<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
CATALINA MARKETING CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[CATALINA MARKETING CORPORATION LOGO]
NOTICE OF ANNUAL MEETING
TO BE HELD ON
JULY 22, 1997
------------------------
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 offices of the Company, 11300 9th Street North,
St. Petersburg, Florida 33716 on Tuesday, July 22, 1997 at 9:00 AM (the "Annual
Meeting") for the following purposes:
1. To elect three Class III Directors;
2. To approve an amendment to the Company's Amended and Restated 1989 Stock
Option Plan (the "Option Plan") to increase by 1,250,000 the number of
shares of the Company's common stock available under the Option Plan for
the grant of options, and the issuance of shares upon exercise thereof;
3. To approve an amendment to the Option Plan to provide for the
acceleration of options if an optionee's employment is terminated under
certain circumstances following a sale of the Company;
4. To ratify and approve the Company's independent public accountants for
fiscal 1998; and
5. 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, 1997 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 19, 1997
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> 3
PROXY STATEMENT
CATALINA MARKETING CORPORATION
11300 9TH STREET NORTH
ST. PETERSBURG, FLORIDA 33716
------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JULY 22, 1997
------------------------
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 1997 Annual Meeting of Stockholders to be held on Tuesday,
July 22, 1997 at 9:00 AM at the Company's offices, 11300 9th Street North, St.
Petersburg, Florida 33716, 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 this solicitation, 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
19, 1997 to each stockholder of record as of the close of business on June 3,
1997.
VOTING AT THE MEETING
The Company had 18,236,211 shares of Common Stock, par value $.01 per share
(the "Common Stock"), outstanding as of June 3, 1997. Holders of record of
shares of Common Stock at the close of business on June 3, 1997 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. Holders of a majority of the outstanding
shares, if present in person or represented by proxy, will constitute a quorum
at the Annual Meeting. Abstentions and "broker non-votes" (which occur if a
broker or other nominee does not have discretionary authority and has not
received voting instructions from the beneficial owner with respect to the
particular item) are counted for purposes of determining the presence or absence
of a quorum for the transaction of business. In all matters other than the
election of directors, the affirmative vote of the majority of shares present in
person or by proxy at the Annual Meeting and entitled to vote thereon are
required to approve the proposals set forth herein. For such purpose,
abstentions are counted for purposes of calculating shares entitled to vote but
are not counted as shares voting and therefore have the effect of a vote against
each such proposal. Also, for these purposes, broker non-votes are not counted
as shares eligible to vote and therefore have no effect. Directors will be
elected by a plurality of the votes of the shares present in person or
represented by proxy and entitled to vote. Accordingly, abstentions and broker
non-votes will have no effect on the outcome of the election of directors.
<PAGE> 4
NOMINATION AND ELECTION OF DIRECTORS
(PROPOSAL 1)
The persons named in the enclosed proxy will vote FOR the three nominees
named below under "Nominees for Directors" as the three Class III 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 III Directors. Each Class III Director is to hold
office until the 2000 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 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, EXECUTIVE OFFICERS AND OTHER SIGNIFICANT EMPLOYEES
The directors and nominees for director of the Company and executive
officers and other significant employees of the Company as of the date of this
Proxy Statement, are as follows:
<TABLE>
<S> <C> <C>
Tommy D. Greer........................... 65 Chairman of the Board
George W. Off............................ 50 Chief Executive Officer, President and Director
Daniel D. Granger........................ 48 Executive Vice President, Sales and President,
Catalina Marketing Services Division ("CMS")
Philip B. Livingston..................... 40 Senior Vice President and Chief Financial Officer
Michael G. Bechtol....................... 40 Executive Vice President, Retail, CMS
David M. Diamond......................... 38 Executive Vice President, Marketing and New
Applications, CMS
Michael T. McClorey...................... 37 President, Health Resource Publishing Company
David L. Van Buskirk..................... 47 President, Catalina Marketing International
Division
Frank H. Barker.......................... 66 Director
Frederick W. Beinecke.................... 54 Director
Patrick W. Collins....................... 68 Director
Stephen I. D'Agostino.................... 63 Director
Thomas G. Mendell........................ 50 Director
Helene Monat............................. 50 Director
Thomas W. Smith.......................... 69 Director
Michael B. Wilson........................ 60 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 1999 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.
2
<PAGE> 5
ATTENDANCE AT MEETINGS AND BOARD COMMITTEES
During the fiscal year ended March 31, 1997, the Board of Directors held a
total of five meetings. Each member 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, other than Patrick W. Collins who attended 50% of the Compensation
Committee meetings.
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 four occasions in fiscal 1997, 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 stock pursuant to the
Company's Amended and Restated 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 did not meet in fiscal 1997, 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 four occasions in fiscal 1997, 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, Helene Monat and
Thomas W. Smith.
The Nominating Committee, which did not meet in fiscal 1997, 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 three persons will be placed in nomination for election to
the Board of Directors as Class III Directors. The shares represented by the
proxy cards returned will be voted FOR the election of these nominees unless
otherwise stated in the proxy.
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 and
Chairman of Texas State Optical Corp., an optical stores franchiser,
3
<PAGE> 6
from August 1990 to December 1991. Mr. D'Agostino is a director of Super Value
Stores, Inc., a grocery wholesaler.
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.
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.
OTHER DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
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. Effective January 1997, Mr. Greer's
responsibilities were reduced with the President and Chief Executive Officer of
the Company assuming certain of Mr. Greer's day to day responsibilities. 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.
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.
Daniel D. Granger became Executive Vice President, Sales, of the Company
and President of CMS, 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.
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.
Michael G. Bechtol has served as Executive Vice President, Retail, CMS,
since April 1997. In such capacity Mr. Bechtol directs all retail management
activities for the Company's core business in the United States. Mr. Bechtol has
been employed by the Company in various capacities since 1986.
David M. Diamond has served as Executive Vice President, Marketing and New
Applications, CMS, since January 2, 1997. Prior to joining the Company, Mr.
Diamond was a marketing consultant from 1993 to 1996, served as President of
Lamaze Publishing Company from 1991 to 1992, and was Senior Vice President of
New Products with ActMedia from 1988 to 1991.
Michael T. McClorey has been President of Health Resource Publishing
Company, a subsidiary of the Company, since April 3, 1995. Mr. McClorey joined
the Company in 1986 and has served in a variety of sales and retail management
positions for the Company, most recently as a senior vice president.
David L. Van Buskirk has been President of Catalina Marketing International
Division since January 1995. Prior to serving in this capacity, Mr. Van Buskirk
held positions in international management and retail operations with the
Company. Before joining the Company in March 1990, Mr. Van Buskirk held sales
and management positions with IRI, Wetterau Foods and National Tea, a division
of Loblaws Cos.
4
<PAGE> 7
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.
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.
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.
Helene Monat was elected as a director of the Company in October 1992.
Since January 1997 Ms. Monat has served as Vice President, Sales and Marketing
of Intelledge Corporation, a marketer of in-store electronic shelf labels and
promotional services. 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.
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.
CERTAIN TRANSACTIONS
During April and May 1996, the Company made short-term loans to Joseph A.
Lillis, III, who served as Executive Vice President, Retail and Corporate
Development of the Company until his resignation on April 25, 1997, in the
aggregate amount of $134,361 in connection with the purchase of a home. The
aggregate principal amount was repaid by Mr. Lillis in June 1996. No interest
accrued on the principal balance of the loans.
In 1995, the Company made a short-term loan to Philip B. Livingston, Senior
Vice President and Chief Financial Officer of the Company, with a principal
balance of $250,000 in connection with the purchase of a home. The principal
balance of $250,000 was repaid by Mr. Livingston on August 1, 1996. No interest
accrued on the principal balance of the loan prior to repayment.
In January 1996, the Company and Helene Monat entered into a Consulting
Agreement pursuant to which Ms. Monat provides consultative and advisory
services to the Company for aggregate annual compensation of $100,000. The
Consulting Agreement has a term of three years, expiring in January 1999.
5
<PAGE> 8
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 31, 1997, 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)................................ 1,921,550 9.8%
100 E. Pratt Street
Baltimore, MD 21202
The Prudential Insurance Company of America (3)............. 1,518,500 7.7%
Prudential Plaza
Newark, NJ 07102
Jennison Associates Capital Corp. (3)....................... 1,505,500 7.7%
466 Lexington Avenue
New York, NY 10017
William Blair & Company, L.L.C.............................. 1,491,108 7.6%
222 West Adams Street
Chicago, IL 60606
Pilgrim Baxter & Associates (4)............................. 1,169,200 5.9%
1255 Drummers Lane
Suite 300
Wayne, PA 19087
Frederick W. Beinecke (5)................................... 1,153,800 5.9%
c/o Antaeus Enterprises, Inc.
