<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X[caad 214]/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
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>
[LOGO]
ANACOMP, INC.
12365 CROSTHWAITE CIRCLE
POWAY, CALIFORNIA 92064
(619) 679-9797
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
- -------------------------------------------------------------------------------
To Our Shareholders:
The 1999 Annual Meeting of Shareholders (the "Annual Meeting") of
Anacomp, Inc. ("Anacomp" or the "Company"), will be held at the Company's
offices located at 12365 Crosthwaite Circle, Poway, California, on February
8, 1999, at 8:30 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 amend and restate the
Company's 1996 Long-Term Incentive Plan to increase the number of shares
issuable thereunder and to amend certain other provisions;
3. To consider and vote upon a proposal to amend the Company's
Amended and Restated Articles of Incorporation to increase the number of
authorized shares of Common Stock thereunder; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
If you do not expect to attend the Annual 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 15,
1998, 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 Meeting may be adjourned in order to permit further solicitation
of proxies.
By order of the Board of Directors,
Richard D. Jackson
CO-CHAIRMAN OF THE BOARD
Lewis Solomon
CO-CHAIRMAN OF THE BOARD
Dated: December 31, 1998
Poway, California
PLEASE SIGN AND RETURN
THE ENCLOSED PROXY
<PAGE>
ANACOMP, INC.
12365 CROSTHWAITE CIRCLE
POWAY, CALIFORNIA 92064
(619) 679-9797
------------------------
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 8, 1999
------------------------
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 ("Anacomp" or the "Company"), by the Board of
Directors in connection with the solicitation of proxies to be used in voting
at the 1999 Annual Meeting of Shareholders (the "Annual Meeting") to be held
on February 8, 1999, at the Company's offices located at 12365 Crosthwaite
Circle, Poway, California, 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 January 4, 1999.
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, THEN THE PROXY WILL BE VOTED FOR THE ELECTION OF THE BOARD OF
DIRECTORS' NOMINEES, FOR THE AMENDMENT OF THE COMPANY'S 1996 LONG-TERM
INCENTIVE PLAN AND FOR THE AMENDMENT OF THE COMPANY'S AMENDED AND RESTATED
ARTICLES OF INCORPORATION. 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 COMPANY'S DIRECTORS.
The Board of Directors set December 15, 1998, as the record date (the
"Record Date") for the determination of Shareholders entitled to notice of
and to vote at the Annual Meeting. On the Record Date, there were 14,274,308
shares of Common Stock issued and outstanding. Each such share of Common
Stock is entitled to one vote on all matters described below.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the inspectors of election appointed for such 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 shares of
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 $5,000 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 of Common Stock 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
1
<PAGE>
REQUIRED TO FILE AN ANNUAL REPORT ON FORM 10-K (THE "FORM 10-K") WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") FOR THE COMPANY'S
FISCAL YEAR ENDED SEPTEMBER 30, 1998. A COPY OF THE FORM 10-K IS INCLUDED
WITH THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS. SHAREHOLDERS MAY OBTAIN A
COPY OF THE COMPLETE EXHIBITS TO THE FORM 10-K BY WRITING TO ANACOMP, INC.,
12365 CROSTHWAITE CIRCLE, POWAY, CALIFORNIA 92064, ATTENTION: SECRETARY.
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 of Common Stock 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 Company's
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), then the Board of
Directors may designate a substitute nominee or nominees (in which case the
persons named as proxies on the enclosed proxy card will vote the shares
represented by all valid proxy cards for the election of such substitute
nominee or nominees), allow the vacancy to remain open until a substitute
candidate can be located, or by resolution provide for a lesser number of
directors.
The following table sets forth the name of each nominee for director,
his age, his principal occupation and five-year business history, and the
year in which he first served as a director of the Company:
<TABLE>
<CAPTION>
Initial Service
Name and Age Principal Occupation as a Director
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ralph W. Koehrer, 53 . . . . . President and Chief Executive Officer of the Company 1997
Talton R. Embry, 52 . . . . . Chairman and Chief Investment Officer, 1996
Magten Asset Management Corp.
Darius W. Gaskins, Jr., 59 . Partner, High Street Associates, Inc. 1996
Jay P. Gilbertson, 38 . . . . President and Chief Operating Officer, WebMD, Inc. 1996
Richard D. Jackson, 61 . . . . Co-Chairman of the Board of the Company; Consultant 1996
George A. Poole, Jr., 67. . . Private investor 1996
Lewis Solomon, 65 . . . . . . Co-Chairman of the Board, Chairman of the Company; G & L 1996
Investments
</TABLE>
Ralph W. Koehrer was elected Chief Executive Officer and Director
(effective May 1, 1997) on April 29, 1997 and President (effective January 6,
1997) on December 10, 1996. Prior to joining the Company, Mr. Koehrer was
with Automatic Data Processing, Inc. ("ADP") for eleven years, most recently
as Corporate Vice President of ADP and as President of ADP's Information and
Processing Services 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
Corp. since 1978. Mr. Embry is also a director of Combined Broadcasting, Inc.
and BDK Holdings, Inc.
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.
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, as
well as a founding partner of CFGW, a consulting firm founded in 1993. Mr.
Gaskins also serves as a director of Rohr Industries, Inc. (formerly UNR
Industries, Inc.), Northwestern Steel and Wire Company and Sapient, Inc.
2
<PAGE>
Jay P. Gilbertson has served as a director since June 4, 1996. On
November 30, 1998, Mr. Gilbertson was elected President and Chief Operating
Officer of WebMD, Inc., a healthcare internet company for whom Mr. Gilbertson
already served as a director. From November 1997 until August 1998, Mr.
Gilbertson served as President (as a member of the Office of the President),
Chief Financial Officer and Co-Chief Operating Officer of HBO & Company
("HBOC"). He has been the Chief Financial Officer of HBOC since April 1993.
From December 1991 to April 1993, he served as Corporate Controller of HBOC.
Richard D. Jackson has served as a director since June 4, 1996. He was
elected Vice Chairman of the Board of Directors on June 4, 1996 and
Co-Chairman of the Board effective May 1, 1997. 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. Mr. Jackson also serves as a director of
Schweitzer-Mauduit International, Inc.
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 U.S. Home Corporation and Harvard Industries, Inc.
Lewis Solomon has served as a director since June 4, 1996 and was
elected Lead Director on that date. He was elected Co-Chairman of the Board
effective May 1, 1997. Mr. Solomon has been Chairman of G&L Investments for
the past five years. He also serves as a director of Anadigics, Inc., Artesyn
Technologies, Inc. and Terayon Communications Systems.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" ITS NOMINEES FOR DIRECTORS.
SECURITY OWNERSHIP OF MANAGEMENT AND OTHER BENEFICIAL OWNERS
The following table sets forth certain information, as of the Record
Date unless otherwise noted, regarding the shares of Common Stock
beneficially owned by each of the Company's directors, by each of its Named
Executive Officers (as defined in "Executive Compensation--Summary
Compensation Table" below), by all directors and executive officers of the
Company as a group, and by certain other beneficial owners of more than five
percent (5%) of the Company's Common Stock. Each such person has sole voting
and dispositive power with respect to such shares of Common Stock, except as
otherwise indicated. For purposes of calculating the percentage of Common
Stock owned by each of the directors, executive officers and 5% shareholders
of the Company, the Company has assumed that each such person has exercised
all of his or its stock options and/or Common Share Warrants for shares of
Common Stock and that such shares are issued and outstanding, and that no
other persons have exercised options or Common Share Warrants. ("*" indicates
that the person owns less than 1% of the Company's Common Stock.).
