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:
[ ] 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
Catuity Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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CATUITY INC.
<Table>
LEVEL 4 BALLARAT HOUSE 2711 E. JEFFERSON AVE.
68-72 WENTWORTH AVE. DETROIT, MICHIGAN 48207
SURRY HILLS NSW 2010 AUSTRALIA
</Table>
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 2002
We will hold the Annual Meeting of Shareholders of Catuity, Inc. at the AAP
Theatrette, AAP Centre, 259 George Street, Sydney, NSW 2000 Australia on
Thursday, May 23, 2002 at 9:30 a.m. Australian Eastern Standard Time (Wednesday,
May 22, 2002 at 7:30 p.m. Eastern Daylight Time in the United States) for the
following purposes:
1. To elect six members of the board of directors to serve until the
next Annual Meeting and until their successors have been elected and
qualified;
The Board of Directors recommend a vote FOR approval of the
election of the nominees listed under Proposals 1 through 6.
2. To approve the executive services agreement and options award
thereunder of David L. Mac.Smith.
The Directors, other than Mr. Mac.Smith, recommend a vote FOR
approval of the executive services and options award agreement of Mr.
Mac.Smith. Mr. Mac.Smith and his associates are precluding from voting
on this resolution.
3. To approve a $16,000 USD increase in the amount payable to
non-executive directors, bringing the maximum amount payable to
non-executive directors annually as a whole, to $104,000 USD.
The Directors recommend a vote FOR approval of an increase in the
maximum amount payable to non-executive directors. All directors and
their associates are precluding from voting on this resolution.
4. To act upon such other matters as may properly come before the
meeting or any adjournments or postponements thereof.
We have described the items of business more fully in the Proxy Statement
accompanying this Notice. The record date for determining those shareholders who
will be entitled to notice of, and to vote at, the Annual Meeting and at any
adjournment is April 8, 2002. The stock transfer books will not be closed
between the record date and the date of the Annual Meeting. A list of
shareholders entitled to vote at the Annual Meeting will be available for
inspection at Catuity's offices.
Whether or not you plan to attend the Annual Meeting, please complete,
sign, date and return the enclosed proxy promptly in the accompanying reply
envelope. Please refer to the enclosed voting form for instructions. You may
revoke your proxy at any time prior to the Annual Meeting. If you decide to
attend the Annual Meeting and wish to change your proxy vote, you may do so
automatically by voting in person at the Annual Meeting.
By Order of the Board of Directors
/s/ Jack H. Lowry
JOHN H. LOWRY III
Secretary
Detroit, Michigan
April 17, 2002
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
VOTING RIGHTS AND SOLICITATION.............................. 1
Voting.................................................... 1
Proxies................................................... 1
Solicitation of Proxies................................... 1
PROPOSALS NO. 1-6 -- ELECTION OF DIRECTORS.................. 2
General................................................... 2
Business Experience of Directors.......................... 2
Board Committees and Meetings............................. 3
Director Compensation..................................... 4
Recommendation of the Board of Directors.................. 4
PROPOSAL NO. 7 -- APPROVAL OF EXECUTIVE SERVICES AGREEMENT
AND OPTIONS AWARD THEREUNDER OF DAVID L. MAC.SMITH........ 4
General................................................... 4
Voting Exclusion Statement................................ 5
Recommendation of the Board of Directors.................. 5
PROPOSAL NO. 8 -- APPROVAL OF INCREASE IN THE MAXIMUM AMOUNT
PAID TO NON-EXECUTIVE DIRECTORS........................... 5
General................................................... 5
Voting Exclusion Statement................................ 5
Recommendation of the Board of Directors.................. 5
OWNERSHIP OF SECURITIES..................................... 6
Compliance with SEC Reporting Requirements................ 7
EXECUTIVE COMPENSATION AND RELATED INFORMATION.............. 7
Compensation Committee Report............................. 7
Compensation Philosophy and Objectives.................... 7
Compensation Components and Process....................... 8
Compensation Committee Interlocks and Insider
Participation.......................................... 9
Summary of Cash and Certain Other Compensation............ 9
Stock Options.............................................
Option Exercises and Holdings.............................
Employment Contracts, Termination of Employment, and
Change in Control Agreements........................... 10
Certain Relationships and Related Transactions............ 11
STOCK PERFORMANCE GRAPH..................................... 12
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS..... 12
SHAREHOLDER PROPOSALS FOR 2003 PROXY STATEMENT.............. 13
FORM 10-K................................................... 13
OTHER MATTERS............................................... 14
</Table>
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
We are furnishing these proxy materials for the solicitation of proxies by
the Catuity Inc. Board of Directors for our Annual Meeting of the Shareholders
to be held on Thursday, May 23, 2002 at 9:30 a.m. (AEST) at the AAP Theatrette,
AAP Centre, 259 George Street, Sydney, NSW 2000 Australia (Wednesday, May 22,
2002 at 7:30 p.m. United States Eastern Daylight Time) and at any adjournments
or postponements. We first mailed these proxy materials on or about April 17,
2002 to all shareholders entitled to vote at the Annual Meeting.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual
Meeting are listed in the accompanying Notice of Annual Meeting of Shareholders.
We have described each proposal in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION
VOTING
Our Common Stock is the only type of security entitled to vote at the
Annual Meeting. On April 8, 2002, the record date for determination of
shareholders entitled to vote at the Annual Meeting, there were 8,069,338 shares
of Common Stock outstanding. Each shareholder of record on April 8, 2002 is
entitled to one vote for each share of Common Stock held on that date. A
majority of the outstanding shares of Common Stock entitled to vote must be
present or represented at the Annual Meeting in order to have a quorum for the
conduct of business generally. Abstentions and broker non-votes are counted as
present for the purpose of determining the presence of a quorum for the
transaction of business. In the election of directors, the six candidates
receiving the highest number of affirmative votes will be elected. Proposal 7
and Proposal 8 require the approval of the affirmative vote of a majority of our
outstanding voting shares present or represented and entitled to vote on those
matters at the Annual Meeting. Abstentions and broker non-votes can have the
effect of preventing approval of a proposal where the number of affirmative
votes, though a majority of the votes cast, does not constitute a majority of
the shares present or represented and entitled to vote on the particular matter.
The inspector of election appointed for the Annual Meeting will tabulate all
votes. The inspector will separately tabulate affirmative and negative votes,
abstentions, and broker non-votes.