99 Park Avenue, Suite 2200
New York, NY 10016
Warburg, Pincus Counsellors, Inc............................ 1,089,760 5.6%
466 Lexington Avenue
New York, NY 10017
Thomas W. Smith (6)......................................... 1,058,624 5.4%
323 Railroad Avenue
Greenwich, CT 06830
Antaeus Enterprises, Inc. (5)............................... 1,054,794 5.4%
99 Park Avenue, Suite 2200
New York, NY 10016
Tommy D. Greer.............................................. 207,858 1.1%
George W. Off............................................... 338,046 1.7%
Daniel D. Granger........................................... 69,242 *
Philip B. Livingston........................................ 20,591 *
Frank H. Barker............................................. 1,335 *
Patrick W. Collins.......................................... 1,776 *
Stephen I. D'Agostino (7)................................... 74,844 *
Thomas G. Mendell........................................... 11,158 *
Helene Monat (8)............................................ 118,750 *
Michael B. Wilson........................................... 3,872 *
Joseph A. Lillis, III (9)................................... 30,275 *
All directors and executive officers as a group (13
persons).................................................. 3,090,171 15.4%
</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
6
<PAGE> 9
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. Greer--140,336, Off--217,500, Granger--62,500, Livingston--18,500
and Lillis--30,000 and Ms. Monat--80,000, all of which options are
exercisable within 60 days of March 31, 1997. The beneficial ownership
reported above does not include phantom stock units (each unit being the
non-voting economic equivalent to one share of Common Stock) held by certain
officers and directors of the Company under the Catalina Marketing
Corporation Deferred Compensation Plan as follows: Messrs. Barker--538.25
units, Collins--666 units, D'Agostino--307.41 units, Mendell--598.47 units,
Off--3,263.86 units, Smith--2,162.28 units and Wilson--121.93 units and Ms.
Monat--2,167.95 units.
(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.
(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. Prudential
owns 100% of the stock of Jennison Associates Capital Corp. ("Jennison"). As
a result, Prudential may be deemed to have the power to exercise or direct
the exercise of the voting and/or dispositive power that Jennison may have
with respect to shares of Common Stock beneficially owned by Jennison. The
shares reported by Prudential with the Securities and Exchange Commission
may include shares held by Jennison. It is unclear, based on a review of
Prudential's and Jennison's Schedule 13G filings, whether Prudential's
reported ownership includes shares of Common Stock beneficially owned by
Jennison.
(4) Pilgrim Baxter & Associates shares voting power with respect to these shares
with Harold J. Baxter and Gary L. Pilgrim and, with respect to 1,074,100 of
these shares, with the PBHG Growth Fund.
(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 44,006 shares owned directly by him, 55,000 shares held by
a trust for his benefit, and 1,054,794 shares held by Antaeus. Antaeus and
Mr. Beinecke may be deemed to be part of a group, together with a trust,
that beneficially owns 1,153,800 shares constituting approximately 5.9% 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. Thomas W. Smith, a director of the Company, include
100,884 shares owned directly by Mr. Smith, 442,000 shares held by Idoya
Partners, a limited partnership of which Mr. Smith is general partner,
419,000 shares held by Prescott Associates, a limited partnership of which
Mr. Smith is general partner, 24,400 shares held by Prescott International
Partners, a limited partnership of which Mr. Smith is general partner,
19,200 held by Mr. Smith's wife and various other family members, with
respect to which he shares voting power, 23,140 shares held in accounts for
Mr. Smith's children over which he has trading authority, and 30,000 shares
held by Prescott Investors profit sharing account of which Mr. Smith is
trustee.
(7) Shares listed for Mr. D'Agostino include 1,900 shares held in an IRA account
by his wife. Mr. D'Agostino disclaims beneficial ownership of such shares.
(8) Shares listed for Ms. Monat include 378 shares held in a trust account for
the benefit of her child. Ms. Monat disclaims beneficial ownership of such
shares.
(9) Mr. Lillis' employment with the Company ceased on April 25, 1997.
7
<PAGE> 10
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 and 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 1997 fiscal year: Daniel D. Granger (two
occasions), Tommy D. Greer (one occasion) and George W. Off (one occasion).
AMENDMENTS TO AMENDED AND RESTATED 1989 STOCK OPTION PLAN
(PROPOSALS 2 AND 3)
PROPOSAL 2
Subject to the approval of the Company's stockholders, the Board of
Directors of the Company, on April 22, 1997, approved an amendment to the
Catalina Marketing Corporation Amended and Restated 1989 Stock Option Plan (the
"Option Plan") to increase the number of shares of Common Stock available for
the grant of options, and for the issuance of shares upon exercise thereof, by
1,250,000 ("Proposal 2"). As reported below, as of April 30, 1997, there were
583,940 shares of Common Stock available for the grant of additional options
under the Option Plan. No options have been granted since April 30, 1997. The
purpose of Proposal 2 is to assure that the Company has sufficient shares
available under the Option Plan to attract or retain excellent employees for the
Company. If Proposal 2 is approved, there would be 1,833,940 shares of Common
Stock available for the grant of additional options.
On April 30, 1997, there were 18,205,472 shares of Common Stock
outstanding, and 2,320,978 shares of Common Stock were subject to outstanding
options. Thus, the proposed increase in shares available for the grant of
options under the Option Plan represents approximately 6% of the number of
shares currently outstanding and subject to existing options. Since the
Company's initial public offering in 1992, the Company has repurchased more
shares of Common Stock than have been the subject of newly granted options
during the same time period, effectively offsetting the dilutive impact of these
option grants.
The affirmative vote of a majority of the outstanding shares present or
represented and entitled to vote at the meeting will be required to approve
Proposal 2. YOUR BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THIS PROPOSAL 2 TO APPROVE AN AMENDMENT TO THE OPTION PLAN.
PROPOSAL 3
Subject to the approval of the Company's stockholders, the Board of
Directors of the Company has approved an amendment to the Option Plan to provide
for the acceleration, upon the termination of an optionee's employment, of
vesting of replacement options issued in connection with a sale of all or
substantially all of the assets of the Company, the merger of the Company with
another corporation where the Company does not survive or the consolidation of
the Company with another corporation ("Proposal 3").
Currently, the Option Plan provides that, in the event that all or
substantially all of the assets of the Company are sold, the Company engages in
a merger where the Company does not survive or the Company is consolidated with
another corporation (referred to herein as a "Corporate Transaction"), each
outstanding option will become exercisable (without regard to the vesting
provisions thereof) immediately prior to the effective date of the Corporate
Transaction or, in its sole discretion, the surviving corporation of the
Corporate Transaction may (i) grant to optionees an option to purchase shares of
the surviving corporation on substantially the same terms as the option granted
under the Option Plan or (ii) provide optionees the choice
8
<PAGE> 11
of exercising the option prior to the consummation of the Corporate Transaction
or receiving a replacement option. If Proposal 3 is approved by the Company's
stockholders, the Option Plan will be amended to provide that any replacement
options granted by the surviving corporation in connection with a Corporate
Transaction will become immediately exercisable (without regard to the vesting
provisions thereof), and remain exercisable for a period of at least 30 days, in
the event the optionee's employment with the resulting company should
subsequently terminate within two years following the effective date of the
Corporate Transaction in respect of which the replacement options were granted,
unless such employment is terminated by the Company for Cause, as defined below,
or by the Optionee voluntarily without Good Reason, as defined below.
In connection with this amendment, "Cause" will be defined in the Option
Plan as dishonesty, fraud, misconduct, unauthorized use or disclosure of
confidential information or trade secrets, conviction or confession of a crime
punishable by law (except misdemeanor violations), or engaging in practices
contrary to stock "insider trading" policies of the Company, in each case as
determined by the Administrator.