3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Shares of Common Percent
Name Stock of Class
Beneficially Owned
---------------------------------------------------------------------------
<S> <C> <C>
Ralph W. Koehrer 84,667(a) *
Talton R. Embry 0(b) *
Darius W. Gaskins, Jr. 19,713(c) *
Jay P. Gilbertson 15,000(d) *
Richard D. Jackson 28,039(e) *
George A. Poole, Jr. 21,875(f) *
Lewis Solomon 36,022(g) *
Frederick F. Geyer 68,334(h) *
Peter Williams 12,500(i) *
Donald W. Thurman 21,785(j) *
William C. Ater 2,963(k) *
All directors and executive officers 450,599(l) 3.1%
of the Company as a group (23 persons)
</TABLE>
OTHER BENEFICIAL HOLDERS OF COMMON STOCK
<TABLE>
<S> <C> <C>
Magten Asset Management Corp. 4,596,206(m) 32.2%
35 East 21st Street
New York, NY 10010
Merrill Lynch & Co., Inc. 1,500,000(n) 10.5%
World Financial Center, North Tower
250 Vesey Street
New York, NY 10281
Pioneering Management Corporation 1,164,420(o) 8.2%
60 State Street
Boston, MA 02109
State Street Research & Management Company 1,036,505(p) 7.2%
One Financial Center
Boston, MA 02111
</TABLE>
-------------------------------------
(a) Includes 66,667 shares issuable upon the exercise of stock options.
(b) Mr. Embry is a director, executive officer and sole stockholder of
Magten Asset Management Corp., a registered investment advisor
("Magten"). Mr. Embry may be deemed to be the beneficial owner of the
shares of Common Stock owned by Magten and its investment advisory
clients as discussed in Note (m) below. Mr. Embry, as trustee of four
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 153,083 shares of Common Stock held by such trusts and
sole voting and investment power with respect to 2,612 shares of Common
Stock held by his minor children. Mr. Embry disclaims beneficial
ownership of all of the above shares.
(c) Includes 17,713 shares issuable upon the exercise of stock options.
(d) Represents 15,000 shares issuable upon the exercise of stock options.
(e) Includes 25,209 shares issuable upon the exercise of stock options.
(f) Includes 16,875 shares issuable upon the exercise of stock options.
(g) Includes 26,022 shares issuable upon the exercise of stock options.
4
<PAGE>
(h) Represents 33,334 shares issuable upon the exercise of stock options and
35,000 shares of restricted stock. Dr. Geyer has sole voting power with
respect to all of such shares of restricted stock, but dispositive power
(which he holds solely) only with respect to 10,000 of such shares.
(i) Represents 12,500 shares issuable upon the exercise of stock options.
(j) Includes 20,834 shares issuable upon the exercise of stock options and 6
shares issuable upon the exercise of the Company's Common Share Warrants.
(k) Includes 1 share issuable upon the exercise of the Company's Common
Share Warrants.
(l) Includes 362,906 shares issuable upon the exercise of stock options and
67 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 (b) above.
(m) 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
3,658,263 and 4,596,206, respectively, shares of the Common Stock, and
no voting power with respect to 937,943 shares of the Common Stock. All
of such shares, which in the aggregate represent 32.2% 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 Investment
Management Co., Hughes Master Retirement Trust, and Los Angeles Fire and
Police Pension Systems - Fund 2525.
(n) Merrill Lynch & Co., Inc. has shared voting power and shared dispositive
power with respect to 1,500,000 shares of the Common Stock, for which
Merrill Lynch disclaims beneficial ownership.
(o) Includes 34,111 shares issuable upon the exercise of the Company's
Common Share Warrants. State Street Research & Management Company has
sole voting power and sole dispositive power with respect to 1,002,394
shares of the Common Stock, for which State Street disclaims beneficial
ownership.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held five meetings in the fiscal
year ended September 30, 1998. 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, 1998 were Messrs. Poole (Chairman of the Committee),
Gilbertson and Solomon. The Audit Committee met three times during that
fiscal year. 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, to meet with the Company's
independent accountants after the completion of the annual audit of the
Company's financial statements and the accountant's rendering of their
opinion as a result thereof, to discuss the accountant's comments with
respect to such financial statements and the Company's accounting methods and
procedures, and such other matters as the Audit Committee deems appropriate.
The members of the Company's Compensation Committee during the fiscal
year ended September 30, 1998, were Messrs. Embry (Chairman of the
Committee), Gaskins and Jackson. The Compensation Committee met four times
during that fiscal year. The Compensation Committee determines the
compensation and benefits of the Chief Executive Officer and other executive
officers of the Company. It also oversees the Company's stock option,
employee stock purchase, and other stock-based plans. The Compensation
Committee 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. However, it will not consider
nominees to the Board recommended by the Shareholders.
The members of the Company's Executive Committee during the fiscal year
ended September 30, 1998, were Messrs. Jackson (Chairman of the Committee),
Koehrer and Solomon. The Executive Committee met 20 times during that fiscal
year. The Executive Committee has and may exercise all of the powers of the
Board of Directors during the intervals between meetings of the Board. It is
also responsible for reviewing possible acquisitions, mergers, joint
ventures, partnerships and entries into new technologies.
5
<PAGE>
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive $1,250 for each
directors and committee meeting attended in person, $1,000 for each such
meeting attended by telephone, $625 for each committee meeting attended on
the same day as a board meeting, and an annual retainer of $12,500. 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 and again
in February 1997, to purchase 20,000 shares of Common Stock. In addition,
Messrs. Jackson and Solomon, as the non-employee members of the Executive
Committee as well as the Co-chairmen of the Board, receive a retainer of
$60,000 per year, payable $15,000 per quarter. Each of the Co-chairmen also
received an additional option to purchase 25,000 shares of Common Stock. Each
of the directors may elect to receive his annual retainer in options to
purchase Common Stock in lieu of cash.
EXECUTIVE COMPENSATION
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 incentive programs. The Committee
is composed solely of non-employee directors.
The Committee's goals for the executive officer compensation program
are to: (1) target total cash compensation at levels required to attract and
retain qualified persons in executive officer positions; (2) have a
significant portion of the annual cash compensation be "at risk" based upon
the Company's performance and individual contribution; and (3) link the
interests of the executive and the Shareholders through the periodic granting
of stock options.
To assist the Committee in its assessment of the competitive market,
the Company retained the services of an outside consulting firm that compared
levels of compensation of the Company's executive officers with compensation
levels for officers of thirteen other companies selected as a peer group.
Peer companies were selected based upon their similarity to the Company in
terms of their line of business and size. The consulting firm has reported to
the Company that the total compensation of the Company's executive officers
is at or below the middle range of compensation levels of the companies in
the executive compensation peer group.
The companies in the executive compensation peer group are not the same
as the companies included in the performance graph peer group described under
the heading "Performance Graph". The Committee believes that the market for
executive talent, and thus the companies appropriate for executive
compensation comparisons, are different from the companies that may be
alternative investments for shareholders.
The at risk portion of the annual compensation is provided by the
Company's annual incentive bonus plan. The Chief Executive Officer has 40% of
his targeted annual incentive compensation at risk and the other executive
officers have 35% at risk. For fiscal 1998, the criteria for determining the
bonuses consisted of profit, revenue, asset management, and cash flow (which
the Company refers to as "EBITDA," or earnings before interest, other income,
reorganization items, special and restructuring charges, taxes, depreciation
and amortization and extraordinary items). The revenue, profit and cash flow
goals were established at levels that required growth over fiscal 1997 in
order for an executive officer's target bonus to be fully earned.
Stock options are awarded at the discretion of the Committee. The
Committee's goal is to provide competitive long term incentive opportunities
over time. Option awards to individuals are structured to be larger at the
time of hire or promotion than the ongoing grants.
