<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]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ADVO, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
Notes:
<PAGE>
[LOGO OF ADVO APPEARS HERE] (R)
December 18, 1995
Dear Stockholder:
You are cordially invited to the Annual Meeting of Stockholders of ADVO,
Inc., to be held on Thursday, January 18, 1996, at the Sheraton Hotel at
Bradley International Airport, Windsor Locks, Connecticut, commencing at 10:30
A.M. (EST). Your Board of Directors and management look forward to greeting
personally those of you who are able to attend.
At the Meeting, you will be asked to elect the members of the Board of
Directors; to approve an amendment to the Company's 1988 Non-qualified Stock
Option Plan and the 1993 Stock Option Subplan, as amended; to ratify the
appointment of independent auditors for the fiscal year ending September 28,
1996; and to transact such other business as may properly be brought before
the Meeting.
In addition to the specific matters to be acted upon, there will be a report
on the progress of the Company and an opportunity for you to ask questions of
general interest. Important information is contained in the accompanying proxy
statement, which you are urged to read carefully.
It is important that your shares are represented and voted at the Meeting,
regardless of the number you own and whether or not you plan to attend.
Accordingly, you are requested to mark, sign, date and return the enclosed
proxy in the envelope provided at your earliest convenience.
Your interest and participation in the affairs of the Company are greatly
appreciated.
Sincerely,
/s/ Robert Kamerschen
Robert Kamerschen
Chairman and Chief
Executive Officer
<PAGE>
[LOGO OF ADVO APPEARS HERE] (R)
ADVO, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of ADVO, Inc. (the "Company") will be
held at the Sheraton Hotel at Bradley International Airport, Windsor Locks,
Connecticut, on Thursday, January 18, 1996, at 10:30 A.M. (EST), to consider
and take action on the following items:
1. The election of nine Directors, as described in the attached proxy
statement, to serve until the Annual Meeting of Stockholders in 1997;
2. The approval of an amendment to the 1988 Non-qualified Stock Option
Plan and the 1993 Stock Option Subplan, as amended;
3. The ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending September 28,
1996; and
4. The transaction of such other business as may properly come before
said meeting or any adjournment thereof.
Only holders of Common Stock of record at the close of business on November
24, 1995 are entitled to vote at the Meeting or any adjournment thereof. A
list of the stockholders entitled to vote at the Meeting will be available for
examination by any stockholder for any purpose germane to the Meeting during
ordinary business hours for ten days prior to the Meeting at the Sheraton
Hotel at Bradley International Airport, Windsor Locks, Connecticut.
By Order of the Board of Directors
/s/ David M. Stigler
David M. Stigler, Secretary
Windsor, Connecticut
December 18, 1995
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON,
PLEASE MARK, SIGN AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE AS PROMPTLY
AS POSSIBLE.
<PAGE>
ADVO, INC.
ONE UNIVAC LANE
P.O. BOX 755
WINDSOR, CONNECTICUT 06095-0755
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies
to be used at the Annual Meeting of Stockholders of ADVO, Inc. (the "Company"
or "ADVO"), a Delaware corporation, to be held at the Sheraton Hotel at
Bradley International Airport, Windsor Locks, Connecticut, on Thursday,
January 18, 1996, at 10:30 A.M. (EST).
The solicitation of proxies on the enclosed form is made on behalf of the
Board of Directors of the Company.
The cost of soliciting proxies on the accompanying form has been or will be
borne by the Company. In addition to solicitation by mail, the Company will
request banks, brokers and other custodians, nominees, and fiduciaries to send
proxy material to the beneficial owners and to secure their voting
instructions, if necessary. The Company will reimburse such banks, brokers,
custodians, nominees and fiduciaries for their expenses in so doing.
Directors, officers, and regular employees of the Company, who will receive no
compensation for their services other than their regular salaries, may solicit
proxies personally, by telephone and by telegram from stockholders. The
Company has retained Morrow & Co., Inc. to assist in the solicitation of
proxies at an estimated cost of $20,000, including expenses, which will be
paid by the Company. These proxy materials are first being mailed to
stockholders on or about December 18, 1995.
A stockholder signing and returning a proxy on the enclosed form has the
power to revoke it at any time before the shares subject to it are voted, by
notifying the Secretary of the Company in writing of such revocation, by
filing a duly executed proxy bearing a later date, or by attending the meeting
and voting in person. Properly executed proxies, not revoked, will be voted in
accordance with the instructions contained thereon. Unless a contrary
specification is made thereon, it is the intention of the attorneys named in
the enclosed form of proxy to vote FOR the election of the nominees named
herein as Directors and FOR Proposals 2 and 3.
OUTSTANDING VOTING SECURITIES
Only holders of ADVO Common Stock, par value $.01 per share ("Common
Stock"), of record at the close of business on November 24, 1995 (the "Record
Date") are entitled to notice of and to vote at the Meeting. On the Record
Date, there were 20,836,403 shares of Common Stock outstanding. Each share of
Common Stock is entitled to one vote.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of the Record Date, those persons known to the Company who beneficially
owned more than 5% of the Common Stock were as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
<S> <C> <C>
Warburg, Pincus Capital Partners L.P.(1)
466 Lexington Avenue
New York, New York 10017.......................... 5,580,245(2) 23.8%
Howard H. Newman(3)
466 Lexington Avenue
New York, New York 10017.......................... 5,580,245 23.8
John L. Vogelstein(3)
466 Lexington Avenue
New York, New York 10017.......................... 5,580,245 23.8
T. Rowe Price Associates, Inc.(4)
100 East Pratt Street
Baltimore, Maryland 21202......................... 1,910,500 9.2
Robert Kamerschen(5)
ADVO, Inc.
One Univac Lane
Windsor, Connecticut 06095........................ 1,446,410 6.7
Wanger Asset Management, L.P.(4)
227 West Monroe Street, Ste. 3000
Chicago, Illinois 60606........................... 1,280,000 6.1
</TABLE>
- --------
(1) The sole general partner of Warburg, Pincus Capital Partners, L.P.
("Warburg") is Warburg, Pincus & Co., a New York general partnership
("WP"). Lionel I. Pincus is the managing Partner of WP and may be deemed
to control it. E.M. Warburg, Pincus & Co., Inc. ("E.M. Warburg"), through
a wholly owned subsidiary, manages Warburg. WP owns all of the outstanding
stock of E.M. Warburg and, as the sole general partner of Warburg, has a
20% interest in the profits of Warburg. E.M. Warburg owns 1.5% of the
limited partnership interests in Warburg. Messrs. Newman and Vogelstein,
directors of the Company, are Managing Directors of E.M. Warburg and
general partners of WP. As such, Messrs. Newman and Vogelstein may be
deemed to have an indirect pecuniary interest (within the meaning of Rule
16a-1 under the Securities Exchange Act of 1934) in an indeterminate
portion of the shares beneficially owned by Warburg, E.M. Warburg and WP.
See Note 3 below.
(2) Consists of 2,923,418 shares of Common Stock and 2,656,827 shares of
Common Stock for which ADVO Warrants owned by Warburg are exercisable.
Outstanding ADVO Warrants are exercisable at an exercise price of $2.71
per share. The number of shares of Common Stock subject to ADVO Warrants
and the exercise price are subject to anti-dilution adjustments in the
event the Company issues any Common Stock or convertible securities
convertible into Common Stock at either below the then-current market
price of the Common Stock or below such exercise price.
(3) All of the shares owned by Messrs. Newman and Vogelstein are owned
directly by Warburg and are included because of Messrs. Newman's and
Vogelstein's affiliation with Warburg. Messrs. Newman and Vogelstein
disclaim "beneficial ownership" of these shares within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934. See Note 1.
2
<PAGE>
(4) The information relating to the ownership of the Common Stock by this
entity or individual is based on a statement on Schedule 13D or Schedule
13G filed by such entity or individual with the Securities and Exchange
Commission (the "SEC").
(5) Includes shares awarded under the 1986 Employee Restricted Stock Plan, as
amended, and 817,874 shares Mr. Kamerschen has the right to acquire within
60 days of the Record Date pursuant to the exercise of options granted
under the Company's stock option plans.
GOVERNANCE OF THE COMPANY
In accordance with the Company's Bylaws, as amended, and the applicable laws
of Delaware, responsibility for the management of the Company is vested in the
Board of Directors. During the fiscal year ended September 30, 1995, the Board
of Directors met ten times. Each Director attended 100% of the aggregate
number of meetings of the Board of Directors and the total number of the
committees on which he served, except Richard Stowe who attended 83% of the
meetings and John Vogelstein who attended 50% of the meetings.
The Board has delegated responsibilities with respect to certain audit
matters to the Audit Committee. The members of the Audit Committee are Messrs.
Fritz (Chairman), Newman and Stowe. The Audit Committee is responsible for
reviewing the adequacy of financial controls and the adequacy and accuracy of
financial reporting. The Audit Committee met two times during the fiscal year
ended September 30, 1995, and no member of the Audit Committee missed a
meeting.
The Board has delegated responsibilities with respect to certain
compensation matters to the Compensation Committee. The members of the
Compensation Committee are Messrs. Newman (Chairman), Fritz, Lachman and
Rockwell. The Compensation Committee has the responsibility to help formulate
short and long-term compensation plans and help develop the Company's
compensation philosophy. The committee also reviews specific proposals
regarding executive compensation and other aspects of the terms of employment
of the Company's senior management. The Compensation Committee met two times
during the fiscal year ended September 30, 1995, and no member of the
Compensation Committee missed a meeting.
The Company has no executive committee, nominating committee or other
committees, except for the above. Total attendance was 93% for all board and
committee meetings.
Directors, other than those who are full-time employees of the Company or a
subsidiary, each are currently eligible to receive an annual fee of $15,000
and a fee of $1,000 for each Board and committee meeting attended. Directors
serving as chairmen of any committees of the Board of Directors receive an
additional $2,000 per year for each chairmanship held. Directors who are full-
time employees of the Company receive no remuneration for serving on the Board
of Directors or its committees. Messrs. Vogelstein and Newman have declined to
receive compensation as Directors due to their status as beneficial owners of
the Company's Common Stock. (See "Security Ownership of Certain Beneficial
Owners.") Mr. Stowe has declined to receive compensation as a Director due to
Welsh, Carson, Anderson & Stowe IV ("WCAS IV") and WCAS Venture Partners'
("WCAS VP") previous beneficial ownership of the Company's Common Stock. Mr.
Stowe is a general partner of the sole general partner of each WCAS IV and
WCAS VP. All Directors' expenses for attending Board of Directors' meetings
are reimbursed by the Company.
3
<PAGE>
In fiscal 1995, restrictions lapsed on the following number of shares held
by the following directors: 1,000 held by Mr. Fritz, 1,000 held by Mr.
Rockwell, and 1,000 held by Mr. Lachman. In addition, grants were made to each
of Mr. Fritz, Mr. Lachman and Mr. Rockwell of options to purchase 1,000 shares
at an exercise price of $19.25 per share in fiscal 1995. The options will
become exercisable in equal annual installments over the next four years.
Restricted shares may not be sold or transferred prior to the lapse of
restrictions. Recipients, however, have the right to vote such shares.
Generally, the restrictions on shares lapse in installments over a period of
three years.
1. ELECTION OF DIRECTORS
The Bylaws of the Company, as amended, provide for a Board of Directors
consisting of not less than three nor more than 15 members, the exact number
to be fixed from time to time by the Board of Directors. The Board of
Directors has determined that the Company will have nine Directors. Each
person elected as a Director of the Company will hold office until the next
Annual Meeting of Stockholders or until his successor is duly elected and
qualified.