For purposes of this amendment, "Good Reason" will be defined as the
occurrence of any of the following events or conditions:
1. a change in the optionee's status, title, position or responsibilities
(including reporting responsibilities) that represents a substantial
reduction of the optionee's status, title, position or
responsibilities in respect of the Company's business as in effect
immediately prior thereto; the assignment to the optionee of
substantial duties or responsibilities that are inconsistent with such
status, title, position or responsibilities; or any removal of the
optionee from or failure to reappoint or reelect the optionee to any
of such positions, except in connection with the termination of the
optionee's employment for Cause, for Disability (as defined by the
Option Plan) or as a result of his or her death, or by the optionee
other than for Good Reason;
2. a reduction in the optionee's annual base salary;
3. the Company's requiring the optionee (without the optionee's consent)
to be based at any place outside a 35-mile radius of his or her place
of employment prior to the Corporate Transaction, except for
reasonably required travel on the Company's business that is not
materially greater than such travel requirements prior to such
transaction;
4. the Company's failure to (i) continue in effect any material
compensation or benefit plan (or reasonable replacement therefor) in
which the optionee was participating at the time of the Corporate
Transaction including, but not limited to the Option Plan, or (ii)
provide the optionee with compensation and benefits at least equal (in
terms of benefit levels and/or reward opportunities) to those provided
for under each employee benefit plan, program and practice as in
effect immediately prior to the Corporate Transaction (or as in effect
following such transaction, if greater); or
5. any material breach by the Company of any provision of the Option
Plan.
The purpose of Proposal 3 is to provide additional protection to employees
of the Company in the event of a Corporate Transaction in which replacement
options are granted by protecting the value of such options unless the employee
is terminated for Cause or resigns without Good Reason. In the event of such a
transaction, the Board of Directors deems it important to ensure that members of
management are not distracted from their responsibilities by concerns over their
personal situations and believes that such distraction can in part be avoided by
ensuring that the value of options granted under the Option Plan will be
realized, unless a member of management resigns voluntarily or is terminated for
Cause. The Board of Directors believes that such additional protection will also
enhance the ability of the Company to attract and retain excellent employees.
Although not proposed for such purpose, Proposal 3 may have an
anti-takeover effect by rendering it more expensive for an acquiror to terminate
employees or reducing the acquiror's flexibility following a takeover. The
Company is not aware of any present proposal or effort by any third party to
take control of the Company.
9
<PAGE> 12
The affirmative vote of a majority of the outstanding shares present or
represented and entitled to vote at the meeting will be required to approve
Proposal 3. YOUR BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THIS PROPOSAL 3 TO APPROVE AN AMENDMENT TO THE OPTION PLAN.
SUMMARY OF THE OPTION PLAN
Purpose. The Board believes that the Option Plan has been and will
continue to be an important method for the Company to provide incentives to key
employees of the Company and its subsidiaries, to encourage proprietary interest
in the Company and to attract new employees with outstanding qualifications. The
increase in the number of shares of Common Stock is being proposed in order to
permit the Board of Directors to continue to make available to existing and
future employees benefits under the Option Plan.
Eligibility And Administration. The Option Plan authorizes the
Administrator (the "Administrator") which is defined as either the Board of
Directors or a committee of at least three members appointed by the Board of
Directors, to grant incentive stock options and nonstatutory stock options to
the Company's employees (including officers and directors who are employees) for
the purchase of shares of the Company's authorized but unissued or reacquired
Common Stock. The current Administrator is the Compensation Committee of the
Board of Directors. With the exception of directors who are not also employees
of the Company and members of the Administrator, who, under the terms of the
Option Plan, may not receive grants of options, the Administrator has complete
discretion to select the eligible employees who are to be granted options. The
Administrator also has the discretion to determine the number of shares subject
to each option, designate each option as an incentive or nonstatutory stock
option and otherwise interpret the Option Plan. The Administrator's
interpretation and construction of the Option Plan is final and binding on the
Company.
The Compensation Committee has been appointed by the Board of Directors to
administer the Option Plan. The members of the Compensation Committee are
Frederick W. Beinecke as chairman, Patrick W. Collins, Thomas G. Mendell and
Michael B. Wilson. Currently there are three executive officers, including one
employee director, eligible to participate under the Option Plan. All employees
of the Company are eligible to participate under the Option Plan. As of April
30, 1997, there were 249 employees, other than executive officers, holding
options under the Option Plan.
Options Granted Since Inception of the Option Plan. Through April 30,
1997, options have been granted under the Option Plan to (i) the Chief Executive
Officer and other named executive officers set forth on page 16 hereof, (ii)
each nominee for reelection as a director and (iii) each group, as set forth
below, with exercise prices varying from $1.90 to $53.50, in the amounts
indicated:
<TABLE>
<CAPTION>
NUMBER OF UNDERLYING
SHARES OF
NAME AND POSITION COMMON STOCK GRANTED(1)
- ----------------- -----------------------
<S> <C>
George W. Off............................................... 514,000
Tommy D. Greer.............................................. 245,000
Daniel D. Granger........................................... 180,700
Joseph A. Lillis, III (2)................................... 150,000
Philip B. Livingston........................................ 120,000
Stephen I. D'Agostino....................................... --
Thomas G. Mendell........................................... --
Michael B. Wilson........................................... --
All Executive Officers, as a Group.......................... 1,059,700
All Non-Employee Directors, as a Group (2)(3)............... 241,600
All Employees other than Executive Officers, as a Group..... 3,393,312
</TABLE>
- ---------------
(1) Of the options listed, options have been exercised for the following number
of shares of Common Stock: Mr. Off 174,000, Mr. Greer 100,000, Mr. Granger
50,700, Mr. Livingston 1,500, Executive Officers 326,200, Non-Employee
Directors 84,000 and All Employees other than Executive Officers 1,185,382.
10
<PAGE> 13
(2) Of the options shown for Mr. Lillis and All Non-employee Directors, 120,000
and 77,600 were forfeited upon the resignation of Mr. Lillis and Ms. Monat,
respectively, from employment with the Company.
(3) Non-employee directors are not eligible for grants under the Option Plan.
The number shown represents options granted to Helene Monat prior to her
resignation from employment with the Company.
The Company will continue to make periodic grants under the Option Plan in
a manner consistent with past practice.
Shares Available for Issuance Under the Option Plan. Without taking into
account Proposal 2's increase in the authorized number of shares of Common Stock
available under the Option Plan, as of April 30, 1997, options to purchase
2,320,978 shares of Common Stock at prices ranging from $14.67 to $53.50 were
outstanding under the Option Plan, and an additional 583,940 shares were
available for future grants of options. On the same date, there were 18,205,472
shares of Common Stock outstanding. Thus, the proposed increase in shares
available for the grant of new options under the Option Plan represents
approximately 6% of the number of shares currently outstanding and subject to
existing options.
Grant and Exercise Of Options. Options issued under the Option Plan are
designated as either incentive stock options or nonstatutory stock options.
Incentive stock options are options meeting the requirements of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and nonstatutory
options are options not intended to so qualify.
The exercise price of options granted under the Option Plan may not be less
than 100% of the fair market value of the Common Stock of the Company (as
defined by the Option Plan) on the date of grant. With respect to any
participant who owns stock representing more than 10% of the voting rights of
the outstanding Common Stock of the Company, the exercise price of any incentive
stock option granted must equal at least 110% of the fair market value of the
Common Stock on the grant date, and the maximum term of any such incentive stock
option must not exceed five years.
Options are evidenced by written stock option agreements in a form approved
by the Administrator from time to time, and no option is effective until the
applicable stock option agreement has been executed by both parties thereto.
Options granted under the Option Plan may become exercisable in cumulative
increments over a period of months or years as determined by the Administrator,
provided that no option may become exercisable prior to one (1) year following
the grant thereof. Generally, options granted under the Option Plan over the
last several years to continuing employees have become exercisable at the rate
of 25% per year, commencing one year after the date of grant, although shorter
vesting periods have been granted by the Administrator. Grants to new employees
have generally become exercisable at a rate of 20% per year, commencing one year
after the date of grant. The exercise price may be paid in cash or, if permitted
by Administrator, in shares of the Company's Common Stock having a fair market
value on the exercise date equal to the exercise price. Effective July 1, 1996,
Optionees who also participate in the Company's Deferred Compensation Plan may
elect, in lieu of receiving shares of Common Stock upon the exercise of
nonstatutory options, to deposit the option profit (the difference between the
aggregate option exercise price and the fair market value of the Common Stock on
the date of exercise) into a phantom stock unit account under the Deferred
Compensation Plan.
No options granted under the Option Plan are exercisable after the
expiration of six (6) years from the date of grant, and such options are subject
to earlier termination if the optionee leaves the Company's employ. In addition,
no employee may receive options under the Option Plan to purchase in excess of
300,000 shares, although options granted prior to April 1, 1994 are not counted
in determining when an employee has reached such limitation. Further, the
aggregate fair market value (as of the respective date or dates of grant) of the
shares of Common Stock underlying incentive stock options that are exercisable
for the first time by any optionee during any calendar year under the Option
Plan and all other similar plans maintained by the Company may not exceed
$100,000.
