<PAGE> 1
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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
Anacomp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
ANACOMP [LOGO]
ANACOMP, INC.
11550 N. MERIDIAN STREET
P.O. BOX 40888
INDIANAPOLIS, INDIANA 46240
(317) 844-9666
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
The 1997 Annual Meeting ("Annual Meeting") of Shareholders of Anacomp,
Inc., will be held at the Sheraton Gateway Hotel, 1900 Sullivan Road, College
Park, Georgia, on February 3, 1997, at 11:00 a.m. for the following purposes:
1. To elect seven directors for a one-year term.
2. To consider and vote upon a proposal to adopt a new 1996 Long-Term
Incentive Plan for the Company.
3. To consider and vote upon a proposal to adopt a new 1997 Qualified
Employee Stock Purchase Plan for the Company.
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
If you do not expect to attend the meeting, please sign, date and return
the enclosed proxy in the enclosed return envelope to which no postage need be
affixed if mailed in the United States.
Only shareholders of record at the close of business on December 6, 1996,
will be entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. In the event there are not sufficient votes for approval
of one or more of the above matters at the time of the Annual Meeting, the
Annual Meeting may be adjourned in order to permit further solicitation of
proxies.
By order of the Board of Directors,
P. Lang Lowrey, III
Chairman of the Board
Dated: December 31, 1996
Indianapolis, Indiana
PLEASE SIGN AND RETURN
THE ENCLOSED PROXY
<PAGE> 3
ANACOMP, INC.
11550 NORTH MERIDIAN STREET
P.O. BOX 40888
INDIANAPOLIS, INDIANA 46240
(317) 844-9666
---------------------
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 3, 1997
---------------------
PROXY STATEMENT
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
---------------------
This Proxy Statement is furnished to the holders (the "Shareholders") of
Common Stock, par value $.01 per share (the "Common Stock") of Anacomp, Inc., an
Indiana corporation (the "Company"), by the Board of Directors in connection
with the solicitation of proxies to be used in voting at the 1997 Annual Meeting
of Shareholders to be held on February 3, 1997 at the Sheraton Gateway Hotel,
1900 Sullivan Road, College Park, Georgia, and at any adjournments thereof. The
approximate date on which this Proxy Statement and the accompanying form of
proxy are being mailed to Shareholders is December 31, 1996.
The enclosed proxy is solicited by the Board of Directors of the Company. A
person giving a proxy has the power to revoke it at any time before it is
exercised by giving written notice to the Secretary of the Company or by
attending the Annual Meeting and voting in person. The proxy, if returned
properly executed and not subsequently revoked, will be voted in accordance with
the choices made by the Shareholders with respect to the proposals listed
thereon. IF A CHOICE IS NOT MADE WITH RESPECT TO THE PROPOSALS, THE PROXY WILL
BE VOTED FOR THE ELECTION OF THE BOARD OF DIRECTORS' NOMINEES, FOR THE ADOPTION
OF THE 1996 LONG-TERM INCENTIVE PLAN AND FOR THE ADOPTION OF THE 1997 QUALIFIED
EMPLOYEE STOCK PURCHASE PLAN. IF ANY OTHER MATTERS SHOULD BE PRESENTED AT THE
ANNUAL MEETING, THE HOLDERS OF THE PROXIES WILL VOTE ON SUCH MATTERS IN
ACCORDANCE WITH THE VIEWS OF A MAJORITY OF THE DIRECTORS.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspectors of election appointed for the meeting, and such inspectors will
determine whether or not a quorum is present. The presence in person or by proxy
of the holders of a majority of the outstanding Common Stock in the aggregate
constitutes a quorum for the transaction of business. The inspectors of election
will treat abstentions as shares that are present and entitled to vote for
purposes of determining the presence of a quorum but as unvoted for purposes of
determining the approval of any matter submitted to the Shareholders for a vote.
If a quorum exists, action on any matter (other than the election of Directors)
is approved if the votes properly cast favoring the action exceed the votes
properly cast opposing the action. Directors shall be elected by a plurality of
the votes properly cast. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that matter.
The cost of this solicitation will be borne by the Company. In addition to
the solicitation of proxies by use of the mails, officers and regular employees
of the Company may communicate with Shareholders personally or by mail,
telephone, telegram or otherwise for the purpose of soliciting such proxies. The
Company has also retained ChaseMellon Shareholder Services, L.L.C. to aid in the
solicitation of proxies from individual shareholders, brokerage firms, banks and
institutional holders of shares. The fee for such services is $4,000 plus
expenses. The Company will reimburse brokers and other nominees for their
reasonable out-of-pocket expenses in forwarding solicitation material to
beneficial owners of shares held of record by such brokers or nominees. A copy
of the Company's Annual Report to Shareholders accompanies this Proxy Statement.
THE COMPANY WAS REQUIRED TO FILE AN ANNUAL REPORT FOR ITS FISCAL YEAR ENDED
SEPTEMBER 30, 1996 ON FORM 10-K WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION"). A COPY OF THE FORM IS INCLUDED WITH THE COMPANY'S ANNUAL REPORT
TO SHAREHOLDERS. SHAREHOLDERS MAY OBTAIN A COPY OF THE COMPLETE EXHIBITS TO THE
<PAGE> 4
FORM 10-K BY WRITING TO ANACOMP, INC., 11550 N. MERIDIAN STREET, P.O. BOX 40888,
INDIANAPOLIS, INDIANA 46240.
VOTING SECURITIES
As of December 6, 1996, the record date for the determination of
Shareholders entitled to notice of and to vote at the meeting, there were
13,700,764 shares of Common Stock issued and outstanding. All amounts listed
herein for shares of Common Stock of the Company and for prices for such shares
have been adjusted for all stock dividends and stock splits declared. Each such
share of Common Stock is entitled to one vote on all matters.
SECURITY OWNERSHIP OF MANAGEMENT AND OTHER BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock by each director and named executive officer and by
all directors and executive officers of the Company as a group and of certain
other beneficial owners of more than 5% of any class of the Company's voting
securities as of December 1, 1996, unless otherwise noted. Each such person has
sole voting and dispositive power with respect to such securities, except as
otherwise indicated.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
SHARES OF STOCK PERCENT
NAME BENEFICIALLY OWNED OF CLASS
- ------------------------------------------------------------------- ------------------ --------
<S> <C> <C>
P. Lang Lowrey, III................................................ 0 0.0%
Talton R. Embry.................................................... 0(a) 0.0
Darius W. Gaskins, Jr.............................................. 0 0.0
Jay P. Gilbertson.................................................. 0 0.0
Richard D. Jackson................................................. 0 0.0
George A. Poole, Jr................................................ 2,500 0.0
Lewis Solomon...................................................... 0 0.0
Thomas R. Simmons.................................................. 0 0.0
William C. Ater.................................................... 1(b) 0.0
Donald L. Viles.................................................... 85(c) 0.0
Hasso Jenss........................................................ 17(d) 0.0
All directors and executive officers of the Company as a group (20
persons)......................................................... 3,605(e) 0.0
OTHER BENEFICIAL HOLDERS
Magten Asset Management Corp....................................... 4,675,383(f) 34.1%
35 East 21st Street
New York, NY 10010
Franklin Resources, Inc............................................ 1,444,670(g) 10.5
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, CA 94403
Merrill Lynch & Co., Inc........................................... 1,407,670(h) 10.3
World Financial Center, North Tower
250 Vesey Street
New York, NY 10281
State Street Research & Management Company......................... 1,082,467(i) 7.9
One Financial Center
Boston, MA 02111
</TABLE>
- ---------------
(a) Mr. Embry is a director, executive officer and sole stockholder of Magten
Asset Management Corp., a registered investment advisor. Mr. Embry may be
deemed to be the beneficial owner of shares owned by Magten and its
investment advisory clients as discussed in Note (f) below. Mr. Embry, as
trustee of four
2
<PAGE> 5
pension trusts for the benefit of current and former employees of Magten
(including himself), also has sole voting power and dispositive power with
respect to 53,349 shares of Common Stock held by such trusts and sole
voting and investment power with respect to 2,616 shares of Common Stock
held by his minor children. Mr. Embry disclaims beneficial ownership of all
of the above shares.
(b) Represents one share issuable upon the exercise of the Company's Common
Share Warrants.
(c) Includes 40 shares issuable upon the exercise of the Company's Common Share
Warrants.
(d) Represents 17 shares issuable upon the exercise of the Company's Common
Share Warrants.
(e) Includes 60 shares issuable upon the exercise of the Company's Common Share
Warrants. Excludes shares beneficially owned by Mr. Embry, as to which Mr.
Embry disclaims beneficial ownership. See Note (a) above.
(f) Magten may be deemed to be the beneficial owner of shares owned by its
investment advisory clients. Magten has shared voting power (with its
investment advisory clients and Mr. Embry) and shared dispositive power
(with its investment advisory clients and Mr. Embry) with respect to
3,737,449 and 4,675,383, respectively, shares of the Common Stock. All of
such shares, which in the aggregate represent 34.1% of the Company's voting
securities, are beneficially owned by the investment advisory clients of
Magten and for which Magten disclaims beneficial ownership. The following
investment advisory clients of Magten have an interest in more than 5% of
the shares of Common Stock: General Motors Employees Domestic Group Pension
Trust, Bankers Trust as Trustee for the Hughes Master Retirement Trust, and
Los Angeles Fire and Police Pension Systems -- Fund 2525.
(g) Franklin Resources, Inc. has sole voting power and shared dispositive power
with respect to 1,444,670 shares of the Common Stock, for which Franklin
disclaims beneficial ownership.
(h) Merrill Lynch & Co., Inc. has shared voting power and shared dispositive
power with respect to 1,407,670 shares of the Common Stock, for which
Merrill Lynch disclaims beneficial ownership.
(i) Includes 32,284 shares issuable upon the exercise of the Company's Common
Share Warrants. State Street Research & Management Company is a
wholly-owned subsidiary of Metropolitan Life Insurance Company. State
Street and Metropolitan Life disclaim beneficial ownership of all of the
above shares.
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's stock, to file initial reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission. Officers, directors
and greater than ten-percent beneficial owners are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during the fiscal year ended September 30,
1996, all Section 16(a) filings were made on a timely basis.
ELECTION OF DIRECTORS
(PROPOSAL 1)
At the annual meeting seven directors are to be elected to serve for the
ensuing year and until their respective successors are elected and qualified.
The shares represented by the proxies will be voted for the nominees of the
Board of Directors named below, unless otherwise specified on the proxy.
Pursuant to the provisions of the By-laws, the Board of Directors has fixed the
number of directors at seven. All directors are elected annually.
If any nominee becomes unavailable for any reason or a vacancy should occur
before election (which events are not anticipated), the shares represented by
the proxies may be voted for such other person as may be determined by the
holders of such proxies in accordance with the view of a majority of the
directors.
3
<PAGE> 6
The following table sets forth the name of each nominee for director, his
principal occupation and five-year business history, the year in which he first
served as a director of the Company and his age. With the exception of Mr.
Lowrey, each of the nominees first became a director of the Company on June 4,
1996, the date of the Company's emergence from Chapter 11 bankruptcy.
<TABLE>
<CAPTION>
PRINCIPAL INITIAL SERVICE
NAME AND AGE OCCUPATION AS A DIRECTOR
- ------------------------------------- ------------------------------------------ ---------------
<S> <C> <C>
P. Lang Lowrey, III, 43.............. Chairman of the Board, President and Chief 1995
Executive Officer
Talton R. Embry, 50.................. Chairman and Chief Investment Officer, 1996
Darius W. Gaskins, Jr., 59........... Magten Asset Management Corp. 1996
Partner, High Street Associates, Inc.
Jay P. Gilbertson, 36................ Chief Financial Officer, HBO & Company 1996
Richard D. Jackson, 59............... Consultant 1996
George A. Poole, Jr., 65............. Private investor 1996
Lewis Solomon, 63.................... Chairman, G & L Investments 1996
</TABLE>
P. Lang Lowrey, III was elected Chairman of the Board on June 4, 1996. Mr.
Lowrey was elected President, Chief Operating Officer and Director in May 1995
and subsequently assumed the duties of Chief Executive Officer, effective
October 1, 1995. Prior to that, he served as Vice President -- Magnetics Group
from November 1992 to May 1995. He served from October 1990 to October 1992 as
Vice President -- Worldwide Marketing Division.
Talton R. Embry has served as a director since June 4, 1996. Mr. Embry has
been Chairman and Chief Investment Officer of Magten Asset Management
Corporation, which is an investment advisory firm, since 1978. Mr. Embry is also
a director of Capsure Holdings Corp., Varco International Inc., TSX Corporation,
Combined Broadcasting, Inc., BDK Holdings, Inc., Thermadyne Holdings Corp. and
Revco Drug Stores. In July 1992, Mr. Embry was elected Co-Chairman of the Board
of Directors of Revco Drug Stores.
On September 9, 1993, Magten Asset Management Corp. and Talton R. Embry,
without admitting or denying the allegations in a complaint by the Securities
and Exchange Commission, consented to the entry of judgments enjoining them from
violating (and, in the case of Mr. Embry, aiding and abetting violations of)
anti-fraud and other provisions of the Exchange Act, the Investment Advisor's
Act of 1940 and the Investment Company Act of 1940. The final judgment to the
action, Securities and Exchange Commission v. Talton R. Embry and Magten Asset
Management Corp., 93 Civ. 6294 (LMM) (filed September 9, 1993 S.D.N.Y.), was
entered on September 14, 1993.
The Commission's complaint alleged principally that Mr. Embry failed to
advise his clients of certain personal and proprietary trades relevant to the
clients' holdings and to comply with certain reporting requirements. As part of
the settlement, Mr. Embry made a $1 million payment for the benefit of certain
of Magten's clients.
