telephone,\n>the\nInternet, or >marking,\nsigning and returning your proxy or voting instruction card. \n\n\n\n\n\n\n\n\n\n \n \n\n\n \n \n \n\n\n\n\nMarathon Oil Corporation\n\n\n5555 San Felipe Road\n\n\nHouston, TX 77056 \n \n \n \nClarence P. Cazalot, Jr.\n\n\nPresident and Chief Executive Officer \n\n\n\n\n\nMarch 10,\n\n\nDear\nMarathon Stockholder, \n\n\nOn\nbehalf of your board of directors and management, you are cordially invited to attend our 2005 annual meeting of stockholders to be held in the Conference Center Auditorium of the Marathon Oil\nTower, 5555 San Felipe Road, Houston, Texas, on Wednesday, April 27, 2005 at 10:00 a.m. Central Time. \n\n\nIf\nyour shares are held of record with National City Bank, our transfer agent and registrar, we have enclosed a proxy card for your use. You may vote these shares by completing and returning the proxy\ncard, or alternatively, calling a toll-free telephone number or using the Internet as described on the proxy card. If your shares are held by a broker or other nominee (i.e., in \"street\nname\"), enclosed is a voting instruction card, which you should use to vote those shares. You also have the option of voting by mail, or through the use of the telephone or Internet. \n\n\nYou\nwill find information regarding the matters to be voted on at the meeting in the enclosed proxy statement. Our 2004 Annual Report to stockholders is also enclosed with these materials. \n\n\nYour\nvote is important. We hope you will vote either by telephone, over the Internet or by marking, signing and returning your proxy or voting instruction card as soon as possible, whether or not you\nplan to attend the meeting. \n\n\nSincerely, \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n\n\n\nNotice of Annual Meeting of Stockholders \n \n\n\n\n\n\n\n\nProxy Statement \n\n\n \n\n\n\n\n\n\n\n \n\n\n Questions and Answers \n\n\n \n\n\n\n\n\n\n\n \n\n\n The Board of Directors and Governance Matters \n\n\n \n\n\n\n\n\n\n\n \n\n\n Compensation of Directors \n\n\n \n\n\n\n\n\n\n\n \n\n\n Proposals of the Board \n\n\n \n\n\n\n\n\n\n\n \n \n\n\n Proposal No. 1 \n\n\n \n\n\n\n \n\n\n\n\n \n \nElection of Directors \n \n\n\n\n\n \n \nNominees for Director \n \n\n\n\n\n \n \nContinuing Directors \n \n\n\n\n\n \n \n\n\n Proposal No. 2 \n\n\n \n\n\n\n \n\n\n\n\n \n \nRatification of Independent Auditors for 2005 \n \n\n\n\n\n \n\n\n Proposals of Stockholders \n\n\n \n\n\n\n\n\n\n\n \n \n\n\n Proposal No. 3 \n\n\n \n\n\n\n \n\n\n\n\n \n \nDeclassification of the Board of Directors \n \n\n\n\n\n \n \n\n\n Proposal No. 4 \n\n\n \n\n\n\n \n\n\n\n\n \n \nElection of Directors By a Majority Vote \n \n\n\n\n\n \n\n\n Audit Committee Report \n\n\n \n\n\n\n\n\n\n\n \n\n\n Information Regarding the Independent Registered Public Accounting Firm's Fees, Services and Independence \n\n\n \n\n\n\n\n\n\n\n \n\n\n Security Ownership of Certain Beneficial Owners \n\n\n \n\n\n\n\n\n\n\n \n\n\n Security Ownership of Directors and Executive Officers \n\n\n \n\n\n\n\n\n\n\n \n\n\n Section 16(a) Beneficial Ownership Reporting Compliance \n\n\n \n\n\n\n\n\n\n\n \n\n\n Executive Compensation and Other Information \n\n\n \n\n\n\n\n\n\n\n \n \n\n\n Compensation Committee Report on Executive Compensation \n\n\n \n\n\n\n\n\n\n\n \n \n\n\n Stockholder Return Performance Presentation \n\n\n \n\n\n\n\n\n\n\n \n \n\n\n Certain Relationships and Related Party Transactions \n\n\n \n\n\n\n\n\n\n\n \n \n\n\n Pension Benefits \n\n\n \n\n\n\n\n\n\n\n \n \n\n\n Change in Control Arrangements and Employment Contracts \n\n\n \n\n\n\n\n\n\n\n\n\n\nAPPENDIX I-Audit Committee Policy for Pre-Approval of Audit, Audit-Related, Tax and Permissible Non-Audit Services \n\n\n \n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n Notice of Annual Meeting of Stockholders\n\n on April 27, 2005 \n\n\nWe will hold our 2005 annual meeting of stockholders in the Conference Center Auditorium of the Marathon Oil Tower, 5555 San Felipe Road, Houston, Texas 77056\non Wednesday, April 27, 2005 at 10:00 a.m. Central Time, in order to: \n\n\n\n•elect\nfour Class III directors;\n\n\n\n\n•ratify\nthe appointment of PricewaterhouseCoopers LLP as our independent auditors for 2005;\n\n\n\n\n•consider\na stockholder proposal to declassify the Board of Directors, if properly presented for action at the meeting;\n\n\n\n\n•consider\na stockholder proposal to elect directors by a majority vote, if properly presented for action at the meeting; and\n\n\n\n\n•transact\nany other business that properly comes before the meeting. \nYou\nare entitled to vote at the meeting if you were an owner of record of Marathon Oil Corporation common stock at the close of business on February 28, 2005. If your ownership is through a\nbroker or other intermediary, you will need to have proof of your stockholdings in order to be admitted to the\nmeeting. A recent account statement, letter or proxy from your broker or other intermediary will suffice. \n\n\nWe\nhave enclosed a copy of the Company's 2004 Annual Report to stockholders with this notice and proxy statement. \n\n\n\n\n\nBy order of the Board of Directors, \n \n \n\n\n\n\n \n \n \n\n\n\n\n\n\n \n \n \n\n\n\n\nWilliam F. Schwind, Jr.\n\n\nSecretary \n \n \n\n\n\n\n \n \n \n\n\n\n\n \n \n \n\n\n\n\nDated: March 10, 2005 \n \n \n\n\n\n\n \n \n \n\n\n\n\n \n \n \n\n\n\n\n \n \n \n\n\n\n\nMarathon Oil Corporation\n\n\n5555 San Felipe Road\n\n\nHouston, TX 77056\n\n\n \n \n \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n\nProxy Statement \n\n\nWe have sent you this proxy statement because the Board of Directors is asking you to give your proxy (that is, the authority to vote your shares) to\nour proxy committee so they may vote your shares on your behalf at our annual meeting of stockholders. The members of the proxy committee are Thomas J. Usher, Clarence P.\nCazalot, Jr. and Janet F. Clark. They will vote your shares as you instruct. \n\n\nWe\nwill hold the meeting on April 27, 2005 in the Conference Center Auditorium of the Marathon Oil Tower, 5555 San Felipe Road, Houston, Texas. The proxy statement contains information about\nthe matters being voted on and other information that may be helpful to you. \n\n\nWe\nbegan the mailing of the proxy statement, the proxy card and the 2004 Annual Report on or about March 17, 2005. \n\n\n \n \n\n\nQuestions and Answers \n\n \n\n\no Who may vote? \n\n\nYou may vote if you were a holder of Marathon Oil Corporation (\"Marathon\" or the \"Company\") common stock at the close of business on February 28, 2005, which is the\nrecord date of the meeting. Each share of common stock is entitled to one vote. \n\n\no What may I vote on? \n\n\nYou may vote on: \n\n\n\n\n•the\nelection of four nominees to serve as Class III directors;\n\n\n\n\n•the\nratification of PricewaterhouseCoopers LLP as our independent auditors for 2005;\n\n\n\n\n•a\nstockholder proposal to declassify the Board of Directors; and\n\n\n\n\n•a\nstockholder proposal to elect directors by a majority vote. \n\no How does the Board recommend I vote? \n\n\nThe Board recommends that you vote: \n\n\n\n\n•FOR each of the nominees for director;\n\n\n\n\n•FOR the ratification of PricewaterhouseCoopers LLP as independent auditors for 2005;\n\n\n\n\n•AGAINST the stockholder proposal to declassify the Board of Directors; and\n\n\n\n\n•AGAINST the stockholder proposal to elect directors by a majority vote. \n\no How do I vote? \n\n\nYou may vote by telephone or over the Internet by following the instructions on the enclosed proxy card (or, if you own your shares through a broker or other intermediary, on\nthe enclosed voting instruction card). You may also vote by marking, signing and dating the enclosed proxy card or voting instruction card, and returning it in the prepaid envelope. The proxy\ncommittee will vote your shares in accordance with your directions. If you return a proxy card but do not mark the boxes showing how you wish to vote, the proxy committee will vote your shares in\naccordance with the Board's recommendation on each proposal, but only if you have signed and dated the card. Unsigned proxy cards will not be voted at all. If you are a stockholder of record (that is,\nif you are registered on the books of our transfer agent), you may also vote in person by attending the meeting. \n\n\n\n\n\n\n\n\n\n \no May I change my vote? \n\n\nIf you are a stockholder of record, you may change your vote or revoke your proxy at any time before your shares are voted at the meeting by: \n\n\n\n\n•voting\nagain by telephone or over the Internet;\n\n\n\n\n•sending\nus a proxy card dated later than your last vote;\n\n\n\n\n•notifying\nthe Secretary of Marathon in writing; or\n\n\n\n\n•voting\nat the meeting. \n\no How many outstanding shares are there? \n\n\nAt the close of business on February 28, 2005, which is the record date for the meeting, there were 347,013,291 shares of Marathon common stock outstanding. \n\n\no How big a vote do the proposals need in order to be adopted? \n\n\nDirectors are elected by a plurality of the votes of the shares present in person at the meeting and those represented by proxy and entitled to vote; that is, those receiving\nthe most votes are elected, even if they receive less than a majority. Each of the other proposals will be approved if it receives a majority of the votes of the shares present in person at the\nmeeting and those represented by proxy and entitled to vote. Abstentions are counted as votes present and entitled to vote and have the same effect as votes against a proposal. Broker\nnon-votes are not counted as either votes for or votes against a proposal. Both abstentions and broker non-votes are counted in determining that a quorum is present for the\nmeeting. \n\n\no What are broker non-votes? \n\n\nThe New York Stock Exchange permits brokers to vote their customers' shares on routine matters when the brokers have not received voting instructions from their customers. The\nelection of directors and the ratification of independent auditors are examples of routine matters on which brokers may vote in this way. Brokers may not vote their customers' shares on\nnon-routine matters such as the stockholder proposal to declassify the Board of Directors, and the stockholder proposal to elect directors by a majority vote, unless they have received\nvoting instructions from their customers. Non-voted shares on non-routine matters are broker non-votes. \n\n\no What constitutes a quorum? \n\n\nUnder our by-laws, a quorum is one-third of the voting power of the outstanding shares of stock entitled to vote. \n\n\no Will my vote be confidential? \n\n\nAll voting records which identify stockholders are kept permanently confidential except as necessary to meet legal requirements and in other limited circumstances such as proxy\ncontests. The vote tabulators and the inspector of elections are required to execute confidentiality agreements. \n\n\no How will voting be conducted on other matters raised at the meeting? \n\n\nIf any matters are presented at the meeting other than the proposals on the proxy card, the proxy committee will vote on them using their best judgment. Your signed proxy card,\nor your telephone or Internet vote, gives them the authority to do this. Under our by-laws, notice of any matter to be presented by a stockholder for a vote at the meeting must have been\nreceived by our corporate Secretary on or after December 30, 2004 and no later than January 29, 2005, and it must have been accompanied by certain information about the stockholder\npresenting it. We have not received notice of any matter to be presented other than those on the proxy card. \n\n\no When must stockholder proposals be submitted for the 2006 annual meeting? \n\n\nStockholder proposals submitted for inclusion in our 2006 proxy statement must be received in writing by our corporate Secretary no later than the close of business on\nNovember 17, 2005. Stockholder proposals submitted outside the process for inclusion in the proxy statement must be received from stockholders of record on or after January 1, 2006 and\nno later than January 31, 2006 and must be accompanied by certain information about the stockholders making the proposals, in accordance with our by-laws. \n\n\n\n\n\n\n\n\n\n \nThe Board of Directors and Governance Matters \n\n\nUnder our by-laws and the laws of Delaware, Marathon's state of incorporation, the business and affairs of Marathon are managed under the direction of the Board of\nDirectors. The Board met nine times in 2004. Their attendance averaged approximately 99 percent. Under our Corporate Governance Principles, directors are expected to attend the annual meeting\nof stockholders, and in 2004 all of our directors attended the meeting. \n\n\nWith\nrespect to a lead or presiding director, the chairman of the Board presides at all meetings of stockholders and of the Board of Directors. In circumstances where the outside directors meet\nwithout the chairman or in circumstances where the chairman is unavailable, the chairman of the Corporate Governance and Nominating Committee presides at any such meeting, unless the Board determines\nthat another director should lead the discussion due to the particular subject matter being discussed. \n\n\nThe\nBoard has four principal committees, all the members of which are independent, non-employee directors. These committees are described on this and the following pages. The table below\nshows the current committee memberships of each director and the number of meetings that each corresponding committee held in 2004. \n\n\nBoard Committee Memberships \n\n\n\n\n\n\n\n*Chair\n\n\n\n\n\n\n\n\n \nBoard and Committee Independence \n\n\nThe principal committee structure of the Board includes audit, compensation, corporate governance and nominating, and financial policy. These committees are comprised entirely\nof independent directors. \n\n\nIn\ndetermining independence, the Board affirmatively determines whether directors have no material relationship with the Company. When assessing materiality, the Board considers all relevant facts and\ncircumstances including, without limitation, transactions between the Company and the director directly or organizations with which the director is affiliated, and the frequency and dollar amounts\nassociated with these transactions. The Board further considers whether the transactions were at arm's length in the ordinary course of business and whether the transactions were consummated on terms\nand conditions similar to those of unrelated parties. In addition, the Board uses the following categorical standards to determine director independence: (1) not being a present or former\nemployee, or having an immediate family member as an executive officer, of the Company within the past three years; (2) not personally receiving, or having an immediate family member receive,\nany direct compensation from the Company in excess of $100,000 during any twelve-month period within the last three years, other than compensation for board or committee service, pension or other\nforms of deferred compensation for prior service, or compensation paid to an immediate family member who is a non-executive employee of the Company; (3) with respect to the\nCompany's external auditor, (a) not being engaged, or having an immediate family member engaged, as a current partner by the Company's external auditor, (b) not being a current employee\nof the Company's external auditor,\n(c) not having an immediate family member who is a current employee of the Company's external auditor and who participates in such firm's audit, assurance or tax compliance (but not tax\nplanning) practice, or (d) not being engaged or employed or having an immediate family member engaged or employed, within the past three years (but is no longer) a partner or employee of such\nfirm and personally worked on the Company's audit within that time; (4) not being employed, or having an immediate family member employed, within the past three years as an executive officer of\nanother company where now or at any time during the past three years any of the Company's present executive officers serve or served on the other company's compensation committee; (5) not being\na current employee, or having an immediate family member who is a current executive officer, of a company that makes or made payments to, or receives or received payments from, the Company for\nproperty or services in an amount which, in any of the three preceding fiscal years, exceeded the greater of $1 million, or 2% of the other company's consolidated gross revenues; and\n(6) not being an executive officer of a tax-exempt organization of which the Company has within the three preceding fiscal years made any contributions to that organization in any\nsingle fiscal year that exceeded the greater of $1 million, or 2% of the tax-exempt organization's consolidated gross revenues. \n\n\nApplying\nthese categorical standards, the Board determined that the following directors qualify as independent: Charles F. Bolden, Jr.; David A. Daberko; William L. Davis; Shirley Ann Jackson; Philip\nLader; Charles R. Lee; Dennis H. Reilley; Seth E. Schofield; Thomas J. Usher; and Douglas C. Yearley. \n\n\n\n\n\n\n\n\n\n \nAudit Committee \n\n\nThe Audit Committee has a written charter adopted by the Board, which is available on the Company's website at\nhttp://www.marathon.com/Audit Committee Charter/. The charter requires the committee to reassess and report to the\nBoard on the adequacy of the charter on an annual basis, which the committee did in 2004. All the members of the Audit Committee are independent (as independence is defined in Exchange Act\nRule 10A-3, as well as the general independence requirements of NYSE Rule 303A.02). \n\n\nThis\ncommittee is, among other things, responsible for: \n\n\n\n•appointing,\nreplacing, compensating and overseeing the work of the independent auditor;\n\n\n\n\n•reviewing\nthe fees proposed by the independent auditor for the coming year and approving in advance all audit, audit-related, tax and permissible non-audit\nservices to be performed by the independent auditor;\n\n\n\n\n•separately\nmeeting with the independent auditors, the internal auditors and management with respect to the status and results of their activities;\n\n\n\n\n•reviewing\nwith the chief executive officer, the chief financial officer, and the general counsel the Company's disclosure controls and procedures and management's\nconclusions about the efficacy of such disclosure controls and procedures;\n\n\n\n\n•reviewing,\napproving and discussing with management and the independent auditors the annual and quarterly financial statements, the annual report to stockholders, and the\nForm 10-K;\n\n\n\n\n•reviewing\nearnings press releases, as well as financial information and earnings guidance issued publicly or provided to analysts and rating agencies; and\n\n\n\n\n•completing\nan annual performance evaluation of this committee. \nThe\nAudit Committee has the authority to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of the Company, and to retain outside legal,\naccounting or other consultants. \n\n\nAudit Committee Policy for Pre-Approval of Audit, Audit-Related, Tax and Permissible Non-Audit\nServices\n\n\nEffective\nJanuary 1, 2003, the Audit Committee adopted the Audit Committee Policy for Pre-Approval of Audit, Audit-Related, Tax and Permissible Non-Audit Services. This\npolicy is attached as Appendix I to this proxy statement and is also available on the\nCompany's website at\nhttp://www.marathon.com/Policy PreAppAudit Tax NonAudit/. Among other\nthings, this policy sets forth the procedure for the committee to pre-approve all audit, audit-related, tax and permissible non-audit services, other than as provided under the\nde minimus exception. Notwithstanding the de minimus exception, it is the intent of the committee that standard practice will be to pre-approve all permissible non-audit\nservices. The committee delegated pre-approval authority of up to $500,000 to the Audit Committee Chair for unbudgeted items. \n\n\nAudit Committee Financial Expert\n\n\nBased\non the attributes, education and experience requirements set forth in Section 407 of the Sarbanes-Oxley Act of 2002 and associated regulations, the Board of Directors has determined that\nDavid A. Daberko, Charles R. Lee, and Dennis H. Reilley each qualify as an \"Audit Committee Financial Expert.\" \n\n\n\n\n\n\n\n\n\n \n\n•Mr. Daberko\nis currently the Chairman of the Board and Chief Executive Officer of National City Corporation. In addition to certifying the effectiveness of internal\ncontrols and procedures required by his position as CEO, Mr. Daberko's previous positions with National City required him to oversee internal accounting controls and set internal control\npolicy. As head of bank investments, he was responsible for overseeing accounting for that area. Mr. Daberko holds a MBA in finance from Case Western Reserve University.\n\n\n\n\n•Mr. Lee\nheld positions as Senior Vice President-Finance for Penn Central Corp. and Columbia Pictures Industries Inc., and Senior Vice President of Finance with\nGTE Corporation. He received a MBA with distinction from the Harvard Graduate School of Business Administration.\n\n\n\n\n•Mr. Reilley\nis the Chairman, President and Chief Executive Officer of Praxair, Inc. In addition to certifying the effectiveness of internal controls and\nprocedures required by his position as CEO, Mr. Reilley's experience includes serving as chair of Entergy Corporation's audit committee. He holds a Bachelor of Science in finance from Oklahoma\nState University. \nGuidelines for Hiring of Employees or Former Employees of the Independent Auditor\n\n\nThe\nAudit Committee adopted guidelines for hiring of employees or former employees of the independent auditor. In summary, these guidelines provide that the Company shall not hire any employee or\nformer employee of its independent auditor for a position in a financial reporting oversight role if such employee or former employee was the lead or concurring partner, or any other member of the\naudit engagement team who provides more than ten hours of audit, review or attest services during the one-year period preceding the date of the initiation of the audit. A complete set of\nthese guidelines is available on the Company's website at\nhttp://www.marathon.com/Guide Hire Employees Indep Auditor/. \n\n\nPolicy for Whistleblowing Procedures\n\n\nEffective\nAugust 1, 2003, the Audit Committee adopted and approved the Company's Policy for Whistleblowing Procedures. This policy establishes procedures for the receipt, retention and\ntreatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of the Company of\nconcerns regarding questionable accounting or auditing matters. The Policy for Whistleblowing Procedures is available on the Company's website at\nhttp://www.marathon.com/Policy Whistleblowing Procedures/. \n\n\nCompensation Committee \n\n\nThe Compensation Committee is composed solely of directors who satisfy all criteria for independence under applicable law and the rules of the New York Stock Exchange and who,\nin the opinion of the Board, are free of any relationship that would interfere with their exercise of independent judgment as members of the committee. \n\n\nThis\ncommittee is, among other things, responsible for: \n\n\n\n•making\nrecommendations to the Board and to the boards of subsidiaries on all matters of policy and procedures relating to executive compensation;\n\n\n\n\n•establishing\nthe chief executive officer's compensation level based on the Board's performance evaluation of the chief executive officer; \n\n\n\n\n\n\n\n\n \n\n\n\n\n•approving\nthe compensation of the other executive officers, and reviewing the succession plan relating to positions held by the other executive officers;\n\n\n\n\n•recommending\nto the Board and administering the incentive compensation plans and equity-based plans of the Company;\n\n\n\n\n•confirming\nthe achievement of performance levels under the Company's incentive compensation plans; and\n\n\n\n\n•evaluating\nits performance on an annual basis. \nThe\nCharter of the Compensation Committee is available on the Company's website at\nhttp://www.marathon.com/Charter Comp Committee/. \n\n\nCorporate Governance and Nominating Committee \n\n\nThe Corporate Governance and Nominating Committee is composed solely of independent directors in accordance with the rules of the New York Stock Exchange. The committee's\nprimary purpose is to discharge the Board's responsibility related to public policy matters, the development and implementation of a set of corporate governance principles, the identification of\nindividuals qualified to become board members, and the review of the qualifications and make-up of the Board membership. \n\n\nThe\ncommittee is, among other things, responsible for: \n\n\n\n•reviewing\nand making recommendations to the Board concerning the appropriate size and composition of the Board, including candidates for election or re-election\nas directors, the criteria to be used for the selection of candidates for election as directors, the appropriate skills and characteristics required of Board members in the context of the current\nmake-up of the Board, the composition and functions of the Board committees, and all matters relating to the development and effective functioning of the Board;\n\n\n\n\n•considering\nand recruiting candidates to fill positions on the Board;\n\n\n\n\n•considering\nnominees recommended by stockholders for election as directors;\n\n\n\n\n•reviewing\nand making recommendations to the Board of each Board committee's membership and committee chairpersons including, without limitation, a determination of whether\none or more Audit Committee members qualifies as an \"audit committee financial expert\" in accordance with applicable law;\n\n\n\n\n•assessing\nand recommending overall corporate governance practices;\n\n\n\n\n•establishing\nthe process and administering the evaluation of the Board;\n\n\n\n\n•reviewing\npublic issues identified by management and the Company's efforts in addressing these public issues through research, analysis, lobbying efforts and participation\nin business and government programs;\n\n\n\n\n•reviewing\nand approving codes of conduct applicable to directors, officers and employees;\n\n\n\n\n•reviewing\nthe Company's policy statement on stockholders' rights plans and reporting any recommendations to the Board; and\n\n\n\n\n•evaluating\nits performance on an annual basis. \nA\ncurrent copy of the Corporate Governance and Nominating Committee's Charter is available on the Company's website at\nhttp://www.marathon.com/Charter CorpGovNom Committee/. \n\n\n\n\n\n\n\n\n\n \nDirector Identification and Selection\n\n\nThe\nprocess for director selection and director qualifications are set forth in Article III, Section (a) of the Company's Corporate Governance Principles which are available on the\nCompany's website at http://www.marathon.com/Corporate Governance Principles/. In summary, the chairman of the\nCorporate Governance and Nominating Committee and the Chief Executive Officer should work with a third party professional search firm to review director candidates and their credentials. At least one\nmember of the committee, the Chairman of the Board, and the Chief Executive Officer should meet with the director candidate. This screening process applies to nominating committee recommended\nnominees, as well as nominees recommended by the stockholders in accordance with the Company's by-laws. The criteria for selecting new directors include their independence, as defined by\napplicable law, stock exchange listing standards and the categorical standards listed in the Company's Corporate Governance Principles, their integrity and judgment, their records of public service,\ntheir ability to devote sufficient time to the affairs of the Company, the diversity of backgrounds and experience they will bring to the Board, and the needs of the Company from time to time.\nDirectors should also be individuals of substantial accomplishment with demonstrated leadership capabilities and that they should represent all stockholders and not any special interest group or\nconstituency. The Committee's Charter also gives the Committee the sole authority to retain and terminate any search firm to be used to identify director candidates, including sole authority to\napprove the search firm's fees and other retention terms. \n\n\nCode of Ethics for Senior Financial Officers\n\n\nPursuant\nto Section 406 of the Sarbanes-Oxley Act of 2002 and its associated regulations, the Corporate Governance and Nominating Committee approved and adopted a Code of Ethics for Senior\nFinancial Officers which is available on the Company's website at\nhttp://www.marathon.com/Code Ethics Sr Finan Off/.\nAs required, this code applies to the Company's principal executive officer, the principal financial officer, the principal accounting officer or controller, or persons performing similar functions,\nand mandates that these officers, among other things: \n\n\n\n•act\nwith honesty and integrity, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;\n\n\n\n\n•provide\nfull, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange\nCommission and in other public communications made by the Company;\n\n\n\n\n•comply\nwith applicable governmental laws, rules and regulations; and\n\n\n\n\n•promote\nthe prompt internal reporting of violations of this Code of Ethics to the chair of the Audit Committee of the Board of Directors and to the appropriate person or\npersons identified in the Company's Code of Business Conduct. \nThe\ncode further provides that any violation will be subject to appropriate discipline, up to and including dismissal from the Company and prosecution under the law. \n\n\n\n\n\n\n\n\n\n \nCommittee on Financial Policy \n\n\nThe Committee on Financial Policy provides oversight with respect to the appropriate capital structure and financial policies of Marathon. Its key responsibility in that role\nis to make recommendations to the Board concerning dividends. A copy of the committee charter is available on the Company's website at http://www.marathon.com/Charter_Comm_FinanPolicy/. \n\n\nThe\ncommittee is, among other things, responsible for: \n\n\n\n•approving\nfinancings by Marathon (except financings which involve the issuance of common stock), including the recommendation of action to subsidiaries, partnerships and\njoint ventures;\n\n\n\n\n•authorizing\nloans to outside entities, guarantees by Marathon of the credit of others, and other uses of Marathon credit; and\n\n\n\n\n•evaluating\nits performance on an annual basis and develop criteria for the evaluation. \nCorporate Governance Principles \n\n\nThe Board of Directors adopted the Company's Corporate Governance Principles, amended and restated as of January 1, 2005. These principles are available on the Company's\nwebsite at http://www.marathon.com/Corporate_Governance_Principles/. In summary, the Corporate Governance Principles address the general functioning of the Board, including its responsibilities, the\nBoard size, director elections and limits on the number of Board memberships. These principles also address Board independence, committee composition, the lead director position, the process for\ndirector selection and director qualifications, the Board's performance review, the Board's planning and oversight functions, director compensation and director retirement and resignation. \n\n\nCommunications from Security Holders \n\n\nSecurity holders may send communications to the Board through the Secretary of the Company. You may communicate with the Chair of our Audit, Compensation, Corporate Governance\nand Nominating, and Financial Policy Committees by sending an e-mail to auditchair@marathonoil.com, compchair@marathonoil.com, corpgovchair@marathonoil.com, or\nfinpolicychair@marathonoil.com, respectively. You may communicate with our outside directors, individually or as a group, by sending an e-mail to\nnon-managedirectors@marathonoil.com. \n\n\nThe\nSecretary will forward to the directors all communications that, in his or her judgment, are appropriate for consideration by the directors. Examples of communications that would not be considered\nappropriate for consideration by the directors include commercial solicitations and matters not relevant to the security holders, to the functioning of the Board, or to the affairs of the Company. \n\n\nAvailability of Governance Documents \n\n\nStockholders may obtain a print copy of the Company's corporate governance documents, including the Corporate Governance Principles, committee charters, and code of business\nconduct, by contacting our Investor Relations office. \n\n\n\n\n\n\n\n\n\n \nCompensation of Directors \n\n\nOur by-laws require that each non-employee director be paid compensation and attendance fees as the Board may from time to time determine. Directors who\nare employees of Marathon receive no compensation for their service on the Board. In 2004, we paid our non-employee directors as follows: \n\n\n\n\n\nIn\naddition to the annual retainer, we also paid our Chairman of the Board, Mr. Usher, a chairman's fee of $240,000 in 2004. The chairman does not receive meeting fees for his attendance. \n\n\nMr. Usher\nreceived cash payments in 2004 of $6,076,564 due to the exercise of stock appreciation rights previously granted to him in connection with his service as Chief Executive Officer of\nthe Company. In February 2005, a cash payment of $6,313,000 was made to Mr. Usher due to the exercise of stock appreciation rights previously granted to him in connection with the\nseparation of the businesses of the U.S. Steel Group and Marathon Group and his agreement to serve as Chairman, Chief Executive Officer and President of United States Steel Corporation, Chairman of\nthe Board of Directors of Marathon, and Chairman of the Board of Managers of MAP. \n\n\nUnder\nour Deferred Compensation Plan for Non-Employee Directors, non-employee directors are required to defer half of their annual retainer in the form of common stock units. A\ncommon stock unit is what is sometimes referred to as \"phantom stock\" because initially no stock is actually issued. Instead, we keep an unfunded book entry account for each director that shows how\nmany common stock units he or she has. We credit each non-employee director's deferred stock account with common stock units on the date he or she would otherwise receive the annual\nretainer payment. The ongoing value of each common stock unit equals the market price of the common stock. When dividends are paid on Marathon's common\nstock, we credit each account with equivalent amounts in additional common stock units. Then, when a director leaves the Board, he or she is issued actual shares of common stock corresponding to the\nnumber of common stock units in his or her account. We believe this is an effective way to increase the directors' equity holdings in Marathon and thereby further align their interests with those of\nour stockholders. \n\n\nDirectors\nmay elect to defer the remaining portion of their annual retainer in the form of cash. This unfunded deferred cash benefit may be invested in certain investment options offered under the\nplan, which mirror the investment options offered to employees under the Marathon Oil Company Thrift Plan with the exception of the Marathon common stock fund. When a director leaves the Board, he or\nshe receives the deferred cash either in a lump sum or in installments over ten years. \n\n\n\n\n\n\n\n\n\n \nIf\nMarathon were to undergo a change in control resulting in the removal of a non-employee director from the Board, that director would receive a cash payment equal to the value of his or\nher deferred stock and deferred cash accounts. \n\n\nNon-employee\ndirectors, other than the Chairman, also receive an annual non-retainer common stock unit award. Each year, the eligible directors receive a certain number of\ncommon stock units based on Marathon's stock price on the date of grant. The non-retainer common stock units are credited to a bookkeeping account and receive dividend payments in the same\nmanner as the deferred stock unit awards described above. They vest upon the director's departure from the Board and are paid in actual shares of common stock. \n\n\nIn\n2004, the Corporate Governance and Nominating Committee commissioned an independent compensation consulting firm to conduct a review of director compensation. Based on the results of this review,\nthe Board approved a $20,000 increase to the annual non-retainer common stock unit award effective in 2005. As of January 2005, the annual non-retainer common stock unit\naward was valued at $60,000. \n\n\nPursuant\nto the director stock award program, under the stockholder-approved 2003 Incentive Compensation Plan, each non-employee director may receive a matching grant of up to 1,000 shares\nof common stock upon his or her initial election to the Board. In order to qualify, a director must purchase an equivalent number of shares in the open market during the 60 days following his\nor her initial election to the Board. \n\n\nThe\nBoard of Directors has established stock ownership guidelines for non-employee directors of five times the annual retainer fee to be achieved by January 1, 2009. \n\n\n\n\n\n\n\n\n\n \nProposals of the Board \n\n\nThe Board will present the following proposals at the meeting: \n\n\nProposal No. 1 \n\n\nElection of Directors \n\n\nMarathon's Restated Certificate of Incorporation divides the directors into three classes: Class I, Class II and Class III. Each class must consist, as\nnearly as possible, of one-third of the directors. Once elected, directors serve for a term of three years and until their successors are duly elected and qualified. At each annual\nmeeting, directors who are elected to succeed directors whose terms have expired are identified as being of the same class as those they succeed. A director elected to fill a vacancy is elected to the\nsame class as the director he or she succeeds, and a director elected to fill a newly created directorship holds office until the next election of the class to which he or she is elected. \n\n\nOur\nby-laws require the Board to fix the number of directors, and under our Corporate Governance Principles, the Board is charged with endeavoring to maintain between ten and fourteen\nmembers. The current four Class III directors are nominees for election this year for a three-year term that will expire at the 2008 annual meeting. All directors except\nMr. Lader (who was elected by the Board effective September 1, 2002) have previously been elected by the stockholders. Of the eleven current directors, one is an officer of Marathon,\nseven have top executive experience with a wide variety of businesses, one has a distinguished career in academia, business and government, one has a distinguished career as an international business\nleader and diplomat, and one has a distinguished career with the military and the National Aeronautics and Space Administration. A brief statement about the background of each nominee and each\ncontinuing director is given on the following pages. If any nominee for whom you have voted becomes unable to serve, your proxy may be voted for another person designated by the Board. \n\n\nOur\nby-laws describe the procedures that must be used in order for someone nominated by a stockholder of record to be eligible for election as a director. They require that notice be\nreceived by the Secretary at least 45 days, but not more than 75 days, before the first anniversary of the date on which we first mailed our proxy materials for the preceding year's\nannual meeting of stockholders. The notice must contain certain information about the nominee, including his or her age, address,\noccupation and share ownership, as well as the name, address and share ownership of the stockholder giving the notice. \n\n\n\n\n\n\n\n\n\n \n \n \n\n\nNominees for Class III Directors \n\n \n\n\nTerms\nExpire 2008 \n\n\n\n\n\n\n\n \n \nShirley Ann Jackson Director since\n2000 Age 58\n\n\n \n\n President, Rensselaer Polytechnic Institute\n\n\n \n\n\nDr. Jackson received a BS degree in physics in 1968, and a Ph.D. in theoretical elementary particle physics in 1973, from the Massachusetts Institute of Technology. She was a research associate at the Fermi National Accelerator Laboratory, a\nvisiting scientist at the European Center for Nuclear Research and, from 1976 to 1991, a theoretical physicist at the former AT&T Bell Laboratories. Dr. Jackson was a professor of theoretical physics at Rutgers University from 1991 to 1995.\nShe was Chairman of the U. S. Nuclear Regulatory Commission from 1995 to 1999. Dr. Jackson was named President of Rensselaer Polytechnic Institute in 1999. She is a director of United States Steel Corporation, Federal Express Corporation,\nAT&T Corp., Medtronic, Inc., and Public Service Enterprise Group Incorporated. Dr. Jackson is also a director of the New York Stock Exchange. She is a member of the Board of Trustees for Massachusetts Institute of Technology, Georgetown\nUniversity, Rockefeller University, and the Brookings Institute. Dr. Jackson holds 32 honorary degrees, was awarded the New Jersey Governor's Award in Science in 1993, and was inducted into the National Women's Hall of Fame in 1998, and named a\nfellow of the Association for Women in Science in 2004. In 2005, she will chair the American Association for the Advancement of Science. \n\n\n\n\n\n\n\n\n \n\n\n \n\n\nPhilip Lader Director since\n2002 Age 58\n\n\n \n\n Non-executive Chairman of WPP Group plc\n\n\n \n\n\nAmbassador Lader received a bachelor's degree from Duke University (Phi Beta Kappa), a master's degree from the University of Michigan and a juris doctor degree from Harvard Law School, with subsequent graduate studies in law at Oxford University.\nAwarded honorary doctorates by 14 universities and colleges, he served as U.S. Ambassador to the Court of St. James's from 1997 through 2001 and was White House Deputy Chief of Staff, Deputy Director of the Office of Management and Budget, and\nAdministrator of the U.S. Small Business Administration. Formerly President of Sea Pines Company and Executive Vice President of Sir James Goldsmith's U.S. holding company, he is non-executive Chairman of WPP Group plc, the global\nadvertising/communications services company, which includes J. Walter Thompson, Ogilvy & Mather, and Young & Rubicam, a Senior Advisor to Morgan Stanley, and a partner in the law firm of Nelson, Mullins, Riley &\nScarborough. Ambassador Lader serves on the Boards of Directors of WPP Group plc, RAND and AES Corporations, and Lloyd's (of London), and is a Trustee of the British Museum. \n\n\n\n\n\n\n\n\n \n\n\n \n\n\nSeth E. Schofield Director since\n1994 Age 65\n\n\n \n\n\nRetired Chairman and Chief Executive Officer, USAir Group\n\n\n \n\n\nMr. Schofield graduated from the Harvard Business School Program for Management Development in 1975. He served in various corporate staff positions after joining USAir in 1957 and became Executive Vice President-Operations in 1981.\nMr. Schofield served as President and Chief Operating Officer from 1990 until 1991. He was elected President and Chief Executive Officer in 1991 and became Chairman of the boards of USAir Group and USAir, Inc. in 1992. He retired in\nJanuary 1996. Mr. Schofield is a director of United States Steel Corporation and Calgon Carbon Corp. He also is a member of the Advisory Board and Investment Committee of Desai Capital Management. \n\n\n\n\n\n\n\n\n \n\n\n \n\n\nDouglas C. Yearley Director since\n1992 Age 69\n\n\n \n\n Chairman Emeritus, Phelps Dodge Corporation\n\n\n \n\n\nMr. Yearley graduated from Cornell University with a Bachelor's degree in metallurgical engineering and attended the Program for Management Development at Harvard Business School. He joined Phelps Dodge in 1960 in project development. He held\nseveral key positions before being elected Executive Vice President and a director in 1987, Chairman and Chief Executive Officer in 1989 and President in 1991. He retired in May 2000. He is a director of United States Steel Corporation, Lockheed\nMartin Corporation, and Heidrick & Struggles International, Inc. He was a director of J.P. Morgan & Co. Incorporated and Morgan Guaranty Trust Company of New York from 1993 to 2000, and Southern Peru Copper Corporation from\n1991 to 2000. He is a member of the National Council of the World Wildlife Fund, and a graduate member of The Business Council. \n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\nContinuing Class I Directors \n\n \n\n\nTerms\nExpire 2006 \n\n\n\n\n\n\n\n\n\n \n\n\n \n\n\nClarence P. Cazalot, Jr. Director since\n2000 Age 54\n\n\n \n\n President and Chief Executive Officer, Marathon Oil Corporation\n\n\n \n\n\nMr. Cazalot graduated from Louisiana State University in 1972 with a BS degree in geology, and joined Texaco Inc. that same year as a geophysicist. After holding a number of increasingly responsible management positions, Mr. Cazalot\nwas elected a Vice President of Texaco Inc. and President of Texaco's Latin America/West Africa Division in 1992. In 1994, he was named President of Texaco Exploration and Production Inc. Mr. Cazalot was appointed President of Texaco\nInternational Marketing and Manufacturing in 1997, and in 1998 he was named President-International Production and Chairman of London-based Texaco Ltd. He was elected President of Texaco's worldwide production operations in 1999.\nMr. Cazalot joined USX Corporation as Vice Chairman and Marathon Oil Company as President in March 2000. Effective upon the separation of USX's steel and energy businesses on January 1, 2002, Mr. Cazalot was named President and\nChief Executive Officer of Marathon Oil Corporation. He also serves as Chairman of the Board of Managers of Marathon Ashland Petroleum LLC. Mr. Cazalot serves on the Boards of Directors of Baker Hughes Incorporated, the US-Saudi Arabian Business\nCouncil, the American Petroleum Institute and the Greater Houston Partnership. \n\n\n\n\n\n\n\n\n \n\n\n \n\n\nDavid A. Daberko Director since\n2002 Age 59\n\n\n \n\n Chairman of the Board and Chief Executive Officer, National City Corporation\n\n\n \n\n\nMr. Daberko graduated from Denison University with a BA and from Case Western Reserve University with an MBA. He joined National City Bank in 1968 as a management trainee and held a number of management positions within the company. In 1985, he\nled the assimilation of the former BancOhio National Bank into National City Bank, Columbus. In 1987, Mr. Daberko was elected Deputy Chairman of the corporation and President of National City Bank in Cleveland. He served as President and Chief\nOperating Officer from 1993 until 1995 when he was named Chairman and Chief Executive Officer. Mr. Daberko is a director of OMNOVA Solutions, Inc. He is a trustee of Case Western Reserve University, University Hospitals Health System,\nHawken School, Greater Cleveland Partnership and the American Bankers Association. \n\n\n\n\n\n\n\n\n \n\n\n \n\n\nWilliam L. Davis Director since\n2002 Age 61\n\n\n \n\n Retired Chairman, President and Chief Executive Officer, R.R. Donnelley & Sons Company\n\n\n \n\n\nMr. Davis graduated from Princeton University in 1965 with a BA degree. From 1977 through 1997 he held a variety of positions with Emerson Electric Company, including the position of President of two of its subsidiaries, Appleton Electric\nCompany and Skil Corporation, and Senior Executive Vice President for the Emerson Tool Group, the Industrial Motors and Drives Group and the Process Control Group. Mr. Davis joined R.R. Donnelley & Sons Company in 1997 as the Chairman\nand Chief Executive Officer. In 2001, he accepted the responsibility as President of the company. Mr. Davis retired as Chairman, President and Chief Executive Officer of R.R. Donnelley & Sons Company in February 2004. He is\nChairman of the Board of Evanston Northwestern Healthcare and a former director of Mallinckrodt. Mr. Davis is a trustee of Northwestern University. \n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\nContinuing Class II Directors \n\n \n\n\nTerms\nExpire 2007 \n\n\n\n\n\n\n\n \n \nCharles F. Bolden, Jr. Director since\n2003 Age 58\n\n\n \n\n Independent Military and Aerospace Consultant\n\n\n \n\n\nMr. Charles F. Bolden, Jr. received a Bachelor of Science degree from the U.S. Naval Academy, a Master of Science degree in systems management from the University of Southern California, and is a graduate of the U.S. Naval Test Pilot School at\nPatuxent River, Maryland. He has received Honorary Doctorates from several distinguished universities. He was a space shuttle pilot astronaut for the National Aeronautics and Space Administration (NASA) for 13 years, flying four space missions.\nFrom April 1992 to June 1993 Mr. Bolden served as Assistant Deputy Administrator for NASA. He was assigned Deputy Commanding General, 1MEF, Marine Forces, Pacific in 1997. Mr. Bolden served as Commanding General, 1 MEF (FWD) for\nOperation Desert Thunder in Kuwait from February to June 1998. In July 1998, he was promoted to Major General serving as the Commanding General of the Third Marine Aircraft Wing. Mr. Bolden retired from the United States Marine Corps\non January 1, 2003 after serving 34 and a half years. He has been awarded a number of military and NASA decorations. Mr. Bolden was the President and Chief Operating Officer of American PureTex Water Corporation and PureTex Water Works from\nJanuary to April 2003. He was Senior Vice President at TechTrans International, Inc. from April 2003 until January 1, 2005. Mr. Bolden is currently an independent military and aerospace consultant. He is a director of\nGenCorp Inc. and Palmetto GBA, a subsidiary of BlueCross BlueShield of South Carolina. Mr. Bolden is a trustee for the University of Southern California, and is also a director of the Military Child Education Coalition, the Family Literacy\nFoundation, and the Tailhook Education Foundation. \n\n\n\n\n\n\n\n\n \n\n\n \n\n\nCharles R. Lee Director since\n1991 Age 64\n\n\n \n\n Retired Chairman of the Board, Verizon Communications Inc.\n\n\n \n\n\nMr. Lee received his bachelor's degree in metallurgical engineering from Cornell University and an MBA with distinction from the Harvard Graduate School of Business Administration. He served in various financial and management positions before\nbecoming Senior Vice President-Finance for Penn Central Corp. and then Columbia Pictures Industries Inc. In 1983, Mr. Lee joined GTE Corporation (which merged with Bell Atlantic Corporation to form Verizon Communications in 2000) as Senior\nVice President of Finance and in 1986 was named Senior Vice President of Finance and Planning. He was elected President, Chief Operating Officer and Director in December 1988 and was elected Chairman of the Board and Chief Executive Officer of\nGTE in 1992. Mr. Lee served as Chairman of the Board and Co-CEO of Verizon Communications from June 30, 2000 through March 31, 2002. He served as non-executive Chairman of the Board from April 2002 to December 2003. He is a\ndirector of United States Steel Corporation, The Proctor & Gamble Company, United Technologies Corporation, DIRECTV Group, Inc., American Institutes for Research, and Project GRAD USA. Mr. Lee is a member of the Board of Overseers\nof Weill Cornell Medical College. He is a member of The Business Council. Mr. Lee is also a Trustee Emeritus and Presidential Councilor of Cornell University. \n\n\n\n\n\n\n\n\n \n\n\n \n\n\nDennis H. Reilley Director since\n2002 Age 51\n\n\n \n\n Chairman, President and Chief Executive Officer, Praxair, Inc.\n\n\n \n\n\nMr. Reilley graduated from Oklahoma State University with a BS in finance in 1978. He began working at Conoco, Inc. in 1975 as a pipeline engineer and in 1979 was promoted to Executive Assistant to the Chairman. Mr. Reilley held many\nkey positions at E. I. Du Pont de Nemours & Company which purchased Conoco in 1981. He held senior management positions in DuPont's Chemicals and Specialties business including Vice President and General Manager of Special Chemicals. In\nMay 1999 he was appointed Executive Vice President and Chief Operating Officer of DuPont with responsibility for pigments and chemicals, specialty polymers, nylon and polyester. Mr. Reilley became Chairman, President and Chief Executive\nOfficer of Praxair, Inc. in 2002. He is a director of Entergy Corporation and the Conservation Fund. Mr. Reilley is former Chairman of the American Chemistry Council. \n\n\n\n\n\n\n\n\n \n\n\n \n\n\nThomas J. Usher Director since\n1991 Age 62\n\n\n \n\n Non-executive Chairman of the Board, Marathon Oil Corporation and Non-executive Chairman of the Board, United States Steel Corporation\n\n\n \n\n\nMr. Usher graduated from the University of Pittsburgh with a BS degree in industrial engineering, an MS degree in operations research and a Ph.D. in systems engineering. He joined United States Steel Corporation (\"U. S. Steel\") (later renamed\nUSX Corporation) in 1965 and held various positions in industrial engineering. From 1975 through 1979, he held a number of management positions at U. S. Steel's South and Gary Works. Mr. Usher was elected Executive Vice President-Heavy Products\nin 1986, President-U. S. Steel Group and director of USX in 1991, President and Chief Operating Officer of USX in 1994 and Chairman of the Board and Chief Executive Officer effective July 1, 1995. He retired as Chief Executive Officer of United\nStates Steel Corporation in September 2004. Mr. Usher is the non-executive Chairman of the Board of United States Steel Corporation, and a director of H. J. Heinz Co., The PNC Financial Services Group, Inc., and PPG Industries,\n Inc. He is a trustee of the University of Pittsburgh, and a director of the Extra Mile Education Foundation and the Boy Scouts of America. Mr. Usher is a member of the Business Council. \n\n\n\n\n\n\n\n\n\n\n\n\n \nProposal No. 2 \n\n\nRatification of Independent Auditors for 2005 \n\n\nPricewaterhouseCoopers LLP, an independent registered public accounting firm, has served as independent auditors of the Company for many years. We believe that their knowledge\nof Marathon's business and its organization gained through this period of service is very valuable. In accordance with the established policy of the firm, partners and employees of\nPricewaterhouseCoopers assigned to the Marathon engagement are periodically rotated, thus giving Marathon the benefit of new thinking and approaches in the audit area. We expect representatives of\nPricewaterhouseCoopers to be present at the meeting with an opportunity to make a statement if they desire to do so and to be available to respond to appropriate questions. \n\n\nFor\nthe year 2004, PricewaterhouseCoopers performed professional services in connection with audits of Marathon's consolidated financial statements and internal control over financial reporting,\ncertain subsidiaries and certain pension and other employee benefit plans. They also reviewed quarterly reports and other filings with the Securities and Exchange Commission and other agencies. \n\n\n\n\n\n\n\n\n\n\n Proposals of Stockholders \n\n\nStockholders will present the following proposals at the meeting: \n\n\nProposal No. 3 \n\n\nDeclassification of the Board of Directors \n\n\nThe Central Pension Fund of the International Union of Operating Engineers and Participating Employers, 4115 Chesapeake Street, N.W., Washington, D.C. 20016-4655,\nbeneficial owner of at least 55,213 shares of common stock, has given notice that it intends to present the following resolution for adoption by the shareholders at the annual meeting of stockholders.\nIn accordance with applicable proxy regulations, the proposal and supporting statement, for which the Company accepts no responsibility, are set forth below. \n\n\nSHAREHOLDER PROPOSAL \n\n\nBE IT RESOLVED that the stockholders of Marathon Oil Corporation (\"Company\") urge the Board of Directors to take the necessary steps, in compliance with Delaware state law, to\ndeclassify the Board of Directors for the purpose of director elections. The Board declassification shall be done in a manner that does not affect the unexpired terms of directors previously elected. \n\n\nSUPPORTING\nSTATEMENT \n\n\nThe\nBoard of Directors of our Company is divided into three classes serving staggered, three-year terms. This type of board arrangement is commonly referred to as a \"classified\" board. A\nclassified board structure is not in the best interests of the Company or the shareholders. The elimination of the staggered election of the Board of Directors would require each director to stand for\nelection annually. Such a declassification of the board would allow shareholders, annually, the opportunity to register their views on the performance of the board collectively and each director\nindividually. \n\n\nShareholders\ndeserve the opportunity to vote on each director annually rather than once every three years. Any concerns that the annual election of all directors could leave our Company without\nexperienced board members in the event that all incumbents are voted out are unfounded. In the event that the shareholders voted to replace the entire board, such action would reflect the discretion\nand will of the shareholders, and their judgment of the relative value of the incumbents' experience. \n\n\nA\nclassified board structure serves to protect the incumbency of the Board of Directors and current management, and limits accountability to shareholders. A classified board structure is unnecessary,\nreduces management accountability to shareholders and may negatively impact financial performance. \n\n\nWe\nurge your support FOR this proposal. \n\n\n\n\n\n\n\n\n\n \nYOUR BOARD RECOMMENDS A VOTE AGAINST THE STOCKHOLDER\n\n\nPROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS \n\n\nThe classified Board of Directors was adopted in 1984 when Marathon stockholders decided by 87.2% of the votes cast in favor of the directors' proposal that the Board be\ndivided into three classes of directors elected to staggered three-year terms with one class elected each year. The Board, and the overwhelming majority of stockholders, then believed that\na classified board was in the Company's best interest. Your Board continues to hold this view. \n\n\nClassified\nboards promote continuity and stability with a view to creating long-term stockholder value. The election of directors by classes is designed to prevent a sudden, disruptive\nchange to the composition of the Board, which can occur if an entirely new Board is elected every year. A classified board further ensures that a majority of the directors at any time will have prior\nexperience and in-depth knowledge of the Company and its strategic goals. Directors develop a more detailed understanding of the Company's operations, benefit from ongoing experience, and\npromote a long-term focus on the Company's strategic values. \n\n\nFor\nthese reasons, the Board recommends that you vote AGAINST this proposal. \n\n\n\n\n\n\n\n\n\n \nProposal No. 4 \n\n\nElection of Directors by a Majority Vote \n\n\nUnited Brotherhood of Carpenters Pension Fund, 101 Constitution Avenue, N.W., Washington, D. C. 20001, owner of at least 5,600 shares of common stock, has given notice that it\nintends to present the following proposal at the annual meeting of stockholders. In accordance with applicable proxy regulations, the proposal and supporting statement, for which the Company accepts\nno responsibility, are set forth below. \n\n\nDirector Election Majority Vote Standard Proposal \n\n\nResolved: That the shareholders of Marathon Oil Corporation (\"Company\") hereby request that the Board of Directors initiate the appropriate\nprocess to amend the Company's governance documents (certificate of incorporation or bylaws) to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast at\nan annual meeting of shareholders. \n\n\nSupporting Statement: Our Company is incorporated in Delaware. Among other issues, Delaware corporate law addresses the issue of the level\nof voting support necessary for a specific action, such as the election of corporate directors. Delaware law provides that a company's certificate of incorporation or bylaws may specify the number of\nvotes that shall be necessary for the transaction of any business, including the election of directors. (DGCL, Title 8, Chapter 1, Subchapter VII, Section 216). Further, the law provides that\nif the level of voting support necessary for a specific action is not specified in the\ncertificate of incorporation or bylaws of the corporation, directors \"shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled\nto vote on the election of directors.\" \n\n\nOur\nCompany presently uses the plurality vote standard for the election of directors. We feel that it is appropriate and timely for the Board to initiate a change in the Company's director election\nvote standard. Specifically, this shareholder proposal urges that the Board of Directors initiate a change to the director election vote standard to provide that in director elections a majority vote\nstandard will be used in lieu of the Company's current plurality vote standard. Specifically, the new standard should provide that nominees for the board of directors must receive a majority of the\nvote cast in order to be elected or re-elected to the Board. \n\n\nUnder\nthe Company's current plurality vote standard, a director nominee in a director election can be elected or re-elected with as little as a single affirmative vote, even while a\nsubstantial majority of the votes cast are \"withheld\" from that director nominee. So even if 99.99% of the shares \"withhold\" authority to vote for a candidate or all the candidates, a 0.01% \"for\" vote\nresults in the candidate's election or re-election to the board. The proposed majority vote standard would require that a director receive a majority of the vote cast in order to be\nelected to the Board. \n\n\nIt\nis our contention that the proposed majority vote standard for corporate board elections is a fair standard that will strengthen the Company's governance and the Board. Our proposal is not intended\nto limit the judgment of the Board in crafting the requested governance change. For instance, the Board should address the status of incumbent directors who fail to receive a majority vote when\nstanding for re-election under a majority vote standard or whether a plurality director election standard is appropriate in contested elections. \n\n\nWe\nurge your support of this important director election reform. \n\n\n\n\n\n\n\n\n\n \nYOUR BOARD RECOMMENDS A VOTE AGAINST THE STOCKHOLDER\n\n\nPROPOSAL TO ELECT DIRECTORS BY A MAJORITY VOTE \n\n\nMarathon has a history of electing, by a plurality, a strong and independent Board of Directors. In the past ten years, every Director nominee has received an affirmative vote\ngreater than 93.3% of the shares cast through the plurality process. Consequently, changing from the current plurality voting requirement to the proposed majority voting requirement would have had no\neffect on the outcome of any director elections over this period of time. \n\n\nThe\nplurality voting threshold is the accepted standard for the election of directors of publicly-traded companies, is the default standard under Delaware law and provides important advantages over\nthe majority voting threshold suggested by the stockholder proposal. For example, the majority voting threshold may cause undesired vacancies on the Board, which may be disruptive to the Company and\ncould lead to inefficiencies in the operation of the Board and its committees. In addition, this voting threshold may have a negative impact on stockholders who wish to elect someone other than a\nBoard recommended nominee. \n\n\nFor\nthese reasons, the Board recommends that you vote AGAINST this proposal. \n\n\n\n\n\n\n\n\n\n \nAudit Committee Report \n\n\nOur committee has reviewed and discussed Marathon's audited financial statements and its report on internal control over financial reporting for 2004 with Marathon's\nmanagement. We have discussed with the independent auditors, PricewaterhouseCoopers LLP (\"PricewaterhouseCoopers\"), the matters required to be discussed by Statement on Auditing Standards\nNo. 61 (Communication with Audit Committees), as may be modified or supplemented. We have received the written disclosures and the letter from PricewaterhouseCoopers required by Independence\nStandards Board Standard No. 1 (Independence Discussions with Audit Committees), as may be modified or supplemented, and we have discussed with PricewaterhouseCoopers its independence. Based on\nthe review and discussions referred to above, we recommended to the Board that the audited financial statements and the report on internal control over financial reporting for Marathon be included in\nthe Company's Annual Report on Form 10-K for 2004 for filing with the Securities and Exchange Commission. \n\n\nShirley\nAnn Jackson, Chair \n\n\nCharles\nF. Bolden, Jr. \n\n\nDavid\nA. Daberko \n\n\nWilliam\nL. Davis \n\n\nCharles\nR. Lee \n\n\nDennis\nH. Reilley \n\n\nDouglas\nC. Yearley \n\n\n\n\n\n\n\n\n\n \nInformation Regarding the Independent Registered\n\n\nPublic Accounting Firm's Fees, Services and Independence \n\n\nIndependent Auditor Fees and Services\n\n\nAggregate\nfees for professional services rendered for the Company by PricewaterhouseCoopers LLP (\"PricewaterhouseCoopers\") for the years ended December 31, 2004 and 2003 were: \n\n\n\n\n\n\n\n\n\n(1)This\namount includes $3.5 million for the internal control assessment required by Section 404 of the Sarbanes-Oxley Act of 2002.\n\n\n\n\n(2)Effective\nJanuary 1, 2003, the Audit Committee adopted the Audit Committee Policy for Pre-Approval of Audit, Audit-Related, Tax and Permissible\nNon-Audit Services. This policy is attached as Appendix I to this proxy statement. Commencing with 2003, the Audit Committee pre-approved all the fees and services\nincluded within the scope of this policy. The Audit Committee did not utilize the de minimus exception in 2004 or 2003. \n\n\n\nThe Audit fees for the years ended December 31, 2004 and 2003 were for professional services rendered for the audit of the\nconsolidated financial statements and audit of internal control over financial reporting of the Company, statutory and regulatory audits, issuance of comfort letters, consents, and assistance with and\nreview of documents filed with the SEC. \n\n\nThe\nAudit-Related fees for the years ended December 31, 2004 and 2003 were for assurance and related services related to employee benefit plan\naudits, attest services that are not required by statute or regulation including services performed in 2003 related to compliance with Section 404 of the Sarbanes-Oxley Act of 2002, and\nconsultations concerning financial accounting and reporting standards. \n\n\nTax fees for the years ended December 31, 2004 and 2003 were for services related to tax compliance, including the preparation of tax returns and\nclaims for refund; and tax planning and tax advice, including assistance with and representation in tax audits and appeals, assistance with customs audits, preparation of individual income tax returns\nfor expatriates, executive tax services and requests for rulings or technical advice from tax authorities. \n\n\nPricewaterhouseCoopers\ndid not provide executive tax services in 2004 and has been replaced in 2005 as our provider of expatriate tax return preparation services. \n\n\n\n\n\n\n\n\n\n \nIncluded\nin the 2004 tax fees is $200,000 of fees related to the completion of a contract with PricewaterhouseCoopers for a finding-based fee arrangement that commenced in 2001. The Company was\nreimbursed by United States Steel Corporation for the $200,000 paid to PricewaterhouseCoopers. \n\n\nFurther\nreducing the 2004 tax fees was a refund of fees totaling $287,573 related to a fee adjustment for the completion of a contract with PricewaterhouseCoopers for a finding-based fee arrangement\nthat commenced in 1999. \n\n\nAll Other fees for the years ended December 31, 2004 and 2003 were for services rendered for accounting research software licenses, assistance\nwith the preparation of statutory financial statements, assistance with filing of statistical information with government agencies, and record storage services. \n\n\nCompatibility of PricewaterhouseCoopers' Services with its Independence\n\n\nThe\nAudit Committee has considered whether PricewaterhouseCoopers' provision of the services provided under \"All Other\" above is compatible with maintaining PricewaterhouseCoopers' independence, and\nthe committee has determined that it is. \n\n\n\n\n\n\n\n\n\n \nSecurity Ownership of Certain Beneficial Owners \n\n\nThe following table furnishes information concerning all persons known to Marathon to beneficially own five percent or more of the common stock of Marathon: \n\n\n\n\n\n\n\n\n\n(1)Based\non Schedule 13G dated February 9, 2005 which indicates that Capital Research and Management Company had sole voting power over no shares, shared voting power over\nno shares, sole dispositive power over 50,252,000 shares and shared dispositive power over no shares.\n\n\n\n\n(2)Based\non Schedule 13G dated February 14, 2005 which indicates that Barclays Global Investors, NA is the beneficial owner of 37,770,772 shares and had sole voting power\nover 34,166,586 shares, shared voting power over no shares, sole dispositive power over 37,770,772 shares, and shared dispositive power over no shares. According to such Schedule 13G,\n(i) Barclays Global Investors, NA is the beneficial owner of 28,565,376 shares and has sole voting power over 25,256,878 shares, shared voting power over no shares, sole dispositive power over\n28,565,376 shares, and shared dispositive power over no shares, (ii) Barclays Global Fund Advisors is the beneficial owner of 3,753,744 shares and has sole voting power over 3,474,656 shares,\nshared voting power over no shares, sole dispositive power over 3,753,744 shares, and shared dispositive power over no shares, (iii) Barclays Global Investors, Ltd. is the beneficial\nowner of 4,942,593 shares and has sole voting power over 4,925,993 shares, shared voting power over no shares, sole dispositive power over 4,942,593 shares, and shared dispositive power over no\nshares, (iv) Barclays Global Investors Japan Trust and Banking Company Limited. is the beneficial owner of 289,700 shares and has sole voting power over 289,700 shares, shared voting power over\nno shares, sole dispositive power over 289,700 shares, and shared dispositive power over no shares, (v) Barclays Life Assurance Company Limited is the beneficial owner of 17,854 shares and has\nsole voting power over 17,854 shares, shared voting power over no shares, sole dispositive power over 17,854 shares, and shared dispositive power over no shares, (vi) Barclays Capital\nSecurities Limited is the beneficial owner of 18,205 shares and has sole voting power over 18,205 shares, shared voting power over no shares, sole dispositive power over 18,205 shares, and shared\ndispositive power over no shares, and (vii) Palomino Limited is the beneficial owner of 183,300 shares and has sole voting power over 183,300 shares, shared voting power over no shares, sole\ndispositive power over 183,300 shares and shared dispositive power over no shares. \n\n\n\n\n\n\n\n\n Security Ownership of Directors and Executive Officers \n\n\nThe following table sets forth the number of shares of Marathon common stock beneficially owned as of January 31, 2005 by each director, by each executive officer named\nin the Summary Compensation Table and by all directors and executive officers as a group. In calculating the percentage of outstanding stock, each listed person's stock options that are or may be\nexercisable within sixty days have been added to the total outstanding shares. \n\n\n\n\n\n\n\n\n\n(1)Includes\nannual retainer deferrals of Common Stock Units issued under the Marathon Oil Corporation Deferred Compensation Plan for Non-Employee Directors and the Marathon\nOil Corporation 2003 Incentive Compensation Plan (\"2003 Incentive Compensation Plan\") as follows: \n\n\n\n\n\n\n\n\n\n(2)Includes\n2,824 Common Stock Units issued as annual non-retainer director stock awards under the 2003 Incentive Compensation Plan.\n\n\n\n\n(3)Includes\nshares held under the Marathon Thrift Plan, the United States Steel Savings Fund Plan for Salaried Employees, the Dividend Reinvestment and Direct Stock Purchase Plan, and\nthe Non-Employee Director Stock Plan.\n\n\n\n\n(4)Reflects\nperformance shares or restricted stock granted under the 1990 Stock Plan and the 2003 Incentive Compensation Plan, which are subject to limits on sale and transfer and can be\nforfeited under certain conditions. Includes 15,000 restricted shares granted to Ms. Clark pursuant to her employment agreement, which vest on January 16, 2007, the third anniversary of\nthe date of grant.\n\n\n\n\n(5)Includes\n11,009 shares indirectly held by Mr. Usher through a Revocable Trust Account governed by a Revocable Trust Agreement, dated July 3, 2001, pursuant to which\nMr. Usher is the settlor, co-trustee with his spouse and beneficial owner of the shares held in said account; includes 500 shares indirectly held by Mr. Yearley in a family\ntrust; includes 1,000 shares indirectly held by Mr. Davis in the William L. Davis III Revocable Trust; and includes 200 shares held indirectly by Mr. Behrman through a Family Living\nTrust, pursuant to which Mr. Behrman's mother-in-law is the beneficiary, and Mr. Behrman's spouse is the trustee and has a remainder interest therein.\n\n\n\n\n*(6)The\npercentage of shares beneficially owned by each director or nominee, or each executive officer does not exceed one percent of the common shares outstanding; and the percentage of\nshares beneficially owned by all directors and executive officers of the Company, as a group, does not exceed one percent of the common shares outstanding. \n\n\n\n\n\n\n\n \nSection 16(a) Beneficial Ownership\n\n\nReporting Compliance \n\n\nSection 16(a) of the Securities and Exchange Act of 1934, as amended, requires that the Company's directors and executive officers, and persons who own more than ten\npercent of a registered class of the Company's equity securities, file reports of beneficial ownership on Form 3 and changes in beneficial ownership on Form 4 or Form 5 with the\nSecurities and Exchange Commission. Based solely on the Company's review of the reporting forms and written representations provided to the Company from the individuals required to file reports, the\nCompany believes that each of its executive officers and directors has complied with the applicable reporting requirements for transactions in the Company's securities during the fiscal year ended\nDecember 31, 2004, with the exception of one late report on Form 4 filed by Mr. Behrman. This late report related to the purchase of 200 shares of common stock by a family living\ntrust, in which Mr. Behrman's mother-in-law is the beneficiary and his spouse is the trustee and has a remainder interest therein. Mr. Behrman has disclaimed\nbeneficial ownership of this common stock to the extent of his and/or his spouse's pecuniary interest therein. \n\n\n\n\n\n\n\n\n\n \nExecutive Compensation and Other Information \n\n\nThe following table sets forth certain information concerning the compensation awarded to, earned by, or paid to Mr. Cazalot, President and Chief Executive Officer, and\nthe other four most highly compensated executive officers of Marathon who were serving as executive officers at the end of 2004, for services rendered in all capacities during 2004, 2003 and 2002. \n\n\nSummary Compensation Table \n\n\n\n\n\n\n\n(1)The\nsalaries shown in this column reflect three months at one annual salary rate and nine months at the current annual salary rate for all named officers except for Ms. Clark\nwho was hired January 5, 2004 at an annual salary of $400,000.\n\n\n\n\n(2)The\namounts shown include salary and bonus earned as well as earned but deferred. All Marathon officers are eligible to defer up to 20% of their salary and bonus under the unfunded\nMarathon Oil Company Non-Qualified Deferred Compensation Plan. The investment options under this plan mirror the investment options offered to employees under the Marathon Oil Company\nThrift Plan with the exception of the Marathon common stock fund.\n\n\n\n\n(3)The\nbonus amounts shown for Mr. Cazalot in 2004, 2003, and 2002 include a $200,000 annual retention bonus paid by Marathon pursuant to Mr. Cazalot's employment\nagreement, which provides for the payment of a retention bonus of $200,000 on the first, second, third, fourth and fifth anniversaries of his employment date. Ms. Clark's bonus amount for 2004\nincludes a $300,000 signing bonus paid by Marathon pursuant to Ms. Clark's employment agreement, of which one half ($150,000) was paid within 45 days of her hire date (January 5,\n2004) and the other half ($150,000) was paid in December 2004. (See page 46 of this report for additional information on Mr. Cazalot's and Ms. Clark's employment agreements.) \n\n\n\n\n\n\n\n \n\n(4)Other\nAnnual Compensation is summarized below: \n\n\n\n\n\n\n\n\n\n\n\n(a)Officers\nreceive dividend payments on unvested performance shares that are equivalent to the dividends received by all common stockholders. Ms. Clark also receives dividends on\nher unvested restricted stock hire grant. As noted, Mr. Cazalot also received dividends on his United States Steel unvested performance shares in 2002.\n\n\n\n\n(b)The\namounts shown are the amounts of income imputed to the officers for personal use of Company aircraft based on the Standard Industry Fare Level (\"SIFL\") rates and\nrelated terminal charges as allowed by the Internal Revenue Code.\n\n\n\n\n(c)All\nMarathon employees, including officers, can receive reimbursements for fitness-related activities covered under a wellness program up to a specified maximum.\n\n\n\n\n(d)Officers\nare eligible for reimbursement for professional advice related to tax, estate, and financial planning up to a specified maximum.\n\n\n\n\n(e)The\namount shown for Mr. Lowden in 2004 reflects taxable travel expenses and the related tax gross up. Amounts shown in 2002 represent a gross up allowance for tax preparation\nand planning charges. Beginning in 2003, the Company no longer provides a tax gross up for these amounts.\n\n\n\n\n\n\n\n(5)Under\nthe terms of her employment agreement, Ms. Clark was granted 15,000 shares of restricted stock on January 16, 2004. The dollar value of the grant reflected in the\nSummary Compensation Table is calculated by multiplying the shares by $33.41, the closing price of Marathon stock on the date of grant. All 15,000 shares will vest on the third anniversary of the\ngrant date. Dividends are paid on restricted stock. The value of these shares was $564,150 on December 31, 2004 based on a closing price of $37.61.\n\n\n\n\n(6)All\ngrants were stock-settled SARs with the exception of Ms. Clark's hire grant of 20,000 stock options with tandem stock appreciation rights which was made on\nJanuary 16, 2004.\n\n\n\n\n(7)The\namounts in this column reflect the value of vested performance shares from the 1990 Stock Plan for the years 2004, 2003, and 2002. The amount shown in 2002 for Mr. Cazalot\nalso reflects (i) a $73,494 payout from vesting of United States Steel performance shares under the 1990 Stock Plan and (ii) a $145,292 cash settlement received from United States Steel\ndue to the decision by its Compensation Committee to cancel all unvested performance share awards previously granted to Marathon officers in light of the separation of the steel and energy businesses\nof Marathon.\n\n\n\n\n(8)The\namounts in this column are the amounts contributed by the Company under the tax-qualified Marathon Oil Company Thrift Plan and the related supplemental savings plans\nwhich provide officers with benefits (payable from general assets) that would otherwise be payable from the tax-qualified plan but for the Internal Revenue Code limits placed on that plan. \n\n\n\n\n\n\n\n \nThe following table sets forth certain information concerning stock options with tandem stock appreciation rights (\"SARs\") and stock-settled stock appreciation\nrights (also referred to as \"SARs\") granted during 2004 to each executive officer named in the Summary Compensation Table under the 2003 Incentive Compensation Plan: \n\n\n2004 Option/SAR Grants \n\n\n\n\n\n\n\n\n\n(1)SARs\nwere granted to the named executive officers on May 26, 2004. One third of the SARs shown are exercisable on May 26, 2005, another third on May 26, 2006, and\nthe final third on May 26, 2007. If an officer dies, SARs will continue to vest and will remain exercisable until the earlier of May 26, 2014 or three years from the date of death. If an\nofficer retires, SARs will continue to vest and will remain exercisable until the earlier of May 26, 2014, or in the event of Mr. Cazalot's retirement, nine years from the date of\nretirement; in the event of the retirement of all other named officers, six years from the date of retirement. The terms of the SARs are unaffected by a termination due to disability, but all other\nterminations result in the forfeiture of unvested SARs. \n\nIn\naddition, all SARs would become immediately exercisable upon a change in control as defined in the 2003 Incentive Compensation Plan. Upon the exercise of a SAR, officers receive an amount in shares\nequal to the excess of the fair market value of a share on the date the SAR is exercised over the grant price per share. \n\n\n\n\n(2)As\npart of the terms of an employment agreement, Ms. Clark was granted 20,000 stock options with tandem stock appreciation rights on January 16, 2004. One third of the\noptions are exercisable on January 16, 2005, another third on January 16, 2006, and the final third on January 16, 2007. If Ms. Clark retires, the options will continue to\nvest and will remain exercisable until the earlier of January 16, 2014 or six years from the date of retirement. The remaining terms and conditions of the grant are the same as those mentioned\nin (1) above.\n\n\n\n\n(3)The\nCompany uses the Black-Scholes option pricing model to value the stock options and SARs as of the date of grant. The Black-Scholes value used for the January 16, 2004 grant\nis $8.14 and the May 26, 2004 grant is $8.83. The accuracy of this model depends on key assumptions about future interest rates, stock price volatility and dividend yields, among other factors.\nThe grant date present value of these options and SARs was calculated using the variables below: \n\n\n\n\n\n\n\n\nThe\nultimate values of the SARs and options will depend on the future market price of the Company's common stock, which cannot be forecasted with reasonable accuracy. The actual value, if any, an\nemployee will realize upon exercise of a SAR or option will depend on the excess of the market value of the Company's common stock over the grant price on the date the SAR or option is exercised. \n\n\n\n\n\n\n\n\n\n \nThe\nfollowing table sets forth certain information concerning options to purchase Marathon common stock and SARs exercised by each executive officer named in the Summary Compensation Table during 2004\ntogether with the total number of options and SARs outstanding at December 31, 2004 and the value of such options and SARs. \n\n\nOption/SAR Exercises and Year-End Values \n\n\n\n\n\n\n\n\n\n(1)Represents\nthe pre-tax gain, which is the difference between the fair market value of the shares on the date of exercise and the grant price.\n\n\n\n\n(2)Represents\nthe fair market value stock price less the grant price for all remaining exercisable and unexercisable options for which the grant price is less than the fair market value\nprice. The fair market value is based on the average of the high and low trading price of Marathon's common stock on December 31, 2004 which was $37.565. Exercisable options/SARs have been held\nat least one year from the date of grant. \n\n\n\n\n\n\n\n \nAs\ndescribed in the Compensation Committee Report, in 2004 the Company granted long-term incentive awards in the form of performance shares under the 2003 Incentive Compensation Plan. In\naddition, the Company granted nominal levels of performance shares under the 1990 Stock Plan in order to fulfill the terms of the long-term incentive program established in 2000. The\nfollowing table reflects the shares granted in 2004 to the named executives: \n\n\nLong-Term Incentive Plans-Awards in Last Fiscal Year \n\n\n\n\n\n\n\n\n\n(1)In\nMay 2004, performance share grants were made under the 2003 Incentive Compensation Plan. Vesting of these shares is tied to Total Shareholder Return (\"TSR\") as compared to\nthe TSR of each of the member companies within the AMEX Oil Index (\"XOI\"). These performance shares will have a three-year performance period with payout varying from 0% to 200% of target\nbased on actual performance. In the event of a change of control of the Company, all performance shares would immediately vest at target levels. Prior to vesting, dividends are paid on the target\nnumber of performance shares.\n\n\n\n\n(2)These\ngrants were made under the 1990 Stock Plan in order to fulfill the terms of a previously-established performance share program that will expire in 2005. Due to the Plan's\none-year holding period requirement and the fact that the performance exceeded target in 2003, an additional grant of performance shares was necessary in 2004. This grant will allow\nsufficient shares to be available to fulfill the maximum potential payout in 2005 in the event performance exceeds target for 2004. The threshold, target, and maximum vesting opportunities were not\naffected by the 2004 grants. Vesting of these performance shares is based entirely on the achievement of pre-established performance measures related to corporate performance with payouts\nvarying from 0% to 200% of target based on actual performance. \n\nTo\nemphasize the long-term nature of the awards, vesting decisions are based on three-year average operational and financial performance, as compared with\nthree-year peer-group performance as described in the Compensation Committee\nReport. In the event of a change of control of the Company, all performance shares would immediately vest at target levels. \n\n\nDividends\nare paid on all unvested shares. \n\n\n\n\n\n\n\n\n\n\n\n Compensation Committee Report\n\n\non Executive Compensation \n\n\nThe Compensation Committee (the \"Committee\") of Marathon Oil Corporation sets policies and administers programs regarding compensation for Marathon's executive officers and\nregularly reports its actions to the Board. In addition, the Committee reviews and approves the compensation of the Marathon Ashland Petroleum LLC (\"MAP\") officers on behalf of the MAP Board of\nManagers. The Committee is comprised only of independent, non-employee directors. The members who served on the committee are Mr. Yearley, Mr. Davis, Dr. Jackson,\nMr. Lader, Mr. Reilley, and Mr. Schofield. \n\n\nThe\npurpose of this report is to summarize the philosophy, compensation components and specific program objectives that are considered by the Committee when making decisions regarding compensation for\nMarathon officers. \n\n\nCompensation Philosophy \n\n\nCompensation programs for Marathon officers are designed to attract, retain, and motivate employees who are responsible for making significant contributions to the achievement\nof corporate goals and objectives. The Committee reviews on an annual basis all elements of officers' compensation, including benefits and perquisites. The Committee believes that the total\ncompensation package offered to officers is reasonable. \n\n\nThe\nprincipal elements of our officers' compensation program are: \n\n\n\n•Base\nsalary\n\n\n\n\n•Annual\nbonus award\n\n\n\n\n•Long-term\nincentive awards (performance shares and stock options or stock-settled stock appreciation rights). \nAnnual\nbonus and long-term incentive compensation is provided under the stockholder-approved 2003 Incentive Compensation Plan (the \"Incentive Plan\"). \n\n\nOverall,\nexecutive compensation at Marathon is designed to provide total compensation opportunities that are at the median level as compared to our peers. Actual awards earned under our incentive\ncompensation programs will vary based upon the performance of both the Company and the individual officer. When performance goals are exceeded, incentive compensation will be above the median. When\nperformance is below our objectives, incentive compensation, if provided, will be below the median. \n\n\nThe\nCommittee has hired an independent compensation consultant who reports directly to the Committee. The consultant provides them with expert advice and comparative data on executive compensation.\nWith the help of the consultant, the Committee regularly compares the salary, annual bonus and long-term incentive opportunities for the CEO and officers with that of similar positions at\ncomparable companies. To maintain competitiveness, Marathon uses compensation data from companies more similarly situated to Marathon than some of the companies comprising the Standard & Poor's\nDomestic Integrated Oil Index (see page 41). \n\n\n\n\n\n\n\n\n\n \nThe\nCommittee believes that stock ownership requirements better align the interests of the officers to those of Marathon's stockholders. Consistent with this philosophy, in 2003 the Committee\nestablished stock ownership guidelines that require all Marathon officers to acquire and hold significant levels of Marathon common stock. An individual will be allowed up to five years from the\nimplementation of the guidelines or, if later, his or her appointment to an officer position, to reach the minimum required level of Marathon common stock ownership. Requirements are as follows: \n\n\n\n•Chief\nExecutive Officer-225,000 shares\n\n\n\n\n•Chief\nFinancial Officer-60,000 shares\n\n\n\n\n•Senior\nVice Presidents-42,000 shares\n\n\n\n\n•Vice\nPresidents-12,000 shares \nThe\nCommittee is committed to preserving the deductibility of compensation under Section 162(m) of the Internal Revenue Code whenever possible. Section 162(m) of the Internal Revenue\nCode places a limit of $1 million on the amount of compensation that Marathon may deduct in any one year for the CEO and each of the most highly compensated executive officers as reported in\nthe Proxy Statement. Certain performance-based compensation approved by stockholders is not subject to the deduction limit. However, the Committee awards non-deductible compensation when\nthey believe such grants are in the best interest of the Company. \n\n\nBase Salary \n\n\nSalary administration for Marathon officers is based upon the following criteria: \n\n\n\n•Officer\nPerformance-Actual salary adjustments are based primarily upon the officer's performance, including living the Marathon values.\n\n\n\n\n•External\nCompetitiveness-Overall salary competitiveness is reviewed annually based on peer company data as provided by our independent consultant. The salary for\neach position is designed to fall at or near the 50th percentile for similar positions at comparable companies.\n\n\n\n\n•Internal\nEquity-The salary objective for each position is designed to accurately reflect its relative \"value\" to the Company. \n\n\n\nOfficers'\nsalary increases are granted only if justified by performance and as deemed necessary to maintain salary level competitiveness. The annual bonus and long-term incentive programs,\nwhich are performance based, provide the primary opportunity for increased compensation levels. \n\n\n\n\n\n\n\n\n\n \nAnnual Bonus Awards \n\n\nThe Committee approves annual bonus awards under the stockholder-approved Incentive Plan. Marathon's annual bonus target opportunities for officers are designed to provide\nawards that are competitive with annual bonus target opportunities for similar positions at peer companies. However, since actual bonus payouts are closely tied to performance, exceptional bonuses are\nawarded for superior performance and reduced or no bonuses are given for performance below our objectives. \n\n\nDuring\nthe first quarter, the Committee authorized a bonus pool for 2004 based upon the Company's income from operations. After the pool was certified, the Committee awarded individual bonuses from\nthe pool based upon pre-established performance measures specifically related to the success of the Company and the business unit segments, as well as individual performance. \n\n\nThe\nperformance measures used for consideration of the 2004 bonus payments are listed below. Each officer's bonus payment was tied to the performance measures (among those listed) that correspond to\nthe success of his or her respective business unit segment. \n\n\n\n•Marathon\nOil Corporation Return on Capital Employed Competitive Comparison\n\n\n\n\n•Safety\nPerformance\n\n\n\n\n•Environmental\nImpact Measures\n\n\n\n\n•Upstream\nAdjusted Net Income per Barrel of Oil Equivalent Competitive Comparison\n\n\n\n\n•Downstream\nAdjusted Operating Income per Barrel of Crude Oil Throughput Competitive Comparison\n\n\n\n\n•Net\nProved Reserve Additions\n\n\n\n\n•Refining\nMechanical Availability\n\n\n\n\n•Individual\nPerformance, including Living the Marathon Values \nAs\nrequired under the Incentive Plan, the Committee confirmed the performance achievements prior to the payment of awards. The Committee reserves the right to adjust or eliminate an annual bonus award\nthat would otherwise be payable under the Incentive Plan based on its assessment of overall performance.\n\n\nLong-Term Incentive Awards \n\n\nLong-term incentive awards are a critical element in the mix of compensation as they provide a direct link to stockholder interests. Our objective in making\nlong-term incentive grants is to provide officers with opportunities to receive competitive levels of compensation for meeting performance objectives, exceptional rewards for superior\nperformance, or reduced or no rewards for performance below our objectives. \n\n\nIn\nMay 2004, the Committee granted long-term incentive awards under the Company's stockholder-approved plans. New grants of performance shares and stock appreciation rights were\nmade under the Incentive Plan. These awards were based upon competitive data, individual performance and the overall successful performance of the Company in 2003. In addition, the Committee awarded\nnominal levels of performance shares under the 1990 Stock Plan in order to fulfill the terms of the long-term incentive program established in 2000. \n\n\n\n\n\n\n\n\n\n \nPerformance Shares \n\n\nIn May 2004, the Committee granted performance shares to the officers with vesting tied to Total Shareholder Return (\"TSR\") as compared to the TSR for each of the member\ncompanies within the AMEX Oil Index (\"XOI\"). These performance shares will have a three-year performance period with vesting at the end of the three-year performance period,\nvarying from 0% to 200% of target based on actual performance. \n\n\nAdditionally,\nthe Committee approved the vesting of performance shares granted in 2000 under the 1990 Stock Plan. Vesting of these shares was based entirely on the achievement of\npre-established performance measures over the course of a three-year performance period, as compared with peer group performance. The pre-established measures used\nfor determining this 2004 vesting were as follows: \n\n\n\n•Net\nIncome from Operations per Barrel of Oil Equivalent Competitive Comparison\n\n\n\n\n•Oil\nand Gas Reserve Replacement Ratio\n\n\n\n\n•Earnings\nBefore Interest, Taxes and Depreciation as a Percent of Total Assets\n\n\n\n\n•Safety\nPerformance\n\n\n\n\n•Adjusted\nOperating Income per Barrel of Crude Oil Throughput Competitive Comparison \n\n\n\nVesting\nlevels may be reduced or eliminated entirely at the discretion of the Committee based on an overall assessment of performance. \n\n\nStock Options/Stock-Settled Stock Appreciation Rights (\"Stock SARs\") \n\n\nIn May 2004, the Committee granted stock-settled stock appreciation rights (\"Stock SARs\"), which are similar to fixed price stock options. This change from options to\nStock SARs was facilitated by Marathon's decision to expense stock options, as Stock SARs now have an equivalent accounting treatment to stock options. However, the Committee reserves the right to\ngrant either fixed priced stock options or Stock SARs as a form of long-term incentive compensation. \n\n\nAll\nStock SARs have an exercise price per share equal to the fair market value of the stock on the day of grant, and re-pricing is not permitted under the Incentive Plan. Stock SARs\ngranted in 2004 have a three-year pro-rata vesting period and a maximum term of 10 years. Stock SAR recipients have no stockholder rights until the Stock SAR has been\nexercised. \n\n\nChief Executive Officer \n\n\nMr. Cazalot's base salary, annual bonus award and long-term incentive awards are determined in the same manner as the compensation of other executive\nofficers. \n\n\nUnder\nMr. Cazalot's leadership, the highlights of Marathon's 2004 achievements that influenced his incentive compensation are as follows: \n\n\n\n•Realized\ncontinued strong exploration success with a total of six discoveries in four countries\n\n\n\n\n•Strengthened\ncore areas by advancing several key international development projects which will serve as the basis for production growth in the coming years, such as:\n\n\n\n\n\n\n-Approval\nof the Alvheim plan of development and operations in Norway\n\n\n\n\n-Completion\nof the condensate project and advancement of the liquefied petroleum gas (\"LPG\") expansion project in Equatorial Guinea\n\n\n\n\n-Approval\nfor the Corrib development in Ireland \n\n\n\n\n\n\n\n\n \n\n\n\n\n\n•Added\nnet proved reserves of approximately 221 million barrels of oil equivalent while producing 122 million barrels of oil equivalent, resulting in a 181%\nreserve replacement ratio\n\n\n\n\n•Advanced\nour Integrated Gas Strategy by:\n\n\n\n\n\n\n-Sanctioning\nEquatorial Guinea liquefied natural gas (\"LNG\") project, with construction on schedule for first deliveries of LNG in late 2007\n\n\n\n\n-Successfully\ncompleting a gas-to-liquids demonstration plant\n\n\n\n\n-Signing\nLNG supply agreement for Elba Island LNG regas terminal capacity rights\n\n\n\n\n\n•Strengthened\nMAP assets by:\n\n\n\n\n\n\n-Completing\nCatlettsburg, Kentucky refinery repositioning project\n\n\n\n\n-Increasing\ncrude oil capacity at Garyville, Louisiana refinery\n\n\n\n\n-Achieving\nrecord refinery crude and feedstock throughputs for fourth quarter and full year. \n\nAfter\nreviewing the achievements of the Company under his leadership and competitive CEO pay data provided by an independent consultant, the Committee approved a base salary of $1,100,000 for\nMr. Cazalot, effective April 1, 2005. \n\n\nFor\n2004, Mr. Cazalot's annual bonus target was set at the median level as compared to other CEO bonus targets among our peer companies. Target levels of performance on both a Company and\nindividual level exceeded established performance goals set forth for Mr. Cazalot, therefore, he was paid a bonus of $1,900,000 for 2004. This annual bonus award was based upon the Company's\nfocused execution of its key business strategies and the improved profitability of each of its three business segments. Like all other officers, he also received long-term incentive awards\nin the form of performance shares and Stock SARs in May 2004. Mr. Cazalot's long-term incentive awards were based on the Committee's evaluation of his performance and\nachievements as well as industry comparative data. As a result of these decisions, the Committee believes Mr. Cazalot's total compensation is competitive among his industry peers. \n\n\nDouglas\nC. Yearley, Chair\n\n\nWilliam L. Davis\n\n\nShirley Ann Jackson\n\n\nPhilip Lader\n\n\nDennis H. Reilley\n\n\nSeth E. Schofield \n\n\n\n\n\n\n\n\n\n \nStockholder Return Performance Presentation \n\n\nThe line graph below compares the yearly change in cumulative total stockholder return for our common stock with the cumulative total return of the Standard & Poor's\nDomestic Integrated Oil Index and the Standard & Poor's 500 Stock Index. \n\n\nComparison of Cumulative Total Return\n\n\non $100 Invested in Marathon Stock on December 31, 1999\n\n\nvs.\n\n\nS&P Domestic Integrated Oil Index and S&P 500(1)\n\n\n\n\n\n\n\n\n\n(1)Total\nreturn assumes reinvestment of dividends. \n\n\n\n\n\n\n\n\n Certain Relationships and Related Party Transactions \n\n\nUnited States Steel Corporation \n\n\nThomas J. Usher is the Chairman of the Board of United States Steel Corporation. In addition to Mr. Usher, four other members of Marathon's Board of Directors are\nmembers of the Board of Directors for United States Steel. \n\n\nThe\nSeparation \n\n\nOn\nDecember 31, 2001, Marathon disposed of its steel business through a tax-free distribution of the common stock of its wholly-owned subsidiary United States Steel to holders of\nUSX-U.S. Steel Group common stock in exchange for all outstanding shares of USX-U.S. Steel Group common stock on a one-for-one basis. As a result,\nMarathon and United States Steel entered into a number of agreements governing their future relationship. \n\n\nObligations\nAssociated with Financings \n\n\nMarathon\nremains obligated (primarily or contingently) for certain debt and other financial arrangements for which United States Steel has assumed responsibility for repayment under the terms of the\nseparation. As of December 31, 2004, Marathon has identified $671 million financial obligations, which have been assumed by United States Steel. These financial obligations will continue\nin 2005. \n\n\nRetirement\nBenefits Payments \n\n\nPursuant\nto the terms of the separation, Marathon made payments to United States Steel in the amount of $4.1 million in 2004 for its share of retirement benefits. This amount includes a charge\nfor Marathon's share of non-qualified benefit payments to Mr. Usher of $3.4 million as a result of his retirement as chief executive officer of United States Steel. \n\n\nOther\nTransactions \n\n\nIn\n2004, Marathon made payments to United States Steel related to a federal tax audit settlement and a state tax refund for years prior to the separation. During 2004, amounts paid by either party to\nthe other party were less than 5% of the receiving party's consolidated gross revenues for that period. \n\n\nAlso\nin 2004, Marathon had sales of natural gas to United States Steel totaling $28.7 million and sales of refined products of $1.2 million. Marathon purchased raw materials from United\nStates Steel in the amount of $26.6 million. These transactions were in the ordinary course of business and at competitive prices and terms. \n\n\nBarclays Global Investors, NA \n\n\nBarclays Global Investors, NA and its affiliates own greater than 5% of the outstanding common stock of Marathon. In 2004, Marathon and affiliates of Barclays were parties to\ncommodity-based derivative contracts, which resulted in net cash settlement payments to Barclays in the amount of $3.5 million. \n\n\nOther Transactions \n\n\nOther than as provided above, the Company and its subsidiaries have had transactions with entities with which certain directors were affiliated in the regular course of\nbusiness since January 1, 2004. Our Board of Directors has given due consideration to these transactions and has determined that no director had a material interest in any such transaction.