PROXIES
Whether or not you are able to attend the Annual Meeting, we urge you to
vote your proxy. Catuity's Board of Directors is soliciting your proxy, and the
Board will vote your proxy as you direct on your proxy when properly completed.
If you sign and return your proxy but do not specify any voting directions, your
proxy will be voted FOR the nominees of the Board of Directors (proposals 1-6),
FOR proposals 7 and 8, and in the discretion of the proxy holders as to other
matters that may properly come before the Annual Meeting. You may revoke or
change your proxy at any time before the Annual Meeting. To do this, send a
written notice of revocation or another signed proxy with a later date to
Catuity's Secretary at our principal executive offices before the beginning of
the Annual Meeting. You may also revoke your proxy by attending the Annual
Meeting and voting in person.
SOLICITATION OF PROXIES
Catuity will bear the entire cost of solicitation, including the
preparation, assembly, printing, and mailing of this Proxy Statement, the proxy,
and any additional solicitation material we furnish to shareholders. We will
furnish copies of solicitation material to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to the beneficial owners,
and we have retained Proxy Services Inc. to assist us in this
1
endeavor. We anticipate that we will pay $500, plus reasonable out of pocket
expenses, for these services. The original solicitation of proxies by mail may
be supplemented by a solicitation by telephone, telegram, or other means by our
directors, officers, or employees. We will not pay any additional compensation
to these individuals for these services. Except as described above, we do not
presently intend to solicit proxies other than by mail or via the Internet.
PROPOSALS NO. 1-6
ELECTION OF DIRECTORS
GENERAL
The names of our nominees for director, their positions and offices with
Catuity are set forth in the table below. The proxy holders intend to vote all
proxies received by them in the accompanying form for the nominees listed below
unless otherwise instructed. If any nominee is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who your Board may designate to fill the vacancy. As of the date of this
Proxy Statement, the Board of Directors is not aware of any nominee who is
unable or will decline to serve as a director. The six nominees receiving the
highest number of affirmative votes of the shares entitled to vote at the Annual
Meeting will be elected directors to serve until the next Annual Meeting and
until their successors have been elected and qualified. Shareholders may not
cumulate votes in the election of directors.
<Table>
<Caption>
NAME AGE POSITION(S)
---- --- -----------
David L. Mac.Smith.................... 51 Director and Chairman(2)
Michael V. Howe....................... 53 Director, President and Chief
Executive Officer(2)
Alexander S. Dawson................... 58 Director(1),(2)
Duncan P.F. Mount..................... 54 Director(1)
Alan L. Gilman........................ 58 Director(1),(2)
Robert C. Robins...................... 60 Director
</Table>
- ---------------
(1) Member, Audit Committee
(2) Member, Compensation Committee
BUSINESS EXPERIENCE OF DIRECTORS
David L. Mac.Smith is our founder and currently our Chairman of the Board.
He has been the Chief Executive Officer and Managing Director of CAT, our wholly
owned subsidiary, since November 1992. In December 1999, he became our President
and CEO. In January 2000, he resigned as our President and CEO and became our
Chairman. Prior to November 1992, he was the founder and, from 1982 to 1991, CEO
of Technology Investment Management Limited, a funds management company with
specific focus on technology related businesses. He has a Bachelor of Law degree
from the Australian National University.
Michael V. Howe has served as our President and Chief Executive Officer
since January 2000. From December 1995 through December 1999, he was the
Director of Marketing Communications for United Airlines, responsible for the
United Mileage Plus loyalty rewards program and the United partnership program.
Prior to joining United Airlines, he served as the Chief Executive Officer of
Young and Rubicam Advertising in Detroit, Michigan from October 1990 to November
1995. He has a Bachelor of Business Administration from John Carroll University
and a Master of Business Administration from Michigan State University.
Alexander S. Dawson is currently one of our non-employee Directors. He
served as the Chairman of CAT, our wholly owned subsidiary, from November 1992
to December 1999. From April 1987 to January
2
1991, he was Chief Executive Officer of Arnotts Ltd., Australia's largest
biscuit and snack food manufacturing company. From January 1988 to December
1990, he was a member of the Business Council of Australia. He served as
Chairman of United Distillers (Australasia) Limited from August 1994 to March
1996. He has a Bachelor of Commerce degree from the University of New South
Wales and a Master of Business Administration from Columbia University.
Duncan P.F. Mount is currently one of our non-employee Directors. He served
as a non-employee Director of CAT, our wholly owned subsidiary, from March 1999
to December 1999. From October 1996 to September 1999, he was the Asian adviser
to CEF.TAL Investment Management Limited, a Hong Kong based joint venture
between the Canadian Imperial Bank of Commerce, Cheung Kong Holdings Limited and
TAL Investment Counsel. He spent 17 years in Hong Kong as the Managing Director
of Gartmore Investment Management Limited, from May 1980 to October 1988, and as
managing director of CEF Investment Management Limited from May 1988 to October
1996, entities which are fund management and investment companies. From October
1996 to December 1998, he was Managing Director of CEF.TAL Australia Limited. He
holds a Bachelor and Master of Arts degree in Economics and Law (Hons) from
Cambridge University.
Alan L. Gilman joined the Board of Directors on July 1, 2000 following his
retirement from Arthur Andersen LLP. For 22 years prior to retirement, Mr.
Gilman was a partner with Arthur Andersen LLP and specialized in the retail
industry. Most recently he managed the Arthur Andersen Competency Center,
specializing in retail consulting. From September 1992 to August 1999, he served
as the managing partner of Senn-Delaney, a unit of Arthur Andersen specializing
in the retail industry. In addition to his role with Senn-Delaney, he held
worldwide leadership responsibility for Arthur Andersen's retail industry and
consumer products activities. Prior to September 1992, he was an Audit Partner
focusing primarily on retail distribution and advertising. Mr. Gilman is also
serving as the chairman of the Audit and Compensation Committees of the Board.
Robert C. Robins joined the Board of Directors on October 9, 2000 following
his retirement from Visa USA. He is currently an Executive Vice President of
Business Development with National Processing Corporation. Mr. Robins was
Executive Vice President of Visa USA in charge of the bankcard association's
division that markets Visa products and services to merchants across the United
States. Prior to that he spent seven years in various sales and marketing
management positions with American Cyanamid Company. He also was with Alba Inc.
and the Nestle Corporation in both field sales and corporate management
positions.
BOARD COMMITTEES AND MEETINGS
During the year that ended on December 31, 2001, the Board of Directors and
its' committees held sixteen meetings. All of the directors attended or
participated in more than 75% of the aggregate of (i) the total number of
meetings of the Board of Directors and (ii) the total number of meetings held by
all Committees of the Board on which each such director served.