At the same time, Mr. Embry, without admitting or denying the allegations
in an order filed by the Commission, settled a parallel Commission
administrative action against Mr. Embry. The administrative proceeding, the
Matter of Talton R. Embry, Administrative Proceeding File No. 3-8153, was
commenced by the Commission on September 16, 1993. In the settlement, Mr. Embry
agreed to the appointment, for a period of five years, of an independent
consultant approved by the Commission to oversee Mr. Embry's personal securities
transactions and to conduct biannual compliance audits of Magten. Gerald Rath,
Esq. of the law firm of Bingham Dana & Gould, Boston, Massachusetts, has been
appointed and approved as the independent consultant.
On February 26, 1996, Magten and the Maryland Securities Commissioner
entered into a consent order whereby Magten paid a fine of $1,500. The Maryland
Securities Commissioner alleged that Magten effected investment advisory
transactions in Maryland prior to its registration as a Maryland investment
adviser. Magten is currently registered as an investment adviser in Maryland,
and its activities are not restricted.
4
<PAGE> 7
Darius W. Gaskins, Jr. has served as a director since June 4, 1996. Mr.
Gaskins has been a partner of High Street Associates, Inc. since 1991. Mr.
Gaskins also serves as a director of UNR Industries, Inc., Northwestern Steel
and Wire Company and Sapient, Inc.
Jay P. Gilbertson has served as a director since June 4, 1996. Mr.
Gilbertson has been the Chief Financial Officer of HBO & Company since April
1993. From December 1991 to April 1993, he served as Corporate Controller of HBO
& Company.
Richard D. Jackson has served as a director since June 4, 1996, and was
elected Vice Chairman of the Board of Directors on June 4, 1996. Mr. Jackson has
been a consultant since 1995. He joined First Financial Management Corporation
in 1993 as Chief Operating Officer and Senior Executive Vice President and was
elected Vice Chairman in February 1995, a position he held until August 1995.
From 1990 to 1993, Mr. Jackson served as Vice Chairman and Chief Executive
Officer of the Georgia Federal Bank.
George A. Poole, Jr. has served as a director since June 4, 1996. Mr. Poole
has been a private investor for more than the past five years and serves as a
director of Spreckels Industries, Inc., Bucyrus-Erie Company, Rock Island Foods,
Inc. and FCC Receivables Corporation, a wholly-owned subsidiary of Franklin
Resources, Inc.
Lewis Solomon has served as a director since June 4, 1996 and was elected
Lead Director on that date. Mr. Solomon has been Chairman of G&L Investments for
the past five years. He also serves as a director of Anadigics, Inc., Computer
Products, Inc., Cybernetics Services, inc., ICTV, Inc., Terayon Corporation and
TSX Corporation.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held twenty-four meetings in the
fiscal year ended September 30, 1996, three of them subsequent to June 4, 1996.
No incumbent director attended less than 75% of the meetings held by the Board
of Directors and the committees on which he served. The Board of Directors of
the Company has an Audit Committee, a Compensation Committee, and an Executive
Committee. The Board of Directors does not have a Nominating Committee but has
assigned the functions of such a Committee to the Compensation Committee.
The members of the Company's Audit Committee during the fiscal year ended
September 30, 1996 were, until June 4, 1996, Messrs. Roger S. Palamara, Richard
E. Neal, Paul G. Roland and Frederick W. Zuckerman and, from June 4, 1996 to the
present, Messrs. Poole (Chairman of the Committee), Gilbertson and Solomon. The
Audit Committee met one time during the fiscal year ended September 30, 1996.
The principal duties assigned to the Audit Committee are to recommend to the
Board of Directors the accounting firm to be selected as independent accountants
of the Company and to meet with the Company's independent accountants after
completion of the annual audit and their rendering of their opinion as a result
thereof, to discuss their comments thereon and the Company's accounting methods
and procedures as the Audit Committee deems appropriate.
The members of the Company's Compensation Committee during the fiscal year
ended September 30, 1996 were, until June 4, 1996, Messrs. Palamara, Neal,
Roland, Zuckerman and Clark A. Johnson and, from June 4, 1996 to the present,
Messrs. Embry (Chairman of the Committee), Gaskins and Jackson. The Compensation
Committee met five times during the fiscal year ended September 30, 1996. The
Compensation Committee determines the compensation and benefits of the Chief
Executive Officer and other executive officers of the Company. It is also
responsible for evaluating the performance of existing members of the Board of
Directors and for making recommendations on new candidates for membership on the
Board. The Compensation Committee also oversees the Company's stock option,
employee stock purchase, and other stock-based plans.
The members of the Company's Executive Committee during the fiscal year
ended September 30, 1996 were, from June 4, 1996 to the present, Messrs. Jackson
(Chairman of the Committee), Lowrey and Solomon. The Executive Committee met one
time during the fiscal year ended September 30, 1996. The Executive Committee
has and may exercise all the powers of the Board of Directors during the
intervals
5
<PAGE> 8
between meetings of the Board. It is also responsible for reviewing possible
acquisitions, mergers, joint ventures, partnerships and other entries into new
technologies.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive $1,000 for each
directors' meeting attended, $750 for each directors' meeting attended by
telephone, $500 for each committee meeting attended and an annual retainer of
$12,000. Employee directors receive no fees. Each of the non-employee directors
was granted options in November, 1996 to purchase 5,000 shares of Common Stock
for such director's first year of service. Effective October 1, 1996, the fees
received by directors who are not employees of the Company increased to an
annual retainer of $12,500, $1,250 for each directors' and committee meeting
attended in person and $1,000 for each such meeting attended by telephone. In
addition, effective June 4, 1996, the nonemployee members of the Executive
Committee will receive a retainer of $40,000 per year, payable $10,000 each
quarter. From November, 1995 to June, 1996, Paul G. Roland as Chairman of the
Board of Directors received additional compensation of $3,500 per month, with a
maximum total annual compensation of $75,000.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth as to the Company's
Chief Executive Officer and the other four most highly compensated executive
officers all compensation awarded to, earned by, or paid to said individuals
(the "Named Executive Officers") for all services rendered in all capacities to
the Company and its subsidiaries for the fiscal years ended September 30, 1996,
1995 and 1994, except as may otherwise be specifically noted.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------- ------------
OTHER ANNUAL STOCK ALL OTHER
FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) (#)(4) ($)
- ------------------------------------- ------ ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
P. Lang Lowrey, III.................. 1996 450,000 742,152 136,557(2) 40,000 0
Chairman of the Board, Chief 1995 289,692 87,750 -- 375,000 0
Executive Officer and President 1994 147,500 180,836 -- 0 0
Thomas R. Simmons.................... 1996 206,500 41,595 -- 25,000 3,303(5)(6)
President, U.S. Group 1995 206,500 66,374 -- 0 1,680(6)
1994 147,500 137,011 -- 0 2,082(5)(6)
William C. Ater...................... 1996 168,000 37,544 134,697(3) 25,000 1,000(5)
Vice President, Chief 1995 154,000 21,975 -- 0 0
Administrative Officer and 1994 110,000 114,981 -- 0 1,000(5)
Secretary
Donald L. Viles...................... 1996 157,446 45,980 -- 25,000 1,000(5)
Executive Vice President and Chief 1995 167,846 5,000 -- 0 0
Financial Officer 1994 81,000 85,265 -- 0 1,000(5)
Hasso Jenss.......................... 1996 170,352 29,576 -- 25,000 0
President, European Group 1995 172,771 72,006 -- 0 0
1994 109,224 87,553 -- 0 0
</TABLE>
- ---------------
(1) Except as noted below, the aggregate amount of perquisites and other
personal benefits, securities or property, given to each Named Executive
Officer valued on the basis of aggregate incremental cost to the Company
did not exceed the lesser of $50,000 or 10% of the total of annual salary
and bonus for each such officer during fiscal 1996, 1995 and 1994.
6
<PAGE> 9
(2) Includes $63,894 in relocation expenses and $62,410 in income tax assistance
for certain relocation expense reimbursements.
(3) Includes $69,786 in relocation expenses and $58,242 in income tax assistance
for certain relocation expense reimbursements.
(4) All stock option grants prior to June 4, 1996 were cancelled as of that
date.
(5) These figures includes the following contributions made by the Company to
the Anacomp Savings Plus Plan for fiscal 1996 and fiscal 1994: for Mr.
Simmons, Mr. Ater and Mr. Viles, $1,000 each per year.
(6) Includes $2,303 in imputed interest in 1996, $1,680 in 1995 and $1,082 in
1994, on Mr. Simmons' loan from the Company. The interest is calculated on
the basis of the applicable federal rate computed by the Internal Revenue
Service.
STOCK OPTIONS
As indicated in the Summary Compensation Table, stock option grants were
made to the Named Executive Officers during fiscal 1996. The following table
sets forth additional information concerning said grants during fiscal 1996.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
% OF TOTAL STOCK PRICE APPRECIATION
OPTIONS FOR 10-YEAR OPTION
GRANTED TO EXERCISE GRANT-DATE TERM(2)(3)
EMPLOYEES PRICE MARKET PRICE EXPIRATION ------------------------------
NAME GRANTED (#) IN FISCAL YEAR ($/SH) ($/SH) DATE 0% ($) 5% ($) 10% ($)
- ------------------------ ----------- -------------- -------- ------------ ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 8.125 $13.2339 $21.0736
P. Lang Lowrey, III..... 40,000(1) 4.22 $ 4.63 $8.125 08/22/2006 139,800 344,156 657,744
Thomas R. Simmons....... 25,000(1) 2.63 4.63 8.125 08/22/2006 87,375 215,098 411,090
William C. Ater......... 25,000(1) 2.63 4.63 8.125 08/22/2006 87,375 215,098 411,090
Donald L. Viles......... 25,000(1) 2.63 4.63 8.125 08/22/2006 87,375 215,098 411,090
Hasso Jenss............. 25,000(1) 2.63 4.63 8.125 08/22/2006 87,375 215,098 411,090
</TABLE>
- ---------------
(1) Of the options granted, 1/4 vest on 6/30/97; 1/4 on 6/30/98, 1/4 on 6/30/99,
and 1/4 on the earlier of (i) 6/30/03 or (ii) the date, if any, on which it
is first determined that the Company has met at least 95% of its EBITDA
goal for fiscal years 1997, 1998 and 1999 combined, as such goal is
described in the Company's Third Amended Joint Plan of Reorganization. In
certain circumstances, pursuant to employment contracts, options may vest
sooner than indicated.
(2) The figures shown are potential future undiscounted values based on actual
option term and annual compounding at the applicable rate. Potential
realizable value equals stock price at end of option term less exercise
price, times the number of options granted.
(3) If the assumed annual rate of stock price appreciation of 0%, 5%, or 10% per
year should occur, the market value per share of Common Stock at the end of
the ten-year option term would be $8.125, $13.2339, or $21.0736, as the
case may be.
7
<PAGE> 10
The following table sets forth information regarding all options exercised
during fiscal 1996 or held at September 30, 1996 by the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN FISCAL 1996
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FY-END IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED VALUE (#) EXERCISABLE/ FY-END ($)
NAME ON EXERCISE (#) REALIZED($) UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ------------------------- ------------------ ----------- --------------------- ----------------------------
<S> <C> <C> <C> <C>
P. Lang Lowrey, III...... 0 0 0/40,000 $0/$144,800
Thomas R. Simmons........ 0 0 0/25,000 $0/ 90,500
William C. Ater.......... 0 0 0/25,000 $0/ 90,500
Donald L. Viles.......... 0 0 0/25,000 $0/ 90,500
Hasso Jenss.............. 0 0 0/25,000 $0/ 90,500
</TABLE>
- ---------------
(1) Based on the September 30, 1996 closing price of $8.25 on The NASDAQ Stock
Market -- Composite Transactions of the Company's Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors are
Messrs. Embry, Gaskins and Jackson, none of whom are employees of the Company.
EMPLOYMENT CONTRACTS
With the exception of Mr. Jenss, the Named Executive Officers are party to
employment agreements with the Company. Set forth below is a brief description
of each such agreement.
P. Lang Lowrey, III. Mr. Lowrey entered into an Amended and Restated
Employment Agreement with the Company effective as of October 1, 1996, with an
initial term of one year and renewable thereafter for additional one-year
periods.
Pursuant to the terms of his agreement, Mr. Lowrey's compensation plan for
fiscal 1997 is comprised of (i) a base salary of $500,000; (ii) an area profit
bonus up to $133,333 paid monthly equal to year-to-date actual performance of
the Company's adjusted net income as a percentage of year-to-date quota for the
Company's adjusted net income; (iii) a strategic focus bonus up to $100,000 paid
quarterly based on defined strategic corporate revenue goals; (iv) an asset
management bonus up to $50,000 paid quarterly based on the Company's asset
management targets; and (v) a corporate EBITDA bonus up to $50,000 paid after
year-end based on the Company's EBIDTA goal. All bonuses paid on a monthly or
quarterly basis are adjusted at year-end and, with the exception of the asset
management bonus, may be greater if goals are exceeded with a maximum possible
total performance bonus of $616,666.
Mr. Lowrey also has been granted, in addition to the options described
above under "Option Grants in Fiscal 1996", options under the 1996 Long-Term
Incentive Plan to acquire 190,679 shares of the Company's Common Stock at an
exercise price of $7.95 per share (the fair market price on October 1, 1996, the
first day of his employment under this agreement).