\nSuch transactions were in the ordinary course of business and at competitive prices and terms. We anticipate that similar transactions will occur in 2005. \n\n\n\n\n\n\n\n\n\n \nPension Benefits \n\n\nMarathon provides retirement benefits to its employees, including the named executive officers, under the Retirement Plan of Marathon Oil Company. The following table shows the\nannual pension benefits for retirement at age 65 for various levels of eligible earnings which would be payable to employees retiring with the years of service shown. The table is based on a formula\nof a specified percentage (dependent on years of participation in the applicable Marathon retirement plan) of average annual eligible earnings in the three consecutive years of the ten years prior to\nretirement in which such earnings were highest. \n\n\nMarathon Oil Company Retirement Plan\n\n\nTable of Pension Benefits\n\n\n\n\n\nFinal Average\n\n\nAnnual Pay For\n\n\nHighest Three\n\n\nConsecutive Years\n\n\nIn Ten-Year\n\n\nPeriod Preceding\n\n\nRetirement \n \n \n\n \n \n \n\n \n \n \n\n \n \n \n\n \n \n \n\n \n \n \n\n \n \n \n\n \n \n \n\n \n\n\n\n\n \nAnnual Benefits for Years of Participation \n\n\n\n\n \n1 Year \n \n5 Years \n \n10 Years \n \n15 Years \n \n20 Years \n \n25 Years \n \n30 Years \n \n35 Years \n\n\n\n\n$ \n100,000 \n \n$ \n1,316 \n \n$ \n6,570 \n \n$ \n13,146 \n \n$ \n19,716 \n \n$ \n26,288 \n \n$ \n32,860 \n \n$ \n39,432 \n \n$ \n46,004 \n\n\n\n\n \n300,000 \n \n \n4,520 \n \n \n22,566 \n \n \n45,150 \n \n \n67,716 \n \n \n90,288 \n \n \n112,860 \n \n \n135,432 \n \n \n158,004 \n\n\n\n\n \n500,000 \n \n \n7,724 \n \n \n38,562 \n \n \n77,154 \n \n \n115,716 \n \n \n154,288 \n \n \n192,860 \n \n \n231,432 \n \n \n270,004 \n\n\n\n\n \n700,000 \n \n \n10,928 \n \n \n54,558 \n \n \n109,158 \n \n \n163,716 \n \n \n218,288 \n \n \n272,860 \n \n \n327,432 \n \n \n382,004 \n\n\n\n\n \n900,000 \n \n \n14,132 \n \n \n70,554 \n \n \n141,162 \n \n \n211,716 \n \n \n282,288 \n \n \n352,860 \n \n \n423,432 \n \n \n494,004 \n\n\n\n\n \n1,100,000 \n \n \n17,336 \n \n \n86,550 \n \n \n173,166 \n \n \n259,716 \n \n \n346,288 \n \n \n432,860 \n \n \n519,432 \n \n \n606,004 \n\n\n\n\n \n1,300,000 \n \n \n20,540 \n \n \n102,546 \n \n \n205,170 \n \n \n307,716 \n \n \n410,288 \n \n \n512,860 \n \n \n615,432 \n \n \n718,004 \n\n\n\n\n \n1,500,000 \n \n \n23,744 \n \n \n118,542 \n \n \n237,174 \n \n \n355,716 \n \n \n474,288 \n \n \n592,860 \n \n \n711,432 \n \n \n830,004 \n\n\n\n\n \n1,700,000 \n \n \n26,948 \n \n \n134,538 \n \n \n269,178 \n \n \n403,716 \n \n \n538,288 \n \n \n672,860 \n \n \n807,432 \n \n \n942,004 \n\n\n\n\n \n1,900,000 \n \n \n30,152 \n \n \n150,534 \n \n \n301,182 \n \n \n451,716 \n \n \n602,288 \n \n \n752,860 \n \n \n903,432 \n \n \n1,054,004 \n\n\n\n\n \n2,100,000 \n \n \n33,356 \n \n \n166,530 \n \n \n333,186 \n \n \n499,716 \n \n \n666,288 \n \n \n832,860 \n \n \n999,432 \n \n \n1,166,004 \n\n\n\n\n \n2,300,000 \n \n \n36,560 \n \n \n182,526 \n \n \n365,190 \n \n \n547,716 \n \n \n730,288 \n \n \n912,860 \n \n \n1,095,432 \n \n \n1,278,004 \n\n\n\n\n \n2,500,000 \n \n \n39,764 \n \n \n198,522 \n \n \n397,194 \n \n \n595,716 \n \n \n794,288 \n \n \n992,860 \n \n \n1,191,432 \n \n \n1,390,004 \n\n\n\n\n\nIn order to comply with the limitations prescribed by the Internal Revenue Code, pension benefits will be paid directly by Marathon pursuant to a\nnon-qualified retirement plan when they exceed the amounts permitted by the Code to be paid from federal income tax qualified pension plans. The terms of the non-qualified\nretirement plan provide enhanced benefits for all Marathon officers based on bonuses earned during their last ten years of employment. These additional benefits are based on the difference between\n(i) the sum of the three highest bonuses paid during the final ten years of employment, and (ii) the sum of the three bonuses included under the definition of final average earnings used\nin the Marathon retirement plans. As of February 1, 2005, this enhancement did not result in an increase in benefits for Ms. Clark and Mr. Hinchman. As of February 1, 2005,\nit is estimated that Mr. Cazalot, Mr. Lowden and Mr. Behrman will be entitled to receive annual benefits of $26,937, $1,742 and $1,733, respectively, beginning at age 65 under\nthis enhancement feature of the non-qualified retirement plan. \n\n\n\n\n\n\n\n\n\n \nCovered\nearnings include pay for hours worked, pay for allowed hours, military leave allowance, commissions, 401(k) contributions to the Marathon Oil Company Thrift Plan, deferred compensation\ncontributions, and bonuses. These earnings for the named executive officers are reported in the salary and bonus columns of the Summary Compensation Table on page 31. The benefits reflected above are\nbased upon a straight life annuity form of benefit and include the applicable Social Security offset as defined by the Marathon Plan. \n\n\nAs\nof January 31, 2005, Mr. Cazalot is credited with 4.83 years of participation, Ms. Clark 1.00, Mr. Hinchman 24.58, Mr. Behrman 4.33, and Mr. Lowden\n4.08. \n\n\n\n\n\n\n\n\n\n \nChange in Control Arrangements and Employment Contracts \n\n\nWe believe that if a change in control of Marathon becomes possible our key officers should be encouraged to continue their dedication to their assigned duties. For that\nreason, we have entered into agreements with each of the current officers named in the Summary Compensation Table on page 31 that provide, if an officer's employment is terminated under certain\ncircumstances following a change in control or during a potential change in control period, the officer will be entitled to the following severance benefits: \n\n\n\n•a\ncash payment of up to three times the sum of the officer's current salary plus the highest bonus in the three years before the termination or change in control;\n\n\n\n\n•life\nand health insurance benefits for up to 36 months after termination at the lesser of current cost or active employee cost;\n\n\n\n\n•an\nadditional three years of service credit and three years of age credit for purposes of retiree health and life insurance benefits;\n\n\n\n\n•a\ncash payment equal to the actuarial equivalent of the difference between amounts receivable by the officer under our pension plans and those which would be payable if\n(a) the officer had an additional three years of service credit, (b) the officer's final average pay had included his or her highest annual bonus from the preceding three years,\n(c) for purposes of determining early retirement commencement factors, the officer had three additional years of service credit and three additional years of age, and (d) the officer's\npension had been fully vested;\n\n\n\n\n•a\ncash payment equal to the difference between amounts receivable under our savings or thrift plans and amounts which would have been received if the officer's savings had\nbeen fully vested; and\n\n\n\n\n•a\ncash payment of the amount necessary to ensure that the payments listed above are not subject to net reduction due to the imposition of federal excise taxes. \nIn\naddition, immediately upon a change in control or upon an officer's termination of employment during a potential change in control, the officer's outstanding stock options and stock appreciation\nrights will be fully vested and exercisable, and the officer's restricted stock will be fully vested. \n\n\nEach\nagreement is automatically extended each year unless we notify the officer that we do not wish it extended. In any event, however, each agreement continues during a potential change in control\nperiod and for two years after a change in control. The severance benefits are payable if, any time after a change in control or during a potential change in control period, the officer's employment\nis terminated for good reason or is terminated for other than cause or disability. The severance benefits are not payable if termination is due to the officer's death or disability, is by Marathon for\ncause, is by the officer for other than good reason, or occurs after the officer reaches age 65. \n\n\nThe\ndefinition of a change in control for purposes of these agreements is complex but is summarized as follows. It includes any change in control required to be reported in response to Item 6(e) of\nSchedule 14A under the Securities Exchange Act of 1934 and provides that a change in control will have occurred if: \n\n\n\n\n\n\n\n\n\n \n\n•any\nperson not affiliated with Marathon acquires 20 percent or more of the voting power of our outstanding securities;\n\n\n\n\n•the\nBoard no longer has a majority made up of (1) individuals who were directors on the date of the agreements and (2) new directors (other than directors who\njoin the Board in connection with an election contest) approved by two-thirds of the directors then in office who (a) were directors on the date of the agreements or (b) were\nthemselves previously approved by the Board in this manner;\n\n\n\n\n•we\nmerge with another company and our stockholders end up with less than 50 percent of the voting power of the new entity;\n\n\n\n\n•our\nstockholders approve a plan of complete liquidation of Marathon; or\n\n\n\n\n•we\nsell all or substantially all of Marathon's assets. \nIn\naddition, if any person takes certain actions or enters into an agreement that could effectuate a change in control, a potential change in control will have occurred. \n\n\nIn\nMarch 2000, Marathon entered into an employment contract with Mr. Cazalot. Pursuant to the terms and conditions of the contract that remain applicable, Mr. Cazalot is entitled\nto an annual performance-based bonus award; a retention bonus of $200,000 on the first, second, third, fourth and fifth anniversaries of his employment date (which was March 3, 2000); an\ninitial stock option grant for 300,000 shares of Marathon common stock with an option price to be determined in accordance with the 1990 Stock Plan and exercisable as follows: 100,000 shares three\nyears from the date of grant (which was March 3, 2000), 100,000 shares four years from the date of grant, and 100,000 shares five years from the date of grant; eligibility for all of Marathon's\nexisting and future employee benefit programs applicable to executive officers; a comprehensive physical examination at Marathon's expense each calendar year in accordance with Marathon's policy\ncovering physical examinations for its executive officers; tax preparation and financial planning advice under terms and conditions comparable to those applicable to Marathon executive management; a\nchange-in-control agreement such as those described above; coverage for his family and himself under Marathon's medical care plan; reimbursement of the cost of membership fees\nand dues for one country club; and five weeks of paid vacation per year or the number of weeks to which he would be entitled under Marathon's vacation plan, whichever is longer. \n\n\nIn\nDecember 2003, Marathon entered into an employment contract with Ms. Clark. The terms and conditions of the contract provide for Ms. Clark to receive an annual salary of\n$400,000; a signing bonus of $300,000, one half to be paid within forty-five days of her starting date of employment (which was January 5, 2004) and one half to be paid on the\none-year anniversary; an initial stock option grant for 20,000 shares of Marathon common stock, with an option price equal to the average of the high and low prices of the stock on the\ndate of grant (January 16, 2004) and exercisable in one-third increments on each of the first three anniversaries of the grant date; a grant of 15,000 shares of\ntime-based restricted stock that will vest on the third anniversary of her date of grant (January 16, 2004); and four weeks of paid vacation per year. Pursuant to the contract,\nMs. Clark is also entitled to receive the same additional benefits that other Marathon executives at her level receive. The second half of the bonus referred to above was paid in\nDecember 2004. \n\n\n\n\n\n\n\n\n\n \nStatement Regarding the Delivery of a Single Set of Proxy Materials to Households With Multiple Marathon Stockholders \n\n\nIf you have consented to the delivery of only one set of proxy materials to multiple Marathon stockholders who share your address, then only one proxy statement is being\ndelivered to your household unless we have received contrary instructions from one or more of the stockholders sharing your address. We will deliver promptly upon oral or written request a separate\ncopy of the proxy statement to any stockholder at your address. If you wish to receive a separate copy of the proxy statement, you may call us at (713) 629-6600 (please ask for\nInvestor Relations) or write to us at Marathon Oil Corporation, Investor Relations Office, P.O. Box 3128, Houston, Texas, 77210-3128. Stockholders sharing an address who now receive\nmultiple copies of the proxy statement may request delivery of a single copy by calling us at the above number or writing to us at the above address. \n\n\nSolicitation Statement \n\n\nWe will bear the cost of this solicitation of proxies. In addition to soliciting proxies by mail, our directors, officers and employees may solicit proxies by telephone, in\nperson or by other means. They will not receive any extra compensation for this work. The Company has also retained Georgeson Shareholder to assist with the solicitation of proxies for a fee not to\nexceed $7,500, plus reimbursement for out-of-pocket expenses. We will also make arrangements with brokerage firms and other custodians, nominees and fiduciaries to forward\nproxy solicitation material to the beneficial owners of common stock, and we will reimburse them for reasonable\nout-of-pocket expenses that they incur in connection with forwarding the material. \n\n\nBy\norder of the Board of Directors, \n\n\n\n\n\n\n\nWilliam\nF. Schwind, Jr.\n\n\nSecretary \n\n\nMarch 10,\n\n\n\n\n\n\n\n\n\n\n \n\n\n\n \n \n\n\nAPPENDIX I \n\n \n\n\n \n \n\n\nMarathon Oil Corporation \n\n \n\n\n \n \n\n\nAudit Committee Policy\n\n For\n\n Pre-Approval of Audit, Audit-Related, Tax and Permissible Non-Audit\n\n Services \n\n \n\n\nStatement of Purpose and Scope\n\n\nThe\npurpose of this policy is to provide procedures to comply with Section 202 of the Sarbanes-Oxley Act of 2002 regarding pre-approval of all audit, audit-related, tax and\npermissible non-audit services provided by Marathon Oil Corporation's independent auditor. All audit, audit-related, tax and permissible non-audit services, except as noted\nunder the de minimus exception herein, for Marathon Oil Corporation and its consolidated entities (collectively, the \"Company\") requires pre-approval by the Audit Committee (the\n\"Committee\") of the Board of Directors (the \"Board\") prior to commencement of such services from the Company's independent auditor. \n\n\nProcedures\n\n\nThe\nfollowing procedures will be followed for pre-approving all audit, audit-related, tax and permissible non-audit services. \n\n\n\n\n1.In\naccordance with Section 202 of the Sarbanes-Oxley Act of 2002, the Committee shall pre-approve all audit, audit-related, tax and permissible non-audit\nservices, other than as provided under the de minimus exception below. The appendices to this policy describe the audit (Appendix A), audit-related (Appendix B), tax (Appendix C)\nand permissible non-audit (Appendix D) services that shall be pre-approved by the Committee.\n\n\n\n\n2.The\nCommittee may pre-approve any audit, audit-related, tax and permissible non-audit services up to one year in advance for the ensuing year.\n\n\n\n\n3.The\nCommittee may pre-approve services by specific categories pursuant to a forecasted budget.\n\n\n\n\n4.In\nthe fourth quarter of each year, the Chief Financial Officer (\"CFO\") shall present a forecast of audit, audit-related, tax and permissible non-audit services for the\nensuing year to the Committee for approval. Throughout the next year on an \"as needed\" basis, the CFO shall, in coordination with the independent auditor, provide an updated budget of audit,\naudit-related, tax and permissible non-audit services to the Committee. \n\nI-1\n\n\n\n\n\n\n\n \n\n\n\n\n5.Audit Services.\n\n\n\n\n\n\na.The\nannual audit services engagement terms and fees will be subject to the specific pre-approval of the Committee. The Committee will approve, if necessary, any changes in\nterms, conditions and fees resulting from changes in audit scope, Company structure or other matters.\n\n\n\n\nb.In\naddition to the annual audit services approved by the Committee, the Committee may grant pre-approval for other audit services, which are those services that only the\nindependent auditor can provide. The Committee shall pre-approve the audit services listed in Appendix A. All other audit services not listed on Appendix A must be separately\npre-approved by the Committee.\n\n\n\n\n\n6.Audit-Related Services. Audit-related services are services reasonably related to the\nperformance of the audit or review of the Company's financial statements and that are traditionally performed by the independent auditor. The Committee believes that the performance of audit-related\nservices does not impair the independence of the auditor and has approved the audit-related services listed in Appendix B. All other audit-related services not listed on Appendix B must\nbe separately pre-approved by the Committee.\n\n\n\n\n7.Tax Services. Tax services include services such as tax compliance, tax planning and tax\nadvice. The Committee believes that the performance of tax services does not impair the independence of the auditor and shall pre-approve the tax services listed in Appendix C. All\ntax services not listed on Appendix C must be separately pre-approved by the Committee.\n\n\n\n\n8.Permissible Non-Audit Services. Permissible non-audit services are\nservices that are not prohibited services as set forth in Exhibit 1 hereto. The Committee believes that the performance of permissible non-audit services does not impair the\nindependence of the auditor and shall pre-approve the services listed in Appendix D. All permissible non-audit services not listed on Appendix D must be\nseparately pre-approved by the Committee. \n\nDe Minimus Exception \n\n\nThe pre-approval requirement for permissible non-audit services provided above is waived, provided the following criteria are satisfied: \n\n\n\n\n1.the\naggregate amount of all such services provided to the Company constitutes not more than 5 percent of the total amount of revenues paid by the Company to the independent\nauditor during the fiscal year in which the permissible non-audit services are provided;\n\n\n\n\n2.such\nservices were not recognized by the Company at the time of the engagement to be non-audit services; and\n\n\n\n\n3.such\nservices are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee or by one or more members or the Committee who\nare members of the Board to whom authority to grant such approvals has been delegated by the Committee. \n\nI-2\n\n\n\n\n\n\n\n \n\n\n\n\nNotwithstanding\nthis de minimus exception, it is the intent of the Committee that standard practice will be to pre-approve all permissible non-audit services. \n\n\nDelegation \n\n\n\n\n1.The\nCommittee may delegate to one or more designated members of the Committee who are independent directors of the Board, the authority to grant pre-approvals required\nherein. The decisions of any member to whom authority is delegated to pre-approve an activity hereunder shall be presented to the full Committee at each of its scheduled meetings.\n\n\n\n\n2.Pursuant\nto the above authority, the Committee hereby delegates pre-approval authority of up to $500,000 to the Chair of the Committee for unbudgeted items. The Chair shall\nreport the items pre-approved under this delegation of authority at the next scheduled Committee meeting.\n\n\n\n\n3.The\nCommittee does not delegate to management any of its responsibilities to pre-approve services performed by the independent auditor. \n\nSupporting Documentation \n\n\nWhen requested by the Committee, the independent auditor shall provide detailed supporting documentation for each service provided hereunder. \n\n\n \n \n\n\nAppendix A \n\n \n\n\nAudit Services \n\n\nThe following audit services are subject to pre-approval by the Audit Committee. \n\n\n\n\n•Financial Statement Audit-Statutory audits or financial audits for the Company, and subsidiaries and affiliates\nthereof.\n\n\n\n\n•Regulatory Financial Filings-Services related to 1933 and 1934 Act filings with the SEC (e.g., registration\nstatements, and current and periodic reports), including issuance of comfort letters, review of documents, consents, and assistance in responding to SEC comment letters.\n\n\n\n\n•Attest Services Required by Statute or Regulation-Attestation services required by statute or regulation\nincluding, without limitation, the report on the entity's internal controls as specified in Section 404 of the Sarbanes-Oxley Act of 2002. \n\n \n \n\n\nAppendix B \n\n \n\n\nAudit-Related Services \n\n\nThe following audit-related services are subject to pre-approval by the Audit Committee. \n\n\n\n\n•Employee Benefit Plan Audits-Audit of pension and other employee benefit plans.\n\n\n\n\n•Financial Due Diligence-Assistance in financial due diligence with respect to pre- and\npost-business combinations, including review of financial statements, financial data and records, and discussions with Company or counter-party finance and accounting personnel regarding,\namong other things, purchase accounting issues. \n\nI-3\n\n\n\n\n\n\n\n \n\n\n\n\n•Application and General Control Reviews-Review of information technology and general controls related to specific\napplications, including overall general computer controls, excluding those that are a part of the financial statement audit.\n\n\n\n\n•Consultations regarding GAAP-Consultations by the Company's management as to the accounting or disclosure\ntreatment of transactions or events and/or the actual impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard setting bodies.\n\n\n\n\n•Attestation-Attestation and agreed-upon procedures engagements not required by statute or regulation.\n\n\n\n\n•Other Audits-Subsidiary, equity investee or other related entity audits or audits of pools of assets not required\nby statute or regulation that are incremental to the audit of the consolidated financial statements. \n\n \n \n\n\nAppendix C \n\n \n\n\nTax Services \n\n\nThe following tax services are subject to pre-approval by the Audit Committee. \n\n\n\n\n•Federal and State Tax Compliance-Preparation and/or review of tax returns, including sales and use tax, excise\ntax, income tax, and property tax. Consultation regarding applicable handling of items for tax returns, required disclosures, elections, and filing positions available to the Company.\n\n\n\n\n•International Tax Compliance-Preparation and review of income, local, VAT, and GST tax returns. Consultation\nregarding appropriate handling of items on the returns, required disclosures, elections and filing positions available to the Company. Preparation or review of U.S. filing requirements for foreign\ncorporations.\n\n\n\n\n•Federal and State Tax Consulting-Assistance with tax audits. Responding to requests from the Company's tax\norganization regarding technical interpretations, applicable laws and regulations, and tax accounting. Tax advice on mergers, acquisitions, and restructurings.\n\n\n\n\n•International Tax Consulting-Assistance with tax examinations. Advice on various matters including foreign tax\ncredit, foreign income tax, tax accounting, foreign earnings and profits, U.S. treatment of foreign subsidiary income, VAT, GST, excise tax or equivalent taxes in the jurisdiction. Tax advice on\nrestructurings, mergers and acquisitions.\n\n\n\n\n•Transfer Pricing-Advice and assistance with respect to transfer pricing matters, including preparation of reports\nused by the Company to comply with taxing authority documentation requirements regarding royalties and inter-company pricing and assistance with tax exemptions.\n\n\n\n\n•Customs and Duties-Compliance reviews and advice on compliance in the areas of tariffs and classification,\norigin, pricing, and documentation. Assistance with customs audits. \n\nI-4\n\n\n\n\n\n\n\n \n\n\n\n\n•Expatriate Tax Services-Preparation of individual income tax returns, advice on impact of changes in local tax\nlaws and consequences of changes in compensation programs or practices.\n\n\n\n\n•Executive Tax Services for Calendar Year 2003 Only-Preparation of individual income tax returns, and advice on\nimpact of changes in federal, state and local tax laws. \n\n \n \n\n\nAppendix D \n\n \n\n\nPermissible Non-Audit Services \n\n\nThe following permissible non-audit services are subject to pre-approval by the Audit Committee. \n\n\n\n\n•Assistance\nwith preparation of statutory financial statements\n\n\n\n\n•Assistance\nwith filing of statistical information with governmental agencies\n\n\n\n\n•Accounting\nresearch software license \n\n \n \n\n\nExhibit 1 \n\n \n\n\n \n \n\n\nProhibited Services \n\n \n\n\nThe independent auditor shall be prohibited from performing the following services: \n\n\n\n\n•Bookkeeping\nor other services related to the accounting records or financial statements of the audit client;\n\n\n\n\n•Financial\ninformation systems design and implementation;\n\n\n\n\n•Appraisal\nor valuation services, fairness opinions, or contribution-in-kind reports;\n\n\n\n\n•Actuarial\nservices;\n\n\n\n\n•Internal\naudit outsourcing services;\n\n\n\n\n•Management\nfunctions or human resources;\n\n\n\n\n•Broker\nor dealer, investment adviser, or investment banking services;\n\n\n\n\n•Legal\nservices and expert services unrelated to the audit; and\n\n\n\n\n•Any\nother service that the Board determines, by regulation, is impermissible. \n\nI-5\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \nMarathon Oil Corporation\n\n\n5555 San Felipe Road\n\n\nHouston, TX 77056 \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n[LOGO] Marathon\n\n\nOil Corporation\n\n\n\n\n c/o National City Bank\n\n\nCorporate Trust Operations\n\n\nLocator 5352\n\n\nP. O. Box 92301\n\n\nCleveland, OH 44101-4301 \n \nVOTE BY TELEPHONEHave this proxy card available when you call the Toll-Free number 1-800-542-1160 using a Touch-Tone phone\nand follow the simple instructions presented to record your vote.\n\n\n\n\n\nVOTE BY INTERNETHave this proxy card available when you access the website http://www.votefast.com and follow the simple instructions\npresented to record your vote.\n\n\n\n\n\nVOTE BY MAILPlease mark, sign and date this proxy card and return it in the postage-paid envelope provided or return it to: National City\nBank, P.O. Box 535600, Pittsburgh, PA 15253-9931.\n\n\n \n\n\n\n\n\n\n\n\n Vote by Telephone\n\n\nCall Toll-Free using a\n\n\nTouch-Tone phone:\n\n 1-800-542-1160 \n \n Vote by Internet\n\n\nAccess the Website and\n\n\nCast your vote:\n\n http://www.votefast.com \n \n Vote by Mail\n\n\nReturn this proxy card\n\n\nin the postage-paid\n\n\nenvelope provided \n\n\n\n\n\nVote 24 hours a day, 7 days a week! \n\n\n Your telephone or Internet vote must be received by 11:59 p.m. Eastern Time\n\n\non April 26, 2005 to be counted in the final tabulation. \n\n\n If voting by telephone or Internet, please do not send this proxy card by mail. \n\n\n\n\n\n \n \n\n\n\n - \n \n \n\n\n\n\n\nProxy must be signed and dated below.\n\n\n- Please fold and detach card at perforation before mailing. - \n\n\n\n\n\n\nPROXY \nMARATHON OIL CORPORATION \nPROXY \n\n\n\n\n\nTHIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS ON APRIL 27, 2005. \n\n\nYOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOXES (SEE REVERSE SIDE) BUT\nYOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS\nCARD.\n\n\n\n\n\n \nPlease sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing on behalf of a corporation or as a fiduciary, attorney, executor, administrator, trustee or guardian, please\ngive full title as such. \n\n\n\n\n\n\n\n \n\n\n Signature \n\n\n\n\n\n\n\n \n\n\n Signature \n\n\n\n\n\n\n\n \n\n\n\nDate: \n\n\n \n\n\n \n\n\n\n, 2005 \n\n\n\n\n\n\n\n\n\n\n\n\n\n[LOGO] Marathon\n\n\nOil Corporation \n2005 ANNUAL MEETING OF STOCKHOLDERS\n\n\n\n\n\nATTENDANCE CARD\n\n \n\n\n\n\n\nYou\nare cordially invited to attend the Annual Meeting of Stockholders on Wednesday, April 27, 2005. \n\n\nThe\nMeeting will be held in the Conference Center Auditorium of the Marathon Oil Tower, 5555 San Felipe Road, Houston, Texas 77056 at 10:00 A.M. Central Time. \n\n\n(Please detach this card from your proxy card and bring it with you as identification. The use of an attendance card is for our mutual convenience, however your right to attend\nwithout an attendance card, upon proper identification, is not affected.)\n\n\nWilliam\nF. Schwind, Jr.\n\n\nSecretary \n\n\n(For the personal use of the named stockholder(s) on the back-not transferable.)\n\n\n\n\n\n\n\n\nProxy card must be signed and dated on the reverse side. \n\n\n - Please fold and detach card at perforation before mailing. -\n\n\n\nThe undersigned hereby appoints Thomas J. Usher, Clarence P. Cazalot, Jr. and Janet F. Clark, or any\nof them, proxies to vote as herein directed on behalf of the undersigned at the Annual Meeting of Stockholders of Marathon Oil Corporation on Wednesday, April 27, 2005 and at any meeting\nresulting from an adjournment or postponement thereof and upon all other matters properly coming before the Meeting, including the proposals set forth in the proxy statement for such Meeting with\nrespect to which the proxies are instructed to vote as follows: \n\n\nThe directors recommend a vote FOR Proposals 1 and 2. \n\n\nProposal No. 1 Election of directors in the class whose three-year term of office will\nexpire in 2008 \n\n\n\n\n\n \n \no \n \nFOR ALL nominees listed below\n\n\n(except as otherwise marked below) \n \no \n \nWITHHOLD AUTHORITY\n\n\nto vote for all nominees listed below \n \n\n\n\n\n\n\n\n\n \n \nNOMINEES: \n \n(01) Shirley Ann Jackson \n \n(02) Philip Lader \n \n(03) Seth E. Schofield \n \n(04) Douglas C. Yearley \n\n\n\n\n \n \n \n \n(to withhold authority to vote for any individual nominee strike through that nominee's name) \n\n\n\n\n\n\n\n\n\no Please check this box if you plan to attend the Annual Meeting. \n\n\no Do you consent to access all future proxy material via the\nInternet? (If so, please check this box.) \n\n\nPROXY TO BE SIGNED AND DATED ON THE REVERSE SIDE \n\n\n\n\n\n\n\n\n\n\n[LOGO] Marathon\n\n\nOil Corporation\n\n\n\n\n c/o National City Bank\n\n\nCorporate Trust Operations\n\n\nLocator 5352\n\n\nP. O. Box 92301\n\n\nCleveland, OH 44101-4301 \n \nVOTE BY TELEPHONEHave this voting instruction card available when you call the Toll-Free number 1-800-542-1160 using a\nTouch-Tone phone and follow the simple instructions presented to record your vote.\n\n\n\n\n\nVOTE BY INTERNETHave this voting instruction card available when you access the website http://www.votefast.com and follow the simple\ninstructions presented to record your vote.\n\n\n\n\n\nVOTE BY MAILPlease mark, sign and date this voting instruction card and return it in the postage-paid envelope provided or return it to:\nNational City Bank, P.O. Box 535600, Pittsburgh, PA 15253-9931.\n\n\n \n\n\n\n\n\n\n\n\n Vote by Telephone\n\n\nCall Toll-Free using a\n\n\nTouch-Tone phone:\n\n 1-800-542-1160 \n \n Vote by Internet\n\n\nAccess the Website and\n\n\nCast your vote:\n\n http://www.votefast.com \n \n Vote by Mail\n\n\nReturn this proxy card\n\n\nin the postage-paid\n\n\nenvelope provided \n\n\n\n\n\nVote 24 hours a day, 7 days a week! \n\n\n Your telephone or Internet vote must be received by 11:59 p.m. Eastern Time\n\n\non Thursday, April 21, 2005 to be counted in the final tabulation. \n\n\n If voting by telephone or Internet, please do not send this voting instruction card by mail. \n\n\n\n\n\n \n \n\n\n\n - \n \n \n\n\n\n\n\nVoting instruction card must be signed and dated below.\n\n\n- Please fold and detach card at perforation before mailing. - \n\n\n\n\n\n\nMARATHON OIL CORPORATION \nVOTING INSTRUCTION CARD \n\n\n\n\n\n\nThese\nconfidential voting instructions are to Fidelity Management Trust Company, as Trustee for the Marathon Oil Company Thrift Plan (the \"Plan\"), and are solicited on behalf of the Board of Directors\nfor the Annual Meeting of Stockholders to be held on Wednesday, April 27, 2005 at 10:00 A.M. Central Time in the Conference Center Auditorium of the Marathon Oil Tower, 5555 San Felipe\nRoad, Houston, TX 77056. \n\n\nThe\nundersigned, as a participant in the Plan, hereby directs the Trustee to vote the number of shares of Marathon Oil Corporation common stock credited to the undersigned's account under the Plan at\nthe Annual Meeting of Stockholders, and at any meeting resulting from an adjournment(s) or postponement(s) thereof, upon all subjects that may properly come before the meeting, including the matters\ndescribed in the 2005 Proxy Statement, subject to any directions indicated on the reverse side. In the Trustee's discretion, it may vote upon such other matters as may properly come before the\nmeeting. \n\n\n\n\n\n \n Sign here as name appears to the left \n\n\n\n\n\n\n\n \n\n\n\nDate: \n\n\n \n\n\n \n\n\n\n, 2005 \n\n\n\n\n\n\n\n\n\n\n\n\n\n[LOGO] Marathon\n\n\nOil Corporation \n2005 ANNUAL MEETING OF STOCKHOLDERS\n\n\n\n\n\nATTENDANCE CARD\n\n \n\n\n\n\n\nYou\nare cordially invited to attend the Annual Meeting of Stockholders on Wednesday, April 27, 2005. \n\n\nThe\nMeeting will be held in the Conference Center Auditorium of the Marathon Oil Tower, 5555 San Felipe Road, Houston, Texas 77056 at 10:00 A.M. Central Time. \n\n\n(Please detach this card from your voting instruction card and bring it with you as identification. A map to the meeting site is inscribed on this card for your convenience.\nThe use of an attendance card is for our mutual convenience, however your right to attend without an attendance card, upon proper identification, is not affected.)\n\n\nWilliam\nF. Schwind, Jr.\n\n\nSecretary \n\n\n(For the personal use of the named stockholder(s) on the back-not transferable.)\n\n\n\n\n\n\n\n\nVoting instruction card must be signed and dated on the reverse side. \n\n\n - Please fold and detach card at perforation before mailing. -\n\n\n\nYour vote is confidential. The shares credited to your account will be voted as directed. If no\ndirection is made, if the card is not signed, or if the card is not received by April 21, 2005, the shares credited to your account will not be voted. You cannot vote your shares in person at\nthe Annual Meeting; the Trustee is the only one who can vote your shares.\n\n\nAlthough the Trustee takes no stand, the Board of Directors recommends a vote FOR\nProposals 1 and 2, and AGAINST Proposals 3 and 4.\n\n\nThe directors recommend a vote FOR Proposals 1 and 2. \n\n\nProposal No. 1 Election of directors in the class whose three-year term of office will\nexpire in 2008 \n\n\n\n\n\n \n \no \n \nFOR ALL nominees listed below\n\n\n(except as otherwise marked below) \n \no \n \nWITHHOLD AUTHORITY\n\n\nto vote for all nominees listed below \n \n\n\n\n\n\n\n\n\n \n \nNOMINEES: \n \n(01) Shirley Ann Jackson \n \n(02) Philip Lader \n \n(03) Seth E. Schofield \n \n(04) Douglas C. Yearley \n\n\n\n\n \n \n \n \n(to withhold authority to vote for any individual nominee strike through that nominee's name) \n\n\n\n\n\n\n\n\n\no Please check this box if you plan to attend the Annual Meeting. \n\n\nVOTING INSTRUCTIONS TO BE SIGNED AND DATED ON THE REVERSE SIDE \n\n\n\n\n\n\n\n\n\n\n[LOGO] Marathon\n\n\nOil Corporation\n\n\n\n\n c/o National City Bank\n\n\nCorporate Trust Operations\n\n\nLocator 5352\n\n\nP. O. Box 92301\n\n\nCleveland, OH 44101-4301 \n \nVOTE BY TELEPHONEHave this voting instruction card available when you call the Toll-Free number 1-800-542-1160 using a\nTouch-Tone phone and follow the simple instructions presented to record your vote.\n\n\n\n\n\nVOTE BY INTERNETHave this voting instruction card available when you access the website http://www.votefast.com and follow the simple\ninstructions presented to record your vote.\n\n\n\n\n\nVOTE BY MAILPlease mark, sign and date this voting instruction card and return it in the postage-paid envelope provided or return it to:\nNational City Bank, P.O. Box 535600, Pittsburgh, PA 15253-9931.\n\n\n \n\n\n\n\n\n\n\n\n Vote by Telephone\n\n\nCall Toll-Free using a\n\n\nTouch-Tone phone:\n\n 1-800-542-1160 \n \n Vote by Internet\n\n\nAccess the Website and\n\n\nCast your vote:\n\n http://www.votefast.com \n \n Vote by Mail\n\n\nReturn this proxy card\n\n\nin the postage-paid\n\n\nenvelope provided \n\n\n\n\n\nVote 24 hours a day, 7 days a week! \n\n\n Your telephone or Internet vote must be received by 11:59 p.m. Eastern Time\n\n\non Thursday, April 21, 2005 to be counted in the final tabulation. \n\n\n If voting by telephone or Internet, please do not send this voting instruction card by mail. \n\n\n\n\n\n \n \n\n\n\n - \n \n \n\n\n\n\n\nVoting instruction card must be signed and dated below.\n\n\n- Please fold and detach card at perforation before mailing. - \n\n\n\n\n\n\nMARATHON OIL CORPORATION \nVOTING INSTRUCTION CARD \n\n\n\n\n\n\nThese\nconfidential voting instructions are to the Fidelity Management Trust Company, as Trustee for the United States Steel Corporation Savings Fund Plan for Salaried Employees (the \"Plan\"), and are\nsolicited on behalf of the Board of Directors for the Annual Meeting of Stockholders to be held on Wednesday, April 27, 2005 at 10:00 A.M. Central Time in the Conference Center\nAuditorium of the Marathon Oil Tower, 5555 San Felipe Road, Houston, TX 77056. \n\n\nThe\nundersigned, as a participant in the Plan, hereby directs the Trustee to vote the number of shares of Marathon Oil Corporation common stock credited to the undersigned's account under the Plan at\nthe Annual Meeting of Stockholders, and at any meeting resulting from an adjournment(s) or postponement(s) thereof, upon all subjects that may properly come before the meeting, including the matters\ndescribed in the 2005 Proxy Statement, subject to any directions indicated on the reverse side. In the Trustee's discretion, it may vote upon such other matters as may properly come before the\nmeeting. \n\n\n\n\n\n \n Sign here as name appears to the left \n\n\n\n\n\n\n\n \n\n\n\nDate: \n\n\n \n\n\n \n\n\n\n, 2005 \n\n\n\n\n\n\n\n\n\n\n\n\n\n[LOGO] Marathon\n\n\nOil Corporation \n2005 ANNUAL MEETING OF STOCKHOLDERS\n\n\n\n\n\nATTENDANCE CARD\n\n \n\n\n\n\n\nYou\nare cordially invited to attend the Annual Meeting of Stockholders on Wednesday, April 27, 2005. \n\n\nThe\nMeeting will be held in the Conference Center Auditorium of the Marathon Oil Tower, 5555 San Felipe Road, Houston, Texas 77056 at 10:00 A.M. Central Time. \n\n\n(Please detach this card from your voting instruction card and bring it with you as identification. A map to the meeting site is inscribed on this card for your convenience.\nThe use of an attendance card is for our mutual convenience, however your right to attend without an attendance card, upon proper identification, is not affected.)\n\n\nWilliam\nF. Schwind, Jr.\n\n\nSecretary \n\n\n(For the personal use of the named stockholder(s) on the back-not transferable.)\n\n\n\n\n\n\n\n\nVoting instruction card must be signed and dated on the reverse side. \n\n\n - Please fold and detach card at perforation before mailing. -\n\n\n\nYour vote is confidential. The shares credited to your account will be voted as directed. If no\ndirection is made, if the card is not signed, or if the card is not received by April 21, 2005, the Trustee will vote the shares credited to your account in the same proportion that those\nparticipants who have given instructions to the Trustee have requested that their shares be voted. You cannot vote your shares in person at the Annual Meeting; the Trustee is the only one who can vote\nyour shares.\n\n\nAlthough the Trustee takes no stand, the Board of Directors recommends a vote FOR\nProposals 1 and 2, and AGAINST Proposals 3 and 4.\n\n\nThe directors recommend a vote FOR Proposals 1 and 2. \n\n\nProposal No. 1 Election of directors in the class whose three-year term of office will\nexpire in 2008 \n\n\n\n\n\n \n \no \n \nFOR ALL nominees listed below\n\n\n(except as otherwise marked below) \n \no \n \nWITHHOLD AUTHORITY\n\n\nto vote for all nominees listed below \n \n\n\n\n\n\n\n\n\n \n \nNOMINEES: \n \n(01) Shirley Ann Jackson \n \n(02) Philip Lader \n \n(03) Seth E. Schofield \n \n(04) Douglas C. Yearley \n\n\n\n\n \n \n \n \n(to withhold authority to vote for any individual nominee strike through that nominee's name) \n\n\n\n\n\n\n\n\n\no Please check this box if you plan to attend the Annual Meeting. \n\n\nVOTING INSTRUCTIONS TO BE SIGNED AND DATED ON THE REVERSE SIDE \n\n\n\n\n\n\n\n\n\n\n\n\n\n"},"accession_number":{"kind":"string","value":"0001047469-05-006063"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":85,"cells":{"_id":{"kind":"string","value":"1018593_DEF 14A_2005_0000949377-05-000022"},"cik":{"kind":"string","value":"1018593"},"company":{"kind":"string","value":"PHOENIX-KAYNE FUNDS"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-01-06T00:00:00","string":"2005-01-06T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-02-15T00:00:00","string":"2005-02-15T00:00:00"},"sic":{"kind":"string","value":"NULL"},"state_of_inc":{"kind":"string","value":"DE"},"state_location":{"kind":"string","value":"MA"},"fiscal_year_end":{"kind":"string","value":"0930"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1018593/0000949377-05-000022-index.html"},"htm_filing_link":{"kind":"string","value":"NULL"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1005020/000094937705000022/0000949377-05-000022.txt"},"filename":{"kind":"string","value":"1018593_DEF 14A_2005_0000949377-05-000022.txt"},"text":{"kind":"string","value":"\nDEF 14A\nkayne_seneca70271-def14a.txt\nPROXY STATEMENT\n\n\n UNITED STATES\n SECURITIES AND EXCHANGE COMMISSION\n WASHINGTON, D.C. 20549\n\n SCHEDULE 14A\n\n Proxy Statement Pursuant to Section 14(a) of the\n Securities Exchange Act of 1934 (Amendment No. )\n\nFiled by the Registrant [X]\nFiled by a Party other than the Registrant [ ]\n\nCheck the appropriate box:\n\n[ ] Preliminary Proxy Statement\n[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS\n PERMITTED BY RULE 14a-6(e)(2))\n[X] Definitive Proxy Statement\n[ ] Definitive Additional Materials\n[ ] Soliciting Material Pursuant to ss.240.14a-12\n\n Phoenix-Kayne Funds\n Phoenix-Seneca Funds\n -------------------------------------\n (Name of Registrants as Specified in their Charters)\n\n Matthew A. Swendiman, Esq.\n c/o The Phoenix Companies, Inc.\n One American Row\n Hartford, Connecticut 06102\n -------------------------------------\n (Name of Person(s) Filing Proxy Statement if other than the Registrant)\n\nPayment of Filing Fee (Check appropriate box):\n[X] No fee required.\n[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.\n\n 1) Title of each class of securities to which transaction applies:\n\n- --------------------------------------------------------------------------------\n\n 2) Aggregate number of securities to which transaction applies:\n\n- --------------------------------------------------------------------------------\n\n 3) Per unit price of other underlying value of transaction computed pursuant\n to Exchange Act Rule 0-11 (set forth the amount on which the filing fee\n is calculated and state how it was determined):\n\n- --------------------------------------------------------------------------------\n\n 4) Proposed maximum aggregate value of transaction:\n\n- --------------------------------------------------------------------------------\n\n 5) Total fee paid:\n\n- --------------------------------------------------------------------------------\n\n\n\n[ ] Fee paid previously with preliminary materials.\n\n[ ] Check box if any part of the fee is offset as provided by Exchange Act\n Rule 0-11(a)(2) and identify the filing for which the offsetting fee was\n paid previously. Identify the previous filing by registration statement\n number, or the Form or Schedule and the date of its filing.\n\n 1) Amount Previously Paid:\n- --------------------------------------------------------------------------------\n 2) Form, Schedule or Registration No.:\n- --------------------------------------------------------------------------------\n 3) Filing Party:\n- --------------------------------------------------------------------------------\n 4) Date Filed:\n- --------------------------------------------------------------------------------\n\n\n\n\n\n\n\n PHOENIX-KAYNE FUNDS\n 1800 AVENUE OF THE STARS, 2ND FLOOR\n LOS ANGELES, CA 90067\n\n AND\n\n PHOENIX-SENECA FUNDS\n 909 MONTGOMERY STREET\n SAN FRANCISCO, CA 94133\n\n -----------------------\n\n NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS\n FEBRUARY 15, 2005\n\n -----------------------\nTo the Shareholders:\n\n A Joint Special Meeting of Shareholders of Phoenix-Kayne Funds and\nPhoenix-Seneca Funds (hereafter, the \"Trust\") will be held in the offices of\nPhoenix Investment Partners, Ltd., 56 Prospect Street, Hartford, Connecticut, on\nTuesday, February 15, 2005 at 10:00 A.M. for the following purposes:\n\n (1) To reconstitute the Board of Trustees of the Phoenix-Kayne Funds and\n the Phoenix-Seneca Funds (the \"Board\") and to elect fourteen trustees\n to such Board to serve until the next meeting of shareholders at which\n trustees are elected;\n\n (2) To ratify the Board's selection of PricewaterhouseCoopers LLP as the\n Phoenix-Kayne Funds and the Phoenix-Seneca Funds Independent\n Registered Public Accounting Firm for the 2005 fiscal years ending\n December 31, 2005 and September 30, 2005, respectively; and\n\n (3) To consider and act upon such other matters as may properly come before\n the meeting or any adjournment thereof.\n\n The Board has fixed January 3, 2005 as the record date for the determination\nof shareholders entitled to notice of and to vote at the meeting.\n\n Whether or not you plan to attend the meeting in person, please vote your\nshares. As a convenience to our shareholders, you may now vote in any one of the\nfollowing ways:\n\n o Through the Internet for the Phoenix-Kayne Funds at\n www.eproxyvote.com/kayne;\n\n\n\n\n o Through the Internet for the Phoenix-Seneca Funds at\n www.eproxyvote.com/seneca;\n\n o By telephone, with a toll-free call to 1-877-779-8683;\n\n o By mail, with the enclosed proxy card and postage-paid envelope; or\n\n o In person at the meeting.\n\n We encourage you to vote via the Internet or by telephone. Please have your\nproxy card in hand, then go to the above Internet site or call the above\ntelephone number and follow the instructions given there. Use of Internet or\ntelephone voting will reduce the time and costs associated with this proxy\nsolicitation. If you elect to vote using one of these methods, do not return\nyour proxy card unless you later elect to change your vote. Whichever method you\nchoose, please read the enclosed proxy statement carefully before you vote.\n\n PLEASE RESPOND--WE ASK THAT YOU VOTE PROMPTLY IN ORDER TO AVOID THE\n ADDITIONAL EXPENSE OF FURTHER SOLICITATION. YOUR VOTE IS IMPORTANT.\n\n\n By Order of the Board of Trustees,\n\n\n\n\n MATTHEW A. SWENDIMAN, Secretary\nHartford, Connecticut\nJanuary 5, 2005\n\n\n\n PHOENIX-KAYNE FUNDS\n 1800 AVENUE OF THE STARS, 2ND FLOOR\n LOS ANGELES, CALIFORNIA 90067\n\n AND\n\n PHOENIX-SENECA FUNDS\n 909 MONTGOMERY STREET\n SAN FRANCISCO, CALIFORNIA 94133\n\n ---------------------------\n\n PROXY STATEMENT\n\n A JOINT SPECIAL MEETING OF SHAREHOLDERS\n TO BE HELD ON FEBRUARY 15, 2005\n\n ---------------------------\n\n The enclosed proxy is solicited by the Boards of Trustees of Phoenix-Kayne\nFunds (the \"Kayne Fund\") and Phoenix-Seneca Funds (the \"Seneca Fund\")\n(collectively, the \"Trust\") for use at the Joint Special Meeting of Shareholders\nto be held on Tuesday, February 15, 2005, and at any adjournment thereof.\nShareholders of record at the close of business on January 3, 2005\n(\"Shareholders\") are entitled to notice of and to vote at the meeting or any\nadjourned session.\n\n On January 3, 2005 (the \"Record Date\"), the number of whole shares of each\nseries of the Kayne Fund and the Seneca Fund outstanding (the \"Shares\"), and the\nwhole votes represented by such shares as of the Record Date:\n\n- --------------------------------------------------------------------------------\n TRUST, Series and Class Shares Outstanding Votes Represented\n- ---------------------------- -------------------------- ------------------------\nPHOENIX-KAYNE FUNDS:\n- ---------------------------- -------------------------- ------------------------\nPhoenix-Kayne\nCalifornia Intermediate\nTax-Free Bond Fund\n- ---------------------------- -------------------------- ------------------------\n Class X Shares 3,553,211 38,303,616\n- ---------------------------- -------------------------- ------------------------\nPhoenix-Kayne\nIntermediate Total\nReturn Bond Fund\n- ---------------------------- -------------------------- ------------------------\n Class X Shares 4,696,061 50,717,462\n- ---------------------------- -------------------------- ------------------------\n\n\n- ---------------------------- -------------------------- ------------------------\nPhoenix-Kayne\nInternational Fund\n- ---------------------------- -------------------------- ------------------------\n Class A Shares 897,934 11,287,035\n- ---------------------------- -------------------------- ------------------------\n Class B Shares 30,900 386,256\n- ---------------------------- -------------------------- ------------------------\n Class C Shares 84,305 1,053,813\n- ---------------------------- -------------------------- ------------------------\n Class X Shares 3,671,695 46,373,511\n- ---------------------------- -------------------------- ------------------------\nPhoenix-Kayne Rising\nDividends Fund\n- ---------------------------- -------------------------- ------------------------\n Class A Shares 3,350,237 52,933,740\n- ---------------------------- -------------------------- ------------------------\n Class B Shares 189,519 2,965,975\n- ---------------------------- -------------------------- ------------------------\n Class C Shares 198,865 3,114,230\n- ---------------------------- -------------------------- ------------------------\n Class X Shares 6,053,555 95,888,304\n- ---------------------------- -------------------------- ------------------------\nPhoenix-Kayne Small-\nMid Cap Fund\n- ---------------------------- -------------------------- ------------------------\n Class A Shares 3,577,385 72,406,274\n- ---------------------------- -------------------------- ------------------------\n Class B Shares 217,883 4,340,231\n- ---------------------------- -------------------------- ------------------------\n Class C Shares 878,515 17,526,381\n- ---------------------------- -------------------------- ------------------------\n Class X Shares 4,480,358 91,175,288\n- ---------------------------- -------------------------- ------------------------\nPHOENIX-SENECA FUNDS:\n- ---------------------------- -------------------------- ------------------------\nPhoenix-Seneca Bond\nFund\n- ---------------------------- -------------------------- ------------------------\n Class A Shares 2,624,878 27,797,457\n- ---------------------------- -------------------------- ------------------------\n Class B Shares 711,040 7,394,821\n- ---------------------------- -------------------------- ------------------------\n Class C Shares 319,776 3,332,070\n- ---------------------------- -------------------------- ------------------------\n Class X Shares 3,706,664 39,624,025\n- ---------------------------- -------------------------- ------------------------\nPhoenix-Seneca Equity\nIncome Fund\n- ---------------------------- -------------------------- ------------------------\n Class A Shares 249,678 4,142,165\n- ---------------------------- -------------------------- ------------------------\n Class B Shares 114,894 1,879,664\n- ---------------------------- -------------------------- ------------------------\n Class C Shares 120,776 1,983,147\n- ---------------------------- -------------------------- ------------------------\n Class X Shares 1,377,523 23,541,865\n- --------------------------------------------------------------------------------\n\n\n\nPhoenix-Seneca Mid-Cap\n\"EDGE\"(SM) Fund\n- ---------------------------- -------------------------- ------------------------\n Class A Shares 2,138,403 35,540,261\n- ---------------------------- -------------------------- ------------------------\n Class B Shares 1,186,760 18,664,007\n- ---------------------------- -------------------------- ------------------------\n Class C Shares 1,180,837 18,550,946\n- ---------------------------- -------------------------- ------------------------\n Class X Shares 792,566 13,521,178\n- --------------------------------------------------------------------------------\n\n Each Shareholder will be entitled to one vote for each dollar of net asset\nvalue of Shares held as of the Record Date and a proportional fractional vote\nfor each fractional dollar value. Votes will be tabulated for the Kayne Fund and\nthe Seneca Fund separately.\n\n All Shares will be voted in accordance with the specifications on duly\nexecuted proxies for such Shares. If a duly executed proxy does not specify a\nchoice between approval or disapproval of, or abstention with respect to, the\nproposal, the Shares represented by the proxy will be voted in favor of the\nproposal. Any Shareholder executing a proxy has the power to revoke it at any\ntime before it is exercised by executing and submitting to the Trust a\nlater-dated proxy or written notice of revocation or by attending the meeting\nand voting in person.\n\n In addition to the solicitation of proxies by mail, officers and employees\nof Phoenix Investment Partners, Ltd. or its affiliates, may solicit proxies\npersonally or by telephone or telegram. Banks, brokers, fiduciaries and nominees\nwill, upon request, be reimbursed by the Trust for their reasonable expenses in\nsending proxy material to beneficial owners of Trust shares. The cost of\nsolicitation will be borne by Phoenix Investment Partners, Ltd. or an affiliate.\n\n In the event that sufficient votes in favor of either of the proposals set\nforth in the attached Notice of the meeting are not received by the time\nscheduled for the meeting, the persons named as proxies may propose one or more\nadjournments of the meeting for a period or periods of not more than 60 days in\nthe aggregate to permit further solicitation of proxies with respect to the\nproposal. Any such adjournment or postponement will require the affirmative vote\nof a majority of the votes cast on the question in person or by proxy at the\nsession of the meeting to be adjourned. The persons named as proxies will vote\nin favor of such adjournment those proxies which they are entitled to vote in\nfavor of such proposals. They will vote against such adjournment those proxies\nrequired to be voted against any such proposal.\n\n If a Shareholder abstains from voting as to any matter, then the Shares held\nby such Shareholder shall be deemed present at the meeting for purposes of\n\n\n\ndetermining a quorum, but shall not be included for purposes of calculating the\nvote with respect to such matter, and shall not be deemed to have been voted in\nfavor of such matter. If a broker returns a \"non-vote\" proxy, indicating a lack\nof authority to vote on such matter, then the Shares covered by such non-vote\nproxy shall be deemed present at the meeting for all purposes except for the\npurpose of calculating the vote with respect to such matter.\n\n As used in this Proxy Statement, the term \"interested person\" has the\nmeaning provided therefore in the Investment Company Act of 1940, as amended\n(the \"1940 Act\").\n\n At December 1, 2004, the Trustees and officers as a group owned less than 1%\nof the then outstanding shares of the Trust or of any class thereof.\n\n This Proxy Statement and the enclosed form of proxy are first being mailed\nto Shareholders on or about January 18, 2005. A COPY OF THE TRUST'S MOST RECENT\nANNUAL AND SEMIANNUAL REPORTS WILL BE FURNISHED, WITHOUT CHARGE, TO ANY\nSHAREHOLDERS UPON REQUEST TO PHOENIX EQUITY PLANNING CORPORATION, 56 PROSPECT\nSTREET, P.O. BOX 150480, HARTFORD, CT 06115-0480 OR CALL, TOLL FREE, AT (800)\n243-4361.\n\n\n\n\n PROPOSAL NO. 1\n\n TO RECONSTITUTE THE BOARD OF TRUSTEES\n AND TO ELECT FOURTEEN TRUSTEES TO SUCH BOARD\n\n At a special meeting of the Board of Trustees of the Kayne Fund and the\nSeneca Fund (the \"Partners Board\") on August 16-18, 2004, the independent\nTrustees (trustees who are not interested persons of the Trust) considered a\nproposal by management to consolidate the oversight of the Kayne Fund and the\nSeneca Fund under a new Board of Trustees consisting of all of the members of\nthe Board of Trustees of the Phoenix Funds (the \"Phoenix Funds Board\") (the\n\"Reconstituted Board\"). The Phoenix Funds Board oversees more than 20 mutual\nfunds managed by advisory affiliates of Phoenix Investment Partners, Ltd.\n(\"PXP\"). The Adviser for the Kayne Fund is Kayne Anderson Rudnick Investment\nManagement, LLC (\"Kayne Advisers\") and the adviser for the Seneca Fund is\nPhoenix Investment Counsel, Inc. (\"PIC\"), both of which are advisory affiliates\nof PXP.\n\n Since the early 1990's, PXP has assumed management of various acquired\nmutual fund complexes. PXP has worked to consolidate the board functions\nassociated with the acquired fund complexes.\n\n Consolidation under the Reconstituted Board would reduce expenses to\nshareholders associated with maintaining the Partners Board as a separate board\nof trustees. Consolidation will reduce the administrative efforts in having to\ncoordinate and oversee separate board meetings and permit oversight of the Kayne\nFund (Phoenix-Kayne California Intermediate Tax-Free Bond Fund, Phoenix-Kayne\nIntermediate Total Return Bond Fund, Phoenix-Kayne International Fund,\nPhoenix-Kayne Rising Dividends Fund and Phoenix-Kayne Small-Mid Cap Fund) and\nthe Seneca Fund (Phoenix-Seneca Bond Fund, Phoenix-Seneca Equity Income Fund and\nPhoenix-Seneca Mid-Cap \"EDGE\"(SM) Fund) by a common board.\n\n The independent Trustees have approved fixing the number of trustees at\nfourteen and have nominated the fourteen Phoenix Funds Board members as\ncandidates to fill the trustees' positions on the Reconstituted Board (the\n\"Nominees\"). The persons named in the enclosed proxy intend, unless authority is\nwithheld, to vote for the election as trustees of the Nominees named below. The\nPartners Board recommends that the shareholders reconstitute the board of\ntrustees and elect the persons who they have nominated for election.\n\n Each of the Nominees has agreed to serve as a trustee if elected. If, at the\ntime of the meeting, any Nominee should be unavailable for election (which is\nnot presently anticipated), the persons named as proxies may vote for other\npersons in their discretion. Trustees will hold office until the earlier of\ntheir death, resignation, removal or retirement, or the next meeting of\nshareholders\n\n\n\n\nat which trustees are elected and the selection and qualification of their\nsuccessors.\n\n The following table sets forth the names, dates of birth, principal\noccupations and other information relating to the Nominees except for Messrs.\nDill and Romans who are being nominated for a two year term to expire in 2006,\nto coincide with the expiration of their terms as Trustees of the Phoenix Funds\nBoard. There is no stated term of office for trustees of the Kayne and Seneca\nFunds.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n *Ms. LaMarche is an \"interested person\" as defined in the 1940 Act, by reason\n of her position as Director of The Phoenix Companies, Inc. and Phoenix Life\n Insurance Company.\n\n**Mr. McLoughlin is an \"interested person\" as defined in the Investment Company\n Act of 1940, by reason of his former relationship with Phoenix Investment\n Partners, Ltd. and its affiliates.\n\n\n\n\nRELATIONSHIPS OF CERTAIN NOMINEES\n Under applicable requirements, each independent Nominee (or an immediate\nfamily member thereof) who had any direct or indirect interest, the value of\nwhich exceeds $60,000, during the two most recently completed calendar years, in\nthe Trust's Advisers, Kayne Adviser and PIC, the principal underwriter of the\nTrust, Phoenix Equity Planning Corporation, or any entity controlling,\ncontrolled by or under common control with the Kayne Adviser, PIC or Phoenix\nEquity Planning Corporation (not including registered investment companies) must\ndisclose any such relationship.\n\n Mr. Oates is Director and Chairman of the Board and a shareholder of Hudson\nCastle Group, Inc. (formerly, IBEX Capital Markets, Inc.) (\"Hudson\"), a\nprivately owned financial services firm. Phoenix Investment Partners, Ltd., an\naffiliate of PIC owns approximately 1% of the common stock of Hudson and Phoenix\nLife Insurance Company, also an affiliate, owns approximately 8% of Hudson's\ncommon stock.\n\nNOMINEE OWNERSHIP OF EQUITY SECURITIES\n Set forth below for each Nominee is a dollar range of equity securities of\nthe Trust, together with the aggregate dollar range of equity securities in all\nregistered investment companies overseen by each Nominee that are in the same\nfamily of investment companies as the Trust, as of December 31, 2003.\n\n\n AGGREGATE DOLLAR\n RANGE OF NOMINEE\n DOLLAR RANGE OWNERSHIP IN ALL\n OF DOLLAR RANGE OF FUNDS OVERSEEN\n EQUITY EQUITY BY NOMINEE IN\n SECURITIES SECURITIES FAMILY OF\n OF THE KAYNE OF THE SENECA INVESTMENT\n NAME OF NOMINEE FUND FUND COMPANIES\n --------------- ---- ---- ---------\nE. Virgil Conway None None $1-$10,000\nHarry Dalzell-Payne None None None\nS. Leland Dill None None None\nFrancis E. Jeffries None None Over $100,000\nLeroy Keith, Jr. None None None\nMarilyn E. LaMarche None None None\nPhilip R. McLoughlin None $1-$10,000 Over $100,000\nGeraldine M. McNamara None None None\nEverett L. Morris None None Over $100,000\nJames M. Oates None None Over $100,000\nDonald E. Romans None None Over $100,000\nRichard E. Segerson None None Over $100,000\nFerdinand L.J. Verdonck None None None\nLowell P. Weicker, Jr. None None None\n\n\n\n\nCOMPENSATION OF CURRENT TRUSTEES\n During the Kayne Fund's fiscal year ended December 31, 2004, the Nominees\nwho were not previously Trustees of the Kayne Fund received no compensation from\nthe Kayne Fund. However, the Nominees who are currently the Trustees of the\nKayne Fund received the following compensation:\n\n AGGREGATE TOTAL COMPENSATION\n COMPENSATION FROM KAYNE FUND AND\n FROM THE FUND COMPLEX PAID\n NAME KAYNE FUND TO TRUSTEES\n ---- ---------- -----------\n E. Virgil Conway $20,699 $186,500\n **Carl D. Covitz $6,000 $4,000\n Harry Dalzell-Payne $21,573 $169,875\n *Marilyn E. LaMarche $8,261 $63,750\n Philip R. McLoughlin None $6,000\n Geraldine M. McNamara $24,440 $167,125\n Everett L. Morris $17,380 $181,500\n *James M. Oates $10,162 $113,375\n *Ferdinand L. J. Verdonck $7,964 $17,750\n **William H. Waldorf $6,000 $4,000\n\n The Kayne Fund has established a Consulting Committee consisting of those\nformer Independent Trustees of the Kayne Fund who accepted the Board's\ninvitation to become a member and of certain other individuals identified by\nPhoenix management. The Consulting Committee provides consultation to the Board\nin connection with fund governance and related matters, as appropriate, in the\ncourse of the Board's deliberations. The Committee's members are appointed for a\ntwo-year term and are paid an annual stipend of $8,000, plus reasonable expenses\nincurred in the performance of the required services. The Consulting Committee\ndoes not meet independently from the Board and its members attend only those\nmeetings to which they are invited by the Chairman of the Board of Trustees. The\nConsulting Committee members are noted above with one or two asterisks.\n\n*Ms. LaMarche's and Messrs. Oates' and Verdonck's terms were extended past the\noriginal arrangement date of November 30, 2004 until they are elected to the\nBoard.\n\n**Messrs. Covitz and Waldorf were no longer members of the Consulting Committee\nas of November 30, 2004.\n\n During the Seneca Fund's fiscal year ended September 30, 2004, the Nominees\nwho were not previously Trustees of Seneca Fund received no compensation from\nthe Seneca Fund. However, the Nominees who are currently Trustees of the Seneca\nFund received the following compensation:\n\n\n\n\n TOTAL COMPENSATION FROM\n AGGREGATE SENECA FUND AND\n COMPENSATION FUND COMPLEX PAID\nNAME FROM THE SENECA FUND TO TRUSTEES\n- ---- -------------------- -----------\nE. Virgil Conway $7,375 $180,375\nHarry Dalzell-Payne $5,923 $155,375\nPhilip R. McLoughlin None None\nGeraldine M. McNamara $6,023 $149,375\nEverett L. Morris $8,101 $175,631\n\n The Kayne Fund and Seneca Fund do not maintain pension or retirement plans.\nHowever, the Phoenix Funds has a deferred compensation plan.\n\n\n With respect to the Kayne Fund, each Trustee who is currently not an\ninterested person of Kayne Advisers, or any of its affiliates, was entitled\nunder a fee structure in place from January 1, 2004 through June 30, 2004 to a\nfee of $2000 for each Board meeting attended and a fee of $250 for each\ncommittee meeting attended, excluding the Consulting Committee, for which each\ncommittee member was paid an annual stipend of $8,000 through November 30, 2004.\nFrom July 1, 2004 through December 31, 2004, each Trustee who is not currently\nan interested person of Kayne Advisers or any of its affiliates, was entitled to\na consolidated fee schedule that applies across all funds in the Phoenix Fund\ncomplex. This schedule consists of an annual retainer of $53,000 for Board\nmembers, $5,000 for Audit Committee members, $2,000 for Governance and\nNominating Committee members and $5,000 for Executive and Compliance Committee\nmembers. Each Board member was entitled to a fee of $2,500 for each in person\nmeeting and $1,250 for each telephonic meeting. Each Audit Committee member was\nentitled to $3,000 for each in person meeting and $1,500 for each telephonic\nmeeting. Each Governance and Nominating Committee member was entitled to $2,000\nfor each meeting attended in person and $1,000 for each telephonic meeting. Each\nExecutive and Compliance Committee member was entitled to $5,000 for each\nmeeting attended in person and $1,250 for each telephonic meeting. The\nChairperson of the Audit Committee receives an additional $5,000 retainer fee.\n\n With respect to the Seneca Fund, each Trustee who is currently not an\ninterested person of PIC, or any of its affiliates, was entitled under a fee\nstructure in place from October 1, 2003 through June 30, 2004 to a fee of $500\nfor each Board meeting attended and a fee of $250 for each committee meeting\nattended. From July 1, 2004 through September 30, 2004, each Trustee who is not\ncurrently an interested person of PIC or any of its affiliates, was entitled to\na consolidated fee schedule that applies across all funds in the Phoenix Fund\ncomplex. This schedule consists of an annual retainer of $53,000 for Board\nmembers, $5,000 for Audit Committee members, $2,000 for Governance and\n\n\n\n\nNominating Committee members and $5,000 for Executive and Compliance Committee\nmembers. Each Board member was entitled to a fee of $2,500 for each in person\nmeeting and $1,250 for each telephonic meeting. Each Audit Committee member was\nentitled to $3,000 for each in person meeting and $1,500 for each telephonic\nmeeting. Each Governance and Nominating Committee member was entitled to $2,000\nfor each meeting attended in person and $1,000 for each telephonic meeting. Each\nExecutive and Compliance Committee member was entitled to $5,000 for each\nmeeting attended in person and $1,250 for each telephonic meeting. The\nChairperson of the Audit Committee receives an additional $5,000 retainer fee.\n\n The foregoing fees do not include the reimbursement of expenses incurred in\nconnection with meeting attendance. Officers and employees of the Advisers who\nare interested persons are compensated by the Advisers, or an affiliate of the\nAdvisers, and receive no compensation from the Trust.\n\nCURRENT BOARD COMMITTEES AND MEETINGS\n The Partners Board has established an Audit Committee. The Committee reviews\nthe Trust's financial reporting procedures, their system of internal control and\nthe independent audit process. The Committee also reviews the Trust's procedures\nfor monitoring compliance with investment restrictions, applicable laws and\nregulations and the Code of Ethics. The Audit Committee currently consists of E.\nVirgil Conway, Harry Dalzell-Payne, Geraldine M. McNamara and Everett L. Morris.\n\n The Partners Board has established a Governance and Nominating Committee.\nThe Governance and Nominating Committee identifies, evaluates and ultimately\nselects nominees for election to the Board. They are also charged with the\nresponsibility of developing and recommending to the Board a set of governance\nprinciples applicable to the Trust. The members of the Governance and Nominating\nCommittee of the Trust include all of the Independent Trustees. The Governance\nand Nominating Committee currently consists of E. Virgil Conway, Harry\nDalzell-Payne, Geraldine M. McNamara and Everett L. Morris.\n\n The Partners Board has established an Executive and Compliance Committee.\nThe Executive and Compliance Committee assists the Partners Board in effectively\nperforming its functions. It is the responsibility of the committee to\nfacilitate efficient management of the Kayne and Seneca Funds by exercising all\npowers of the Board which may be lawfully delegated when the Board is not in\nsession, subject to certain limitations. The Executive and Compliance Committee\ncurrently consists of E. Virgil Conway, Philip R. McLoughlin, Geraldine M.\nMcNamara and Everett L. Morris with respect to the Kayne Fund and E. Virgil\nConway, Harry Dalzell-Payne, Philip R. McLoughlin, Geraldine M. McNamara and\nEverett L. Morris with respect to the Seneca Fund.\n\n\n\n\n The Partners Board with respect to the Kayne Fund held eleven Board\nmeetings, the Audit Committee held four meetings, the Governance and Nominating\nCommittee held three meetings and the Executive and Compliance Committee held no\nmeetings during the fiscal year ended December 31, 2004. The Partners Board with\nrespect to the Seneca Fund held nine Board meetings, the Audit Committee held\nfour meetings, the Governance and Nominating Committee held two meetings and the\nExecutive and Compliance Committee held no meetings during the fiscal year ended\nSeptember 30, 2004. Each Trustee was present for at least 75% of the total\nnumber of meetings of the Board, or of the Board and Audit Committee, Governance\nand Nominating Committee, and Executive and Compliance Committee.\n\n The independent Trustees have not established a formal policy regarding\nconsideration of any trustee candidates recommended by shareholders, but will\nconsider any such candidate as the independent Trustees currently consider\ncandidate recommendations from a variety of sources. Shareholders wishing to\nsubmit candidate recommendations for future consideration should send a letter\nto any of the Governance and Nominating Committee members, including all\nrelevant information pertaining to the candidate, at the address of the Trust.\nSuch communication will be reviewed by the Governance and Nominating Committee\nand, accordingly, the Governance and Nominating Committee does not believe that\na more formal policy is necessary at this time.\n\n The Governance and Nominating Committee has not set out specific, minimum\nqualifications that must be met by a candidate for consideration for a position\non the Board. In evaluating and nominating candidates, including candidates\nrecommended by shareholders, the Governance and Nominating Committee considers\nsuch factors as: (a) the knowledge and expertise of the candidates in terms of\nsuch matters as, but not limited to, mutual fund governance, relevant laws and\nfund policies, and evidence of sound business judgment obtained through\nexperience (not necessarily with mutual funds) dealing with regulatory,\nmanagement, technical or financial issues; (b) the \"independence\" of the\ncandidates with regard to the 1940 Act, as well as any actual or perceived\naffiliations or relationships with Management; (c) their perceived ability to\neffectively and appropriately contribute to the ongoing functions of the Board,\nincluding, without limitation, their work ethic, personal integrity, ability to\nattend meetings and their ability to add unique, specific or otherwise valuable\nviewpoints; (d) whether or not any other more qualified candidates have come\nforward expressing an interest to serve as trustees; (e) the compatibility of\nany possible recommendation in terms of existing board composition and\nanticipated transitions; and (f) such other factors as the Governance and\nNominating Committee deem relevant.\n\n The Partners Board has not established a formal process for shareholders to\nsend communications to the Board. The Board believes that those\n\n\n\n\ncommunications sent to the address of the Trust and addressed to the Board will\nbe sent to the Board. This being the case, the Board does not believe that a\nformal process is necessary at this time.\n\n The Phoenix Funds Nominating Committee has not established a formal policy\nregarding consideration of any trustee candidates recommended by shareholders,\nbut would consider any such candidate as the Phoenix Funds Governance and\nNominating Committee currently considers candidate recommendations from a\nvariety of sources. The Phoenix Funds Board has not established a formal process\nfor shareholders to send communications to the Board.\n\nEXECUTIVE OFFICERS\n The following table sets forth certain information about the Executive\nOfficers of the Trust. The address of each individual, unless otherwise noted,\nis 56 Prospect Street, Hartford, CT 06115-0480.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nVOTING REQUIREMENTS\n The fourteen nominees receiving the highest number of votes will be elected,\nprovided that at least 33-1/3% of the Seneca Fund's and 40% of the Kayne Fund's\noutstanding voting securities are present at the meeting, in person or by proxy.\n\n THE TRUSTEES RECOMMEND A VOTE \"FOR\" THE ELECTION\n OF THE NOMINEES FOR TRUSTEES.\n\n INVESTMENT ADVISER, UNDERWRITER\n AND ADMINISTRATOR\n\n Kayne Anderson Rudnick Investment Management, LLC, 1800 Avenue of the Stars,\n2nd Floor, Los Angeles, CA 90067 and Phoenix Investment Counsel, Inc., 56\nProspect Street, Hartford, CT 06115-0480 are the Kayne Fund's and the Seneca\nFund's Advisers, respectively. Seneca Capital Management, LLC, 909 Montgomery\nStreet, San Francisco, CA 94133 serves as Subadviser to the Seneca Funds.\n\n Phoenix Equity Planning Corporation, 56 Prospect Street, P.O. Box 150480,\nHartford, Connecticut 06115-0480, serves as the Trust's underwriter and\nfinancial agent/administrator.\n\n PROPOSAL NO. 2\n\n RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED\n PUBLIC ACCOUNTING FIRM\n\n The Partners Board, including all of the independent Trustees, has approved\nthe selection of PricewaterhouseCoopers LLP (\"PwC\") as the Kayne Fund's and\nSeneca Fund's independent registered public accounting firm for the 2005 fiscal\nyears ending December 31, 2005 and September 30, 2005, respectively. The\nfinancial statements included in the Trust's Annual Reports have been examined\nby PwC. Representatives of PwC are not expected to be present at the Special\nMeeting of Shareholders, but have been given the opportunity to make a statement\nif they so desire and will be available by telephone during the meeting to\nrespond to appropriate questions.\n\n The SEC's auditor independence rules require the Audit Committee of the\nTrust to pre-approve (a) all audit and permissible non-audit services provided\nby the Trust's registered independent public accountants directly to the Trust\nand (b) those permissible non-audit services provided by the Trust's independent\nauditors to the Trust's investment Advisers and any entity controlling,\ncontrolled by or under common control with the investment Advisers that provides\nongoing services to the Trust (the \"Affiliated Service Providers\"), if the\nservices relate directly to the operations and financial reporting of the Trust.\n\n\n\n\n\n The aggregate fees billed by Briggs Bunting Dougherty LLP for 2002 and by\nPwC for 2003 and 2004 for the indicated services rendered to the Trust for the\nlast two fiscal years were:\n\n KAYNE FUND\n FISCAL YEAR\n ENDED AUDIT- ALL OTHER\n DECEMBER 31 AUDIT FEES RELATED FEES(1) TAX FEES(2) FEES\n ----------- ---------- ------------ -------- ----\n 2002 $51,000 $0 $5,000 $0\n 2003 $102,600 $0 $20,500 $0\n\n\n SENECA FUND\n FISCAL YEAR\n ENDED AUDIT- ALL OTHER\n SEPTEMBER 30 AUDIT FEES RELATED FEES(1) TAX FEES(2) FEES\n ------------ ---------- ------------ -------- ----\n 2003 $81,060 $0 $14,750 $0\n 2004 $81,060 $0 $14,500 $0\n\n(1) \"Audit-Related Fees\" are those related to performance of the audit and\n review of the Trust's financial statements not disclosed under \"Audit Fees.\"\n\n(2) \"Tax Fees\" are those primarily associated with review of the Trust's tax\n provision and qualification as a regulated investment company (RIC) in\n connection with audits of the Trust's financial statements, review of\n year-end distributions by the Fund to avoid excise tax for the Trust,\n periodic discussion with management on tax issues affecting the Trust, and\n reviewing and signing the Fund's federal income and excise tax returns.\n\n None of the hours expended by PwC on the audit of the Trust's financial\nstatements for the fiscal year ended December 31, 2003 for the Kayne Fund and\nfor the fiscal years ended September 30, 2003 and 2004 for the Seneca Fund were\nattributed to work performed by individuals other than PwC full-time, permanent\nemployees.\n\n The aggregate non-audit fees not requiring preapproval billed by Briggs\nBunting in 2002 and by PwC to PIC and other Affiliated Services Providers for\n2003 and 2004, the Trust's last two fiscal years were:\n\n KAYNE FUND\n FISCAL YEAR ENDED AUDIT-\n DECEMBER 31 RELATED FEES(1) TAX FEES(2) ALL OTHER FEES(3)\n ----------- ------------ -------- --------------\n 2002 $0 $5,000 $34,000\n 2003 $112,750 $92,567 $51,072\n\n\n\n\n\n\n\n SENECA FUND\n FISCAL YEAR ENDED AUDIT-\n SEPTEMBER 30 RELATED FEES(1) TAX FEES(2) ALL OTHER FEES(3)\n ------------ ------------ -------- --------------\n 2003 $75,000 $62,050 $13,230\n 2004 $69,700 $42,825 $273,403\n\n(1) \"Audit-Related Fees\" are those related to performance of a review of the\n transfer agent operations of Phoenix Equity Planning Corporation, the\n Trust's transfer agent.\n\n(2) \"Tax Fees\" are those primarily associated with consultations on tax matters\n and tax compliance services.\n\n(3) \"All Other Fees\" were those related to non-financial information system\n consulting services.\n\n The Partners Board has adopted policies and procedures with regard to the\npre-approval of services provided by PwC. Audit, audit-related and tax\ncompliance services provided to the Trust on an annual basis require specific\npre-approval by the Board. As noted above, the Board must also approve other\nnon-audit services provided to the Trust and those non-audit services provided\nto the Trust's Affiliated Service Providers that relate directly to the\noperations and financial reporting of the Trust. Certain of these non-audit\nservices that the Board believes are a) consistent with the SEC's auditor\nindependence rules and b) routine and recurring services that will not impair\nthe independence of the independent auditors may be approved by the Board\nwithout consideration on a specific case-by-case basis (\"general pre-approval\").\nThe Audit Committee has determined that Mr. E. Virgil Conway, Chair of the Audit\nCommittee, may provide pre-approval for such services that meet the above\nrequirements in the event such approval is sought between regularly scheduled\nmeetings. In the event that Mr. Conway determines that the full board should\nreview the request, he has the opportunity to convene a meeting of the Partners\nBoard. In any event, the Board is informed of each service approved subject to\ngeneral pre-approval at the next regularly scheduled in-person Board meeting.\nThere were no services requested that required pre-approval for the Trust.\n\n The non-audit services provided to the Kayne Adviser and to PIC and other\nAffiliated Service Providers for the year 2002 were not preapproved under the\nTrust's current pre-approval policy as such services were contracted or rendered\nprior to implementation of the SEC's auditor independence rules. However, the\nnon-audit services provided to the Kayne Adviser and to PIC and other Affiliated\nService Providers for the years 2003 and 2004 were preapproved pursuant to the\nSEC's auditor independence rules. The Audit Committee of the Trust has\nconsidered and determined that the provision of non-audit services provided to\nthe Kayne Adviser and to PIC and other Affiliated Service Providers that were\nnot pre-approved in accordance with the Trust's pre-approval policy is\ncompatible with PwC's independence. In accordance with Independence Standards\nBoard No. 1, PwC, the registered independent public auditors for the Trust's\nmost recently completed fiscal\n\n\n\n\n\n\nyear, has confirmed to the Audit Committee that it is independent with respect\nto the Trust.\n\n THE TRUSTEES RECOMMEND A VOTE \"FOR\"\n PROPOSAL NO. 2.\n\n\n PROPOSAL NO. 3\n\n OTHER BUSINESS\n\nOTHER MATTERS\n As of the date of this Proxy Statement, the Trust's management knows of no\nother matters to be brought before the meeting. However, if any other matters\nproperly come before the meeting, the persons named in the enclosed proxy will\nvote in accordance with their judgment on such matters.\n\n ADDITIONAL INFORMATION\n\nSHAREHOLDER PROPOSALS\n The Trust is not required and does not intend to hold annual meetings of\nshareholders. The next meeting of shareholders will be held at such time as may\nbe determined by the Trustees or legally required. Any shareholder desiring to\npresent a proposal for consideration at the next meeting of shareholders must\nsubmit the proposal in writing so that it is received by the Trust within a\nreasonable time before the solicitation for such meeting is made and must\nsatisfy all other legal requirements.\n\n All shareholders are urged to vote. The enclosed proxy is revocable and will\nnot affect your right to vote in person if you attend the meeting.\n\n By Order of the Board of Trustees,\n\n\n\n\n MATTHEW A. SWENDIMAN,\n Secretary\n\nHartford, Connecticut\nJanuary 5, 2005\n\n\n\n\n PHOENIX-KAYNE FUNDS\n 1800 AVENUE OF THE STARS, 2ND FLOOR\n LOS ANGELES, CA 90067\n\n AND\n\n PHOENIX-SENECA FUNDS\n 909 MONTGOMERY STREET\n SAN FRANCISCO, CA 94133\n\n PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS\n FEBRUARY 15, 2005\n\n\n PROXY\n\n The undersigned shareholder of Phoenix-Kayne Funds or Phoenix-Seneca Funds\n(the \"Trust\"), revoking any and all previous proxies heretofore given for shares\nof the Trust held by the undersigned, hereby constitutes and appoints Philip R.\nMcLoughlin and Matthew A. Swendiman, and each of them, proxies and attorneys of\nthe undersigned, with full power of substitution of each, for and in the name of\nthe undersigned to vote and act upon all matters (unless and except as expressly\nlimited below) at the Special Meeting of Shareholders of the Trust to be held on\nFebruary 15, 2005 at the offices of the Phoenix Investment Partners, Ltd., 56\nProspect Street, Hartford, Connecticut, and at any and all adjournments thereof,\nwith respect to all shares of the Trust for which the undersigned is entitled to\nprovide instructions or with respect to which the undersigned would be entitled\nto provide instructions or act with all the powers the undersigned would possess\nif personally present and to vote with respect to specific matters as set forth\nbelow. Any proxies heretofore given by the undersigned with respect to said\nmeeting are hereby revoked.\n\n To avoid the expense of adjourning the Meeting to a subsequent date, please\nreturn this proxy in the enclosed self-addressed, postage-paid envelope. In the\nalternative, you may vote by telephone by calling toll-free 1-877-779-8683 and\nfollowing the recorded instructions or through the Internet for the\nPhoenix-Kayne Funds at www.eproxyvote.com/kayne or for the Phoenix-Seneca Funds\nat www.eproxyvote.com/seneca and following the instructions given there. Please\nbe sure to have this proxy card in hand when voting either by telephone or\nInternet. Prompt voting by shareholders will avoid the costs associated with\nfurther solicitation.\n\n This proxy, if properly executed, will be voted in the manner as directed\nherein by the undersigned shareholder. Unless otherwise specified in the squares\nprovided, the undersigned's vote will be cast \"FOR\" the proposals. If no\ndirection is made for the Proposals, this proxy will be voted \"FOR\" such\nProposals.\n\n THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF\n TRUSTEES OF THE TRUST WHICH RECOMMENDS VOTES\n \"FOR\" THE PROPOSALS.\n\n\n\n ACCOUNT NUMBER:\n -------------------------\n SHARES:\n -------------------------\n CONTROL NO.:\n -------------------------\n\nTO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]\n\nKEEP THIS PORTION FOR OUR RECORDS\nDETACH AND RETURN THIS PORTION ONLY\nTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.\n\nVOTE ON PROPOSAL\n1. ELECTION OF TRUSTEES\n To reconstitute the Board of Trustees and Withhold For All\nelect fourteen Trustees (except as marked to For Authority Except\nthe contrary below) [ ] [ ] [ ]\n\n E. Virgil Conway.............................________________________________\n Harry Dalzell-Payne..........................________________________________\n S. Leland Dill...............................________________________________\n Francis E. Jeffries..........................________________________________\n Leroy Keith, Jr..............................________________________________\n Marilyn E. LaMarche..........................________________________________\n Philip R. McLoughlin.........................________________________________\n Geraldine M. McNamara........................________________________________\n Everett L. Morris............................________________________________\n James M. Oates...............................________________________________\n Donald B. Romans.............................________________________________\n Richard E. Segerson..........................________________________________\n Ferdinand L. J. Verdonck.....................________________________________\n Lowell P. Weicker, Jr........................________________________________\n\n(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDEPENDENT NOMINEE, MARK\nTHE \"FOR ALL EXCEPT\" BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME.)\n\n2. RATIFICATION OF AUDITORS\n To ratify the Board's selection of\nPricewaterhouseCoopers LLP as the\nPhoenix-Kayne Funds and the\nPhoenix-Seneca Funds Independent\nRegistered Public Accounting Firm for\nthe 2005 Fiscal Years ending December 31, For Against Abstain\n2005 and September 30, 2005, respectively. [ ] [ ] [ ]\n\n3. TO TRANSACT SUCH OTHER BUSINESS AS PROPERLY MAY COME BEFORE THE MEETING OR\n ANY ADJOURNMENT THEREOF.\n\nNOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF SHARES ARE REGISTERED\nIN MORE THAN ONE NAME, ALL REGISTERED SHAREHOLDERS SHOULD SIGN THIS PROXY; BUT\nIF ONE SHAREHOLDER SIGNS, THIS SIGNATURE BINDS THE OTHER SHAREHOLDER(S). WHEN\nSIGNING AS AN ATTORNEY, EXECUTOR, ADMINISTRATOR, AGENT, TRUSTEE, GUARDIAN, OR\nCUSTODIAN FOR A MINOR, PLEASE GIVE FULL TITLE AS SUCH, IF A CORPORATION, PLEASE\nSIGN IN FULL CORPORATE NAME BY AN AUTHORIZED PERSON. IF A PARTNERSHIP, PLEASE\nSIGN IN PARTNERSHIP NAME BY AN AUTHORIZED PERSON. THIS PROXY MAY BE REVOKED BY\nTHE SHARHOLDER(S) AT ANY TIME PRIOR TO THE SPECIAL MEETING OF THE SHAREHOLDERS.\n\n- ------------------------------ ---------------- ------------------------------\n\n- ------------------------------ ---------------- ------------------------------\nSignature Date Signature (Joint Owners) Date\n(PLEASE SIGN WITHIN BOX)\n\n\n\n"},"accession_number":{"kind":"string","value":"0000949377-05-000022"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":86,"cells":{"_id":{"kind":"string","value":"101829_DEF 14A_2005_0001193125-05-037477"},"cik":{"kind":"string","value":"101829"},"company":{"kind":"string","value":"UNITED TECHNOLOGIES CORP /DE/"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-02-25T00:00:00","string":"2005-02-25T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-04-13T00:00:00","string":"2005-04-13T00:00:00"},"sic":{"kind":"string","value":"3724"},"state_of_inc":{"kind":"string","value":"DE"},"state_location":{"kind":"string","value":"VA"},"fiscal_year_end":{"kind":"string","value":"1231"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/101829/0001193125-05-037477-index.html"},"htm_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/101829/000119312505037477/ddef14a.htm"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/101829/0001193125-05-037477.txt"},"filename":{"kind":"string","value":"101829_DEF 14A_2005_0001193125-05-037477.htm"},"text":{"kind":"string","value":"\nDEF 14A\nddef14a.htm\nDEFINITE PROXY STATEMENT\n\nDefinite Proxy Statement\nSCHEDULE 14A INFORMATION \n\n \n\n Proxy Statement Pursuant to Section 14(a) of \n\n the Securities Exchange Act of 1934 \n\n \n\n [Amendment No. ] \n\n \n\n Filed by the Registrant x \n\n \n\n Filed by a Party other than the\nRegistrant ¨ \n\n \n\n Check the appropriate box: \n\n \n\n\n\n\n \n \n \n \n \n \n \n\n\n\n \n \n \n \n\n\n\n ¨\n\n \n \nPreliminary Proxy Statement \n \n \n \n \n\n\n\n \n \n \n \n\n\n\n x\n\n \n \nDefinitive Proxy Statement \n \n ¨\n\n \n \n Confidential, for Use of the Commission Only\n\n (as\npermitted by Rule 14a-6(e)(2))\n\n \n\n\n\n ¨\n\n \n \nDefinitive Additional Materials \n \n \n \n \n\n\n\n \n \n \n \n\n\n\n ¨\n\n \n \nSoliciting Material under §240.14a-12 \n \n \n \n \n\n\n \n\n United Technologies\nCorporation \n\n (Name of Registrant as Specified in Its Charter) \n\n \n\n \n\n (Name of Person(s) Filing Proxy Statement if\nother than the Registrant) \n\n \n\n Payment of\nFiling Fee (Check the appropriate box): \n\n \n\n\n\n\nx \n \nNo fee required \n\n \n\n\n\n\n¨ \n \nFee computed on table below per Exchange Act Rules 14a-6(i)(1) and O-11. \n\n \n\n\n\n\n \n(1) \n \nTitle of each class of securities to which transaction applies: \n\n \n\n\n\n\n \n(2) \n \nAggregate number of securities to which transaction applies: \n\n \n\n\n\n\n \n(3) \n \nPer unit price or other underlying value of transaction computed pursuant to Exchange Act Rule O-11 (Set forth the amount on which the filing fee is calculated and state how it was\ndetermined): \n\n \n\n\n\n\n \n(4) \n \nProposed maximum aggregate value of transaction: \n\n \n\n\n\n\n \n(5) \n \nTotal fee paid: \n\n \n\n\n\n\n¨ \n \nFee paid previously with preliminary materials. \n\n \n\n\n\n\n¨ \n \nCheck box if any part of the fee is offset as provided by Exchange Act Rule O-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the\nprevious filing by registration statement number, or the Form or Schedule and the date of its filing. \n\n \n\n\n\n\n \n(1) \n \nAmount Previously Paid: \n\n \n\n\n\n\n \n(2) \n \nForm Schedule or Registration Statement No.: \n\n \n\n\n\n\n \n(3) \n \nFiling Party: \n\n \n\n\n\n\n \n(4) \n \nDate Filed: \n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n \n United Technologies Corporation\n\n 1 Financial Plaza\n\n Hartford, CT 06103\n\n \n\n\n \n\n \n\n February 25, 2005 \n\n \n\n NOTICE OF ANNUAL MEETING OF SHAREOWNERS \n\n \n\n Dear Fellow Shareowner: \n\n \n\n I am pleased to invite\nthe shareowners of United Technologies Corporation to attend the 2005 Annual Meeting of Shareowners to be held on April 13, 2005 in the Celeste Bartos Forum of The New York Public Library, Fifth Avenue & 42nd Street, New York, New York. The doors will open at 1:30 p.m. and the meeting will begin at 2:00 p.m. The meeting will address the following matters:\n\n\n \n\n\n\n\n1. \n \nElection of eleven directors. \n\n \n\n\n\n\n2. \n \nAppointment of a firm of independent registered public accountants to serve as Independent Auditors. \n\n \n\n\n\n\n3. \n \nApproval of United Technologies Corporation 2005 Long Term Incentive Plan. \n\n \n\n\n\n\n4. \n \nShareowner proposals described in the accompanying Proxy Statement. \n\n \n\n\n\n\n5. \n \nOther business if properly raised. \n\n \n\n Shareowners of record of UTC Common Stock at the close of business on February 15, 2005, the record date for the meeting, and their authorized representatives by proxy\nwill be entitled to attend and vote at the meeting. \n\n \n\n Since seating is limited,\nwe ask that shareowners request a ticket in advance to attend. Please refer to page 2 of the attached Proxy Statement for further information concerning tickets. \n\n \n\n EACH VOTE IS VERY IMPORTANT. SHAREOWNERS ARE REQUESTED TO PLEASE SUBMIT A PROXY OR VOTING INSTRUCTIONS AS SOON AS POSSIBLE, WHETHER OR\nNOT THEY PLAN TO ATTEND THE MEETING. Most shareowners have a choice of voting over the Internet, by telephone or by using a traditional proxy card. Please refer to the attached proxy materials or the information forwarded by your bank, broker or\nother holder of record to see which voting methods are available. \n\n \n\n George\nDavid \n\n Chairman and Chief Executive Officer \n\n \n\n REQUEST ELECTRONIC DELIVERY OF ANNUAL MEETING DOCUMENTS. \n\n Shareowners\nmay elect to receive future distribution of proxy documents and annual reports by electronic access. To take advantage of this cost-saving service please see page 26 of the attached Proxy Statement for further information. \n\n\n\n\n\n\n\nPROXY STATEMENT \n\n \n\n\n\n \n\n\n\n\n \n \n \n\n\n\n \n \nPage\n\n \n\n\n\n \n \n\n\n\n \nGeneral Information Regarding the Annual Meeting\n\n \n \n\n\n\n \n \n\n\n\n \nPROPOSAL 1: Election of Directors\n\n \n \n\n\n\n \n \n\n\n\n \nGeneral Information Concerning the Board of Directors\n\n \n \n\n\n\n \n \n\n\n\n \nNominees\n\n \n \n\n\n\n \n \n\n\n\n \nCommittees of the Board\n\n \n \n\n\n\n \n \n\n\n\n \nCorporate Governance Guidelines\n\n \n \n\n\n\n \n \n\n\n\n \nSecurity Ownership of Directors, Executive Officers and Certain Beneficial Owners\n\n \n \n\n\n\n \n \n\n\n\n \nPerformance Graph\n\n \n \n\n\n\n \n \n\n\n\n \nReport of the Committee on Compensation and Executive Development\n\n \n \n\n\n\n \n \n\n\n\n \nCompensation of Named Executive Officers\n\n \n \n\n\n\n \n \n\n\n\n \nSummary Compensation Table\n\n \n \n\n\n\n \n \n\n\n\n \nOption Grants in Last Fiscal Year\n\n \n \n\n\n\n \n \n\n\n\n \nAggregated Option Exercises and Values\n\n \n \n\n\n\n \n \n\n\n\n \nTermination of Employment and Change of Control Arrangements\n\n \n \n\n\n\n \n \n\n\n\n \nPension Plan Table\n\n \n \n\n\n\n \n \n\n\n\n \nCompensation of Directors\n\n \n \n\n\n\n \n \n\n\n\n \nReport of Audit Committee\n\n \n \n\n\n\n \n \n\n\n\n \nPROPOSAL 2: Appointment of a Firm of Independent Public Accountants to Serve as Independent Auditors\n\n \n \n\n\n\n \n \n\n\n\n \nPROPOSAL 3: Approval of United Technologies Corporation 2005 Long Term Incentive Plan\n\n \n \n\n\n\n \n \n\n\n\n \nEquity Compensation Plan Information\n\n \n \n\n\n\n \n \n\n\n\n \nPROPOSALS 4-6: Shareowner Proposals\n\n \n \n\n\n\n \n \n\n\n\n \nAdditional Meeting Information\n\n \n \n\n\n\n \n \n\n\n\n \nOther Matters\n\n \n \n\n\n\n \n \n\n\n\n \nCertain Transactions and Business Relationships\n\n \n \n\n\n\n \n \n\n\n\n \nSection 16(a) Beneficial Ownership Reporting Compliance\n\n \n \n\n\n\n \n \n\n\n\n \nAppendix A - Director Independence Standards\n\n \n \n\n\n\n \n \n\n\n\n \nAppendix B - United Technologies Corporation 2005 Long Term Incentive Plan\n\n \n \n\n\n\n\n\n\n\nUNITED TECHNOLOGIES CORPORATION \n\n \n\n PROXY STATEMENT \n\n \n\n EACH SHAREOWNER’S VOTE IS VERY IMPORTANT. Whether or not shareowners plan to attend the Annual Meeting, all shareowners are requested to submit a proxy or voting\ninstructions as soon as possible so that all shares can be voted at the meeting in accordance with the instructions of shareowners. \n\n \n\n The Board of Directors is soliciting proxies for the 2005 Annual Meeting of Shareowners of United Technologies Corporation (“UTC”) to be held on April 13, 2005.\nThis Proxy Statement is being made available to shareowners on or about February 25, 2005. \n\n \n\n \nGENERAL INFORMATION REGARDING THE ANNUAL MEETING \n\n \n\n How does the Board of Directors recommend shareowners vote on the matters to be addressed? \n\n \n\n The Board recommends a vote: \n\n \n\n FOR each of its nominees for election as directors, \n\n FOR the appointment of PricewaterhouseCoopers LLP as Independent\nAuditors, \n\n FOR approval of the 2005 Long Term Incentive Plan, and \n\n AGAINST each of the shareowner proposals described on pages 22 through 25. \n\n \n\n Who is entitled to vote? Shareowners of record of UTC Common Stock (“Common Stock”) at the close of business on February\n15, 2005, the record date, and their authorized proxies are entitled to vote. A registered shareowner is a person or entity who held shares on that date registered in its name on the records of EquiServe Trust Company, N.A.\n(“EquiServe”), UTC’s stock transfer agent. Persons or entities who held shares on the record date through a broker, bank or other nominee (including any shares held through a UTC employee savings plan) are considered beneficial\nowners and generally are entitled to provide voting instructions to the registered holder. A list of registered shareowners entitled to vote will be available at UTC’s offices, 1 Financial Plaza, Hartford, CT for 10 days prior to the\nmeeting and at the meeting location during the meeting. \n\n \n\n How can shareowners\nvote? We send proxy cards and offer electronic voting to all registered shareowners to enable them to direct the voting of their shares. Those registered shareowners who previously have elected to receive electronic access to their proxy\nmaterials (rather than receiving mailed copies) and many active employees who participate in UTC employee savings plans will receive e-mail notification as to how to submit proxies or voting instructions. Brokers, banks and nominees typically offer\ntelephonic or electronic means by which beneficial owners can submit voting instructions, in addition to the traditional mailed voting instruction cards. Shareowners who submit a proxy or voting instructions need not vote at the Annual\nMeeting. However, we will pass out written ballots to any registered shareowner, savings plan participant or holder of a legal proxy who wishes to vote in person at the Annual Meeting. \n\n \n\n Can shareowners vote by telephone or via the Internet? Registered shareowners and participants in a UTC employee savings plan\nin the United States or Canada may submit proxies or voting instructions by telephone by dialing 1-877-PRX-VOTE or 1-877-779-8683, having a copy of the proxy card available for reference (or the e-mail message they receive with instructions\non how to vote) and following the voice prompts. Registered shareowners and UTC savings plan participants may also submit proxies or voting instructions via the Internet by accessing the following website:\nwww.eproxyvote.com/utx, having a copy of the proxy card available for reference (or the e-mail message they receive with instructions on how to vote) and marking the appropriate boxes. Please note that the facilities for telephone and\nInternet voting cannot accommodate cumulative voting for the election of directors, and therefore shareowners who wish to exercise cumulative voting rights can do so only by submitting a written proxy or voting instructions. Beneficial owners\nof shares held through a broker, bank or nominee may submit voting instructions by telephone or via the Internet if the firm holding shares for their account offers any of these voting methods. Beneficial shareowners should refer to the instructions\non how to vote provided by that firm. \n\n\n\n\n\n\nHow are shares held by the UTC employee savings plans voted? Participants in the UTC Employee Savings Plan may\ndirect the voting of Common Stock by the savings plan trustee by returning a voting instruction card or by providing voting instructions by telephone or via the Internet. If participants do not provide voting instructions or if the instructions are\nincomplete or unclear, the trustee will vote the uninstructed shares with the plurality of shares for which voting instructions have been received. The trustee will also vote unallocated Common Stock in the Savings Plan with the plurality of\ninstructed shares. \n\n \n\n How will the proxy holders vote shares? The proxy\nholders designated on the proxy card will vote according to the instructions shareowners submit on proxy cards, by telephone or via the Internet. If shareowners sign and return proxy cards but do not indicate voting instructions on one or more of\nthe matters listed, the proxy holders will vote the uninstructed shares for the Board’s nominees for election as a director, for the appointment of PricewaterhouseCoopers LLP, for approval of the 2005 Long Term Incentive Plan, and against each\nof the shareowner proposals. \n\n \n\n Who can attend the Annual Meeting and how can\nshareowners request tickets? All shareowners of record on February 15, 2005 or their authorized proxies may attend. Since seating is limited, we ask that shareowners request tickets in advance to attend. Holders of shares registered in\ntheir name on the records of EquiServe and UTC savings plan participants can request tickets by sending an e-mail request to the Corporate Secretary at corpsec@corphq.utc.com or by returning the Reservation Card provided with the mailed\nannual meeting materials. Persons who forget to bring a ticket will be admitted to the meeting only if they bring proof that they were a shareowner of record or UTC savings plan participant as of February 15, 2005 and proof of identification.\nPersons holding shares through a broker, bank or nominee may request a ticket by writing to the Corporate Secretary and including a copy of a brokerage account statement or a legal proxy from the broker, bank or nominee, in either case evidencing\ntheir ownership of shares as of the record date. \n\n \n\n \nPROPOSAL 1: ELECTION OF DIRECTORS \n\n \n\n \nGeneral Information Concerning the Board of Directors. The entire Board is elected annually by the shareowners. The Board has selected eleven nominees based upon the recommendation of its Committee on Nominations and\nGovernance, which evaluates candidates based upon their ability, integrity and experience. Each nominee is currently a director and was elected at the 2004 Annual Meeting. \n\n \n\n The Board has adopted the independence standards for directors set forth in Appendix A to this Proxy Statement. These standards conform to\nthe requirements of the New York Stock Exchange (“NYSE”). Based on UTC’s independence standards, the Board has affirmatively determined that each of the nominees is independent, other than Mr. David. If any of the nominees becomes\nunavailable prior to the Annual Meeting to serve as a director, the Board may select a replacement nominee or reduce the number of directors to be elected. The proxy holders will vote the shares for which they serve as proxy for any replacement\ncandidate nominated by the Board. \n\n \n\n Ms. Bernard is not standing for re-election.