<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
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
The Money Store Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X $125 per Exchange Act Rules 0-11(c)(1)(ii) or 14a-6(i)(l), 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:
......................................................................
[_] 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:
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<PAGE>
[LOGO]THE MONEY STORE
April 18, 1997
Dear Shareholder:
On behalf of the Board of Directors of The Money Store Inc., it is my
pleasure to invite you to attend the 1997 Annual Meeting of Shareholders of
the Company, which will be held at The Hilton at Short Hills, 41 John F.
Kennedy Parkway, Short Hills, New Jersey 07078, on Tuesday, May 20, 1997, at
nine o'clock in the morning, local time.
The business to be transacted at the meeting is set forth in the Notice of
Meeting and is more fully described in the accompanying proxy statement.
It is important that your shares be represented at the meeting, regardless
of how many you hold. Whether or not you can be present in person, please
sign, date and return your proxy in the enclosed postage paid envelope, as
soon as possible. If you do attend the meeting and wish to vote in person,
your proxy can be revoked at your request.
We appreciate your support and look forward to seeing you at the meeting.
Sincerely yours,
/s/ Marc Turtletaub
----------------------------
Marc Turtletaub
Chief Executive Officer
<PAGE>
THE MONEY STORE INC.
2840 MORRIS AVENUE
UNION, NEW JERSEY 07083
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1997
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The Money
Store Inc. (the "Company") will be held at The Hilton at Short Hills, 41 John
F. Kennedy Parkway, Short Hills, New Jersey 07078, on Tuesday, May 20, 1997,
at nine o'clock in the morning, local time, for the following purposes:
1. To elect two Class C Directors for a term of three years and until
their successors shall have been elected and shall have qualified and one
Class A director for a term of one year until his successor shall have been
elected and shall have qualified; and
2. To consider and act upon a proposal to approve and adopt the Company's
1997 Stock Incentive Plan; and
3. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
Shareholders of record at the close of business on March 31, 1997 will be
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
/s/ Morton Dear
-------------------
Morton Dear
Secretary
Union, New Jersey
April 18, 1997
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WISH YOUR SHARES TO BE
VOTED, PLEASE DATE, SIGN AND MAIL THE ACCOMPANYING PROXY AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED POSTAGE PAID ENVELOPE.
<PAGE>
THE MONEY STORE INC.
2840 MORRIS AVENUE
UNION, NEW JERSEY 07083
PROXY STATEMENT
The accompanying proxy is solicited by and on behalf of the Board of
Directors of The Money Store Inc., a New Jersey corporation (the "Company"),
for use at the Annual Meeting of Shareholders to be held at The Hilton at
Short Hills, 41 John F. Kennedy Parkway, Short Hills, New Jersey 07078, on
Tuesday, May 20, 1997, at nine o'clock in the morning, local time, or any
adjournments thereof. Shareholders of record at the close of business on March
31, 1997 will be entitled to vote at the meeting.
The shares represented by the accompanying proxy will be voted (or withheld
from voting) as directed with respect to Proposal No. 1, the election of
Directors, and Proposal No. 2, the approval and adoption of the Company's 1997
Stock Incentive Plan or, if no direction is indicated with respect to either
Proposal No. 1 or Proposal No. 2, will be voted in favor of the election as
Directors of the nominees named in this Proxy Statement below and in favor of
approving and adopting the Company's 1997 Stock Incentive Plan. Each proxy
executed and returned by a shareholder may be revoked at any time thereafter
by giving written notice of such revocation to the Secretary of the Company or
by attending the Annual Meeting and electing to vote in person, except as to
any matter or matters upon which, prior to such revocation, a vote shall have
been cast pursuant to the authority conferred by such proxy.
The enclosed proxy also serves as the voting instruction card for the
trustees who hold shares of record for participants in The Money Store Profit-
Sharing Plan. Shares for which no instructions are received by the trustees
will be voted in the same proportion as the shares for which the trustees
receive instructions.
Under New Jersey law, abstentions and broker non-votes are counted for
purposes of establishing a quorum, but otherwise do not count. Generally, the
approval of a specified percentage of shares voted at a shareholder meeting is
required to approve a proposal and thus abstentions and broker non-votes have
no effect on the outcome of a vote. At the Annual Meeting, a plurality of the
shares of Common Stock voted is required to elect a Director, without regard
to either broker non-votes or abstentions. Where New Jersey law or the
Company's certificate of incorporation or bylaws requires that the matter
voted upon be approved by a specified percentage of the outstanding shares,
then abstentions and broker non-votes have the same effect as negative votes.
An Annual Report to Shareholders for the year ended December 31, 1996,
including audited financial statements, accompanies this Proxy Statement.
Additional copies of the Annual Report are available upon request. The date of
this Proxy Statement is the approximate date on which the Proxy Statement and
form of proxy were first sent or given to shareholders.
VOTING SECURITIES
The Company has set the close of business on March 31, 1997 as the record
date (the "Record Date") for the purpose of determining shareholders entitled
to vote at the Annual Meeting. At the close of business on the Record Date,
the Company had outstanding 57,985,380 shares of Common Stock, no par value
per share (the "Common Stock"), the only class of voting securities of the
Company outstanding. Except with respect to the election of Directors, each
shareholder is entitled to one vote for each share held. With respect to the
election of Directors, shareholders have the right to cumulate their votes.
That right permits each shareholder to multiply the number of shares the
shareholder is entitled to vote by the number of Directors to be elected in
order to determine the number of votes the shareholder is entitled to cast,
and, then, to cast all or any number of such votes for one nominee or to
distribute them among any two or more nominees. Because two classes of
Directors are being elected at the 1996 Annual Meeting, the Company has
determined to permit shareholders to cumulate
<PAGE>
all of their votes across both classes. The proxies solicit discretionary
authority to vote cumulatively. All references to the number of shares and
price per share information herein reflect all stock splits effected prior to
the date hereof unless otherwise noted.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table provides information at February 1, 1997, with respect
to (i) any person known to the Company to be the beneficial owner of five
percent or more of the Common Stock, (ii) all Directors (both continuing and
nominees) of the Company, (iii) each of the five most highly compensated
executive officers of the Company, and (iv) all Directors and executive
officers as a group. Unless otherwise indicated, the beneficial ownership
disclosed consists of sole voting and investment power.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP (2) OF CLASS
- --------------------------------------- ------------- --------
<S> <C> <C>
Alan Turtletaub....................................... 533,780(3) *
Marc Turtletaub....................................... 19,969,750(4) 34.5%
Morton Dear........................................... 91,896 *
Anthony R. Medici (5)................................. 96,653 *
Anthony L. Watson (6)................................. 8,125 *
Harry Puglisi......................................... 35,000 *
Alexander C. Schwartz, Jr. (7)........................ 5,625 *
William S. Templeton.................................. 49,375 *
Lawrence J. Wodarski.................................. 94,615 *
Fred Alger Management, Inc. and Fred M. Alger III (8). 3,394,000 5.9%
All Directors and executive officers as a group (15
persons)............................................. 20,973,602 36.3%
</TABLE>
- --------
* Less than one percent.
(1) Unless otherwise indicated, the address of each beneficial owner is c/o
The Money Store Inc., 2840 Morris Avenue, Union, NJ 07083.
(2) Includes options held by Directors and executive officers as a group
exercisable within 60 days of February 1, 1997 to purchase 306,149 shares
of Common Stock. Of such shares, Messrs. Dear, Medici, Watson, Puglisi,
Templeton and Wodarski hold options to purchase 10,346, 56,553, 8,125,
15,000, 46,375, and 83,750 shares, respectively.
(3) Includes 112,500 shares of Common Stock owned by a charitable foundation,
over which Mr. Alan Turtletaub has shared voting and investment power
under its certificate of incorporation.
(4) Includes (i) 2,913,160 shares of Common Stock over which Mr. Marc
Turtletaub has the sole power to vote as trustee of two trusts for the
benefit of a family member; (ii) 1,281,920 shares of Common Stock over
which he has sole voting and investment power for the benefit of a family
member, (iii) 3,750 shares of Common Stock owned by a family member, (iv)
3,750 shares of Common Stock over which a family member has sole voting
and investment power as custodian for the benefit of a family member, (v)
112,500 shares of Common Stock owned by a charitable foundation over which
he has shared voting and investment power under its certificate of
incorporation, and (vi) 1,500 shares over which he has joint ownership
with family members.
(5) Mr. Medici resigned as a Director of the Company on November 15, 1996 and
retired as an executive officer of the Company on January 2, 1997.
(6) Mr. Watson's address is c/o Health Insurance Plan of Greater New York, 7
West 34th Street, New York, NY 10001-8190.
2
<PAGE>
(7) Mr. Schwartz's address is P. O. Box 424 Ridge Road, Tuxedo Park, New York
10987.
(8) Fred Alger Management, Inc. and Fred M. Alger III have filed a Schedule
13G with the Securities Exchange Commission dated January 10, 1997 (the
"Alger Schedule 13G"). Based upon the Alger Schedule 13G, the address of
such beneficial owners is 75 Maiden Lane, New York. NY 10038. The Alger
Schedule 13G discloses that such benficial owners have sole voting power
with respect to 52,100 shares of Common Stock, shared voting power with
respect to 3,128,200 shares of Common Stock and sole dispositive power
with respect to 3,385,000 shares of Common Stock.
The shares of Common Stock beneficially owned by Alan Turtletaub and Marc
Turtletaub constitute 35.16% of the shares of Common Stock entitled to vote at
the Annual Meeting. Alan and Marc Turtletaub have indicated that they intend
to vote all such shares of Common Stock for the election as Directors of each
of the Company's nominees named below under "Proposal No. 1: Election of
Directors" and for the adoption of the Company's 1997 Stock Incentive Plan as
described under "Proposal No. 2: Adoption of the 1997 Stock Incentive Plan."
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of seven members and is
divided into three Classes serving staggered terms, the term of one Class of
Directors to expire each year. At the Annual Meeting, the shareholders will
elect two Class C Directors for a term of three years expiring in 2000 and
until their respective successors shall have been elected and shall have
qualified and one Class A Director for a term of one year expiring in 1998 to
complete the term of Anthony R. Medici, a Class A Director, who resigned from
the Board in 1996. The term of the Class A Directors expires in 1998 and the
term of the Class B Directors expires in 1999, at which times Directors of the
appropriate Class will be elected for three year terms. All the nominees are
presently serving as Directors of the Company. If no direction to the contrary
is given, all proxies received by the Board of Directors will be voted "FOR"
the election as Directors of Morton Dear, Alan Turtletaub, and William S.
Templeton. In the event that any nominee is unable or declines to serve, the
proxy solicited herewith may be voted for the election of another person in
his stead at the discretion of the proxies. The Board of Directors knows of no
reason to anticipate that this will occur.
Biographical information follows for each person nominated and each person
whose term of office will continue after the meeting.
NOMINEES
CLASS A DIRECTOR
William S. Templeton was elected as a Director of the Company by the Board
of Directors in October 1996 to replace Anthony R. Medici after Mr. Medici's
resignation. Mr. Templeton has been a Senior Vice President of the Company
since 1990. In October 1992, Mr. Templeton became President of the Company's
Home Equity Loan subsidiaries and, in such capacity, is primarily responsible
for their day to day operations. Since joining the Company in 1973, Mr.
Templeton has served in a variety of positions.
CLASS C DIRECTORS
Morton Dear has been Executive Vice President, Chief Financial Officer and
Secretary of the Company since 1983, and for the past 24 years has been
primarily responsible for the financial affairs of the Company. Since joining
the Company in 1973, he has served in a variety of positions. Mr. Dear is a
Certified Public Accountant, a licensed real estate broker and a licensed
mortgage banker. He is a past Chairman of the Board of Directors of the Easter
Seal Society of New Jersey and is on the Advisory Board of Valley National
Bank.
3
<PAGE>
Alan Turtletaub was a founder of the Company and has been Chairman of the
Board of Directors of the Company since 1989. He was the President and Chief
Executive Officer of the Company from 1979 to 1989. Mr. Turtletaub is a
licensed real estate broker, a licensed broker in life, fire and casualty
insurance and a licensed mortgage banker. He is a member of the Board of
Directors of Cali Realty Corporation and HIP Insurance Company of New Jersey
Inc. and is on the Advisory Board of Valley National Bank.
CONTINUING DIRECTORS
CLASS A DIRECTORS
Alexander C. Schwartz, Jr. became a Director of the Company in January 1993.
Until January 31, 1996, Mr. Schwartz, currently a private investor, was a
Managing Director in the Investment Banking Division of Prudential Securities
Incorporated, where he had been employed for 33 years.
Anthony L. Watson has been the President and Chief Executive Officer of the
Health Insurance Plan of Greater New York ("HIP") since September 1990. Prior
thereto, he served as an Executive Vice President of HIP for five years. Mr.
Watson also serves on the Boards of Directors or Boards of Trustees of
numerous organizations in the healthcare field.
CLASS B DIRECTORS
Harry Puglisi has been the Treasurer of the Company since 1982. Since
joining the Company in 1975, Mr. Puglisi also has served as Assistant
Controller and Controller of the Company. Mr. Puglisi is a Certified Public
Accountant.