All of the nominees set forth below were elected by the stockholders to
their present terms at the 1995 Annual Meeting. Each nominee has consented to
being named herein and has agreed to serve if elected. In case any such
nominee shall have become, at the time of the meeting, unable or unwilling to
serve (an event which the Board of Directors of the Company has no reason to
expect), the attorneys named in the enclosed form of proxy intend to vote for
another person designated by the Board of Directors.
The affirmative vote of a plurality of the voting power represented at the
meeting is required for a nominee to be elected as a Director of the Company.
"Plurality" means that the nominees who receive the largest number of votes
cast "FOR" are elected as directors up to the maximum number of Directors to
be chosen at the meeting. Broker non-votes are not counted towards the
plurality vote calculation.
NOMINEES FOR ELECTION
ROBERT KAMERSCHEN, age 59. Mr. Kamerschen has been the Chairman of the Board
since January 1989. From November 1988 to February 1989, he was President of
the Company, and he has been Chief Executive Officer and a Director since
November 1988. Mr. Kamerschen is also a Director of Playboy Enterprises, Inc.,
Micrografx, Inc., and Domain, Inc.
JOSEPH P. DURRETT, age 50. Mr. Durrett became President, Chief Operating
Officer and a Director of the Company on September 1, 1992. From February 1990
to August 1992, he was Senior Vice President of Sales of Kraft General Foods
Inc., the food segment subsidiary of Philip Morris Companies Inc. Mr. Durrett
is chairman-elect of the Children's Miracle Network.
LARRY G. MORRIS, age 57. Mr. Morris has been Senior Executive Vice President
and Chief Administrative and Process Development Officer of the Company since
May 1994 and a Director since October 1989. From August 1989 to April 1994, he
was Executive Vice President, Chief Financial and Administrative Officer.
JACK W. FRITZ, age 68. Mr. Fritz has been a Director of the Company since
March 1984. Until January 1987, Mr. Fritz was President, Chief Executive
Officer and a Director of John Blair & Company,
4
<PAGE>
the Company's former parent, and had held those positions for more than five
years. Mr. Fritz serves as a director on the Warburg, Pincus Funds board, and
is also a Director of the Counsellors Tandem Securities Fund, Inc., Fritz
Broadcasting, Inc. and Fritz Communications.
JOHN R. ROCKWELL, age 67. Mr. Rockwell became a Director on May 5, 1990.
Until April 1, 1990, he was Senior Vice President, Group Executive and a
Director of Booz, Allen & Hamilton, Inc., a management consulting firm, a
position he held for more than five years. Mr. Rockwell is also a Director of
Forum Corporation and Tom's of Maine, Inc.
LAWRENCE LACHMAN, age 79. Mr. Lachman has been a Director of the Company
since December 1987. He is the retired Chairman of the Board and Chief
Executive Officer of Bloomingdale's, a department store. Mr. Lachman is
currently a business consultant. He is also a Director of DFS Group Limited.
HOWARD H. NEWMAN, age 48. Mr. Newman has been a Director of the Company
since August 1986. He has been associated with E.M. Warburg, a specialized
financial services company, since January 1984 and has been a Managing
Director since January 1987. Mr. Newman is also a Director of Marine Drilling
Companies, Inc., Newfield Exploration Company, Renaissance Holdings Ltd., and
Comcast UK Cable Partners Limited.
RICHARD H. STOWE, age 52. Mr. Stowe has been a Director of the Company since
August 1986. Mr. Stowe is a general partner of the sole general partner of
WCAS IV, WCAS VP and related limited partnerships. WCAS IV and WCAS VP are
specialized investment firms. He has held these positions for more than the
past five years. Mr. Stowe is also a Director of Medaphis Corporation, Health
Management Systems, Inc. and EmCare Holdings, Inc.
JOHN L. VOGELSTEIN, age 61. Mr. Vogelstein has been a Director of the
Company since November 1988. Mr. Vogelstein was a Director of the Company from
August 1986 to December 1987. He has been Vice Chairman of the Board of
Directors of E.M. Warburg for more than the past five years and was appointed
President of E.M. Warburg on January 1, 1994. Mr. Vogelstein is also a
Director of Magma Copper Co., Aegis Group plc, Value Health, Inc., Mattel,
Inc., LCI International and The MetraHealth Companies, Inc.
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
Common Stock beneficially owned by the Directors, nominees, the persons named
in the Summary Compensation Table on page 8 of this Proxy Statement and by all
Directors and officers as a group, as of the Record Date. Except as otherwise
indicated, each person listed has sole voting and investment powers with
respect to shares beneficially owned.
<TABLE>
<CAPTION>
PERCENT
NUMBER OF SHARES OF
NAME OF INDIVIDUAL OF COMMON STOCK CLASS
- ------------------ ---------------- -------
<S> <C> <C>
Robert Kamerschen................................... 1,446,410(1) 6.7%
Joseph P. Durrett................................... 142,559(2) .7
Larry G. Morris..................................... 154,370(3) .7
Lowell W. Robinson.................................. 31,272(4) .2
Peter A. Corrao..................................... 97,226(5) .5
Jack W. Fritz....................................... 40,328(6) .2
John R. Rockwell.................................... 19,250(7) .1
Lawrence Lachman.................................... 13,000(7) .1
Howard H. Newman.................................... 5,580,245(8)(9) 23.8
Richard H. Stowe.................................... 10,053 *
John L. Vogelstein.................................. 5,580,245(8)(9) 23.8
All Directors and officers as group (16 persons).... 7,704,869(9)(10) 31.4
</TABLE>
- --------
* Less than .1%
(1) Includes 227,834 shares awarded under the 1986 Employee Restricted Stock
Plan, as amended, and 817,874 shares Mr. Kamerschen has the right to
acquire within 60 days of the Record Date pursuant to the exercise of
options granted under the Company's stock option plans.
(2) Includes 69,471 shares awarded under the 1986 Employee Restricted Stock
Plan, as amended, and 72,588 shares Mr. Durrett has the right to acquire
within 60 days of the Record Date pursuant to the exercise of options
granted under the Company's stock option plans.
(3) Includes 78,033 shares awarded under the 1986 Employee Restricted Stock
Plan, as amended, and 52,784 shares Mr. Morris has the right to acquire
within 60 days of the Record Date pursuant to the exercise of options
granted under the Company's stock option plans.
(4) Includes 23,147 shares awarded under the 1986 Employee Restricted Stock
Plan, as amended, and 8,125 shares Mr. Robinson has the right to acquire
within 60 days of the Record Date pursuant to the exercise of options
granted under the Company's stock option plans.
(5) Includes 56,976 shares awarded under the 1986 Employee Restricted Stock
Plan, as amended, and 25,034 shares Mr. Corrao has the right to acquire
within 60 days of the Record Date pursuant to the exercise of options
granted under the Company's stock option plans.
(6) Includes shares awarded under the 1990 Non-Employee Directors' Restricted
Stock Plan and 18,347 shares owned by Mr. Fritz's wife, of which shares
Mr. Fritz disclaims beneficial ownership.
(7) Includes shares awarded under the 1990 Non-Employee Directors' Restricted
Stock Plan.
(8) All of the shares indicated as owned by Messrs. Newman and Vogelstein are
owned directly by Warburg and are included because of Messrs. Newman's and
Vogelstein's affiliation with Warburg. Messrs. Newman and Vogelstein
disclaim "beneficial ownership" of these shares within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934. (See "Security Ownership
of Certain Beneficial Owners".)
6
<PAGE>
(9) Assumes exercise of ADVO Warrants owned by Warburg.
(10) Includes 570,925 shares awarded under the 1986 Employee Restricted Stock
Plan, as amended, and the 1990 Non-Employee Directors' Restricted Stock
Plan, and 1,055,304 shares all officers as a group have the right to
acquire within 60 days of the Record Date pursuant to the exercise of
options granted under the Company's stock option plans.
SECTION 16 REPORTS
Under the securities laws of the United States, the Company's Directors, its
executive (and certain other) officers and any persons holding ten percent or
more of the Company's Common Stock are required to report their ownership of
the Company's Common Stock and any changes in that ownership to the SEC.
Specific due dates for these reports have been established. In 1995, all
required reports of beneficial ownership of the Company's Common Stock were
timely filed.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table shows compensation paid by the Company and its
subsidiaries for services in all capacities during fiscal 1995, 1994 and 1993
to each of the following named executive officers of the Company, including
the Chief Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- ---------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
BONUS AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY (1) (2) (#)(3) (4)
- --------------------------- ---- ------------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert Kamerschen,....... 1995 $ 481,303 $ 196,076 -- 48,000 $50,147
Chairman and Chief 1994 462,540 374,445 -- 488,136 49,751
Executive Officer 1993 448,422 124,756 -- -- 38,865
Joseph P. Durrett,....... 1995 356,356 94,410 $181,150 32,000 32,122
President and 1994 325,871 197,719 -- 23,700 29,535
Chief Operating Officer 1993 319,548 58,786 599,025 35,000 --
Larry G. Morris,......... 1995 248,496 53,203 -- 18,426 20,193
Senior Executive Vice
President, 1994 240,099 102,757 -- 65,434 20,178
Chief Administrative and
Process 1993 232,386 38,180 -- -- 17,208
Development Officer
Lowell W. Robinson,...... 1995 244,642 57,096 -- 45,000 4,827
Executive Vice President
and 1994 95,343 39,981 431,000 25,000 --
Chief Financial Officer 1993 -- -- -- -- --
Peter A. Corrao,......... 1995 214,077 71,981 -- 12,370 16,130
Senior Vice President-- 1994 201,812 66,761 -- 34,101 11,688
Special Accounts 1993 195,696 27,443 -- -- 15,472
</TABLE>
- --------
(1) Amounts for each fiscal year represent bonus compensation earned for that
year payable in the subsequent year.
(2) The number of restricted shares of Common Stock held at fiscal year end
and the value of such holdings, based on the number of restricted shares
times the closing market price at September 30, 1995 are 12,500 shares and
$297,000 for Mr. Kamerschen, 21,667 shares and $515,000 for Mr. Durrett
and 16,677 shares and $396,000 for Mr. Robinson. Restricted shares vest
equally over a three-year period from the date of grant (one-third on each
anniversary date) with the exception of a grant to Mr. Kamerschen in
fiscal 1992 which vests equally over a four-year period. Holders of
restricted shares are eligible to receive dividends to the same extent as
holders of Common Stock when dividends are declared and payable.
(3) Includes reload option grants received from surrendering previously owned
shares of ADVO Common Stock to pay the exercise price on option exercises
and shares withheld from option exercises to satisfy income tax
withholding requirements.
(4) Amounts represent contributions made on behalf of the named executives to
the Company's 401(k) plan and non-qualified savings plan.
OPTIONS
Set forth below is certain information concerning stock options granted
during fiscal 1995 by the Company to the named executive officers.