\nThe Board expresses its appreciation to Ms. Bernard for her dedicated service as a member of UTC’s Board of Directors. \n\n \n\n\n\n\n\n\n\n\n\nNominees. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREOWNERS VOTE FOR EACH OF THE FOLLOWING NOMINEES: \n\n \n\n\n\n\n \n \n \n\n\n\n\n \n \nGEORGE DAVID, Chairman and Chief Executive Officer, United Technologies Corporation. Mr. David was elected Chief Executive Officer in 1994 and Chairman in 1997. He has also served as UTC’s\nPresident since January 2002, and previously held that position from 1992 to 1999. Mr. David is a member of the Board of Directors of Citigroup Inc. and the Board of Trustees of The Carnegie Hall Corporation, Inc. He is also a board member of the\nNational Academy Foundation and a member of The Business Council and The Business Roundtable. Mr. David was awarded the Order of Friendship from the Russian Federation in 1999 and in May 2002 France named him to its Legion of Honor. Mr. David is 62\nand has been a UTC director since 1992. \n\n\n\n \n \n\n\n\n\n \n \nJEAN-PIERRE GARNIER, Ph.D., has served as Chief Executive Officer and Executive Member of the Board of Directors of GlaxoSmithKline plc (pharmaceuticals) since 2000. Dr. Garnier served as Chief\nExecutive Officer of SmithKline Beecham plc in 2000 and as Chief Operating Officer and Executive Member of the Board of Directors of SmithKline Beecham plc from 1996 to 2000. He served as Chairman, Pharmaceuticals, SmithKline Beecham from 1994 to\n1995. Dr. Garnier is a director of the Eisenhower Exchange Fellowships. Dr. Garnier is 57 and has been a UTC director since 1997. \n\n\n\n \n \n\n\n\n\n \n \nJAMIE S. GORELICK is a partner at the international law firm, Wilmer Cutler Pickering Hale and Dorr LLP, having joined the firm in 2003. Ms. Gorelick represents companies on regulatory,\ncompliance, governance and enforcement issues. She has held numerous positions in the U.S. Government, serving as Deputy Attorney General of the United States, as General Counsel of the Department of Defense, as Assistant to the Secretary of Energy,\nand most recently as a member of the bipartisan National Commission on Terrorist Threats Upon the United States. She also served as Vice Chair of Fannie Mae from 1997 to 2003. She is currently a member of the boards of Schlumberger, Ltd., the John\nD. and Catherine T. MacArthur Foundation, the Carnegie Endowment for International Peace, the Washington Legal Clinic for the Homeless, and Legal Affairs. She is a member of the Council on Foreign Relations. Ms. Gorelick is 54 and has been a UTC\ndirector since 2000. \n\n\n\n \n \n\n\n\n\n \n \nCHARLES R. LEE served as the Non-Executive Chairman of the Board of Directors of Verizon Communications (telecommunications) from April 2002 until his retirement in December 2003. He was\nChairman and Co-Chief Executive Officer of Verizon Communications from June 2000 to March 2002. Prior to the merger of GTE Corporation and Bell Atlantic Corporation to form Verizon Communications, Mr. Lee served as Chairman and Chief Executive\nOfficer of GTE Corporation from 1992 to 2000. He is a director of United States Steel Corporation, Marathon Oil Corporation, The Procter & Gamble Company and The DIRECTV Group, Inc. Mr. Lee is also a member of the Board of the American Institute\nfor Research (AIR) and is a Trustee Emeritus and Presidential Councilor of Cornell University. In addition, he serves on the Board of Overseers for the Weill Cornell Medical Center and is a member of The Business Council. Mr. Lee is 65 and has been\na UTC director since 1994. \n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n \nRICHARD D. MCCORMICK served as Chairman of the Board of U S WEST, Inc. (telecommunications) from June 1998 until his retirement in May 1999. He was Chairman, President and Chief Executive\nOfficer of U S WEST, Inc. from May 1992 until June 1998. He is also a director of Wells Fargo and Company, Unocal Corporation, Nortel Networks Corporation, Nortel Networks Limited and HealthTrio Inc., a privately held provider of software for the\nhealthcare industry. In addition, he is Honorary Chairman of the International Chamber of Commerce, Vice Chairman of the United States Council for International Business, a trustee of the Denver Art Museum, Vice President of the Denver Art Museum\nFoundation and Director Emeritus of Creighton University. Mr. McCormick is 64 and has been a UTC director since 1999. \n\n\n\n \n \n\n\n\n\n \n \nHAROLD W. MCGRAW III has been Chairman of the Board of the McGraw-Hill Companies (global information services) since 2000 and President and Chief Executive Officer of McGraw-Hill since 1998. Mr.\nMcGraw was President and Chief Operating Officer of McGraw Hill from 1993 to 1998. He is Chairman of both the Emergency Committee for American Trade and The Business Roundtable’s International Trade and Investment Task Force, and is a member of\nThe Business Council. He also served on President George W. Bush’s Transition Advisory Committee on Trade. He is a member of the Carnegie Hall Board of Trustees and co-chairs Carnegie Hall’s Corporate Fund. He is Chairman of the National\nCouncil on Economic Education as well as The National Actors Theatre. He is also on the boards of The New York Public Library and the National Academy Foundation. Mr. McGraw is 56 and has been a UTC director since December 2003. \n\n\n\n \n \n\n\n\n\n \n \nFRANK P. POPOFF has served as Chairman of Chemical Financial Corp. (banking and financial services) since May 2004. He is the Retired Chairman and Chief Executive Officer of The Dow Chemical\nCompany, Midland, Michigan. Mr. Popoff served as Chairman of The Dow Chemical Company from 1992 to 2000 and as its Chief Executive Officer from 1987 to 1995. Mr. Popoff is also a director of American Express Company, Qwest Communications\nInternational Inc., and Shin-Etsu Chemical Co. Ltd. He is a past chairman of the Chemical Manufacturers Association and a founder of The Business Council for Sustainable Development. He is also a member of the American Chemical Society and Director\nEmeritus of The Dow Chemical Company and the Indiana University Foundation. Mr. Popoff is 69 and has been a UTC director since 1996. \n\n\n\n \n \n\n\n\n\n \n \nH. PATRICK SWYGERT has served as President of Howard University since 1995. Mr. Swygert served as President of the University at Albany, State University of New York from 1990 to 1995, and as\nExecutive Vice President of Temple University from 1987 to 1990. He also serves on the Boards of Fannie Mae and Hartford Financial Services Group Inc. Mr. Swygert is Chairman of the Historically Black Colleges and Universities Capital Financing\nProgram Advisory Board of the U.S. Department of Education, and a member of the Brown v. Board of Education U.S. Commemoration Commission, the U.S. National Commission for United Nations Educational, Scientific and Cultural Organization (UNESCO),\nthe Commission on Presidential Debates, The Eisenhower Fellowships, and the National Security Agency Advisory Board. Mr. Swygert is 61 and has been a UTC director since 2001. \n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n \nANDRÉ VILLENEUVE has been the Non-Executive Chairman of Euronext.LIFFE, the London futures and derivatives exchange, since August 2003. He served as an executive director of Reuters from\n1989 to 2000. He was Chairman of Instinet Corporation, an electronic brokerage subsidiary of Reuters from 1990 to 1999, and Executive Chairman from 1999 to 2002. He was Chairman of Promethee, the French think tank, from 1998 to 2002. He is currently\na non-executive director of Aviva PLC (formerly Commercial Union, then CGU), IFRI (Institut Francais de Relations Internationales) and EuroArbitrage. Mr. Villeneuve is 60 and has been a UTC director since 1997. \n\n\n\n \n \n\n\n\n\n \n \nHAROLD A. WAGNER has served as Chairman (non-executive) of Agere Systems Inc. (communications components) since 2001. He served as Chairman and Chief Executive Officer of Air Products and\nChemicals, Inc. from 1992 to 2000 and as its Chairman, President and Chief Executive Officer from 1992 to 1998. He is a director of CIGNA Corporation, PACCAR Inc., and Maersk, Inc. He also serves on the Business Advisory Council of A. P. Moller,\nInc., the Board of Trustees of Lehigh University, the Board and Executive Committee of the Eisenhower Exchange Fellowships, and is Chairman of the Board of the Dorothy Rider Pool Healthcare Trust. He is a member of The Business Roundtable. Mr.\nWagner is 69 and has been a UTC director since 1994. \n\n\n\n \n \n\n\n\n\n \n \nCHRISTINE TODD WHITMAN served as Administrator of the U.S. Environmental Protection Agency from January 2001 through June 2003. She was Governor of the State of New Jersey from 1994 through\n2001. She has served as President of The Whitman Strategy Group (environment and public policy consulting) since December 2004. She is a director of Texas Instruments Incorporated, S.C. Johnson & Son, Inc. and the Millennium Challenge\nCorporation. In addition, she is Co-Chairman of the National Smart Growth Council, and serves on the Steering Committee of The Cancer Institute of New Jersey; the Leadership Council of the Republican Pro-Choice Coalition; the Governing Board of the\nOquirrh Institute, and is a member of the board of the New America Foundation. She is also a member of the newly formed Center for Civic Engagement and Volunteerism Advisory Board at Raritan Valley Community College. Ms. Whitman is 58 and has been a\nUTC director since December 2003. \n\n\n \n\n \nCommittees of the Board. The standing committees of the Board consist of the Audit Committee, the Committee on Nominations and Governance, the Committee on Compensation and Executive Development, the Finance\nCommittee and the Public Issues Review Committee. Each committee other than the Finance Committee is composed solely of directors determined by the Board to be independent in accordance with NYSE standards. \n\n \n\n The Audit Committee assists the Board in its oversight of the integrity of UTC’s\nfinancial statements and the qualifications and independence of the independent auditors. The Committee also nominates an accounting firm to serve as Independent Auditors and is responsible for the compensation, retention and oversight of the\nIndependent Auditors. Directors Gorelick, McCormick, Popoff (Chairman), Swygert, Villeneuve and Wagner are members of the Committee. The Board has determined that Directors McCormick, Popoff, Villeneuve and Wagner are audit committee financial\nexperts within the meaning of the rules of the Securities and Exchange Commission (“SEC”) and that all Committee members are independent in accordance with NYSE standards. During 2004, the Committee held eight meetings. \n\n \n\n The Committee on Nominations and Governance recommends criteria for service as a\ndirector, reviews candidates and recommends appropriate governance practices and compensation for directors. Directors Bernard, Garnier, Lee, McCormick (Chairman), Swygert, and Wagner are members of the Committee. The Committee believes candidates\nfor the Board should have the ability to exercise objectivity and independence in making informed business decisions; extensive knowledge, experience and judgment; the highest integrity; loyalty to the interests of UTC and its \n\n\n \n\n\n\n\n\n\n\n\n\nshareowners; a willingness to devote the extensive time necessary to fulfill a director’s duties; the ability to contribute to the diversity of\nperspectives present in board deliberations; and an appreciation of the role of the corporation in society. The Committee considers candidates meeting these criteria who are suggested by directors, management and shareowners. From time to time, the\nCommittee recommends highly qualified candidates who are considered to enhance the strength, independence and effectiveness of the Board. UTC also pays fees to one or more search firms to assist in the identification and evaluation of qualified\ncandidates. The Committee will consider director candidates recommended by shareowners, who may submit recommendations by letter addressed to the Corporate Secretary. During 2004, the Committee held four meetings. \n\n \n\n The Committee on Compensation and Executive Development is responsible for executive\ncompensation and development programs, including corporate goals and objectives relevant to Chief Executive Officer (“CEO”) compensation, approval of the CEO’s compensation based on an evaluation of performance in light of these goals\nand objectives, review of long term incentive plans and annual incentive compensation and review of compensation actions affecting other executive officers. The Committee also reviews management development policies and programs. Directors Garnier,\nLee, McCormick, Popoff and Wagner (Chairman) are members of the Committee. During 2004, the Committee held eight meetings. \n\n \n\n The Finance Committee reviews and makes recommendations to the Board on the management of the financial resources of UTC and major financial strategies and\ntransactions. Directors David, Gorelick, Lee (Chairman), McGraw, Popoff, Villeneuve and Whitman are members of the Committee. During 2004, the Committee held five meetings. \n\n \n\n The Public Issues Review Committee reviews UTC’s contributions program, political action committees, and responses to public\nissues such as equal employment opportunity, the environment, and safety in the workplace. Directors Bernard, Garnier (Chairman), Gorelick, McGraw, Swygert, Villeneuve and Whitman are members of the Committee. During 2004, the Committee held four\nmeetings. \n\n \n\n Attendance. The Board met eight times during 2004 with an\naverage attendance of 94%. Each director attended 75% or more of the aggregate number of meetings of the Board and Committees on which he or she served. The non-management directors meet in regularly scheduled executive sessions and have selected\nMr. Wagner to serve as Presiding Director at executive sessions. The Board’s policy is that directors standing for reelection should attend the annual meeting of shareowners if their schedules permit. Of the current directors, all but two\nattended the last annual meeting in April 2004. \n\n \n\n \nCorporate Governance Guidelines. UTC’s Corporate Governance Guidelines, the charter for each Board Committee and UTC’s Code of Ethics are available on UTC’s website: www.utc.com.\nUTC’s Governance Guidelines require that a substantial majority of the Board be independent in accordance with NYSE standards. The Code of Ethics applies to all directors and employees, including the principal executive, financial and\naccounting officers. Shareowners may send communications to the Board, the Chairman, the Presiding Director or one or more non-management directors by using the contact information provided on UTC’s website under the headings\n“Governance”, “Contact UTC’s Board”. Shareowners also may send communications by letter addressed to the Corporate Secretary at UTC, 1 Financial Plaza, Hartford, CT 06103 or by contacting the Business Practices Office at\n860-728-6485. These communications will be received and reviewed by UTC’s Business Practices Office. The receipt of concerns about UTC accounting, internal controls, auditing matters or business practices will be reported to the Audit\nCommittee. The receipt of other concerns will be reported to the appropriate Committee(s) of the Board. UTC employees can raise questions or concerns confidentially or anonymously using UTC’s Ombuds/Dialog program. \n\n \n\n\n\n\n\n\n\n\n\nSecurity Ownership of Directors, Executive Officers and Certain Beneficial Owners. The following table shows, as of February 1, 2005, the shares of Common Stock beneficially owned (including rights to acquire\nbeneficial ownership of shares upon the exercise of stock options then exercisable and that would become exercisable within 60 days) by each director and nominee, the five “Named Executive Officers” in the Summary Compensation Table on\npage 10 and all directors and executive officers as a group. Each director, nominee and executive officer beneficially owned less than 1% of the outstanding Common Stock. The directors and executive officers as a group beneficially owned\napproximately 1.6% of the Common Stock. As of December 31, 2004, based on filings with the SEC, UTC was not aware of any beneficial owner of more than five percent of the outstanding shares of Common Stock. While State Street Bank and Trust Company,\nas trustee, holds all of the Common Stock beneficially owned by employees participating in UTC’s Employee Stock Ownership Plan, State Street Bank and Trust Company disclaims beneficial ownership of those shares. \n\n \n\n\n\n\n\n(1) \n \nIncluded in the number of shares beneficially owned by Messrs. David, Bousbib, Bucknall, Chênevert and Darnis and all directors and executive officers as a group are\n2,775,000; 574,000; 358,000; 606,000; 361,000 and 6,776,960 shares, respectively, which such persons had the right to acquire within 60 days pursuant to the exercise of employee stock options; 784,683; 22,349; 60,525; 23,268; 17,998 and 1,059,183\nshares, respectively, as to which such persons had sole voting and investment power; and 53,350; 2,082; 36,410; 2,449; 5,214 and 229,503 shares, respectively, as to which such persons had sole voting but no investment power.\n \n\n \n\n\n\n\n(2) \n \nMs. Bernard, Messrs. McGraw and Swygert and Mrs. Whitman also held 1,310; 1,150; 2,654 and 1,150 non-voting restricted stock units acquired under the Nonemployee Directors’\nRestricted Stock Unit Plan. \n\n \n\n\n\n\n(3) \n \nIncludes the following number of shares of restricted Common Stock for which each of the following directors had sole voting power: \n\n \n\n\n \n\n\n\n\n(4) \n \nThe nonemployee directors also held the following amounts of vested, non-voting deferred stock units acquired under the Directors Deferred Stock Unit Plan. Each unit is valued by\nreference to one share of Common Stock. \n\n \n\n\n \n\n\n\n\n(5) \n \nMs. Gorelick and Messrs. Lee, McCormick, Popoff, Swygert and Wagner had sole voting and investment power with respect to the balance of their holdings of Common Stock.\n \n\n \n\n\n\n\n\n\n\n\n\nPerformance Graph \n\n The following graph presents the cumulative total shareowner return for the five years ending December 31,\n2004 for UTC’s Common Stock, as compared to the Standard & Poor’s 500 Stock Index and to the Dow Jones 30 Industrial Average. UTC’s Common Stock price is a component of both indices. These figures assume that all dividends paid\nover the five-year period were reinvested, and that the starting value of each index and the investment in Common Stock was $100.00 on December 31, 1999. \n\n \n\n \n \n\n \n\n\n \n\n \nReport of the Committee on Compensation and Executive Development \n\n The Committee on Compensation and Executive Development (the\n“Committee”) is responsible for UTC’s executive compensation program. The principal purposes of the program are the recruitment and retention of leaders and the alignment of management and shareowner interests. The program emphasizes\nlong term, at risk and variable compensation. Key components of the program include base salary, bonus, stock options, dividend equivalents, and other elements set forth on the Summary Compensation Table on page 10. To reinforce\nmanagement/shareowner alignment, the Committee has adopted share ownership guidelines for UTC’s most senior management group. Performance based compensation from bonuses, stock options and dividend equivalents is not subject to the $1 million\ndeduction limit imposed by Section 162(m) of the Internal Revenue Code. \n\n \n\n The\nCommittee utilizes compensation data from a group of 25 peer companies (the “Compensation Peer Group”) to establish market norms for the program. The Committee has also retained an independent outside consultant to provide additional\nbenchmark data and counsel to assist in the decision making process. The Committee targets base salary and incentive compensation for UTC executives at approximately the median of the Compensation Peer Group. The potential value of long term\nincentive awards is targeted at the median for the program overall and within the quartile above the median for senior executives. Actual values vary with individual and corporate performance. \n\n \n\n Annual bonuses are determined by financial objectives and assessments of individual\nperformance. The Corporate Office 2004 objectives were earnings per share growth and free cash flow as a percentage of net income. Business unit objectives were growth in operating income and free cash flow as a percentage of net income. Success\nagainst these objectives and overall assessed performance determine the bonus pool amounts that are established separately for the Corporate Office and each business unit. The Committee determines individual award amounts for UTC’s most senior\nexecutives. Bonuses for the five Named Executive Officers collectively may not exceed 0.75% of UTC’s adjusted net income, with no more than 30% of this amount available to the CEO and a maximum of 17.5% to each of the other four Named Executive\nOfficers. \n\n \n\n\n\n\n\n\n\n\n2004 long term incentive awards consisted of stock options and performance based dividend equivalents (“DEs”)\nunder the Continuous Improvement Incentive Program (“CIIP”) under the Long Term Incentive Plan. Targeted values of awards are allocated between stock options and dividend equivalents. Stock options have a term of ten years, are priced at\nmarket on the date of grant, and vest after three years or at retirement. DEs are granted along with stock options and vest subject to achievement of three year cumulative CIIP financial performance targets. A vested DE is the right to receive a\npayment equal to the Common Stock dividend. DE payments, if earned, commence following the three year performance measurement period and continue for up to seven years or until the associated option is exercised. This combination of stock options\nwith value directly linked to share price appreciation, and performance based DEs linked to CIIP targets, creates a long term incentive program of at risk compensation correlated with the creation of shareowner value, consistent with the\nCommittee’s fundamental objective of aligning management and shareowner interests. \n\n \n\n Compensation actions affecting the CEO are based on measured performance and the Committee’s overall assessment of corporate and individual performance. Relationships to Compensation Peer Group data are also considered. Mr.\nDavid’s bonus for 2004 of $3.5 million was based on earnings per share and free cash flow and the Committee’s positive overall assessment of his and UTC’s performance for the year, as discussed below. The combination of base salary\nand bonus placed Mr. David in the quartile above the median of the Compensation Peer Group. Mr. David was granted 270,000 stock options and associated DEs in 2004. Under Mr. David’s leadership, total return to UTC’s shareowners, as\ndetailed below, has been exemplary. In recognition of this success and his value to the Corporation, the Committee awarded Mr. David an additional grant of 500,000 stock options in February of this year. \n\n \n\n UTC again delivered strong financial performance in 2004. Diluted earnings per share\nincreased 18% from $4.69 to $5.52 and have increased at an annual rate of 13% over the past 5 years. This 13% earnings growth rate ranks first in UTC’s established population of 12 peer companies used for financial comparisons and is\nnotable for the more adverse economic conditions in which it has been achieved. Cash flow from operations increased 29% to $3.7 billion. After $795 million of capital expenditures but before $906 million of voluntary pension contributions\nglobally, cash flow from operations was equal to 128% of net income. Revenues increased 21% to $37.4 billion, with 8% of that growth organic to UTC’s existing businesses. The debt-to-capital ratio declined from 31% to 29%. UTC completed $1.3\nbillion in acquisitions, including the Linde commercial refrigeration business. Linde is the market leader in Europe and significantly enhances the geographical balance and overall market position of Carrier’s commercial refrigeration business.\nUTC repurchased $992 million of its shares in 2004. \n\n \n\n UTC’s Total\nShareowner Return (“TSR”) for 2004 was 11%, compared with 5% for the Dow and 11% for the S&P 500. UTC’s ten year compound TSR through 2004 is 672%, compared with 243% for the Dow and 212% for the S&P 500. \n\n \n\n The Committee attributes UTC’s sustained performance at high levels to continuous\nprocess improvement, a balanced portfolio of businesses, successful product development, and acquisitions building on UTC’s established and market leading businesses. Process improvement at UTC is managed under ACE (Achieving Competitive\nExcellence). Results are readily seen in a tripling of Carrier’s air conditioning shipments since 1992, on a workforce only 11% larger. Otis’ new equipment orders have tripled and units maintained doubled over the same time, on a workforce\nonly 21% larger. UTC’s segment operating income margin overall has expanded from 5% a dozen years ago to 14% currently. UTC has enhanced balance in its portfolio of business over the last decade notably with profit dependence on aerospace\ndecreased from 49% to 44%. \n\n \n\n Product developments in 2004 included the\nproduction launch of the all new Sikorsky S-92 helicopter. First flights of the Eclipse 500 and Cessna Mustang, both powered by Pratt & Whitney’s new PW600, occurred in 2004 and signal a new generation of ultra light jets and potentially\nwidely available air taxi service. Hamilton Sundstrand was awarded eight systems on the Boeing 787 Dreamliner, accounting for 90% of Hamilton Sundstrand’s total bid package by value. Carrier led its industry in adopting the 13 SEER Federal\nefficiency standard. Effective a year from now, all Carrier residential air conditioners shipped in the United States will be 30% more energy efficient than the prior Federal standard. \n\n \n\n\n\n\n\n\n\n\nMr. David has been UTC’s President or Chief Executive Officer since 1992 and has been responsible for the\ninitiatives cited here. Since 1992, UTC’s Total Shareholder Return has been 975% compared to 321% for the Dow Jones Industrials and 248% for the S&P 500. \n\n \n\n Mr. David’s leadership skills and accomplishments were profiled positively in a BusinessWeek Magazine cover story in 2004 (“The\nUnsung CEO”). Separately, the Magazine picked him as one of the best managers of the year as a “repeat performer”. \n\n \n\n UTC’s results in 2004 and implementation of its strategies over a longer period evidence management’s capabilities. The Committee believes that its compensation\nprogram has effectively aligned management and shareowner interests and, as intended, has delivered exceptional value as measured by results. \n\n \n\n Committee on Compensation and Executive Development \n\n \n\n\n\n\n \n \n \n\n\n\nH. A. Wagner, Chairman \n \nCharles R. Lee \n\n\n\nJean-Pierre Garnier \n \nRichard D. McCormick \n\n\n\nFrank P. Popoff \n \n \n\n\n \n\n \nCompensation of Named Executive Officers \n\n The following tables summarize the compensation earned by the CEO and the other four\nmost highly compensated executive officers, as determined based on combined salary and bonus, for services performed in all capacities during the last three fiscal years. \n\n \n\n \nSummary Compensation Table \n\n \n\n\n\n\n\n(1) \n \nIncentive compensation shown in the Bonus column for the Named Executive Officers was paid under the Annual Incentive Compensation Plan, which is discussed in the Report of the\nCommittee on Compensation and Executive Development on page 8. \n\n \n\n\n\n\n\n\n\n\n\n\n(2) \n \nThe amounts shown in this column for 2004 include: $171,292 for personal use of corporate aircraft for security reasons for Mr. David; perquisite allowances for each of Messrs.\nDavid, Chênevert, Bousbib, Darnis and Bucknall of $120,631, $46,327, $47,210, $39,106 and $38,713, respectively; leased vehicle payments for each of Messrs. David, Chênevert, Bousbib, Darnis and Bucknall of $18,082, $5,564, $12,044,\n$21,105 and $17,843, respectively. The amounts shown for 2003 include: $86,479 for personal use of corporate aircraft for security reasons for Mr. David; perquisite allowances for each of Messrs. David, Chênevert, Bousbib, Darnis and Bucknall\nof $123,699, $45,067, $38,960, $32,780 and $39,982, respectively; and leased vehicle payments for each of Messrs. David, Chênevert, Bousbib, Darnis and Bucknall of $15,659, $6,792, $13,177, $18,054 and $15,945, respectively. The amounts shown\nfor 2002 include: $160,049 for personal use of corporate aircraft for security reasons for Mr. David; perquisite allowances for each of Messrs. David, Chênevert Bousbib, Darnis and Bucknall of $46,466, $40,744, $34,042, $28,103 and $39,582,\nrespectively; and leased vehicle payments for each of Messrs. David, Chênevert, Bousbib, Darnis and Bucknall of $7,837, $6,199, $13,832, $15,529 and $15,877, respectively; and a payment of $32,469 associated with Mr. Darnis’ 2001 transfer\nfrom an overseas assignment. \n\n \n\n\n\n\n(3) \n \nOn December 31, 2004, the officers listed held the following amounts of non-vested restricted shares: Mr. Bousbib, 10,000 shares valued at $1,033,500; and Mr. Bucknall, 20,000\nshares valued at $2,067,000. These values reflect the closing price of Common Stock on December 31, 2004 multiplied by the number of restricted shares held. Dividends generally are paid quarterly on all shares of restricted stock. The 2002\nrestricted stock awards shown reflect the closing price of Common Stock on the date of grant, and consist of grants of 10,000 shares to each of Messrs. Bousbib and Darnis and 40,000 shares to Mr. Bucknall. These awards are subject to time based\nvesting. For each of Messrs. Bousbib and Darnis, 10,000 shares vested on April 10, 2004. For Mr. Bucknall 20,000 shares vested on April 10, 2004 and 20,000 will vest, subject to his continued employment, on April 10, 2006. \n\n\n \n\n\n\n\n(4) \n \nFor 2004, this category consisted of employer matching contributions in the Employee Savings Plan of $7,380 each for Messrs. David, Chênevert, Bousbib, Darnis and Bucknall,\nand life insurance premium payments by UTC of $72,576, $30,530, $24,225, $32,591 and $29,750, respectively, for Messrs. David, Chênevert, Bousbib, Darnis and Bucknall. \n\n \n\n \nOption Grants in Last Fiscal Year \n\n \n\n\n\n\n\n(1) \n \nUnder certain circumstances, including a change of control of UTC, the Board of Directors, under the terms of the Long Term Incentive Plan, may accelerate the vesting of option\ngrants, purchase an outstanding grant for the cash value thereof, or provide for other adjustments or modifications to the outstanding grants. All stock options were granted with an exercise price equal to the market price of Common Stock on the\ndate of grant. \n\n \n\n\n\n\n(2) \n \nThe estimated values listed in this column are based on the Black-Scholes option pricing model and a number of variables. The following assumptions were used in determining the\nestimated value of the grants: risk free interest rate of 3.10%, stock price volatility of 38%, dividend yield of 1.5% and option holding period of 5 years. The estimated values are not intended as a forecast of future appreciation in the price of\nthe Common Stock. If the Common Stock does not increase in value above the exercise price of the stock options, then the grants described in the table will have no value. There is no assurance that the value realized by an executive will be at or\nnear the values estimated. \n\n \n\n\n\n\n(3) \n \nThese stock options were granted on January 9, 2004, and will vest and become exercisable on January 9, 2007. These stock options include an equal number of Dividend Equivalents\n(“DEs”), which upon vesting will entitle the holder of the options to receive, whenever a dividend is paid on the Common Stock, a cash payment equal to the number of shares issuable on exercise of the option multiplied by the per-share\namount of the dividend. The DEs will vest only if specified performance goals established at the time of the grant of DEs, measured over a three-year performance period, are satisfied. \n\n \n\n\n\n\n\n\n\n\n\nAggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values \n\n \n\n\n\n\n\n(1) \n \nThe value reported is based either on the closing price of the Common Stock on the NYSE on the date of exercise or on December 31, 2004, as applicable, and is calculated by\nsubtracting the exercise price per share from the closing price of Common Stock on the date of exercise or on December 31, 2004, as applicable. \n\n \n\n\n\n\n(2) \n \n1,543,750; 195,625; 140,333; 52,804 and 245,500 exercisable options have vested DEs as a result of cumulative performance target achievements in prior years for Messrs. David,\nChênevert, Bousbib, Darnis, and Bucknall, respectively. \n\n \n\n \nTermination of Employment and Change-in-Control Arrangements \n\n In 1981, the Board of Directors adopted the Senior Executive\nSeverance Plan (the “Severance Plan”). The Committee on Compensation and Executive Development and the CEO have the authority to select the participants under the Severance Plan. As of December 31, 2004, 32 key executives, including each\nof the Named Executive Officers, were covered under the Severance Plan. For executives covered as of December 10, 2003, the Severance Plan provides that in the event the participant’s employment with UTC terminates for any reason (other than\ndeath, disability or retirement at or after the normal retirement date) within two years after any change of control of UTC (as defined in the Severance Plan) the participant will receive: (i) a cash payment equal to three times the\nparticipant’s highest annual compensation (including base salary and incentive compensation) during the preceding three years; (ii) accelerated vesting of all awards outstanding under the Long Term Incentive Plan; (iii) special supplemental\nretirement benefits determined as if the participant had three years additional credited service under UTC’s pension plans as of the date of termination; and (iv) continuation of other fringe benefits or equivalent benefits for a period of\nthree years. The Severance Plan provides for a supplemental cash payment to the extent necessary to preserve the level of benefits in the event of the imposition of excise taxes payable by a participant in respect of “excess parachute\npayments” under the Internal Revenue Code. In 2003, the Severance Plan was amended to impose a limitation on benefits. As amended, for executives who become covered under the Severance Plan after December 10, 2003, the value of certain of the\nbenefits under the Severance Plan may not exceed 2.99 times base salary plus bonus. Specifically, the value of lump sum severance payments, periodic cash payments, consulting fees, post-termination employee benefit plan and fringe benefit\ncontinuation and additional pension service credit are subject to this limit. The value of accelerated vesting under the Long Term Incentive Plan and payments made to offset excise taxes are not subject to the 2.99 times limit. Each of the Named\nExecutive Officers was a participant in the Severance Plan on December 10, 2003, and accordingly is not affected by these limits. \n\n \n\n In addition to the Severance Plan, 31 key executives, including the Named Executive Officers, are eligible to receive separation benefits at the time of their termination\nfrom employment with UTC, subject to certain limited exceptions. The value of such separation benefits under this program is 2.5 times base salary at the date of separation. Benefits are subject to offset against any amounts paid pursuant to the\nSeverance Plan. \n\n \n\n\n\n\n\n\n\n\n\nPension Plan Table \n\n \n\n\n \n\n The above table sets forth estimated\nannual benefits payable upon retirement at age 65 under UTC’s defined benefit pension plans. Compensation covered by the pension plans consists of total cash remuneration in the form of salaries, including awards paid under the Annual Executive\nIncentive Compensation Plan (shown in the Bonus column of the Summary Compensation Table), but excluding awards paid under the Long Term Incentive Plan (shown in the Long Term Compensation columns of the Summary Compensation Table). Benefits are\ncomputed as a single life annuity payable at age 65. The benefit amount equals a percentage of final average earnings during the highest five consecutive years out of the last ten years worked, less a portion of the participant’s social\nsecurity benefit. As a result of Internal Revenue Code limitations, a substantial portion of senior executives’ pension benefits are excluded from UTC’s tax qualified retirement plan and trust and instead are provided through a\nsupplemental plan that restores the excluded portion of the benefits. Pension benefits paid from the supplemental plan are paid in the same form of annuity applicable under the qualified plan or, subject to certain conditions, in a lump sum or\nannual installments. Benefits under the supplemental plan are generally not funded in advance except in the event of a change of control as defined by the plan. \n\n \n\n\nAs of December 31, 2004, the Named Executive Officers had the following full years of credited service for determining benefits: G. David, 29 years; A. Bousbib, 7\nyears; G. Darnis, 21 years; L. Chênevert, 11 years; and W. Bucknall, 39 years. \n\n \n\n \nCompensation of Directors. Nonemployee directors are paid an annual retainer of $100,000 ($110,000 for committee chairs, $125,000 for Audit Committee members, $135,000 for the Audit Committee Chair and the director\ndesignated to preside at executive sessions of the non-management directors), which they may elect to receive in one of the following forms: (a) 60% in deferred stock units issued under the Directors Deferred Stock Unit Plan and 40% in cash; (b)\n100% in deferred stock units; (c) 60% in non-qualified options to purchase Common Stock and 40% in cash; or (d) 100% in non-qualified options to purchase Common Stock. Each deferred stock unit has a value equal to one share of Common Stock.\nFollowing termination of a director’s service, the value of the accumulated deferred stock units is paid in cash as a lump sum or in installments, at the election of the director. Each deferred stock unit balance is credited with additional\ndeferred stock units equivalent in value to the dividend paid on the corresponding number of shares of Common Stock. Nonemployee directors also receive a fee of $5,000 for each special meeting they are required to attend in addition to the regularly\nscheduled board and committee meetings. \n\n \n\n Each nonemployee director receives\nannually, on the date of the annual meeting, a grant of stock options valued at $100,000. Nonemployee director stock options are issued under the Nonemployee Director Stock Option Plan. Options issued are valued at issuance using the Black-Scholes\noption valuation model. All director options have an exercise price equal to the closing price of Common Stock on the date of issuance, become exercisable after three years, and have a ten-year term. \n\n \n\n\n\n\n\n\n\n\nUnder the Directors’ Restricted Stock Unit Program, each nonemployee director receives on the date of election to\nthe Board a one-time grant of restricted stock units valued at $100,000, based on the closing price of Common Stock on the date of grant. Dividend equivalents are credited on the units. The units awarded vest ratably over five years, but may not be\nsold or otherwise transferred until the director retires or resigns from the Board. If a director leaves the Board before all of the units vest, the non-vested units will be forfeited, except that, in the event of death or disability, a change in\ncontrol of UTC, or if a director retires or resigns to accept full-time employment in public or charitable service, all units not previously vested will vest immediately. At retirement, the director will receive the value of the units in cash.\n\n\n \n\n UTC maintains a charitable gift program for directors elected prior to 2004,\nfunded by life insurance on the lives of the participating directors. Under this program, UTC will make charitable contributions totaling up to $1 million following the death of a director, allocated among up to four charities recommended by the\ndirector. Beneficiaries must be tax-exempt under Section 501(c)(3) of the Internal Revenue Code. Donations are expected to be deductible by UTC from taxable income for federal and other income tax purposes. Directors derive no financial benefit from\nthe program since all insurance proceeds and tax deductions accrue solely to UTC. \n\n \n\n \nReport of the Audit Committee \n\n The Audit Committee reviews and makes recommendations to the Board of Directors concerning the\nreliability and integrity of UTC’s financial statements and the adequacy of its system of internal controls and processes to assure compliance with UTC’s policies and procedures, Code of Ethics and applicable laws and regulations. The\nCommittee annually nominates UTC’s Independent Auditors for appointment by the shareowners, and evaluates the independence, qualifications and performance of UTC’s internal and independent auditors. The Committee establishes procedures for\nand oversees receipt, retention, and treatment of complaints received by UTC regarding accounting, internal control or auditing matters; and the confidential, anonymous submission by UTC employees of concerns regarding questionable accounting or\nauditing matters. \n\n \n\n The Committee has reviewed and discussed with management and\nUTC’s Independent Auditors UTC’s audited financial statements as of and for the year ended December 31, 2004, as well as the representations of management and the Independent Auditor’s opinion thereon regarding UTC’s internal\ncontrol over financial reporting required by Section 404 of the Sarbanes-Oxley Act. The Committee discussed with UTC’s internal and Independent Auditors the overall scope and plans for their respective audits. The Committee met with the\ninternal and Independent Auditors, with and without management present, to discuss the results of their examinations, the evaluation of UTC’s internal controls, management’s representations regarding internal control over financial\nreporting, and the overall quality of UTC’s financial reporting. The Committee has discussed with UTC’s Independent Auditors the matters required by Statement on Auditing Standards, No. 61, Communication with Audit\nCommittees, as amended, and also, the auditors’ independence from UTC and its management, including the written disclosures and letter from UTC’s Independent Auditors required by Independence Standards Board, Standard No. 1,\nIndependence Discussions with Audit Committees, as amended. \n\n \n\n UTC’s\nIndependent Auditors represented to the Committee that UTC’s audited financial statements were prepared in accordance with generally accepted accounting principles in the United States of America. \n\n \n\n Based on the reviews and discussions referred to above, the Committee has recommended to the\nBoard of Directors that the audited financial statements referred to above be included in UTC’s Annual Report on Form 10-K for the year ended December 31, 2004 for filing with the SEC. The Committee has recommended to the Board of Directors\nthat PricewaterhouseCoopers be nominated for appointment by the shareowners as UTC’s Independent Auditors for 2005. \n\n \n\n Audit Committee \n\n \n\n\n\n\n \n \n \n\n\n\nFrank P. Popoff, Chairman \n \nH. Patrick Swygert \n\n\n\nJamie S. Gorelick \n \nAndré Villeneuve \n\n\n\nRichard D. McCormick \n \nH. A. Wagner \n\n\n \n\n\n\n\n\n\n\n\n\n\n\nPROPOSAL 2: \n \nAPPOINTMENT OF A FIRM OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS TO SERVE AS INDEPENDENT AUDITORS \n\n \n\n PricewaterhouseCoopers LLP served as UTC’s independent registered accounting firm in\n2004. The Audit Committee and the Board of Directors have nominated PricewaterhouseCoopers LLP to serve as Independent Auditors for UTC until the next Annual Meeting in 2006. UTC retained PricewaterhouseCoopers LLP to provide the following services\nfor 2004 and 2003 in the following categories and amounts: \n\n \n\n\n \n\n Audit Fees represent fees for the\naudit of UTC’s consolidated annual financial statements, including an audit of internal control over financial reporting in 2004, the review of interim financial statements in UTC’s financial statements filed on Form 10-Q and the\nperformance of audits in accordance with statutory requirements. \n\n \n\n Audit Related\nFees represent fees for due diligence assistance related to mergers and acquisitions, employee benefit plan audits, assistance regarding the application of GAAP to proposed transactions and special reports pursuant to agreed upon procedures. In 2003\nand 2004, services were also provided in connection with compliance with new rules concerning internal control over financial reporting. \n\n \n\n Tax Fees in 2004 represent fees of approximately $5,250 for U.S. and non-U.S. tax compliance and related planning and assistance with tax refund claims, as well as\napproximately $3,975 for tax consulting and advisory fees. Of the amount reported in 2003, approximately $4,797 constitutes U.S. and non-U.S. tax compliance and related planning and assistance with refund claims and $1,904 constitutes tax consulting\nand advisory fees and tax compliance services to expatriates. \n\n \n\n All Other Fees\nrepresent fees for legal compliance and business practices reviews. \n\n \n\n The Audit\nCommittee has adopted procedures requiring Committee review and approval in advance of all particular engagements for services provided by UTC’s Independent Auditors. Consistent with applicable laws, the procedures permit limited amounts of\nservices, other than audit, review or attest services, to be approved by one or more members of the Committee pursuant to authority delegated by the Committee, provided the Committee is informed of each particular service. All of the engagements and\nfees for 2004 were approved by the Committee, including approximately $3 million of Tax Fees that were initially approved by the Chairman of the Committee pursuant to delegated authority. The Committee reviews with PricewaterhouseCoopers LLP whether\nthe non-audit services to be provided are compatible with maintaining the auditors’ independence. The Board previously determined that starting in 2003 fees paid to the Independent Auditors for non-audit services in any year will not exceed the\nfees paid for audit services during the year. Permissible non-audit services will be limited to fees for tax services, accounting assistance or audits in connection with acquisitions, and other services specifically related to accounting or audit\nmatters such as audits of employee benefit plans. Representatives of PricewaterhouseCoopers LLP will be present at the Annual Meeting, will have an opportunity to make any statements they desire, and will also be available to respond to appropriate\nquestions from shareowners. \n\n \n\n THE BOARD OF DIRECTORS RECOMMENDS THAT\nSHAREOWNERS VOTE FOR APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP. \n\n \n\n\n\n\n\n\n\n\n\n\n\nPROPOSAL 3. \n \nAPPROVAL OF UTC 2005 LONG TERM INCENTIVE PLAN. \n\n \n\n The Board of Directors has adopted, and is submitting to shareowners for approval, the United Technologies Corporation 2005 Long Term Incentive Plan (the “2005\nPlan”). \n\n \n\n Background \n\n The Board of Directors believes that the fundamental objective of a long term incentive compensation program is the alignment of management and shareowner interests.\nUTC’s previous Long Term Incentive Plan (the “Prior Plan”) utilized a combination of stock and performance based awards to successfully align management and shareowner interests, as measured by total shareholder return. For the ten\nyear period ended December 31, 2004, UTC’s total shareholder return was 672%, compared to 243% for the Dow Jones Industrials and 212% for the S&P 500. For the five-year period ending December 31, 2004, UTC’s total shareholder return\nwas 71%, compared with 3.5% for the Dow Jones Industrials and minus 11% for the S&P 500. \n\n \n\n The Board of Directors has designed the 2005 Plan to build upon the momentum achieved under the Prior Plan. As with the Prior Plan, the 2005 Plan allows for several forms of awards based on the value of Common Stock\nand for the utilization of performance based vesting targets that measure operational and financial performance improvements relevant to shareowner value. However, the 2005 Plan is not merely a continuation of the Prior Plan. There will be important\ndifferences in the compensation strategy the Committee on Compensation and Executive Development (the “Committee”) intends to use. The 2005 Plan also contains a fixed share reserve and a fixed term. Key points include: \n\n \n\n\n\n\n \n• \n \nEmphasis on Performance Based Awards. The Committee intends to increase the portion of awards that will vest solely on the basis of performance targets. The most senior\nexecutive group of approximately 100 executives will receive 50% of the value of their awards in the form of performance share units subject to three-year performance targets. A performance share unit is equal in value to a share of Common Stock.\nUnder the Prior Plan, approximately 25% of the value of regular cycle awards were subject to performance based vesting. Between 25 and 33% of the value of awards to other executives will consist of performance share units. The Committee intends to\nuse at market stock appreciation rights that are settled in stock for the balance of regular cycle awards. \n\n\n\n\n \n• \n \nDiscounted stock option and stock appreciation rights and re-pricing prohibited. As with the Prior Plan, the 2005 Plan prohibits stock appreciation rights or stock option\nawards with an exercise price less than fair market value of Common Stock on the date of grant. The 2005 Plan also prohibits re-pricing such awards or the cancellation of such awards in exchange for new awards with a lower exercise price, except in\nthe event of stock splits and certain other capital transactions. \n\n\n\n\n \n• \n \nInclusion of minimum vesting provisions. The 2005 Plan generally provides for a minimum three-year vesting schedule for stock appreciation rights and stock options.\nAdditionally, awards contingent upon performance-based vesting will also generally be subject to a three-year performance measurement period. No more than 10% of awards may be subject to less than a three-year vesting period.\n \n\n\n\n\n \n• \n \nFixed Plan Term. The 2005 Plan replaces the evergreen provision in the Prior Plan that provided for a 2% annual increase in the pool of available shares with a fixed reserve\nof 19,000,000 shares, or approximately 4% of common shares outstanding. The 2005 Plan will expire after all shares have been awarded, or April 30, 2010, if sooner. The Committee expects that the shares awarded annually under the 2005 Plan, or the\nrun rate, will range between 1 and 1.5% of shares outstanding. UTC has historically re-purchased shares at least equal to the number of shares issued under its equity compensation arrangements and expects to continue this as a major corporate\nobjective. \n\n\n\n\n \n• \n \nControlled use of full value awards. The 2005 Plan limits the number of full value awards (e.g., restricted stock, restricted stock units, performance share units, etc.) that\ncan be granted on a share for share basis to 3,500,000 shares. While the Committee retains the flexibility to convert the shares reserved for stock appreciation rights and stock options into additional full value awards, full value shares issued in\nexcess of the 3,500,000 full share limit will result in the cancellation of three shares from the available reserve (i.e., a 3 to 1 ratio). \n\n \n\n\n\n\n\n\n\n\n\n\n \n• \n \nShares terminated under prior plans will not increase plan reserve. Shares subject to awards under previous plans that are cancelled, forfeited, or expired will not be\navailable for re-grant in the 2005 Plan. There will be no transfer of unused shares reserved for other plans into the 2005 Plan share reserve. Upon approval of the 2005 Plan, UTC will not grant any new awards under existing equity compensation\nplans. \n\n\n\n\n \n• \n \nShares surrendered to pay taxes or exercise price for stock options will not increase the plan reserve. Shares tendered to UTC for taxes or to pay the exercise price will not\nprovide UTC with additional shares for the 2005 Plan. \n\n\n\n\n \n• \n \nStock appreciation rights settled in shares will not be counted on a net basis. Each stock settled stock appreciation right will count as a full share against the 2005 Plan\nshare reserve limit rather than the net gain realized upon exercise. \n\n\n\n\n \n• \n \nStock Ownership Guidelines. To further encourage the alignment of management and shareowner interests, the Committee has separately adopted stock ownership guidelines for\nUTC’s most senior management group that will become effective as of April 1, 2005. The CEO will be required to own shares or share equivalents having a value equal to five times base salary within five years of attaining that position. Other\nmembers of the senior management group will be required to own shares or share equivalents having a value equal to three times base salary within five years of joining the senior management group. \n\n \n\n Description of the Plan \n\n The text of the 2005 Plan is attached hereto as Appendix B and is hereby incorporated by reference. The following summary of key provisions of the 2005 Plan is qualified in its entirety by reference to the attached\n2005 Plan document. \n\n \n\n Purpose of the Plan \n\n The purpose of the 2005 Plan is to align shareowner and management interests through stock and performance-based awards linked to shareholder value and to give UTC a\ncompetitive advantage in attracting and retaining key employees and directors. \n\n \n\n Eligibility and Participation \n\n Executives, employees and directors of UTC, its subsidiaries and affiliates will be eligible to participate\nin the 2005 Plan, as determined by the Committee. Upon approval of the 2005 Plan by shareowners, UTC will not grant any new awards under existing equity compensation plans. \n\n \n\n Administration of the Plan \n\n The 2005\nPlan will be administered by the Committee, composed exclusively of independent non-employee directors in accordance with New York Stock Exchange listing requirements. The Committee will have full authority to administer the 2005 Plan, including,\nwithout limitation, the authority to determine who will receive awards, to establish the specific terms that will govern awards as will be set forth in individual award agreements, to interpret awards and 2005 Plan provisions, to revoke awards in\nthe event of serious misconduct and to amend the Plan and outstanding awards subject to certain limitations set forth in the Plan document. The Committee may delegate authority to officers of UTC, provided however, that it may not delegate authority\nwith respect to executives who are reporting persons under Section 16 of the Securities Exchange Act of 1934. The Committee’s authority to amend existing awards is restricted in the event of a change in control. The Board’s Committee on\nNominations and Governance will authorize awards to non-employee directors. \n\n \n\n Shares Reserved for Plan Awards \n\n A maximum of 19,000,000 shares of Common Stock may be delivered pursuant to awards granted under the 2005\nPlan. Of the 19,000,000 shares so reserved, 3,500,000 shares may be delivered on a one for one basis in connection with restricted stock, restricted share unit, performance share unit and other awards equal in value to a full share of Common Stock\n(a “full share award”). If more than 3,500,000 shares are delivered pursuant to full share awards, the remaining shares available for stock appreciation right and stock option awards will be reduced by a ratio of 3 to 1 for \n\n\n \n\n\n\n\n\n\n\n\n\neach full share award in excess of 3,500,000. If awards granted under the 2005 Plan are forfeited or otherwise expire without delivery of shares, the shares\nreserved for issuance pursuant to any such terminated award will remain available for future awards and will not count against the 2005 Plan share limit. Awards that are valued by reference to Common Stock but settled in cash will be subject to the\nforegoing share limitations. \n\n \n\n Shares tendered to pay the exercise price or tax\nwithholding obligation for stock options will be treated as delivered for purposes of calculating the share reserve limit and will not be added back to the share reserve for additional grants. The pool of available shares will be reduced by the\ngross number of shares underlying stock appreciation right awards. \n\n \n\n Individual Award Limits \n\n No individual participant may be granted awards in excess of 1,000,000 stock options or stock appreciation rights\nor 500,000 restricted shares, restricted share units or other full share awards in any one calendar year. \n\n \n\n Stock Appreciation Rights and Stock Options \n\n The 2005 Plan provides for awards of stock appreciation rights,\nnon-qualified stock options and incentive stock options intended to comply with Section 422 of the Internal Revenue Code. The Committee intends to utilize stock appreciation rights for regular cycle awards if tax-efficient, or, alternatively, will\nuse non-qualified stock option awards. The 2005 Plan specifically prohibits stock appreciation rights and stock options with an exercise price less than the fair market value of Common Stock on the date of grant, the re-pricing of stock appreciation\nand stock option awards or the cancellation of such awards in exchange for new awards with a lower exercise price except in the event of a stock split or certain other capital transactions. \n\n \n\n A stock appreciation right entitles the holder to receive shares of Common Stock or cash\nequal in value to the difference between the fair market value of Common Stock on the exercise date and the value of Common Stock on the grant date. Stock appreciation rights and stock options will have a maximum term of 10 years. Generally, options\nwill be subject to a minimum three-year vesting schedule. In limited circumstances, the Committee can provide grants with a vesting schedule of less than three years; however, no more than 10% of the pool of shares can be used for awards to\nexecutives and directors that have a vesting period of less than three years. Upon retirement, however, stock appreciation rights and stock options will become exercisable if the recipient has held them for at least one year. Exercisable stock\nappreciation and stock option awards may be exercised for a period of 90 days following termination, for 3 years following termination after age 50 with eligibility for the rule of 65 under UTC’s retirement plan and for the remainder of their\nterm following retirement. In cases of long-term disability, awards are not forfeited and will remain outstanding and become exercisable as scheduled during the period of disability. All outstanding stock appreciation right and stock option awards\nwill become exercisable for a period of one year in the event of the death of the participant. \n\n \n\n Restricted Stock and Restricted Stock Unit Awards \n\n A restricted stock award is an award of shares of Common Stock\nsubject to a restriction on transferability. The restriction on transferability will lapse following a stated period of time, upon attainment of specified performance targets or some combination thereof. Generally, awards will be subject to a\nminimum three-year time or performance based vesting schedule. In limited circumstances, the Committee can provide grants with a vesting schedule of less than three years; provided, however, that such grants to executives and directors may not\nexceed 10% of the shares reserved for full value share awards under the 2005 Plan. A recipient of a restricted stock award will have all of the rights of a holder of Common Stock with respect to the underlying shares except for the restriction on\ntransferability, including the right to vote the shares and receive dividends. A restricted stock unit is equal in value to one share of Common Stock and will vest following a specified period of continuous employment as set forth in the award\nagreement. A performance share unit is a restricted stock unit that will vest solely upon the achievement of specified performance targets. The holder of a restricted stock unit or performance share unit award is generally not entitled to the rights\nof a holder of Common Stock. Both restricted stock units and performance share units will be settled by delivery of shares of Common Stock or cash, as specified in the award agreement. \n\n \n\n The 2005 Plan also authorizes other types of awards valued by reference to Common Stock. \n\n \n\n\n\n\n\n\n\n\nChange in Control and Other Events \n\n The 2005 Plan provides the Committee with discretion to take certain actions with respect to outstanding awards in the event of a change in control or certain other material events that affect UTC’s capital\nstructure or the number of shares of Common Stock outstanding. In the event of a stock split, reverse stock split, share combination, recapitalization, sale of assets, extraordinary dividend or other event affecting the value of a share of Common\nStock or the number of shares outstanding, the various share limitations set forth in the 2005 Plan and the number of shares subject to outstanding awards will be adjusted as necessary and appropriate to reflect the change in the number or value of\noutstanding shares and to preserve the value of outstanding awards. The Committee may also, in its discretion, take other actions, including without limitation, the cancellation of outstanding awards in exchange for payments of cash, property, or a\ncombination thereof having an aggregate value as determined by the Committee to be appropriate to protect the value of participants’ interests in their awards. \n\n \n\n In the event of a change in control, the Committee may, in its discretion, provide that all stock appreciation rights and stock options will\nimmediately vest and become exercisable, lapse any restrictions applicable to restricted stock and provide that performance based vesting targets applicable to performance share units and other awards will be deemed satisfied and that such\nperformance based awards will be considered to be earned and payable in full. In addition, if within 24 months following a change in control an award recipient is involuntarily terminated, resigns following a material and adverse change in\ncompensation, responsibilities, functions or reporting relationship or resigns rather than relocate more than 50 miles from his or her job location, then, without further action by the Committee, such recipient will become vested in all outstanding\nawards as of the date of termination. Stock appreciation rights and stock options so vested may be exercised until the earlier of the third anniversary of the date of termination or the expiration of the term of the award. \n\n \n\n For purposes of the 2005 Plan, a change in control means generally: (i) the acquisition by an\nindividual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act) of beneficial ownership of 20% or more of the then outstanding shares of Common Stock; (ii) a change in the composition of the Board of\nDirectors such that the individuals who constitute a majority of the Board cease for any reason to constitute at least a majority of the Board (for this purpose, individuals whose nomination for election to the Board is approved by a vote of at\nleast two-thirds of the directors then comprising the incumbent board shall be considered to be a member of the incumbent board); or (iii) the consummation of a merger or similar consolidation following which: (A) the individuals and entities that\nwere owners of Common Stock do not own more than 50% of the outstanding shares of the new resulting business entity; or (B) an individual or group owns 20% or more of the outstanding shares of the resulting new business entity; or (C) the members of\nthe incumbent UTC Board do not comprise a majority of the board of directors of the resulting new business entity. \n\n \n\n Qualified Performance-Based Awards \n\n The 2005 Plan provides that\ncompensation from stock options, stock appreciation rights, performance share units and other performance-based awards will generally be structured to be exempt from the limitation on deductible compensation imposed by Section 162(m) of the Internal\nRevenue Code Section. The Committee will administer the 2005 Plan and the 2005 Plan will be interpreted consistent with the purpose of maintaining the exemption from the Section 162(m) deduction limitation, except that qualified performance targets\nwill be waived in the event of death and may be waived in the event of a change of control. The Committee is responsible for certifying to the measurement of applicable performance targets. The 2005 Plan provides that performance based compensation\nawards intended to be exempt from the Section 162(m) deduction limitation will be subject to vesting on the basis of one or more of the following performance targets: (i) diluted earnings per share; (ii) total shareowner return; (iii) working\ncapital and gross inventory turnover; or (iv) revenue growth. The Committee shall determine which of the foregoing criteria shall be applicable to awards and shall set the specific targets no later than 90 days following the commencement of the\napplicable measurement period, which will generally be 3 years. \n\n \n\n Effective\nDate and Term \n\n The 2005 Plan will be effective April 13, 2005 if approved at the Annual Meeting. The first regular cycle of award grants will occur in\n2006. The 2005 Plan will terminate on the earlier of the date that all shares reserved for issuance \n\n\n \n\n\n\n\n\n\n\n\n\nhave been awarded or April 30, 2010. The 2005 Plan may be amended by the Committee provided that no 2005 Plan amendment may materially impair the rights of\naward recipients with respect to existing awards and no amendment shall be made without approval of UTC’s shareowners to the extent that such approval is required by applicable law or the listing standards of the New York Stock Exchange.\n\n\n \n\n Federal Income Tax Consequences \n\n The following discussion is intended only as a brief summary of the material U.S. Federal income tax rules that are generally relevant to 2005 Plan awards. The laws\ngoverning the tax aspects of awards are highly technical and such laws are subject to change. \n\n \n\n Upon the exercise of a stock appreciation right, an award recipient will be subject to ordinary income tax, and wage and employment tax withholding equal to the excess of the fair market value of Common Stock on the\nexercise date over the fair market value of Common Stock on the date of grant. UTC will generally be entitled to a corresponding deduction equal to the amount of ordinary income that the recipient recognizes. Upon the sale of Common Stock\nacquired upon exercise of a stock appreciation right, the recipient will recognize long or short-term capital gain or loss, depending on whether the recipient held the stock for more than one year from the date of exercise. Upon the exercise of a\nnon-qualified option, the excess of the fair market value of the shares acquired on the exercise of the option over the exercise price paid (the “spread”) will constitute compensation taxable to the recipient as ordinary income. UTC will\ngenerally be entitled to a corresponding deduction equal to the amount of ordinary income recognized by the recipient. With respect to incentive stock options (“ISOs”), a recipient who holds shares acquired upon exercise will not recognize\ntaxable income. If the recipient holds the shares for at least one year, the recipient will recognize long-term capital gain or loss, as the case may be, measured by the difference between the stock’s selling price and the exercise price. UTC\nwill not receive a tax deduction with respect to the exercise of an ISO if the one year ISO holding period is satisfied. Award recipients do not recognize any taxable income and UTC is not entitled to a deduction upon the grant of a stock\nappreciation right, a non-qualified option or an ISO. \n\n \n\n The recipient of a\nperformance share unit, restricted stock, restricted stock unit, or other stock-based or performance based award will not recognize taxable income at the time of grant as long as the award is subject to a substantial risk of forfeiture as a result\nof performance based vesting targets, continued service requirements or other conditions that must be satisfied before payment or delivery of shares can occur. The recipient will generally recognize ordinary income and be subject to wage and\nemployment tax withholding when the substantial risk of forfeiture expires or is removed unless the cash to be paid or shares to be delivered are deferred until a date subsequent to the vesting date. UTC will generally be entitled to a corresponding\ndeduction equal to the amount of income the recipient recognizes. \n\n \n\n Foreign\nEmployees and Foreign Law Considerations \n\n The Committee may grant awards to individuals who are foreign nationals and are located outside of the United\nStates. With respect to such individuals, the Committee is authorized to amend the 2005 Plan, establish sub-plans and/or provide provisions to applicable award agreements for the purpose of complying with legal or regulatory provisions of countries\noutside the United States. \n\n \n\n THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A\nVOTE FOR APPROVAL OF THE 2005 LONG TERM INCENTIVE PLAN. \n\n \n\n\n\n\n\n\n\n\n\nEquity Compensation Plan Information \n\n The following table provides information as of December 31, 2004 concerning Common Stock\nissuable under equity compensation plans: \n\n \n\n\n\n\n\n(1) \n \nConsists of options awarded under the Long Term Incentive Plan (the “LTIP”) and the Nonemployee Director Stock Option Plan (the “Nonemployee Director Plan”).\nOptions to be issued under the LTIP include options that resulted from the conversion of awards granted under equity compensation plans of Sundstrand Corp. at the time it merged into Hamilton Sundstrand Corp. \n\n \n\n\n\n\n(2) \n \nRepresents the maximum number of shares of Common Stock available to be awarded as of December 31, 2004 in accordance with the following recurring annual limits: (i) Under the LTIP,\nthe maximum number of shares with respect to which awards may be issued for any calendar year may not exceed 2% of the outstanding shares of Common Stock, plus Common Stock equivalents included in the calculation of earnings per share and Treasury\nshares, as reported in UTC’s Annual Report on Form 10-K for the preceding fiscal year; and (ii) Under the Nonemployee Director Plan, the number of stock options awarded annually may not exceed 4,000 for each nonemployee director. For 2004,\n12,959,000 shares were available under these Plans of which 4,804,177 shares were the subject of awards. As of February 15, 2005, 4,850,950 options were awarded under the LTIP in 2005. The LTIP will expire on April 13, 2005.\n \n\n \n\n\n\n\n \n \nNo additional shares will be issued under the LTIP and following shareowner approval of the 2005 LTIP, no additional shares will be awarded under the Nonemployee Director Plan. The\nshares currently reserved under the LTIP and Nonemployee Director Plan will not be rolled into the 2005 LTIP and will no longer be available for grant. \n\n \n\n\n\n\n(3) \n \nConsists of options awarded under the Employee Stock Option Plan and the Board of Directors Deferred Stock Unit Plan (the “Deferred Stock Unit Plan”).\n \n\n \n\n\n\n\n(4) \n \nRepresents the maximum number of shares of Common Stock that may be issued in 2004 under the Employee Stock Option Plan, the Deferred Stock Unit Plan and the UTC Employee Scholar\nProgram. Recurring annual limits for each Plan are as follows: (i) The Employee Stock Option Plan was adopted by the Board in 1997 to further align the interests of participating employees with those of shareowners. Under the Plan, key employees\nbelow executive level are eligible to receive stock option awards. All options have an exercise price equal to the closing price of Common Stock on the date of issuance, become exercisable after three years and have a ten-year term. A maximum of\n4,000,000 stock options may be awarded annually under the Employee Stock Option Plan and no more than 20,000,000 shares in total may be awarded after June 30, 2003. Following approval of the 2005 LTIP, no additional awards will be made under the\nEmployee Stock Option Plan; (ii) Under the Deferred Stock Unit Plan, nonemployee directors receive an annual retainer in cash and/or deferred stock units as described on page 13. A director may elect to receive stock options of equivalent\nBlack-Scholes value under the Nonemployee Director Plan in lieu of cash or deferred stock units otherwise provided under the Deferred Stock Unit Plan; (iii) Under the Employee Scholar Program eligible employees receive Common Stock having a value of\nup to $10,000 when they receive a bachelor’s degree. Recipients of an associate’s degree receive shares of Common Stock having a value of up to $5,000. A maximum of 400,000 shares of Common Stock may be awarded annually under the Employee\nScholar Program and no more than 4 million shares in total may be awarded after June 30, 2003. The number of shares awarded each year is based on the number of college degrees awarded under the Program. It is anticipated that an additional 50,000\nshares will be issued under the Employee Scholar Program between January 1, 2005 and April 13, 2005. For 2004, 7,934,646 shares of Common Stock were available under these plans, of which 3,541,336 shares of Common Stock were the subject of awards.\n \n\n \n\n\n\n\n \n \nFollowing approval of the 2005 LTIP, no additional shares will be issued under the Employee Stock Option Plan, Deferred Stock Unit Plan and the Employee Scholar Program, since these\ntypes of awards will be provided under the 2005 LTIP in the future. All shares that are currently reserved under these programs will not be rolled into the 2005 LTIP and will no longer be available for grant. \n\n \n\n\n\n\n(5) \n \nAs of February 15, 2005, 47,659,476 options and stock appreciation rights were outstanding with a weighted average exercise price of $70.54 and a weighted average holding period of\n6.4 years. 126,450 restricted shares were also outstanding. \n\n \n\n\n\n\n\n\n\n\n\nPROPOSALS 4-6: SHAREOWNER PROPOSALS \n\n Share holdings of the various shareowner proponents and, where applicable, names and\naddresses of additional filers, will be supplied upon request. \n\n \n\n Proposal 4:\nShareowner Proposal Concerning Disclosure of Executive Compensation \n\n Mrs. Evelyn Y. Davis, Watergate Office Building, Suite 215, 2600 Virginia Avenue,\nNW, Washington, D.C. 20037, has advised that she intends to introduce the following proposal at the Annual Meeting: \n\n \n\n RESOLVED: “That the shareholders recommend that the Board take necessary steps that United Technologies specifically identify by name and corporate title in all\nfuture proxy statements those executive officers, not otherwise so identified, who are contractually entitled to receive in excess of $500,000 annually as a base salary, together with whatever other additional compensation bonuses and other cash\npayments were due them. \n\n \n\n REASONS: “In support of such proposed Resolution\nit is clear that the shareholders have a right to comprehensively evaluate the management in the manner in which the Corporation is being operated and its resources utilized.” “At present only a few of the most senior executive officers\nare so identified, and not the many other senior executive officers who should contribute to the ultimate success of the Corporation.” “Through such additional identification the shareholders will then be provided an opportunity to better\nevaluate the soundness and efficacy of the overall managements.” \n\n \n\n “Last year the owners of 64,046,888 shares, representing approximately 18.6% of shares voting, voted for my similar proposal.” \n\n “If you AGREE, please mark your proxy FOR this proposal.” \n\n \n\n The Board of Directors’ Statement in Opposition \n\n Disclosure of executive compensation is governed by the SEC’s disclosure rules.\nUTC already discloses in its proxy statements base salary and other compensation received by the Chief Executive Officer and other most highly compensated executive officers. \n\n \n\n The proposal would require disclosure by UTC beyond other companies and could be damaging by assisting competitors in recruiting executives\nfrom UTC. \n\n \n\n The Board believes the SEC is the appropriate agency to establish\ncompensation disclosure rules. UTC complies fully with regulations established by both the SEC and the NYSE. \n\n \n\n THE BOARD OF DIRECTORS THEREFORE RECOMMENDS THAT SHAREOWNERS VOTE AGAINST THIS PROPOSAL. \n\n \n\n Proposal 5: Shareowner Proposal Concerning Ethical Criteria for Military Contracts \n\n The Sisters of Charity of Saint Elizabeth, P.O. Box 476, Convent Station, NJ 07961 and other filers have advised that they intend to introduce the following proposal at the Annual Meeting: \n\n \n\n Resolved: that the Board of Directors review and if necessary amend and amplify our\nCompany’s code of conduct and statements of ethical criteria for military production-related contract bids, awards and contract execution, and report the results of this process to shareholders within six months of the annual meeting.\n\n\n \n\n Supporting Statement \n\n Our company, as a global corporation, faces increasingly complex questions and challenges as the international, social, cultural, economic and political context within\nwhich it operates changes. \n\n \n\n We believe that authentic global security exists\nonly when all people everywhere feel secure. Global security will only come about when there is justice for all through human development and environmental and economic sustainability. \n\n \n\n\n\n\n\n\n\n\nFaith communities measure the global economy not only by what it produces, but also by its impact on the environment, how\nit touches human life and whether it protects the dignity of the human person. \n\n \n\n We believe decisions to develop and to produce weapons can have grave consequences for the lives and/or freedom of people worldwide if the company has not considered its responsibility for its decisions. We believe that economic decision\nmaking has both moral and financial components, and that our company’s responsibilities include analyzing the effects of its decisions with respect to employees, communities, and nations and a sustainable environmental future. \n\n \n\n We believe companies engaging in research, development, production and sales of weapons,\nweapons components and weapons delivery systems must evaluate the decisions made when bidding on such work. That bidding contract process must follow a defined format and include clear, concise criteria and policies. \n\n \n\n We recommend that the criteria/standards include: \n\n \n\n\n\n\n \n• \n \nethical business practices such that human rights and fair labor standards are upheld; \n\n\n\n\n \n• \n \nconsideration of the impact of the contract on a sustainable environment, which in appropriate cases might include long-term environmental impact studies, questions of waste\nmanagement or toxic releases and transfers; \n\n\n\n\n \n• \n \nstrategies for stability of employment, including description of alternate production plans and funding sources; \n\n\n\n\n \n• \n \ndirectives for business practices which respect the culture of communities in which factories are located; \n\n\n\n\n \n• \n \nguidelines derived after critical study of political and civil stability of countries and before sale of weapons, weapons parts and dual-use technology; \n\n\n\n\n \n• \n \nstudies of potential impacts of military production and use of those products on peoples’ economies, environments and societies, along with specific actions for remediation,\nshould it be required; \n\n\n\n\n \n• \n \ndisclosure of the existence and nature of arrangements with any local security forces; \n\n\n\n\n \n• \n \nprocesses that ensure that the principles of the common good and the integrity of creation are considered when making decisions about bidding on contracts. \n\n\n \n\n We believe that careful, values-based consideration of the contracts on which management\nbids, whether for research and development, production or foreign sales, is crucial for continued public acceptance of the company as an ethical entity entitled to derive profit from armament manufacturing. \n\n \n\n The Board of Directors’ Statement in Opposition \n\n UTC’s Annual Report to Shareowners and its periodic Reports on Forms 10-K and 10-Q provide extensive information concerning military products and services.\nUTC’s website includes the Corporation’s Code of Ethics and descriptions of its Business Practices organization and compliance programs. \n\n \n\n The Board believes UTC’s Code of Ethics is directly responsive to concerns raised in this resolution, including compliance with laws and regulations and adherence to\nthe highest standards for environmental protection and the health and safety of employees. \n\n \n\n Work on military programs is highly regulated by the U.S. Government. The Board of Directors believes that the executive and legislative branches of the U.S. Government are the proper forums to consider and determine\npublic policy with respect to military production and contracts. UTC complies wholly with such policies and related regulations. \n\n \n\n The Board of Directors does not believe that a further review of its Code of Ethics is warranted or that a special report on criteria for military contracts would be\ninformative or beneficial. \n\n \n\n THE BOARD OF DIRECTORS THEREFORE RECOMMENDS THAT\nSHAREOWNERS VOTE AGAINST THIS PROPOSAL. \n\n \n\n\n\n\n\n\n\n\nProposal 6: Shareowner Proposal Concerning CEO Compensation \n\n The Catholic Equity Fund, 1100 West Wells Street, Milwaukee, WI 53233-2332 and other filers have advised that they intend to introduce the following proposal at the\nAnnual Meeting: \n\n \n\n COMPETITIVE PAY-UNITED TECHNOLOGIES\n\n\n \n\n RESOLVED: The shareholders urge the Board of Directors: \n\n\n \n\n\n\n\n \n• \n \nTo limit the Compensation paid to the CEO in any fiscal year to no more than 100 times the average Compensation paid to the company’s Non-Managerial Workers in the prior fiscal\nyear, unless the shareholders have approved paying the CEO a greater amount; \n\n\n\n\n \n• \n \nIn any proposal for shareholder approval, to provide that the CEO can receive more than the 100-times amount only if the company achieves one or more goals that would mainly reflect\nthe CEO’s contributions rather than general market conditions; and \n\n\n\n\n \n• \n \nIn that proposal, to assure the shareholders that the Board will seriously consider reducing the CEO’s compensation in the event of any unusual reduction in the company’s\nworkforce resulting from outsourcing or other factors. \n\n \n\n This\nproposal does not apply to the extent that complying would necessarily breach a compensation agreement in effect at the time of the present shareholder meeting. \n\n \n\n\n“Compensation” means salary, bonus, the grant-date present value of stock options, the grant-date present value of restricted stock, payments under long-term\nincentive plans, and “other annual” and “all other compensation” as those categories are defined for proxy statement purposes. \n\n \n\n “Non-Managerial Workers” means U.S.-based employees working in the categories of Blue-Collar Occupations or Service Occupations or the Sales and Administrative\nSupport components of White-Collar Occupations as used by the Bureau of Labor Statistics in its National Compensation Surveys. \n\n \n\n Supporting Statement: Our resolution is based on these premises: \n\n \n\n\n\n\n1. \n \nUnless internally anchored, market-based compensation methods tend to produce excessive CEO compensation; \n\n\n\n\n2. \n \nVery high CEO pay should require shareholder approval since it tends to produce sub par share performance long-term; and \n\n\n\n\n3. \n \nVery highly paid CEOs should realize that they might share some pain when choosing job reductions as a means to achieve corporate goals. \n\n \n\n Our resolution would introduce an internal foundation for CEO compensation-the\ncompany’s CEO/average-worker pay ratio. Commentators note that on the average for U.S. companies this ratio has gone from about 42 in 1980 to several hundred today and that it tends to be much lower in foreign companies that compete\nsuccessfully with U.S. companies. Consistent with these facts, the Blue Ribbon Commission of the National Association of Corporate Directors has urged compensation committees to use such a ratio as a factor in setting CEO compensation. Our\nresolution follows this advice. \n\n \n\n Our resolution would not arbitrarily limit CEO\ncompensation. Rather, it would offer the board the opportunity to persuade the shareholders that very high CEO compensation would make the company more competitive and would be in their interest. \n\n \n\n At United Technologies, CEO Compensation averaged 11.3 million dollars in 2001, 2002, and\n2003. This is 443 times the $25,501 that the average U.S. worker makes according to the AFL-CIO’s Executive Paywatch (http://www.aflcio.org/corporateamerica/paywatch/). The CEO realized $66,226,550 on options exercised during 2003. In their\n2004 analyses of executive pay versus shareholder return, Business Week gave the CEO its second worst rating (http://www.businessweek.com/pdfs/2004/0416_execpay.pdf), and Forbes gave the CEO a grade of C\n(http://www.forbes.com/lists/2004/04/21/04ceoland.html). \n\n \n\n\n\n\n\n\n\n\nThe Board of Directors’ Statement in Opposition \n\n The Board believes this proposal is contrary to the interests of UTC and its shareowners since it would restrict the Board in establishing executive compensation programs designed to attract and retain talented\nexecutives committed to shareholder value. \n\n \n\n The Committee on Compensation and\nExecutive Development of UTC’s Board approves UTC’s executive compensation programs. These programs align the interests of management and shareowners and result in significant portions of executive compensation being directly variable with\nearnings and stock price performance. For example, the CEO compensation recited in this resolution is 89% variable. \n\n \n\n The Board believes the Corporation’s executive compensation programs have led directly to exceptional performance. Total shareowner return for the ten years ended\n2004 was 672%, more than three times the S&P 500. For the five years ended 2004, UTC’s total shareowner return was 71%, compared with minus 11% for the S&P 500. \n\n \n\n THE BOARD OF DIRECTORS THEREFORE RECOMMENDS THAT SHAREOWNERS VOTE AGAINST THIS PROPOSAL. \n\n \n\n \nADDITIONAL MEETING INFORMATION \n\n \n\n How many\nshares can vote? As of the record date, 512,172,665 shares of Common Stock were issued and outstanding. Each share of Common Stock outstanding on the record date is entitled to one vote. A quorum requires the presence at the Annual Meeting, in\nperson or by proxy, of the holders of shares representing a majority of the votes entitled to be cast. \n\n \n\n How many votes are needed for matters to be adopted at the meeting? Directors are elected by a plurality of the votes cast. This means that the eleven nominees who receive the highest number of votes will be\nelected. The 2005 Long Term Incentive Plan will be approved if it receives votes in favor representing a majority of the votes cast on the matter (provided the total vote cast on the matter represents over 50% of the shares outstanding). Other\nmatters will be approved if they receive the affirmative vote of a majority of the votes constituting the quorum. If a shareowner abstains from voting on a particular matter, or if a broker is not allowed under stock exchange rules to vote shares\nfor which a client has not given voting instructions, the effect will be the same as a vote against the matter. \n\n \n\n Is cumulative voting for directors permitted? Yes. When voting for the election of directors, each owner of Common Stock is entitled to a number of votes equal to\nthe number of shares of Common Stock owned multiplied by the number of directors to be elected. This number of votes may be cast for a single nominee or distributed among any two or more nominees, in the discretion of the shareowner. Cumulative\nvoting rights can be exercised only by submission of a written proxy or voting instruction. If no instruction is given the votes will be distributed by the proxy holders equally among the Board’s nominees. \n\n \n\n Who will count the vote? Will votes be confidential? Representatives of\nEquiServe will receive and tabulate proxies, act as independent Inspectors of Election, supervise the voting and decide the validity of proxies. EquiServe has been instructed that the vote of each shareowner must be kept confidential and must not be\ndisclosed (except in the event of legal proceedings or, in the event of a contested proxy solicitation, to permit the solicitation of the votes of undecided shareowners). \n\n \n\n Can a proxy be revoked? Yes. Shareowners may revoke any proxy before it is voted by sending written notice to the Corporate Secretary\nidentifying the proxy being revoked; by following the prompts provided through the telephone and Internet voting facilities for revoking a proxy previously submitted by telephone or via the Internet; by submitting a new proxy with a later date; or\nby voting in person at the meeting. \n\n \n\n How will voting on any other business\nbe conducted? Although we do not know of business to be conducted at the meeting other than the matters described in this Proxy Statement, duly signed proxy cards and voting instructions submitted by telephone or via the Internet authorize the\nproxy holders to vote in accordance with their judgment on any other matters that may arise. \n\n \n\n\n\n\n\n\n\n\nWhen are shareowner proposals for the 2006 Annual Meeting due? A shareowner who wishes to have a proposal included\nin UTC’s proxy statement for the 2006 Annual Meeting must submit the proposal in writing to the Corporate Secretary for receipt by October 28, 2005, in order to be considered for inclusion. Under UTC’s Bylaws, shareowners who wish to\nintroduce a proposal to be voted on at UTC’s 2006 Annual Meeting must send advance written notice to the Corporate Secretary for receipt no earlier than December 14, 2005 and no later than January 13, 2006. \n\n \n\n How are proxies solicited and how much did this solicitation cost? In addition to the\ndistribution of this Proxy Statement, proxies may be solicited on behalf of the Board of Directors by employees of UTC by mail, e-mail, in person and by telephone. These employees will not receive any additional compensation for these activities.\nUTC will bear the cost of soliciting proxies and reimburse brokers and other nominees for reasonable out-of-pocket expenses for forwarding proxy materials to beneficial shareowners. Georgeson Shareholder Communications, Inc. has been retained by UTC\nto assist in the distribution of proxy materials and the solicitation of proxies for a fee estimated at $16,000, plus out-of-pocket expenses. \n\n \n\n How can shareowners obtain electronic access to the proxy materials, instead of receiving mailed copies? Holders of shares registered in their name on the\nrecords of EquiServe may contact EquiServe at www.econsent.com/utx to sign up to receive electronic access to the materials rather than receiving mailed copies. These shareowners will receive e-mail notification when the Annual Report\nand Proxy Statement are available, with electronic links to access the documents (in PDF and HTML formats) on a UTC website and instructions on how to vote shares via the Internet. Enrollment for electronic access will be effective for a future\nannual meeting if received two weeks prior to the record date for that meeting, and remain in effect for subsequent years, unless cancelled two weeks prior to the record date for any subsequent annual meeting. Beneficial shareowners also may\nbe able to request electronic access to proxy materials by contacting the broker, bank or nominee, or by contacting ADP Investor Communication Services at www.utc.com/investors/econsent/ics.htm. \n\n \n\n How can shareowners reduce the number of copies of proxy materials sent to a\nhousehold? Eligible beneficial shareowners who share a single address may have received a notification that only one copy of the Annual Report and Proxy Statement will be sent to that address unless the broker, bank or nominee that\nprovided the notification received contrary instructions from any beneficial shareowner at that address. This practice, known as “householding”, is designed to reduce printing and mailing costs. However, if a beneficial shareowner at such\nan address wishes to receive a separate Annual Report or Proxy Statement this year or in the future, the shareowner may contact the Corporate Secretary at 860-728-7870 or at UTC, 1 Financial Plaza, Hartford CT 06103. Eligible registered\nshareowners receiving multiple copies of these documents can request householding by contacting UTC in the same manner. Persons holding shares through a bank, broker or nominee can request householding by contacting that entity. \n\n \n\n\n\n\n\n\n\n\n\nOTHER MATTERS \n\n \n\n \nCertain Transactions and Business Relationships \n\n UTC and its subsidiaries from time to time may have transactions in the\nordinary course of business with companies for which certain of the nonemployee directors are officers or directors. These transactions are not of a nature and do not involve amounts that impair the independence of any of the nonemployee directors\nunder UTC’s director independence standards. The transactions also are not material to UTC and UTC believes the transactions are not material in relation to the businesses of such other companies or the interests, if any, of the directors\ninvolved. With respect to officers, a brother of William L. Bucknall, Jr., Senior Vice President, Human Resources and Organization, is employed by Sikorsky as Manager, Human Resources. A brother of Todd J. Kallman, Vice President, Corporate Strategy\nand Development, is employed by Otis Elevator as an Account Manager. A son of Ronald F. McKenna, Chairman of Hamilton Sundstrand, is employed by Pratt & Whitney as a Procurement Specialist and a son-in-law of Mr. McKenna is employed by Hamilton\nSundstrand as Manager, Marketing & Business Development. The compensation and benefits provided to these individuals are consistent with that provided to other employees with equivalent qualifications and responsibilities at these subsidiaries.\n\n\n \n\n \nSection 16(a) Beneficial Ownership Reporting Compliance \n\n UTC believes, based upon a review of the forms filed and written\nconfirmation provided by its officers and directors, that during 2004 all of its officers and directors filed on a timely basis the reports required by Section 16(a) of the Securities Exchange Act of 1934, except that there were inadvertent delays\nin reporting a gift of 115 shares by George David, the acquisition of 3.0518 deferred stock units by George Jamison and the acquisition of 17.2934 deferred stock units by Jan van Dokkum. \n\n \n\n Debra A. Valentine \n\n Vice President, Secretary and \n\n Associate General Counsel \n\n \n\n\n\n\n\n\n\n\n\nAPPENDIX A \n\n \n\n INDEPENDENCE OF\nDIRECTORS \n\n \n\n The Board has adopted the following standards to assist it in\nmaking determinations of director independence, and may revise these standards from time to time as it deems appropriate, subject to applicable stock exchange listing requirements. A director is not independent if: \n\n \n\n\n\n\n1. \n \nThe director is, or has been within the last three years, an employee of the Corporation, or an immediate family member is, or has been within the last three years, an executive\nofficer, of the Corporation. \n\n \n\n\n\n\n2. \n \nThe director has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than $100,000 in direct compensation\nfrom the Corporation, other than director and committee fees or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service). Compensation received by an immediate family\nmember for service as an employee of the Corporation (other than an executive officer) need not be considered in determining independence under this test. \n\n \n\n\n\n\n3. \n \n(A) The director or an immediate family member is a current partner of a firm that is the Corporation’s internal or external auditor; (B) the director is a current employee of\nsuch a firm; (C) the director has an immediate family member who is a current employee of such a firm and who participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice; or (D) the director or an immediate\nfamily member was within the last three years (but is no longer) a partner or employee of such a firm and personally worked on the Corporation’s audit within that time. \n\n \n\n\n\n\n4. \n \nThe director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of the Corporation’s\npresent executive officers at the same time serves or served on that company’s compensation committee. \n\n \n\n\n\n\n5. \n \nThe director is a current employee, or an immediate family member is a current executive officer, of another company that has made payments to, or received payments from the\nCorporation for property or services in an amount which in any of the last three fiscal years exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues. \n\n \n\n\n\n\n6. \n \nThe director serves as an executive officer of a tax exempt organization that within the preceding three years received contributions from the Corporation in any single fiscal year\nin excess of the greater of $1 million or 2% of such tax exempt organization’s consolidated gross revenues. \n\n \n\n Director affiliations that do not conflict with these standards or exceed these thresholds will not be considered to impair a director’s independence. These\nstandards will be applied in accordance with any transition periods or other transition provisions under the applicable stock exchange listing rules. \n\n \n\n For purposes of this determination of director independence, the term “immediate family member” shall include a person’s spouse, parents, children,\nsiblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares such person’s home. The term “executive officer” has the same meaning as specified for\nthe term “officer” in Rule 16a-1(f) under the Securities Exchange Act of 1934. \n\n \n\n As required by the Charter of the Audit Committee, Audit Committee members must also satisfy the independence requirements of Section 10A(m)(3) of the Securities Exchange Act of 1934. \n\n \n\n\n\n\n\n\n\n\n\nAPPENDIX B \n\n \n\n UNITED TECHNOLOGIES\nCORPORATION \n\n 2005 LONG TERM INCENTIVE PLAN \n\n \n\n SECTION 1. Purpose \n\n The purpose of this\nPlan is to give the Corporation a competitive advantage in attracting, retaining and motivating officers, employees and directors through a long term incentive plan providing stock and performance based awards linked to shareholder value.\n\n\n \n\n SECTION 2. Definitions \n\n Certain terms used herein have definitions provided when they are first used. In addition, for purposes of this Plan, the following terms are defined as set forth below:\n\n\n \n\n\n\n\na. \n \n“Affiliate” means a corporation or other entity in which the Corporation has an equity or other financial interest, a joint venturer or partner of the Corporation,\nor an organization that is involved in a strategic, technological or marketing collaboration with the Corporation. \n\n \n\n\n\n\nb. \n \n“Award” means an Option, Stock Appreciation Right, Performance Share Unit, Restricted Stock, Restricted Stock Unit, Dividend Equivalent or other stock-based Award\ngranted pursuant to the terms of this Plan. \n\n \n\n\n\n\nc. \n \n“Award Agreement” means a written document or agreement setting forth the specific terms and conditions of an Award. \n\n \n\n\n\n\nd. \n \n“Board” means the Board of Directors of the Corporation. \n\n \n\n\n\n\ne. \n \n“Cause” means: (i) conduct involving a felony criminal offense under U. S. federal or state law or an equivalent violation of the laws of any other country; (ii)\ndishonesty, fraud, self dealing or material violations of civil law in the course of fulfilling the Participant’s employment duties; (iii) breach of the Participant’s intellectual property agreement or other written agreement with the\nCorporation; or (iv) willful misconduct injurious to the Corporation or any of its Subsidiaries or Affiliates as shall be determined by the Committee. \n\n \n\n\n\n\nf. \n \n“Change in Control” has the meaning set forth in Section 10(e). \n\n \n\n\n\n\ng. \n \n“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. \n\n \n\n\n\n\nh. \n \n“Commission” means the Securities and Exchange Commission or any successor agency. \n\n \n\n\n\n\ni. \n \n“Committee” means the Board’s Committee on Compensation and Executive Development. \n\n \n\n\n\n\nj. \n \n“Common Stock” means common stock, par value $1 per share, of the Corporation. \n\n \n\n\n\n\nk. \n \n“Corporation” means United Technologies Corporation, a Delaware corporation. \n\n \n\n\n\n\nl. \n \n“Disability” means permanent and total disability as determined under the Corporation’s long-term disability plan applicable to the Participant, or if there is\nno such plan applicable to the Participant, “Disability” as determined by the Committee. \n\n \n\n\n\n\nm. \n \n“Disaffiliation” means the sale, spin-off, public offering or other transaction that effects the divestiture of the Corporation’s ownership of a Subsidiary,\nAffiliate or division of the Corporation. \n\n \n\n\n\n\nn. \n \n“Early Retirement” means early retirement as defined in the applicable provisions of the Participant’s pension plan or as specified by the Committee in the\nAward Agreement. \n\n \n\n\n\n\no. \n \n“Eligible Individuals” means directors, officers, and employees of the Corporation or any of its Subsidiaries or Affiliates, and prospective directors, officers and\nemployees who have accepted offers of employment or affiliation with the Corporation or its Subsidiaries or Affiliates. \n\n \n\n\n\n\np. \n \n“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto. \n\n \n\n\n\n\n\n\n\n\n\n\nq. \n \n“Exchange” means the New York Stock Exchange. \n\n \n\n\n\n\nr. \n \n“Fair Market Value” means, as of any given date, the closing price for Common Stock on the Exchange. If there is no reported price on the relevant date, Fair Market\nValue will be the closing price for the next following day for which there is a reported closing price for Common Stock. \n\n \n\n\n\n\ns. \n \n“Grant Date” means the effective date of an award as specified in the Award Agreement. \n\n \n\n\n\n\nt. \n \n“Normal Retirement” means retirement from active employment with the Corporation, a Subsidiary or an Affiliate at or after age 65. \n\n \n\n\n\n\nu. \n \n“Participant” means an Eligible Individual to whom an Award is or has been granted. \n\n \n\n\n\n\nv. \n \n“Performance Target” means one or more performance targets established by the Committee in connection with the grant of Performance Share Units or other stock-based\nawards. In the case of Qualified Performance-Based Awards, such targets shall be based on the attainment of specified levels of one or more of the following measures: (i) diluted earnings per share; (ii) total shareowner return; (iii) working\ncapital and gross inventory turnover; and (iv) revenue growth. \n\n \n\n\n\n\nw. \n \n“Plan” means this United Technologies Corporation 2005 Long Term Incentive Plan, as set forth herein and as hereafter amended from time to time.