In the event all or substantially all of the assets of the Company are
sold, the Company engages in a merger where the Company does not survive or the
Company is consolidated with another corporation, each outstanding option will
become exercisable (without regard to the vesting provisions thereof)
immediately
11
<PAGE> 14
prior to the effective date of the transaction or, in its sole discretion, the
surviving corporation may (i) grant to optionees an option to purchase shares of
the surviving corporation upon substantially the same terms as the option
granted under the Option Plan or (ii) provide optionees the choice of exercising
the option prior to the consummation of the transaction or receiving a
replacement option. As described above, if Proposal 3 is approved, this
provision will be amended to provide for the acceleration of replacement options
if the optionee's employment is terminated without Cause or the optionee resigns
with Good Reason within two years after the effective date of any such sale of
assets, merger or consolidation.
During the lifetime of the optionee, the option is exercisable only by
optionee and is not assignable or transferable. In the event of the optionee's
death, the option is not transferable other than by will or the laws of descent
and distribution.
Amendment And Termination. The Option Plan will continue in effect until
terminated by the Board or until expiration of the Option Plan on April 26,
1999. The Board may suspend or discontinue the Option Plan or revise or amend
it, provided that, without the approval of the Company's stockholders, no such
revision or amendment may:
(i) Materially increase the benefits accruing to participants under the
Option Plan;
(ii) Increase the number of shares which may be issued under the Option
Plan;
(iii) Change the designation of classes of persons eligible to receive
options under the Option Plan;
(iv) Modify the Option Plan such that it fails to meet the requirements of
Rule 16b-3 of the Securities and Exchange Commission; or
(v) Amend the Option Plan to defeat the purpose of the above restrictions
on amendments.
Federal Income Tax Consequences. The following discussion is intended only
as a general summary of the federal income tax consequences to participants and
the Company with respect to the Option 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. Further, the tax treatment of each
participant will depend in part upon such participant's particular tax
situation.
The Code provides favorable tax treatment for incentive stock options.
Incentive stock options are subject to certain requirements which are set forth
in the Option Plan. Generally, upon the grant of an incentive stock option, and
upon the exercise of the incentive stock option during employment or within
three months after termination of employment, the optionee will not realize any
income. However, any appreciation in the value of the shares from the date of
grant will generally be an item of adjustment at the time of exercise in
determining the optionee's potential liability for alternative minimum tax. The
alternative minimum tax may produce a higher tax than the regular income tax
applicable to the optionee.
The sale or disposition of Common Stock purchased upon exercise of an
incentive stock option is generally a taxable event. The optionee will realize a
gain or loss in an amount equal to the difference between his or her basis
(normally the exercise price) in the Common Stock and the proceeds from the sale
or disposition. If the Common Stock acquired pursuant to an incentive stock
option is not sold or otherwise disposed of within two years from the date of
grant of the incentive stock option and is held for at least one year after
exercise of the incentive stock option (the "Holding Period"), any gain or loss
resulting from the sale or disposition of the Common Stock will be treated as
long term capital gain or loss. If Common Stock acquired upon exercise of an
incentive stock option is disposed of prior to the expiration of the Holding
Period (a "Disqualifying Disposition"), the excess of the fair market value of
the Common Stock on the date of exercise over the exercise price or the excess
of the sale price over the exercise price, whichever is less, will be treated as
ordinary income in the year of disposition. However, any additional gain will be
taxed as capital gain. If an optionee disposes of the Common Stock more than one
year after the date of exercise, such capital gain or loss will be treated as
long term capital gain or loss.
12
<PAGE> 15
The Company normally is not entitled to a deduction with respect to
incentive stock options. However, in the event of a Disqualifying Disposition,
the Company is entitled to deduct the ordinary income realized by the optionee.
Optionees are required to notify the Company of any Disqualifying Dispositions.
No taxable income will be realized by an optionee upon the grant of a
nonqualified stock option. Upon exercise of a nonstatutory stock option, the
optionee must include in his or her income the excess of the fair market value
of the Common Stock on the date of exercise over the exercise price. The Company
may deduct this amount provided the Company satisfies the applicable reporting
requirements. An optionee's new basis in the Common Stock acquired upon exercise
of a nonstatutory stock option will generally be the fair market value of the
shares on the date of exercise. Upon a subsequent disposition of such Common
Stock, the optionee will ordinarily realize a capital gain or loss to the extent
of any intervening appreciation or depreciation. If an optionee disposes of the
Common Stock more than one year after the date of exercise, such capital gain or
loss will be treated as long term capital gain or loss.
THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 4)
The Board of Directors has selected Arthur Andersen LLP to audit the
financial statements of the Company for the year ending March 31, 1998. 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 1998.
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.
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
13
<PAGE> 16
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
solely 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.
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 relationships
and the performance and prospects of the Company. Base salaries for two
executive officers, Messrs. Granger and Livingston, increased effective January
1, 1997 and May 1, 1997, respectively, by an average of 13%. Two other executive
officers listed on the Summary Compensation Table (Messrs. Greer and Lillis)
were not eligible for base salary increases. See, footnotes (c) and (d) to the
Summary Compensation Table on page 16. Also see, "-- Committee Decisions
Affecting Chief Executive Officer's Compensation" for a discussion of increases
in Mr. Off's salary.
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 10% to 44% of individual
employee's salary for fiscal 1997.
Bonuses for fiscal year 1997 were less than bonuses paid for fiscal year
1996. The Compensation Committee set aggressive goals for the management of the
Company for fiscal year 1997, which goals were substantially, although not
fully, achieved. Examples of the Company's performance include a 28% increase in
revenue and a 20% increase in earnings per share for fiscal 1997 as compared to
increases of 18% and 29%,
14
<PAGE> 17
respectively, for fiscal 1996. In light of such results, the Compensation
Committee deemed it appropriate to award bonuses to the Company's senior
management, although generally 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
align employee interests with the stockholders' interests.
COMMITTEE DECISIONS AFFECTING CHIEF EXECUTIVE OFFICER'S COMPENSATION
In February 1997, Mr. Off's base salary for fiscal 1997 was increased by
the Compensation Committee to $400,000 retroactively effective to May 1, 1996, a
52% 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 and upon the Compensation Committee's examination of
information provided by a survey of executive compensation of other companies
similar to the Company.
As stated above, bonuses paid to executive officers for fiscal 1997 were
less than bonuses paid for fiscal 1996 as a result of the Company's financial
objectives for fiscal 1997 not being fully achieved. Mr. Off's bonus for fiscal
1997 was determined by the Compensation Committee based on specific financial
and non-financial performance goals. Mr. Off's incentive bonus of $82,240 for
fiscal 1997, 21% of his salary, was based upon the Compensation Committee's
evaluation of his performance and contribution to the Company's achievements in
fiscal 1997, in which increases in revenue, net income and earnings per share
were 28%, 24% and 20%, respectively, over the prior year. In relation to this
performance, Mr. Off's annual compensation for fiscal 1997 (salary paid and
bonus earned) was 20% higher than his annual compensation for the prior year.
In addition, the Compensation Committee granted a stock option for the
purchase of 50,000 shares to Mr. Off for fiscal 1997.
RESPECTFULLY SUBMITTED,
Frederick W. Beinecke Patrick W. Collins Thomas G. Mendell Michael B. Wilson
15
<PAGE> 18
COMPENSATION OF EXECUTIVE OFFICERS AND NON-EMPLOYEE DIRECTORS
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(a)($) BONUS($) OPTIONS GRANTED COMPENSATION(b)
- --------------------------- ------ ------------ -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
George W. Off 1997 388,375 82,240 50,000 69,396
President, Chief Executive 1996 248,630 145,000 50,000 50,676
Officer and Director 1995 229,100 154,421 40,000 22,172
Tommy D. Greer (c) 1997 284,744 87,549 -- 19,114
Chairman of the Board 1996 250,016 120,000 -- 20,394
1995 248,150 145,609 145,000 6,000
Daniel D. Granger 1997 220,000 110,000 50,000 21,633
Executive Vice President 1996 195,100 115,000 -- 45,225
Sales, and President, CMS 1995 185,329 84,873 -- 23,748
Joseph A. Lillis, III (d) 1997 220,789 90,300 -- 91,146
Executive Vice President, 1996 35,558 10,711 150,000 23,492
Retail and Corporate Development
Philip B. Livingston (e) 1997 188,247 65,000 -- 73,491
Senior Vice President 1996 90,694 45,000 100,000 83,375
and Chief Financial Officer
</TABLE>
- ---------------
(a) Salary includes all before-tax contributions by the employee to the
Company's Deferred Compensation Plan.