Mr. Lowrey's employment agreement further provides that, in the event of a
merger or consolidation where the Company is not the surviving company, or a
transfer of all or substantially all of the Company's assets, in either case if
the surviving or transferee company does not agree to be bound by the terms of
the employment agreement, or in the event of a change in control of the Company,
Mr. Lowrey may elect to treat his employment agreement as terminated and receive
a Severance Allowance equal to his prior 24 months compensation, including bonus
and benefits, but not to exceed one million dollars (the "Severance Allowance")
and the immediate vesting of previously awarded but unvested options. In
addition, Mr. Lowrey is entitled to receive the Severance Allowance and the
accelerated vesting of options under a variety of other
8
<PAGE> 11
circumstances, but excluding termination for cause, his voluntary resignation
after the initial term of the agreement or his decision not to renew the
agreement at the end of its initial term or any renewal term.
Mr. Lowrey also entered into a covenant not to compete with the Company for
a period of one year following any termination of employment and not to solicit
the Company's customers for a period of two years following any termination of
employment.
Thomas R. Simmons. Mr. Simmons entered into a three-year employment
agreement with the Company which expired on September 30, 1995, and which was
subsequently renewed for successive one-year terms expiring on September 30,
1996 and September 30, 1997. He has also entered into a covenant not to compete
with the Company for a period of one year following any termination of
employment and not to solicit the Company's customers for a period of two years
following any termination of employment.
Mr. Simmons' compensation plan for fiscal 1997 is comprised of (i) a base
salary of $206,500; (ii) an area profit bonus up to $44,477 paid monthly equal
to year-to-date actual performance of divisional EBIT as a percentage of
year-to-date quota; (iii) a strategic focus bonus up to $33,358 paid quarterly
based on defined divisional strategic products and services revenue; (iv) an
asset management bonus up to $16,679 paid quarterly based on the Company's asset
management targets; and (v) a corporate EBITDA bonus up to $16,679 paid after
year-end based on the Company's EBITDA goal. All bonuses paid on a monthly or
quarterly basis are adjusted at year-end and, with the exception of the asset
management bonus, may be greater if goals are exceeded with a maximum possible
total performance bonus of $189,028.
Mr. Simmons' employment agreement provides that, in the event of a merger
or consolidation or a transfer of substantially all of the Company's assets or a
change in control of the Company, Mr. Simmons will receive a severance allowance
equal to his prior twelve months' compensation if he is subsequently terminated
without cause or if he deems a termination to have occurred due to a demotion,
transfer or reduction in compensation. Mr. Simmons is also entitled to such
severance allowance if he is terminated without cause by the Company or if he
deems a termination to have occurred due to a demotion, transfer or reduction in
compensation.
William C. Ater. Mr. Ater entered into a three-year employment agreement
with the Company which expired on September 30, 1995, and which was subsequently
renewed for successive one-year terms expiring on September 30, 1996 and
September 30, 1997. Such agreement was amended on June 25, 1996. He has also
entered into a covenant not to compete with the Company for a period of one year
following any termination of employment and not to solicit the Company's
customers for a period of two years following any termination of employment.
Mr. Ater's compensation plan for fiscal 1997 is comprised of (I) a base
salary of $168,000; (ii) an area profit bonus up to $36,185 paid monthly equal
to year-to-date actual performance of the Company's adjusted net income as a
percentage of year-to-date quota for the Company's adjusted net income; (iii) a
strategic focus bonus up to $27,139 paid quarterly based on defined strategic
corporate revenue goals; (iv) an asset management bonus up to $13,569 paid
quarterly based on the Company's asset management targets; and (v) a corporate
EBITDA bonus up to $13,569 paid after year-end based on the Company's EBIDTA
goal. All bonuses paid on a monthly or quarterly basis are adjusted at year-end
and, with the exception of the asset management bonus, may be greater if goals
are exceeded with a maximum possible total performance bonus of $153,786.
Mr. Ater's employment agreement provides that, in the event of a merger or
consolidation or a transfer of substantially all of the Company's assets or a
change in control of the Company, Mr. Ater will receive a severance allowance
equal to his prior twenty-four months' compensation if he is subsequently
terminated without cause or if he deems a termination to have occurred due to a
demotion, transfer or reduction in compensation. Mr. Ater is also entitled to
such severance allowance if he is terminated without cause by the Company or if
he deems a termination to have occurred due to a demotion, transfer or reduction
in compensation.
Donald L. Viles. Mr. Viles entered into an employment agreement with the
Company effective February 15, 1996 and which expires on September 30, 1998. He
has also entered into a covenant not to
9
<PAGE> 12
compete with the Company for a period of one year following any termination of
employment and not to solicit the Company's customers for a period of two years
following any termination of employment.
Mr. Viles' compensation plan for fiscal 1997 is comprised of (i) a base
salary of $168,000; (ii) an area profit bonus up to $36,185 paid monthly equal
to year-to-date actual performance of the Company's adjusted net income as a
percentage of year-to-date quota for the Company's adjusted net income; (iii) a
strategic focus bonus up to $27,139 paid quarterly based on defined strategic
corporate revenue goals; (iv) an asset management bonus up to $13,569 paid
quarterly based on the Company's asset management targets; and (v) a corporate
EBITDA bonus up to $13,569 paid after year-end based on the Company's EBIDTA
goal. All bonuses paid on a monthly or quarterly basis are adjusted at year-end
and, with the exception of the asset management bonus, may be greater if goals
are exceeded with a maximum possible total performance bonus of $153,786.
Mr. Viles' employment agreement provides that, in the event of a merger or
consolidation or a transfer of substantially all of the Company's assets or a
change in control of the Company or a discontinuation of the Company's business,
Mr. Viles will receive a severance allowance equal to his prior twenty-four
months' compensation if he elects to treat any such occurrence as a termination
of his agreement. Mr. Viles is also entitled to such severance allowance if he
is terminated by mutual agreement or without cause by the Company or if he deems
a termination to have occurred due to a demotion, transfer or reduction in
compensation.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
As discussed above, the employment agreements of Messrs. Lowrey, Simmons,
Ater and Viles provide for certain payments in the event of a termination of
employment or a change of control of the Company. Mr. Jenss is entitled to
termination pay and other benefits as provided by applicable German labor laws.
BOARD OF DIRECTORS'
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
determines the compensation and benefits of the Chief Executive Officer and
other executive officers of the Company and oversees the Company's stock option,
employee stock purchase and other stock-based plans. The Committee is composed
solely of non-employee directors.
The compensation of executive officers of the Company was substantially
determined prior to the constitution of the current Committee on June 4, 1996.
The Committee understands from the former Compensation Committee (the "Former
Committee") that the compensation policy of the Company had been that a
substantial portion of the annual compensation of each executive officer related
to, and was contingent upon, the individual executive officer's performance.
Accordingly, under the Former Committee's guidance, a significant portion of an
executive officer's annual compensation was "at risk," at target levels during
fiscal 1996 comprising approximately 30% of total cash compensation.
The executive officer's performance for purposes of compensation decisions
was measured under the annual bonus plan against goals established by the Chief
Executive Officer and reviewed by the Former Committee at the start of the
fiscal year. As a general principle during fiscal 1996, the bonus goals of the
executive officers were tied 70% to a profit objective and 30% to a revenue
objective, in most cases at levels providing incentive to the executive officer
to achieve profit and revenue objectives higher than the prior year's actual
results.
Certain decisions regarding the compensation of the Chief Executive Officer
for fiscal 1996 were made prior to June 4, 1996 by the Former Committee and the
then Board of Directors, including entering into an employment agreement with
the Chief Executive Officer that established his salary at $450,000 with an
EBITDA-based bonus (with respect to which he earned $42,152 in fiscal 1996) upon
becoming Chief Executive Officer and awarding the Chief Executive Officer a
retention bonus of $200,000 as an inducement to
10
<PAGE> 13
remain with the Company during its restructuring under Chapter 11 of the
Bankruptcy Code and to accept a temporary transfer to Poway, California.
Subsequent to the Company's emergence from bankruptcy and the appointment
of the current Board of Directors, the Chief Executive Officer was awarded a
restructuring bonus of $500,000 in recognition of his individual efforts in
connection with the Company's successful restructuring. In addition, it was
determined that the amount of the previously awarded retention bonus would be
offset against any incentive bonus to which the Chief Executive Officer may have
been entitled under his employment agreement.
The Disclosure Statement filed with the bankruptcy court as part of the
Company's restructuring committed the Company to implement a stock option plan
for the benefit of the Company's post-restructuring management, providing for
the issuance of up to 7 1/2% of the fully diluted Common Stock at the time of
emergence from bankruptcy. To fulfill this obligation of the Company, the Board
of Directors adopted the 1996 Restructure Recognition Incentive Plan. Pursuant
to such Plan, the Company granted to the named executive officers the options
set forth under "Executive Compensation -- Stock Options -- Option Grants in
Fiscal 1996." The exercise price of such grants was set at $4.63 per share, in
comparison to the grant date market price of $8.125 per share, in order to
provide post-restructuring management an immediate reward for their collective
efforts in the Company's successful restructuring.
Compensation Committee of the Board of
Directors
Talton R. Embry, Chairman
Darius W. Gaskins, Jr.
Richard D. Jackson
11
<PAGE> 14
PERFORMANCE GRAPH
The following graph and table depict the cumulative total Shareholder
returns following an assumed investment of $100 in shares of the Company's
Common Stock for the periods of September 30, 1991 through June 4, 1996 (the
effective date of the Company's Third Amended Joint Plan of Reorganization) and
June 5, 1996 through September 30, 1996 (subsequent to consummation of such Plan
and emergence from bankruptcy). All shares of common stock, $.01 par value per
share, outstanding on June 4, 1996 (shown to the left of the vertical bar on the
graph), were cancelled on such date. The period shown on the graph to the right
of the vertical bar represents the Company's current shares of Common Stock.
Also presented below for comparison are the cumulative total shareholder returns
of a like assumed investment and the reinvestment of all dividends for the same
periods in each of the Standard and Poor's 500 Index (the "S&P 500") and the
Standard and Poor's Computer Software and Services Index ("Software and
Services").
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 June 4, 1996 June 5,1996 1996
---- ---- ---- ---- ---- ------------ ----------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anacomp $100 $100 $ 88 $ 92 $ 21 $ 7 $100 $ 95
S&P 100 111 125 130 169 197 100 102
S&P Software 100 123 163 194 283 364* 100* 112
</TABLE>
- ---------------
All amounts rounded to nearest dollar.
* Daily returns for the S&P Software Index are not computed. Data for June 4 and
June 5 use the index as of May 31, 1996 as an estimation.
12
<PAGE> 15
PROPOSAL TO ADOPT THE 1996 LONG-TERM INCENTIVE PLAN
(PROPOSAL 2)
On July 22, 1996, the Board of Directors adopted the Anacomp, Inc. 1996
Long-Term Incentive Plan (the "Incentive Plan"). The Company has reserved
1,450,000 shares of its Common Stock for issuance in connection with options and
awards under this plan. The Incentive Plan became effective as of as of its
adoption by the Board. However, if the Shareholders fail to approve the
Incentive Plan at the Annual Meeting, any incentive stock options previously
granted under the plan will be automatically converted to non-qualified stock
options.
A summary of the Incentive Plan is set forth below. The summary is
qualified in its entirety by reference to the full text of the Incentive Plan,
which is attached to this Proxy Statement as Appendix A.
GENERAL
The purpose of the Incentive Plan is to promote the success, and enhance
the value, of the Company by linking the personal interests of employees,
officers and directors to those of the stockholders, and by providing such
employees, officer and directors with an incentive for outstanding performance.
As of December 16, 1996, there were approximately 2,000 persons eligible to
participate in the Incentive Plan.
The Incentive Plan authorizes the granting of awards ("Awards") to
employees, officers and directors of the Company or its subsidiaries in the
following forms: (i) options to purchase shares of Common Stock ("Options"),
which may be incentive stock options or non-qualified, (ii) stock appreciation
rights ("SARs"); (iii) performance units ("Performance Units"); (iv) restricted
stock ("Restricted Stock"); (v) dividend equivalents ("Dividend Equivalents");
and (vi) other stock-based awards.
Pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Company may not deduct compensation in excess of $1 million
paid to the Chief Executive Officer and the four next most highly compensated
executive officers of the Company. The Incentive Plan is designed to comply with
Code Section 162(m) so that the grant of Options and SARs under the plan, and
other Awards, such as Performance Units, that are conditioned on the performance
goals described in Section 13.11 of the plan, will be excluded from the
calculation of annual compensation for purposes of Code Section 162(m) and will
be fully deductible by the Company. The Board has approved the Incentive Plan
for submission to the stockholders in order to permit the grant of Awards
thereunder that will constitute deductible performance-based compensation for
purposes of Code Section 162(m).
Subject to adjustment as provided in the Incentive Plan, the aggregate
number of shares of Common Stock reserved and available for Awards or which may
be used to provide a basis of measurement for or to determine the value of an
Award (such as with a SAR or Performance Unit) is 1,400,000, of which no more
than 150,000 shares may be in the form of Restricted Stock and no more than
100,000 shares may be in the form of Options for which the exercise price is
below the fair market value of the Common Stock on the date of grant. The
maximum number of shares of Common Stock with respect to one or more Options
and/or SARs that may be granted during any one calendar year under the Incentive
Plan to any one participant is 500,000. The maximum fair market value of any
Awards (other than Options and SARs) that may be received by a participant (less
any consideration paid by the participant for such Award) during any one
calendar year under the Incentive Plan is $2,000,000.
ADMINISTRATION
The Incentive Plan will be administered by the Compensation Committee of
the Board of Directors of the Company (the "Committee"). The Committee has the
power, authority and discretion to designate participants; determine the type or
types of Awards to be granted to each participant and the terms and conditions
thereof; establish, adopt or revise any rules and regulations as it may deem
necessary or advisable to administer the Incentive Plan; and make all other
decisions and determinations that may be required under, or as the Committee
deems necessary or advisable to administer, the Incentive Plan.