\n \n\n \n\n\n\n\nx. \n \n“Qualified Performance-Based Award” means an Award intended to qualify for the Section 162(m) Exemption, as provided in Section 11. \n\n \n\n\n\n\ny. \n \n“Retirement” means Normal or Early Retirement. \n\n \n\n\n\n\nz. \n \n“Section 162(m) Exemption” means the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C)\nof the Code. \n\n \n\n\n\n\naa. \n \n“Share” means a share of Common Stock. \n\n \n\n\n\n\nbb. \n \n“Subsidiary” means any corporation, partnership, joint venture or other entity during any period in which at least a 50% voting or profits interest is owned,\ndirectly or indirectly, by the Corporation or any successor to the Corporation. \n\n \n\n\n\n\ncc. \n \n“Term” means the maximum period of an Award which shall not exceed ten years for Options and Stock Appreciation Rights. \n\n \n\n\n\n\ndd. \n \n“Termination of Employment” means the termination of a Participant’s employment with, or performance of services for, the Corporation and any of its\nSubsidiaries or Affiliates. Unless otherwise determined by the Committee, if a Participant’s employment with the Corporation and its Affiliates terminates but such Participant continues to provide services to the Corporation and its Affiliates\nin a non-employee capacity, such change in status shall not be deemed a Termination of Employment. A Participant shall be deemed to incur a Termination of Employment in the event of the Disaffiliation of such Participant’s Subsidiary,\nAffiliate, or division unless the Committee specifies otherwise. Temporary absences from employment because of illness, vacation or leave of absence and transfers among the Corporation and its Subsidiaries and Affiliates do not constitute a\nTermination of Employment. \n\n \n\n SECTION 3. Administration\n\n\n\n\n\na. \n \n Committee. The Plan shall be administered by the Committee, which shall be composed exclusively of independent non-employee directors appointed by the Board.\nThe Committee shall have full authority to administer the Plan, including the authority to select Eligible Individuals to whom Awards are granted, to determine the number of Shares covered by each Award, the terms and conditions of each Award as set\nforth in the Award Agreement and to interpret the terms and provisions of the Plan and Award Agreements, provided, however, that the Board Committee on Nominations and Governance shall be responsible for approving Awards to non-employee directors.\nThe Committee shall have the authority to modify, amend or adjust the terms and conditions of any Award to comply with tax and securities laws, including laws of countries outside of the United \n\n\n \n\n \n\n\n\n\n\n\n\n\n\n\n \n \nStates, and to comply with changes of law and accounting standards. The Committee may temporarily suspend Awards pursuant to any “blackout” period\nthat it deems necessary or advisable in its sole discretion. \n\n \n\n \n\n\n\n\nb. \n \nProcedures. The Committee may act by a majority of its members then in office. It also may allocate responsibilities and powers among its members and may delegate its\nresponsibilities and powers to any person or persons selected by it, to the extent permitted by applicable law and the listing standards of the Exchange. The Committee may delegate authority to grant, interpret and administer Awards under the Plan\nto officers of the Corporation, provided however, that no such authority shall be delegated with respect to awards granted to any officer of the Corporation who is a reporting person under Section 16 of the Exchange Act. The full Board may exercise\nany of the Committee’s authority. If the Board takes any action that conflicts with action taken by the Committee, the Board action shall control. \n\n \n\n\n\n\nc. \n \nDiscretion of Committee. Any determination made by the Committee or by a person pursuant to delegated authority (a “Delegate”) with respect to any Award shall be\nmade in the sole discretion of the Committee or such Delegate unless in contravention of any express term of the Plan. All decisions made by the Committee or a Delegate shall be final and binding on all persons, including the Corporation,\nParticipants, and Eligible Individuals provided, however, that in the event of a Change in Control, all such decisions shall be subject to de novo review. \n\n \n\n\n\n\nd. \n \nAward Agreements. The terms and conditions of each Award, as determined by the Committee, shall be set forth in a written Award Agreement, which shall be delivered to the\nParticipant receiving such Award as promptly as is reasonably practicable following the grant of such Award. The Award’s effectiveness will not be dependent on any signature unless specifically so provided in the Award Agreement. Awards shall\ngenerally be subject to a three year vesting period and no more than 10% of Awards to executives and directors may have a vesting period of less than three years, provided, however, that vesting may accelerate in the event of change in control and\ncertain other events as set forth in Section 10 herein, and in the events of death, disability or retirement, as will be specified in the Award Agreement. \n\n \n\n SECTION 4. Common Stock Subject to Plan \n\n\n\n\na. \n \nPlan Maximums. A maximum of 19,000,000 Shares may be delivered pursuant to Awards granted under the Plan. If more than 3,500,000 of such Shares are awarded pursuant to\nRestricted Stock, Restricted Share Unit, Performance Share Unit or other Awards with value denominated in full Shares (“Full Share Awards”), remaining Shares available for Option, Stock Appreciation Right and other Awards will be reduced\nby 3 for each Full Share Award in excess of 3,500,000. No more than 3,000,000 shares may be subject to Incentive Stock Option Awards. \n\n \n\n\n\n\nb. \n \nIndividual Limits. No Participant may be granted Awards covering in excess of 1,000,000 stock appreciation rights or stock options or 500,000 Shares of Restricted Stock,\nPerformance Share Units or other Full Share Awards during any calendar year. \n\n \n\n\n\n\nc. \n \nRules for Calculating Shares Delivered. To the extent that any Award is forfeited, or any Option or Stock Appreciation Right terminates, expires or lapses without being\nexercised, the Shares subject to such Awards not delivered as a result thereof shall again be available for Awards under the Plan. Shares tendered or withheld to pay the exercise price of a Stock Option or to pay tax withholding will count against\nthe foregoing limitations and will not be added back to the Shares available under the Plan. Each Stock Appreciation Right will count as one Share, notwithstanding the fact that net Shares delivered upon exercise may be less than the number of Stock\nAppreciation Rights granted. Awards valued by reference to Common Stock that may be settled in equivalent cash value will count against the foregoing limitations to the same extent as if settled in Shares. \n\n \n\n SECTION 5. Options and Stock Appreciation Rights \n\n\n\n\na. \n \nOptions. An “Option” entitles the holder to acquire Shares at an exercise price equal to or greater than the Fair Market Value of Common Stock on the Grant Date,\nsubject to the terms and conditions set forth in the Award Agreement. Options will be non-qualified Options unless the Award Agreement specifies that the Option is an Incentive Stock Option intended to comply with Section 422 of the Code.\n \n\n \n\n\n\n\n\n\n\n\n\n\nb. \n \nStock Appreciation Rights. A “Stock Appreciation Right” entitles the holder to acquire shares of Common Stock or to receive a cash payment in each case equal in\nvalue to the difference between Fair Market Value on the Grant Date and Fair Market Value on the date of exercise, subject to the terms and conditions set forth in the Award Agreement. Upon the exercise of a Stock Appreciation Right, the Participant\nshall be entitled to receive cash or Shares equal in value to the product of (i) the excess of the Fair Market Value of one Share over the exercise price of the applicable Stock Appreciation Right, multiplied by (ii) the number of Shares in respect\nof which the Stock Appreciation Right has been exercised. The Award Agreement shall specify whether such payment is to be made in cash, Common Stock or both. \n\n \n\n\n\n\nc. \n \nLimitations. The exercise price per Share of an Option or a Stock Appreciation Right shall be determined by the Committee and set forth in the applicable Award Agreement, and\nshall not be less than the Fair Market Value of a share of the Common Stock on the Grant Date. In no event may any Option or Stock Appreciation Right granted under this Plan be amended, other than pursuant to Section 10, to decrease the exercise\nprice thereof, be cancelled in conjunction with the grant of any new Option or Stock Appreciation Right with a lower exercise price, or otherwise be subject to any action that would be treated, for accounting purposes, as a “repricing” of\nsuch Option or Stock Appreciation Right, unless such amendment, cancellation, or action is approved by the Corporation’s shareholders. \n\n \n\n\n\n\nd. \n \nTerm. The Term of each Option and Stock Appreciation Right shall be fixed by the Committee, but shall not exceed ten years from the Grant Date. \n\n \n\n\n\n\ne. \n \nVesting and Exercisability. Except as otherwise provided herein, Options and Stock Appreciation Rights shall be vested and exercisable at such time or times and subject to\nsuch terms and conditions as shall be determined by the Committee and set forth in the Award Agreement. \n\n \n\n\n\n\nf. \n \nMethod of Exercise. Vested Options and Stock Appreciation Rights may be exercised, in whole or in part, during the applicable Term by giving written notice of exercise to the\nCorporation specifying the number of Options or Stock Appreciation Rights to be exercised. In the case of the exercise of an Option, such notice shall be accompanied by payment in full of the exercise price (which shall equal the product of such\nnumber of Shares subject to an Option multiplied by the applicable exercise price) by certified or bank check or such other instrument as the Corporation may accept. If approved by the Committee, payment, in full or in part, may also be made as\nfollows: \n\n \n\n\n\n\n \n(i) \n \nPayments may be made in the form of unrestricted Shares already owned by the Participant (by delivery of such Shares or by attestation) of the same class as the Common Stock subject\nto the Option (based on the Fair Market Value of the Common Stock on the date the Option is exercised); \n\n \n\n\n\n\n \n(ii) \n \nTo the extent permitted by applicable law, payment may be made by delivering a properly executed exercise notice to the Corporation, together with a copy of irrevocable instructions\nto a broker to deliver promptly to the Corporation the amount of sale proceeds necessary to pay the purchase price, and, if requested, the amount of any federal, state, local or foreign withholding taxes. To facilitate the foregoing, the Corporation\nmay enter into agreements for coordinated procedures with one or more brokerage firms; \n\n \n\n\n\n\n \n(iii) \n \nBy such other means as the Committee shall authorize, including without limitation, the withholding of Shares otherwise receivable upon settlement of the Award in payment of the\nexercise price. \n\n \n\n\n\n\ng. \n \nTermination of Employment. Options and Stock Appreciation Rights will generally vest after a three year holding period or achievement of Performance Targets, if applicable. Awards\nshall be forfeited in the event of a Participant’s Termination of Employment prior to the vesting date, except as set forth below: \n\n \n\n\n\n\n \n(i) \n \nIn the event of a Participant’s death, Options and Stock Appreciation Rights held by the Participant shall immediately vest and all outstanding Options and Stock Appreciation\nRights may be exercised at any time until the first anniversary of the date of death; \n\n \n\n\n\n\n \n(ii) \n \n Upon a Participant’s Termination of Employment by reason of Disability, Options or Stock Appreciation Rights held by the Participant that were exercisable\nimmediately before the Termination of Employment may be exercised at any time until the earlier of (A) the third anniversary of such Termination of \n\n\n \n\n \n\n\n\n\n\n\n\n\n\n\n \n \nEmployment or (B) the expiration of the Term thereof. Non-vested Stock Appreciation Rights and Options will continue to be eligible to vest as scheduled\nduring the period the Participant remains disabled and will be exerciseable for three years after the vesting date; \n\n \n\n \n\n\n\n\n \n(iii) \n \nUpon a Participant’s Termination of Employment by reason of Retirement or Early Retirement, Options or Stock Appreciation Rights held for more than one year shall immediately\nbecome vested and exercisable. Vested Options and Stock Appreciation Rights may be exercised until the expiration of their Term with respect to Participants who retire on or after age 55; \n\n \n\n\n\n\n \n(iv) \n \nUpon a Participant’s Termination of Employment for Cause, all Options and Stock Appreciation Rights held by the Participant will be forfeited immediately, whether or not\nvested; \n\n \n\n\n\n\n \n(v) \n \nIf a Participant dies after Termination of Employment, outstanding Option or Stock Appreciation Rights may be exercised until the first anniversary of the date of death; and\n \n\n \n\n\n\n\n \n(vi) \n \nUpon a Participant’s Termination of Employment for any reason other than death, Disability, Retirement or for Cause, any vested Option or Stock Appreciation Right may be\nexercised until the earlier of (A) the 90th day following such Termination of Employment or (B) expiration of the Term thereof. \n\n \n\n Notwithstanding the foregoing, the Committee shall have the power, in its discretion, to apply different rules concerning the consequences of a Termination of Employment;\nas set forth in the applicable Award Agreement. \n\n \n\n SECTION 6. Restricted Stock\n\n\n\n\n\na. \n \nNature of Awards and Certificates. Shares of “Restricted Stock” are actual Shares issued to a Participant, evidenced by book-entry registration in the name of the\nParticipant and shall reference the terms, conditions, and restrictions applicable to such Award. \n\n \n\n\n\n\nb. \n \nTerms and Conditions. Shares of Restricted Stock shall be subject to the following terms and conditions: \n\n \n\n\n\n\n \n(i) \n \nThe Committee may designate an Award of Restricted Stock as a Qualified Performance-Based Award that will vest only upon the attainment of Performance Targets. The Committee may\nalso condition the grant or vesting of a Restricted Stock Award upon the continued service of the Participant or a combination of continued service and performance vesting criteria; \n\n \n\n\n\n\n \n(ii) \n \nThe Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Shares of Restricted Stock prior to the expiration of the required period of continued\nservice or the achievement of applicable Performance Targets. Except as provided in the preceding sentence, the Participant shall have all of the rights of a stockholder of the Corporation holding the class or series of Common Stock that is the\nsubject of the Restricted Stock Award, including the right to vote the Shares and the right to receive cash dividends; and \n\n \n\n\n\n\n \n(iii) \n \nUpon a Participant’s Termination of Employment during the restriction period or before the applicable Performance Targets are satisfied, non-vested Shares of Restricted Stock\nshall be forfeited by such Participant; provided, however that Performance Units will vest in the event of death and may vest or remain eligible to vest in the event of Early Retirement, Retirement or Disability, as set forth in the Award Agreement.\n \n\n \n\n SECTION 7. Performance Share Units \n\n\n\n\na. \n \nNature of Award. A “Performance Share Unit” is equal in value to one Share and subject to vesting on the basis of the achievement of specified Performance Targets.\nUpon vesting, Performance Share Units will be settled by delivery of Shares or cash (as specified in the Award Agreement) to the Participant equal to the number of vested Performance Share Units. \n\n \n\n\n\n\nb. \n \nTerms and Conditions. Performance Share Units shall be subject to the following terms and conditions: \n\n \n\n\n\n\n \n(i) \n \nPerformance Share Units are Qualified Performance-Based Awards and shall vest solely as a result of the achievement of Performance Targets. An Award of Performance Share Units shall\nbe settled if and when the Performance Share Units become vested; \n\n \n\n\n\n\n\n\n\n\n\n\n \n(ii) \n \nA Participant may not assign, transfer, pledge or otherwise encumber Performance Share Units; \n\n \n\n\n\n\n \n(iii) \n \nThe Award Agreement shall specify if the Participant shall be entitled to receive current or deferred payments of cash or Common Stock in respect of non-vested Performance Units\ncorresponding to the dividends payable on the Common Stock; and \n\n \n\n\n\n\n \n(iv) \n \nUpon a Participant’s Termination of Employment before the applicable Performance Targets are satisfied, all Performance Share Units still subject to restriction shall be\nforfeited by such Participant; provided, however that Performance Units will vest in the event of death and may vest or remain eligible to vest in the event of Early Retirement, Retirement or Disability, as set forth in the Award Agreement.\n \n\n \n\n SECTION 8. Restricted Stock Units \n\n Nature of Award. A “Restricted Stock Unit” is equal in value to one Share of Common Stock and subject to vesting on the basis of a period of continuous\nemployment with the Corporation or an Affiliate or other criteria as specified in the Award Agreement. Upon vesting, Restricted Stock Units will be settled by delivery of Shares to the Participant equal to the number of vested Restricted Stock\nUnits. \n\n \n\n SECTION 9. Other Stock-Based Award \n\n Other Awards that are valued in whole or in part by reference to, or are otherwise based upon, Common Stock, including (without limitation) unrestricted stock, dividend\nequivalents, and convertible debentures, may be granted under the Plan. \n\n \n\n SECTION 10. Future Events \n\n\n\n\na. \n \nAdjustments to Common Stock. In the event of a stock split, reverse stock split, share combination, recapitalization, sale of assets, stock dividend, extraordinary dividend\nor similar event affecting the value of a Share of Common Stock, or the number of shares outstanding (each, a “Share Change”), applicable Share limitations as set forth in Section 4 and outstanding Awards, the number of Shares subject to\noutstanding Awards, the exercise price of Options and Stock Appreciation Rights and other relevant provisions of the Plan and outstanding Awards shall be adjusted as necessary and appropriate to reflect the Share Change and to preserve the value of\nAwards. \n\n \n\n\n\n\nb. \n \nChanges to the Corporation’s Capital Structure. In the event of a merger, consolidation, spin-off, reorganization, stock rights offering, liquidation, Disaffiliation, or\nother material event affecting the capital structure of the Corporation (each, a “Corporate Transaction”), the Committee or the Board may in its discretion make such substitutions or adjustments as it deems appropriate and equitable to:\n(A) the aggregate number and kind of Shares or other securities reserved for issuance and delivery under the Plan; (B) the various maximum limitations set forth in Section 4; (C) the number and kind of Shares or other securities subject to\noutstanding Awards; and (D) the exercise price of outstanding Options and Stock Appreciation Rights. Adjustments may include, without limitation, the cancellation of outstanding Awards in exchange for payments of cash, property or a combination\nthereof having an aggregate value equal to the value of such Awards, as determined by the Committee or the Board in its sole discretion to be necessary or appropriate to protect the value of Participants’ interests in their Awards. In the event\nof a Disaffiliation, the Committee may arrange for the assumption of Awards, or replacement of Awards with new awards based on other property or other securities. \n\n \n\n\n\n\nc. \n \nChange in Control. In the event of a Change in Control, notwithstanding any other provision of the Plan to the contrary, the Committee may, in its discretion, take any of the\nfollowing actions: \n\n \n\n\n\n\n \n(i) \n \nprovide that any Options and Stock Appreciation Rights outstanding which are not then exercisable and vested shall become immediately vested and fully exercisable;\n \n\n \n\n\n\n\n \n(ii) \n \nimmediately lapse restrictions and deferral limitations applicable to any Restricted Stock, Restricted Stock Unit and other Awards and such Restricted Stock shall become free of all\nrestrictions, fully vested and transferable and Restricted Stock Units and other Awards shall be settled as promptly as practicable in the form set forth in the applicable Award Agreement; \n\n \n\n\n\n\n\n\n\n\n\n\n \n(iii) \n \nprovide that Performance Targets applicable to Performance Share Units and other Awards shall be deemed to be satisfied and such Awards shall be considered to be earned and payable\nin full, and any deferral or other restriction shall lapse and such Restricted Stock Units and other Awards shall be settled as promptly as is practicable in the form set forth in the applicable Award Agreement; and \n\n \n\n\n\n\n \n(iv) \n \nmake such additional adjustments, substitutions and/or settlements of outstanding Awards as it deems appropriate to protect Participants’ interests in their Awards, consistent\nwith the Plan’s purposes, including, without limitation, the cancellation of outstanding Awards in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such Awards, as determined by\nthe Committee or the Board in its sole discretion. \n\n \n\n\n\n\nd. \n \nTermination of Employment Following Change in Control. To the extent not otherwise vested by the Committee in accordance with the provisions of this Section 10 and\nnotwithstanding any other provision of this Plan to the contrary, during the 24-month period following a Change in Control: (i) upon the involuntary termination of a Participant’s employment other than termination for Cause; (ii) upon the\nvoluntary termination of employment by the Participant following a material and adverse change in the Participant’s compensation, responsibilities, functions or reporting relationship; or (iii) in the event a Participant resigns rather that\naccept a mandatory relocation greater than 50 miles; then, in any such event, all outstanding Awards held by such Participant shall become vested as of the Date of Termination. Any Option or Stock Appreciation Right held by the Participant as of the\ndate of the Change in Control that remains outstanding as of the date of Termination of Employment may thereafter be exercised, until the earlier of (i) the third anniversary of the date of termination; or (ii) the expiration of the Term of such\nOption. Restricted Shares shall immediately be free and transferable and Restricted Share Units, Performance Share Units and other Awards shall be vested as of the Termination of Employment and settled as soon as practicable as specified in the\nAward Agreement. \n\n \n\n\n\n\ne. \n \nDefinition of Change in Control. For purposes of the Plan, a “Change in Control” shall mean any of the following events: \n\n \n\n\n\n\n \n(i) \n \nThe acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership (within\nthe meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the then-outstanding Shares of Common Stock plus any other outstanding shares of stock of the Corporation entitled to vote in the election of directors (the\n“Outstanding Corporation Voting Securities”); provided, however, that the Corporation and any employee benefit plan (or related trust) sponsored by it shall not be deemed to be a Person; or \n\n \n\n\n\n\n \n(ii) \n \nA change in the composition of the Board such that the individuals who constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority\nof the Board. For this purpose, any individual whose election or nomination for election by the Corporation’s shareholders was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered a\nmember of the Incumbent Board; or \n\n \n\n\n\n\n \n(iii) \n \nThe consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Corporation or any of its subsidiaries or a\nsale or other disposition of substantially all of the assets of the Corporation or a material acquisition of assets or stock of another entity by the Corporation or any of its subsidiaries, (each, a “Business Combination”) if:\n \n\n \n\n\n\n\n \nA. \n \nthe individuals and entities that were the beneficial owners of the Outstanding Corporation Voting Securities immediately prior to such Business Combination do not beneficially own,\ndirectly or indirectly, more than 50% of the then-outstanding shares of stock and the combined voting power of the then-outstanding voting securities of the corporation resulting from such Business Combination; or \n\n \n\n\n\n\n \nB. \n \na Person beneficially owns, directly or indirectly, 20% or more of the then-outstanding shares of stock of the corporation resulting from such Business Combination; or\n \n\n \n\n\n\n\n \nC. \n \nmembers of the Incumbent Board do not comprise at least a majority of the members of the board of directors of the corporation resulting from such Business Combination; or\n \n\n \n\n\n\n\n\n\n\n\n\n\n \n(iv) \n \nThe approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation. \n\n \n\n SECTION 11. Qualified Performance-Based Awards \n\n\n\n\na. \n \nThe provisions of this Plan are intended to ensure that all Options, Stock Appreciation Rights, Performance Share Units and other Qualified Performance-Based Awards granted\nhereunder to any Participant who is or may be a “covered employee” (within the meaning of Section 162(m)(3) of the Code) qualify for the Section 162(m) Exemption, and all such Awards and this Plan shall be interpreted and operated\nconsistent with that intention. \n\n \n\n\n\n\nb. \n \nEach Qualified Performance-Based Award (other than an Option or Stock Appreciation Right) shall be earned, vested and payable (as applicable) only upon the achievement of one or\nmore Performance Targets, together with the satisfaction of any other conditions, such as continued employment, as the Committee may determine to be appropriate. Qualified Performance-Based Awards may not be amended, nor may the Committee exercise\ndiscretionary authority in any manner that would cause the Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption; provided, however; that the Committee may provide, either in connection with the grant of the\napplicable Award or by amendment thereafter, that achievement of such Performance Targets will be waived: (i) upon the death or Disability of the Participant (or under any other circumstance with respect to which the existence of such possible\nwaiver will not cause the Award to fail to qualify for the Section 162(m) Exemption); and (ii) in accordance with Section 10 herein. \n\n \n\n\n\n\nc. \n \nThe Committee shall certify to the measurement of performance by the Corporation and the business units relative to Performance Targets and the resulting vesting achievement\npercentage. The Committee shall rely on such financial information and other materials as it deems necessary and appropriate to enable it to certify to the percentage of achievement of Performance Targets. The Committee shall make its vesting\ndetermination not later than the end of the first quarter following the end of the performance measurement period. \n\n \n\n SECTION 12. Term, Amendment and Termination \n\n\n\n\na. \n \nEffective Date. The Plan shall be effective as of April 13, 2005 (the “Effective Date”), subject to the approval of the shareholders of the Corporation.\n \n\n \n\n\n\n\nb. \n \nTermination. The Plan will terminate on the earlier of: (i) the date all Shares have been awarded as authorized in Section 4; or (ii) April 30, 2010. Awards outstanding shall\nnot be affected or impaired by the termination of the Plan. \n\n \n\n\n\n\nc. \n \nAmendment of Plan. The Board may amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would materially impair the rights\nof a Participant with respect to a previously granted Award without such Participant’s consent, except an amendment made to comply with applicable law, stock exchange rules or accounting rules. In addition, no amendment shall be made without\nthe approval of the Corporation’s shareholders to the extent such approval is required by applicable law or the listing standards of the Exchange. \n\n \n\n\n\n\nd. \n \nAmendment of Awards. Subject to Section 10, the Committee may unilaterally amend the terms of any Award theretofore granted, prospectively or retroactively, but no such\namendment shall cause a Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption or be made without the Participant’s consent if such amendment materially impairs the rights of any Participant with respect to an\nAward, except amendments made to cause the Plan or Award to comply with applicable law, stock exchange rules, tax rules or accounting rules. \n\n \n\n SECTION 13. General Provisions \n\n\n\n\na. \n \nNature of Payments. All Awards made pursuant to this Plan are in consideration of services performed for the Corporation or its Affiliates. Any gain realized pursuant to such\nAwards constitutes a special incentive payment to the Participant and shall not be taken into account as compensation for purposes of any of the employee benefit plans of the Corporation or any Affiliate. Nothing contained in the Plan shall prevent\nthe Corporation or any Subsidiary or Affiliate from adopting other or additional compensation arrangements for its employees. \n\n \n\n\n\n\n\n\n\n\n\n\nb. \n \nUnfunded Plan. The Plan constitutes an “unfunded” plan for incentive and deferred compensation. Neither the Corporation nor the Committee shall have any obligation\nto segregate assets or establish a trust or other arrangements to meet the obligations created under the Plan. Any liability of the Corporation to any Participant with respect to an Award shall be based solely upon contractual obligation created by\nthe Plan and the Award Agreement. No such obligation shall be deemed to be secured by any pledge or encumbrance on the property of the Corporation. \n\n \n\n\n\n\nc. \n \nNo Contract of Employment. The Plan shall not constitute a contract of employment, and adoption of the Plan or granting of an Award shall not confer upon any employee the\nright to continued employment, nor shall it interfere in any way with the right of the Corporation or any Subsidiary or Affiliate to terminate the employment of any employee at any time. \n\n \n\n\n\n\nd. \n \nRequired Taxes. No later than the date an amount first becomes includible in gross income with respect to any Award, Participants must pay to the Corporation, or make\narrangements satisfactory to the Corporation regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Corporation, withholding\nobligations may be settled with Common Stock, including Common Stock that is part of the Award that gives rise to the withholding requirement; provided, however, that not more than the legally required minimum withholding may be settled with Common\nStock. The obligations of the Corporation under the Plan and any Award Agreement shall be conditional on such payment or arrangements, and the Corporation and its Affiliates shall, to the extent permitted by law, have the right to deduct any such\ntaxes from any payment otherwise due to such Participant. \n\n \n\n\n\n\ne. \n \nForfeiture of Interests and Gains Upon Certain Events. All Awards, including vested Awards, shall be forfeited, and a Participant shall be obligated to repay gains previously\nrealized from Awards upon any of the following events: \n\n \n\n\n\n\n \n(1) \n \nTermination of Employment for Cause; \n\n \n\n\n\n\n \n(2) \n \nif within three years following any Termination of Employment the Committee or the Corporation determines that the Participant engaged in conduct that would have constituted the\nbasis for a Termination of Employment for Cause; or \n\n \n\n\n\n\n \n(3) \n \nif at any time during the twelve month period immediately following any Termination of Employment, a Participant: (i) solicits for employment or otherwise attempts to retain the\nprofessional services of any individual then employed or engaged by the Corporation (other than a person performing secretarial or similar services) or who was so employed or engaged during the three month period preceding such solicitation; or (ii)\npublicly disparages the Corporation or any of its officers, directors or senior executive employees or otherwise makes any public statement that is materially detrimental to the interests of the Corporation or such individuals.\n \n\n \n\n Following any of these events and immediately\nupon notice from the Corporation, the Participant must repay an amount equal to all income or gain realized in respect of any Awards on and after the earlier of (A) the date that is twelve months prior to the Date of Termination of Employment or (B)\nthe date the conduct occurred that constituted the basis for termination for Cause in (1) or (2) above. The amount of repayment shall include, without limitation: (i) gains from the exercise of Options or Stock Appreciation Rights; (ii) amounts\nreceived in connection with the delivery or sale of Shares or cash paid in respect of any Award; and (iii) any dividends, dividend equivalents or other distributions received in respect of any Award. There shall be no forfeiture or repayment under\nthis Section 13 (e) following a Change in Control. \n\n \n\n\n\n\nf. \n \nCertain Deferrals. The Committee may from time to time establish procedures pursuant to which a Participant may elect to defer, until a date later than the date a Performance\nShare Unit would otherwise become vested and payable. In the event of such a deferral, the deferred Units will be credited with dividend equivalents to be re-invested in additional Units or paid in cash, at the election of the Participant.\n \n\n \n\n\n\n\ng. \n \nDesignation of Death Beneficiary. The Committee shall establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts\npayable in the event of such Participant’s death are to be paid or by whom any rights of such Eligible Individual, after such Participant’s death, may be exercised. \n\n \n\n\n\n\n\n\n\n\n\n\nh. \n \nGoverning Law and Interpretation. The Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of\nDelaware, without reference to principles of conflict of laws and, where applicable, the laws of the United States. The captions of this Plan are not part of the provisions hereof and shall have no force or effect. \n\n \n\n\n\n\ni. \n \nNon-Transferability. Awards under the Plan are not transferable except by will or by the laws of descent and distribution. The Committee may provide that certain Options and\nStock Appreciation Rights may be transferred to a Participant’s children or family members, whether directly or indirectly by means of a trust, partnership or otherwise. “Family member” shall have the meaning given to such term in\nGeneral Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended, and any successor thereto. Options and Stock Appreciation Rights shall be exercisable only by the applicable Participant, the guardian or legal representative\nof such Participant, or any person to whom such Option or Stock Appreciation Right is permissibly transferred pursuant to Section 13(i). \n\n \n\n\n\n\nj. \n \nForeign Employees and Foreign Law Considerations. The Committee may grant Awards to Eligible Individuals who are foreign nationals, who are located outside the United States\nor who are not compensated from a payroll maintained in the United States, or who are otherwise subject to (or could cause the Corporation to be subject to) legal or regulatory provisions of countries or jurisdictions outside the United States, on\nsuch terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan, and, in furtherance of such purposes, the\nCommittee may make such modifications, amendments, procedures, or subplans as may be necessary or advisable to comply with such legal or regulatory provisions. \n\n \n\n\n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n \n\n \n\n\n\n\n \n \n \n\n\n\n P\n\n R\n\n O\n\n X\n\n Y\n\n è\n\n \n \n Proxy Solicited on Behalf of the Board of Directors of\n\n the Corporation for Annual Meeting, April 13, 2005\n\n The\nundersigned hereby appoints Charles R. Lee, Frank P. Popoff and H. A. Wagner, and each of them with power of substitution to each, proxies for the undersigned to act and vote at the Annual Meeting of the Shareowners of United Technologies\nCorporation (“UTC”) to be held April 13, 2005, and at any adjournment thereof, as directed on this card, upon the matters set forth on the reverse side hereof, all as described in the Proxy Statement, and, in their discretion, upon any\nother business which may properly come before said meeting.\n\n \n\n \n\n\n\n \nThis card also constitutes voting instructions to the Trustee under each of the UTC employee savings plans to vote, in person or by proxy, the proportionate interest of the undersigned in the\nshares of Common Stock of UTC held by the Trustee under any such plan(s) as described in the Proxy Statement. To withhold a vote for any individual, please insert the nominee’s name (or the number provided below) in the blank provided in Item 1\non the reverse of this Proxy Card. \n\n\n \n\n Election of Directors, Nominees:\n\n\n \n\n\n\n\n \n \n \n\n\n\n01) George David \n \n07) Frank P. Popoff \n\n\n\n02) Jean-Pierre Garnier \n \n08) H. Patrick Swygert \n\n\n\n03) Jamie S. Gorelick \n \n09) André Villeneuve \n\n\n\n04) Charles R. Lee \n \n10) H. A. Wagner \n\n\n\n05) Richard D. McCormick \n \n11) Christine Todd Whitman \n\n\n\n06) Harold McGraw III \n \n \n\n\n \n\n You are encouraged\nto specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors’ recommendations. The proxy holders cannot vote your shares unless you\nsign and return this card. \n\n \n\n SEE REVERSE \n\n SIDE \n\n \n\n éFOLD AND DETACH HEREé \n\n \n\n United Technologies\nCorporation \n\n \n\n Notice Of \n\n \n\n Annual Meeting of Shareowners \n\n \n\n Wednesday, April 13, 2005 \n\n \n\n 2:00 p.m. \n\n \n\n Celeste Bartos Forum \n\n The New York Public Library \n\n Fifth\nAvenue & 42nd Street \n\n New York, New York \n\n (PLEASE USE ENTRANCE ON 42ND STREET \n\n\n\n\n\n\n\n\n \n \n \n \n \n\n\n\nx \n \n Please mark your\n\n votes as in\nthe\n\n example.\n\n \n \n\n\n \n\n This Proxy when properly executed\nwill be voted in the manner directed herein. If no direction is made, this Proxy will be voted FOR all of the Board of Directors nominees, FOR proposals 2 and 3 and AGAINST proposals 4, 5 and 6, or if this card constitutes voting instructions to a\nSavings Plan Trustee, such Trustee will vote as described in the Proxy Statement. \n\n \n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n \n \nFOR \n \n WITH-\n\n HELD\n\n \n \n \n \nFOR \n \nAGAINST \n \nABSTAIN \n \n \n \nFOR \n \nAGAINST \n \nABSTAIN \n\n\n\n \n \n \n \n \n \n \n \n \n \n \n\n\n\n 1) Election of Directors. (see reverse) \n\n \n \n¨ \n \n¨ \n \n 2) Appointment of Independent Auditors\n\n \n \n¨ \n \n¨ \n \n¨ \n \n 4) Shareowner Proposal Concerning Disclosure of Executive Compensation\n\n \n \n¨ \n \n¨ \n \n¨ \n\n\n\n \n\n Vote for all nominees except:\n\n \n\n \n\n \n \n 3) Approval of United Technologies Corporation 2005 Long Term Incentive Plan\n\n \n \n¨ \n \n¨ \n \n¨ \n \n \n\n 5) Shareowner\nProposal Concerning Ethical Criteria for Military Contracts\n\n \n \n \n\n ¨\n\n \n \n \n\n ¨\n\n \n \n \n\n ¨\n\n \n\n\n\n \n \n \n \n 6) Shareowner Proposal Concerning CEO Compensation\n\n \n \n¨ \n \n¨ \n \n¨ \n\n\n\n \n \n \n \n \n \n \n \n \n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\nThe Board of Directors recommends a vote FOR the election of directors. \n \n The Board of Directors recommends a\n\n vote FOR proposals 2 and 3.\n\n \n \n The Board of Directors recommends a vote\n\n AGAINST proposals 4, 5 and 6.\n\n \n\n\n \n\n\n\n\n \n \n \n\n\n\n Signature(s)\n \n \n\n \n \nThe signer hereby revokes all proxies heretofore given by the signer to vote at said meeting or any adjournments thereof. \n\n\n\n Date\n \n\n \n \n\n\n\nNOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as\nsuch. \n \n\n\n \n\n é FOLD AND DETACH HERE é \n\n \n\n\n\n\n \n \n \n\n\n\nVOTER CONTROL NUMBER: \n \n \n\n \n\n\n\n \n \n \n\n \n\n\n \n\n VOTE BY TELEPHONE OR\nVIA THE INTERNET \n\n \n\n You may use the telephone or Internet to vote your shares at any time, 24 hours a day, 7 days a week, by using the voter control number indicated above or you may return your Proxy Card by mail. \n\n \n\n\n\n\n \n \n \n \n \n\n\n\n TO VOTE BY TELEPHONE: \n\n \n \n TO VOTE VIA THE INTERNET:\n\n \n \n TO VOTE BY MAIL:\n\n \n\n\n\n On touch tone telephone, call toll-free\n\n 1-877-PRX-VOTE (1-877-779-8683).\n\n Outside the U.S. and Canada call\n\n 1-201-536-8073.\n\n \n \nhttp://www.eproxyvote.com/utx \n \n Return your signed, dated\n\n Proxy in the envelope provided.\n\n \n\n\n \n\n Your electronic vote authorizes the\nnamed proxies in the same manner as if you marked, signed, dated and returned the Proxy Card. If you choose to vote your shares electronically, there is no need for you to mail back your Proxy Card. Please note that if you wish to attend the Annual\nMeeting you must still return your white or blue Ticket Request Card. \n\n \n\n ONLINE ACCESS TO PROXY MATERIALS. Registered shareowners may sign up at the following website for online access to future annual reports and proxy materials, rather than receiving mailed copies:\nhttp://www.econsent.com/utx \n\n \n\n THE DIRECT REGISTRATION\nSYSTEM offers shareowners the ability to register their shares in “book entry” form without having a physical certificate issued. For information, call UTC’s Shareholder Direct information line at 1-800-881-1914. \n\n\n \n\n UTC’S SHAREOWNER DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN provides\neligible holders of UTC Common Stock with a simple and convenient method of investing cash dividends and voluntary cash payments in additional shares of Common Stock without payment of any brokerage commission or service charge. Shareowners should\ncarefully review the Plan Prospectus before investing. For a Plan Prospectus contact EquiServe at 1-800-519-3111. \n\n \n\n FOR UTC INFORMATION call our 24-hour-a-day toll-free Shareholder Direct information line, which provides recorded summaries of UTC’s quarterly earnings\ninformation and other company news. Callers also may request copies of quarterly earnings and news releases, by either fax or mail, and obtain copies of the UTC Annual Report and Form 10-K. To access the service, dial 1-800-881-1914. Additional\ninformation about UTC can be found at: http://www.utc.com \n\n\n\n"},"accession_number":{"kind":"string","value":"0001193125-05-037477"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":87,"cells":{"_id":{"kind":"string","value":"1019361_DEF 14A_2004_0001019361-05-000001"},"cik":{"kind":"string","value":"1019361"},"company":{"kind":"string","value":"ROFIN SINAR TECHNOLOGIES INC"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-01-28T00:00:00","string":"2005-01-28T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2004-09-30T00:00:00","string":"2004-09-30T00:00:00"},"sic":{"kind":"string","value":"3690"},"state_of_inc":{"kind":"string","value":"DE"},"state_location":{"kind":"string","value":"MI"},"fiscal_year_end":{"kind":"string","value":"0930"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019361/0001019361-05-000001-index.html"},"htm_filing_link":{"kind":"string","value":"NULL"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019361/000101936105000001/0001019361-05-000001.txt"},"filename":{"kind":"string","value":"1019361_DEF 14A_2004_0001019361-05-000001.txt"},"text":{"kind":"string","value":"\nDEF 14A\nproxy04.txt\nPROXY STATEMENT\n\n SCHEDULE 14A INFORMATION\n\n Proxy Statement Pursuant to Section 14(a) of\n the Securities Exchange Act of 1934\n\nFiled by the Registrant /x/\nFiled by a Party other than the Registrant / /\n\nCheck the appropriate box:\n\n/ / Preliminary Proxy Statement\n\n/ / Confidential, for Use of the Commission Only\n (as permitted by Rule 14a-6(e)(2))\n\n/x/ Definitive Proxy Statement\n\n/ / Definitive Additional Materials\n\n/ / Soliciting Material Pursuant to Section 240.14a-12\n\n\n ROFIN-SINAR TECHNOLOGIES INC.\n --------------------------------------------------------\n (Name of Registrant as Specified in Its Charter)\n\n\n -------------------------------------------------------------------\n (Name of Person(s) Filing Proxy Statement, if other than Registrant)\n\n\nPayment of Filing Fee (Check the appropriate box):\n\n/x/ No fee required.\n\n/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.\n\n 1) Title of each class of securities to which transactions applies:\n\n -------------------------------------------------------------------\n 2) Aggregate number of securities to which transaction applies:\n\n -------------------------------------------------------------------\n 3) Per unit price or other underlying value of transaction computed\n pursuant to Exchange Act Rule 0-11 (Set forth the amount on which\n the filing fee is calculated and state how it was determined):\n\n -------------------------------------------------------------------\n 4) Proposed maximum aggregate value of transaction:\n\n -------------------------------------------------------------------\n 5) Total fee paid:\n\n -------------------------------------------------------------------\n\n\n/ / Fee paid previously with preliminary materials.\n/ / Check box if any part of the fee is offset as provided by Exchange Act\n Rule 0-11(a)(2) and identify the filing for which the offsetting fee was\n paid previously. Identify the previous filing by the registration\n statement number, or the Form or Schedule and the date of its filing.\n\n 1) Amount Previously Paid:\n ------------------------------------------\n 2) Form Schedule or Registration Statement No.:\n ---------------------\n 3) Filing Party:\n ----------------------------------------------------\n 4) Date Filed:\n ------------------------------------------------------\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nGUNTHER BRAUN as interim\n Chairman of the Board,\n and\n Chief Executive Officer January 28, 2005\n\n\nDear Stockholder:\n\nYou are cordially invited to attend the Annual Meeting of Stockholders which\nwill be held on Thursday, March 17, 2005, at 10:00 a.m., local time, at the\nResort Suites of Scottsdale, 7677 E. Princess Dr., Scottsdale, AZ 85255.\n\nAt this year's annual meeting, the agenda includes the election of certain\ndirectors and a proposal to ratify the appointment of our independent\nauditors. The Board of Directors recommends that you vote FOR election of the\nslate of nominees for directors and FOR ratification of appointment of the\nindependent auditors. We will also report on current business conditions and\nour recent developments. Members of the Board of Directors and our executive\nofficers will be present to discuss the affairs of Rofin-Sinar Technologies\nInc. and to answer any questions you may have.\n\nIt is important that your shares be represented and voted at the annual\nmeeting, regardless of the size of your holdings. Accordingly, please\ncomplete, sign and date the enclosed proxy card and return it promptly in the\nenclosed envelope to ensure your shares will be represented. If you do attend\nthe annual meeting, you may, of course, withdraw your proxy should you wish\nto vote in person.\n\nTo help us plan for the meeting, please mark the appropriate box on the\naccompanying proxy card telling us if you will be attending.\n\n Sincerely,\n\n\n /s/ Gunther Braun\n --------------------\n Gunther Braun\n\n\n\n\n\n\n\n\n\n\n\n\n [ROFIN-SINAR TECHNOLOGIES LOGO]\n\n\n\n\n\n NOTICE OF ANNUAL MEETING OF STOCKHOLDERS\n\n\n\nTO THE STOCKHOLDERS\nOF ROFIN-SINAR TECHNOLOGIES INC.\n\n\nThe Annual Meeting of Stockholders of Rofin-Sinar Technologies Inc. will be\nheld at the Resort Suites of Scottsdale, 7677 E. Princess Dr., Scottsdale, AZ\n85255, on Thursday, March 17, 2005, at 10:00 a.m., local time, for the\nfollowing purposes:\n\n 1. To elect two Class III directors to serve for a three-year term\n until the 2008 Annual Meeting of Stockholders;\n\n 2. To appoint KPMG LLP as independent auditors for the Company for\n the fiscal year ending September 30, 2005;\n\n 3. To transact such other business as may properly come before the\n meeting and any adjournments thereof.\n\nThese items are fully discussed in the following pages, which are made part\nof this notice. Only stockholders of record at the close of business on\nJanuary 21, 2005 will be entitled to vote at the annual meeting.\n\n\n By Order of the Board of Directors\n\n /S/ Cindy Denis\n ----------------------------\n Cindy Denis\n Secretary\n\nPlymouth, Michigan\nJanuary 28, 2005\n\n\n\nEVEN IF YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE PROMPTLY COMPLETE,\nSIGN, DATE AND MAIL THE ENCLOSED PROXY CARD. A SELF-ADDRESSED ENVELOPE IS\nENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED\nSTATES. STOCKHOLDERS WHO ATTEND THE ANNUAL MEETING MAY REVOKE THEIR PROXIES\nAND VOTE IN PERSON IF THEY SO DESIRE.\n\n\n\n\n\n\n\n ROFIN-SINAR TECHNOLOGIES INC.\n 40984 CONCEPT DRIVE\n PLYMOUTH, MICHIGAN 48170\n\n --------------------------------------\n PROXY STATEMENT\n --------------------------------------\n\n FOR ANNUAL MEETING OF STOCKHOLDERS\n TO BE HELD ON MARCH 17, 2005\n --------------------------------------\n\nThis Proxy Statement is furnished in connection with the solicitation of\nproxies by the Board of Directors of Rofin-Sinar Technologies Inc., a\nDelaware corporation (the \"Company\"), to be voted at the Annual Meeting of\nStockholders of the Company (the \"Annual Meeting\") to be held at the Resort\nSuites of Scottsdale, 7677 E. Princess Dr., Scottsdale, AZ 85255, on March\n17, 2005 at 10:00 a.m., local time, and at any adjournments thereof. The\napproximate date on which this Proxy Statement and form of proxy are first\nbeing sent to the stockholders is January 28, 2005. References in this Proxy\nStatement to \"we,\" \"our\" or \"us\" refer to Rofin-Sinar Technologies Inc.,\nunless otherwise noted.\n\nOnly holders of record of shares of Common Stock of the Company at the close\nof business on January 21, 2005 (the \"Record Date\") are entitled to vote at\nthe Annual Meeting or any adjournments thereof. Each owner of record on the\nRecord Date is entitled to one vote for each share of Common Stock of the\nCompany so held. The presence, either in person or by properly executed\nproxy, of the owners of one third of the outstanding shares of Common Stock\nof the Company entitled to vote is necessary to constitute a quorum at the\nAnnual Meeting and to permit action to be taken by the stockholders at such\nmeeting. As of the close of business on the Record Date, there were\n15,078,150 shares of Common Stock of the Company outstanding.\n\nAny proxy given pursuant to this solicitation may be revoked by the person\ngiving it at any time before it is exercised by delivering to the Company (to\nthe attention of Cindy Denis) a written notice of revocation or a duly\nexecuted proxy bearing a later date, or by attending the Annual Meeting and\nvoting in person.\n\nAll properly executed proxies delivered pursuant to this solicitation and not\nrevoked will be voted at the Annual Meeting in accordance with the directions\ngiven. Stockholders voting by proxy for the election of directors nominated\nto serve until the 2008 Annual Meeting may vote in favor of all nominees or\nwithhold their votes as to all nominees or withhold their votes as to\nspecific nominees. Stockholders should specify their choices on the enclosed\nform of proxy. If no specific instructions are given with respect to the\nmatters to be acted upon, the shares represented by a signed proxy will be\nvoted FOR the election of all nominees for director, and FOR the proposal to\nratify the appointment of auditors. Directors will be elected by a plurality\nof the votes cast by the holders of the shares of Common Stock voting in\nperson or by proxy at the Annual Meeting. Abstentions and broker non-votes\nwill not affect the outcome of the vote.\n\n\n - 1 -\n\nThe Board of Directors of the Company knows of no business that will be\npresented for consideration at the Annual Meeting other than the matters\ndescribed in this Proxy Statement. If any other matters are presented at the\nAnnual Meeting, the persons named in the proxy card will vote in accordance\nwith their judgment.\n\nThis solicitation is being made by the Board of Directors of the Company and\nits cost (including preparing and mailing of the notice, this Proxy Statement\nand the form of proxy) will be paid by the Company. The Company will also\nmake arrangements with brokerage houses and other custodians, nominees and\nfiduciaries to send the proxy material to their principals and will reimburse\nthem for their reasonable expenses in so doing. To the extent necessary in\norder to ensure sufficient representation at the Annual Meeting, the Company\nintends to utilize the services of a proxy solicitor as well as the services\nof officers and regular employees of the Company to solicit the return of\nproxies by mail, telephone, telegram, telex and personal interview. No\ncompensation in addition to regular salary and benefits will be paid to any\nofficer or regular employee for such solicitation.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n - 2 -\n\n PROPOSAL ONE:\n ELECTION OF DIRECTORS\nBoard of Directors\n\nPursuant to the Company's Certificate of Incorporation, the Board of\nDirectors is divided into three classes, with staggered three-year terms, and\nnot more than one class of directors being elected at any Annual Meeting of\nthe Stockholders. Under the By-Laws of the Company, the number of directors\nof the Company has been set at seven since the August 5, 2003 Board Meeting.\n\nPeter Wirth and William R. Hoover, the two Class III directors whose terms\nwill expire at the Annual Meeting, have been nominated by the Board of\nDirectors to stand for re-election as Class III directors to hold office\nuntil the 2008 Annual Meeting of Stockholders and until their successors are\nelected and qualified. The Board of Directors knows of no reason why any\nnominee will be unable or unwilling to serve as a nominee or director if\nelected.\n\nCertain information concerning Peter Wirth and William R. Hoover is furnished\nbelow:\n\n Peter Wirth has been Chairman of the Board of Directors and Chief\n Executive Officer and President of the Company since September 1996.\n He has also served as General Manager of Rofin-Sinar Laser GmbH (\"RSL\")\n since October 1994. From 1991 until October 1994, Dr. Wirth was\n President of Rofin-Sinar Inc. (\"RSI\"). He joined RSL in 1979 as Sales\n Manager for Industrial Lasers, and became Director, Sales and Marketing\n in 1983. He holds a Master's Degree and a Ph.D. in Physics from the\n Technical University in Munich, Germany.\n\n William R. Hoover has been a member of the Company's Board of Directors\n since September 1996. He is on the Board of Directors of Computer\n Sciences Corporation, a provider of information technology consulting,\n systems integration and outsourcing to industry and government. He was\n the Chairman of the Executive Committee and was Chairman of the Board\n of that company from November 1972 to March 1997. He has been a\n consultant to that company since March 1995; prior to that, he was its\n President from November 1969 to March 1995 and its Chief Executive\n Officer from November 1972 until March 1995. Mr. Hoover serves as\n Director on the Board of Computer Sciences Corporation.\n\nThe two nominees receiving the highest number of affirmative votes will be\nelected as Class III directors of the Company.\n\nRecommendation of the Nominating Committee of the Board of Directors\nConcerning the Election of Directors\n\nThe Nominating Committee of the Board of Directors of the Company recommends\na vote FOR Peter Wirth and William R. Hoover as Class III directors to hold\noffice until the 2008 Annual Meeting of Stockholders and until their\nsuccessors are elected and qualified. Proxies received by the Board of\nDirectors will be so voted unless stockholders specify a contrary choice in\ntheir proxy. The members of the Nominating Committee, Messrs. Reins, Willis,\nSmoke, and Hoover, are independent directors within the meaning of Rule\n4200(a)(15) of the National Association of Securities Dealers (\"NASD\")\nMarketplace Rules. - 3 -\n\n\n NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS\n FOR A THREE-YEAR TERM EXPIRING AT THE 2008 ANNUAL MEETING:\n\n Name Age Director Since\n -------------------- ----- ----------------\n Peter Wirth 58 1996\n William R. Hoover (A)(B)(C) 75 1996\n\n\n DIRECTORS WHOSE TERMS EXPIRE AT THE 2007 ANNUAL MEETING:\n\n Name Age Director Since\n -------------------- ----- ----------------\n Carl F. Baasel 63 2000\n Gary K. Willis (A)(B)(C) 59 1996\n Daniel J. Smoke (A)(B)(C) 55 2003\n\n\n DIRECTORS WHOSE TERMS EXPIRE AT THE 2006 ANNUAL MEETING:\n\n Name Age Director Since\n -------------------- ----- ----------------\n Gunther Braun 47 1996\n Ralph E. Reins (A)(B)(C) 64 1996\n\n\n\n________________________________________\n(A) Member of the Audit Committee\n(B) Member of the Compensation Committee\n(C) Member of the Nominating Committee\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n - 4 -\n\n DIRECTORS AND EXECUTIVE OFFICERS\n\nThe following table sets forth certain information with respect to the\nCompany's directors and executive officers.\n\nName Age Title\n ------------------- ----- ---------------------------------------\nPeter Wirth 58 Chairman of the Board of Directors,\n Chief Executive Officer and President\n\nGunther Braun 47 Executive Vice President, Finance and\n Administration, Chief Financial Officer,\n Treasurer and Director\n\nWalter Volkmar 61 General Manager, Rofin-Sinar Laser GmbH\n Marking Division\n\nLouis Molnar 51 President, Rofin-Sinar Inc.\n\nCarl F. Baasel 63 Managing Director of Carl Baasel\n Lasertechnik GmbH & Co. KG and Director\n\nWilliam R. Hoover 75 Director\n\nRalph E. Reins 64 Director\n\nGary K. Willis 59 Director\n\nDaniel J. Smoke 55 Director\n\nBusiness Experience\n\nPeter Wirth has been Chairman of the Board of Directors and Chief Executive\nOfficer and President of the Company since September 1996. He has also\nserved as General Manager of RSL since October 1994. From 1991 until October\n1994, Dr. Wirth was President of RSI. He joined RSL in 1979 as Sales Manager\nfor Industrial Lasers, and became Director, Sales and Marketing in 1983. He\nholds a Master's Degree and a Ph.D. in Physics from the Technical University\nin Munich, Germany.\n\nGunther Braun has been Executive Vice President, Finance and Administration,\nChief Financial Officer and Treasurer, as well as a member of the Company's\nBoard of Directors since September 1996. Since 1994, he has also been the\nFinancial Director for RSL. He joined RSL in 1989 in connection with RSL's\nacquisition of Coherent General Inc.'s Laser Optronics marking division. Mr.\nBraun holds a Business Administration Degree from the Fachhochschule in\nRegensburg, Germany.\n\nWalter Volkmar has been Manager of the Marking Division of RSL since 1994.\nHe joined RSL in 1989 in connection with RSL's acquisition of Coherent\nGeneral Inc.'s Laser Optronics marking division. Dr. Volkmar holds Master's\nDegrees in Mechanical Engineering and Business Administration from the\nTechnical University in Darmstadt, Germany and a Ph.D. in Economics and Trade\nfrom the University of Parma in Italy.\n\n - 5 -\n\nLouis Molnar has been President of Rofin-Sinar Inc., a fully owned subsidiary\nof the Company, located in Plymouth, Michigan, USA since August 2000. Mr.\nMolnar served as President and Chief Operational Officer of GALCO Industrial\nElectronics, a company offering electrical and electronic control products,\nfrom July 1997 until August 2000. Prior to this, Mr. Molnar served as\nDirector for FANUC Robotics, where he was responsible for the entire business\ninfrastructure and operations, as well as all engineering functions for the\nAutomotive Components and General Industries markets. Mr. Molnar holds a\nBachelor of Science Degree in Electrical Engineering from Oakland University\nand a Master's Degree in Business Administration from Michigan State\nUniversity.\n\nCarl F. Baasel became a member of the Company's Board of Directors in October\n2000, following the Company's acquisition of a majority stake in Carl Baasel\nLasertechnik GmbH, a company that Mr. Baasel founded in 1975. Mr. Baasel\nserved as that company's Managing Director until September 2001, when it was\ntransformed into a limited partnership under the name \"Carl Baasel\nLasertechnik GmbH & Co. KG\". Since September 2001, he has served as Managing\nDirector of this limited partnership, which is a fully owned subsidiary of\nthe Company. Mr. Baasel holds a Master's Degree in Physics from the\nTechnical University of Munich.\n\nWilliam R. Hoover has been a member of the Company's Board of Directors since\nSeptember 1996. He is on the Board of Directors of Computer Sciences\nCorporation, a provider of information technology consulting, systems\nintegration and outsourcing to industry and government. He was the Chairman\nof the Executive Committee and was Chairman of the Board of that company from\nNovember 1972 to March 1997. He has been a consultant to that company since\nMarch 1995; prior to that, he was its President from November 1969 to March\n1995 and its Chief Executive Officer from November 1972 until March 1995.\nMr. Hoover serves as Director on the Board of Computer Sciences Corporation.\n\nRalph E. Reins has been a member of the Company's Board of Directors since\nSeptember 1996. He was Chief Executive Officer of Qualitor Inc. until July\n1, 2002 and remained as Chairman of Qualitor Inc. until it was sold in\nDecember 2004. Mr. Reins served as President and Chief Executive Officer of\nAP Parts International, Inc. from 1995 to 1997, as President and Chief\nExecutive Officer of Envirotest Systems Corp. in 1995, as President of Allied\nSignal Automotive from 1991 through 1994 and as President of United\nTechnologies Automotive from 1990 to 1991. Prior to that, he was Chairman,\nChief Executive Officer, President and Chief Operating Officer of Mack Truck\nfrom 1989 to 1990 and President and Chief Executive Officer of ITT Automotive\nfrom 1985 to 1989. Mr. Reins was a Director at Weirton Steel until December\n12, 2002, and is a member of the Society of Automotive Engineers.\n\n\n\n\n\n\n\n\n\n\n\n - 6 -\n\n\nGary K. Willis has been a member of the Company's Board of Directors since\nSeptember 1996. Mr. Willis recently retired from Zygo Corporation, where\nsince November 1998, he had been Chairman of the Board of Directors. Mr.\nWillis had also served as Director of Zygo Corporation since February 1992\nand as its President and Chief Executive Officer from 1992 and 1993 through\n1999, respectively. Prior to joining Zygo Corporation, he was Chairman,\nPresident and Chief Executive Officer of The Foxboro Company. Mr. Willis\nalso serves as a Director of Benthos Corporation, Plug Power Corporation, and\nMiddlesex Health Services, Inc. Mr. Willis has a Bachelor of Science Degree\nin Mechanical Engineering from Worcester Polytechnical Institute.\n\nDaniel J. Smoke has been a member of the Company's Board of Directors since\nAugust 2003. Mr. Smoke is the Chief Financial Officer of B. R. Lee\nIndustries, Inc. Mr. Smoke was previously the Chief Financial Officer of\nMarco Wood Products Inc. Prior to 2004, Mr. Smoke was in a private\nconsulting practice since 1999. Mr. Smoke served as Vice President and Chief\nFinancial Officer of Bucyrus International, Inc. from 1996 to 1999. Prior to\nthat, he served as Vice President and Chief Financial Officer for Folger Adam\nCompany from 1995 to 1996. Mr. Smoke held various positions at Eagle\nIndustries, Inc. from 1986 to 1994, including Vice President of Finance,\nCorporate Controller, Senior Vice-President and Group Executive, and Division\nPresident. Mr. Smoke has a Bachelor of Arts Degree in Business\nAdministration from Washington State University and a Master of Science\nDegree in Accounting from California State University. Mr. Smoke is a\nCertified Public Accountant.\n\n\nRelationships Among Directors or Executive Officers\n\nThere are no family relationships among any of the directors or executive\nofficers of the Company.\n\n\nSection 16(a) Beneficial Ownership Reporting Compliance\n\nSection 16(a) of the Securities Exchange Act of 1934, as amended, requires\nthe Company's officers and directors, and persons who own more than ten\npercent of a registered class of the Company's equity securities, to file\nreports of securities ownership and changes in such ownership with the\nSecurities and Exchange Commission (the \"SEC\"). Officers, directors and\ngreater than ten percent shareholders are also required by rules promulgated\nby the SEC to furnish the Company with copies of all Section 16(a) forms they\nfile.\n\nBased solely upon a review of the copies of such forms, the absence of a Form\n3, Form 4 or Form 5 or written representations that no Form 4's or 5's were\nrequired, the Company believes that, with respect to the fiscal year ended\nSeptember 30, 2004, its officers, directors and greater than ten percent\nbeneficial owners complied with all applicable Section 16(a) filing\nrequirements.\n\n\n\n\n - 7 -\n\n COMMITTEES OF THE BOARD OF DIRECTORS;\n MEETINGS AND COMPENSATION OF DIRECTORS\n\nDuring the fiscal year ended September 30, 2004, the Board of Directors held\nnine meetings. The Board currently has an Audit Committee, a Compensation\nCommittee and a Nominating Committee. All incumbent directors attended more\nthan 75% of the meetings of the Board of Directors and the respective\ncommittees of which they are members. We do not have a formal policy\nregarding attendance by directors at annual meetings of stockholders but\nencourage such attendance. All directors who were on the Board at the time\nof the last annual meeting attended the meeting.\n\nThe Audit Committee. The Audit Committee is responsible for recommending to\nthe Board of Directors the independent public accountants to be selected to\nconduct the annual audit of the books and records of the Company, reviewing\nthe proposed scope of such audit and approving the audit fees to be paid in\nconnection with such audit, reviewing the adequacy and effectiveness of the\naccounting and internal financial controls of the Company with the\nindependent auditors and the Company's financial and accounting staff,\nreviewing and approving transactions between the Company and its directors,\nofficers and affiliates, considering whether the provision by the external\nauditors of services related to the annual audit and quarterly reviews is\nconsistent with maintaining the auditors' independence, and reviewing\nannually the adequacy of the Audit Committee Charter. The Board of Directors\nhas adopted a written Charter for the Audit Committee. A copy of the Audit\nCommittee Charter was attached as Appendix A to the Proxy Statement filed on\nJanuary 30, 2004. During fiscal year 2004, the members of the Audit\nCommittee were Mr. Reins, Mr. Willis, Mr. Hoover, and Mr. Smoke. Mr. Hoover\nresigned as Chairman of the Audit Committee at the March 18, 2004 annual\nmeeting, at which time Mr. Smoke became the Chairman of the Audit Committee.\nMr. Smoke has been identified as a \"financial expert\" under applicable\nSecurities and Exchange Commission audit committee rules. Mr. Reins, Mr.\nWillis, Mr. Smoke, and Mr. Hoover are independent directors within the\nmeaning of Rule 4200(a)(15) of the NASD Marketplace Rules. In fiscal 2004,\nthe Audit Committee held four meetings.\n\nThe Nominating Committee. The Nominating Committee is responsible for\nassisting the Board by actively identifying individuals qualified to become\nBoard members and recommending to the Board of Directors nominees for\nelection at the next annual meeting of stockholders. The Nominating\nCommittee has two primary methods for identifying candidates (other than\nthose proposed by the Company's stockholders, as discussed below). First, on\na periodic basis, the Nominating Committee solicits ideas for possible\ncandidates from a number of sources - members of the Board; senior level\nCompany executives; individuals personally known to the members of the Board;\nand research. Second, the Nominating Committee may from time to time use its\nauthority under its charter to retain, at the Company's expense, one or more\nsearch firms to identify candidates (and to approve such firms' fees and\nother retention terms). The Nominating Committee will also consider nominees\nrecommended by stockholders. Although there are no formal procedures for\nstockholders to nominate persons to serve as directors, stockholders wishing\nto submit nominations should notify the Company at its principal offices\n(Attention: Cindy Denis, Secretary, 40984 Concept Drive, Plymouth, MI 48170)\nof their intent to do so. To be considered by the Nominating Committee,\n\n - 8 -\n\n\nnominations must be received on or before the deadline for receipt of\nstockholder proposals. See \"Stockholders' Proposals.\" Any candidate\nsubmitted by a stockholder must meet the definition of an \"independent\ndirector\" under NASD rules. The Nominating Committee will consider all\ncandidates identified through the processes described above, and will\nevaluate each of them, including incumbents, based on the same criteria.\nOnce the nominee has been contacted and accepts to be considered as a\nnominee, the Nominating Committee reviews the nominee's resume and other\ncredentials and analyzes the expertise the nominee would offer the Board of\nDirectors and the Company. Directors are selected based on their ability to\nrepresent the best interests of the Company's shareholders and not just one\nparticular constituency; demonstrated sound business judgment and an\ninquiring mind as well as expertise that adds to the composition of the\nBoard; professional experience, education, and their interest in, and\ncapacity for understanding the complexities of, the operation of the Company;\nand being prepared to participate fully in Board activities, including active\nmembership on at least one Board committee and attendance at, and active\nparticipation in, meetings of the Board and the committee of which he or she\nis a member. These individuals can bring considerable experience to the\nimpartial oversight of the Company's operations. The Board of Directors has\nadopted a written Charter for the Nominating Committee. A copy of the\nNominating Committee Charter was attached as Appendix B to the Proxy\nStatement filed on January 30, 2004. During fiscal year 2004, the members of\nthe Nominating Committee were Mr. Reins, Mr. Willis, Mr. Hoover and Mr.\nSmoke. Mr. Reins, Mr. Willis, Mr. Smoke, and Mr. Hoover are independent\ndirectors within the meaning of Rule 4200(a)(15) of the NASD Marketplace\nRules. In fiscal 2004, the Nominating Committee held one meeting.\n\n\nThe Compensation Committee. The Compensation Committee is responsible for\nproviding a general review of the Company's compensation and benefit plans,\nensuring that they meet corporate financial and strategic objectives. The\nresponsibilities of the Compensation Committee also include administering the\n1996 Equity Incentive Plan, the Annual Incentive Plan, and the 2002 Equity\nIncentive Plan (all of which are described below), including selecting the\nofficers and salaried employees to whom awards will be granted and making\nsuch awards. The members of the Compensation Committee are Mr. Hoover, Mr.\nReins, Mr. Willis and Mr. Smoke, each of whom are independent directors\nwithin the meaning of Rule 4200(a)(15) of the NASD Marketplace Rules. Mr.\nHoover, Mr. Reins, Mr. Willis and Mr. Smoke are not employees of the Company.\nIn fiscal 2004, the Compensation Committee held two meetings.\n\n\n\n\n\n\n\n\n\n\n\n\n\n - 9 -\n\n\nCompensation of Directors. Each director who is not an employee of the\nCompany is entitled to an annual cash retainer fee of $15,000 plus an\nhonorarium of $1,000 and $500 for each Board meeting and committee meeting,\nrespectively, which he attends. Furthermore, directors are reimbursed for\nreasonable travel expenses incurred in connection with their duties as\ndirectors of the Company. In addition, in 1997 the Company adopted a non-\nemployee director stock plan (the \"Directors' Plan\") which authorizes 100,000\nshares of Common Stock for issuance pursuant to stock awards and restricted\nstock awards to non-employee directors. Under the Directors' Plan, each non-\nemployee director who is first elected or appointed to the Board of Directors\nprior to age 65 will receive an initial grant of 1,500 shares of Common Stock\nand an annual grant of 1,500 shares of Common Stock, which vest immediately,\nin each subsequent year in which he or she serves on the board. Each non-\nemployee director who is first appointed or elected to the Board of Directors\nafter attaining age 65 will receive upon his or her initial appointment or\nelection a one-time grant of 7,500 shares of restricted stock which will vest\nin five equal installments on the date of grant and each of the following\nfour anniversaries thereof.\n\n\nStockholder Communications with the Board. Any stockholder who wishes to\nsend any other communications to the Board, a particular committee of the\nBoard or a particular director should also deliver such communications to the\nSecretary of the Company at the address listed above. The Secretary is\nresponsible for determining, in consultation with other officers of the\nCompany, counsel, and other advisers as appropriate, which stockholder\ncommunications will be related to the Board.\n\n\nCode of Business Conduct and Ethics. The Board of Directors and the Company\nare committed to good corporate governance practices. The Company's Code of\nBusiness Conduct and Ethics requires management and employees to abide by\nhigh standards of business conduct and ethics. The Code of Business Conduct\nand Ethics is available in the Investors Relations section of the Company's\nweb site at www.rofin-inc.com.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n - 10 -\n\n\n REPORT OF AUDIT COMMITTEE\n\nNovember 2, 2004\n\nTo the Board of Directors\n\nWe have reviewed and discussed with management the Company's audited\nfinancial statements as of and for the year ended September 30, 2004.\n\nWe have discussed with KPMG LLP the matters required to be discussed by\nStatement on Auditing Standards No. 61, Communication with Audit Committees,\nas amended, by the Auditing Standards Board of the American Institute of\nCertified Public Accountants.\n\nWe have received and reviewed the written disclosures and the letter from\nKPMG LLP required by Independence Standard No. 1, Independence Discussions\nwith Audit Committees, as amended, by the Independence Standards Board, and\nhave discussed with the auditors the auditors' independence.\n\nBased on the reviews and discussions referred to above, we recommend to the\nBoard of Directors that the financial statements referred to above be\nincluded in the Company's Annual Report on Form 10-K for the year ended\nSeptember 30, 2004.\n\n\n/S/ Daniel J. Smoke\n- ----------------------------\nMr. Daniel J. Smoke\nAudit Committee Chairman\n\n\n\n/S/ Ralph E. Reins\n- ----------------------------\nMr. Ralph E. Reins\nAudit Committee Member\n\n\n\n/S/ Gary K. Willis\n- ----------------------------\nMr. Gary K. Willis\nAudit Committee Member\n\n\n/S/ William R. Hoover\n- ----------------------------\nMr. William R. Hoover\nAudit Committee Member\n\n\n\n\n\n - 11 -\n\n OWNERSHIP OF COMMON STOCK BY MANAGEMENT\n\nThe following table sets forth information as of January 1, 2005, with\nrespect to beneficial ownership of the Company's Common Stock by each\ndirector, each of the executive officers named in the Summary Compensation\nTable below, and the directors, nominees, and executive officers of the\nCompany as a group. To the Company's knowledge, each of the directors,\nnominees, and executive officers has sole voting and investment power with\nrespect to the shares he owns.\n\n Name and Address Number of Shares of\n of Beneficial Common Stock\n Owner (1) Beneficially Owned (2) Percentage of Class\n -------------------- ------------------------ ---------------------\n Peter Wirth 115,300 *\n Gunther Braun 62,000 *\n Walter Volkmar -- *\n Carl F. Baasel 36,000 *\n William R. Hoover 42,000 *\n Ralph E. Reins 18,500 *\n Gary K. Willis 18,500 *\n Daniel J. Smoke 4,950 *\n All directors and\n Executive officers\n as a group (8 persons) 297,250 2.0\n ----------------------------\n* Less than one (1) percent of class.\n\n(1) The address of each of the directors and executive officers is 40984\n Concept Drive, Plymouth, MI 48170.\n\n(2) The amounts listed include the following shares of Common Stock that may\n be acquired within 60 days of January 1, 2005 through the exercise of\n stock options: Dr. Wirth, 112,000; Mr. Baasel, 17,000; and Mr. Braun,\n 62,000.\n\n PRINCIPAL STOCKHOLDERS\n\nBeneficial Ownership\n\nThe following table sets forth information as to the only persons known to\nthe Company to be the beneficial owner of more than five (5) percent of the\nCompany's Common Stock:\n\n\n Name and Address of Amount and Nature\n Beneficial Owner of Beneficial Ownership Percentage of Class\n --------------------- ----------------------- -------------------\n\n None -- --\n\n\n\n\n\n - 12 -\n\n EQUITY COMPENSATION PLAN INFORMATION\n\nThe following table sets forth information regarding shares issued under\nequity compensation plans as of September 30, 2004:\n\n Number of Number of\n Securities to be Weighted Average Securities\n Issued Upon Exercise Price Remaining\n Exercise of of Outstanding Available For\n Outstanding Options Options Future Issuance\n -------------------- ---------------- ----------------\nEquity Compensation\n Plans:\n\n Not approved by\n shareholders ---- ---- ----\n\n Approved by\n Shareholders 346,350 $ 11 1/8 679,500\n\n\n\n\n COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION\n\nMessrs. Hoover, Reins, Willis, and Smoke are the members of the Compensation\nCommittee of the Board of Directors of the Company, neither of whom is an\nofficer of the Company. There are no compensation committee interlocks\ninvolving executive officers of the Company.\n\n\n\n CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS\n\nThe information required by this Item is included in the \"Compensation\nCommittee\", \"Interlocks and Insider Participation\" and \"Certain Transactions\"\nsections of the Company's Proxy Statement to be filed in connection with the\nCompany's 2005 Annual Meeting of Stockholders to be held in March 2005, and\nis incorporated by reference herein.\nThe Company had sales to its minority shareholder in Japan amounting to $1.8\nmillion, $1.6 million , and $2.6 million in fiscal years 2004, 2003, and\n2002, respectively and the amounts outstanding related to those sales is\nlisted as accounts receivable related party in the consolidated balance\nsheet.\nThe Company's sales to related parties have generally been on terms\ncomparable to those available in connection with sales to unaffiliated\nparties.\n\n\n\n\n\n - 13 -\n\nThe main facility in Starnberg is rented under a 25 year operating lease from\nthe former minority shareholder of CBL, who is also a member of the board of\ndirectors of the Company, and includes a clause to terminate the lease\ncontract within a two-year notice period during the contract period. The\nCompany paid rent expense of $0.6 million and $0.5 million to the former\nminority shareholder during fiscal years 2004 and 2003, respectively.\nPayables to the director and former minority shareholder of CBL as of\nSeptember 30, 2004 amounted to $0.6 million and are included in other accrued\nliabilities.\nThe Company has accrued $1.1 million, at September 30, 2004 ($1.1 million at\nSeptember 30, 2003) for the option purchase prices for the minority interests\nin RBE, and $0.4 million ($0.3 million at September 30, 2003) was accrued for\naccumulated interest on this obligation (see Note 1 to the accompanying\nfinancial statements). Additionally the company has accrued $0.1 million at\nSeptember 30, 2004 for the option purchase price for the minority interests\nin Optoskand AB. These amounts are included in accounts payable to related\nparty in the accompanying consolidated balance sheet. The corresponding\ninterest on this obligation ($0.1 million in 2004, 2003, and 2002) is\nincluded in interest expense in the accompanying consolidated statement of\noperations. Effective October 22, 2004 the minority shareholder of RBE\nresigned from the limited partnership and the remaining shares were purchased\nfor the price of Euro 1.2 million (equivalent to $1.5 million based on the\nexchange rate at September 30, 2004), including interest accumulated on the\nobligation.\nAccounts payable to related party also includes a short-term loan from the\nminority shareholder of Dilas of $0.1 million at September 30, 2004.\nThe Company believes that all transactions noted above have been executed on\nan arms-length basis. Except for the foregoing, no director, officer,\nnominee director, 5% holder of the Company's shares, or immediate family\nmember, associate or affiliate thereof, had any material interest, direct or\nindirect, in any transaction since the beginning of fiscal 2003 or has any\nmaterial interest, direct or indirect, in any proposed transaction, having a\nvalue of $60,000 or more.\n\n EXECUTIVE COMPENSATION AND RELATED INFORMATION\n\nCompensation Committee Report on Executive Officer Compensation\n\nThe Compensation Committee consists solely of non-management directors. The\ncurrent members of the Compensation Committee are Messrs. Hoover, Reins,\nWillis, and Smoke.\n\n\n\n\n\n\n\n\n\n - 14 -\n\n\nPolicies, Goals and Responsibilities\n\nThe Compensation Committee is responsible for oversight and administration of\nexecutive compensation. The philosophy of the Compensation Committee is to\nestablish an executive compensation program that will allow the Company to\nachieve the following objectives:\n\n * Attract, retain and motivate key executives of the Company.\n\n * Tie executive pay to shareholder value creation through the\n use of equity-based incentives.\n\n * Link pay to performance by making individual compensation\n directly dependent upon the achievement of certain predetermined\n performance goals.\n\nThe Company's executive compensation programs are designed to meet three\nfundamental objectives:\n\n (1) to set compensation at levels sufficient to attract and retain a\n diverse mix of experienced, highly competent executives;\n\n (2) to provide incentives to improve the Company's financial\n performance and performance against strategic and operational\n goals; and\n\n (3) to evaluate, reinforce and reward individual achievement of\n business objectives with pay that fluctuates with performance.\n\nThe salary and incentive compensation programs for the Company's executive\nofficers were established based on advice from independent consultants by\nreference to a survey group of companies with sales of less than $500 million\nper year. The use of independent consultants has provided additional\nassurance that the Company's compensation programs are appropriately aligned\nwith its objectives, and that, based upon survey data, executive compensation\nlevels are appropriately aligned with the compensation levels of persons in\nsimilar positions at comparable companies, taking into account, in certain\ninstances, differences between U.S. and German compensation practices.\n\nComponents of Compensation\n\nBase Salaries. In fiscal year 2004, executive officers' base salaries have\nincreased compared to their base salaries in fiscal year 2003, between 0% and\n10% on average, and are enumerated in the summary compensation table below.\nThe Compensation Committee reviews executive officer base salaries on an\nannual basis and determines those base salaries by an evaluation of factors\nwhich may include individual performance and comparisons with salaries paid\nat comparable companies in the Company's industry.\n\n\n\n\n\n\n - 15 -\n\nAnnual Incentives. The Annual Incentive Plan was established in 1996 and\nprovides that key employees, including executive officers, are eligible to\nparticipate at the discretion of the Compensation Committee. The maximum\nbonus each participant may receive under the Annual Incentive Plan is\nexpressed as a percentage of base salary, with percentages varying among\nparticipants based upon their positions at the Company. Bonus opportunities\nwith respect to fiscal year 2004 were based upon the degree to which the\nCompany (or, with respect to middle management, the applicable business unit\nor division of the Company) achieved certain preset performance goals related\nto net sales, order entry, operating profits and after-tax profits. The\nCompensation Committee anticipates that, in the future, survey data and\ncomparisons to peer companies will continue to be considered in determining\nperformance criteria and bonus levels.\n\nIn fiscal year 2004, the Company did achieve the preset performance goals\nunder the Annual Incentive Plan and the Company's executive officers were\nawarded the bonuses outlined in the summary compensation table below.\n\nLong-Term Incentives. In 1996, the Company adopted the 1996 Equity Incentive\nPlan, and in 2002, the Company adopted the 2002 Equity Incentive Plan, which\nprovide for grants of stock options, restricted stock and performance shares\nto officers and other key employees of the Company.\n\nIn fiscal year 2004, the Company granted 50,000 stock options to Peter Wirth;\n40,000 stock options to Gunther Braun; 20,000 stock options to Carl F. Baasel\nand 30,000 stock options to Louis Molnar, under the 2002 Equity Incentive\nPlan.\n\nThe Compensation Committee believes that stock options are an important part\nof incentive compensation because stock options only have value if the\nCompany's stock price increases over time. Thus, the Compensation Committee\nanticipates that additional option grants will be made to the executive\nofficers and other key employees of the Company from time to time to reflect\ntheir ongoing contributions to the Company, to provide additional incentives\nand to take into account practices at competitive companies.\n\n\nCompensation of the Chairman of the Board and Chief Executive Officer\n\nThe Company and Dr. Wirth are parties to an employment agreement providing\nfor a minimum annual base salary, subject to periodic adjustment, of Euro\n230,000 (which equated to $278,759 in fiscal year 2004 based on a weighted\naverage currency exchange rate of US $1.00 = Euro 0.8251) and the payment of\nan annual incentive bonus based upon the Company's attainment of\npredetermined performance goals. Dr. Wirth's salary in fiscal year 2004\nremained unchanged from his salary in fiscal year 2003. The Compensation\nCommittee determined Dr. Wirth's annual incentive bonus of $153,317 for\nfiscal year 2004 based upon the Company's attainment of a predetermined\nperformance goal related to net sales and to after-tax profit. In fiscal\nyear 2004, the Company did achieve the predetermined performance goal and,\nthus, Dr. Wirth received an annual incentive bonus, as outlined in the\nsummary compensation table.\n\n\n\n - 16 -\n\n\nIn fiscal year 2004, 50,000 stock options were granted to Dr. Wirth under the\n2002 Equity Incentive Plan.\n\n\nPolicy with Respect to Qualifying Compensation for Deductibility\n\nSection 162(m) of the Internal Revenue Code of 1986, as amended, generally\nlimits to $1,000,000 the tax deductible compensation paid for a particular\nyear to the chief executive officer and to each of the four most highly\ncompensated executive officers who are employed as executive officers on the\nlast day of such year (the \"Named Executive Officers\"). The Compensation\nCommittee intends to comply with Section 162(m) (and the regulations\nthereunder) to preserve the deductibility of performance based compensation\npaid to any Named Executive Officer. If compliance with Section 162(m) (and\nthe regulations thereunder) conflicts with the compensation philosophy or is\ndetermined not to be in the best interests of shareholders, the Compensation\nCommittee will abide by the compensation philosophy, regardless of the tax\nimpact of such actions.\n\n\n COMPENSATION COMMITTEE\n\n William R. Hoover\n Ralph E. Reins\n Daniel J. Smoke\n Gary K. Willis\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n - 17 -\n\n\nExecutive Compensation\n\nThe following table presents certain summary information concerning\ncompensation paid for services to the Company during fiscal years 2004, 2003,\nand 2002 to the Named Executive Officers of the Company.\n\n SUMMARY COMPENSATION TABLE\n Long-Term\n Compensation\n ------------\n Securities All Other\nName and\t (1) (2) Underlying Compens-\nPrincipal Position Year Salary($) \tBonus($) \tOptions(#) ation($)\n- ------------------ ---- ---------- ----------- ---------- ---------\n Peter Wirth 2004\t $ 278,759 \t $ 153,317 50,000 --\n Chairman, Chief 2003\t $ 255,796 \t $ 123,017 30,000 --\n Executive Officer 2002\t $ 208,812 $ 92,563 30,000 --\n and President\n\n Gunther Braun 2004 $ 195,431 $ 98,988 40,000 --\n Executive Vice 2003 $ 166,982 $ 71,313 30,000 --\n President Finance 2002 $ 137,315 $ 54,207 30,000 --\n And Administration\n and Chief Financial\n Officer\n\n Walter Volkmar 2004 $ 162,758 $ 59,081 -- --\n General Manager, 2003 $ 146,482 $ 45,250 25,000 --\n RSL Marking 2002 $ 123,055 \t$ 40,728 20,000 --\n Division\n\n Carl F. Baasel 2004 $ 127,665 $ 56,175 20,000 --\n Managing Director, 2003 $ 121,774 $ 50,081 15,000 --\n Carl Baasel 2002 $ 101,659 $ 38,722 15,000\n Lasertechnik GmbH\n & Co. KG\n\n Louis Molnar 2004 $ 218,544 $ 79,333 30,000 5,746 (3)\n President, RSI 2003 $ 214,087 $ 67,974 25,000 3,031\n 2002 $ 211,141 $ 62,634 25,000 5,102\n- -------------------\n (1) Amounts paid in Euro have been converted into U.S. dollars at the\n weighted average exchange rate for the relevant fiscal year (for\n fiscal year ended September 30, 2002: US$1.00: Euro 1.0881; for\n fiscal year ended September 30, 2003: US$1.00: Euro 0.9255 and for\n fiscal year ended September 30, 2004: US$1.00: Euro 0.8251)\n\n (2) Bonuses are reflected on the accrual method of accounting, consistent\n with the presentation in audited financial statements. Fiscal year\n 2004 bonuses were paid in December 2004.\n\n (3) $5,746 of matching contributions were made by RSI on behalf of\n Mr. Molnar in accordance with the Rofin-Sinar Inc. 401(k) Plan.\n\n - 18 -\n\n\nThe following table presents information concerning grants of stock options\nduring fiscal year 2004 to each of the Named Executive Officers.\n\n\n INDIVIDUAL OPTION GRANTS IN FISCAL YEAR ENDED SEPTEMBER 30, 2004\n\n Potential\n Number of % of Total Realizable Value at\n Securities Options Assumed Annual Rates\n Underlying Granted to of Stock Price\n Options Employees Exercise Appreciation for\n Granted(#) in Fiscal Price($/Sh) Expiration Option Term(3)\nName (1) Year (2) Date 5%($) 10%($)\n- -------- ---------- ---------- ------------ ---------- -------- --------\nPeter\n Wirth 50,000 17.51% $ 32.71 3/18/14 $1,028,557 $2,606,566\nGunther\n Braun 40,000 14.01% $ 32.71 3/18/14 $ 822,846 $2,085,253\nCarl F.\n Baasel 20,000 7.01% $ 32.71 3/18/14 $ 411,423 $1,042,626\nLouis\n Molnar 30,000 10.51% $ 32.71 3/18/14 $ 617,134 $1,563,939\n\n- ------------\n\n(1) All option grants to the Named Executive Officers were made pursuant\n to the 2002 Equity Incentive Plan and have a ten-year term.\n\n(2) All options were granted to the Named Executive Officers at an exercise\n price equal to the fair market value of the underlying stock on the date\n of grant. All options will vest and become exercisable in equal\n installments on each of the first five anniversaries of the date of\n grant. Pursuant to the terms of the awards, all options will, subject to\n the discretion of the Compensation Committee, become fully exercisable\n upon the occurrence of a change in control as defined in the 2002 Equity\n Incentive Plan.\n\n(3) Potential gains are net of exercise price, but before taxes associated\n with exercise. These amounts represent assumed rates of appreciation\n only, based on SEC rules, and do not represent the Company's estimate or\n projection of the Company's stock price in the future. Actual gains, if\n any, on stock option exercises depend upon the actual future performance\n of Common Stock and the continued employment of the option holders\n through the vesting period. The amounts reflected in this table may not\n necessarily be achieved.\n\n\n\n\n\n\n\n\n\n - 19 -\n\n AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2004\n AND FISCAL YEAR 2004 YEAR-END OPTION VALUES\n Value of\n Number of Unexercised\n Unexercised In-The-Money\n Options at Options at\n Shares FY-End (#) FY-End ($)\n Acquired on Value Exercisable/ Exercisable/\n Name Exercise (#) Realized ($) \tUnexercisable Unexercisable(1)\n- -------------- ------------ ----------- ---------------- -----------------\nPeter Wirth -- -- 126,000/114\t,000 2,212,640/1,289,610\nGunther Braun -- -- 72,000/ 98,000 1,309,370/1,157,580\nWalter Volkmar -- -- 9,000/ 48,000 180,470/ 955,440\nCarl F. Baasel -- -- 15,000/ 45,000 296,580/ 496,770\nLouis Molnar -- -- 16,000/ 77,000 287,380/ 901,560\n\n- -------------\n(1) Based on the closing price of Common Stock, as reported on the NASDAQ\n National Market, at September 30, 2004, which was $29.38 per share.\n\nPension Plans\n\nRSL Pension Plan\n\nMessrs. Wirth, Braun and Volkmar participate in the Rofin-Sinar Laser GmbH\nPension Plan (the \"RSL Pension Plan\") for RSL executives, an unfunded plan in\naccordance with the typical practices of German companies. The RSL Pension\nPlan provides pensions to participants who (i) retire on or after age 60 or\nterminate employment due to a permanent disability and (ii) have served at\nleast ten years with RSL at the time of separation.\n\nThe annual benefits payable under the RSL Pension Plan, which commence at the\nstatutory retirement age of 65 (according to German law), are based upon the\nage at which the participant leaves RSL. Book reserves are kept to record\nbenefits accruals under the RSL Pension Plan. Messrs. Wirth, Braun and\nVolkmar joined or were deemed to have joined (as applicable) the RSL Pension\nPlan on July 1, 1979, November 1, 1984 and March 1, 1985, respectively.\nAssuming retirement at or after age 60, Messrs. Wirth, Braun and Volkmar\nwould receive a monthly pension benefit of $2,859, $2,051 and $1,325,\nrespectively (at the weighted average Euro/U.S. dollar exchange rate in\neffect during the year ended September 30, 2004).\n\nRofin-Sinar Inc. Pension Plan\n\nIn 1996 RSI adopted a defined benefit plan for its employees known as the\nRofin-Sinar Inc. Pension Plan (the \"RSI Plan\"). Under the RSI Plan,\nemployees receive annual pension benefits equal to the product of (i) the sum\nof 1.125% of the first $12,000 of average final compensation and 1.5% of\n\"average final compensation\" in excess of that amount, and (ii) the number of\nyears of service in which the employee was employed by a participating\nemployer. Average final compensation is based upon the period of four\nconsecutive plan years out of the last ten full plan years preceding the\nemployee's retirement which produces the highest amount.\n\n\n - 20 -\n\nNo Named Executive Officers are currently participating in the RSI Plan.\n\nEmployment Agreements and Termination of Employment Arrangements\n\nEmployment Agreements with Named Executive Officers\n\nIn September 1996 the Company and RSL entered into employment agreements with\nMessrs. Wirth and Braun (collectively, the \"Employment Agreements\"), under\nwhich the executives have retained the job titles specified in their prior\nemployment agreements, and are entitled to a base compensation, adjusted by\nthe Compensation Committee, of not less than Euro 230,000 and Euro 165,000,\nrespectively ($278,759 and $199,976, respectively, at the weighted average\nexchange rate for fiscal year 2004 of Euro 0.8251 per $1.00) plus an annual\nincentive bonus based upon the Company's attainment of preset performance\ngoals. Each Employment Agreement has an indefinite term, subject to earlier\ntermination by either the Company and RSL or the executive upon two years'\nprior written notice. In accordance with the Employment Agreements, each\nexecutive has agreed (i) not to disclose or exploit any of the Company's\nConfidential Information (as defined therein), (ii) to assign to the Company\nall inventions or improvements made by the executive in the course of his\nemployment with the Company, and (iii) not to compete with the Company for a\nsix month period after the completion of his term of employment with the\nCompany. During the six-month non-competition period, the executive is\ngenerally entitled under German law to receive half of his monthly salary.\nThe employment agreements do not provide for severance.\n\n\nStock Performance Graph\n\nThe following graph presents the one-year total return for Rofin-Sinar\nTechnologies Inc. Common Stock compared with the NASDAQ Stock Market Index\nand the S&P Technology Sector Index. Rofin-Sinar selected these comparative\ngroups due to industry similarities and the fact that they contain several\ndirect competitors.\n\nThe graph assumes that the value of the investment in Rofin-Sinar\nTechnologies Inc. Common Stock, the NASDAQ Stock Market Index, and the S&P\nTechnology Sector Index each was $100 on September 30, 1999 and that all\ndividends were reinvested. The S&P Technology Sector Index is weighted by\nmarket capitalization.\n\nEDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC\n\n Quarter Rofin-Sinar NASDAQ Stock S&P Technology\n End Technologies Inc. Market Index Sector Index\n ------- ---------------- ------------ --------------\n 9/30/99 100 100 100\n 9/30/00 156 160 121\n 9/30/01 117 56 44\n 9/30/02 99 49 30\n 9/30/03 330 58 49\n 9/30/04 461 65 50\n\n\n - 21 -\n\n PROPOSAL TWO:\n INDEPENDENT PUBLIC ACCOUNTANTS\n\nThe Board of Directors recommends the appointment of KPMG LLP, independent\nauditors for the Company since fiscal year 1994, to serve in the same\ncapacity for the fiscal year ending September 30, 2005. Resolution will be\nsubmitted to stockholders at the Annual Meeting to ratify their appointment.\nThe affirmative vote of a majority of the shares represented and voting at\nthe Annual Meeting is required to ratify appointment. Unless otherwise\ninstructed, the proxy holder will vote the proxies received FOR the\nratification of the appointment of KPMG LLP as the independent auditors for\nthe Company for fiscal 2005.\n\nIn the event the stockholders fail to ratify the appointment, the Board of\nDirectors will reconsider its selection. If the resolution ratifying the\nappointment of KPMG LLP as independent auditors is approved by the\nstockholders, the Board of Directors nevertheless retains the discretion to\nselect different auditors at any time during the year if the Board of\nDirectors believes that change would be in the best interests of the Company\nand its stockholders.\n\nA representative of KPMG LLP will not be present at the meeting; however, the\nCompany's independent auditors will be available via telephone conferencing\nto respond to appropriate questions.\n\nThe following table presents fees for professional audit services rendered by\nKPMG LLP for the audit of the Company's annual financial statements for 2003\nand 2004, and fees billed for other services rendered by KPMG LLP.\n\n 2003 2004\n --------- ---------\n Audit fees $ 553,000 $ 480,000\n Audit related fees (1) 8,000 257,000\n --------- ---------\n Audit and audit related fees 561,000 737,000\n\n Tax fees (2) 111,000 119,000\n\n All other fees -- --\n --------- ---------\n Total fees $ 672,000 $ 856,000\n ========= =========\n\n(1) Audit related fees consisted principally of fees for audits of financial\n statements of certain employee benefit plans, fees for the audit of the\n Company's filing of Form S-3 Registration Statement, and fees related\n to the acquisitions of PRC Laser Corporation and Lee Laser, Inc.\n(2) Tax fees consisted of fees for tax consultation and tax compliance\n services.\n\n\n\n\n\n\n - 22 -\n\n\nThe Audit Committee pre-approves all audit and permitted non-audit services\nprovided by the independent auditors prior to the commencement of services.\nMr. Smoke, the Audit Committee Chairman, has the delegated authority to pre-\napprove such services and these pre-approval decisions are presented to the\nfull Audit Committee at its next scheduled meeting. During fiscal year 2004\nand 2003, the Audit Committee pre-approved 100% of the total fees to KPMG\nLLP.\n\nRecommendation of the Board of Directors Concerning the Election of\nIndependent Public Accountants\n\nThe Board recommends a vote FOR ratification of the appointment of KPMG LLP\nas the Company's independent auditor for the current fiscal year.\n\n\n\n EXPENSES OF SOLICITATION\n\nAll expenses incurred in connection with the solicitation of proxies will be\nborne by the Company. The Company will request brokerage houses, custodians,\nfiduciaries and nominees to forward proxy materials to their principals and\nwill reimburse them for their reasonable expenses in doing so. The Company\nexpects to retain assistance in proxy solicitation, the expenses for which\nare not expected to exceed $50,000. Solicitation may also be undertaken by\nmail, telephone and personal contact by directors, officers and employees of\nthe Company without additional compensation.\n\nThe Bank of New York, the Company's transfer agent and registrar, will\nreceive and tabulate proxies.