6
<PAGE>
Because he had only recently been appointed Chief Executive Officer at
May 1, 1997, Mr. Koehrer's fiscal 1998 base salary and targeted annual bonus
compensation were established at levels below the median of the peer
companies. Mr. Koehrer's actual incentive bonus for the Company's fiscal 1998
performance was 77% of his target level, reflecting the Company's actual
performance against its performance targets relative to the four criteria
previously described. Mr. Koehrer's fiscal 1998 option grant was consistent
with competitive norms, when combined with the larger grant provided in
fiscal 1997 in conjunction with his promotion to Chief Executive Officer.
Compensation Committee of the Board of Directors
Talton R. Embry, Chairman
Darius W. Gaskins, Jr.
Richard D. Jackson
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth as to the Company's
Chief Executive Officer and the other four most highly compensated executive
officers (collectively, the "Named Executive Officers") all compensation
awarded to, earned by, or paid to the Named Executive Officers for all
services rendered in all capacities to the Company and its subsidiaries for
the fiscal years ended September 30, 1998, 1997 and 1996, except as may
otherwise be specifically noted. (Note: The positions indicted for Messrs.
Williams and Thurman were the positions that such executive officers held
during the 1998 fiscal year. Effective November 16, 1998, both individuals
were promoted to the position of Executive Vice President.).
7
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
- -------------------------------------------------------------------------------------------------------------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#)(8) ($)(9)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ralph W. Koehrer 1998 392,308 205,568 -- -- 42,500 6,402
President, Chief Executive Officer 1997 200,077 109,878 152,201(2) -- 157,500 1,093
and Director 1996 -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Frederick F. Geyer 1998 207,692 103,125 175,000(3) 538,125(7) 100,000 868
Executive Vice President 1997 -- -- -- -- -- --
(effective January 5, 1998) 1996 -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Peter Williams 1998 165,934 128,748 15,436(4) -- 35,000 2,500(10)
Senior Vice President 1997 101,667 47,561 17,937(4) -- -- 2,500(10)
1996 98,740 36,870 17,109(4) -- 25,000 2,500(10)
- -------------------------------------------------------------------------------------------------------------------------------
Donald W. Thurman 1998 176,154 75,342 -- -- 30,000 1,902(10)
Senior Vice President 1997 142,346 84,483 -- -- 25,000 1,764(10)
1996 125,258 39,235 -- -- 25,000 478
- -------------------------------------------------------------------------------------------------------------------------------
William C. Ater 1998 174,196 69,734 -- -- 15,000 7,402(10)
Senior Vice President, Chief 1997 181,632 75,731 85,768(5) -- -- 2,611(10)
Administrative Officer and 1996 170,479 37,544 45,458(6) -- 25,000 5,190(10)
Secretary & (11)
- -------------------------------------------------------------------------------------------------------------------------------
</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 1998, 1997 and 1996.
(2) Represents $1,093 in relocation expenses, $1,108 in income tax
assistance for certain relocation expense reimbursements and $150,000
for a relocation bonus.
(3) Represents a relocation bonus.
(4) Represents an automobile and gasoline allowance.
(5) Represents $41,895 in relocation expenses and $43,873 in income tax
assistance for certain relocation expense reimbursements.
(6) Represents $27,891 in relocation expenses and $17,567 in income tax
assistance for certain relocation expense reimbursements.
(7) Dollar value (on the date of grant) of the 35,000 shares of restricted
stock granted to Dr. Geyer on January 5, 1998. 10,000 of the shares
vested on 9/30/98, 5,000 of the shares vest on 3/1/99, 10,000 of the
shares vest on 6/30/99 and 10,000 of the shares vest on 6/30/00. The
value of the 35,000 shares of restricted stock totaled $459,375 at
September 30, 1998, based upon the $13.125 closing sales price for the
Common Stock on the NASDAQ Stock Market on that date. The Company will
pay dividends on the shares of restricted stock to the same extent that
it pays dividends to the Shareholders generally.
(8) All stock option grants prior to June 4, 1996 were cancelled as of that
date.
(9) For each Named Executive Officer, includes premiums paid by the Company on
a group term life insurance policy for the benefit of each such person.
(10) Includes a $1,000 contribution made by the Company to the Anacomp
Savings Plus (or 401(k)) Plan.
(11) Includes a $3,000 payout upon the fiscal year 1996 termination of the
Company's Executive Benefit Trust program.
8
<PAGE>
STOCK OPTIONS
As indicated in the Summary Compensation Table, stock option grants
were made to the Named Executive Officers during fiscal 1998. The following
table sets forth additional information concerning those grants during fiscal
1998.
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
Number of % of Total Potential Realizable Value at Assumed
Securities Options Grant-Date Annual Rates of Stock Price Appreciation
Underlying Granted to Exercise Market for 10-Year Option Term(5)
Options Employees Price Price Expiration ----------------------------------------
Name Granted(#) in Fiscal Year ($/Sh) ($/Sh) Date 0%($) 5%($) 10%($)
- ----------------------- ------------ -------------- --------- ------------ ----------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ralph W. Koehrer 42,500(1) 4.31 13.500 13.500 11/17/07 0 360,837 914,413
Frederick F. Geyer 100,000(2) 10.15 14.625 15.375 01/05/08 75,000 1,041,930 2,525,410
Peter Williams 35,000(3) 3.55 13.500 13.500 11/17/07 0 297,160 753,046
Donald W. Thurman 30,000(4) 3.04 16.375 16.375 05/04/08 0 308,952 782,925
William C. Ater 15,000(3) 1.52 13.500 13.500 11/17/07 0 127,356 322,734
</TABLE>
- -----------------------
(1) All of the options granted vest on 9/30/98.
(2) Of the options granted, one-third vest on 1/5/99, one-third vest on
1/5/00 and one-third vest on 1/5/01.
(3) All of the options granted vest on 5/17/99.
(4) All of the options granted vest on 11/4/99.
(5) The figures shown are potential future undiscounted values based on actual
option term and annual compounding at the applicable rate. Potential
realizable value equals the stock price at the end of the option term less
the exercise price, times the number of options granted.
The following table sets forth information regarding all options
exercised during fiscal 1998 or held at September 30, 1998 by the Named
Executive Officers.
AGGREGATE OPTION EXERCISES IN FISCAL 1998
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Unexercised Options Value of Unexercised
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>
Ralph W. Koehrer -- -- 66,667/133,333 18,126/434,687
Frederick F. Geyer -- -- 0/100,000 0/0
Peter Williams -- -- 12,500/47,500 106,188/106,188
Donald W. Thurman -- -- 20,834/59,166 109,188/112,438
William C. Ater 6,250 69,000 6,250/27,500 53,094/106,188
- -----------------------
</TABLE>
(1) Based upon the September 30, 1998 closing price of $13.125 for the Common
Stock on The NASDAQ Stock Market.
PENSION PLAN TABLE
The following table illustrates the estimated aggregate annual benefits
payable at normal retirement under the Anacomp Ltd. 1997 Pension Plan (the
"U.K. Plan") for various combinations of compensation and years of service,
assuming (i) retirement at age 65 and (ii) the lower earnings limit offset in
force in the United Kingdom on September 30, 1998 (approximately U.S.$5,686).
Benefits under the U.K. Pension Plan are only available to employees of
Anacomp Ltd., a wholly-owned subsidiary of the Company organized in the United
Kingdom. Peter Williams is the only Named Executive Officer eligible to
participate in the U.K. Pension Plan. (All amounts below are expressed in
U.S. dollars.)