8
<PAGE>
The hypothetical present value on the date of grant of stock options granted
in fiscal 1995 shown below are presented pursuant to the SEC proxy rules and
are calculated under the modified Black-Scholes model for pricing options. The
actual before-tax amount, if any, realized upon the exercise of stock options
will depend upon the excess, if any, of the market price of the Common Stock
over the exercise price per share of the stock option at the time the stock
option is exercised. There is no assurance that the hypothetical present
values of the stock options reflected in this table will be realized.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT
GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE VALUE (3)
---------- ------------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
GRANTS(1)
Robert Kamerschen....... 24,000 4% $18.000 1/24/2005 $ 253,511
24,000 4 18.000 4/24/2001 245,060
Joseph P. Durrett....... 10,000 2 18.125 12/1/2004 106,409
11,000 2 18.000 1/24/2005 116,193
11,000 2 18.000 4/24/2001 112,319
Larry G. Morris......... 7,500 1 18.000 1/24/2005 79,222
7,500 1 18.000 4/24/2001 76,581
Lowell W. Robinson...... 7,500 1 18.000 1/24/2005 79,222
7,500 1 18.000 4/24/2001 76,581
30,000 5 18.250 7/25/2005 296,637
Peter A. Corrao......... 5,500 1 18.000 1/24/2005 58,096
5,500 1 18.000 4/24/2001 56,160
RELOAD GRANTS(2)
Larry G. Morris......... 3,426 1 18.000 1/24/2001 34,565
Peter A. Corrao......... 1,370 * 18.000 1/24/2001 13,822
</TABLE>
- --------
* less than 1%
(1) Stock options granted in fiscal 1995 will become exercisable in 25%
increments at one-year intervals from the date of grant. The grants with
expiration dates of April 24, 2001 also stipulate that the market value of
the Company's Common Stock must reach specified levels in order to become
exercisable in addition to the time vesting provisions. These options
become exercisable six years from the grant date if the market price
provision is not met and expire ninety days later. All options are subject
to the reload feature of the 1988 Non-qualified Stock Option Plan and the
1993 Stock Option SubPlan. See Exhibit A attached hereto.
(2) Represent reload option grants received upon the exercise of previously
outstanding exercisable options (the "original options"). The number of
reload options awarded upon the exercise of original options is equal to
the number of previously held shares an optionee tenders to pay the
exercise price of the original options and the number of shares an
optionee elects to have withheld from the exercise of the original options
to pay statutory tax withholding requirements. The reload options retain
the expiration date of the original options and have an exercise price
equal to the fair market value of the Common Stock on the date of exercise
of the original options. Reload options must be held for one year from the
date of grant before they become exercisable.
9
<PAGE>
(3) The present values on grant date are calculated under the modified Black-
Scholes model, which is a mathematical formula used to value options
traded on stock exchanges, modified for pricing employee stock options.
This formula considers a number of factors in order to estimate the
option's present value, including the stock's historical volatility (34%),
the stock's dividend rate (.6%), the exercise period of the option and the
risk free rate of return (6.00%-7.85% depending on the option's grant and
expiration dates).
Set forth below is certain information concerning the named executive
officers and the number and amounts realized on stock option exercises during
fiscal 1995 and the number and value of specified options at September 30,
1995. The value of exercised and unexercised in-the-money stock options at
September 30, 1995 shown below are presented pursuant to SEC rules. The actual
before-tax amount, if any, realized upon exercise of stock options will depend
upon the excess, if any, of the market price of the Common Stock over the
exercise price per share of the stock option at the time the stock option is
exercised. There is no assurance that the values of unexercised in-the-money
stock options reflected in this table will actually be realized.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT YEAR-END(#) AT YEAR-END(1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert Kamerschen....... -- $ -- 811,874 95,512 $9,448,261 $519,499
Joseph P. Durrett....... -- -- 67,338 85,862 393,535 492,377
Larry G. Morris......... 4,688 37,973 50,909 32,951 260,909 180,390
Lowell W. Robinson...... -- -- 6,250 63,750 40,625 373,125
Peter A. Corrao......... 1,875 15,188 22,289 24,182 114,231 131,664
</TABLE>
- --------
(1) Value is calculated by determining the difference between the fair market
value at September 30, 1995 of the securities underlying the options
($23.75) and the exercise price of the options.
REPORT OF THE COMPENSATION COMMITTEE
The role of the Compensation Committee of the Board of Directors is to act
as a liaison between the Board of Directors and management in all matters of
executive compensation, balancing the interests of stockholders and the needs
of management. As such, the governance and administration of executive
compensation programs and development of compensation policy and philosophy
are the domain of the Compensation Committee. The Compensation Committee
undertakes this role by reviewing and approving governing plan documents and
individual compensation issues for certain executives. The Compensation
Committee's policy regarding Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), is that any compensation above the threshold
specified in that Section be based on performance objectives in order to
retain the Company's Federal tax deduction as permitted under the Code. The
Compensation Committee is composed entirely of non-employee Directors.
Compensation Philosophy:
ADVO's compensation programs are designed to:
. Provide a fair, competitive and dynamic compensation program.
10
<PAGE>
. Attract, retain, and develop a highly skilled and motivated workforce.
. Tie compensation directly to the accomplishment of superior Company
performance, creation of long-term shareholder value and attainment of
specific strategic initiatives by emphasizing variable rather than fixed
compensation.
. Align stockholders and management interests.
To accomplish this philosophy, ADVO's executive compensation program is
composed of base salary, short-term incentives and long-term incentives, which
taken together provide a competitive compensation package that is highly
leveraged toward the attainment of superior Company performance.
Base Salary:
ADVO's philosophy is to pay competitive base salaries as compared with a
broad spectrum of organizations. To assess its competitive position, ADVO
participates in and reviews salary surveys with participant companies from
multiple industry segments. These companies represent a cross section of
organizations in all industries and are of similar size and scope. These
companies may or may not be included in the peer group analysis under "Company
Financial Performance", since many of the Company's competitors for executive
talent are outside the Company's business competitor peer group of companies
or are privately held companies. The surveys are professionally administered
by third parties and represent the different functional areas of ADVO's
organization, e.g., marketing, finance and information systems. In general,
ADVO's salary position is approximately at the median of the marketplace.
Based on these surveys, ADVO annually reviews its salary structure and adjusts
it as necessary to reflect the market. Individual base pay is determined by
considering:
. The individual's background, experience and current salary in relation to
the market (as represented by the salary range assigned to the
individual's position).
. Accomplishments as determined by the individual's performance appraisal.
. The financial spending guidelines of the Company.
Short-Term Incentive:
ADVO's philosophy is to provide significant financial incentives for key
managers to attain and exceed the Company's financial objectives. For fiscal
1995, executive officers at ADVO are primarily eligible to participate in
either the Corporate Management Incentive Plan or the Division/Regional
Management Incentive Plan. Both of these plans provide a competitively
benchmarked target award based on the level of the individual's job. These
targets range from 10% to 75% of salary. To realize the target award, certain
Company financial performance objectives must be attained. ADVO annually
establishes operating income goals at the corporate, divisional and regional
levels. The corporate performance objective is based on consolidated operating
income and is measured in terms of actual operating income achieved versus the
annually established plan. Additionally, the Division/Regional Incentive Plan
incorporates divisional and regional operating income objectives. The specific
objective targets are considered confidential and disclosure of such could
competitively jeopardize ADVO's business. The corporate, divisional and
regional results are evaluated independently. The combined payout percentage
based upon these results is uncapped. To determine actual awards, the target
award amounts are factored by these payout percentages. A minimum threshold of
plan attainment is in place, below which no payout is made. The CEO has the
discretion to modify these actual awards +/- 10%.
11
<PAGE>
The bonuses of the CEO and any associate subject to Section 162(m) of the Code
are based solely on financial results as defined above, and are subject to a
capped individual payout.
The Company's financial performance for the fiscal 1995 year was below its
operating income target. This resulted in adjusted corporate awards which
were, on average, less than target awards. Division and Regional performance
varied, with results both above and below target levels set under the plan.
After adjusting for corporate, divisional and regional financial results,
individual award payouts ranged from 11% to 154.6% of target awards. Approved
awards for those disclosed in the Summary Compensation Table range from 55% to
79% of target awards.
As a result of organizational restructuring within ADVO, for fiscal 1996 and
beyond, other short-term incentive plans will be put in place for some of the
general management team. These plans will provide a strong link between the
employee's accountabilities, scope of impact and business performance through
the use of operationally tailored measurement criteria focusing on margin
improvement and operating income goals.
Long-Term Incentive:
The 1988 Non-qualified Stock Option Plan, as amended, and the 1993 Stock
Option Subplan are the primary vehicles for long-term incentives. The plans
allow for the granting of:
. Options with service requirements for vesting.
. Options with performance requirements as well as service requirements for
vesting.
. Reload options which require the purchase and retention of ADVO Common
Stock.
All three types of options were granted this year. This mix of option types
is meant to:
. Link compensation opportunities to Company achievements.
. Balance annual results with ADVO's long-term performance.
. Strengthen the partnership between ADVO's executives and stockholders.
Participation in this plan is limited to key management and executives in
the corporation. Long-term compensation targets vary by the level of the
individual's position and were established based on market analysis provided
from third party external consultants. Periodically these targets will be
reviewed. These targets are expressed as a percentage of base pay. The
resulting target values are translated into shares based on the fair market
value of the shares. In fiscal 1995, of the resulting number of shares granted
as options, 50% were granted as service based vesting non-qualified options,
and 50% were granted with a performance criterion in addition to the service
requirement. The performance criterion is achieved only when the stock has
appreciated to $25.00 per share and remained at or above that price for 90 out
of 180 consecutive days. If this criterion is not met, the options vest in 6
years and expire 90 days later.
The Company's executives were also given the opportunity to receive "reload
options". To receive such options, the plan requires executives to exercise
their options by tendering mature shares of stock to "pay" for the underlying
cost of the options and mandatory federal tax obligations. In return, they
receive reload options in the same number as the number of mature shares they
tendered for payment. Any profit that resulted from the exercise was returned
to the executive in the form of stock, which is to be retained for two years.
12
<PAGE>
Service based options are also used for employment, promotion and retention
situations and are determined in the same manner as described above.
In addition, ADVO has a restricted stock plan. While the governing plan
allows for broader usage, historically, this plan has been used for
employment, promotion and retention situations. When these situations arise,
the number of shares granted is based upon the level of the job.
For fiscal year 1993, executives had the opportunity to participate in a
long-term Incentive Plan. The plan was based on a three-year performance cycle
with established performance measurement criteria. Each year a new three year
cycle started. The criteria include the three-year average growth in pre-tax
earnings per share (EPS) and adjusted return on assets (ROA). At the beginning
of each cycle, goals for these criteria were established. The specific goals
are considered confidential and disclosure of such could adversely impact
ADVO's business. Participants had a competitive target award scaled to the
level of their responsibilities. These target levels ranged from 18% to 100%
of salary. At the close of the performance cycle, actual awards, which are
payable in cash, are adjusted to reflect achievement versus the established
goals for the above stated criteria.
The final year of the 1993 cycle was fiscal 1995. The plan has been
discontinued at the conclusion of the existing payout cycle. No new cycles
will begin. Performance criteria for the final three-year cycle were evaluated
at the close of fiscal year 1995, resulting in no payout for any participant.
CEO Compensation and Company Performance:
As discussed on page 16, the Company and Mr. Kamerschen entered into an
employment agreement on November 14, 1991, outlining some specific conditions
of employment concerning compensation arrangements, not all of which are under
the governance of the Compensation Committee. Under this agreement Mr.
Kamerschen's salary is reviewed annually, and may be increased, but not
decreased by the Committee. This annual increase is to be no less than the
amount of the increase of the United States City Average Consumer Price Index
for all Urban Consumers for All Items (CPI-U). As such, the Committee reviews
Mr. Kamerschen's salary in the first quarter of the fiscal year using the same
base salary guidelines utilized for other executives as described in the "Base
Salary" section on page 11, and adjusts his salary in light of Company
performance for the preceeding fiscal year. The Company exceeded its prior
year (fiscal 1994) profit plan, with record revenues and earnings.