\n\n STOCKHOLDERS' PROPOSALS\n\nProposals of stockholders intended to be presented at the 2006 Annual Meeting\nof Stockholders must be received by the Company on or before Friday,\nSeptember 30, 2005, to be eligible for inclusion in the Company's proxy\nstatement and proxy relating to that meeting.\n\nUnder the Company's Certificate of Incorporation and By-Laws, stockholders\ndesiring to nominate persons for election as directors or bring other\nbusiness before the annual meeting must deliver or mail a notice to the\nSecretary that must be received at the principal executive offices of the\nCompany not less than 60 days nor more than 90 days prior to the anniversary\ndate of the immediately preceding annual meeting of stockholders; provided,\nhowever, that in the event that the annual meeting is called for a date that\nis not within 30 days before or after such anniversary date, notice by the\nstockholder in order to be timely must be so received not later than the\nclose of business on the tenth day following the day on which such notice of\nthe date of the annual meeting is mailed or such public disclosure of the\ndate of the annual meeting is made, whichever first occurs. Stockholders'\nnotices must contain the specific information set forth in the Certificate of\nIncorporation and the By-Laws. Stockholders will be furnished a copy of the\nCompany's Certificate of Incorporation and By-Laws without charge upon\nwritten request to the Secretary of the Company.\n\n - 23 -\n\n HOUSEHOLDING OF PROXY MATERIALS\n\nThe SEC has adopted rules that permit companies and intermediaries (e.g.,\nbrokers) to satisfy the delivery requirements for proxy statements and annual\nreports with respect to two or more stockholders sharing the same address by\ndelivering a single proxy statement addressed to those stockholders. This\nprocess, which is commonly referred to as \"householding\", potentially means\nextra convenience for stockholders and cost savings for companies.\n\nThis year, a number of brokers with account holders who are the Company's\nstockholders will be \"householding\" our proxy materials. A single proxy\nstatement will be delivered to multiple stockholders sharing an address\nunless contrary instructions have been received from the affected\nstockholders. Once you have received notice from your broker that they will\nbe \"householding\" communications to your address, \"householding\" will\ncontinue until you are notified otherwise or until you revoke your consent.\nIf, at any time, you no longer wish to participate in \"householding\" and\nwould prefer to receive a separate proxy statement and annual report, please\nnotify your broker. You may also direct your written request for a separate\nproxy statement and annual report to: Investor Relations, Rofin-Sinar\nTechnologies Inc., 40984 Concept Drive, Plymouth, MI 48170 or contact Cindy\nDenis at (734) 416-0206. Stockholders who currently receive multiple copies\nof the proxy statement at their address and would like to request\n\"householding\" of their communications should contact their broker.\n\n OTHER INFORMATION\n\nThe Company knows of no other matters which will be presented for\nconsideration at the Annual Meeting. If any other matters or proposals\nproperly come before the meeting, including voting for the election of any\nperson as a director in place of a nominee named herein who becomes unable to\nserve or for good cause will not serve, and voting on proposals omitted from\nthe proxy statement pursuant to the rules of the Securities and Exchange\nCommission, it is intended that proxies received will be voted in accordance\nwith the discretion of the proxy holders.\n\nThe Annual Report to Stockholders for the fiscal year ended September 30,\n2004, which includes financial statements, is enclosed. The Annual Report\ndoes not form any part of the material for the solicitation of proxies.\n\nAny stockholder who desires a copy of the Company's 2004 Annual Report on\nForm 10-K filed with the Securities and Exchange Commission may obtain a copy\n(excluding exhibits) without charge by addressing a written request to the\nSecretary, Rofin-Sinar Technologies Inc., 40984 Concept Drive, Plymouth,\nMichigan 48170.\n By Order of the Board of Directors\n\n /S/ Gunther Braun\n ---------------------------\n Gunther Braun as interim\n Chairman of the Board, and\n Chief Executive Officer\n\nPlymouth, Michigan\nJanuary 28, 2005\n - 24 -\n\n ROFIN-SINAR TECHNOLOGIES INC.\n THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS\n\nThe undersigned hereby appoints Peter Wirth and Cindy Denis as Proxies,\neach with the power to appoint his or her substitute, and hereby authorizes\neach of them to represent and to vote, as designated below, all the Common\nShares of Rofin-Sinar Technologies Inc. which the undersigned is entitled to\nvote at the Annual Meeting to be held on March 17, 2005 or any adjournment\nthereof.\n\nThis proxy will be voted as directed. If no direction is indicated, this\nproxy will be voted FOR proposals 1, 2 and 3.\n\n\n1. Election of Directors:\n For Election to Term Expiring in 2008: Peter Wirth and\n William R. Hoover\n\n / / For / / Withheld / / Exceptions *\n\n\n * Exceptions\n -----------------------\n\n To vote your shares for all director nominees, mark the \"For\" box on\n item 1. To withhold voting for all nominees, mark the \"Withheld\" box.\n If you do not wish your shares voted \"For\" a particular nominee, mark the\n \"Exceptions\" box and enter the name(s) of the exception(s) in the space\n provided.\n\n\n2. Proposal to ratify the appointment of KPMG LLP as the Company's\n independent auditors for the fiscal year ending September 30, 2005.\n\n / / For / / Against / / Abstain\n\n\n3. In their discretion, the Proxies are authorized to vote upon such other\n further business, if any, as lawfully may be brought before the meeting.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n - 25 -\n\n\n\n\n"},"accession_number":{"kind":"string","value":"0001019361-05-000001"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":88,"cells":{"_id":{"kind":"string","value":"1019650_DEF 14A_2005_0001019056-05-000358"},"cik":{"kind":"string","value":"1019650"},"company":{"kind":"string","value":"UNIONBANCORP INC"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-03-29T00:00:00","string":"2005-03-29T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-03-29T00:00:00","string":"2005-03-29T00:00:00"},"sic":{"kind":"string","value":"6021"},"state_of_inc":{"kind":"string","value":"DE"},"state_location":{"kind":"string","value":"IL"},"fiscal_year_end":{"kind":"string","value":"1231"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019650/0001019056-05-000358-index.html"},"htm_filing_link":{"kind":"string","value":"NULL"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019650/000101905605000358/0001019056-05-000358.txt"},"filename":{"kind":"string","value":"1019650_DEF 14A_2005_0001019056-05-000358.txt"},"text":{"kind":"string","value":"\nDEF 14A\nubc_2005proxy.txt\nDEF 14A\n\n SCHEDULE 14A INFORMATION\n\nProxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934\n\nFiled by the Registrant [X]\nFiled by a Party other than the Registrant [ ]\n\nCheck the appropriate box:\n\n[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the\n Commission Only (as permitted by\n Rule 14a-6(e)(2))\n[X] Definitive Proxy Statement\n[ ] Definitive Additional Materials\n[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12\n\n UNIONBANCORP, INC.\n- ------------------------------------------------------------------------------\n (Name of Registrant as Specified In Its Charter)\n\n- ------------------------------------------------------------------------------\n (Name of Person(s) Filing Proxy Statement, if other than the Registrant)\n\nPayment of Filing Fee (Check the appropriate box):\n\n[X] No fee required.\n[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.\n\n (1) Title of each class of securities to which transaction applies: NA\n -------------------------------------------------------------------------\n (2) Aggregate number of securities to which transaction applies: NA\n -------------------------------------------------------------------------\n (3) Per unit price or other underlying value of transaction computed\n pursuant to Exchange Act Rule 0-11 (set forth the amount on which the\n filing fee is calculated and state how it was determined): NA\n -------------------------------------------------------------------------\n (4) Proposed maximum aggregate value of transaction: NA\n -------------------------------------------------------------------------\n (5) Total fee paid: NA\n -------------------------------------------------------------------------\n\n[ ] Fee paid previously with preliminary materials.\n\n[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule\n0-11(a)(2) and identify the filing for which the offsetting fee was paid\npreviously. Identify the previous filing by registration statement number, or\nthe Form or Schedule and the date of its filing.\n\n (1) Amount Previously Paid: NA\n (2) Form, Schedule or Registration Statement No.: NA\n (3) Filing Party: NA\n (4) Date Filed: NA\nNotes:\n\n [LOGO OMITTED]\n UNIONBANCORP, INC.\n\n\n March 29, 2005\n\nDear Fellow Stockholder:\n\n You are cordially invited to attend UnionBancorp, Inc.'s annual meeting of\nstockholders at the Starved Rock Lodge and Conference Center located in Utica,\nIllinois, on Tuesday, April 26, 2005, at 10:00 a.m. local time. At the meeting,\nwe will report to you on the progress of UnionBancorp and respond to your\ncomments or questions. Moreover, several members of our management team will be\navailable to speak with you individually about our record of achievement and\nplans for the future.\n\n Your board of directors has nominated three persons to serve as Class I\ndirectors on the board of directors. Their names appear in the enclosed proxy\nmaterials. All three of the nominees are incumbent directors. We recommend that\nyou vote your shares for the nominees.\n\n We encourage you to attend the meeting in person. Because it is important\nthat your shares be represented at the meeting, please sign and return the\nenclosed proxy, whether or not you plan to attend the meeting.\n\n We look forward with pleasure to seeing and visiting with you at the\nmeeting.\n\n With best personal wishes,\n\n /s/ DEWEY R. YAEGER\n\n Dewey R. Yaeger\n President and\n Chief Executive Officer\n\n\n\n\n 321 West Main Street o Ottawa Illinois o 815-431-2720\n\n\n ---------------------------\n\n THIS PAGE INTENTIONALLY\n\n LEFT BLANK\n\n ---------------------------\n\n\n [LOGO OMITTED] UNIONBANCORP, INC.\n\n\n NOTICE OF ANNUAL MEETING OF STOCKHOLDERS\n TO BE HELD APRIL 26, 2005\n ----------------------------------------\n\nTO HOLDERS OF COMMON STOCK:\n\n The annual meeting of stockholders of UnionBancorp, Inc., a Delaware\ncorporation, will be held at the Starved Rock Lodge and Conference Center\nlocated in Utica, Illinois, on Tuesday, April 26, 2005, at 10:00 a.m., local\ntime, for the purpose of considering and voting upon the following matters:\n\n 1. To elect three Class I directors.\n\n 2. To take action with respect to any other matters that may be properly\n brought before the meeting and that might be considered by the\n stockholders of a Delaware corporation at their annual meeting.\n\n We are not aware of any other business to come before the meeting. Only\nthose stockholders of record as of the close of business on March 1, 2005, shall\nbe entitled to notice of the meeting and to vote at the meeting and any\nadjournments or postponements of the meeting. In the event there are not\nsufficient votes for a quorum or to approve or ratify any of the foregoing\nproposals at the time of the meeting, the meeting may be adjourned or postponed\nin order to permit our further solicitation of proxies.\n\n By Order of the Board of Directors\n\n /s/ DEWEY R. YAEGER\n\n Dewey R. Yaeger\n President and\n Chief Executive Officer\nOttawa, Illinois\nMarch 29, 2005\n\nPLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE\nAS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN\nPERSON. YOUR VOTE IS IMPORTANT TO ENSURE THAT A MAJORITY OF THE STOCK IS\nREPRESENTED. IT IS HOPED THAT YOU WILL BE ABLE TO ATTEND THE MEETING, AND IF YOU\nDO YOU MAY VOTE YOUR STOCK IN PERSON IF YOU WISH. IF YOU LATER FIND THAT YOU MAY\nBE PRESENT AT THE MEETING OR FOR ANY OTHER REASON DESIRE TO REVOKE YOUR PROXY,\nYOU MAY DO SO AT ANY TIME PRIOR TO ITS EXERCISE. STOCKHOLDERS HOLDING SHARES IN\nBROKERAGE ACCOUNTS (\"STREET NAME\" HOLDERS) WHO WISH TO VOTE AT THE MEETING WILL\nNEED TO OBTAIN A PROXY FROM THE INSTITUTION THAT HOLDS THEIR SHARES.\n\n\n ---------------------------\n\n THIS PAGE INTENTIONALLY\n\n LEFT BLANK\n\n ---------------------------\n\n\n [LOGO OMITTED]\n UNIONBANCORP, INC.\n\n\n PROXY STATEMENT\n\nThis proxy statement is furnished in connection with the solicitation by the\nboard of directors of UnionBancorp, Inc. of proxies to be voted at the annual\nmeeting of stockholders to be held at the Starved Rock Lodge and Conference\nCenter located in Utica, Illinois, on Tuesday, April 26, 2005, at 10:00 a.m.,\nlocal time, or at any adjournments or postponements of the meeting.\n\nUnionBancorp, Inc., a Delaware corporation, is a regional financial services\ncompany based in Ottawa, Illinois which has one bank subsidiary. Our offices\nserve communities throughout central and northern Illinois through twenty-two\nlocations.\n\nThis proxy statement and the accompanying notice of meeting and proxy are first\nbeing mailed to holders of shares of our common stock, par value $1.00 per\nshare, on or about March 29, 2005 to stockholders of record as of March 1, 2005.\nWe are required to file an annual report, called a Form 10-K, with the SEC. A\ncopy of Form 10-K for the fiscal year ended December 31, 2004 is enclosed for\nyour reference.\n\nVoting Rights and Proxy Information\n\nThe board of directors has fixed the close of business on March 1, 2005, as the\nrecord date for the determination of stockholders entitled to notice of, and to\nvote at, the annual meeting. Our transfer books will not be closed between the\nrecord date and the date of the annual meeting. The board of directors hopes\nthat all stockholders can be represented at the annual meeting. Whether or not\nyou expect to be present, please sign and return your proxy in the enclosed\nself-addressed, stamped envelope. Stockholders giving proxies retain the right\nto revoke them at any time before they are voted by written notice of revocation\nto the Secretary of UnionBancorp, and stockholders present at the meeting may\nrevoke their proxy and vote in person.\n\nThe shares represented by each valid proxy received in time will be voted at the\nannual meeting and, if a choice is specified on the proxy, it will be voted in\naccordance with that specification. If no instructions are specified in a signed\nproxy returned to the company, the shares represented thereby will be voted in\nFAVOR of the election of the directors listed in the enclosed proxy. If any\nother matters are properly presented at the annual meeting, including, among\nother things, consideration of a motion to adjourn the meeting to another time\nor place, the individuals named as proxies and acting thereunder will have the\nauthority to vote on those matters according to their best judgment to the same\nextent as the person delivering the proxy would be entitled to vote. If the\nannual meeting is adjourned or postponed, a proxy will remain valid and may be\nvoted at the adjourned or postponed meeting. As of the date of printing of this\nproxy statement, we do not know of any other matters that are to be presented at\nthe annual meeting other than the election of three Class I directors.\n\n 1.\n\n\nStockholders giving proxies retain the right to revoke them at any time before\nthey are voted by written notice of revocation to the Secretary of UnionBancorp,\nor by a later executed proxy. Attendance at the annual meeting will not\nautomatically revoke a proxy, but a stockholder attending the annual meeting may\nrequest a ballot and vote in person, thereby revoking a prior granted proxy.\n\nOn March 1, 2005, we had 4,059,110 issued and outstanding shares of common\nstock. For the election of directors, and for all other matters to be voted upon\nat the annual meeting, each share of common stock is entitled to one vote. A\nmajority of the outstanding shares of the common stock must be present in person\nor represented by proxy to constitute a quorum for purposes of the annual\nmeeting. Abstentions and broker non-votes (i.e., shares held by brokers in\nstreet name, voting on certain matters due to discretionary authority or\ninstructions from the beneficial owners but not voting on other matters due to\nlack of authority to vote on such matters without instructions from the\nbeneficial owner) will be counted for purposes of determining a quorum but will\nnot count toward the determination of whether such matters are approved or\ndirectors are elected. Directors will be elected by a plurality of the votes\npresent in person or represented by proxy at the meeting and entitled to vote.\nIn all other matters, the affirmative vote of the majority of shares of common\nstock present in person or represented by proxy at the annual meeting and\nentitled to vote on the subject matter shall be required to constitute\nstockholder approval. Abstentions will be treated as votes against a proposal\nand broker non-votes will have no effect on the vote.\n\n I. ELECTION OF DIRECTORS\n\nWe have a staggered board of directors, divided into three classes. One class is\nelected annually to serve for three years. At the annual meeting, our\nstockholders will be entitled to elect three Class I directors for terms of\nthree years or until their successors are elected and qualified. Each of the\nnominees for election as Class I directors are incumbent directors. Our board of\ndirectors has reviewed the independence of the nominees for election to the\nboard and the independence of the incumbent directors in accordance with the\nstandards of the Nasdaq Stock Market. In accordance with such review, the board\nof directors has determined that each of Messrs. Breipohl, Doty, McDonnell,\nReinhardt, Shinkle, Sullivan and Trainor are independent under those standards.\nThese independent directors constitute a majority of the incumbent members and\nnominees for election to the board.\n\nThe proxy provides instructions for voting for all director nominees or for\nwithholding authority to vote for one or more director nominees. Unless\ninstructed to the contrary, the persons acting under the proxy which we are\nsoliciting will vote for the nominees listed below. In the event, however, that\nany nominee shall be unable to serve, which is not now contemplated, the proxy\nholders reserve the right to vote at the annual meeting for a substitute\nnominee.\n\nInformation About Directors and Nominees\n\nSet forth below is information, current as of March 1, 2005, concerning the\nnominees for election and for the other directors whose terms of office will\ncontinue after the meeting, including the age, year first elected a director and\nbusiness experience of each during the previous five years. Unless otherwise\nindicated, each person has held the positions shown for at least five years. The\nthree nominees, if elected at the annual meeting, will serve as Class I\ndirectors for three-year terms, expiring in 2008. We recommend that you vote\nyour shares FOR all three nominees.\n\n 2.\n\n\n NOMINEES\n\nName Director Position with UnionBancorp\n(Age) Since and Principal Occupation\n- ----- ----- ------------------------\n\nClass I\n(term expires 2008)\n\nRichard J. Berry 1985 Director of UnionBancorp; Attorney,\n(Age 52) Myers, Berry, O'Conor & Kuzma, Ltd.\n\nWalter E. Breipohl 1993 Director of UnionBancorp; Owner,\n(Age 51) Kaszynski/ Breipohl Realtors/Developers\n\nJohn A. Trainor 1985 Director of UnionBancorp; Chairman of\n(Age 74) UnionBancorp (2000-2002); Owner, Trainor\n Grain & Supply Company, Inc.\n\n\n CONTINUING DIRECTORS\n\nName Director Position with UnionBancorp\n(Age) Since and Principal Occupation\n- ----- ----- ------------------------\n\nClass II\n(term expires 2006)\n\nRobert J. Doty 1996 Director of UnionBancorp; Chairman of\n(Age 77) Prairie Bancorp, Inc. (1989-1996);\n Consultant, Farm Management\n\nI. J. Reinhardt, Jr. 1991 Director of UnionBancorp; Director and\n(Age 67) General Manager, St. Louis Beverage\n Company\n\nDewey R. Yaeger 2003 Director of UnionBancorp; President and\n(Age 64) Chief Executive Officer of UnionBancorp\n (since November 2003); Senior Vice\n President and Chief Credit Officer of\n UnionBancorp (April-November 2003);\n President and Chief Executive Officer of\n Castle Bank, N.A. (1997-2003)\n\n 3.\n\n\nClass III\n(term expires 2007)\n\nDennis J. McDonnell 2000 Chairman of the Board (since 2002) and\n(Age 62) Director of UnionBancorp; Chairman of\n McDonnell Investment Management, LLC\n (2001-present); Director of Global\n Decisions Group; President and Chief\n Operating Officer of Van Kampen\n Investment Advisory Corporation\n (1983-2000)\n\nJohn A. Shinkle 1997 Director of UnionBancorp; Executive Vice\n(Age 53) President and Director, Synovus\n Securities, Inc.\n\nScott C. Sullivan 1996 Director of UnionBancorp; Attorney,\n(Age 50) Williams & McCarthy\n\nAll of our directors will hold office for the terms indicated, or until their\nrespective successors are duly elected and qualified. There are no arrangements\nor understandings between UnionBancorp and any person pursuant to which any\ndirector has been selected. No member of the board of directors is related to\nany other member of the board of directors.\n\nBoard Committees and Meetings\n\nOur board of directors generally meets on a quarterly basis. The board of\ndirectors met six times during 2004. During 2004, all directors attended at\nleast 75 percent of the meetings of the board and the committees on which they\nserved. Our board of directors has standing executive, nominating and corporate\ngovernance, audit, compensation and facilities committees.\n\nThe executive committee is comprised of Messrs. McDonnell (Chair), Sullivan,\nTrainor and Yaeger. The executive committee meets on an as needed basis and\nexercises the power of the board of directors between board meetings. This\ncommittee did not meet in 2004.\n\nThe audit committee is responsible for assisting the board of directors with\noversight of (1) the integrity of our financial statements, (2) our compliance\nwith legal and regulatory requirements, (3) the independent auditor's\nqualifications and independence and (4) the performance of our internal\naccounting function and independent auditors. The audit committee has the direct\nauthority and responsibility to select, evaluate and, where appropriate, replace\nthe independent auditors, and is an \"audit committee\" for purposes of Section\n3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the audit\ncommittee are Messrs. Reinhardt (Chair), Breipohl and Doty. During 2004, the\naudit committee met four times.\n\nThe compensation committee establishes compensation and benefits for the chief\nexecutive officer and reviews and recommends compensation and benefits for the\nother executive officers and employees of our subsidiary, UnionBank. The\ncommittee also administers and oversees our stock-based incentive compensation\nplans. The members of the compensation committee are Messrs. Shinkle (Chair),\nMcDonnell, Sullivan and Yaeger (ex officio). As an ex officio member of the\ncommittee, Mr. Yaeger has no voting rights. The compensation committee met four\ntimes in 2004.\n\n 4.\n\n\nThe facilities committee examines and analyzes existing locations on an ongoing\nbasis and assists the board in implementation of long-range strategies. The\nmembers of the facilities committee are Messrs. Breipohl (Chair), Doty and\nSullivan. The facilities committee meets on an as needed basis and met three\ntimes in 2004.\n\nNominating and Corporate Governance Committee\n\nOur board of directors has a nominating and corporate governance committee which\nconsists of three directors. Messrs. McDonnell (Chair), Shinkle and Sullivan are\nthe current members of this committee. The nominating and corporate governance\ncommittee identifies individuals to become board members and selects, or\nrecommends for the board's selection, director nominees to be presented for\nstockholder approval at the annual meeting of stockholders or to fill any\nvacancies. The nominating and corporate governance committee met two times in\n2004.\n\nOur board of directors has adopted a written charter for the nominating and\ncorporate governance committee. A copy of the charter was filed as an exhibit to\nthe 2004 Proxy Statement. Based upon the review described above under the\nsection \"Election of Directors\", the board of directors has determined that each\nof the members of our nominating and corporate governance committee is\nindependent under the applicable standards of the Nasdaq Stock Market.\n\nThe nominating and corporate governance committee will consider director\nnominees recommended by stockholders. A stockholder who wishes to recommend a\nperson or persons for consideration as a nominee for election to the Board of\nDirectors must send a written notice by mail, c/o Nominating and Corporate\nGovernance Committee, UnionBancorp, Inc., 321 West Main Street, Ottawa, Illinois\n61350, that sets forth: (1) the name, address (business and residence), date of\nbirth and principal occupation or employment (present and for the past five\nyears) of each person whom the stockholder proposes to be considered as a\nnominee; (2) the number of shares of the common stock beneficially owned (as\ndefined by section 13(d) of the Securities Exchange Act of 1934) by each such\nproposed nominee; (3) any other information regarding such proposed nominee that\nwould be required to be disclosed in a definitive proxy statement to\nstockholders prepared in connection with an election of directors pursuant to\nsection 14(a) of the Securities Exchange Act of 1934; and (4) the name and\naddress (business and residential) of the stockholder making the recommendation\nand the number of shares of the common stock beneficially owned (as defined by\nsection 13(d) of the Securities Exchange Act of 1934) by the stockholder making\nthe recommendation. We may require any proposed nominee to furnish additional\ninformation as may be reasonably required to determine the qualifications of\nsuch proposed nominee to serve as a director of UnionBancorp. Stockholder\nrecommendations will be considered only if received no less than 120 days nor\nmore than 150 days before the date of the proxy statement sent to stockholders\nin connection with the previous year's annual meeting of stockholders. The\nnominating and corporate governance committee will consider any nominee\nrecommended by a stockholder in accordance with the preceding paragraph under\nthe same criteria as any other potential nominee.\n\nThe nominating and corporate governance committee has not established specific,\nminimum qualifications for recommended nominees or specific qualities or skills\nfor one or more of our directors to possess. The nominating and corporate\ngovernance committee uses a subjective process for identifying and evaluating\nnominees for director, based on the information available to, and the subjective\njudgments of, the members of the nominating and corporate governance committee\nand our then current needs. We do not believe there would be any difference in\nthe manner in which the committee evaluates nominees based on whether the\nnominee is recommended by a stockholder or not.\n\n 5.\n\n\nCode of Ethics\n\nThe Company has adopted a Code of Ethics that applies to all of our employees,\nofficers and directors, including our principal executive officer, principal\nfinancial officer, principal accounting officer or controller, or persons\nperforming similar functions. Our Code of Ethics contains written standards that\nwe believe are reasonably designed to deter wrongdoing and to promote:\n\n o Honest and ethical conduct, including the ethical handling of actual\n or apparent conflicts of interest between personal and professional\n relationships;\n o Full, fair, accurate, timely, and understandable disclosure in reports\n and documents that we file with, or submit to, the Securities and\n Exchange Commission and in other public communications we make;\n o Compliance with applicable governmental laws, rules and regulations;\n o The prompt internal reporting of violations of the code to an\n appropriate person or persons named in the code; and\n o Accountability for adherence to the code.\n\nWe will provide to any person without charge, upon request, a copy of our Code\nof Ethics. Requests for a copy of our Code of Ethics should be made to our\nsecretary at 321 West Main Street, Ottawa, Illinois 61350.\n\nStockholder Communications with the Board and Policy for Director Attendance at\nAnnual Meetings\n\nOur board of directors has a process for stockholders to send communications to\nthe board of directors, its nominating and corporate governance committee or its\naudit committee, including complaints regarding accounting, internal accounting\ncontrols, or auditing matters. Communications can be sent to the board of\ndirectors, its nominating and corporate governance committee or its audit\ncommittee or specific directors either by regular mail to the attention of the\nboard of directors, its nominating and corporate governance committee, its audit\ncommittee or specific directors, at our principal executive offices at 321 West\nMain Street, Ottawa, Illinois 61350. All of these communications will be\nreviewed by our secretary (1) to filter out communications that our secretary\ndeems, in his or her reasonable judgment, are not appropriate for our directors,\nsuch as spam and communications offering to buy or sell products or services,\nand (2) to sort and relay the remainder to the appropriate committee or\ndirectors.\n\nWe expect and encourage all of our directors and nominees for election as\ndirectors to attend the annual meeting of stockholders, absent a compelling\nreason. All of our directors attended the 2004 annual meeting of stockholders.\n\nCompensation of Directors\n\nEach non-employee director was paid a fee of $1,000 for each board meeting\nattended and $250 for each committee meeting attended. In addition, each\nnon-employee director was paid an annual retainer of $2,500. Effective March 31,\n2004, employee directors are no longer paid additional fees as a director. Each\nof our non-employee directors may also receive an annual grant of options to\npurchase shares of common stock under the UnionBancorp, Inc. 2003 Stock Option\nPlan. The UnionBancorp, Inc. 2003 Stock Option Plan provides for annual formula\ngrants to each of our directors of options to purchase shares of common stock\nwith an exercise price of not less than 100% of the then current market price of\nthe common stock on the date of the grant. Such options become exercisable over\nfive years. During 2004, each non-employee director was granted options to\npurchase 2,500 shares of common stock at a price of $21.75 per share. The\noptions vest pro rata over a five year period and terminate on December 17,\n2014.\n\n 6.\n\n\nExisting Equity Compensation Plans\n\nThe Company currently maintains the UnionBancorp, Inc. 2003 Stock Option Plan\n(the \"2003 Stock Option Plan\"), which the Company's Board of Directors adopted\non December 19, 2002 and the stockholders of the Company approved on April 22,\n2003. The UnionBancorp, Inc. 1993 Stock Option Plan (the \"1993 Stock Option\nPlan\"), which the Company's Board of Directors adopted on February 18, 1993 and\nthe stockholders of the Company approved on April 12, 1993 was terminated on\nApril 12, 2003. The following table provides information regarding the number of\nshares of common stock subject to each of these plans as well as information\nregarding outstanding options to purchase the Company's common stock under the\nplans as of December 31, 2004.\n\n Equity Compensation Plan Information\n\n\n\n(1) Includes shares issuable under the UnionBancorp, Inc. 2003 Stock Option\nPlan.\n\n(2) In 1999, the Company adopted the UnionBancorp, Inc. Non-qualified Stock\nOption Plan (\"the 1999 Option Plan\"), a broadly based compensation plan. Under\nthe 1999 Option Plan, non-qualified options may be granted to employees and\neligible directors of the Company and its subsidiaries to purchase the Company's\ncommon stock at 100% of the fair market value on the date the option is granted.\nThe Company has authorized 50,000 shares for issuance under the 1999 Option\nPlan. During 1999, 40,750 of these shares were granted and are vested in three\nyears. The options have an exercise period of ten years from the date of grant.\n\n SECURITY OWNERSHIP OF CERTAIN\n BENEFICIAL OWNERS AND MANAGEMENT\n\nThe following table sets forth certain information with respect to the\nbeneficial ownership of our common stock at March 1, 2005, by each person known\nby us to be the beneficial owner of more than 5% of the outstanding common\nstock, by each director or nominee, by each executive officer named in the\nsummary compensation table which can be found later in this proxy statement, and\nby all of our directors and executive officers as a group.\n\nThe following table is based on information supplied to us by the directors,\nofficers and stockholders described above. The Company has determined beneficial\nownership in accordance with the rules of the SEC. Shares of common stock\nsubject to options that are either currently exercisable or exercisable within\n60 days of March 1, 2005 are treated as outstanding and beneficially owned by\nthe option holder for the purpose of computing the percentage ownership of the\noption holder. However, these shares are not treated as outstanding for the\n\n 7.\n\n\npurpose of computing the percentage ownership of any other person. The table\nlists applicable percentage ownership based on 4,059,110 shares outstanding as\nof March 1, 2005. Unless otherwise indicated, the address for each person listed\nbelow is 321 West Main Street, Ottawa, Illinois 61350.\n\n\n\n- ----------------\n* Indicates less than one percent.\n\n(1) The information contained in this column is based upon information\n furnished to us by the persons named above and the members of the\n designated group. Amounts reported include shares held directly as well as\n shares which are held in retirement accounts and shares held by members of\n the named individuals' families or held by trusts of which the named\n individual is a trustee or substantial beneficiary, with respect to which\n shares the respective individual may be deemed to have sole or shared\n voting and/or investment power. The nature of beneficial ownership for\n shares shown in this column is sole voting and investment power, except as\n set forth in the footnotes below. Inclusion of shares shall not constitute\n an admission of beneficial ownership or voting and investment power over\n included shares.\n\n 8.\n\n\n(2) Amounts shown include shares obtainable as of March 1, 2005 (or obtainable\n within 60 days of March 1, 2005) through the exercise of options to\n purchase shares of common stock granted under UnionBancorp's stock option\n plans as follows: Mr. Berry - 15,800 shares; Mr. Breipohl - 15,800 shares;\n Mr. Doty - 10,750 shares; Mr. McDonnell - 6,750 shares; Mr. Reinhardt -\n 15,900 shares; Mr. Shinkle - 10,750 shares; Mr. Sullivan - 10,750 shares;\n Mr. Trainor - 12,750 shares; Mr. Clary - 9,620 shares; Mr. Lansford - 9,050\n shares and Mr. Stevenson - 6,466 shares. Option holders have the sole power\n to exercise their respective options and would also be entitled to exercise\n sole voting and investment power over the shares issued upon the exercise\n of such options.\n\n(3) All of the shares held by the employee stock ownership plan are allocated\n to particular participants' accounts and the employee stock ownership plan\n trustee has shared voting and no investment power over such shares.\n\n(4) As reported to the Securities and Exchange Commission on Schedule 13D dated\n August 10, 2004. In addition, Mr. Whalen's wife, Paula Wolff, Mr. Whalen's\n children, the WPW Family Foundation and WPW Associates, L.P., a family\n limited partnership, were also named as parties sharing voting and\n investment power over such shares. The amount above also includes\n approximately 86,070 shares which are issuable upon the conversion of 1,381\n shares of UnionBancorp, Inc. convertible preferred stock held by Mr.\n Whalen.\n\n(5) Jeffrey L. Gendell (\"Gendell\") filed a Schedule 13G/A dated February 14,\n 2005 reporting that as of December 31, 2004 Gendell, along with certain\n affiliates (Tontine Financial Partners, L.P., Tontine Management, L.L.C.,\n and Tontine Overseas Associates, L.L.C.), collectively beneficially owned\n 396,300 shares of common stock, with sole voting and investment power over\n such shares. Gendell is located at 55 Railroad Avenue, 3rd Floor,\n Greenwich, Connecticut 06830.\n\n(6) Includes 11,100 shares held in trusts for which Mr. Berry is a co-trustee,\n over which shares Mr. Berry has shared voting and investment power.\n\n(7) Includes shares held jointly by Mr. McDonnell and his wife over which\n voting and dispositive power is shared. Also includes shares held in trust\n for which Mr. McDonnell is trustee. The amount above also includes\n approximately 86,070 shares which are issuable upon the conversion of 1,381\n shares of UnionBancorp, Inc. convertible preferred stock held by Mr.\n McDonnell. Mr. McDonnell's address is 815 Jackson Avenue, River Forest,\n Illinois 60305.\n\n(8) Includes 6,000 shares held by Mr. Reinhardt jointly with his spouse, over\n which shares Mr. Reinhardt has shared voting and investment power.\n\n(9) Includes 400 shares held by members of Mr. Shinkle's family. Mr. Shinkle\n has no voting or investment power over 100 of such shares and has shared\n voting and investment power over the remaining 300 shares. Also includes\n 2,561 shares held in trust for which Mr. Shinkle serves as trustee. Mr.\n Shinkle also has voting and investment power over 1,500 shares held in an\n investment club.\n\n(10) Includes 1,660 shares held by Mr. Sullivan jointly with his spouse and\n 1,000 shares held by members of Mr. Sullivan's family. Mr. Sullivan has\n shared voting and investment power over the 2,660 shares.\n\n(11) Includes 8,515 shares held solely by Mr. Trainor's spouse, over which\n shares Mr. Trainor has no voting or investment power.\n\n(12) Includes 356 shares held by Mr. Yaeger in his 401(k) plan and 303 shares\n allocated to Mr. Yaeger under the employee stock ownership plan.\n\n(13) Includes 913 shares held by Mr. Clary jointly with his spouse, over which\n shares Mr. Clary has shared voting and investment power. Also includes\n 6,084 shares held by Mr. Clary in his 401(k) plan and 2,810 shares\n allocated to Mr. Clary under the employee stock ownership plan.\n\n(14) Includes 2,000 shares held by Mr. Lansford jointly with his spouse, over\n which shares Mr. Lansford has shared voting and investment power. Also\n includes 2,858 shares allocated to Mr. Lansford under the employee stock\n ownership plan. Mr. Lansford retired effective December 31, 2004.\n\n(15) Includes 425 shares held by Mr. Stevenson jointly with his spouse, over\n which shares Mr. Stevenson has shared voting and investment power. Also\n includes 522 shares held by Mr. Stevenson in his 401(k) plan and 5,177\n shares allocated to Mr. Stevenson under the employee stock ownership plan.\n\n(16) Footnotes (2) and (6) through (15) are incorporated herein.\n\n 9.\n\n\nSection 16(a) Beneficial Ownership Compliance\n\nSection 16(a) of the Securities Exchange Act of 1934 requires that our executive\nofficers, directors and persons who own more than 10% of our common stock file\nreports of ownership and changes in ownership with the Securities and Exchange\nCommission. They are also required to furnish us with copies of all Section\n16(a) forms they file. Based solely on our review of the copies of such forms,\nand, if appropriate, representations made to us by any reporting person\nconcerning whether a Form 5 was required to be filed for 2004, we are not aware\nthat any of our directors, executive officers or 10% stockholders failed to\ncomply with the filing requirements of Section 16(a) during 2004, except for Mr.\nSullivan who failed to file one Form 4 reporting one transaction in connection\nwith the purchase of Company common stock through a broker-maintained dividend\nreinvestment plan.\n\n EXECUTIVE COMPENSATION\n\nSummary Compensation\n\nThe following table shows the compensation earned for the last three fiscal\nyears by the chief executive officer and our three other executive officers\nwhose 2004 salary and bonus exceeded $100,000:\n\n\n\n(1) All options vest at a rate of 20% per year on or about each anniversary of\n the date of grant.\n\n(2) We were not required to disclose Mr. Yaeger's salary information with\n respect to his compensation prior to 2003 because he joined the company in\n 2003. Represents the dollar value of allocations under our employee stock\n ownership plan in the amount of $5,869 for 2004, premiums for split dollar\n life insurance of $2,772 for 2004 and $1,056 for 2003, fees for services\n provided to our board of directors and director fees for serving on the\n boards of various subsidiaries of $2,150 for 2004 and $6,200 for 2003 and\n $7,350 of 401(k) employer contributions for 2004.\n\n(3) We were not required to disclose Mr. Clary's salary information with\n respect to his compensation prior to 2003 because he was not named an\n executive officer until 2003. Represents the dollar value of allocations\n under our employee stock ownership plan in the amount of $4,943 for 2004\n and $2,820 for 2003, premiums for split dollar life insurance of $266 for\n 2004 and $227 for 2003, director fees for serving on the board of a\n subsidiary of $1,200 for 2003, $5,108 of 401(k) employer contributions for\n 2004 and $4,230 for 2003.\n\n 10.\n\n\n(4) Represents the dollar value of allocations under our employee stock\n ownership plan in the amount of $4,359 for 2004, $2,422 for 2003 and $4,400\n for 2002, premiums for split dollar life insurance of $1,214 for 2004,\n $1,006 for 2003 and $891 for 2002, fees for services provided to our board\n of directors and director fees for serving on the boards of various\n subsidiaries of $2,000 for 2003 and $8,300 for 2002, and $4,568 of 401(k)\n employer contributions for 2004, $3,632 for 2003 and $3,300 for 2002. Mr.\n Lansford retired from the company effective December 31, 2004.\n\n(5) Represents the dollar value of allocations under our employee stock\n ownership plan in the amount of $4,409 for 2004, $2,354 for 2003 and $4,351\n for 2002, premiums for split dollar life insurance of $206 for 2004, $155\n for 2003 and $152 for 2002 and $4,620 of 401(k) employer contributions for\n 2004, $3,531 for 2003 and $3,300 for 2002.\n\n(6) Perquisites that do not exceed the lower of $50,000 or 10% of salary and\n bonus in the aggregate in any year for a named executive officer are not\n disclosed in the table in accordance with SEC rules.\n\n\nStock Option Information\n\nNo stock options were granted in 2004 to any of the individuals named above in\nthe summary compensation table. The following table sets forth certain\ninformation concerning the exercisable and nonexercisable stock options at\nDecember 31, 2004 held by the individuals named in the summary compensation\ntable.\n\n\n\n(1) The dollar amounts under these columns are the result of theoretical\ncalculations at 5% and 10% rates set by the SEC and, therefore, are not intended\nto forecast possible future appreciation, if any, in the common stock.\n\nEmployment Agreements and Other Arrangements\n\nWe are not a party to any employment agreements with our executive officers\nnamed in the compensation table, except for the following:\n\nOn November 3, 2003, the Company entered into change of control agreements with\ntwo of its executives, Rick R. Clary and Kurt R. Stevenson. The agreements\nprovide that if, within two years after a change in control occurs, the\nexecutive's employment is terminated without \"good cause,\" then the executive\nshall receive a cash payment equal to two times the executive's salary. On\nOctober 26, 2004, Mr. Clary and Mr. Stevenson had their agreements amended to\nclarify their reporting channels as a result of organizational restructuring\ninitiatives.\n\nCompensation Committee Interlocks and Insider Participation\n\nDuring 2004, the members of the compensation committee were Messrs. Shinkle\n(Chair), McDonnell, Sullivan and Yaeger (ex officio). None of these individuals\nwas an officer or employee of UnionBancorp or any of our subsidiaries during\n2004, and none of these individuals is a former officer or employee of\nUnionBancorp or any of our subsidiaries, except for Mr. Yaeger who is president\nand chief executive officer. Mr. Yaeger did not participate in any decisions\npertaining to his compensation.\n\n 11.\n\n\nBoard Compensation Committee Report on Executive Compensation\nThe incorporation by reference of this proxy statement into any document filed\nwith the Securities and Exchange Commission by UnionBancorp shall not be deemed\nto include the following report unless the report is specifically stated to be\nincorporated by reference into such document.\n\nThe compensation committee of our board of directors is comprised of three\nindependent directors and is responsible for providing oversight to ensure that\nthe company's compensation incentives are competitive and that they are aligned\nto allow company goals to be successfully achieved. In determining compensation,\nthe following factors are generally taken into consideration:\n\n o the performance of the executive officers in achieving our short and\n long-term goals;\n o payment of compensation commensurate with the ability and expertise of\n the executive officers; and\n o payment of compensation that is competitive with similar companies.\n\nThe committee considers the foregoing factors, as well as others, in determining\ncompensation. There is no assigned weight given to any of these factors.\n\nAdditionally, the compensation committee considers various benefits, such as our\nemployee stock ownership plan, 401(k) plan and the stock option plan, together\nwith perquisites in determining compensation. The committee believes that the\nbenefits provided through the stock-based plans more closely tie the\ncompensation of the officers to the interests of the stockholders and provide\nsignificant additional performance incentives for the officers which directly\nbenefit the stockholders through an increase in the stock value.\n\nCompensation of the Chief Executive Officer. During 2004, Mr. Yaeger received a\nbase salary of $220,000. Annually, the compensation committee evaluates four\nprimary areas of performance in determining the chief executive officer's level\nof compensation. This base salary was set based on:\n\n o long-range strategic planning and implementation;\n o the Company's financial performance;\n o compliance with regulatory requirements and relations with regulatory\n agencies; and\n o the individual's effectiveness of managing relationships with\n stockholders and the board of directors\n\nWhen evaluating our financial performance, the committee considers\nprofitability, asset growth, asset quality and risk management. The primary\nevaluation criteria are considered to be essential to our long-term viability\nand are given equal weight in the evaluation. Finally, the committee reviews\ncompensation packages of peer institutions, as well as compensation surveys\nprovided by independent third parties, to ensure that the chief executive\nofficer's compensation is competitive and commensurate with his level of\nperformance.\n\n Compensation Committee:\n John A. Shinkle (Chair)\n Dennis J. McDonnell\n Scott C. Sullivan\n Dewey R. Yaeger (ex officio)\n\n 12.\n\n\nStockholder Return Performance Presentation\n\nThe incorporation by reference of this proxy statement into any document filed\nwith the Securities and Exchange Commission by UnionBancorp shall not be deemed\nto include the following performance graph and related information unless such\ngraph and related information are specifically stated to be incorporated by\nreference into such document.\n\nThe following graph shows a comparison of cumulative total returns for\nUnionBancorp, the Nasdaq Stock Market (US Companies) and an index of SNL Midwest\nBank Stocks for the five-year period beginning January 1, 2000 and ending on\nDecember 31, 2004. The graph was prepared at our request by SNL Financial LC,\nCharlottesville, Virginia.\n\n COMPARISON OF CUMULATIVE TOTAL RETURN\n (ASSUMES $100 INVESTED ON JANUARY 1, 2000)\n\n TOTAL RETURN PERFORMANCE\n\n\n [GRAPHIC CHART OMITTED]\n\n\n\n 13.\n\n\n TRANSACTIONS WITH MANAGEMENT\n\nSeveral of our directors and executive officers (including their affiliates,\nfamilies and companies in which they are principal owners, officers or\ndirectors) were loan customers of, and had other transactions with, us and our\nsubsidiaries in the ordinary course of business. These loans and lines of credit\nwere made in the ordinary course of business on substantially the same terms,\nincluding interest rates and collateral, as those prevailing at the time for\ntransactions with other persons and did not involve more than the normal risk of\ncollectibility or present other unfavorable features. During 2004, we paid\napproximately $414,673 to the law firm of Myers, Berry, O'Conor & Kuzma, Ltd.\nfor legal services, which includes a contingency owed to the firm in connection\nwith litigation involving the Company. Richard J. Berry, a director of\nUnionBancorp, is a principal of that firm.\n\n ACCOUNTANT FEES\n\nAudit Fees\nAudit fees and expenses billed to the Company by Crowe Chizek and Company LLC\nfor the audit of the Company's financial statements for the fiscal years ended\nDecember 31, 2004 and December 31, 2003, and for the review of the Company's\nfinancial statements included in the Company's quarterly reports on Form 10-Q,\nare as follows:\n\n 2004 2003\n ---- ----\n\n $169,700 $123,800\n\nAudit Related Fees\nAudit related fees and expenses billed to the Company by Crowe Chizek and\nCompany LLC for fiscal years 2004 and 2003 for services related to the\nperformance of the audit or review of the Company's financial statements that\nwere not included under the heading \"Audit Fees\", are as follows:\n\n 2004 2003\n ---- ----\n\n $ --- $ ---\n\nTax Fees\nTax fees and expenses billed to the Company for fiscal years 2004 and 2003 for\nservices related to tax compliance, tax advice and tax planning, consisting\nprimarily of preparing the Company's federal and state income tax returns for\nthe previous fiscal periods and inclusive of expenses are as follows:\n\n 2004 2003\n ---- ----\n\n $30,850 $37,250\n\nAll Other Fees\nFees and expenses billed to the Company for fiscal years 2004 and 2003 for all\nother services, which primarily consisted of the audit of the benefit plans are\nas follows:\n\n 2004 2003\n ---- ----\n\n $29,815 $41,538\n\n 14.\n\n\nThe audit committee, after consideration of the matter, does not believe that\nthe rendering of these services by Crowe Chizek to be incompatible with\nmaintaining its independence as our principal accountant. In accordance with\nSection 10A(i) of the Exchange Act, before Crowe Chizek and Company LLC is\nengaged by us to render audit or non-audit services, the engagement is approved\nby our audit committee. None of the audit-related, tax and other services\ndescribed in the table above were required to be approved by the audit committee\npursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.\n\nThe audit committee is responsible for reviewing and pre-approving any non-audit\nservices to be performed by the company's independent auditors. The audit\ncommittee has delegated its pre-approval authority to the chairman of the audit\ncommittee to act between meetings of the audit committee. Any pre-approval given\nby the chairman of the audit committee pursuant to this delegation is presented\nto the full audit committee at its next regularly scheduled meeting. The audit\ncommittee or chairman of the audit committee reviews and, if appropriate,\napproves non-audit service engagements, taking into account the proposed scope\nof the non-audit services, the proposed fees for the non-audit services, whether\nthe non-audit services are permissible under applicable law or regulation and\nthe likely impact of the non-audit services on the independence of the\nindependent auditors. Since the effective date of the SEC rules requiring\npre-approval of non-audit services on May 6, 2003, each new engagement of the\ncompany's independent auditors to perform non-audit services has been approved\nin advance by the audit committee or the chairman of the audit committee\npursuant to the foregoing procedures.\n\n AUDIT COMMITTEE REPORT\n\nThe incorporation by reference of this proxy statement into any document filed\nwith the Securities and Exchange Commission by UnionBancorp shall not be deemed\nto include the following report unless the report is specifically stated to be\nincorporated by reference into such document.\n\nThe duties and responsibilities of the audit committee are set forth in the\naudit committee charter. A copy of the charter was filed as an exhibit to the\n2004 Proxy Statement. As described above under the section \"Election of\nDirectors\", the board of directors has determined that each member of the audit\ncommittee is independent as defined in the applicable standards of the Nasdaq\nStock Market.\n\nThe audit committee has reviewed and discussed our audited financial statements\nfor the fiscal year ended December 31, 2004 with our management and Crowe\nChizek and Company LLC, our independent auditors. The committee has also\ndiscussed with Crowe Chizek the matters required to be discussed by SAS 61\n(Codification for Statements on Auditing Standards) as well as having received\nand discussed the written disclosures and the letter from Crowe Chizek required\nby Independence Standards Board Statement No. 1 (Independence Discussions with\nAudit Committee). Based on the review and discussions with management and Crowe\nChizek, the committee has recommended to the board that the audited financial\nstatements be included in our annual report on Form 10-K for the fiscal year\nending December 31, 2004 for filing with the Securities and Exchange Commission.\n\n Audit Committee:\n I.J. Reinhardt, Jr. (Chair)\n Walter E. Breipohl\n Robert J. Doty\n\n 15.\n\n\nAudit Committee Financial Expert\n\nWhile the board of directors endorses the effectiveness of our audit committee,\nits membership does not include a director who qualifies for designation as an\n\"audit committee financial expert\" - a new concept under federal regulation that\ncontemplates such designation only when an audit committee member satisfies all\nfive qualification requirements, such as experience (or \"experience actively\nsupervising\" others engaged in), preparing, auditing, analyzing or evaluating\nfinancial statements presenting a level of accounting complexity comparable to\nwhat is encountered in connection with our Company's financial statements. The\nCompany is currently trying to recruit an individual that meets the requirement\nof a financial expert to serve on the board and audit committee.\n\n STOCKHOLDER PROPOSALS FOR 2006 ANNUAL MEETING\n\nFor inclusion in our proxy statement and form of proxy relating to the 2006\nannual meeting of stockholders, stockholder proposals must be received by us on\nor before November 28, 2005. In order to be presented at such meeting, notice of\nthe proposal must be received by UnionBancorp on or before March 27, 2006, and\nmust otherwise comply with our bylaws.\n\n \"HOUSEHOLDING\" OF PROXY MATERIALS\n\nIn December of 2000, the Securities and Exchange Commission adopted new rules\nthat permit companies and intermediaries (e.g., brokers) to satisfy the delivery\nrequirements for proxy statements, prospectuses and annual reports with respect\nto two or more security holders sharing the same address by delivering a single\ncopy of proxy statements, prospectuses and annual reports, as the case may be,\naddressed to those security holders. This process, which is commonly referred to\nas \"householding,\" potentially means extra convenience for security holders and\ncost savings for companies.\n\nThis year, a number of brokers with accountholders who are UnionBancorp\nstockholders will be \"householding\" our proxy materials. As indicated in the\nnotice previously provided by these brokers to UnionBancorp stockholders, a\nsingle proxy statement and Form 10-K annual report will be delivered to multiple\nstockholders sharing an address unless contrary instructions have been received\nfrom an affected stockholder. Once you have received notice from your broker or\nthe Company that they will be \"householding\" communications to your address,\n\"householding\" will continue until you are notified otherwise or until you\nrevoke your consent. If, at any time, you no longer wish to participate in\n\"householding\" and would prefer to receive a separate proxy statement and Form\n10-K annual report, please notify your broker, direct your written request to\nUnionBancorp, Inc., Investor Relations, 321 West Main Street, Ottawa, IL 61350\nor contact Investor Relations at (815) 431-2720.\n\nStockholders who currently receive multiple copies of the proxy statement and\nForm 10-K annual report at their address and would like to request\n\"householding\" of their communications should contact their broker or, if a\nstockholder is a direct holder of UnionBancorp shares, they should submit a\nwritten request to Computershare Investor Services, the Company's transfer\nagent, at 2 North LaSalle Street, Chicago, IL 60602.\n\n 16.\n\n\n OTHER MATTERS\n\nWe do not intend to present any other business at the meeting and know of no\nother matters which will be presented. However, if any other matters come before\nthe meeting, it is the intention of the persons named in the accompanying proxy\nto vote in accordance with their best judgment on those matters. A\nrepresentative of our independent auditors, Crowe Chizek and Company LLC, is\nexpected to attend the annual meeting and will be available to respond to\nappropriate questions and to make a statement if he or she so desires.\n\nYour proxy is solicited by the board of directors, and we will pay the cost of\nsolicitation. In addition to soliciting proxies by use of the mail, officers,\ndirectors and regular employees of UnionBancorp or our subsidiaries, acting on\nour behalf, may solicit proxies by telephone, telegraph or personal interview.\nWe will, at our expense, upon the receipt of a request from brokers and other\ncustodians, nominees and fiduciaries, forward proxy soliciting material to the\nbeneficial owners of shares held of record by such persons.\n\n FAILURE TO INDICATE CHOICE\n\nIf any stockholder fails to indicate a choice with respect to any of the\nproposals on the proxy for the annual meeting, the shares of such stockholder\nshall be voted FOR the nominees listed under proposal 1.\n\n By Order of the Board of Directors\n\n /s/ DEWEY R. YAEGER\n\n Dewey R. Yaeger\n President and\n Chief Executive Officer\n\nOttawa, Illinois\nMarch 29, 2005\n\n\n ALL STOCKHOLDERS ARE URGED TO SIGN\n AND MAIL THEIR PROXIES PROMPTLY\n\n 17.\n\n\n\n ---------------------------\n\n THIS PAGE INTENTIONALLY\n\n LEFT BLANK\n\n ---------------------------\n\n\n[UBC GRAPHIC LOGO OMITTED] MMMMMMMMMMMM +\nUNIONBANCORP, INC.\n 000000000.000 ext\n 000000000.000 ext\n 000000000.000 ext\nMR A SAMPLE 000000000.000 ext\nDESIGNATION (IF ANY) 000000000.000 ext\nADD 1 000000000.000 ext\nADD 2 000000000.000 ext\nADD 3\nADD 4\nADD 5\nADD 6 C 1234567890 J N T\n\n\n [ ] Mark this box with an X if you have\n made changes to your name or\n address details above.\n\n================================================================================\n Annual Meeting Proxy Card\n================================================================================\n\n PROXY IS SOLICITED BY THE BOARD OF DIRECTORS\n FOR THE ANNUAL MEETING OF STOCKHOLDERS - APRIL 26, 2005\n\n The undersigned hereby appoints John A. Shinkle and Scott C. Sullivan, or\n either of them acting in the absence of the other, with power of substitution,\n attorneys and proxies, for and in the name and place of the undersigned, to\n vote the number of shares of common stock that the undersigned would be\n entitled to vote if then personally present at the annual meeting of the\n stockholders of UnionBancorp, Inc., to be held at the Starved Rock Lodge and\n Conference Center located in Utica, Illinois, on Tuesday, April 26, 2005,\n 10:00 a.m., local time, or any adjournments or postponements of the meeting,\n upon the matters set forth in the notice of annual meeting and proxy statement\n (receipt of which is hereby acknowledged) as designated below, and in their\n discretion, the proxies are authorized to vote upon such other business as may\n come before the meeting.\n\n THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE BELOW. IF\n NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES.\n\n\n[A] Election of Directors\n\n 1. The Board of Directors recommends a vote FOR the listed nominees.\n\n For Withhold\n\n 01 - Richard J. Berry [ ] [ ]\n\n 02 - Walter E. Breipohl [ ] [ ]\n\n 03 - John A. Trainor [ ] [ ]\n\n Mark this box with an X if you\n plan to attend the meeting. [ ]\n\n[B] Other Matters\n\nIn their discretion, the proxies are authorized to vote upon such other For\nWithhold matters as may properly come before the meeting.\n\n\n[C] Authorized Signatures - Sign Here - This section must be completed for your\n instructions to be executed.\n\nNOTE: Please sign exactly as your name(s) appears. For joint accounts, each\nowner should sign. When signing as executor, administrator, attorney, trustee or\nguardian, etc., please give your full title.\n\nSignature 1 - Please keep signature within the box\n --------------------------------------------------\n| |\n --------------------------------------------------\n\n\nSignature 2 - Please keep signature within the box\n --------------------------------------------------\n| |\n --------------------------------------------------\n\n\nDate (mm/dd/yyyy)\n --------------------------------------------------\n| __/__/____ |\n --------------------------------------------------\n\n\n 1 U P X H H H P P P P 005055 +\n\n"},"accession_number":{"kind":"string","value":"0001019056-05-000358"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":89,"cells":{"_id":{"kind":"string","value":"1018963_DEF 14A_2005_0000950152-05-002078"},"cik":{"kind":"string","value":"1018963"},"company":{"kind":"string","value":"ALLEGHENY TECHNOLOGIES INC"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-03-14T00:00:00","string":"2005-03-14T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-04-22T00:00:00","string":"2005-04-22T00:00:00"},"sic":{"kind":"string","value":"3317"},"state_of_inc":{"kind":"string","value":"DE"},"state_location":{"kind":"string","value":"TX"},"fiscal_year_end":{"kind":"string","value":"1231"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1018963/0000950152-05-002078-index.html"},"htm_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1018963/000095015205002078/j1035101def14a.htm"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1018963/0000950152-05-002078.txt"},"filename":{"kind":"string","value":"1018963_DEF 14A_2005_0000950152-05-002078.htm"},"text":{"kind":"string","value":"\nDEF 14A\nj1035101def14a.htm\nALLEGHENY TECHNOLOGIES INCORPORATED\n\nALLEGHENY TECHNOLOGIES INCORPORATED\n\n\n\nSCHEDULE 14A\n\n\n\n\n(RULE 14a-101)\n\n\n\n\nINFORMATION REQUIRED IN PROXY STATEMENT\n\n\n\n\nSCHEDULE 14A INFORMATION\n\n\n\n\nPROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE\nSECURITIES\n\n\n\n\nEXCHANGE ACT OF 1934\n\n\n\n\nFiled by the Registrant þ\n\n\n\n\n\nFiled by a Party other than the\nRegistrant o\n\n\n\n\n\nCheck the appropriate box:\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\no Preliminary\n Proxy Statement\n \n \n \n\n\n\n\n\no Confidential,\n for Use of the Commission Only (as permitted by\n Rule 14a-6(e)(2))\n \n\n\n\n\n\nþ Definitive\n Proxy Statement\n \n\n\n\n\n\no Definitive\n Additional Materials\n \n\n\n\n\n\no Soliciting\n Material Pursuant to Section 240.14a-11c or Section 240.14a-12\n \n\n\n\n\n\n\nALLEGHENY TECHNOLOGIES INCORPORATED\n\n\n\n\n \n\n\n\n\n\n\n(Name of Registrant as Specified In Its Charter)\n\n\n\n\n\n\n\n\n \n\n\n\n\n\n\n(Name of Person(s) Filing Proxy Statement)\n\n\n\n\nPayment of Filing Fee (Check the appropriate box):\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nþ \n\n No fee required. \n\n\n\n\n \n\n\n\n\no \n\n Fee computed on table below per Exchange Act\n Rules 14a-6(i)(1) and 0-11. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n (1) \n\n Title of each class of securities to which transaction applies: \n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n (2) \n\n Aggregate number of securities to which transaction applies: \n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n (3) \n\n Per unit price or other underlying value of transaction computed\n pursuant to Exchange Act Rule 0-11 (set forth the amount on\n which the filing fee is calculated and state how it was\n determined): \n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n (4) \n\n Proposed maximum aggregate value of transaction: \n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n (5) \n\n Total fee paid: \n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\no \n\n Fee paid previously with preliminary materials. \n\n\n\n\n \n\n\n\n\no \n\n Check box if any part of the fee is offset as provided by\n Exchange Act Rule 0-11(a)(2) and identify the filing for which\n the offsetting fee was paid previously. Identify the previous\n filing by registration statement number, or the Form or Schedule\n and the date of its filing. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n (1) \n\n Amount Previously Paid: \n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n (2) \n\n Form, Schedule or Registration Statement No.: \n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n (3) \n\n Filing Party: \n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n (4) \n\n Date Filed: \n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n\n 1000 Six PPG Place \n\n\n\n\n \n\n Pittsburgh, PA 15222-5479 \n\n\n\n\n\nMarch 14, 2005\n\n\n\n\nTo our Stockholders:\n\n\n\n\nWe are pleased to invite you to attend the 2005 Annual Meeting\nof Stockholders. The meeting will be held at 11:00 a.m.,\nEastern Time, on Friday, April 22, 2005, in the Grand\nBallroom, 17th Floor, Omni William Penn Hotel, 530 William Penn\nPlace, Pittsburgh, Pennsylvania. The location is accessible to\ndisabled persons.\n\n\n\n\nThis booklet includes the notice of meeting as well as the\nCompany’s proxy statement. Enclosed with this booklet are\nthe following:\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n• \n\n Proxy or voting instruction card (including instructions for\n telephone and Internet voting) \n\n\n\n\n \n\n\n\n\n• \n\n Proxy or voting instruction card return envelope (postage paid\n if mailed in the U.S.) \n\n\n\n\n\nA copy of the Company’s Annual Report for the year 2004 is\nalso enclosed.\n\n\n\n\nYour Board of Directors recommends that you vote FOR\nItem A, the election of the five nominees named in this\nproxy statement; FOR Item B, the ratification of the\nappointment of Ernst & Young LLP to serve as the\nCompany’s independent auditors for 2005; and FOR\nItem C, the reapproval of performance-based goals under the\nCompany’s 2000 Incentive Plan. This proxy statement also\noutlines many of the corporate governance practices at ATI,\ndiscusses our compensation practices and philosophy, and\ndescribes the Audit Committee’s recommendation to the Board\nregarding our 2004 financial statements. We encourage you to\nread these materials carefully.\n\n\n\n\nWe urge you to vote promptly, whether or not you expect to\nattend the meeting.\n\n\n\n\nIf you are a stockholder of record and plan to attend the\nmeeting, please mark the appropriate box on the proxy card, or\nenter the appropriate information by telephone or Internet, so\nthat we can send your admission ticket to you before the meeting.\n\n\n\n\nWe look forward to seeing as many of you as possible at the 2005\nAnnual Meeting.\n\n\n\n\nSincerely,\n\n\n\n\n\n\n\n\n\nL. Patrick Hassey\n\n\n\n\nChairman, President and Chief Executive Officer\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nALLEGHENY TECHNOLOGIES\nINCORPORATED\n\n\n\n\n\nNotice of Annual Meeting of\nStockholders\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\nMeeting Date: \n \n\n Friday, April 22, 2005 \n\n\n\n\n \n\n\n\n\n\nTime: \n \n\n 11:00 a.m., Eastern Time \n\n\n\n\n \n\n\n\n\n\nPlace: \n \n\n Grand Ballroom \n\n\n 17th Floor \n\n\n Omni William Penn Hotel \n\n\n 530 William Penn Place \n\n\n Pittsburgh, Pennsylvania \n\n\n\n\n \n\n\n\n\n\nRecord Date: \n \n\n March 3, 2005 \n\n\n\n\n\nAgenda\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n1) \n\n Election of five directors; \n\n\n\n\n \n\n\n\n\n2) \n\n Ratification of the appointment of Ernst & Young LLP as\n independent auditors for 2005; \n\n\n\n\n \n\n\n\n\n3) \n\n Reapproval of performance-based goals under the Company’s\n 2000 Incentive Plan; and \n\n\n\n\n \n\n\n\n\n4) \n\n Transaction of any other business properly brought before the\n meeting. \n\n\n\n\n\nStockholder List\n\n\n\n\nA list of stockholders entitled to vote will be available during\nbusiness hours for 10 days prior to the meeting at the\nCompany’s executive offices, 1000 Six PPG Place,\nPittsburgh, Pennsylvania 15222-5479, for examination by any\nstockholder for any legally valid purpose.\n\n\n\n\nAdmission to the Meeting\n\n\n\n\nHolders of Allegheny Technologies stock or their authorized\nrepresentatives by proxy may attend the meeting. If you are a\nstockholder of record and you plan to attend the meeting, you\nmay obtain an admission ticket from us by mail by checking the\nbox on the proxy card indicating your planned attendance and\nreturning the completed proxy card promptly, or by entering the\nappropriate information by telephone or the Internet. If your\nshares are held through an intermediary such as a broker or a\nbank, you should present proof of your ownership at the meeting.\nProof of ownership could include a proxy from your bank or\nbroker or a copy of your account statement.\n\n\n\n\nThe approximate date of the mailing of this proxy statement and\ncard as well as a copy of ATI’s 2004 Annual Report is\nMarch 14, 2005. For further information about Allegheny\nTechnologies, please visit our web site at\nwww.alleghenytechnologies.com.\n\n\n\n\nOn behalf of the Board of Directors:\n\n\n\n\n\n\n\n\n\nJon D. Walton\n\n\n\n\nCorporate Secretary\n\n\n\n\nDated: March 14, 2005\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nProxy Statement Table of\nContents\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n\n\n\n\n \n \nPage \n\n\n\n\n \n \n \n\n\n\n\n\n\n QUESTIONS\n AND ANSWERS\n\n\n\n \n \n \n \n\n\n\n\n\n\n OUR\n CORPORATE GOVERNANCE\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Corporate\n Governance Guidelines\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Number and\n Independence of Directors\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Director Terms\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Director\n Attendance at Annual Meetings\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Committees of\n the Board of Directors\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Board and\n Committee Membership\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Director Compensation\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Corporate\n Guidelines for Business Conduct and Ethics\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Identification\n and Evaluation of Candidates for Director\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Process for\n Stockholder Communications with Directors\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n 2006 Annual\n Meeting and Stockholder Proposals\n\n\n\n \n \n \n \n\n\n\n\n\n\n STOCK\n OWNERSHIP INFORMATION\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Section 16(a)\n Beneficial Ownership Reporting Compliance\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Five Percent\n Owners of Common Stock\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Stock\n Ownership of Management\n\n\n\n \n \n \n \n\n\n\n\n\n\n PROPOSALS\n REQUIRING YOUR VOTE\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Election of\n Directors - Item A on Proxy Card\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Ratification\n of Selection of Independent Auditors - Item B on\n Proxy Card\n\n\n\n \n \n \n \n\n\n\n\n \n \n\n\n Audit\n Committee Pre-Approval Policy\n\n\n\n \n \n \n \n\n\n\n\n \n \n\n\n Independent\n Auditor: Services and Fees\n\n\n\n \n \n \n \n\n\n\n\n \n \n\n\n Report of\n Audit Committee\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Reapproval of\n Performance-Based Goals Under the 2000 Incentive\n Plan -\n\n\n Item C on Proxy Card\n\n\n\n \n \n \n \n\n\n\n\n\n\n OTHER BUSINESS\n\n\n\n \n \n \n \n\n\n\n\n\n\n REPORT ON\n EXECUTIVE COMPENSATION\n\n\n\n \n \n \n \n\n\n\n\n\n\n EXECUTIVE COMPENSATION\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Summary\n Compensation Table\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Stock Options\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Long-Term\n Incentive Programs\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Pension Plans\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Employment and\n Change in Control Agreements\n\n\n\n \n \n \n \n\n\n\n\n\n\n CUMULATIVE\n TOTAL STOCKHOLDER RETURN\n\n\n\n \n \n \n \n\n\n\n\n\n\n CERTAIN TRANSACTIONS\n\n\n\n \n \n \n \n\n\n\n\n\n\n OTHER INFORMATION\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Annual Report\n on Form 10-K\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n Proxy Solicitation\n\n\n\n \n \n \n \n\n\n\n\n\n\n Appendix A -\n Standards of Director Independence\n\n\n\n \n \n \nA-1 \n \n\n\n\n\n\n\n Appendix B -\n Audit Committee Charter\n\n\n\n \n \n \nB-1 \n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nYOUR VOTE IS IMPORTANT\n\n\n\n\nPlease vote as soon as possible. You can help the Company\nreduce expenses by voting your shares by telephone or Internet;\nyour proxy card contains the instructions. Or, complete, sign\nand date your proxy card and return it as soon as possible in\nthe enclosed postage-paid envelope.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nPROXY STATEMENT FOR\n\n\n\n\n2005 ANNUAL MEETING OF\nSTOCKHOLDERS\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\nQUESTIONS AND ANSWERS\n\n\n\n\nYou can help the Company save money by electing to receive\nfuture proxy statements and annual reports over the Internet\ninstead of by mail. See question 11 below.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n1. \n\nWho is entitled to vote at the Annual\n Meeting? \n\n\n\n\n\nIf you held shares of Allegheny Technologies Incorporated\n(“ATI” or the “Company”) Common Stock at the\nclose of business on March 3, 2005, you may vote at the\nannual meeting. On that day, 96,248,836 shares of our Common\nStock were outstanding. Each share is entitled to one vote.\n\n\n\n\nIn order to vote, you must either designate a proxy to vote on\nyour behalf or attend the meeting and vote your shares in\nperson. The Board of Directors requests your proxy so that your\nshares will count toward a quorum and be voted at the meeting.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n2. \n\nHow do I cast my vote? \n\n\n\n\n\nThere are four different ways you may cast your vote. You may\nvote by:\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n• \n\n telephone, using the toll-free number listed on each proxy or\n voting instruction card; \n\n\n\n\n \n\n\n\n\n• \n\n the Internet, at the address provided on each proxy or voting\n instruction card; \n\n\n\n\n \n\n\n\n\n• \n\n marking, signing, dating and mailing each proxy or voting\n instruction card and returning it in the envelope provided (If\n you return your signed proxy card but do not mark the boxes\n showing how you wish to vote, your shares will be voted FOR the\n election of the five nominees for director named in this proxy\n statement, FOR the ratification of the appointment of the\n independent auditors, and FOR reapproval of performance-based\n goals under the Company’s 2000 Incentive Plan.); or \n\n\n\n\n \n\n\n\n\n• \n\n attending the meeting and voting your shares in person, if you\n are a “stockholder of record” (that is, your shares\n are registered directly in your name on the Company’s books\n and not held through a broker, bank or other nominee). \n\n\n\n\n\nIf you are a stockholder of record and wish to vote by telephone\nor electronically through the Internet, follow the instructions\nprovided on the proxy card. You will need to use the individual\ncontrol number that is printed on your proxy card in order to\nauthenticate your ownership.\n\n\n\n\nThe deadline for voting by telephone or the Internet is\n11:59 p.m., Eastern time, on April 21, 2005.\n\n\n\n\nIf your shares are held in “street name” (that is,\nthey are held in the name of broker, bank or other nominee), or\nyour shares are held in one of the Company’s savings or\nretirement plans, you will receive instructions with your\nmaterials that you must follow in order to have your shares\nvoted. For voting procedures for shares held in the\nCompany’s savings or retirement plans, see question 6 below.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n3. \n\nHow do I revoke or change my\n vote? \n\n\n\n\n\nYou may revoke your proxy or change your vote at any time before\nit is voted at the meeting by:\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n• \n\n notifying the Corporate Secretary at the Company’s\n executive office; \n\n\n\n\n \n\n\n\n\n• \n\n transmitting a proxy dated later than your prior proxy either by\n mail, telephone or Internet; or \n\n\n\n\n \n\n\n\n\n• \n\n attending the annual meeting and voting in person or by proxy\n (except for shares held in “street name” through a\n broker, bank or other nominee, or in the Company’s savings\n or retirement plans). \n\n\n\n\n\nThe latest-dated, timely, properly completed proxy that you\nsubmit, whether by mail, telephone or the Internet, will count\nas your vote. If a vote has been recorded for your shares and\nyou submit a proxy card that is not properly signed and dated,\nthe previously recorded vote will stand.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n4. \n\nWhat shares are included on the proxy\n or voting instruction card? \n\n\n\n\n\nThe shares on your proxy or voting instruction card represent\nthose shares registered directly in your name, those held on\naccount in the Company’s dividend reinvestment plan and\nshares held in the Company’s savings and retirement plans.\nIf you do not cast your vote, your shares (except those held in\nthe Company’s savings and retirement plans) will not be\nvoted. See question 6 for an explanation of the voting\nprocedures for shares in the Company’s savings and\nretirement plans.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n5. \n\nWhat does it mean if I get more than\n one proxy or voting instruction card? \n\n\n\n\n\nIf your shares are registered differently and are in more than\none account, you will receive more than one card. Please\ncomplete and return all of the proxy or voting instruction cards\nyou receive (or vote by telephone or the Internet all of the\nshares on each of the proxy or voting instruction cards you\nreceive) in order to ensure that all of your shares are voted.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n6. \n\nHow are shares that I hold in a Company\n savings or retirement plan voted? \n\n\n\n\n\nIf you hold ATI Common Stock in one of the Company’s\nsavings or retirement plans, you may tell the plan trustee how\nto vote the shares of Common Stock allocated to your account.\nYou may either sign and return the voting instruction card\nprovided by the plan or transmit your instructions by telephone\nor the Internet. If you do not transmit instructions, your plan\nshares will be voted as the plan administrator directs or as\notherwise provided in the plan.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n7. \n\nHow are shares held by a broker, bank\n or other nominee voted? \n\n\n\n\n\nIf you hold your shares of ATI Common Stock in “street\nname” through a broker, bank or other nominee account, you\nare a “beneficial owner” of the shares. In order to\nvote your shares, you must give voting instructions to your\nbroker, bank or other intermediary who is the “nominee\nholder” of your shares. The Company asks brokers, banks and\nother nominee holders to obtain voting instructions from the\nbeneficial owners of shares that are registered in the\nnominee’s name. Proxies that are transmitted by nominee\nholders on behalf of beneficial owners will count toward a\nquorum and will be voted as instructed by the nominee holder.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n8. \n\nWhat is a quorum? \n\n\n\n\n\nA majority of the outstanding shares, present or represented by\na proxy, constitutes a quorum. There must be a quorum for the\nmeeting to be held. You are part of the quorum if you have voted\nby proxy or voting instruction card. Abstentions, broker\nnon-votes and votes withheld from director nominees count as\n“shares present” at the meeting for purposes of\ndetermining a quorum.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n9. \n\nWhat is the required vote for a\n proposal to pass? \n\n\n\n\n\nThe director nominees receiving the highest number of votes will\nbe elected to fill the seats on the Board. Only votes\n“for” or “withheld” affect the outcome.\nAbstentions are not counted for purposes of the election of\nDirectors.\n\n\n\n\nApproval of each of the other items requires the favorable vote\nof a majority of the votes cast. Only votes “for” and\n“against” a proposal count. Abstentions and broker\nnon-votes do not count in the voting results. A broker non-vote\noccurs when a broker, bank or other nominee holder does not vote\non a particular item because the nominee holder does not have\ndiscretionary authority to vote on that item and has not\nreceived instructions from the beneficial owner of the shares.\nBroker non-votes will not affect the outcome of any of the\nmatters being voted upon at the meeting, and they are not\ncounted as shares voting with respect to the matter on which the\nbroker has not voted expressly.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n10. \n\nIs my vote confidential? \n\n\n\n\n\nThe Company maintains a policy of keeping stockholder votes\nconfidential.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n11. \n\nCan I, in the future, receive my proxy\n statement and annual report over the Internet? \n\n\n\n\n\nStockholders can elect to view future Company proxy statements\nand annual reports over the Internet instead of receiving paper\ncopies in the mail and thus can save the Company the cost of\nproducing and mailing these documents. Costs normally associated\nwith electronic access, such as usage and telephonic charges,\nwill be borne by you.\n\n\n\n\nIf you are a “stockholder of record”, you can choose\nto receive future annual reports and proxy statements\nelectronically by following the prompt if you choose to vote\nover the Internet. If you hold your Company stock in\n“street name” (such as through a broker), check the\ninformation provided by your nominee for instructions on how to\nelect to view future proxy statements and annual reports over\nthe Internet.\n\n\n\n\nStockholders who choose to view future proxy statements and\nannual reports over the Internet will receive instructions\ncontaining the Internet address for those materials, as well as\nvoting instructions, approximately four weeks before future\nmeetings.\n\n\n\n\nIf you enroll to view the Company’s future annual reports\nand proxy statements electronically and vote over the Internet,\nyour enrollment will remain in effect for all future\nstockholders’ meetings unless you cancel it.\n\n\n\n\nTo cancel, stockholders of record should access\nwww.melloninvestor.com/isd and follow the instructions to cancel\nyour enrollment. You should retain your control number appearing\non your enclosed proxy card. If you hold your Company stock in\n“street name”, check the information provided by your\nnominee holder for instructions on how to cancel your enrollment.\n\n\n\n\nIf at any time you would like to receive a paper copy of the\nannual report or proxy statement, please write to Allegheny\nTechnologies Incorporated, Corporate Secretary, 1000 Six PPG\nPlace, Pittsburgh, Pennsylvania 15222-5479.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nOUR CORPORATE GOVERNANCE\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\nCorporate Governance\nGuidelines\n\n\n\n\nATI’s Board of Directors has adopted Corporate Governance\nGuidelines. The Guidelines are designed to assist the Board in\nthe exercise of its duties and responsibilities to the Company.\nThey reflect the Board’s commitment to monitor the\neffectiveness of decision making at the Board and management\nlevel, with a view to achieving ATI’s strategic objectives.\nThey are subject to modification by the Board from time to time.\n\n\n\n\nYou can find the Company’s Corporate Governance Guidelines,\nas well as the charters for all Board committees, including the\nAudit Committee, the Nominating and Governance Committee, and\nthe Personnel and Compensation Committee and Stock Incentive\nAward Subcommittee, and, the Corporate Guidelines for\nBusiness Conduct and Ethics, on our web site at\nwww.alleghenytechnologies.com, by first clicking “About\nUs” and then “Our Corporate Governance.” Copies\nwill also be mailed to stockholders on written request directed\nto the Corporate Secretary, Allegheny Technologies Incorporated,\n1000 Six PPG Place, Pittsburgh, PA 15222-5479.\n\n\n\n\n\n\n\n\n\n\nNumber and Independence of\nDirectors\n\n\n\n\nThe Board of Directors determines the number of directors. The\nBoard currently consists of 11 members. Upon the election of\ndirectors at the Annual Meeting, the Board will consist of ten\nmembers.\n\n\n\n\nIn accordance with the ATI Corporate Governance Guidelines, a\nsubstantial majority of ATI’s directors are, and at least a\nmajority of ATI’s directors will be,\n“independent” under the NYSE definition of\nindependence and the Company’s categorical board\nindependence standards, which are set forth in the ATI Corporate\nGovernance Guidelines and attached to this proxy statement as\nAppendix A. A director is “independent” only if\nthe director is a non-management director and, in the\nBoard’s judgment, does not have a material relationship\nwith the Company or its management.\n\n\n\n\nIn addition to L. Patrick Hassey, the current Chairman,\nPresident and Chief Executive Officer of the Company, the Board\nconsiders Robert P. Bozzone, a former Chairman, President and\nChief Executive Officer of the Company, to be a management\ndirector.\n\n\n\n\nFollowing a review of relevant information and a recommendation\nof the Nominating and Governance Committee, the Board has\ndetermined that nine of the Company’s 11 current directors\nmeet the categorical independence standards set forth in the ATI\nCorporate Governance Guidelines and are independent and that,\nupon the election of the five nominees named below, eight of the\nCompany’s ten directors will meet the categorical\nindependence standards set forth in the ATI Corporate Governance\nGuidelines and will be independent. The Board has also\ndetermined that each member of the Audit Committee satisfies the\nenhanced standards of independence applicable to Audit Committee\nmembers under the listing standards and rules of the NYSE and\nthe Securities and Exchange Commission.\n\n\n\n\n\n\n\n\n\n\nDirector Terms\n\n\n\n\nThe directors are divided into three classes and the directors\nin each class generally serve for a three-year term unless the\ndirector is unable to serve due to death, retirement or\ndisability. The term of one class of directors expires each year\nat the annual meeting of stockholders. The Board may fill a\nvacancy by electing a new director to the same class as the\ndirector being replaced. The Board may also create a new\ndirector position in any class and elect a director to hold the\nnewly created position until the term of the class expires.\n\n\n\n\n\n\n\n\n\n\nDirector Attendance at Annual\nMeetings\n\n\n\n\nWe typically schedule a Board meeting in conjunction with our\nannual meeting of stockholders and expect that our directors\nwill attend, absent a valid reason, such as a schedule conflict.\nLast year, 10 of the 11 individuals then serving as directors\nattended our annual meeting.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nCommittees of the Board of\nDirectors\n\n\n\n\n \n\n\n\n\n\n\nStanding Committees\n\n\n\n\nThe Board of Directors has the following standing committees:\nAudit Committee, Finance Committee, Nominating and Governance\nCommittee, Personnel and Compensation Committee and Stock\nIncentive Award Subcommittee of the Personnel and Compensation\nCommittee (sometimes called the “Compensation\nCommittees”), Executive Committee and Technology Committee.\n\n\n\n\nOnly independent directors are permitted to serve on the Audit\nCommittee, the Compensation Committees, and the Nominating and\nGovernance Committee. Audit Committee members must meet an\nadditional independence standard under the NYSE rules.\nSpecifically, Audit Committee members may not receive any\ncompensation from the Company other than their directors’\ncompensation.\n\n\n\n\nEach committee has a written charter that describes its\nresponsibilities. Each of the Audit Committee, the Compensation\nCommittees, and the Nominating and Governance Committee has the\nauthority, as it deems appropriate, to independently engage\noutside legal, accounting or other advisors or consultants. In\naddition, each committee annually conducts a review and\nevaluation of its performance. The current charters of each\ncommittee are published on our web site at\nwww.alleghenytechnologies.com and will be mailed to stockholders\nupon written request.\n\n\n\n\nAudit Committee\n\n\n\n\nThe current members of the Audit Committee are James E. Rohr\n(Chairman), Diane C. Creel, James C. Diggs, Michael J. Joyce and\nJohn D. Turner. The Board of Directors has determined that these\ncommittee members have no financial or personal ties to the\nCompany (other than director compensation and equity ownership\nas described in this proxy statement) that would impact their\nindependence and that they meet the NYSE standards for\nindependence. The Board of Directors has also determined that\nJames E. Rohr and Michael J. Joyce meet the SEC criteria of an\n“audit committee financial expert” and meet the NYSE\nstandard of having accounting or related financial management\nexpertise. Mr. Rohr’s extensive background and\nexperience includes serving as the chief executive officer of a\npublicly traded bank holding company, where he has actively\nsupervised the chief financial officer and participated\nextensively in dealing with accounting, auditing, internal\ncontrol, and risk management issues. Mr. Joyce has over\n35 years of accounting, auditing and consulting experience,\nhaving most recently served as New England Managing Partner of\nDeloitte & Touche USA LLP prior to his retirement in\nMay 2004. The Board of Directors has determined that, given\nthe depth and breadth of Mr. Joyce’s background and\nexperience, and his recent retirement, Mr. Joyce’s\nsimultaneous service on the audit committees of three other\npublic companies will not impair his ability to effectively\nserve on the Company’s Audit Committee.\n\n\n\n\nThe Audit Committee assists the Board in its oversight of the\nintegrity of ATI’s financial statements, ATI’s\ncompliance with legal and regulatory requirements, the\nqualifications and independence of ATI’s independent\nauditors, and the performance of ATI’s internal audit\nfunction and independent auditors. The Committee has the\nauthority and responsibility for the appointment, retention,\ncompensation and oversight of ATI’s independent auditors,\nincluding pre-approval of all audit and non-audit services to be\nperformed by the independent auditors.\n\n\n\n\nThe independent auditors and the internal auditors have full\naccess to the Committee and meet with the Committee, with (and\non a routine basis without) management being present, to discuss\nall appropriate matters.\n\n\n\n\nThe Audit Committee report appears at page 18. The charter\nof the Audit Committee is attached as Appendix B.\n\n\n\n\nFinance Committee\n\n\n\n\nThe Finance Committee makes recommendations and provides\nguidance to the Board regarding major financial policies of the\nCompany. It also serves as named fiduciary of the employee\nbenefit plans maintained by the Company.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nNominating and Governance\nCommittee\n\n\n\n\nThe Nominating and Governance Committee is responsible for\noverseeing corporate governance matters. It oversees the annual\nevaluation of the Company’s Board and its committees. It\nalso recommends to the Board individuals to be nominated as\ndirectors. This includes evaluation of new candidates as well as\nevaluation of current directors who are being considered for\nre-election. This Committee is responsible for administering\nATI’s director compensation programs. The Committee also\nperforms other duties as are described in the ATI Corporate\nGovernance Guidelines.\n\n\n\n\nPersonnel and Compensation\nCommittee\n\n\n\n\nThe Personnel and Compensation Committee, together with the\nStock Incentive Award Subcommittee, establishes and annually\nreassesses the executive compensation program. Their Report on\nExecutive Compensation begins on page 20.\n\n\n\n\nThe Personnel and Compensation Committee reviews and approves\ncorporate goals and objectives relevant to CEO compensation,\nevaluates the CEO’s performance in light of those goals and\nobjectives and, together with the Stock Incentive Award\nSubcommittee, determines and approves the CEO’s\ncompensation level (either as a committee or together with the\nother independent directors, as directed by the Board) based on\nthis evaluation. The Personnel and Compensation Committee,\ntogether with the Stock Incentive Award Subcommittee, also\nreviews and approves non-CEO executive officer compensation, and\nmakes recommendations to the Board with respect to incentive\ncompensation plans and equity-based plans that require Board\napproval. The Personnel and Compensation Committee also\nadministers ATI’s incentive compensation plans, except to\nthe extent the Stock Incentive Award Subcommittee administers\nthem.\n\n\n\n\nNone of the members of the Personnel and Compensation Committee\nis an employee of the Company and each member is an\n“outside director” for the purposes of the corporate\ncompensation provisions contained in Section 162(m) of the\nInternal Revenue Code.\n\n\n\n\nStock Incentive Award\nSubcommittee\n\n\n\n\nThe Stock Incentive Award Subcommittee is responsible for\nadministering and making awards under ATI’s stock-based\nincentive compensation programs for the Company’s officers.\n\n\n\n\nNone of the members of the Subcommittee is an employee of the\nCompany. Each member is a “non-employee director” for\nthe purposes of Rule 16b-3 of the Securities and Exchange\nCommission and an “outside director” for the purposes\nof the compensation provisions contained in Section 162(m) of\nthe Internal Revenue Code.\n\n\n\n\nExecutive Committee\n\n\n\n\nThe Executive Committee acts on behalf of the Board when an\nemergency arises or scheduling makes it otherwise difficult for\nthe full Board to convene or on specific actions that the Board\nrefers to this committee.\n\n\n\n\nTechnology Committee\n\n\n\n\nThe Technology Committee reviews changing technologies and\nevaluates how they affect the Company and its technical\ncapabilities.\n\n\n\n\n\n\n\n\n\n\nBoard and Committee\nMembership\n\n\n\n\nDuring 2004, the Board of Directors held nine meetings. The\nBoard’s committees consisted of the seven standing\ncommittees described above. In 2004, all directors attended at\nleast 75% of the Board meetings and committee meetings of which\nthey were members, and average attendance at Board and committee\nmeetings was approximately 96%.\n\n\n\n\nThe non-management directors meet separately from the other\ndirectors in regularly scheduled executive sessions without\nmembers of management (except to the extent that the\nnon-management directors request the attendance of a member of\nmanagement). The Chairman of the Board, if non-management,\nserves as Chair of these meetings. If the Chairman is not\nnon-management or the Chairman so chooses, the position of Chair\nrotates on a per meeting basis, in the order specified in the\nATI Corporate Governance Guidelines, among the non-management\nChairs of the Board’s committees.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nThe table below identifies the directors that the Board has\ndetermined to be independent and provides Board committee\nmemberships as of March 3, 2005. The table also sets forth\nthe number of meetings held by each Board committee in 2004.\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n \n \nStock \n \n \n\n\n\n\n \n \nNominating \n \nPersonnel \n \nIncentive \n \n \n\n\n\n\n \n \nand \n \nand \n \nAward \n \n \n\n\n\n\n Director \n \nIndependent \n \nAudit(1) \n \nFinance \n \nGovernance \n \nCompensation \n \nSubcommittee(2) \n \nExecutive \n \nTechnology \n\n\n\n\n \n\n\n\n\n\n\nH. K. Bowen\n \n\n\n \n \n\nX\n \n \n \n \n \n \n \n \n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nX \n(3) \n\n\n\n\n \n\n\n\n\n\n\nR. P. Bozzone\n \n\n\n \n \n \n \n \n \n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nX \n \n \n \nX \n \n\n\n\n\n \n\n\n\n\n\n\nD. C. Creel\n \n\n\n \n \n\nX\n \n \n \nX \n \n \n \nX \n(3) \n \n \nX \n \n \n \nX \n \n \n \nX \n(3) \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\nJ. C. Diggs\n \n\n\n \n \n\nX\n \n \n \nX \n \n \n \nX \n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\nL. P. Hassey\n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nX \n(3) \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\nM. J. Joyce\n \n\n\n \n \n\nX\n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\nW. C. McClelland\n \n\n\n \n \n\nX\n \n \n \n \n \n \n \n \n \n \n \nX \n(3) \n \n \nX \n \n \n \nX \n \n \n \n \n \n \n \nX \n \n\n\n\n\n \n\n\n\n\n\n\nC. J. Queenan, Jr. \n\n\n \n \n\nX\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nX \n(3) \n \n \n \n \n \n \nX \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\nJ. E. Rohr\n \n\n\n \n \n\nX\n \n \n \nX \n(3) \n \n \n \n \n \n \n \n \n \n \nX \n \n \n \nX \n \n \n \nX \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\nL. T. Thomas\n \n\n\n \n \n\nX\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nX \n \n\n\n\n\n \n\n\n\n\n\n\nJ. D. Turner\n \n\n\n \n \n\nX\n \n \n \nX \n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nX \n \n\n\n\n\n \n\n\n\n\n\n\nNumber of Meetings in 2004\n \n\n\n \n \n\n-\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(1) \n\n The Board has determined that all members of the Audit Committee\n are “independent” under the listing standards and\n rules of the NYSE and the Securities and Exchange Commission \n\n\n\n\n \n\n\n\n\n(2) \n\n Subcommittee of the Personnel and Compensation Committee \n\n\n\n\n \n\n\n\n\n(3) \n\n Committee Chairperson \n\n\n\n\n\n\n\n\n\n\n\nDirector Compensation\n\n\n\n\nIn 2004, non-employee directors received an annual retainer fee\nof $28,000 for services as a director. An annual fee of $5,000\nis also paid to each committee chair. Directors also are paid\n$1,500 for each Board meeting and $1,000 for each committee\nmeeting attended. Directors who are employees of the Company do\nnot receive any compensation for their services on the Board or\nits committees. Mr. Bozzone as Chairman of the Board\nreceived a monthly cash retainer of $11,600 in lieu of Board\nretainer and meeting fees, prior to his retirement in\nMay 2004.\n\n\n\n\nOn December 9, 2004, the Board of Directors\n(1) approved an increase in the annual retainer fee payable\nto non-employee directors for services they render to the\nCompany, (2) adopted stock ownership guidelines for board\nmembers; and (3) froze and discontinued the Company’s\nFee Continuation Plan for Non-Employee Directors.\n\n\n\n\nBeginning in January 2005, the annual retainer fee payable\nby the Company to its non-employee directors was increased to\n$60,000 per year. In taking this action, the Board encouraged\ndirectors to obtain a meaningful stock ownership interest in the\nCompany. Under the terms of the Company’s Non-Employee\nDirector Stock Compensation Plan (the “Director Stock\nPlan”), each non-employee director receives at least 25% of\nthe annual retainer fee in the form of ATI Common Stock and/or\noptions to acquire Common Stock. The Board also determined that\ndirectors will be expected to own shares of ATI Common Stock\nhaving a market value of at least two times the annual retainer\namount within five years, or within five years of first becoming\na director, whichever occurs first, and at least three times the\nannual retainer amount within a reasonable time thereafter.\n\n\n\n\nUnder the Director Stock Plan, options to purchase 1,000 shares\nof Common Stock are granted to non-employee directors at the\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nconclusion of each annual meeting of stockholders. The purchase\nprice of the Common Stock covered by these annual options is the\nfair market value of the Common Stock on the date the option is\ngranted.\n\n\n\n\nIn discontinuing the Fee Continuation Plan, the Board froze the\namount payable under the Plan. Under the frozen Plan, an amount\nequal to the annual retainer fee in effect for 2004, which was\n$28,000, will be paid for each year of the current\ndirector’s credited service as a director (as defined in\nthe Plan) up to a maximum of ten years. Previously, the annual\nbenefit amount equaled the retainer fee in effect immediately\nprior to the termination of the director’s service as a\ndirector.\n\n\n\n\n\n\n\n\n\n\nCorporate Guidelines for Business\nConduct and Ethics\n\n\n\n\nATI has a code of ethics and business conduct, which we refer to\nas the Corporate Guidelines for Business Conduct and Ethics,\nthat applies to all directors, officers and employees,\nincluding our principal executive officer, our principal\nfinancial officer, and our controller and chief accounting\nofficer. ATI has had a code of conduct for many years. We\nrequire all directors, officers and employees to adhere to these\nCorporate Guidelines in addressing legal and ethical issues\nencountered in their work. The Corporate Guidelines require that\nour directors, officers and employees avoid conflicts of\ninterest, comply with all laws, conduct business in an honest\nand ethical manner and otherwise act with integrity in all of\ntheir actions by or on behalf of the Company. Our Corporate\nGuidelines include a Code of Ethics specifically for our Chief\nExecutive Officer, our Chief Financial Officer and all other\nfinancial officers and executives, which supplements the general\nprinciples set forth in the Corporate Guidelines and is intended\nto promote honest and ethical conduct, full and accurate\nreporting, and compliance with laws as well as other matters.