<TABLE>
<CAPTION>
AVERAGE
PENSIONABLE YEARS OF SERVICE
SALARY 15 20 25 30 35
- ----------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$125,000 $ 31,250 $ 41,667 $ 52,083 $ 62,500 $ 72,917
150,000 37,500 50,000 62,500 75,000 87,500
175,000 43,750 58,333 72,917 87,500 102,084
200,000 50,000 66,667 83,334 100,000 116,667
225,000 56,250 75,000 93,750 112,500 131,250
250,000 62,500 83,334 104,167 125,000 145,834
300,000 75,000 100,000 125,000 150,000 175,000
400,000 100,000 133,334 166,667 200,000 233,334
450,000 112,500 150,000 187,500 225,000 262,501
500,000 125,000 166,667 208,334 250,001 291,667
</TABLE>
A participant's annual retirement pension is equal to one-sixtieth of
his or her average pensionable salary for the previous three years,
multiplied by his or her years of pensionable service. "Pensionable salary"
is equal to a participant's total gross earnings for the previous British tax
year (from April 6 to the following April 5), less a lower earnings limit
offset established by the British government (approximately $5,686 as of
April 6, 1998).
As of April 6, 1998 (the start of the most recent British tax year)
Peter Williams had a pensionable salary of approximately $210,237 and had
approximately 14 years and two months of credited service for purposes of
calculating retirement benefits. The compensation reported for Dr. Williams
in the Summary Compensation Table does not correspond to his pensionable
salary under the UK Pension Plan, in part because the Company's fiscal year
is not concurrent with the British tax year.
EMPLOYMENT CONTRACTS
Except for Mr. Thurman, each of the Named Executive Officers is a party
to an employment agreement with the Company. Set forth below is a brief
description of each such agreement.
RALPH W. KOEHRER. Mr. Koehrer entered into an employment agreement with
the Company, dated December 7, 1997, but with an effective date of October 1,
1997, which provides for an initial term of three years and which is
9
<PAGE>
automatically renewable thereafter for additional one-year terms. As a part
of that employment agreement, Mr. Koehrer also entered into a covenant not to
compete with the Company while an employee or as a consultant to the Company
after any termination of employment, and not to solicit the Company's
customers for a period of two years following any termination of employment.
Mr. Koehrer's compensation plan for fiscal 1999 has total targeted
compensation of $900,000, comprised of the following: (a) a base salary of
$400,000; (b) a corporate EBITDA bonus of $280,000, paid in quarterly
installments based on the Company's actual quarterly EBITDA performance
versus quarterly quota for EBITDA; (c) a corporate revenue bonus of $80,000,
paid in quarterly installments based on the Company's actual quarterly total
revenue performance versus quarterly quota for revenue; (d) an asset
management bonus of $40,000, paid in quarterly installments based on the
Company's attaining its quarterly asset management targets; (e) a digital
bonus-domestic of $50,000, paid annually based on the Company's attaining
100% of its digital services and systems sales quota in the United States;
and (f) a digital bonus-international of $50,000, paid annually based on the
Company's attaining 100% of its digital services and systems sales quota
outside of the United States. With the exception of the asset management
bonus and the two annual digital bonuses, all bonuses may be greater if goals
are exceeded or less if goals are not attained.
Mr. Koehrer's compensation as President and Chief Executive Officer is
structured in accordance with the executive compensation policy discussed
above under the heading "Board of Directors' Compensation Committee Report on
Executive Compensation" and pursuant to his employment agreement. As
indicated in that Report, Mr. Koehrer's fiscal 1998 base salary and target
bonus was at a level which the Company believes was below the middle range
based on the review of the executive compensation peer group. Effective
October 1, 1998, the beginning of fiscal 1999, Mr. Koehrer's incentive
compensation was increased to equal his $400,000 base salary, and he was also
awarded with the two digital bonuses described above in order to place more
incentive on Mr. Koehrer to reach the Company's 1999 corporate goals with
respect to digital sales and services. The Company believes that Mr.
Koehrer's total compensation for fiscal 1999 is in the mid-range of the
aforementioned peer group.
Mr. Koehrer also has been granted, in addition to the options to
acquire 100,000 shares of Common Stock awarded to him during fiscal year
1997, options under the Company's 1996 Long-Term Incentive Plan (the
"Incentive Plan") to acquire 42,500 shares of Common Stock at an exercise
price of $13.50, the fair market value of the Common Stock on November 17,
1997, the day his employment agreement was approved by the Company's
Compensation Committee.
Mr. Koehrer's employment agreement 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 Mr. Koehrer's employment agreement, or in the event of a change in
control of the Company, Mr. Koehrer may elect to treat his employment
agreement as terminated and receive a severance allowance of, INTER ALIA, the
lesser of $1 million or 24 months cash compensation, which shall be in
addition to the regular compensation and benefits that he is entitled to
receive up to the date on which his employment terminates. In addition, Mr.
Koehrer is entitled to receive such severance allowance and the accelerated
vesting of options upon termination under a variety of other circumstances,
but excluding termination for cause, death or his voluntary resignation upon
90 days advance notice. Finally, if at the end of the original term of the
employment agreement or any renewal thereof the Company declines to renew
such agreement and does not request that Mr. Koehrer continue working or the
Company discontinues the month-to-month employment arrangement, then in any
such case Mr. Koehrer is entitled to a severance allowance equal to his 12
months' base salary.
FREDERICK F. GEYER entered into an employment agreement with the
Company, effective January 5, 1998, which provides for an initial term of two
years and which is automatically renewable thereafter for additional one-year
terms. As a part of that employment agreement, Dr. Geyer 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.
Dr. Geyer's compensation plan for fiscal 1999 has total targeted
compensation of $540,000, comprised of the following: (a) a base salary of
$300,000; (b) a corporate EBITDA bonus of $60,000, paid in quarterly
installments based on the Company's actual quarterly EBITDA performance
versus quarterly quota for EBITDA; (c) a business unit EBITDA bonus of
$80,000, paid in quarterly installments based on actual quarterly performance
versus quota
10
<PAGE>
for the EBITDA of the Company's business units for which Dr. Geyer is
responsible; (d) a business unit revenue bonus of $40,000, paid in quarterly
installments based on actual quarterly performance versus quarterly quota for
the total revenue of the Company's business units for which Dr. Geyer is
responsible; (e) an asset management bonus of $20,000, paid in quarterly
installments based on Dr. Geyer's business units attaining their quarterly
asset management targets; (f) a digital bonus-domestic of $20,000, paid
annually based on the Company's attaining 100% of its digital services and
systems sales quota in the United States; and (f) a digital
bonus-international of $20,000 paid annually based on the Company's attaining
100% of its digital services and system sales quota outside of the United
States. With the exception of the asset management bonus and the two annual
digital bonuses, all bonuses may be greater if goals are exceeded or less if
goals are not attained.
Dr. Geyer'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 or a discontinuation of the
Company's business, Dr. Geyer will receive a severance allowance equal to his
prior 24 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. Dr. Geyer 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. Finally, if at the end of the original
term of the employment agreement or any renewal thereof the Company declines
to renew such agreement and does not request that Dr. Geyer continue working
or the Company discontinues the month-to-month employment arrangements, then
in any such case Dr. Geyer is entitled to a severance allowance equal to his
12 months' base salary.
PETER WILLIAMS. Dr. Williams entered into an employment agreement with
the Company and Xidex UK Limited, an indirect, wholly-owned subsidiary of the
Company ("Xidex"), dated May 3, 1995, but effective October 1, 1994. (The
employment agreement has since been assigned to Anacomp Ltd., Xidex's parent
corporation.) The term of such employment agreement continues until it is
terminated by either Dr. Williams or the Company giving the other party not
less than 12 calendar months' notice in writing. As a part of that employment
agreement, he has also entered into a covenant not to compete with the
Company's magnetic media business for a period of one year following any
termination of employment and not to solicit the Company's customers for a
period of one year following any termination of employment.