(b) Other compensation includes Company matching contributions and all earnings
(vested and non-vested) contributed by the Company under the Company's
Deferred Compensation Plan and reimbursement for moving expenses.
(c) Effective January 1997, Mr. Greer's responsibilities were reduced with Mr.
Off assuming certain of Mr. Greer's day-to-day responsibilities.
(d) Effective April 25, 1997, Mr. Lillis tendered his resignation as an
Executive Vice President and employee of the Company. Mr. Lillis had served
in such capacity since January, 1996.
(e) Mr. Livingston joined the Company as Senior Vice President and Chief
Financial Officer in October, 1995.
16
<PAGE> 19
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
% OF TOTAL FOR OPTION TERM($)(b)
OPTIONS OPTIONS GRANTED EXERCISE EXPIRATION ----------------------
GRANTED(a) TO EMPLOYEES PRICE($) DATE 5% 10%
---------- --------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
George W. Off (CEO)........... 50,000 7.65% 38.75 4/29/01 535,296 1,182,863
Tommy D. Greer................ -- -- -- -- -- --
Daniel D. Granger............. 50,000 7.65% 38.75 4/29/01 535,296 1,182,863
Joseph A. Lillis, III......... -- -- -- -- -- --
Philip B. Livingston.......... -- -- -- -- -- --
</TABLE>
- ---------------
(a) Options granted generally have a term of five years, and become exercisable
at the rate of 25% per year, commencing one year after the date of grant,
except for options associated with a new hire which generally have a term of
six years, become exercisable at the rate of 20% per year, and are subject
to early termination in certain instances relating to termination of
employment.
(b) Potential Realizable Value is based on the assumption that the market price
of the stock appreciates at the stated rate, compounded annually, from the
date of grant to the expiration of the option. These values are calculated
based on requirements promulgated by the Securities and Exchange Commission
and do not reflect the Company's estimate of future stock price
appreciation.
OPTION EXERCISES AND YEAR END VALUE TABLE
<TABLE>
<CAPTION>
AT FISCAL YEAR END
---------------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS IN-THE-MONEY OPTIONS($)(a)
ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George W. Off (CEO).... 7,000(b) 507,938 182,500 107,500 4,199,938 959,063
Tommy D. Greer......... -- -- 135,672 9,328 2,382,740 163,823
Daniel D. Granger...... 3,500 164,938 50,000 50,000 1,068,750 12,500
Joseph A. Lillis,
III.................. -- -- 30,000 120,000(c) 255,000 1,020,000(c)
Philip B. Livingston... 1,500 42,188 18,500 80,000 249,750 1,080,000
</TABLE>
- ---------------
(a) The closing price of the Company's Common Stock was $39.00 per share on
March 31, 1997, the last business day of the fiscal year.
(b) George W. Off exercised options to purchase 10,500 shares of Common Stock of
which 236.14 shares were withheld for payment of the exercise price,
3,263.86 shares were deferred under the Company's Deferred Compensation Plan
and are held as phantom stock units and 7,000 shares were issued to Mr. Off.
(c) Effective with his resignation as an employee of the Company on April 25,
1997, Mr. Lillis forfeited options relating to such 120,000 shares, which
were not then exercisable.
17
<PAGE> 20
COMMON STOCK PRICE PERFORMANCE GRAPH
The following graph compares the Company's cumulative total return to
stockholders since March 31, 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 for
Advertising, and other related S.I.C. Codes.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
CATALINA MARKETING CORPORATION,
NYSE MARKET INDEX AND PEER GROUP INDEX(1).
<TABLE>
<CAPTION>
CATALINA NYSE MKT
MEASUREMENT PERIOD MARKETING VALUATION PEER GROUP PEER GROUP
(FISCAL YEAR COVERED) CORP INDEX INDEX - OLD INDEX - NEW
<S> <C> <C> <C> <C>
3/31/92 100 100 100 100
3/31/93 139 115 121 122
3/31/94 160 119 127 140
3/31/95 174 133 155 156
3/31/96 274 173 224 192
3/31/97 274 202 255 227
</TABLE>
Assumes $100 invested on March 31, 1992, in Catalina Marketing Corporation
at a closing price of $14.25 on such date, the New York Stock Exchange and the
peer group defined. Historical results are not necessarily indicative of future
performance.
- ---------------
(1) The Company has constructed a new peer group index for purposes of this
Proxy Statement, designed to more closely align the entities included with
the Company. The new peer group is made up of: Acxiom Corporation, Advo,
Inc., Concord EFS, Inc., CUC International, Inc., Dun & Bradstreet
Corporation, Grey Advertising, Inc., Heritage Media Corporation, Information
Resources, Inc., PIA Merchandising Services, Inc., Quick Response Services,
Inc. and Valassis Communications, Inc. For comparison purposes, information
regarding the peer group used by the Company in its 1996 Proxy Statement is
also included. The old peer group index is made up of: Ackerly
Communication, Inc., All American Communications, Inc., 4 Kids Entertainment
Inc., Greenstone Roberts Advertising, Inc., Grey Advertising, Inc., Heritage
Media Corporation, Interpublic Group of Companies, Inc., Omnicom Group, and
WPP Group Plc.
18
<PAGE> 21
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. Also, upon each election or reelection of a non-employee director such
director receives an aggregate of 2,000 restricted shares of Common Stock
pursuant to the Company's 1992 Director Stock Grant Plan, as amended.
FUTURE STOCKHOLDER PROPOSALS
The Company must receive at its principal office appearing on the front
page of this Proxy Statement before February 19, 1998, any proposal which a
stockholder wishes to submit to the 1998 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, 1997. 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 19, 1997
19
<PAGE> 22
APPENDIX A
FINAL
6/19/97
SECOND AMENDED AND RESTATED
CATALINA MARKETING CORPORATION
1989 STOCK OPTION PLAN*
1. PURPOSE.
The Plan is intended to provide incentive to key employees
and directors of the Corporation and its Subsidiaries, to encourage proprietary
interest in the Corporation, and to attract new employees and 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 of the Plan.
(c) "Board" shall mean the Board of Directors of
the Corporation.
(d) "Cause" in respect of an Optionee shall mean
the dishonesty, fraud, misconduct, unauthorized use or disclosure of
confidential information or trade secrets, conviction or confession of a crime
punishable by law (except misdemeanor violations), or engaging in practices
contrary to stock "insider trading" policies of the Corporation, by such
Optionee in each case as determined by the Administrator, with such
determination to be conclusive and binding on such affected Optionee and all
other persons.
(e) "Code" shall mean the Internal Revenue Code
of 1986, as amended.
- --------------------------------------------------------------------------------
* Amended and Restated to include revisions adopted
January 28, 1992, April 19, 1994, April 30, 1996 and April
22, 1997.
<PAGE> 23
(f) "Committee" shall mean the committee
appointed by the Board in accordance with Section 4 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, or any successor hereunder.
(i) "Disability" shall mean the condition of an
Employee who is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months.
(j) "Disinterested Person" shall have the meaning
assigned to this phrase in Rule 16b-3 of the Securities and Exchange Commission
adopted under the Exchange Act.
(k) "Employee" shall mean an individual who is
employed (within the meaning of Section 3401 of the Code and the regulations
thereunder) by the Corporation or a Subsidiary.
(l) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(m) "Exercise Price" shall mean the price per
Share of Common Stock, determined by the Administrator, at which an Option may
be exercised.
(n) "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:
(1) If the Shares are traded on a nationally
recognized exchange or the National Market System (the "NMS") of the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"),
the closing 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 ask prices on such exchange or the NMS at the end of the day on
such date;
-2-
<PAGE> 24
(2) 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
(3) If neither (1) nor (2) applies, the fair
market value as determined by the Administrator in good faith. Such
determination shall be conclusive and binding on all persons.
