not paid
a bonus since the Company did not achieve the stated financial objectives set by
the board of directors. It has been the Company's desire to establish a
long-term, incentive-based compensation arrangement with Mr. Calian and Mr.
Calian's desire to receive a significant portion of his compensation in the form
of stock option grants. Accordingly, in 1998 the Company granted to Mr. Calian
options to purchase 500,000 shares of Common Stock vesting over five (5) years,
subject to certain acceleration provisions based on appreciation of the
Company's Common Stock price. In 1998, options to purchase 200,000 shares were
accelerated based on the appreciation of the market value of the Company's
Common Stock. The grant of options to Mr. Calian was made at the market price
for the Common Stock on the date of the grant. The Compensation Committee
believes that Mr. Calian's salary and bonus are less than those of chief
executive officers at companies of similar size in the travel industry, but that
given the stock option grants, Mr. Calian's total compensation package is on
market terms.
Respectively submitted,
Jerry R. Jacob
Mark Slezak
10
<PAGE> 13
PERFORMANCE GRAPH
Below is a graph comparing total stockholder return on the Company's Common
Stock, from December 31, 1993 through 1998, with a peer group comprised of 16
entertainment and leisure companies and a published industry index, the S&P 500,
as required by the rules of the SEC.
COMPARISON OF CUMULATIVE TOTAL RETURN
ASSUMES INITIAL INVESTMENT OF $100 AND REINVESTMENT OF DIVIDENDS
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Starting
Basis
Description 1993 1994 1995 1996 1997 1998
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Company $100.00 $ 78.48 $ 63.76 $ 76.96 $106.27 $103.34
----------------------------------------------------------------------------------------------------
S & P 500 $100.00 $101.32 $139.40 $171.40 $228.59 $293.91
----------------------------------------------------------------------------------------------------
Peer Group $100.00 $ 98.51 $120.98 $128.21 $178.35 $208.30
----------------------------------------------------------------------------------------------------
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of its Common Stock,
to file reports of ownership and changes of ownership with the SEC. Officers,
directors and greater than 10% stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
The Company believes that, for 1998, all applicable filing requirements of
the Company's officers and directors were complied with, except that a Form 4
for one transaction in 1998 for Mr. Varvel was inadvertently filed late in
February 1999.
11
<PAGE> 14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 15, 1999, except as noted,
certain information with respect to each person or entity who is known by the
management of the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Company's Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
------------------- ----------------------- --------
<S> <C> <C> <C>
Samuel Zell and Entities Controlled by
Samuel Zell and/or Ann Lurie:(2)(3)(4).................. 51.8%
EGI Holdings, Inc. ................................... 3,641,873
EGIL Investments, Inc. ............................... 3,641,874
Samstock, L.L.C....................................... 52,500
Anda Partnership...................................... 52,500
Samuel Zell........................................... 125,500
Ann Lurie Revocable Trust............................. 17,000 7,531,247
---------
Two N. Riverside Plaza
Chicago, IL 60606
Wallace R. Weitz & Company(5)..................................... 1,497,000 10.4%
1125 S. 103rd Street, Suite 600
Omaha, NE 68124-6008
</TABLE>
- ---------------
(1) The number of shares of the Company's Common Stock indicated as beneficially
owned is reported on the basis of regulations of the SEC governing the
determination of beneficial ownership of securities.
(2) The referenced entities or individuals are each the beneficial owner of the
shares of Common Stock shown next to their name. EGI Holdings, Inc.
("Holdings") and EGIL Investments, Inc. ("Investments") are both Illinois
corporations and wholly owned by Equity Group Investments, Inc., an Illinois
corporation ("Equity"). The stockholders of Equity are trusts created for
the benefit of Samuel Zell and his family and Ann Lurie and her family. One
of the co-trustees of certain of the trusts created for the benefit of Mrs.
Lurie and her family is Mark Slezak. Samstock, L.L.C. is a Delaware limited
liability company and wholly owned by SZ Investments, L.L.C., a Delaware
limited liability company. The sole managing member of SZ Investments,
L.L.C. is a corporation whose sole stockholder is a trust of which Mr. Zell
is the trustee and beneficiary; the non-managing members are two
partnerships whose partners are trusts created for the benefit of Mr. Zell.
Anda Partnership is an Illinois general partnership whose partners are
trusts created for the benefit of Mrs. Lurie and her family of which Mrs.
Lurie and Mr. Slezak are co-trustees. Mrs. Lurie is the trustee and
beneficiary of the Ann Lurie Revocable Trust.
The above chart includes 5,500 stock units beneficially owned by Mr. Zell
which convert to 5,500 shares of Common Stock at a time determined by Mr.
Zell at the time of the grant. The chart also includes options to purchase
120,000 shares of Common Stock beneficially owned by Mr. Zell which are
currently exercisable or exercisable within 60 days of the date of this
table.
Mr. Zell disclaims beneficial ownership of 3,641,874 shares beneficially
owned by the subsidiaries of Equity; 52,500 shares beneficially owned by
Anda Partnership and 17,000 shares beneficially owned by the Ann Lurie
Revocable Trust. Mrs. Lurie disclaims beneficial ownership of 3,641,873
shares beneficially owned by the subsidiaries of Equity; 52,500 shares
beneficially owned by Samstock, L.L.C.; 5,500 stock units beneficially owned
by Mr. Zell; and options to purchase 120,000 shares beneficially owned by
Mr. Zell.