13
<PAGE> 16
AWARDS
Stock Options. The Committee is authorized to grant Options, which may be
incentive stock options ("ISOs") or nonqualified stock options ("NSOs"), to
participants. All Options will be evidenced by a written Award Agreement between
the Company and the participant, which will include such provisions as may be
specified by the Committee. The terms of any ISO must meet the requirements of
Section 422 of the Code.
Stock Appreciation Rights. The Committee may grant SARs to participants.
Upon the exercise of a SAR, the participant has the right to receive the excess,
if any, of: the fair market value of one share of Common Stock on the date of
exercise, over the grant price of the SAR as determined by the Committee, which
will not be less than the fair market value of one share of Common Stock on the
date of grant in the case of any SAR related to an ISO. All awards of SARs will
be evidenced by an Award Agreement, reflecting the terms, methods of exercise,
methods of settlement, form of consideration payable in settlement, and any
other terms and conditions of the SAR, as determined by the Committee at the
time of grant.
Performance Units. The Committee may grant Performance Units to
participants on such terms and conditions as may be selected by the Committee.
The Committee will have the complete discretion to determine the number of
Performance Units granted to each participant and to set performance goals and
other terms or conditions to payment of the Performance Units in its discretion
which, depending on the extent to which they are met, will determine the number
and value of Performance Units that will be paid to the participant.
Restricted Stock Awards. The Committee may make awards of Restricted Stock
to participants, which will be subject to such restrictions on transferability
and other restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the right to
receive dividends, if any, on the Restricted Stock).
Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to participants subject to such terms and conditions as may be
selected by the Committee. Dividend Equivalents entitle the participant to
receive payments equal to dividends with respect to all or a portion of the
number of shares of Common Stock subject to an Option Award or SAR Award, as
determined by the Committee. The Committee may provide that Dividend Equivalents
be paid or distributed when accrued or be deemed to have been reinvested in
additional shares of Common Stock, or otherwise reinvested.
Other Stock-Based Awards. The Committee may, subject to limitations under
applicable law, grant to participants such other Awards that are payable in,
valued in whole or in part by reference to, or otherwise based on or related to
shares of Common Stock, as deemed by the Committee to be consistent with the
purposes of the Incentive Plan, including without limitation shares of Common
Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Common Stock, and Awards valued by
reference to book value of shares of Common Stock or the value of securities of
or the performance of specified subsidiaries of the Company. The Committee will
determine the terms and conditions of any such Awards.
Performance Goals. The Committee may determine that any Award will be
determined solely on the basis of (a) the achievement by the Company or a
subsidiary of a specified target return on equity or return on assets, (b) the
Company's or subsidiary's stock price, (c) the achievement by a business unit of
the Company or subsidiary of a specified target net income or earnings per
share, including, without limitation, earnings before interest, taxes,
depreciation and amortization (EBITDA), or (d) any combination of the goals set
forth in (a) through (c) above. Furthermore, the Committee reserves the right
for any reason to reduce (but not increase) any Award, notwithstanding the
achievement of a specified goal. If an Award is made on such basis, the
Committee must establish goals prior to the beginning of the period for which
such performance goal relates (or such later date as may be permitted under Code
Section 162(m)). Any payment of an Award granted with performance goals will be
conditioned on the written certification of the Committee in each case that the
performance goals and any other material conditions were satisfied.
Limitations on Transfer; Beneficiaries. No Award will be assignable or
transferable by a participant other than by will or the laws of descent and
distribution or, except in the case of an ISO, pursuant to a
14
<PAGE> 17
qualified domestic relations. However, a participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of
the participant and to receive any distribution with respect to any Award upon
the participant's death.
Acceleration Upon Certain Events. Upon the participant's death or
disability, all outstanding Options, SARs, and other Awards in the nature of
rights that may be exercised will become fully exercisable and all restrictions
on outstanding Awards will lapse. Any Options or SARs will thereafter continue
or lapse in accordance with the other provisions of the Incentive Plan and the
Award Agreement. In the event of a Change in Control of the Company (as defined
in the Incentive Plan), all outstanding Options, SARs, and other Awards in the
nature of rights that may be exercised will become fully vested and all
restrictions on all outstanding Awards will lapse. In the event of (i) the
commencement of a public tender offer for all or any portion of the Common
Stock, or (ii) a proposal to merge, consolidate or otherwise combine into and
with another corporation (in which transaction the Company would not survive) is
submitted to the stockholders of the Company for approval, the Board may in its
sole discretion declare all outstanding Options, SARs, and other Awards in the
nature of rights that may be exercised to become fully vested, and/or all
restrictions on all outstanding Awards to lapse, in each case as of such date as
the Board may, in its sole discretion, declare, which may be on or before the
consummation of such tender offer or other transaction or event.
TERMINATION AND AMENDMENT
With the approval of the Board, at any time and from time to time, the
Committee may terminate, amend or modify the Incentive Plan without stockholder
approval; provided, however, that the Committee may condition any amendment on
the approval of stockholders of the Company if such approval is necessary or
deemed advisable with respect to tax, securities or other applicable laws,
policies or regulations. No termination, amendment, or modification of the
Incentive Plan may adversely affect any Award previously granted under the
Incentive Plan, without the written consent of the participant.
CERTAIN FEDERAL INCOME TAX EFFECTS
Nonqualified Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of a non-discounted NSO. However, the participant
will realize ordinary income on the exercise of the NSO in an amount equal to
the excess of the fair market value of the Common Stock acquired upon the
exercise of such option over the exercise price, and the Company will receive a
corresponding deduction. The gain, if any, realized upon the subsequent
disposition by the participant of the Common Stock will constitute short- or
long-term capital gain, depending on the participant's holding period.
Incentive Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of a non-discounted ISO or the exercise thereof by
the participant. If the participant holds the shares of Common Stock for the
greater of two years after the date the Option was granted or one year after the
acquisition of such shares of Common Stock (the "required holding period"), the
difference between the aggregate option price and the amount realized upon
disposition of the shares of Common Stock will constitute a long-term capital
gain or loss, and the Company will not be entitled to a federal income tax
deduction. If the shares of Common Stock are disposed of in a sale, exchange or
other "disqualifying disposition" during the required holding period, the
participant will realize taxable ordinary income in an amount equal to the
excess of the fair market value of the Common Stock purchased at the time of
exercise over the aggregate option price, and the Company will be entitled to a
federal income tax deduction equal to such amount.
SARs. Under present federal income tax regulations, a participant
receiving a non-discounted SAR will not recognize income, and the Company will
not be allowed a tax deduction, at the time the Award is granted. When a
participant exercises the SAR, the amount of cash and the fair market value of
any shares of Common Stock received will be ordinary income to the participant
and will be allowed as a deduction for federal income tax purposes to the
Company.
15
<PAGE> 18
Performance Units. Under present federal income tax regulations, a
participant receiving Performance Units will not recognize income and the
Company will not be allowed a tax deduction at the time the Award is granted.
When a participant receives payment of Performance Units, the amount of cash and
the fair market value of any shares of Common Stock received will be ordinary
income to the participant and will be allowed as a deduction for federal income
tax purposes to the Company.
Restricted Stock. Under present federal income tax regulations, and unless
the participant makes an election to accelerate recognition of the income to the
date of grant, a participant receiving a Restricted Stock Award will not
recognize income, and the Company will not be allowed a tax deduction, at the
time the Award is granted. When the restrictions lapse, the participant will
recognize ordinary income equal to the fair market value of the Common Stock,
and the Company will be entitled to a corresponding tax deduction at that time.
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
As of December 16, 1996, stock options had been granted or approved for
grant under the Incentive Plan to the persons and groups shown in the table
below. Any additional future Awards will be made at the discretion of the
Committee. Therefore, it is not presently possible to determine the number or
terms of Awards to be made in the future to the persons and groups shown in the
table below.
<TABLE>
<CAPTION>
INCENTIVE PLAN
----------------------------------
NAME AND POSITION DOLLAR VALUE NUMBER OF OPTIONS
- --------------------------------------------------------------- ------------- -----------------
<S> <C> <C>
P. Lang Lowrey, III(1)......................................... (4) 190,679
Chairman of the Board, Chief
Executive Officer and President
All Executive Officers as a Group (including the
above)(1)(2)................................................. (4) 318,179
Talton R. Embry(3)............................................. (4) 20,000
Director Nominee
Darius W. Gaskins, Jr.(3)...................................... (4) 20,000
Director Nominee
Jay P. Gilbertson(3)........................................... (4) 20,000
Director Nominee
Richard D. Jackson(3).......................................... (4) 20,000
Director Nominee
George A. Poole, Jr.(3)........................................ (4) 20,000
Director Nominee
Lewis Solomon(3)............................................... (4) 20,000
Director Nominee
All Non-Executive Directors as a Group(3) (including the
above)....................................................... (4) 120,000
All Non-Executive Employees as a Group......................... N/A none
</TABLE>
- ---------------
(1) Pursuant to his new Employment Agreement with the Company, Mr. Lowrey was
granted on November 15, 1996 non-qualified Options to purchase 190,679
shares of Common Stock for a purchase price of $7.95 per share. The Options
have a ten-year term and are exercisable in full on October 1, 1999.
(2) Pursuant to his Employment Agreement as the new president and chief
operating officer of the Company beginning January 6, 1997, Ralph W.
Koehrer will be granted non-qualified Options to purchase 127,500 shares of
Common Stock. Options to purchase 85,000 of such shares will be granted as
of January 6, 1997, his date of hire, and Options to purchase the remaining
42,500 of such shares will be granted after two years from the date of
hire, in each case, at a purchase price equal to the fair market value of
the Common Stock on the grant date. The Options will have a ten-year term
and will be exercisable in full on the third anniversary of the grant date.
(3) On November 15, 1996, the Committee approved, subject to the approval of the
Incentive Plan by the shareholders, the grant on February 3, 1997 to each
of the non-employee directors of the Company of
16
<PAGE> 19
non-qualified Options to purchase 20,000 shares of Common Stock at a
purchase price equal to the fair market value of the Common Stock on the
grant date. Such Options will have a term of ten years and will be
exercisable on a cumulative basis as to 25% per year, beginning February 3,
1998.
(4) The dollar value of the above Options is dependent on the difference between
the exercise price and the fair market value of the underlying shares on
the date of exercise.
ADDITIONAL INFORMATION
The closing price of the Common Stock, as reported by the Nasdaq National
Market on December 16, 1996, was $8.125.
The affirmative vote of the holders of a majority of the shares present or
represented by proxy and entitled to vote at the meeting on this proposal will
constitute approval of the Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE INCENTIVE
PLAN.
PROPOSAL TO ADOPT THE 1997 QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL 3)
On December 10, 1996, the Board of Directors adopted, subject to
Shareholder approval at the Annual Meeting, the Anacomp, Inc. 1997 Qualified
Employee Stock Purchase Plan (the "Stock Purchase Plan"). If approved by
Shareholders, the Stock Purchase Plan will be effective as of January 1, 1997.
A summary of the Stock Purchase Plan is set forth below. The summary is
qualified in its entirety by reference to the full text of the Stock Purchase
Plan, which is attached to this Proxy Statement as Appendix B.
GENERAL
The purpose of the Stock Purchase Plan is to enhance the proprietary
interest, through ownership of Common Stock of the Company, among the employees
of the Company and its subsidiaries designated by the Company as eligible to
participate in the Stock Purchase Plan.
ADMINISTRATION
The Stock Purchase Plan will be administered by the Compensation Committee
of the Board of Directors (the "Committee"). Subject to the express provisions
of the Stock Purchase Plan, the Committee has authority to interpret and
construe the provisions of the Stock Purchase Plan, to adopt rules and
regulations for administering the Stock Purchase Plan, and to make all other
determinations necessary or advisable for administering the Stock Purchase Plan.
The Committee will select from time to time a person or persons, who may be
officers or employees of the Company (the "Administrator"), to operate the Stock
Purchase Plan, perform the day-to-day administration of the Stock Purchase Plan
and maintain records of the Stock Purchase Plan.
STOCK SUBJECT TO THE STOCK PURCHASE PLAN
A maximum of 500,000 shares of Common Stock (the "Shares") will be made
available for purchase by participants under the Stock Purchase Plan, subject to
appropriate adjustment for stock dividends, stock split or combination of
shares, recapitalization or other changes in the Company's capitalization. The
Shares issuable under the Stock Purchase Plan may be issued out of authorized
but unissued shares or transferred from available treasury stock. All cash
received or held by the Company under the Stock Purchase Plan may be used by the
Company for any corporate purpose.
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ELIGIBILITY; GRANT AND EXERCISE OF OPTIONS
All employees of the Company or its participating subsidiaries who are
regularly scheduled to work at least 20 hours each week and at least five months
each calendar year are eligible to participate in the Stock Purchase Plan. As of
December 16, 1996, there were approximately 2,000 persons eligible to
participate in the Stock Purchase Plan.
An eligible employee may elect to become a participant in the Stock
Purchase Plan by filing with the Administrator a request form which authorizes a
regular payroll deduction from the employee's paycheck. A participants' request
form authorizing a payroll deduction will remain effective from Offering Period
to Offering Period until amended or canceled. An Offering Period is the 12-month
period beginning April 1 of each year; except that the first Offering Period is
the 15-month period from January 1, 1997 to March 31, 1998. A participant's
payroll deduction must be in any whole percentage from one to ten percent of
such participant's base compensation payable each pay period, and at any other
time an element of base compensation is payable. A participant may not make cash
contributions or payments to the Stock Purchase Plan.