\n\n\n\n\nDuring 2004, our employees were required to certify that they\nreviewed and understood the Corporate Guidelines. In addition,\nall officers and managers are required to certify as to their\ncompliance with the standards set forth in the Corporate\nGuidelines.\n\n\n\n\nThe Company encourages employees to communicate concerns before\nthey become problems. We believe that building and maintaining\ntrust, respect and communications between employees and\nmanagement and between fellow employees is critical to the\noverriding goal of efficiently producing high quality products,\nproviding the maximum level of customer satisfaction, and\nultimately fueling profitability and growth. Only the Audit\nCommittee of the Board of Directors can amend or grant waivers\nfrom the provisions of the Guidelines relating to the\nCompany’s executive officers and directors and any such\namendments or waivers will be promptly posted on our web site at\nwww.alleghenytechnologies.com. To date, no such amendments have\nbeen made or waivers granted.\n\n\n\n\nA copy of the Corporate Guidelines for Business Conduct and\nEthics, which includes the Code of Ethics, is available on\nour web site at www.alleghenytechnologies.com by first clicking\n“About Us” and then “Our Corporate\nGovernance” and will be mailed to stockholders on written\nrequest directed to the Corporate Secretary, Allegheny\nTechnologies Incorporated, 1000 Six PPG Place, Pittsburgh, PA\n15222-5479.\n\n\n\n\n\n\n\n\n\n\nIdentification and Evaluation of\nCandidates for Director\n\n\n\n\nThe Board is responsible for recommending director nominees to\nthe stockholders and for selecting directors to fill vacancies\nbetween stockholder meetings. The Nominating and Governance\nCommittee recommends candidates to the Board. The Nominating and\nGovernance Committee is comprised entirely of independent\ndirectors under the applicable rules and regulations of the NYSE\nand Securities and Exchange Commission. The Committee operates\nunder a written charter adopted by the Board of Directors. A\ncopy of the Committee’s charter is available at the\nCompany’s web site at www.alleghenytechnologies.com by\nfirst clicking “About Us” and then “Our Corporate\nGovernance.” Paper copies can be obtained by writing to the\nCorporate Secretary, Allegheny Technologies Incorporated, 1000\nSix PPG Place, Pittsburgh, PA 15222-5479.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nThe Committee considers director candidates suggested by members\nof the Committee, other directors, senior management and\nstockholders.\n\n\n\n\nPreliminary interviews of director candidates may be conducted\nby the Chairman of the Nominating and Governance Committee or,\nat his request, any other member of the Committee or the\nChairman of the Board. Background material pertaining to\ndirector candidates is distributed to the members of the\nCommittee for their review. Director candidates who the\nCommittee determines merit further consideration are interviewed\nby the Chairman of the Committee and other Committee members,\ndirectors and key senior management. The results of these\ninterviews are considered by the Nominating and Governance\nCommittee in its deliberations.\n\n\n\n\nDirector candidates are generally selected on the basis of the\nfollowing criteria: their business or professional experience,\nrecognized achievement in their respective fields, their\nintegrity and judgment, their ability to devote sufficient time\nto the affairs of the Company, the diversity of their\nbackgrounds and the skills and experience that their membership\nadds to the overall competencies of the Board, and the needs of\nthe Company from time to time. Nominees must also represent the\ninterests of all stockholders. In accordance with the retirement\npolicy for directors set forth in the ATI Corporate Governance\nGuidelines, a person who is 72 years or older cannot be\nelected to serve on the Board.\n\n\n\n\nIn evaluating the needs of the Board, the Nominating and\nGovernance Committee considers the qualifications of sitting\ndirectors and consults with other members of the Board\n(including as part of the Board’s annual self-evaluation),\nthe Chairman, President and Chief Executive Officer and other\nmembers of senior management. At a minimum, all recommended\ncandidates must exemplify the highest standards of personal and\nprofessional integrity, meet any required independence\nstandards, and be willing and able to constructively participate\nin and contribute to Board and committee meetings. Additionally,\nthe Committee conducts reviews of current directors whose terms\nare nearing expiration, but who may be proposed for re-election,\nin light of the considerations described above and their past\ncontributions to the Board.\n\n\n\n\nStockholders may nominate candidates for election to the Board\nby following the procedures described in ATI’s certificate\nof incorporation. Stockholder-recommended candidates will not be\nevaluated on a different basis from other candidates. The\nprovisions of ATI’s certificate of incorporation generally\nrequire that written notice of a nomination be received by the\nCorporate Secretary, who will forward the information to the\nNominating and Governance Committee of the Board of Directors\nfor the Committee’s consideration, not less than\n75 days and not more than 90 days before the first\nanniversary of the date of the preceding year’s annual\nmeeting. For our annual meeting in the year 2006, we must\nreceive this notice on or after January 20, 2006 and on or\nbefore February 4, 2006. The notice must contain certain\ninformation about the nominee, including his or her age,\naddress, occupation and share ownership, as well as the name,\naddress and share ownership of the stockholder giving notice.\n\n\n\n\nStockholders may obtain a copy of the full text of the\nprovisions of our certificate of incorporation by writing to the\nCorporate Secretary, Allegheny Technologies Incorporated, 1000\nSix PPG Place, Pittsburgh, PA 15222-5479. A copy of our\ncertificate of incorporation has been filed with the Securities\nand Exchange Commission and can be viewed on our web site at\nwww.alleghenytechnologies.com.\n\n\n\n\n\n\n\n\n\n\nProcess for Stockholder Communications\nwith Directors\n\n\n\n\nWe maintain a process for stockholders to communicate with the\nBoard of Directors or any individual director. ATI stockholders\nwho want to communicate with the Board or any individual\ndirector can write to:\n\n\n\n\n\n \n \n\n\n\n\n \n\n Allegheny Technologies Incorporated \n\n\n\n\n \n\n Corporate Secretary \n\n\n\n\n \n\n Board Administration \n\n\n\n\n \n\n 1000 Six PPG Place \n\n\n\n\n \n\n Pittsburgh, PA 15222-5479 \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nor call 1-877-787-9761 (toll free). Your letter or message\nshould indicate that you are an ATI stockholder. Depending on\nthe subject matter, the Corporate Secretary will:\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n• \n\n forward the communication to the director or directors to whom\n it is addressed; \n\n\n\n\n \n\n\n\n\n• \n\n attempt to handle the inquiry directly as, for example, where it\n is a request for information about the Company or it is a\n stock-related matter; or \n\n\n\n\n \n\n\n\n\n• \n\n not forward the communication if it is primarily commercial in\n nature or it relates to an improper or irrelevant topic. \n\n\n\n\n\nAt each Board meeting, the Corporate Secretary presents a\nsummary of all communications received since the last meeting\nthat were not forwarded and makes those communications available\nto the directors on request.\n\n\n\n\n\n\n\n\n\n\n2006 Annual Meeting and Stockholder\nProposals\n\n\n\n\nUnder Rule 14a-8 of the Securities and Exchange Commission,\nproposals of stockholders intended to be presented at the 2006\nAnnual Meeting of Stockholders must be received no later than\nNovember 13, 2005 for inclusion in the proxy statement and\nproxy card for that meeting. In addition, the Company’s\ncertificate of incorporation provides that in order for\nnominations or other business to be properly brought before an\nannual meeting by a stockholder, the stockholder must give\ntimely notice thereof in writing to the Corporate Secretary. To\nbe timely, the provisions of ATI’s certificate of\nincorporation generally require that notice be received by the\nCorporate Secretary not less than 75 days and not more than\n90 days before the first anniversary of the date of the\npreceding year’s annual meeting. For our annual meeting in\nthe year 2006, we must receive this notice on or after\nJanuary 20, 2006 and on or before February 4, 2006.\nThe notice must contain certain information, including\ninformation about the proposal and the interest, if any, of the\nstockholder who is making the proposal, as well as the name,\naddress and share ownership of the stockholder giving notice.\n\n\n\n\nStockholders may obtain a copy of the full text of the\nprovisions of our certificate of incorporation by writing to the\nCorporate Secretary, Allegheny Technologies Incorporated, 1000\nSix PPG Place, Pittsburgh, PA 15222-5479. A copy of our\ncertificate of incorporation has been filed with the Securities\nand Exchange Commission and can be viewed on our web site at\nwww.alleghenytechnologies.com.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nSTOCK OWNERSHIP INFORMATION\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\nSection 16(a) Beneficial Ownership\nReporting Compliance\n\n\n\n\nThe rules of the Securities and Exchange Commission require the\nCompany to disclose late filings of reports of stock ownership\n(and changes in stock ownership) by its directors and statutory\ninsiders. To the best of the Company’s knowledge, all\nfilings by these individuals were made on a timely basis in 2004.\n\n\n\n\n\n\n\n\n\n\nFive Percent Owners of Common\nStock\n\n\n\n\nAs of March 3, 2005, the Company had received notice that\nthe individuals and entities listed in the following table are\nbeneficial owners of five percent or more of Company Common\nStock. In general, “beneficial ownership” includes\nthose shares a person has the power to vote or transfer, and\noptions to acquire Common Stock that are exercisable currently\nor within 60 days.\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \nAmount and Nature of \n \nPercent of \n\n\n\n\nName and Address of Beneficial Owner \n \nBeneficial Ownership \n \nClass \n\n\n\n\n \n\n\n\n\n\n\nWellington Management Company, LLP\n \n\n\n \n \n \n7,709,600 \n(a) \n \n \n8.0 \n% \n\n\n\n\n\n75 State Street\n \n \n \n \n \n \n \n \n \n\n\n\n\n\nBoston, MA 02109\n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\nCitigroup, Inc.\n \n\n\n \n \n \n7,109,371 \n(b) \n \n \n7.4 \n% \n\n\n\n\n\n399 Park Avenue\n \n \n \n \n \n \n \n \n \n\n\n\n\n\nNew York, NY 10043\n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\nRichard P. Simmons\n \n\n\n \n \n \n6,338,871 \n(c) \n \n \n6.6 \n% \n\n\n\n\n\nBirchmere\n \n \n \n \n \n \n \n \n \n\n\n\n\n\nQuaker Hollow Road\n \n \n \n \n \n \n \n \n \n\n\n\n\n\nSewickley, PA 15143\n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\nThe Singleton Group, LLC\n \n\n\n \n \n \n5,775,000 \n(d) \n \n \n6.0 \n% \n\n\n\n\n\n335 North Maple Drive,\n Suite 177\n \n \n \n \n \n \n \n \n \n\n\n\n\n\nBeverly Hills, CA 90210\n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(a) \n\n Based on a schedule 13G filing under the Securities\n Exchange Act of 1934 made on February 14, 2005, as of\n December 31, 2004, Wellington Management Company held\n shared voting power with respect to 7,281,400 shares and shared\n dispositive power with respect to 7,709,600 shares. \n\n\n\n\n \n\n\n\n\n(b) \n\n Based upon a Schedule 13G filing under the Securities\n Exchange Act of 1934 made by Citicorp, Inc. and three affiliated\n companies on February 10, 2005, as of December 31,\n 2004, Citicorp, Inc. beneficially owned, and had shared power to\n direct the voting and disposition of, 7,109,371 shares of Common\n Stock, of which Citigroup Global Markets Holdings Inc.,\n Citigroup Financial Products Inc. and Citigroup Global Markets\n Inc. beneficially owned, and had shared power to direct the\n voting and disposition of, 6,984,196 shares, 5,018,492 shares\n and 4,792,769 shares, respectively. \n\n\n\n\n \n\n\n\n\n(c) \n\n Based upon a Schedule 13D/ A filing made by\n Mr. Simmons on September 16, 2004, as of that date,\n Mr. Simmons beneficially owned all of these shares. The\n amount shown includes options to acquire 3,026 shares that are\n exercisable under Company incentive stock plans. \n\n\n\n\n \n\n\n\n\n(d) \n\n As of December 31, 2000, The Singleton Group LLC, Caroline\n W. Singleton, William W. Singleton and Donald E. Rugg held\n shared voting and dispositive power with respect to 5,775,000\n shares as indicated in the Schedule 13G, as amended, filed\n by Caroline W. Singleton. As indicated in a Schedule 13G\n filed in April 2000, Donald E. Rugg also held sole voting\n and dispositive power with respect to 158 shares. \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nStock Ownership of Management\n\n\n\n\nThe following table sets forth the shares of Common Stock\nreported to the Company as beneficially owned as of\nMarch 3, 2005 by the nominees for director, the continuing\ndirectors and each officer named in the Summary Compensation\nTable.\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \nShares \n \nShares That \n \n \n\n\n\n\n \n \nBeneficially \n \nMay Be Acquired \n \nTotal \n\n\n\n\nBeneficial Owner \n \nOwned \n \nWithin 60 Days(1) \n \nShares(2) \n\n\n\n\n \n\n\n\n\n\n\nH. Kent Bowen\n \n\n\n \n \n \n1,243 \n \n \n \n \n \n \n1,243 \n \n\n\n\n\n\n\nRobert P. Bozzone\n \n\n\n \n \n \n2,703,659 \n \n \n \n30,000 \n \n \n \n2,733,659 \n \n\n\n\n\n\n\nDiane C. Creel\n \n\n\n \n \n \n4,813 \n \n \n \n21,195 \n \n \n \n26,008 \n \n\n\n\n\n\n\nJames C. Diggs\n \n\n\n \n \n \n2,531 \n \n \n \n3,000 \n \n \n \n5,531 \n \n\n\n\n\n\n\nRichard J. Harshman\n \n\n\n \n \n \n50,499 \n \n \n \n84,998 \n \n \n \n135,497 \n \n\n\n\n\n\n\nL. Patrick Hassey\n \n\n\n \n \n \n98,830 \n \n \n \n121,000 \n \n \n \n219,830 \n \n\n\n\n\n\n\nMichael J. Joyce\n \n\n\n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\nDouglas A. Kittenbrink\n \n\n\n \n \n \n50,869 \n \n \n \n89,998 \n \n \n \n140,867 \n \n\n\n\n\n\n\nW. Craig McClelland\n \n\n\n \n \n \n18,038 \n \n \n \n6,268 \n \n \n \n24,306 \n \n\n\n\n\n\n\nJames E. Rohr\n \n\n\n \n \n \n8,551 \n \n \n \n6,268 \n \n \n \n14,819 \n \n\n\n\n\n\n\nJack W. Shilling\n \n\n\n \n \n \n63,909 \n \n \n \n89,998 \n \n \n \n153,907 \n \n\n\n\n\n\n\nLouis J. Thomas\n \n\n\n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\nJohn D. Turner\n \n\n\n \n \n \n6,648 \n \n \n \n \n \n \n6,648 \n \n\n\n\n\n\n\nJon D. Walton\n \n\n\n \n \n \n83,870 \n \n \n \n89,998 \n \n \n \n173,868 \n \n\n\n\n\n \n\n\n\n\n\n\nAll directors, nominees, named\n officers and other statutory insiders as a group (15)\n \n\n\n \n \n \n3,123,658 \n \n \n \n590,221 \n \n \n \n3,713,879 \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(1) \n\n The table includes restricted shares in the following amounts:\n L. Patrick Hassey, 60,592; Richard J. Harshman, 16,038; Douglas\n A. Kittenbrink, 17,151; Jack W. Shilling, 17,821; Jon D. Walton,\n 16,038; and all continuing directors, director nominees and\n statutory insiders as a group, 136,372. The table includes\n shares held in the Company’s 401(k) plans for the accounts\n of Messrs. Bozzone, Kittenbrink, Shilling and Walton and\n shares held jointly with the named individuals’ spouses.\n The table also includes the following shares where beneficial\n ownership is disclaimed: 120,000 shares owned by\n Mr. Bozzone’s spouse; 3,700 shares owned by\n Mr. Walton’s spouse; and 257 shares held by the\n spouses of other statutory insiders. \n\n\n\n\n \n\n\n\n\n(2) \n\n The percentage of outstanding shares is 3.8% for the group.\n Except for Mr. Bozzone, who holds 2.8% of the outstanding\n shares, the percentage of outstanding shares held by each\n director, nominee and named officer in the table is less than 1%. \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nPROPOSALS REQUIRING YOUR VOTE\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\nElection of Directors - Item\nA on Proxy Card\n\n\n\n\nThe Board of Directors has nominated for election this year five\nincumbent directors.\n\n\n\n\nThe nominees include Michael J. Joyce and Louis J. Thomas, who\nwere elected by the Board in September 2004. Prior to his\nelection to the Board, Mr. Joyce was known to, and\nrecommended for election to the Board by, a non-employee\ndirector. The United Steelworkers of America (“USWA”)\nproposed the nomination of Mr. Thomas as agreed to in\nconnection with the 2004 labor negotiations with Allegheny\nLudlum Corporation, a Company subsidiary. At that time, the\nCompany agreed that the International President of the USWA may\npropose a nominee for election as a director of the Company to\nthe Company’s Chairman, President and Chief Executive\nOfficer. The USWA nominee is to be a prominent individual with\nexperience in public service, labor, education or business who\nmeets the antitrust and conflicts of interest screening required\nof all Company directors. Upon recommendation by the Nominating\nand Governance Committee and election to the Board, the USWA\nnominee is expected to serve as a director during the term of\nthe labor agreement.\n\n\n\n\nCharles J. Queenan, Jr. is 74 years of age and is not\neligible for nomination as a director under the Company’s\nCorporate Governance Guidelines. The Company wishes to thank\nMr. Queenan for his many years of service and for the many\ncontributions he has made to the Board of Directors, including\nhis service as Chairman of the Personnel and Compensation\nCommittee.\n\n\n\n\nThe five nominees who receive the highest number of votes cast\nwill be elected. If you sign and return your proxy card, the\nindividuals named as proxies on the card will vote your shares\nFOR the election of the five nominees named below unless you\nprovide other instructions. You may withhold authority for the\nproxies to vote your shares on any or all of the nominees by\nfollowing the instructions on your proxy card. If a nominee\nbecomes unable to serve, the proxies will vote for a\nBoard-designated substitute or the Board may reduce the number\nof directors. Management has no reason to believe that any of\nthe five nominees for election named below will be unable to\nserve.\n\n\n\n\nBackground information about the nominees and the continuing\ndirectors, including their business experience during the past\nfive years, follows.\n\n\n\n\nTHE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR\n\n\n\n\nTHE ELECTION OF ALL FIVE NOMINEES LISTED BELOW.\n\n\n\n\nNominees - Term To Expire at the\n2008 Annual Meeting (Class III)\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nRobert P. Bozzone\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nAge:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nDirector Since:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nRecent Business Experience:\n \n\n\n \n \n\nMr. Bozzone served as Chairman of\n the Company from July 2001 until May 2004, and was Chairman,\n President and Chief Executive Officer of the Company from\n December 2000 until July 2001. He had served as Vice Chairman of\n the Company beginning in August 1996 and was Vice Chairman of\n Allegheny Ludlum Corporation from August 1994 to August 1996.\n Previously, he was President and Chief Executive Officer of\n Allegheny Ludlum Corporation.\n \n\n\n\n\n \n\n\n\n\n\n\nOther Directorships:\n \n\n\n \n \n\nDuquesne Light Holdings, Inc.\n (Chairman of the Board), Teledyne Technologies Incorporated and\n Water Pik Technologies, Inc. (Chairman of the Board).\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nJames C. Diggs\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nAge:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nDirector Since:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nPrincipal Occupation:\n \n\n\n \n \n\nSenior Vice President, General\n Counsel and Secretary of PPG Industries, Inc., a producer of\n coatings, glass and chemicals.\n \n\n\n\n\n \n\n\n\n\n\n\nRecent Business Experience:\n \n\n\n \n \n\nMr. Diggs has been Senior Vice\n President, General Counsel of PPG Industries, Inc. since 1997.\n He assumed the position of Secretary in September 2004.\n \n\n\n\n\n \n\n\n\n\n\n\nMichael J. Joyce\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nAge:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nDirector Since:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nRecent Business Experience:\n \n\n\n \n \n\nMr. Joyce served as New England\n Managing Partner of Deloitte and Touche USA LLP prior to his\n retirement in May 2004.\n \n\n\n\n\n \n\n\n\n\n\n\nOther Directorships:\n \n\n\n \n \n\nA. C. Moore Arts &\n Crafts, Inc., Brandywine Realty Trust and Heritage Property\n Investment Trust.\n \n\n\n\n\n \n\n\n\n\n\n\nW. Craig McClelland\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nAge:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nDirector Since:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nRecent Business Experience:\n \n\n\n \n \n\nMr. McClelland was Chairman and\n Chief Executive Officer of Union Camp Corporation, a fine\n papers, packaging and chemicals manufacturer and land resources\n company, prior to his retirement in 1999.\n \n\n\n\n\n \n\n\n\n\n\n\nOther Directorships:\n \n\n\n \n \n\nInternational Paper Company and\n Water Pik Technologies, Inc.\n \n\n\n\n\n\n\nNominee - Term to Expire at the\n2006 Annual Meeting (Class I)\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nLouis J. Thomas\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nAge:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nDirector Since:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nRecent Business Experience:\n \n\n\n \n \n\nMr. Thomas served as Director,\n District 4, United Steelworkers of America for the Northeastern\n United States and Puerto Rico prior to his retirement in May\n 2004.\n \n\n\n\n\n \n\n\n\n\n\n\nOther Directorships:\n \n\n\n \n \n\nGreat Lakes Bancorp, Inc., the\n holding company for Greater Buffalo Savings Bank.\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nContinuing Directors - Term to\nExpire at the 2006 Annual Meeting (Class I)\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nDiane C. Creel\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nAge:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nDirector Since:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nPrincipal Occupation:\n \n\n\n \n \n\nChairman, Chief Executive Officer\n and President of Ecovation Inc., a waste stream technology\n company using patented technologies, since May 2003.\n \n\n\n\n\n \n\n\n\n\n\n\nRecent Business Experience:\n \n\n\n \n \n\nChief Executive Officer and\n President of Earth Tech, an international consulting engineering\n firm, from 1992 to May 2003.\n \n\n\n\n\n \n\n\n\n\n\n\nOther Directorships:\n \n\n\n \n \n\nAmerican Funds of Capital Research\n Management, Foster Wheeler Ltd., Goodrich Corporation and\n Teledyne Technologies Incorporated. Ms. Creel has advised the\n Company that she intends to step down as a director of Foster\n Wheeler Ltd. at its 2005 Annual Meeting of Stockholders.\n \n\n\n\n\n \n\n\n\n\n\n\nJames E. Rohr\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nAge:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nDirector Since:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nPrincipal Occupation:\n \n\n\n \n \n\nChairman and Chief Executive\n Officer, The PNC Financial Services Group, Inc.\n \n\n\n\n\n \n\n\n\n\n\n\nRecent Business Experience:\n \n\n\n \n \n\nMr. Rohr had served as President of\n The PNC Financial Services Group from 1992-2002 and assumed the\n position of Chief Executive Officer in 2000. He was named\n Chairman in 2001.\n \n\n\n\n\n \n\n\n\n\n\n\nOther Directorships:\n \n\n\n \n \n\nEquitable Resources, Inc., The PNC\n Financial Services Group, Inc., and Blackrock, Inc. The PNC\n Financial Services Group, Inc. holds a 71% stake in Blackrock,\n Inc.\n \n\n\n\n\n\n\nContinuing Directors - Term to\nExpire at the 2007 Annual Meeting (Class II)\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nH. Kent Bowen\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nAge:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nDirector Since:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nPrincipal Occupation:\n \n\n\n \n \n\nBruce V. Rauner Professor of\n Business Administration, Harvard University, Graduate School of\n Business Administration, where his research and teaching is in\n the field of operations and technology management.\n \n\n\n\n\n \n\n\n\n\n\n\nRecent Business Experience:\n \n\n\n \n \n\nPrior to 1992, he was the Ford\n Professor of Engineering and co-founder of the Leaders for\n Manufacturing Program at the Massachusetts Institute of\n Technology.\n \n\n\n\n\n \n\n\n\n\n\n\nOther Directorships:\n \n\n\n \n \n\nAlign Technology, Inc. and Ceramics\n Process Systems Corporation.\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nL. Patrick Hassey\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nAge:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nDirector Since:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nPrincipal Occupation:\n \n\n\n \n \n\nChairman, President and Chief\n Executive Officer.\n \n\n\n\n\n \n\n\n\n\n\n\nRecent Business Experience:\n \n\n\n \n \n\nMr. Hassey has been President and\n Chief Executive Officer of the Company since October 2003. He\n assumed the position of Chairman in May 2004. Mr. Hassey was\n Executive Vice President and a member of the corporate executive\n committee at Alcoa Inc. from November 2002 until his early\n retirement in February 2003. He had served as Executive Vice\n President of Alcoa and Group President of Alcoa Industrial\n Components from May 2000 to October 2002. Prior to May 2000, he\n served as Executive Vice President of Alcoa and President of\n Alcoa Europe, Inc.\n \n\n\n\n\n \n\n\n\n\n\n\nJohn D. Turner\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\nAge:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nDirector Since:\n \n\n\n \n \n\n \n\n\n\n\n \n\n\n\n\n\n\nRecent Business Experience:\n \n\n\n \n \n\nMr. Turner served as Chairman and\n Chief Executive Officer of Copperweld Corporation, a\n manufacturer of tubular and bimetallic wire products and a\n wholly owned subsidiary of The LTV Corporation, an integrated\n steel producer, from December 2001 until his retirement in March\n 2003. He served as President of LTV Copperweld from 1999 to 2001\n and Executive Vice President and Chief Operating Officer of The\n LTV Corporation from February to December 2001.\n \n\n\n\n\n \n\n\n\n\n\n\nOther Directorships:\n \n\n\n \n \n\nMatthews International Corporation\n and Duquesne Light Holdings, Inc.\n \n\n\n\n\n\n\n\n\n\n\n\n\nRatification of Selection of \n\n\n Independent Auditors - Item B on Proxy Card\n\n\n\n\nErnst & Young LLP (“Ernst & Young”) has served\nas independent auditors for the Company since August 15,\n1996 and served as independent auditors for Allegheny Ludlum\nCorporation since 1980. They have unrestricted access to the\nAudit Committee to discuss audit findings and other financial\nmatters. The Audit Committee believes that Ernst & Young is\nknowledgeable about the Company’s operations and accounting\npractices and is well qualified to act in the capacity of\nindependent auditors.\n\n\n\n\nIn appointing Ernst & Young as the Company’s\nindependent auditors for the fiscal year ending\nDecember 31, 2005, and making its recommendation that\nstockholders ratify the appointment, the Audit Committee of the\nBoard of Directors has considered whether the audit and\nnon-audit services Ernst & Young provides are compatible\nwith maintaining the independence of our outside auditors.\n\n\n\n\nIf the stockholders do not ratify the selection of Ernst &\nYoung, the Audit Committee will reconsider the appointment of\nErnst & Young as the Company’s independent auditors.\n\n\n\n\nRepresentatives of Ernst & Young will be present at the\nAnnual Meeting. They will be given the opportunity to make a\nstatement if they desire to do so, and they will be available to\nrespond to appropriate questions following the Meeting.\n\n\n\n\nTHE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR\nRATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG, LLP AS\nINDEPENDENT AUDITORS FOR FISCAL YEAR 2005.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nAudit Committee Pre-Approval\nPolicy\n\n\n\n\nThe Audit Committee has adopted a policy that sets forth the\nmanner in which the Audit Committee will review and approve all\nservices to be provided by Ernst & Young before the firm is\nretained to perform the service. Under this policy, the\nengagement terms and fees of all audit services and all\naudit-related services are subject to the specific pre-approval\nof the Audit Committee. In addition, while the Committee\nbelieves that the independent auditor may be able to provide tax\nservices to the Company without impairing the auditor’s\nindependence, going forward, absent unusual circumstances, the\nAudit Committee does not expect to retain the independent\nauditor to provide tax services. Under the policy, the Committee\nhas delegated limited pre-approval authority to the Chairman of\nthe Committee with respect to permitted, non-tax related\nservices; the Chairman is required to report any pre-approval\ndecisions to the Audit Committee at its next scheduled meeting.\nThe Audit Committee pre-approved all non-audit services provided\nby Ernst & Young in 2004 and 2003 except for the de minimis\namount described in the following chart.\n\n\n\n\n\n\n\n\n\n\nIndependent Auditor: Services and\nFees\n\n\n\n\nThe fees and expenses billed by Ernst & Young for the\nindicated services performed during 2004 and 2003 were as\nfollows:\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n Service \n \n \n\n\n\n\n \n\n\n\n\n\n\nAudit fees\n \n\n\n \n \n$ \n2,748,000 \n \n \n$ \n1,538,000 \n \n\n\n\n\n\n\nAudit-related fees\n \n\n\n \n \n \n387,000 \n \n \n \n206,000 \n \n\n\n\n\n\n\nTax fees\n \n\n\n \n \n \n191,000 \n* \n \n \n470,000 \n \n\n\n\n\n\n\nAll other fees\n \n\n\n \n \n \n- \n \n \n \n- \n \n\n\n\n\n \n\n\n\n\n\n\nTotal\n \n\n\n \n \n$ \n3,326,000 \n* \n \n$ \n2,214,000 \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n* \n\n The Audit Committee applied the de minimis exception to the\n pre-approval requirement provided for in the Sarbanes-Oxley Act\n and in the SEC rules to $24,000 of this amount, representing 13%\n of tax fees and less than 1% of total fees. \n\n\n\n\n\n“Audit fees” consisted of fees related to the annual\naudit of the Company’s consolidated financial statements\nand review of the financial statements in our Quarterly Reports\non Form 10-Q, Sarbanes-Oxley Section 404 attestation\nservices, audit and attestation services related to statutory or\nregulatory filings, the issuance of comfort letters and consents\nand the issuance of a “preferability letter” in\nconnection with a change in accounting method.\n\n\n\n\n“Audit-related fees” consisted of fees related to the\naudits of employee benefit plans, pension and captive insurance\ncompany audits, and due diligence in connection with\nacquisitions.\n\n\n\n\n“Tax fees” consisted of fees related to international\ntax returns including compliance and audit assistance, prior to\nthe transition of such services to another accounting firm,\nexpedited IRS refund services, IRS transcript reviews and\nemployment tax matters.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nReport of Audit Committee\n\n\n\n\nThe following is the report of the Audit Committee with respect\nto the Company’s audited financial statements for the year\nended December 31, 2004, which include the consolidated\nbalance sheets of the Company as of December 31, 2004 and\n2003, and the related consolidated statements of operations,\nstockholders’ equity and cash flows for each of the three\nyears in the period ended December 31, 2004, and the notes\nthereto (collectively, the “Financial Statements”).\n\n\n\n\nManagement is responsible for the Company’s internal\ncontrols and financial reporting process. Ernst & Young LLP\n(“Ernst & Young”), the Company’s independent\nauditors, are responsible for performing an independent audit of\nthe Company’s Financial Statements in accordance with\ngenerally accepted auditing standards and expressing an opinion\nas to their conformity with generally accepted accounting\nprinciples and for attesting to management’s report on the\nCompany’s internal control over financial reporting. One of\nthe Audit Committee’s responsibilities is to monitor and\noversee the financial reporting process and to review and\ndiscuss management’s report on the Company’s internal\ncontrol over financial reporting.\n\n\n\n\nThe Audit Committee has reviewed, met and held discussions with\nthe Company’s management, internal auditors, and the\nindependent auditors regarding the Financial Statements,\nincluding a discussion of quality, not just acceptability, of\nthe Company’s accounting principles, and Ernst &\nYoung’s judgment regarding these matters.\n\n\n\n\nThe Audit Committee discussed with the Company’s internal\nauditors and independent auditors matters required to be\ndiscussed by SAS 61 (Codification of Statements on Auditing\nStandards, AU§380). The Audit Committee met with the\ninternal auditors and independent auditors, with and without\nmanagement present, to discuss the results of their\nexaminations, their evaluations of the Company’s internal\ncontrols, and the overall quality of the Company’s\nfinancial reporting. The Audit Committee has also discussed with\nErnst & Young matters required to be discussed by applicable\nauditing standards.\n\n\n\n\nThe Audit Committee has received the written disclosures and the\nletter from Ernst & Young required by the Independence\nStandards Board Standard No. 1 (Independence Standards\nBoard Standard No. 1, Independence Discussions with Audit\nCommittees) and has also considered the compatibility of\nnon-audit services with Ernst & Young’s independence.\nThis information was also discussed with Ernst & Young.\n\n\n\n\nBased on the review and discussions referred to above, the Audit\nCommittee recommended to the Board of Directors at the\nFebruary 25, 2005 meeting of the Board that the Financial\nStatements be included in the Company’s Annual Report on\nForm 10-K for the year ended December 31, 2004 as\nfiled with the Securities and Exchange Commission. The Board has\napproved this inclusion.\n\n\n\n\nSubmitted by:\n\n\n\n\nAUDIT COMMITTEE, whose members are:\n\n\n\n\nJames E. Rohr, Chairman\n\n\n\n\nDiane C. Creel\n\n\n\n\nJames C. Diggs\n\n\n\n\nMichael J. Joyce\n\n\n\n\nJohn D. Turner\n\n\n\n\n\n\n\n\n\n\nReapproval of Performance-Based Goals\nUnder the 2000 Incentive Plan - Item C on Proxy\nCard\n\n\n\n\n \n\n\n\n\n\n\nAt the 2000 Annual Meeting, ATI’s stockholders approved the\n2000 Incentive Plan (the “Incentive Plan”), pursuant\nto which incentive compensation is paid to officers and key\nemployees of the Company and its subsidiaries and to designated\nnon-employees who render significant services to the Company or\nany of its subsidiaries. We are now asking stockholders to\nreapprove the performance goals used for performance-based\nawards under the Incentive Plan (as specifically described in\nthe next paragraph below, the “Performance Goals”),\nincluding the clarification that cash flow and income before\ntaxes are appropriate measures for performance-based\ncompensation, so that the Company may maintain its full tax\ndeduction for incentive compensation paid pursuant to the\nIncentive Plan.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nThe applicable Performance Goals may consist of specified levels\nof one or more of the following: operating income, operating\nprofit, income before taxes, earnings per share, return on\ninvestment or working capital, return on stockholders’\nequity, economic value added (the amount, if any, by which net\noperating profit after tax exceeds a reference cost of capital),\nbalanced scorecard, cash flow, reductions in inventory,\ninventory turns and on-time delivery performance, any one of\nwhich may be measured with respect to the Company or any one or\nmore of its subsidiaries or business units and either in\nabsolute terms or as compared to another company or companies,\nand safety measures and other quantifiable, objective measures\nof individual performance relevant to the particular\nindividual’s job responsibilities.\n\n\n\n\nSection 162(m) of the Internal Revenue Code limits the\ndeductibility for federal income tax purposes of annual\ncompensation in excess of $1 million per executive paid by\nATI to its chief executive officer and the four other most\nhighly compensated executive officers, unless such compensation\nqualifies as “performance-based compensation” under\nSection 162(m). To continue to qualify compensation paid\nunder the Incentive Plan as “performance-based\ncompensation,” the stockholders must reapprove every five\nyears the Performance Goals used for performance-based awards\nunder the Incentive Plan.\n\n\n\n\nThe Incentive Plan permits grants of incentives in the form of\nstock options, restricted shares, other stock-based awards, and\nshort-term cash incentive awards. The Personnel and Compensation\nCommittee and the Stock Incentive Award Subcommittee (the\n“Compensation Committees”) of the Board administer the\nIncentive Plan, approve the selection of executives and other\nkey employees for participation and determine the timing and\namount of awards. Stock options, restricted shares other\nstock-based awards, and short-term cash incentive awards granted\nunder the Incentive Plan may be intended to qualify as\n“performance-based compensation” under\nSection 162(m). The Compensation Committees establish the\nparticular Performance Goals and level of achievement relating\nto these Performance Goals upon which grants of\nperformance-based restricted shares and other stock-based\nawards, and short-term cash incentive awards are based. In any\ncalendar year, no participant under the Incentive Plan may be\ngranted stock-based awards covering more than 1 million\nshares and cash-based awards with respect to more than\n$5 million in cash, provided that an award relating to a\nperiod of more than one year is pro-rated over the applicable\nperiod for the purposes of applying these limitations. The Board\nmay amend, suspend or modify the Incentive Plan at any time,\nexcept as limited by the terms of the Incentive Plan.\n\n\n\n\nTHE BOARD RECOMMENDS THAT YOU VOTE FOR REAPPROVAL OF\nTHE PERFORMANCE-BASED GOALS UNDER THE 2000 INCENTIVE PLAN.\n\n\n\n\n\n\n\n\n\n\nOTHER BUSINESS\n\n\n\n\n \n\n\n\n\n\n\nThe Company knows of no business that may be presented for\nconsideration at the meeting other than the items indicated in\nthe Notice of Annual Meeting. If other matters are properly\npresented at the meeting, the persons designated as proxies on\nyour proxy card may vote at their discretion.\n\n\n\n\nFollowing adjournment of the formal business meeting, L. Patrick\nHassey, Chairman, President and Chief Executive Officer, will\naddress the meeting and will hold a general discussion period\nduring which the stockholders will have an opportunity to ask\nquestions about the Company and its business.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nREPORT ON EXECUTIVE\nCOMPENSATION\n\n\n\n\n \n\n\n\n\n\n\nThe Personnel and Compensation Committee and Stock Incentive\nAward Subcommittee (together referred to in this Report as the\n“Committee”) furnish this report on executive\ncompensation. In discussions of stock awards to the named\nofficers in the Summary Compensation Table and other statutory\ninsiders, the term “Committee” refers to the Stock\nIncentive Award Subcommittee.\n\n\n\n\nExecutive Compensation\nCharacteristics\n\n\n\n\nThe Committee believes that total executive compensation at the\nCompany should have the following characteristics:\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n• \n\n It is to be competitive in the aggregate, using a set of\n business and labor market competitors, including data supplied\n by Hewitt Associates, a nationally recognized executive\n compensation consulting firm, to gauge the competitive\n marketplace. Competitive for these purposes is a target base\n compensation at or near the 50th percentile (median) for\n comparable positions. \n\n\n\n\n \n\n\n\n\n• \n\n It is to be performance oriented, with a substantial\n portion of total compensation tied to internal and external\n measures of Company performance. Superior performance should\n increase total compensation opportunities to well above the 50th\n percentile level. \n\n\n\n\n \n\n\n\n\n• \n\n It is to link compensation to the interests of stockholders\n by promoting performance that will enhance stockholder value\n and providing stock-based incentives. \n\n\n\n\n \n\n\n\n\n• \n\n It is to promote long-term careers with the Company by\n paying the executives competitively, motivating them to\n contribute to the Company’s success, and rewarding them for\n their performance. \n\n\n\n\n\nCompensation Policies and\nPrograms\n\n\n\n\nConsistent with the characteristics outlined above, the\nCommittee has adopted the following compensation program,\nconsisting of three components, base salary, annual incentives\nand long-term incentives:\n\n\n\n\nBase salary for all management positions will be at or\nnear the industry or market median for comparable positions\nunless there are sound reasons for significant variations. The\nCommittee’s judgment is the guiding factor in\ndeterminations of base salary, as well as other compensation\nissues. The executive’s actual salary relative to this\ncompetitive framework varies based on individual performance and\nthe individual’s skill, experience and background.\n\n\n\n\nShort-term incentives under the Company’s Annual\nIncentive Plan (“AIP”) are designed to provide the\nopportunity to earn a competitive (50th percentile) award, based\non the achievement of predefined performance measures. Under the\ngeneral provisions of the AIP, no compensation is earned if\nperformance falls below preset thresholds but up to 200% of the\ntarget award is paid in the case of significant overachievement.\nThe performance measures are based primarily on the achievement\nof goals of Company financial performance and of operating goals\nthat position the Company for future financial achievement.\nDiscretionary adjustments are permitted by the Committee and are\ngenerally limited to plus or minus 20% in cases of superior\nindividual achievement, so long as aggregate adjustments do not\nexceed 5%. However, these limits may be increased at the\ndiscretion of the Committee in the case of outstanding\nachievements by the Company.\n\n\n\n\nIn its consideration of performance targets for the 2004 AIP,\nthe Committee took into account the challenging economic\nconditions facing the Company as well as the Company’s\nbusiness and operations plans. The Committee also considered the\nadverse effects on employee morale if substantial opportunities\nwere not provided for meeting financial and operating\nperformance goals given the Committee’s decision not to pay\nAIP for 2002 and 2003 to corporate officers and executives and\nin 2003 more broadly to management level employees generally. In\nthe view of the Committee, the goals established for 2004,\nindividually and in the aggregate, represented substantial\nchallenges to AIP participants. The performance goals for 2004\nconsisted of the following components:\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n\n\n\n\n\n\nOperating Earnings Achievements\n \n\n\n \n \n \n40% \n \n\n\n\n\n\n\nOperating Cash\n Flow Achievements\n \n\n\n \n \n \n30% \n \n\n\n\n\n\n\nManufacturing Improvements\n \n\n\n \n \n \n10% \n \n\n\n\n\n \n\n\n(Inventory Turns 5%)\n \n\n\n \n \n \n \n \n\n\n\n\n \n\n\n(Yield Improvements 5%)\n \n\n\n \n \n \n \n \n\n\n\n\n\n\nSafety and Environmental\n Improvements\n \n\n\n \n \n \n10% \n \n\n\n\n\n \n\n\n(Lost Time Incidents 5%)\n \n\n\n \n \n \n \n \n\n\n\n\n \n\n\n(Recordable Incidents 5%)\n \n\n\n \n \n \n \n \n\n\n\n\n\n\nCustomer Responsiveness Improvements\n \n\n\n \n \n \n10% \n \n\n\n\n\n \n\n\n(Delivery Performance 5%)\n \n\n\n \n \n \n \n \n\n\n\n\n \n\n\n(Quality/ Complaints 5%)\n \n\n\n \n \n \n \n \n\n\n\n\n\n\nTotal\n \n\n\n \n \n \n100% \n \n\n\n\n\n\n\nUnder the 2004 AIP, no payments would be made if the operating\nearnings or operating cash flow achieved were less than the\nestablished minimums for each item, notwithstanding the level of\nachievement of the other performance goals for the year.\n\n\n\n\nLong-term incentives: The year 2003 had been a transition\nyear for the Company’s long-term incentive programs, in\nlarge part due to the effects of the Sarbanes-Oxley Act of 2002,\nwhich resulted in the termination of the Company’s Stock\nAcquisition and Retention Programs (the “SARP”). In\n2004, the Committee adopted a long-term program with three parts\nthat were, individually and in the aggregate, designed to focus\nthe attention of participating executives on changes and\nimprovements in operations necessary to reverse the trends of\nthe prior three years, further control costs and build a base\nfor profitable operations.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n• \n\n The Committee chose to continue to provide long-term incentive\n opportunities under the Company’s Total Shareholder Return\n Incentive Compensation Program (“TSRP”), under the\n Company’s 2000 Incentive Plan, to encourage executives to\n focus their efforts on matters that improve the return to\n stockholders more rapidly than a peer group of companies. \n\n\n\n\n \n\n\n\n\n• \n\n For the restricted stock component of the long-term incentive\n program, also granted under the 2000 Incentive Plan, restricted\n stock vesting was weighted half on performance only and half on\n retention with acceleration for performance. The form of the\n restricted stock award for 2004 was designed to focus the\n attention of eligible executives on reversing losses and\n developing profitability for the Company and simultaneously\n provide encouragement to executives to remain with the Company\n through the difficult market conditions that the Company was\n facing at the time the awards were approved. \n\n\n\n\n \n\n\n\n\n• \n\n A new program, called the Key Executive Performance Program\n (“KEPP”), was designed to focus the Company’s\n most senior executives directly on reversing the Company’s\n recent financial performance and, if achieved, would provide the\n executives with rewards that are individually substantial but\n only a small fraction of the earnings improvement generated. \n\n\n\n\n \n\n\n\n\n• \n\n Finally, the Committee discontinued its regular stock option\n program. \n\n\n\n\n\nIn the view of the Committee, its adoption of the three parts of\nthe long-term incentive program for 2004 effectively transformed\nthe focus of the program to directly encourage individuals to be\nagents for positive change in financial and operational\nperformance. Hewitt Associates advised the Committee that the\nCompany’s long-term incentive program for 2004-2006, as\ndescribed above, is competitive.\n\n\n\n\nThe programs implemented for 2004 were:\n\n\n\n\n(1) Total Shareholder Return Incentive Compensation\nProgram - Under the TSRP, participants receive an\nopportunity to earn a target number of shares based on a\ncomparison of the Company’s total shareholder return\n(“TSR”) for a three-year performance period with the\nTSR during such period of a peer group of companies approved by\nthe Committee. The peer group, which consists of publicly held\ncompanies that engage in metals or metals-related businesses, is\nnot the same as the peer group index used in the performance\ngraph on page 31. Target awards are calculated as a percent\nof base salary.\n\n\n\n\nThe Committee determined that there would be a new TSRP\nperformance period starting on January 1, 2004 and ending\non December 31, 2006. Under the terms of the TSRP, the\nCommittee selected the eligible participants, established a\ntarget number of performance shares for each participant and\nconstructed the peer group of companies for that performance\nperiod.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nFor the 2004-2006 performance period, participants in the TSRP\ncan earn from 50% (at threshold, which is performance at the\n25th percentile) to a maximum of 300% of the targeted number of\nshares for performance at the 90th percentile or above,\ndepending on the percentile rank of the Company’s TSR for\nthe performance period as compared to the TSR of the peer group\nof companies for the same period. In view of the Company’s\nbusiness plan and to provide opportunities for awards at levels\ndeemed competitive, the threshold level of performance was\nreduced from 35% to 25% and an additional level of maximum\nperformance was added for performance deemed outstanding.\nPreviously, the maximum award was 200% of the target award at\nthe 75th percentile or above. Performance below threshold will\nearn 0%. Certificates for the earned number of shares of Common\nStock, if any, are issued to the participants after the end of\nthe performance period. The design of the TSRP was largely\nunchanged from 2003.\n\n\n\n\n(2) Restricted Stock Program: In connection with a\nbroad and on-going discussion about stock options as a\ncompensation device, the Committee chose to not grant stock\noptions in 2004 and to award shares of restricted ATI Common\nStock under the Company’s 2000 Incentive Plan, and add a\nperformance-based component to the grant. For restricted shares\nawarded in 2004, one half of each restricted stock award will\nvest solely on the achievement of performance criteria over the\nperiod January 1, 2004 through December 31, 2006. The\nremaining one half of each award will vest, if at all, upon the\nearlier of (i) March 11, 2009 (if, except in the case\nof death or retirement, the participant is still an employee of\nthe Company on that date) or (ii) attainment of the\nperformance criteria for the January 1, 2004 through\nDecember 31, 2006. The performance criteria were closely\ntied to attainment of the Company’s business plan for the\n2004-06 period.\n\n\n\n\nIn making the award, the Committee reduced the number of\nemployees eligible to participate in the Company’s\nequity-based long-term incentive programs. Instead, the\nCommittee suggested that employees who previously received\nequity-based awards (which continued, by their terms, to vest\nthrough the year 2006), but were below certain responsibility\nlevels would, at some point in the future, be provided a form of\nsuitable replacement.\n\n\n\n\nThe amount of the restricted share award is calculated as a\npercent of base salary, based on the market value of the stock\n(without restrictions) on the date of the award.\n\n\n\n\n(3) Key Employee Performance Plan: After the\ndiscontinuance of the SARP, the Committee was advised that the\nlong-term incentives offered by the Company would not be\ncompetitive unless a replacement plan was implemented. In 2004,\nthe Committee adopted the KEPP as a cash bonus plan that\nmeasures improvements in the Company’s after-tax net income\nfor the period January 1, 2004 through December 31,\n2006 (the “Measurement Period”) over the period\nJanuary 1, 2001 through December 31, 2003 (the\n“Base Period”). No amounts are payable under KEPP\nunless the Company’s after-tax net income for the\nMeasurement Period exceeds the Company’s after-tax net\nincome, as defined, for the Base Period (which was a loss of\n$252 million) by $192 million. When set, this target\nrepresented a significant turnaround from the losses incurred by\nthe Company during 2002 and 2003 and the projected loss for the\nfirst year in the Measurement Period. Potential payments\nincrease if after-tax net income for the Measurement Period\nimproves by predetermined amounts, but the maximum payment is\nreached if after-tax net income increases by $502 million\nover the Base Period. A portion of a particular\nparticipant’s potential bonus payment must be paid if the\ndesignated earnings improvements are reached. However, at all\nperformance levels other than maximum, the Committee retains\nnegative discretion to reduce a portion of the potential bonus\npayment. The reduction, if made, is intended to be guided by the\nextent to which fifteen weighted and identified operating\nobjectives are attained. These operating objectives are intended\nto position the Company for future financial performance.\nParticipation in KEPP is restricted to the nine most senior\nexecutives of the Company.\n\n\n\n\nStock ownership guidelines: In light of the changes in\nthe equity-based compensation programs in 2003-2004, the\nCompany’s stock ownership guidelines were revised in 2004\nso that the guidelines apply only to executive officers, as\nfollows:\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n\n\n\n\n\n\nCEO\n \n\n\n \n \n \n3 times salary \n \n\n\n\n\n\n\nExecutive Vice Presidents\n \n\n\n \n \n \n2 times salary \n \n\n\n\n\n\n\nVice Presidents\n \n\n\n \n \n \n1 times salary \n \n\n\n\n\n\n\nThe executives have until September 2008 to reach the\ntargeted ownership levels. The guidelines, which call for a\nminimum level of stock ownership based on the executive’s\nbase salary, are designed to further link these executives’\ninterests to increased stockholder value.\n\n\n\n\nCompensation of the Chief Executive\nOfficer and 2004 Compensation Results\n\n\n\n\nL. Patrick Hassey became the Company’s President and Chief\nExecutive Officer on October 1, 2003, and became Chairman\non May 6, 2004. Under the terms of his employment\nagreement, Mr. Hassey is paid an annual base salary of at\nleast $850,000, which, according to the Committee’s\nconsulting firm, is within the competitive range. Under the\nagreement, Mr. Hassey also participates in the AIP, TSRP\nand KEPP, as well as the Supplemental Pension Plan (on the terms\noutlined below). In accordance with the provisions of the AIP,\nTSRP and restricted stock program, Mr. Hassey’s target\naward is 80%, which for 2004 resulted in a target award of\n66,667 shares under the TSRP and the issuance of 59,728 shares\nof restricted stock. The Committee determined that\nMr. Hassey’s participation level in KEPP, as a percent\nof the total awards payable to the nine participants in the\nKEPP, is 23.8%.\n\n\n\n\nAIP for 2004: In establishing the award for 2004, the\nCommittee determined that operating earnings and cash flow for\nATI and each operating company were substantially in excess of\nthe maximum target performance and that achievements in\nmanufacturing improvements, safety and environmental, and\ncustomer responsiveness were well in excess of target\nperformance. In addition to looking at the performance targets\nset forth in the AIP, the Committee evaluated the performance of\nL. Patrick Hassey, Chairman, President and Chief Executive\nOfficer, as to results, strategy, building the Company’s\ncapabilities, leadership performance, and board and governance\nleadership performance. The Committee determined that\nMr. Hassey’s delivery on the results targeted was\nexceptional in all areas. After reviewing Mr. Hassey’s\nperformance, including the significant progress made in leading\nthe Company, developing its management team, substantially\nexceeding the business plan and implementing a number of\noperating and strategic goals deemed critical by the Company,\nthe Committee chose to pay Mr. Hassey a total award of\n$2 million, which included a discretionary bonus of\n$943,280 above the formula amount of the AIP. In addition, based\non the Company’s performance and the actions taken by the\nCompany’s executive management team, the Committee\ndetermined that each of the named officers would be paid a total\naward of $500,000.\n\n\n\n\nTSRP for 2002-2004: The three-year performance period\nunder the TSRP, for 2002 through 2004, expired on\nDecember 31, 2004. At that time, the Company’s\npercentile ranking was 35.71% compared to the total shareholder\nreturn (as defined in the TSRP) of the peer group of companies\nidentified under the TSRP for that performance period. Since the\npercentile ranking was above the minimum 35% percentile,\ncertificates representing shares of ATI Common Stock (after\ncertain tax withholding in the form of stock as approved by the\nCommittee) were delivered to eligible TSRP participants with a\nvalue of 52.4% of the target award for the 2002-2004 performance\nperiod. No award was paid to Mr. Hassey under this program,\nbecause he did not become the Company’s CEO until\nOctober 2003 and accordingly did not participate in the\nTSRP for the 2002-2004 performance period.\n\n\n\n\n2003 Restricted Stock Program: In March 2003, the\nCommittee made awards of restricted shares of Common Stock which\nwould vest on March 13, 2008, if the executive was then an\nemployee of the Company or, if earlier, on the attainment of\npositive earnings on an earnings per share basis in a fiscal\nyear. Based on earnings for 2004, that criterion was met and\ncertificates without restrictions for Common Stock (after\ncertain tax withholding in the form of stock as approved by the\nCommittee) were delivered to holders of the restricted stock. No\naward was paid to Mr. Hassey under this program because he\ndid not become the Company’s CEO until October 2003.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nStock Ownership Guidelines: Each of the named officers\nmet the stock ownership guidelines as of December 31, 2004.\n\n\n\n\nDeductibility of Executive\nCompensation\n\n\n\n\nSection 162(a) of the Internal Revenue Code imposes limits\non tax deductions for annual compensation paid to a chief\nexecutive officer and other highly compensated officers unless\nthe compensation qualifies as “performance-based” or\nis otherwise exempt under the law. The Company’s Incentive\nPlan which embraces the awards of restricted stock and the TSRP,\nas well as the KEPP, are intended to meet the deductibility\nrequirements of the regulations promulgated under\nSection 162(m). The Committee, however, may determine in\nany year, as it did in 2004 in connection with the discretionary\nbonus paid to Mr. Hassey as described above, that it would\nbe in the best interests of the Company that such amount be paid\neven if a portion of the amount was not deductible under the\nrequirements of Section 162(m) of the Code.\n\n\n\n\nSubmitted by:\n\n\n\n\nPERSONNEL AND COMPENSATION\n\n\n\n\nCOMMITTEE, whose members are:\n\n\n\n\nCharles J. Queenan, Jr., Chairman\n\n\n\n\nDiane C. Creel, Vice Chair\n\n\n\n\nW. Craig McClelland\n\n\n\n\nJames E. Rohr\n\n\n\n\nSTOCK INCENTIVE AWARD\n\n\n\n\nSUBCOMMITTEE, whose members are:\n\n\n\n\nDiane C. Creel, Chair\n\n\n\n\nW. Craig McClelland\n\n\n\n\nJames E. Rohr\n\n\n\n\nCompensation Committee Interlocks and\nInsider Participation\n\n\n\n\nNo member of the Personnel and Compensation Committee or Stock\nIncentive Award Subcommittee is an officer or employee of the\nCompany. Mr. Queenan holds the honorific title of senior\ncounsel to a law firm that provided services to the Company\nduring 2004 and 2005. Mr. Queenan does not participate in\nthat firm’s earnings or profits. No other member of the\nCommittee has a current or prior relationship, and no officer\nwho is a statutory insider of the Company has a relationship to\nany other company required to be described under the Securities\nand Exchange Commission rules relating to disclosure of\nexecutive compensation.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nEXECUTIVE COMPENSATION\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\nSummary Compensation Table\n\n\n\n\nThe following Summary Compensation Table sets forth information\nabout the compensation paid by the Company to the Chief\nExecutive Officer and to each of the other four most highly\ncompensated officers required to file reports under\nSection 16 of the Securities Exchange Act of 1934, as of\nDecember 31, 2004 (the “named officers”).\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \nAnnual Compensation \n \nLong-Term Compensation \n \n \n\n\n\n\n \n \n \n \n \n \n \n\n\n\n\n \n \n \n \nAwards \n \nPayouts \n \n \n\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \n \n \nOther \n \n \n \nSecurities \n \n \n \n \n\n\n\n\n \n \n \n \nAnnual \n \n \n \nUnder- \n \n \n \n \n\n\n\n\nName and \n \n \n \nCompen- \n \nRestricted \n \nlying \n \nLTIP \n \nAll Other \n\n\n\n\nPrincipal \n \n \n \nSalary \n \nBonus \n \nsation \n \nStock \n \nOptions \n \nPayouts \n \nCompensation \n\n\n\n\nPositions(1) \n \nYear \n \n($)(2) \n \n($)(3) \n \n($)(4) \n \nAward($)(5) \n \n(Shares)(7) \n \n($)(8) \n \n($)(9) \n\n\n\n\n \n\n\n\n\n\n\nL. Patrick Hassey\n \n\n\n \n \n\n \n \n \n850,000 \n \n \n \n2,000,000 \n \n \n \n20,004 \n \n \n \n662,981 \n \n \n \n \n \n \n \n \n \n527,022 \n \n\n\n\n\n \n\nChairman, President and\n \n \n\n \n \n \n212,500 \n \n \n \n670,000 \n \n \n \n352,680 \n \n \n \n \n \n \n120,000 \n \n \n \n \n \n \n124,314 \n \n\n\n\n\n \n\nChief Executive Officer\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\nRichard J. Harshman\n \n\n\n \n \n\n \n \n \n358,334 \n \n \n \n500,000 \n \n \n \n2,764 \n \n \n \n175,491 \n \n \n \n \n \n \n114,319 \n \n \n \n76,688 \n \n\n\n\n\n \n\nExecutive Vice President-Finance\n \n \n\n \n \n \n305,000 \n \n \n \n \n \n \n329,222 \n \n \n \n59,999 \n \n \n \n40,000 \n \n \n \n \n \n \n517,687 \n \n\n\n\n\n \n\n\nand Chief Financial Officer\n \n\n\n \n \n\n \n \n \n300,000 \n \n \n \n \n \n \n58,160 \n \n \n \n300,000 \n(6) \n \n \n60,000 \n \n \n \n18,896 \n \n \n \n129,783 \n \n\n\n\n\n \n\n\n\n\n\n\nDouglas A. Kittenbrink\n \n\n\n \n \n\n \n \n \n358,334 \n \n \n \n500,000 \n \n \n \n2,764 \n \n \n \n175,491 \n \n \n \n \n \n \n133,375 \n \n \n \n83,962 \n \n\n\n\n\n \n\n\nExecutive Vice President,\n \n\n\n \n \n\n \n \n \n336,872 \n \n \n \n \n \n \n387,971 \n \n \n \n70,001 \n \n \n \n40,000 \n \n \n \n \n \n \n615,952 \n \n\n\n\n\n \n\nATI Business Systems and\n \n \n\n \n \n \n350,000 \n \n \n \n \n \n \n57,073 \n \n \n \n268,000 \n(6) \n \n \n60,000 \n \n \n \n16,983 \n \n \n \n169,361 \n \n\n\n\n\n \n\nGroup President, Engineered\n Products Segment\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\nJack W. Shilling\n \n\n\n \n \n\n \n \n \n400,000 \n \n \n \n500,000 \n \n \n \n2,764 \n \n \n \n194,994 \n \n \n \n \n \n \n152,432 \n \n \n \n215,996 \n \n\n\n\n\n \n\nExecutive Vice President,\n \n \n\n \n \n \n385,003 \n \n \n \n \n \n \n527,065 \n \n \n \n80,001 \n \n \n \n40,000 \n \n \n \n \n \n \n961,936 \n \n\n\n\n\n \n\nCorporate Development and\n \n \n\n \n \n \n400,000 \n \n \n \n \n \n \n62,165 \n \n \n \n400,000 \n(6) \n \n \n60,000 \n \n \n \n28,837 \n \n \n \n316,869 \n \n\n\n\n\n \n\nChief Technical Officer\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\nJon D. Walton\n \n\n\n \n \n\n \n \n \n356,666 \n \n \n \n500,000 \n \n \n \n2,991 \n \n \n \n175,491 \n \n \n \n \n \n \n129,560 \n \n \n \n215,656 \n \n\n\n\n\n \n\nExecutive Vice President,\n \n \n\n \n \n \n327,253 \n \n \n \n \n \n \n522,768 \n \n \n \n67,999 \n \n \n \n40,000 \n \n \n \n \n \n \n905,671 \n \n\n\n\n\n \n\nHuman Resources,\n \n \n\n \n \n \n340,000 \n \n \n \n \n \n \n60,478 \n \n \n \n340,000 \n(6) \n \n \n60,000 \n \n \n \n36,042 \n \n \n \n357,605 \n \n\n\n\n\n \n\nChief Legal and Compliance Officer,\n General Counsel and Corporate Secretary\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(1) \n\n Mr. Hassey became President and Chief Executive Officer on\n October 1, 2003. Prior to October 1, 2003,\n Mr. Hassey was an outside consultant to ATI executive\n management. He also served as a non-employee director of the\n Company from July 1 through September 30, 2003. The other\n officers were named to their respective offices in\n October 2003. \n\n\n\n\n \n\n\n\n\n(2) \n\n Includes cash compensation deferred pursuant to the savings\n portion of the Company’s Retirement Savings Plan, a\n qualified defined contribution plan under Section 401(a) of\n the Internal Revenue Code. Does not include amounts paid to\n Mr. Hassey for his services as a non-employee director of\n the Company from July 1 through September 30, 2003. In\n April 2003, in view of the difficult business and economic\n conditions impacting the Company, the base salaries of the then\n named officers for 2003 were reduced by 5%. \n\n\n\n\n \n\n\n\n\n(3) \n\n Includes payments under the Company’s Annual Incentive Plan\n and, for Mr. Hassey in 2003, the amount of the sign on and\n retention bonus paid to him under his employment agreement. See\n Employment Agreement and Change in Control Agreements below. \n\n\n\n\n \n\n\n\n\n(4) \n\n There was no other annual compensation exceeding the lesser of\n $50,000 or 10% of total salary and bonus compensation in each of\n the years shown. The remaining amounts for 2004 represent tax\n payments made by the Company relating to benefits provided to\n the named officers. Effective April 1, 2003, the Company\n cancelled various benefits previously provided to Company\n executives, including financial planning assistance,\n business-related health and country club memberships, and use of\n a Company-supplied car. For 2003, includes amounts reimbursed\n for the payment of taxes substantially all of which, for\n Mr. Hassey, related to the sign on and retention bonus\n designed to cover the costs of his relocation to Pittsburgh,\n Pennsylvania, and for the other named officers, related to\n amounts received in the termination of the Company’s stock\n acquisition and retention programs (the “SARP”) which\n were then used to repay to the Company balances outstanding on\n the SARP loans. \n\n\n\n\n \n\n\n\n\n(5) \n\n Represents the dollar value of the Company’s Common Stock\n on the date the restricted stock was granted. All grants of\n restricted stock were made under the Company’s Incentive\n Plan. The following number of shares of restricted shares of\n Common Stock were awarded to each of the named officers on\n March 11, 2004: 59,728 shares for Mr. Hassey, 15,810\n shares for Mr. Harshman, 15,810 shares for\n Mr. Kittenbrink, 17,567 shares for Dr. Shilling and 15,810\n shares for Mr. Walton. The dollar values are based on the\n closing price of the Company’s Common Stock on\n March 11, 2004 ($11.10). One-half of these restricted\n shares will vest solely on the achievement of performance\n criteria over the period January 1, 2004 through \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n\nDecember 31, 2006. The\n remaining one half of each award will vest, if at all, upon the\n earlier of (i) March 11, 2009 (if, except in the case\n of death or retirement, the participant is still an employee of\n the Company on that date) or (ii) attainment of the\n specified performance criteria for the performance period\n January 1, 2004 through December 31, 2006. Dividends\n are paid on restricted shares, but the dividends paid on the\n restricted shares issued in 2004 are automatically reinvested in\n additional shares subject to the same restrictions. As of\n December 31, 2004, this reinvestment resulted in the\n issuance of the following number of additional restricted shares\n of Common Stock: 864 shares for Mr. Hassey, 229 shares for\n Mr. Harshman, 229 shares for Mr. Kittenbrink, 254\n shares for Dr. Shilling and 229 shares for Mr. Walton.\n The total number of restricted shares held by the named officers\n on December 31, 2004 and the market value of such shares\n (if unrestricted) on the last business day of 2004 based on the\n closing stock price of $21.67 were Mr. Hassey, 60,592\n shares ($1,313,029); Mr. Harshman, 41,845 shares\n ($906,781); Mr. Kittenbrink, 47,260 shares, ($1,024,124);\n Dr. Shilling, 52,230 shares ($1,131,824); and\n Mr. Walton, 45,286 shares ($981,348). The restricted shares\n awarded to Messrs. Harshman, Kittenbrink, Shilling and\n Walton in 2003 vested because the Company reported positive\n earnings on an earnings per share basis at the end of 2004.\n \n\n\n\n\n \n\n\n\n\n(6) \n\nThe restricted shares reported for\n 2002 were included in the restricted shares the named officers\n forfeited in connection with the termination of the SARP in\n 2003. In connection with the SARP termination, the number of\n restricted shares and stock options forfeited were as follows:\n Mr. Harshman, 43,998 shares and 33,634 options;\n Mr. Kittenbrink, 46,438 shares and 55,997 options;\n Dr. Shilling, 62,329 shares and 62,554 options; and\n Mr. Walton, 54,481 shares and 89,316 options.\n \n\n\n\n\n \n\n\n\n\n(7) \n\nReflects options granted under the\n Company’s Incentive Plan. No options were granted under\n this Plan in 2004. The amount shown represents the number of\n shares the named officer could purchase by exercising the\n options. The 2003 amount does not include options to purchase\n 1,000 shares of Common Stock that Mr. Hassey received as\n compensation for his service as a non-employee director prior to\n October 1, 2003.\n \n\n\n\n\n \n\n\n\n\n(8) \n\nFor 2004, the amounts show the\n market value of the shares of Common Stock distributed under the\n TSRP for the 2002-2004 Performance Period on February 10,\n 2005, which was the effective date of the award, based on the\n closing stock price of $22.85. For 2002, the amounts shown\n include the cash and the closing market price of Common Stock\n distributed under the Performance Share Plan for the 1999-2000\n award period. This plan was discontinued and replaced by the\n TSRP in 2001. No amount was paid under the TSRP for the\n 2001-2003 performance period.\n \n\n\n\n\n \n\n\n\n\n(9) \n\nFor 2004, includes annual accruals\n by the Company for possible future payments to the named\n officers under the Supplemental Pension Plan described under\n “Pension Plans” on page 28. For 2004, the amounts\n accrued were: Mr. Hassey, $425,000; Mr. Harshman,\n $37,349; Mr. Kittenbrink, $46,424; Dr. Shilling,\n $167,589 and Mr. Walton, $172,530. Includes credits for\n 2004 Company contributions pursuant to the retirement portion of\n the Company’s Retirement Savings Plan to the named officers\n in the amount of $13,845 each and Company matching contributions\n pursuant to the savings portion of that Plan in the amount of\n $6,500 each. Includes credits for 2004 Company contributions to\n the Benefit Restoration Plan, as follows: Mr. Hassey,\n $73,163; Mr. Harshman, $17,800; Mr. Kittenbrink,\n $16,009; Dr. Shilling, $22,175; and Mr. Walton,\n $17,625. Under the Benefit Restoration Plan, the Company\n supplements the payments received by participants under the\n pension provisions described under “Pension Plans” on\n page 28 and the Retirement Savings Plan by accruing\n benefits on behalf of the participants in amounts that are\n equivalent to the portion of the payments or benefits that\n cannot be paid or accrued under such plans due to limitations\n imposed by the Internal Revenue Code. Includes the premium cost\n of group insurance coverage in excess of $50,000 as follows:\n Mr. Hassey, $8,514; Mr. Harshman, $1,194;\n Mr. Kittenbrink, $1,184; Dr. Shilling, $5,887; and\n Mr. Walton, $5,156.\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nStock Options\n\n\n\n\nNo options were granted to the named executive officers during\n2004.\n\n\n\n\nThe following table indicates that none of the named officers\nexercised stock options during 2004 and sets forth the\nunexercised options held at December 31, 2004.\n\n\n\n\nAggregated Option Exercises In 2004 And Fiscal Year-End Option\nValues at December 31, 2004\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \n \n \n \n \nNumber of Securities \n \nValue of Unexercised \n\n\n\n\n \n \n \n \n \n \nUnderlying Unexercised \n \nIn-The-Money \n\n\n\n\n \n \nShares \n \n \n \nOptions at 12/31/04 (#) \n \nOptions at 12/31/04 ($)(1) \n\n\n\n\n \n \nAcquired \n \nValue \n \n \n \n \n\n\n\n\nName \n \non Exercise (#) \n \nRealized ($) \n \nExercisable \n \nUnexercisable \n \nExercisable \n \nUnexercisable \n\n\n\n\n \n\n\n\n\n\n\nL. P. Hassey\n \n\n\n \n \n \n \n \n \n \n \n \n121,000 \n \n \n \n \n \n \n1,800,700 \n \n \n \n \n\n\n\n\n\n\nR. J. Harshman\n \n\n\n \n \n \n \n \n \n \n \n \n68,331 \n \n \n \n46,669 \n \n \n \n801,742 \n \n \n \n718,335 \n \n\n\n\n\n\n\nD. A. Kittenbrink\n \n\n\n \n \n \n \n \n \n \n \n \n73,331 \n \n \n \n46,669 \n \n \n \n819,871 \n \n \n \n718,335 \n \n\n\n\n\n\n\nJ. W. Shilling\n \n\n\n \n \n \n \n \n \n \n \n \n73,331 \n \n \n \n46,669 \n \n \n \n819,871 \n \n \n \n718,335 \n \n\n\n\n\n\n\nJ. D. Walton\n \n\n\n \n \n \n \n \n \n \n \n \n73,331 \n \n \n \n46,669 \n \n \n \n819,871 \n \n \n \n718,335 \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(1) \n\n The “value” of unexercised options is calculated by\n subtracting the exercise price per share from $21.61, which was\n the average of the high and low sales prices of a share of\n Company Common Stock on the New York Stock Exchange on the last\n business day of 2004. \n\n\n\n\n\nIn connection with the termination of the SARP, named officer\nparticipants forfeited 241,501 options previously granted to\nthem. See Note 6 to the Summary Compensation Table.\n\n\n\n\n\n\n\n\n\n\nLong-Term Incentive Programs\n\n\n\n\nThe following table sets forth information about awards for the\n2004-2006 performance period established in 2004 under the Total\nShareholder Return Incentive Compensation Program (the\n“TSRP”).\n\n\n\n\nThe amounts included in the Estimated Future Payouts columns\nrepresent the potential issuance of Common Stock to the named\nofficers depending on the level of achievement (i.e., threshold,\ntarget or maximum) of the performance goals for the three-year\nperformance period; interpolation is made on a straight line\nbasis between each scale. Participants will not receive any\nshares of Common Stock under the program if the Company does not\nachieve the threshold level of performance objectives during the\nperformance period. These awards are also discussed in the\nReport on Executive Compensation.\n\n\n\n\nTotal Shareholder Return Incentive Compensation Program -\n\n\n\n Awards In 2004\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \n \n \n \n \nEstimated Future Payouts \n\n\n\n\n \n \n \n \n \n \nUnder Non-Stock Price-Based Plans \n\n\n\n\n \n \n \n \nPerformance or \n \n \n\n\n\n\n \n \n \n \nOther Period Until \n \nBelow \n \n \n\n\n\n\n \n \nShares, Units \n \nMaturation or \n \nThreshold \n \nThreshold \n \nTarget \n \nMaximum \n\n\n\n\nName \n \nor Other Rights \n \nPayout(1) \n \n(#) \n \n(#) \n \n(#) \n \n(#) \n\n\n\n\n \n\n\n\n\n\n\nL. P. Hassey\n \n\n\n \n \n \n66,667 \n \n \n \n2004-2006 \n \n \n \n \n \n \n33,334 \n \n \n \n66,667 \n \n \n \n200,001 \n \n\n\n\n\n\n\nR. J. Harshman\n \n\n\n \n \n \n17,647 \n \n \n \n2004-2006 \n \n \n \n \n \n \n8,824 \n \n \n \n17,647 \n \n \n \n52,941 \n \n\n\n\n\n\n\nD. A. Kittenbrink\n \n\n\n \n \n \n17,647 \n \n \n \n2004-2006 \n \n \n \n \n \n \n8,824 \n \n \n \n17,647 \n \n \n \n52,941 \n \n\n\n\n\n\n\nJ. W. Shilling\n \n\n\n \n \n \n19,608 \n \n \n \n2004-2006 \n \n \n \n \n \n \n9,804 \n \n \n \n19,608 \n \n \n \n58,824 \n \n\n\n\n\n\n\nJ. D. Walton\n \n\n\n \n \n \n17,647 \n \n \n \n2004-2006 \n \n \n \n \n \n \n8,824 \n \n \n \n17,647 \n \n \n \n52,941 \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(1) \n\n The amount of the award is based on the participant’s base\n salary at the beginning of the performance period. At the time\n the award opportunity was set, the awards were denominated in\n shares of Common Stock (with the number of shares based on the\n average price of a share of Common Stock on the New York Stock\n Exchange for a fixed period immediately prior to the beginning\n of the performance period). \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nThe following table sets forth information about awards for the\n2004-2006 measurement period established in 2004 under the Key\nEmployee Performance Program (the “KEPP”).\n\n\n\n\nUnder the KEPP, participants are eligible to receive a\npre-stated percentage of a long-term incentive pool, calculated\nas a function of a percentage of the executive’s base\nsalary, as defined. Performance over the three-year performance\nperiod 2004-2006 is measured as a function of the Company’s\naggregate after-tax net income relative to the 2001-2003\nbaseline of a loss of $252 million. Two separate award\npools have been established under the KEPP. The Level 1\npool is earned strictly as a function of aggregate after-tax net\nincome in 2004-2006 relative to the 2001-2003 baseline. The\nLevel 2 pool, funded as a function of the aggregate\nafter-tax net income described above, is paid only in the event\nthat specific pre-set strategic goals are achieved. The\nLevel 2 pool is zero if the maximum award is achieved in\nthe Level 1 pool. All payouts will be made in cash. If the\nminimum performance in both measures is below the threshold\nlevel, then no award will be earned. For the 2004-2006\nperformance periods, the maximum payment is reached if aggregate\nafter-tax net income increases by $502 million over the\nbase period. These awards are also discussed in the Compensation\nCommittee Report.\n\n\n\n\nKey Employee Performance Program - Awards In 2004\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \n \n \n \n \nEstimated Future Payouts Under \n\n\n\n\n \n \n \n \nPerformance or \n \nNon-Stock Price-Based Plans \n\n\n\n\n \n \n \n \nOther Period Until \n \n \n\n\n\n\n \n \nShares, Units \n \nMaturation or \n \nBelow Threshold \n \nThreshold and Target \n \nMaximum \n\n\n\n\nName \n \nor Other Rights \n \nPayout (1) \n \n($) \n \n($) \n \n($) \n\n\n\n\n \n\n\n\n\n\n\nL. P. Hassey\n \n\n\n \n \n \n- \n \n \n \n2004-2006 \n \n \n \n \n \n \n850,000 \n \n \n \n6,000,000 \n \n\n\n\n\n\n\nR. J. Harshman\n \n\n\n \n \n \n- \n \n \n \n2004-2006 \n \n \n \n \n \n \n400,000 \n \n \n \n2,800,000 \n \n\n\n\n\n\n\nD. A. Kittenbrink\n \n\n\n \n \n \n- \n \n \n \n2004-2006 \n \n \n \n \n \n \n400,000 \n \n \n \n2,800,000 \n \n\n\n\n\n\n\nJ. W. Shilling\n \n\n\n \n \n \n- \n \n \n \n2004-2006 \n \n \n \n \n \n \n400,000 \n \n \n \n2,800,000 \n \n\n\n\n\n\n\nJ. D. Walton\n \n\n\n \n \n \n- \n \n \n \n2004-2006 \n \n \n \n \n \n \n400,000 \n \n \n \n2,800,000 \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\nPension Plans\n\n\n\n\nThe Company maintains a qualified defined benefit pension plan,\ncalled the Allegheny Technologies Incorporated Pension Plan\n(“ATI Pension Plan”), which has a number of benefit\nformulas that apply separately to various groups of employees\nand retirees. In general, the variances among formulas are\ndetermined by work location and job classification. A principal\ndeterminant is whether an employee was employed by Allegheny\nLudlum Corporation (“Allegheny Ludlum”), as in the\ncase of Messrs. Kittenbrink, Shilling and Walton, or by\nTeledyne, Inc. (“TDY”), as in the case of\nMr. Harshman, in 1996 when those corporations engaged in a\nbusiness combination to form the Company. Mr. Hassey does\nnot participate in the ATI Pension Plan under any formula.\n\n\n\n\nAllegheny Ludlum ceased pension accruals under its pension\nformula in 1988, except for employees who then met certain age\nand service criteria. Dr. Shilling met those criteria and\ncontinues to accrue benefits under the Allegheny Ludlum formula\nof the ATI Pension Plan as well as under a restoration plan that\nwill pay retirement benefits to Dr. Shilling from general\ncorporate assets in an amount representing the difference\nbetween the amount generated under the Allegheny Ludlum formula\nwithout regard to limitations imposed by the Internal Revenue\nCode, and the amount generated after giving effect to\nlimitations under the Internal Revenue Code. Mr. Walton has\na modest frozen benefit under the Allegheny Ludlum formula.\nMr. Kittenbrink accrued no benefit under the Allegheny\nLudlum benefit formula. Neither Mr. Walton nor\nMr. Kittenbrink participate in a restoration plan for\ndefined benefits.\n\n\n\n\nBoth the Allegheny Ludlum formula and the TDY formula multiply\nyears of service by compensation and then by a factor to produce\na benefit which, in turn, is reduced with respect to Social\nSecurity amounts payable to determine a monthly amount payable\nas a straight life annuity. Participants can choose alternate\nbenefit\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nforms, including survivor benefits. The Allegheny Ludlum and TDY\ndefinitions of service and compensation differ somewhat, as do\nthe factors used in the respective formulas. However, the\ndifferences in the resulting benefits between the two formulas\nare small for the named officers to which they apply.\n\n\n\n\nUpon becoming a corporate employee, Mr. Harshman ceased\nreceiving credit for service under the TDY formula after having\nbeen credited with approximately twenty years of service under\nthat formula. Mr. Harshman participates in a restoration\nplan for defined benefits that would restore to him from\ncorporate assets the amount not payable under the TDY formula\ndue to limits under the Internal Revenue Code.\n\n\n\n\nAs an alternative benefit, if greater than the benefit under the\napplicable Allegheny Ludlum or TDY formula, the named\nindividuals, other than Mr. Hassey, participate in the ATI\nPension Plan at specified, actuarially determined accrual rates\nper year that do not exceed annual accrual rates permitted under\nthe Internal Revenue Code. The monthly straight life annuity\nvalue is determined by multiplying (1) the highest rate of\nmonthly compensation in the five years prior to retirement after\ngiving effect to applicable limitations on compensation imposed\nby Section 401(a)(17) of the Internal Revenue Code (which\nwas $205,000 for 2004) by (2) the specified accrual rates\n(ranging from 2.5% to 3.4%) and then by (3) years of\nservice not in excess of 30. Benefits are not subject to offset\nfor Social Security or other third party benefits. These\nbenefits are subject to further reduction to comply with any\napplicable limitations under the Internal Revenue Code. As of\nDecember 31, 2004, credited years of service recognized\nunder this provision of the ATI Pension Plan were 26.67 for\nMr. Harshman, 12.67 for Mr. Kittenbrink, 30.00 for\nDr. Shilling, and 18.83 for Mr. Walton.\nMr. Hassey does not participate in the ATI Pension Plan. No\nrestoration plan applies to benefits accrued under the\nspecified, actuarially determined rates.\n\n\n\n\nThe following table shows the estimated annual benefits\ncalculated on a straight life annuity basis payable to\nDr. Shilling and other eligible participants under the\nAllegheny Ludlum formula of the ATI Pension Plan and applicable\nrestoration plans in specified compensation and years of service\nclassifications upon attainment of age 65:\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \nEstimated Annual Pension Benefits for \n\n\n\n\n \n \nRepresentative Years of Continuous Service* \n\n\n\n\n \n \n \n\n\n\n\n Remuneration \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n $ \n300,000 \n \n \n$ \n95,400 \n \n \n$ \n119,250 \n \n \n$ \n143,100 \n \n \n$ \n166,951 \n \n \n$ \n190,801 \n \n \n$ \n190,801 \n \n\n\n\n\n \n400,000 \n \n \n \n127,400 \n \n \n \n159,250 \n \n \n \n191,100 \n \n \n \n222,951 \n \n \n \n254,801 \n \n \n \n254,801 \n \n\n\n\n\n \n500,000 \n \n \n \n159,400 \n \n \n \n199,250 \n \n \n \n239,100 \n \n \n \n278,951 \n \n \n \n318,801 \n \n \n \n318,801 \n \n\n\n\n\n \n600,000 \n \n \n \n191,400 \n \n \n \n239,250 \n \n \n \n287,100 \n \n \n \n344,951 \n \n \n \n382,801 \n \n \n \n382,801 \n \n\n\n\n\n \n800,000 \n \n \n \n255,400 \n \n \n \n319,250 \n \n \n \n383,100 \n \n \n \n446,951 \n \n \n \n510,801 \n \n \n \n510,801 \n \n\n\n\n\n \n1,000,000 \n \n \n \n319,400 \n \n \n \n399,250 \n \n \n \n479,100 \n \n \n \n558,951 \n \n \n \n638,801 \n \n \n \n638,801 \n \n\n\n\n\n \n1,500,000 \n \n \n \n479,400 \n \n \n \n599,250 \n \n \n \n719,100 \n \n \n \n838,951 \n \n \n \n958,801 \n \n \n \n958,801 \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n* \n\n The set of formulas used to determine retirement benefits under\n this provision of the ATI Pension Plan considers the\n participant’s annual eligible earnings in the highest five\n consecutive years of the last ten years prior to retirement at\n an accrual rate per year of service not to exceed limitations\n under applicable law multiplied by years of service recognized\n under the ATI Pension Plan. Eligible earnings include base\n salary, including tax-deferred contributions by the employee\n under the Company’s savings plans, and awards, when\n received, under the Company’s short-term incentive plans.\n Benefits are integrated with social security. \n\n\n\n\n\nAt the service level of twenty years applicable to\nMr. Harshman under the TDY formula, benefits calculated\nsolely under the TDY formula are approximately the same as the\namount shown in the column headed “20”. The modest\nfrozen benefits payable to Mr. Walton under the Allegheny\nLudlum formula are substantially less than the minimum amount\nset forth in the above table.\n\n\n\n\nIn addition, the Company has established a Supplemental Pension\nPlan that provides certain key employees of the Company and its\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nsubsidiaries, including the named officers (or their\nbeneficiaries in the event of death), with monthly payments in\nthe event of retirement, disability or death, equal to 50% of\nmonthly base salary as of the date of retirement, disability or\ndeath. Monthly retirement benefits start following the end of\nthe two-month period after the later of (1) age 62, if\nactual retirement occurs prior to age 62 but after age 58 with\nthe approval of the Board of Directors, or (2) the date\nactual retirement occurs, and generally continue for a 118-month\nperiod. With respect to Mr. Hassey, one year of payments is\naccrued for each year of service, to a maximum of 10 years.\nThe plan describes the events that will terminate an\nemployee’s participation in the plan.\n\n\n\n\n\n\n\n\n\n\nEmployment and Change In Control\nAgreements\n\n\n\n\nIn August 2003, the Company entered into an employment\nagreement with L. Patrick Hassey in connection with his\nemployment as President and Chief Executive Officer, effective\nOctober 1, 2003. The agreement has an initial term of three\nyears and renews automatically each month absent notice from one\nparty to another so that the agreement continues to have a\nthree-year term. Under the terms of his employment agreement,\nMr. Hassey is paid an annual base salary of at least\n$850,000. Under the agreement, for 2003, Mr. Hassey\nreceived (a) a target level bonus for the October 1,\n2003 to December 31, 2003 time period, and participation in\nthe Company’s Annual Incentive Program thereafter;\n(b) a sign-on and retention bonus in the aggregate,\nafter-tax amount of $500,000 designed to cover the costs of his\nrelocation to Pittsburgh, Pennsylvania; and (c) an initial\ngrant of options to purchase 120,000 shares of Common Stock,\nwhich was the target award amount under the Company’s stock\noption program and which vested on the date he became the\nCompany’s President and Chief Executive Officer. In\naddition, Mr. Hassey is entitled to participate in the\nCompany’s other executive compensation programs, including\nthe TSRP, the KEPP and the Supplemental Pension Plan on the\nterms outlined above. The agreement provides that if the Company\nterminates Mr. Hassey’s employment for reasons other\nthan cause or he resigns for good reason (as such terms are\ndefined in the employment agreement), Mr. Hassey will\nreceive a cash severance payment equal to three times the sum of\nhis annual base salary plus the amount of AIP payable for the\nyear at the greater of actual-to-date performance or target; all\naccrued benefits; acceleration of the vesting of stock options\nand stock-based rights; and earned but not yet paid TSRP or\nother equity-based awards; unless such termination or\nresignation occurs after a change of control. If such\ntermination or resignation occurs within one year after a change\nof control, Mr. Hassey will receive payments with respect\nto the TSRP and KEPP for the completed and uncompleted\nperformance periods, equity-based awards will vest at the target\nlevel of performance, and he will be reimbursed for taxes,\nincluding excise taxes, assessed.\n\n\n\n\nThe Company entered an employment agreement with Mr. Walton\nin connection with the combination of Allegheny Ludlum and\nTeledyne in 1996. The agreement provides for the payment of base\nsalary as well as for eligibility to participate in incentive\ncompensation, equity, employee and fringe benefit plans offered\nto senior executives of the Company. By its terms, the agreement\nrenews automatically each month absent notice from one party to\nthe other, so that the then remaining term is one year. The\nagreement generally terminates prior to the expiration date\nwithout breach by any party in the event of\nMr. Walton’s death, disability or voluntary\nresignation. The Company may also terminate the agreement for\ncause without breach by it. Mr. Walton may resign for good\nreason (which is defined to include demotion, reduction in base\npay or movement of corporate headquarters) and receive severance\npayments equal to the base pay and bonus, determined based on\nactual financial results, as well as continued participation in\ncertain compensation and employee benefit plans, for one year,\nincluding certain supplemental pension benefits.\n\n\n\n\nThe Company has entered into change in control severance\nagreements, as amended, with the named officers and other key\nemployees to assure the Company that it will have the continued\nsupport of the executive and the availability of the\nexecutive’s advice and counsel notwithstanding the\npossibility, threat or occurrence of a change in control (as\ndefined in the agreement). In general, the agreements provide\nfor the payment of severance benefits if a change in control\noccurs and within 24 months\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nafter the change in control either the Company terminates the\nexecutive’s employment with the Company without cause (as\ndefined) or the executive terminates employment with the Company\nfor good reason (as defined). Severance compensation includes a\nmultiple of base salary (three for the named officers), certain\naccrued benefits, and payments with respect to the TSRP and KEPP\nfor the completed and uncompleted performance periods. The\nagreements with Messrs. Harshman, Kittenbrink, Shilling and\nWalton and other key employees also provide for a prorated\npayment of an incentive bonus equal to that which would have\nbeen paid had the Company achieved 120% of target, the\ncontinuation of welfare benefits for 36 months and\nreimbursement for outplacement services. The agreements also\nprovide for the vesting of outstanding options and the lifting\nof restrictions on stock awarded under the Incentive Plan. The\nagreements have a term of three years, which three-year term\nwill continue to be extended until either party gives written\nnotice that it no longer wants to continue to extend the term.\nIf a change of control occurs during the term, the agreements\nwill remain in effect for the longer of three years or until all\nobligations of the Company under the agreements have been\nfulfilled. In 2004, the Committee reviewed the change in control\nseverance agreements, including the change in control valuation,\nas well as the purposes and effects of the agreements and\ndetermined that it is in the Company’s best interests to\nretain the change in control agreements on their current terms\nand conditions.\n\n\n\n\n\n\n\n\n\n\nCUMULATIVE TOTAL STOCKHOLDER\nRETURN\n\n\n\n\n \n\n\n\n\n\n\nThe graph set forth below shows the cumulative total stockholder\nreturn (i.e., price change plus reinvestment of dividends) on\nthe Common Stock from December 31, 1999 through\nDecember 31, 2004 as compared to the S&P 500 Index\nand the S&P Steel Index (formerly known as the S&P Iron\n& Steel Index). The graph assumes that $100 was\ninvested on December 31, 1999.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \nAllegheny Technologies \n \nS&P 500 Index \n \nS & P 500 Steel Index \n\n\n\n\n \n \n \n \n \n \n \n\n\n\n\n\n\nDec-99\n \n\n\n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\nDec-00\n \n\n\n \n \n \n73.62 \n \n \n \n90.9 \n \n \n \n62.86 \n \n\n\n\n\n\n\nDec-01\n \n\n\n \n \n \n81.21 \n \n \n \n80.09 \n \n \n \n80.68 \n \n\n\n\n\n\n\nDec-02\n \n\n\n \n \n \n31.92 \n \n \n \n62.39 \n \n \n \n61.61 \n \n\n\n\n\n\n\nDec-03\n \n\n\n \n \n \n70.8 \n \n \n \n80.29 \n \n \n \n104.48 \n \n\n\n\n\n\n\nDec-04\n \n\n\n \n \n \n117.72 \n \n \n \n89.03 \n \n \n \n167.33 \n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nCERTAIN TRANSACTIONS\n\n\n\n\n \n\n\n\n\n\n\nFamily Relationship. Terry L. Dunlap, President of\nAllegheny Ludlum, is a member of the immediate family of Robert\nP. Bozzone, a member of the Company’s Board of Directors.\nDuring 2004, Mr. Dunlap received annual cash compensation\nof $547,375 and participated, on a proportionate basis, based on\nhis base salary and salary grade, in the compensation programs\ndescribed in this proxy statement.\n\n\n\n\nKirkpatrick & Lockhart Nicholson Graham LLP. The\nCompany retained the law firm of Kirkpatrick & Lockhart\nNicholson Graham LLP to perform services for the Company during\n2004 and 2005. Charles J. Queenan, Jr., a member of the\nCompany’s Board of Directors, holds the honorific title of\nsenior counsel to that law firm. See “Compensation\nCommittee Interlocks and Insider Participation” on\npage 24.\n\n\n\n\n\n\n\n\n\n\nOTHER INFORMATION\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\nAnnual Report on\nForm 10-K\n\n\n\n\nCOPIES OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K, WITHOUT\nEXHIBITS, CAN BE OBTAINED WITHOUT CHARGE BY WRITTEN REQUEST TO\nTHE CORPORATE SECRETARY AT 1000 SIX PPG PLACE, PITTSBURGH,\nPENNSYLVANIA 15222-5479 OR (412) 394-2800.\n\n\n\n\n\n\n\n\n\n\nProxy Solicitation\n\n\n\n\nThe Company pays the cost of preparing, assembling and mailing\nthis proxy-soliciting material. We will reimburse banks, brokers\nand other nominee holders for reasonable expenses they incur in\nsending these proxy materials to our beneficial stockholders\nwhose stock is registered in the nominee’s name.\n\n\n\n\nThe Company has engaged Morrow & Company, Inc. to help\nsolicit proxies from brokers, banks and other nominee holders of\nCommon Stock at a cost of $8,000 plus expenses. Our employees\nmay also solicit proxies for no additional compensation.\n\n\n\n\nOn behalf of the Board of Directors:\n\n\n\n\n\n\n\n\n\nJon D. Walton\n\n\n\n\nCorporate Secretary\n\n\n\n\nDated: March 14, 2005\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nAppendix A\n\n\n\n\n\n\n\n\n\nSTANDARDS OF DIRECTOR\nINDEPENDENCE\n\n\n\n\nThe Board has established the following standards to assist it\nin determining whether or not directors qualify as\n“independent” pursuant to the guidelines and\nrequirements set forth in the New York Stock Exchange’s\nCorporate Governance Rules. The Board will make its\ndetermination that a director is independent following a review\nof all relevant information and shall apply the following\nstandards:\n\n\n\n\n1. Independence\nGenerally\n\n\n\n \nAn “Independent Director” is one who:\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n(a) \n\n is not, and has not been within the past three years: \n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\n\n(i)\n \n\n\n \n \n\nan employee of the Company;\n \n\n\n\n\n\n\n(ii)\n \n\n\n \n \n\ndirectly compensated by the Company\n in an amount in excess of $100,000 per year, other than director\n and committee fees and pension or other forms of deferred\n compensation for prior service that is not contingent on\n continued service;\n \n\n\n\n\n\n\n(iii)\n \n\n\n \n \n\naffiliated with or employed by a\n present or former internal or external auditor of the Company or\n any of its affiliates;\n \n\n\n\n\n\n\n(iv)\n \n\n\n \n \n\nemployed as an executive officer of\n another company where any of the Company’s present\n executives serves on the compensation committee of the other\n company;\n \n\n\n\n\n\n\n(v)\n \n\n\n \n \n\nan executive officer or employee of\n another company that makes payments to, or receives payments\n from, the Company for property or services in an amount that\n exceeds, in any single fiscal year, the greater of\n $1 million or 2% of the other company’s consolidated\n gross revenues;\n \n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n(b) \n\n does not have, and has not had within the past three years, an\n immediate family member who has been an executive officer of the\n Company or has received the direct compensation described in\n clause (a)(ii) above (other than as an employee who is not an\n executive officer of the Company) or has had a relationship\n described in clause (a)(iii) above (other than as an employee\n who is not employed in a professional capacity by the auditor)\n or (a)(iv) above or has been an executive officer of another\n company described in clause (a)(v) above; and \n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n(c) \n\n has been determined by the Company’s Board not to have any\n material relationship with or to the Company (either directly or\n as a partner, stockholder or officer of an organization that has\n a material relationship with or to the Company). Ownership of a\n significant amount of the Company’s stock does not, by\n itself, preclude a determination of independence. \n\n\n\n\n\n2. Additional Independence\nCriteria for Audit Committee Members\n\n\n\n\nIn addition to being an Independent Director, as defined above,\neach member of ATI’s Audit Committee must not, except in\nhis or her capacity as a member of the Audit Committee, the\nBoard or any other Board committee of the Company:\n(a) accept directly or indirectly any consulting, advisory\nor other compensatory fee from the Company or any subsidiary\nthereof; or (b) be an affiliated person of the Company or any\nsubsidiary thereof. For this purpose, the term “affiliated\nperson” means one who, directly or indirectly through one\nor more intermediaries, controls, or is controlled by, or is\nunder common control with, the Company or any subsidiary\nthereof. A person will not be deemed to be in control of the\nCompany or any subsidiary, however, unless the person is:\n(A) the beneficial owner, directly or indirectly, of more\nthan 10% of any class of voting equity securities of the Company\nor (B) an executive officer or director of the Company.\n\n\n\nA-1\n\n\n\n\n\n\n\n\n\n\n\n\n\nAs an amplification of the foregoing:\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\n\n(i)\n \n\n\n \n \n\nDirector’s fees (including\n fees for service on committees) must be the sole compensation\n that an Audit Committee member receives from the Company.\n \n\n\n\n\n\n\n(ii)\n \n\n\n \n \n\nPermissible director fees may\n include equity-based awards and may also include fees that are\n structured to provide additional compensation for additional\n duties (such as extra fees for serving on and/or chairing Board\n committees).\n \n\n\n\n\n\n\n(iii)\n \n\n\n \n \n\nA former Company employee who later\n qualifies as an Independent Director will not be barred from\n chairing or serving as a voting member of the Audit Committee\n merely because he or she receives a pension or other form of\n deferred compensation from the Company for his or her prior\n service (provided such compensation is not contingent in any way\n on continued service as a director).\n \n\n\n\n\n\n\n(iv)\n \n\n\n \n \n\nNeither an Audit Committee member\n nor his or her firm may receive any fees from the Company,\n directly or indirectly, for services as a consultant or a legal\n or financial adviser. This applies without regard to whether the\n Audit Committee member is directly involved in rendering any\n such services to the Company.\n \n\n\n\n\n\n\n3. Materiality Determination Based\non Facts and Circumstances\n\n\n\n\nIn assessing the materiality of any existing or proposed\ndirector’s relationship with the Company for the purpose of\nevaluating the director’s independence (other than a\nrelationship described in clause (a) of the definition of\nan Independent Director, which will always be deemed material),\nthe Board will consider all relevant facts and circumstances.\nMaterial relationships can include, but are not limited to,\ncommercial, industrial, banking, consulting, legal, accounting,\ncharitable and familial relationships. The Board should evaluate\nmateriality not only from the perspective of the director, but\nalso from that of persons and organizations with which the\ndirector has a relationship. To assist in determining the\nmateriality of specific relationships, the Board has adopted the\nfollowing non-exclusive standards (the “Materiality\nStandards”):\n\n\n\n\nThe interest of a person or a person’s Immediate Family\nMember in a transaction or series of similar transactions with\nthe Company or its subsidiaries within the past five years will\nnot be deemed to create a material relationship with the Company\nfor the purposes of determining that person’s independence\nif:\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\n\n(i)\n \n\n\n \n \n\nthe amount of the transaction or\n series of transactions does not exceed $60,000, or\n \n\n\n\n\n\n\n(ii)\n \n\n\n \n \n\nthe amount of the transaction or\n series of transactions exceeds $60,000, but (A) the\n transaction accounts for less than the greater of 2 percent\n or $1 million of the Company’s consolidated gross\n revenues for the last full fiscal year, (B) the transaction\n is a commercial transaction carried out at arm’s length in\n the ordinary course of business, and (C) the interest of the\n person or the person’s Immediate Family Member arises\n solely from (1) his or her position as an executive officer\n or employee of another party to the transaction and the\n transaction accounts for less than the greater of 2 percent\n or $1 million of the consolidated gross revenues of that\n other party for its last fiscal year or (2) his or her ownership\n of less than ten percent of the equity ownership of another\n party to the transaction, or\n \n\n\n\n\n\n\n(iii)\n \n\n\n \n \n\nthe rate or rates involved in the\n transaction are determined by competitive bids, or the\n transaction involves the rendering of services as a common or\n contract carrier, or public utility, at rates or charges fixed\n in conformity with law or governmental authority, or\n \n\n\n\n\n\nA-2\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\n\n(iv)\n \n\n\n \n \n\nthe transaction involves services\n as a bank depositary of funds, transfer agent, registrar,\n trustee under a trust indenture, or similar services.