(3) 3,603,000 of the shares owned by Holdings are held at four financial
institutions as collateral for loans. Under the various loan agreements, the
institutions cannot vote or exercise any ownership rights relating to the
pledged shares unless there is an event of default.
(4) 1,000,000 of the shares owned by Investments are held at a financial
institution as collateral for a loan. Under the loan agreement, the
institution cannot vote or exercise any ownership rights relating to the
pledged shares unless there is an event of default.
12
<PAGE> 15
(5) As of December 31, 1998, according to a Schedule 13G dated February 10, 1999
filed with the SEC by Wallace R. Weitz & Company. The Common Stock reported
herein is beneficially owned by Wallace R. Weitz & Company, a Nebraska
corporation and a registered investment advisor.
SECURITY OWNERSHIP BY MANAGEMENT
The following information is furnished as of April 15, 1999, with respect
to the shares of the Company's Common Stock beneficially owned by each of the
directors and executive officers named in the Summary Compensation Table and by
all directors and executive officers as a group. Information concerning the
directors and executive officers and their security holdings has been furnished
by them to the Company. The amounts of the Company's Common Stock and stock
options beneficially owned are reported on the basis of regulations of the SEC
governing the determination of beneficial ownership of securities.
<TABLE>
<CAPTION>
SHARES UPON
EXERCISE OF STOCK
OPTIONS(1) AND
NAME OF SHARES OF CONVERSION OF STOCK
BENEFICIAL OWNER COMMON STOCK UNITS(2) TOTAL PERCENT
---------------- ------------ ------------------- ----- -------
<S> <C> <C> <C> <C>
Jordan B. Allen............................. 117 192,167 192,284 1.3%
Philip C. Calian............................ 15,499 517,180 532,679 3.6%
Townsend E. Carman.......................... -- 8,332 8,332 *
Arthur A. Greenberg......................... 70,000 46,145(3) 116,145 *
Jerry R. Jacob.............................. 10,083 31,145(3) 41,228 *
Emanuel L. Rouvelas......................... 13,000 2,000(4) 15,000 *
Mark Slezak................................. 7,336,247(5) 2,000(4) 7,338,247 50.9%
Joseph P. Sullivan.......................... -- 4,900(4) 4,900 *
Russell Varvel.............................. 1,253 49,000 50,253 *
Jeffrey N. Watanabe......................... 1,000(6) 2,000(4) 3,000 *
J. Scott Young.............................. 469 156,666 157,135 1.1%
Samuel Zell................................. 7,336,247(5) 125,500(3) 7,461,747 51.3%
All Directors and Executive Officers as a
Group(14 persons)......................... 7,589,479 1,137,035 8,726,514 56.1%
</TABLE>
- ---------------
* Less than 1%.
(1) Represents beneficial ownership of shares that may be acquired by the
exercise of stock options which are currently exercisable or exercisable
within 60 days of the date of this table.
(2) Represents beneficial ownership of stock units which convert to Common Stock
(on a 1-for-1 basis) at a time determined at the date of grant; since such
time of conversion is not ascertainable, the Company has chosen to include
all stock units which are now vested or will vest within 60 days of the date
of this table.
(3) Includes 5,500 stock units which convert to Common Stock (on a 1-for-1
basis) at the time determined at the date of grant. Holders of such stock
units do not vote the shares.
(4) Represents stock units which convert to Common Stock (on a 1-for-1 basis) at
the time determined at the date of grant. Holders of such stock units do not
vote the shares.
(5) Includes 3,641,873 shares beneficially owned by Holdings and 3,641,874
shares beneficially owned by Investments. For Mr. Zell, includes 52,500
shares beneficially owned by Samstock, L.L.C. For Mr. Slezak, includes
52,500 shares beneficially owned by Anda Partnership. Mr. Slezak disclaims
beneficial ownership of these shares. See footnote (2) to Security Ownership
of Certain Beneficial Owners for further information and disclaimer of
ownership.
(6) Represents shares beneficially owned by Mr. Watanabe through a self-directed
pension plan.
13
<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Equity and its affiliates provided certain administrative support and
advisory services for the Company, including, but not limited to, legal, tax
advisory and benefit services, for which the Company has been charged by Equity.
In 1998, the Company paid approximately $435,000 for such services performed by
Equity and its affiliates.
The Company leases its principal executive offices in Chicago, Illinois
from an affiliate of Equity. In 1998, the Company did not make any rental
payments as its rent obligations were abated under the terms of the lease. As a
result of the 1997 relocation of the Company's American Hawaii Cruises mainland
offices from Chicago to New Orleans, the Company had unused office space in its
Chicago location. In 1998, the Company and Equity amended the Company's lease,
reducing the space covered by the lease. As part of this amendment, the Company
released the unused office space and Equity reimbursed the Company for the
remaining value of the leasehold improvements paid for by the Company in the
released premises by granting the Company a $0.6 million reduction in future
rent under the lease. In addition, prior to amending the lease, the Company
leased the unused space to Equity Office Properties Trust, an affiliate of Mr.
Zell, and received $78,000 in 1998. These arrangements with affiliates of Equity
and Mr. Zell were conducted on terms no less favorable to the Company than could
be obtained from unaffiliated third parties and were approved by a majority of
the non-affiliated members of the board of directors.