Improvements were achieved in all the key barometers of ADVO's business,
including the total number of shared mail packages, average pieces per package
and revenue per thousand packages. In addition, several highlights among
others demonstrating the Company's solid achievement include a turnaround in
the Atlantic Division, a successful revitalization of two of ADVO's product
lines, an expanding role of ADVO's sophisticated Microtargeting services and a
continued focus on cash flow management and cost control. These factors were
taken under consideration qualitatively and at the discretion of the
Committee. Accordingly, this Committee approved an increase of $23,100 per
year for Mr. Kamerschen, or 5.1%.
As provided in the Agreement, Mr. Kamerschen's short-term incentive is
determined under the Corporate Management Incentive Plan. Under this plan, the
CEO's bonus is determined based solely on financial results and is awarded at
the discretion of the Board of Directors. Consistent with the plan as
described previously, as measured by Company performance in fiscal 1995, Mr.
Kamerschen was granted an incentive award of $196,076, representing 55% of his
target award.
13
<PAGE>
There was no payout under the final cycle of the Long-Term Incentive Plan.
Mr. Kamerschen was awarded 48,000 options in the annual grant using the
approach described above, of which 24,000 were options with performance
requirements.
Benefits:
ADVO offers benefits to its key executives, serving a different purpose than
do the above described elements of compensation. In general, these provide a
level of security against financial misfortune which may result from illness,
disability or death. The benefits are principally those that are offered to
the ADVO employee population, with some variations, and generally promote tax
efficiency and replacement of benefit opportunities afforded other employees,
but which are lost to executives due to regulatory limits.
Compensation Committee
Howard H. Newman (Chair)
Jack W. Fritz
Lawrence Lachman
John R. Rockwell
14
<PAGE>
COMPANY FINANCIAL PERFORMANCE
The following graph compares the performance of the Company's Common Stock
with the S&P 500 Index and a Selected Peer Group Index constructed by the
Company. The comparison of total return for each of the years assumes $100 was
invested on October 1, 1990 in each of the Company, the S&P 500 Index and the
Selected Peer Group Index with investment return weighted on the basis of
market capitalization. The Peer Group is comprised of Acxiom Corp., Catalina
Marketing, R.R. Donnelley & Sons Co., Dunn & Bradstreet, Heritage Media, Inc.,
Information Resources, Inc., Knight-Ridder, Inc., Readers Digest, Scholastic
Corp., Times Mirror Co., Tribune Co., Valassis Communications and the
Washington Post. The Peer Group represents a mix of newspaper, publishing,
database and marketing services companies that ADVO competes with in several of
its major markets.
Comparison of Five Year Cumulative Total Return*
Among ADVO, Inc., S&P 500 Index and a Selected Peer Group**
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
ADVO, Inc............... $100.00 $182.90 $257.89 $209.55 $225.65 $316.86
S&P 500................. 100.00 131.17 145.66 164.60 170.67 221.43
Peer Group.............. 100.00 125.92 154.06 156.09 160.75 186.03
</TABLE>
Assumes $100 Invested on October 1, 1990 in ADVO, Inc. Common Stock, S&P 500
Index & the Peer Group Index.
* Total Return assumes reinvestment of dividends.
** ADVO's fiscal year ends on the last Saturday in September.
15
<PAGE>
EMPLOYMENT AGREEMENTS
On November 14, 1991, the Company entered into an employment agreement with
Mr. Kamerschen pursuant to which he is employed as Chief Executive Officer of
the Company. The employment agreement has a term of five years, and provides
for automatic renewal for a five-year period thereafter unless the Company
gives Mr. Kamerschen six months' notice prior to the expiration of the initial
term that it intends to terminate the agreement. Under the employment
agreement, Mr. Kamerschen receives an annual salary of $425,000 per year,
subject to annual increases as determined by the Board of Directors, and
further to be adjusted annually to reflect increases in the Consumer Price
Index. The employment agreement provides that annual bonuses may be awarded
under the Company's bonus plan. Pursuant to the employment agreement, Mr.
Kamerschen received 50,000 restricted shares of Common Stock under the
Company's 1986 Employee Restricted Stock Plan, as amended (the "Restricted
Stock Plan"). Under the terms of the agreement, the restrictions on such
shares lapsed one-fourth each on November 14, 1992, 1993, 1994, and 1995. In
addition, Mr. Kamerschen received a cash payment of $180,000 upon the signing
of the agreement. The employment agreement also provides that if the Company
terminates Mr. Kamerschen's employment for any reason other than for cause (as
defined), the Company shall continue to pay a salary to Mr. Kamerschen at the
same rate, plus a bonus of 75% of such salary, and allow him to continue to
participate in other benefit programs for the duration of the employment
period or for two years from the date of termination, whichever is greater. If
at the time of termination there are more than two years left in the
employment period, for the period in excess of two years, the severance
compensation will not include any bonus. In addition, Mr. Kamerschen receives
a housing allowance (currently $3,113 per month) as long as he remains
employed by the Company.
On July 13, 1992, the Company entered into an employment agreement with Mr.
Durrett, pursuant to which he is employed as President and Chief Operating
Officer of the Company for a term of two years, at a salary of $310,000 per
year, subject to increases as determined by the Board of Directors plus
bonuses pursuant to the Company's bonus plan. The employment agreement was
renewed for another two years on September 1, 1994. Pursuant to the employment
agreement, Mr. Durrett received 62,500 restricted shares of Common Stock under
the Company's Restricted Stock Plan, as amended. Under the terms of the
agreement, the restrictions on such shares lapsed one-third each on September
1, 1993, 1994 and 1995. Mr. Durrett also received options under the 1988 Non-
qualified Stock Option Plan, as amended, to purchase 62,500 shares of the
Company's Common Stock at a price of $18.15 per share, such options becoming
exercisable in installments of one-fourth each on September 1, 1993, 1994,
1995 and 1996. In addition, Mr. Durrett received additional grants on the
first anniversary date of the commencement of the agreement of 35,000 shares
of Common Stock under the Restricted Stock Plan to vest over a three year
period in equal installments and options to purchase 35,000 shares of Common
Stock under the Company's 1988 Non-qualified Stock Option Plan, as amended, at
a price of $17.13 per share and to vest over a period of four years in equal
installments. This agreement provides for automatic renewal every two years,
on the anniversary date of the agreement, unless the Company gives Mr. Durrett
six months' notice prior to a renewal date that it does not intend to renew
the agreement. The employment agreement also provides that if the Company
terminates Mr. Durrett's employment for any reason other than for cause (as
defined), the Company shall continue to pay a salary to Mr. Durrett at the
same rate, plus a bonus of 50% of such salary, and allow him to continue to
participate in other benefit programs for one year after the date of
termination.
On August 21, 1991, the Company entered into an employment agreement with
Mr. Morris, pursuant to which he was employed as Executive Vice President,
Chief Financial and Administrative Officer. In
16
<PAGE>
May 1994 Mr. Morris was promoted to Senior Executive Vice President, Chief
Administrative and Process Development Officer and his employment agreement
was renewed for another three years. The employment agreement has a term of
three years, at an annual salary of $199,100, subject to increases as
determined by the Board of Directors, plus bonuses pursuant to the Company's
bonus plan. The agreement provides for automatic renewal every three years on
the anniversary date of the agreement unless the Company gives Mr. Morris six
months' notice that it does not intend to renew the agreement. The employment
agreement also provides that if the Company terminates Mr. Morris' employment
for any reason other than for cause (as defined), the Company shall continue
to pay a salary to Mr. Morris at his then current level, plus a bonus of 40%
of such salary, and allow him to continue to participate in other benefit
programs for one year after the date of termination.
EXECUTIVE SEVERANCE AGREEMENTS
The Board of Directors has authorized the Company to enter into individual
Executive Severance Agreements (the "Agreements") with Messrs. Kamerschen,
Durrett, Morris, Robinson and Corrao (the "Executives"). The structure of the
Agreements is substantially similar, but the terms of the individual
Agreements differ in some important respects as noted below.
The Agreements' provisions become effective upon the occurrence of a Change
of Control (as described below) and continue for the duration of the Severance
Period. With regard to Messrs. Kamerschen, Durrett, Morris and Robinson, the
Severance Period is two years following a Change of Control. With regard to
Mr. Corrao, the Severance Period is one and one-half years following a Change
of Control. In all cases, the Severance Period ends with the death of the
Executive. If, during the Severance Period, an Executive's employment is
terminated by the Company for any reason other than death, disability or cause
(as described below), or if the Executive terminates his employment for good
reason (as described below) the Company must pay to the Executive a lump sum
severance payment. With regard to Messrs. Kamerschen, Durrett, Morris and
Robinson, the severance payment due upon such a termination of employment is
equal to two times the sum of (i) the Executive's annual base pay at the
highest rate in effect at any time within the 90-day period preceding the date
a notice of termination of employment is given or, if higher, at the highest
rate of base pay in effect within the 90-day period immediately preceding the
Change of Control and (ii) the greatest amount of incentive (bonus) pay
received by the Executive for any calendar year or portion thereof from and
including the third year prior to the first occurrence of a Change of Control.
With regard to Mr. Corrao, the severance payment is equal to one and one-half
times the foregoing sum. Additionally, upon termination, Messrs. Kamerschen,
Durrett, Morris, and Robinson will be entitled to receive medical and life
insurance benefits for the period of two years from the date of the
termination or cash in lieu thereof. Mr. Corrao will be entitled to receive
medical and life insurance benefits for the period of one and one-half years
from the date of termination or cash in lieu thereof.
Under the Agreements, "cause" means an Executive's intentional act of fraud,
embezzlement, theft, damage to Company property or disclosure of confidential
information that causes material harm to the Company. "Good reason" means (i)
an adverse change in the Executive's responsibilities; (ii) a reduction in the
Executive's base, bonus pay, or benefits; (iii) a failure of any successor to
the Company to assume the obligations under the Agreement; (iv) any material
breach of the Agreement by the Company; or (v) any action of the Company
requiring the Executive to perform his or her services at a location which is
more than thirty five miles from the location where the Executive was employed
immediately preceding the date of the Change in Control.
17
<PAGE>
A "Change of Control" means the occurrence of any of the following events:
(i) the acquisition by any individual , entity or group other than Warburg (a
"Person"), of beneficial ownership of voting securities of the Company where
such acquisition causes such Person to own 30% or more of the combined voting
power of the then outstanding voting securities of the Company entitled to
vote generally in the election of Directors (the "Outstanding Company Voting
Securities") other than certain acquisitions; or (ii) individuals who
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board. Any individual becoming a
Director whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the Directors
then comprising the Incumbent Board shall be considered as though such
individuals were a member of the Incumbent Board, (excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the
election or removal of Directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board) and any
nominee of Warburg proposed by Warburg to be elected to the Board shall be
considered a member of the Incumbent Board; or (iii) the approval by the
stockholders of the Company of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation ("Business
Combination") or, if consummation of such Business Combination is subject, at
the time of such approval by shareholders, to the consent of any government or
governmental agency, the obtaining of such consent (either explicitly or
implicitly by consummation); excluding a Business Combination pursuant to
which (A) all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more then 60% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be,
of the corporation resulting from such Business Combination in substantially
the same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Voting Securities, (B) no Person
(excluding any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 30% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (C) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or (iv) approval by the stockholders of the
Company of a complete liquidation or dissolution of the Company
Each Executive is solely responsible for all federal, state, local or
foreign taxes due with respect to any payment received under the Agreement,
including, without limitation, any excise tax imposed by Section 4999 of the
Code. However, all payments under the Agreement would be reduced to the extent
necessary so that no portion of the payments would be subject to the excise
tax imposed by Section 4999 of the Code but only if, by reason of such
reduction, the net after-tax benefit received by the Executive exceeds the net
benefit received by the Executive if no such reduction was made.