\n \n\n\n\n\n\n\n•\n \n\n\n \n \n\nA person’s affiliation with a\n firm, corporation or other entity that engages, or during the\n fiscal year immediately prior to the date of the determination\n has engaged, or proposes to engage in a transaction with the\n Company or its subsidiaries, as a customer or supplier or\n otherwise, whose business accounts for less than the greater of\n 2 percent or $1 million of the Company’s\n consolidated gross revenues for its last full fiscal year and\n less than the greater of 2 percent or $1 million of\n the consolidated gross revenues of the other firm, corporation\n or other entity for its last fiscal year, will not be deemed to\n create a material relationship with the Company for purposes of\n determining that person’s independence.\n \n\n\n\n\n\n\n•\n \n\n\n \n \n\nA person’s affiliation with a\n firm, corporation or other entity to which the Company or its\n subsidiaries is indebted at the date of the determination in an\n aggregate amount that is less than 5 percent of ATI’s\n consolidated gross assets for its last full fiscal year, will\n not be deemed to create a material relationship with the Company\n for purposes of determining that person’s independence.\n \n\n\n\n\n\n\n•\n \n\n\n \n \n\nA person’s service as “of\n counsel” to a law firm that the Company has retained during\n the last fiscal year or has retained or proposes to retain\n during the current fiscal year will not be deemed to create a\n material relationship with the Company for purposes of\n determining that person’s independence if that person does\n not receive compensation from that law firm other than receipt\n of a pension or other form of deferred compensation for prior\n service (provided such compensation is not contingent in any way\n on continued service).\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n\n For purposes of the Materiality Standards only, the term\n “Company” refers to the Company and its subsidiaries,\n unless the context requires otherwise, and a person is\n affiliated with a firm, corporation or other entity if he or she\n is an executive officer of, or owns, or during the last full\n fiscal year has owned, either of record or beneficially in\n excess of a ten percent equity interest in that firm,\n corporation or other entity. \n\n\n\n\n \n\n\n\n\n \n\n The basis for the Board’s determination that a relationship\n is not material will be disclosed in ATI’s proxy statement.\n If the relationship does not satisfy the Materiality Standards,\n the basis for the Board’s determination will be\n specifically explained. \n\n\n\n\n\n4. Certain Definitions\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n(a) \n\nImmediate Family Members. “Immediate Family\n Members” include a person’s spouse, parents, children,\n siblings, mothers-and fathers-in-law, sons- and\n daughters-in-law, brothers- and sisters-in-law, and anyone\n (other than employees) who shares such person’s home. \n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n(b) \n\nAffiliate. Except as otherwise specified in\n paragraph 2. above for purposes of certain Audit Committee\n requirements or as otherwise defined for purposes of the\n Materiality Standards, “affiliate” of the Company\n means a subsidiary, sibling company, predecessor or parent\n company, except that another entity shall no longer be deemed an\n affiliate of the Company after five years following termination\n of its relationship with the Company. Thus, a director who is or\n has been within the past two years an executive officer of\n another entity that stopped being an affiliate of the Company\n more than five years ago will qualify as an Independent Director\n absent any other disqualifying relationship. \n\n\n\n\nA-3\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nAppendix B\n\n\n\n\n\n\n\n\n\nAUDIT COMMITTEE CHARTER\n\n\n\n\nThe Board of Directors shall appoint annually the Audit\nCommittee (the “Committee”) and appoint its Chairman.\nMembers of the Committee shall serve at the will of the Board of\nDirectors.\n\n\n\n\nComposition\n\n\n\n\nThe Committee shall be comprised of three or more directors, and\nshall meet the size, independence and financial literacy and\nexpertise requirements of the New York Stock Exchange\n(“NYSE”), of Section 10A(m)(3) of the Securities\nand Exchange Act of 1934 (the “Exchange Act”) and the\nrules and regulations promulgated by the Securities and Exchange\nCommission (“SEC”), as may be in effect from time to\ntime. The Board of Directors shall endeavor to appoint at least\none member to the Committee who is an “audit committee\nfinancial expert” as defined by the SEC.\n\n\n\n\nCommittee members shall not simultaneously serve on the audit\ncommittees of more than two other companies without first\nobtaining approval from the Company’s Board of Directors.\n\n\n\n\nPurpose\n\n\n\n\nThe Committee’s primary purpose shall be to assist the\nBoard of Directors’ oversight of (i) the integrity of\nthe financial statements of the Company, (ii) the\nCompany’s compliance with legal and regulatory\nrequirements, (iii) the qualifications and independence of\nthe Company’s independent accountants engaged for the\npurpose of preparing or issuing an audit report or performing\nother audit, review or attest services for the Company\n(“independent accountants”) and (iv) the\nperformance of the Company’s internal audit function and\nindependent accountants. The Committee shall also prepare the\naudit committee report required by the SEC to be included in the\nCompany’s annual proxy statement. The Committee shall also\nperform such other duties and responsibilities set forth in and\nconsistent with this Charter.\n\n\n\n\nAuthority\n\n\n\n\nThe Committee shall have the authority to review and investigate\nany matter or activity involving financial accounting,\nreporting, conflict of interest, or internal controls of the\nCompany. The Committee shall have the authority to obtain advice\nand assistance from outside legal, accounting or other advisors\nwithout seeking approval from the Board of Directors. The\nCompany shall provide appropriate funding to the Committee for\npayment of (i) the compensation of any registered\naccounting firm engaged for the purpose of preparing or issuing\nan audit report or performing other audit, review or attest\nservices for the Company, (ii) compensation to any advisors\nemployed by the Committee and (iii) the Committee’s\nordinary administrative expenses that are necessary or\nappropriate in carrying out its duties.\n\n\n\n\nDuties and Responsibilities\n\n\n\n\nThe Committee shall:\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n1. \n\n Lead the Board of Directors in fulfilling its statutory and\n fiduciary responsibilities for fiscal examinations of the\n Company and in monitoring management’s and the independent\n accountants’ participation in the Company’s accounting\n and financial reporting process. \n\n\n\n\n \n\n\n\n\n \n2. \n\n Review the Company’s administrative, operational and\n internal accounting controls and its prescribed fiscal\n procedures, financial controls and codes of conduct with the\n independent accountants and the Company’s financial\n management. \n\n\n\n\n \n\n\n\n\n \n3. \n\n Exercise sole authority to appoint, retain, compensate, oversee,\n evaluate and terminate the Company’s independent\n accountants considering, among other things, the independence and \n\n\n\n\nB-1\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n \n\n effectiveness of the independent accountants. The Committee\n shall resolve all disagreements between the Company’s\n management and the independent accountants regarding financial\n accounting. The independent accountants shall report directly to\n the Committee. The Committee shall exercise sole authority to\n pre-approve all auditing services and permitted non-audit\n services (including the fees and terms thereof) to be performed\n for the Company by its independent accountants, subject to the\n de minimis exception for non-audit services described in\n Section 10A(i)(1)(B) of the Exchange Act which are approved\n by the Committee prior to the completion of the audit. The\n Committee shall not engage the independent accountants to\n perform non-audit services prohibited by law or regulation. The\n Committee shall consult with management but shall not delegate\n these responsibilities to management, and shall be directly\n responsible for the resolution of disputes between management\n and the independent accountants regarding financial reporting.\n The Committee may form and delegate authority to subcommittees\n consisting of one or more members when appropriate, including\n the authority to grant pre-approvals of audit and permitted\n non-audit services, provided that decisions of such\n subcommittees to grant pre-approvals shall be presented to the\n full Committee at its next scheduled meeting. \n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n4. \n\n At least annually, obtain and review a report from the\n Company’s independent accountants describing (a) the\n accountants’ internal quality-control procedures,\n (b) any material issues raised by the most recent\n quality-control review, or peer review, of the accountants, or\n by any inquiry or investigation by governmental or professional\n authorities within the preceding five years respecting one or\n more independent audits carried out by the accountants, and any\n steps taken to deal with these issues, and (c) all\n relationships between the independent accountants and the\n Company (to be used as an aid in assessing the accountants’\n independence). Obtain the written statement from the independent\n accountants that the accountants are required to furnish to the\n Committee under Independence Standards Board Standard No. 1. At\n least annually, present its conclusions with respect to the\n independent accountants to the Board of Directors. \n\n\n\n\n \n\n\n\n\n \n5. \n\n Obtain from the independent accountants assurance that\n Section 10A of the Exchange Act has been adhered to. \n\n\n\n\n \n\n\n\n\n \n6. \n\n Review the report from the independent accountants required by\n Section 10A of the Exchange Act describing, as to any audit it\n performs: \n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n (a) \n\n all critical accounting policies and practices to be used; \n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n (b) \n\n all alternative treatments of financial information within GAAP\n that have been discussed with management, ramifications of the\n use of such alternatives, and the treatment preferred by the\n independent accountants; and \n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n (c) \n\n other material written communications between the independent\n accountants and management, such as any management letter or\n schedule of unadjusted differences. \n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n7. \n\n Set clear Company policies as to the hiring of employees or\n former employees of the Company’s independent accountants. \n\n\n\n\n \n\n\n\n\n \n8. \n\n Discuss the Company’s earnings press releases (paying\n particular attention to any use of “pro forma” or\n “adjusted” non-GAAP information), as well as financial\n information and earnings guidance provided to analysts and\n rating agencies, in the manner required by the NYSE. This\n discussion may be done generally, such as discussing the types\n of information to be disclosed and the types of presentations to\n be made. Prior to the issuance of the Company’s release of\n quarterly and annual earnings, the Committee shall review with\n the independent accountants, the senior internal audit executive\n and management of the Company the results of each quarterly\n review and annual audit and any other matters required to be\n communicated to the Committee by the independent accountants\n under generally accepted auditing standards. \n\n\n\n\n \n\n\n\n\n \n9. \n\n Meet to review and discuss with management, the senior internal\n audit executive and the independent accountants the\n Company’s annual audited financial statements and quarterly\n financial statements, as well as related SEC reports, including\n reviewing the Company’s specific disclosures under\n “Management’s Discussion and Analysis of Financial\n Condition and Results of Operations,” \n\n\n\n\nB-2\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n \n\n for their adequacy and compliance with generally accepted\n accounting, reporting and disclosure principles. Discuss with\n the independent accountants its independent judgment about the\n quality and acceptability of accounting principles that were\n used, the reasonableness of significant judgments that were\n used, and the clarity of the disclosure in the financial\n statements. Recommend to the Board of Directors whether, based\n on discussions with management, the senior internal audit\n executive and the independent accountants, the financial\n statements shall be included in the Company’s Annual Report\n on Form 10-K. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n10. \n\n Provide annually to the Board of Directors (a) the report\n of the Committee, for inclusion in the Company’s annual\n meeting proxy statement, which includes the written statement\n required to be made by the Committee in order to comply with\n proxy reporting obligations and (b) such written\n affirmation regarding the Committee as is required currently by\n the NYSE. \n\n\n\n\n \n\n\n\n\n11. \n\n Review the scope and staffing of the annual audit plan and other\n activities and proposed fees of the independent accountants. \n\n\n\n\n \n\n\n\n\n12. \n\n Review the scope and staffing of the annual internal audit plan\n and other activities of the Company’s internal audit\n function. \n\n\n\n\n \n\n\n\n\n13. \n\n Evaluate the effectiveness of the Company’s internal and\n external audit efforts, accounting and financial controls,\n policies and procedures, and compliance with business ethics\n policies and practices through a review of reports by, and at\n regular meetings with, the internal auditors, the independent\n accountants and management, as appropriate. Periodically meet\n separately with management, the internal auditors and the\n independent accountants. \n\n\n\n\n \n\n\n\n\n14. \n\n Discuss with the independent accountants matters relating to the\n scope and results of the independent accountants’ audit\n that the independent accountants are required to provide to the\n Committee under Statement on Auditing Standards No. 61 as\n amended by Statement on Auditing Standards No. 90, and\n applicable professional standards. \n\n\n\n\n \n\n\n\n\n15. \n\n Regularly review with the independent accountants any audit\n problems or difficulties and management’s response,\n including any restrictions on the scope of the independent\n accountants’ activities, restrictions on access to\n requested information and any significant disagreements with\n management. Review with the independent accountants:\n (a) any accounting adjustments that were noted or proposed\n by the independent accountants but were “passed,”\n (b) any communications between the audit team and the\n accounting firm’s national office respecting auditing or\n accounting issues presented by the engagement, (c) any\n “management” or “internal control” letter\n issued, or proposed to be issued, by the accountants to the\n Company and (d) the responsibilities, budget and staffing\n of the Company’s internal audit function. \n\n\n\n\n \n\n\n\n\n16. \n\n Discuss with management the Company’s major financial risk\n exposures and the steps management has taken to monitor and\n control such exposures, including the Company’s risk\n assessment and risk management guidelines and policies. \n\n\n\n\n \n\n\n\n\n17. \n\n Review: (a) major issues regarding accounting principles\n and financial statement presentations, including any significant\n changes in the Company’s selection or application of\n accounting principles, and major issues as to the adequacy of\n the Company’s internal controls and any specific audit\n steps adopted in light of material control deficiencies;\n (b) analyses prepared by management and/or the independent\n accountants setting forth significant financial reporting issues\n and judgments made in connection with the preparation of\n financial statements, including analyses of the effects of\n alternative GAAP methods on the financial statements;\n (c) the effect of regulatory and accounting initiatives, as\n well as off-balance sheet structures, if any, on the financial\n statements of the Company; and (d) disclosures made to the\n Committee and independent accountants by the Company’s CEO\n and CFO during their certification process for the\n Form 10-K and Form 10-Q about any significant\n deficiencies in the design or operation of internal controls or\n material weaknesses therein and any fraud, whether or not\n material, involving management or other employees who have a\n significant role in the Company’s internal controls. \n\n\n\n\n \n\n\n\n\n18. \n\n Review the appointment and replacement of the senior internal\n auditing executive of the Company. \n\n\n\n\nB-3\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n19. \n\n Establish procedures for (a) the receipt, retention and\n treatment of complaints received by the Company regarding\n accounting, internal accounting controls, or auditing matters,\n and (b) the confidential, anonymous submission by employees\n of the Company of concerns regarding questionable accounting or\n auditing matters. \n\n\n\n\n \n\n\n\n\n20. \n\n Discuss with the Company’s General Counsel (a) legal\n matters that may have a material impact on the financial\n statements, (b) the Company’s compliance policies,\n (c) any material reports or inquiries received from\n regulators or governmental agencies and (d) any reports of\n material violations of securities laws or breaches of fiduciary\n duty. \n\n\n\n\n \n\n\n\n\n21. \n\n Review reports and disclosures of insider and affiliated party\n transactions. \n\n\n\n\n \n\n\n\n\n22. \n\n Annually, review and reassess the adequacy of the Committee\n Charter and submit it and recommend any proposed changes to the\n Board of Directors for approval. \n\n\n\n\n \n\n\n\n\n23. \n\n Annually review the performance of the Committee. \n\n\n\n\n\nLimitation of Committee’s\nRole\n\n\n\n\nNotwithstanding that the Committee has the duties and\nresponsibilities and powers set forth in this Charter, it is not\nthe duty of the Committee to plan or conduct audits or to\ndetermine that the Company’s financial statements are\ncomplete and accurate and are in accordance with generally\naccepted accounting principles and applicable rules and\nregulations. Management is responsible for preparing the\nCompany’s financial statements and the independent\naccountants are responsible for auditing those financial\nstatements.\n\n\n\n\nMeetings\n\n\n\n\nThe Committee shall hold at least four meetings each year and\nothers as deemed necessary by its chairman. The Committee shall\nreport regularly to the Board of Directors.\n\n\n\n\nDate adopted: February 25, 2005\n\n\n\nB-4\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nIf you sign and return this card but do not specify a vote, the Trustee intends to vote FOR Items A, B and C and in its discretion on other matters.\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\n\nPlease Mark Here for Address Change or Comments\n\n\n \n \no \n\n\n\n\nSEE REVERSE SIDE \n\n\n\n\n\n\n\n\n\n\n\n\n\n\nThe Board of Directors recommends a vote FOR Items A, B and C:\n\n\n\n\n\n\n\n\n\n\n\n\nA. \nElection of the five nominees as\ndirectors: \n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\n\nFOR \n \n \n\n\n\n\nthe nominees (except\n \n \nWITHHELD \n\n\n\n\nas indicated)\n \n \nfrom all nominees \n\n\n\n\no\n \n \no \n\n\n\n\n\n\n\n\n01 Robert P. Bozzone, 02 James C. Diggs, 03 Michael J. Joyce, 04 W. Craig McClelland, 05 Louis J.\nThomas\n\n\n\n\n(To withhold authority to vote for any nominee(s), write the name(s) of the nominee(s) in\nthe space that follows:)\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n\n\n\n \n \n \n \nFOR\n \n \nAGAINST\n \n \nABSTAIN \n\n\n\n\nB.\n\n\n \n \nRatification of Appointment of Independent Auditors\n \n \no\n \n \no\n \n \no \n\n\n\n\n\n\n\n \n \n \n \nFOR\n \n \nAGAINST\n \n \nABSTAIN \n\n\n\n\nC.\n\n\n \n \nReapproval of Performance-Based Goals under 2000 Incentive Plan\n \n \no\n \n \no\n \n \no \n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n\n\n\n\n\n\n \n\n\n \n \nPlease check here to request an admission ticket to the Meeting.\n \n \no \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\nSignature\n\n\n \n \n \n \nSignature\n \n \n \n \nDate \n \n \n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nPlease sign EXACTLY as your name appears above. \n\n\n\n\n\n\n\n\n\n\n\n5 FOLD AND DETACH HERE 5\n\n\nVote by Internet or Telephone or Mail\n\n\n24 Hours a Day, 7 Days a Week\n\n\nInternet and telephone voting is available through 11:59 PM Eastern Time\n\n\nApril 18, 2005.\n\n\nYour Internet or telephone vote authorizes the Trustee to vote your shares in the same manner\n\n\nas if you marked, signed and returned your proxy card.\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \nInternet\n\n\n \n \n \n \n \n \nTelephone\n \n \n \n \n \n \nMail \n \n\n\n\n\n \nhttp://www.proxyvoting.com/emp\n\n\n \n \n \n \n \n \n1-866-540-5760\n \n \n \n \n \n \nMark, sign and date \n \n\n\n\n\n \nUse the Internet to vote your proxy.\nHave your proxy card in hand when\nyou access the web site.\n\n\n \n \n \nOR\n \n \n \nUse any touch-tone telephone to\nvote your proxy. Have your proxy\ncard in hand when you call.\n \n \n \nOR\n \n \n \nyour proxy card\n\nand\n\nreturn it in the\n\nenclosed postage-paid\n\nenvelope. \n \n\n\n\n\n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n\n\nIf you vote your proxy by Internet or by telephone,\n\n\nyou do NOT need to mail back your proxy card.\n\n\nYou can view the Annual Report and Proxy Statement\n\n\non the Internet at http://www.alleghenytechnologies.com\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\nALLEGHENY TECHNOLOGIES INCORPORATED\n\n\nVOTING INSTRUCTION CARD FOR 2005 ANNUAL MEETING\n\n\n\n\n\n\n\n \n• \nAllegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan \n\n\n\n\n \n\n\n\n\n \n• \nAllegheny Technologies Retirement Savings Plan \n\n\n\n\n \n\n\n\n\n \n• \nSavings and Security Plan of the Lockport and Waterbury Facilities \n\n\n\n\n \n\n\n\n\n \n• \nThe 401(k) Savings Account Plan For Employees of the Washington Plate Plant \n\n\n\n\n \n\n\n\n\n \n• \nThe 401(k) Plan \n\n\n\n\n \n\n\n\n\n \n• \n401(k) Savings Account Plan for the Employees of Exton Facility \n\n\n\n\n \n\n\n\n\n \n• \nTDY Industries, Inc. 401(k) Profit Sharing Plan for Certain Employees of Metalworking\nProducts \n\n\n\n\nThe undersigned hereby directs Mellon Bank, N.A., the Trustee of the above Plans, to vote the full\nnumber of shares of Common Stock allocated to the account of the undersigned under the Plans, at\nthe Annual Meeting of Stockholders of Allegheny Technologies Incorporated on April 22, 2005, and\nany adjournments thereof, upon the matters set forth on the reverse of this card, and, in its\ndiscretion, upon such other matters as may properly come before such meeting.\n\n\n\n\nPLAN PARTICIPANTS MAY GIVE DIRECTIONS BY TOLL-FREE TELEPHONE OR INTERNET BY FOLLOWING THE\nINSTRUCTIONS ON THE REVERSE SIDE OR PARTICIPANTS MAY GIVE DIRECTIONS BY COMPLETING, DATING AND\nSIGNING THIS CARD AND RETURNING IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.\n\n\nIf you wish to use this card to vote your shares, please vote, date and sign on the reverse side.\n\n\n\n\n\n\nAddress Change/Comments (Mark the corresponding box on the reverse side)\n\n\n\n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n5 FOLD AND DETACH HERE 5\n\n\n\n\n\n\n\n \n• \nAllegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan \n\n\n\n\n \n\n\n\n\n \n• \nAllegheny Technologies Retirement Savings Plan \n\n\n\n\n \n\n\n\n\n \n• \nSavings and Security Plan of the Lockport and Waterbury Facilities \n\n\n\n\n \n\n\n\n\n \n• \nThe 401(k) Savings Account Plan For Employees of the Washington Plate Plant \n\n\n\n\n \n\n\n\n\n \n• \nThe 401(k) Plan \n\n\n\n\n \n\n\n\n\n \n• \n401(k) Savings Account Plan for the Employees of Exton Facility \n\n\n\n\n \n\n\n\n\n \n• \nTDY Industries, Inc. 410(k) Profit Sharing Plan for Certain Employees of\nMetalworking Products \n\n\n\n\nAs a Plan participant, you have the right to direct Mellon Bank, N.A., the Plan Trustee, how to\nvote the shares of Allegheny Technologies Common Stock that are allocated to your Plan account and\nshown on the attached voting instruction card. The Trustee will hold your instructions in complete\nconfidence except as may be necessary to meet legal requirements.\n\n\n\n\nYou may vote by telephone, Internet or by completing, signing and returning the voting instruction\ncard (above). A postage-paid return envelope is enclosed.\n\n\n\n\nThe Trustee must receive your voting instructions by April 18, 2005. If the Trustee does not\nreceive your instructions by April 18, 2005, the Plan administrator may instruct the Trustee to\nvote your shares as the administrator directs.\n\n\n\n\nYou will receive a separate set of proxy solicitation materials for any shares of Common Stock you\nown other than your Plan shares. Your non-Plan shares must be voted separately from your Plan shares.\n\n\n\n\n\n\n\n\n\n\nEASY WAY TO SAVE THE COMPANY MONEY\n\n\nPlease consider voting by Telephone (1-866-540-5760); or Internet\n\n\n(http://www.proxyvoting.com/emp).\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nIf you sign and return this card but do not specify a vote, the proxies will vote FOR Items A, B and C and in their discretion on other matters.\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\n\nPlease Mark Here for Address Change or Comments\n\n\n \n \no \n\n\n\n\nSEE REVERSE SIDE \n\n\n\n\n\n\n\n\n\n\n\n\n\n\nThe Board of Directors recommends a vote FOR Items A, B and C:\n\n\n\n\n\n\n\n\n\n\n\n\nA. \nElection of the five nominees as\ndirectors: \n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\n\nFOR \n \n \n\n\n\n\nthe nominees (except\n \n \nWITHHELD \n\n\n\n\nas indicated)\n \n \nfrom all nominees \n\n\n\n\no\n \n \no \n\n\n\n\n\n\n\n\n01 Robert P. Bozzone, 02 James C. Diggs, 03 Michael J. Joyce, 04 W. Craig McClelland, 05 Louis J.\nThomas\n\n\n\n\n(To withhold authority to vote for any nominee(s), write the name(s) of the nominee(s) in\nthe space that follows:)\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n\n\n\n \n \n \n \nFOR\n \n \nAGAINST\n \n \nABSTAIN \n\n\n\n\nB.\n\n\n \n \nRatification of Appointment of Independent Auditors\n \n \no\n \n \no\n \n \no \n\n\n\n\n\n\n\n \n \n \n \nFOR\n \n \nAGAINST\n \n \nABSTAIN \n\n\n\n\nC.\n\n\n \n \nReapproval of Performance-Based Goals under 2000 Incentive Plan\n \n \no\n \n \no\n \n \no \n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n\n\n\n\n\n\n \n\n\n \n \nPlease check here to request an admission ticket to the Meeting.\n \n \no \n\n\n\n\n\n\n\n\nChoose MLinksm for fast, easy and secure 24/7\nonline access to your future proxy materials, investment\nplan statements, tax documents and more. Simply log on to\nInvestor ServiceDirect® at\nwww.melloninvestor.com/isd where step-by-step instructions\nwill prompt you through enrollment.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\nSignature\n\n\n \n \n \n \nSignature\n \n \n \n \nDate \n \n \n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nPlease sign EXACTLY as your name appears above. \n\n\n\n\n\n\n\n\n\n\n\n5 FOLD AND DETACH HERE 5\n\n\nVote by Internet or Telephone or Mail\n\n\n24 Hours a Day, 7 Days a Week\n\n\nInternet and telephone voting is available through 11:59 PM Eastern Time\n\n\nApril 21, 2005.\n\n\nYour Internet or\ntelephone vote authorizes the named proxies to vote your shares in the same manner\n\n\nas if you marked, signed and returned your proxy card.\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \nInternet\n\n\n \n \n \n \n \n \nTelephone\n \n \n \n \n \n \nMail \n \n\n\n\n\n \nhttp://www.proxyvoting.com/ati\n\n\n \n \n \n \n \n \n1-866-540-5760\n \n \n \n \n \n \nMark, sign and date \n \n\n\n\n\n \nUse the Internet to vote your proxy.\nHave your proxy card in hand when\nyou access the web site.\n\n\n \n \n \nOR\n \n \n \nUse any touch-tone telephone to\nvote your proxy. Have your proxy\ncard in hand when you call.\n \n \n \nOR\n \n \n \nyour proxy card\n\nand\n\nreturn it in the\n\nenclosed postage-paid\n\nenvelope. \n \n\n\n\n\n \n \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n\n\nIf you vote your proxy by Internet or by telephone,\n\n\nyou do NOT need to mail back your proxy card.\n\n\nYou can view the Annual Report and Proxy Statement\n\n\non the Internet at http://www.alleghenytechnologies.com\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\nALLEGHENY TECHNOLOGIES INCORPORATED\n\n\nPROXY FOR 2005 ANNUAL MEETING\n\n\nSolicited on Behalf of the Board of Directors of Allegheny Technologies Incorporated\n\n\nThe undersigned hereby appoints Richard J. Harshman, Mary W. Snyder and Jon D. Walton or any of\nthem, each with power of substitution and revocation, proxies or proxy to vote all shares of Common\nStock which the registered stockholder named herein is entitled to vote with all powers which the\nstockholder would possess if personally present, at the Annual Meeting of Stockholders of Allegheny\nTechnologies Incorporated on April 22, 2005, and any adjournments thereof, upon the matters set\nforth on the reverse side of this card, and, in their discretion, upon such other matters as may\nproperly come before such meeting.\n\n\n\n\nSTOCKHOLDERS MAY VOTE BY TOLL-FREE TELEPHONE OR THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE\nREVERSE SIDE OR STOCKHOLDERS MAY VOTE BY COMPLETING, DATING AND SIGNING THIS PROXY CARD AND\nRETURNING IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.\n\n\nIf you wish to use this card to vote your shares, please vote, date and sign on the reverse side.\n\n\n\n\n\n\nAddress Change/Comments (Mark the corresponding box on the reverse side)\n\n\n\n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n5 FOLD AND DETACH HERE 5\n\n\n\n\n\nDear Stockholder,\n\n\n\n\nEnclosed are materials relating to the Allegheny Technologies 2005 Annual Meeting of\nStockholders. The Notice of the Meeting and Proxy Statement describe the formal business to be\ntransacted at the meeting.\n\n\n\n\nYour vote is important. Please vote your proxy promptly whether or not you expect to attend the\nmeeting. You may vote by toll-free telephone, by Internet or by signing and returning the proxy\ncard (above) in the enclosed postage-paid envelope.\n\n\n\n\n\n\n\nJon D. Walton\n\n\n\nCorporate Secretary\n\n\n\n\n\n\n\nEASY WAYS TO SAVE THE COMPANY MONEY\n\n\n\n\n\n\n\n1. \nPlease consider voting by Telephone (1-866-540-5760); or\n\n\n\nInternet (http://www.proxyvoting.com/ati). \n\n\n\n\n \n\n\n\n\n2. \nPlease consider consenting to view the Company’s future Annual Reports and Proxy\nStatements electronically, via the Internet. In order to consent go to the website of\nAllegheny Technologies’ Transfer Agent, http://www.melloninvestor.com/isd, and follow the\nprompts. \n\n\n\n\n \n\n\n\n\n\n\n"},"accession_number":{"kind":"string","value":"0000950152-05-002078"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":90,"cells":{"_id":{"kind":"string","value":"1019737_DEF 14A_2005_0001193125-05-061541"},"cik":{"kind":"string","value":"1019737"},"company":{"kind":"string","value":"NAVIGANT CONSULTING INC"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-03-28T00:00:00","string":"2005-03-28T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-05-04T00:00:00","string":"2005-05-04T00:00:00"},"sic":{"kind":"string","value":"8742"},"state_of_inc":{"kind":"string","value":"DE"},"state_location":{"kind":"string","value":"IL"},"fiscal_year_end":{"kind":"string","value":"1231"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019737/0001193125-05-061541-index.html"},"htm_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019737/000119312505061541/ddef14a.htm"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019737/0001193125-05-061541.txt"},"filename":{"kind":"string","value":"1019737_DEF 14A_2005_0001193125-05-061541.htm"},"text":{"kind":"string","value":"\nDEF 14A\nddef14a.htm\nDEFINITIVE SCHEDULE 14A\n\nDefinitive Schedule 14A\nUNITED STATES \n\n SECURITIES AND EXCHANGE COMMISSION \n\n Washington, D.C. 20549 \n\n \n\n \n\n SCHEDULE 14A \n\n (Rule 14a-101) \n\n \n\n INFORMATION REQUIRED IN PROXY STATEMENT \n\n SCHEDULE 14A INFORMATION \n\n \n\n Proxy Statement\nPursuant to Section 14(a) of \n\n the Securities Exchange Act of 1934 (Amendment No. 1 ) \n\n \n\n \n\n Filed by the Registrant x Filed by a Party other than the Registrant ¨\n\n \n\n Check the appropriate box:\n\n\n \n\n\n\n\n¨ \n \nPreliminary Proxy Statement \n\n \n\n\n\n\n¨ \n \nConfidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) \n\n \n\n\n\n\nx \n \nDefinitive Proxy Statement \n\n \n\n\n\n\n¨ \n \nDefinitive Additional Materials \n\n \n\n\n\n\n¨ \n \nSoliciting Material Pursuant to §240.14a-12 \n\n \n\n \n\n \n\n Navigant Consulting, Inc. \n\n (Name of Registrant as Specified In Its\nCharter) \n\n \n\n \n\n \n\n (Name of Person(s) Filing Proxy Statement, if other than the Registrant)\n\n\n \n\n \n\n Payment of Filing Fee (Check the appropriate box): \n\n \n\n\n\n\nx \n \nNo fee required. \n\n \n\n\n\n\n¨ \n \nFee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. \n\n \n\n\n\n\n \n(1) \n \nTitle of each class of securities to which transaction applies: \n\n \n\n\n\n\n \n \n\n\n\n\n \n(2) \n \nAggregate number of securities to which transaction applies: \n\n \n\n\n\n\n \n \n\n\n\n\n \n(3) \n \nPer 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\ndetermined): \n\n \n\n\n\n\n \n \n\n\n\n\n \n(4) \n \nProposed maximum aggregate value of transaction: \n\n \n\n\n\n\n \n \n\n\n\n\n \n(5) \n \nTotal fee paid: \n\n \n\n\n\n\n \n \n\n\n\n\n \n\n \n\n\n\n\n¨ \n \nFee paid previously with preliminary materials. \n\n \n\n\n\n\n¨ \n \nCheck 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\nprevious filing by registration statement number, or the Form or Schedule and the date of its filing. \n\n \n\n\n\n\n \n(1) \n \nAmount Previously Paid: \n\n \n\n\n\n\n \n \n\n\n\n\n \n(2) \n \nForm, Schedule or Registration Statement No.: \n\n \n\n\n\n\n \n \n\n\n\n\n \n(3) \n \nFiling Party: \n\n \n\n\n\n\n \n \n\n\n\n\n \n(4) \n \nDate Filed: \n\n \n\n\n\n\n \n \n\n \n\n \n\n\n\n\n\n\n\n \n\n \n\n March 28, 2005 \n\n\n\n\nDear \n \nShareholder: \n\n \n\n You are cordially invited to attend the 2005 Annual Meeting of Shareholders of Navigant Consulting, Inc., which will be held at The Chicago Club, 81 East\nVan Buren, Chicago, Illinois, 60605 on Wednesday, May 4, 2005, at 9:00 a.m. Central Standard Time. I look forward to greeting as many of our shareholders as possible. \n\n \n\n Details of the business to be conducted at the meeting are given in the attached Notice of Annual Meeting and Proxy\nStatement. \n\n \n\n Whether or not you plan to attend the meeting, it\nis important that your shares be represented and voted at the meeting. Therefore, I urge you to sign and date the enclosed proxy card and promptly return it in the enclosed envelope so that your shares will be represented at the meeting. You may\nalso vote your shares over the Internet. If you so desire, you may withdraw your proxy and vote in person at the meeting. \n\n \n\n We look forward to meeting those of you who will be able to attend the meeting. \n\n \n\n Sincerely, \n\n \n \n\n William M. Goodyear \n\n Chairman of the Board and \n\n Chief Executive Officer \n\n\n\n\n\n\n\n \n\n \n\n 615 North Wabash Avenue\n\n\n Chicago, Illinois 60611 \n\n \n\n NOTICE OF ANNUAL MEETING OF SHAREHOLDERS \n\n TO BE HELD WEDNESDAY, MAY 4, 2005 \n\n \n\n To the Shareholders of\nNavigant Consulting, Inc.: \n\n \n\n We will hold the Annual Meeting of\nShareholders of Navigant Consulting, Inc. (the “Company”) at The Chicago Club, 81 East Van Buren, Chicago, Illinois 60605 on Wednesday, May 4, 2005 at 9:00 a.m. Central Standard Time. The purposes of the meeting are to: \n\n \n\n 1. Elect two Directors to our Board of Directors to serve\nfor a term of three years; \n\n \n\n 2. Consider and\nvote upon a proposed amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the Company’s total authorized shares of common stock to 150 million; \n\n \n\n 3. Consider and vote upon the 2005 Long-Term Incentive Plan\nto replace the Company’s current Long-Term Incentive Plan, which is due to expire in 2006; \n\n \n\n 4. Ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year 2005; and\n\n\n \n\n 5. Transact any other business properly\nbrought before the meeting or any adjournments of the meeting. \n\n \n\n If you were a shareholder of record at the close of business on March 10, 2005, you are entitled to notice of and to vote at the Annual Meeting. \n\n \n\n IMPORTANT \n\n \n\n Whether or not you expect to attend the meeting, we urge you to sign, date and otherwise complete the enclosed proxy card and return it promptly in the\nenvelope provided. No postage is required if mailed in the United States. You may also vote over the Internet by following the instructions on the enclosed proxy card. Sending in your proxy will not prevent you from attending and personally voting\nyour shares at the meeting because you have the right to revoke your proxy at any time before it is voted. \n\n \n\n We have also enclosed Navigant Consulting, Inc.’s 2004 Annual Report to Shareholders, which includes the Form 10-K and the proxy statement, with this\nnotice of Annual Meeting. \n\n \n\n By order of the\nBoard of Directors, \n\n \n\n \n \n\n Philip P. Steptoe \n\n Secretary \n\n \n\n Chicago, Illinois \n\n March 28, 2005 \n\n \n\n \n\n YOUR VOTE IS IMPORTANT. \n\n PLEASE VOTE\nYOUR PROXY ON THE INTERNET BY VISITING \n\n www.proxyvote.com \n\n OR \n\n MARK, SIGN, DATE AND RETURN YOUR PROXY CARD BY MAIL \n\n WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING \n\n\n\n\n\n\nNavigant Consulting, Inc. \n\n 615 North Wabash Avenue \n\n Chicago, Illinois 60611 \n\n \n\n \n\n PROXY STATEMENT \n\n \n\n \n\n General \n\n \n\n We have sent you this proxy statement and the enclosed proxy card because our Board of Directors is soliciting your proxy to\nvote at the 2005 Annual Meeting of Shareholders. We will hold the Annual Meeting on Wednesday, May 4, 2005, at 9:00 a.m. Central Standard Time, at The Chicago Club, 81 East Van Buren, Chicago, Illinois 60605. We will begin mailing this proxy\nstatement and the accompanying proxy card to shareholders beginning on or about March 28, 2005. \n\n \n\n At the Annual Meeting, our shareholders will consider (1) the election of two Directors to our Board of Directors; (2) a proposal to amend the\nCompany’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock to 150 million; (3) a proposal to adopt the 2005 Long-Term Incentive Plan to replace the current Long-Term Incentive Plan,\nwhich is due to expire next year; and (4) the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2005. The Board of Directors does not know of any other matters that may properly be\nbrought before the Annual Meeting. If other matters should properly come before the Annual Meeting, the persons named as proxies in the enclosed proxy card intend to vote or otherwise act on those matters in accordance with their best judgment.\n\n\n \n\n “NAVIGANT” is a service mark of Navigant\nInternational, Inc. Navigant Consulting, Inc. (“NCI”) is not affiliated, associated, or in any way connected with Navigant International, Inc. and NCI’s use of “NAVIGANT” is made under license from Navigant International,\nInc. \n\n \n\n Proxy Solicitation \n\n \n\n We will bear the expenses of this solicitation of proxies, including\nexpenses of preparing and mailing this proxy statement. In addition to solicitation by mail, we may solicit proxies in person or by telephone, telegram or other means of communication by our officers, directors and employees, who will receive no\nadditional compensation for, but may be reimbursed for their out-of-pocket expenses incurred in connection with, that solicitation. We have engaged D.F. King & Co., Inc. to solicit proxies and to assist us in distributing materials for a fee\nestimated at $9,000, plus reimbursement of out-of-pocket expenses. We will furnish copies of solicitation materials to brokerage firms, nominees, fiduciaries and custodians to forward to beneficial owners of shares held in their names and will\nreimburse brokerage firms and other persons representing beneficial owners of stock for their reasonable expenses in forwarding our solicitation materials to beneficial owners. \n\n \n\n Shareholders Entitled to Vote and Voting Information \n\n \n\n Only shareholders of record at the close of business on March 10, 2005, the record date for the Annual Meeting, are entitled\nto notice of and to vote at the Annual Meeting and any adjournments thereof. Each share of our common stock, par value $0.001 per share, entitles the record holder to one vote on each matter to be voted on at the meeting. As of the record date,\napproximately 48,558,000 shares of our common stock were issued and outstanding. A majority of the shares of our common stock which are issued and outstanding and entitled to vote will constitute a quorum at the meeting. \n\n \n\n Directors are elected by a plurality of the votes cast at a meeting at which\na quorum is present. A plurality means that the nominees with the largest number of votes are elected as directors up to the maximum number of directors to be chosen at the meeting. Any other matters voted on at the meeting shall be determined by a\nmajority of the votes cast. \n\n\n\n\n\n\nIf you mark “withhold authority” on your proxy card with respect to the election of a nominee\nfor director, your vote will not count either “for” or “against” the nominee. If a broker or other person holding shares for you does not vote on a proposal (broker non-votes), your shares will not be counted in determining the\nnumber of votes cast. Abstentions, however, will be considered to be votes cast. Votes withheld, abstentions and broker non-votes will be counted in determining whether a quorum is present at the meeting. \n\n \n\n If you do not give directions on your proxy card and you return the signed\ncard, the persons named in the proxy card will vote the shares at their discretion on all matters. \n\n \n\n If you vote by proxy, you may revoke that proxy at any time before it is voted by attending the meeting in person and voting in person, by sending us a\nproxy bearing a later date, or by filing with the Secretary of the Company a written revocation at the principal executive offices of Navigant Consulting, Inc., 615 North Wabash Avenue, Chicago, Illinois 60611. \n\n \n\n YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR MARKED AND SIGNED PROXY CARD\nPROMPTLY SO YOUR SHARES CAN BE REPRESENTED, EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON. \n\n \n\n PROPOSAL 1: \n\n \n\n ELECTION OF DIRECTORS \n\n \n\n The Board of Directors\nis divided into three classes, with a class of directors elected each year for a three-year term. At the Annual Meeting two Directors, Mr. William M. Goodyear and Ms. Valerie B. Jarrett, have been nominated for election to the Board. The Directors\nelected at the Annual Meeting will serve for a term of three years and until their successors are elected and qualified. Such term will expire at our Annual Meeting of Shareholders to be held in 2008. The persons named as proxies will vote for Mr.\nGoodyear and Ms. Jarrett for election to the Board unless the proxy card is marked otherwise. \n\n \n\n If either Mr. Goodyear or Ms. Jarrett becomes unable or unwilling to serve, proxies will be voted for election of a person designated by the Board. The Board knows of no reason why either Mr. Goodyear or Ms. Jarrett\nshould be unable or unwilling to serve. \n\n \n\n The Board of Directors\nrecommends that shareholders vote “FOR” Mr. Goodyear and Ms. Jarrett. \n\n \n\n A listing of the principal occupation, other major affiliations and age of the continuing Directors of the Company, including the nominees for election, is set forth below: \n\n \n\n Nominees for Election at this Meeting to a Term Expiring at the Annual Meeting of\nShareholders in 2008: \n\n \n\n William M. Goodyear, 56, has served\nas a Director since December 1999. The Board of Directors elected him Chairman of the Board and Chief Executive Officer in May 2000 and subsequently elected him President. He is past Chairman and former Chief Executive Officer of Bank of America,\nIllinois. In addition, he was President of the Bank of America’s Global Private Bank until January 1999. He was Vice Chairman and a member of the Board of Directors of Continental Bank, prior to the 1994 merger between Continental Bank\nCorporation and BankAmerica Corporation. Mr. Goodyear joined Continental Bank in 1972 and subsequently held a variety of assignments including corporate finance, corporate lending, trading and distribution. He was stationed in London from 1986 to\n1991 where he was responsible for European and Asian Operations. Mr. Goodyear is currently a member of Chicago’s Commercial Club, the Board of Trustees of the Chicago Public Library Foundation and the Finance Council of the Archdiocese of\nChicago. He is the Chairman of the Board of Trustees for the Museum of Science and Industry, a member of the Board of Trustees of the University of Notre Dame and serves on the Rush University Medical Center Board, where he chairs the Finance\nCommittee. Mr. Goodyear is a Trustee of Equity Office Properties Trust, where he is Chairman of its Audit Committee. \n\n \n\n\n\n\n\n\n\n\nValerie B. Jarrett, 48, has served as a Director since April 2002. Ms. Jarrett is a Managing Director and\nthe Executive Vice President of The Habitat Company, a premier developer and manager of residential apartments. The Habitat Company also provides residential and commercial brokerage services as well as corporate relocation services. Before joining\nThe Habitat Company, Ms. Jarrett served eight years in the City of Chicago government, first as Deputy Corporation Counsel for Finance and Development, then as Deputy Chief of Staff for Mayor Richard Daley and finally, as Commissioner of the\nDepartment of Planning and Development. Prior to joining City government, Ms. Jarrett practiced law with two private law firms specializing in the area of commercial real estate. Ms. Jarrett is Chairman of The Chicago Stock Exchange and Vice\nChairman of the University of Chicago Hospitals Board of Trustees. She also serves as a Director of USG Corporation, Harris Insight Funds and The Joyce Foundation. Ms. Jarrett is a Trustee of the University of Chicago, the Museum of Science and\nIndustry, and Window To The World Communications, Inc. \n\n \n\n Directors Whose\nTerms Continue until the Annual Meeting of Shareholders in 2006: \n\n \n\n Thomas A. Gildehaus, 64, has served as a Director since October 2000. In recent years Mr. Gildehaus has served as Chairman of Southwest Supermarkets LLC of Phoenix, Arizona, Chairman and Chief Executive Officer of Northwestern Steel and\nWire Company of Sterling, Illinois, and President and Chief Executive Officer of UNR Industries, Inc. of Chicago, Illinois. Prior to 1992, Mr. Gildehaus served ten years as Executive Vice President of Deere & Company in Moline, Illinois. In the\n1970s, Mr. Gildehaus was Vice President of Temple, Barker & Sloane, a consulting firm in Lexington, Massachusetts. He is a director of Genesis Health Systems Inc, and Mercator Partners, LLC. He is also a trustee of the Figgy Art Museum. Mr.\nGildehaus is a graduate of Yale University and received a Master of Business Administration degree, with Distinction, from Harvard University. \n\n \n\n Peter B. Pond, 60, has served as a Director since November 1996. Mr. Pond is the founder and General Partner of Alta Equity Partners, a venture capital\nfirm. He formerly served as the Midwest Head of Investment Banking for Donaldson, Lufkin & Jenrette Securities Corporation from June 1991 to March 2000. Mr. Pond is Chairman of Maximus, Inc., a provider of program management and consulting\nservices to state, county and local government health and human services agencies. \n\n \n\n Directors Whose Terms Continue until the Annual Meeting of Shareholders in 2007: \n\n \n\n James R. Thompson, 68, has served as a Director since August 1998. Governor Thompson was named Chairman of the Chicago law firm of Winston & Strawn in\nJanuary 1993. He joined the firm in January 1991 as Chairman of the Executive Committee after serving four terms as Governor of the State of Illinois from 1977 until 1991. Prior to his terms as Governor, he served as U.S. Attorney for the Northern\nDistrict of Illinois from 1971 to 1975. Governor Thompson served as the Chief of the Department of Law Enforcement and Public Protection in the Office of the Attorney General of Illinois, as an Associate Professor at Northwestern University School\nof Law, and as an Assistant State’s Attorney of Cook County. He is a former Chairman of the President’s Intelligence Oversight Board. Governor Thompson is currently a member of the Boards of Directors of FMC Corporation, FMC Technologies,\nInc., Maximus, Inc. and Hollinger International, Inc. He was also a member of the National Commission on Terrorist Attacks upon the United States. \n\n \n\n Samuel K. Skinner, 66, has served as a Director since December 1999. Mr. Skinner is the retired Chief Executive Officer of U.S. Freightways Corporation, a\ntransportation and logistics business. He currently serves as an Adjunct Professor of Management and Strategy at the Kellogg School of Management at Northwestern University. He is also Of Counsel to the law firm of Greenberg & Traurig, LLP. He\nformerly served as Co-Chairman of Hopkins & Sutter, a law firm based in Chicago. Mr. Skinner retired as President of Commonwealth Edison Company and its holding company, Unicom Corporation. Prior to joining Commonwealth Edison, he served as\nChief of Staff to former President George Bush. Prior to his White House service, Mr. Skinner served in the President’s cabinet for nearly three years as Secretary of Transportation. From 1977 to 1989, Mr. Skinner practiced law as a senior\npartner in the Chicago law firm of Sidley & Austin (now Sidley Austin Brown & Wood LLP). From 1984 to 1988, while practicing law full time, he also served as Chairman of the Regional \n\n\n \n\n\n\n\n\n\n\n\n\nTransportation Authority of Northeastern Illinois and was appointed by President Reagan as Chairman of the President’s Commission on Organized Crime.\nFrom 1968 to 1975, Mr. Skinner served in the office of the United States Attorney for the Northern District of Illinois and in 1977, President Ford appointed him United States Attorney, one of the few career prosecutors ever to hold such position.\nHe is currently a member of the Boards of Directors of Midwest Air Group, Inc, Express Scripts, Diamond Cluster, Click Commerce, APAC Customer Services and Dade Behring. Mr. Skinner has advised the Board of Directors that he will not be a candidate\nfor reelection to the board of directors of APAC Customer Services at its next annual meeting in June 2005. \n\n \n\n Board and Committee Meetings \n\n \n\n The Board met eight times in 2004. All Directors attended at least 75% of the meetings of the Board and of the committees on which they served. \n\n \n\n The Board of Directors has an Audit Committee which monitors the integrity of the Company’s financial statements, financial reporting process and\ninternal controls regarding finance, accounting and legal compliance; monitors the independence and performance of our independent accountants; provides an avenue of communication among the independent accountants, management, including internal\naudit, and our Board of Directors; and monitors significant litigation and financial risk exposure. The current members of the Audit Committee are Messrs. Gildehaus (Chairman), Pond, Skinner and Ms. Jarrett, each of whom is independent as defined by\nthe listing standards of the New York Stock Exchange and applicable Securities and Exchange Commission (“SEC”) rules. The Board of Directors has determined that Mr. Gildehaus meets the criteria as an “audit committee financial\nexpert” as defined in applicable SEC rules. The Audit Committee met nine times during 2004. \n\n \n\n The Board of Directors has a Compensation Committee which reviews and monitors matters related to management development and succession; develops and\nimplements executive compensation policies and pay for performance criteria for the Company; reviews and approves the initial and annual base salaries, annual incentive bonus and all long-term incentive awards of our Chairman of the Board and Chief\nExecutive Officer; reviews and approves such compensation arrangements for all corporate officers and certain other key employees; approves stock-related incentives under our stock incentive and executive compensation plans, and exercises all powers\nof the Board of Directors under those plans other than the power to amend or terminate those plans; reviews and approves material matters concerning our employee compensation and benefit plans; and carries out such responsibilities as have been\ndelegated to it under various compensation and benefit plans and such other responsibilities with respect to our compensation matters as may be referred to it by our Board of Directors or management. The members of the Compensation Committee are\nMessrs. Skinner (Chairman), Gildehaus, Pond and Ms. Jarrett, each of whom is independent as defined by the listing standards of the New York Stock Exchange. The Committee’s Report on Executive Compensation is included under the caption\n“Compensation Committee Report on Executive Compensation.” The Compensation Committee met three times during 2004. \n\n \n\n The Board has a Nominating and Governance Committee which identifies individuals qualified to become Board members and recommends to the Board director\nnominees for election at the next Annual Meeting of Shareholders. In February 2004, the Nominating and Governance Committee approved revised guidelines and charters for the Board and its committees, as well as a new Code of Business Standards and\nEthics, all of which are posted on the Company’s website (www.navigantconsulting.com). Copies of those documents are available upon request as described under “Other Information.” Currently, the members of the Nominating and\nGovernance Committee are Ms. Jarrett (Chairman), Mr. Skinner and Mr. Gildehaus, each of whom is independent as defined by the listing standards of the New York Stock Exchange. The Nominating and Governance Committee met three times during 2004.\nGovernor Thompson currently serves as the Board’s Presiding Director. \n\n \n\n The Board of Directors has an Executive Committee, which can act in lieu of the Board of Directors as necessary. The members of the Executive Committee are Messrs. Goodyear (Chairman) and Skinner and Governor\nThompson. The Executive Committee did not meet in 2004. \n\n \n\n\n\n\n\n\n\n\nWhile the Company has no formal policy regarding attendance by Directors at the Annual Meeting of\nShareholders, the Company encourages its Directors to attend. With the exception of Governor Thompson, who was serving on the National Commission on Terrorist Attacks upon the United States, all of the Directors attended the 2004 Annual Meeting of\nShareholders. \n\n \n\n Director Compensation \n\n \n\n Each non-employee Director is paid an annual retainer of $40,000 and a fee\nof $1,500 for each Board meeting or Committee meeting attended, except that members of the Audit Committee are paid $2,000 per Committee meeting attended. Each Committee Chairman is paid an additional annual retainer of $10,000, except that the\nadditional annual retainer for the Chairman of the Audit Committee is $20,000. All Directors are reimbursed for travel expenses incurred in connection with attending Board and Committee meetings. \n\n \n\n Each non-employee Director makes an election to receive his or her annual\nretainer in the form of either cash or stock options to purchase shares in the Company. The number of stock options received is determined by dividing the annual retainer by the market price on the date of grant in January of each year. Such stock\noptions become fully exercisable on the first anniversary of the grant date. \n\n \n\n In addition, the existing long-term incentive plan provides that each non-employee Director elected to serve a three-year term shall receive a one-time grant of stock options to purchase 15,000 shares at the market\nprice immediately following the Director’s initial election. For non-employee Directors whose initial term is less than three years, the initial grant is reduced pro rata. Such stock options become fully exercisable on the six-month anniversary\nof the date of the initial election. The existing plan also provides that each non-employee Director receives an annual award of stock options of 5,000 shares at the closing market price on January 1st of each year. Such stock options become fully\nexercisable on the first anniversary of the grant date. However, these annual awards have not been made for 2005, for the reasons discussed below. \n\n \n\n The Compensation Committee has recommended that the 2005 Long-Term Incentive Plan be adopted, effective May 4, 2005, to replace the existing plan, which\nis due to expire in 2006. As discussed below, one of the changes in the proposed new plan is to remove the “formula options” feature, which provides for the one-time and annual option grants to non-employee Directors, as summarized in the\nimmediately preceding paragraph. In lieu of such “formula options,” under the new plan the Compensation Committee would have the same flexibility each year to establish the equity component of non-employee Directors’ fees as it\ncurrently has with respect to the equity component of employee compensation. After consulting with its compensation consultant, the Compensation Committee has recommended that if the new plan is adopted, for their service in 2005 the non-employee\nDirectors will receive an annual grant of 1,500 options and 3,500 shares of restricted stock in lieu of the 5,000 share formula option grant discussed in the preceding paragraph. The options would become fully exercisable and the restricted stock\nwould vest one year after the grant date. If the shareholders do not approve the new plan, then immediately following the Annual Meeting the non-employee Directors will receive their annual 5,000 share formula option grants for 2005 under the\nexisting plan as described in the immediately preceding paragraph. Although the Company does not anticipate electing any new non-employee Directors, if the new plan is adopted, the Compensation Committee’s current intention is that any\nnon-employee Director elected for the first time should receive a one-time grant of 3,750 option shares and 6,750 restricted stock shares, in each case vesting over a three year period, in lieu of the formula 15,000 option share grant described in\nthe immediately preceding paragraph. In addition, the Compensation Committee also established equity ownership guidelines for non-employee Directors and associated time periods for compliance. \n\n \n\n CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS \n\n \n\n Governor Thompson, one of our Directors, is Chairman of the law firm of\nWinston & Strawn. Winston & Strawn has provided us in the past and may provide us in the future with legal representation. \n\n \n\n Our Executive Vice President and Chief Operating Officer, Julie Howard, has a sister, Lisa Johnson, who is employed by the Company as a manager. Her total\ncompensation in 2004 was approximately $87,000. \n\n \n\n\n\n\n\n\n\n\nAUDIT COMMITTEE REPORT \n\n \n\n Our Committee has reviewed and discussed with management of the Company the audited financial statements of the Company as\nof and for the year ended December 31, 2004 (the “Audited Financial Statements”). In addition, we have discussed with KPMG LLP, the independent registered public accounting firm for the Company, the matters required by Statement on\nAuditing Standards No. 61, as amended. The Committee also has received the written disclosures from KPMG LLP required by Independence Standards Board Standard No. 1, and we have discussed with that firm its independence from the Company. We\nalso have discussed with the management of the Company, including internal audit, and KPMG LLP such other matters and received such assurances from them as we deemed appropriate. Based on the foregoing review and discussions and relying thereon, we\nhave recommended to the Company’s Board of Directors the inclusion of the Audited Financial Statements in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2004. The Committee appointed KPMG LLP to act as\nthe Company’s independent registered public accounting firm for 2005.1 \n\n \n\n AUDIT COMMITTEE \n\n \n\n Thomas A. Gildehaus, Chairman \n\n Valerie B. Jarrett \n\n Peter B. Pond \n\n Samuel K. Skinner \n\n \n\n\n\n\n \nPursuant to regulations promulgated by the Securities and Exchange Commission, neither the “Audit Committee Report,” the “Compensation Committee Report on Executive\nCompensation” nor the material under the caption “Shareholder Return Performance Graph” shall be deemed to be soliciting material or to be filed with the Securities and Exchange Commission for purposes of the Securities Exchange Act\nof 1934, as amended, nor shall such report or such material be deemed to be incorporated by reference in any past or future filing by the Company under that Act or the Securities Act of 1933, as amended. \n\n \n\n\n\n\n\n\n\n\nNOMINATING AND GOVERNANCE COMMITTEE REPORT \n\n \n\n The Committee monitors and reviews new SEC rules and NYSE corporate\ngovernance standards as they are proposed, revised and adopted. In February 2004 the Committee approved revised corporate guidelines and committee charters that are intended to ensure compliance with the SEC rules and NYSE listing standards. Copies\nof these revised guidelines and charters are posted on the Company’s website, www.navigantconsulting.com. In addition, the Committee approved in 2004 a Code of Business Standards and Ethics (the “Code”), which is posted on the\nCompany’s website. \n\n \n\n The Committee reviews and makes\nrecommendations to the Board as to whether individual directors are “independent” for purposes of applicable SEC corporate governance rules and NYSE listing standards. The Committee’s review is based on all relevant facts and\ncircumstances, as well as applicable criteria set forth in applicable SEC rules and NYSE listing standards. In addition, the Committee has developed certain “categorical standards “ describing certain relationships that are considered\nimmaterial and do not preclude a finding of “independence.” \n\n \n\n The following relationships are considered immaterial and do not preclude a finding of “independence”: \n\n \n\n\n\n\n \n1. \n \nThe Director is affiliated with or employed by a company, partnership or other entity that receives payments from the Company for services in an amount which, in the current fiscal\nyear, does not exceed the greater of (a) $1 million or (b) two (2) percent of such other company’s consolidated gross revenues, provided, however, that solely for purposes of determining “audit committee independence,” a director may\nnot accept, directly or indirectly, a consulting, advisory or other compensatory fee from the Company in any amount (other than Director’s and committee fees). \n\n \n\n\n\n\n \n2. \n \nThe Director is an employee, officer or director of a foundation, university or other non-profit organization to which the Company gives directly, or indirectly through the\nprovision of services, less than $250,000 during the year in question. \n\n \n\n\n\n\n \n3. \n \nIn addition, in any cases where payments are made by the Company “indirectly” to an immediate family member, as for example fees paid to a law firm in which such immediate\nfamily member is a partner, if such immediate family member disclaims and does not accept any share of such Company payments, the Board will not consider that such payments preclude the Director from being considered “independent” for all\npurposes, including service on the Company’s Audit Committee. \n\n \n\n A copy of these categorical standards is posted on the Company’s website. Based on this review, the Committee has found and the Board has affirmed that all of the Company’s current Directors except for Mr.\nGoodyear are “independent” within the meaning of the NYSE listing standards, and that all of the members of the Company’s Audit Committee meet the SEC’s more stringent standards for audit committee independence. \n\n \n\n In February 2005, the Committee recommended to the Board that Mr. William M.\nGoodyear and Ms. Valerie B. Jarrett be reelected to the Company’s Board of Directors to serve a term of three years. In considering the qualifications of future candidates for election to the Board of Directors, the Committee will consider all\nrelevant factors, including judgment, character, reputation, education and experience, in relation to the qualifications of any alternate candidates and in relation to the particular needs of the Board, its committees and the Company as they exist\nat the time such candidates are considered. The Committee values diversity, including gender and race. The Committee will also consider each candidate’s relationships, if any, with the Company, its Directors, officers, employees and\nshareholders, as well as any applicable criteria set forth in SEC rules, New York Stock Exchange listing standards, and Delaware law. The Committee has not paid a fee to any third party to identify or evaluate potential nominees. The Nominating and\nGovernance Committee will consider nominees for director recommended by shareholders on the same basis as candidates identified by the Committee, provided that the nominations are received by the Committee within the time frame established by our\nBy-laws for nominations by shareholders of director candidates described under “Shareholder Proposals for the 2005 Proxy \n\n\n \n\n\n\n\n\n\n\n\n\nStatement.” Recommendations should be sent to Navigant Consulting, Inc., 615 North Wabash Avenue, Chicago, Illinois 60611, Attention: Corporate\nSecretary. \n\n \n\n NOMINATING AND GOVERNANCE\n\n\n COMMITTEE \n\n \n\n Valerie B. Jarrett, Chairman \n\n Thomas A. Gildehaus \n\n Samuel K. Skinner \n\n \n\n PROPOSAL 2 \n\n \n\n AMENDMENT OF THE COMPANY’S CERTIFICATE OF INCORPORATION\n\n\n \n\n In November 1997, the shareholders voted to amend the\nCompany’s Certificate of Incorporation to increase the total number of authorized shares of common stock to 75,000,000. The Board of Directors now has proposed and recommends for adoption by the Company’s shareholders an amendment to the\nCertificate of Incorporation that would increase the total number of authorized shares of common stock to 150,000,000. No change will be made to the number of authorized shares of Preferred stock (3,000,000), none of which is currently outstanding.\nThe Company’s shareholders are asked to approve this amendment. \n\n \n\n The holders of a majority of the shares of common stock present in person or by proxy at the meeting must vote in favor of the proposed amendment for it to be approved. The Board of Directors recommends that shareholders vote\n“FOR” the amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of common stock to 150,000,000. \n\n \n\n The proposed amendment provides that paragraph A of Article Four of the Certificate be amended to read in its entirety as\nfollows: \n\n \n\n AUTHORIZED SHARES. The total number of shares of all\nclasses of stock which the Corporation shall have authority to issue is one hundred fifty-three million (153,000,000), consisting of one hundred fifty million (150,000,000) shares of Common Stock, $.001 par value per share (the “Common\nStock”), and three million (3,000,000) shares of Preferred Stock, $.001 par value per share (the “Preferred Stock”). \n\n \n\n As of March 10, 2005 there were approximately 48,558,000 shares of Common Stock issued and outstanding, and a total of 3,457,111 shares reserved for\nissuance under the Company’s Employees’ Stock Purchase Plan, the Company’s Long-Term Incentive Plan and the 2001 Supplemental Equity Incentive Plan. Consequently, 22,984,703 shares of Common Stock were available for future issuance as\nof such date. \n\n \n\n The Board of Directors believes that it is\ndesirable for the Company to have available additional authorized but unissued shares of common stock to provide the Company with shares of common stock to be used for general corporate purposes, future acquisitions and equity financings. Without\nthe additional authorized but unissued shares, the Company’s ability to finance additional growth could be restricted. Approval of the proposed amendment now will eliminate the delays and expense which otherwise would be incurred if shareholder\napproval were required to increase the authorized number of shares of common stock for possible future transactions involving the issuance of additional shares. An increase in the number of authorized shares will also increase the number of shares\nwhich may be reserved and subsequently issued pursuant to the Company’s then-current long-term incentive plan and other employee benefit plans. Additional issuances of shares of common stock may also increase the public float, and therefore the\nliquidity of the shares of common stock for all holders. \n\n \n\n The\nadditional shares of common stock may be issued subject to certain restrictions, by the Board of Directors at such times, in such amounts and upon such terms as the Board may determine without further \n\n\n \n\n\n\n\n\n\n\n\n\napproval of the shareholders. The Company’s current shareholders could suffer a dilution of voting rights, net income and net tangible book value per\nshare of the common stock as the result of any such issuance of common stock depending on the number of shares issued and the purpose, terms and conditions of the issuance. \n\n \n\n While the increase in the authorized shares of common stock is not being proposed for this reason, the availability of the\nadditional shares could be used to render more difficult or discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of our stock, or the removal of incumbent management by increasing the aggregate\noutstanding shares, and therefore the number of shares required to accomplish such a transaction. The Board of Directors may approve the issuance of previously authorized shares of common or preferred stock at such times and to such persons as it\nmay determine to be in the best interests of our Company and our shareholders, except for certain transactions involving the issuance of stock for which the New York Stock Exchange rules require prior shareholder approval. The proposed amendment\ntherefore may have the effect of discouraging unsolicited takeover attempts, even if the transaction were favored by the current shareholders. \n\n \n\n PROPOSAL 3: \n\n \n\n APPROVAL OF 2005 LONG-TERM INCENTIVE PLAN \n\n \n\n General \n\n \n\n Our Board of\nDirectors is proposing the Navigant Consulting, Inc. 2005 Long-Term Incentive Plan (the “Plan”) for shareholder approval. The Plan was approved by our Board of Directors on February 17, 2005, but is subject to shareholder approval.\n\n\n \n\n The purposes of the Plan are to (i) align the interests of the\nCompany’s shareholders and recipients of awards under the Plan, (ii) attract and retain officers, other employees, nonemployee directors, consultants, independent contractors and agents and (iii) motivate such persons to act in the long-term\nbest interests of the Company’s shareholders. Under the Plan, the Company may grant (a) stock options and stock appreciation rights (“SARs”), (b) stock awards, consisting of restricted stock, restricted stock units, performance shares\nand performance share units and (c) performance unit awards. Officers and other employees of the Company (approximately 700 persons currently participating), non-employee directors (currently 5 persons) and consultants, independent contractors and\nagents (currently 4 persons) will be eligible to participate in the Plan. \n\n \n\n Unless otherwise instructed, the proxy holders will vote the proxies received by them “FOR” approval of the Plan. \n\n \n\n Description of the Plan \n\n \n\n The following is a summary of the Plan, which is qualified in its entirety by reference to the complete text of the Plan, which is attached as\nExhibit A to this Proxy Statement and incorporated herein by reference. \n\n \n\n Administration. The Plan will be administered by the Compensation Committee of our Board of Directors (the “Committee”), which will have the authority to select persons who will receive awards and determine all of the terms\nand conditions of each award. The Committee will have authority to prescribe rules and regulations for administering the Plan and to decide questions of interpretation or application of any provision of the Plan. The Committee may, in its\ndiscretion, subject to the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations thereunder, take action such that (i) outstanding options and SARs will become exercisable in part or\nin full, (ii) all or a portion of the restriction period or performance period (if any) applicable to any outstanding restricted stock or restricted stock units shall lapse, (iii) all or a portion of the performance period applicable to any\noutstanding performance shares, performance share units or performance units shall lapse and (iv) the performance measures (if any) applicable to any outstanding award \n\n\n \n\n\n\n\n\n\n\n\n\nshall be deemed to be satisfied at the maximum or any other level. Except with respect to grants to persons subject to Section 16 of the Securities Exchange\nAct of 1934, as amended, and persons whose compensation is likely to be subject to the $1 million deduction limit under Section 162(m) of the Code, the Committee may, subject to applicable law, delegate some or all of its authority to administer the\nPlan to the Chief Executive Officer or other executive officer of the Company. \n\n \n\n Available Shares. Under the Plan, 5,250,000 shares of our common stock are available for awards, subject to adjustment in the event of a stock split, stock dividend, recapitalization, reorganization, merger,\nconsolidation, combination, exchange of shares, liquidation, spin-off or other similar change or event (the “Plan Share Limit”). If the Plan is approved by shareholders, the Company’s Long-Term Incentive Plan, as amended through\nNovember 30, 2000 (the “Prior Plan”), will be terminated and no further awards will be granted under the Prior Plan. \n\n \n\n Shares subject to options and SARs will be counted against the Plan Share Limit as one share for every one share subject thereto. Shares subject to stock\nawards, or payable pursuant to performance unit awards, will be counted against the Plan Share Limit as one and one-half shares for every one share subject thereto or payable pursuant thereto. The Plan Share Limit will be increased by shares that\nare not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of an award granted under the Plan or outstanding under the Prior Plan at the time of adoption of the Plan, with such increases made in a manner that is\nconsistent with Plan Share Limit deductions. No increases will be made by reason of the exercise of SARs. \n\n \n\n Award Limits. To the extent necessary for an award to be qualified performance-based compensation under Section 162(m) of the Code and the\nregulations thereunder (i) the maximum number of shares with respect to which options or SARs or a combination thereof may be granted during any fiscal year to any person will be 300,000, subject to adjustment as described above, (ii) the maximum\nnumber of shares with respect to which stock awards subject to performance measures may be granted during any fiscal year to any person will be 150,000, subject to adjustment as described above, and (iii) the maximum amount that may be payable with\nrespect to performance units granted during any fiscal year to any person will be $5,000,000. \n\n \n\n No Repricing. Except in connection with an adjustment relating to a change in the Company’s capital structure as described above, the Committee may not, without shareholder approval, amend or replace any\npreviously granted option or SAR in a transaction that constitutes a repricing under the rules of the New York Stock Exchange. \n\n \n\n Stock Options and Stock Appreciation Rights. The Committee may grant to eligible participants options to purchase shares of our common stock which\nare either non-qualified stock options or incentive stock options within the meaning of Section 422 of the Code. The Committee also may grant SARs, the exercise of which entitles the holder to receive shares of our common stock (which may be\nrestricted stock), cash or a combination thereof with a value equal to the difference between the fair market value of our common stock on the exercise date and the base price of the SAR. The Committee will determine the terms of each option and\nSAR, including the number and exercise price or base price of the shares subject to the option or SAR, the term of the option or SAR and the conditions as to the exercisability of the option or SAR. Upon exercise of an option, the purchase price\nmust be paid (i) in cash, (ii) by delivery of certain previously-acquired shares of our common stock, (iii) except as may be prohibited by applicable law, by delivery of an irrevocable notice of exercise to a broker-dealer acceptable to the Company\nor (iv) by a combination of cash and delivery of certain previously-acquired shares. The exercise price of an option and the base price of an SAR will not be less than 100% of the fair market value of our common stock on the date of grant.\n\n\n \n\n No stock option or SAR will be exercisable more than ten years\nafter its date of grant, provided that if the recipient of an incentive stock option owns greater than ten percent of the voting power of all shares of capital stock of the Company, the option will be exercisable for no more than five years after\nits date of grant and the option exercise price will be the price required by the Code, currently 110% of the fair market value of our \n\n\n \n\n\n\n\n\n\n\n\n\ncommon stock on its date of grant. To the extent that the aggregate fair market value of our common stock with respect to which an incentive stock option is\nexercisable for the first time by an individual during a calendar year exceeds the amount established by the Code, currently $100,000, such option will be treated as a non-qualified stock option. \n\n \n\n Unless otherwise specified in the agreement relating to an option or SAR, in\nthe event of termination of employment or service for any reason other than cause, each option and SAR will be exercisable to the extent exercisable on the date of such termination and in the event of termination for cause, each option and SAR will\nterminate on the date of such termination of employment. In the case of termination by reason of death or disability, each option and SAR will be exercisable for one year after the date of such termination (or such other period, or shorter period in\nthe case of an incentive stock option, as determined by the Committee), but in no event after the expiration of such option or SAR (subject to extension in the case of death). In the event of termination of employment for any other reason (including\nretirement), each option and SAR will be exercisable to the extent exercisable on the date of such termination of employment for a period of three months after such termination of employment (or, in the case of a nonqualified stock option, such\nother period as determined by the Committee), but in no event after the expiration of such option or SAR. If a holder dies during the specified periods following termination of employment for any reason other than cause, each stock option or SAR\nwill be exercisable to the extent that such option or SAR was exercisable on the date of the holder’s death, and may thereafter be exercised for one year (or such other period as determined by the Committee) from the date of death, but in no\nevent after the expiration of such option or SAR (subject to extension). \n\n \n\n Stock Awards and Performance Unit Awards. The Plan provides for the grant of stock awards in the form of restricted stock awards, restricted stock unit awards, performance share awards and performance share\nunit awards. Restricted stock awards consist of shares, and restricted stock units consist of rights, in each case the vesting of which is subject to a restriction period determined by the Committee and may be subject to other terms and conditions,\nincluding the attainment of performance measures within a specified performance period. Restricted stock unit awards entitle the holder thereof to receive, upon vesting, shares or cash, or a combination thereof. Performance share awards consist of\nshares and performance share unit awards consist of rights, in each case the vesting of which is subject to the attainment of performance measures within a specified performance period determined by the Committee and which may be subject to other\nterms and conditions. Performance share unit awards entitle the holder thereof to receive, upon vesting, shares (which may be restricted stock) or cash, or a combination thereof. \n\n \n\n The holder of restricted stock or performance shares will have rights as a shareholder of the Company, including the right\nto vote and receive dividends with respect to the shares subject to the award. Prior to the settlement of a restricted stock unit award or a performance share unit award, the holder of the award will have no rights as a shareholder with respect to\nthe shares of our common stock subject to the award. \n\n \n\n In\naddition to stock-based awards, the Plan provides for the grant of performance unit awards, which consist of rights, not denominated in shares, that entitle the recipients to receive, upon vesting, shares or cash, or a combination thereof, based\nupon the achievement of performance measures. \n\n \n\n Stock awards and\nperformance unit awards vest during a period of not less than six months, as designated by the Committee. \n\n \n\n Unless otherwise specified in the agreement relating to a stock award or a performance unit award, if the employment of the holder of the award terminates\nfor cause, the portion of such award which is unvested as of such termination will be forfeited, and if the employment of the holder of such award terminates for any other reason (i) in the case of a restricted stock award or restricted stock unit\naward, the portion of the award which is unvested as of such termination will be forfeited and (ii) in the case of a stock award subject to performance measures or a performance unit award, the portion of the award which is unvested as of such\ntermination will be forfeited unless otherwise determined by the Committee. \n\n \n\n\n\n\n\n\n\n\nPerformance Measures. The vesting of performance share awards, performance share unit awards and\nperformance units will be subject to the satisfaction of performance measures. The vesting of restricted stock awards or restricted stock unit awards and the exercisability of stock options or SARs also may, in the discretion of the Committee, be\nsubject to the satisfaction of performance measures. Performance measures include one or more of: our common stock value, earnings per share, return on assets, equity or invested capital, total shareholder return, earnings or net income of the\nCompany, revenues, market share, cash flows or cost reduction goals, or any combination of the foregoing, as determined by the Committee. \n\n \n\n Non-transferability. No award granted under the Plan will be transferable other than by will, the laws of descent and distribution or pursuant to\nbeneficiary designation procedures approved by the Company, unless otherwise specifically approved by the Committee. \n\n \n\n Change in Control. In the event of a Change in Control, the incumbent Board of Directors may, in its discretion, take any of the following actions\nor any combination of the following actions: (i) require that all outstanding options and SARs become exercisable and that all outstanding awards vest; (ii) require that shares of the corporation resulting from such Change in Control, or a parent\ncorporation thereof, be substituted for some or all of the shares of our common stock subject to an outstanding award; or (iii) require outstanding awards, in whole or in part, be surrendered to the Company in exchange for a cash payment or shares\nof the corporation resulting from such Change in Control, or a parent corporation thereof. In general, “Change in Control” means (a) certain acquisitions of more than 50% of the then outstanding shares of our common stock, (b) a change in\nour Board of Directors resulting in the incumbent directors ceasing to constitute at least a majority of our Board of Directors, (c) the consummation of a reorganization, merger or consolidation or sale or disposition of at least 60%, or all or\nsubstantially all, of the assets of the Company, or the acquisition of the assets of another corporation for voting securities of the Company (unless, among other conditions, the Company’s shareholders receive more than 60% of the stock of the\nresulting company) or (d) the consummation of a liquidation or dissolution of the Company. \n\n \n\n Effective Date, Termination and Amendment. If approved by shareholders at the Annual Meeting, the Plan will become effective as of the date of the Annual Meeting and will terminate 10 years after its effective\ndate, unless terminated earlier by our Board of Directors. Our Board of Directors may amend the Plan at any time, subject to any requirement of shareholder approval required by applicable law, rule or regulation, including Section 162(m) of the Code\nand any rule of the NYSE. \n\n \n\n New Plan Benefits \n\n \n\n The following table sets forth the number of stock options and shares of\nrestricted stock which would be granted under the Plan to nonemployee directors on the date of the Annual Meeting if the Plan is approved by shareholders. No determination has been made by the Committee regarding future awards under the Plan to\nother eligible persons. \n\n \n\n 2005 Long-Term Incentive Plan\n\n\n \n\n\n\n\n \n \n \n \n \n\n\n\n Name and Position\n\n \n \n Dollar Value ($)\n\n \n \n Number of Units\n\n \n\n\n\n Non-Executive Director Group\n\n \n \n $444,500(1)\n\n \n \n17,500 shares of restricted stock and options to purchase 7,500 shares of common stock (2) \n\n\n\n\n\n(1) \n \nOn March 10, 2005, the closing sale price per share of our common stock on the New York Stock Exchange was $25.40. For consistency of presentation, the dollar value shown for shares\nof restricted stock that would be awarded to the Non-Executive Director Group in 2005 also is based on such price. The options that would be awarded to the Non-Executive Director Group in 2005 have not been assigned a dollar value.\n \n\n \n\n\n\n\n\n\n\n\n\n\n(2) \n \nImmediately following the Annual Meeting, each nonemployee director will be granted options to purchase 1,500 shares and will be awarded 3,500 shares of restricted stock. The\noptions will become exercisable and the restrictions on the shares of restricted stock will lapse one year after the date of grant. \n\n \n\n Federal Income Tax Consequences \n\n \n\n The following is a brief summary of certain U.S. federal income tax consequences generally arising with respect to awards under the Plan. This summary is\nbased on the U.S. federal income tax laws as in effect on December 31, 2004 and does not consider the potential impact of the American Jobs Creation Act of 2004 on the tax treatment of awards under the Plan. \n\n \n\n Stock Options. A participant will not recognize taxable income at the\ntime an option is granted and the Company will not be entitled to a tax deduction at such time. A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) upon exercise of a\nnon-qualified stock option equal to the excess of the fair market value of the shares purchased over their exercise price, and the Company will be entitled to a corresponding deduction. A participant will not recognize income (except for purposes of\nthe alternative minimum tax) upon exercise of an incentive stock option. If the shares acquired by exercise of an incentive stock option are held for the longer of two years from the date the option was granted and one year from the date the shares\nwere transferred to the participant, any gain or loss arising from a subsequent disposition of such shares will be taxed as long-term capital gain or loss, and the Company will not be entitled to any deduction. If, however, such shares are disposed\nof within the above-described period, then in the year of such disposition the participant will recognize compensation taxable as ordinary income equal to the excess of the lesser of (i) the amount realized upon such disposition and (ii) the fair\nmarket value of such shares on the date of exercise over the exercise price, and the Company generally will be entitled to a corresponding deduction. \n\n \n\n SARs. A participant will not recognize taxable income at the time SARs are granted and the Company will not be entitled to a tax deduction at such\ntime. Upon exercise, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) in an amount equal to the fair market value of any shares delivered and the amount of cash\npaid by the Company. This amount is deductible by the Company as compensation expense. \n\n \n\n Restricted Stock and Performance Shares. A participant will not recognize taxable income at the time restricted stock or performance shares are granted and the Company will not be entitled to a tax deduction at\nsuch time, unless the participant makes an election to be taxed at such time. If such election is not made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at\nthe time the restrictions lapse in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for such shares. The amount of ordinary income recognized by making the above-described election or\nupon the lapse of restrictions is deductible by the Company as compensation expense, except to the extent the deduction limits of Section 162(m) of the Code apply. In addition, a participant receiving dividends with respect to restricted stock or\nperformance shares for which the above-described election has not been made and prior to the time the restrictions lapse will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee), rather\nthan dividend income, in an amount equal to the dividends paid and the Company will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) apply. \n\n \n\n Restricted Stock Units, Performance Share Units and Performance Units.\nA participant will not recognize taxable income at the time restricted stock units, performance share units or performance units are granted and the Company will not be entitled to a tax deduction at such time. Upon the settlement of these awards,\nthe participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) in an amount equal to the fair market value of any shares delivered and the amount of cash paid by the Company.\nThis amount is deductible by the Company as compensation expense, except to the extent the deduction limits of Section 162(m) apply. \n\n \n\n\n\n\n\n\n\n\nThe approval of the Plan requires the affirmative vote of the holders of a majority of the shares of our\ncommon stock represented at the Annual Meeting, in person or by proxy, and entitled to vote thereon. \n\n \n\n Our Board of Directors recommends a vote “FOR” approval of the Navigant Consulting, Inc. 2005 Long-Term Incentive Plan. \n\n \n\n COMPENSATION COMMITTEE REPORT \n\n ON EXECUTIVE COMPENSATION \n\n \n\n This report of the Compensation Committee (the “Committee”) describes the philosophy that underlies the cash and equity-based components of our\nexecutive compensation program. It also describes the details of each element of the program and the rationale for compensation paid to our Chief Executive Officer and other officers and key employees in general. \n\n \n\n Compensation Philosophy and Objectives \n\n \n\n The Committee believes that the compensation offered to its Chief Executive\nOfficer, other officers and key employees must be sufficient to attract, retain and fairly compensate highly qualified individuals. Executive compensation should be competitive and based on overall financial results, individual contributions and\nteamwork, with the objective that a fair relationship exists between executive pay and the creation of shareholder value. The Committee, among other things, considers the performance of the Company’s operations, the compensation of officers and\nkey employees of competitors and other companies, salary surveys of industry-related positions or positions at comparably sized companies and the salary history of the particular individual and other compensation then in place, including outstanding\nequity based awards. \n\n \n\n The Committee determines compensation by\nusing its subjective judgment and taking into account both qualitative and quantitative factors. No weights are assigned to such factors with respect to any compensation component. There is no singular objective formula by which compensation is\ndetermined and the decisions are ultimately subjective. \n\n \n\n Annual Compensation\n\n\n \n\n The compensation program has three elements: \n\n\n \n\n\n\n\n \n• \n \nannual base salary; \n\n \n\n\n\n\n \n• \n \nannual incentive compensation, which is based on certain performance objectives; and \n\n \n\n\n\n\n \n• \n \nequity awards under the Company’s incentive plans, which are based on both Company performance and individual performance. \n\n \n\n Base Salary. Base salaries for the Chief Executive Officer, other\nofficers and key employees are established based on the scope of the duties and responsibilities of each individual’s position. The base salary of the Chief Executive Officer is reviewed annually in accordance with his employment agreement. Mr.\nGoodyear’s employment agreement is described below in the section entitled “Management Compensation.” Typically, other officers and key employees also have employment agreements specifying base salaries that are reviewed annually.\n\n\n \n\n Annual Incentive Compensation. The Board has previously\napproved a compensation program based on certain financial performance criteria, including revenue growth, profitability and percentage performance of target goals. After a review of the Company’s and individual performance, incentive\ncompensation, if any, is paid to officers and employees in cash or restricted stock for the calendar year in which it was earned on or before March 1st of the following year. The incentive compensation is forfeited if an individual is not an active\nemployee on the date incentive compensation is paid. \n\n \n\n\n\n\n\n\n\n\nIn 2004 the Company instituted a stock incentive program pursuant to which officers and senior employees\nwill receive a specified portion of their annual incentive compensation in restricted stock in lieu of cash. The restricted stock is granted pursuant to the existing long-term incentive plan described below. Corporate officers, including the Chief\nExecutive Officer, will receive 25% of their annual incentive compensation in the form of restricted stock with the option to take an additional 5% to 20% of their annual incentive compensation in restricted stock. The Company will grant an\nadditional amount of restricted stock equal to a percentage of the value of the incentive compensation paid in restricted stock in lieu of cash. The Company has also established ownership guidelines for officers and senior employees as well as\nassociated time periods for compliance. \n\n \n\n Long-Term Incentive\nPlan. The Committee believes that equity compensation is an important component of the compensation offered by the Company and promotes long-term retention of its key employees, motivates high levels of performance and recognizes a key\nemployee’s contributions to the success of the Company. In addition, equity compensation aligns management’s interests with those of our shareholders on a long-term basis. The Committee recognizes that we conduct our business in an\nincreasingly competitive environment. In order to remain competitive, we must employ the best and most talented key employees who possess demonstrated skills and experience. The Committee believes that equity compensation may give us an advantage in\nattracting and retaining such employees. The Committee also believes our long-term incentive plan is an important feature of our executive compensation package. Under the plan, options, restricted stock and other forms of equity compensation may be\ngranted to the Chief Executive Officer, other officers and key employees who are expected to make important contributions to our future success. In reviewing the size of such equity grants, the Committee focuses primarily on our performance and the\nperceived role of each person in accomplishing our performance objectives, as well as the satisfaction of individual performance objectives. As discussed above, the Company is seeking shareholder approval to replace its existing long-term incentive\nplan, which is due to expire in 2006, with a new long-term incentive plan. \n\n \n\n Policy on Deductibility of Compensation \n\n \n\n Code\nSection 162(m) prohibits us from deducting for federal income tax purposes any amount paid in excess of $1,000,000 per year to our Chief Executive Officer or any of our four most highly paid executive officers, except that compensation above\n$1,000,000 may be deducted if it is “performance-based compensation” within the meaning of the Code. The Committee believes that our current compensation arrangements, which are primarily based on performance, are appropriate and in the\nCompany’s and its shareholders’ best interests, without regard to tax considerations. Thus, if the tax laws or their interpretation change or other circumstances occur which might make some portion of the executive compensation\nnon-deductible for federal tax purposes, the Committee does not plan to make significant changes in the basic philosophy and practices reflected in our executive compensation program. \n\n \n\n Chief Executive Officer’s Compensation \n\n \n\n\nThe total compensation of Mr. Goodyear under his employment agreement and his annual incentive bonus approved by the Committee for 2004 are consistent\nwith the Committee’s compensation objectives described above. In particular, Mr. Goodyear’s annual incentive compensation for 2004 was determined by the Committee based on its review of the Company’s and Mr. Goodyear’s\nperformance during 2004 and certain benchmarking information and recommendations provided by its compensation consultant. Mr. Goodyear’s employment agreement is described in detail in the section below entitled, “Management\nCompensation.” \n\n \n\n COMPENSATION COMMITTEE\n\n\n \n\n Samuel K. Skinner, Chairman \n\n Thomas A. Gildehaus \n\n Valerie B. Jarrett \n\n Peter B. Pond \n\n \n\n\n\n\n\n\n\n\nSHAREHOLDER RETURN PERFORMANCE GRAPH \n\n \n\n The following graph compares the percentage change in the cumulative total shareholder return on our common stock against\nthe New York Stock Exchange Market Index (the “NYSE Index”), the Peer Group described below and the peer group reported in our last proxy statement (the “Old Peer Group”). The graph assumes that $100 was invested on December 31,\n1999, in each of our common stock, the NYSE Index, the Old Peer Group and the Peer Group. The graph also assumes that all dividends, if paid, were reinvested. \n\n \n\n\nNote: The stock price performance shown below is not necessarily indicative of future price performance. \n\n \n\n \n \n\n \n\n\n Notes: \n\n (a) The Peer Group consists of the following companies: ChoicePoint, Inc., Charles River Associates, Inc., FTI Consulting, Inc., Gartner Group, Inc., Huron Consulting\nGroup Inc., LECG Corporation and META Group, Inc. Huron and LECG are new additions to the Peer Group. The Peer Group and the Old Peer Group are weighted by market capitalization. \n\n (b) The Old Peer Group consists of the same companies above, except Huron and LECG. In addition, the Old Peer Group included American Management Systems, Inc. and Kroll Inc., both of which were acquired during 2004.\n\n\n \n\n\n\n\n\n\n\n\nMANAGEMENT COMPENSATION \n\n \n\n General \n\n \n\n The following table sets forth compensation awarded or earned by the Chief Executive Officer and three other executive officers who earned more than\n$100,000 for 2004 (collectively, the “Executive Officers”). \n\n \n\n Summary Compensation Table \n\n \n\n\n\n\n\n(1) \n \nSee the discussion of Mr. Goodyear’s employment agreement under “Employment Agreements” below. \n\n\n\n\n(2) \n \nSee the discussion of Mr. Perks’ employment agreement under “Employment Agreements” below. \n\n\n\n\n(3) \n \nSee the discussion of Ms. Howard’s employment agreement under “Employment Agreements” below. \n\n\n\n\n(4) \n \nSee the discussion of Mr. Steptoe’s employment agreement under “Employment Agreements” below. \n\n\n\n\n(5) \n \nMr. Goodyear’s 2004 bonus was $1,300,000, which consisted of $715,000 in cash plus 30,405 shares of restricted stock. Mr. Perks’ 2004 bonus was $367,500 which consisted of\n$202,125 in cash plus 8,595 shares of restricted stock. Ms. Howard’s 2004 bonus was $500,000 which consisted of $325,000 in cash plus 9,095 shares of restricted stock. Mr. Steptoe’s 2004 bonus was $150,000, which consisted of $82,500 in\ncash plus 3,509 shares of restricted stock. For each of the Executive Officers, the portion of the bonus paid in cash is included under the “Bonus” column above and the portion of the bonus paid in shares of restricted stock is included\nunder the “Restricted Stock Award(s)” column above. \n\n\n\n\n(6) \n \n For each of the Executive Officers, the portion of the bonus paid in shares of restricted stock is included in the “Restricted Stock Award(s)” column.