The Company paid approximately $768,000 for legal services to Preston Gates
Ellis & Rouvelas Meeds ("Preston Gates") during 1998. Mr. Rouvelas is a partner
of Preston Gates. During 1998, the Company paid approximately $113,000 for legal
services to Watanabe, Ing & Kawashima ("WIK"). Mr. Watanabe is a partner of WIK.
APPROVAL OF THE 1999 STOCK OPTION PLAN
(PROPOSAL 2)
The Company seeks stockholder approval of the 1999 Stock Option Plan (the
"1999 Plan"). The board of directors adopted the 1999 Plan as of January 4, 1999
and recommended that the 1999 Plan be submitted to the stockholders of the
Company for approval.
The full text of the 1999 Plan, as approved and adopted by the board of
directors, is set forth in Exhibit A to this Proxy Statement, and the following
description of the 1999 Plan is qualified in its entirety by reference to such
text. The 1999 Plan is substantially the same as the Company's 1992 Stock Option
Plan, as amended (the "1992 Plan").
DESCRIPTION OF THE PLAN
The purpose of the 1999 Plan is to incentivize certain directors, officers,
key employees and consultants and to reward such persons for their contributions
to the Company. Pursuant to the 1999 Plan, certain officers, directors, key
employees and consultants of the Company are offered the opportunity to acquire
shares of Common Stock through the grant of stock options ("Options"), including
non-qualified stock options and, for key employees, incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). In addition, the 1999 Plan provides for the granting of
stock appreciation rights ("SARs"), stock units or grants, performance shares
and reload options. Options, SARs, stock units or grants, performance shares and
reload options are sometimes referred to herein as "Awards." At present, there
are approximately 156 persons who participate under the 1992 Plan. It is not
possible at this time to estimate the number of persons who will become eligible
to participate in the 1999 Plan.
The 1999 Plan is administered by the Compensation Committee which is
appointed by the board of directors. The Compensation Committee determines those
officers, directors, key employees and consultants to whom, and the time or
times at which, grants of Awards will be made. The Compensation Committee
interprets the 1999 Plan, adopts rules relating thereto and determines the terms
and provisions of Awards. The Compensation Committee also has the right to
accelerate Award exercise rights or make other adjustments if
14
<PAGE> 17
the Company is merged or consolidated, the property or stock of the Company is
acquired by another corporation or the Company is reorganized, liquidated or
impacted by an extraordinary transaction.
A total of 3.0 million shares of Common Stock are currently reserved for
issuance under the 1999 Plan. The 1999 Plan will terminate at such time as no
further shares of Common Stock are available for issuance upon the exercise of
Awards and all outstanding Awards have expired or been exercised. The board of
directors may at any time amend or terminate the 1999 Plan. Stockholder approval
of an amendment is necessary if required for compliance with Rule 16b-3
promulgated under Section 16(b) of the Securities Exchange Act of 1934.
In order to promote longevity within the Company and to tie compensation to
the Company's performance, the Company has granted Options to purchase an
aggregate of approximately 620,000 shares of Common Stock to certain senior
officers of the Company and its subsidiaries as of the date of this Proxy
Statement. The grant of these Options is subject to the approval of this
proposal by the Company's stockholders at the Annual Meeting. These Options will
vest over a period of three (3) years and be exercisable at a price fixed on the
date of the grant. The exercise price for all Options granted under the 1999
Plan has not been, and shall not be, less than the fair market value of the
underlying Common Stock at the time the Option is granted.
Set forth below is information as of the date of this Proxy Statement
concerning Option grants made by the Compensation Committee to: named executive
officers; executive officers as a group; non-executive directors as a group; and
all employees, except executive officers, as a group. The maximum benefit
received by such grantees pursuant to these grants cannot be determined at this
time because the future performance of the Common Stock is unknown. The
Compensation Committee may make additional grants in 1999 and thereafter that
could be on materially different terms from those of the grants set forth below.
It is not possible to determine the maximum benefits (other than pursuant to
limits on the number of shares that may be granted in the aggregate or to any
person) that will be granted to any person in 1999 under the 1999 Plan or what
benefits or amount would have been received by any person.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND PRINCIPAL POSITION SUBJECT TO OPTIONS
--------------------------- ------------------
<S> <C>
Philip C. Calian............................................ 100,000
President and Chief Executive Officer
J. Scott Young.............................................. 50,000
Exec. VP -- Operations; President and Chief Operating
Officer of American Hawaii and Delta Queen
Jordan B. Allen............................................. 50,000
Exec. VP and General Counsel
Russell Varvel.............................................. --
Exec. VP and General Sales Manager Of American Hawaii and
Delta Queen
Townsend E. Carman.......................................... --
Exec. VP -- Honolulu Operations of American Hawaii
Executive Officers as a Group, including those named
above..................................................... 600,000(1)
Non-Executive Directors as a Group.......................... --
All Employees, except Executive Officers, as a Group........ 20,000
</TABLE>
- ---------------
(1) Includes Option grants to Messrs. Calian, Young and Allen reflected above
and 400,000 Options granted to Mr. McLeod under the terms of his February
1999 employment agreement with the Company.
15
<PAGE> 18
On April 15, 1999, the closing price of the Common Stock on the Nasdaq
National Market was $18.8125 per share.