If the Company fails to comply with any of its obligations under the
Agreement or in the event that the Company or any other person takes or
threatens to take action to declare the Agreement void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or
to recover from, the Executive the benefits provided or intended to be
provided to the Executive by the Company,
18
<PAGE>
the Executive is authorized by the Agreement to retain counsel of the
Executive's choice, at the expense of the Company, to advise and represent the
Executive in connection with any such interpretation, enforcement, or defense,
including without limitation the initiation or defense of any litigation or
other legal action, whether by or against the Company or any member of the
Board of Directors, officer, stockholder, or other person or entity affiliated
with the Company, in any jurisdiction.
Benefits under the Agreements are in addition to severance amounts payable
under an Executive's employment agreement.
RELATED PARTY TRANSACTIONS
At November 24, 1995, the Company had $46,024,000 invested in money market
mutual funds and marketable securities managed by Warburg, Pincus Counsellors,
Inc. ("Counsellors"). Income earned on such investments during fiscal 1995
amounted to approximately $2,757,000. Counsellors is controlled by WP, the
general partner of Warburg (see "Security Ownership of Certain Beneficial
Owners"). Mr. Fritz, who is a Director of the Company, is a Director of the
various Counsellors-managed mutual funds. The Company bases all investment
decisions upon the available rates of return, and the investments described
above were made because of the competitive rates available from Counsellors.
Mr. Newman and Mr. Vogelstein, who are Directors of the Company, are
Managing Directors of E.M. Warburg and are general partners of WP. (See
"Security Ownership of Certain Beneficial Owners").
2. APPROVAL OF AMENDMENTS TO THE
1988 NON-QUALIFIED STOCK OPTION PLAN
AND 1993 STOCK OPTION SUBPLAN, AS AMENDED
On October 8, 1995, the Board of Directors approved an amendment to the
Company's 1988 Non-qualified Stock Option Plan and the 1993 Stock Option
Subplan, as amended (the "1988 Plan"), subject to stockholder approval, to
increase the number of shares available for grant under the 1988 Plan from
3,800,000 to 4,300,000 shares. The following discussion is a summary of the
1988 Plan as proposed to be amended, a copy of which is attached hereto as
Exhibit A.
Administration: The 1988 Plan is administered by the Compensation Committee
which is appointed by the Company's Board of Directors. The Committee is
composed of not less than two members of the Board of Directors appointed by
the Board of Directors. Each member of the Committee is a "disinterested
person" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Act"). The Committee determines those individuals to
whom options are granted under the 1988 Plan.
Subplans: The Board of Directors or the Committee may establish such
subplans under the Plan as it may deem desirable in order to qualify options
thereunder as "performance-based compensation" as defined in the Code. The
Board has established the 1993 Stock Option Subplan (the "1993 Subplan").
Options: Options granted under the 1988 Plan are non-qualified stock
options; that is, they are not qualified for special tax treatment under the
Code.
19
<PAGE>
The 1988 Plan, permits the granting of "reload" options with respect to
options granted under the 1988 Plan (the "original options"). A "reload"
option is an option granted on the date of exercise of an original option to
purchase a number of shares which is equal to the number of shares surrendered
to pay the exercise price of the original option, the number of shares
surrendered or withheld to pay tax withholding due on exercise of the original
options or such other number of shares not to exceed the total number of
shares with respect to which the original option is exercised. The expiration
date of a reload option would be the same as that of the original option
unless otherwise determined by the Committee. "Reload" options may be
authorized with respect to options that are themselves granted as reload
options.
Eligibility: One or more options may be granted under the 1988 Plan by the
Committee to such officers or key employees of the Company, or of a parent or
subsidiary of the Company, at such time and in such amounts as the Committee
determines. A member of the Board of Directors is eligible to participate in
the 1988 Plan only if such Board member is also an employee of the Company.
Approximately 100 persons are eligible to participate in the 1988 Plan.
Shares Subject to Options: Currently, the 1988 Plan provides that an
aggregate of 3,800,000 shares of Common Stock, subject to adjustment to
prevent dilution in the event of stock splits, stock dividends or other
changes in the Company's capitalization, may be subject to options under the
1988 Plan. Such shares may be treasury shares or authorized but unissued
shares. If any outstanding option expires or terminates prior to its exercise
in full, or if any option exercise is settled in cash, the shares of Common
Stock that are allocable to the unexercised portion of such option will become
available for the grant of other options. In addition, if in connection with
any option exercises, any shares of Common Stock are tendered to the Company
in satisfaction of tax withholdings obligations or in payment of the option
price, an equal number of shares shall be available for option grants under
the Plan. However, such shares will be available solely for grants of options
to persons who are not subject to Section 16 of the Act. If Proposal 2 is
adopted by the stockholders, the number of shares that may be subject to
options under the 1988 Plan would be increased from an aggregate of 3,800,000
shares to an aggregate of 4,300,000 shares. As of the Record Date, options to
purchase 3,635,326 shares had been issued under the 1988 Plan.
Option Price: The price at which shares may be purchased pursuant to an
option cannot be less than the greater of the par value of the shares of
Common Stock or the fair market value of the Common Stock on the date the
option is granted. Optionees may be granted, in exchange for the surrender and
cancellation of outstanding options, new options having option prices lower
than the option price of the options so surrendered and cancelled.
Exercise of Options: No option may be exercised after the expiration of ten
years from the date it is granted. Currently, the 1988 Plan provides that no
option may be granted under the 1988 Plan after January 31, 1998.
Each optionee to whom an option is granted, who has not already done so,
must agree in writing, as a condition to the granting of the option, not to
enter into a business in direct competition with the Company for one year
after the termination of employment with the Company. Each option shall be
exercisable as determined by the Committee. In addition to vesting based upon
future service, the Plan permits vesting to be conditioned upon the
achievement of performance objectives or other events. Under certain
conditions, such as the receipt of approval from the Committee, or in the
event of certain mergers, consolidations, reorganizations, the approval by the
stockholders of the Company of the
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liquidation or dissolution of the Company or the sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all of the consolidated assets of the Company, the time at
which an option is exercisable may be accelerated to allow the exercise of the
option, in whole or in part, at a time earlier than that otherwise provided at
the time of the original grant of the option. In addition, all or any part of
any remaining unexercised options may be exercised in full, whether or not
then exercisable, upon a "Change of Control" as defined under "Executive
Severance Agreements".
The option price for the number of shares with respect to which the option
is exercised shall be paid in full to the Company upon exercise of an option.
The optionee may pay all or part of the option price by delivering shares of
the Company's Common Stock which shall be credited against the option price at
the fair market value of such stock on the date of exercise. In addition, the
optionee may use the shares received upon the exercise of an option to pay the
option price and acquire additional shares. This technique allows optionees to
exercise the option which they have been granted by using any appreciation
present in the shares which they own. The Plan also permits payment to be made
by a full recource promissory note for a term of up to two years for the
lesser of up to 90% of the option price or that portion of the option price
which exceeds par value of the shares at an interest rate equal to or greater
than the applicable federal rate determined under Section 1274(d) of the Code.
Withholding Tax: Under the 1988 Plan, optionees have the opportunity to
satisfy withholding tax obligations, in whole or in part, either by having the
Company withhold from the shares to be issued upon exercise that number of
shares that would satisfy the withholding amount due or by delivering to the
Company already owned Common Stock to satisfy the withholding amount.
Elections by participants to deliver already owned stock or to have the
Company withhold shares upon exercise of options to satisfy withholding tax
obligations: (1) must be made prior to the Tax Date, as defined; (2) are
irrevocable; and (3) are subject to the consent or disapproval of the Board of
Directors or the Committee. If the participant is an officer or director of
the Company for purposes of Section 16(b) of the Act, such election must
comply with Rule 16b-3 under the Act, unless otherwise determined by the
Committee.
Transfer: Options are not transferable by the optionee other than by will or
under the laws of descent and distribution, or as provided in Rule 16b-3 under
the Act, and are exercisable, during the optionee's lifetime, only by the
optionee.
Termination: Options shall terminate, unless exercised, upon the earlier of
the date of expiration of the option or three months after the date of the
severance of the employment relationship between the optionee and the Company,
or a parent or subsidiary of the Company; provided, however, that all options
held by an optionee shall terminate immediately upon receipt by an optionee of
notice of termination if the optionee is terminated for deliberate, willful or
gross misconduct as determined by the Company.
If, before the date of expiration of the option, the optionee retires from
the employ of the Company, or a parent or subsidiary of the Company, for
reasons of age or for reasons of disability, the option shall terminate on the
earlier of such date of expiration or one year after the date of such
retirement. In the event of such retirement, the optionee shall have the right
prior to the termination of such option to exercise the option to the extent
to which the optionee was entitled to exercise such option immediately prior
to such retirement provided that in the event of retirement due to disability
all options then held by the optionee shall become immediately exercisable. If
the retired optionee shall
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die before the termination of the option, the optionee's executors,
administrators or any person or persons to whom the option may be transferred
by will or by the laws of descent and distribution shall have the right, at
any time prior to the earlier of the date of the expiration of the option or
the end of the one-year period beginning on the date of the optionee's death,
to exercise the option to the same extent as said retired optionee.
In the event of the death of the holder of an option while in the employ of
the Company, or a parent or subsidiary of the Company, and before the date of
expiration of such option, such option shall become immediately exercisable.
Such option shall terminate on the earlier of such date of expiration or one
year following the date of such death. After the death of the optionee, the
optionee's executors, administrators or any person or persons to whom the
option may be transferred by will or by the laws of descent and distribution
shall have the right, at any time prior to such termination, to exercise the
option to the same extent to which the deceased optionee was entitled to
exercise such option.
Modification: The Board of Directors may amend, suspend or terminate the
1988 Plan at any time; provided, however, that without the further approval of
the holders of at least a majority of the voting power of the outstanding
shares of Common Stock present in person or by proxy at a meeting of the
stockholders, the Board may not (a) increase the aggregate number of shares
which may be issued under options pursuant to the provisions of the 1988 Plan
(except for the adjustment provisions), (b) reduce the minimum option price at
which options may be granted, or (c) change the class of employees eligible to
receive options.
Registration of Option Shares: No shares shall be issued and delivered upon
exercise of any option unless a registration statement under the Securities
Act of 1933 with respect to the shares of Common Stock to be reserved for
issuance upon the exercise of options to be granted under the 1988 Plan has
become effective, and unless all other applicable laws and regulations have
been complied with.
Federal Income Tax Consequences: Upon the exercise of an option, an optionee
will recognize ordinary compensation income in an amount equal to the excess
of the fair market value of the Common Stock on the date of exercise over the
option price. Any gain or loss recognized by the optionee on the subsequent
disposition of the stock will be a capital gain or loss.
The Company will generally be entitled to a deduction for Federal income tax
purposes at the same time and in the same amount as an optionee is required to
recognize ordinary compensation income as described above. However, Section
162(m) of the Code provides that no deduction will be allowed for certain
compensation paid to "covered employees", as defined in Section 162(m)(3), to
the extent such compensation exceeds $1,000,000 in a taxable year. It is
intended that this limitation will not apply with respect to options granted
pursuant to the 1993 Subplan by reason of the options constituting
"performance based compensation" as described in Section 162(m)(4)(c) of the
Code. However, due to the recent enactment of Section 162(m) of the Code, and
in the absence of the issuance of any guidance by the Treasury Department
under Section 162(m) of the Code to date, this cannot be assured.
To the extent that an employee recognizes a capital gain as described above,
the Company will not be entitled to a deduction for Federal income tax
purposes.