A book account will be established for each participant, to which the
participant's payroll deductions will be credited, until these amounts are
either withdrawn, distributed or used to purchase Common Stock, as described
below. No interest will be credited on these cash amounts. Whole shares of
Common Stock will be held in the participant's account until distributed as
described below.
On the first day of each Offering Period each eligible employee is granted
an option to purchase (an "Option") on the last day of the Offering Period (the
"Purchase Date") at the price described below (the "Purchase Price") the number
of full shares of Common Stock which the cash credited to his account at that
time will purchase at the Purchase Price. An employee may not be granted an
Option for an Offering Period if immediately after the grant, he or she would
own five percent or more of the total combined voting power or value of all
classes of stock of the Company or any of its subsidiaries. A participant cannot
receive Options that, in combination with options under other plans qualified
under Section 423 of the Code, would result during any calendar year in the
purchase of shares having an aggregate fair market value of more than $25,000.
Unless the cash credited to a participant's account is withdrawn or
distributed, his Option to purchase shares of Common Stock will be deemed to
have been exercised automatically on the Purchase Date. The cash balance, if
any, remaining in the participant's account at the end of an Offering Period
will be refunded to the participant, without interest. The Purchase Price will
be the lesser of (i) 85% of the fair market value of the Common Stock on the
first day of the Offering Period; or (ii) 85% of the fair market value of the
Common Stock on the Purchase Date. Since the shares will be purchased at less
than market value, employees will receive a benefit from participating in the
Stock Purchase Plan.
Options granted under the Stock Purchase Plan are not transferable by the
participant other than by will or by the laws of descent and distribution and
are exercisable only by the participant during his or her lifetime.
NO IMPLIED RIGHTS
Neither the establishment of the Stock Purchase Plan, nor the grant of any
Options thereunder, nor the exercise thereof will be deemed to give to any
employee the right to be retained in the employ of the Company or any of its
subsidiaries or to interfere with the right of the Company or any such
subsidiary to discharge any employee or otherwise modify the employment
relationship at any time.
TERMINATION OF EMPLOYMENT
If a participant terminates employment, the cash balance in his account
will be returned to him (or his beneficiary in the case of the participant's
death) in cash, without interest, as soon as practicable, and certificates for
the shares of Common Stock credited to his account will be distributed as soon
as practicable or other appropriate evidence of ownership effected.
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AMENDMENT AND TERMINATION OF THE PLAN
The Committee may amend or modify the Plan, in whole or in part, at any
time; provided, however, that no amendment or modification may (a) affect any
right or obligation with respect to any grant previously made, unless required
by law, or (b) unless previously approved by the stockholders of the Company,
where such approval is necessary to satisfy federal securities laws, the Code,
or rules of any stock exchange on which the Company's Common Stock is listed (i)
in any manner materially affect the eligibility requirements, (ii) increase the
number of shares of Common Stock eligible for purchase under the Stock Purchase
Plan, or (iii) materially increase the benefits to participants. The Stock
Purchase Plan may be terminated by the Committee at any time, in which event the
Administrator will terminate all payroll deductions. Cash balances then credited
to participants' accounts will be distributed as soon as practicable, without
interest.
FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND TO PARTICIPANTS
The Stock Purchase Plan is designed to qualify as an Employee Stock
Purchase Stock Purchase Plan under Section 423 of the Code. A general summary of
the federal income tax consequences regarding the Stock Purchase Plan is stated
below.
Neither the grant nor the exercise of Options under the Stock Purchase Plan
will have a tax impact on the participant or the Company. If an participant
disposes of the Common Stock acquired upon the exercise of his Options after at
least two years from the date of grant and one year from the date of exercise,
then the participant must treat as ordinary income the amount by which the
lesser of (i) the fair market value of the Common Stock at the time of
disposition, or (ii) the fair market value of the Common Stock at the date of
grant, exceeds the Purchase Price. Any gain in addition to this amount will be
treated as a long-term capital gain. If an participant holds Common Stock at the
time of his death, the holding period requirements are automatically deemed to
have been satisfied and he will realize ordinary income in the amount by which
the lesser of (i) the fair market value of the Common Stock at the time of
death, or (ii) the fair market value of the Common Stock at the date of grant
exceeds the Purchase Price. The Company will not be allowed a deduction if the
holding period requirements are satisfied. If a participant disposes of Common
Stock before expiration of two years from the date of grant and one year from
the date of exercise, then the participant must treat as ordinary income the
excess of the fair market value of the Common Stock on the date of exercise of
the Option over the Purchase Price. Any additional gain will be treated as
long-term or short-term capital gain or loss, as the case may be. The Company
will be allowed a deduction equal to the amount of ordinary income recognized by
the participant.
The above discussion is intended to summarize the applicable provisions of
the Code which are in effect as of January 1, 1997. The tax consequences of
participating in the Stock Purchase Plan may vary with respect to individual
situations. Accordingly, participants should consult with their tax advisors in
regard to the tax consequences of participating in the Stock Purchase Plan as to
both federal and state income tax considerations.
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
Participation in the Stock Purchase Plan is voluntary and no participation
will be permitted unless and until the stockholders approve the plan.
Consequently, it is not presently possible to determine, with respect to (i) the
executive officers named in the Summary Compensation Table, (ii) all current
executive officers as a group, or (iii) all participants, including all current
officers who are not executive officers, as a group, either the benefits or
amounts that will be received by such persons or groups pursuant to the Stock
Purchase or the benefits or amounts that would have been received by such
persons or groups under the Stock Purchase Plan if it had been in effect during
the last fiscal year.
ADDITIONAL INFORMATION
The closing price of the Common Stock, as reported by the Nasdaq National
Market on December 16, 1996, was $8.125.
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The affirmative vote of the holders of a majority of the shares present or
represented by proxy and entitled to vote at the meeting on this proposal will
constitute approval of the Stock Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE STOCK
PURCHASE PLAN.
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP has served as the Company's independent accountant for
its most recently completed fiscal year. Representatives of Arthur Andersen LLP
have been invited to attend the Annual Meeting. They will have the opportunity
to make a statement if they desire to do so and will be available to respond to
Shareholders' questions.
SHAREHOLDER PROPOSALS
Any proposal which a Shareholder intends to submit for consideration by the
Shareholders at the next Annual Meeting of Shareholders of the Company must be
received by the Company by August 15, 1997. Any such proposals should be sent to
the Secretary of the Company at 11550 North Meridian Street, P.O. Box 40888,
Indianapolis, Indiana 46240.
OTHER BUSINESS
The Board of Directors knows of no other business which may come before the
Annual Meeting of Shareholders. If any other business should come before the
Meeting, the proxyholders intend to vote the proxies received in accordance with
the business judgment of the proxyholders, and discretionary authority to do so
is included in the accompanying form of Proxy.
By Order of the Board of Directors,
P. Lang Lowrey, III
Chairman of the Board
December 31, 1996
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APPENDIX A
ANACOMP, INC.
1996 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1 General. The purpose of the Anacomp, Inc. 1996 Long-Term Incentive
Plan (the "Plan") is to promote the success, and enhance the value, of Anacomp,
Inc. (the "Corporation"), by linking the personal interests of its employees,
officers and directors to those of Corporation stockholders and by providing its
employees, officers and directors with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to the Corporation in its
ability to motivate, attract, and retain the services of employees, officers and
directors upon whose judgment, interest, and special effort the successful
conduct of the Corporation's operations is largely dependent. Accordingly, the
Plan permits the grant of incentive awards from time to time to selected
employees, officers and directors.
ARTICLE 2
EFFECTIVE DATE
2.1 Effective Date. The Plan shall be effective upon the date that it is
approved by the Board. However, the Plan shall be submitted to the stockholders
of the Corporation for approval within 12 months of the Board's approval
thereof. No Incentive Stock Options granted under the Plan may be exercised
prior to approval of the Plan by the stockholders, and if the stockholders fail
to approve the Plan within such 12-month period, any Incentive Stock Options
previously granted hereunder shall be automatically converted to Non-Qualified
Stock Options without any further act. In the discretion of the Committee,
Awards may be made to Covered Employees which are intended to satisfy the
conditions for deductibility under Code Section 162(m). Any such Section 162(m)
Awards shall be contingent upon the stockholders having approved the Plan.
ARTICLE 3
DEFINITIONS
3.1 Definitions. When a word or phrase appears in the Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Sections 1.1 or 2.1 unless a clearly different meaning is required
by the context. The following words and phrases shall have the following
meanings:
(a) "Award" means any grant of an Option, Stock Appreciation Right,
Restricted Stock, Performance Unit, Dividend Equivalent, or Other
Stock-Based Award, or any other right or interest relating to Stock or
cash, granted to a Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Corporation.
(d) "Change of Control" means and includes each of the following:
(1) A change of control of the Corporation through a transaction or
series of transactions, such that any person (as that term is used in
Section 13 and 14(d)(2) of the 1934 Act), excluding affiliates of the
Corporation as of the Effective Date, is or becomes the beneficial owner
(as that term is used in Section 13(d) of the 1934 Act) directly or
indirectly, of securities of the Corporation representing 50% or more of
the combined voting power of the Corporation's then outstanding
securities;
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(2) Consummation of any consolidation, merger, share exchange or
similar transaction involving the Corporation after which 49% or more of
the voting securities of the surviving corporation is beneficially held
by persons other than persons who were beneficial owners of voting
securities of the Corporation immediately prior to the transaction;
(3) Consummation of any sale, lease, exchange or other transfer of
all or substantially all of the assets of the Corporation to parties
that are not within a "controlled group of corporations" (as defined in
Section 1563 of the Code) in which the Corporation is a member; or
(4) A change in a majority of the members of the Board within a
12-month period unless the election or nomination for election by the
Corporation's stockholders of each new director during such 12-month
period was approved by the directors then still in office who were
directors at the beginning of such 12-month period.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" means the committee of the Board described in Article
4.
(g) "Corporation" means Anacomp, Inc., an Indiana corporation.
(h) "Covered Employee" means an individual defined in Code Section
162(m)(3).
(i) "Disability" means the Participant's inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than 12 months, or any successor definition of the term "Permanent and
Total Disability" under Section 22(e)(3) of the Code.
(j) "Dividend Equivalent" means a right granted to a Participant under
Article 11.
(k) "Effective Date" has the meaning assigned such term in Section
2.1.
(l) "Fair Market Value", on any date, means (i) if the Stock is listed
on a securities exchange or is traded over the Nasdaq National Market, the
closing sales price on such exchange or over such system on such date or,
in the absence of reported sales on such date, the closing sales price on
the immediately preceding date on which sales were reported, or (ii) if the
Stock is not listed on a securities exchange or traded over the Nasdaq
National Market, the mean between the bid and offered prices as quoted by
Nasdaq for such date, provided that if it is determined that the fair
market value is not properly reflected by such Nasdaq quotations, Fair
Market Value will be determined by such other method as the Committee
determines in good faith to be reasonable.
(m) "Incentive Stock Option" means an Option that is intended to meet
the requirements of Section 422 of the Code or any successor provision
thereto.
(n) "Non-Qualified Stock Option" means an Option that is not an
Incentive Stock Option.
(o) "Option" means a right granted to a Participant under Article 7 of
the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.
(p) "Other Stock-Based Award" means a right, granted to a Participant
under Article 12, that relates to or is valued by reference to Stock or
other Awards relating to Stock.
(q) "Participant" means a person who, as an employee, officer or
director of the Corporation or any Subsidiary, has been granted an Award
under the Plan.
(r) "Performance Unit" means a right granted to a Participant under
Article 9, to receive cash, Stock, or other Awards, the payment of which is
contingent upon achieving certain performance goals established by the
Committee.
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(s) "Plan" means the Anacomp, Inc. 1996 Long-Term Incentive Plan, as
amended from time to time.
(t) "Restricted Stock" means Stock granted to a Participant under
Article 10 that is subject to certain restrictions and to substantial risk
of forfeiture.
(u) "Retirement" means a Participant's termination of employment with
the Corporation after attaining age 59 1/2.
(v) "Stock" means the $0.01 par value common stock of the Corporation
and such other securities of the Corporation as may be substituted for
Stock pursuant to Article 14.
(w) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the difference
between the Fair Market Value of a share of Stock as of the date of
exercise of the SAR over the grant price of the SAR, all as determined
pursuant to Article 8.
(x) "Subsidiary" means any corporation of which a majority of the
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Corporation.
(y) "1933 Act" means the Securities Act of 1933, as amended from time
to time.
(z) "1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time.
ARTICLE 4
ADMINISTRATION
4.1 Committee. The Plan shall be administered by the Compensation
Committee of the Board or, at the discretion of the Board from time to time, by
the Board. The Committee shall consist of two or more members of the Board who
are (i) "outside directors" as that term is used in Section 162 of the Code and
the regulations promulgated thereunder, and (ii) "non-employee directors" as
such term is defined in Rule 16b-3 promulgated under Section 16 of the 1934 Act
or any successor provision. During any time that the Board is acting as
administrator of the Plan, it shall have all the powers of the Committee
hereunder, and any reference herein to the Committee (other than in this Section
4.1) shall include the Board.
4.2 Action by the Committee. For purposes of administering the Plan, the
following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present and acts approved in writing
by a majority of the Committee in lieu of a meeting shall be deemed the acts of
the Committee. Each member of the Committee is entitled to, in good faith, rely
or act upon any report or other information furnished to that member by any
officer or other employee of the Corporation or any Subsidiary, the
Corporation's independent certified public accountants, or any executive
compensation consultant or other professional retained by the Corporation to
assist in the administration of the Plan.