Dr. Williams' compensation plan for fiscal 1999 has total targeted
compensation of $377,920, comprised of the following: (a) a base salary of
$188,960; (b) a corporate EBITDA bonus of $45,350, paid in quarterly
installments based on the Company's actual quarterly EBITDA performance
versus quarterly quota for EBITDA; (c) a business unit EBITDA bonus of
$60,467 paid in quarterly installments based on actual performance versus
quarterly quota for the EBITDA of the Company's business unit for which Dr.
Williams is responsible; (d) a business unit revenue bonus of $30,234, paid
in quarterly installments based on actual quarterly performance versus
quarterly quota for the total revenue of the Company's business unit for
which Dr. Williams is responsible; (e) an asset management bonus of $15,117,
paid in quarterly installments based on Dr. Williams' business units
attaining their quarterly asset management targets; and (f) a digital bonus
of $37,792, paid annually based on Dr. Williams' business unit attaining 100%
of its annual digital systems and services quota. (Dr. Williams is paid in
pounds sterling, and all of the foregoing numbers reflect a currency
translation of pounds sterling to dollars at the rate of $1.7085 per pound
sterling.)
Dr. Williams' employment agreement provides that in the event of a
merger or consolidation or a transfer of substantially all of Xidex's assets
or a change in control of Xidex, Dr. Williams will receive a severance
allowance equal to his prior 12 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. Dr. Williams is also
entitled to such severance allowance if he is terminated without cause by
Xidex or if he deems a termination to have occurred due to a demotion,
transfer or reduction in compensation. Finally, if Dr. Williams is terminated
by reason of redundancy (or reduction in force), then in addition to the
severance allowance described above (but in lieu of the 12 months' notice)
Dr. Williams would be entitled to a payment equal to twice his weekly
compensation multiplied by his years of service.
WILLIAM C. ATER. Mr. Ater entered into an employment agreement with the
Company effective October 1, 1992. The original term of the agreement expired
on September 30, 1995, but it has been renewed for successive one-year terms
with the current term expiring on September 30, 1999. Such agreement was
amended on June 25, 1996. As a part of that employment agreement, 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.
11
<PAGE>
Mr. Ater's compensation plan for fiscal 1999 has total targeted
compensation of $258,464, comprised of the following: (a) a base salary of
$168,000; (b) a corporate EBITDA bonus of $63,324, paid in quarterly
installments based on the Company's actual EBITDA performance versus
quarterly quota for EDITDA; (c) a corporate revenue bonus of $18,092, paid in
quarterly installments based on the Company's actual quarterly total revenue
performance versus quarterly quota for the revenue; and (d) an asset
management bonus of up to $9,048, paid in quarterly installments based on the
Company's quarterly asset management targets. With the exception of the asset
management bonus, all bonuses may be greater if goals are exceeded or less if
goals are not attained.
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 24 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. Finally, if at the end of any renewal term of the
employment agreement the Company declines to renew such agreement and does
not request that Mr. Ater continue working or the Company discontinues the
month-to-month employment arangements, then in any such case Mr. Ater is
entitled to a severance allowance equal to his prior 24 months' compensation.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
As discussed above, the employment agreements of Messrs. Koehrer,
Geyer, Williams and Ater provide for certain payments in the event of a
termination of employment or a change of control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors was,
during fiscal 1998, an officer or employee of the Company or any of its
subsidiaries, or was formerly an officer of the Company or any of its
subsidiaries, or had any relationships requiring disclosure by the Company.
RELATED PARTY TRANSACTIONS
Hasso Jenss, the Company's Senior Vice President and General
Manager-COM Systems Business, borrowed $115,600 from the Company on August
12, 1998 in connection with his relocation from Germany to the Poway,
California area and his purchase of a residence. The indebtedness is
evidenced by a promissory note dated that same date which bears interest at
7.5% per annum with a stated maturity date of November 30, 1998 (subject to
extension). On December 16, 1998, Mr. Jenss repaid to the Company the entire
principal amount of the promissory note, and he repaid all accrued interest
on December 18, 1998.
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, 1993 through June 4, 1996 (the
effective date of the Company's Third Amended Joint Plan of Reorganization)
and June 5, 1996 through September 30, 1998 (subsequent to consummation of
such Plan of Reorganization and the Company's emergence from Chapter 11
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 ("S&P Software and Services").
12
<PAGE>
<TABLE>
<CAPTION>
September 30, September 30,
- ----------------------------------------------------------------------------------------------------------------
1993 1994 1995 June 4, 1996 June 5, 1996 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anacomp $100 $104 $ 24 $ 8 $100 $ 95 $178 $151
S&P 500 100 104 135 157 100 102 143 156
S&P Software & Services 100 104 173 223 * 100 * 112 185 225
</TABLE>
- --------------------------
All amounts are rounded to the nearest dollar.
*Daily returns for the S&P Software and Services are not computed. Data for
June 4 and June 5 use the index as of May 31, 1996 as an estimation.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent (10%) of the Company's Common Stock, to
file initial reports of ownership and reports of changes in ownership with
the Commission. Officers, directors and greater than 10% beneficial owners
are required by the Commission's regulations to furnish the Company with
copies of all Section 16(a) forms that they file.
Based solely upon 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, 1998, all Section 16(a) filings were made on a timely basis.
AMENDMENT AND RESTATEMENT OF THE
1996 LONG-TERM INCENTIVE PLAN
(PROPOSAL 2)
GENERAL
The Company currently maintains the Anacomp, Inc. 1996 Long-Term
Incentive Plan (the "Incentive Plan"), under which stock options and other
incentive awards may be granted to employees, officers and directors of the
Company. As of December 15, 1998, there were approximately 10,000 shares
remaining available for awards under the Incentive Plan. On November 16,
1998, the Board of Directors recommended, subject to shareholder approval,
certain amendments to the Incentive Plan, as described below.
13
<PAGE>
A summary of the Incentive Plan, as proposed to be amended, is set
forth below. The summary is qualified in its entirety by the full text of the
Incentive Plan. The Company will provide, upon request and without charge, a
copy of the full text of the Incentive Plan to each person to whom a copy of
this Proxy Statement is delivered. Requests should be directed to: William C.
Ater, Secretary, Anacomp, Inc., 12365 Crosthwaite Circle, Poway, California
92064.
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 Shareholders, and by
providing such persons with an incentive for outstanding performance. As of
December 15, 1998, there were approximately 3,400 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 affiliated companies
in the following forms: (a) options to purchase shares of Common Stock
("Options"), which may be incentive stock options or non-qualified stock
options; (b) stock appreciation rights ("SARs"); (c) performance units
("Performance Units"); (d) restricted stock ("Restricted Stock"); (e)
dividend equivalents ("Dividend Equivalents"); and (f) 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 its 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 upon the performance goals described in Section 13.13 of the
Incentive 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.
AMENDMENT TO INCREASE AVAILABLE SHARES
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 a Performance Unit) currently is
1,400,000, of which no more than 150,000 may be granted in the form of
Restricted Stock Awards and no more that 100,000 shares may be in the form of
Options for which the exercise price is below the fair market value on the
date of grant. The aggregate number of shares available for Awards under the
Plan is proposed to be increased to 2,400,000, of which no more than 250,000
may be granted in the form of Restricted Stock Awards. Other limits would
remain unchanged. 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 (measured as of the date of grant) 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.