Each of our directors holds office until the next annual meeting of
shareholders or until his successor has been duly elected or qualified or until
his earlier death, resignation or removal. Executive officers are appointed by,
and serve at the discretion of, our Board of Directors.
The board has two standing Committees: the Audit Committee and the
Compensation Committee.
The Audit Committee, among other things, makes a recommendation to the
Board of Directors concerning the engagement of independent auditors and
monitors the results of our operating and internal controls as reported by
management and the independent auditors. This Committee currently consists of
Messrs. Gilman, Mount and Dawson with Mr. Gilman serving as Chairman. The Audit
Committee held three meetings during 2001.
The Compensation Committee is responsible for establishing the compensation
levels of the Company's executive officers. Members of the Committee who are
also executive officers do not participate in discussions or decisions about
their own compensation level or changes in it. In
3
recommending and determining compensation, the committee considers independent
studies of comparable remuneration packages. This Committee currently consists
of Messrs. Mac.Smith, Howe, Gilman and Dawson with Mr. Gilman serving as
Chairman. The Compensation Committee held four informal meetings and one formal
meeting during 2001.
DIRECTOR COMPENSATION
During 2001, non-employee directors received a $10,000 annual retainer fee,
paid in quarterly payments of $2,500 following each calendar quarter, for
serving on the Board. In addition, each director receives a $1,000 fee for each
meeting attended during the year. Under the Director Stock Option Plan, upon the
date a person first becomes a member of the Board, the director automatically
receives a stock option to acquire 10,000 Catuity shares. In addition, on the
last business day of September of every year, each director then in office will
receive a stock option to acquire 5,000 Catuity shares. The exercise price per
share of any option is the fair market value on the date of grant.
Effective October 1, 2001, and subject to shareholder approval of Proposal
8, a fee of $5,000 per year will be paid to the Chairperson of a committee and a
fee of $2,000 per year will be paid to Board members who serve as committee
members as part of Director Compensation.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommend a vote FOR the election of the nominees
listed above.
PROPOSAL NO. 7
APPROVAL OF EXECUTIVE SERVICES AGREEMENT AND OPTIONS AWARD
THEREUNDER OF DAVID L. MAC.SMITH
GENERAL
The seventh matter to be considered at the Annual Meeting will be the
approval of the executive services agreement and options award thereunder of
David L. Mac.Smith.
We entered into a two-year executive services agreement, subject to
shareholder approval, with our Chairman, David L. Mac.Smith, effective June 1,
2001. Under the agreement, Mr. Mac.Smith is entitled to receive a base salary of
$410,000 AUD ($207,829 USD at the exchange rate in effect on June 1, 2001)
subject to annual review for possible increase based on consideration of cost of
living, level of responsibility, competitive remuneration, performance and
increases awarded to our other employees. Mr. Mac.Smith is also entitled to
payment by the Company of certain required Australian superannuation withholding
amounts.
Under the terms of his executive services agreement, Mr. Mac.Smith will
have the right to purchase up to 100,000 shares of the Company's common stock.
The option exercise price of $7.75 AUD ($3.93 USD) represents a 2% premium over
the closing price of $7.60 AUD on the Australian Stock Exchange on the date of
grant. The award brings Mr. MacSmith's option holdings to 200,000 shares. During
2001, 50,000 options previously granted to Mr. MacSmith expired without being
exercised. The following table sets forth the details related to the option
grant under the June 1, 2001 executive services agreement:
<Table>
<Caption>
OPTION EXERCISE OPTION EXPIRY
DETAILS NO. OF OPTIONS PRICE DATE
------- -------------- --------------- -------------
Options to be unconditionally Issued by the
Company to the Executive on June 1,
2001...................................... 26,000 $7.75 AUD June 1, 2009
Options to vest at the rate of 2,000 per
month for the duration of this
agreement................................. 48,000 $7.75 AUD June 1, 2009
Options to vest on June 1, 2002............. 26,000 $7.75 AUD June 1, 2009
</Table>
4
Mr. Mac.Smith may terminate the agreement by giving six months' notice in
writing. If a person or party gives notice of its intention to acquire, or
acquires, more than 30% of the issued capital of the Company or any parent of
the Company, all unvested shares and options will vest and Mr. Mac.Smith may
terminate the agreement at any time within a period of six months following such
event by giving three months' notice. We may terminate the agreement for cause
or, if Mr. Mac.Smith becomes unable to perform his duties, or if agreement has
not been reached prior to June 1, 2003 on continued employment after the term.
On termination of the agreement by either party for any reason, we shall pay Mr.
Mac.Smith the then prevailing basic salary package for 12 months from the
effective date of termination. If we terminate the agreement, Mr. Mac.Smith must
resign as a director.
VOTING EXCLUSION STATEMENT
The Company will disregard any votes cast on Proposal 7 by Mr. Mac.Smith or
an associate of Mr. Mac.Smith. However, the Company need not disregard the vote
if it is cast by a person as proxy for a person who is entitled to vote, in
accordance with the directions on the proxy form; or it is cast by such person
chairing the meeting as proxy for a person who is entitled to vote, in
accordance with a direction on the proxy form to vote as the proxy decides.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors, other than Mr. Mac.Smith, recommend a vote FOR
approval of the executive services agreement and options award thereunder of
David L. Mac.Smith.
PROPOSAL NO. 8
APPROVAL OF INCREASE IN THE MAXIMUM AMOUNT PAID TO NON-EXECUTIVE DIRECTORS
GENERAL
The eighth matter to be considered at the Annual Meeting will be the
approval of an increase in the maximum amount payable to non-executive
directors.
There are currently no fees paid to directors for participation on
committees either as a member or as the committee chairman. In order to promote
involvement, and adequately compensate non-executive directors for the
additional time spent completing committee related work, an annual fee of $5,000
is proposed to be paid to the chairman of a committee and $2,000 for each
committee member is to be paid, pro rated for the partial year, effective
October 1, 2001. The total annual amount of compensation increase proposed for
non-executive directors related to committee involvement is $16,000. The
increase will bring the maximum amount that may be paid to non-executive
directors annually as a whole, to $104,000. In 2001 non-executive directors
attended twelve Board meetings and 8 committee meetings.
VOTING EXCLUSION STATEMENT
The Company will disregard any votes cast on Proposal 8 by directors: Mr.