FEDERAL INCOME TAX CONSEQUENCES
The 1999 Plan, to the extent possible, complies with Section 162(m) of the
Code to ensure the Company can maximize the income tax deductions for grants
made under the 1999 Plan. Section 162(m) of the Code limits the deduction a
publicly held corporation may take to the extent compensation exceeds $1,000,000
for certain employees. This limit does not apply to compensation paid solely
from Options granted with exercise prices at or above fair market value on the
grant date, or compensation paid due to meeting stated performance goals,
provided the goals are determined by the Compensation Committee and approved by
the stockholders of the Company. Therefore, certain performance-based objectives
have been established by the Compensation Committee to be used in connection
with conditions, restrictions and limitations for awards of stock under the 1999
Plan. By approving the 1999 Plan, the stockholders will be approving the
performance goals identified by the Compensation Committee of the board.
There will be no federal income tax consequences to a participant or the
Company upon the grant of either an ISO or an NQSO under the 1999 Plan. Upon
exercise of a NQSO, a participant will recognize ordinary income in an amount
equal to (i) the fair market value on the date of the exercise of the acquired
shares of Common Stock, less (ii) the exercise price of the NQSO, and the
Company will be entitled to a tax deduction in the same amount. Upon exercise of
an ISO, a participant recognizes no immediate taxable income. Income recognition
is deferred until the participant sells the shares of Common Stock. If the
Option is exercised no later than three (3) months after the termination of the
participant's employment, and the participant does not dispose of the shares
acquired pursuant to the exercise of the Option within two (2) years from the
date of the Option was granted and within one (1) year after the exercise of the
Option, the gain on the sale will be treated as long-term capital gain. The
excess of the fair market value of the Common Stock acquired upon exercise over
the option price constitutes a tax preference item for purposes of computing the
"alternative minimum tax" under the Code. The Company is not entitled to any tax
deduction at the time of the exercise of an ISO. If the participant sells the
shares received upon the exercise of an ISO in less than the required holding
period, the participant will recognize ordinary income in an amount equal to the
lesser of (i) the fair market value of the common stock on the date of exercise
minus the option price, or (ii) the amount realized on disposition minus the
option price, and the Company will be entitled to a deduction in the same
amount.
A director does not recognize income upon the granting of a stock unit
under the 1999 Plan but rather at the time the unit converts to Common Stock,
and the Company does not take a deduction at the time of the grant but rather
when the units are converted to Common Stock.
APPROVAL OF THE 1999 PLAN
The 1999 Plan shall not take effect until approved by the stockholders of
the Company. The affirmative vote of the holders of a majority of the shares of
the Company's Common Stock present or represented and voting is required for
approval of the 1999 Plan.
RECOMMENDATION OF BOARD OF DIRECTORS
WITH RESPECT TO THE 1999 STOCK OPTION PLAN:
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSED 1999 STOCK OPTION PLAN. IF A
CHOICE IS SPECIFIED ON THE PROXY BY A STOCKHOLDER, THE SHARES WILL BE VOTED AS
SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED "FOR" APPROVAL.
16
<PAGE> 19
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick, L.L.P. have been the principal auditors for the Company
for the past year. Representatives of KPMG Peat Marwick, L.L.P. are expected to
be present at the Annual Meeting, will be given an opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions from stockholders.
STOCKHOLDERS' PROPOSALS FOR 2000 ANNUAL MEETING
A proposal submitted by a stockholder for the 2000 Annual Meeting of the
Company must be received by the Secretary of the Company, Two North Riverside
Plaza, Suite 200, Chicago, Illinois 60606, by December 31, 1999, in order to be
eligible to be included in the Company's proxy statement for that meeting. New
SEC rules regarding stockholder proposals became effective on June 29, 1998.
Pursuant to these new rules, if the Company has not received notice by December
30, 1999 of any matter a stockholder intends to propose for a vote at the
Company's annual meeting, then a proxy solicited by the board of directors may
be voted on such matter in the discretion of the proxy holder, without
discussion of the matter in the Proxy Statement soliciting such proxy and
without such matter appearing as a separate item on the proxy card.
CONCLUSION
The Company knows of no other business which will be presented at the
Annual Meeting. However, if other matters properly come before the meeting, it
is the intention of the Proxy Agents to vote upon such matters in accordance
with their good judgment in such matters.
By Order of the Board of Directors
/s/ Jordan B. Allen
Jordan B. Allen
Executive Vice President, General
Counsel and Secretary
April 19, 1999
Chicago, Illinois
17
<PAGE> 20
EXHIBIT A
AMERICAN CLASSIC VOYAGES CO.
1999 STOCK OPTION PLAN
1. PURPOSE AND STRUCTURE.
The purpose of this 1999 Stock Option Plan (the "1999 Plan") is to
encourage and enable certain directors, officers, key employees and consultants
of American Classic Voyages Co. (the "Company") and its subsidiaries to acquire
a proprietary interest in the Company through the ownership of common stock of
the Company. Such ownership will provide such employees with a more direct stake
in the future welfare of the Company and encourage them to remain with the
Company or a subsidiary of the Company. It is also expected that the 1999 Plan
will encourage qualified persons to seek and accept employment with the Company.