OTHER AMENDMENTS TO THE INCENTIVE PLAN
The Incentive Plan is proposed to be further amended: (i) to amend
the definition of "subsidiary" to include limited liability companies,
partnerships and other entities, and, in the case of incentive stock options,
to conform to the definition of "subsidiary corporation" in Code Section
424(f); (ii) to eliminate the absolute requirement that members of the
committee administering the Incentive Plan be both "outside directors" for
purposes of Code Section 162(m) and "non-employee directors" for purposes of
Rule 16b-3 of the Exchange Act (although it is still intended that they so
qualify); (iii) to eliminate the Incentive Plan's lapse restrictions with
respect to non-qualified stock options (thus leaving such restrictions to be
specified in individual option agreements); (iv) to require that any shares
of Common Stock surrendered in payment of the exercise price of an Option
have been held by the optionee for at least six months; (v) to allow the
Compensation Committee to permit the transfer of Awards in its discretion;
(vi) to permit the Compensation Committee to accelerate the vesting of Awards
in its discretion and to specify the effects on the Award of such
acceleration; (vii) to add "reclassification" and "shares exchanges" to the
list of events warranting an appropriate adjustment to outstanding Awards and
to give the Committee discretion to make equitable adjustments; (viii) to
give the Compensation Committee discretion to amend outstanding Awards
without reducing or diminishing the value of such Awards; (ix) to permit the
Compensation Committee to require the
14
<PAGE>
withholding of shares from an Award to satisfy tax withholding requirements;
and (x) to make technical language changes in certain provisions to conform
with applicable law.
ADMINISTRATION
The Incentive Plan is administered by the Company Compensation
Committee. The Compensation 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 Compensation Committee
deems necessary or advisable to administer, the Incentive Plan.
AWARDS
STOCK OPTIONS. The Compensation Committee is authorized to grant
Options, which may be incentive stock options ("ISOs") or non-qualified 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 Compensation Committee, provided
that the terms of any ISO must meet the requirements of Section 422 of the
Code.
STOCK APPRECIATION RIGHTS. The Compensation 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. 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 Compensation Committee at the time of grant.
PERFORMANCE UNITS. The Compensation Committee may grant Performance
Units to participants on such terms and conditions as may be selected by the
Compensation Committee. The Compensation 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 upon 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 Compensation Committee may make awards
of Restricted Stock to participants, which will be subject to such
restrictions on transferability and other restrictions as the Compensation
Committee may impose (including, without limitation, limitations upon the
right to vote Restricted Stock or the right to receive dividends, if any, on
the Restricted Stock).
DIVIDEND EQUIVALENTS. The Compensation Committee is authorized to
grant Dividend Equivalents to participants subject to such terms and
conditions as may be selected by the Compensation 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 Award, as determined by the Compensation Committee. The
Compensation 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 Compensation 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 Compensation
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 affiliated
companies of the Company. The Compensation Committee will determine the terms
and conditions of any such Awards.
15
<PAGE>
PERFORMANCE GOALS. The Compensation 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, EBITDA, or (d) any
combination of the goals set forth in (a) through (c) above. If an Award is
made on such basis, the Compensation 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)), and the
Compensation Committee may for any reason reduce (but not increase) any
Award, notwithstanding the achievement of a specified goal. Any payment of an
Award granted with performance goals will be conditioned upon the written
certification of the Compensation Committee in each case that the performance
goals and any other material conditions were satisfied.
LIMITATIONS ON TRANSFER; BENEFICIARIES. No unexercised or restricted
Award will be assignable or transferable by a participant other than by will
or by the laws of descent and distribution or, except in the case of an ISO,
pursuant to a qualifying domestic relations order; PROVIDED, HOWEVER, that
the Compensation Committee may (but need not) permit other transfers where
the Compensation Committee concludes that such transferability (a) does not
result in accelerated taxation, (b) does not cause any Option intended to be
an ISO to fail to be described in Code Section 422(b) and (c) is otherwise
appropriate and desirable, taking into account any factors deemed relevant,
including without limitation, any state or federal tax or securities laws or
regulations applicable to transferable Awards. A participant may, in the
manner determined by the Compensation 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
(as defined in the Incentive Plan) of the Company, 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. If the proposed amendments set forth herein are approved by the
shareholders, then regardless of whether a Change in Control has occurred,
the Compensation Committee may, in its sole discretion, determine that all or
a portion of a participant's Options, SARs, and other Awards in the nature of
rights that may be exercised shall become fully or partially exercisable,
and/or that all or a part of the restrictions on all or a portion of the
outstanding Awards shall lapse, in each case, as of such date as the
Compensation Committee may, in its sole discretion, declare. The Compensation
Committee may discriminate among participants and among Awards granted to a
participant in exercising such discretion.
TERMINATION AND AMENDMENT
With the approval of the Board of Directors, the Compensation
Committee may terminate, amend or modify the Incentive Plan without
shareholder approval; provided, however, that the Compensation Committee may
condition any amendment upon the approval of the Shareholders 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. If the proposed amendments are approved by the
Shareholders, then the Compensation Committee may amend, modify or terminate
any outstanding Award without the approval of the participant as long as such
amendment, modification or termination does not reduce or diminish the value
of such Award determined as if the Award had been exercised, vested, cashed
in or otherwise settled on the date of such amendment or termination.
CERTAIN FEDERAL INCOME TAX EFFECTS
NON-QUALIFIED 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 (subject to the provisions of
Section 162(m) of the Code). A
16
<PAGE>
subsequent sale or exchange of such shares of Common Stock will result in
gain or loss measured by the difference between (a) the exercise price,
increased by any compensation reported upon the participant's exercise of the
option and (b) the amount realized upon such sale or exchange. Such gain or
loss will be capital in nature if the shares were held as a capital asset and
will be long-term if such shares were held for the applicable long-term
capital gain 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 an 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 upon exercise (the
"required holding period"), the difference between the aggregate exercise
price and the amount realized upon disposition of the shares of Common Stock
will constitute a 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, then the participant will realize taxable ordinary
income in an amount equal to the excess (if any) of the fair market value of
the Common Stock purchased at the time of exercise (or, if less, the amount
realized on the disposition of the shares) over the aggregate exercise price,
and the Company will be entitled to a federal income tax deduction equal to
such amount (subject to the provisions of Section 162(m) of the Code). Upon
the exercise of an ISO, the participant may be subject to alternative minimum
tax on certain items of tax preference. If an ISO is exercised at a time when
it no longer qualifies as an incentive stock option, then the option will be
treated as an NSO.
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 that 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 (subject to the provisions of Section 162(m) of the
Code).
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 (subject to the provisions of
Section 162(m) of the Code).
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 (subject to the provisions of Section 162(m) of the
Code).
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
As of December 15, 1998, Options had been granted or approved for
grant under the Incentive Plan to the following persons and groups. Any
future Option grants will be made at the discretion of the Compensation
Committee. Therefore, it is not presently possible to determine the benefits
or amounts that will be received by such persons or groups pursuant to the
Incentive Plan in the future.