Dawson, Mr. Mount, Mr. Gilman, Mr. Robins, Mr. Mac.Smith, Mr. Howe or an
associate of the named directors. However, the Company need not disregard the
vote if it is cast by a person as proxy for a person who is entitled to vote, in
accordance with the directions on the proxy form; or it is cast by such person
chairing the meeting as proxy for a person who is entitled to vote, in
accordance with a direction on the proxy form to vote as the proxy decides.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommend a vote FOR approval of an increase in the
maximum amount payable to non-executive directors.
5
OWNERSHIP OF SECURITIES
The following tables set forth certain information regarding beneficial
ownership of our capital stock as of April 1, 2002 by:
- each person who is known by us to beneficially own more than five percent
of our common stock;
- our Chief Executive Officer and the other named executive officers
included in the Compensation Tables below;
- each of our directors; and
- all of our directors and executive officers as a group.
<Table>
<Caption>
AMOUNT AND NATURE OF
SHARES OF COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENT OWNED(2)
------------------------------------ ---------------------- ----------------
Lance D. O'Connor(3).............................. 526,614 Direct 6.5
6-8 Kangaroo Point Road
Kangaroo Point, NSW 2224
Australia
Alexander S. Dawson............................... 185,000 Direct
38 Macleay Street 15,000 Vested Options
Potts Point, NSW 2011 ---------
Australia 200,000 2.5
David L. Mac.Smith(4)............................. 251,417 Direct
58 View Street 148,000 Vested Options
Woollahra, NSW 2025 ---------
Australia 399,417 4.9
Michael V. Howe................................... 100 Direct
62 Hampton Road 183,000 Vested Options
Grosse Pointe Shores, MI 48230 ---------
183,100 2.2
Duncan P.F. Mount(5).............................. 260,000 Direct
9 Ithica Road 15,000 Vested Options
Elizabeth Bay, NSW 2011 ---------
Australia 275,000 3.4
John H. Lowry III................................. 85,000 Vested Options 1.0
21972 Heatheridge
Northville, MI 48167
Alan L. Gilman.................................... 1,500 Direct
4720 Morris Lake Circle 15,000 Vested Options
West Bloomfield, MI 48323 ---------
16,500 *
Robert Kosnik..................................... 630 Direct
1189 Greenleaf Drive 75,000 Vested Options
Rochester Hills, MI 48309 ---------
75,630 *
Robert C. Robins.................................. 500 Direct
901 Glenway 5,000 Vested Options
Hillsborough, CA 94010 ---------
15,500 *
Jonathan R.E. Adams............................... 27,000 Vested Options *
10 Riggs Avenue
Severna Park, MD 21146
All directors and executive officers as a group
(11 persons).................................... 1,235,465 Direct
593,000 Vested Options
---------
1,828,465 21.1%
</Table>
6
- ---------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock subject
to options, warrants or other rights to purchase which are currently
exercisable or are exercisable within 60 days after April 1, 2002 are deemed
vested and outstanding for purposes of computing the percentage ownership of
any other person. Except as indicated by footnotes and subject to community
property laws, where applicable, the persons named above have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them. Share data does not include any Shares the
beneficial ownership of which has been disclaimed pursuant to SEC Rules.
(2) Percentage of Beneficial Ownership is calculated on the basis of the amount
of outstanding securities plus those securities of the named person deemed
to be outstanding under Rule 13-d3 (promulgated under the Securities and
Exchange Act of 1934, as amended) by virtue of such securities being subject
to rights to acquire beneficial ownership within 60 days after April 1,
2002. An asterisk indicates beneficial ownership of less than 1% of the
common stock outstanding.
(3) Includes 19,400 shares held by Jenolan Pty Limited, of which Mr. O'Connor is
a shareholder and director. Mr. O'Connor disclaims that he is the beneficial
owner of such shares for purposes of section 13(d) or any other purpose.
(4) Includes 48,000 options shares which are subject to shareholder approval as
described in this proxy statement.
(5) Includes 260,000 shares held by Boom Australia Pty Ltd., the trustee of the
Mount Family Trust, of which Mr. Mount is a director.
COMPLIANCE WITH SEC REPORTING REQUIREMENTS
Under the securities laws of the United States, the Company's directors,
executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in their ownership to the
Securities and Exchange Commission ("SEC"). The SEC has established specific due
dates, and Catuity is required to disclose in this Proxy Statement any failure
to file by those dates. Based upon (i) the copies of Section 16(a) reports that
we received from such persons for their 2001 fiscal year transactions and (ii)
the written representations received from one or more of such persons that no
annual Form 5 reports were required to be filed for them for the 2001 fiscal
year, we believe that there has been compliance with all Section 16(a) filing
requirements applicable to such officers, directors, and ten-percent beneficial
owners for such fiscal year.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the "Committee") of the Board of Directors was
constituted in early 2001. This report describes the compensation-related
activities of the Board as a whole taken during 2001. The Committee sets the
compensation of the Chairman and the Chief Executive Officer, reviews the
design, administration and effectiveness of compensation programs for other key
executives, and approves stock option grants for all executive officers. The
Committee, serving under a charter adopted by the Board of Directors, is
composed of both executive directors and outside directors. Executive directors
do not participate in the discussions or determination of their own
compensation.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company operates in the extremely competitive and rapidly changing high
technology industry. The Committee believes that the compensation programs for
the executive officers should be designed to attract, motivate and retain
talented executives responsible for the success of the Company, should be
7
determined within a competitive framework and be based on the achievement of
designated financial targets, individual contribution, customer satisfaction and
financial performance relative to that of the Company's competitors. Within this
philosophy, the Committee's objectives are to:
- Offer a total compensation program that takes into consideration the
compensation practices of peer companies (the "Peer Companies") and other
selected companies in the market that the Company competes for executive
talent.
- Provide annual variable incentive awards that take into account the
Company's overall financial performance in terms of designated corporate
objectives and the relative performance of the Peer Companies as well as
individual contributions and a measure of customer satisfaction.
- Align the financial interests of executive officers with those of
shareholders by providing significant equity-based, long-term incentives.
COMPENSATION COMPONENTS AND PROCESS
The three major components of the Company's executive officer compensation
are: (i) base salary, (ii) variable incentive awards, and (iii) long-term,
equity-based incentive awards.
The Board determined the compensation levels for the executive officers
based on information obtained regarding the compensation levels of such
positions in the market for similar sized companies and compensation survey
information available from independent studies.