Market Price: The last sales price on the Record Date of the Company's
Common Stock on the New York Stock Exchange as reported in The Wall Street
Journal was $ 26.50 per share.
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Vote Required: The affirmative vote of the holders of a majority of the
voting power of the outstanding shares of Common Stock represented at the
Annual Meeting in person or by proxy is required for approval of the proposed
amendment to the 1988 Plan. Abstaining votes and broker non-votes are counted
as votes cast in tabulating the majority requirement and have the same effect
as a vote cast against this Proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
3. APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors recommends that proxies be voted in favor of the
ratification of the appointment of Ernst & Young LLP, certified public
accountants, as independent auditors for the fiscal year ending September 28,
1996.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting where they will have an opportunity to make a statement if they
desire to do so and are expected to be available to answer appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3.
OTHER BUSINESS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those set forth in the Notice of Annual Meeting of
Stockholders. However, if any other matters properly come before such meeting,
the persons named in the enclosed form of proxy will have discretionary
authority to vote all proxies on such matters in accordance with their
judgment.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Annual Meeting of
Stockholders in 1997 must be received by the Company no later than August 10,
1996 in order to be considered for inclusion in the Company's proxy statement
and form of proxy relating to the Annual Meeting of Stockholders in 1997. Any
such proposal must comply with Rule 14a-8 promulgated by the Securities and
Exchange Commission pursuant to the Act.
/s/ David M. Stigler
David M. Stigler
Secretary
December 18, 1995
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EXHIBIT A
The portions of the 1988 Plan as proposed to be amended pursuant to Proposal
2 are underlined.
ADVO, INC.
1988 NON-QUALIFIED STOCK OPTION PLAN AND 1993 STOCK OPTION SUBPLAN
AS AMENDED AND RESTATED EFFECTIVE JANUARY 18, 1996
1. PURPOSES
The purposes of this Stock Option Plan (the "Plan") are (a) to secure for
ADVO, Inc. (the "Company") and its stockholders the benefits arising from
officers and other key employees of the Company, and any parent or subsidiary
of the Company, who will be responsible for its future growth and continued
success, having an ownership interest in the Company and (b) to enable the
Company to attract, retain and motivate top caliber officers and key employees
by providing them with competitive long term equity opportunities under the
terms and conditions and in the manner contemplated by this Plan.
2. ADMINISTRATION
The Plan shall be administered by the Board of Directors. In the
alternative, the Board may appoint a Stock Option Committee (the "Committee"),
consisting of not less than two members of the Board of Directors appointed by
the Board of Directors, who may but are not required to be members of the
Board of Directors. Any Committee so appointed shall have the sole authority
to exercise all of the responsibilities and duties of the Board of Directors
under this Plan, except for the appointment, removal or replacement of members
of the Committee and except as otherwise provided herein. A member of the
Committee may only serve on the Committee if he or she is, at the time of
taking any discretionary action relating to an optionee who is then subject to
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), a "disinterested person" within the meaning of Rule 16b-3 under the
Exchange Act (as then applicable to the Plan). Each member of the Committee
shall hold office until his or her successor is designated as a member of the
Committee by the Board of Directors. Any vacancy in the Committee may be
filled by a resolution adopted by a majority of the Board of Directors. Any
member of the Committee may be removed at any time, with or without cause, by
a resolution adopted by a majority of the Board of Directors. Any action of
the Committee with respect to the administration of the Plan shall be taken by
majority vote. In the event the Board of Directors appoints a Committee to
administer the Plan pursuant to this Section 2, then, except to the extent
specified in this paragraph and in Sections 7 and 16 hereof, for purposes of
administering the Plan, the term "Committee" shall be substituted for the term
"Board of Directors" wherever it appears hereinafter. Whether or not the Board
of Directors has appointed a Committee to administer the Plan, the Board of
Directors or the Committee may establish such subplans under the Plan as it
may deem desirable in order to qualify options thereunder as "performance-
based compensation" as defined under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), or for any other purpose, provided that
stockholder approval of any such subplan shall be obtained if and to the
extent deemed necessary or advisable by the Board of Directors.
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Subject to the express provisions of the Plan, the Board of Directors shall
have authority to (i) construe and interpret the Plan, (ii) prescribe, amend
and rescind rules and regulations relating to the Plan, (iii) determine the
individuals to whom, and the time or times at which options shall be granted,
the number of shares to be subject to each option, the option price, and the
duration of each option, and (iv) make all other determinations necessary or
advisable for the administration of the Plan. All determinations and
interpretations made by the Board of Directors shall be binding and conclusive
on all participants in the Plan and on their legal representatives and
beneficiaries.
3. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN
Subject to adjustment as provided in Section 14 hereof, the shares of stock
to be offered under the Plan may be authorized but unissued shares of the
Company's Common Stock, $.01 par value, or issued shares which have been
reacquired. The aggregate amount of Common Stock to be delivered upon exercise
of all options granted under the Plan shall not exceed 4,300,000 shares. If
---------
any option granted hereunder shall expire or terminate for any reason without
having been exercised in full, or if any option exercise is settled in cash
under Section 9, the unpurchased shares subject thereto shall again be
available for the purposes of this Plan. If, in connection with any option
granted hereunder, any shares of Common Stock are tendered to the Company in
payment of the option price under Section 9 or are surrendered to or withheld
by the Company in satisfaction of tax withholding obligations under Section 17
hereof, a number of shares equal to the number of shares tendered,
surrendered, or withheld shall again be available for option grants under this
Plan; provided, however, that such shares shall be available exclusively for
options granted to persons who, at the time of grant, are not subject to
Section 16 of the Exchange Act.
4. NON-QUALIFIED OPTIONS
Options granted under the Plan shall not be incentive stock options for
purposes of Section 422 of the Code.
5. ELIGIBILITY AND PARTICIPATION
Officers and other key employees of the Company or of any parent or
subsidiary of the Company, whether or not directors of the Company, shall be
eligible to participate in the Plan. Directors who are not also employees are
not eligible to participate in the Plan. An individual who has been granted an
option may, if he is otherwise eligible, be granted additional options.
Nothing in the Plan shall be deemed to give any employee any right to
participate in this Plan or to receive an option hereunder.
6. OPTION PRICE
The purchase price per share of Common Stock (the "option price") covered by
each option shall be determined by the Committee, but shall not be less than
the greater of the par value of the Common Stock or the fair market value of
the Common Stock at the time such option is granted (except as provided in
Section 8 with respect to options substituted for options to purchase stock of
other issuers). The fair market value of the Common Stock on a specified date
shall mean the closing price for a share of the Common Stock on the stock
exchange, if any, on which the Common Stock is primarily traded, but if no
shares of Common Stock were traded on such date, then on the last previous
date on which a share was so traded, or, if shares of Common Stock are not
primarily traded on a stock exchange, the
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average of the high and low sales prices at which one share of Common Stock is
traded on the over-the-counter market, as reported on the National Association
of Securities Dealers Automated Quotation System, or, if none of the above is
applicable, the value of a share of Common Stock as established by the Board
of Directors for such date using any reasonable method of valuation.
7. DURATION AND TIME OF EXERCISE OF OPTIONS
Each option and all rights thereunder shall expire on such date as the Board
of Directors may determine, but in no event later than ten (10) years from the
date on which the option is granted, and shall be subject to earlier
termination as provided herein.
Each option shall be exercisable in such installments during the period
prior to its expiration date as the Board of Directors shall determine, or
may, if so determined by the Board of Directors, be exercisable either in
whole or in part at any time prior to its expiration date. If the option is
made exercisable in installments and the optionee shall not in any given
installment period purchase all of the shares which the optionee is entitled
to purchase in such installment period, then the optionee shall have the right
cumulatively thereafter to purchase any shares not so purchased and such right
shall continue until the expiration date or sooner termination of such option.
In addition to vesting based upon future service, the Board of Directors may
condition the right to exercise options upon the achievement of performance
objectives or other events.
Except in the case of an Exempt Reorganization, in the event of:
(a) a reorganization, merger or consolidation of the Company in which the
Company is not the surviving or resulting corporation or pursuant to which
the Common Stock would be converted into cash, securities or other property
(other than a merger or other business combination involving the Company in
which the holders of the Common Stock of the Company immediately prior to
the merger have the same proportionate ownership of the Common Stock of the
surviving corporation immediately after the merger),
(b) the approval by the stockholders of the Company of any plan or
proposal for the dissolution or liquidation of the Company, or
(c) a sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all of the
Company's consolidated assets, then all or any part of the remaining
unexercised options granted to any person shall be exercisable in full,
whether or not then exercisable, during a period commencing on a date fixed
by the Board of Directors prior to the effective time of such
reorganization, merger, consolidation, dissolution, liquidation, sale,
lease, exchange or transfer and continuing to the time which is immediately
prior to such effective time (and upon such effective time any unexercised
options shall expire). For purposes of the preceding sentence:
(1) "Exempt Reorganization" means a Reorganization in which either
(x) the election or appointment of the individuals who immediately
after the effective time of the Reorganization constitute the directors
of the Continuing Corporation was approved by a vote of at least two-
thirds of the individuals constituting the directors of the Company
immediately prior to such effective time (each such individual in
office immediately prior to the effective time, a "Prior Director") or
(y) a majority of the directors of the Continuing Corporation
immediately after such effective time were Prior Directors.
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(2) "Reorganization" means:
(A) a reorganization, merger or consolidation of the Company in
which the Company is not the surviving or resulting corporation or
pursuant to which the Common Stock would be converted into
securities or other property or
(B) a reorganization of the Company into a holding company
structure, including such a reorganization involving a business
combination with another corporation or entity, or
(C) a sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all of
the Company's consolidated assets or a dissolution or liquidation of
the Company, in each case pursuant to which the holders of the
Common Stock receive securities of another entity.
(3) "Continuing Corporation" means the entity surviving a
Reorganization.
(4) "Prior Director" shall be deemed to include any individual
proposed by Warburg, Pincus Capital Partners, L.P. ("Warburg") as a
substitute for a Prior Director and elected a director of the
Continuing Corporation.
In addition, subject to the foregoing, all or any part of any remaining
unexercised options may be exercised in full whether or not then exercisable,
if (A) any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act), other than Warburg and its affiliates, shall become the
beneficial owner (within the meaning of Rule 13d-3 under such Act) of 30% or
more of the Company's Common Stock or (B) at any time Eligible Directors shall
cease for any reason to constitute a majority of the entire Board of Directors
of the Company. An "Eligible Director" shall mean (i) any individual who was a
director at September 27, 1990 (a "1990 Director"), (ii) any individual
proposed by Warburg and elected as a director in place of a 1990 Director, or
(iii) any director elected by, or nominated for election by the Company's
stockholders by, the vote of at least two-thirds of the directors who at the
time of such vote were Eligible Directors. For purposes of clause (B) of this
paragraph the term "Committee" may not be substituted for the term "Board of
Directors".
The Board of Directors may, at any time, in its absolute discretion,
accelerate the time at which an outstanding option can be exercised, in whole
or in part.
8. REPLACEMENT AND SUBSTITUTE OPTIONS: RELOAD OPTIONS
The Board of Directors may, in its absolute discretion, grant to optionees,
in exchange for the surrender and cancellation of their outstanding options to
purchase the Company's Common Stock, new options having option prices lower
than the option price of the options so surrendered and cancelled and
containing such other terms and conditions as the Board of Directors may deem
appropriate, provided that such new options shall comply with all terms and
conditions of the Plan. Options may be granted under the Plan in substitution
for options to purchase stock of other issuers held by persons who become
employees of the Company or any parent or subsidiary of the Company, in which
case the option price per share may be adjusted downward from the minimum
option price specified in Section 6 hereof to reflect the value, as determined
by the Board of Directors, of any options surrendered or forfeited by such
persons.