17
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------- ----------------------------------------------------------
INCENTIVE PLAN
----------------------------- ----------------------------
NAME AND POSITION DOLLAR VALUE NUMBER OF OPTIONS
- -------------------------------------------- ----------------------------- ----------------------------
<S> <C> <C>
Ralph W. Koehrer,
President and Chief
Executive Officer (1) 200,000
- -------------------------------------------- ----------------------------- ----------------------------
Frederick F. Geyer,
Executive Vice President (1) 100,000
- -------------------------------------------- ----------------------------- ----------------------------
Peter Williams
Executive Vice President (1) 60,000
- -------------------------------------------- ----------------------------- ----------------------------
Donald W. Thurman
Executive Vice President (1) 80,000
- -------------------------------------------- ----------------------------- ----------------------------
William C. Ater
Senior Vice President,
Chief Administrative Officer
and Secretary (1) 33,750
- -------------------------------------------- ----------------------------- ----------------------------
All Executive Officers as a Group
(including the above) (1) 795,500
- -------------------------------------------- ----------------------------- ----------------------------
Talton R. Embry, Director (1) 0
- -------------------------------------------- ----------------------------- ----------------------------
Darius W. Gaskins, Jr. , Director (1) 28,313
- -------------------------------------------- ----------------------------- ----------------------------
Jay P. Gilbertson, Director (1) 25,000
- -------------------------------------------- ----------------------------- ----------------------------
Richard D. Jackson, Director (1) 51,875
- -------------------------------------------- ----------------------------- ----------------------------
George A. Poole, Jr., Director (1) 26,875
- -------------------------------------------- ----------------------------- ----------------------------
Lewis Solomon, Director (1) 52,688
- -------------------------------------------- ----------------------------- ----------------------------
All Non-Executive Directors
as a Group(including the above) (1) 184,751
- -------------------------------------------- ----------------------------- ----------------------------
All Non-Executive Employees
as a Group (1) 1,063,405
- -------------------------------------------- ----------------------------- ----------------------------
</TABLE>
(1) The dollar value of the above Options is dependent upon the
difference between the particular Option exercise price and the fair market
value of the underlying shares of Common Stock on the date of exercise.
ADDITIONAL INFORMATION
The closing sales price of the Common Stock, as reported by the
NASDAQ National Market on December 15, 1998, was $15.50.
SHAREHOLDER VOTE REQUIRED TO APPROVE THE AMENDMENTS TO THE INCENTIVE PLAN
Approval of the amendments to and restatement of the Incentive Plan
will require the affirmative vote of the holders of a majority of the shares
of Common Stock which are represented in person or by proxy and entitled to
vote at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" THE PROPOSAL TO AMEND THE INCENTIVE PLAN TO INCREASE BY 1,000,000
THE SHARES OF COMMON STOCK AVAILABLE FOR AWARDS THEREUNDER, AND TO MAKE THE
OTHER CHANGES DESCRIBED IN THE PARAGRAPH ABOVE ENTITLED "OTHER AMENDMENT TO
THE INCENTIVE PLAN".
AMENDMENT OF THE ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
(PROPOSAL 3)
The Board of Directors of the Company recommends that the
shareholders approve an amendment to the Company's Amended and Restated
Articles of Incorporation (the "Articles of Incorporation") to increase the
number
18
<PAGE>
of authorized shares of Common Stock from 20,000,000 to 40,000,000 shares
(the "Proposed Amendment"). Specifically, the Articles of Incorporation will
be amended by deleting the text of Article V thereof and substituting the
following in its place:
"The total number of shares that the Corporation has authority to
issue shall be 41,000,000 shares, consisting of 40,000,000 common
shares (the "Common Shares"), and 1,000,000 preferred shares (the
"Preferred Shares"). The Corporation's shares shall have a par value
of one cent per share. The Corporation shall have the power to issue
fractional shares or scrip in the manner and to the extent now or
hereafter permitted by the laws of the State of Indiana."
In all other respect, the terms and provisions of the Company's Articles of
Incorporation will remain unaltered.
As of the Record Date for the Annual Meeting, 14,274,308 shares of
Common Stock were outstanding, 2,082,123 shares were reserved for issuance
under the Company's various stock option plans, 376,498 shares were issuable
upon the exercise of outstanding Common Share Warrants, and 375,948 shares
were reserved for issuance under the Company's employee stock purchase plan,
leaving only 2,891,123 shares available for issuance for other purposes. If
the Proposed Amendment is adopted, up to 20,000,000 additional shares of
Common Stock will be available for future issuance or sale without further
Shareholder approval. However, Shareholder approval of particular
transactions may at the time be required by law or by the rules or policies
of any exchange or market upon which shares of the Common Stock may be traded
or quoted. The Common Stock is presently traded on the Nasdaq National Market.
The Company has no present plans to issue additional shares of Common
Stock, except for issuances for which shares have already been reserved. Upon
approval of the Proposed Amendment by the Shareholders, the additional shares
of Common Stock would be authorized but unissued and unreserved and could be
issued for various general corporate purposes including, without limitation,
stock splits, stock dividends, benefit plans, financing transactions or
acquisitions. The Board of Directors believes that the additional authorized
Common Stock would give the Company greater flexibility by allowing the
Company to issue shares of Common Stock without the expense and delay of a
Shareholders' meeting to authorize additional shares if and when the need
arises. However, the issuance of the additional shares of Common Stock may
have a dilutive effect on the Company's earnings per share and, for a
Shareholder that does not purchase additional shares to maintain such
Shareholder's pro rata interest in the Company, on such shareholder's
percentage of voting power.
In addition, the issuance of the additional shares of Common Stock
authorized by the Proposed Amendment may render more difficult or discourage
a merger, tender offer or proxy contest involving the Company, the assumption
of control of the Company by the holder of a large block of the Company's
securities, or the removal of incumbent management. For example, the issuance
of the additional shares of Common Stock could discourage a potential
acquiror by: (i) increasing the number of shares of Common Stock necessary to
gain control of the Company; (ii) permitting the Company, through the public
or private issuance of shares of Common Stock, to dilute the stock ownership
of the potential acquiror; and (iii) permitting the Company to privately
place shares of Common Stock with purchasers who would side with the Board of
Directors in opposing a takeover bid.
The Proposed Amendment is not being recommended in response to any
specific effort of which the Company's management is aware to accumulate
shares or obtain control of the Company. In addition, the Proposed Amendment
is not part of a plan by management to adopt a series of amendments to the
Company's Articles of Incorporation that have anti-takeover effects, and
management does not presently intend to propose other measures in future
proxy solicitations that will have anti-takeover effects.
If the Proposed Amendment is approved by the shareholders, the
amendment to the Articles of Incorporation will become effective upon the
filing of Articles of Amendment thereto with the Secretary of State of
Indiana, which will occur as soon as practicable following the approval of
the Proposed Amendment by the Shareholders. Shareholders of the Company have
no dissenters' rights with respect to the Proposed Amendment and will have no
preemptive rights in connection with the issuance of any new shares of Common
Stock.
19
<PAGE>
SHAREHOLDER VOTE REQUIRED TO AMEND THE ARTICLES OF INCORPORATION
Approval of the amendment to Article V of the Articles of Incorporation
will require the affirmative vote of the holders of a majority of the shares
of Common Stock which are represented in person or by proxy and entitled to
vote at the Annual Meeting.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE PROPOSAL TO AMEND
THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK FROM 20,000,000 TO 40,000,0000 SHARES, AND UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO AMEND THE COMPANY'S
ARTICLES OF INCORPORATION TO PROVIDE FOR SUCH INCREASE.
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 will attend the Annual Meeting, and 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
The eligibility of Shareholders to submit proposals, the proper
subjects of Shareholder proposals and other issues governing Shareholder
proposals are regulated by the rules (the "Shareholder Proposal Rules")
adopted under Section 14 of the Exchange Act. Shareholder proposals submitted
pursuant to Rule 14a-8 under the Exchange Act for inclusion in the Company's
proxy materials for the 2000 Annual Meeting of Shareholders must be received
by the Company at its principal executive office, 12365 Crosthwaite Circle,
Poway, California 92064, no later than Wednesday, September 1, 1999.
In addition, in accordance with recent amendments to the Shareholder
Proposal Rules, written notice of shareholder proposals to be submitted
outside of Rule 14a-8 described above for consideration at the 2000 Annual
Meeting of Shareholders must be received by the Company, at the address set
forth in the preceding paragraph, on or before Saturday, November 20, 1999,
in order to be considered timely for purposes of the Shareholder Proposal
Rules. The persons designated as proxies by the Company in connection with
the 2000 Annual Meeting of Shareholders will have discretionary voting
authority with respect to any Shareholder proposal of which the Company did
not receive timely notice.