Pursuant to the 1999 Plan, certain directors, officers, key employees and
consultants will be offered the opportunity to acquire common stock through the
grant of certain interests, including: (a) "non-qualified" stock options
("NQSOs"); (b) for key employees only, "incentive stock options" ("ISOs") (which
term, when used herein, shall have the meaning ascribed thereto by Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code"); (c) stock
appreciation rights ("SARs") or phantom shares; and (d) stock units or grants;
(e) performance shares; and (f) reload options to purchase additional shares if
shares are delivered in payment for any other interest. The term "Options"
hereinafter shall refer to the interests in items (a), (b), (d) and (f) of the
preceding sentence, and the term "Award" hereinafter shall refer to all of the
foregoing interests. The term "Subsidiary" hereinafter shall mean any present or
future corporation which is or would be a "subsidiary corporation" of the
Corporation as the term is defined in Section 424 of the Code determined as if
the Corporation were the employer corporation. The Options designated as ISOs
and the provisions of the 1999 Plan applicable thereto shall be interpreted in a
manner consistent with Section 422 of the Code and all valid regulations issued
thereunder.
2. ADMINISTRATION OF THE 1999 PLAN.
The 1999 Plan shall be administered by the Committee as described in
Paragraph 3. In administering the 1999 Plan, the Committee may adopt rules and
regulations for carrying out the 1999 Plan. Any interpretation and decision with
regard to any question arising under the 1999 Plan made by the Committee shall
be final and conclusive as to all participants in the 1999 Plan ("Participants")
and all other employees of the Company or a Subsidiary. The Committee shall
determine the directors, officers, employees and consultants to whom, and the
time or times at which, grants shall be made, the number and type of Awards to
be included in the grants, the times or times within which (during the term of
the Awards) all or portions of Awards may be exercised, the price at which
Awards granted will be exercisable, the SAR exercise value and all other matters
with respect to the Awards.
3. COMMITTEE.
The "Committee" is the Compensation Committee which shall be appointed from
time to time by the Board of Directors of the Company (the "Board") and which
shall be constituted as to permit the 1999 Plan and grants hereunder to comply
with Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), Section 162(m) of the Code and
Treasury Regulation Section 1.162-27.
The Board may at any time and from time to time remove any member of the
Committee, with or without cause, appoint additional members of the Committee
and fill vacancies, however caused, in the Committee. A majority of the members
of the Committee shall constitute a quorum. All determinations of the Committee
shall be made by a majority of its members. Any decision or determination of the
Committee reduced to writing and signed by a majority of the members of the
Committee shall be as effective as if it had been made at a meeting duly called
and held. The Committee may delegate any of its powers except the
A-1
<PAGE> 21
selection and determination of grants of Awards to persons subject to Section
16(b) of the Exchange Act and Section 162(m) of the Code and any of the
responsibilities described in Section 8 below.
The interpretation and construction by the Committee of any provisions of
the Plan or of any agreement or of other matters related to the Plan shall be
final. The Committee may from time to time adopt such rules and regulations for
carrying out the Plan as it may deem best. No member of the Board of Directors
or the Committee shall be liable for any action or determination made in good
faith with respect to the Plan.
4. SHARES OF STOCK SUBJECT TO THE 1999 PLAN.
Except as provided in Subparagraphs 7(i) and 7(j) and Paragraph 9, the
number of shares that may be issued or transferred pursuant to the exercise of
NQSOs, ISOs, or stock units granted under the 1999 Plan shall not exceed
3,000,000 shares of the common stock of the Company (the "Common Stock"). Such
shares may be authorized and unissued shares or previously issued shares
acquired or to be acquired by the Company and held in treasury. The number of
shares subject to SARs shall not exceed 3,000,000 less the number of shares that
may be issued or transferred pursuant to the exercise of NQSOs, ISOs or stock
units granted under the 1999 Plan. The number of shares that may be subject to
Awards granted to any director, officer, employee or consultant in any year
cannot exceed 500,000 shares. Any shares subject to an Award, which, for any
reason, expires or is terminated unexercised, may again be subject to an Award
under the 1999 Plan.
5. ELIGIBILITY.
Awards may be granted only to directors, officers, key employees and
consultants of the Company or a Subsidiary as selected by the Committee as being
potential contributors to the successful operation of the Company or a
Subsidiary.
6. GRANTING OF AWARDS.
All Awards granted pursuant to the 1999 Plan shall be granted no later than
ten years from the 1999 Plan's effective date. The date of the grant of any
Award shall be the date on which the Committee authorizes the grant of such
Award by resolution or any other date specified by the Committee.
7. TERMS AND CONDITIONS OF OPTIONS.
Awards shall be evidenced by agreements, which need not be identical and
shall contain in substance the following terms and conditions:
(a) Option Price. The purchase price under each ISO or NQSO shall be not
less than 100% of the Fair Market Value of the Common Stock at the time the
Option is granted. In the case of an ISO granted to a Participant owning more
than 10% of the total combined voting power of all classes of stock of the
Company, or of any Subsidiary, actually or constructively under Section 424(d)
of the Code (a "10% Shareholder"), the purchase price shall not be less than
110% of the Fair Market Value of the Common Stock subject to the ISO at the time
of its grant.