4.3 Authority of Committee. The Committee has the power, authority and
discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted under the
Plan, including but not limited to, the exercise price, grant price, or
purchase price, any option reload feature, any restrictions or limitations
on an Award, any schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations or
waivers thereof, based in each case on such considerations as the Committee
in its sole discretion determines;
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(e) Determine whether, to what extent, and under what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in,
cash, Stock, other Awards, or other property, or an Award may be canceled,
forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(g) Decide all other matters that must be determined in connection
with an Award;
(h) Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan; and
(i) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan.
4.4. Decisions Binding. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1. Number of Shares. Subject to adjustment as provided in Section 14.1,
the aggregate number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Unit
Award) shall be 1,400,000, of which no more than 150,000 shares shall be in the
form of Restricted Stock Awards and no more than 100,000 shares shall be in the
form of Options for which the exercise price is below the Fair Market Value on
the date of grant.
5.2. Lapsed Awards. To the extent that an Award is canceled, terminates,
expires or lapses for any reason, any shares of Stock subject to the Award will
again be available for the grant of an Award under the Plan and shares subject
to SARs or other Awards settled in cash will be available for the grant of an
Award under the Plan.
5.3. Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.4. Limitation on Awards. Notwithstanding any provision in the Plan to
the contrary, the maximum number of shares of Stock with respect to one or more
Options and/or SARs that may be granted during any one calendar year under the
Plan to any one Participant shall be 500,000. The maximum fair market value of
any Awards (other than Options and SARs) that may be received by a Participant
(less any consideration paid by the Participant for such Award) during any one
calendar year under the Plan shall be $2,000,000.
ARTICLE 6
ELIGIBILITY
6.1. General. Awards may be granted only to individuals who are employees,
officers or directors of the Corporation or a Subsidiary, as determined by the
Committee.
ARTICLE 7
STOCK OPTIONS
7.1. General. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock under an
Option shall be determined by the Committee.
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(b) Time and Conditions of Exercise. Subject to Section 7.1(c) below,
the Committee shall determine the time or times at which an Option may be
exercised in whole or in part. The Committee also shall determine the
performance or other conditions, if any, that must be satisfied before all
or part of an Option may be exercised. The Committee may waive any exercise
provisions at any time in whole or in part based factors as the Committee
may determine in its sole discretion so that the Option becomes
exerciseable at an earlier date.
(c) Lapse of Option. A Non-Qualified Stock Option granted under the
Plan shall lapse under the following circumstances:
(1) The Non-Qualified Stock Option shall lapse ten years after it
is granted, unless an earlier time is set in the Award Agreement.
(2) If the Participant terminates employment for any reason other
than death, Disability or Retirement, the Non-Qualified Stock Option
shall lapse, unless it is previously exercised, on the earlier of (i)
the date on which the Option would have lapsed under paragraph (1); or
(ii) three months after the Participant's termination of employment;
provided, however, that if the Participant's employment is terminated by
the Company for cause or by the Participant without the consent of the
Company, the Option shall (to the extent not previously exercised), at
the discretion of the Committee, lapse immediately. If the Participant
exercises the Option after termination of employment, the Option may be
exercised only with respect to the shares that were otherwise vested on
the date of termination of employment.
(3) If the Participant terminates employment by reason of his
Disability or Retirement, the Non-Qualified Stock Option shall lapse,
unless it is previously exercised, on the earlier of (i) the date on
which the Option would have lapsed under paragraph (1); or (ii) one year
after the Participant's termination of employment. If the Participant
exercises the Option after his retirement, the Option may be exercised
only with respect to the shares that were otherwise vested on the date
of retirement. Upon the Participant's Disability, any Non-Qualified
Stock Options will immediately vest pursuant to Section 13.8 and may be
exercised by the Participant or his legal representative or
representatives.
(4) If the Participant dies before the Non-Qualified Stock Option
lapses pursuant to paragraph (1), (2) or (3), above, the Option shall
lapse, unless it is previously exercised, on the earlier of (i) the date
on which the Option would have lapsed had the Participant lived and had
his employment status (i.e., whether the Participant was employed by the
Company on the date of his death or had previously terminated
employment) remained unchanged; or (ii) one year after the date of the
Participant's death. Upon the Participant's death, any Non-Qualified
Stock Options will immediately vest pursuant to Section 13.8 and may be
exercised by the Participant's legal representative or representatives,
by the person or persons entitled to do so under the Participant's last
will and testament, or, if the Participant shall fail to make
testamentary disposition of such Option or shall die intestate, by the
person or persons entitled to receive such Option under the applicable
laws of descent and distribution.
(d) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including,
without limitation, cash, shares of Stock, or other property (including
"cashless exercise" arrangements), and the methods by which shares of Stock
shall be delivered or deemed to be delivered to Participants.
(e) Evidence of Grant. All Options shall be evidenced by a written
Award Agreement between the Corporation and the Participant. The Award
Agreement shall include such provisions, consistent herewith, as may be
specified by the Committee.
7.2. Incentive Stock Options. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) Exercise Price. The exercise price per share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive
Stock Option shall not be less than the Fair Market Value as of the date of
the grant.
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(b) Exercise. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(c) Lapse of Option. An Incentive Stock Option shall lapse under the
following circumstances:
(1) The Incentive Stock Option shall lapse ten years after it is
granted, unless an earlier time is set in the Award Agreement.
(2) If the Participant terminates employment for any reason other
than death or Disability, the Incentive Stock Option shall lapse, unless
it is previously exercised, on the earlier of (i) the date on which the
Option would have lapsed under paragraph (1); or (ii) three months after
the Participant's termination of employment; provided, however, that if
the Participant's employment is terminated by the Company for cause or
by the Participant without the consent of the Company, the Incentive
Stock Option shall (to the extent not previously exercised), at the
discretion of the Committee, lapse immediately. If the Participant
exercises the Option after termination of employment, the Option may be
exercised only with respect to the shares that were otherwise vested on
the date of termination of employment.
(3) If the Participant terminates employment by reason of his
Disability, the Incentive Stock Option shall lapse, unless it is
previously exercised, on the earlier of (i) the date on which the Option
would have lapsed under paragraph (1); or (ii) one year after the
Participant's termination of employment. Upon the Participant's
Disability, any Incentive Stock Options will immediately vest pursuant
to Section 13.8 and may be exercised by the Participant or his legal
representative or representatives.
(4) If the Participant dies before the Option lapses pursuant to
paragraph (1), (2) or (3), above, the Incentive Stock Option shall
lapse, unless it is previously exercised, on the earlier of (i) the date
on which the Option would have lapsed had the Participant lived and had
his employment status (i.e., whether the Participant was employed by the
Corporation on the date of his death or had previously terminated
employment) remained unchanged; or (ii) one year after the date of the
Participant's death. Upon the Participant's death, any Incentive Stock
Options will immediately vest pursuant to Section 13.8 and may be
exercised by the Participant's legal representative or representatives,
by the person or persons entitled to do so under the Participant's last
will and testament, or, if the Participant shall fail to make
testamentary disposition of such Incentive Stock Option or shall die
intestate, by the person or persons entitled to receive such Incentive
Stock Option under the applicable laws of descent and distribution.
(d) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time an Award is made) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000.00.
(e) Ten Percent Owners. No Incentive Stock Option shall be granted to
any individual who, at the date of grant, owns stock possessing more than
ten percent of the total combined voting power of all classes of stock of
the Corporation or any Subsidiary unless the exercise price per share of
such Option is at least 110% of the Fair Market Value per share of Stock at
the date of grant and the Option expires no later than five years after the
date of grant.
(f) Expiration of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to the Plan after the day immediately
prior to the tenth anniversary of the Effective Date.
(g) Right to Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant or, in the case of
the Participant's Disability, by the Participant's guardian or legal
representative.
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(h) Directors. The Committee may not grant an Incentive Stock Option
to a non-employee director. The Committee may grant an Incentive Stock
Option to a director who is also an employee of the Corporation or
Subsidiary but only in that individual's position as an employee and not as
a director.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1. Grant of SARs. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(a) Right to Payment. Upon the exercise of a Stock Appreciation
Right, the Participant to whom it is granted has the right to receive the
excess, if any, of:
(1) The Fair Market Value of one share of Stock on the date of
exercise; over
(2) The grant price of the Stock Appreciation Right as determined
by the Committee, which shall not be less than the Fair Market Value of
one share of Stock on the date of grant in the case of any SAR related
to an Incentive Stock Option.
(b) Other Terms. All awards of Stock Appreciation Rights shall be
evidenced by an Award Agreement. The terms, methods of exercise, methods of
settlement, form of consideration payable in settlement, and any other
terms and conditions of any Stock Appreciation Right shall be determined by
the Committee at the time of the grant of the Award and shall be reflected
in the Award Agreement.
ARTICLE 9
PERFORMANCE SHARES
9.1. Grant of Performance Shares. The Committee is authorized to grant
Performance Units to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Units granted to each Participant. All
Awards of Performance Units shall be evidenced by an Award Agreement.
9.2. Right to Payment. A grant of Performance Units gives the Participant
rights, valued as determined by the Committee, and payable to, or exercisable
by, the Participant to whom the Performance Units are granted, in whole or in
part, as the Committee shall establish at grant or thereafter. The Committee
shall set performance goals and other terms or conditions to payment of the
Performance Units in its discretion which, depending on the extent to which they
are met, will determine the number and value of Performance Units that will be
paid to the Participant.
9.3. Other Terms. Performance Units may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1. Grant of Restricted Stock. The Committee is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.
10.2. Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.
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10.3. Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
Corporation; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.
10.4. Certificates for Restricted Stock. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock.
ARTICLE 11
DIVIDEND EQUIVALENTS
11.1 Grant of Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Participants subject to such terms and conditions as may
be selected by the Committee. Dividend Equivalents shall entitle the Participant
to receive payments equal to dividends with respect to all or a portion of the
number of shares of Stock subject to an Option Award or SAR Award, as determined
by the Committee. The Committee may provide that Dividend Equivalents be paid or
distributed when accrued or be deemed to have been reinvested in additional
shares of Stock, or otherwise reinvested.
ARTICLE 12
OTHER STOCK-BASED AWARDS
12.1. Grant of Other Stock-Based Awards. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including without limitation shares
of Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Subsidiaries. The Committee shall determine the terms
and conditions of such Awards.
ARTICLE 13
PROVISIONS APPLICABLE TO AWARDS
13.1. Stand-alone, Tandem, and Substitute Awards. Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.
13.2. Exchange Provisions. The Committee may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Stock, or another
Award (subject to Section 14.1), based on the terms and conditions the Committee
determines and communicates to the Participant at the time the offer is made.
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13.3. Term of Award. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant.
13.4. Form of Payment for Awards. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Corporation or a Subsidiary on the grant or exercise of an Award may be made in
such form as the Committee determines at or after the time of grant, including
without limitation, cash, Stock, or other property, or any combination, and may
be made in a single payment or transfer, in installments, or on a deferred
basis, in each case determined in accordance with rules adopted by, and at the
discretion of, the Committee.
13.5. Limits on Transfer. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Company or a Subsidiary, or shall be
subject to any lien, obligation, or liability of such Participant to any other
party other than the Company or a Subsidiary. No such Award shall be assignable
or transferable by a Participant other than by will or the laws of descent and
distribution or, except in the case of an Incentive Stock Option, pursuant to a
qualified domestic relations order as defined in Section 414(p)(1)(B) of the
Code, if the order satisfies Section 414(p)(1)(A) of the Code.
13.6 Beneficiaries. Notwithstanding Section 13.5, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If no beneficiary has been designated or survives the
Participant, payment shall be made to the person entitled thereto under the
Participant's will or the laws of descent and distribution. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.
13.7. Stock Certificates. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal or state securities laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock.
13.8 Acceleration Upon Death or Disability. Notwithstanding any other
provision in the Plan or any Participant's Award Agreement to the contrary, upon
the Participant's death or Disability, all outstanding Options, Stock
Appreciation Rights, and other Awards in the nature of rights that may be
exercised shall become fully vested and all restrictions on outstanding Awards
shall lapse. Any Option or Stock Appreciation Rights Awards shall thereafter
continue or lapse in accordance with the other provisions of the Plan and the
Award Agreement. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.9. Acceleration Upon a Change of Control. If a Change of Control
occurs, all outstanding Options, Stock Appreciation Rights, and other Awards in
the nature of rights that may be exercised shall become fully vested and all
restrictions on outstanding Awards shall lapse. To the extent that this
provision causes Incentive Stock Options to exceed the dollar limitation set
forth in Section 7.2(d), the excess Options shall be deemed to be Non-Qualified
Stock Options.
13.10. Acceleration Upon Certain Events Not Constituting a Change of
Control. In the event of (i) the commencement of a public tender offer for all
or any portion of the Stock, or (ii) a proposal to merge, consolidate or
otherwise combine into and with another corporation (in which transaction the
Corporation would not survive) is submitted to the stockholders of the
Corporation for approval, the Board may in its sole discretion declare all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised to become fully vested, and/or all restrictions
on all outstanding Awards to lapse,
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in each case as of such date as the Board may, in its sole discretion, declare,
which may be on or before the consummation of such tender offer or other
transaction or event. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.11. Performance Goals. The Committee may determine that any Award
granted pursuant to this Plan to a Participant (including, but not limited to,
Participants who are Covered Employees) shall be determined solely on the basis
of (a) the achievement by the Corporation or a Subsidiary of a specified target
return on equity or return on assets, (b) the Corporation's or Subsidiary's
stock price, (c) the achievement by a business unit of the Corporation or
Subsidiary of a specified target net income or earnings per share, including,
without limitation, earnings before interest, taxes, depreciation and
amortization (EBITDA), or (d) any combination of the goals set forth in (a)
through (c) above. Furthermore, the Committee reserves the right for any reason
to reduce (but not increase) any Award, notwithstanding the achievement of a
specified goal. If an Award is made on such basis, the Committee shall establish
goals prior to the beginning of the period for which such performance goal
relates (or such later date as may be permitted under Code Section 162(m)). Any
payment of an Award granted with performance goals shall be conditioned on the
written certification of the Committee in each case that the performance goals
and any other material conditions were satisfied.
13.12. Termination of Employment. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in accordance with Corporation employment policies in effect
from time to time, or, in the absence of an applicable policy, as determined by
the Committee at its discretion, which determination by the Committee shall be
final and conclusive. A termination of employment shall not occur in a
circumstance in which a Participant transfers from the Corporation to one of its
Subsidiaries, transfers from a Subsidiary to the Corporation, or transfers from
one Subsidiary to another Subsidiary.
ARTICLE 14
CHANGES IN CAPITAL STRUCTURE
14.1. General. In the event a stock dividend is declared upon the Stock,
the shares of Stock then subject to each Award shall be increased
proportionately without any change in the aggregate purchase price therefor. In
the event the Stock shall be changed into or exchanged for a different number or
class of shares of stock or securities of the Corporation or of another
corporation, whether through reorganization, recapitalization, stock split-up,
combination of shares, merger or consolidation, there shall be substituted for
each such share of Stock then subject to each Award the number and class of
shares into which each outstanding share of Stock shall be so exchanged, all
without any change in the aggregate purchase price for the shares then subject
to each Award.
ARTICLE 15
AMENDMENT, MODIFICATION AND TERMINATION
15.1. Amendment, Modification and Termination. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan without stockholder approval; provided, however, that the
Committee may condition any amendment on the approval of stockholders of the
Corporation if such approval is necessary or deemed advisable with respect to
tax, securities or other applicable laws, policies or regulations.
15.2 Awards Previously Granted. No termination, amendment, or modification
of the Plan shall adversely affect any Award previously granted under the Plan,
without the written consent of the Participant.
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ARTICLE 16
GENERAL PROVISIONS
16.1. No Rights to Awards. No Participant or employee, officer or director
shall have any claim to be granted any Award under the Plan, and neither the
Corporation nor the Committee is obligated to treat Participants and employees,
officers or directors uniformly.
16.2. No Stockholder Rights. No Award gives the Participant any of the
rights of a stockholder of the Corporation unless and until shares of Stock are
in fact issued to such person in connection with such Award.
16.3. Withholding. The Corporation or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Corporation, an amount sufficient to satisfy federal, state, and local
taxes (including the Participant's FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of the Plan.
16.4. No Right to Employment. Nothing in the Plan or any Award Agreement
shall interfere with or limit in any way the right of the Corporation or any
Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Corporation or
any Subsidiary.
16.5. Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Corporation or any Subsidiary.
16.6. Indemnification. To the extent allowable under applicable law, each
member of the Committee shall be indemnified and held harmless by the
Corporation from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by such member in connection with or resulting from any
claim, action, suit, or proceeding to which such member may be a party or in
which he may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such member in
satisfaction of judgment in such action, suit, or proceeding against him
provided he gives the Corporation an opportunity, at its own expense, to handle
and defend the same before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Corporation's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Corporation may have to indemnify them or hold
them harmless.
16.7. Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the
Corporation or any Subsidiary.
16.8. Expenses. The expenses of administering the Plan shall be borne by
the Corporation and its Subsidiaries.
16.9. Titles and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
16.10. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
16.11. Fractional Shares. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
16.12. Government and Other Regulations. The obligation of the Corporation
to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such
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approvals by government agencies as may be required. The Corporation shall be
under no obligation to register under the 1933 Act, any of the shares of Stock
paid under the Plan. If the shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933 Act, the Corporation
may restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
16.13. Governing Law. To the extent not governed by federal law, the Plan
and all Award Agreements shall be construed in accordance with and governed by
the laws of the State of Indiana.
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APPENDIX B
ANACOMP, INC.
1997 QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
BACKGROUND
1.1 Establishment of the Plan. Anacomp, Inc. (the "Corporation") hereby
establishes a stock purchase plan, effective January 1, 1997, to be known as the
"Anacomp, Inc. 1997 Qualified Employee Stock Purchase Plan" (the "Plan"), as set
forth in this document. The Plan is intended to be a qualified employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended, and the regulations and rulings thereunder.
1.2 Applicability of the Plan. The provisions of this Plan are applicable
only to certain individuals who, on or after January 1, 1997, are employees of
the Corporation and its subsidiaries participating in the Plan.
1.3 Purpose. The purpose of the Plan is to enhance the proprietary
interest among the employees of the Corporation and its participating
subsidiaries through ownership of Common Stock of the Corporation.
ARTICLE II
DEFINITIONS
Whenever capitalized in this document, the following terms shall have the
respective meanings set forth below.
2.1 Administrator. Administrator shall mean the person or persons (who may
be officers or employees of the Corporation) selected by the Committee to
operate the Plan, perform day-to-day administration of the Plan, and maintain
records of the Plan.
2.2 Board. Board shall mean the Board of Directors of the Corporation.
2.3 Code. Code shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations thereunder.
2.4 Committee. Committee shall mean a committee which consists of members
of the Board and which has been designated by the Board to have the general
responsibility for the administration of the Plan. Unless otherwise designated
by the Board, the Compensation Committee of the Board of Directors of the
Corporation shall serve as the Committee administering the Plan. Subject to the
express provisions of the Plan, the Committee shall have plenary authority in
its sole and absolute discretion to interpret and construe any and all
provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations necessary or advisable for
administering the Plan. The Committee's determinations on the foregoing matters
shall be conclusive and binding upon all persons.
2.5 Common Stock. Common Stock shall mean Common Stock, $0.01 par value
per share, of the Corporation.
2.6 Compensation. Compensation shall mean, for any Participant, for any
period, the Participant's total compensation, as required to be reported in Form
W-2, for the respective period, subject to appropriate adjustments that would
exclude items such as non-cash compensation and reimbursement of moving, travel,
trade or business expenses.
2.7 Corporation. Corporation shall mean Anacomp, Inc., an Indiana
corporation.
2.8 Direct Registration System. Direct Registration System shall mean a
direct registration system approved by the Securities and Exchange Commission
and by the National Association of Securities Dealers,
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Inc. or any securities exchange on which the Common Stock is then listed,
whereby shares of Common Stock may be registered in the holder's name in
book-entry form on the books of the Corporation.
2.9 Effective Date. Effective Date shall mean January 1, 1997.
2.10 Employee. Employee shall mean an employee of an Employer.
2.11 Employer. Employer shall mean the Corporation and any Subsidiary
designated by the Committee as an employer participating in the Plan.
2.12 Fair Market Value. Fair Market Value of a share of Common Stock, as
of any applicable date, shall mean (i) if the Common Stock is listed on a
securities exchange or is traded over the Nasdaq National Market, the closing
sales price on such exchange or over such system on such date or, in the absence
of reported sales on such date, the closing sales price on the immediately
preceding date on which sales were reported, or (ii) if the Common Stock is not
listed on a securities exchange or traded over the Nasdaq National Market, the
mean between the bid and offered prices as quoted by Nasdaq for such date,
provided that if it is determined that the fair market value is not properly
reflected by such Nasdaq quotations, Fair Market Value will be determined by
such other method as the Committee determines in good faith to be reasonable.
2.13 Offering Date. Offering Date shall mean the first day of each
Offering Period.
2.14 Offering Period. Offering Period shall mean the twelve (12) month
period beginning April 1 of each year during which offers to purchase Common
Stock are outstanding under the Plan; provided, however, that the first offering
period shall be the fifteen-month period from January 1, 1997 to March 31, 1998.
No payroll deductions shall be taken until the effective date of a Registration
Statement under the Securities Act of 1933, as amended, covering the shares to
be issued under the Plan.
2.15 Option. Option shall mean a right to purchase Common Stock under the
Plan.
2.16 Participant. Participant shall mean any Employee who has elected to
participate in the Plan under Section 3.3 and who has an account balance under
the Plan.
2.17 Plan. Plan shall mean the Anacomp, Inc. 1997 Qualified Employee Stock
Purchase Plan, as amended and in effect from time to time.
2.18 Purchase Date. Purchase Date shall mean the last day of each Offering
Period.
2.19 Purchase Price. Purchase Price shall mean the purchase price of
Common Stock determined under Section 5.1.
2.20 Request Form. Request Form shall mean an Employee's authorization
either in writing on a form approved by the Administrator or through electronic
communication approved by the Administrator which specifies the Employee's
payroll deduction in accordance with Section 6.2, and contains such other terms
and provisions as may be required by the Administrator.
2.21 Subsidiary. Subsidiary shall mean any present or future corporation
which is a "subsidiary corporation" of the Corporation as defined in Code
Section 424.
Except when otherwise indicated by the context, the definition of any term
herein in the singular may also include the plural.
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ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. Each Employee who is an Employee regularly scheduled to
work at least 20 hours each week and at least five months each calendar year
shall be eligible to participate in the Plan as of the later of:
(a) the Offering Date immediately following the Employee's last date
of hire by an Employer; or
(b) the Effective Date.
Notwithstanding the foregoing, no Employee shall be granted an Option for
an Offering Period if, immediately after the grant, the Employee would own
stock, and/or hold outstanding options to purchase stock, possessing five
percent or more of the total combined voting power or value of all classes of
stock of the Corporation or any Subsidiary. For purposes of this Section, the
attribution rules of Code Section 424(d) shall apply in determining stock
ownership of any Employee.
3.2 Leave of Absence. For purposes of Section 3.1, an individual on a
leave of absence from an Employer shall be deemed to be an Employee for the
first 180 days of such leave. Such individual's employment with the Employer
shall be deemed to terminate at the close of business on the 180th day of the
leave, unless the individual has returned to regular employment with an Employer
before the close of business on such 180th day. Termination of any individual's
leave of absence by an Employer, other than on account of a return to employment
with an Employer, shall be deemed to terminate an individual's employment with
the Employer for all purposes of the Plan.
3.3 Initial Participation. An Employee eligible to participate in the Plan
under Section 3.1 may submit a Request Form to the Administrator for an Offering
Period. The Request Form shall authorize a regular payroll deduction from the
Employee's Compensation for the Offering Period, subject to the limits and
procedures described in Section 6.1. A Participant's Request Form authorizing a
regular payroll deduction shall remain effective from Offering Period to
Offering Period until amended or canceled under Section 6.3.
ARTICLE IV
STOCK AVAILABLE
4.1 In General. Subject to the adjustments in Sections 4.2 and 4.3, an
aggregate of 500,000 shares of Common Stock shall be available for purchase by
Participants pursuant to the provisions of the Plan. These shares may be
authorized and unissued shares or may be shares issued and subsequently acquired
by the Corporation. If an Option under the Plan expires or terminates for any
reason without having been exercised in whole or part, the shares subject to
such Option that are not purchased shall again be available for subsequent
Option grants under the Plan. If the total number of shares of Common Stock for
which Options are exercised on any Purchase Date exceeds the maximum number of
shares then available under the Plan, the Committee shall make a pro rata
allocation of the shares available in as nearly a uniform manner as shall be
practicable and as it shall determine to be equitable; and the balance of the
cash credited to Participants' accounts shall be distributed to the Participants
as soon as practicable.
4.2 Adjustment in Event of Changes in Capitalization. In the event of a
stock dividend, stock split or combination of shares, recapitalization or other
change in the Corporation's capitalization, or other distribution with respect
to holders of the Corporation's Common Stock other than normal cash dividends,
an automatic adjustment shall be made in the number and kind of shares as to
which outstanding Options or portions thereof then unexercised shall be
exercisable and in the available shares set forth in Section 4.1, so that the
proportionate interest of the Participants shall be maintained as before the
occurrence of such event. This adjustment in outstanding Options shall be made
without change in the total price applicable to the unexercised portion of such
Options and with a corresponding adjustment in the Purchase Price per share;
provided, however, that in no event shall any adjustment be made that would
cause any Option to fail to qualify as an option pursuant to an employee stock
purchase plan within the meaning of Section 423 of the Code.
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4.3 Dissolution, Liquidation, or Merger. Upon the dissolution or
liquidation of the Corporation, or upon a reorganization, merger, or
consolidation of the Corporation with one or more corporations in which the
Corporation is not the surviving corporation, or upon a sale of substantially
all of the property or stock of the Corporation to another corporation, the
holder of each Option then outstanding under the Plan shall be entitled to
receive at the next Purchase Date upon the exercise of such Option for each
share as to which such Option shall be exercised, as nearly as reasonably may be
determined, the cash, securities, or property which a holder of one share of the
Common Stock was entitled to receive upon and at the time of such transaction.
The Board shall take such steps in connection with these transactions as the
Board deems necessary or appropriate to assure that the provisions of this
Section shall thereafter be applicable, as nearly as reasonably may be
determined, in relation to the cash, securities, or property which the holder of
the Option may thereafter be entitled to receive. In lieu of the foregoing, the
Committee may terminate the Plan in accordance with Section 8.2.
ARTICLE V
OPTION PROVISIONS
5.1 Purchase Price. The Purchase Price of a share of Common Stock
purchased for a Participant pursuant to each exercise of an Option shall be the
lesser of:
(a) 85 percent of the Fair Market Value of a share of Common Stock on
the Offering Date (or if such date is not a regular business day, then on
the first business day following the Offering Date); or
(b) 85 percent of the Fair Market Value of a share of Common Stock on
the Purchase Date (or if such date is not a regular business day, then on
the first business day preceding the Purchase Date).
5.2 Calendar Year $25,000 Limit. Notwithstanding anything else contained
herein, no Employee may be granted an Option which permits such Employee's
rights to purchase Common Stock under this Plan and any other qualified employee
stock purchase plan (within the meaning of Code Section 423) of the Corporation
and its Subsidiaries to accrue at a rate which exceeds $25,000 of Fair Market
Value of such Common Stock for each calendar year in which an Option is
outstanding at any time. For purposes of this Section, Fair Market Value shall
be determined as of the Offering Date.
5.3 First Offering Period Limit. Notwithstanding anything else contained
herein, the maximum number of shares of Common Stock that a participant shall be
eligible to purchase with respect to the first Offering Period under the Plan is
5,000 shares.
ARTICLE VI
PURCHASING COMMON STOCK
6.1 Participant's Account. The Administrator shall establish a book
account in the name of each Participant. As discussed in Section 6.2 below, a
Participant's payroll deductions shall be credited to the Participant's account,
without interest, until such cash is withdrawn, distributed, or used to purchase
Common Stock as described below.
During such time, if any, as the Corporation participates in a Direct
Registration System, shares of Common Stock acquired upon exercise of an Option
shall be directly registered in the name of the Participant. If the Corporation
does not participate in a Direct Registration System, then until distribution is
requested by a Participant pursuant to Article VII, stock certificates
evidencing the Participant's shares of Common Stock acquired upon exercise of an
Option shall be held by the Corporation as the nominee for the Participant.
These shares shall be credited to the Participant's account. Certificates shall
be held by the Corporation as nominee for Participants solely as a matter of
convenience. A Participant shall have all ownership rights as to the shares
credited to his or her account, and the Corporation shall have no ownership or
other rights of any kind with respect to any such certificates or the shares
represented thereby.
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All cash received or held by the Corporation under the Plan may be used by
the Corporation for any corporate purpose. The Corporation shall not be
obligated to segregate any assets held under the Plan.
6.2 Payroll Deductions; Dividends.
(a) Payroll Deductions. By submitting a Request Form at any time during an
Offering Period (or in the case of the first Offering Period, on or after March
1, 1997 for payroll deductions beginning on or after April 1, 1997) in
accordance with rules adopted by the Committee, an Employee eligible to
participate in the Plan under Section 3.1 may authorize a payroll deduction to
purchase Common Stock under the Plan for the Offering Period. The payroll
deduction shall be effective on the first pay period commencing at least 30 days
after receipt of the Request Form by the Administrator. The payroll deduction
shall be in any whole percentage up to a maximum of ten percent (10%) of such
Employee's Compensation payable each pay period, and at any other time an
element of Compensation is payable. A Participant's payroll deduction shall not
be less than one (1) percent of such Employee's Compensation payable each
payroll period.
(b) Dividends. Dividends paid on Common Stock which are credited to a
Participant's account as of the dividend payment date shall be paid to the
Participant as soon as practicable.
6.3 Deduction Changes and Discontinuance. A Participant may increase,
decrease, or completely discontinue, his or her payroll deductions by filing a
new Request Form with the Administrator. This increase, decrease or
discontinuance shall be effective on the first pay period commencing at least 30
days after receipt of the Request Form by the Administrator. A Participant who
discontinues his or her payroll deductions may not resume participation in the
Plan until the following Offering Period.
Any amount held in the Participant's account after the effective date of
the discontinuance of his or her payroll deductions will either be refunded or
used to purchase Common Stock in accordance with Section 7.1.
6.4 Leave of Absence; Transfer to Ineligible Status. If a Participant
either begins a leave of absence, is transferred to employment with a Subsidiary
not participating in the Plan, or remains employed with an Employer but is no
longer eligible to participate in the Plan, the Participant shall cease to be
eligible for payroll deductions to his or her account pursuant to Section 6.2.
The cash standing to the credit of the Participant's account shall become
subject to the provisions of Section 7.1.
If the Participant returns from the leave of absence before being deemed to
have ceased employment with the Employer under Section 3.2, or again becomes
eligible to participate in the Plan, the Request Form, if any, in effect
immediately before the leave of absence or disqualifying change in employment
status shall be deemed void and the Participant must again complete a new
Request Form to resume participation in the Plan.
6.5 Automatic Exercise. Unless the cash credited to a Participant's
account is withdrawn or distributed as provided in Article VII, his or her
Option shall be deemed to have been exercised automatically on each Purchase
Date, for the purchase of the number of full shares of Common Stock which the
cash credited to his or her account at that time will purchase at the Purchase
Price. The cash balance, if any, remaining in the Participant's account at the
end of an Offering Period shall be refunded to the Participant, without
interest. The amount of cash that may be used to purchase shares of Common Stock
may not exceed the Compensation restrictions set forth in Section 6.2.
If the cash credited to a Participant's account on the Purchase Date
exceeds the applicable Compensation restrictions of Section 6.2 or exceeds the
amount necessary to purchase the maximum number of shares of Common Stock
available during the Offering Period, such excess cash shall be refunded to the
Participant. The excess cash may not be used to purchase shares of Common Stock
nor retained in the Participant's account for a future Offering Period.
Each Participant shall receive a statement on an annual basis indicating
the number of shares credited to his or her account under the Plan.
6.6 Listing, Registration, and Qualification of Shares. The granting of
Options for, and the sale and delivery of, Common Stock under the Plan shall be
subject to the effecting by the Corporation of any listing,
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registration, or qualification of the shares subject to that Option upon any
securities exchange or under any federal or state law, or the obtaining of the
consent or approval of any governmental regulatory body deemed necessary or
desirable for the issuance or purchase of the shares covered.
ARTICLE VII
WITHDRAWALS; DISTRIBUTIONS
7.1 Discontinuance of Deductions; Leave of Absence; Transfer to Ineligible
Status. In the event of a Participant's complete discontinuance of payroll
deductions under Section 6.3 or a Participant's leave of absence or transfer to
an ineligible status under Section 6.4, the cash balance then standing to the
credit of the Participant's account shall be:
(a) returned to the Participant, in cash, without interest, as soon as
practicable, upon the Participant's written request received by the
Administrator at least 30 days before the next Purchase Date; or
(b) held under the Plan and used to purchase Common Stock for the
Participant under the automatic exercise provisions of Section 6.5.
7.2 In-Service Withdrawals. During such time, if any, as the Corporation
participates in a Direct Registration System, shares of Common Stock acquired
upon exercise of an Option shall be directly registered in the name of the
Participant and the Participant may withdraw certificates in accordance with the
applicable terms and conditions of such Direct Registration System. If the
Corporation does not participate in a Direct Registration System, (i) a
Participant may, while an Employee of the Corporation or any Subsidiary,
withdraw certificates for some or all of the shares of Common Stock credited to
his or her account at any time, upon 30 days' written notice to the
Administrator, and (ii) each Participant shall be permitted only one withdrawal
under this Section each calendar quarter. If a Participant requests a
distribution of only a portion of the shares of Common Stock credited to his or
her account, the Administrator will distribute the oldest securities held in the
Participant's Account first, using a first in-first out methodology.
7.3 Termination of Employment for Reasons Other Than Death. If a
Participant terminates employment with the Corporation and the Subsidiaries for
reasons other than death, the cash balance in the Participant's account shall be
returned to the Participant in cash, without interest, as soon as practicable.
Certificates for the shares of Common Stock credited to his or her account shall
be distributed to the Participant as soon as practicable, unless the Corporation
then participates in a Direct Registration System, in which case, the
Participant shall be entitled to evidence of ownership of such shares in such
form as the terms and conditions of such Direct Registration System permit.
7.4 Death. In the event a Participant dies, the cash balance in his or her
account shall be distributed to the Participant's beneficiary, in cash, without
interest, as soon as practicable. Certificates for the shares of Common Stock
credited to the Participant's account shall be distributed to the beneficiary as
soon as practicable, unless the Corporation then participates in a Direct
Registration System, in which case, the beneficiary shall be entitled to
evidence of ownership of such shares in such form as the terms and conditions of
such Direct Registration System permit.
In the event of the Participant's death, the Participant's beneficiary
shall be the person or entity identified on the Participant's employee data
record maintained by the Corporation or on such other form as determined by the
Administrator. This designation of beneficiary may be changed by the Participant
in accordance with procedures established by the Administrator.
7.5 Registration. Whether represented in certificate form or by direct
registration pursuant to a Direct Registration System, shares of Common Stock
acquired upon exercise of an Option shall be directly registered in the name of
the Participant or, if the Participant so indicates on the Request Form, (a) in
the Participant's name jointly with a member of the Participant's family, with
the right of survivorship, (b) in the name of a custodian for the Participant
(in the event the Participant is under a legal disability to have stock issued
in the Participant's name), or (c) in a manner giving effect to the status of
such shares as community property. No
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other names may be included in the Common Stock registration. The Corporation
shall pay all issue or transfer taxes with respect to the issuance or transfer
of shares of such Common Stock, as well as all fees and expenses necessarily
incurred by the Corporation in connection with such issuance or transfer.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 Amendment. The Committee shall have the right to amend or modify the
Plan, in full or in part, at any time and from time to time; provided, however,
that no amendment or modification shall:
(a) affect any right or obligation with respect to any grant
previously made, unless required by law, or
(b) unless previously approved by the stockholders of the Corporation,
where such approval is necessary to satisfy federal securities laws, the
Code, or rules of any stock exchange on which the Corporation's Common
Stock is listed:
(1) in any manner materially affect the eligibility requirements
set forth in Sections 3.1 and 3.2, or change the definition of Employer
as set forth in Section 2.11,
(2) increase the number of shares of Common Stock subject to any
options issued to Participants (except as provided in Sections 4.2 and
4.3), or
(3) materially increase the benefits to Participants under the
Plan.
8.2 Termination. The Committee may terminate the Plan at any time in its
sole and absolute discretion. The Plan shall be terminated by the Committee if
at any time the number of shares of Common Stock authorized for purposes of the
Plan is not sufficient to meet all purchase requirements, except as specified in
Section 4.1.
Upon termination of the Plan, the Administrator shall give notice thereof
to Participants and shall terminate all payroll deductions. Cash balances then
credited to Participants' accounts shall be distributed as soon as practicable,
without interest.
ARTICLE IX
MISCELLANEOUS
9.1 Shareholder Approval. The Plan shall be approved and ratified by the
stockholders of the Corporation, not later than 12 months after adoption of the
Plan by the Board of Directors of the Corporation, pursuant to Treasury
regulation Section 1.423-2(c). If for any reason such approval is not given by
such date, the Plan shall be null and void, and all payroll deductions to the
Plan shall cease. The cash balances and Common Stock credited to Participants'
accounts shall be promptly distributed to them; and any Common Stock
certificates issued and delivered to Participants prior to such date shall
remain the property of the Participants.
9.2 Employment Rights. Neither the establishment of the Plan, nor the
grant of any Options thereunder, nor the exercise thereof shall be deemed to
give to any Employee the right to be retained in the employ of the Corporation
or any Subsidiary or to interfere with the right of the Corporation or any
Subsidiary to discharge any Employee or otherwise modify the employment
relationship at any time.
9.3 Tax Withholding. The Administrator may make appropriate provisions for
withholding of federal, state, and local income taxes, and any other taxes, from
a Participant's Compensation to the extent the Administrator deems such
withholding to be legally required.
9.4 Rights Not Transferable. Rights and Options granted under this Plan
are not transferable by the Participant other than by will or by the laws of
descent and distribution and are exercisable only by the Participant during his
or her lifetime.
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9.5 No Repurchase of Stock by Corporation. The Corporation is under no
obligation to repurchase from any Participant any shares of Common Stock
acquired under the Plan.
9.6 Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Indiana except to the extent such laws
are preempted by the laws of the United States.
9.7 Shareholder Approval; Registration. The Plan was adopted by the Board
of Directors of the Corporation on December 10, 1996 to be effective as of
January 1, 1997, provided that no Offering Period may begin until a Registration
Statement under the Securities Act of 1933, as amended, covering the shares to
be issued under the Plan, has become effective. The Plan is subject to approval
by the stockholders of the Corporation within 12 months of approval by the Board
of Directors.
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APPENDIX C
ANACOMP, INC.
11550 NORTH MERIDIAN STREET
P.O. BOX 40888
INDIANAPOLIS, INDIANA 46240
PROXY FOR THE 1997 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints P. Lang Lowrey, III and William C. Ater, and
each of them proxies and attorneys-in-fact, with the power of substitution (the
action of both of them or their substitutes present and acting or if only one
be present and acting then the action of such one to be in any event
controlling), to vote all stock of the undersigned at the 1997 Annual Meeting
of Shareholders of Anacomp, Inc., and at any adjournment thereof as follows:
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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<S> <C> <C>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
Please mark
your votes as
indicated in /x/
this example
FOR WITHHELD
FOR ALL FOR AGAINST ABSTAIN
Item 1 - ELECTION OF DIRECTORS / / / / Item 2 - Approval of 196 Long-Term Incentive Plan / / / / / /
Messrs. T.R. Embry, D.W. Gaskins, Jr.,
J.P. Gilbertson, R.D. Jackson
P.L. Lowrey, III, G.A. Poole, Jr. Item 3 - Approval of 1997 Qualified Employee Stock / / / / / /
L. Solomon Purchase Plan
WITHHELD FOR: (Write that nominee's Item 4 - To vote in accordance with the views of a
name in the space provided below. majority of the Board of Directors on the transaction
of such other business as may properly come before
the meeting and any adjournment thereof.
If you plan to attend
the Annual Meeting, / /
please mark the box.
Signature(s) Date
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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.
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