(o) "Good Reason" in respect of an Optionee shall
mean the occurrence of any of the following events or conditions following a
Terminating Transaction:
(1) A change in the Optionee's status,
title, position or responsibilities (including reporting responsibilities) that
represents a substantial reduction of the status, title, position or
responsibilities in respect of the Corporation's business as in effect
immediately prior thereto; the assignment to the Optionee of substantial duties
or responsibilities that are inconsistent with such status, title, position or
responsibilities; or any removal of the Optionee from or failure to reappoint or
reelect the Optionee to any of such positions, except in connection with the
termination of the Optionee's employment for Cause, for Disability or as a
result of his or her death, or by the Optionee other than for Good Reason;
(2) A reduction in the Optionee's annual
base salary;
(3) The Corporation's requiring the Optionee
(without the Optionee's consent) to be based at any place outside a 35-mile
radius of his or her place of employment prior to a Terminating Transaction,
except for reasonably required travel on the Corporation's business that is not
materially greater than such travel requirements prior to such Terminating
Transaction;
(4) The Corporation's failure to (i)
continue in effect any material compensation or benefit plan (or a reasonable
replacement therefor) in which the Optionee was participating at the time of a
Terminating Transaction,
-3-
<PAGE> 25
including, but not limited to the Plan, or (ii) provide the Optionee with
compensation and benefits at least equal (in terms of benefit levels and/or
reward opportunities) to those provided for under each employee benefit plan,
program and practice as in effect immediately prior to a Terminating Transaction
(or an in effect following the Terminating Transaction, if greater); or
(5) Any material breach by the Corporation
of any provision of the Plan.
(p) "Incentive Stock Option" shall mean an option
described in Section 422(b) of the Code.
(q) "Nonstatutory Stock Option" shall mean an
option not described in Section 422(b) or 423(b) of the Code.
(r) "Option" shall mean any stock option granted
pursuant to the Plan.
(s) "Option Profit" shall mean the amount (not
less than zero) by which the Fair Market Value of a share of Common Stock
subject to a Nonstatutory Stock Option on the date of a Participant's exercise
of a Nonstatutory Stock Option exceeds the exercise price of such Nonstatutory
Stock Option.
(t) "Optionee" shall mean a Participant who has
received an Option.
(u) "Participant" shall have the meaning assigned
to it in Section 5(a) hereof.
(v) "Plan" shall mean this Amended and Restated
Catalina Marketing Corporation 1989 Stock Option Plan, as it may be amended from
time to time.
(w) "Purchase Price" shall mean the Exercise
Price times the number of Shares with respect to which an Option is exercised.
(x) "Retirement" shall mean the voluntary
cessation of employment by an Employee at such time as may be specified in the
then current personnel policies of the Corporation, in the sole discretion of
the Administrator or, in lieu thereof, upon the attainment of age sixty-five
(65) and the completion of not less than twenty (20) years of service with the
Corporation or a Subsidiary.
-4-
<PAGE> 26
(y) "Share" shall mean one (1) share of Common
Stock, adjusted in accordance with Section 10 of the Plan (if applicable).
(z) "Subsidiary" shall mean any subsidiary
corporation as defined in Section 424(f) of the Code.
(aa) "Terminating Transaction" shall have the
meaning assigned to it in Section 10 hereof.
3. EFFECTIVE DATE.
The Plan was adopted by the Board effective
April 26, 1989, subject to the approval of the Corporation's stockholders
pursuant to Section 14 of the Plan, and amended effective January 28, 1992 and
April 19, 1994, in each case subject to the approval of the Corporation's
stockholders to the extent set forth in Sections 12 and 14 of the Plan.
4. ADMINISTRATION.
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 three (3)
members of the Board, none of whom shall be eligible to receive Options under
the Plan. 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 which a quorum is
present, or acts reduced to or approved in writing by a unanimous consent of the
members of the Administrator, shall be the valid acts of the Administrator.
The Administrator shall from time to time at its
discretion select the Employees who are to be granted Options, determine the
number of Shares to be subject to Options to be granted to each Optionee and
designate such Options as Incentive Stock Options or Nonstatutory Stock Options.
A Committee or Board member shall in no event participate in any determination
relating to Options held by or to be granted to such Board member. The
interpretation and construction by the Administrator of any provisions of the
Plan or of any Option granted thereunder shall be final. No member of the
Administrator shall be liable for any
-5-
<PAGE> 27
action or determination made in good faith with respect to the Plan or any
Option granted thereunder.
If the Common Stock is registered under Section 12
of the Exchange Act, then notwithstanding the first or second sentences of the
immediately preceding paragraph, after such registration, selection of officers
for participation and decisions concerning the timing, pricing and amount of an
Option shall be made solely by the Board, if each member is a Disinterested
Person, or by the Committee, each of the members of which is a Disinterested
Person.
5. PARTICIPATION.
(a) Eligibility.
The Optionees shall be such Employees (who
may be officers, whether or not they are directors) (collectively,
"Participants"; individually a "Participant") as the Administrator may select
subject to the terms and conditions of Section 5(b) below:
(b) Ten-Percent Stockholders.
A Participant who owns more than ten percent
(10%) of the total combined voting power of all classes of outstanding stock of
the Corporation, its parent or any of its Subsidiaries shall not be eligible to
receive an Incentive Stock Option unless (i) the Exercise Price of the Shares
subject to such Option is at least one hundred ten percent (110%) of the Fair
Market Value of such Shares on the date of grant and (ii) in the case of an
Incentive Stock Option, such Option by its terms is not exercisable after the
expiration of five (5) years from the date of grant.
(c) Stock Ownership.
For purposes of Section 5(b) above, in
determining stock ownership, a Participant shall be considered as owning the
stock owned, directly or indirectly, by or for his or her brothers and sisters
(by whole or half blood), spouse, ancestors and lineal descendants. Stock owned,
directly or indirectly, by or for a corporation, partnership, estate or trust
shall be considered as being owned proportionately by or for its shareholders,
partners or beneficiaries. Stock with respect to which such Participant holds an
Option or any other option if (as of the time the Option or such other option is
-6-
<PAGE> 28
granted) the terms of such Option or other option provide that it will not be
treated as an Incentive Stock Option, shall not be counted.
(d) Outstanding Stock
For purposes of Section 5(b) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant of the Option to the Optionee. "Outstanding stock"
shall not include shares authorized for issuance under outstanding Options held
by the Optionee or by any other person.
6. STOCK.
The stock subject to Options granted 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 Options under the Plan shall not exceed two million two hundred fifty
thousand (2,250,000).* Effective April 22, 1997, subject to stockholder
approval, the number of Shares remaining for issuance hereunder has been
increased by 1,250,000 Shares. The number of Shares subject to Options
outstanding at any time shall not exceed the number of Shares remaining
available for issuance under the Plan. In the event that any outstanding Option
for any reason expires or is terminated, the Shares allocable to the unexercised
portion of such Option or the Shares so reacquired may again be made subject to
an Option. The limitations established by this Section 6 shall be subject to
adjustment in the manner provided in Section 10 hereof upon the occurrence of an
event specified therein. Commencing April 1, 1994, no Person shall receive
Options under the Plan relating to in excess of 300,000 Shares; provided,
however, that any Options granted to an Optionee prior to such date are not
affected by this limitation and do not count in determining whether an
individual Optionee has received Options in excess of such limitation.
- --------------------------------------------------------------------------------
* On July 15, 1996, a two-for-one split of the Corporation's Common Stock was
effected. Pursuant to Section 10, the number of Shares covered by the Plan as
reflected in Section 6 was adjusted to reflect such stock split such that the
number of Shares remaining for issuance under the Plan as of July 15, 1996 was
doubled. This adjustment is not reflected above.
-7-
<PAGE> 29
7. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreements.
Options shall be evidenced by written stock
option 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. No Option shall be
effective until the applicable stock option agreement is executed by both
parties thereto.
(b) Optionee's Undertaking.
Each Optionee shall agree to remain in the
employ or service of the Corporation or a Subsidiary and to render services for
a period as shall be determined by the Administrator, from the date of the
granting of the Option, but such agreement shall not impose upon the Corporation
or its Subsidiaries any obligation to retain the Optionee in their employ or
service for any period.
(c) Number of Shares.
Each Option shall state the number of Shares
to which it pertains and shall provide for the adjustment thereof in accordance
with the provisions of Section 10 hereof.
(d) Exercise Price.
Each Option shall state the Exercise Price.
The Exercise Price shall not be less than the Fair Market Value on the date of
grant and, in the case of an Incentive Stock Option granted to an Optionee
described in Section 5(b) hereof, shall not be less than one hundred ten percent
(110%) of the Fair Market Value on the date of grant.
(e) Medium and Time of Payment.
The Purchase Price shall be payable in full
in United States dollars upon the exercise of the Option; provided, however,
that if the applicable option agreement so provides, or the Administrator, in
its sole discretion otherwise approves thereof, the Purchase Price may be paid
by the surrender of Shares in good form for transfer, owned by the person
exercising the Option and having a Fair Market Value on the date of exercise
equal to the Purchase Price, or in any combination of cash and Shares, as long
as the sum
-8-
<PAGE> 30
of the cash so paid and the Fair Market Value of the Shares so surrendered
equals the Purchase Price.