(b) SARs. Upon exercise of a SAR, the holder thereof shall be entitled to
receive from the Company consideration in an amount equal to the product of (i)
the difference between the SAR exercise value as determined by the Committee and
the purchase price under such SAR, and (ii) the number of shares of Common Stock
subject to the SAR, or the number of shares represented by the portion of the
SAR which is exercised. The agreement with respect to a SAR may provide that the
holder may request payment in cash, in Common Stock, or in any combination
thereof, provided, however, that the Committee, in its sole discretion shall
decide whether such payment shall be in cash, in Common Stock or in a
combination thereof. Agreements with respect to an SAR may provide that the SAR
is granted alone or in conjunction with an ISO or NQSO and may contain such
other provisions as determined by the Committee.
(c) Exercise of Options and Medium and Time of Payment. An Option may be
exercised only by written notice of intent to exercise such Option with respect
to a specified number of shares of the Common Stock and payment to the Company
of the amount of the purchase price (if any, with respect thereto). Stock
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purchased pursuant to the exercise of an Option shall at the time of purchase be
paid for in full (i) in cash, (ii) with shares of Common stock to be valued at
the fair market value thereof on the date of such exercise, (iii) with a
combination of the foregoing, or (iv) by such other means which the Committee
determines to be consistent with the purpose of the 1999 Plan and applicable
law. Upon receipt of the payment, the Company shall, without stock transfer tax
to the Participant or other person entitled to exercise the Option, deliver to
the person exercising such Option a certificate or certificates for such shares.
It shall be a condition to the performance of the Company's obligation to issue
or transfer Common Stock upon exercise of an Option that the person exercising
the Option pay, or make provision satisfactory to the Company for the payment
of, any taxes (other than stock transfer taxes) which the Company is obligated
to collect with respect to the issue or transfer of Common Stock upon such
exercise. The obligation to pay the Company any amount required to be withheld
under applicable federal, state and local tax laws in connection with the
exercise of Options may be satisfied by having the Company withhold from the
Common Stock to be acquired upon exercise of the Option.
The Committee may establish a program through which Participants may borrow
funds with which to purchase stock pursuant to the exercise of an Option.
Eligibility of any Participant for such borrowing will be determined solely at
the discretion of the Committee. Any such loan shall bear interest at a rate
determined by the Committee.
(d) Exercise Period. No ISO may be exercised after ten (10) years from the
date it is granted. In the case of an ISO granted to a 10% Shareholder, such
ISO, by its terms, may not be exercised more than five (5) years from the date
of grant. Options will become exercisable according to a vesting schedule
determined by the Committee and the exercise of any Option may be accelerated
upon terms and conditions to be determined by the Committee. Notwithstanding any
other provision of the 1999 Plan and any action of the Committee, at the time an
ISO is granted, the aggregate Fair Market Value (determined at the time the ISO
is granted) of the stock with respect to which ISOs are exercisable for the
first time by a Participant during any calendar year (under all plans of the
Company and any parent and subsidiary of the Company which provides for granting
ISOs) shall not exceed $100,000.
(e) Rights as a Stockholder. No holder of any Option shall have rights as a
stockholder with respect to any shares issuable or transferable upon exercise
thereof until the date a stock certificate is issued to him for such shares.
Except as otherwise expressly provided in the 1999 Plan, no adjustment shall be
made for dividends or other rights for which the record date is prior to the
date such stock certificate is issued.
(f) Non-Assignability of Options. No ISO shall be assignable or
transferable by the Participant except by will or by the laws of descent and
distribution. ISOs shall be exercisable during the lifetime of a Participant
only by the Participant. Participants may transfer NQSOs and SARs to (i) family
members (within the contemplation of the federal securities laws as determined
by the Committee), (ii) custodianships under the Uniform Transfers to Minors Act
or any similar statute, (iii) trusts for the benefit of any family member, (iv)
trusts by such Participant for the Participant's primary benefit and (v) upon
termination of a custodianship under the Uniform Transfers to Minors Act or
similar statute or the termination of a trust, by the custodian or trustee
thereof, to the person or persons who, in accordance with the terms of such
custodianship or trust are entitled to receive Options held in custody or trust.
(g) Effect of Termination of Employment or Death. No ISO, NQSO or SAR shall
be exercisable after termination of employment with the Company or a Subsidiary,
except as provided in the stock option agreement or by the Committee. Options
shall not be affected by any change of employment so long as the Participant
continues to be employed by either the Company or a Subsidiary.
Nothing in the 1999 Plan or in any Award shall confer any right to continue
in the employ of the Company or a Subsidiary or interfere in any way with the
right of the Company or Subsidiary of the Company to terminate the employment of
the Participant at any time unless an employee is otherwise subject to such an
agreement.
(h) Leave of Absence. In the case of a Participant on an approved leave of
absence, the Committee may, if it determines that to do so would be in the best
interests of the Company, provide in a specific case or cases
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<PAGE> 23
for continuation of Awards during such leave of absence, such continuation to be
on such terms and conditions as the Committee determines to be appropriate
taking into account the effect, if any, of the provisions of applicable law with
respect to the exercisability of ISOs, except that in no event shall an Option
be exercisable after ten years from the date it is granted.
(i) Recapitalization. If the Common Stock should, as a result of any stock
dividend, stock split, other subdivision or combination of shares of Common
Stock, or any reclassification, recapitalization or otherwise, be increased or
decreased, the number of shares of Common Stock covered by each outstanding
Award, the purchase price under each outstanding Option, the base price of each
SAR and the total number of shares of Common Stock reserved for issuance under
the 1999 Plan shall be adjusted as determined by the Committee to reflect such
action. Any new shares or other securities issued with respect to shares of
Common Stock shall be deemed shares of Common Stock and will be subject to the
same restrictions, conditions and limitations as applied before the adjustment.