Base Salary. The base salary of each executive officer is determined at
levels considered appropriate for comparable positions at Peer Companies. The
Company's objective is to target base salary levels near the 50th percentile of
compensation practices at Peer Companies.
Variable Incentive Awards. The Company has no formal program for providing
a portion of the annual compensation of each executive officer in variable
incentive pay. Performance based bonuses may be awarded, at the discretion of
the Board, when an executive officer's performance, as measured against specific
objectives, is particularly meritorious.
Long-Term, Equity-Based Incentive Awards. The goal of the Company's
long-term, equity-based incentive awards is to align the interests of the
executive officers with shareholders and to provide each executive officer with
a significant incentive to manage the Company from perspective of an owner with
an equity stake in the business. The Board determines the size of long-term,
equity based incentives according to each executive's position within the
Company and sets a level it considers appropriate to create a meaningful
opportunity for stock ownership. In addition, the Board takes into consideration
an individual's recent performance, his or her potential for future
responsibility and promotion, comparable awards made to individuals in similar
positions at Peer Companies, and the number of vested options held by each
individual at the time of the new grant. The relevant weight given to each of
these factors varies among individuals at the Board's discretion.
CEO Compensation. The annual base salary for Mr. Howe that was established
by the Board in December 1999, was in effect for the period January 1, 2001 to
December 31, 2001. The Board's decision was based primarily on the salary levels
paid to chief executive officers of Peer Companies and published data on
compensation levels of chief executive officers of similarly sized companies and
set to approximate the 50th percentile of this surveyed data in order to have a
substantial portion of his total compensation, in the form of stock option
grants, tied to the Company's performance and stock price appreciation.
Chairman Compensation. The Board established the annual base salary and
options award for Mr. Mac.Smith in June 2001. The Board's decision was based
primarily on the salary levels paid to other chairman's of Peer Companies and
published data on compensation levels of chairman's of similarly sized
companies. Consideration was also given to the level of involvement and overall
performance of Mr. Mac.Smith. A substantial portion of his total compensation,
in the form of stock option grants, is tied
8
to the Company's performance and stock price appreciation to align the goals of
the chairman with the long-term interests of shareholders.
Submitted by the Compensation Committee
Alan L. Gilman -- Chairman
David L. Mac.Smith
Michael V. Howe
Alexander S. Dawson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors for the
2001 fiscal year are:
Alan L. Gilman -- Chairman
David L. Mac.Smith
Michael V. Howe
Alexander S. Dawson
Two of the members are executive officers, and the other two members are
not otherwise officers or employees of Catuity.
No executive officer of Catuity has served on the Board of Directors or
compensation committee of any other entity that has or has had one or more
executive officers serving as a member of the Board of Directors of Catuity.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
EXECUTIVE COMPENSATION
The following tables provide certain summary information concerning
compensation and stock options for our Chief Executive Officer and all other
executive officers that earned more than $100,000 (salary and bonus) for all
services rendered in all capacities to Catuity during the year ended December
31, 2001.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM COMPENSATION
AWARDS
-------------------------
ANNUAL COMPENSATION OTHER ANNUAL
-------------------- COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#)
- --------------------------- ---- --------- -------- ------------ ----------
Michael V. Howe............................ 2001 240,000 60,000 -0- -0-
President and CEO 2000 240,000 60,000 -0- 315,000
David L. Mac.Smith(2)...................... 2001 201,761 -0- 4,461 100,000
Chairman 2000 156,263 -0- 4,450 -0-
1999 172,640 -0- 4,425 -0-
John H. Lowry III.......................... 2001 150,000 10,000 -0- -0-
Vice President -- Finance and
Administration 2000 99,000 -0- -0- 150,000
Robert Kosnik.............................. 2001 142,083 15,000 -0- -0-
Vice President -- Sales and Marketing 2000 87,500 -0- -0- 150,000
Jonathan R.E. Adams........................ 2001 125,000 -0- -0- -0-
Vice President -- Implementation and 2000 125,000 -0- -0- 50,000
Technical Services 1999 48,077 -0- -0- 11,000
</Table>
- ---------------
(1) Includes Australian Superannuation Guarantee Levy, a compulsory payment that
funds retirement benefits.
9
(2) Salary amounts have been translated from Australian dollars at the average
exchange rate for each year. The exchange rates were .5182, .5828, and .6455
for the years 2001, 2000, and 1999 respectively.
OPTION GRANTS IN LAST FISCAL YEAR (INDIVIDUAL GRANTS)
<Table>
<Caption>
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS GRANTED TO EXERCISE PRICE
UNDERLYING OPTIONS EMPLOYEES IN PER SHARE EXPIRATION
NAME AND PRINCIPAL POSITION GRANTED FISCAL YEAR ($/SH) DATE
- --------------------------- -------------------- ------------------ -------------- ----------
Michael V. Howe..................... -0- -- -- --
President and CEO
David L. Mac.Smith.................. 100,000 53.04% $3.93 6-1-09
Chairman
John H. Lowry III................... -0- -- -- --
Vice President -- Finance and
Administration
Robert Kosnik....................... -0- -- -- --
Vice President -- Sales and
Marketing
Jonathan R.E. Adams................. -0- -- -- --
Vice President -- Implementation and
Technical Services
</Table>
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<Table>
<Caption>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
NAME AND PRINCIPAL SHARES ACQUIRED VALUE OPTIONS AT FY-END FY-END(1)
POSITION ON EXERCISE REALIZED(2) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------ --------------- ----------- ------------------------- -------------------------
Michael V. Howe.......... -0- -0- 171,000/144,000 $0/$0
President and CEO
David L. Mac.Smith....... -0- -0- 138,000/62,000 $0/$0
Chairman
John H. Lowry III........ -0- -0- 80,000/70,000 $0/$0
Vice President --
Finance and
Administration
Robert Kosnik............ -0- -0- 75,000/75,000 $0/$0
Vice President --
Sales and Marketing
Jonathan R.E. Adams...... -0- -0- 17,500/40,000 $0/$0
Vice President --
Implementation and
Technical Services
</Table>
- ---------------
(1) Based on the closing price per share of common stock on the Nasdaq small cap
market on the last day of 2001, less the option exercise price payable per
share.
(2) Based upon the market price of the purchased shares on the exercise date
less the option exercise price paid for such shares.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, AND CHANGE IN CONTROL
AGREEMENTS
Michael V. Howe. We entered into a five-year employment agreement with our
President and Chief Executive Officer, Michael Howe, effective January 4, 2000.