Marc Turtletaub has been the President and Chief Executive Officer of the
Company since 1989. He has been associated with the Company in various
capacities since 1975. Mr. Turtletaub is an attorney licensed to practice in
California and New Jersey and is a licensed real estate broker in California.
BOARD AND COMMITTEE MEETINGS
The Company has an Executive Committee, a Compensation Committee and an
Audit Committee. The Executive Committee, currently comprised of Messrs. Alan
and Marc Turtletaub and Dear, is authorized and empowered, to the extent
permitted by New Jersey law, to exercise all functions of the Board of
Directors in the interval between meetings of the Board of Directors. The
functions of the Audit Committee, currently comprised of Messrs. Schwartz and
Watson, include recommending to the Board of Directors the engagement of the
Company's independent certified public accountants, reviewing with such
accountants the plan for and results of their auditing engagement and the
independence of such accountants. The Compensation Committee, currently
comprised of Messrs. Alan and Marc Turtletaub, reviews and makes
recommendations with respect to compensation of officers and key employees
other than grants under the Company's stock incentive plans.
During the year ended December 31, 1996, there were three meetings of the
Board of Directors, two meetings of the Executive Committee, one meeting of
the Audit Committee and one meeting of the Compensation Committee. Each
Director attended not less than 75% of the meetings of the Board and not less
than 75% of the meetings held by all committees on which he served.
Each Director who is not an officer or employee of the Company is paid an
annual retainer of $25,000 in addition to a fee of $500, plus expenses, for
each Board of Directors meeting attended. Each committee member, who is not an
officer or employee of the Company, is paid a fee of $500 for each committee
meeting attended. Committee fees are paid only for meetings held on days when
no Board of Directors meeting is held.
4
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Directors and Executive Officers of the Company are as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITIONS HELD WITH THE COMPANY
---- --- -------- -------------------------------
<C> <C> <C> <S>
Alan Turtletaub............ 83 1974 Chairman of the Board of Directors
Marc Turtletaub............ 51 1981 President, Chief Executive Officer and
Director
Morton Dear................ 59 1981 Executive Vice President, Chief Financial
Officer,
Secretary and Director
Harry Puglisi.............. 49 1983 Treasurer and Director
Alexander C. Schwartz, Jr.. 64 1992 Director
Anthony L. Watson.......... 56 1991 Director
William S. Templeton....... 48 1996 Senior Vice President and Director
Michael H. Benoff.......... 43 -- Senior Vice President
James K. Ransom............ 47 -- Vice President and Principal Accounting
Officer
John A. Reeves............. 46 -- Senior Vice President, President of the
Company's Student Loan subsidiary and
Executive Vice President of Home Equity Loan
subsidiaries
Lawrence J. Wodarski....... 49 -- Senior Vice President and Chief
Administrative Officer
Paul R. Eber............... 40 -- Executive Vice President of the Company's
Student Loan subsidiary
J. Tom Jones............... 56 -- President of the Company's Auto Loan
subsidiary
Paul I. Leliakov........... 39 -- President of the Company's SBA Loan
subsidiary
</TABLE>
Biographical information follows for the Executive Officers named in the
above chart who are not Directors of the Company.
Lawrence J. Wodarski has been a Senior Vice President of the Company since
1991, and from 1988 to 1996 was primarily responsible for the day to day
operations of the Company's Small Business Administration ("SBA") Loan
subsidiaries. In January 1996, Mr. Wodarski relinquished his responsibilities
for the Company's SBA Loan subsidiaries as a result of his appointment to the
newly created role of Chief Administrative Officer of the Company. Since
joining the Company in July 1987, he has served in a variety of positions.
John A. Reeves has been a Senior Vice President of the Company since 1993
and was a Vice President of the Company from 1990 to 1993. In 1993, Mr. Reeves
was promoted to President of the Company's Student Loan subsidiary and became
an Executive Vice President of the Company's Home Equity Loan subsidiaries.
From 1985, when he joined the Company, to 1988, he was an Assistant Corporate
Counsel of the Company.
Michael H. Benoff has been a Senior Vice President of the Company since
1994. Since joining the Company in 1987, Mr. Benoff's responsibilities have
been primarily in the finance area. He has been responsible for the Company's
investor relations since its initial public offering in 1991.
James K. Ransom has been a Vice President of the Company since 1995 and was
appointed Principal Accounting Officer of the Company in February 1996. He
joined the Company in 1989 as the Assistant Treasurer. Mr. Ransom is a
Certified Public Accountant.
Paul R. Eber has been an Executive Vice President of the Company's Student
Loan subsidiary since joining the Company in 1993, and he is in charge of its
operations. Prior to joining the Company, Mr. Eber was employed in a variety
of capacities by the Illinois Student Aid Commission from February 1983 to
June 1990 and the Texas Guaranteed Student Loan Corporation from June 1990 to
February 1993.
5
<PAGE>
J. Tom Jones has been the President of the Company's Auto Loan subsidiary
since joining the Company in October 1994. He has primary responsibility for
this subsidiary. Prior to joining the Company, Mr. Jones, who has over 25
years of experience in the auto finance business, served for 8 years as a
Senior Vice President for Westcorp Financial Services, an auto loan finance
company.
Paul I. Leliakov has been President of the Company's SBA Loan subsidiary
since January 1996. Since joining the Company in 1986, Mr. Leliakov has worked
in a variety of positions serving as the SBA Loan subsidiary's Executive Vice
President and Chief Operating Officer since 1993.
FAMILY RELATIONSHIPS
Marc Turtletaub is Alan Turtletaub's son. No other family relationship
exists among any of the Directors or executive officers of the Company. No
arrangement or understanding exists between any Director or executive officer
or any other person pursuant to which any Director or executive officer was
selected as a Director or executive officer of the Company. Subject to rights
under applicable employment agreements, each executive officer serves at the
pleasure of the Board of Directors.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Other than the awarding of certain raises and bonuses and extending certain
employment contracts, the Compensation Committee took no action with respect
to compensation of the Company's executive officers during 1996. All of the
Company's other compensation plans and the employment contracts applicable to
the executive officers were in place prior to 1994.
In 1994, the Company established a nonqualified, unfunded pension benefit
plan (the "Plan"). Currently covered under the Plan are Messrs. Dear, Puglisi,
Templeton, Wodarski and Reeves. The Plan, recommended by the Compensation
Committee and approved by the Board of Directors, was established both in
recognition of the contributions made to the Company by the currently covered
individuals and as incentive for them to remain with the Company.
Stock Option Plans
Augmenting the Company's 1991 Stock Option Plan (the "1991 Plan"), the
Company adopted the 1995 Stock Incentive Plan of The Money Store Inc. (the
"1995 Plan") on August 15, 1995 which was approved by the shareholders of the
Company on October 12, 1995.
The purpose of the 1991 Plan, the 1995 Plan and the 1997 Stock Incentive
Plan (which is the subject of the second proposal in this proxy statement) is
to encourage the Company's employees and directors to acquire a larger
proprietary interest in the Company and to provide incentives to maximize the
long-term growth of the Company. It is anticipated that the opportunity for
acquisition of such proprietary interest will aid the Company in securing and
retaining its employees.
The Compensation Committee and the Board believe that equity ownership by
management helps align management and shareholder interests in enhancing
shareholder value. The Compensation Committee and the Board believe that,
based on the Company's performance, granting additional equity interest to
management is warranted to reward them for past performance and encourage
their future efforts. The Compensation Committee and the Board will continue
to review stock-based compensation from time to time and recommend rewards to
management with such compensation that is reflective of the Company's and
management's performance.
6
<PAGE>
Compensation Philosophy
In evaluating the performance and the compensation of the executive officers
of the Company, the Compensation Committee took particular note of
management's success in meeting the Company's goals for continued growth of
revenues, profits and return on equity. For 1996, 10%, 25%, and 10% increases
in these areas were established and surpassed. These goals were established by
the Compensation Committee after evaluating trends in the Company's
performance, the status of the economy, and input from these key executives
relative to their plans for geographic and product expansion, cost
containment, and increased productivity. Raises and bonuses granted in 1996
primarily reward executive officers for results and performance in 1995 while
providing incentive for the reported year. While certain key employees have
employment agreements which guarantee a certain base salary, the Compensation
Committee seeks to reward them with both raises and bonuses, the size of which
are related to both the Company's aforementioned goals and each individual's
respective performance. The magnitude of these increases were based on
historic levels of Company increases determined without regard to increases
for executives in comparable companies and with equal weight given to the
Company's stated goals.
Base Salary and Bonus
Most executive officers, including the Chief Executive Officer, are
compensated pursuant to written employment agreements providing for base
salary and bonuses. The amount of any raise or bonus depends upon the
Compensation Committee's evaluation of such officer's work performance
relative to the Company's goals of increasing revenues, profits and return on
equity or other contributions to the Company's success made by such officer
during the year. The Compensation Committee believes that a meaningful base
salary and bonus are important factors necessary to retain and attract
qualified executive personnel.
The salaries of the Chief Executive Officer and the Chairman of the Board
did not change in 1996 from their 1995 levels. The Compensation Committee
believes that since they own a controlling interest in the Company, money
available for salary increases and bonuses should be made available to other
executives. No bonuses were paid to either Marc or Alan Turtletaub in 1996.
Evaluation Procedure
In determining matters relating to executive officer compensation (other
than the Chief Executive Officer), the Compensation Committee reviews the
respective areas of authority of the various executive officers and the
performance and contribution of each to the efforts of the Company in meeting
its goals.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
deductibility by a publicly-held corporation of compensation paid in a taxable
year to the Chief Executive Officer and any other executive officer whose
compensation is required to be reported in the Summary Compensation Table to
$1 million per executive officer. For the 1996 tax year, the Company did not
exceed, and therefore was not affected by, this limitation.
Compensation Committee:
Marc Turtletaub Alan Turtletaub
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As stated above, during 1996, the Compensation Committee consisted of
Messrs. Marc Turtletaub, the President and Chief Executive Officer of the
Company, and Alan Turtletaub, the Chairman of the Board of Directors.
7
<PAGE>
Alan Turtletaub and Marc Turtletaub, Directors and executive officers of the
Company, are the general partners in a general partnership which has a one-
third interest in a joint venture which is the lessor of the Company's
corporate headquarters in Union, New Jersey. During the past three years, the
Company has occupied approximately 50,000 square feet in Union under a lease
expiring in the year 2000. The annual rent under the lease, subject to certain
adjustments, is approximately $1,200,000.
Because of the control by Alan Turtletaub and Marc Turtletaub over the
Company's operations, the above-described transactions were not the result of
arm's-length negotiations between independent parties. Additional or modified
agreements, arrangements or transactions may be entered into by the Company
and Alan Turtletaub and/or Marc Turtletaub from time to time in the future.
Any such future agreements, arrangements and transactions will be determined
through negotiations between the parties thereto. However, the Company will
not enter into any transaction with Marc Turtletaub or Alan Turtletaub or any
other Director or executive officer, or with any affiliate of any of them,
unless such transaction has been approved by at least a majority of the
independent Directors of the Company.
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation for the past three years of
the Company's Chief Executive Officer and each of the Company's other four
most highly compensated executive officers:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS (3)
-------------------------------------- ----------------------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) UNDERLYING OPTIONS COMPENSATION(4)
- --------------------------- ---- -------- -------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Marc Turtletaub.......... 1996 $450,000 -- -- -- $ 7,119
Chief Executive Officer 1995 450,000 -- -- -- 7,164
1994 450,000 -- -- -- 7,182
Morton Dear.............. 1996 290,839 $339,200 -- -- 11,619
Chief Financial Officer 1995 267,500 237,400 -- 56,250 11,664
1994 252,500 167,400 -- -- 11,682
William S. Templeton..... 1996 252,996 240,750 -- -- 11,619
Senior Vice President 1995 213,833 164,000 $ 65,000 75,000 11,664
1994 190,000 104,600 100,000 -- 11,682
Lawrence J. Wodarski..... 1996 182,911 164,600 -- -- 11,619
Senior Vice President 1995 148,055 111,200 -- 46,875 11,664
1994 132,330 71,100 -- -- 10,733
A. R. Medici (5)......... 1996 189,403 164,600 -- -- 11,619
Executive Vice President 1995 189,000 111,200 -- -- 11,664
1994 189,000 83,700 -- -- 11,682
</TABLE>
- --------
(1) Consists of bonuses determined for the year indicated and paid either in
that year or the following year.
(2) Except for Mr. Templeton, the value of each of the named executive
officer's perquisites did not exceed the threshold for disclosure
established under the Securities and Exchange Commission's proxy rules. In
connection with Mr. Templeton's promotion to President of the Company's
Home Equity Loan subsidiaries in 1992, Mr. Templeton was required to
relocate to Sacramento, California from Union, New Jersey. The Company
assisted Mr. Templeton in such relocation. At the time, the Company also
agreed to lend Mr. Templeton $100,000, after the payment of any taxes, of
which a portion was advanced in 1992 and the balance in 1993. The loan did
not bear interest and, therefore, the Company agreed to reimburse Mr.
Templeton for any resulting income tax liability. One-third of the then
current amount outstanding under the loan was forgiven in November 1993,
another one-third in 1994 and the final one-third in November 1995. In
1995, Mr. Templeton's compensation included $65,000 representing the
forgiveness of the final one-third of his $100,000 loan from the Company
and reimbursement for the tax effect thereon.