\nThis column includes, for 2004, (i) 22,522, 6,367, 6,737 and 2,599 shares of restricted stock for Mr. Goodyear, Mr. Perks, Ms. Howard and Mr. Steptoe, respectively, which will vest six months after the March 1, 2005 date of grant, (ii) 7,883, 2,228,\n2,358 and 910 shares of restricted stock for Mr. Goodyear, Mr. Perks, Ms. Howard and Mr. Steptoe, respectively, one-third of which will vest every six months after the March 1, 2005 date of grant, (iii) 34,649, 11,550, 17,324 and 2,887 shares of\nrestricted stock for Mr. Goodyear, Mr. Perks, Ms. Howard and Mr. Steptoe, respectively, one-fourth of which will vest every year after the March 1, 2005 date of grant, and (iv) 20,000 shares of restricted stock for Ms. Howard, which vested six\nmonths after the March 1, 2004 grant date. This column includes, for 2003, (i) 18,438, 7,490 and 6,914 shares of restricted stock for Mr. Goodyear, Mr. Perks and Ms. Howard, respectively, which vested six months after the March 1, 2004 date of grant\nand (ii) 6,453, 2,622 and 2,420 shares of restricted stock for Mr. Goodyear, Mr. Perks and Ms. Howard, respectively, one-third of which has vested or will vest every six months after the March 1, 2004 date of grant. For each of the Executive\nOfficers, the restricted stock awards granted in 2002 (90,000 shares for Mr. Goodyear, 45,000 shares for Mr. Perks, 45,000 shares for Ms. Howard and 22,500 shares for Mr. Steptoe) will vest on the sixth anniversary of the grant, subject to\naccelerated vesting based on certain corporate performance targets. \n\n\n \n\n \n\n\n\n\n\n\n\n\n\n\n \n \nIn each of February 2004 and February 2005 the Compensation Committee determined that corporate performance targets had been met and therefore accelerated\nthe vesting of twenty-five percent of the restricted stock award for each Executive Officer. At December 31, 2004: Mr. Goodyear held 186,391 restricted shares, which were valued at $4,958,000 at December 31, 2004; Mr. Perks held 43,862 restricted\nshares, which were valued at $1,166,729 at December 31, 2004; Ms. Howard held 65,383 restricted shares, which were valued at $1,739,188 at December 31, 2004; and Mr. Steptoe held 32,500 restricted shares, which were valued at $864,500 at December\n31, 2004. \n\n \n\n\n\n\n(7) \n \nThe stock options listed above vest in four equal annual installments. \n\n\n\n\n(8) \n \nFor each of the executive officers, $5,100 of the amounts reflected in this column represents matching payments under the Company’s 401(k) plan. The remaining amounts represent\nearnings associated with group life insurance. \n\n \n\n Executive\nOption Grants \n\n \n\n There were no stock option grants made to\nthe Executive Officers in 2004. \n\n \n\n Option and SAR Exercises and Holdings\n\n\n \n\n The following table sets forth the exercise of options\nand stock appreciation rights during 2004 by the Executive Officers and the number of options and stock appreciation rights and approximate values for in-the-money options and stock appreciation rights at December 31, 2004. \n\n \n\n Aggregated Option/SAR Exercises in 2004 and \n\n Year End Option/SAR Values \n\n \n\n\n \n\n Employment Agreements\n\n\n \n\n Employment Agreement with Mr. Goodyear. Effective\nJanuary 1, 2003, the Company entered into an amended and restated employment agreement with its Chairman and Chief Executive Officer, Mr. Goodyear. The term of the employment agreement is indefinite. The employment agreement provides for an annual\nbase salary, which is subject to adjustment from time to time, and does not limit Mr. Goodyear’s bonus. The employment agreement provides, among other things, that if the Company terminates the executive for other than good cause (as defined in\nthe agreement) or Mr. Goodyear terminates his employment for good reason (as defined in the agreement), then the Company will pay to Mr. Goodyear an amount equal to the sum of two times his base salary and two times his average annual bonus for the\nimmediately preceding three years. However, if Mr. Goodyear terminates his own employment other than for good reason, the Company would have no further obligation to Mr. Goodyear other than the obligation to pay him his base salary through the date\nof termination and any other compensation and benefits then due. In the event of Mr. Goodyear’s termination of employment following a change in control (as defined in the agreement) for any reason, the Company shall pay to Mr. Goodyear an\namount equal to the sum of three times his base salary and three times the average annual bonus for the immediately preceding three years. \n\n \n\n\n\n\n\n\n\n\nOther Employment Agreements with Executive Officers. The Company has employment agreements with\nother of its Executive Officers. The employment agreement with Mr. Perks, our Executive Vice President and Chief Financial Officer, is for a rolling two-year period, such that the remainder of the term shall always be two full years, provides for an\nannual base salary, which is subject to adjustment from time to time, and an annual bonus opportunity. The employment agreement provides, among other things, that if the Company terminates Mr. Perks for other than cause (as defined in the agreement)\nor Mr. Perks terminates his employment for good reason (as defined in the agreement), then the Company will pay to Mr. Perks an amount equal to the sum of 1.5 times his base salary plus the annual bonus most recently paid to him and a pro rata bonus\nfor the calendar year of termination. However, if Mr. Perks terminates his own employment other than for good reason, the Company would have no further obligation to Mr. Perks other than the obligation to pay his base salary through the date of\ntermination and any other compensation and benefits then due. The agreement also provides that if Mr. Perks’ employment is terminated for any reason during the one year period following a change in control (as defined in the agreement) or if\nsuch employment is terminated by Mr. Perks for any reason during the period beginning six months and ending twelve months following a change in control (as defined in the agreement), then the Company shall pay to Mr. Perks an amount equal to two\ntimes the sum of (a) his base salary and (b) his average annual bonus for the immediately preceding three years. \n\n \n\n The employment agreement with Ms. Howard, our Executive Vice President and Chief Operating Officer, is for a rolling one-year period, such that the\nremainder of the term shall always be one full year, provides for an annual base salary, which is subject to adjustment from time to time, and an annual bonus opportunity. The employment agreement provides, among other things, that if the Company\nterminates Ms. Howard for other than cause (as defined in the agreement) or Ms. Howard terminates her employment for good reason (as defined in the agreement), then the Company will pay to Ms. Howard an amount equal to the sum of her base salary and\nthe average of her annual bonus for the immediately preceding three years. However, if Ms. Howard terminates her own employment other than for good reason, the Company would have no further obligation to Ms. Howard other than the obligation to pay\nher base salary through the date of termination and any other compensation and benefits then due. The agreement also provides that if Ms. Howard’s employment is terminated for any reason during the one year period following a change in control\n(as defined in the agreement), or if such employment is terminated by Ms. Howard for any reason during the period beginning six months and ending twelve months following a change in control (as defined in the agreement), then the Company shall pay\nto Ms. Howard an amount equal to two times the sum of her base salary and her average annual bonus for the immediately preceding three years. \n\n \n\n The employment agreement with Mr. Steptoe, our Vice President, General Counsel and Secretary, is for a rolling one-year period, such that the remainder of\nthe term shall always be one full year, provides for an annual base salary, which is subject to adjustment from time to time, and an annual bonus opportunity. The employment agreement provides, among other things, that if the Company terminates Mr.\nSteptoe for other than cause (as defined in the agreement) or Mr. Steptoe terminates his employment for good reason (as defined in the agreement), then the Company will pay to Mr. Steptoe an amount equal to the sum of his base salary and the average\nof his annual bonus for the immediately preceding three years. However, if Mr. Steptoe terminates his own employment other than for good reason, the Company would have no further obligation to Mr. Steptoe other than the obligation to pay him his\nbase salary through the date of termination and any other compensation and benefits then due. The agreement also provides that if Mr. Steptoe’s employment is terminated for any reason during the one year period following a change in control (as\ndefined in the agreement), or if such employment is terminated by Mr. Steptoe for any reason during the period beginning six months and ending twelve months following a change in control (as defined in the agreement), then the Company shall pay to\nMr. Steptoe an amount equal to two times the sum of his base salary and his average annual bonus for the immediately preceding three years. \n\n \n\n\n\n\n\n\n\n\nEQUITY COMPENSATION PLAN INFORMATION \n\n \n\n The following table summarizes the number of outstanding options, warrants and rights granted to employees and Directors, as\nwell as the number of securities remaining available for future issuance, under the Company’s compensation plans as of December 31, 2004. \n\n \n\n\n \n\n\n\n\n\n\n\n\nSTOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL HOLDERS \n\n \n\n The following table sets forth certain information regarding the beneficial\nownership of common stock as of March 10, 2005 by: (i) each of our Directors and nominees; (ii) each of the Executive Officers; (iii) all of our Directors and Executive Officers as a group and (iv) each person who beneficially owns more than 5% of\nthe outstanding shares of our common stock, based on filings with the Securities and Exchange Commission. We believe that, except where noted otherwise, each person named below has sole voting and investment power with respect to all shares of\ncommon stock shown as beneficially owned by such person, subject to community property laws where applicable. Except as noted below, the address of each person named below is in care of our principal executive offices. \n\n \n\n\n\n\n\n* \n \nLess than 1% \n\n\n\n\n(1) \n \nApplicable percentage of ownership as of March 10, 2005 is based upon approximately 48,558,000 shares of common stock outstanding. Beneficial ownership is a technical term\ndetermined in accordance with the rules of the Securities and Exchange Commission. Beneficial ownership generally means that a shareholder has sole or shared power to vote or sell the stock either directly or indirectly or the right to acquire the\nshares within 60 days. \n\n\n\n\n(2) \n \nBased on information provided in the Schedule 13G filed by Westfield Capital Management Co. LLC with the Securities and Exchange Commission on February 14, 2005. Of the 3,352,786\nshares reported on the Schedule 13G, Westfield reported sole voting power with respect to 2,946,686 shares and sole dispositive power with respect to all 3,352,786 shares. The address of Westfield Capital Management Co, LLC is Residence One\nFinancial Center, Boston, MA 02111. \n\n\n\n\n(3) \n \nIncludes 292,750 shares of common stock subject to options that are or become exercisable within 60 days of March 10, 2005. \n\n\n\n\n(4) \n \nIncludes 107,500 shares of common stock subject to options that are or become exercisable within 60 days of March 10, 2005. \n\n\n\n\n(5) \n \nIncludes 47,018 shares of common stock subject to options that are or become exercisable within 60 days of March 10, 2005. \n\n\n\n\n(6) \n \nIncludes 151,250 shares of common stock subject to options that are or become exercisable within 60 days of March 10, 2005. \n\n\n\n\n(7) \n \nIncludes 35,000 shares of common stock subject to options that are or become exercisable within 60 days of March 10, 2005. \n\n\n\n\n(8) \n \nIncludes 29,066 shares of common stock subject to options that are or become exercisable within 60 days of March 10, 2005. \n\n\n\n\n(9) \n \nShares of common stock are subject to options that are or become exercisable within 60 days of March 10, 2005. \n\n\n\n\n(10) \n \nIncludes 5,000 shares of common stock subject to options that are or become exercisable within 60 days of March 10, 2005. \n\n\n\n\n(11) \n \nShares of common stock subject to options that are or become exercisable within 60 days of March 10, 2005. \n\n\n\n\n(12) \n \nIncludes 949,943 shares of common stock subject to options that are or become exercisable within 60 days of March 10, 2005. \n\n \n\n\n\n\n\n\n\n\nSECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE \n\n \n\n Section 16(a) of the Securities Exchange Act of 1934 requires our Directors\nand Executive Officers, and any persons who beneficially own more than 10% of our common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common stock. To our knowledge,\nbased solely on a review of the copies of such reports sent to us and representations received by our directors and officers, we believe that during the year ended December 31, 2004, our Directors, executive officers and 10% shareholders complied\nwith their Section 16(a) filing requirements. Ms. Howard had one late report relating to an amendment of her Form 3 filing in November 2003 as a result of an inadvertent misstatement of the number of shares owned as of the filing date. \n\n\n \n\n SHAREHOLDER PROPOSALS FOR THE 2005 PROXY STATEMENT \n\n \n\n If you wish to submit a proposal to be included in the proxy statement for\nour Annual Meeting of Shareholders in 2006, you must submit the proposal in writing to the Secretary, Navigant Consulting, Inc., at 615 North Wabash Avenue, Chicago, Illinois 60611. We must receive a proposal by November 28, 2005 in order to\nconsider it for inclusion in the proxy statement for the 2006 Annual Meeting of Shareholders. \n\n \n\n In addition, our By-laws provide that for business to be properly brought before an Annual Meeting by a shareholder, the shareholder must deliver written notice to, or mail such written notice so that it is received\nby the Secretary of the Company at the principal executive offices of the Company, not less than one hundred twenty nor more than one hundred fifty days prior to the first anniversary of the date of our proxy statement released to shareholders in\nconnection with the previous year’s election of directors or meeting of shareholders, except that if no annual meeting of shareholders or election by consent was held in the previous year, a proposal must be received by the Company within ten\ndays after the Company has publicly disclosed the date of the meeting in the manner provided in our By-laws. Our By-laws provide that nominations by shareholders for persons for election as directors must be made by written notice delivered to, or\nmailed and received by the Secretary of the Company at the principal executive offices of the Company not less than one hundred twenty nor more than one hundred fifty days prior to the meeting, except that if the Company has not publicly disclosed\nin the manner provided in the By-laws the date of the meeting at least seventy days prior to the meeting date, notice may be given by a shareholder if received by the Secretary of the Company not later than the close of business on the tenth day\nfollowing the day on which the Company publicly disclosed the meeting date. The By-laws contain provisions regarding information that must be set forth in the shareholder’s notice or otherwise provided in connection with shareholder nominations\nor other business to be brought by shareholders. \n\n \n\n\n\n\n\n\n\n\nINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM \n\n \n\n KPMG LLP, the Company’s independent registered public accounting firm,\naudited our financial statements as of and for the year ended December 31, 2004. The following table presents fees for professional audit services rendered by KPMG LLP for the audit of the Company’s annual financial statements for 2003 and 2004\nand fees billed for other services rendered by KPMG LLP. The Audit Committee reviewed the provision of the services provided by KPMG LLP with respect to such fees and concluded that such services were compatible with maintaining KPMG LLP’s\nindependence. The Audit Committee has authorized management to use, when appropriate, the Company’s independent registered public accounting firm for non-audit, tax-related services, provided the cost of such services does not exceed $25,000\nper quarter. \n\n \n\n\n\n\n\n(1) \n \nAudit-related fees consist principally of fees for a report on the Company’s controls as a service organization under Statement on Auditing Standards No. 70, performed at the\nrequest of certain clients. \n\n\n\n\n(2) \n \nAudit-related fees consist of fees for consultation on Sarbanes-Oxley Act and SEC compliance matters. \n\n\n\n\n(3) \n \nTax fees consist of fees for tax consultation and tax compliance services. \n\n \n\n PROPOSAL 4: \n\n \n\n RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED \n\n PUBLIC ACCOUNTING FIRM\n\n\n \n\n Shareholders will be asked to ratify the appointment by\nthe Audit Committee of KPMG LLP as the Company’s independent registered public accounting firm for the year 2005. \n\n \n\n The Board of Directors and the Audit Committee recommend that shareholders vote “FOR” the appointment of KPMG LLP. \n\n \n\n Representatives from KPMG LLP are expected to be present at the Annual\nMeeting and will be available to respond to appropriate questions. The KPMG LLP representatives will be given an opportunity to make a statement if they desire. \n\n \n\n\nOTHER INFORMATION \n\n \n\n If you would like to contact the Company’s Presiding Director or the non-management Directors as a group, please write to: \n\n \n\n Governor James R. Thompson \n\n Winston & Strawn \n\n 33 W. Wacker Drive\n\n\n Chicago, IL 60601 \n\n \n\n\n\n\n\n\n\n\nAll communications will be reviewed by the Presiding Director, who will determine whether each\ncommunication will be distributed to all non-management Directors. \n\n \n\n If you would like a copy of our Annual Report on Form 10-K that we filed with the Securities and Exchange Commission as of and for the year ended December 31, 2004 (excluding exhibits), our corporate governance guidelines, board committee\ncharters or our Code of Conduct, we will send you one without charge. Please write to: \n\n \n\n Ms. Mary E. Rosinski \n\n Investor Relations Manager \n\n Navigant Consulting, Inc. \n\n 615 North Wabash Avenue \n\n Chicago, Illinois 60611 \n\n \n\n\n\n\n\n\n\n\nEXHIBIT A \n\n \n\n\nNAVIGANT CONSULTING, INC. \n\n \n\n 2005 LONG-TERM INCENTIVE PLAN \n\n \n\n I. INTRODUCTION \n\n \n\n 1.1 Purposes. The purposes of the Navigant Consulting, Inc. 2005 Long-Term Incentive Plan (this “Plan”) are (i) to align\nthe interests of the Company’s stockholders and the recipients of awards under this Plan by increasing the proprietary interest of such recipients in the Company’s growth and success, (ii) to advance the interests of the Company by\nattracting and retaining officers, other employees, nonemployee directors, consultants, independent contractors and agents and (iii) to motivate such persons to act in the long-term best interests of the Company’s stockholders. \n\n \n\n 1.2 Certain Definitions. \n\n \n\n “Agreement” shall mean the written agreement\nevidencing an award hereunder between the Company and the recipient of such award. \n\n \n\n “Board” shall mean the Board of Directors of the Company. \n\n \n\n “Cause” shall mean (i) the commission of a felony or the commission of any other crime that is injurious to the Company, to a\nCompany employee or to a client of the Company; (ii) willful misconduct, dishonesty, fraud, attempted fraud or other willful action or willful failure to act that is injurious to the Company, to a Company employee or to a client of the Company;\n(iii) any material breach of fiduciary duty owed to the Company or to a client of the Company; (iv) any material breach of the terms of any agreement with the Company (including without limitation any employment agreement and any agreement regarding\nnon-competition, non-solicitation of clients or employees, or confidentiality); (v) any material violation of a restriction on disclosure or use of privileged, proprietary or confidential information (including information belonging to the Company,\nto a client of the Company or to a third party to whom the Company owes a duty of confidentiality), but only if such violation is committed with actual notice of such restriction on disclosure; or (vi) any other material breach of the Company’s\nCode of Business Conduct and Ethics or its securities trading policies, as amended from time to time. The Committee’s determination of the existence of Cause shall be conclusive and binding. \n\n \n\n “Change in Control” shall have the meaning set forth\nin Section 5.8(b). \n\n \n\n “Code” shall mean\nthe Internal Revenue Code of 1986, as amended. \n\n \n\n “Committee” shall mean the Committee designated by the Board, consisting of three or more members of the Board, each of whom shall be (i) a “Non-Employee Director” within the meaning of Rule 16b-3 under the\nExchange Act, (ii) an “outside director” within the meaning of Section 162(m) of the Code and (iii) “independent” within the meaning of the rules of the New York Stock Exchange or, if the Common Stock is not listed on the New\nYork Stock Exchange, within the meaning of the rules of the principal national stock exchange on which the Common Stock is then traded. \n\n \n\n “Common Stock” shall mean the common stock, par value $0.001 per share, of the Company. \n\n \n\n “Company” shall mean Navigant Consulting, Inc., a\nDelaware corporation, or any successor thereto. \n\n \n\n “Corporate Transaction” shall have the meaning set forth in Section 5.8(b)(iii). \n\n \n\n “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. \n\n \n\n “Fair Market Value” shall mean the closing\ntransaction price of a share of Common Stock as reported on the New York Stock Exchange on the date as of which such value is being determined or, if the Common Stock \n\n\n \n\n\nA-1 \n\n\n\n\n\n\n\nis not listed on the New York Stock Exchange, the closing transaction price of a share of Common Stock on the principal national stock exchange on which the\nCommon Stock is traded on the date as of which such value is being determined or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, that if\nFair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate.\n\n\n \n\n “Incentive Stock Option” shall mean an\noption to purchase shares of Common Stock that meets the requirements of Section 422 of the Code, or any successor provision, which is intended by the Committee to constitute an Incentive Stock Option. \n\n \n\n “Incumbent Board” shall have the meaning set forth in\nSection 5.8(b)(ii). \n\n \n\n “Leave of Absence”\nshall mean a period of time, not to exceed two years, during which, pursuant to an arrangement approved in advance in writing by the Committee or its designee, an employee is excused from performing his or her duties of employment and does not earn\nany base pay or annual incentive bonus. \n\n \n\n “Non-Employee Director” shall mean any director of the Company who is not an officer or employee of the Company or any Subsidiary. \n\n \n\n “Non-Qualified Stock Option” shall mean a stock option which is not an Incentive Stock Option.\n\n\n \n\n “Outstanding Common Stock” shall have\nthe meaning set forth in Section 5.8(b)(i). \n\n \n\n “Outstanding Voting Securities” shall have the meaning set forth in Section 5.8(b)(i). \n\n \n\n “Performance Measures” shall mean the criteria and objectives, established by the Committee, which shall be satisfied or met (i)\nas a condition to the grant or exercisability of all or a portion of an option or SAR or (ii) during the applicable Performance Period as a condition to the holder’s receipt, in the case of a Restricted Stock Award or a Performance Share Award,\nof the shares of Common Stock subject to such award, or, in the case of a Restricted Stock Unit Award or a Performance Share Unit Award, of the shares of Common Stock subject to such award or of payment with respect to such award. To the extent\nnecessary for an award to be qualified performance-based compensation under Section 162(m) of the Code and the regulations thereunder, such criteria and objectives shall include one or more of the following: the attainment by a share of Common Stock\nof a specified Fair Market Value for a specified period of time, earnings per share, return on assets, return on equity, return on invested capital, total shareholder return, earnings or net income of the Company before or after taxes, revenues,\nmarket share, cash flow or cost reduction goals, or any combination of the foregoing. \n\n \n\n “Performance Option” shall mean an Incentive Stock Option or Non-Qualified Stock Option, the grant of which or the exercisability of all or a portion of which is contingent upon the attainment\nof specified Performance Measures within a specified Performance Period. \n\n \n\n “Performance Period” shall mean any period of not less than six months designated by the Committee during which (i) the Performance Measures applicable to an award shall be measured and (ii)\nthe conditions to vesting applicable to an award shall remain in effect. \n\n \n\n “Performance Share” shall mean a share of Common Stock, the vesting of which is subject to the attainment of specified Performance Measures within a specified Performance Period. \n\n \n\n “Performance Share Award” shall mean an award of\nPerformance Shares under this Plan. \n\n \n\n “Performance\nShare Unit” shall mean a right to receive, contingent upon the attainment of specified Performance Measures within a specified Performance Period, one share of Common Stock, which may be Restricted Stock, or in lieu thereof, the Fair\nMarket Value of such Performance Share in cash. \n\n \n\n\nA-2 \n\n\n\n\n\n\n“Performance Share Unit Award” shall mean an award of Performance Share Units\nunder this Plan. \n\n \n\n “Performance Unit”\nshall mean a right to receive, contingent upon the attainment of specified Performance Measures within a specified Performance Period, a specified cash amount or, in lieu thereof, shares of Common Stock having a Fair Market Value equal to such cash\namount. \n\n \n\n “Performance Unit Award” shall\nmean an award of Performance Units under this Plan. \n\n \n\n “Permanent and Total Disability” shall have the meaning set forth in Section 22(e)(3) of the Code or any successor thereto. \n\n \n\n “Restricted Stock” shall mean shares of Common Stock which are subject to a Restriction Period and which may, in addition thereto,\nbe subject to the attainment of specified Performance Measures within a specified Performance Period. \n\n \n\n “Restricted Stock Award” shall mean an award of Restricted Stock under this Plan. \n\n \n\n “Restricted Stock Unit” shall mean a right to receive\none share of Common Stock or, in lieu thereof, the Fair Market Value of such share of Common Stock in cash, which shall be contingent upon the expiration of a specified Restriction Period and which may, in addition thereto, be contingent upon the\nattainment of specified Performance Measures within a specified Performance Period. \n\n \n\n “Restricted Stock Unit Award” shall mean an award of Restricted Stock Units under this Plan. \n\n \n\n “Restriction Period” shall mean any period of not less than six months designated by the Committee during which (i) the Common\nStock subject to a Restricted Stock Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the Agreement relating to such award, or (ii) the conditions to\nvesting applicable to a Restricted Stock Unit Award shall remain in effect. \n\n \n\n “SAR” shall mean a stock appreciation right which is not granted in tandem with, or by reference to, an option, which entitles the holder thereof to receive, upon exercise, shares of Common\nStock (which may be Restricted Stock), cash or a combination thereof with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number\nof such SARs which are exercised. \n\n \n\n “Stock\nAward” shall mean a Restricted Stock Award, a Restricted Stock Unit Award, a Performance Share Award or a Performance Share Unit Award. \n\n \n\n “Subsidiary” shall mean any corporation, limited liability company, partnership, joint venture or similar entity in which the\nCompany owns, directly or indirectly, an equity interest possessing more than 50% of the combined voting power of the total outstanding equity interests of such entity. \n\n \n\n “Tax Date” shall have the meaning set forth in Section 5.5. \n\n \n\n “Ten Percent Holder” shall have the meaning set forth\nin Section 2.1(a). \n\n \n\n 1.3 Administration. This Plan\nshall be administered by the Committee. Any one or a combination of the following awards may be made under this Plan to eligible persons: (i) options to purchase shares of Common Stock in the form of Incentive Stock Options or Non-Qualified Stock\nOptions (which may include Performance Options), (ii) SARs, (iii) Stock Awards in the form of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Share Units and (iv) Performance Units. The Committee shall, subject to the\nterms of this \n\n\n \n\n\nA-3 \n\n\n\n\n\n\n\nPlan, select eligible persons for participation in this Plan and determine the form, amount and timing of each award to such persons and, if applicable, the\nnumber of shares of Common Stock, the number of SARs, the number of Restricted Stock Units, the number of Performance Share Units and the number of Performance Units subject to such an award, the exercise price or base price associated with the\naward, the time and conditions of exercise or settlement of the award and all other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the award. The Committee may, in its sole discretion and for\nany reason at any time, subject to the requirements of Section 162(m) of the Code and regulations thereunder in the case of an award intended to be qualified performance-based compensation, take action such that (i) any or all outstanding options\nand SARs shall become exercisable in part or in full, (ii) all or a portion of the Restriction Period or Performance Period (if any) applicable to any outstanding Restricted Stock or Restricted Stock Units shall lapse, (iii) all or a portion of the\nPerformance Period applicable to any outstanding Performance Shares, Performance Share Units or Performance Units shall lapse and (iv) the Performance Measures (if any) applicable to any outstanding award shall be deemed to be satisfied at the\nmaximum or any other level. The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish rules and regulations it deems necessary or desirable for the administration of this Plan and may\nimpose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities. All such interpretations, rules, regulations and conditions shall be conclusive and binding on all\nparties. \n\n \n\n The Committee may delegate some or all of its power\nand authority hereunder to the Board or, subject to applicable law, to the Chief Executive Officer or other executive officer of the Company as the Committee deems appropriate; provided, however, that (i) the Committee may not delegate\nits power and authority to the Board or the Chief Executive Officer or other executive officer of the Company with regard to the grant of an award to any person who is a “covered employee” within the meaning of Section 162(m) of the Code\nor who, in the Committee’s judgment, is likely to be a covered employee at the time during the period an award hereunder to such employee would be outstanding and (ii) the Committee may not delegate its power and authority to the Chief\nExecutive Officer or other executive officer of the Company with regard to the selection for participation in this Plan of a person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an award to such\nperson. \n\n \n\n No member of the Board or Committee, and neither the\nChief Executive Officer nor any other executive officer to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction or determination made in connection with this Plan\nin good faith, and the members of the Board and the Committee and the Chief Executive Officer or other executive officer shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense\n(including attorneys’ fees) arising therefrom to the full extent permitted by law (except as otherwise may be provided in the Company’s Certificate of Incorporation and/or By-laws) and under any directors’ and officers’ liability\ninsurance that may be in effect from time to time. \n\n \n\n A majority\nof the Committee shall constitute a quorum. The acts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by all of the members\nof the Committee without a meeting. \n\n \n\n 1.4\nEligibility. Participants in this Plan shall consist of such officers, other employees, nonemployee directors, consultants, independent contractors and agents, and persons expected to become officers, other employees, nonemployee\ndirectors, consultants, independent contractors and agents, of the Company and its Subsidiaries as the Committee in its sole discretion may select from time to time. The Committee’s selection of a person to participate in this Plan at any time\nshall not require the Committee to select such person to participate in this Plan at any other time. \n\n \n\n 1.5 Shares Available. (a) Plan Share Limit. Subject to adjustment as provided in Section 5.7, five million, two hundred fifty\nthousand (5,250,000) shares of Common Stock shall be available under this Plan (the “Plan Share Limit”). \n\n \n\n\nA-4 \n\n\n\n\n\n\n(b) Deductions. Shares subject to options and SARs shall be counted against the Plan Share Limit\nas one share for every one share subject thereto. Shares subject to Restricted Stock Awards, Restricted Stock Unit Awards, Performance Share Awards or Performance Share Unit Awards, or payable pursuant to Performance Unit Awards, shall be counted\nagainst the Plan Share Limit as one and one-half shares for every one share subject thereto or payable pursuant thereto. Dividend equivalents paid with respect to awards shall not be counted against the Plan Share Limit. \n\n \n\n (c) Increases. The Plan Share Limit shall be increased by\nshares that are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of an award granted under this Plan. Increases in the Plan Share Limit by virtue of this Section 1.5(c) shall be made in a manner that is\nconsistent with Plan Share Limit deductions made pursuant to Section 1.5(b). No increases shall be made in the Plan Share Limit by reason of the exercise of SARs. \n\n \n\n (d) Prior Plan. The Plan Share Limit shall be increased in the manner set forth in Section 1.5(c) with respect to\nawards made under the Company’s Long-Term Incentive Plan, As Amended through November 30, 2000 (the “Prior Plan”), that are outstanding on the date of adoption of this Plan by the Board as if such awards under the Prior Plan had been\nmade under this Plan. \n\n \n\n (e) Source of Shares. Shares of\nCommon Stock to be delivered under this Plan shall be made available from authorized and unissued shares of Common Stock, or authorized and issued shares of Common Stock reacquired and held as treasury shares or otherwise or a combination thereof.\n\n\n \n\n 1.6 Award Limits. To the extent necessary for an\naward to be qualified performance-based compensation under Section 162(m) of the Code and the regulations thereunder (i) the maximum number of shares of Common Stock with respect to which options or SARs or a combination thereof may be granted\nduring any fiscal year of the Company to any person shall be 300,000, subject to adjustment as provided in Section 5.7; (ii) the maximum number of shares of Common Stock with respect to which Stock Awards subject to Performance Measures may be\ngranted during any fiscal year of the Company to any person shall be 150,000, subject to adjustment as provided in Section 5.7, and (iii) the maximum amount that may be payable with respect to Performance Units granted during any fiscal year of the\nCompany to any person shall be $5,000,000. \n\n \n\n II. STOCK OPTIONS AND STOCK\nAPPRECIATION RIGHTS \n\n \n\n 2.1 Stock Options. The\nCommittee may, in its discretion, grant options to purchase shares of Common Stock to such eligible persons as may be selected by the Committee. Each option, or portion thereof, that is not an Incentive Stock Option shall be a Non-Qualified Stock\nOption. An Incentive Stock Option may not be granted to any person who is not an employee of the Company or any parent or subsidiary (as defined in Section 424 of the Code). Each Incentive Stock Option shall be granted within 10 years of the\neffective date of this Plan. To the extent that the aggregate Fair Market Value (determined as of the date of grant) of shares of Common Stock with respect to which options designated as Incentive Stock Options are exercisable for the first time by\na participant during any calendar year (under this Plan or any other plan of the Company, or any parent or Subsidiary) exceeds the amount (currently $100,000) established by the Code, such options shall constitute Non-Qualified Stock Options.\nOptions shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. \n\n \n\n (a) Number of Shares and Purchase Price. The number of shares of\nCommon Stock subject to an option and the purchase price per share of Common Stock purchasable upon exercise of the option shall be determined by the Committee; provided, however, that the purchase price per share of Common Stock\npurchasable upon exercise of a Non-Qualified Stock Option or an Incentive Stock Option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such option; provided further, that if an\nIncentive Stock Option shall be granted to any person who, at the time such option is granted, owns capital stock possessing more than 10 percent of the total combined voting power of all classes of capital stock of the \n\n\n \n\n\nA-5 \n\n\n\n\n\n\n\nCompany (or of any parent or Subsidiary) (a “Ten Percent Holder”), the purchase price per share of Common Stock shall not be less than the\nprice (currently 110% of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option. \n\n \n\n (b) Option Period and Exercisability. The period during which an option may be exercised shall be determined by the Committee; provided,\nhowever, that no option shall be exercised later than 10 years after its date of grant; provided further, that if an Incentive Stock Option shall be granted to a Ten Percent Holder, such option shall not be exercised later than\nfive years after its date of grant. The Committee may, in its discretion, determine that an option is to be granted as a Performance Option and may establish an applicable Performance Period and Performance Measures which shall be satisfied or met\nas a condition to the grant of such option or to the exercisability of all or a portion of such option. The Committee shall determine whether an option shall become exercisable in cumulative or non-cumulative installments and in part or in full at\nany time. An exercisable option, or portion thereof, may be exercised only with respect to whole shares of Common Stock. \n\n \n\n (c) Method of Exercise. An option may be exercised (i) by giving written notice to the Company specifying the number of whole shares of Common\nStock to be purchased and accompanying such notice with payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures\nestablished by the Company) of previously owned whole shares of Common Stock (which the optionee has held for at least six months prior to delivery of such shares and for which the optionee has good title, free and clear of all liens and\nencumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to\nthe Company to whom the optionee has submitted an irrevocable notice of exercise or (D) a combination of (A) and (B), in each case to the extent set forth in the Agreement relating to the option, and (ii) by executing such documents as the Company\nmay reasonably request. Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No certificate representing Common Stock\nshall be delivered until the full purchase price therefor and any withholding taxes thereon, as described in Section 5.5, have been paid (or arrangement made for such payment to the Company’s satisfaction). \n\n \n\n 2.2 Stock Appreciation Rights. The Committee may, in its\ndiscretion, grant SARs to such eligible persons as may be selected by the Committee. SARs shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as\nthe Committee shall deem advisable. \n\n \n\n (a) Number of SARs and\nBase Price. The number of SARs subject to an award shall be determined by the Committee. The base price of an SAR shall be determined by the Committee; provided, however, that such base price shall not be less than 100% of the Fair\nMarket Value of a share of Common Stock on the date of grant of such SAR. \n\n \n\n (b) Exercise Period and Exercisability. The Agreement relating to an award of SARs shall specify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a\ncombination thereof. The period for the exercise of an SAR shall be determined by the Committee; provided, however, that no SAR may be exercised later than 10 years after its date of grant. The Committee may, in its discretion,\nestablish Performance Measures which shall be satisfied or met as a condition to the grant of an SAR or to the exercisability of all or a portion of an SAR. The Committee shall determine whether an SAR may be exercised in cumulative or\nnon-cumulative installments and in part or in full at any time. An exercisable SAR, or portion thereof, may be exercised only with respect to a whole number of SARs. If an SAR is exercised for shares of Restricted Stock, a certificate or\ncertificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the\nexercise of an SAR for shares of Common Stock, including Restricted Stock, the holder of such SAR shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such SAR. \n\n \n\n\nA-6 \n\n\n\n\n\n\n(c) Method of Exercise. An SAR may be exercised (i) by giving written notice to the Company\nspecifying the whole number of SARs which are being exercised and (ii) by executing such documents as the Company may reasonably request. \n\n \n\n 2.3 Termination of Employment or Service. (a) Disability. Subject to Section 2.3(f) and unless otherwise specified in the Agreement\nrelating to an option or SAR, as the case may be, if the employment with or service to the Company of the holder of an option or SAR terminates by reason of disability, each option and SAR held by such holder shall be exercisable only to the extent\nthat such option or SAR, as the case may be, is exercisable on the effective date of such holder’s termination of employment or service and may thereafter be exercised by such holder (or such holder’s legal representative or similar\nperson) until and including the earlier to occur of (i) the date which is one year (or such other period as set forth in the Agreement relating to such option or SAR) after the effective date of such holder’s termination of employment or\nservice and (ii) the expiration date of the term of such option or SAR. \n\n \n\n (b) Retirement. Subject to Section 2.3(f) and unless otherwise specified in the Agreement relating to an option or SAR, as the case may be, if the employment with or service to the Company of the holder of an option or SAR terminates\nby reason of retirement, each option and SAR held by such holder shall be exercisable only to the extent that such option or SAR, as the case may be, is exercisable on the effective date of such holder’s termination of employment or service and\nmay thereafter be exercised by such holder (or such holder’s legal representative or similar person) until and including the earlier to occur of (i) the date which is three months (or such other period as set forth in the Agreement relating to\nsuch option or SAR) after the effective date of such holder’s termination of employment or service and (ii) the expiration date of the term of such option or SAR. \n\n \n\n (c) Death. Unless otherwise specified in the Agreement relating to an option or SAR, as the case may be, if the\nemployment with or service to the Company of the holder of an option or SAR terminates by reason of death, each option and SAR held by such holder shall be exercisable only to the extent that such option or SAR, as the case may be, is exercisable on\nthe date of such holder’s death and may thereafter be exercised by such holder’s executor, administrator, legal representative, beneficiary or similar person until and including the earlier to occur of (i) the date which is one year (or\nsuch other period as set forth in the Agreement relating to such option or SAR) after the date of death and (ii) the expiration date of the term of such option or SAR; provided, however, that, in the event that the date of death is\nless than six months prior to such expiration date, such holder’s executor, administrator, legal representative, beneficiary or similar person, as the case may be, shall have six months from the date of death to so exercise such option or SAR\n(except that, in the event that such option is an Incentive Stock Option, such period of exercise shall not under any circumstance extend beyond the tenth anniversary of the date of grant of such Incentive Stock Option). \n\n \n\n (d) Termination for Cause. If the employment with or service to the\nCompany of the holder of an option or SAR is terminated by the Company for Cause, each option and SAR held by such holder shall terminate automatically on the effective date of such holder’s termination of employment or service. \n\n \n\n (e) Other Termination. Subject to Section 2.3(f) and unless otherwise\nspecified in the Agreement relating to an option or SAR, as the case may be, if the employment with or service to the Company of the holder of an option or SAR terminates for any reason other than disability, retirement, death or Cause, each option\nand SAR held by such holder shall be exercisable only to the extent that such option or SAR is exercisable on the effective date of such holder’s termination of employment or service and may thereafter be exercised by such holder (or such\nholder’s legal representative or similar person) until and including the earlier to occur of (i) the date which is three months (or such other period as set forth in the Agreement relating to such option or SAR) after the effective date of such\nholder’s termination of employment or service and (ii) the expiration date of the term of such option or SAR. \n\n \n\n (f) Termination of Employment - Incentive Stock Options. Unless otherwise specified in the Agreement relating to an Incentive Stock Option, if\nthe employment with the Company of the holder of an Incentive Stock \n\n\n \n\n\nA-7 \n\n\n\n\n\n\n\nOption terminates by reason of Permanent and Total Disability, each Incentive Stock Option held by such optionee shall be exercisable only to the extent that\nsuch option is exercisable on the effective date of such holder’s termination of employment or service and may thereafter be exercised by such optionee (or such optionee’s legal representative or similar person) until and including the\nearlier to occur of (i) the date which is one year (or such shorter period as set forth in the Agreement relating to such option) after the effective date of such optionee’s termination of employment and (ii) the expiration date of the term of\nsuch option. \n\n \n\n Unless otherwise specified in the Agreement\nrelating to an Incentive Stock Option, if the employment with the Company of the holder of an Incentive Stock Option terminates for any reason other than Permanent and Total Disability, death or Cause, each Incentive Stock Option held by such\noptionee shall be exercisable only to the extent that such option is exercisable on the effective date of such holder’s termination of employment or service and may thereafter be exercised by such holder (or such holder’s legal\nrepresentative or similar person) until and including the earlier to occur of (i) the date which is three months after the effective date of such optionee’s termination of employment and (ii) the expiration date of the term of such option.\n\n\n \n\n (g) Death Following Termination of Employment or\nService. Subject to Section 2.3(f) and unless otherwise specified in the Agreement relating to an option or SAR, as the case may be, if the holder of an option or SAR dies during the post-termination exercise period specified in Section 2.3(a),\n(b), (d) or (e), as applicable, each option and SAR held by such holder shall be exercisable only to the extent that such option or SAR, as the case may be, is exercisable on the date of such holder’s death and may thereafter be exercised by\nthe holder’s executor, administrator, legal representative, beneficiary or similar person until and including the earlier to occur of (i) the date which is one year (or such other period as set forth in the Agreement relating to such option or\nSAR) after the date of death and (ii) the expiration date of the term of such option or SAR; provided, however, that, in the event that the date of death is less than six months prior to such expiration date, such holder’s\nexecutor, administrator, legal representative, beneficiary or similar person, as the case may be, shall have six months from the date of death to so exercise such option or SAR (except that, in the event that such option is an Incentive Stock\nOption, such period of exercise shall not under any circumstance extend beyond the tenth anniversary of the date of grant of such Incentive Stock Option). \n\n \n\n 2.4 No Repricing. Notwithstanding anything in this Plan to the contrary and subject to Section 5.7, without the approval of the stockholders\nof the Company the Committee will not amend or replace any previously granted option or SAR in a transaction that constitutes a “repricing,” as such term is used in Section 303A.08 of the Listed Company Manual of the New York Stock\nExchange. \n\n \n\n III. STOCK AWARDS \n\n \n\n 3.1 Stock Awards. The Committee may, in its discretion, grant\nStock Awards to such eligible persons as may be selected by the Committee. The Agreement relating to a Stock Award shall specify whether the Stock Award is a Restricted Stock Award, a Restricted Stock Unit Award, a Performance Share Award or a\nPerformance Share Unit Award. \n\n \n\n 3.2 Terms of Restricted\nStock Awards. Restricted Stock Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.\n\n\n \n\n (a) Number of Shares and Other Terms. The number of\nshares of Common Stock subject to a Restricted Stock Award, the Restriction Period and the Performance Measures and Performance Period (if any) applicable to a Restricted Stock Award shall be determined by the Committee. \n\n \n\n (b) Vesting and Forfeiture. The Agreement relating to a Restricted\nStock Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of the shares of Common Stock subject to such award (i) if the holder of such award remains\ncontinuously in the \n\n\n \n\n\nA-8 \n\n\n\n\n\n\n\nemployment of the Company during the specified Restriction Period and (ii) if specified Performance Measures (if any) are satisfied or met during a specified\nPerformance Period, and for the forfeiture of the shares of Common Stock subject to such award (x) if the holder of such award does not remain continuously in the employment of the Company during the specified Restriction Period or (y) if specified\nPerformance Measures (if any) are not satisfied or met during a specified Performance Period. \n\n \n\n (c) Stock Certificates. During the Restriction Period, a certificate or certificates representing a Restricted Stock Award shall be registered in the holder’s name and may bear a legend, in addition to any\nlegend which may be required pursuant to Section 5.6, indicating that the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to the\nRestricted Stock Award. All such certificates shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed\nnecessary or appropriate, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the Restricted Stock Award in the event such award is forfeited in whole or in part. Alternatively, the shares of\nCommon Stock subject to a Restricted Stock Award may be held by the Company or a custodian in book entry form, with restrictions on such shares duly noted, until the termination of any Restriction Period and the satisfaction or attainment of any\nPerformance Measures during the specified Performance Period (if any) applicable to such Restricted Stock Award. Upon termination of any applicable Restriction Period and the satisfaction or attainment of applicable Performance Measures during the\nspecified Performance Period (if any), subject to the Company’s right to require payment of any taxes in accordance with Section 5.5, a certificate or certificates evidencing ownership of the requisite number of shares of Common Stock shall be\ndelivered to the holder of such award. \n\n \n\n (d) Rights with\nRespect to Restricted Stock Awards. Unless otherwise set forth in the Agreement relating to a Restricted Stock Award, and subject to the terms and conditions of a Restricted Stock Award, the holder of such award shall have all rights as a\nstockholder of the Company, including, but not limited to, voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that a\ndistribution with respect to shares of Common Stock, other than a regular cash dividend, shall be deposited with the Company and shall be subject to the same restrictions as the shares of Common Stock with respect to which such distribution was\nmade. \n\n \n\n 3.3 Terms of Restricted Stock Unit Awards.\nRestricted Stock Unit Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. \n\n \n\n (a) Number of Shares and Other Terms. The number of shares of Common\nStock subject to a Restricted Stock Unit Award, the Restriction Period and the Performance Measures and Performance Period (if any) applicable to a Restricted Stock Unit Award shall be determined by the Committee. \n\n \n\n (b) Vesting and Forfeiture. The Agreement relating to a Restricted\nStock Unit Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such Restricted Stock Unit Award (i) if the holder of such award remains continuously in the\nemployment of the Company during the specified Restriction Period and (ii) if specified Performance Measures (if any) are satisfied or met during a specified Performance Period, and for the forfeiture of the shares of Common Stock subject to such\naward (x) if the holder of such award does not remain continuously in the employment of the Company during the specified Restriction Period or (y) if specified Performance Measures (if any) are not satisfied or met during a specified Performance\nPeriod. \n\n \n\n (c) Settlement of Vested Restricted Stock Unit\nAwards. The Agreement relating to a Restricted Stock Unit Award shall specify (i) whether such award may be settled in shares of Common Stock or cash or a combination thereof and (ii) whether the holder thereof shall be entitled to receive, on a\ncurrent or deferred basis, dividend equivalents, and, if determined by the Committee, interest on, or the deemed reinvestment of, any deferred \n\n\n \n\n\nA-9 \n\n\n\n\n\n\n\ndividend equivalents, with respect to the number of shares of Common Stock subject to such award. Prior to the settlement of a Restricted Stock Unit Award,\nthe holder of such award shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award. \n\n \n\n 3.4 Terms of Performance Share Awards. Performance Share Awards shall be subject to the following terms and conditions and shall be subject\nto such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. \n\n \n\n (a) Number of Shares and Other Terms. The number of shares of Common Stock subject to a Performance Share Award and the Performance Measures and\nPerformance Period applicable to a Performance Share Award shall be determined by the Committee. \n\n \n\n (b) Vesting and Forfeiture. The Agreement relating to a Performance Share Award shall provide, in the manner determined by the Committee, in its\ndiscretion, and subject to the provisions of this Plan, for the vesting of the shares of Common Stock subject to such award if the specified Performance Measures are satisfied or met during the specified Performance Period and for the forfeiture of\nthe shares of Common Stock subject to such award if the specified Performance Measures are not satisfied or met during the specified Performance Period. \n\n \n\n (c) Stock Certificates. During the Performance Period, a certificate or certificates representing a Performance Share Award shall be registered in\nthe holder’s name and may bear a legend, in addition to any legend which may be required pursuant to Section 5.6, indicating that the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms\nand conditions of this Plan and the Agreement relating to the Performance Share Award. All such certificates shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each\nendorsed in blank with a guarantee of signature if deemed necessary or appropriate, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the Performance Share Award in the event such award is\nforfeited in whole or in part. Alternatively, the shares of Common Stock subject to a Performance Share Award may be held by the Company or a custodian in book entry form, with restrictions on such shares duly noted, until the satisfaction or\nattainment of any Performance Measures during the specified Performance Period applicable to such Performance Share Award. Upon the satisfaction or attainment of applicable Performance Measures during the specified Performance Period, subject to the\nCompany’s right to require payment of any taxes in accordance with Section 5.5, a certificate or certificates evidencing ownership of the requisite number of shares of Common Stock shall be delivered to the holder of such award. \n\n \n\n (d) Rights with Respect to Performance Share Awards. Unless otherwise\nset forth in the Agreement relating to a Performance Share Award, and subject to the terms and conditions of a Performance Share Award, the holder of such award shall have all rights as a stockholder of the Company, including, but not limited to,\nvoting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that a distribution with respect to shares of Common Stock, other than a\nregular cash dividend, shall be deposited with the Company and shall be subject to the same restrictions as the shares of Common Stock with respect to which such distribution was made. \n\n \n\n 3.5 Terms of Performance Share Unit Awards. Performance Share Unit Awards shall be subject to the following\nterms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. \n\n \n\n (a) Number of Shares and Other Terms. The number of shares of Common Stock subject to a Performance Share Unit Award\nand the Performance Measures and Performance Period applicable to a Performance Share Unit Award shall be determined by the Committee. \n\n \n\n (b) Vesting and Forfeiture. The Agreement relating to a Performance Share Unit Award shall provide, in the manner determined by the Committee, in\nits discretion, and subject to the provisions of this Plan, for the vesting \n\n\n \n\n\nA-10 \n\n\n\n\n\n\n\nof such Performance Share Unit Award if the specified Performance Measures are satisfied or met during the specified Performance Period and for the\nforfeiture of the shares of Common Stock subject to such award if the specified Performance Measures are not satisfied or met during the specified Performance Period. \n\n \n\n (c) Settlement of Vested Performance Share Unit Awards. The Agreement relating to a Performance Share Unit Award\nshall specify (i) whether such award may be settled in shares of Common Stock or cash or a combination thereof and (ii) whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents and, if determined\nby the Committee, interest on, or the deemed reinvestment of, any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award. Prior to the settlement of a Performance Share Unit Award, the holder of\nsuch award shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award. \n\n \n\n 3.6 Termination of Employment or Service. (a) Disability, Retirement, Death or Other Termination. Unless otherwise specified in the\nAgreement relating to a Stock Award, if the employment with or service to the Company of the holder of the Stock Award terminates by reason of disability, retirement, death or any other reason, except termination for Cause (i) the portion of the\nRestricted Stock Award or Restricted Stock Unit Award which is unvested as of the effective date of such holder’s termination of employment or service shall be forfeited and such portion shall be cancelled by the Company, and (ii) in the case\nof a Stock Award subject to Performance Measures, the portion of the Stock Award which is unvested as of the effective date of such holder’s termination of employment or service shall be forfeited and such portion shall be cancelled by the\nCompany, unless otherwise determined by the Committee. \n\n \n\n (b)\nTermination for Cause. Unless otherwise set forth in the Agreement relating to a Stock Award, if the employment with or service to the Company of the holder of the Stock Award terminates for Cause, the portion of the Stock Award which is\nunvested as of the effective date of such holder’s termination of employment or service shall be forfeited and such portion shall be cancelled by the Company. \n\n \n\n IV. PERFORMANCE UNIT AWARDS \n\n \n\n 4.1 Performance Unit Awards. The Committee may, in its discretion, grant Performance Unit Awards to such eligible persons as may be selected\nby the Committee. \n\n \n\n 4.2 Terms of Performance Unit\nAwards. Performance Unit Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable. \n\n\n \n\n (a) Number of Performance Units and Performance Measures. The\nnumber of Performance Units subject to a Performance Unit Award and the Performance Measures and Performance Period applicable to a Performance Unit Award shall be determined by the Committee. \n\n \n\n (b) Vesting and Forfeiture. The Agreement relating to a Performance\nUnit Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such Performance Unit Award if the specified Performance Measures are satisfied or met during the\nspecified Performance Period and for the forfeiture of such award if the specified Performance Measures are not satisfied or met during the specified Performance Period. \n\n \n\n (c) Settlement of Vested Performance Unit Awards. The Agreement relating to a Performance Unit Award shall specify\nwhether such award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof. If a Performance Unit Award is settled in shares of Restricted Stock, a certificate or certificates representing\nsuch Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights as a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the settlement of a Performance\nUnit Award in shares of Common Stock, including Restricted Stock, the holder of such award shall have no rights as a stockholder of the Company. \n\n \n\n\nA-11 \n\n\n\n\n\n\n4.3 Termination of Employment or Service. (a) Disability, Retirement, Death or Other\nTermination. Unless otherwise set forth in the Agreement relating to a Performance Unit Award, if the employment with or service to the Company of the holder of the Performance Unit Award terminates by reason of disability, retirement, death or\nany other reason, except termination for Cause, the portion of the Performance Unit Award which is unvested as of the effective date of such holder’s termination of employment or service shall be forfeited and such portion shall be cancelled by\nthe Company, unless otherwise determined by the Committee. \n\n \n\n (b)\nTermination for Cause. Unless otherwise set forth in the Agreement relating to a Performance Unit Award, if the employment with or service to the Company of the holder of the Performance Unit Award terminates for Cause, the portion of the\nPerformance Unit Award which is unvested as of the effective date of such holder’s termination of employment or service shall be forfeited and such portion shall be cancelled by the Company. \n\n \n\n V. GENERAL \n\n \n\n 5.1 Effective Date and Term of Plan. This Plan shall be submitted to the stockholders of the Company for\napproval at the Company’s 2005 annual meeting of stockholders and, if approved by the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at such annual meeting of stockholders, shall become\neffective on the date of such approval. This Plan shall terminate 10 years after its effective date, unless terminated earlier by the Board. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination.\n\n\n \n\n Awards hereunder may be made at any time prior to the\ntermination of this Plan, provided that no award may be made later than 10 years after the effective date of this Plan. In the event that this Plan is not approved by the stockholders of the Company, this Plan and any awards hereunder shall be void\nand of no force or effect. \n\n \n\n 5.2 Amendments. The\nBoard may amend this Plan as it shall deem advisable, subject to any requirement of stockholder approval required by applicable law, rule or regulation, including Section 162(m) of the Code and any rule of the New York Stock Exchange, or, if the\nCommon Stock is not listed on the New York Stock Exchange, any rule of the principal national stock exchange on which the Common Stock is then traded; provided, however, that no amendment may impair the rights of a holder of an\noutstanding award without the consent of such holder. \n\n \n\n 5.3\nAgreement. Each award under this Plan shall be evidenced by an Agreement setting forth the terms and conditions applicable to such award. No award shall be valid until an Agreement is executed by the Company and the recipient of such\naward and, upon execution by each party and delivery of the Agreement to the Company, such award shall be effective as of the effective date set forth in the Agreement. \n\n \n\n 5.4 Non-Transferability. No award shall be transferable other than by will, the laws of descent and\ndistribution or pursuant to beneficiary designation procedures approved by the Company, unless otherwise specifically approved by the Committee. Except to the extent permitted by the foregoing sentence or the Agreement relating to an award, each\naward may be exercised or settled during the holder’s lifetime only by the holder or the holder’s legal representative or similar person. Except as permitted by the second preceding sentence, no award may be sold, transferred, assigned,\npledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or\notherwise dispose of any award, such award and all rights thereunder shall immediately become null and void. \n\n \n\n 5.5 Tax Withholding. The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock or the\npayment of any cash pursuant to an award made hereunder, payment by the holder of such award of any federal, state, local or other taxes which may be required to be withheld or paid in connection with such award. An Agreement may provide that (i)\nthe Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder, having an aggregate Fair Market Value \n\n\n \n\n\nA-12 \n\n\n\n\n\n\n\ndetermined as of the date the obligation to withhold or pay taxes arises in connection with an award (the “Tax Date”), or withhold an amount of\ncash which would otherwise be payable to a holder, in the amount necessary to satisfy any such obligation or (ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Company, (B) delivery (either\nactual delivery or by attestation procedures established by the Company) to the Company of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy\nany such obligation, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be\npayable to a holder, equal to the amount necessary to satisfy any such obligation, (D) in the case of the exercise of an option and except as may be prohibited by applicable law, a cash payment by a broker-dealer acceptable to the Company to whom\nthe optionee has submitted an irrevocable notice of exercise or (E) any combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the award. Shares of Common Stock to be delivered or withheld may not have an\naggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate. Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining\namount due shall be paid in cash by the holder. \n\n \n\n 5.6\nRestrictions on Shares. Each award made hereunder shall be subject to the requirement that if at any time the Company determines that the listing, registration or qualification of the shares of Common Stock subject to such award upon any\nsecurities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares thereunder, such shares shall not\nbe delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company may require that certificates evidencing shares\nof Common Stock delivered pursuant to any award made hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules\nand regulations thereunder. \n\n \n\n 5.7 Adjustment. In\nthe event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of\nCommon Stock other than a regular cash dividend, the number and class of securities available under this Plan, the number and class of securities subject to each outstanding option and the purchase price per security, the terms of each outstanding\nSAR, the maximum number of securities with respect to which options or SARs may be granted during any fiscal year of the Company to any one grantee, the terms of each outstanding Restricted Stock Award, Restricted Stock Unit Award, Performance Share\nAward and Performance Share Unit Award, including the number and class of securities subject thereto, the terms of each outstanding Performance Unit, the maximum number of shares of Common Stock that may be awarded during any fiscal year of the\nCompany pursuant to a Performance Share Award or a Performance Share Unit Award to any one grantee and the maximum amount that may be payable pursuant to any Performance Unit Award granted during any fiscal year of the Company to any one grantee\nshall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding options and SARs without an increase in the aggregate purchase price or base price. The decision of the Committee regarding any such adjustment\nshall be final, binding and conclusive. If any such adjustment would result in a fractional security being (a) available under this Plan, such fractional security shall be disregarded, or (b) subject to an award under this Plan, the Company shall\npay the holder of such award, in connection with the first vesting, exercise or settlement of such award, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to\nthe nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the vesting, exercise or settlement date over (B) the exercise or base price, if any, of such award. \n\n \n\n\nA-13 \n\n\n\n\n\n\n5.8 Change in Control. (a) In the event of a Change in Control, the Board (as constituted\nprior to such Change in Control) may, in its discretion, take any of the following actions or any combination of the following actions: \n\n \n\n (i) require that (A) all outstanding options and SARs shall immediately become exercisable in full, (B) the Restriction Period applicable\nto any outstanding Restricted Stock Award or Restricted Stock Unit Award shall lapse, (C) the Performance Period applicable to any outstanding Performance Share, Performance Share Unit, Performance Unit or Restricted Stock Award or Restricted Stock\nUnit Award (if applicable) shall lapse, and (D) the Performance Measures applicable to any outstanding award shall be deemed to be satisfied at the maximum, target or any other level; \n\n \n\n (ii) require that shares of capital stock of the corporation resulting from such Change in Control, or a\nparent corporation thereof, be substituted for some or all of the shares of Common Stock subject to an outstanding award, with an appropriate and equitable adjustment to such award as determined by the Board in accordance with Section 5.7; or\n\n\n \n\n (iii) require outstanding awards, in whole or\nin part, to be surrendered to the Company by the holder, and to be immediately cancelled by the Company, and to provide for the holder to receive (A) a cash payment in an amount equal to (1) in the case of an option, the number of shares of Common\nStock then subject to the portion of such option surrendered, multiplied by the excess, if any, of the highest per share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place, over the purchase\nprice per share of Common Stock subject to the option, (2) in the case of an SAR, the number of shares of Common Stock then subject to the portion of such SAR surrendered, multiplied by the excess, if any, of the highest per share price offered to\nstockholders of the Company in any transaction whereby the Change in Control takes place, over the base price of the SAR, (3) in the case of a Stock Award, the number of shares of Common Stock then subject to the portion of such award surrendered,\nmultiplied by the highest per share price offered to stockholders of the Company in any transaction whereby the Change in Control takes place, and (4) in the case of a Performance Unit Award, the number of Performance Units then subject to the\nportion of such award surrendered, the value of which shall be calculated at the maximum, target or any other level; (B) shares of capital stock of the corporation resulting from such Change in Control, or a parent corporation thereof, having a fair\nmarket value not less than the amount determined under clause (A) above; or (C) a combination of the payment of cash pursuant to clause (A) above and the issuance of shares pursuant to clause (B) above. \n\n \n\n (b) “Change in Control” shall mean: \n\n \n\n (i) the acquisition by any individual, entity or group (a\n“Person”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of\neither (A) the then outstanding shares of Common Stock (the “Outstanding Common Stock”) or (B) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the\n“Outstanding Voting Securities”); excluding, however, the following: (1) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the\nsecurity being so exercised, converted or exchanged was acquired directly from the Company), (2) any acquisition by the Company, (3) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any\ncorporation controlled by the Company, or (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 5.8(b); provided further, that for purposes of\nclause (2), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of more than 50% of the\nOutstanding Common Stock or more than 50% of the Outstanding Voting Securities by reason of an acquisition by the Company, and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of the\nOutstanding Common Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control; \n\n \n\n\nA-14 \n\n\n\n\n\n\n(ii) individuals who, as of the date hereof, constitute the Board (the “Incumbent\nBoard”) cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the Company’s\nstockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of\nthe Company as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened\nsolicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; \n\n \n\n (iii) the consummation of a reorganization, merger or consolidation or sale or other disposition of at least 60%, or all or substantially\nall, of the assets of the Company, or the acquisition of the assets of another corporation for voting securities of the Company (a “Corporate Transaction”); excluding, however, a Corporate Transaction pursuant to which (A) all or\nsubstantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or\nindirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting\nfrom such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same\nproportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (B) no Person (other than: the Company; any employee\nbenefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such\nCorporate Transaction, directly or indirectly, more than 50% of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding\nshares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (C) individuals who were\nmembers of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or \n\n \n\n (iv) the consummation of a plan of complete liquidation or dissolution of the Company. \n\n \n\n 5.9 Deferrals. The Committee may determine that the delivery of\nshares of Common Stock or the payment of cash, or a combination thereof, upon the exercise or settlement of all or a portion of any award made hereunder shall be deferred, or the Committee may, in its sole discretion, approve deferral elections made\nby holders of awards. Deferrals shall be for such periods and upon such terms as the Committee may determine in its sole discretion. \n\n \n\n 5.10 No Right of Participation or Employment. Unless otherwise set forth in an employment agreement, no person shall have any right to\nparticipate in this Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company,\nany Subsidiary or any affiliate of the Company to terminate the employment of any person at any time without liability hereunder. \n\n \n\n 5.11 Leave of Absence. In the event that the holder of an award is granted a Leave of Absence during the period of such holder’s\nemployment, the Committee may provide, subject to such conditions as it may deem to be in the Company’s best interest, that the vesting of such award shall be suspended during the period of such Leave of Absence and the period of such Leave of\nAbsence shall not be taken into account in determining (a) the portion of any option or SAR which is exercisable or (b) the portion of any Stock Award or Performance Unit Award which is vested. During any Leave of Absence, awards shall remain\nsubject to forfeiture and cancellation as provided in Section 5.12 hereof. No award shall expire later than its scheduled expiration date as a result of a Leave of Absence. \n\n \n\n\nA-15 \n\n\n\n\n\n\n5.12 Cancellation of Award and Forfeiture of Gain. Notwithstanding anything contained in\nthis Plan, or any Agreement, if the holder of an award engages in any activity which constitutes Cause, breaches any of his or her obligations to the Company or any of its affiliates under a noncompetition, nonsolicitation, confidentiality,\nintellectual property or other restrictive covenant or engages in any activity which is contrary, inimical or harmful to the Company or any of its affiliates, including but not limited to violations of Company policy to the extent then applicable to\nthe holder of such award, the Company may take such action as it shall deem appropriate to cause each award held by such holder to be cancelled and to cease to be exercisable or vested, as the case may be, as of the date on which the holder first\nengaged in such activity or breached such obligation, and the Company thereafter may require the repayment of any amounts received by such holder in connection with the exercise or vesting of such award following the date that such holder first\nengaged in such activity or breached such obligation. \n\n \n\n 5.13 Rights as Stockholder. No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or other equity security of the Company which is subject to an award\nhereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security. \n\n \n\n 5.14 Designation of Beneficiary. If permitted by the Company, a holder of an award may file with the Committee a written designation of one\nor more persons as such holder’s beneficiary or beneficiaries (both primary and contingent) in the event of the holder’s death or incapacity. To the extent an outstanding option or SAR granted hereunder is exercisable, such beneficiary or\nbeneficiaries shall be entitled to exercise such option or SAR. \n\n \n\n Each beneficiary designation shall become effective only when filed in writing with the Committee during the holder’s lifetime on a form prescribed by the Committee. The spouse of a married holder domiciled in a community property\njurisdiction shall join in any designation of a beneficiary other than such spouse. The filing with the Committee of a new beneficiary designation shall cancel all previously filed beneficiary designations. \n\n \n\n If a holder fails to designate a beneficiary, or if all designated\nbeneficiaries of a holder predecease the holder, then each outstanding option and SAR hereunder held by such holder, to the extent exercisable, may be exercised by such holder’s executor, administrator, legal representative or similar person.\n\n\n \n\n 5.15 Governing Law. This Plan, each award\nhereunder and the related Agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and\nconstrued in accordance therewith without giving effect to principles of conflicts of laws. \n\n \n\n 5.16 Foreign Employees. Without amending this Plan, the Committee may grant awards to eligible persons who are subject to the laws of foreign countries or jurisdictions on such terms and conditions\ndifferent from those specified in this Plan as may in the judgment of the Committee be necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such purposes the Committee may make such\nmodifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws of other countries or jurisdictions in which the Company or its Subsidiaries operate or have employees. \n\n \n\n\nA-16 \n\n\n\n\n\n\n\n \n\n \n\n C/O PROXY SERVICES \n\n P.O. BOX 9142 \n\n FARMINGDALE, NY 11735 \n\n\n \n\n VOTE BY INTERNET - www.proxyvote.com \n\n \n\n Use the Internet to transmit your voting instructions and for electronic delivery of\ninformation up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction\nform. \n\n \n\n VOTE BY TELEPHONE - 1-800-690-6903 \n\n \n\n Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M.\nEastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. \n\n \n\n VOTE BY MAIL \n\n \n\n Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Navigant Consulting, Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717. \n\n \n\n TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: \n\n\n \n\n NVGNT1 \n\n \n\n KEEP THIS PORTION FOR YOUR RECORDS \n\n \n\n DETACH AND RETURN THIS PORTION ONLY \n\n \n\n THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. \n\n \n\n NAVIGANT CONSULTING, INC. \n\n \n\n Vote on Directors \n\n \n\n THE DIRECTORS RECOMMEND A VOTE “FOR” ITEM 1 \n\n \n\n\n\n\n1. \nProposal to elect (01) William M. Goodyear and (02) Valerie B. Jarrett to the Board of Directors for a term of three years. \n\n \n\n\n\n\n \n \n \n \n \n\n\n\nFor All \n \nWithhold All \n \nFor All Except \n\n\n\n¨ \n \n¨ \n \n¨ \n\n\n \n\n To withhold authority to vote for any\nindividual nominee(s), mark “For All Except” and write the nominee’s number on the line below. \n\n \n\n \n\n THE DIRECTORS RECOMMEND A VOTE “FOR” ITEM 2 \n\n \n\n\n\n\n2. \nProposal to consider and vote upon a proposed amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the Company’s total authorized\ncommon stock to 150 million shares. \n\n \n\n\n\n\n \n \n \n \n \n\n\n\nFor \n \nAgainst \n \nAbstain \n\n\n\n¨ \n \n¨ \n \n¨ \n\n\n \n\n THE DIRECTORS RECOMMEND A VOTE\n“FOR” ITEM 3 \n\n \n\n\n\n\n3. \nProposal to consider and vote upon a proposed new Long-Term Incentive Plan to replace the Company’s current Long-Term Incentive Plan, which is due to expire in 2006.\n \n\n \n\n\n\n\n \n \n \n \n \n\n\n\nFor \n \nAgainst \n \nAbstain \n\n\n\n¨ \n \n¨ \n \n¨ \n\n\n \n\n THE DIRECTORS RECOMMEND A VOTE\n“FOR” ITEM 4 \n\n \n\n\n\n\n4. \nProposal to ratify the appointment of KPMG LLP as independent registered public accounting firm for the Company in 2005. \n\n \n\n\n\n\n \n \n \n \n \n\n\n\nFor \n \nAgainst \n \nAbstain \n\n\n\n¨ \n \n¨ \n \n¨ \n\n\n \n\n Please indicate if you plan to attend\nthis meeting \n\n \n\n\n\n\n \n \n \n \n \n\n\n\nYes \n \nNo \n \n \n\n\n\n¨ \n \n¨ \n \n \n\n\n \n\n\n\n\n \n \n \n \n \n \n \n\n\n\n \n \n \n \n \n \n \n\n\n\n Signature [PLEASE SIGN WITHIN\nBOX] \n \n\n \n \n Date\n\n \n \n \n \n Signature (Joint\nOwners) Date\n\n \n\n\n\n\n\n\n\nNAVIGANT CONSULTING, INC. \n\n Annual Meeting of Shareholders - May 4, 2005 \n\n THIS PROXY IS SOLICITED ON\nBEHALF OF THE BOARD OF DIRECTORS \n\n \n\n The undersigned shareholder(s) of\nNavigant Consulting, Inc., a Delaware Corporation, hereby acknowledge(s) receipt of the Proxy Statement dated March, 2005, and hereby appoint(s) Ben W. Perks and Philip Steptoe, and each of them, proxies and attorneys-in- fact, with full power to\neach of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the Annual Meeting of Shareholders of Navigant Consulting, Inc., to be held Wednesday, May 4, 2005 at 9:00 a.m., Central Standard Time, at The\nChicago Club, 81 E. Van Buren, Chicago, Illinois 60605, and at any adjournment or adjournments thereof, and to vote (including cumulatively, if required) all shares of Common Stock which the undersigned would be entitled to vote if then and\nthere personally present, on all matters set forth on the reverse side: \n\n \n\n The\nshares represented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned Shareholder(s). If no direction is made, this proxy will be voted FOR items 1, 2, 3 and 4. If any other matters properly\ncome before the meeting, or if cumulative voting is required, the person named in this proxy will vote in their discretion. \n\n \n\n PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY \n\n IN THE ENCLOSED ENVELOPE. \n\n \n\n (Continued, and to be signed and dated, on the reverse side.) \n\n\n\n"},"accession_number":{"kind":"string","value":"0001193125-05-061541"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":91,"cells":{"_id":{"kind":"string","value":"1013934_DEF 14A_2005_0000950136-05-001611"},"cik":{"kind":"string","value":"1013934"},"company":{"kind":"string","value":"STRAYER EDUCATION INC"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-03-28T00:00:00","string":"2005-03-28T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-05-03T00:00:00","string":"2005-05-03T00:00:00"},"sic":{"kind":"string","value":"8200"},"state_of_inc":{"kind":"string","value":"MD"},"state_location":{"kind":"string","value":"VA"},"fiscal_year_end":{"kind":"string","value":"1231"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1013934/0000950136-05-001611-index.html"},"htm_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1013934/000095013605001611/file001.htm"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1013934/0000950136-05-001611.txt"},"filename":{"kind":"string","value":"1013934_DEF 14A_2005_0000950136-05-001611.htm"},"text":{"kind":"string","value":"\nDEF 14A\nfile001.htm\nDEFINITIVE PROXY STATEMENT\n\n\n\n\nSCHEDULE 14A\nINFORMATION\n\n Proxy Statement Pursuant to Section 14(a) of the\nSecurities Exchange Act of 1934\n\n\nFiled by the Registrant\n[X] Filed by a Party other than the Registrant\n[ ]\n\n\nCheck the appropriate box:\n\n\n\n\n \n \n\n\n\n\n[ ] \nPreliminary Proxy\nStatement \n\n\n\n\n\n\n \n \n\n\n\n\n[ ] \nConfidential, for\nUse of the Commission Only (as permitted by Rule 14a-6(e)(2)) \n\n\n\n\n\n\n \n \n\n\n\n\n[X] \nDefinitive Proxy Statement \n\n\n\n\n\n\n \n \n\n\n\n\n[ ] \nDefinitive Additional\nMaterials \n\n\n\n\n\n\n \n \n\n\n\n\n[ ] \nSoliciting Material\nPursuant to §240.14a-12 \n\n\n\n\nStrayer Education,\nInc.\n\n\n\n(Name\nof Registrant as Specified in Its Charter)\n\n\nN/A\n\n\n\n(Name of\nPerson(s) Filing Proxy Statement, if other than the Registrant)\n\n\nPayment of Filing Fee (Check the appropriate box):\n\n\n\n\n \n \n\n\n\n\n[X] \nNo fee required. \n\n\n\n\n\n\n \n \n\n\n\n\n[ ] \nFee computed on table\nbelow per Exchange Act Rules 14a-6(i)(1) and 0-11. \n\n\n\n\n1) Title of each class of securities to which\ntransaction applies:\n \n\n\n\n2) Aggregate number of securities to which transaction\napplies: \n\n\n\n\n\n \n \n\n\n\n\n3) \nPer unit price or other underlying\nvalue of transaction computed pursuant to Exchange Act Rule 0-11 (set\nforth the amount on which the filing fee is calculated and state how it\nwas determined):\n \n\n\n\n\n4) Proposed maximum aggregate value of transaction:\n \n\n\n\n5) Total fee paid:\n \n\n\n\n\n\n \n \n\n\n\n\n[ ] \nFee paid previously\nwith preliminary materials. \n\n\n\n\n\n\n \n \n\n\n\n\n[ ] \nCheck box if any part\nof the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and\nidentify the filing for which the offsetting fee was paid previously.\nIdentify the previous filing by registration statement number, or the\nForm or Schedule and the date of its filing. \n\n\n\n\n1) Amount Previously Paid:\n \n\n\n\n2) Form, Schedule or Registration Statement No.:\n \n\n\n\n3) Filing Party:\n \n\n\n\n4) Date Filed:\n \n\n\n\n\n\n\n\n\n\n\n\nSTRAYER\nEDUCATION, INC.\n\n1100 Wilson Blvd., Suite 2500\n\nArlington, VA\n\n(703) 247-2500\n\n\nDear Fellow\nStockholder:\n\n\nYou are cordially invited to attend the 2005 annual\nmeeting of Stockholders of Strayer Education, Inc. (the\n\"Corporation\"), to be held at 8:30 a.m.\nlocal time on May 3, 2005, at the Strayer University campus located\nat 1133 15th Street, N.W., 3rd floor, Room 322,\nin Washington, DC.\n\n\n\nAt this year's meeting, you will\nvote on (i) the election of eleven directors, (ii) the ratification of\nthe appointment of PricewaterhouseCoopers LLP as the\nCorporation's independent registered public accounting firm,\n(iii) amending the Corporation's Employee Stock Option Plan to\nauthorize 500,000 additional shares for future issuance thereunder,\nextend the term of the Plan to 2020 and to make certain other\nclarifying changes, and (iv) any other matters that may properly come\nbefore the meeting. We have attached a notice of meeting and a proxy\nstatement that contain more information about these items and the\nmeeting.\n\n\nYour vote is important. We encourage you to sign and\nreturn your proxy before the meeting so that your shares will be\nrepresented and voted at the meeting even if you cannot attend in\nperson.\n\n\nWe look forward to seeing you at the 2005 Annual Meeting\nof Stockholders.\n\n\n\n\n\n \nSincerely, \n\n\n\n\n\n\n\n\n\n\n \n/s/\nROBERT S.\nSILBERMAN \n\n\n\n\n\n\n\n\n\n\n \nROBERT\nS. SILBERMAN\n\n\n\nChairman of the Board\n\nand Chief Executive\nOfficer \n\n\n\n\n\n\n\nMarch 28,\n\n\n\n\n\n\n\n\n\n\nSTRAYER\nEDUCATION, INC.\n\n\n1100 Wilson Blvd., Suite\n\nArlington, VA 22209\n\n(703)\n247-2500\n\n\n\nNOTICE OF ANNUAL\nMEETING OF STOCKHOLDERS\n\n\n\nThe\n2005 Annual Meeting of Stockholders of Strayer Education, Inc. (the\n\"Corporation\"), will be held at the Strayer\nUniversity campus located at 1133 15th Street, N.W.,\n3rd floor, Room 322, in Washington, DC on May 3, 2005, at\n8:30 a.m. for the following purposes:\n\n\n\n\n \n \n\n\n\n\n1. \nTo elect eleven directors to the Board of\nDirectors to serve for a term of one year or until their respective\nsuccessors are elected and qualified. \n\n\n\n\n\n\n \n \n\n\n\n\n2. \nTo\nratify the appointment of PricewaterhouseCoopers LLP as the independent\nregistered public accounting firm for the Corporation. \n\n\n\n\n\n\n \n \n\n\n\n\n3. \nTo amend the Corporation's Employee\nStock Option Plan to authorize 500,000 additional shares for future\nissuance thereunder, extend the term of the Plan to 2020 and to make\ncertain other clarifying changes. \n\n\n\n\n\n\n \n \n\n\n\n\n4. \nTo\nconsider and act upon such other business as may properly come before\nthe meeting. \n\n\n\n\n\nTHIS NOTICE IS BEING SENT TO COMMON STOCKHOLDERS\nOF RECORD AS OF MARCH 14, 2005. WHETHER OR NOT YOU PLAN TO ATTEND THE\nMEETING, YOU ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE\nENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED STAMPED\nENVELOPE.\n\n\n\n\n\n\n \nBy Order of the Board of\nDirectors \n\n\n\n\n\n\n\n\n\n\n \n/s/ Steven A.\nMcArthur \n\n\n\n\n\n\n\n\n\n\n\n\n \nSteven\nA. McArthur\n\n\n\nSecretary \n\n\n\n\n\n\n\nArlington,\nVA\n\nMarch 28, 2005\n\n\n\n\n\n\n\n\n\n\nSTRAYER EDUCATION,\nINC.\n\n1100 Wilson Blvd., Suite 2500\n\nArlington, VA\n\n(703) 247-2500\n\n\nPROXY STATEMENT\n\n\nAnnual\nMeeting of Stockholders\n\nMay 3, 2005\n\n\nThis Proxy Statement is\nfurnished on or about March 28, 2005, to holders of the common stock of\nStrayer Education, Inc. (the \"Corporation\"),\n1100 Wilson Blvd., Suite 2500, Arlington, VA 22209, in connection with\nthe solicitation on behalf of the Board of Directors of the Corporation\nof proxies to be voted at the 2005 Annual Meeting of Stockholders (the\n\"Annual Meeting\"). The Annual Meeting will be\nheld at 8:30 a.m. local time on May 3, 2005, at the Strayer University\ncampus located at 1133 15th Street, N.W., 3rd\nfloor, Room 322, in Washington, DC.\n\n\nThe cost of soliciting\nproxies will be borne by the Corporation. Copies of solicitation\nmaterial may be furnished to brokers, custodians, nominees and other\nfiduciaries for forwarding to beneficial owners of shares of the\nCorporation's common stock, and normal handling charges may be\npaid for such forwarding service. Solicitation of proxies may be made\nby the Corporation by mail or by personal interview, telephone and\ntelegraph by officers and other management employees of the\nCorporation, who will receive no additional compensation for their\nservices. The Corporation has also retained MacKenzie Partners, Inc. to\nprovide proxy solicitation services for a fee of $5,000 plus\nreimbursement of its out-of-pocket expenses.\n\n\nAny stockholders\ngiving a proxy pursuant to this solicitation may revoke it at any time\nprior to exercise of the proxy by giving notice of such revocation to\nthe Secretary of the Corporation at the Corporation's executive\noffices at 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209,\nproviding a later dated proxy or by attending the meeting and voting in\nperson.\n\n\nAt the close of business on March 14, 2005, there were\n14,641,955 shares of the common stock of the Corporation outstanding\nand entitled to vote at the meeting. Only common stockholders of\nrecord on March 14, 2005 will be entitled to vote at the meeting,\nand each share will have one vote.\n\n\nVoting Information\n\n\nAt the Annual Meeting votes will be counted by written ballot. A\nmajority of the shares entitled to vote will constitute a quorum for\npurposes of the Annual Meeting. The election of the Board of\nDirectors' nominees for eleven directors will require the\naffirmative vote of a plurality of the common shares present in person\nor represented by proxy and entitled to vote in the election of\ndirectors. Ratification of the appointment of the Corporation's\nindependent registered public accounting firm and approval of the\namendment to the Option Plan, and approval of any other business which\nmay properly come before the Annual Meeting, or any adjournments\nthereof, will require the affirmative vote of a majority of the common\nshares present in person or represented by proxy and entitled to vote\nthereon. Under Maryland law and the Corporation's Articles of\nIncorporation and By-laws, the aggregate number of votes entitled to be\ncast by all common stockholders present in person or represented by\nproxy at the Annual Meeting, whether those stockholders vote\n\"For,\" \"Against\" or\nabstain from voting, will be counted for purposes of determining the\nminimum number of affirmative votes required for approval of such\nmatters, and the total number of votes cast\n\"For\" each of these matters will be counted\nfor purposes of determining whether sufficient affirmative votes have\nbeen cast. An abstention from voting on a matter by a common\nstockholder present in person or represented by proxy at the meeting,\nother than the election of directors, has the same legal effect as a\nvote \"Against\" the matter even though the\nstockholder or interested parties analyzing the results of the voting\nmay interpret such a vote differently. Broker non-votes will have the\neffect of reducing the number of shares considered present and entitled\nto vote on the matter. Abstentions and broker non-votes will have no\neffect on the election of directors.\n\n\nA common stockholder may,\nwith respect to the election of directors, (1) vote for the election of\nall named director nominees, (2) withhold authority to vote for all\nnamed director nominees or (3) vote for \n\n\n\n\n\n\n\n\n\n\n\n\n\nthe election of all named director nominees\nother than any nominee with respect to whom the stockholder withholds\nauthority to vote by so indicating in the appropriate space on the\nproxy card. A form of proxy card is attached hereto as Exhibit A.\n\n\nProxies properly executed and received by the Corporation prior to\nthe meeting and not revoked, will be voted as directed therein on all\nmatters presented at the meeting. In the absence of specific direction\nfrom a common stockholder, proxies will be voted for the election of\nall named director nominees. If a proxy indicates that all or a portion\nof the shares represented by such proxy are not being voted with\nrespect to a particular proposal, such non-voted shares will not be\nconsidered present and entitled to vote on such proposal, although such\nshares may be considered present and entitled to vote on other\nproposals and will count for the purpose of determining the presence of\na quorum.\n\n\nPROPOSAL 1\n\n\nElection of Directors\n\n\nThe\nCorporation currently has a twelve member Board, all of whom are\nelected by the Corporation's common stockholders. There is\ncurrently one vacancy on the Board, thus eleven nominees are being\nvoted on at the Annual Meeting.\n\n\nAll eleven of the directors\nwhich the common stockholders are currently entitled to elect are to be\nelected at the Annual Meeting. It is intended that the votes\nrepresented by the proxies will be cast for the election as directors,\nfor a term of one year or until their successors are chosen and\nqualified, of the persons listed below. Each of the nominees is\ncurrently a director of the Corporation. The following table and text\npresents information as of the date of this proxy statement concerning\npersons nominated for election as directors of the Corporation\nincluding in each case their current membership on Committees of the\nBoard of Directors, principal occupations or affiliations during the\nlast five years and certain other directorships held.\n\n\n\n\n\n\n\n\n\n\n\n\nNominees for Common Stock Directors\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nName/Title \n \nAge \n \nBoard\n\nCommittees \n \nElected\nto\n\nStrayer\nBoard \n \nCommon\n\nStock \n \nVested\n\nOptions(a) \n \nUnvested\n\nOptions \n\n\n\n\nRobert\nS.\nSilberman, \n \n \n \n \n- \n \n \n \n \n \n6,152 \n \n \n \n366,667 \n \n \n \n133,333 \n \n\n\n\n\nChairman\n& CEO \n \n\n\n\n\nDr. Charlotte F.\nBeason, \n \n \n \n \nNominating/ \n \n \n \n \n \n3,450 \n \n \n \n \n \n \n \n\n\n\n\nDirector \n \n \n \n \n \nGovernance \n \n\n\n\n\nWilliam\nE.\nBrock, \n \n \n \n \nNominating/ \n \n \n \n \n \n \n \n \n10,000 \n \n \n \n \n\n\n\n\nDirector \n \n \n \n \n \nGovernance \n \n\n\n\n\nDavid\nA.\nCoulter,(b) \n \n \n \n \n- \n \n \n \n \n \n \n \n \n10,000 \n \n \n \n \n\n\n\n\nDirector \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nGary\nGensler, \n \n \n \n \nAudit \n \n \n \n \n \n3,000 \n \n \n \n10,000 \n \n \n \n \n\n\n\n\nDirector \n \n\n\n\n\nRobert\nR.\nGrusky,(c) \n \n \n \n \nAudit \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nDirector \n \n \n \n \n \n\n\n\n\nRobert\nL.\nJohnson, \n \n \n \n \nCompensation \n \n \n \n \n \n5,341 \n \n \n \n3,333 \n \n \n \n3,334 \n \n\n\n\n\nDirector \n \n\n\n\n\nSteven\nB.\nKlinsky, \n \n \n \n \nNominating/ \n \n \n \n \n \n1,192,120 \n \n \n \n \n \n \n \n\n\n\n\nDirector \n \n \n \n \n \nGovernance \n \n \n \n \n \n\n\n\n\nTodd\nA.\nMilano, \n \n \n \n \nCompensation \n \n \n \n \n \n9,106 \n \n \n \n \n \n \n \n\n\n\n\nDirector \n \n\n\n\n\nG.\nThomas Waite,\nIII, \n \n \n \n \nAudit \n \n \n \n \n \n3,128 \n \n \n \n \n \n \n \n\n\n\n\nDirector \n \n\n\n\n\nJ.\nDavid\nWargo,(c) \n \n \n \n \nCompensation \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nDirector \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(a) \nOr\nwill vest within 60 days of the date of this proxy statement. \n\n\n\n\n\n\n \n \n\n\n\n\n(b) \nMr. Coulter is presently serving as the\nBoard's Presiding Outside Director. \n\n\n\n\n\n\n \n \n\n\n\n\n(c) \nMessrs. Grusky and Wargo have an economic\ninterest in the Company as passive limited partners in New Mountain\nInvestments, LP, which is the general partner of New Mountain Partners,\nLP (\"NMP\"). NMP is the entity which owns\n1,192,120 shares of Company common stock. \n\n\n\n\n\n\n \n \n \n\n\n\n\nMr. Robert S. Silberman \n \nhas been\nChairman of the Board since February 2003 and Chief Executive Officer\nsince March 2001. Mr. Silberman was Executive in Residence at New\nMountain Capital, LLC from August 2000 to March 2001. From 1995 to\n2000, Mr. Silberman served in a variety of senior management positions\nat CalEnergy Company, Inc., including President and Chief Operating\nOfficer. From 1993 to 1995, Mr. Silberman was Assistant to the Chairman\nand Chief Executive Officer of International Paper Company. From 1989\nto 1993, Mr. Silberman served in several senior positions in the U.S.\nDepartment of Defense, including as Assistant Secretary of the Army.\nMr. Silberman has been a Director of Strayer since March 2001. He\nserves on the Board of Directors of Surgis, Inc., Danielson Holding\nCompany, and on the Management Advisory Board of New Mountain Capital,\nLLC. He also serves on the Board of Visitors of The Johns Hopkins\nUniversity School of Advanced International Studies. Mr. \n\n\n\n\n \n \n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n \n\nSilberman is a member of the Council on\nForeign Relations. Mr. Silberman holds a bachelor's degree in\nhistory from Dartmouth College and a master's degree in\ninternational policy from the The Johns Hopkins\nUniversity. \n\n\n\n\n \n \n \n\n\n\n\n\n\n \n \n \n\n\n\n\nDr. Charlotte F.\nBeason \n \nis a consultant in education and health care\nadministration. From 1988 to 1996 she was Director of Health\nProfessions Education Service and the Health Professional Scholarship\nProgram at the Department of Veterans Affairs. From 2000 to 2003, Dr.\nBeason was Chair and Vice Chair of the Commission on Collegiate Nursing\nEducation (an autonomous agency accrediting baccalaureate and graduate\nprograms in nursing); she is a member of the Accreditation Review\nCommittee of the American Nurses Credentialing Commission. Dr. Beason\nis a member of the Nominating/Governance Committee of the Board and\nalso a member of the Strayer University Board of Trustees. Dr. Beason\nholds a bachelor's degree in nursing from Berea College, a\nmaster's degree in psychiatric nursing from Boston University and\na doctorate in clinical psychology and public practice from Harvard\nUniversity. \n\n\n\n\n \n \n \n\n\n\n\n\n\n \n \n \n\n\n\n\nMr. William E. Brock \n \nfounded\nIntellectual Development Systems, Inc., an education services company\nin 1996. From 1988 to 1995 Mr. Brock was the founder and Chairman of\nthe Brock Group, a firm specializing in international trade, investment\nand human resources. From 1985 to 1987, Mr. Brock served in the\nPresident's Cabinet as the U.S. Secretary of Labor, and from 1981\nto 1985, as the U.S. Trade Representative. Elected Chairman of the\nRepublican National Committee from 1977 to 1981, Mr. Brock previously\nserved as a Member of Congress and, subsequently, as U.S. Senator for\nthe State of Tennessee. Mr. Brock serves as a Counselor and Trustee of\nthe Center for Strategic and International Studies, and as a member of\nthe Board of Directors of On Assignment, Inc., and Health Extra, Inc.\nMr. Brock is Chair of the Nominating/Governance Committee of the Board.\nHe holds a bachelor's degree in commerce from Washington and Lee\nUniversity. Mr. Brock has also received a number of honorary\ndegrees. \n\n\n\n\n \n \n \n\n\n\n\n\n\n \n \n \n\n\n\n\nMr. David A. