<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] PRELIMINARY COPY
----------------
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Catalina Marketing Corporation
................................................................................
(Name of Registrant as Specified In Its Charter)
Catalina Marketing Corporation
................................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
.........................................................................
2) Aggregate number of securities to which transaction applies:
.........................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
.........................................................................
4) Proposed maximum aggregate value of transaction:
.........................................................................
5) Total fee paid:
.........................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.........................................................................
2) Form, Schedule or Registration No.:
.........................................................................
3) Filing Party:
.........................................................................
4) Date Filed:
.........................................................................
<PAGE>
[LOGO APPREARS HERE]
NOTICE OF ANNUAL MEETING
TO BE HELD ON
JULY 23, 1996
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
CATALINA MARKETING CORPORATION, a Delaware corporation (herein called the
"Company"), will be held at the Hyatt Regency Westshore, 6200 Courtney
Campbell Causeway, Tampa, Florida 33607 on Tuesday, July 23, 1996 at 9:00 AM
(the "Annual Meeting") for the following purposes:
1. To elect four Class II Directors;
2. To approve an amendment to the Company's 1992 Director Stock Grant Plan
to provide for the grant of 1,000 shares of Common Stock to each director
upon election or reelection to the Board of Directors and an amendment to
the 1992 Director Stock Grant Plan permitting deferral of stock grants
under the terms of the Company's Deferred Compensation Plan;
3. To approve various amendments to the Company's Deferred Compensation Plan
to, among other things, (i) permit participants to defer up to 50% of
their bonus or commissions for investment in the Plan's Common Stock
account, (ii) permit the deferral by directors of director fees for
investment in the Plan's Common Stock account and (iii) permit the
deferral of stock granted to directors under the 1992 Director Stock
Grant Plan and the deposit of that stock into the Plan's Common Stock
account;
4. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock
to 50,000,000 from 30,000,000;
5. To ratify and approve the Company's independent public accountants for
fiscal 1997; and
6. To consider and act upon any other matters which may properly come before
the Annual Meeting and any adjournment thereof.
In accordance with the provisions of the Company's Bylaws, the Board of
Directors has fixed the close of business on June 3, 1996 as the record date
for the determination of the holders of Common Stock entitled to notice of and
to vote at the Annual Meeting.
A list of stockholders entitled to vote at the Annual Meeting will be open
for examination by any stockholder for any purpose germane to the meeting
during ordinary business hours for a period of 10 days prior to the Annual
Meeting at the offices of the Company, 11300 9th Street North, St. Petersburg,
Florida 33716, and will also be available for examination at the Annual
Meeting until its adjournment.
YOUR ATTENTION IS DIRECTED TO THE ACCOMPANYING PROXY STATEMENT. WE INVITE
ALL STOCKHOLDERS TO ATTEND THE ANNUAL MEETING. TO ENSURE THAT YOUR SHARES WILL
BE VOTED AT THE ANNUAL MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY VOTE IN PERSON, EVEN THOUGH YOU HAVE SENT IN YOUR
PROXY.
By Order of the Board of Directors,
/s/ George W. Off
------------------------------------
George W. Off
President and Chief Executive
Officer St.
Petersburg, Florida
June 21, 1996
IMPORTANT: Whether or not you plan to attend the meeting,
you are requested to complete and promptly return the
enclosed proxy in the envelope provided.
<PAGE>
PROXY STATEMENT
CATALINA MARKETING CORPORATION
11300 9TH STREET NORTH
ST. PETERSBURG, FLORIDA 33716
----------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JULY 23, 1996
----------------
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of CATALINA MARKETING CORPORATION, a Delaware corporation (the "Company"), for
use at the Company's 1996 Annual Meeting of Stockholders to be held on
Tuesday, July 23, 1996 at 9:00 AM at the Hyatt Regency Westshore, 6200
Courtney Campbell Causeway, Tampa, Florida, and at any and all adjournments
thereof (the "Annual Meeting"), for the purposes set forth in the accompanying
Notice of Annual Meeting. Any stockholder has the power to revoke his or her
proxy at any time before it is voted. A proxy may be revoked by delivering
written notice of revocation to the Company at its principal office, 11300 9th
Street North, St. Petersburg, Florida 33716, Attention: Corporate Secretary,
by a subsequent proxy executed by the person executing the prior proxy and
presented at the meeting, or by attendance at the Annual Meeting and voting in
person by the person executing the proxy. In addition to solicitation by mail,
officers, directors and regular employees of the Company, who will receive no
additional compensation for their services, may solicit proxies by mail,
telegraph or personal calls. The Company may, but does not currently plan to,
engage a proxy solicitation firm in connection with the solicitation of
proxies. The expense of any such engagement is not expected to exceed $10,000.
All costs of solicitation will be borne by the Company. The Company has
requested brokers and nominees who hold stock in their name to furnish this
proxy material to their customers and the Company will reimburse such brokers
and nominees for their related out-of-pocket expenses. This Proxy Statement of
the Company will be mailed on or about June 21, 1996 to each stockholder of
record as of the close of business on June 3, 1996.
VOTING AT THE MEETING
The Company had 9,784,227 shares of Common Stock, par value $.01 per share
(the "Common Stock"), outstanding as of June 3, 1996. Holders of record of
shares of the Common Stock at the close of business on June 3, 1996 will be
entitled to notice of and to vote at the Annual Meeting and will be entitled
to one vote for each such share so held of record.
NOMINATION AND ELECTION OF DIRECTORS
(PROPOSAL 1)
The persons named in the enclosed proxy will vote FOR the four nominees
named below under "Nominees for Directors" as the four Class II Directors,
unless instructed otherwise in the proxy. The persons receiving the greatest
number of votes, up to the number of directors to be elected, shall be the
persons elected as Class II Directors.
Shares represented by proxies which are marked "withhold authority" will
have the same effect as a vote against the nominees. Each Class II Director is
to hold office until the 1999 Annual Meeting of Stockholders and until his or
her respective successor is duly qualified and elected.
The names and certain information concerning the persons to be nominated to
become directors by the Board of Directors at the Annual Meeting are set forth
below. YOUR BOARD OF DIRECTORS
<PAGE>
RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE NOMINEES
NAMED BELOW UNDER "NOMINEES FOR DIRECTORS". It is intended that shares
represented by the proxies will be voted FOR the election to the Board of
Directors of the persons named below unless authority to vote for nominees has
been withheld in the proxy. Although each of the persons nominated has
consented to serve as a director if elected and your Board of Directors has no
reason to believe that any of the nominees will be unable to serve as a
director, if any nominee withdraws or otherwise becomes unavailable to serve,
the persons named as proxies will vote for any substitute nominee designated
by the Board of Directors. The following information regarding the Company's
directors (including the nominees) and executive officers is relevant to your
consideration of the slate proposed by your Board of Directors.
DIRECTORS AND EXECUTIVE OFFICERS
The current directors, executive officers of the Company and nominees for
director are as follows:
<TABLE>
<S> <C> <C>
Tommy D. Greer.............. 64 Chairman of the Board
George W. Off............... 49 Chief Executive Officer, President and Director
Karl J. Maggard............. 52 Executive Vice President, Marketing
Executive Vice President, Sales and President,
Daniel D. Granger........... 47 Catalina Marketing Services Division
Executive Vice President, Retail and Corporate
Joseph A. Lillis, III....... 49 Development
Senior Vice President and Chief
Philip B. Livingston........ 39 Financial Officer
Frank H. Barker............. 65 Director
Frederick W. Beinecke....... 53 Director
Patrick W. Collins.......... 67 Director
Stephen I. D'Agostino....... 62 Director
Thomas G. Mendell........... 49 Director
Helene Monat................ 49 Director
Thomas W. Smith............. 68 Director
Michael B. Wilson........... 59 Director
</TABLE>
The Board of Directors is divided into three classes, with each class
holding office for staggered three year terms. The terms of Class I Directors
Frank H. Barker, Patrick W. Collins and George W. Off expire in 1998, the
terms of Class II Directors Frederick W. Beinecke, Tommy D. Greer, Helene
Monat and Thomas W. Smith expire in 1996 and the terms of Class III Directors
Stephen I. D'Agostino, Thomas G. Mendell and Michael B. Wilson expire in 1997.
All executive officers of the Company are chosen by the Board of Directors and
serve at the Board's discretion. No family relationships exist between any of
the officers or directors of the Company.
ATTENDANCE AT MEETINGS AND BOARD COMMITTEES
During the fiscal year ended March 31, 1996, the Board of Directors held a
total of five meetings. All members of the Board of Directors attended more
than 75% of the meetings of the Board and of the committees of which he or she
was a member.
The standing committees of the Board of Directors are the Compensation
Committee, the Director Grant Plan Committee, the Audit Committee and the
Nominating Committee.
The Compensation Committee, which met on five occasions in fiscal 1996, is
responsible for: (i) reviewing and recommending to the Board of Directors an
integrated compensation and incentive program for all levels of management;
(ii) reviewing, approving and recommending to the Board of Directors other
employee compensation plans; and, (iii) reviewing and approving compensation
plans for members of the Board of Directors. In addition, the Compensation
Committee is responsible for: (a) granting options to purchase Company
2
<PAGE>
stock pursuant to the Company's 1989 Stock Option Plan; (b) determining the
number of shares subject to options granted and the exercise price per share;
and (c) administering such plan pursuant to its terms. Also, the Compensation
Committee has full and exclusive discretionary authority to (1) construe,
interpret and apply the terms of the Company's Employee Payroll Deduction
Stock Purchase Plan; (2) determine eligibility and adjudicate all disputed
claims under such Plan; and (3) administer such Plan in accordance with its
terms. The Committee currently consists of Frederick W. Beinecke as Chairman,
Patrick W. Collins, Thomas G. Mendell and Michael B. Wilson.
The Director Grant Plan Committee, which met on two occasions in fiscal
1996, is responsible for administering the 1992 Director Grant Plan pursuant
to its terms. The Committee currently consists of Tommy D. Greer as Chairman
and George W. Off.
The Audit Committee, which met on two occasions in fiscal 1996, is
responsible for: (i) reviewing the Company's financial results and the scope
and results of audits; (ii) evaluating the Company's system of internal
controls and meeting with independent auditors and appropriate Company
financial and auditing personnel concerning the Company's system of internal
controls; (iii) recommending to the Board of Directors the appointment of the
independent auditors; and (iv) evaluating the Company's financial reporting
activities and the accounting standards and principles followed. The Committee
currently consists of Stephen I. D'Agostino as Chairman, Frank H. Barker and
Thomas W. Smith.
The Nominating Committee, which met on one occasion in fiscal 1996, is
responsible for recommending qualified candidates for election as directors of
the Company, including the slate of directors which the Board of Directors
proposes for election by stockholders at each annual meeting, and for making
recommendations to the Board of Directors concerning the structure and
membership of the committees of the Board of Directors. In carrying out its
functions in regard to Board membership, the Committee will consider nominees
recommended by stockholders upon written submission of pertinent data to the
attention of the Corporate Secretary. Such data should include complete
information as to the identity of the proposed nominee, including name,
address, present and prior business and/or professional affiliations,
education and experience, particular field or fields of expertise, and the
reasons why, in the opinion of the recommending stockholder, the proposed
nominee is qualified and suited to be a director of the Company as well as
what particular contribution to the success of the Company such person could
be expected to make. The Committee currently consists of Stephen I. D'Agostino
as Chairman, Frederick W. Beinecke, Tommy D. Greer and George W. Off.
NOMINEES FOR DIRECTORS
The following four persons will be placed in nomination for election to the
Board of Directors as Class II Directors. The shares represented by the proxy
cards returned will be voted FOR the election of these nominees unless
otherwise stated in the proxy.
Frederick W. Beinecke was elected as a director of the Company in January
1993, and also served as a director of the Company from 1985 until January
1990. He has been the President of Antaeus Enterprises, Inc. (a venture
capital and marketable securities investment company) since 1982. Mr. Beinecke
is also a director of several private companies.
Tommy D. Greer was the Company's Chief Executive Officer from January 1992
until July 1994, after serving as its President and Chief Operating Officer
from January 1989 to January 1992. Mr. Greer has been a director of the
Company since April 1989 and currently serves as Chairman. Before joining the
Company, Mr. Greer had been retired. Prior to retirement Mr. Greer spent 25
years at Texize Chemicals Company, a household products manufacturer, where he
was responsible for conceptualizing and marketing many popular cleaning
products, including Fantastik Spray Cleaner, Spray & Wash, K2R and Glass Plus.
Mr. Greer was President of Texize from 1969 to 1975.
Helene Monat was elected as a director of the Company in October 1992. From
July 1992 until April 1996, Ms. Monat served as the Company's Executive Vice
President, Sales. From February 1995 until April 1996, she served as President
of Catalina Marketing Services, a business unit of the Company. She was Senior
Vice President, Sales from April 1990 until July 1992 and Vice President,
Sales East prior to that time.
3
<PAGE>
Thomas W. Smith was elected as a director of the Company in July 1994. Mr.
Smith founded and has been President of Prescott Investors, Inc., an
investment advisory firm, since 1973. Mr. Smith is on the board of directors
of MacDermid, Inc., a distributor of specialty chemicals.
OTHER DIRECTORS AND EXECUTIVE OFFICERS
Frank H. Barker, who was elected as a director of the Company in January
1996, was, until his retirement in January 1996, Corporate Vice President
responsible for public relations and government affairs and Company Group
Chairman responsible for the ophthalmic business and the health
promotion/disease prevention business of Johnson & Johnson. Prior to his
retirement, Mr. Barker had been employed by Johnson & Johnson for more than
twenty five years.
Patrick W. Collins, who was elected as a director of the Company in July
1995, was, until his retirement in March 1994, the Vice Chairman and Chief
Operating Officer of Ralphs Grocery Company, and a director of Ralphs from
1988 until March 1994. Prior to his most recent position, Mr. Collins was
Ralphs' President from February 1976 until March 1994. Mr. Collins is also a
director of First Stratford Capital Group, Inc.
Stephen I. D'Agostino was elected as a director of the Company in February
1988. Mr. D'Agostino is a consumer marketing consultant and was Chairman of
Lord Capital Corporation, an investment bank, from January 1989 to December
1991, Chairman of Texas State Optical Corp., an optical stores franchiser,
from August 1990 to December 1991. Mr. D'Agostino is a director of Super Value
Stores, Inc., a grocery wholesaler, as well as Kyser Industrial Corp., a
manufacturer of certain equipment for trucks and refrigerators for
supermarkets and food service organizations.
Daniel D. Granger became Executive Vice President, Sales of the Company and
President of Catalina Marketing Services, a business unit of the Company, in
January 1996. Prior to such time, Mr. Granger had been employed with the
Company for eight years, most recently serving as Chief Executive Officer and
President of Catalina Electronic Clearing Services, a business unit of the
Company.
Joseph A. Lillis, III joined the Company as Executive Vice President, Retail
and Corporate Development in January 1996. From January 1994 to January 1996,
Mr. Lillis served as Senior Vice President and General Manager of Hanes
Licensed Products for Sara Lee Corporation. Prior to joining Sara Lee, Mr.
Lillis served as Senior Vice President and Group Vice President of Advo, Inc.,
a direct mail services provider.
Philip B. Livingston joined the Company as Senior Vice President and Chief
Financial Officer in October 1995. From 1993 to 1995 he was Vice President and
Chief Financial Officer of Celestial Seasonings, Inc., a manufacturer of
specialty tea. From 1989 to 1993 he was Vice President and Chief Financial
Officer of Kenetech Corporation, an independent energy company. From 1985 to
1989 he held various financial management positions for Genentech, Inc., a
manufacturer of pharmaceutical products. Mr. Livingston is a certified public
accountant.
Karl J. Maggard has been the Company's Executive Vice President, Marketing
since June 1994. Prior to June 1994, Mr. Maggard spent 10 years with Tropicana
Products, Inc. as Senior Vice President of Sales and Chairman of the Strategic
Planning Committee.
Thomas G. Mendell was elected as a director of the Company in January 1990.
Mr. Mendell is a partner of The Beacon Group, a merchant banking firm. Prior
to joining The Beacon Group in 1994, Mr. Mendell was a partner of Goldman,
Sachs & Co., which he joined in 1974.
George W. Off, one of the Company's founders, became the President and Chief
Executive Officer in July 1994. Prior to that, Mr. Off was President and Chief
Operating Officer since October 1992, after serving as its Executive Vice
President from April 1990 to October 1992. Mr. Off was re-elected as a
director of the Company in October 1992 after serving in that capacity from
1983 until January 1990.
Michael B. Wilson was elected as a director of the Company in January 1993.
He was Vice President, Sales and Marketing, Consumer and Commercial Paper
Products, for Georgia-Pacific Corporation until his retirement in September
1992. Mr. Wilson also serves on the board of Worldtex, Inc., a covered yarn
manufacturer.
4
<PAGE>
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 31, 1996, certain information
regarding the ownership of Common Stock of each person known by the Company to
be the beneficial owner of more than five percent of the outstanding shares of
the Company's Common Stock, each of its directors and executive officers, and
all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED (1)
OFFICERS, DIRECTORS AND -----------------------
5 PERCENT STOCKHOLDERS NUMBER PERCENT
----------------------- ------------ ----------
<S> <C> <C>
T. Rowe Price Associates (2)....................... 925,000 9.5%
100 E. Pratt Street
Baltimore, MD 21202
The Prudential Insurance Company of America (3).... 860,500 8.8%
Prudential Plaza
Newark, NJ 07102
Jennison Associates Capital Corp................... 857,000 8.8%
466 Lexington Avenue
New York, NY 10017
Thomas W. Smith (4)................................ 529,312 5.4%
323 Railroad Avenue
Greenwich, CT 06830
Antaeus Enterprises, Inc. (5)...................... 533,397 5.5%
420 Lexington Avenue, Suite 3020
New York, NY 10170
Frank H. Barker.................................... 834 *
Frederick W. Beinecke (5).......................... 582,640 6.0%
Patrick W. Collins................................. 1,221 *
Stephen I. D'Agostino (6).......................... 36,980 *
Daniel D. Granger.................................. 39,512 *
Tommy D. Greer (7)................................. 84,067 *
Joseph A. Lillis, III.............................. 0 *
Philip B. Livingston............................... 0 *
Karl J. Maggard.................................... 15,106 *
Thomas G. Mendell.................................. 5,780 *
Helene Monat (8)................................... 75,686 *
George W. Off...................................... 147,456 1.5%
Michael B. Wilson.................................. 2,599 *
All directors and executive officers as a group (14 1,521,193 15.3%
persons)..........................................
</TABLE>
- - --------
* Amount represents less than 1% of the Company's Common Stock.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes generally voting power or
investment power with respect to securities. Shares of Common Stock
subject to options currently exercisable or exercisable within 60 days are
deemed outstanding for computing the percentage ownership of the person
holding the options but are not deemed outstanding for computing the
percentage ownership of any other person. Such shares are included for
Messrs. Granger--20,500, Greer--36,250, Maggard--15,000 and Off--77,750
and Ms. Monat--44,700, all of which options are exercisable within 60 days
of March 31, 1996.
(2) These securities are owned by various individual and institutional
investors for which T. Rowe Price Associates, Inc. ("Price Associates")
serves as investment adviser with power to direct investments and/or
shared power to vote the securities. For purposes of the reporting
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), Price Associates is deemed to be a beneficial owner of
such securities; however, Price Associates expressly disclaims that it is,
in fact, the beneficial owner of such securities.
5
<PAGE>
(3) The Prudential Insurance Company of America ("Prudential") has direct or
indirect voting and/or investment discretion with respect to these
securities which are held for the benefit of clients by Prudential's
separate accounts, internally managed accounts, registered investment
companies, subsidiaries and/or other affiliates. For purposes of the
reporting requirements of the Exchange Act, Prudential is deemed to be a
beneficial owner of such securities; however, Prudential expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(4) Shares listed for Mr. Thomas W. Smith, a director of the Company, include
50,442 shares owned directly by Mr. Smith, 221,000 shares held by Idoya
Partners, a limited partnership of which Mr. Smith is general partner,
209,500 shares held by Prescott Associates, a limited partnership of which
Mr. Smith is general partner, 12,200 shares held by Prescott International
Partners, a limited partnership of which Mr. Smith is general partner,
2,000 held by Mr. Smith's wife, 7,600 shares held in accounts for Mr.
Smith's children over which he has trading authority, 15,000 shares held
by Prescott Investors profit sharing account of which Mr. Smith is
trustee, and 11,570 shares held by trusts in which Mr. Smith is the
trustee.
(5) Frederick W. Beinecke, a director of the Company, is the President and a
director of Antaeus Enterprises, Inc. ("Antaeus"). The shares listed for
Mr. Beinecke include 21,743 shares owned directly by him, 27,500 shares
held by a trust for his benefit, and 533,397 shares held by Antaeus.
Antaeus and Mr. Beinecke may be deemed to be part of a group, together
with a trust, that beneficially owns 582,640 shares constituting
approximately 6% of the Company's outstanding shares. Antaeus, Mr.
Beinecke, and such trust disclaim membership in such a group. Except for
the shares owned directly by each of them, Antaeus and Mr. Beinecke
disclaim beneficial ownership of all such shares.
(6) Shares listed for Mr. D'Agostino include 950 shares held in an IRA account
by his wife. Mr. D'Agostino disclaims beneficial ownership of such shares.
(7) Shares listed for Mr. Greer include 4,285 shares held by his wife, as to
which Mr. Greer disclaims beneficial ownership.
(8) Shares listed for Ms. Monat include 189 shares held in a trust account for
the benefit of her minor child. Ms. Monat disclaims beneficial ownership
of such shares.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive officers,
directors and 10% stockholders to file reports regarding initial ownership and
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Executive officers, directors and 10% stockholders are
required by Securities Exchange Commission regulations to furnish the Company
with copies of all Section 16(a) forms they file. The Company's information
regarding compliance with Section 16(a) is based solely on a review of the
copies of such reports furnished to the Company by the Company's executive
officers, directors and 10% stockholders. The Company is not aware of any
noncompliance with the requirements of Section 16(a) to file reports during
the Company's last fiscal year, other than as reported below. The following
persons filed forms late during the 1996 fiscal year: Frank H. Barker (one
occasion), Daniel D. Granger (two occasions), Helene Monat (one occasion),
George W. Off (one occasion) and Joseph A. Lillis, III (one occasion).
Further, the following recipients of stock grants under the 1992 Director
Grant Plan failed to file reports disclosing the full amount of such grants
due to a misunderstanding of the application of reporting requirements to
grants that vest over a period of time: Patrick W. Collins, Frank H. Barker,
Stephen I. D'Agostino, Michael B. Wilson and Thomas G. Mendell.
6
<PAGE>
AMENDMENTS TO 1992 DIRECTOR STOCK GRANT PLAN
(PROPOSAL 2)
The Board has approved amendments to the Company's 1992 Director Stock Grant
Plan (the "Director Grant Plan"), effective July 25, 1995, subject to the
approval of the Company's stockholders. The affirmative vote of a majority of
the outstanding shares present or represented and entitled to vote at the
Annual Meeting will be required to approve this proposal. The persons named in
the enclosed proxy will vote shares represented by proxies returned to the
Company FOR the proposal unless instructed otherwise in the proxy. Shares
represented by proxies which are marked "abstain" will have the same effect as
a vote against this proposal. YOUR BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE PROPOSAL TO APPROVE THE AMENDMENTS TO THE DIRECTOR
GRANT PLAN.
AMENDMENTS REQUIRING STOCKHOLDER APPROVAL
Amendment to Calculation of Shares Granted Upon Election or Reelection.
Section 6(b) of the Director Grant Plan provides for a grant of shares of
Common Stock to each outside director as of the day that such director takes
office following the election or reelection of such director by the
stockholders or by the Board of Directors, as provided in the Company's
Bylaws. Previously, assuming a three-year term upon the election of an
eligible director, each grant included the number of shares obtained by
dividing $30,000 by the Fair Market Value (as defined in the Director Grant
Plan) of the shares on the effective date of the grant. This formula was
reduced pro rata for any term to which an eligible director was elected, which
term was expected to be less than three years.
In order to simplify the operation of the Director Grant Plan and to
increase the number of shares awarded to the outside directors upon their
election or reelection, the Board of Directors believed that it was in the
best interest of the Company to amend Section 6(b) to provide that upon each
election or reelection of a director such director will receive an aggregate
of 1,000 shares of Common Stock (or, if the Stock Split Dividend described in
Proposal 4 is effected, 2,000 shares) in lieu of the number derived from the
formula described above. This amendment eliminated the necessity of
determining the fair market value of the Company's Common Stock in calculating
the number of shares each director receives. Subject to approval by the
stockholders, Section 6(b) has been revised to read in its entirety as
follows:
Award of Grants. A Grant shall be awarded to each Director as of the day
that such Director takes office following the election or reelection of
such Director by the stockholders or by the Board, as permitted in the
Corporation's Bylaws, in partial consideration for the fulfillment by
such Director of such Director's duties as a director of the
Corporation. Subject to the availability of Shares as specified in
Section 5 of the Plan, each Grant awarded on or after July 25, 1995
shall include an aggregate of one thousand (1,000) Shares (subject to
adjustments in accordance with the provisions of Section 8 hereof) as of
the effective date of the Grant, as determined by the Administrator;
provided, however, that if the term (the "Term of Directorship") for
which the Director has been elected is not a full three-year term, the
number of Shares subject to a Grant shall be the number of Shares
calculated as set forth above, multiplied by a fraction, the numerator
of which is the number of full months during which the Grantee shall
serve as director following the award of the Grant and until the next
annual meeting of stockholders (the "Annual Meeting of Stockholders") at
which the class of directors to which the Grantee belongs is to be
elected (assuming for purposes of this calculation that the Annual
Meeting Date (as hereinafter defined) is July 31 of such fiscal year),
and the denominator of which is thirty-six (36), rounded up to the
nearest whole number of Shares.
Deferral of Grant. The Board has also proposed that the Director Grant Plan
be amended, effective as of the date of the Annual Meeting, to provide that
directors may defer the receipt of stock granted pursuant to Section 6(b) and
deposit the value of such stock as stock units into an account created under
the Company's Deferred Compensation Plan. Once deposited under the terms of
the Deferred Compensation Plan, neither the value of such deposit nor such
stock may be withdrawn until the director's retirement, termination or death
in
7
<PAGE>
accordance with the terms of the Deferred Compensation Plan. If receipt of
such stock is deferred, the director will thereby be able to defer taxable
income on the value of such stock until it is distributed pursuant to the
terms of the Deferred Compensation Plan. To effect this Amendment, a new
Section 6(i) would be added to the Director Grant Plan and would read in its
entirety as follows:
Deferral of Grant. Prior to his or her election or reelection to the
Board of Directors, each Director may elect to defer, in accordance with
the terms of the Corporation's Deferred Compensation Plan, all or a
portion of the Grant he or she shall receive if elected or reelected,
pursuant to Section 6(b). In such case, no shares will be issued to the
Director and a credit will be made to the Common Stock unit account
maintained for such Director under the Deferred Compensation Plan in a
number of units equal to the number of shares deferred on the date of
Grant.
REASONS FOR AMENDMENTS
The proposed amendment to change the formula for grant awards was adopted by
the Board of Directors for two reasons. First, the Board desired to simplify
the operation of the Director Grant Plan. Secondly, when the Director Grant
Plan was adopted (October 27, 1992), the fair market value of the Common Stock
on the New York Stock Exchange was $33.50 per share. As of July 24, 1995, the
day before the amendment was adopted by the Board, the closing price of the
Common Stock on the New York Stock Exchange was $55.50 per share and the
closing price of the Common Stock on June 3, 1996 was $78.00 per share. With
this increase in the value of the Common Stock, the number of shares subject
to grants has decreased due to the formula described above. This decrease was
viewed as an unacceptable consequence of the increase in stock price.
Therefore, to increase the benefits to directors and to counteract the effect
of the increase in stock value, the Board of Directors proposed an amendment
to the Plan to change the method in which grants are calculated, as set forth
herein. By guaranteeing outside directors a meaningful number of shares of
Common Stock of the Company upon election or reelection, the Plan provides a
valuable incentive to directors to continue in service to the Company.
The proposed amendment regarding the deferral of grants was adopted by the
Board of Directors to further increase the value of director compensation
without materially increasing the cost to the Company. By deferring grants,
directors will be able to defer taxable income on the value of a grant.
Further, by creating an incentive for directors to hold their stock for the
long term, in the form of units under the Deferred Compensation Plan, the
amendment further aligns directors' interests with the interests of the
stockholders of the Company.
SUMMARY OF THE DIRECTOR GRANT PLAN
The Director Grant Plan is intended to provide incentive to outside
directors of the Company, to encourage proprietary interest in the Company by
the Company's directors, and to attract new outside directors with outstanding
qualifications. The availability of stock grants is an important feature of
the Company's ability to attract and retain qualified directors.
Eligibility. The "Grantees" who are awarded grants under the Director Grant
Plan are the outside (non-employee) directors, duly elected to the board by
the Company's stockholders or otherwise in accordance with the Company's
Bylaws, and all outside (non-employee) directors appointed to fill a vacancy
or a newly created directorship position on the Board. The Company currently
has eight outside (non-employee) directors who are eligible to participate in
the Director Grant Plan.
Administration. The Director Grant Plan is administered, in the discretion
of the Board from time to time, by the Board or by a committee appointed by
the Board (the "Director Grant Plan Committee"). The Director Grant Plan
Committee must consist of not less than two members of the Board. The Board or
such Director Grant Plan Committee administering the Director Grant Plan (the
"Director Grant Plan Administrator") has the authority to (i) construe and
interpret the Director Grant Plan; (ii) define the terms used in the Director
Grant Plan; (iii) prescribe, amend and rescind rules and regulations relating
to the administration of the Director Grant Plan; and (iv) make all other
determinations necessary or advisable for the administration of the Director
8
<PAGE>
Grant Plan. The Director Grant Plan Committee has been appointed by the board
to administer the Director Grant Plan. The members of the Director Grant Plan
Committee are Tommy D. Greer as Chairman and George W. Off.
Shares Available For Grants Under the Plan. The stock subject to grants
awarded under the Director Grant Plan are shares of authorized but unissued or
reacquired shares of Common Stock. The aggregate number of shares which were
initially available for grants under the Director Grant Plan was 50,000, and
there are currently 43,707 shares available for future grants under the
Director Grant Plan. The aggregate number of shares covered by the Director
Grant Plan and the number of shares covered by each grant will be
proportionately adjusted as a result of any stock split, stock dividend,
combination of shares or any other similar change (including the Stock Split
Dividend described in Proposal 4). Shares subject to any outstanding grants
which are forfeited for any reason are returned to the Company in accordance
with the Director Grant Plan and the shares so forfeited may again be subject
to grants.
Participants; Award of Grants. The Grantees consist exclusively of outside
(non-employee) directors of the Company. However, no director is eligible to
receive a grant if and to the extent that such director is prohibited from
personally accepting or benefitting from a grant due to such director's
affiliation with a business organization. Such directors will, instead,
receive $10,000 per year in cash, in quarterly installments, for each year
during the term of their directorships. All outside directors are currently
eligible to receive stock benefits under the Director Grant Plan. Grants are
evidenced by written stock grant agreements in such form as the Director Grant
Plan Administrator shall from time to time determine.
A grant is awarded to each Grantee as of the day that such Grantee takes
office following the election or reelection of such Grantee by the
stockholders or by the Board, as provided in the Company's Bylaws, in partial
consideration for the fulfillment by such Grantee of such Grantee's duties as
a director of the Company. Prior to the amendment to the Director Grant Plan
being proposed for approval by the stockholders, assuming a three-year term
upon the election of an eligible director, each grant included the number of
shares obtained by dividing $30,000 by the Fair Market Value (as defined in
the Director Grant Plan) of the shares on the effective date of the grant.
This formula was reduced pro rata for any term to which an eligible director
was elected, which term was expected to be less than three years. For example,
if a Grantee's term was expected to be eighteen months, the Fair Market Value
of the Shares to be awarded was $15,000. Pursuant to the amendment, this
formula has been changed such that each director will receive, upon election
or reelection for any three-year term, a grant of 1,000 shares (or 2,000
shares as adjusted for the Stock Split Dividend). The number of shares granted
will be reduced pro rata for any term of less than three years in length.
Although not required to do so, the Company has registered the award of shares
pursuant to the Director Grant Plan under the Securities Act of 1933, as
amended.
9
<PAGE>
Grants Awarded Since Inception of the Director Grant Plan. Following final
approval of the Director Grant Plan by the Board on January 26, 1993, grants
have been awarded to Grantees who currently serve as directors pursuant to the
terms of the Director Grant Plan as follows:
GRANTS UNDER THE DIRECTOR GRANT PLAN
<TABLE>
<CAPTION>
AGGREGATE FAIR NUMBER OF MONTHS
DATE CLASS OF MARKET VALUE ON EXPECTED IN TERM NUMBER OF
DIRECTOR OF GRANT DIRECTOR(1) DATE OF GRANT FOLLOWING GRANT SHARES IN GRANT
-------- -------- ----------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Frederick W. Beinecke... 1/26/93 II $ 5,031 6 125
Stephen I. D'Agostino... 1/26/93(2) III 23,345 18 580
Michael B. Wilson....... 1/26/93 III 15,013 18 373
Frederick W. Beinecke... 7/27/93 II 30,000 36 780
Thomas G. Mendell....... 4/01/94(3) III 3,333 4 73
Stephen I. D'Agostino... 7/26/94 III 30,000 36 663
Thomas G. Mendell....... 7/26/94 III 30,000 36 663
Michael B. Wilson....... 7/26/94 III 30,000 36 663
Thomas W. Smith......... 7/26/94 II 20,000 24 442
Patrick W. Collins...... 7/26/94 I 10,000 12 221
Patrick W. Collins...... 7/25/95 I 55,380 36 1,000(4)
Frank H. Barker......... 1/23/96 I 54,353 30 834(5)
</TABLE>
- - --------
(1) The terms of Class I Directors expire at the time of the 1998 Annual
Meeting of Stockholders, the terms of the Class II Directors expire at the
time of the 1996 Annual Meeting of Stockholders and the terms of the Class
III Directors expire at the time of the 1997 Annual Meeting of
Stockholders.
(2) This grant was deemed granted upon ratification of certain changes to the
Director Grant Plan on January 26, 1993 but was awarded in a manner to
provide a benefit based on the Fair Market Value ($34.50 per share) on the
date of adoption (October 27, 1992) of the Director Grant Plan. Based on
such Fair Market Value, the benefit to Mr. D'Agostino was approximately
$20,000.
(3) Prior to April 1994, Mr. Mendell was not eligible to receive grants under
the Director Grant Plan due to his affiliation with a business
organization which prohibited his receiving benefits under the Director
Grant Plan. However, prior to the end of the Company's 1994 fiscal year,
Mr. Mendell terminated his relationship with such business organization
and thus became eligible to receive grants under the Director Grant Plan.
Accordingly, on April 1, 1994, Mr. Mendell received a grant of 73 shares
to cover the four month period until the 1994 Annual Stockholders Meeting.
(4) As noted, the amendment being presented for approval by stockholders was
effective July 25, 1995, the date of the 1995 Annual Stockholder Meeting.
Therefore, subject to stockholder approval, Mr. Collins, who was elected
as a director at such meeting, received a grant of 1,000 shares.
(5) For the same reasons disclosed with respect to Mr. Collins in footnote 4
above, Mr. Barker received a grant of 834 shares on January 23, 1996, the
date of his election to the Board of Directors, which represents a grant
of 1,000 shares reduced to reflect the fact that he was expected to serve
a term of 30 months following the date of grant.
If the nominees for election as directors being considered at the Annual
Meeting are elected by the stockholders and the proposed amendments to the
Director Grant Plan are approved, then Mr. Beinecke, Ms. Monat and Mr. Smith
will each receive grants of 1,000 shares. The fair market value of the Shares
on June 3, 1996 was $78.00 per share. If this is the fair market value on the
date of the Annual Meeting, then each grant will have an aggregate value of
$78,000.
Vesting. Shares included in grants are subject to the vesting provisions
set forth in the Director Grant Plan. Shares which have vested according to
the formula described herein are considered "Vested Shares" and
10
<PAGE>
shares which have not so vested are considered "Non-Vested Shares." The shares
included in each grant vest on each successive Annual Meeting date (the
"Annual Meeting Date") following the effective date of the grant. The number
of shares subject to a grant which become Vested Shares as of each Annual
Meeting Date is calculated by multiplying the number of shares included in the
grant by a fraction, the numerator of which is equal to the number of months
which have elapsed since the later of (i) the election or reelection of such
Grantee (i.e., the effective date of the grant) or (ii) the last Annual
Meeting Date, and the denominator of which is the number of full months during
which the Grantee serves as director following the award of the grant and
until the next Annual Meeting Date at which the class of directors to which
the Grantee belongs is to be elected (assuming for purposes of this
calculation that the Annual Meeting Date is July 31 of such fiscal year).
A Grantee may not assign, sell, pledge, hypothecate or otherwise transfer
any grant or any Non-Vested Shares. If a Grantee ceases to be a director for
any reason or no reason, including upon death or disability, removal (with or
without cause) or resignation, the grant will be automatically terminated
immediately upon the effective date of such cessation and all shares included
in the grant which are Non-Vested Shares as of the effective date of such
cessation, will be forfeited automatically and will, effective immediately
upon such cessation, be returned to the status of authorized shares to be
issued pursuant to grants under the Director Grant Plan.
A Grantee will have all rights as a stockholder with respect to all shares
included in the grant, regardless of whether the shares awarded are Vested
Shares or Non-Vested Shares, including, without limitation, the right to vote
any such shares and the right to receive dividends.
Change of Control. Upon the occurrence of a change of control of the
Company (i.e., a sale of all or substantially all of the Company's assets, a
merger of the Company with another entity where the Company is not the
surviving corporation or the consolidation of the Company with another
Company) (a "Forfeiture Event"), the Director Grant Plan will terminate.
Unless such Forfeiture Event occurs within thirty days following the date of
an Annual Meeting of Stockholders, any shares of Common Stock which would have
become Vested Shares at the next succeeding Annual Meeting of Stockholders
shall become vested and all other Non-Vested Shares will be forfeited. If a
Forfeiture Event occurs within such thirty-day period, all Non-Vested Shares
will be forfeited.
Amendment and Termination. Grants may be awarded pursuant to the Director
Grant Plan until the expiration of the Director Grant Plan on October 27,
2002.
The Board may, from time to time, with respect to any shares at the time not
subject to grants, suspend or discontinue the Director Grant Plan or revise or
amend it in any respect whatsoever, provided that the Board may not revise or
amend the Director Grant Plan more than once every six months (other than to
conform with changes in certain laws), and provided further that no amendment
or revision may adversely affect, without the affected Grantee's written
consent, the rights of any Grantee to whom shares have been issued pursuant to
the Director Grant Plan. In addition, without the approval of the Company's
stockholders, no such revision or amendment may:
1.Materially increase the benefits accruing to Grantees under the Director
Grant Plan;
2.Increase the number of Shares which may be issued under the Director
Grant Plan; or
3. Change the designation in the Director Grant Plan with respect to the
classes of persons eligible to receive Grants.
Federal Income Tax Consequences. The following discussion is intended only
as a general summary of the federal income tax consequences to Grantees and
the Company with respect to the Director Grant Plan. The discussion is based
on current laws which are subject to change at any time or which may be
interpreted differently. The discussion does not address tax consequences
under the laws of any state, local or foreign jurisdiction, nor does it
address federal and state estate, inheritance and gift taxes, and the tax
treatment of each Grantee will depend in part upon such Grantee's particular
tax situation.
11
<PAGE>
In general, a Grantee will not recognize income upon receipt of shares
pursuant to a grant. However, upon vesting of a Grantee's shares, a Grantee
will recognize compensation income (and receive basis in such shares) in an
amount equal to the fair market value of the Vested Shares determined on the
vesting date, and the Company will be entitled to a compensation deduction
equal to such amount. Alternatively, no later than 30 days after a grant of
shares, a Grantee may make an election under Section 83(b) of the Internal
Revenue Code of 1986, as amended (the "Code"). In such case, the Grantee will
recognize compensation income in the taxable year of the grant (and receive a
basis) equal to the fair market value of such shares determined on the date of
grant, and the Company will be entitled to a compensation deduction equal to
such amount. In general, under either alternative, a Grantee will recognize
capital gain or loss upon the subsequent disposition of the shares.
Unless a Grantee makes an election under Section 83(b) of the Code, as
described above, amounts paid to a Grantee as dividends with respect to such
shares prior to the date that a Grantee's shares vest under the Director Grant
Plan will be treated for federal income tax purposes as compensation income
(taxable at ordinary income rates) for which the Company will be entitled to a
compensation deduction with respect to such amounts. However, upon the vesting
of a Grantee's shares (or a Grantee's making of a timely Code Section 83(b)
election), amounts paid to a Grantee as dividends will be treated as dividends
for federal income tax purposes for which the Company will not be entitled to
a deduction with respect to such amounts.
Assuming approval of the proposed amendments, if a Grantee elects under the
Company's Deferred Compensation Plan to defer the receipt of shares pursuant
to a grant, the Grantee will not be taxed at the time of such election or upon
vesting of the grant. Rather, upon the receipt of shares from the Deferred
Compensation Plan upon death, disability or retirement, tax will be due on the
then value of the shares distributed. The taxable value of such shares will be
treated as ordinary compensation income to the Grantee and the Company will be
entitled to a corresponding compensation deduction.
AMENDMENTS TO DEFERRED COMPENSATION PLAN
(PROPOSAL 3)
The Board has approved an amendment and restatement of the Company's
Deferred Compensation Plan (the "Deferred Compensation Plan"), effective as of
July 1, 1996, certain of which amendments are subject to the approval of the
Company's stockholders. The affirmative vote of a majority of the outstanding
shares present or represented and entitled to vote at the Annual Meeting will
be required to approve this proposal. The persons named in the enclosed proxy
will vote shares represented by proxies returned to the Company FOR the
proposal unless instructed otherwise in the proxy. Shares represented by
proxies which are marked "abstain" will have the same effect as a vote against
this proposal. YOUR BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE PROPOSAL TO APPROVE THE AMENDMENTS TO THE DEFERRED COMPENSATION PLAN.
AMENDMENTS REQUIRING STOCKHOLDER APPROVAL
Deferral by Participants of Bonus or Commissions. The Deferred Compensation
Plan currently permits eligible employees to defer up to 100% of their regular
salary, bonus, commission, or any special compensation received during any
Deferred Compensation Plan year. Such deferred compensation is deposited in a
Deferred Compensation Account maintained by the Plan Administrator, as defined
below, in the name of the participant. Such deferred compensation bears
interest quarterly at a rate determined by the Plan Administrator in its sole
discretion, which rate is determined by reference to the average rate earned
by the Company's 401(k) plan, but in no event may exceed the prime rate as
reported by the Wall Street Journal plus one percent (1%).
Subject to stockholder approval, the Board of Directors has amended the
deferral provisions of the Deferred Compensation Plan to permit eligible
participants to elect that a portion of their deferred compensation equal to
up to fifty percent (50%) of each participant's annual bonus or commissions be
deposited into a Common Stock
12
<PAGE>
Account maintained under the Deferred Compensation Plan on such participant's
behalf. Deposits into the Common Stock Account during any one year pursuant to
this amendment are subject to a maximum amount of $100,000 per participant.
Amounts deferred are credited to the participant's Common Stock Account in a
number of hypothetical stock units equal to the dollar amount of the deferral
divided by the fair market value of the Common Stock (defined as the closing
price on the New York Stock Exchange of the Common Stock on the date in
question) on the five business days preceding the payment date for the bonus
or commission deferred. As noted, amounts deferred by eligible participants
are credited to units denominated in shares of Common Stock, but no shares of
Common Stock will be issued until the participants receive the related
payments in accordance with the Deferred Compensation Plan. Upon retirement,
termination of employment, or death, a participant or his or her beneficiary
will receive shares of Common Stock equal to the number of units in his or her
Common Stock Account. Such Common Stock would be distributed in the same
manner as other distributions under the Deferred Compensation Plan, either in
a lump sum or installments payable over ten years.
Deferral of Directors Fees. In addition to the amounts currently deferrable
pursuant to the Deferred Compensation Plan by employees of the Company, the
Board of Directors has amended the Deferred Compensation Plan, subject to
stockholder approval, to permit independent directors of the Company to
participate. Directors may defer up to one hundred percent (100%) of the cash
meeting fees paid to them for service to the Company. Any such director fees
deferred may be invested in the Common Stock Account maintained on behalf of
each director as described above. No directors fees deferred and invested in
Common Stock units will be subject to matching by the Company.
Deferral of Stock Grants Made Under The Director Grant Plan. Upon election
and reelection, each independent director receives a grant of stock in
accordance with the terms of Director Grant Plan, as more fully described
under Proposal 2. Subject to stockholder approval, the Board of Directors has
amended the Deferred Compensation Plan to permit stock grants to be deferred
and converted into stock units credited to the Common Stock Account maintained
by the Plan Administrator on behalf of each director. For each share of Common
Stock otherwise to be included in a grant under the Director Grant Plan, the
director's Common Stock Account under the Deferred Compensation Plan will be
credited with one stock unit. In order to defer a stock grant, each eligible
director must elect deferral prior to the annual stockholders meeting at which
his or her election or reelection to the Board of Directors of the Company
will be considered. Amounts deferred and placed in the director's Common Stock
Account are subject to the vesting schedule set forth in the Director Grant
Plan as more fully described under Proposal 2. By deferral of stock grants,
directors may postpone taxation with respect to the value of such stock grant
which would otherwise be taxable to him or her upon vesting.
Revocability of Elections. Subject to certain unforeseeable financial
emergency revocations permitted by the Deferred Compensation Plan, the
elections described above relating to the deferral of bonus or commissions
shall be irrevocable after the beginning of the Deferred Compensation Plan
year. In the case of director fees, the deferral election shall be irrevocable
upon the commencement of the meeting with respect to which such election is
made. Deferrals with respect to stock grants cannot be modified or amended
once the applicable stockholder meeting has commenced. Any such deferral
election will continue until revoked or modified in writing, which revocation
or modification shall only apply to compensation payable to the participant
after the end of the Deferred Compensation Plan year or for subsequent Board
of Directors or annual stockholder meetings. In addition to the above, with
respect to executive officers and directors subject to Section 16 of the
Exchange Act, and to the extent required by such section, executive officers
or directors making an election to deposit bonus, compensation, or directors
fees into Common Stock Accounts (but not stock grants) must make an
irrevocable election at least six months in advance of the effective date of
the transaction.
Adjustments to Common Stock Accounts. Upon the payment of dividends on the
Company's Common Stock, each participant's Common Stock Account will be
increased by the addition of units reflecting the value of such dividend.
Appropriate adjustments will also be made to reflect any stock split, stock
dividend, combination of shares or any other similar change relating to the
Common Stock.
13
<PAGE>
REASONS FOR AMENDMENTS
The Board of Directors has adopted the amendments to the Deferred
Compensation Plan described herein to enhance the effectiveness of the
Deferred Compensation Plan in attracting and retaining individuals of
outstanding abilities and specialized skills. The Board of Directors believes
that by permitting employees to invest certain of their deferred compensation
in units of Common Stock of the Company which will then be held for the
remainder of their employment with the Company, the Deferred Compensation Plan
will serve to provide additional incentives to such employees as stockholders
of the Company. By amending the Deferred Compensation Plan to permit directors
to defer compensation, the Board of Directors believes that they will provide
additional valuable benefits to such directors by allowing them to save for
their own retirement by deferring a portion of their income. Further, by
providing executive officers and directors with means of deferring taxation on
a portion of their income, the Company will enhance the value of such income
to such employees and directors without material additional expense to the
Company. As a result, the Company believes that the Deferred Compensation Plan
as amended will enable the Company to better attract and retain individuals
with outstanding abilities and specialized skills. In addition, it is deemed
to be in the best interest of the Company and its stockholders to align the
interests of the Company's directors and officers, whenever possible, with the
interests of the Company's stockholders.
SUMMARY OF THE DEFERRED COMPENSATION PLAN
In addition to the amendments being proposed to the stockholders for
approval at the Annual Meeting, the Deferred Compensation Plan has also been
amended by approval of the Board of Directors, effective as of July 1, 1996,
in several ways which are not subject to stockholder approval. The following
is a description of the Deferred Compensation Plan, as so amended.
General. The Company has maintained a deferred compensation plan for all
employees with a title of Vice President or a more senior title since January
1992. The original deferred compensation plan was amended and restated by the
Company and has been in effect, as amended, since January 1995. As currently
in effect, the Deferred Compensation Plan permits the deferral of all or any
part of a participant's regular salary, bonus, commission or special
compensation during the Deferred Compensation Plan year. Such deferred amounts
are invested in a Deferred Compensation Account, bearing interest as described
above, maintained by the Deferred Compensation Plan Administrator in the name
of each participant. Effective July 1, 1996, deferred amounts may be invested
at the direction of the employee in a variety of investment funds
substantially similar to the funds available under the Company's 401(k) plan.
The Plan Administrator will be under no obligation to follow the participant's
directions.
Under the Deferred Compensation Plan, Messrs. Off, Greer, Maggard and
Granger and Ms. Monat deferred aggregate compensation of $114,505, $19,383,
$15,986, $9,052 and $217,863, respectively, during fiscal year 1996, and
$152,983, $0, $14,950, $25,310 and $209,274, respectively, during fiscal year
1995.
Plan Administrator; Eligible Participants. The Deferred Compensation Plan is
currently administered by the Company (the "Plan Administrator"). The Company
currently intends to appoint the committee that administers the 401(k) plan as
Plan Administrator, effective July 1, 1996. The Plan Administrator has
complete control and discretion to manage the operation and administration of
the Deferred Compensation Plan, including without limitation, the power to (i)
determine all questions relating to the eligibility of employees to
participate or continue to participate in the Deferred Compensation Plan; (ii)
maintain all records and books of account necessary for the administration of
the Deferred Compensation Plan; (iii) interpret the provisions of the Deferred
Compensation Plan and make and publish such interpretive or procedural rules
as are not inconsistent with the Deferred Compensation Plan; (iv) compute,
certify and arrange for the payment of benefits to which any participant or
beneficiary is entitled; (v) process claims for benefits under the Deferred
Compensation Plan; (vi) engage agents and professionals to assist in carrying
out its duties; and (vii) develop and maintain such instruments as may be
deemed necessary from time to time by the Plan Administrator to facilitate
payment of benefits under the Deferred Compensation Plan. The Deferred
Compensation Plan provides that the Plan
14
<PAGE>
Administrator, in its sole discretion, shall determine those employees of the
Company or certain related entities eligible to participate in the Deferred
Compensation Plan. In accordance with current guidelines developed by the Plan
Administrator, all employees of the Company with the title of Vice President
or any more senior title are eligible to participate in the Deferred
Compensation Plan. If the proposed amendments are approved, eligible
participants will be expanded to include independent directors of the Company.
Deferral of Option Profit Upon Exercise of Non-Qualified Stock
Options. Effective July 1, 1996, participants in the Company's 1989 Stock
Option Plan (the "Option Plan") may defer the Option Profit, as defined below,
otherwise payable to the participant in shares of Common Stock upon the stock
for stock exercise, described below, of non-qualified stock options under the
Option Plan by filing an election form with the Plan Administrator at least
one year prior to the date on which the non-qualified stock option vests. With
respect to non-qualified stock options that are vested as of July 1, 1996 or
will become vested before July 1, 1997, participants may elect on or before
August 30, 1996 to defer the Option Profit received upon exercise thereof. Any
such Option Profit deferred will be credited to the deferring participant's
Common Stock Account and will be represented by stock units in a number
determined by dividing the Option Profit by the fair market value of the
Common Stock on the date of exercise of the non-qualified stock option. A
conforming amendment has been made to the Option Plan to permit the deferral
of the Option Profit.
For purposes of the Deferred Compensation Plan, the "Option Profit" is
defined as the amount (not less than zero) by which the fair market value of
the shares of Common Stock subject to a non-qualified stock option on the date
of the participant's exercise of such option exceeds the aggregate exercise
price of such option. A stock for stock exercise eligible for Option Profit
deferral is effected under the Deferred Compensation Plan by the optionee
paying the exercise price of an option by delivering to the Company shares of
Common Stock owned by the optionee for at least six months prior to exercise,
in good form for transfer, having a fair market value as of the date of
exercise equal to the aggregate exercise price of the subject option.
Following the deferral transaction, the previously owned shares continue to be
owned by the participant outside of the Deferred Compensation Plan.
Company Contributions. The Company credits each participant, excluding
directors, with a matching contribution based upon his compensation deferral
as follows: the first two percent (2%) of salary deferred pursuant to the
Deferred Compensation Plan is matched at a rate of one hundred percent (100%)
and the next two percent (2%) of salary deferred is matched at the rate of
twenty-five percent (25%). Any additional compensation deferred under the
Deferred Compensation Plan does not entitle the participant to a matching
contribution. All matching contributions are deposited in a Matching
Contribution Account maintained for each participant and are invested in the
same manner as Deferred Compensation Accounts. Further, as of each Deferred
Compensation Plan year, the Company may, in its sole discretion, credit
participants with a discretionary contribution in an amount to be determined
by the Company.
Vesting. A participant's vested interest in matching contributions is equal
to a percentage based on such participant's numbers of years of service.
Effective July 1, 1996, vesting will occur ratably in annual installments of
twenty percent (20%) per year to one hundred percent (100%) after five years
of service. Prior to such date, matching contributions vested fully after two
years of service.
Loans. Participants may borrow up to the lesser of 50% of their account
balance under the Deferred Compensation Plan (excluding the value of their
Common Stock Account) or $100,000. A maximum of two loans per participant not
exceeding in the aggregate the above limits may be outstanding at any one
time. Any such loans will be secured by the remaining balance of the
participant's account.
Distributions under Deferred Compensation Plan. Subject to certain
unforeseen emergency provisions, no amounts deferred may be distributed until
the participant's termination of employment with the Company or any related
employer or death. Distributions shall be made either in a series of annual
installments (not to exceed ten) or a lump sum, as selected by the participant
pursuant to an advance election. If a participant dies before receiving all
benefits of the Deferred Compensation Plan, all unpaid amounts shall be paid
to the beneficiary or
15
<PAGE>
beneficiaries designated by the participant to receive such benefits. If a
participant's employment is terminated for reasons other than retirement on or
after the participant's normal retirement date, as defined by the Deferred
Compensation Plan, the participant's disability or death, such participant
shall receive the balance of his Deferred Compensation Account and the vested
portion of his Matching Contribution Account and any discretionary
contributions made by the Company on his behalf. Upon attaining normal
retirement age or termination for disability or death, the participant shall
be one hundred percent (100%) vested in all matching and discretionary
contributions made under the Deferred Compensation Plan.
Change in Control. If a participant's employment is terminated other than
for Cause (as defined in the Deferred Compensation Plan) during the two years
following a Change in Control of the Company (also as defined in the Deferred
Compensation Plan), the participant's accounts under the Deferred Compensation
Plan will become fully vested. Upon the occurrence of a Change in Control of
the Company, no amendments may be made to the Deferred Compensation Plan which
would be adverse to the participants. Should a Change in Control occur, the
Deferred Compensation Plan's administration and claims procedure will be
handled by an independent third party instead of the Company or its duly
appointed administrative committee. Immediately prior to a Change in Control
units held in Common Stock Accounts will be converted into actual shares of
Common Stock and contributed to the trust, described below. In addition to the
above, the right to amend the Deferred Compensation Plan following a Change in
Control of the Company will be given to the participants acting by majority
vote rather than the Company.
Section 16 and Amendments. The Deferred Compensation Plan following the
adoption of the proposed amendments is intended to comply with Rule 16b-3
("Rule 16b-3") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), so that purchases of shares of the Deferred Compensation Plan
will be exempt from the short-swing prohibitions set forth in Section 16(b) of
the Exchange Act. Subject to certain limitations, the Company's Board of
Directors may amend the Deferred Compensation Plan from time to time. Under
Rule 16b-3, as presently in effect, stockholder approval is required for any
amendment to the Deferred Compensation Plan which would increase materially
the number of shares issuable to executive officers or directors under the
Deferred Compensation Plan, increase materially the Company stock benefits
which may be provided under the Deferred Compensation Plan to executive
officers or directors or modify materially the eligibility requirements for
participation in Company stock funds by executive officers and directors in
the Deferred Compensation Plan. In addition, no amendment may significantly
reduce the value of a participant's vested accounts.
Rabbi Trust. It is intended that the Deferred Compensation Plan be deemed
unfunded for federal tax purposes and for purposes of Title I of the Employee
Retirement Income Security Act of 1974 ("ERISA"). All accounts established
under the Deferred Compensation Plan have been maintained merely as
bookkeeping accounts and amounts credited to the participants' accounts have
been the general assets of the Company subject to the claims of the Company's
general creditors until such amounts are distributed to the participants.
Effective July 1, 1996, the Company has amended the Plan to establish a trust
fund to hold the assets of the Deferred Compensation Plan for the benefit of
participants. Following establishment of such trust, the Company intends to
make contributions to the trust equal to the amounts of deferred compensation
(along with all matching contributions), including amounts equal to all
compensation deferred, all matching amounts and earnings on accounts to date
under the Deferred Compensation Plan. Although such amounts will be deposited
into the trust, the Deferred Compensation Plan will continue to be unfunded
for tax and ERISA purposes because the assets of the trust will remain subject
to the claims of the Company's general creditors in the event of insolvency.
Notwithstanding the above, prior to a Change in Control, participants' Common
Stock Accounts will not be held in the trust. Such accounts will merely be
bookkeeping accounts on the records of the Company. Immediately prior to a
Change in Control, units in Common Stock Accounts will be converted into
actual shares of Common Stock and contributed to the trust. Further, in the
event of a Change in Control of the Company, assets will be deposited in the
trust equal to the liabilities under the Deferred Compensation Plan if not
already so deposited and its administration will be handled by an independent
third party instead of the Company. To fully fund the trust as of June 3,
1996, the Company would be required to deposit assets with a value of
approximately
16
<PAGE>
$3,660,000 into the trust. Such deposit will be made from the general cash
reserves of the Company and will not have a material adverse effect on the
financial position of the Company.
Federal Income Tax Considerations. The Deferred Compensation Plan is
intended to be administered as a non-qualified deferred compensation plan for
a select group of management or highly compensated employees. It is also
intended that amounts deferred and earnings accrued under the Deferred
Compensation Plan are not recognized as income for federal tax purposes until
such contributions or earnings are actually distributed or withdrawn from the
Deferred Compensation Plan. The Company is not entitled to a compensation
expense deduction for amounts deferred under the Deferred Compensation Plan
and will be required to pay income tax on all earnings on amounts held in the
Deferred Compensation Plan which accrue under the Deferred Compensation Plan
while such amounts remain in the Deferred Compensation Plan. Upon distribution
or withdrawal of any such amounts, the respective participant will be subject
to income tax on such amounts and the Company will receive a compensation
expense deduction in the amount of the withdrawal or distribution.
AMENDMENT TO CERTIFICATE OF INCORPORATION
TO INCREASE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(PROPOSAL 4)
The Board of Directors has approved an amendment to Article Fourth of the
Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation"), subject to the approval of the Company's stockholders, to
increase the number of authorized shares of Common Stock of the Company to
50,000,000 from 30,000,000. The affirmative vote of a majority of the
outstanding shares entitled to vote thereon at the Annual Meeting will be
required to approve this proposal. The persons name in the enclosed proxy will
vote the shares represented by proxies returned to the Company FOR the
proposal unless instructed otherwise in the proxy. Shares represented by
proxies which are marked "abstain" will have the same effect as a vote against
this proposal. YOUR BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE PROPOSAL TO APPROVE AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
The following resolution relating to an amendment to the Certificate of
Incorporation will be introduced at the Annual Meeting for the purpose
described below:
RESOLVED, the existing paragraph A of Article Fourth of the Certificate of
Incorporation is amended in the following respects:
Paragraph A is amended to read in its entirety as follows:
A. The Corporation is authorized to issue two classes of shares designated
"Common Stock" and "Preferred Stock," respectively. The number of shares of
Common Stock authorized to be issued is 50,000,000, par value $.01 per
share, and the number of shares of Preferred Stock authorized to be issued
is 5,000,000, par value $.01 per share.
Currently, the Company has 30,000,000 shares of Common Stock authorized. As
of June 3, 1996, there were outstanding 9,784,227 shares of Common Stock of
the Company. In addition, on the same date, (i) 1,578,900 shares of Common
Stock were reserved and available for issuance upon the exercise of options
granted or which may be granted under the Company's 1989 Stock Option Plan,
(ii) 43,707 shares of Common Stock were reserved and available for issuance
upon grants of shares pursuant to the Director Grant Plan, (iii) 133,342
shares of Common Stock were reserved and available for issuance pursuant to
the Company's Employee Payroll Deduction Stock Purchase Plan and (iv) 10,000
shares of Common Stock were reserved pursuant to various other obligations of
the Company. Therefore, as of such date, the Company had only 18,449,824
shares of authorized Common Stock remaining for future issuance which were not
standing reserved for a specific purpose.
Effective June 5, 1996, the Board of Directors approved a two-for-one split
of the Common Stock, to be effected in the form of a stock dividend (the
"Stock Split Dividend"). The Stock Split Dividend will be paid on
17
<PAGE>
July 15, 1996 to holders of record of the Common Stock on June 24, 1996. Upon
payment of the Stock Split Dividend, each holder of record of Common Stock on
June 24, 1996 will receive one additional share of Common Stock for each share
of Common Stock held on such date. Following the Stock Split Dividend, the
number of shares subject to outstanding stock options, the number of shares
reserved for issuance under the Company's 1989 Stock Option Plan, the number
of shares issuable to directors under the Director Grant Plan, the number of
shares reserved for issuance under the Employee Payroll Deduction Stock
Purchase Plan and the number of shares reserved for issuance for other
purposes will be proportionately increased to reflect the Stock Split
Dividend. In addition, the exercise price of outstanding stock options will be
proportionately reduced, in accordance with the terms of the 1989 Stock Option
Plan. Also, the number of shares subject to grants pursuant to the Director
Grant Plan will be doubled such that, for example, assuming adoption of the
amendment to such plan described in Proposal 2, upon election or reelection of
an outside director for a three-year term, the director will receive a grant
of 2,000 (instead of 1,000) shares under the Director Grant Plan. As a result,
following the Stock Split Dividend the Company will have only 6,899,648 shares
of authorized Common Stock remaining for future issuance which will not be
standing reserved for a specific purpose.
The Board of Directors of the Company believes that it is in the best
interest of the Company and its stockholders that there be a greater number of
authorized and unissued shares available to give the Company the flexibility
it needs to conduct its business and accommodate future growth. The proposed
increase in authorized shares of Common Stock is desirable to enhance the
Company's flexibility in structuring its future capitalization, to meet
financing needs for expansion and growth and for other corporate purposes
which the Board may deem desirable. The Board of Directors believes that if
the Stock Split Dividend is effected without an increase in authorized Common
Stock, the remaining available unissued shares would not provide sufficient
flexibility for corporate action in the future.
The purpose of the proposed increase in the number of shares of authorized
Common Stock is to ensure that additional shares of Common Stock will be
available, if needed, for issuance in connection with any future transactions
approved by the Board of Directors, including, among others, future stock
splits, stock dividends, acquisitions, financings and other corporate
purposes. The Board of Directors believes that the availability of the
additional shares of Common Stock for such purposes without delay or the
necessity for a special stockholders meeting (except as may be required by
applicable law or regulatory authorities or by the policies, rules and
regulations of the New York Stock Exchange or any other stock exchange on
which the Company's securities may then be listed) will be beneficial to the
Company by providing it with the flexibility required to consider and promptly
respond to future business opportunities and needs as they arise. If the
proposed amendment is approved by the stockholders, no future authorization
for the issuance of newly authorized Common Stock will be solicited prior to
such issuance (except as may be required by applicable law or regulatory
authorities or by the policies, rules or regulations of the New York Stock
Exchange or any other stock exchange on which the Company's securities may
then be listed).
Other than as described above with respect to shares reserved for issuance
for specific purposes and with respect to the Stock Split Dividend, the
Company has no current plans to issue additional shares of Common Stock.
It is possible that shares of Common Stock may be issued at a time and under
circumstances which may increase or decrease earnings per share and increase
or decrease the book value per share of shares presently held. Further,
although the proposed increase in authorized shares of Common Stock is not
proposed for the purpose of any anti-takeover effect, the issuance of
additional shares of Common Stock authorized pursuant thereto may have an
anti-takeover effect and may delay or prevent a tender offer or takeover
attempt that a stockholder may consider in its best interest, including those
attempts that might result in a premium over the market price of shares held
by such stockholder. The proposed amendment will enable the Board of Directors
to issue shares of Common stock to third parties which could render more
difficult or discourage an attempt to obtain control of the Company by means
of a merger, tender offer, proxy contest or otherwise.
18
<PAGE>
In addition to the above matters, the proposed amendment is intended to
clarify a clerical matter relating to the Company's Certificate of
Incorporation as currently in effect. Specifically, the Certificate of
Incorporation has not formally been amended to eliminate the reference in that
document to shares of Series A Preferred Stock and Series D Preferred Stock,
both of which series were outstanding prior to the Company's initial public
offering which closed in March 1992. In connection with such initial public
offering, all such shares of Series A Preferred Stock and Series D Preferred
Stock outstanding (being 936,475 shares in the aggregate) were converted into
Common Stock and no shares of either such series have been, or are
contemplated to be, reissued.
The Company has taken the position that these shares are not, in fact,
available for reissuance, but the Delaware Secretary of State continues to
record such shares as authorized. Therefore, the Board of Directors of the
Company has authorized the filing of an amendment to the Certificate of
Incorporation to eliminate any reference to either of such series. The
proposed amendment to the Certificate of Incorporation would make clear that
the only shares of Preferred Stock which are authorized are the 5,000,000
shares of "undesignated" Preferred Stock which the Company has reported as
authorized, with none outstanding, since the completion of its initial public
offering. The Board of Directors of the Company is authorized pursuant to the
Certificate of Incorporation to provide for the issuance of such Preferred
Stock in series, to establish the number of shares to be included in each such
series and the designations, preferences and relative, participating,
optional, conversion and other special rights, and qualifications, limitations
or restrictions, of such shares without further action of the stockholders of
the Company. Such authority of the Board of Directors includes, but is not
limited to, fixing the number of shares constituting any series or the
distinct designation thereof, the rate and nature (whether participating or
cumulative) of any dividends payable on shares of Preferred Stock, the voting
rights of such shares, the conversion or redemption features of any such
shares, and the rights of such shares in the event of liquidation, dissolution
or winding up of the Company. The Company has no current plans to issue any
shares of Preferred Stock.
THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 5)
The Board of Directors has selected Arthur Andersen LLP to audit the
financial statements of the Company for the year ended March 31, 1997. Arthur
Andersen LLP has audited the Company's financial statements since 1985. The
persons named in the enclosed proxy will vote shares represented by proxies
returned to the Company FOR the proposal unless instructed otherwise in the
proxy.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL TO RATIFY AND APPROVE THE SELECTION OF THE ACCOUNTING FIRM ARTHUR
ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL 1997.
A representative of Arthur Andersen LLP will be present at the Annual
Meeting to respond to any questions and to make a statement on behalf of his
firm, if he so desires.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware
of any matters other than those set forth herein and in the Notice of Annual
Meeting that will come before the meeting. Should any other matters arise
requiring the vote of stockholders, it is intended that proxies will be voted
in respect thereto in accordance with the best judgment of the person or
persons voting the proxies.
19
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is composed of Messrs.
Beinecke as Chairman, Collins, Mendell and Wilson, all of whom are independent
directors. The Committee is responsible to the Board and indirectly to
stockholders for assuring that:
1. The Company's human resource policies are effective in attracting,
retaining and developing outstanding executive talent;
2. The Company has succession plans for senior management positions;
3. The Company's total compensation program supports the Company's business
goals and strategies, reinforces desired corporate behaviors, and
properly recognizes performance; and
4. The Company's compensation levels are internally equitable and
externally competitive.
The Committee sets compensation policies designed to maintain a strong
relationship between performance and rewards, to align the interests of the
executive officers with those of the stockholders and to actively encourage
ownership of the Company's Common Stock. The Committee's actions with regard
to executive officers who are members of the Board are subject to Board
approval.
EXECUTIVE COMPENSATION POLICY
The Company's compensation program is designed to attract, motivate, reward
and retain the management talent required to achieve aggressive corporate
growth and profitability objectives, and thereby increase stockholder value.
It is the Company's policy to provide conservatively competitive base salaries
to attract and retain highly capable managers, attractive annual incentive
bonuses to encourage and reward achievement of the Company's annual growth and
profitability goals, and significant equity opportunities to align the
interests of management with those of stockholders.
Because of the unique position the Company occupies within its market
sector, there are few peer companies with which the Company can compare its
management compensation. Consequently, the Compensation Committee does not
rely on competitive surveys to set management compensation levels. However,
the Compensation Committee does review the executive compensation levels in
other publicly held growth companies in related and other industries, and
obtains advice from independent consultants as to the Company's pay practices
and levels.
The tax deductibility of a senior executive's compensation is limited to $1
million a year unless such compensation is "performance based" or meets other
exemptions under the Code. It is the Company's policy to structure and
administer its compensation program for executives to maximize the tax
deductibility of executive compensation for the benefit of its stockholders
whenever appropriate.
EXECUTIVE COMPENSATION PROGRAM
The principal elements of the executive compensation program are base
salary, annual incentive bonuses and stock options. Key management personnel
receive each element of compensation in various combinations, with the portion
of total compensation provided by annual incentive bonuses and stock options
increasing at higher management levels.
BASE SALARIES
The Compensation Committee reviews the salaries paid to the Company's
executive officers and considers increases based on several factors, including
competitive compensation data, individual performance, internal
20
<PAGE>
relationships and the performance and prospects of the Company. Base salaries
for executive officers were increased effective May 1, 1996 by an average of
5%.
ANNUAL INCENTIVE BONUSES
Annual incentive bonuses are awarded to the Company's senior management
under the annual management incentive plan. Bonuses are set as a maximum
percentage of salary by management level and are earned based on individual
and Company performance in relation to financial and non-financial objectives
set by the Compensation Committee. Bonus maximums range from 20% of salary up
to 80% of salary. The objectives for senior management are recommended by the
Chief Executive Officer and approved by the Compensation Committee. Cash
payments under the annual management incentive plan ranged from 13% to 58% of
individual employee's salary for fiscal 1996.
Bonuses for fiscal year 1996 were less than bonuses paid for fiscal year
1995. The Compensation Committee set very aggressive goals for the management
of the Company for fiscal year 1996, which goals were substantially, although
not fully, achieved. Examples of the Company's strong performance include an
18.5% increase in revenues and a 29.2% increase in earnings per share for
fiscal 1996 as compared to fiscal 1995. In light of such positive results, the
Compensation Committee deemed it appropriate to award substantial bonuses to
the Company's senior management, although not as large as those awarded the
year before.
STOCK OPTIONS
Annual stock option grants are recommended by the Chief Executive Officer
and are reviewed and approved by the Compensation Committee. Grants are based
on several factors, including an evaluation of individual performance, tenure
with the Company and management level. Special grants are considered to
attract experienced managers to join the Company. The Compensation Committee
believes that employee stock options are highly important to retain key
employees and in aligning employee interests with the stockholders' interests.
COMMITTEE DECISIONS AFFECTING CHIEF EXECUTIVE OFFICER'S COMPENSATION FOR
FISCAL 1997
Mr. Off's base salary was increased by the Compensation Committee to
$262,500 effective on May 1, 1996, a 5% increase over the prior year. Mr.
Off's salary level was determined based on his performance and contribution to
the Company's performance as evaluated by the Compensation Committee.
The CEO's bonus for fiscal 1996 was determined by the Compensation Committee
based on specific financial and non-financial performance goals. Mr. Off's
incentive bonus of $145,000 for fiscal 1996, 58% of his salary, was based upon
the Compensation Committee's evaluation of his performance and contribution to
the Company's achievements in fiscal 1996, in which increases in revenues, net
income and earnings per share were 18.5%, 27.8% and 29.2%, respectively, over
the prior year. In relation to this performance, Mr. Off's annual compensation
for fiscal 1996 (salary paid and bonus earned) was 2.6% higher than his annual
compensation for the prior year.
In addition, the Compensation Committee granted 25,000 stock options to Mr.
Off for fiscal 1996.
RESPECTFULLY SUBMITTED,
Frederick W. Beinecke Patrick W. Collins Thomas G. Mendell Michael B. Wilson
21
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(A)($) BONUS($) OPTIONS GRANTED COMPENSATION(B)
- - --------------------------- ------ ------------ -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
George W. Off 1996 248,630 145,000 25,000 50,676
President, Chief Executive 1995 229,100 154,421 20,000 22,172
Officer and Director 1994 200,676 108,792 -- 74,905
Tommy D. Greer 1996 250,016 120,000 -- 20,394
Chairman of the Board 1995 248,150 145,609 72,500 6,000
1994 224,521 144,488 -- 63,747
Helene Monat (c) 1996 222,385 102,873 18,800 74,143
Executive Vice President, 1995 197,560 128,128 20,000 7,600
Sales, and Director 1994 173,669 100,000 -- 1,132
Karl Maggard 1996 204,005 60,000 -- 10,385
Executive Vice President, 1995 163,500 93,600 75,000 3,563
Marketing
Daniel D. Granger (c) 1996 195,100 115,000 -- 45,225
Executive Vice President, 1995 185,329 84,873 -- 23,748
Sales, and President, Catalina 1994 150,568 68,640 -- 44,490
Marketing Services Division
</TABLE>
- - --------
(a) Salary includes all before-tax contributions by the employee to the
Company's Deferred Compensation Plan.
(b) Other compensation includes Company matching contributions and all
earnings (vested and non-vested) contributed by the Company under the
Company's Deferred Compensation Plan and reimbursement for moving expenses
associated with the corporate headquarters relocation to St. Petersburg,
Florida.
(c) Effective April 19, 1996, Helene Monat tendered her resignation as an
Executive Vice President and employee of the Company. Ms. Monat will
continue as a consultant to the Company, and has consented to her
nomination for reelection for director at the Annual Meeting. Daniel D.
Granger became an Executive Vice President of the Company effective
January 23, 1996 in anticipation of Ms. Monat's resignation.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
% OF TOTAL PRICE APPRECIATION
OPTION FOR OPTION TERM($)(B)
OPTIONS GRANTED TO EXERCISE EXPIRATION ----------------------
GRANTED(A) EMPLOYEES PRICE($) DATE 5% 10%
---------- ---------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
George W. Off (CEO)..... 25,000 6.6% 46.25 5/1/00 70,271 169,287
Tommy D. Greer.......... -- -- -- -- -- --
Helene Monat............ 18,800 5.0% 46.25 5/1/00 52,844 127,303
Karl J. Maggard......... -- -- -- -- -- --
Daniel D. Granger....... -- -- -- -- -- --
</TABLE>
- - --------
(a) Options granted generally become exercisable at the rate of 25% per year,
commencing one year after the date of grant, except for options associated
with a new hire which generally become exercisable at the rate of 20% per
year, and are subject to early termination in certain instances relating
to termination of employment.
(b) Potential Realizable Values is based on the assumption that the market
price of the stock appreciates at the stated rate, compounded annually,
from the date of grant to the expiration of the option. These values are
22
<PAGE>
calculated based on requirements promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
appreciation.
OPTION EXERCISES AND YEAR END VALUE TABLE
<TABLE>
<CAPTION>
AT FISCAL YEAR END
---------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS IN-THE-MONTH OPIONS($)(A)
ACQUIRED VALUE ------------------------- -------------------------
ON EXERCISE RELIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George W. Off (CEO)..... 7,500 412,500 66,500 58,750 3,248,654 2,200,139
Tommy D. Greer.......... -- -- 18,125 54,375 626,444 1,879,335
Helene Monat............ 30,622 1,473,609 35,000 43,800(b) 1,438,436 1,526,634(b)
Karl Maggard............ -- -- 15,000 60,000 469,687 1,878,750
Daniel D. Granger....... 9,425 448,866 20,500 6,250 914,280 263,671
</TABLE>
- - --------
(a) The closing price of the Company's Common Stock was $78.13 per share on
March 29, 1996, the last business day of the fiscal year.
(b) Effective with her resignation as an employee of the Company, Ms. Monat
forfeited options relating to 34,100 of such shares, which were not then
exercisable.
COMMON STOCK PRICE PERFORMANCE GRAPH
The following graph compares the Company's cumulative total return to
stockholders since its Initial Public Offering on March 26, 1992 with that of
the New York Stock Exchange Index and a peer group consisting of those public
companies traded on an exchange and listed under the Standard Industry
Classification (S.I.C.) Code 731--Advertising.
23
<PAGE>
[GRAPH APPEARS HERE]
COMPARISON(1) OF CUMULATIVE TOTAL RETURN AMONG
CATALINA MARKETING CORPORATION,
NYSE MARKET INDEX AND PEER GROUP INDEX(2).
Catalina NYSE Market Peer
Measurement period Marketing Valuation Group
(Fiscal year Covered) Group Index Index
- - --------------------- --------- ------------ -----
Measurement PT -
03/26/92 $100 $100 $100
FYE 3/31/92 $143 $100 $100
FYE 3/31/93 $198 $115 $120
FYE 3/31/94 $225 $119 $134
FYE 3/31/95 $248 $133 $134
FYE 3/31/96 $391 $173 $251
Assumes $100 invested on March 26, 1992, in Catalina Marketing Corporation,
the New York Stock Exchange and the peer group defined. Historical results are
not necessarily indicative of future performance.
- - --------
(1) Based on the Company's Initial Public Offering price of $20.00. However,
it should be noted that the closing price of the Company's Common Stock on
the first day of trading on the New York Stock Exchange, March 27, 1992,
was $28.00.
(2) The peer group index is made up of the following securities: Ackerly
Communication, Inc., Advanced Promotion Technologies, Inc., All American
Communications, Inc., 4 Kids Entertainment, Greenstone Roberts
Advertising, Inc., Heritage Media Corporation, Grey Advertising, Inc.,
Interpublic Group of Companies, Inc., Omnicom Group, Saatchi & Saatchi
Plc., Site-Based Media, Inc., and WPP Group Plc.
NON-EMPLOYEE DIRECTOR COMPENSATION
In addition to grants made pursuant to the Company's 1992 Director Stock
Grant Plan, non-employee directors receive $1,500 per day for each one day
meeting attended in person, including committee meetings. The Chairman of each
committee receives $3,000 annually. Also, non-employee directors receive a fee
of $300 for each telephonic Board or committee meeting of less than one hour,
or a fee of $1,500 for such telephonic meetings which are in excess of one
hour. All expenses in connection with attendance at such meetings are paid by
the Company.
24
<PAGE>
FUTURE STOCKHOLDER PROPOSALS
The Company must receive at its principal office appearing on the front page
of this Proxy Statement before February 21, 1997, any proposal which a
stockholder wishes to submit to the 1997 Annual Meeting of Stockholders, if
the proposal is to be considered by the Board of Directors for inclusion in
the proxy materials for that annual meeting.
Please return your proxy as soon as possible. Unless a quorum consisting of
a majority of the outstanding shares entitled to vote is represented at the
meeting, no business can be transacted. Therefore, please be sure to date and
sign your proxy exactly as your name appears on your stock certificate and
return it in the enclosed prepaid return envelope. Please act promptly to
ensure that you will be represented at this important meeting.
THE COMPANY WILL PROVIDE WITHOUT CHARGE, ON THE WRITTEN REQUEST OF ANY
BENEFICIAL OWNER OF SHARES ENTITLED TO VOTE AT THE ANNUAL MEETING OF
STOCKHOLDERS, A COPY WITHOUT EXHIBITS OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR
ENDED MARCH 31, 1996. REQUESTS SHOULD BE MAILED TO THE SECRETARY, CATALINA
MARKETING CORPORATION, 11300 9TH STREET NORTH, ST. PETERSBURG, FLORIDA 33716.
THE ANNUAL REPORT ON FORM 10-K IS NOT SOLICITING MATERIAL AND IS NOT
INCORPORATED IN THIS DOCUMENT BY REFERENCE.
By Order of the Board of Directors
/s/ George W. Off
-----------------------------------
George W. Off
President and Chief Executive
Officer
June 21, 1996
25
<PAGE>
Final, As Amended
6/6/96
CATALINA MARKETING CORPORATION
------------------------------
1992 DIRECTOR STOCK GRANT PLAN
------------------------------
1. PURPOSE.
-------
The Plan is intended to provide incentive to outside directors of the
Corporation, to encourage proprietary interest in the Corporation, and to
attract new outside directors with outstanding qualifications.
2. DEFINITIONS.
-----------
Whenever the following terms are used in this Plan, they shall have the
meaning specified below unless the context clearly indicates otherwise.
(a) "Act" shall mean the Securities Act of 1933, as amended.
---
(b) "Administrator" shall mean the Board or the Committee, whichever shall
-------------
be administering the Plan from time to time in the discretion of the Board, as
described in Section 4(a) of the Plan.
(c) "Annual Meeting Date" shall have the meaning assigned to it in Section
-------------------
6(e) hereof.
(d) "Board" shall mean the Board of Directors of the Corporation.
-----
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(f) "Committee" shall mean the committee appointed by the Board in
---------
accordance with Section 4(a) of the Plan.
(g) "Common Stock" shall mean the Common Stock, par value $.01 per share,
------------
of the Corporation.
(h) "Corporation" shall mean Catalina Marketing Corporation, a Delaware
-----------
corporation.
-1-
<PAGE>
(i) "Directors" shall mean, collectively, all outside (non-employee)
---------
directors, duly elected to the Board by the Corporation's stockholders or
otherwise in accordance with the Corporation's Bylaws, and all outside (non-
employee) directors appointed to fill a vacancy or a newly created directorship
position of the Board.
(j) "Disability" shall mean the condition of a Director who is unable to
----------
substantially fulfill his responsibilities as a member of the Board by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
(l) "Fair Market Value" shall mean the value of one (1) Share of Common
-----------------
Stock, determined as follows, without regard to any restriction other than a
restriction which, by its terms, will never lapse:
(i) If the Shares are traded on an exchange or the National
Market System (the "NMS") of the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ"), the last sale price as
reported for composite transactions on the date of valuation or, if no
sales occurred on that date, then the average of the highest bid and lowest
asked prices on such exchange or the NMS at the end of the day on such
date;
(ii) If the Shares are not traded on an exchange or the NMS but
are otherwise traded over-the-counter, the average of the highest bid and
lowest asked prices quoted in the NASDAQ system as of the close of business
on the date of valuation, or, if on such day such security is not quoted in
the NASDAQ system, the average of the representative bid and asked prices
on such date in the domestic over-the-counter market as reported by the
National Quotation Bureau, Inc., or any similar successor organization; and
(iii) If neither (i) nor (ii) applies, the fair market value as
determined by the Administrator in good faith. Such determination shall be
conclusive and binding on all persons.
-2-
<PAGE>
(m) "Grant" shall mean any stock award granted pursuant to the Plan.
-----
(n) "Grantee" shall mean a Director who has received a Grant pursuant to
-------
Section 4(b) hereof.
(o) "Plan" shall mean this Catalina Marketing Corporation 1992 Director
----
Stock Grant Plan, as it may be amended from time to time.
(p) "Share" shall mean one (1) share of Common Stock, adjusted in
-----
accordance with Section 8 of the Plan (if applicable).
(q) "Term of Directorship" shall have the meaning assigned to it in Section
--------------------
6(b) hereof.
(r) "Transition Grants" shall have the meaning assigned to it in Section
-----------------
6(c) hereof.
(s) "Valuation Date" shall have the meaning assigned to it in Section 6(c)
--------------
hereof.
(t) "Vested Shares" and "Non-Vested Shares" shall have the meanings
------------- -----------------
assigned to such terms in Section 6(e) hereof.
3. EFFECTIVE DATE.
--------------
The Plan was adopted by the Board effective October 27, 1992, subject to
the approval of the Corporation's stockholders pursuant to Section 12 hereof.
4. ADMINISTRATION AND ELIGIBILITY.
------------------------------
(a) Administrator. The Plan shall be administered, in the discretion of
-------------
the Board from time to time, by the Board or by the Committee. The Committee
shall be appointed by the Board and shall consist of not less than two (2)
members of the Board. The Board may from time to time remove members from, or
add members to, the Committee. Vacancies on the Committee, however caused,
shall be filled by the Board. The Board shall appoint one of the members of the
Committee as Chairman. The Administrator shall hold meetings at such times and
places as it may determine. Acts of a majority of the Administrator at a
meeting at which a quorum is present, or acts reduced to or approved in writing
by unanimous consent of the members of the Administrator, shall be the valid
acts of the Administrator.
-3-
<PAGE>
The Administrator shall maintain a list of the Directors who have been
awarded Grants, and determine the number of Shares granted to each Director in
accordance with Section 6(b) hereof. Subject to the express provisions of the
Plan, the Administrator shall have the authority to construe and interpret the
Plan and to define the terms used in the Plan, to prescribe, amend and rescind
rules and regulations relating to the administration of the Plan, and to make
all other determinations necessary or advisable for the administration of the
Plan. The interpretation and construction by the Administrator of any
provisions of the Plan or of any Grant granted thereunder shall be final. No
member of the Administrator shall be liable for any action or determination made
in good faith with respect to the Plan or any Grant awarded thereunder.
(b) Participation. The Grantees shall consist exclusively of Directors of
-------------
the Corporation; provided, however, that no Director shall be eligible to be a
-------- -------
Grantee if and to the extent that such Director is prohibited from personally
accepting or benefiting from a Grant hereunder due to such Director's
affiliation with a business organization; provided further, however, that if at
-------- ------- -------
any time a Director who has not been eligible under the Plan due to the
immediately preceding proviso becomes eligible to participate, such Director
shall be treated as having been elected to a term of less than three years at
the time such Director becomes so eligible, and at such time shall receive a
Grant as though such Director had been elected at such time, pursuant to Section
6(b) of the Plan. If a Director is not eligible to be a Grantee due to the
first proviso of the immediately preceding sentence, then such Director shall be
entitled to cash compensation of $10,000 per year during the Term of
Directorship, with such compensation to be paid on a quarterly basis or as
otherwise directed by the Administrator.
5. STOCK.
-----
The stock subject to Grants awarded under the Plan shall be Shares of the
Corporation's authorized but unissued or reacquired Common Stock. The aggregate
number of Shares which may be issued upon exercise of Grants under the Plan
shall not exceed fifty thousand (50,000), subject to the occurrence of any of
the events specified in Section 8 hereof. The number of Shares subject to
additional Grants at any time shall not exceed the number of Shares remaining
available for issuance under the Plan. In the event that any Shares subject to
any outstanding grants for any reason
-4-
<PAGE>
are forfeited and returned to the Corporation in accordance with Section 6(f) of
the Plan, the Shares so forfeited may again be subject to Grants.
6. TERMS AND CONDITIONS OF GRANTS.
------------------------------
(a) Stock Grant Agreements. Grants shall be evidenced by written stock
----------------------
grant agreements in such form as the Administrator shall from time to time
determine. Such agreements need not be identical but shall comply with and be
subject to the terms and conditions set forth below.
(b) Award of Grants. A Grant shall be awarded to each Director as of the
---------------
day that such Director takes office following the election or re-election of
such Director by the stockholders or by the Board, as permitted in the
Corporation's Bylaws, in partial consideration for the fulfillment by such
Director of such Director's duties as a director of the Corporation. Subject to
the availability of Shares as specified in Section 5 of the Plan, each Grant
shall include AN AGGREGATE OF ONE THOUSAND (1,000) SHARES (SUBJECT TO
ADJUSTMENTS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 8 HEREOF)/*/ as of the
effective date of the Grant, as determined by the Administrator/*/;
provided, however, that if the term (the "Term of Directorship") for which the
- - -------- -------
Director has been elected is not a full three-year term, the number of Shares
subject to a Grant shall be the number of Shares calculated as set forth above,
multiplied by a fraction, the numerator of which is the number of full months
during which the Grantee shall serve as director following the award of the
Grant and until the next annual meeting of stockholders (the "Annual Meeting of
Stockholders") at which the class of directors to which the Grantee belongs is
to be elected (assuming for purposes of this calculation that the Annual Meeting
Date (as hereinafter defined) is July 31 of such fiscal year), and the
denominator of which is thirty-six (36), rounded up to the nearest whole number
of Shares.
(c) Grants Upon Adoption of Plan. Notwith-standing any provision to the
----------------------------
contrary herein, upon the final ratification of the Plan by the Board, and
subject to the approval by stockholders as contemplated by Section 12 of the
Plan, all persons who were Directors upon the
- - ----------------------
/*/ The language appearing in bold-face herein was adopted and certain other
language deleted by the Board on July 25, 1995 and approved by the stockholders
on ______________, 1996.
-5-
<PAGE>
adoption by the Board of the Plan (October 27, 1992) (the "Valuation Date") will
receive Grants ("Transition Grants") effective upon the date of such final
ratification calculated as follows:
(i) Class I Directors shall receive Grants which shall include
the number of Shares obtained by dividing $30,000 by the Fair Market Value
as of the Valuation Date, as determined by the Administrator, rounded up to
the nearest whole number of Shares;
(ii) Class II Directors shall receive Grants which shall include
one-third (1/3) of the number of Shares to be received by Class I
Directors, rounded up to the nearest whole number of Shares; and
(iii) Class III Directors shall receive Grants which shall
include two-thirds (2/3) of the number of Shares to be received by Class II
Directors, rounded up to the nearest whole number of Shares.
(d) Number of Shares. Each Grant shall state the number of Shares to which
----------------
it pertains and shall provide for the adjustment thereof in accordance with the
provisions of Section 8 hereof.
(e) Vesting. Shares included in Grants shall be subject to the vesting
-------
provisions herein set forth. Shares which have vested according to the schedule
set forth below shall be considered "Vested Shares" and Shares which have not so
vested shall be considered "Non-Vested Shares." The Shares included in each
Grant shall vest on the date of each successive Annual Meeting of Stockholders
of the Corporation (the "Annual Meeting Date") following the effective date of
the Grant. The number of Shares subject to a Grant which shall become Vested
Shares as of each Annual Meeting Date shall be calculated by multiplying the
number of Shares included in the Grant by a fraction, the numerator of which is
equal to the number of months which have elapsed since the later of (i) the
election or re-election of such Director or (ii) the last Annual Meeting Date,
and the denominator of which is the number of full months during which the
Grantee shall serve as director following the award of the Grant and until the
next Annual Meeting of Stockholders at which the class of directors to which the
Grantee belongs is to be elected (assuming for purposes of this calculation that
the Annual Meeting Date is July 31 of such fiscal year); provided, however, in
-------- -------
the case of Transition Grants, Directors shall be deemed to have
-6-
<PAGE>
completed twelve (12) months of service as a Director on the Annual Meeting
Date. If no Annual Meeting of Stockholders shall have occurred in any fiscal
year on or before July 31 of such fiscal year, then unless the Board shall have
adopted a resolution adopting an alternative date, July 31 shall be considered
to be the Annual Meeting Date.
(f) Restrictions on Non-Vested Shares. A Grantee may not assign, sell,
---------------------------------
pledge, hypothecate or otherwise transfer any Grant or any Non-Vested Shares.
If a Grantee ceases to be a Director for any reason or no reason, including upon
death or Disability, removal (with or without cause) or resignation, the Grant
shall be automatically terminated immediately upon the effective date of such
cessation and all Shares included in Grants which are Non-Vested Shares as of
the effective date of such cessation, shall be forfeited automatically and
shall, effective immediately upon such cessation, be returned to the status of
authorized to be issued pursuant to Grants under the Plan. In the discretion of
the Administrator, the Corporation may devise any mechanism reasonable for the
purpose of enforcing the restrictions and limitations on Non-Vested Shares. In
the absence of any other such mechanism, the Corporation may retain possession
of any certificates representing Non-Vested Shares, but shall cause certificates
representing Shares which have become Vested Shares registered in the name of
the Grantee to be delivered to the Grantee entitled to the same promptly
following the time at which such Shares become Vested Shares as herein
described.
(g) Rights as a Stockholder. Except as provided in Section 6(f) of the
-----------------------
Plan, a Grantee shall have and enjoy all rights as a stockholder with respect to
all Shares included in the Grant, regardless of whether the Shares awarded are
Vested or Non-Vested, including, without limitation, the right to vote any such
Shares, the right to receive all communications addressed by the Corporation to
its stockholders, and the right to receive dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions or other rights as
provided in the Certificate of Incorporation or Bylaws of the Corporation.
Notwithstanding any provision hereof, a Director may not transfer any Shares
received pursuant to a Grant for a period of six (6) months immediately
following the effective date of the Grant.
(h) Payment of Taxes; Related Matters. In the event the Corporation
---------------------------------
determines it is required to
-7-
<PAGE>
withhold state, local or Federal income tax as a result of the grant of a Grant
or the vesting of any Shares subject to a Grant, the Corporation may require a
Grantee to make arrangements satisfactory to the Corporation to enable it to
satisfy such withholding requirements. Payment of such withholding requirements
may be made, in the discretion of the Administrator, (i) in cash, (ii) by
delivery of Shares registered in the name of the Grantee, or by the Corporation
not issuing such number of Shares subject to the Grant having a Fair Market
Value at the effective date of the Grant or the date of such vesting equal to
the amount to be withheld, or (iii) any combination of (i) and (ii) above. An
election under the preceding sentence may only be made during the period
beginning on the third business day following the date of release of quarterly
and annual summary statements of sales and earnings as provided by Rule 16b-
3(e)(3)(iii) (or Rule 16b-3(e)(3) following the scheduled amendment of Rule 16b-
3) of the Securities and Exchange Commission and ending on the twelfth business
day following such date and only if such period occurs before the date the
Corporation requires payment of the withholding tax. The election need not be
made during the ten-day window if (a) it is made at least six (6) months prior
to the date of the Grant or (b) counsel to the Corporation determines that
compliance with such requirement is unnecessary.
THE STOCK GRANT AGREEMENTS SHALL APPRISE THE GRANTEE OF THE TAX
CONSEQUENCES TO THE GRANTEE OF SECTION 83 OF THE CODE (INCLUDING THE TAX
CONSEQUENCES TO THE GRANTEE OF FILING OF AN ELECTION PURSUANT TO SECTION 83(b)
OF THE CODE), AND SHALL ALLOCATE THE RESPONSIBILITY FOR RECEIVING APPROPRIATE
ADVICE WITH RESPECT THERETO TO THE GRANTEE.
(I) DEFERRAL OF GRANT. PRIOR TO HIS OR HER ELECTION OR RE-ELECTION TO THE
-----------------
BOARD OF DIRECTORS, EACH DIRECTOR MAY ELECT TO DEFER, IN ACCORDANCE WITH THE
TERMS OF THE CORPORATION'S DEFERRED COMPENSATION PLAN, ALL OR A PORTION OF THE
GRANT HE OR SHE SHALL RECEIVE IF ELECTED OR RE-ELECTED, PURSUANT TO SECTION
6(B). IN SUCH CASE, NO SHARES WILL BE ISSUED TO THE DIRECTOR AND A CREDIT WILL
BE MADE TO THE COMMON STOCK UNIT ACCOUNT MAINTAINED FOR SUCH DIRECTOR UNDER THE
DEFERRED COMPENSATION PLAN IN A NUMBER OF UNITS EQUAL TO THE NUMBER OF SHARES
DEFERRED ON THE DATE OF GRANT./**/
- - ----------
/**/ The language appearing in bold-face herein was adopted by the Board of
Directors on April 30, 1996 and approved by the stockholders on ________,
1996.
-8-
<PAGE>
(j) Other Provisions. The stock grant agreements authorized under the Plan
----------------
may contain such other provisions not inconsistent with the terms of the Plan
(including, without limitation, restrictions upon the transfer of Shares of
stock following the award of the Grant) as the Administrator shall deem
advisable.
7. TERM OF PLAN.
------------
Grants may be awarded pursuant to the Plan until the expiration of the Plan
on October 27, 2002.
8. RECAPITALIZATIONS AND OTHER TRANSACTIONS.
----------------------------------------
Subject to any required action by stockholders, the aggregate number of
Shares covered by the Plan as provided in Section 5 hereof and the number of
Shares covered by each Grant shall be proportionately adjusted for any increase
or decrease in the number of issued Shares resulting from a stock split, stock
dividend (but only of Common Stock), combination of shares or any other change,
by reclassification, reorganization, redesignation, recapitalization or
otherwise, or any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Corporation. If any such
adjustment results in a fractional share, such fraction shall be disregarded.
Subject to any required action by stockholders, if the Corporation shall
merge with another corporation and the Corporation is the surviving corporation
in such merger and under the terms of such merger the shares of Common Stock
outstanding immediately prior to the merger remain outstanding and unchanged,
each outstanding Grant shall continue to apply to the Shares subject thereto,
and any Shares awarded pursuant to a Grant prior to a merger, which have yet to
fully vest in accordance with the schedule set forth in Section 6(e) of the
Plan, shall continue to be subject to the same vesting schedule. In addition,
in the event of a merger where the Corporation is the surviving corporation,
each outstanding Grant shall also pertain and apply to any additional securities
and other property, if any, to which a holder of the number of Shares subject to
the Grant would have been entitled as a result of the merger. If the
Corporation sells all, or substantially all, of its assets, or the Corporation
merges (other than a merger of the type described in the immediately preceding
sentence) or consolidates with another corporation (SUCH EVENT BEING A
-9-
<PAGE>
"FORFEITURE EVENT,")/***/, this Plan and each outstanding Grant shall terminate
and each Non-Vested Share awarded hereunder pursuant to a Grant shall be
forfeited; PROVIDED, HOWEVER, THAT UNLESS THE CONSUMMATION OF THE FORFEITURE
-------- -------
EVENT TAKES PLACE WITHIN THIRTY (30) DAYS FOLLOWING AN ANNUAL MEETING DATE, IN
THE EVENT OF A FORFEITURE EVENT, ANY SHARES THAT WOULD HAVE BECOME VESTED SHARES
AT THE NEXT SUCCEEDING ANNUAL MEETING DATE FOLLOWING THE CONSUMMATION OF THE
FORFEITURE EVENT SHALL BE VESTED SHARES UPON AND FOR A PERIOD OF THIRTY (30)
DAYS PRECEDING THE CONSUMMATION OF THE FORFEITURE EVENT, BUT CONTINGENT UPON THE
CONSUMMATION OF THE FORFEITURE EVENT./***/ A dissolution or liquidation of
the Corporation, other than a dissolution or liquidation immediately following a
sale of all or substantially all of the assets of the Corporation, which shall
be governed by the immediately preceding sentence, shall also cause this Plan
and each Grant hereunder to terminate and each Non-Vested Share under any Grant
to be forfeited.
To the extent that the foregoing adjustments relate to securities of the
Corporation, such adjustments shall be made by the Administrator, whose
determination shall be conclusive and binding on all persons.
Except as expressly provided in this Section, the Grantee shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or stock of another
corporation, and any issue by the Corporation of shares of stock of any class,
or securities convertible into shares of stock of any class, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number of
Shares subject to a Grant.
The award of a Grant pursuant to the Plan shall not affect in any way the
right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
- - ---------------
/***/ The language appearing in bold-face herein was adopted by the Board on
April 19, 1994 and approved by the stockholders on July 26, 1994.
-10-
<PAGE>
9. SECURITIES LAW REQUIREMENTS.
---------------------------
(a) Legality of Issuance. No Shares shall be issued upon the award of any
--------------------
Grant unless and until the Corporation has determined that:
(i) it and the Grantee have taken all actions required to
register the award of the Shares under the Act, or to perfect an exemption
from the registration requirements thereof;
(ii) any applicable listing requirement of any stock exchange on
which the Common Stock is listed has been satisfied; and
(iii) any other applicable provision of state or Federal law has
been satisfied.
(b) Restrictions on Transfer; Representations of Grantee; Legends.
-------------------------------------------------------------
Regardless of whether the award of Shares under the Plan has been registered
under the Act or has been registered or qualified under the securities laws of
any state, the Corporation may impose restrictions upon the sale, pledge or
other transfer of such Shares (including the placement of appropriate legends on
stock certificates) if, in the judgment of the Corporation and its counsel, such
restrictions are necessary or desirable in order to achieve compliance with the
provisions of the Act, the securities laws of any state or any other law. In
the event that the award of Shares under the Plan is not registered under the
Act but an exemption is available which requires an investment representation or
other representation, each Grantee shall be required to represent that such
Shares are being acquired for investment, and not with a view to the sale or
distribution thereof, and to make such other representations as are deemed
necessary or appropriate by the Corporation and its counsel. Stock certificates
evidencing Shares acquired under the Plan pursuant to an unregistered
transaction shall bear the following restrictive legend (or similar legend in
the discretion of the Administrator) and such other restrictive legends as are
required or deemed advisable under the provisions of any applicable law:
-11-
<PAGE>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION AND
MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY IN FORM AND CONTENT TO THE ISSUER THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER SUCH ACT."
Any determination by the Corporation and its counsel in connection with any
of the matters set forth in this Section shall be conclusive and binding on all
persons.
(c) Registration or Qualification of Securities. The Corporation may, but
-------------------------------------------
shall not be obligated to, register or qualify the award of Shares pursuant to
the Plan under the Act or any other applicable law. The Corporation shall not
be obligated to take any affirmative action in order to cause the award of
Shares under the Plan to comply with any law.
(d) Exchange of Certificates. If, in the opinion of the Corporation and
------------------------
its counsel, any legend placed on a stock certificate representing Shares
awarded under the Plan is no longer required, the holder of such certificate
shall be entitled to exchange such certificate for a certificate representing
the same number of Shares but without such legend.
10. INFORMATION TO GRANTEES.
-----------------------
The Corporation shall provide each Grantee on an annual or other periodic
basis financial and other information regarding the Corporation. The
Corporation may provide this information to each Grantee in any manner
reasonably calculated to insure receipt of the information by each Grantee.
-12-
<PAGE>
11. AMENDMENT OF THE PLAN.
---------------------
The Board may, from time to time, with respect to any Shares at the time
not subject to Grants, suspend or discontinue the Plan or revise or amend it in
any respect whatsoever, provided that the Board shall not revise or amend the
--------
Plan more than once every six (6) months (other than to comport with changes in
the Code or the Employee Retirement Income Security Act, or the rules or
regulations thereunder), and provided, further, that no amendment or revision
-------- -------
shall adversely affect, without the affected Grantee's written consent, the
rights of any Grantee to whom the Shares have been issued pursuant to the Plan.
In addition, without the approval of the Corporation's stockholders, no such
revision or amendment shall:
(a) Materially increase the benefits accruing to the Grantees under the
Plan;
(b) Increase the number of Shares which may be issued under the Plan;
(c) Change the designation in Section 4 hereof with respect to the classes
of persons eligible to receive Grants;
(d) Modify the Plan such that it fails to meet the requirements of Rule
16b-3 of the Securities and Exchange Commission for the exemption of the
acquisition, cancellation, expiration or surrender of Grants from the operation
of Section 16(b) of the Exchange Act; or
(e) Amend this Section to defeat its purpose.
12. APPROVAL OF STOCKHOLDERS.
------------------------
The Plan shall be subject to approval by the affirmative vote of the
holders of a majority of the outstanding shares present or represented and
entitled to vote at the first annual meeting of stockholders of the Corporation
following the adoption of the Plan, and in no event later than October 27, 1993.
Following the adoption of the Plan by the Board on October 27, 1992, but prior
to stockholder approval, Grants may be awarded to Directors duly elected or
appointed to serve on the Board of the Corporation, pending stockholder
approval, and upon such approval by the stockholders, the actions of the
Administrator by which the Grants were awarded shall be
-13-
<PAGE>
ratified. Any amendment described in Section 11 shall also be subject to
approval by the Corporation's stockholders.
13. EXECUTION.
---------
To record the adoption of the Plan by the Board on October 27, 1992, the
Corporation has caused its authorized officers to affix the corporate name and
seal hereto.
CATALINA MARKETING CORPORATION
By /s/ Tommy D. Greer
---------------------------------
Tommy D. Greer, Chairman
By /s/ Barry A. Brooks
---------------------------------
Barry A. Brooks, Secretary
[Seal]
-14-
<PAGE>
CATALINA MARKETING CORPORATION
DEFERRED COMPENSATION PLAN
EFFECTIVE JULY 1, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I Definitions............................. 3
1.1 "Account or Accounts"................... 3
1.2 "Annual Meeting"........................ 3
1.3 "Annual Meeting Year"................... 3
1.4 "Beneficiary"........................... 3
1.5 "Beneficiary Designation Form".......... 4
1.6 "Board"................................. 4
1.7 "Bonus"................................. 4
1.8 "Cause"................................. 4
1.9 "Change in Control"..................... 4
1.10 "Claimant".............................. 5
1.11 "Code".................................. 5
1.12 "Common Stock".......................... 5
1.13 "Committee"............................. 5
1.14 "Company"............................... 5
1.15 "Deferral".............................. 5
1.16 "Director".............................. 6
1.17 "Director Fees"......................... 6
1.18 "Disability"............................ 6
1.19 "Dividend".............................. 6
1.20 "Earnings".............................. 6
1.21 "Effective Date"........................ 6
1.22 "Election Form"......................... 6
1.23 "Employee".............................. 7
1.24 "ERISA"................................. 7
1.25 "Exchange Act".......................... 7
1.26 "Fair Market Value"..................... 7
1.27 "Non-Qualified Stock Option"............ 7
1.28 "Normal Retirement Date"................ 7
1.29 "Option Profit"......................... 7
1.30 "Participant"........................... 7
1.31 "Plan".................................. 8
1.32 "Plan Administrator".................... 8
1.33 "Plan Agreement"........................ 8
1.34 "Plan Rules"............................ 8
1.35 "Plan Year"............................. 8
1.36 "Related Employer"...................... 8
1.37 "Rule 16b-3"............................ 8
1.38 "Salary"................................ 8
1.39 "Stock Grants".......................... 8
1.40 "Stock Units"........................... 9
1.41 "Termination of Employment"............. 9
1.42 "Trust"................................. 9
-i-
<PAGE>
Page
----
1.43 "Unforeseeable Financial Emergency"..... 9
1.44 "Valuation Date"........................ 9
1.45 "Vested"................................ 9
1.46 "Year of Service"....................... 9
ARTICLE II Eligibility and Participation........... 9
2.1 Selection............................... 9
2.2 Participation........................... 10
ARTICLE III Deferral Elections...................... 10
3.1 Cash Deferral Amount.................... 10
3.2 Elections to Defer Cash................. 10
3.3 Stock Grants Deferrals.................. 11
3.4 Stock Grants Elections.................. 11
3.5 Option Profit Deferrals................. 11
3.6 Option Profit Elections................. 11
3.7 Withholding of Deferral Amounts......... 11
3.8 Irrevocable Elections................... 12
3.9 Unforeseeable Financial Emergency....... 12
3.10 Election Forms.......................... 12
ARTICLE IV Common Stock Account.................... 12
4.1 Deferral Amounts........................ 12
4.2 Credited Amounts........................ 12
4.3 Irrevocable Choice...................... 13
4.4 Elections by Certain Officers
and Directors........................... 13
ARTICLE V Company Matching Contributions.......... 13
5.1 Matching Contributions.................. 13
5.2 Discretionary Contributions............. 14
5.3 Limitations............................. 14
ARTICLE VI Participant Accounts and Investment of
Deferred Amounts........................ 14
6.1 Deferred Compensation Account........... 14
6.2 Common Stock Account.................... 14
6.3 Matching Contribution Account........... 15
6.4 Discretionary Contribution Account...... 15
6.5 Earnings................................ 15
6.6 Investment.............................. 15
6.7 Valuation of Accounts................... 16
-ii-
<PAGE>
Page
----
6.8 Statement of Accounts.................. 16
ARTICLE VII In Service Distributions............... 17
7.1 Distributions for Unforeseeable
Financial Emergencies................... 17
7.2 Withdrawal Election..................... 17
ARTICLE VIII Loans................................... 16
8.1 Loans to Participants................... 16
ARTICLE IX Distributions Following Termination of
Employment.............................. 19
9.1 Distribution............................ 19
9.2 Elections............................... 19
9.3 Time for Payment........................ 19
9.4 Small Payments.......................... 19
9.5 Cashout of Installment Payments......... 20
9.6 Form of Payment......................... 20
9.7 Restrictions on Common Stock............ 20
ARTICLE X Distributions Following Death........... 20
10.1 Death While Employed by Employer Group.. 20
10.2 Death After Termination of Employment... 21
10.3 Lump Sum Election....................... 21
10.4 Form of Payment......................... 21
10.5 Restrictions on Common Stock............ 21
ARTICLE XI Beneficiary Designation................. 22
11.1 Beneficiary............................. 22
11.2 Beneficiary Designation; Change;
Spousal Consent......................... 22
11.3 No Beneficiary Designation.............. 22
11.4 Doubt as to Beneficiary................. 22
ARTICLE XII Vesting................................. 23
12.1 Vesting Schedules....................... 23
12.2 Deferred Compensation Account........... 23
12.3 Vesting Schedule for Pre-January
1, 1997 Additions to the
Matching Contribution and
-iii-
<PAGE>
Page
----
Discretionary Contribution Accounts.............. 23
12.4 Vesting Schedule for Additions to the Matching
Contribution and Discretionary Contribution
Accounts on or after January 1, 1997............. 23
12.5 Accelerated Vesting.............................. 23
12.6 Forfeitures Upon Termination of Employment....... 24
ARTICLE XIII Administration................................... 24
13.1 Plan Administrator............................... 24
13.2 Committee........................................ 25
13.3 Plan Administrator's Authority................... 25
ARTICLE XIV Amendment and Termination........................ 25
14.1 Amendments....................................... 25
14.2 Termination of Plan.............................. 25
14.3 Following a Change in Control.................... 26
ARTICLE XV Claims Procedures................................ 26
15.1 Presentation of Claim............................ 26
15.2 Notification of Decision......................... 26
15.3 Review of a Denied Claim......................... 27
15.4 Arbitration...................................... 27
15.5 Legal Action..................................... 28
15.6 Following a Change in Control.................... 28
ARTICLE XVI Trust............................................ 28
16.1 Establishment of Trust........................... 28
16.2 Interrelationship of the Plan and the Trust...... 28
ARTICLE XVII Miscellaneous.................................... 28
17.1 Unsecured General Creditor/Unfunded Plan......... 28
17.2 Payments to Minors and Incompetents.............. 29
17.3 Plan Not a Contract of Employment................ 29
17.4 No Interest In Assets............................ 29
17.5 Recordkeeping.................................... 29
17.6 Notice........................................... 29
-iv-
<PAGE>
Page
----
17.7 Successors............................................ 30
17.8 Spouse's Interest..................................... 30
17.9 Taxes and Withholding................................. 30
17.10 Legal Fees to Enforce Rights After Change in Control.. 30
17.11 Court Order........................................... 31
17.12 Furnishing Information................................ 31
17.13 Non-Alienation of Benefits............................ 31
17.14 Governing Law......................................... 31
17.15 Section 16............................................ 31
17.16 Liability Limited..................................... 32
-v-
<PAGE>
CATALINA MARKETING CORPORATION
DEFERRED COMPENSATION PLAN
EFFECTIVE JULY 1, 1996
PURPOSE
Catalina Marketing Corporation (the "Company") hereby amends and
restates the Catalina Marketing Corporation Deferred Compensation Plan (the
"Plan") effective as of July 1, 1996. The Plan was originally effective as of
January 1, 1992. The Plan has been established for the benefit of a select
group of management personnel and directors to ensure that the overall
effectiveness of the Company's and its Related Employers' compensation program
will attract, retain and motivate qualified individuals. The Plan is intended
to provide certain key employees and directors who substantially contribute to
the success of the Company and its Related Employers the opportunity to defer
the receipt of compensation.
The Plan is a non-qualified deferred compensation plan and is designed
to permit select employees and directors of the Company to defer a portion of
their compensation to provide retirement, death and disability benefits. The
Company intends to match participants' contributions.
The Company intends to make contributions to the Catalina Marketing
Corporation Deferred Compensation Trust (the "Trust") in amounts necessary to
fund the benefits provided in the Plan. The assets of the Trust shall be
general assets of the Company and shall be subject to the claims of the general
creditors of the Company.
While the Company intends to continue the Plan, it reserves the right
to terminate the Plan, in whole or in part, at any time. Benefits under the
Plan shall at all times be subject to the claims of the Company's general
creditors. Therefore, neither participation in the Plan nor eligibility
therefore shall entitle any employee or director to have the Plan or any of its
provisions continued for his or her benefit in the future.
The Plan systematically operates to defer the income of employees and
directors for periods extending to
-2-
<PAGE>
termination of employment or beyond, and therefore, is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Accordingly,
federal law shall govern this Plan. However, the Plan is not intended to
qualify under Section 401(a) of the Internal Revenue Code and similar provisions
of state law. Finally, the Plan is unfunded and is maintained by the Company
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees, and therefore, is exempt from the
participation, vesting, funding and fiduciary responsibility requirements of
parts 2, 3 and 4 of Title I of ERISA.
ARTICLE I
---------
DEFINITIONS
-----------
For purposes hereof, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
1.1 "ACCOUNT OR ACCOUNTS" shall mean, with respect to a Participant
other than a Director, the (i) the Deferred Compensation Account, (ii) Common
Stock Account, (iii) Matching Contribution Account and (iv) Discretionary
Contribution Account established pursuant to Article VI and, with respect to a
Participant who is a Director, the (i) Deferred Compensation Account and (ii)
Common Stock Account. These Accounts shall be bookkeeping entries only and
shall be utilized solely as a device for the measurement and determination of
the amounts to be paid to a Participant pursuant to this Plan. The Deferred
Compensation and Common Stock Accounts shall be fully vested at all times and
the Matching Contribution Account and the Discretionary Contribution Account
shall vest in accordance with Article XII.
1.2 "ANNUAL MEETING" shall mean the annual meeting of the Company's
stockholders.
1.3 "ANNUAL MEETING YEAR" shall mean the one year period beginning
on the date of an Annual Meeting.
1.4 "BENEFICIARY" shall mean one or more persons, trusts, estates
or other entities, designated in accordance with Article XI to receive benefits
under this Plan upon the death of a Participant.
-3-
<PAGE>
1.5 "BENEFICIARY DESIGNATION FORM" shall mean the form established
from time to time by the Plan Administrator that a Participant completes, signs
and returns to the Plan Administrator to designate one or more Beneficiaries,
which shall be substantially in the form set forth in Exhibit "A".
1.6 "BOARD" shall mean the Board of Directors of the Company.
1.7 "BONUS" shall mean bonuses and commissions paid in the calendar
year in question to a Participant for employment services rendered to the
Company, before reduction for compensation contributed to or deferred under any
Company benefit plan.
1.8 "CAUSE" shall mean the following (i) the Participant's refusal
to follow written, lawful directions or his or her material failure to perform
his or her duties, in either case, after the Participant has been given notice
and a reasonable opportunity to cure his or her default; (ii) the Participant's
material failure to comply with Company policies, such as those set forth in the
Catalina Marketing Corporation Handbook, as amended from time to time, and any
confidentiality agreement executed by the Participant and the Company; or (iii)
the Participant's engaging in conduct which is or may be unlawful or
disreputable, to the possible detriment of the Company, any of its affiliates,
or the Participant's own reputation.
1.9 "CHANGE IN CONTROL" shall mean a change in control of the
Company, which shall be deemed to have occurred if the conditions set forth in
any one of the following four paragraphs shall have been satisfied:
(i) any corporation, person, other entity or group, (other than
the trustee of any qualified retirement plan maintained by the Company)
becomes the "beneficial owner" (as defined in Rule 13(d)-3 of the Exchange
Act), directly or indirectly, of securities representing twenty five
percent (25%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of twenty-four consecutive months,
individuals who at the beginning of such consecutive twenty-four month
period constitute the Board cease for any reason (other than retirement
upon reaching normal retirement age, disability or
-4-
<PAGE>
death) to constitute at least a majority thereof, unless the election or
the nomination for election by the Company's shareholders of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such twenty-
four month period;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the
shareholders of the Company approve a plan or complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all
or substantially all the Company's assets;
(iv) there shall occur a transaction or series of transactions
which the Board shall determine to have the effect of a Change in Control.
1.10 "CLAIMANT" shall have the meaning set forth in Section 15.1,
below.
1.11 "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
1.12 "COMMON STOCK" shall mean the Common Stock, par value $0.01 of
the Company or any security of the Company issued in substitution, exchange or
lieu thereof.
1.13 "COMMITTEE" shall mean the administrative committee appointed
to manage and administer the Plan in accordance with the provisions of Article
XIII.
1.14 "COMPANY" shall mean Catalina Marketing Corporation and its
successors.
1.15 "DEFERRAL" shall mean the Salary, Bonus and Director Fees that
a Participant defers in accordance with Article III for the deferral period in
question.
-5-
<PAGE>
1.16 "DIRECTOR" shall mean a member of the Board.
1.17 "DIRECTOR FEES" shall mean cash meeting fees paid to Directors
for services to the Company.
1.18 "DISABILITY" shall mean a period of disability that commences
while a Participant is employed by the Company or a Related Employer and during
which the Participant qualifies for benefits under a long-term disability plan
of the Company or the Related Employer, or, if the Participant does not
participate in such a plan, a period of disability during which the Participant
would have qualified for benefits under such a plan, as determined in the sole
discretion of the Plan Administrator, had the Participant been a participant in
such a plan. A Disability shall be deemed to have occurred on the date on which
it is determined that the Participant qualifies (or would have qualified) for
such benefits. The significance under this Plan of a Participant suffering a
Disability is that the Participant (i) shall be deemed to have had a Termination
of Employment, which shall cause his or her Account to be distributed pursuant
to Article IX and (ii) the Participant's Account shall become fully Vested
pursuant to Article XII.
1.19 "DIVIDEND" shall mean a dividend declared and paid by the
Company on the Common Stock.
1.20 "EARNINGS" shall mean the amount credited to a Participant's
Account based on the earnings attained by the Trustee on the investment of the
amounts held by the Trust, and any amount credited to the Common Stock Account
pursuant to Section 6.2 which is attributable to a Dividend. Until distributed
to the Participant, Earnings are solely the property of the Company and shall be
subject to the rights of the Company's general creditors.
1.21 "EFFECTIVE DATE" of the Plan shall mean, as amended and
restated, July 1, 1996, and with respect to Article IV and Sections 3.3, 3.4,
3.5 and 3.6, July 1, 1996 subject to approval by the Company's shareholders at
the 1996 Annual Meeting.
1.22 "ELECTION FORM" shall mean the form established from time to time
by the Plan Administrator that a Participant completes, signs and returns to the
Plan Administrator to make a deferral election under the Plan, which shall be
substantially in the form of the Agreement
-6-
<PAGE>
set forth in Exhibit "B" for an Employee and Exhibit "C" for a Director.
1.23 "EMPLOYEE" shall mean an individual who renders services to the
Company or a Related Employer as a common law employee (I.E., a person whose
----
wages from the Company are subject to federal income tax withholding).
1.24 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
1.25 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended and in effect from time to time, or any successor statute.
1.26 "FAIR MARKET VALUE" shall mean the closing price on the New
York Stock Exchange - Composite Tape of the Common Stock on the date(s) in
question, or, if the Common Stock shall not have been traded on any such
date(s), the closing price on the New York Stock Exchange - Composite Tape on
the first day prior thereto on which the Common Stock was so traded or if the
Common Stock is not traded on the New York Stock Exchange, such other amount as
may be determined by the Committee by any fair and reasonable means. Fair
Market Value determined by the Committee in good faith shall be final, binding
and conclusive on all parties.
1.27 "NON-QUALIFIED STOCK OPTION" shall mean an award to purchase
shares of Common Stock that is not an incentive stock option under Section 422
of the Code and is granted pursuant to the provisions of any of the Company's
stock option plans which grant the optionee the ability to elect to defer the
Spread under this Plan.
1.28 "NORMAL RETIREMENT DATE" shall mean the date a Participant
attains age 65.
1.29 "OPTION PROFIT" shall mean the amount (not less than zero) by
which the Fair Market Value of a share of Common Stock subject to the Non-
Qualified Stock Option on the date of the Participant's exercise of the Non-
Qualified Stock Option exceeds the exercise price of a Non-Qualified Stock
Option.
1.30 "PARTICIPANT" shall mean any Employee or Director who is
covered by this Plan as provided in Article II.
-7-
<PAGE>
1.31 "PLAN" shall mean the Catalina Marketing Corporation Deferred
Compensation Plan hereby created and as it may be amended form time to time.
1.32 "PLAN ADMINISTRATOR" shall mean the Committee or Plan
Administrator, if appointed pursuant to Section 13.2.
1.33 "PLAN AGREEMENT" shall mean a written agreement, as amended
from time to time, which is entered into by and between the Company and a
Participant, which shall be substantially in the form of the Agreement set forth
in Exhibit "D". Each such Agreement incorporates the Plan by reference and each
such Agreement is hereby incorporated into the Plan by reference with respect to
the Participant who is a party thereto.
1.34 "PLAN RULES" shall mean rules adopted by the Company in
accordance with Section 13.1(g) for the administration, interpretation or
application of the Plan. See Exhibit "E" for details on Plan Rules.
1.35 "PLAN YEAR" shall mean the 12-month period ending on December
31.
1.36 "RELATED EMPLOYER" shall mean an affiliate (and its successors)
of the Company, related to the Company in the manner described in Sections
414(b) or (c) of the Code, that the Plan Administrator in its sole discretion
allows to participate in the Plan.
1.37 "RULE 16B-3" shall mean Rule 16b-3 of the General Rules and
Regulations of the Exchange Act (or any successor rule or regulation).
1.38 "SALARY" shall mean base salary paid in the calendar year in
question to a Participant for services rendered to the Company, before reduction
for compensation contributed to or deferred under any Company benefit plan. In
no event shall severance benefits of any type be taken into account in computing
a Participant's Salary.
1.39 "STOCK GRANTS" shall mean an award of Common Stock granted to a
Director pursuant to the 1992 Director Stock Grant Plan or any successor plan
that allows the Director to elect to defer the receipt of the stock grant under
this Plan.
-8-
<PAGE>
1.40 "STOCK UNITS" shall mean units in the Plan each of which
represent a share of Common Stock.
1.41 "TERMINATION OF EMPLOYMENT" shall mean a Participant's
cessation of employment or service with the Company or a Related Employer
voluntarily or involuntarily, for any reason other than death.
1.42 "TRUST" shall mean the one (1) or more grantor, or "rabbi",
trusts, within the meaning of Code Section 671 that may be established between
the Company and the trustee (or trustees) named therein. Despite the existence
of such a trust, this Plan is technically an unfunded plan for tax purposes and
for purposes of Title I of ERISA.
1.43 "UNFORESEEABLE FINANCIAL EMERGENCY" shall mean an unanticipated
emergency that is caused by an event beyond the control of the Participant that
would result in severe financial hardship to the Participant resulting from (i)
a sudden and unexpected illness or accident of the Participant or a dependent of
the Participant, (ii) a loss of the Participant's property due to casualty, or
(iii) other such extraordinary and unforeseeable circumstances, all as
determined in the sole discretion of the Plan Administrator.
1.44 "VALUATION DATE" shall mean any date for which the balance to
the credit of the Account maintained for a Participant is determined.
1.45 "VESTED" shall mean nonforfeitable.
1.46 "YEAR OF SERVICE" shall mean the 12-consecutive month period
beginning with a Participant's date of hire by the Company or a Related
Employer, or in the case of a Director, the date he or she was appointed to the
Board, and each 12-consecutive month period that begins with the anniversary
date of the Participant's date of hire or Board appointment.
ARTICLE II
----------
ELIGIBILITY AND PARTICIPATION
-----------------------------
2.1 SELECTION. Participation in the Plan shall be limited to (i) a
---------
select group of management or highly compensated Employees and (ii) the
Directors. From the
-9-
<PAGE>
select group of Employees, the Plan Administrator, in its sole discretion, shall
determine those Employees eligible to participate in the Plan. Accordingly, an
Employee who, in the opinion of the Plan Administrator based upon its then
current guidelines, has contributed significantly to the growth and successful
operations of the Company or a Related Employer and who meets any additional
criteria for eligibility that the Plan Administrator, in its sole discretion,
may adopt from time to time, will be eligible to become a Participant.
2.2 PARTICIPATION. Once a selected Employee or Director has filed
-------------
with the Plan Administrator (within the time it requires) an executed copy of
the Plan Agreement prescribed by the Plan Administrator, the Employee or
Director shall become a Participant on the latest of the date set forth in the
Plan Agreement, the date on which his or her Plan Agreement is filed with the
Plan Administrator or the date upon which a deferral is first credited to his or
her Account.
ARTICLE III
-----------
DEFERRAL ELECTIONS
------------------
3.1 CASH DEFERRAL AMOUNT. A Participant may elect to defer all or
--------------------
any part of his or her anticipated Salary, Bonus and Director Fees.
3.2 ELECTIONS TO DEFER CASH. In connection with a Participant's
-----------------------
commencement of participation in the Plan, the Participant may make a deferral
election by delivering to the Plan Administrator a completed and signed Election
Form at the same time the Participant files his or her completed and signed Plan
Agreement with the Plan Administrator. Thereafter, if the Participant wishes to
commence or discontinue making a Deferral, or to change the amount of his or her
Deferral, the Participant must file a new Election Form with the Plan
Administrator 30 days before the beginning of the (a) Plan Year for changes to
the Deferral of a Participant's Bonus, (b) calendar quarter (i.e. January 1,
April 1, July 1 or October 1) for changes to the Deferral of a Participant's
Salary, or (c) Board meeting or Board committee meeting with respect to which
the election is made for changes to the Deferral of Director Fees, which shall
supersede any prior Election Form.
-10-
<PAGE>
3.3 STOCK GRANTS DEFERRALS. A Director may elect to defer all or any
----------------------
part of his or her anticipated Stock Grants.
3.4 STOCK GRANTS ELECTIONS. A Director may commence or discontinue
----------------------
making a Stock Grants deferral, or change the amount of his or her deferral by
filing an Election Form with the Plan Administrator prior to any Annual Meeting
at which his or her election or reelection to the Board will be considered (at
which the Stock Grant would be made), which shall supersede any prior Election
Form. Elections to defer Stock Grants shall be effective only with respect to
Stock Grants made to a Director following the Effective Date. Notwithstanding
anything to the contrary contained in this Section, a Stock Grants deferral and
election shall be subject to any additional requirements, such as vesting,
imposed by the plan under which the Stock Grant is granted to the Director.
3.5 OPTION PROFIT DEFERRALS. A Participant may elect to defer all
-----------------------
or any part of his or her Option Profit on the exercise of a Non-Qualified Stock
Option, but only if the Participant paid the exercise price of the Non-Qualified
Stock Option with Common Stock that, as of the date of exercise, the Participant
had held for at least six months.
3.6 OPTION PROFIT ELECTIONS. A Participant may make an Option
-----------------------
Profit deferral by filing an Election Form with the Plan Administrator at least
one year prior to the date the Non-Qualified Stock Option vests. With respect
to Non-Qualified Stock Options that are vested as of the Effective Date or will
become vested within one year after the Effective Date, a Participant may make
an Option Profit deferral within sixty days of the Effective Date.
Notwithstanding anything to the contrary contained in this Section, an Option
Profit deferral and election shall be subject to any additional requirements
imposed by the plan under which the Non-Qualified Stock Option is granted to the
Participant.
3.7 WITHHOLDING OF DEFERRAL AMOUNTS. A Participant's deferrals
-------------------------------
shall be withheld as specified in the Participant's Election Form, subject to
any rules established by the Plan Administrator limiting or prescribing how
deferrals are to be withheld, such as rules requiring that deferrals first be
made out of commission or incentive compensation.
-11-
<PAGE>
3.8 IRREVOCABLE ELECTIONS. Except as provided in Section 3.9, any
---------------------
election by a Participant pursuant to Section 3.1 shall be irrevocable for any
Plan Year or Annual Meeting Year once the Plan Year or Annual Meeting Year has
begun. Any deferral election will continue until revoked or modified in a
writing delivered by the Participant to the Plan Administrator, which revocation
or modification shall only apply to compensation payable to the Participant
after the end of the Plan Year or Annual Meeting Year in which such election is
delivered to the Plan Administrator. Except as provided in Section 3.9, any
election by a Participant made pursuant to Sections 3.3 and 3.5 shall be
irrevocable.
3.9 UNFORESEEABLE FINANCIAL EMERGENCY. If a Participant suffers an
---------------------------------
Unforeseeable Financial Emergency, the Participant will be permitted to revoke
his deferral election for the remainder of the Plan Year in which it is
determined by the Plan Administrator that the Unforeseeable Financial Emergency
has occurred.
3.10 ELECTION FORMS. Any election by a Participant under this
--------------
Article shall be made on an Election Form (the terms of which are incorporated
herein by reference).
ARTICLE IV
----------
COMMON STOCK ACCOUNT
--------------------
4.1 DEFERRAL AMOUNTS. The amount of deferrals made pursuant to
----------------
Article III which may be credited to the Common Stock Account will be determined
in the sole discretion of the Plan Administrator in accordance with Plan Rules
it establishes. Unless modified by subsequent Plan Rules, a Participant may
elect to defer up to 50% of his or her Bonus (not to exceed $100,000 in any Plan
Year) and a Director may elect to defer up to 100% of his or her Director Fees
into the Common Stock Account. Unless modified by subsequent Plan Rules, the
entire amount of the Stock Grants and the Option Profit subject to a
Participant's deferral election shall be credited to the Common Stock Account.
4.2 CREDITED AMOUNTS. The Participant's Common Stock Account will
----------------
be credited with a number of Stock Units equal to the following amounts:
-12-
<PAGE>
Bonus the amount of the Bonus deferral divided by the average
Fair Market Value on the five business days preceding the
date the Participant's Bonus is otherwise payable
Director the amount of the Director Fees
Fees deferral divided by the Fair Market Value on the five
business days preceding the date the Director Fees are
otherwise payable
Stock the number of shares of Common Stock deferred by a
Grants Participant from a Stock Grants award when the shares
are otherwise payable (I.E., on the date of vesting)
----
Option the amount of the Option Profit
Profit deferral divided by the Fair Market Value on the date of
exercise of the Non-Qualified Stock Option
The amounts shall be credited on the date the Bonus, Director Fees, Stock Grants
and Option Profit would otherwise be payable to the Participant.
4.3 IRREVOCABLE CHOICE. Amounts credited to the Common Stock
------------------
Account will remain in this Account until distribution is made to the
Participant or Beneficiary pursuant to this Plan.
4.4 ELECTIONS BY CERTAIN OFFICERS AND DIRECTORS. With respect to
-------------------------------------------
persons subject to Section 16 of the Exchange Act, and to the extent required by
such section, such individuals must make any election under this Article
pursuant to an irrevocable election at least six (6) months in advance of the
effective date of the transaction.
ARTICLE V
---------
COMPANY MATCHING CONTRIBUTIONS
------------------------------
5.1 MATCHING CONTRIBUTIONS. The Company will credit each
----------------------
Participant's Matching Contribution Account with a matching contribution based
upon his Salary and Bonus deferrals, as follows:
-13-
<PAGE>
PERCENTAGE OF COMPENSATION DEFERRED MATCHING PERCENTAGE
----------------------------------- -------------------
The first 2% of Salary and 100%
Bonus
The next 2% of Salary 25%
and Bonus
In no event shall a matching contribution be made with respect to a
Participant's deferral amount that exceeds 4% of his or her Salary and Bonus.
5.2 DISCRETIONARY CONTRIBUTIONS. As of each Plan Year, the Company
---------------------------
may, in its sole discretion, credit a Participant's Discretionary Contribution
Account with a discretionary contribution in an amount to be determined by the
Company in its sole discretion.
5.3 LIMITATIONS. Matching contributions shall not be made on
-----------
deferrals of Option Profit, Stock Grants or Director Fees.
ARTICLE VI
----------
PARTICIPANT ACCOUNTS AND INVESTMENT OF DEFERRED AMOUNTS
-------------------------------------------------------
6.1 DEFERRED COMPENSATION ACCOUNT. Deferrals pursuant to this Plan
-----------------------------
shall be recorded by the Plan Administrator in a Deferred Compensation Account
maintained in the name of the Participant. The Deferred Compensation Account
shall be credited with all amounts that have been deferred by the Participant
during the Plan Year, plus Earnings and such account shall be charged from time
to time with all amounts that are distributed to the Participant.
6.2 COMMON STOCK ACCOUNT.
--------------------
(a) Deferrals made pursuant to Article IV and Sections 3.3, 3.4, 3.5
and 3.6 shall be recorded by the Plan Administrator in the Common Stock Account
which shall be invested solely in Stock Units. The Common Stock Account shall
be credited with all amounts that have been deferred by the Participant and
Earnings thereon. In addition, in the event the Company declares and pays a
Dividend, the Common Stock Account shall be credited with a number of Stock
Units equal to (a) the amount of the Dividend paid on the number of shares of
Common Stock equal to the number of Stock Units in the Participant's Vested
Common Stock
-14-
<PAGE>
Account, divided by (b) the Fair Market Value of the Common Stock on the date
the Dividend is declared. Finally, the Common Stock Account shall be charged
from time to time with all amounts that are distributed to the Participant.
(b) In the event of any change in the outstanding shares of Common
Stock by reason of an issuance of additional shares, recapitalization,
reclassification, reorganization, stock split, reverse stock split, combination
of shares, stock dividend or similar transaction, the Committee shall
proportionately adjust, in an equitable manner, the number of Stock Units in
each Participant's Common Stock Account. The foregoing adjustment shall be made
in a manner that will cause the relationship between the aggregate appreciation
in outstanding Common Stock and earnings per share of the Company and the
increase in value of each Stock Unit in the Common Stock Account to remain
unchanged as a result of the applicable transaction.
6.3 MATCHING CONTRIBUTION ACCOUNT. Company matching contributions
-----------------------------
credited to a Participant pursuant to this Plan shall be recorded by the Plan
Administrator in a Matching Contribution Account maintained in the name of the
Participant. The Matching Contribution Account shall be credited with all
amounts that have been contributed by the Company during the Plan Year and such
account shall be charged from time to time with all amounts that are distributed
to the Participant.
6.4 DISCRETIONARY CONTRIBUTION ACCOUNT. Company discretionary
----------------------------------
contributions, if any, credited to a Participant pursuant to this Plan shall be
recorded by the Plan Administrator in a Discretionary Contribution Account
maintained in the name of the Participant. The Discretionary Contribution
Account shall be credited with all amounts that have been contributed by the
Company during the Plan Year and such account shall be charged from time to time
with all amounts that are distributed to the Participant.
6.5 EARNINGS. A Participant's Account shall be credited with
--------
Earnings daily, except that additional Stock Units credited to the Common Stock
Account attributable to a Dividend (pursuant to Section 6.2) shall be credited
on the date the Dividend is paid.
6.6 INVESTMENT. The Plan Administrator may permit a Participant
----------
(or Beneficiary) to have the right to
-15-
<PAGE>
direct the investment of all or any part of the Trust allocable to his or her
Accounts, excluding amounts credited to the Participant's Common Stock Account,
provided that such amounts are currently available for investment purposes
subject to the Plan Administrator's final determination. Such directions to
invest are subject to all of the following:
(a) All directions to invest must be made in writing, or in accordance
with procedures established by the Plan Administrator for telephone direction.
(b) All directions to invest are limited to investment options
selected by the Plan Administrator.
(c) All directions to invest are subject to the approval of the
Plan Administrator.
(d) All interest and other income earned on investments directed by
the Participant shall be accumulated and added to the principal for the
Participant's benefit.
(e) The Plan Administrator and Trustee shall not be responsible for
any loss incurred as the result of the Participant's direction to invest.
6.7 VALUATION OF ACCOUNTS. As of each Valuation Date, a
---------------------
Participant's Account shall consist of the balance of the Participant's Account
as of the last preceding Valuation Date, plus the Participant's deferrals and
contributions by the Company credited to the Account, plus Earnings on the
Account, minus the amount of any distributions made since the immediately
preceding Valuation Date.
6.8 STATEMENT OF ACCOUNTS. The Plan Administrator shall submit to
---------------------
each Participant, within ninety (90) days after the close of each Plan Year and
at such other time as determined by the Plan Administrator, a statement setting
forth the balance to the credit of the Account maintained for a Participant.
-16-
<PAGE>
ARTICLE VII
-----------
IN SERVICE DISTRIBUTIONS
------------------------
7.1 DISTRIBUTIONS FOR UNFORESEEABLE FINANCIAL EMERGENCIES. If the
-----------------------------------------------------
Participant experiences an Unforeseeable Financial Emergency, the Participant
may, with the approval of the Plan Administrator, receive a partial or full
distribution from the Plan of the Vested amounts in his or her Accounts. The
distribution shall not exceed the lesser of the Vested balance then credited to
the Participant's Account or the amount reasonably needed to satisfy the
Unforeseeable Financial Emergency.
7.2 WITHDRAWAL ELECTION. A Participant may at any time elect to
-------------------
withdraw all of the balance then credited to his or her Account, less a ten (10)
percent withdrawal penalty. Thereafter, the Participant shall never again be
eligible to participate in the Plan.
ARTICLE VIII
------------
LOANS
-----
8.1 LOANS TO PARTICIPANTS
---------------------
(a) The Plan Administrator shall have the investment management
discretion to direct the Trustee to loan money to Participants. Each such loan
shall be treated as an investment of the borrower's Account. (A former Employee
who still has an Account under the Plan or a Beneficiary who is entitled to
future benefits because of the death of a Participant, shall not be entitled to
borrow from the Plan.)
(b) The Plan Administrator shall establish Plan Rules governing loan
procedures. These Rules may limit the number of loans a Participant may
receive, require payment of loan processing fees by the Participant (either
directly or out of his or her Vested Account) or establish any other
requirements the Plan Administrator determines to be necessary or desirable. A
Participant who wishes to borrow money from the Plan shall file a written loan
application with the Plan Administrator in accordance with these Plan Rules.
The Plan Administrator, in its sole discretion, shall approve or deny the loan.
The Plan Administrator may deny a loan application if it believes that the loan
would not be repaid (e.g., if the borrower has failed to repay a
- -
-17-
<PAGE>
prior loan on time) or for any other reason if denial would be in the best
interests of the Plan or the Participant. The Plan Administrator shall exercise
its discretion in a uniform and nondiscriminatory manner. No loan shall be
granted unless the following requirements are met:
(i) No more than two loans shall be outstanding at any
time;
(ii) No loan shall be made if the loan amount, when
aggregated with the amount of any outstanding loan, would exceed the lesser of
$100,000 or fifty percent of the Vested portion of the Participant's Account,
excluding the Participant's Common Stock Account;
(iii) The loan shall bear a reasonable rate of interest not
in excess of that permitted by law;
(iv) Except as otherwise authorized by the Plan
Administrator, interest and principal on a loan must be repaid through payroll
deduction in installments not less frequently than quarterly over a specified
period not to exceed five years (including renewals, extensions and
refinancing); and
(v) The loan shall be documented by such notes, evidences
of indebtedness and other instruments executed by the Participant which the Plan
Administrator in its discretion requires.
(c) Each loan from the Plan shall be secured by the borrowing
Participant's interest in the Plan.
(d) A loan shall be in default if the Participant fails to make any
payment when due or if there occurs such other circumstances as may be
prescribed by Plan Rule. A loan which is in default shall, at the Plan
Administrator's election, become immediately due and payable and shall be
subject to the execution provisions of subsection (f).
(e) If a Participant's Employment terminates or the Plan terminates
before he or she has repaid a loan, the loan, at the Plan Administrator's
election, shall become immediately due and shall be repaid out of the
Participant's Vested Account which secures the loan and that Account shall be
reduced accordingly.
-18-
<PAGE>
(f) If a Participant's loan is in default for 120 consecutive days
and the Participant's Employment has not terminated, the loan shall be satisfied
to the extent possible from the Participant's Vested Account which secures the
loan and the Account shall be reduced accordingly. In addition, the Participant
shall be assessed a penalty of ten (10) percent of the outstanding balance of
the defaulted loan as of the date the penalty is assessed. Unless the
defaulting Participant satisfies the penalty by paying it directly to the
Company, the defaulting Participant's Vested Account shall be reduced by the
amount of the penalty, in which case the penalty shall be paid to the Company
directly or used to reduce the Company's obligation to make matching
contributions under Section 5.1, at the Company's option.
ARTICLE IX
----------
DISTRIBUTIONS FOLLOWING TERMINATION OF EMPLOYMENT
-------------------------------------------------
9.1 DISTRIBUTION. Upon Termination of Employment, a Participant's
------------
Vested Account shall be distributed in accordance with this Article.
9.2 ELECTIONS. A Participant, on his or her initial Election Form,
---------
shall elect to receive distributions following Termination of Employment in a
lump sum or in installment payments, not more frequently than quarterly, over a
period of not more than ten years. A Participant may change this election on
any subsequent Election Form filed at least one (1) year prior to the
Participant's Termination of Employment; if made within one (1) year of
Termination of Employment, such a new election shall be invalid.
9.3 TIME FOR PAYMENT. The lump sum payment shall be made, or
----------------
installment payments shall commence, no later than sixty (60) days after the
Participant's Termination of Employment and any annual payment thereafter shall
be made during each subsequent January. If installment payments are being made,
the first benefit payment to a Participant shall be prorated by multiplying it
by a fraction, the numerator of which is the number of days which remain in the
calendar year following the Participant's Termination of Employment and the
denominator of which is three hundred sixty-five (365).
9.4 SMALL PAYMENTS. The minimum annual installment payment shall
--------------
be $5,000 (before withholding of
-19-
<PAGE>
taxes). If annual installment payments to a Participant would be less than this
amount, the Participant's Account shall be distributed over the longest
installment period available under Section 9.2 under which the annual payment
would be at least $5,000 (before withholding of taxes) or, if no such period
exists, in a lump sum.
9.5 CASHOUT OF INSTALLMENT PAYMENTS. A Participant who has elected
-------------------------------
to receive installment payments may, at the time installments are to commence or
thereafter, elect to receive, in lieu of any future installment payments, a lump
sum payment of the balance then credited to his or her Account, less a ten (10)
percent early withdrawal penalty. The ten (10) percent early withdrawal penalty
shall be used to reduce the Company's obligation to make matching contributions
under Section 5.1.
9.6 FORM OF PAYMENT. All payments made pursuant to this Article
---------------
shall be made in cash, except that distributions made from the Common Stock
Account shall be made in Common Stock.
9.7 RESTRICTIONS ON COMMON STOCK. Common Stock distributions
----------------------------
pursuant to this Article shall only be distributed to a Participant upon
delivery to the Company of such representations and warranties as the Company
deems necessary or advisable with respect to the investment intent of the
Participant as required by the Securities Act of 1933, as amended, and any other
federal or state securities laws. The Company shall not be required to
distribute shares of Common Stock to a Participant before such shares become
listed for trading on any stock exchange on which the Common Stock may then be
listed, if any, and the completion of such registration or other qualification
of such shares under any state or federal law, rule or regulation, as the Plan
Administrator shall determine to be necessary or advisable.
ARTICLE X
---------
DISTRIBUTIONS FOLLOWING DEATH
-----------------------------
10.1 DEATH WHILE EMPLOYED BY EMPLOYER GROUP. If a Participant dies
--------------------------------------
while employed by the Company or a Related Employer, the Participant's
Beneficiary shall receive the Participant's Account in the form of death benefit
payments elected by the Participant on his or her
-20-
<PAGE>
last Election Form. The Participant may elect to have such payments made in a
lump sum or in installment payments over a period of not more than ten years.
The minimum annual installment payment shall be $5,000 (before withholding of
taxes). If annual installment payments to a Beneficiary would be less than this
amount, the Participant's Account shall be distributed over the longest
installment period available under this Section under which the annual payment
would be at least $5,000 (before withholding of taxes) or, if no such period
exists, in a lump sum. Death benefit payments shall commence within sixty (60)
days after the date the Plan Administrator is provided with proof of the
Participant's death satisfactory to it.
10.2 DEATH AFTER TERMINATION OF EMPLOYMENT. If a Participant dies
-------------------------------------
after Termination of Employment but before his or her Account has been fully
distributed, unpaid amounts due under Article 9 shall be paid to the
Participant's Beneficiary in the same amount and at the same time as they would
have been paid to the Participant.
10.3 LUMP SUM ELECTION. While a Beneficiary may not select the
-----------------
manner of payment, if requested by a Beneficiary and allowed in the sole
discretion of the Plan Administrator, the Beneficiary shall be paid a lump sum
calculated in accordance with Section 9.5 but without the ten (10) percent early
withdrawal penalty.
10.4 FORM OF PAYMENT. All payments made pursuant to this Article
---------------
shall be made in cash, except that distributions made from the Common Stock
Account shall be made in Common Stock.
10.5 RESTRICTIONS ON COMMON STOCK. Common Stock distributions
----------------------------
pursuant to this Article shall only be distributed to a Participant upon
delivery to the Company of such representations and warranties as the Company
deems necessary or advisable with respect to the investment intent of the
Participant as required by the Securities Act of 1933, as amended, and any other
federal or state securities laws. The Company shall not be required to
distribute shares of Common Stock to a Participant before such shares become
listed for trading on any stock exchange on which the Common Stock may then be
listed, if any, and the completion of such registration or other qualification
of such shares under any state or federal law, rule or regulation, as the Plan
Administrator shall determine to be necessary or advisable.
-21-
<PAGE>
ARTICLE XI
----------
BENEFICIARY DESIGNATION
-----------------------
11.1 BENEFICIARY. Each Participant shall have the right, at any
-----------
time, to designate his or her Beneficiary (both primary as well as contingent)
to receive any benefits payable under the Plan to a beneficiary upon the death
of a Participant. The Beneficiary designated under this Plan may be the same as
or different from the beneficiary designated under any other plan in which the
Participant participates.
11.2 BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT. A
------------------------------------------------
Participant shall designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Plan Administrator or its
designated agent. A Participant shall have the right to change a Beneficiary by
completing and signing a new Beneficiary Designation Form, or such other form
approved by the Plan Administrator, and filing it with the Plan Administrator.
If the Participant names someone other than his or her spouse as a Beneficiary,
a spousal consent, in the form designated by the Plan Administrator, must be
signed by that Participant's spouse and returned to the Plan Administrator.
Upon the acceptance by the Plan Administrator of a new Beneficiary Designation
Form, all Beneficiary designations previously filed shall be canceled. The Plan
Administrator shall be entitled to rely on the last Beneficiary Designation Form
filed by the Participant and accepted by the Plan Administrator prior to his or
her death.
11.3 NO BENEFICIARY DESIGNATION. If a Participant fails to
--------------------------
designate a Beneficiary as provided in Sections 11.1 and 11.2 above or, if all
designated Beneficiaries predecease the Participant or die prior to complete
distribution of the Participant's benefits, then the Participant's designated
Beneficiary shall be deemed to be his or her surviving spouse or, if none the
Participant's estate.
11.4 DOUBT AS TO BENEFICIARY. If the Plan Administrator has any
-----------------------
doubt as to the proper Beneficiary to receive payments pursuant to this Plan,
the Plan Administrator shall have the right, exercisable in its discretion, to
withhold such payments until this matter is resolved to the Plan Administrator's
satisfaction.
-22-
<PAGE>
ARTICLE XII
-----------
VESTING
-------
12.1 VESTING SCHEDULES. A Participant shall become vested in his or
-----------------
her Accounts in accordance with the Vesting Schedules described in this Article.
12.2 DEFERRED COMPENSATION ACCOUNT. All Deferred Compensation
-----------------------------
Common Stock Accounts shall be fully Vested at all times.
12.3 VESTING SCHEDULE FOR PRE-JANUARY 1, 1997 ADDITIONS TO THE
---------------------------------------------------------
MATCHING CONTRIBUTION AND DISCRETIONARY CONTRIBUTION ACCOUNTS. The Vested
- - -------------------------------------------------------------
portion of a Participant's Matching Contribution and Discretionary Contribution
Accounts with respect to additions made to these accounts prior to January 1,
1997 shall be the percentage of such Account shown on the following table:
YEARS OF SERVICE VESTED PERCENTAGE
------------------- ------------------
Less than one year 0%
1 25%
2 (or more) 100%
12.4 VESTING SCHEDULE FOR ADDITIONS TO THE
-------------------------------------
MATCHING CONTRIBUTION AND DISCRETIONARY CONTRIBUTION ACCOUNTS ON OR AFTER
- - -------------------------------------------------------------------------
JANUARY 1, 1997. The Vested portion of a Participant's Matching Contribution and
- - ----------------
Discretionary Contribution Accounts with respect to additions made to these
accounts on or after January 1, 1997 shall be the percentage of such Account
shown on the following table:
YEARS OF SERVICE VESTED PERCENTAGE
------------------ -----------------
Less than one year 0%
1 20%
2 40%
3 60%
4 80%
5 (or more) 100%
12.5 ACCELERATED VESTING. A Participant's Matching Contribution and
-------------------
Discretionary Contribution Accounts shall become fully Vested upon the earliest
to occur of:
-23-
<PAGE>
(a) the individual's attaining Normal Retirement Age while
employed by the Company or a Related Employer,
(b) the individual's death (or presumed death) while employed
by the Company or a Related Employer,
(c) the individual's suffering a Disability while employed by
the Company or a Related Employer, and
(d) the individual's Termination of Employment other than for
Cause during the two (2) years following a Change in Control.
12.6 FORFEITURES UPON TERMINATION OF EMPLOYMENT. The unvested
------------------------------------------
portion of the Accounts of a Participant whose employment terminates shall be
forfeited on the date of his or her Termination of Employment. Forfeitures
shall be used to reduce the Company's obligation to make matching contributions
under Section 5.1.
ARTICLE XIII
------------
ADMINISTRATION
--------------
13.1 PLAN ADMINISTRATOR. Except as provided in Section 15.6, the
------------------
Plan Administrator shall have complete control and discretion to manage the
operation and administration of the Plan. Not in limitation, but in
amplification of the foregoing, the Plan Administrator shall have the following
powers:
(a) To determine all questions relating to the eligibility of
Employees to participate or continue to participate;
(b) To maintain all records and books of account necessary for
the administration of the Plan;
(c) To interpret the provisions of the Plan and to make and to
publish such interpretive or procedural rules as are not inconsistent with the
Plan and applicable law;
(d) To compute, certify and arrange for the payment of benefits
to which any Participant or beneficiary is entitled;
-24-
<PAGE>
(e) To process claims for benefits under the Plan by
Participants or beneficiaries;
(f) To engage agents and professionals to assist the Plan
Administrator in carrying out its duties under this Plan;
(g) To adopt or modify Plan Rules for the regulation or
application of the Plan (see Exhibit E); such Rules may establish administrative
procedures or requirements which modify the terms of this Plan but Plan Rules
shall not substantially alter significant requirements or provisions of the
Plan; and
(h) To develop and maintain such instruments as may be deemed
necessary from time to time by the Plan Administrator to facilitate payment of
benefits under the Plan.
13.2 COMMITTEE. The Plan Administrator may designate a committee to
---------
administer the Plan and perform the duties required of the Plan Administrator
hereunder.
13.3 PLAN ADMINISTRATOR'S AUTHORITY. The Plan Administrator may
------------------------------
consult with Company officers, legal and financial advisers to the Company and
others, but nevertheless the Plan Administrator shall have the full authority
and discretion to act, and the Plan Administrator's actions shall be final and
conclusive on all parties.
ARTICLE XIV
-----------
AMENDMENT AND TERMINATION
-------------------------
14.1 AMENDMENTS. The Company reserves the right to amend the Plan
----------
prospectively or retroactively, at any time. No amendment shall significantly
reduce the value of a Participant's Vested Account prior to such amendment.
14.2 TERMINATION OF PLAN. The Company shall have the right at any
-------------------
time to declare the Plan terminated completely as to it or as to any of its
divisions, facilities, operational units or job classifications. Upon
termination of the Plan, the Company may, but shall not be required, to
accelerate distribution of the amounts in each Participant's Vested Account.
-25-
<PAGE>
14.3 FOLLOWING A CHANGE IN CONTROL. Upon the occurrence of a Change
-----------------------------
in Control, this Plan no longer shall be subject to alteration, amendment,
change, suspension, substitution, deletion, revocation or termination in any
manner adverse to the Participants and Beneficiaries. In addition, if required
by the terms of a Trust, upon a potential change in control (as defined in such
Trust), the Company shall cause a number of shares of Common Stock to be
registered in the name of the Trust equal to the aggregate number of Stock Units
held in all Participant Accounts under the Plan. Further, for each
Participant's Common Stock Account, the number of Stock Units shall be converted
to an equal number of shares of Common Stock, with fractional Stock Units being
converted to cash.
ARTICLE XV
----------
CLAIMS PROCEDURES
-----------------
15.1 PRESENTATION OF CLAIM. If any person (a "Claimant") does not
---------------------
believe that he or she will receive the benefits to which the person is entitled
or believes that fiduciaries of the Plan have breached their duties or that the
Plan is not being operated properly or that his or her legal rights have been or
are being violated with respect to the Plan, the Claimant must file a formal
claim with the Plan Administrator under the procedures set forth in this
Article. The procedures in this Article shall apply to all claims that any
person has with respect to the Plan, including claims against fiduciaries and
former fiduciaries, unless the Plan Administrator determines, in its sole
discretion, that it does not have the power to grant, in substance, all relief
reasonably being sought by the Claimant. A claims official appointed by the
Plan Administrator shall, within a reasonable time, consider the claim and shall
issue his or her determination thereon in writing. If such a claim relates to
the contents of a notice received by the Claimant, the claim must be made within
sixty (60) days after such notice was received by the Claimant. All other
claims must be made within one hundred-eighty (180) days of the date on which
the event that caused the claim to arise occurred. The claim must state with
particularity the determination desired by the Claimant.
15.2 NOTIFICATION OF DECISION. Written notice of the disposition of
------------------------
a claim shall be furnished to the Claimant within thirty (30) days after the
claim is filed with the Plan Administrator. In the event the claim is
-26-
<PAGE>
denied, the reasons for the denial shall be specifically set forth in writing,
pertinent provisions of the Plan shall be cited and, where appropriate, an
explanation as to how the claim can be perfected will be provided.
15.3 REVIEW OF A DENIED CLAIM. Within ninety (90) days after
------------------------
receiving a notice from the Plan Administrator that a claim has been denied in
whole or in part, a Claimant may appeal the denial of his or her claim by filing
a written statement of the Claimant's position with the review official
designated by the Plan Administrator. The review official shall schedule and
give the Claimant an opportunity for a full and fair hearing before the review
official of the issue within thirty (30) days after the appeal is requested.
The review official's decision following such hearing shall be made within
thirty (30) days and shall be communicated in writing to the Claimant.
15.4 ARBITRATION. If a Claimant's claim described in Section 15.1
-----------
(an "Arbitrable Dispute") is denied pursuant to Section 15.3, the Claimant's
only further recourse shall be to submit the claim to final and binding
arbitration in the County of Pinellas, State of Florida, before an experienced
employment arbitrator selected in accordance with the Employment Dispute
Resolution Rules of the American Arbitration Association. Except as otherwise
provided in Section 16.11, each party shall pay the fees of their respective
attorneys, the expenses of their witnesses and any other expenses connected with
the arbitration, but all other costs of the arbitration, including the fees of
the arbitrator, cost of any record or transcript of the arbitration,
administrative fees and other fees and costs shall be paid in equal shares by
each party (or, if applicable, each group of parties) to the arbitration.
Except as otherwise provided in Section 16.11, in any dispute involving a
Claimant or the trustee of a Trust in which the Claimant or the trustee
prevails, the Company shall reimburse the Claimant's or the trustee's reasonable
attorneys fees and related expenses. Arbitration in this manner shall be the
exclusive remedy for any Arbitrable Dispute. The arbitrator's decision or award
shall be fully enforceable and subject to an entry of judgement by a court of
competent jurisdiction. Should any party attempt to resolve an Arbitrable
Dispute by any method other than arbitration pursuant to this Section, the
responding party shall be entitled to recover from the initiating party all
damages, expenses and attorneys fees incurred as a result.
-27-
<PAGE>
15.5 LEGAL ACTION. Prior to a Change in Control, except to enforce
------------
an arbitrator's award, no actions may be brought by a Claimant in any court with
respect to an Arbitrable Dispute.
15.6 FOLLOWING A CHANGE IN CONTROL. Upon the occurrence of a Change
-----------------------------
in Control, an independent party selected by the Committee prior to a Change in
Control shall assume all duties and responsibilities of the Plan Administrator
under this Article and actions may be brought by a Claimant in any appropriate
court with respect to an Arbitrable Dispute.
ARTICLE XVI
-----------
TRUST
-----
16.1 ESTABLISHMENT OF TRUST. The Company may establish a Trust and
----------------------
shall at least annually transfer over to the Trust such assets, if any, as the
Plan Administrator, in its sole discretion, determines to be appropriate. The
assets of the Trust shall be considered part of the general assets of the
Company subject to the claims of its general creditors.
16.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUST. The provisions of
-------------------------------------------
the Plan and the Plan Agreement shall govern the rights of a Participant to
receive distributions pursuant to the Plan. The provisions of any Trust shall
govern the rights of the Participant and the creditors of the Company to the
assets transferred to such Trust. The Company shall at all times remain liable
to carry out its obligations under the Plan. The Company's obligations under
the Plan shall be deemed satisfied to the extent met with assets distributed
pursuant to the terms of the Trust.
ARTICLE XVII
------------
MISCELLANEOUS
-------------
17.1 UNSECURED GENERAL CREDITOR/UNFUNDED PLAN. The Plan constitutes
----------------------------------------
an unsecured promise by the Company or a Related Employer to pay benefits in the
future and the Participants employed by the Company shall have the status of
general unsecured creditors of the Company and Participants employed by a
Related Employer. The Plan is
-28-
<PAGE>
unfunded for Federal tax purposes and for purposes of Title I of ERISA. All
amounts credited to the Participants' accounts will remain the general assets of
the Company and shall remain subject to the claims of the Company's and the
Related Employers' general creditors until such amounts are distributed to the
Participants.
17.2 PAYMENTS TO MINORS AND INCOMPETENTS. If the Plan Administrator
-----------------------------------
receives satisfactory evidence that a person who is entitled to receive any
benefit under the Plan, at the time such benefit becomes available, is a minor
or is physically unable or mentally incompetent to receive such benefit and to
give a valid release therefor, and that another person or an institution is then
maintaining or has custody of such person, and that no guardian committee, or
other representative of the estate of such person shall have been duly
appointed, the Plan Administrator may authorize payment of such benefit
otherwise payable to such person to such other person or institution; and the
release of such other person or institution shall be a valid and complete
discharge for the payment of such benefit.
17.3 PLAN NOT A CONTRACT OF EMPLOYMENT. The Plan shall not be
---------------------------------
deemed to constitute a contract between the Company and any Participant, nor to
be consideration for the employment of any Participant. Nothing in the Plan
shall give a Participant the right to be retained in the employ of the Company;
all Participants shall remain subject to discharge or discipline as Employees to
the same extent as if the Plan had not been adopted.
17.4 NO INTEREST IN ASSETS. Nothing contained in the Plan shall be
---------------------
deemed to give any Participant any equity or other interest in the assets,
business or affairs of the Company or a Related Employer. No Participant in the
Plan shall have a security interest in assets of the Company used to make
contributions or pay benefits.
17.5 RECORDKEEPING. Appropriate records shall be maintained for the
-------------
purpose of the Plan by the officers and Employees of the Company at the
Company's expense and subject to the supervision and control of the Plan
Administrator.
17.6 NOTICE. Any notice or filing required or permitted to be given
------
to the Plan Administrator under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail or by telefax (with a
hard copy sent by mail), to the address or telefax number
-29-
<PAGE>
shown below (or such other address or telefax number specified in notice given
pursuant to this Section):
Chief Financial Officer
Catalina Marketing Corporation
11300 9th Street North
St. Petersburg, Florida 33716
Telefax: 813-579-5297
Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification. Any notice or filing required or permitted to be
given to a Participant under this Plan shall be sufficient if in writing and
hand-delivered, or sent by mail, to the last known address of the Participant.
17.7 SUCCESSORS. The provisions of this Plan shall bind and inure
----------
to the benefit of the Company and its successors and assigns and the
Participant, his or her Beneficiary and their permitted successors and assigns.
17.8 SPOUSE'S INTEREST. The interest in the benefits hereunder of a
-----------------
spouse of a Participant who has predeceased the Participant shall automatically
pass to the Participant and shall not be transferable by such spouse in any
manner, including but not limited to such spouse's will, nor shall such interest
pass under the laws of intestate succession.
17.9 TAXES AND WITHHOLDING. For each Plan Year in which Deferrals
---------------------
are being withheld, the Company shall ratably withhold from that portion of the
Participant's Salary and Bonus that is not being deferred, the Participant's
share of FICA and other employment taxes on the deferral. If necessary, the
Plan Administrator shall reduce a Participant's Deferrals in order to comply
with this Section. The Company (or the trustee of the Trust) shall withhold
from benefits distributed under the Plan all federal, state and local income,
employment and other taxes required to be withheld by applicable law.
17.10 LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL. After a
----------------------------------------------------
Change in Control, if any person or entity has failed to comply (or is
threatening not to comply) with any of its obligations under the Plan, any Trust
or any related agreement, or takes or threatens to take any action to deny,
diminish or to recover from any
-30-
<PAGE>
Participant the benefits intended to be provided thereunder, the Company shall
reimburse the Participant for reasonable attorneys fees and related costs
incurred in the successful pursuance or defense of the Participant's rights. If
the Participant does not prevail, attorneys fees shall also be payable under the
preceding sentence to the extent the Participant had reasonable justification
for retaining counsel, but only to the extent that the scope of such
representation was reasonable.
17.11 COURT ORDER. The Plan Administrator is authorized to make any
-----------
payments directed by court order in any action in which the Plan or the Plan
Administrator has been named as a party.
17.12 FURNISHING INFORMATION. A Participant will cooperate with the
----------------------
Company by furnishing any and all information requested by the Company and take
such other actions as may be requested in order to facilitate the administration
of the Plan and the payment of benefits hereunder, including but not limited to
taking such physical examinations as the Company may deem necessary.
17.13 NON-ALIENATION OF BENEFITS. No benefit under the Plan shall be
--------------------------
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to do so shall be void. No
benefit under the Plan shall in any manner be liable for or subject to the
debts, contracts, liabilities, engagements or torts of the person entitled to
any such benefit, except as specifically provided in the Plan, then such
benefits shall cease and terminate at the discretion of the Plan Administrator.
The Plan Administrator may then hold or apply the same or any part thereof to or
for the benefit of such person or any dependent or beneficiary of such person in
such manner and proportions as it shall deem proper.
17.14 GOVERNING LAW. Except to the extent preempted by ERISA, this
-------------
Plan shall be construed in accordance with the laws of Florida without regard to
its conflicts of laws principles.
17.15 SECTION 16. With respect to persons subject to Section 16 of
----------
the Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act.
To the extent any provision under the Plan or action by the Committee fails to
so comply, it shall be
-31-
<PAGE>
deemed null and void to the extent permitted by law and deemed advisable by the
Committee.
17.16 LIABILITY LIMITED. In administering the Plan neither the Plan
-----------------
Administrator nor any officer, Director or Employee thereof, shall be liable for
any act or omission performed or omitted, as the case may be, by such person
with respect to the Plan; provided, that the foregoing shall not relieve any
person of liability for gross negligence, fraud or bad faith. The Plan
Administrator, its officers, Directors and Employees shall be entitled to rely
conclusively on all tables, valuations, certificates, opinions and reports that
shall be furnished by any actuary, accountant, trustee, insurance company,
consultant, counsel or other expert who shall be employed or engaged by the Plan
Administrator in good faith.
IN WITNESS WHEREOF, the Company has caused this amended and restated
Plan to be executed by its duly authorized officers on this _____ day of
__________________, 1996.
CATALINA MARKETING CORPORATION
By___________________________
-32-
<PAGE>
- - -------------------------------------------------------------------------------
PROXY CATALINA MARKETING CORPORATION
ANNUAL MEETING OF STOCKHOLDERS--JULY 23, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having received the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished therewith hereby appoints
George W. Off and Barry A. Brooks as Proxies, each with the power to
appoint his/her substitute, and hereby authorizes each of them to represent
and to vote, as designated below, all the shares of Common Stock of
Catalina Marketing Corporation (the "Company") held of record by the
undersigned on June 3, 1996, at the Annual Meeting of Stockholders to be
held at the Hyatt Regency Westshore, 6200 Courtney Campbell Causeway,
Tampa, Florida 33607 on Tuesday, July 23, 1996 and at any adjournment or
postponement thereof.
1. ELECTION OF CLASS II [_] FOR ALL nominees listed [_] WITHHOLD AUTHORITY
DIRECTORS below (except as indicated to vote for all
to the contrary below) nominees listed
below
Frederick W. Beinecke, Tommy D. Greer, Helene Monat and Thomas W. Smith
INSTRUCTION: To withhold authority to vote for an individual nominee, write
the nominee's name in the space provided:
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
2. PROPOSAL TO AMEND the Company's 1992 Director Stock Grant Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. PROPOSAL TO AMEND the Company's Deferred Compensation Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
4. PROPOSAL TO AMEND the Company's Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock to 50,000,000
from 30,000,000.
[_] FOR [_] AGAINST [_] ABSTAIN
5. PROPOSAL TO RATIFY and approve the selection of Arthur Andersen LLP as
the Company's independent public accountants.
[_] FOR [_] AGAINST [_] ABSTAIN
6. At their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED ABOVE, AND FOR EACH
OTHER PROPOSAL LISTED ABOVE.
All other proxies heretofore given by the undersigned to vote shares of
stock of Catalina Marketing Corporation, which the undersigned would be
entitled to vote if personally present at the Annual Meeting or any
adjournment or postponement thereof, is hereby expressly revoked.
Dated: _____________________________
------------------------------------
(Print Name)
------------------------------------
(Signature)
Please mark, sign, date and return
the proxy card promptly using the
enclosed envelope. Joint owners
should each sign. Attorneys, execu-
tors, administrators, trustees,
guardians or corporation officers
should give full title.
- - -------------------------------------------------------------------------------