The Board of Directors may grant "reload" options with respect to options
granted hereunder (the "original options"). A "reload" option shall be an
option, granted on the date of exercise of an original
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option, to purchase a number of shares which may be equal to the number of
shares surrendered to pay the exercise price of the original option, the
number of shares surrendered or withheld to pay tax withholding relating to
the exercise of the original option, or such other number of shares not to
exceed the total number of shares with respect to which the original option is
exercised. The expiration date of a "reload" option shall be the same as that
of the original option, unless otherwise determined by the Board of Directors.
"Reload" options may be authorized with respect to options that are themselves
granted as "reload" options. The terms of "reload" options shall meet all
requirements applicable to options granted under the Plan, including the
requirements of Section 6. In connection with the grant of a reload option,
the Board of Directors may require that a specified number of shares acquired
upon exercise of the original option or prior "reload" option shall be non-
transferable for a period of time that the Board of Directors may specify.
9. EXERCISE OF OPTIONS
Options shall be exercised by the delivery of written notice to the officer
of the Company designated by the Board of Directors setting forth the number
of shares with respect to which the option is to be exercised, and specifying
the address to which the certificates for such shares are to be mailed.
The option price of an option granted hereunder shall be paid in full at the
time of exercise (i) in cash by United States currency, certified check or
money order, (ii) by tendering to the Company shares of Stock having a fair
market value on the date of exercise equal to the option price, (iii) by a
full recourse promissory note for a term of up to two years for the lesser of
up to 90% of the option price or that portion of the option price which
exceeds par value of the shares at an interest rate equal to or greater than
the applicable Federal rate determined under Section 1274(d) of the Code, or
(iv) a combination of cash, Stock valued at fair market value and such
promissory note. As promptly as practicable after receipt of such written
notification of the exercise of an option and payment, the Company shall make
delivery to the optionee or as instructed by the optionee of certificates for
the number of transferable shares with respect to which such option has been
so exercised, issued in the optionee's name or as otherwise instructed by the
optionee.
The Board of Directors may, in its discretion, in lieu of delivery of any
shares upon option exercise, make a cash payment in an amount equal to the
difference between the fair market value of the Common Stock on the date of
exercise and the option price per share multiplied by the number of shares for
which the option is being exercised for which the Board of Directors has
determined to pay cash.
10. NON-TRANSFERABILITY OF OPTIONS
An option or other right which may constitute a derivative security granted
under the Plan shall, by its terms, be nontransferable by the optionee, either
voluntarily or by operation of law, otherwise than by will or the laws of
descent and distribution and as provided in Rule 16b-3, and shall be
exercisable during the optionee's lifetime only by the optionee, regardless of
any community property interest therein of the spouse of the optionee, or such
spouse's successors in interest.
11. NON-COMPETITION AGREEMENT; CONTINUANCE OF EMPLOYMENT
Each person to whom an option is granted under the Plan, who has not already
done so at the time of such grant, must agree in writing as a condition to the
granting of the option not to enter into a
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business in direct competition with the Company for one year after the
termination of his employment with the Company. Nothing contained in the Plan
or in any option granted under the Plan shall confer upon any optionee any
right with respect to the continuation of employment by the Company or any
parent or subsidiary of the Company, or interfere in any way with the right of
the Company or of any parent or subsidiary of the Company (subject to the
terms of any separate employment agreement to the contrary) at any time to
terminate such employment or to increase or decrease the compensation of the
optionee from the rate in existence at the time of the granting of an option.
12. TERMINATION OF EMPLOYMENT, DISABILITY OR DEATH OF OPTIONEE
Except as may be otherwise expressly provided herein, options shall
terminate, unless exercised, three (3) months after the date of the severance
of the employment relationship between the optionee and the Company, or a
parent or subsidiary of the Company; provided however, that all options held
by an optionee shall terminate immediately upon receipt by an optionee of the
notice of termination if the optionee is terminated for deliberate, willful or
gross misconduct as determined by the Company. Absence on leave approved by
the Board of Directors shall not be considered the severance of employment.
If, before the date of expiration of the option, the optionee shall retire
from the employ of the Company, or a parent or subsidiary of the Company, for
reasons of age pursuant to a defined benefit or defined contribution plan of
the Company, or a parent or subsidiary of the Company, or for reasons of
disability as defined in Section 105(d)(4) of the Code, the option shall
terminate on the earlier of such date of expiration or one year after the date
of such retirement. In the event of such retirement, the optionee shall have
the right prior to the termination of such option to exercise the option to
the extent to which the optionee was entitled to exercise such option
immediately prior to such retirement provided that in the event of retirement
due to disability all options then held by the optionee shall become
immediately exercisable. If the retired optionee shall die before the
termination of the option, the optionee's executors, administrators or any
person or persons to whom the option may be transferred by will or by the laws
of descent and distribution shall have the right, at any time within the
earlier of the date of expiration of the option or the one-year period
beginning on the date of the optionee's death, to exercise the option to the
same extent as said retired optionee.
In the event of the death of the holder of an option while in the employ of
the Company, or a parent or subsidiary of the Company, and before the date of
expiration of such option, such option shall become immediately exercisable.
Such option shall terminate on the earlier of such date of expiration or one
year following the date of such death. After the death of the optionee, the
optionee's executors, administrators or any person or persons to whom the
option may be transferred by will or by the laws of descent and distribution
shall have the right, at any time prior to such termination, to exercise the
option to the same extent to which the deceased optionee was entitled to
exercise such option.
13. PRIVILEGE OF STOCK OWNERSHIP
No person entitled to exercise any option granted under the Plan shall have
any of the rights or privileges of a stockholder of the Company in respect of
any shares of stock issuable upon exercise of such option until such option
shall have been validly exercised and the option price paid. The Company shall
have no obligation to issue or deliver shares upon exercise of any option
unless and until, in the opinion of counsel for the Company, any applicable
registration requirements of the Securities Act of 1933, any applicable
listing requirements of any national securities exchange on which stock of the
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same class is then listed, and any other requirements of law or of any
regulatory bodies having jurisdiction over such issuance and delivery, shall
have been fully complied with.
14. ADJUSTMENTS
If the outstanding shares of Common Stock of the Company are increased,
decreased, changed into, or exchanged for a different number or kind of shares
or securities of the Company as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse
stock split, an appropriate and proportionate adjustment shall be made in the
maximum number and kind of shares as to which options may be granted under
this Plan. A corresponding adjustment changing the number or kind of shares
allocated to unexercised options or portions thereof, which shall have been
granted prior to any such change, shall likewise be made. Any such adjustment
in the outstanding options shall be made without change in the aggregate
purchase price applicable to the unexercised portion of the option but with a
corresponding adjustment in the price for each share covered by the option.
In addition, in the event the Company declares and pays an extraordinary
cash dividend or distribution, repurchases a significant portion of its stock
or engages in any other action having an effect similar to a recapitalization,
the Board of Directors or Committee may make such substitutions or adjustments
as it may determine to be appropriate in its sole discretion to preserve the
economic value of the options granted under the Plan.
Adjustments under this Section shall be made by the Board of Directors or
Committee, whose determination as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive. No fractional shares
of stock shall be issued under the Plan for any such adjustment.
15. WRITTEN AGREEMENT
Each option granted hereunder shall be embodied in a written Option
Agreement which shall be subject to the terms and conditions prescribed
herein, and shall be signed by the optionee and by an officer of the Company
for and on behalf of the Company. An Option Agreement shall contain such other
provisions as the Board of Directors in its discretion shall deem advisable so
long as the same are not contrary or inconsistent with the terms and
provisions of the Plan.
16. AMENDMENT AND TERMINATION OF PLAN
The Board of Directors of the Company may at any time amend, suspend or
terminate the Plan, provided, however, that without the further approval of
the holders of at least a majority of the voting power of the outstanding
shares of the Company's Common Stock present in person or by proxy at a
meeting of the stockholders, the Board may not (i) increase the maximum number
of shares which may be issued upon exercise of the options granted under the
Plan, except as permitted under the provisions of Section 14, (ii) change the
minimum purchase price set forth in Section 6, or (iii) permit the granting of
Options to anyone other than as provided in Section 5. For the purposes of
this Section, the term "Committee" may not be substituted for the term "Board
of Directors."
No amendment, suspension or termination of the Plan shall, without the
consent of the optionee, materially impair any rights of such optionee under
any outstanding Option Agreement.
17. WITHHOLDING
Any person exercising an option shall be required to pay in cash to the
Company the amount of any taxes the Company is required by law to withhold
with respect to the exercise of such option. Such
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payment shall be due on the date the Company is required by law to withhold
such taxes. Such payment may also be made at the election of the optionee by
the surrender of shares of Common Stock then owned by the optionee, or the
withholding of shares of Common Stock otherwise to be issued to the optionee
on exercise, in an amount that would satisfy the withholding amount due.
Unless otherwise determined by the Board of Directors, any election so made by
optionees subject to Section 16(b) of the Exchange Act shall be in accordance
with the requirements of Rule 16b-3 under such Act and any interpretations
thereof of the Securities and Exchange Commission. The value of such shares
withheld or delivered shall be equal to the fair market value of such shares
on the date of exercise. In the event that such payment is not made when due,
the Company shall have the right to deduct, to the extent permitted by law,
from any payment of any kind otherwise due to such person from the Company,
all or part of the amount required to be withheld.
18. EFFECTIVE DATE OF PLAN
This Plan shall become effective on January 14, 1988, subject to its
approval by the holders of a majority of the voting power of the outstanding
shares of Common Stock of the Company and the Company's Series A Convertible
Preferred Stock, voting together and without regard to classes, present in
person or by proxy and entitled to vote at the 1988 Annual Meeting of
Shareholders. No option shall be granted pursuant to the Plan after January
31, 1998.
19. CONSTRUCTION
The Plan and options granted hereunder shall be governed by and construed in
accordance with the laws of the State of Delaware and in accordance with such
Federal laws as may be applicable.
It is the intent of the Company that the Plan shall comply in all respects
with applicable provisions of Rule 16b-3 under the Exchange Act, so that any
grant of options to or other transaction by an optionee who is subject to the
reporting requirements of Section 16(a) of the Exchange Act shall not result
in short-swing profits liability under Section 16(b) (except for any
transaction exempted under alternative Exchange Act rules or intended by such
optionee to be a non-exempt transaction). Accordingly, if any provision of
this Plan or any agreement relating to an option does not comply with such
requirements of Rule 16b-3 as then applicable to any such transaction so that
such an optionee would be subject to Section 16(b) liability, such provision
shall be construed or deemed amended to the extent necessary to conform to
such requirements, and the optionee shall be deemed to have consented to such
construction or amendment.
1993 STOCK OPTION SUBPLAN
1. PURPOSE OF SUBPLAN
This 1993 Stock Option Subplan (the "Subplan") is implemented under the 1988
Non-Qualified Stock Option Plan (the "Plan") of ADVO, Inc. (the "Company") in
order to promote the purposes of the Plan while ensuring that, with respect to
options granted hereunder to persons who constitute "covered employees" within
the meaning of Section 162(m)(3) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Company will be entitled to fully deduct for tax
purposes any remuneration to such covered employees arising under the Plan.
Capitalized terms used in the Subplan but not defined herein shall have the
same meanings as defined in the Plan.