In the event the Corporation determines that
it is required to withhold state or Federal income tax as a result of the
exercise of an Option, as a condition to the exercise thereof, an Optionee may
be required 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 Optionee, or by the Corporation
not issuing such number of Shares subject to the Option, having a Fair Market
Value at the time of exercise equal to the amount to be withheld or (iii) any
combination of (i) and (ii) above. If the Common Stock is registered under
Section 12 of the Exchange Act and if the Optionee is an officer or director of
the Corporation subject to Section 16(b) of the Exchange Act, 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) of the
Securities and Exchange Commission and ending on the twelfth business day
following such date. The election need not be made during the ten day window
period if counsel to the Corporation determines that compliance with such
requirement is unnecessary.
If the Corporation is required to register
under Section 207.3 of Regulation G of the Board of Governors of the Federal
Reserve System (Title 12 Code of Federal Regulations Part 207), then so long as
such registration is in effect, the credit extended by the Corporation to an
Optionee for the purpose of paying the Purchase Price shall conform to the
requirements of such Regulation G.
Upon a duly made deferral election by an
Optionee eligible to participate under the Corporation's Deferred Compensation
Plan, Shares otherwise issuable to the Optionee upon the exercise of a
Nonstatutory Stock Option and payment of the Purchase Price by the surrender of
Shares in accordance with the first paragraph of this Section 7(e), will not be
delivered to the Optionee. In lieu of delivery of such Shares, the Common Stock
Account of the Optionee maintained pursuant to the Corporation's Deferred
Compensation Plan shall be credited with a number of stock units having a value,
calculated pursuant to such plan,
-9-
<PAGE> 31
equal to the Option Profit associated with the exercised Nonstatutory Stock
Option. Such deferral of Option Profit under the Corporation's Deferred
Compensation Plan is available to Optionees only if the Shares surrendered in
payment of the Purchase Price upon the exercise of a Nonstatutory Stock Option
have been held by the Optionee for at least six months.
(f) Term and Nontransferability of Options.
Each Option shall state the time or times
when all or part thereof becomes exercisable; provided, however, that no Option
shall become exercisable prior to one (1) year following the grant thereof. No
Option shall be exercisable after the expiration of six (6) years (or less, in
the discretion of the Administrator) from the date it was granted, and no
Incentive Stock Option granted to an Optionee described in Section 5(b) hereof
shall be exercisable after the expiration of five (5) years (or less, in the
discretion of the Administrators) from the date it was granted. During the
lifetime of the Optionee, the Option shall be exercisable only by the Optionee
and shall not be assignable or transferable. In the event of the Optionee's
death, the Option shall not be transferable by the Optionee other than by will
or the laws of descent and distribution.
If the Common Stock is registered under
Section 12 of the Exchange Act, all Options granted thereafter to an officer of
the Corporation shall be subject to the limitation that such Options shall not
be exercised within six months from the date of grant except that this
limitation shall not apply in the event the death or Disability of the Optionee
occurs prior to the expiration of the six-month period.
(g) Cessation of Employment (Except by Death,
Disability or Retirement).
If an Optionee ceases to be an Employee for
any reason other than his or her death, Disability or Retirement, such Optionee
shall have the right, subject to the restrictions referred to in Section 7(f)
above, to exercise the Option at any time within ninety (90) days (or such
shorter period as the Administrator may determine) after cessation of
employment, but, except as otherwise provided in the applicable option
agreement, only to the extent that, at the date of cessation of employment, the
Optionee's right to exercise such Option had accrued pursuant to the terms of
the applicable option agreement and
-10-
<PAGE> 32
had not previously been exercised. The foregoing notwithstanding, a stock option
agreement may, in the sole discretion of the Administrator, but need not,
provide that the Option shall cease to be exercisable on the date of such
cessation if such cessation arises by reason of termination for cause (as
defined in the applicable stock option agreement) or if the Optionee upon
cessation becomes an employee, director or consultant of a person or entity that
the Administrator, in its sole discretion, determines is in direct competition
with the Corporation.
For purposes of this Section 7(g) the
employment relationship shall be treated as continuing intact while the Optionee
is on military leave, sick leave or other bona fide leave of absence (to be
determined in the sole discretion of the Administrator). The foregoing
notwithstanding, employment shall not be deemed to continue beyond the ninetieth
(90th) day after the Optionee ceased active employment, unless the Optionee's
reemployment rights are guaranteed by statute or by contract.
If the Common Stock is registered under
Section 12 of the Exchange Act, with respect to any Option held by an officer of
the Corporation that was granted within six (6) months of a Change in Control
(as hereinafter defined), and notwithstanding the ninety (90)-day exercise
period referred to in the first paragraph of this subsection (g), if such
Optionee ceases to be an Employee after such Change in Control, such Optionee
shall have the right, subject to the restrictions referred to in Section 7(f)
above, to exercise such Option at any time during the one month period
immediately following the six (6)-month period commencing with the grant of such
Option. For the purposes of this Section 7(g), a "Change in Control" shall be
deemed to occur upon (i) the sale of all or substantially all of the assets of
the Corporation, (ii) any person or group of persons acquiring the ownership or
right to vote shares constituting greater than fifty percent (50%) of the
outstanding capitalization of the Corporation or (iii) the consummation of a
merger or consolidation of the Corporation where the stockholders of the
Corporation immediately prior to such merger or consolidation do not own at
least fifty percent (50%) of the voting equity (in terms of the right to vote
for the election of directors) of the entity which is the surviving entity
following such merger or consolidation.
-11-
<PAGE> 33
(h) Death of Optionee.
If an Optionee dies while a Participant, or
after ceasing to be a Participant but during the period in which he or she could
have exercised the Option under this Section 7, and has not fully exercised the
Option, then the Option may be exercised in full, subject to the restrictions
referred to in Section 7(f) above, at any time within twelve (12) months (or
such shorter period as the Administrator may determine) after the Optionee's
death by the executor or administrator of his or her estate or by any person or
persons who have acquired the Option directly from the Optionee by bequest or
inheritance, but, except as otherwise provided in the applicable option
agreement, only to the extent that, at the date or death, the Optionee's right
to exercise such Option had accrued and had not been forfeited pursuant to the
terms of the applicable option agreement and had not previously been exercised.
(i) Disability of Optionee.
If an Optionee ceases to be an Employee by
reason of Disability, such Optionee shall have the right, subject to the
restrictions referred to in Section 7(f) above, to exercise the Option at any
time within twelve (12) months (or such shorter period as the Administrator may
determine) after such cessation of employment, but, except as provided in the
applicable option agreement, only to the extent that, at the date of such
cessation of employment, the Optionee's right to exercise such Option had
accrued pursuant to the terms of the applicable option agreement and had not
previously been exercised.
(j) Retirement of Optionee.
If an Optionee ceases to be an Employee by
reason of Retirement, such Optionee shall have the right, subject to the
restrictions referred to in Section 7(f) above, to exercise the Option at any
time within ninety (90) days (or such longer or shorter period as the
Administrator may determine) after cessation of employment, but only to the
extent that, at the date of cessation of employment, the Optionee's right to
exercise such Option had accrued pursuant to the terms of the applicable option
agreement and had not previously been exercised.
-12-
<PAGE> 34
(k) Rights as a Stockholder.
An Optionee, or a permitted transferee of an
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by his or her Option until the date of the issuance of a stock
certificate for such Shares. After such issuance of a stock certificate for such
Shares, the Optionee shall have all rights as a stockholder including, without
limitation, the right to vote any such Shares. No adjustment shall be made for
dividends (ordinary or extra-ordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as provided in Section 10
hereof.
(l) Modification, Extension and Renewal of
Options.
Within the limitations of the Plan, the
Administrator may modify an Option, accelerate the rate at which an Option may
be exercised or extend or renew outstanding Options. The foregoing
notwithstanding, no modification of an Option shall, without the consent of the
Optionee, alter or impair any rights or obligations under any Option previously
granted.
(m) Other Provisions.
The stock option agreements authorized under
the Plan may contain such other provisions not inconsistent with the terms of
the Plan (including, without limitation, restrictions upon the exercise of the
Option or the transfer of Shares of stock following exercise of the Option) as
the Administrator shall deem advisable.
8. LIMITATION ON ANNUAL AWARDS.
The aggregate Fair Market Value (determined as of
the date an Option is granted) of the stock with respect to which Incentive
Stock Options are exercisable for the first time by any Optionee during any
calendar year under this Plan and all other plans maintained by the Corporation,
its parent or its Subsidiaries, shall not exceed $100,000.