Under the agreement, Mr. Howe is entitled to receive a base salary of $240,000,
which is subject to annual review for possible increase by the Board in
conjunction with performance. Mr. Howe is also entitled to receive a
performance-based bonus, which will be determined by the Board each year as part
of the budget review.
10
Mr. Howe received options to purchase up to 315,000 shares of common stock,
at an exercise price of $9.50, which vested 75,000 on commencement of employment
and 12,000 at the end of each calendar quarter through the quarter ending
December 31, 2004 contingent upon his continued employment at the quarter end.
All options expire on the earlier of December 31, 2008 or the date six months
after cessation of employment.
If the agreement is terminated by us without cause, Mr. Howe is entitled to
one year's written notice. We have the right to pay one year's base salary to
effect immediate termination. Mr. Howe may voluntarily terminate the agreement
at any time provided we are given 6 months' advance written notice.
David L. Mac.Smith. We entered into a two-year employment agreement with
our Chairman, David L. Mac.Smith, effective June 1, 2001, subject to shareholder
approval of Proposal 7. Under the agreement, Mr. Mac.Smith is entitled to
receive a base salary of $410,000AUD, subject to annual review for possible
increase based on consideration of cost of living, level of responsibility,
competitive remuneration, performance and increases awarded to our other
employees. Mr. Mac.Smith is also entitled to payment by us of certain required
Australian withholding amounts. During the term of his employment agreement and
for various periods thereafter, Mr. Mac.Smith will have the right to purchase up
to 100,000 shares of common stock. The agreement may be terminated by Mr.
Mac.Smith by giving six months' notice in writing. If a person or party gives
notice of its intention to acquire, or acquires, more than 30% of the issued
capital of the Company or any parent of the Company, all unvested shares and
options will vest and Mr. Mac.Smith may terminate the agreement at any time
within a period of six months following such event by giving three months'
notice. We may terminate the agreement for cause or, if Mr. Mac.Smith becomes
unable to perform his duties, or agreement has not been reached prior to June 1,
2003 on continued employment after the term. If the agreement is terminated by
us, Mr. Mac.Smith must resign as a director.
Under Mr. Mac.Smith's previous employment contract, entered into on May 1,
1995, he was entitled to the equivalent of 10% of any shares issued until the
time we became listed on the ASX. A loan from us was made available to acquire
these shares. At December 31, 2001, this non-interest bearing loan to Mr.
Mac.Smith amounted to $757,773. Our recourse for repayment of the loan is
limited to dividends and share sale proceeds. Mr. Mac.Smith may transfer shares
subject to the loan to members of his family or entities controlled by one or
more members of his family without any obligation to repay the loan. However,
the sale, any transfer, or any disposal of the shares to any other person will
trigger repayment of the loan applicable to such shares.
John H. Lowry III. We entered into a five-year employment agreement with
our Chief Financial Officer, John Lowry, effective May 1, 2000. Under the
agreement, Mr. Lowry is entitled to receive a base salary of $150,000, which is
subject to annual review for possible increase by the President and CEO. Mr.
Lowry is also entitled to receive a performance-based bonus, which will be
determined by the Board each year as part of the budget review.
Mr. Lowry received options to purchase up to 150,000 shares of common
stock, at an exercise price of $7.68, which vested 50,000 on commencement of
employment and 5,000 at the end of each calendar quarter through the quarter
ending June 30, 2005 contingent upon his continued employment at the quarter
end. All options expire on the earlier of December 31, 2008 or the date six
months after cessation of employment.
If we terminate the agreement without cause, Mr. Lowry is entitled to nine
months' written notice. We have the right to pay nine months' salary to effect
immediate termination. Mr. Lowry may voluntarily terminate the agreement at any
time provided we are given 4 months' advance written notice.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than Mr. Mac.Smith's executive services agreement, there were no
reportable relationships or transactions entered into in 2001 between the
Company and a director, executive officer or person beneficially owning more
than 5% of our common stock.
11
STOCK PERFORMANCE GRAPH
The graph depicted below shows the Company's stock price as an index
assuming $100 invested on May 24, 2000 (the date on which Catuity's shares
became registered under Section 12 of the Exchange Act), along with the
composite prices of companies listed on Nasdaq and Catuity's SIC Code Index.
COMPARISON OF CUMULATIVE TOTAL RETURN -- MAY 24, 2000 TO DECEMBER 31, 2001
[PERFORMANCE GRAPH]
<Table>
<Caption>
CATUITY INC. SIC CODE INDEX NASDAQ MARKET INDEX
------------ -------------- -------------------
5/24/2000 100.00 100.00 100.00
12/29/2000 105.76 66.66 72.57
12/31/2001 17.82 36.05 57.85
</Table>
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------
COMPANY/INDEX 5/24/2000 12/29/2000 12/31/2001
- -----------------------------------------------------------------------------------------------
Catuity Inc. 100.00 105.76 17.82
- -----------------------------------------------------------------------------------------------
SIC Code Index 100.00 66.66 36.05
- -----------------------------------------------------------------------------------------------
NASDAQ Market Index 100.00 72.57 57.85
- -----------------------------------------------------------------------------------------------
</Table>
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings made by the Company under those
statutes, the preceding Compensation Committee Report and the Company Stock
Performance Graph will not be incorporated by reference into any of those prior
filings, nor will such report or graph be incorporated by reference into any
future filings made by the Company under those statutes.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors serves as the representative
of the Board for general oversight of Catuity's financial accounting and
reporting process, system of internal control, audit process, and process for
monitoring compliance with laws and regulations. Catuity's management has
primary responsibility for preparing Catuity's financial statements and
Catuity's financial reporting process. Catuity's independent accountants, Ernst
& Young LLP, are responsible for expressing an opinion on the conformity of
Catuity's audited financial statements to generally accepted accounting
principles.
In this context, the Audit Committee hereby reports as follows:
1. The Audit Committee has reviewed and discussed the audited
financial statements with Catuity's management.
2. The Audit Committee has discussed with the independent accountants
the matters required to be discussed by SAS 61 (Codification of Statements
on Auditing Standard, AU 380).
12
3. The Audit Committee has received the written disclosures and the
letter from the independent accountants required by Independence Standards
Board Standard No. 1 (Independence Standards Board Standards No. 1,
Independence Discussions with Audit Committees) and has discussed with the
independent accountants the independent accountants' independence.