8
<PAGE>
(3) No named executive officer received restricted stock awards or long-term
incentive plan payouts during the periods covered by the table.
(4) Consists of contributions by the Company to the executive officers'
respective accounts pursuant to The Money Store Profit-Sharing Plan.
(5) Mr. Medici resigned as a Director of the Company on November 15, 1996 and
retired as an executive officer of the Company on January 2, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
No stock options or incentive awards under the 1991 Plan or under the 1995
Plan were granted to executive officers named in the Executive Compensation
Table in 1996. No stock appreciation rights ("SARs") have ever been granted to
executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information as to options exercised by each of
the executive officers of the Company named in the Executive Compensation
Table during 1996. The table also sets forth the value of options held by such
officers at year end measured in terms of the reported last sale price of the
Common Stock on the Nasdaq Stock Market on December 31, 1996, and the option
exercise price.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END($)
ACQUIRED ON VALUE ------------------------------- -------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE($) UNEXERCISABLE($)
- ---- ----------- ----------- ------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Marc Turtletaub......... -- -- -- -- -- --
Morton Dear............. 91,652 2,185,988 10,346 45,000 285,808 1,243,125
William S. Templeton.... 8,000 154,280 46,375 60,000 1,281,109 1,657,500
Anthony Medici.......... 57,095 1,215,452 61,653 0 1,703,164 0
Lawrence J. Wodarski.... 10,000 251,600 83,750 37,500 2,313,594 1,035,938
</TABLE>
PENSION PLAN TABLE
The Company has adopted a Supplemental Executive Retirement Plan (the
"SERP") which provides retirement benefits to certain key employees who are
designated for participation by the Board of Directors. The SERP is an
unfunded defined benefit plan, under which the amount of a retiree's benefit
is calculated pursuant to a formula based upon years of service with the
Company and compensation.
The SERP provides for three different benefit levels, which are designated
as Target Level I. Target Level II and Target Level III. The Board of
Directors, in its sole discretion, determines the Target Level at which a
named individual shall participate. For Target Level I participants, the SERP
provides for an annual benefit at the normal retirement date equal to 50% of
covered compensation, multiplied by a fraction, the numerator of which is the
participant's number of years of service with the Company (subject to a
maximum of 25) and the denominator of which is 25. For participants in Target
Level II or Target Level III, the benefit is 33 1/3% of covered compensation
or 25% of covered compensation, respectively, multiplied by the same fraction
as for Target Level I. Covered compensation means the highest average annual
compensation, not to exceed $300,000 annually, for any three consecutive
calendar years.
Normal retirement date means the first day of the month following the
participant's 62nd birthday (or the date on which the participant completes
two years of participation in the SERP, if later). Benefit payments will
commence upon the participant's retirement from the Company at or after his
normal retirement date and will be made in installments over a period of ten
years or less (as determined by the Board of Directors), in an amount which is
the actuarial equivalent of the annual benefit determined pursuant to the SERP
benefit formula, as illustrated in the Table below.
9
<PAGE>
The following Pension Plan Table illustrates the annual benefit at normal
retirement date for participants in Target Level I. For participants in Target
Level II or Target Level III, the benefits would be two-thirds or one-half of
the amount shown in the Table, respectively.
<TABLE>
<CAPTION>
YEARS OF SERVICE AT
NORMAL RETIREMENT DATE
-------------------------
REMUNERATION 15 20 25 OR MORE
- ------------ ------ ------- ----------
<S> <C> <C> <C>
125,000............................................... 37,500 50,000 62,500
150,000............................................... 45,000 60,000 75,000
175,000............................................... 52,500 70,000 87,500
200,000............................................... 60,000 80,000 100,000
225,000............................................... 67,500 90,000 112,500
250,000............................................... 75,000 100,000 125,000
275,000............................................... 82,500 110,000 137,500
300,000 or more....................................... 90,000 120,000 150,000
</TABLE>
For the persons named in the Summary Compensation Table, the applicable
Target Level, covered compensation and years of service as of December 31,
1996 are; Mr. Medici--Target Level I, $300,000 and 26 years; Mr. Dear--Target
Level I, $300,000 and 24 years; Mr. Templeton--Target Level II, $300,000 and
24 years; and Mr. Wodarski, Target Level III, $270,000 and 9 years.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Marc Turtletaub.
Marc Turtletaub's employment agreement was amended in March 1996 to expire on
December 31, 1999, subject to earlier termination under certain circumstances.
The agreement automatically continues from year to year after such term unless
terminated on at least 365 days' prior notice by either the Company or the
executive. The agreement with Marc Turtletaub provides for an annual base
salary of $450,000 and certain raises and bonuses also to be determined from
time to time in the discretion of the Board of Directors.
The Company has amended and restated employment agreements entered into in
September 1991 with Messrs. Dear and Templeton. The employment agreements with
Messrs. Dear and Templeton were amended in March 1996 to expire on December
31, 1999, subject to earlier termination under certain circumstances. Mr.
Medici's employment agreement, which was substantially similar to Mr. Dear's
agreement, expired on December 31, 1996, and he retired on January 2, 1997.
The amended and restated agreements automatically continue from year to year
after their respective terms unless terminated on at least 365 days' prior
notice. The amended and restated agreement with Mr. Dear provides for an
annual base salary of $270,000 and certain raises and bonuses to be determined
from time to time in the discretion of the Board of Directors. The amended and
restated agreement with Mr. Templeton provides for an annual base salary of
$218,000, and certain raises and bonuses to be determined from time to time in
the discretion of the Board of Directors. The agreement with Mr. Dear provides
for payment of the difference, if any, between $100,000 and the bonus
otherwise payable to Mr. Dear on June 1 of each year, pursuant to the
Company's bonus plan. The agreement with Mr. Medici provided for payment of
the difference, if any, between $50,000 and the bonus otherwise payable to him
on June 1, pursuant to the Company's bonus plan. The agreement with Mr.
Templeton provides for payment of the difference, if any, between $50,000 and
the bonus otherwise payable to him on June 1 of each year, pursuant to the
Company's bonus plan.
The employment agreements described above provide that if there is a Change
in Control (as defined below) of the Company, then the executives may at their
election, at any time within one year after a Change in Control, terminate
their employment agreements, or if the executives' employment is terminated
for any reason within one year after a Change in Control (other than by reason
of death or incompetence), the executives shall be entitled to receive a lump
sum severance payment equal to 200% of the executives' annual base salary in
effect as of the date of termination or, if greater, such salary as may be in
effect immediately prior to the Change in
10
<PAGE>
Control of the Company, plus an amount equal to 200% of his bonus for the
previous year, plus certain other benefits. For purposes of the employment
agreements, a "Change in Control" will be deemed to have occurred if (a) both
(i) any person or group of persons other than the executives, acquires (or has
acquired during the twelve-month period ending on the date of the most recent
acquisition by such person or group) the beneficial ownership, directly or
indirectly, of securities of the Company representing 40% or more of the
combined voting power of the then outstanding securities of the Company and
(ii) the combined direct and indirect beneficial ownership of Alan Turtletaub
and Marc Turtletaub of securities of the Company represents less than 40% of
the combined voting power of the then outstanding securities of the Company;
or (b) a person or group acquires (or has acquired during the twelve-month
period ending on the date of the most recent acquisition by such person or
group) assets from the Company that have a total fair market value equal to or
more than one-third of the total fair market value of all of the assets of the
Company immediately prior to such acquisition; provided, however, that if any
transaction or event or series of transactions or events resulting in a Change
in Control is approved by a majority of the members of the Board of Directors
holding office prior to the transaction or event or series of transactions or
events, then the transaction or event or series of transactions or events
shall not be deemed to be a Change in Control. Notwithstanding the foregoing,
for purposes of subsection (a), a Change in Control will not be deemed to have
occurred if the power to control (directly or indirectly) the management and
policies of the Company is not transferred from a person or group to another
person or group; and for purposes of subsection (b), a Change in Control will
not be deemed to occur if the assets of the Company are transferred: (i) to a
shareholder in exchange for his stock, (ii) to an entity in which the Company
has (directly or indirectly) a 50% ownership interest, or (iii) to a person or
group that has (directly or indirectly) at least a 50% ownership interest of
the Company with respect to its stock outstanding, or to any entity in which
such person or group possesses (directly or indirectly) a 50% ownership
interest. At December 31, 1996, and based upon salary levels then in effect,
in the event the Company had caused their employment to be terminated in
accordance with the employment agreements or upon a Change in Control, Marc
Turtletaub, Morton Dear and William S. Templeton would have been entitled
pursuant to the employment agreements to receive lump sums of approximately
$900,000, $1,248,000 and $932,000, respectively, together with accelerated
vesting of their stock options.
11
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing the total shareholder returns (assuming
reinvestment of dividends) of the Company from December 31, 1991 through
December 31, 1996, to the Standard & Poor's 500 Composite Stock Index ("S&P
500") and the Dow Jones Financial Services Diversified Index ("DJ Index"). The
graph assumes $100 invested on December 31, 1991 in the Company and each of
the other indices.
COMPARISON OF FIVE YEAR CUMULATIVE RETURN*
AMONG THE MONEY STORE INC., S & P 500 AND
D J FINANCIAL SERVICES DIVERSIFIED
[CHART]
12/91 12/92 12/93 12/94 12/95 12/96
----- ----- ----- ----- ----- -----
TMS 100 116 169 196 625 1110
S & P 100 113 118 132 165 203
D J 100 108 134 120 214 291
12
<PAGE>
RELATED PARTY TRANSACTIONS
Robert Puglisi, a brother of Harry Puglisi, a Director and executive officer
of the Company, was a controller of the Company. For 1996, Robert Puglisi's
compensation (including bonuses and stock option exercises, but excluding
Company contributions under the Profit-Sharing Plan) was approximately
$121,000.
Diane Mansolillo, sister of William S. Templeton, a Director and executive
officer of the Company, is a Regional Assistant Vice President of the Home
Equity Loan division. For 1996, Diane Mansolillo's compensation (including
bonuses and stock option exercises, but excluding Company contributions under
the Profit Sharing Plan) was approximately $152,000.
David Medici, son of Anthony R. Medici, a former Director and executive
officer of the Company is a Senior Vice President of the Home Equity Loan
Division. For 1996, David Medici's compensation (including bonuses, relocation
benefits, and stock option exercises, but excluding Company contributions
under the Profit Sharing Plan was approximately $426,000.
The Company has adopted a policy of encouraging its employees to obtain
their mortgage financing from the Company. Pursuant to such policy, the
Company has written first and second mortgage loans for various employees,
including, from time to time, certain of its Directors and executive officers
and certain members of their immediate families, other relatives and business
associates. Mortgages originated by the Company under the above policy are
generally pooled together with other mortgages originated by the Company in
the ordinary course of its business and sold in the secondary market as
publicly offered pass-through certificates. The Company also usually retains
the right to service the loans. Generally, the interest rates offered pursuant
to this policy are lower than rates offered to the Company's other borrowers,
but are in excess of the rate the Company believes it will have to pay to the
institutional investors to whom such loans are usually sold. When making these
loans to employees, the Company does not necessarily evaluate the specific
rates otherwise available to its employees if those employees were to obtain
loans directly from the Company's institutional investors or from other third
parties. The maturities of such loans range from 15 to 30 years. While such
loans are generally made with respect to primary residences, the Company has
made loans with respect to other properties, including investment properties
because the Company believes that such policy generates goodwill and loyalty
among its employees. The Company expects to continue such policy for the
foreseeable future because the Company believes that such policy generates
goodwill and loyalty among its employees.
The following table sets forth certain information with respect to all
mortgage loans made by the Company to Directors and executive officers of the
Company, or to members of their immediate families, other relatives or
associates, where the amount owing to the Company at any time during the year
ended December 31, 1996 exceeded $60,000:
13
<PAGE>
<TABLE>
<CAPTION>
NAMES OF BORROWERS AND
RELATIONSHIPS TO THE COMPANY TYPE OF DATE OF INTEREST
(IF ANY) LOAN ORIGINATION RATE AMOUNT (1) OTHER INFORMATION
- ---------------------------- -------- ----------- --------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
Mario and Marjorie
Medici (brother &
sister-in-law of A.R.
Medici, a former
Director............... 1st Mtg. 10/21/92 7.65% $141,500 (2) Principal Residence
William S. Templeton (a
Director) and Luz
Amanda Templeton, his
wife................... 1st Mtg. 09/14/93 7.50% $168,800 (3) Investment Property
Michael H. Benoff
(Senior Vice
President)............. 1st Mtg. 10/01/93 7.50% $137,000 (4) Principal Residence
Paul I. Leliakov
(President of small
business loan
subsidiary)............ 1st Mtg. 10/14/93 7.50% $94,000 (5) Principal Residence
Diane J. Mansolillo
(sister of William S.
Templeton)............. 1st Mtg. 03/25/94 7.85% $143,600 (6) Principal Residence
2nd Mtg. 03/25/94 7.85% $36,000 (7) Principal Residence
Anthony L. Watson
(Director)............. 2nd Mtg. 09/30/92 8.25% $142,000 (8) Investment Property
T.K. Mab, Inc. (a
principal shareholder
is the son of Morton
Dear, a Director)...... SBA 05/23/95 10.25% $250,000 (9) SBA Loan
Adjusted
Quarterly
John A. Reeves (Senior
Vice President)........ 2nd Mtg. 07/12/96 9.65% $77,000 (10) Principal Residence
</TABLE>
- --------
(1) The original principal amount of these loans also represents the largest
aggregate amount of indebtedness of the borrowers pursuant to the loans
presented since the date of origination thereof.