(j) Sale or Reorganization. In case the Company is merged or consolidated
with another corporation, or in case the property or stock of the Company is
acquired by another corporation, or in case of a reorganization or liquidation
of the Company, or in case of any extraordinary transaction, the Committee or
the board of directors of any corporation assuming the obligations of the
Company hereunder, shall have the right to provide for the continuation of
Options or for other equitable adjustments as determined by the Committee (by
means, such as, for example, cash payment in an amount equal to the difference
between the Common Stock price and the purchase price, conversion into other
property or securities, or giving written notice to holders that their Options
will become immediately exercisable, notwithstanding any waiting period
otherwise prescribed by the Committee, and that such Options must be exercised
within a specified period of days of such notice or they will be terminated).
Notwithstanding any other provision of the 1999 Plan and any action of the
Committee, any Option granted under the Plan shall be immediately exercisable
following a Change in Control. For purposes of this Plan, a "Change in Control"
shall be deemed to occur upon: (i) the acquisition by any entity, person or
group of more than 50% of the outstanding shares of Common Stock from the
holders thereof; (ii) a merger or consolidation of the Company with one or more
other entities as a result of which the ultimate holders of outstanding shares
immediately prior to such merger hold less than 50% of the shares of beneficial
ownership of the surviving or resulting corporation; or (iii) a direct or
indirect transfer of substantially all of the property of the Company other than
to an entity of which the Company directly or indirectly owns at least 50% of
the shares or beneficial ownership.
(k) General Restrictions. Each Award granted under the 1999 Plan shall be
subject to the requirement that if at any time the Board shall determine, in its
discretion, that the listing, registration or qualification of the shares
issuable or transferable upon exercise thereof upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with the granting of such Award, or the issuance, transfer or purchase of shares
thereunder, such Award may not be exercised in whole or in part unless such
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board. The
Company shall not be obligated to sell or issue any shares of Common Stock in
any manner in contravention of the Securities Act of 1933, as amended, or any
state securities law. Each Participant shall agree to such terms and conditions
in connection with the exercise of an Award, including restrictions on the
disposition of the Common Stock acquired upon exercise thereof, as the Committee
may deem appropriate. Common Stock acquired upon exercise of an Award may be
legended as the Committee shall deem appropriate to reflect the restrictions
imposed by the Committee, the 1999 Plan or by securities laws generally.
8. SPECIAL PROVISIONS UNDER CODE SECTION 162(M).
(a) The provisions of this Section 8 shall apply only to persons designated
by the Committee as individuals who are or who are likely to become "covered
employees," within the contemplation of Section 162(m) of the Code; provided
that, if an individual is so designated and the Committee determines that such
individual is not a covered employee for the year in which the Company is
entitled to a deduction with respect to income he recognizes for Federal income
tax purposes in connection with an Award, the provisions of this Section 8 shall
not apply to such Award. The provisions of this Section 8 shall only apply to
A-4
<PAGE> 24
conditions, restrictions and limitations applicable to Awards that are related
to the performance of the Company and if the provisions of this Section 8 are
necessary so that the Award qualifies as "qualified performance-based
compensation" as defined in Treasury Regulation Section 1.162-27(e)(2). In the
event of any inconsistencies between this Section 8 and the other Plan
provisions within the scope of the foregoing, the provisions of this Section 8
shall control with respect to covered employees.
(b) As soon as practicable following the grant of an Award subject to this
Section 8 (but in no event more than ninety (90) days after the date of grant),
the Committee shall establish the performance-related goals to be used in
connection with conditions, restrictions and limitations applicable to such
Award. The performance-related goals shall be chosen from among the following
factors, or any combination of the following, as the Committee deems
appropriate: total stockholder return; growth in revenues, sales, net income,
stock price, and/or earnings per share; return on assets, net assets, and/or
capital; return on stockholders' equity; or the Company's financial performance
versus peers. The Committee may select among the goals specified, which need not
be the same for each participant or each Award.
(c) With respect to each Award described in paragraph (b), the Committee
shall (at the same time it is making the determinations under paragraph (b))
determine the relationship between the performance-related goals and the
conditions, restrictions and limitations applicable to the Awards.
(d) In connection with the Awards described in paragraph (b), no
performance-related goal will be considered to be satisfied until the Committee
has certified the extent to which the performance-related goals and any other
material terms were satisfied.
(e) Once established, performance-related goals shall not be changed,
except to the extent that the Committee has specified adjustments as part of the
determinations made under paragraph (b) and (c). Except as provided in the
preceding sentence, no performance-related goal applicable to a condition,
restriction or limitation shall be considered to be satisfied if the minimum
performance-related goals applicable thereto are not achieved.
(f) Individual performance shall not be reflected in a performance-related
goal under this Section 8. However, the Committee may retain the discretion to
treat a performance-related goal as not having been satisfied due to the failure
of a Participant to meet individual performance goals.
(g) If, on advice of the Company's tax counsel, the Committee determines
that Code Section 162(m) and the regulations thereunder will not adversely
affect the deductibility for federal income tax purposes of any amount paid
under the Plan by applying provisions of this Plan (including this Section 8(g))
that conflict with this Section 8 to a covered employee, then the Committee may,
in its sole discretion, apply such Section or Sections to the covered employee
without regard to the exceptions to such Section or Sections that are contained
in this Section 8.