4. The Audit Committee has received the written disclosure of fees
paid to the independent accountants for services provided during 2001,
which are as follows:
<Table>
AUDIT FEES
Audit Fees.................................................. $ 84,000
--------
ALL OTHER FEES
Tax Related................................................. 32,000
Audit Related............................................... 27,000
Other....................................................... 10,000
--------
Other Fees............................................. 69,000
Total Fees.................................................. $153,000
========
</Table>
5. Based on the review and discussion referred to in paragraphs (1)
through (4) above, the Audit Committee recommended to the Board of
Directors, and the Board has approved, that the audited financial
statements be included in Catuity's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, for filing with the Securities and
Exchange Commission. Each of the members of the Audit Committee is
independent as defined under the listing standards of the Nasdaq. The
undersigned members of the Audit Committee have submitted this Report to
the Board of Directors:
Alan L. Gilman, Chairman
Alexander S. Dawson
Duncan P.F. Mount
SHAREHOLDER PROPOSALS FOR 2003 PROXY STATEMENT
Shareholder proposals that are intended to be presented at the Company's
Annual Meeting of Shareholders to be held in 2003 must be received by the
Company no later than December 18, 2002 in order to be included in the proxy
statement and related proxy materials. Please send any such proposals to Catuity
Inc., 2711 E. Jefferson Ave, Detroit, Michigan 48207, Attn: Investor Relations.
In addition, the proxy solicited by the Board of Directors for the 2003
Annual Meeting of Shareholders will confer discretionary authority to vote on
any Shareholder proposal presented at that meeting, unless the Company is
provided with notice of such proposal no later than February 22, 2003.
FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
2001, INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES, AND LIST OF EXHIBITS.
REQUESTS SHOULD BE SENT TO CATUITY INC., 2711 E. JEFFERSON AVE, DETROIT,
MICHIGAN 48207, ATTN: INVESTOR RELATIONS.
13
OTHER MATTERS
The Board knows of no other matters to be presented for Shareholder action
at the Annual Meeting. However, if other matters do properly come before the
Annual Meeting or any adjournments or postponements thereof, the Board intends
that the persons named in the proxies will vote upon such matters in accordance
with their best judgment.
By Order of the Board of Directors
/s/ Jack H. Lowry
JOHN H. LOWRY III
Secretary
Dated: April 17, 2002
14
CATUITY INC. PROXY FORM
ARBN 089 327 882 ALL CORRESPONDENCE TO:
Computershare Investor Services Pty Limited
GPO Box 7045 Sydney
New South Wales 1115 Australia
Enquiries (within Australia) 1300 855 080
Mark this box with an "X" if you have made any changes (outside Australia) 61 3 9615 5970
to your name or address details (see reverse) [X] Facsimile 61 2 8234 5050
www.computershare.com
[BAR CODE]
000001
MR JOHN SMITH
FLAT 123 Securityholder Reference Number (SRN)
123 SAMPLE STREET
SAMPLEVILLE VIC 3030 [BAR CODE]
CAT
APPOINTMENT OF PROXY | 1234567890 | ND
I/We being a member/s of the Catuity Inc. and entitled to attend and vote hereby appoint
[X] the Chairman ----------------------------------- Write here the name of the person you are
of the Meeting, OR | | appointing if this person is someone other
(mark with an "X") ----------------------------------- than the Chairman of the Meeting.
or failing the person named, or if no person is named, the Chairman of the Meeting, as my/our proxy and to vote in accordance with
the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of Catuity Inc.
to be held at AAP Theatrette, AAP Centre, 259 George Street, Sydney NSW 2000 on Thursday 23 May 2002 at 9:30am and at any
adjournment of that meeting.
IMPORTANT
TO ENSURE YOUR PROXY VOTES COUNT, YOU SHOULD MARK THIS BOX.
[X] By marking this box, when you have not directed your proxy how to vote below, you acknowledge that the Chairman of
the Meeting (whether nominated or by default), acting as your proxy, may exercise your undirected proxy votes
even if he has an interest in the outcome of each resolution which carries a voting exclusion, and that votes casts
by him, other than as a proxyholder, will be disregarded because of those interests.
The Chairman of the Meeting intends to vote undirected proxies in favour of each such resolution. If you direct your
how to vote, it is not necessary to mark this box.
VOTING DIRECTIONS TO YOUR PROXY - PLEASE MARK [X] TO INDICATE YOUR DIRECTIONS
FOR AGAINST ABSTAIN* FOR AGAINST ABSTAIN*
1. To elect Mr D L MacSmith [ ] [ ] [ ] 5. To elect Mr A L Gilman [ ] [ ] [ ]
2. To elect Mr A S Dawson [ ] [ ] [ ] 6. To elect Mr R C Robins [ ] [ ] [ ]
3. To elect Mr D P F Mount [ ] [ ] [ ] 7. Approve agreement/options [ ] [ ] [ ]
for D L MacSmith
4. To elect Mr M V Howe [ ] [ ] [ ] 8. Approve non-executive [ ] [ ] [ ]
directors' fees
* If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or
on a poll, or if your voting entitlement cannot be voted by the Chairman of the Meeting, your votes will not be counted in computing
the required majority on a poll.
APPOINTING A SECOND PROXY
I/We wish to appoint a second proxy
Mark with an "X" if you State the percentage of your rights or the number
[X] wish to appoint a second AND ________% OR ________________ of securities for this Proxy Form.
proxy.
AUTHORIZED SIGNATURE/S This section MUST be signed in accordance with the instructions overleaf to enable your directions
to be implemented.
INDIVIDUAL OR SECURITYHOLDER 1 SECURITYHOLDER 2 SECURITYHOLDER 3
- -------------------------------------- ------------------------------------------ -------------------------------------
| | | | | |
- -------------------------------------- ------------------------------------------ -------------------------------------
INDIVIDUAL/SOLE DIRECTOR AND DIRECTOR DIRECTOR/COMPANY SECRETARY
SOLE COMPANY SECRETARY
___________________________________________ __________________________________________ _____/_____/_____
CONTACT NAME CONTACT DAYTIME TELEPHONE DATE
C A T 7 P R
</Table>
HOW TO COMPLETE THE PROXY FORM
1 YOUR NAME AND ADDRESS
This is your name and address as it appears on the share register of
Catuity Inc.. If this information is incorrect, please mark the box and
make the correction on the form. Securityholders sponsored by a broker
should advise their broker of any changes. PLEASE NOTE, YOU CANNOT CHANGE
OWNERSHIP OF YOUR SECURITIES USING THIS FORM.