(2) As of December 31, 1996, approximately $95,000 was outstanding pursuant to
this loan.
(3) As of December 31, 1996, approximately $165,000 was outstanding pursuant
to this loan.
(4) As of December 31, 1996, approximately $130,000 was outstanding pursuant
to this loan.
(5) As of December 31, 1996, approximately $91,000 was outstanding pursuant to
this loan.
(6) As of December 31, 1996, approximately $139,000 was outstanding pursuant
to this loan.
(7) As of December 31, 1996, approximately $32,000 was outstanding pursuant to
this loan.
(8) As of December 31, 1996, approximately $119,000 was outstanding pursuant
to this loan.
(9) As of December 31, 1996, approximately $245,000 was outstanding pursuant
to this loan.
(10) As of December 31, 1996, approximately $77,000 was outstanding pursuant
to this loan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that during 1996 its officers and directors complied
with all requirements under Section 16(a) of the Securities Exchange Act of
1934, as amended, except as follows. One sale transaction of Common Stock of
the Company in 1996 by Anthony L. Watson was reported late on a Form 4. One
sale transaction of Common Stock of the Company in 1996 by Marc Turtletaub was
reported late on a Form 4. One sale transaction of Common Stock of the company
in 1996 by William S. Templeton was reported late on a Form 5.
14
<PAGE>
PROPOSAL NO. 2:
ADOPTION OF THE 1997 STOCK INCENTIVE PLAN
GENERAL
The Board of Directors of the Company, by Unanimous Written Consent dated
April 14, 1997, adopted, subject to the approval of the shareholders, the 1997
Stock Incentive Plan of The Money Store Inc. (the "1997 Plan").
DESCRIPTION OF THE 1997 STOCK INCENTIVE PLAN
The purpose of the 1997 Plan is to encourage the Company's employees and
directors to acquire a larger proprietary interest in the Company and to
provide incentives to maximize the long-term growth of the Company. It is
anticipated that the opportunity for acquisition of such proprietary interest
will aid the Company in securing and retaining its employees.
A copy of the 1997 Plan is attached hereto as Exhibit A. The following
summary of the principal provisions of the 1997 Plan is subject to the full
text of the 1997 Plan.
The 1997 Plan will be administered by the Board of Directors unless the
Board appoints a committee (the "Committee"), comprised of two or more
directors of the Company, each of whom is a "Non-Employee Director" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to administer the plan. During any period in which the
Plan is administered by the Committee, all references to the Board in this
description shall be deemed to refer to the Committee.
Awards may be in the form of stock options, restricted stock awards or stock
appreciation rights ("Incentive Awards"). All directors and employees of the
Company (other than Alan Turtletaub and Marc Turtletaub), as may be determined
by the Board from time to time, are eligible to participate in the 1997 Plan.
Stock options may be granted as "incentive stock options" (as defined under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")) or
as non-qualified stock options.
The aggregate number of shares of Common Stock that may be issued pursuant
to Incentive Awards under the 1997 Plan may not exceed 2,800,000, provided,
that rights that are exercisable as an alternative to an option (as described
below) are not subject to the foregoing limitation. The maximum number of
shares which may be the subject of options and stock appreciation rights
granted during the duration of the 1997 Plan to any individual who is a
"covered employee" within the meaning of Section 162(m) of the Code shall not
exceed 1,400,000 shares.
The exercise price of a stock option is determined by the Board; however,
the exercise price of an incentive stock option must be at least equal to the
fair market value of the Common Stock on the date of grant.
The term of stock options and stock appreciation rights cannot exceed ten
years from the date of grant. Options and stock appreciation rights are
exercisable at such rate and times as may be fixed by the Board on the date of
grant; however, no options or stock appreciation rights can be exercised
earlier than the date of grant or shareholder approval of the 1997 Plan. The
holder of a stock option granted in connection with an alternative stock
appreciation right (which is described later) is entitled to exercise such
option only by surrendering the alternative stock appreciation right with
respect to the same number of shares as to which such option is exercised. The
aggregate fair market value (determined at the time the option is granted) of
the Common Stock with respect to which incentive stock options are exercisable
for the first time by a participant during any calendar year (under all stock
option plans of the Company and its subsidiaries) shall not exceed $100,000;
to the extent that this limitation is exceeded, such excess options shall be
treated as non-qualified stock options for purposes of the 1997 Plan and the
Code.
15
<PAGE>
At the time a stock option is granted, the Board may, in its sole
discretion, designate whether the stock option is to be considered an
incentive stock option or non-qualified stock option plan. A stock option with
no such designation shall be deemed an incentive stock option to the extent
that the $100,000 limit described above is met.
Payment of the purchase price for shares acquired upon the exercise of
options may be made by any one or more of the following methods: in cash, by
check, by delivery to the Company of shares of Common Stock already owned by
the option holder, by a "cashless" exercise method with a designated broker,
or by such other method as the Board may permit from time to time. However, a
holder may not use previously owned shares of Common Stock that were acquired
pursuant to the 1997 Plan, or any other stock plan that may be maintained by
the Company or its subsidiaries, to pay the purchase price under an option,
unless the holder has beneficially owned such shares for at least six months.
A stock appreciation right may be granted either independently or in
connection with a stock option at the time of grant. A stock appreciation
right granted in connection with a stock option shall be exercisable (a) only
to the extent that the related stock option is exercisable and (b) either in
conjunction with, or as an alternative to, the exercise of the related option.
A stock appreciation right is the right to receive an amount equal to the
excess (or a portion of the excess, as determined by the Board at the time of
grant), of the fair market value of a share of Common Stock on the date of
exercise over (i) the fair market value of a share of Common Stock on the date
of grant, in the case of a stock appreciation right granted independently of
any stock option, or (ii) the exercise price of the related stock option, in
the case of a stock appreciation right granted in connection with a stock
option (which excess is referred to as the "Spread").
The holder of a conjunctive stock appreciation right granted in connection
with a stock option is deemed to have exercised the right at the same time,
and to the same extent that, the related stock option is exercised. The holder
of an alternative stock appreciation right granted in connection with a stock
option is entitled to exercise such right only by surrendering the related
stock option with respect to the same number of shares as to which such stock
appreciation right is exercised and to receive payment therefor. The number of
shares with respect to which an alternative stock appreciation right is
surrendered shall not be available for future grants of Incentive Awards. A
stock appreciation right granted independently of any related stock option is
exercisable for a duration determined by the Board, but in no event after ten
years from the date of grant. The Board may limit the amount payable upon the
exercise of any stock appreciation right.
At the election of the holder, distribution of the amount payable upon the
exercise of a stock appreciation right may be made in shares of Common Stock,
valued at their fair market value on the date of exercise of the stock
appreciation right, or in cash, or in a combination of cash and shares.
Stock options and stock appreciation rights become immediately exercisable
in full upon the retirement of the holder after reaching the age of 65, upon
the disability or death of the holder while in the employ or service of the
Company, upon the occurrence of such special circumstances as in the opinion
of the Board merit special consideration, or upon the occurrence of a Change
in Control (as defined in the 1997 Plan) while the holder is in the employ or
service of the Company. However, no options or rights may be exercised earlier
than the date of the shareholders' approval of the 1997 Plan.
Stock options and stock appreciation rights terminate at the end of the
tenth business day following the holder's termination of employment. This
period is extended to three months in the case of the holder's retirement at
or after age 65 or disability, and six months in the case of the death of the
holder, in which case the stock options and/or stock appreciation rights are
exercisable by the holder's estate.
The Board may grant restricted stock awards to eligible individuals. A
restricted stock award is the issuance of shares of Common Stock or the grant
of the right to purchase Common Stock at a price determined by the Board. Such
shares of Common Stock, when and if issued, shall be subject to transfer
restrictions determined by the Board in its sole discretion, and subject to
substantial risk of forfeiture unless and until specific conditions
16
<PAGE>
established by the Board at the time of grant are met. Such conditions may be
based on continuing employment or achievement of pre-established performance
objectives, or both, as determined by the Board. Unless the holder of a
restricted stock award ceases to be an employee or director of the Company
(for reasons other than those described below), the transfer restrictions
imposed upon restricted stock awards will lapse in accordance with a schedule
or other conditions as are determined by the Board. All restrictions
immediately cease upon the death or disability of the holder, upon the
occurrence of such special circumstances as in the opinion of the Board merit
special consideration or upon a Change in Control (as defined in the 1997
Plan) while the holder is in the employ or service of the Company.
Payment of the purchase price for restricted shares shall be made in cash,
by check, or by such other methods as the Board may permit.
Certificates for the shares of Common Stock granted or purchased pursuant to
a restricted stock award shall be issued in the name of the holder thereof,
but the certificates shall be retained by the Company for the holder's account
and shall not be delivered to the holder until such time as the restrictions
imposed on the transfer of such shares shall have lapsed. The holder of a
restricted stock award has the right to vote the shares of Common Stock
registered in his or her name. Dividends and distributions (including stock
dividends and distributions in the event of a split-up, conversion, exchange,
reclassification or substitution) with respect to such shares shall be
retained by the Company for the holder's account, to be distributed to the
holder at the time, and to the extent that, the restrictions imposed on the
transfer of such shares shall have lapsed.
Each Incentive Award (other than grants of restricted stock) contains anti-
dilution provisions which will automatically adjust the number of shares
subject to Incentive Awards in the event of a stock dividend, split-up,
conversion, exchange, reclassification or substitution. In addition, upon the
dissolution or liquidation of the Company, or the occurrence of a merger or
consolidation in which the Company is not the surviving corporation, or in
which the Company becomes a subsidiary of another corporation or in which the
voting securities of the Company which are outstanding immediately prior
thereto do not continue to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 50%
of the combined voting securities of the Company or such surviving entity
immediately after such merger or consolidation, or upon the sale of all or
substantially all of the assets of the Company, or upon a spin-off (but only
with respect to employees and directors who become employees and directors of
the spin-off company) the Board may provide that the stock options and stock
appreciation rights granted under the 1997 Plan shall terminate unless
provision is made by the Company in connection with such transaction for the
assumption of stock options and stock appreciation rights theretofore granted,
or the substitution of such stock options and stock appreciation rights of new
options of, and rights with respect to, the successor corporation or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kinds
of shares and the per share exercise prices. If stock options and conjunctive
stock appreciation rights, or independent stock appreciation rights, terminate
as a result of any such transactions, the Board shall provide that the holder
will be entitled to the excess (or, in the case of stock appreciation rights,
a portion of such excess equal to the portion of the Spread to which the
holder would be entitled upon the exercise of such stock appreciation rights )
of (i) the fair market value (determined on the basis of the amount received
by shareholders in connection with such transaction) of the shares subject to
the portion of the stock option and rights not theretofore exercised (whether
or not the stock option and rights are then exercisable pursuant to their
terms or otherwise), over (ii) the aggregate purchase price that would be
payable for such shares upon the exercise of the stock option, or the fair
market value of the shares on the date of grant of independent rights, as the
case may be. In the event of any other change in the corporate structure or
outstanding shares of Common Stock, the Board may make such equitable
adjustment to the number of shares and the class of shares available under the
1997 Plan or to any outstanding Incentive Awards as it shall deem appropriate
to prevent dilution or enlargement of rights.
The Company shall obtain such consideration for granting Incentive Awards
under the 1997 Plan as the Board in its discretion may request.
17
<PAGE>
Each Incentive Award may be subject to provisions to assure that any
exercise or disposition of Common Stock will not violate the securities laws.
No Incentive Award may be granted under the 1997 Plan after August 13, 2007.
The Board of Directors or the Committee may at any time withdraw or amend
the 1997 Plan and may, with the consent of the affected holders of an
outstanding Incentive Award, at any time withdraw or amend the terms and
conditions of outstanding Incentive Awards. Any amendment which would increase
the number of shares issuable pursuant to Incentive Awards or to any
individual or change the class of employees to whom Incentive Awards may be
granted shall be subject to the approval of the shareholders of the Company
within one year of such amendment.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO PARTICIPANTS IN THE 1997 PLAN
The Federal income tax consequences to an employee who receives incentive
stock options generally will, under current law, be as follows:
An employee will not realize any income upon the grant or exercise of an
incentive stock option. If the employee disposes of the shares of Common Stock
acquired upon the exercise of an incentive stock option at least two years
after the date the option is granted and at least one year after the Common
Stock is transferred to him or her, the employee will realize long-term
capital gain in an amount equal to the excess, if any, of his or her selling
price for the shares over the option exercise price. In such case, the Company
will not be entitled to any tax deduction resulting from the issuance or sale
of the shares. If the employee disposes of the shares of Common Stock acquired
upon the exercise of an incentive stock option prior to the expiration of two
years from the date the option is granted, or one year from the date the
Common Stock is transferred to him or her, any gain realized will be taxable
at such time as follows (a) as ordinary income to the extent of the difference
between the option exercise price and the lesser of the fair market value of
the shares on the date the option was exercised or the amount realized from
such disposition, and (b) as capital gain to the extent of any excess, which
gain shall be treated as short-term or long term capital gain depending upon
the holding period of the Common Stock. In such case, the Company may claim an
income tax deduction (as compensation) for the amount taxable to the employee
as ordinary income.