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2. ADMINISTRATION
The Subplan shall be administered by the Committee or, if the Committee
should at any time not consist solely of "outside directors" within the
meaning of Section 162(m)(4)(C)(i) of the Code, by a subcommittee of the
Committee consisting of all members of the Committee who are such "outside
directors;" provided, however, that, if such subcommittee would not have at
least two members, the Board of Directors shall designate additional directors
who are both such "outside directors" and "disinterested persons" within the
meaning of Rule 16b-3 under the Exchange Act (as then applicable to the
Subplan) to serve on such subcommittee, so that the subcommittee has at least
two members. References in the Plan and the Subplan to the "Committee" shall
be deemed to mean such subcommittee, operating pursuant to delegated
authority, at any time it is administering the Subplan. The Committee shall
have all authority under the Subplan as it has under the Plan, except that
terms of options granted hereunder may not be inconsistent, with the express
terms set forth in the Subplan. Any reference to the Board of Directors in a
Plan provision applicable to the Subplan shall mean the Committee.
3. STOCK SUBJECT TO SUBPLAN; LIMITATIONS ON INDIVIDUAL GRANTS
Subject to adjustment as provided in Section 14 of the Plan, the total
number of shares of the Company's common stock, $.01 par value (the "Stock"),
that may be delivered upon exercise of all options granted under the Subplan
shall be 4,300,000. The shares of Stock reserved and available for issuance
---------
hereunder represent an allocation of the shares reserved and available for
issuance under the Plan. Accordingly, no option may be granted hereunder if
sufficient shares for such grants are not then available under both the
Subplan and the Plan, and grants of options may be made under the Plan even
though the effecting of such grants will be to reduce the number of shares
remaining available for issuance hereunder. Likewise, shares issued hereunder
shall be counted against the number of shares reserved and available under the
Plan. Shares subject to an option that is forfeited or otherwise terminated
without a distribution of shares will again be available for grants of options
under the Subplan and the Plan (to the extent specified in the Plan). Except
as modified by this Section 3, the provisions of Section 3 of the Plan shall
apply equally to the Subplan.
Subject to adjustment as described below, the total number of shares of
Stock that may be subject to options that any one person may receive under the
Subplan shall not exceed 150,000 during any calendar year under the Subplan.
The number of shares set forth in the preceding sentence shall be adjusted
proportionately with any adjustment (made in accordance with Section 14 of the
Plan) to the number of shares reserved and available for issuance under the
Plan.
4. ELIGIBILITY
Any person eligible to be granted an option under the Plan will likewise be
eligible for option grants under the Subplan.
5. SPECIFIC TERMS OF OPTION GRANTS
(a) Option Grants. The Committee is authorized to grant non-qualified
stock options to persons eligible to participate hereunder ("Optionees"),
including grants of "reload" options to the extent specified in Section 8
of the Plan, on the terms and conditions set forth in this Section 5.
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(b) Option Price. The option price per share of Stock purchasable under
an option granted hereunder shall be the greatest of (i) 100% of the fair
market value of a share on the date of grant of such option, determined by
the Committee in accordance with Section 6 of the Plan, (ii) 100% of the
"fair market value" of Stock determined in such manner as is necessary to
qualify the option as "performance-based compensation" under Section
162(m)(4)(C) of the Code, or (iii) par value of the Stock.
(c) Term. Options granted hereunder shall expire ten years after the date
of grant by the Committee, unless earlier terminated under Section 5(e)
below; provided, however, that, unless otherwise determined by the
Committee, any option granted as a "reload" option hereunder shall expire
not later than the expiration date of the original option, the exercise of
which results in the grant of such "reload" option or options.
(d) Payment of the Option Price; Exercise Procedures. The option price of
an option granted hereunder shall be paid in full at the time of exercise
(i) in cash by United States currency, certified check or money order, (ii)
by tendering to the Company shares of Stock having a fair market value on
the date of exercise equal to the option price, (iii) by a full recourse
promissory note for a term of up to two years for the lesser of up to 90%
of the option price or that portion of the option price which exceeds par
value of the shares at an interest rate equal to or greater than the
applicable Federal rate under Section 1274(d) of the Code, or (iv) a
combination of cash, Stock valued at fair market value, and such promissory
note. Options granted hereunder shall be exercised by the delivery of
written notice to the officer of the Company designated under Section 9 of
the Plan, setting forth the number of shares with respect to which the
option is to be exercised, and specifying the address to which the
certificates for such shares are to be mailed. As promptly as practicable
after receipt of such written notification of the exercise of an option and
payment, the Company shall make delivery to the Optionee or as instructed
by the Optionee of certificates for the number of transferable shares with
respect to which such option has been so exercised, issued in the
Optionee's name or as otherwise instructed by the Optionee.
(e) Vesting and Termination of Employment. Any option granted hereunder
shall be exercisable only as follows (in addition to any condition on
exercisability imposed under Section 5(f) hereof):
(i) on or after the first anniversary of the date of grant, the
option may be exercised for up to one-fourth ( 1/4) of the shares
subject thereto;
(ii) on or after the second anniversary of the date of grant, the
option may be exercised for up to one-half ( 1/2) of the shares subject
thereto, reduced by the amount of any shares with respect to which the
option has previously been exercised;
(iii) on or after the third anniversary of the date of grant, the
option may be exercised for up to three-fourths ( 3/4) of the shares
subject thereto, reduced by the amount of any shares with respect to
which the option has previously been exercised; and
(iv) on or after the fourth anniversary of the date of grant, the
option may be exercised for all shares subject thereto with respect to
which the option has not previously been exercised; provided, however,
that options shall be subject to all other terms and conditions,
including without limitation terms providing for accelerated
exercisability, set forth in the third and fourth paragraphs of Section
7 of the Plan, but shall not be subject to the discretionary
acceleration of exercisability under the fifth paragraph of Section 7
of the Plan; and provided further, that options may be exercised only
for whole shares. In the event the employment
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relationship between the Optionee and the Company, or a parent or
subsidiary of the Company, is severed, options granted hereunder shall
be exercisable only for such periods, and only to the extent, provided
under Section 12 of the Plan. At any time options granted hereunder
cease to be exercisable by operation of the provisions of Section 12 of
the Plan, such options shall terminate.
(f) Performance Conditions on Vesting. One-half of the options granted to
any Optionee during the 1994 calendar year shall, in addition to any
vesting requirements imposed under Section 5(e) hereof, not become
exercisable until the following performance condition has been satisfied:
During any period of 180 consecutive trading days on which actual trades in
the Stock are reported on the composite tape for the New York Stock
Exchange-listed securities, the closing price of Stock on any 90 of such
trading days equals or exceeds $25.00 per share. Options subject to the
foregoing performance condition shall be subject to accelerated
exercisability in accordance with the terms of the third or fourth
paragraph of Section 7 of the Plan.
(g) Non-Transferability. An option or other right which may constitute a
derivative security granted under the Subplan shall, by its terms, be non-
transferable by the Optionee, either voluntarily or by operation of law,
otherwise than by will or the laws of descent and distribution, and shall
be exercisable during the Optionee's lifetime only by the Optionee,
regardless of any community property interest therein of the spouse of the
Optionee, or such spouse's successors in interest.
6. APPLICABLE PLAN PROVISIONS
The provisions of Sections 11 (including the requirement that the agreement
evidencing options contain a non-competition covenant), 13, 14, 15, 17, and 19
of the Plan shall apply equally to the Subplan.
7. EFFECTIVE DATE, TERMINATION, AND AMENDMENT OF SUBPLAN
This Subplan shall become effective on January 20, 1994; provided, however,
that the Subplan shall be approved by the vote of stockholders of the Company
sufficient to meet the applicable requirements of Section 162(m)(4)(C)(ii) of
the Code, Rule 16b-3(b) under the Exchange Act, the rules of the New York
Stock Exchange, and any other applicable law, regulation, or contractual
provision imposing a stockholder approval requirement; and provided further
that such approval shall be obtained in such manner as will satisfy such
requirements (including a separate vote if required to meet the requirements
of Section 162(m)(4)(C)(ii)). The Subplan shall terminate at such time as no
shares remain available for issuance pursuant to Section 3 and the Company has
no further obligation with respect to any previously granted option; provided,
however, that no options may be granted hereunder at any time after the Plan
has been terminated. The Board of Directors of the Company may at any time
amend, suspend, or terminate the Subplan; provided, however, that any such
amendment shall be approved by vote of stockholders of the Company if and to
the extent required to meet the requirements of any applicable law,
regulation, or contractual provision, including without limitation those
specified in the first sentence of this Section 7.
8. STATUS OF OPTIONS AS "PERFORMANCE-BASED COMPENSATION"; SAVINGS PROVISION
It is the intention of the Company that options granted under the Subplan
constitute "performance-based compensation" under Section 162(m)(4)(C) of the
Code, so that the Company will be allowed a
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full deduction for any remuneration relating to such option without
restriction under Section 162(m) of the Code. Accordingly, any term,
condition, or provision of the Subplan, the Plan, or any agreement relating to
an option granted hereunder that would cause the Company, by operation of
Section 162(m) of the Code, to not be able to fully deduct remuneration
relating to an option granted hereunder shall be inapplicable to such option
or shall be deemed modified and amended to the extent necessary to preserve
such full deductibility under Section 162(m). To the extent that any provision
of the Subplan, whether or not rendered inapplicable or modified by operation
of this Section 8, is inconsistent with the express grant of rights or other
provisions of the Plan, the Plan shall be deemed amended insofar as such
provisions would otherwise apply to the Subplan and options awarded hereunder.
As a condition to his or her receipt of options hereunder, each Optionee shall
be deemed to have consented to any modification or amendment resulting from
this Section 8 and shall be deemed to have waived any rights under the Plan
that may be inconsistent with the provisions of the Subplan.
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PROXY ADVO, INC. PROXY
One Univac Lane, P.O. Box 755, Windsor, Connecticut 06095-0755
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints David M. Stigler and Robert S. Hirst, and
each of them, with full power of substitution, the proxies of the undersigned to
vote all the shares of the Common Stock of ADVO, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on January 18,
1996 or any adjournment thereof.
In their discretion the proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted "FOR" ALL NOMINEES FOR DIRECTOR AND WILL BE VOTED "FOR" Proposals 2 and
3.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders and the related Proxy Statement.
(PLEASE VOTE, SIGN AND DATE ON REVERSE SIDE)
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FOLD AND DETACH HERE
<PAGE>
The Board of Directors recommends that you vote "FOR" items 1, 2 and 3.
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK.
I plan to attend the meeting. [_]
1. Election of Directors:
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed to the right
[_] [_]
Nominees for election by holders of Common Stock: Joseph P. Durrett, Jack W.
Fritz, Robert Kamerschen, Lawrence Lachman, Larry G. Morris, Howard H. Newman,
John R. Rockwell, Richard H. Stowe, John L. Vogelstein.
INSTRUCTION: To withhold your vote for any nominee(s), write that nominee's name
on the line below.
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2. Approval of an Amendment to the 1988 Non-Qualified Stock Option Plan and 1993
Stock Option Subplan as Amended, as described in the Proxy Statement.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Ratification of the appointment of Ernst & Young as the Company's
Independent Auditors for fiscal 1996.
FOR AGAINST ABSTAIN
[_] [_] [_]
Dated:___________________________________, 199_
_______________________________________________
Signature
_______________________________________________
Signature if held jointly
Please sign exactly as name appears at left.
When shares are held by joint tenants, both
should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please
sign in full corporate name by President or
other authorized officer. If a partnership,
please sign in partnership name by authorized
person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
"PLEASE MARK INSIDE BLUE BOXES SO
THAT DATA PROCESSING EQUIPMENT
WILL RECORD YOUR VOTES"
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FOLD AND DETACH HERE