9. TERM OF PLAN.
Options may be granted pursuant to the Plan until
the expiration of the Plan on April 26, 1999.
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10. RECAPITALIZATIONS.
Subject to any required action by stockholders,
the number of Shares covered by the Plan as provided in Section 6 hereof, the
number of Shares covered by each outstanding Option and the Exercise Price
thereof shall be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a subdivision or consolidation of Shares
or the payment of a stock dividend (but only of Common Stock) or any other
increase or decrease in the number of issued Shares effected without receipt of
consideration by the Corporation.
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 Option shall continue to apply to
the Shares subject thereto and 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 Option 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 (each a "Terminating
Transaction"), this Plan and each Option shall terminate; provided that in such
event (i) each Optionee to whom no Option has been tendered by the surviving or
acquiring corporation (or the parent corporation of the surviving or acquiring
corporation) in accordance with all of the terms of clause (ii) or (iii)
immediately below, shall have the right, for a period of at least thirty days,
until five days before the effective date of such sale, merger or consolidation,
to exercise, in whole or in part, any unexpired Option or Options issued to him
or her, without regard to the installment or vesting provisions of any option
agreement, or (ii) in its sole and absolute discretion, the surviving or
acquiring corporation (or the parent corporation of the surviving or acquiring
corporation) may, but shall not be so obligated, (I) tender to all Optionees
with then outstanding Options under the Plan an option or options to purchase
shares of the surviving or acquiring corporation (or of the parent corporation
of the surviving or acquiring corporation), which new option or options contain
such terms and provisions as shall be required substantially to preserve the
rights and benefits of all Options then held by such
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<PAGE> 36
Optionees or, (II) grant the choice to all Optionees with then outstanding
Options of (A) exercising the Options in full as described in clause (i) above
or (B) receiving a replacement Option as set forth in clause (ii)(I), or (iii)
if the Common Stock is registered under Section 12 of the Exchange Act, with
respect to any Option held by a director or officer of the Corporation that was
granted within six (6) months prior to the effectiveness of the proposed sale,
merger or consolidation (a "Designated Option"), the surviving or acquiring
corporation (or the parent corporation of the surviving or acquiring
corporation) shall tender to such Optionee with respect to the Designated Option
a new option or options to purchase shares of the surviving or acquiring
corporation (or of the parent corporation of the surviving or acquiring
corporation), which new option or options contain such terms or provisions as
shall be required substantially to preserve the rights and benefits of such
Designated Option, provided that if the surviving or acquiring corporation (or
its parent) does not tender options to all non-officer and non-director
Optionees in accordance with clause (ii) above, then the option or options
exchanged for such Designated Option shall permit the Optionee to exercise such
substitute option or options in whole or in part, without regard to any
installment or vesting provisions, at any time after the expiration of six
months from the original date of grant of the Designated Option. 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 cause each Option to terminate. In the event an Optionee exercises any
unexpired Option or Options prior to the effectiveness of a sale of all or
substantially all of the Corporation's assets or a merger or consolidation of
the Corporation with another corporation in accordance with clause (i) of this
Section 10, such exercise of any Option or Options shall be subject to the
consummation of such sale, merger or consolidation. If such sale, merger or
consolidation is not consummated, any otherwise unexpired Option or Options
shall be deemed to have not been exercised, and the Optionee and the Corporation
shall take all steps necessary to achieve this effect including, without
limitation, the Optionee delivering to the Corporation the stock certificate
representing the Shares issued upon the exercise of the Option, endorsed in
favor of the Corporation, and the Corporation returning to the Optionee the
consideration representing the Purchase Price paid by the Optionee upon the
exercise of the Option.
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Notwithstanding any other provision of the Plan to
the contrary and except as otherwise expressly provided in the applicable stock
option agreement, the vesting or similar installment provisions relating to the
exercisability of any replacement option tendered to an Optionee pursuant to or
as a result of, or relating to, a Terminating Transaction under clauses (ii) or
(iii) of the preceding paragraph shall be accelerated and the Optionee shall
have the right, for a period of at least thirty days, to exercise such option in
the event the Optionee's employment or services should subsequently terminate
within two years following the effectiveness of the Terminating Transaction in
respect of which such replacement options were granted, unless such employment
or services are terminated by the Corporation for Cause or by the Optionee
voluntarily without Good Reason, or such employment or services are terminated
due to the death or Disability of the Optionee. Notwithstanding the foregoing,
no Incentive Stock Option shall become exercisable pursuant to the foregoing
without the Optionee's consent, if the result would be to cause such option not
to be treated as an Incentive Stock Option.
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 10,
the Optionee shall have no rights by reason of any subdivision of 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 or Exercise Price of Shares subject to an Option.
The grant of an Option 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.
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11. SECURITIES LAW REQUIREMENTS.
(a) Legality of Issuance.
No Shares shall be issued upon the exercise
of any Option unless and until the Corporation has
determined that:
(i) it and the Optionee have taken all actions
required to register the offer and sale 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
Optionee; Legends.
Regardless of whether the offering and sale
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 sale 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 Optionee 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:
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"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 11 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 sale of Shares under the Act or any other
applicable law. The Corporation shall not be obligated to take any affirmative
action in order to cause the sale 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 sold 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.
12. AMENDMENT OF THE PLAN.
The Board may from time to time, with respect to
any Shares at the time not subject to Options, suspend or discontinue the Plan
or revise or amend it in any respect whatsoever except that, without the
approval of the Corporation's stockholders, no such revision or amendment shall:
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<PAGE> 40
(a) Materially increase the benefits accruing to
Participants under the Plan;
(b) Increase the number of Shares which may be
issued under the Plan;
(c) Change the designation in Section 5 hereof
with respect to the classes of persons eligible to receive Options;
(d) Upon the registration of the Common Stock
under Section 12 of the Exchange Act, 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 Options
from the operation of Section 16(b) of the Exchange Act; or
(e) Amend this Section 12 to defeat its purpose.
13. APPLICATION OF FUNDS.
The proceeds received by the Corporation from the
sale of Common Stock pursuant to the exercise of an Option will be used for
general corporate purposes.
14. APPROVAL OF STOCKHOLDERS.
The original adoption of the Plan was subject to
approval by the affirmative vote of the holders of a majority of the outstanding
shares present 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 April 26, 1990, which approval was obtained. The amendments to the Plan
adopted by the Board on January 28, 1992, April 19, 1994 and April 30, 1996,
were subject to approval by the affirmative vote of such a majority, which
approvals were obtained. The effectiveness of the amendments to Section 6 and
Section 10 of the Plan adopted by the Board on April 22, 1997 are also subject
to approval by the stockholders of the Corporation at a meeting to be held on
July 22, 1997, and none of such amendments to the Plan shall be effective until
so approved. Any additional amendment described in Section 12 shall also be
subject to approval by the Corporation's stockholders.
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<PAGE> 41
15. EXECUTION.
To record the adoption of the Plan by the Board on
April 26, 1989, and the amendments described on the first page hereof, 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]
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APPENDIX B
P CATALINA MARKETING CORPORATION
R
O ANNUAL MEETING OF STOCKHOLDERS - JULY 22, 1997
X THIS PROXY SOLICITATED ON BEHALF OF THE BOARD OF DIRECTORS
Y
The undersigned, having recieved 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, 1997, at the Annual Meeting of
Stockholders to be held at the Company's offices, 11300 9th Street
North, St. Petersburg, Florida 33716, on Tuesday, July 22, 1997 and at
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
BELOW AND FOR EACH OTHER PROPOSAL LISTED BELOW.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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<PAGE> 43
Please mark [X]
your votes as
indicated in
this example.
1. Election of Class III Directors FOR AGAINST ABSTAIN
Stephen I. D'Agostino, Thomas G. Mendell [ ] [ ] [ ]
and Michael B. Wilson.
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 Amended and FOR AGAINST ABSTAIN
Restated 1989 Stock Option plan (the "Option [ ] [ ] [ ]
Plan") to increase by 1,250,000 the number of
shares of common stock available for the grant of
options thereunder.
3. Proposal to amend the Option Plan to provide for FOR AGAINST ABSTAIN
acceleration of options if an optionee's employment [ ] [ ] [ ]
is terminated under certain circumstances following
a sale of the Company.
4. Proposal to ratify and approve the selection of FOR AGAINST ABSTAIN
Arthur Andersen LLP as the Company's Independent [ ] [ ] [ ]
public accountants.
5. 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.
Signature(s) Date
---------------------------------------- ---------------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
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- FOLD AND DETACH HERE -