In general, the difference between the fair market value of the Common Stock
at the time the incentive stock option is exercised and the option exercise
price will constitute an item of adjustment, for purposes of determining
alternative minimum taxable income, and under certain circumstances may be
subject, in the year in which the option is exercised, to the alternative
minimum tax.
If an employee uses shares of Common Stock which he or she owns to pay, in
whole or in part, the exercise price for shares acquired pursuant to an
incentive stock option, (a) the holding period for the newly issued shares of
Common Stock equal in value to the old shares which were surrendered upon the
exercise shall include the period during which the old shares were held, (b)
the employee's basis in such newly issued shares will be the same as his or
her basis in the old shares surrendered and (c) no gain or loss will be
recognized by the employee on the old shares surrendered. However, if any
employee uses shares previously acquired pursuant to the exercise of an
incentive stock option to pay all or part of the exercise price under an
incentive stock option, such tender will constitute a disposition of such
previously acquired shares for purposes of the one-year (or two-year) holding
period requirement applicable to such incentive stock option and such tender
may be treated as a taxable exchange.
The Federal income tax consequences to an individual who receives non-
qualified stock options generally will, under current law, be as follows:
An individual will not realize any income at the time the option is granted.
Generally, an individual will realize ordinary income, at the time the option
is exercised, in a total amount equal to the excess of the then fair
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market value of the Common Stock acquired over the exercise price. However,
Section 83 of the Code provides that, if a director, officer or principal
shareholder (i.e., an owner of more than ten percent of the outstanding shares
of Common Stock) receives shares pursuant to the exercise of a non-qualified
stock option, he or she is not required to recognize any income until the date
on which such shares can be sold at a profit without liability under Section
16(b) of the Exchange Act. At such time, the director, officer or principal
shareholder will realize income equal to the amount by which the then fair
market value of the shares acquired pursuant to the exercise of such option
exceeds the price paid for such shares.
Alternatively, a director, officer or principal shareholder who would not
otherwise be taxed at the time the shares are transferred may file a written
election within 30 days with the Internal Revenue Service, to be taxed as of
the date of transfer, on the difference between the then fair market value of
the shares and the price paid for such shares.
All income realized upon the exercise of a non-qualified stock option will
be taxed as ordinary income. The Company will be entitled to a tax deduction
(as compensation) for the amount taxable to an individual (including a
director, officer and principal shareholder) upon the exercise of a non-
qualified stock option, as described above, in the same year as those amounts
are taxable to the individual.
Shares of Common Stock issued pursuant to the exercise of a non-qualified
stock option generally will constitute a capital asset in the hands of an
individual (including a director, officer or principal shareholder) and will
be eligible for capital gain or loss treatment upon any subsequent
disposition. The holding period of an individual (including a director,
officer or principal shareholder) will commence upon the date he or she
recognizes income with respect to the issuance of such shares, as described
above. The individual's basis in the shares will be equal to the greater of
their fair market value as of that date or the amount paid for such shares.
If, however, an individual uses shares of Common Stock which he or she owns to
pay, in whole or in part, the exercise price for shares acquired pursuant to
the exercise of a non-qualified stock option, (a) the holding period for the
newly issued shares of Common Stock equal in value to the old shares which
were surrendered upon the exercise shall include the period during which the
old shares were held, (b) the individual's basis in such newly issued shares
will be the same as his or her basis in the surrendered shares, (c) no gain or
loss will be realized by the individual on the old shares surrendered, and (d)
the individual will realize ordinary income in an amount equal to the fair
market value of the additional number of shares received over and above the
number of old shares surrendered.
The Federal income tax consequences to an individual who receives restricted
stock awards generally will, under current law, be as follows:
An individual will not realize any income when the right to acquire shares
subject to restricted stock awards ("Restricted Shares") is granted, or when
the certificates for the Restricted Shares themselves are registered in the
individual's name. The individual will realize ordinary income as and when the
Restricted Shares are no longer subject to a substantial risk of forfeiture
(which risk of forfeiture includes the restriction imposed by Section 16(b) of
the Exchange Act), in an amount equal to the difference between the fair
market value of the Restricted Shares as of such date and the price he or she
paid for such shares. Alternatively, the individual can file a written
election with the Internal Revenue Service, no more than 30 days after the
certificates for the Restricted Shares are issued, to be taxed as of the date
of issuance on the difference between the then fair market value of the
Restricted Shares and the price he or she paid for such shares. Once the
individual has realized ordinary income with respect to the Restricted Shares,
any subsequent increase in the value of the Restricted Shares generally will
be taxed when the shares are sold as long-term or short-term capital gain,
depending on how long the Restricted Shares are held. The individual's holding
period with respect to the Restricted Shares will begin on the date he or she
realizes ordinary income with respect to the Restricted Shares and the basis
in the shares will be equal to their then fair market value. The Company will
be entitled to a tax deduction when, and to the extent, ordinary income is
realized by the individual with respect to such shares. Any dividends or other
distributions paid on the Restricted Shares generally will be taxable when
distributed to the individual.
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An individual will be subject to tax, at ordinary income rates, on the
amount of cash and the fair market value of any property received upon the
exercise of any stock appreciation rights. The Company will be entitled to a
tax deduction equal to the amount includible in the individual's income.
In addition to the Federal income tax consequences, discussed above, Section
280G of the Code provides that if an officer, shareholder or highly
compensated individual receives a payment which is in the nature of
compensation and which is contingent upon a change in control of the employer,
and such payment equals or exceeds three times his or her "base salary" (as
hereinafter defined), then any amount received in excess of base salary shall
be considered an "excess parachute payment." An individual's "base salary" is
equal to his or her average annual compensation includible in gross income
over the five-year period (or period of employment, if shorter) ending with
the close of the individual's taxable year immediately preceding the taxable
year in which the change in control occurs. If the taxpayer establishes, by
clear and convincing evidence, that an amount received is reasonable
compensation for past or future services, all or a portion of such amount may
be deemed not to be an excess parachute payment. If any payments made under
the 1997 Plan in connection with a change in control of the Company constitute
excess parachute payments with respect to any individual, then in addition to
any income tax which would otherwise be owed on such payment, the individual
will be subject to an excise tax equal to 20% of such excess parachute payment
and the Company will not be entitled to any tax deduction to which it
otherwise would have been entitled with respect to such excess parachute
payment.
Section 280G provides that payments made pursuant to a contract entered into
within one year of the change in control are presumed to be parachute payments
unless the individual establishes, by clear and convincing evidence, that such
contract was not entered into in contemplation of a change in control. In
addition, the General Explanation of the Tax Reform Act of 1984 prepared by
the Staff of the Joint Committee on Taxation indicates that the grant of an
Incentive Award within one year of the change in control or the acceleration
of an Incentive award because of a change in control may be considered a
parachute payment, in an amount equal to the value of the Incentive Award or
the value of the accelerated portion of the Incentive Award, as the case may
be. Pursuant to proposed regulations issued by the Treasury Department under
Section 280G, the acceleration of a non-qualified stock option because of a
change in control is considered a parachute payment in an amount equal to the
value of the accelerated portion of the option. Even if the grant of an
Incentive Award within one year of the change in control or the acceleration
of an Incentive award is not a parachute payment for purposes of section 280G,
the exercise of a stock option or stock appreciation right granted within one
year of the change in control or the exercise of the accelerated portion of a
stock option or stock appreciation right may result in a parachute payment, in
an amount equal to the excess of the fair market value of the shares receive
upon exercise of the option over the exercise price (or the cash or fair
market value of shares received upon the exercise of stock appreciation
rights). Payments received for the cancellation of an Incentive Award because
of a change in control may also result in parachute payments.
Section 162(m) of the Code provides that the deduction by a publicly-held
corporation for compensation paid in a taxable year to the chief executive
officer and the four other most highly compensated executive officers of the
corporation is limited to $1 million per each individual officer. Income
pursuant to Incentive Awards under the 1997 Plan would be subject to the
deductibility limitations of Section 162(m).
The foregoing summary with respect to Federal income taxation does not
purport to be complete and reference is made to the applicable provisions of
the Code.
LISTING AND RECENT SHARE PRICE
The shares of Common Stock are listed on the NASDAQ Stock Market's National
Market. The market price per share at the close of business on April 7, 1997
was $24.125.
VOTE REQUIRED
The affirmative vote of a majority of the votes cast on this Proposal No. 2
is required to approve the 1997 Plan. The Board is of the opinion that the
adoption of the 1997 Plan is advisable and is in the best interests of the
Company.
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THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE PROPOSED ADOPTION OF THE
1997 STOCK INCENTIVE PLAN OF THE MONEY STORE INC. BY THE SHAREHOLDERS. UNLESS
OTHERWISE INSTRUCTED, SIGNED PROXIES WHICH ARE RETURNED IN A TIMELY MANNER
WILL BE VOTED IN FAVOR OF THE PROPOSAL.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of KPMG Peat Marwick LLP as the
Company's independent certified public accountants for the year ending
December 31, 1997. Representatives of KPMG Peat Marwick LLP are expected to be
present at the Annual Meeting, at which time they will have the opportunity to
make a statement if they desire to do so and to respond to appropriate
questions.
OTHER BUSINESS
As of the date of this Proxy Statement, the only business which the Board of
Directors intends to present, and knows that others will present, at the
Annual Meeting is that set forth herein. If any other matter or matters are
properly brought before the Annual Meeting or any adjournments thereof, it is
the intention of the persons named in the accompanying form of proxy to vote
the proxy on such matters in accordance with their judgment.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 1998
Annual Meeting of Shareholders must be received by the Company on or prior to
December 19, 1997 to be eligible for inclusion in the Company's proxy
statement and form of proxy to be used in connection with the 1998 Annual
Meeting.
OTHER INFORMATION
The costs of solicitation of proxies will be borne by the Company. The
Company has retained Beacon Hill Partners Inc., 90 Broad Street, New York, New
York 10004 to assist the Company in the distribution of the proxy materials
and the solicitation of proxies for an estimated fee of $3,500 plus
reimbursement of reasonable out-of-pocket expenses. Beacon Hill Partners, Inc.
may solicit proxies from shareholders by mail, telephone, telex, telegram or
personal call or visit. In addition, Directors, officers and other employees
of the Company may solicit proxies in person or by telephone, without
additional compensation therefor, other than reimbursement of out-of-pocket
expenses. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to forward solicitation material to the
beneficial owners of the shares held of record by such persons, and the
Company will reimburse them for the reasonable out-of-pocket expenses incurred
by them in so doing.
By Order of the Board of Directors,
/s/ Morton Dear
-----------------------
Morton Dear
Secretary
Union, New Jersey
April 18, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996 MAY BE OBTAINED BY SHAREHOLDERS SOLICITED HEREBY, WITHOUT
CHARGE, UPON WRITTEN REQUEST SENT TO INVESTOR RELATIONS DEPARTMENT, THE
MONEY STORE INC., 3301 "C" STREET, SUITE 100-M, SACRAMENTO, CALIFORNIA
95816
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EXHIBIT A
1997 STOCK INCENTIVE PLAN
OF
THE MONEY STORE INC.
1. Purpose. The purpose of this Stock Incentive Plan is to advance the
interests of the Corporation by encouraging and enabling the acquisition of a
larger personal proprietary interest in the Corporation by directors and key
employees of the Corporation and its Subsidiaries upon whose judgment and keen
interest the Corporation is largely dependent for the successful conduct of
its operations and by providing such directors and key employees with
incentives to put forth maximum efforts for the success of the Corporation's
business. It is anticipated that the acquisition of such proprietary interest
in the Corporation and such incentives will stimulate the efforts of such
directors and key employees on behalf of the Corporation and its Subsidiaries
and strengthen their desire to remain with the Corporation and its
Subsidiaries. It is also expected that such incentives and the opportunity to
acquire such a proprietary interest will enable the Corporation and its
Subsidiaries to attract desirable personnel.
2. Definitions. When used in this Plan, unless the context otherwise
requires:
(a) "Alternative Rights" shall have the meaning set forth in Section 7.
(b) "Board of Directors" shall mean the Board of Directors of the
Corporation, as constituted at any time.
(c) "Chairman of the Board" shall mean the person who at the time shall
be Chairman of the Board of Directors.
(d) "Committee" shall mean the Committee, if any, established by the
Board of Directors pursuant to Section 3 to administer the Plan.
(e) "Conjunctive Rights" shall have the meaning set forth in Section 7.
(f) "Corporation" shall mean The Money Store Inc.
(g) "Eligible Persons" shall mean those persons described in Section 4
who are potential recipients of Incentive Awards.
(h) "Fair Market Value" on a specified date shall mean the closing price
at which a Share is traded on the stock exchange, if any, on which Shares
are primarily traded or, if the Shares are not then traded on a stock
exchange, the closing price of a Share as reported on the NASDAQ National
Market System or, if the Shares are not then traded on the NASDAQ National
Market System, the average of the closing bid and asked prices at which a
Share is traded on the over-the-counter market, but if no Shares were
traded on such date, then on the last previous date on which a Share was so
traded, or, if none of the above are applicable, the value of a Share as
established by the Board of Directors for such date using any reasonable
method of valuation.
(i) "Incentive Award" shall mean an Option, Restricted Stock Award or
Rights granted pursuant to this Plan.
(j) "Incentive Stock Option" shall have the meaning set forth in section
422 of the Internal Revenue Code.
(k) "Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended.
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(l) "Options" shall mean the stock options granted pursuant to this Plan.
(m) "Plan" shall mean this 1997 Stock Incentive Plan of The Money Store
Inc., as adopted by the Board of Directors on April 14, 1997, as such Plan
from time to time may be amended.
(n) "President" shall mean the person who at the time shall be the
President of the Corporation.
(o) "Restricted Shares" shall mean the Shares issued as a result of a
Restricted Stock Award.
(p) "Restricted Stock Award" shall mean a grant of Shares or of the right
to purchase Shares pursuant to Section 12 hereof. Such Shares, when and if
issued, shall be subject to such transfer restrictions and risk of
forfeiture as the Board of Directors shall determine at the time the Award
is granted, until such specific conditions are met. Such conditions may be
based on continuing employment or achievement of pre-established
performance objectives, or both.
(q) "Rights" shall mean stock appreciation rights granted pursuant to the
Plan, which shall entitle the holder thereof to receive from the
Corporation cash or Shares or a combination of cash and Shares based upon
the excess of the Fair Market Value of Shares at the time of exercise over
the purchase price of the Shares subject to the related Option, or the Fair
Market Value of Shares on the date the Rights were granted, as the case may
be, subject to the terms and conditions of the Plan.
(r) "Share" shall mean a share of common stock of the Corporation.
(s) "Spread" shall mean (i) with respect to Conjunctive Rights and
Alternative Rights, the excess of the Fair Market Value of one Share on the
date of exercise of such Rights over the purchase price per Share payable
under the related Option and (ii) with respect to Rights not granted in
connection with an Option, the excess of the Fair Market Value of one Share
on the date of exercise of such Rights over the Fair Market Value of one
Share on the date such Rights were granted.
(t) "Subsidiary" shall mean any corporation 50% or more of whose stock
having general voting power is owned by the Corporation, or by another
Subsidiary as herein defined, of the Corporation.
3. Administration. The Plan shall be administered by the Board of Directors,
or if the Board of Directors shall so determine, by a Committee of the Board
of Directors which shall consist of two or more directors of the Corporation,
each of whom shall be a "Non-Employee Director" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as from time to time amended
(the "Exchange Act"). During any period in which the Plan is administered by a
Committee, all references herein to the Board of Directors shall be deemed to
refer to the Committee, except for purposes of the definition of a "Change in
Control" (as set forth in Section 11) and of Section 19. The Board of
Directors shall establish such rules and procedures as are necessary or
advisable to administer the Plan.
Determinations of the Board of Directors as to any question which may arise
with respect to the interpretation of the provisions of the Plan and Incentive
Awards shall be final. The Board of Directors may authorize and establish such
rules, regulations and revisions thereof not inconsistent with the provisions
of the Plan, as it may deem advisable to make the Plan and Incentive Awards
effective or provide for their administration, and may take such other action
with regard to the Plan and Incentive Awards as it shall deem desirable to
effectuate their purpose.
4. Participants. Except as hereinafter provided, the class of persons who
are potential recipients of Incentive Awards granted under this Plan shall
consist of (i) the directors of the Corporation or a Subsidiary and (ii) key
employees of the Corporation or a Subsidiary, as determined by the Board of
Directors. The parties to whom Incentive Awards are granted under this Plan,
and the number of Shares subject to each such Incentive Award, shall be
determined by the Board of Directors in its sole discretion, subject, however,
to the terms and conditions of this Plan. Persons to whom Incentive Awards may
be granted include key employees who are also
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directors of the Corporation or a Subsidiary and also directors who are not
also key employees. Notwithstanding the foregoing, Alan Turtletaub and Marc
Turtletaub shall not be eligible to receive grants of Incentive Awards under
this Plan.
5. Shares. Subject to the provisions of Section 16 hereof, the Board of
Directors may grant Incentive Awards with respect to an aggregate of up to
2,800,000 Shares, all of which shares may be either Shares held in treasury or
authorized but unissued Shares. The maximum number of Shares which may be the
subject of Options and Rights granted during the duration of the Plan to any
individual who is a "covered employee" within the meaning of Section 162(m) of
the Internal Revenue Code shall not exceed 1,400,000 Shares. If the Shares
that would be issued or transferred pursuant to any Incentive Awards are not
issued or transferred and cease to be issuable or transferable for any reason,
or if Restricted Shares which are subject to a Restricted Stock Award are
forfeited, the number of Shares subject to such Incentive Award will no longer
be charged against the limitation provided for herein and may again be made
subject to Incentive Awards; provided, however, that Shares as to which an
Option has been surrendered in connection with the exercise of an Alternative
Right shall not again be available for the grant of any further Incentive
Awards. Notwithstanding the preceding, with respect to any Option and/or any
Rights granted to any individual who is a "covered employee" within the
meaning of Section 162(m) of the Internal Revenue Code that is cancelled, the
number of shares subject to such Option and/or Rights shall continue to count
against the maximum number of shares which may be the subject of Options and
Rights granted to such individual. For purposes of the preceding sentence, if,
after grant, the exercise price of an Option and/or the base amount of any
Rights is reduced, such reduction shall be treated as a cancellation of such
Option and/or Rights and the grant of a new Option and/or Rights (if any), and
both the cancellation of the Option and/or Rights and the new Option and/or
Rights shall reduce the maximum number of shares for which Options and Rights
may be granted to the holder of such Option and/or Rights.
6. Grant of Options. The number of Options to be granted to any Eligible
Person shall be determined by the Board of Directors in its sole discretion.
At the time an Option is granted, the Board of Directors may, in its sole
discretion, designate whether such Option (a) is to be considered as an
Incentive Stock Option, or (b) is not to be treated as an Incentive Stock
Option for purposes of this Plan and the Internal Revenue Code. No Option
which is intended to qualify as an Incentive Stock Option shall be granted
under this Plan to any individual who, at the time of such grant, is not an
employee of the Corporation or a Subsidiary.
Notwithstanding any other provision of this Plan to the contrary, to the
extent that the aggregate Fair Market Value (determined as of the date an
Option is granted) of the Shares with respect to which Options which are
designated as (or deemed to be) Incentive Stock Options granted to an employee
(and any incentive stock options granted to such employee under any other
stock option plan maintained by the Corporation or any Subsidiary that meets
the requirements of Section 422 of the Internal Revenue Code) first become
exercisable in any calendar year exceeds $100,000, such Options shall be
treated as Options which are not Incentive Stock Options. Options with respect
to which no designation is made by the Board of Directors shall be deemed to
be Incentive Stock Options to the extent that the $100,000 limitation
described in the preceding sentence is met. This paragraph shall be applied by
taking options into account in the order in which they are granted.
Nothing herein contained shall be construed to prohibit the issuance of
Options at different times to the same person.
The form of Option shall be determined from time to time by the Board of
Directors. A certificate of Option signed by the Chairman of the Board or the
President or a Vice President of the Corporation, attested by the Treasurer or
an Assistant Treasurer, or Secretary or an Assistant Secretary of the
Corporation and bearing the seal of the Corporation affixed thereto, shall be
issued to each person to whom an Option is granted. The certificate of Option
for an Option shall be legended to indicate whether or not the Option is an
Incentive Stock Option.
7. Grant of Rights. The Board of Directors shall have the authority to grant
to any Eligible Person, in its sole discretion, Rights which may be granted
separately, or in connection with an Option at the time of the grant
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<PAGE>
of an Option. Rights granted in connection with an Option shall be granted
with respect to the same number of Shares as are covered by the Option,
subject to adjustment pursuant to the provisions of Section 16 hereof, and may
be exercised, as determined by the Board of Directors in its discretion at the
time of the grant of the Rights, either in conjunction with, or as an
alternative to, the exercise of the related Option.
Conjunctive Rights ("Conjunctive Rights") granted in connection with an
Option shall entitle the holder thereof to receive payment from the
Corporation, determined as hereinafter provided, only if and to the extent
that the related Option is exercisable and is exercised. Upon any exercise of
an Option in respect of which Conjunctive Rights shall have been granted, the
holder of the Rights shall be entitled to receive payment of an amount equal
to the product obtained by multiplying (i) the Spread, or a portion of the
Spread determined by the Board of Directors at the time of grant, by (ii) the
number of Shares in respect of which the related Option shall have then been
so exercised.
Alternative Rights ("Alternative Rights") granted in connection with an
Option shall entitle the holder thereof to receive payment from the
Corporation, determined as hereinafter provided, only if and to the extent
that the related Option is exercisable, by surrendering the Option with
respect to the number of Shares as to which such Rights are then exercised.
Such Option, to the extent surrendered, shall be deemed exercised for purposes
of the limitations under Section 5. Upon any exercise of Alternative Rights,
the holder thereof shall be entitled to receive payment of an amount equal to
the product obtained by multiplying (i) the Spread, or a portion of the Spread
determined by the Board of Directors at the time of grant, by (ii) the number
of Shares in respect of which the Rights shall have then been so exercised.
Notwithstanding anything contained herein, Alternative Rights granted in
connection with an Option that is an Incentive Stock Option may not be
exercised at any time when the Fair Market Value of the Shares subject thereto
is less than the exercise price of such Option.
Rights granted without relationship to an Option shall be exercisable for a
duration determined by the Board of Directors, but in no event more than ten
years from the date of grant. Such Rights shall entitle the holder, upon the
exercise thereof, to receive payment from the Corporation of an amount equal
to the product obtained by multiplying (i) the Spread, or a portion of the
Spread determined by the Board of Directors at the time of grant, by (ii) the
number of Shares in respect of which the Rights shall have then been so
exercised.
Notwithstanding anything contained herein, the Board of Directors may, in
its sole discretion, limit the amount payable upon the exercise of Rights. Any
such limitation shall be determined as of the date of grant and noted on the
certificate evidencing the grant of the Rights.
At the holder's election, payment of the amount determined hereunder upon
the exercise of Rights may be made solely in cash, or solely in Shares valued
at their Fair Market Value on the date of exercise of Rights, or in a
combination of cash and Shares. No fractional Shares shall be issued by the
Corporation, and settlement therefor shall be made in cash.
The form of Rights shall be as determined from time to time by the Board of
Directors. A certificate of Rights signed by the Chairman of the Board or the
President or a Vice President, attested by the Treasurer or an Assistant
Treasurer, or Secretary or an Assistant Secretary, of the Corporation and
having the seal of the Corporation affixed thereto, shall be delivered to each
Eligible Person to whom Rights are granted.
8. Purchase Price. The price per Share of the Shares to be purchased
pursuant to the exercise of any Option shall be fixed by the Board of
Directors at the time of grant; provided, however, that the purchase price per
Share for the Shares to be purchased pursuant to the exercise of an Incentive
Stock Option shall not be less than the Fair Market Value of a Share on the
day on which the Option is granted.
The purchase price per Share for Restricted Shares to be purchased pursuant
to Restricted Stock Awards shall be fixed by the Board of Directors at the
time of the grant of the Restricted Stock Award; provided, however, that such
purchase price shall not be less than the par value of such Shares. Payment of
such purchase price shall be made in cash or by check payable to the order of
the Corporation, or by such other method as the Board of Directors may permit.
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9. Duration of Options and Related Rights. The duration of any Option
granted under this Plan shall be fixed by the Board of Directors at the time
of grant; provided, however, that no Option shall remain in effect for a
period of more than ten years from the date upon which the Option is granted.
The duration of any Rights granted in connection with any Option shall be
coterminous with the duration of the related Option.
10. Ten Percent Stockholders. Notwithstanding any other provision of this
Plan to the contrary, no Option which is intended to qualify as an Incentive
Stock Option may be granted under this Plan to any employee who, at the time
the Option is granted, owns shares possessing more than 10 percent of the
total combined voting power or value of all classes of stock of the
Corporation, unless the exercise price under such Option is at least 110% of
the Fair Market Value of a Share on the date such Option is granted and the
duration of such Option is no more than five years.
11. Exercise of Options and Rights. Except as otherwise provided herein,
Options and Rights, after the grant thereof, shall be exercisable by the
holder at such rate and times as may be fixed by the Board of Directors;
provided, however, that no Options or Rights may be exercised in part or in
full prior to the date of approval of the Plan by the shareholders of the
Corporation as provided in Section 21.
Notwithstanding the foregoing, all or any part of any remaining unexercised
Options or Rights granted to any person may, after approval of the Plan by the
shareholders of the Corporation as provided in Section 21, be exercised in the
following circumstances: (a) immediately upon (but prior to the expiration of
the term of the Option or Rights) the holder's retirement from the Corporation
and all Subsidiaries on or after his 65th birthday, (b) subject to the
provisions of Section 15 hereof, upon the disability (to the extent and in a
manner as shall be determined by the Board of Directors in its sole
discretion) or the death of the holder, (c) upon the occurrence of such
special circumstance or event as in the opinion of the Board of Directors
merits special consideration, or (d) if, while the holder is employed by, or
serving as a director of, the Corporation or a Subsidiary, there occurs a
Change in Control. For purposes of this Plan, a "Change in Control" shall be
deemed to have occurred if (x) any "person" or group of "persons" (as the term
"person" is used in Sections 13(d) and 14(d) of the Exchange Act) ("Person"),
acquires (or has acquired during the twelve-month period ending on the date of
the most recent acquisition by such Person) direct or indirect beneficial
ownership of securities of the Corporation representing 40% or more of the
combined voting power of the then outstanding securities of the Corporation or
(y) a Person acquires (or has acquired during the twelve-month period ending
on the date of the most recent acquisition by such Person) assets from the
Corporation that have a total fair market value equal to or more than one-
third of the total fair market value of all of the assets of the Corporation
immediately prior to such acquisition; provided, however, that if any
transaction or event or series of transactions or events resulting in a Change
in Control is approved by a majority of the members of the Board of Directors
holding office prior to the transaction or event or series of transactions or
events, then the transaction or event or series of transactions or events
shall not be deemed to be a Change in Control. Notwithstanding the foregoing,
for purposes of subsection (x), a Change in Control will not be deemed to have
occurred if the power to control (directly or indirectly) the management and
policies of the Corporation is not transferred from a Person to another
Person; and, for purposes of subsection (y), a Change in Control will not be
deemed to occur if the assets of the Corporation are transferred: (i) to a
shareholder in exchange for his stock, (ii) to an entity in which the
Corporation has (directly or indirectly) 50% Ownership, or (iii) to a Person
that has (directly or directly) at least 50% Ownership of the Corporation with
respect to its stock outstanding, or to any entity in which such Person
possesses (directly or indirectly) 50% Ownership.
An Option shall be exercised by the delivery of a written notice duly signed
by the holder thereof to such effect ("Exercise Notice"), together with the
Option certificate and the full purchase price of the Shares purchased
pursuant to the exercise of the Option, to the Chairman of the Board or an
officer of the Corporation appointed by the Chairman of the Board for the
purpose of receiving the same. Payment of the full purchase price shall be
made as follows: in cash or by check payable to the order of the Corporation;
by delivery to the Corporation of Shares which shall be valued at their Fair
Market Value on the date of exercise of the Option (provided, that a holder
may not use any Shares acquired pursuant to this Plan or any other plan
maintained by
26
<PAGE>
the Corporation or a Subsidiary unless the holder has beneficially owned such
Shares for at least six months); by providing with the Exercise Notice an
order to a designated broker to sell part or all of the Shares and to deliver
sufficient proceeds to the Corporation, in cash or by check payable to the
order of the Corporation, to pay the full purchase price of the Shares and all
applicable withholding taxes; or by such other methods as the Board of
Directors may permit from time to time. Any Conjunctive Rights granted in
connection with such Option shall be exercised by the inclusion in the
Exercise Notice of a notice of exercise of Rights, together with the Rights
certificate and a specification of the percentages of the Rights which the
holder desires to receive in cash and in Shares.
Within a reasonable time after the exercise of an Option, the Corporation
shall cause to be delivered to the person entitled thereto, a certificate for
the Shares purchased pursuant to the exercise of the Option and, if
Conjunctive Rights have been exercised in connection therewith, the amount of
cash and/or a certificate for the number of Shares determined in accordance
with Section 7 hereof. If the Option and any Conjunctive Rights shall have
been exercised with respect to less than all of the Shares subject to the
Option and Rights, the Corporation shall also cause to be delivered to the
person entitled thereto a new Option certificate and a new Rights certificate
in replacement of the certificates surrendered at the time of the exercise of
the Option and Rights, indicating the number of Shares with respect to which
the Option and Rights remain available for exercise, or the original Option
certificate and Rights certificate shall be endorsed to give effect to the
partial exercise thereof.
Alternative Rights or Rights not granted in connection with an Option shall
be exercised by the delivery of a duly signed notice in writing to such
effect, together with the Rights certificate, and a specification of the
percentages of the Rights which the holder desires to receive in cash and in
Shares. Holders of Alternative Rights shall also surrender the related Option
certificate. Within a reasonable time thereafter, the Corporation shall cause
to be delivered to the person entitled thereto, the amount of cash and/or a
certificate for the number of Shares determined in accordance with Section 7
hereof. Upon the exercise of Alternative Rights, the number of Shares subject
to exercise under the related Option or portion thereof shall be reduced by
the number of Shares represented by the Option or portion thereof surrendered.
Shares subject to Options or portions thereof surrendered upon the exercise of
Alternative Rights shall not be available for subsequent Incentive Awards
under the Plan. If the Rights shall have been exercised with respect to less
than all of the Shares subject thereto (or to the related Option, if any), the
Corporation shall also cause to be delivered to the person entitled thereto a
Rights certificate (and an Option certificate, in the case of Alternative
Rights) with respect to the difference between the number of Shares of the
Rights certificate (and related Option certificate, if any) surrendered at the
time of the exercise of the Rights and the number of Shares with respect to
which the Rights were so exercised (and the related Option, if any, was so
surrendered), or the original Rights certificate (and related Option
certificate, if any) shall be endorsed to give effect to the partial exercise
(and surrender) thereof.
Notwithstanding any other provision of the Plan or of any Option or Rights,
no Option or Rights granted pursuant to the Plan may be exercised at any time
when the Option or Rights or the granting or exercise thereof violates any law
or governmental order or regulation.
12. Terms and Conditions of Restricted Stock Awards.
(a) All Restricted Shares granted to or purchased by an eligible person
pursuant to the Plan shall be subject to the following conditions:
(i) the Restricted Shares may not be sold, transferred, or otherwise
alienated or hypothecated until the restrictions are satisfied, removed
or expire;
(ii) each certificate representing Restricted Shares issued pursuant
to a Restricted Stock Award under this Plan shall bear a legend making
appropriate reference to the restrictions imposed; and
(iii) the Board of Directors may impose such other conditions as it
may deem advisable on any Restricted Shares granted to or purchased by
an Eligible Person pursuant to a Restricted Stock Award
27
<PAGE>
under this Plan, including, without limitation, restrictions under the
requirements of any stock exchange upon which such Shares or shares of
the same class are then listed, and under any securities law applicable
to such Shares.
(b) The restrictions imposed under subsection (a) hereof upon Restricted
Stock Awards shall lapse in accordance with a schedule or such other
conditions as shall be determined by the Board of Directors, subject to the
provisions of Section 15 hereof.
(c) Prior to the satisfaction, expiration or lapse of all of the
restrictions and conditions imposed upon Restricted Shares, a stock
certificate or certificates representing such Restricted Shares shall be
registered in the holder's name but shall be retained by the Corporation
for the holder's account. The holder shall have the right to vote such
Restricted Shares and shall have all other rights and privileges of a
beneficial and record owner with respect thereto, including, without
limitation, the right to receive dividends, distributions and adjustments
with respect thereto; provided, however, that such dividends, distributions
and adjustments shall be retained by the Corporation for the holder's
account and for delivery to the holder, together with the stock certificate
or certificates representing such Restricted Shares, as and when said
restrictions and conditions shall have been satisfied, expired or lapsed.
13. Consideration for Incentive Awards. The Corporation shall obtain such
consideration for the grant of an Incentive Award as the Board of Directors in
its discretion may determine.
14. Non-Transferability of Incentive Awards. Options and Rights shall not be
transferable or assignable by the holder thereof except to the extent that the
Estate or heirs of a deceased holder of Options or Rights may be permitted to
exercise them. Restricted Stock Awards shall not be transferable or assignable
by the holder thereof except that any Restricted Shares subject to
restrictions at the time of the holder's death (and any dividends,
distributions and adjustments with respect thereto) shall be transferred to
the holder's Estate or heirs. Incentive Awards may be exercised or surrendered
during the holder's lifetime only by the holder thereof.
15. Termination of Employment or Service. All or any part of any Option
and/or Rights, to the extent unexercised, shall terminate immediately, upon
the cessation or termination for any reason of the holder's employment by, or
service as a director of, the Corporation or any Subsidiary, except that the
holder shall have until the end of the tenth business day following the
cessation of his employment or service with the Corporation or its
Subsidiaries, and no longer, to exercise any unexercised Option and/or Rights
that he could have exercised on the day on which such employment or service
terminated; provided, that such exercise must be accomplished prior to the
expiration of the term of such Option and Rights. Notwithstanding the
foregoing, if the cessation of employment or service is due to retirement on
or after attaining the age of sixty-five (65) years, or to disability (to an
extent and in a manner as shall be determined in each case by the Board of
Directors in its sole discretion) or to death, the holder or the
representative of the Estate or the heirs of a deceased holder shall have the
privilege of exercising the Options and Rights which are unexercised at the
time of such retirement, or of such disability or death; provided, however,
that such exercise must be accomplished prior to the expiration of the term of
such Option and Rights and (a) within three months of the holder's retirement
or disability, or (b) within six months of the holder's death, as the case may
be. If the employment or service of any holder of an Option or Rights with the
Corporation or a Subsidiary shall be terminated because of the holder's
violation of the duties of such employment or service with the Corporation or
a Subsidiary as he may from time to time have, the existence of which
violation shall be determined by the Board of Directors in its sole discretion
(which determination by the Board of Directors shall be conclusive) all
unexercised Options and Rights of such holder shall terminate immediately upon
such termination of the holder's employment or service with the Corporation
and all Subsidiaries, and a holder of Options or Rights whose employment or
service with the Corporation and Subsidiaries is so terminated, shall have no
right after such termination to exercise any unexercised Option or Rights he
might have exercised prior to the termination of his employment or service
with the Corporation and Subsidiaries.
28
<PAGE>
Except as hereinafter provided, if a holder of a Restricted Stock Award
shall voluntarily or involuntarily leave the employ of the Corporation or any
Subsidiary, all Restricted Shares subject to restrictions at the time his
employment terminates (and any dividends, distributions and adjustments
retained by the Corporation with respect thereto) shall be forfeited and any
consideration received therefor from the holder shall be returned to the
holder. Notwithstanding the foregoing, all restrictions to which Restricted
Stock Awards are subject shall lapse (a) upon the death or disability of the
holder, (b) upon the occurrence of such special circumstance or event as in
the opinion of the Board of Directors merits special considerations or (c)
upon a Change in Control while the holder is employed by, or serving as a
director of, the Corporation or a Subsidiary.
16. Adjustment Provision. If prior to the complete exercise of any Option,
or prior to the satisfaction, expiration or lapse of all of the restrictions
and conditions imposed pursuant to a Restricted Stock Award, there shall be
declared and paid a stock dividend upon the Shares or if the Shares shall be
split up, converted, exchanged, reclassified, or in any way substituted for,
(a) in the case of an Option, then the Option, to the extent that it has
not been exercised, shall entitle the holder thereof upon the future
exercise of the Option to such number and kind of securities or cash or
other property subject to the terms of the Option to which he would have
been entitled had he actually owned the Shares subject to the unexercised
portion of the Option at the time of the occurrence of such stock dividend,
split-up, conversion, exchange, reclassification or substitution, and the
aggregate purchase price upon the future exercise of the Option shall be
the same as if the originally optioned Shares were being purchased
thereunder; and
(b) in the case of a Restricted Share issued pursuant to a Restricted
Stock Award, the holder of such Award shall receive, subject to the same
restrictions and other conditions of such Award as determined pursuant to
the provisions of Section 12, the same securities or other property as are
received by the holders of the Corporation's Shares pursuant to such stock
dividend, split-up, conversion, exchange, reclassification or substitution.
Any fractional shares or securities issuable upon the exercise of the Option
as a result of such adjustment shall be payable in cash based upon the Fair
Market Value of such shares or securities at the time of such exercise. If any
such event should occur, the number of Shares with respect to which Incentive
Awards remain to be issued, or with respect to which Incentive Awards may be
reissued, shall be adjusted in a similar manner.
In addition to the adjustments provided for in the preceding paragraph, upon
the occurrence of any of the events referred to in said paragraph prior to the
complete exercise of any Rights, the Board of Directors, in its sole
discretion, shall determine the amount of cash and/or number of Shares or
other property to which the holder of the Rights shall be entitled upon their
exercise, so that there shall be no increase or dilution in the cash and/or
value of the Shares or other property to which the holder of Rights shall be
entitled by reason of such events.