9. TERMINATION AND AMENDMENT OF THE 1999 PLAN.
The Board shall have the right to amend, suspend, or terminate the 1999
Plan at any time; provided, however, that shareholder approval shall be
necessary to adopt any amendment if the adoption of such amendment without
shareholder approval would cause the 1999 Plan to no longer comply with Rule
16b-3 or any successor rule or regulatory requirement.
10. EFFECTIVE DATE OF THE 1999 PLAN.
The 1999 Plan is effective as of the date of its adoption by the Board,
subject, however, to approval by the shareholders of the Company within 12
months thereafter; and if such approval is not obtained, the 1999 Plan shall
terminate and any and all Awards granted during such interim periods shall also
terminate and be of no further force or effect. The 1999 Plan shall terminate at
such time as no further shares of Common Stock are available for issue upon the
exercise or transfer of Awards hereunder (including shares available due to the
forfeiture or expiration of Awards) and all such options have been exercised or
expired, or on such earlier date as the Board may determine. Any Awards
outstanding at the termination date shall remain outstanding until it has either
expired or has been exercised.
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<PAGE> 25
11. MISCELLANEOUS.
Any references herein to sections of the Code, regulations thereunder or
rules under the Exchange Act shall also mean successor provisions to such
sections, regulations or rules.
For purposes of the 1999 Plan, Fair Market Value shall be determined in
accordance with the Code and the regulations thereunder.
The 1999 Plan is intended to comply with Rule 16b-3 with respect to persons
subject to the Exchange Act and any provision which would prevent compliance
with Rule 16b-3 shall be deemed invalid to the extent permitted by law and
deemed necessary by the Committee.
The Committee may, in order to fulfill the purposes of the 1999 Plan and
without amending the 1999 Plan, modify grants of Awards to participants who are
foreign nationals or employed outside the United States to recognize differences
in local law, tax policy or custom.
12. NON-EMPLOYEE BOARD OF DIRECTOR STOCK UNITS.
The Corporation will pay each non-employee member of the Board, as of the
first day of each applicable period, a certain number of stock units as an
annual retainer, subject to the provisions hereof. The number of stock units for
each Director will be determined as follows: for every twelve (12) month period
commencing July 1, 1999 and thereafter, the sum of $30,000 will be divided by
the Market Value of the common stock of the Corporation, as set forth below. The
Market Value of the common stock of the Corporation will be the average closing
price for the five (5) trading days preceding any grant date. The number of
stock units so determined will be rounded to the nearest one-hundred (100)
shares. The stock units will be converted into an equal number of shares of
common stock at any time or times after the stock units are fully vested, as
selected by each Director prior to each grant of such stock units. Any
distribution on the common stock will either be distributed to the holder of the
stock units or will result in an equitable adjustment in the number of stock
units as determined by the Committee. The number of stock units will also be
equitably adjusted for stock splits and similar events. Grants of stock units
will vest at the rate of 25% on the first day of each calendar quarter and any
unvested stock units will be forfeited if the holder is not a director at the
time of vesting.
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<PAGE> 26
DETACH HERE
- --------------------------------------------------------------------------------
PROXY
AMERICAN CLASSIC VOYAGES CO.
TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 24, 1999
The undersigned hereby appoints SAMUEL ZELL and PHILIP C. CALIAN {"Proxy
Agents"), or either of them, with individual power of substitution, proxies to
vote all shares of Common Stock of American Classic Voyages Co. (the "Company")
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of the Company to be held in New Orleans, Louisiana, on June 24,
1999 and any adjournment thereof regarding the following:
1. The election as directors of the group of eight nominees proposed
by the Board of Directors listed below:
Philip C. Calian, Arthur A. Greenberg, Jerry R. Jacob, Emanuel L.
Rouvelas, Mark Slezak, Joseph P. Sullivan, Jeffrey N. Watanabe and
Samuel Zell.
2. Approval of the Company's 1999 Stock Option Plan.
3. In their discretion, the Proxy Agents are authorized to vote on
such other matters as may properly come before the meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON
THE REVERSE SIDE. IF YOU DO NOT MARK ANY BOXES, YOUR PROXY WILL BE VOTED IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXY AGENTS
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
- ----------------- ----------------
|SEE REVERSE SIDE| CONTINUED AND TO BE SIGNED ON REVERSE SIDE |SEE REVERSE SIDE|
- ----------------- ----------------
<PAGE> 27
DETACH HERE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S><C>
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION
IS MADE, THE PROXY WILL BE VOTED FOR ELECTION OF THE DIRECTOR NOMINEES PROPOSED BY THE BOARD OF DIRECTORS AND LISTED ON THE
OTHER SIDE AND FOR APPROVAL OF THE COMPANY'S 1999 STOCK OPTION PLAN.
FOR AGAINST ABSTAIN
1. Election of Directors. 2. Approval of the Company's 1999 [ ] [ ] [ ]
Nominees: (see reverse) Stock Option Plan.
FOR WITHHELD 3. In their discretion, the Proxy Agents are authorized to vote upon
[ ] [ ] such other matters as may properly come before the meeting.
[ ]
----------------------------------------
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH
SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
Signature: Date: Signature: Date:
------------------------------- ------------------- ------------------------------- ----------------
</TABLE>