2 APPOINTMENT OF A PROXY
If you wish to appoint the Chairman of the Meeting as your proxy, mark the
box. If the person you wish to appoint as your proxy is someone other than
the Chairman of the Meeting please write the name of that person. If you
leave this section blank, or your named proxy does not attend the meeting,
the Chairman of the Meeting will be your proxy and vote on your behalf. A
proxy need not be a securityholder of Catuity Inc..
3 VOTES ON ITEMS OF BUSINESS
You may direct your proxy how to vote by placing a mark in one of the three
boxes opposite each item of business. All your securities will be voted in
accordance with such a direction unless you indicate only a portion of
voting rights are to be voted on any item by inserting the percentage or
number of securities you wish to vote in the appropriate box or boxes. If
you do not mark any of the boxes on a given item, your proxy will vote as
he or she chooses. If you mark more than one box on an item your vote on
that item will be invalid.
4 APPOINTMENT OF A SECOND PROXY
If you wish to appoint a second proxy, an additional Proxy Form may be
obtained by telephoning the share registry of Catuity Inc. or you may copy
this form.
To appoint a second proxy you must:
(a) indicate that you wish to appoint a second proxy by marking the
box.
(b) on each of the first Proxy Form and the second Proxy Form state
the percentage of your voting rights or number of securities
applicable to that form.
(c) return both forms together in the same envelope.
5 AUTHORIZED SIGNATURE(S)
You must sign this form as follows in the spaces provided:
Joint Holding: where the holding is in more than one name all of
the holders must sign.
Power of Attorney: if signed under a Power of Attorney, you must
have already lodged it with the registry, or
alternatively, attach a certified photocopy of
the Power of Attorney to this Proxy Form when you
return it.
Companies: a Director can sign jointly with another Director
or a Company Secretary. A sole Director who is
also a sole Company Secretary can also sign. A
sole Director of a corporation without a Company
Secretary can sign, pursuant to s204A of the
Corporations Act 2001. Please indicate the office
held by signing in the appropriate space.
If a representative of the corporation is to attend the meeting the
appropriate "Certificate of Appointment of Corporate Representative" should
be produced prior to admission. A form of the certificate may be obtained
from the share registry of Catuity Inc..
LODGEMENT OF A PROXY
This Proxy Form (and any Power of Attorney under which it is signed) must
be received not later than 48 hours before the commencement of the meeting.
Any Proxy Form received after that time will not be valid for the scheduled
meeting.
DOCUMENTS MAY BE LODGED :
- - By posting, delivery or facsimile to the Company's share registry at the
address opposite, or
- - By delivery or facsimile to the Registered Office of Catuity Inc being Level
4 Ballarat House
68-72 Wentworth Avenue
Surry Hills NSW 2010 Australia
Facsimile : 61 2 92811242
Catuity Inc. share registry
Computershare Investor Services Pty Limited
GPO Box 7045
Sydney New South Wales 1115
Australia
Facsimile 61 2 8234 5050
PROXY - CATUITY, INC.
LEVEL 4 BALLARAT HOUSE
68-72 WENTWORTH AVE.
SURRY HILLS, NSW 2010 AUSTRALIA
2711 E. JEFFERSON AVE.
DETROIT, MI 48207 USA
MEETING DETAILS
AAP THEATRETTE, AAP CENTRE, 259 GEORGE STREET, SYDNEY, NSW 2000 AUSTRALIA
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING - MAY 22, 2002 AT 7:30 P.M. EASTERN DAYLIGHT TIME IN THE UNITED STATES
MAY 23, 2002 AT 9:30 A.M. AUSTRALIAN EASTERN STANDARD TIME
David L. MacSmith and Michael V. Howe, or one of them, each with the power of
substitution, are hereby authorized to represent and vote the shares of the
undersigned, with all the powers which the undersigned would possess if
personally present, at the Annual Meeting of Stockholders of Catuity, Inc. to be
held on May 22, 2002 at 7:30 p.m. Eastern Daylight Time in the United States and
May 23, 2002 at 9:30 a.m. Australian Eastern Standard Time or at any
postponement or adjournment thereof.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED BY THE STOCKHOLDER. IF NO SUCH
DIRECTIONS ARE INDICATED, THE PROXIES WILL HAVE AUTHORITY TO VOTE FOR THE
NOMINEES IN ITEM 1, FOR THE EXECUTIVE SERVICES AGREEMENT AND OPTIONS AWARD
THEREUNDER OF D. L. MACSMITH IN ITEM 2 AND FOR AN INCREASE IN THE AMOUNT PAYABLE
TO NON-EXECUTIVE DIRECTORS IN ITEM 3.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued and to be voted on reverse side.)
000000 0000000000 0 0000
CATUITY, INC. 000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY) 000000000.000 ext
ADD 1
ADD 2 HOLDER ACCOUNT NUMBER
ADD 3
ADD 4 C 1234567890 J N T
ADD 5
ADD 6
[BAR CODE]
Use a black pen. Mark with Mark this box with an X if you have made changes
an X inside the grey areas [X] [ ] to your name or address details above.
as shown in this example.
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD
- ------------------------------------------------------------------------------------------------------------------------------------
A ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees.
FOR WITHHOLD FOR WITHHOLD
01 - Mr. D. L. MacSmith [ ] [ ] 05 - Mr. A. L. Gilman [ ] [ ]
02 - Mr. A. S. Dawson [ ] [ ] 06 - Mr. R. C. Robins [ ] [ ]
03 - Mr. D. P. F. Mount [ ] [ ]
04 - Mr. M. V. Howe [ ] [ ]
B ISSUES
The Board of Directors recommends a vote FOR the following proposals.
FOR AGAINST ABSTAIN
2. Approve agreement/options for D. L. MacSmith. [ ] [ ] [ ]
(Proposal No. 7)
3. Approve non-executive directors' fees. [ ] [ ] [ ]
(Proposal No. 8)
C AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR INSTRUCTIONS TO BE EXECUTED.
NOTE: Please sign your name(s) EXACTLY as your name(s) appear(s) on this proxy. All joint holders must sign. When signing as
attorney, trustee, executor, administrator, guardian or corporate officer, please provide your FULL title.
Signature 1 - Please keep signature within the box Signature 2 - Please keep signature within the box Date (dd/mm/yyyy)
- --------------------------------------------------- --------------------------------------------------- -----------------------
| | | | | / / |
- --------------------------------------------------- --------------------------------------------------- -----------------------
1 U P X A768