Notwithstanding the foregoing, upon the dissolution or liquidation of the
Corporation, or the occurrence of a merger or consolidation in which the
Corporation is not the surviving corporation, or in which the Corporation
becomes a subsidiary of another corporation or in which the voting securities
of the Corporation outstanding immediately prior thereto do not continue to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting
securities of the Corporation or such surviving entity immediately after such
merger or consolidation, or upon a spin-off (including a reverse spin-off) by
the Corporation, but only as to the holders of Incentive Awards who are to be
employed immediately after the spin-off by the entity which represents less
than fifty percent (50%) of the value of the Corporation immediately prior to
the transaction and any holders who will serve as directors of such entity and
not of the Corporation, or upon the sale of all or substantially all of the
assets of the Corporation, the Board of Directors may, in its sole discretion,
terminate the Options and Rights granted hereunder, unless provision is made
by the Corporation in connection with such transaction for the assumption of
Options and Rights theretofore granted, or the substitution for such Options
and Rights of new options of, and rights with respect to, the successor
corporation or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kinds of shares
29
<PAGE>
and the per share exercise prices. In the event the Options terminate as
aforesaid in connection with such a dissolution, liquidation, merger,
consolidation, spin-off or sale, the Board of Directors shall provide that the
holder of any such Option shall be entitled to receive from the Corporation an
amount equal to the excess of (i) the Fair Market Value (determined on the
basis of the amount received by shareholders in connection with such
transaction) of the Shares subject to the portion of the Option not
theretofore exercised (whether or not the Option is then exer- cisable
pursuant to its terms or otherwise), over (ii) the aggregate purchase price
which would be payable for such Shares upon the exercise of the Option. In the
event Conjunctive Rights or Rights granted independently of an Option
terminate as aforesaid in connection with such a dissolution, liquidation,
merger, consolidation, spin-off or sale, the Board of Directors shall provide
that the holder of any such Rights (whether or not such Rights are then
exercisable pursuant to their terms or otherwise) shall be entitled to receive
from the Corporation an amount equal to (i) in the case of Conjunctive Rights,
the amount received by the holder with respect to the related Option (or a
portion of such amount equal to the portion of the Spread to which the holder
is entitled under the terms of such Rights), or (ii) in the case of Rights
granted without relationship to an Option, the excess of (A) the Fair Market
Value (determined on the basis of the amount received by shareholders in
connection with such transaction) of the Shares subject to the portion of the
Rights not theretofore exercised, over (B) the Fair Market Value of such
Shares on the date such Rights were granted (or a portion of such excess equal
to the portion of the Spread to which the holder is entitled under the terms
of such Rights). In the event of any other change in the corporate structure
or outstanding Shares, the Board of Directors may make such equitable
adjustments to the number of Shares and the class of shares available
hereunder or to any outstanding Incentive Awards as it shall deem appropriate
to prevent dilution or enlargement of rights.
17. Issuance of Shares and Compliance with Securities Act. The Corporation
may postpone the issuance and delivery of Shares pursuant to the grant or
exercise of any Incentive Award until (a) the admission of such Shares to
listing on any stock exchange on which Shares of the Corporation of the same
class are then listed, and (b) the completion of such registration or other
qualification of such Shares under any State or Federal law, rule or
regulation as the Corporation shall determine to be necessary or advisable.
Any holder of an Incentive Award shall make such representations and furnish
such information as may, in the opinion of counsel for the Corporation, be
appropriate to permit the Corporation, in the light of the then existence or
non-existence with respect to such Shares of an effective Registration
Statement under the Securities Act of 1933, as from time to time amended (the
"Securities Act"), to issue the Shares in compliance with the provisions of
the Securities Act or any comparable act. The Corporation shall have the
right, in its sole discretion, to legend any Shares which may be issued
pursuant to the grant or exercise of any Incentive Award, or may issue stop
transfer orders in respect thereof.
18. Income Tax Withholding. If the Corporation or a Subsidiary shall be
required to withhold any amounts by reason of any Federal, State or local tax
rules or regulations in respect of the issuance of Shares pursuant to the
grant or exercise of any Incentive Award, the Corporation or the Subsidiary
shall be entitled to deduct and withhold such amounts from any cash payments
to be made to the holder of such Incentive Award. In any event, the holder
shall make available to the Corporation or Subsidiary, promptly when requested
by the Corporation or such Subsidiary, sufficient funds to meet the
requirements of such withholding; and the Corporation or Subsidiary shall be
entitled to take and authorize such steps as it may deem advisable in order to
have such funds made available to the Corporation or Subsidiary out of any
funds or property due or to become due to the holder of such Incentive Award.
19. Amendment of the Plan. Except as hereinafter provided, the Board of
Directors or the Committee may at any time withdraw or from time to time amend
the Plan as it relates to, and the terms and conditions of, any Incentive
Awards not theretofore granted, and the Board of Directors or the Committee,
with the consent of the affected holder of an Incentive Award, may at any time
withdraw or from time to time amend the Plan as it relates to, and the terms
and conditions of, any outstanding Incentive Award. Notwithstanding the
foregoing, any amendment by the Board of Directors or the Committee which
would increase the number of Shares issuable under the Plan or to any
individual or change the class of Eligible Persons shall be subject to the
approval of the shareholders of the Corporation within one year of such
amendment.
30
<PAGE>
20. No Right of Employment. Nothing contained herein or in an Incentive
Award shall be construed to confer on any employee or director any right to be
continued in the employ of the Corporation or any Subsidiary or as a director
of the Corporation or a Subsidiary or derogate from any right of the
Corporation and any Subsidiary to retire, request the resignation of or
discharge such employee or director (without or with pay), at any time, with
or without cause.
21. Effective Date of the Plan. This Plan is conditioned upon its approval
by the shareholders of the Corporation on or before April 13, 1998 at any
special or annual meeting of the shareholders of the Corporation; except that
this Plan is adopted and approved by the Board of Directors effective April
14, 1997 to permit the grant of Incentive Awards prior to the approval of the
Plan by the shareholders of the Corporation as aforesaid. In the event that
this Plan is not approved by the shareholders of the Corporation as aforesaid,
this Plan and any Incentive Awards granted hereunder shall be void and of no
force or effect.
22. Final Issuance Date. No Incentive Award shall be granted under the Plan
after April 13, 2007.
31
<PAGE>
PROXY
THE MONEY STORE INC.
ANNUAL MEETING OF SHAREHOLDERS, MAY 20, 1997
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael Benoff, Morton Dear and Harry
Puglisi, or a majority of those present and acting, or if only one is present,
then that one, proxies, with full power of substitution, to vote all shares of
Common Stock of The Money Store Inc. which the undersigned is entitled to vote
at the Company's Annual Meeting to be held at The Hilton at Short Hills, 41
John F. Kennedy Parkway, Short Hills, New Jersey 07078, on Tuesday, May 20,
1997, at 9:00 a.m., local time, and at any adjournments thereof, hereby
ratifying all that said proxies or their substitutes may do by virtue hereof,
and the undersigned authorizes and instructs said proxies to vote as follows:
1. ELECTION OF DIRECTORS: To elect the nominees for Class C Directors below for
a term of three years:
Alan Turtletaub Morton Dear; and
To elect the nominee for Class A Directors below for a term of one year:
William S. Templeton
Check the appropriate box to indicate the manner in which you direct the
proxies to vote your shares:
[_] FOR all nominees listed above [_] WITHHOLD AUTHORITY to vote for all
[_] CUMULATE VOTES nominees listed below
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A LINE THOUGH
THE NOMINEE'S NAME IN THE LIST ABOVE.
If you checked the box indicating your desire to cumulate votes rather than
divide your votes equally among the nominees for Directors, please list below
the names of those nominees for whom you wish to vote, indicating opposite each
name the percentage of your total votes to be voted for that person. If no
direction is given, the proxies will cast such votes in favor of any or all of
the Company's nominees as the proxies determine.
---------------------------------------------------------
<PAGE>
2. ADOPTION OF THE 1997 STOCK INCENTIVE PLAN: To approve the adoption of the
Company's 1997 Stock Incentive Plan (the "Plan").
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, upon any other matters which may properly come before
the meeting or any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
Receipt of the Notice of Annual Meeting and Proxy Statement and of the Annual
Report of the Company preceding or accompanying the same is hereby
acknowledged.
YOUR SIGNATURE SHOULD APPEAR THE
SAME AS YOUR NAME APPEARS HEREON.
IF SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE INDICATE THE CAPACITY IN
WHICH SIGNING. WHEN SIGNING AS
JOINT TENANTS, ALL PARTIES TO THE
JOINT TENANCY MUST SIGN. WHEN THE
PROXY IS GIVEN BY A CORPORATION IT
SHOULD BE SIGNED BY AN AUTHORIZED
OFFICER.
Dated ....................... , 1997
............................. (L.S.)
(SIGNATURE OF SHAREHOLDER)
............................. (L.S.)
(SIGNATURE OF SHAREHOLDER)
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
[X} PLEASE MARK VOTES PROXY
AS IN THIS EXAMPLE THE MONEY STORE INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS, MAY 20, 1997
The undersigned hereby appoints Michael Benoff, Morton Dear and Harry
Puglisi, or a majority of those present and acting, or if only one is present,
then that one, proxies, with full power of substitution, to vote all shares of
Common Stock of The Money Store Inc. which the undersigned is entitled to vote
at the Company's Annual Meeting to be held at The Hilton at Short Hills, 41
John F. Kennedy Parkway, Short Hills, New Jersey 07078, on Tuesday, May 20,
1997, at 9:00 a.m., local time, and at any adjournments thereof, hereby
ratifying all that said proxies or their substitutes may do by virtue hereof,
and the undersigned authorizes and instructs said proxies to vote as follows:
- --------------------------------------------------------------------------------
Please be sure to sign and date Date
this Proxy in the box below.
- --------------------------------------------------------------------------------
Stockholder sign above___________________Co-Holder (if any) sign above
WITH- CUMU-
FOR HOLD LATE
1. ELECTION OF DIRECTORS: To elect [ ] [ ] [ ]
the nominees for Class C Directors
below for a term of three years:
ALAN TURTLETAUB, MORTON DEAR; and to elect the nominee for CLASS A DIRECTOR for
a term of one year; WILLIAM S. TEMPLETON
Check the appropriate box to indicate the manner in which you direct the
proxies to vote your shares:
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE THAT NOMINEE'S
NAME ON THE LINE BELOW.
- --------------------------------------------------------------------------------
If you checked the box indicating your desire to cumulate votes rather than
divide your votes equally among the nominees for Directors, please list below
the names of those nominees for whom you wish to vote, indicating opposite each
name the percentage of your total votes to be voted for that person. If no
direction is given, the proxies will cast such votes in favor of any or all of
the Company's nominees as the proxies determine.
- --------------------------------------------------------------------------------
2. ADOPTION OF THE 1997 STOCK FOR AGAINST ABSTAIN
INCENTIVE PLAN: [ ] [ ] [ ]
To approve the adoption of the Company's 1997 Stock Incentive Plan (the
"Plan").
Check the appropriate box to indicate the manner in which you direct the
proxies to vote your shares.
3. In their discretion, upon any other matters which may properly come before
the meeting or any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
Receipt of the Notice of Annual Meeting and Proxy Statement and of the Annual
Report of the Company preceding or accompanying the same is hereby
acknowledged.
- ------------------------------------------------------------------------------
+ +
- ------------------------------------------------------------------------------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
THE MONEY STORE INC.
Your signature should appear the same as your name appears hereon. If signing as
attorney, executor, administrator, trustee or guardian, please indicate the
capacity in which signing. When signing as joint tenants, all parties to the
joint tenancy must sign. When the proxy is given by a corporation it should be
signed by an authorized officer.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
PROXY
THE MONEY STORE, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS, MAY 20, 1997
The undersigned hereby appoints Michael Benoff, Morton Dear and Harry Puglisi,
or a majority of those present and acting, or if only one is present, then that
one, proxies, with full power of substitution, to vote all shares of Common
Stock of The Money Store Inc. which the undersigned is entitled to vote at the
Company's Annual Meeting to be held at The Hilton at Short Hills, 41 John F.
Kennedy Parkway, Short Hills, New Jersey 07078, on Tuesday, May 20, 1997, at
9:00 a.m., local time, and at any adjournments thereof, hereby ratifying all
that said proxies or their substitutes may do by virtue hereof, and the
undersigned authorizes and instructs said proxies to vote as follows:
- --------------------------------------------------------------------------------
Please be sure to sign and date Date
this Proxy in the box below.
- --------------------------------------------------------------------------------
Stockholder sign above Co-Holder (if any) sign above
- ------------------------------------------------------------------------------
401K PLAN
WITH- CUMU-
FOR HOLD LATE
1. ELECTION OF DIRECTORS: To elect
the nominees for Class C Directors
below for a term of three years:
ALAN TURTLETAUB, MORTON DEAR; and to elect the nominee for CLASS A DIRECTOR for
a term of one year; WILLIAM S. TEMPLETON
Check the appropriate box to indicate the manner in which you direct the
proxies to vote your shares:
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE THAT NOMINEE'S
NAME ON THE LINE BELOW.
- --------------------------------------------------------------------------------
If you checked the box indicating your desire to cumulate votes rather than
divide your votes equally among the nominees for Directors, please list below
the names of those nominees for whom you wish to vote, indicating opposite each
name the percentage of your total votes to be voted for that person. If no
direction is given, the proxies will cast such votes in favor of any or all of
the Company's nominees as the proxies determine.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. ADOPTION OF THE 1997 STOCK [ ] [ ] [ ]
INCENTIVE PLAN:
To approve the adoption of the Company's 1997 Stock Incentive Plan (the
"Plan").
Check the appropriate box to indicate the manner in which you direct the
proxies to vote your shares.
3. In their discretion, upon any other matters which may properly come before
the meeting or any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
Receipt of the Notice of Annual Meeting and Proxy Statement and of the Annual
Report of the Company preceding or accompanying the same is hereby
acknowledged.
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DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
THE MONEY STORE INC.
Your signature should appear the same as your name appears hereon. If signing as
attorney, executor, administrator, trustee or guardian, please indicate the
capacity in which signing. When signing as joint tenants, all parties to the
joint tenancy must sign. When the proxy is given by a corporation it should be
signed by an authorized officer.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