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,
Richard D. Jackson
CO-CHAIRMAN OF THE BOARD
Lewis Solomon
CO-CHAIRMAN OF THE BOARD
December 31, 1998
20
<PAGE>
ANACOMP, INC.
AMENDED AND RESTATED 1996 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1 GENERAL. The purpose of the Anacomp, Inc. Amended and Restated
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 originally became effective on July
22, 1996, the date that it was approved by the Board, and it was subsequently
approved by the Corporation's stockholders on February 3, 1997. The Plan, as
amended and restated, became effective as of November 16, 1998, the date such
amendment and restatement was approved by the Board. However, such amendment
and restatement of 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 on or after November 16,
1998 may be exercised prior to approval of such amendment and restatement of
the Plan by the stockholders, and if the stockholders fail to approve the
same within such 12-month period, any Incentive Stock Options granted
hereunder on or after November 16, 1998 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 granted on or after November 16, 1998 shall be
contingent upon the stockholders having approved the amendment and
restatement of 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:
<PAGE>
(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;
(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.
- 2 -
<PAGE>
(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.
- 3 -
<PAGE>
(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.
(s) "Plan" means the Anacomp, Inc. Amended and Restated 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, limited liability
company, partnership or other entity of which a majority of the
outstanding voting stock or voting power is beneficially owned directly
or indirectly by the Corporation. With respect to Incentive Stock
Options, the term "Subsidiary" shall have the meaning set forth in Code
Section 424(f).
(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. It
is intended that the directors appointed to serve on the Committee shall be
"non-employee directors" (within the meaning of Rule 16b-3 promulgated under the
1934 Act) and "outside directors" (within the meaning of Code Section 162(m) and
the regulations thereunder). However, the mere fact that a Committee member
shall fail to qualify under either of the
- 4 -
<PAGE>
foregoing requirements shall not invalidate any Award made by the Committee
which Award is otherwise validly made under the Plan. The members of the
Committee shall be appointed by, and may be changed at any time and from time
to time in the discretion of, the Board. 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 unanimously in writing by the members 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;
(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;
- 5 -
<PAGE>
(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 2,400,000 (inclusive of the 1,400,000 shares
originally authorized), of which no more than 250,000 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 (measured as of the date of grant) of any Awards other than
Options and SARs that may be received by any one Participant (less any
consideration paid by the Participant for such Award) during any one calendar
year under the Plan shall be $2,000,000.
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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.
(b) TIME AND CONDITIONS OF EXERCISE. 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 upon such factors as the Committee
may determine in its sole discretion so that the Option becomes
exerciseable at an earlier date.
(c) 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; provided, however, that if shares of Stock are used to pay
the exercise price of an Option, such shares must have been held by the
Participant for at least six months.
(d) 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, not inconsistent with the
Plan, 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.
(b) EXERCISE. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
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(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.
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(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.
(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
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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 UNITS
9.1. GRANT OF PERFORMANCE UNITS. 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.
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
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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.
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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.
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 (or, if Section 7.2(e) applies, five 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; provided, however, that the Committee may (but need
not) permit other transfers where the Committee concludes that such
transferability (i) does not result in accelerated taxation, (ii) does not
cause any Option intended to be an incentive stock option to fail to be
described in Code Section 422(b), and (iii) is otherwise appropriate and
desirable, taking into account any factors deemed relevant, including without
limitation, state or federal tax or securities laws applicable to
transferable Awards.
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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, in each case as of such date as the Board
may, in its sole discretion, declare, which may be on or
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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. ACCELERATION FOR ANY OTHER REASON. Regardless of whether an
event has occurred as described in Section 13.9 or 13.10 above, the Committee
may in its sole discretion at any time determine that all or a portion of a
Participant's Options, Stock Appreciation Rights, and other Awards in the
nature of rights that may be exercised shall become fully or partially
exercisable, and/or that all or a part of the restrictions on all or a
portion of the outstanding Awards shall lapse, in each case, as of such date
as the Committee may, in its sole discretion, declare. The Committee may
discriminate among Participants and among Awards granted to a Participant in
exercising its discretion pursuant to this Section 13.11.
13.12 EFFECT OF ACCELERATION. If an Award is accelerated under
Section 13.9 or 13.10, the Committee may, in its sole discretion, provide (i)
that the Award will expire after a designated period of time after such
acceleration to the extent not then exercised, (ii) that the Award will be
settled in cash rather than Stock, (iii) that the Award will be assumed by
another party to the transaction giving rise to the acceleration or otherwise
be equitably converted in connection with such transaction, or (iv) any
combination of the foregoing. The Committee's determination need not be
uniform and may be different for different Participants whether or not such
Participants are similarly situated.
13.13. PERFORMANCE GOALS. The Committee may (but need not) 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. 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)), and the Committee may for any reason to reduce
(but not increase) any such Award, notwithstanding the achievement of a
specified goal. 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.
13.14. 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
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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,
reclassification, share exchange, 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 or,
subject to Section 15.2, there shall be made such other equitable adjustment
as the Committee shall approve.
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. At any time and from time to time,
the Committee may amend, modify or terminate any outstanding Award without
approval of the Participant; provided, however, that, subject to the terms of
the applicable Award Agreement, such amendment, modification or termination
shall not, without the Participant's consent, reduce or diminish the value of
such Award determined as if the Award had been exercised, vested, cashed in
or otherwise settled on the date of such amendment or termination. 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.
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.
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<PAGE>
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. With respect to withholding required upon any taxable event under the
Plan, the Committee may, at the time the Award is granted or thereafter,
require that any such withholding requirement be satisfied, in whole or in
part, by withholding shares of Stock having a Fair Market Value on the date
of withholding equal to the amount to be withheld for tax purposes, all in
accordance with such procedures as the Committee establishes.
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.
l6.5. 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, unless provided otherwise in such other
plan.
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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 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.
The foregoing is hereby acknowledged as being the Anacomp, Inc.
Amended and Restated 1996 Long-Term Incentive Plan as adopted by the Board of
Directors of the Corporation as of November 16, 1998.
ANACOMP, INC.
By: __________________________
Its: __________________________
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(Side 1)
ANACOMP, INC.
12365 CROSTHWAITE CIRCLE
POWAY, CALIFORNIA 92064
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Ralph W. Koehrer 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 1999 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.
<PAGE>
FOLD AND DETACH HERE
(Side 2)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
Please mark your votes as / X /
indicated in this example.
1. Election of Directors
Messrs. T.R. Embry, D.W. Gaskins, Jr., J.P. Gilbertson, R.D. Jackson, R.W.
Koehrer, G.A. Poole, Jr., L. Solomon
WITHHELD
FOR FOR ALL
/ / / /
WITHHELD FOR: (Write that nominee's name in the space provided below)
2. Approval of the Amended and Restated 1996 Long-Term Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. Approval of the amendment of Article V of the Amended and Restated
Articles of Incorporation of the Company to increase the authorized Common
Stock from 20,000,000 shares to 40,000,000 shares
FOR AGAINST ABSTAIN
/ / / / / /
4. To vote in accordance with the views of a 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 Signature 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.
FOLD AND DETACH HERE
Dear Shareholder:
On behalf of the Board of Directors of Anacomp, Inc., thank you for your
continued interest and support.
We realize that many of you may be unable to attend our Annual Meeting of
Shareholders in February. Because your vote is important, we encourage you to
promptly complete and return your proxy.
Regards,
Richard D. Jackson, Co-Chairman
Lewis Solomon, Co-Chairman
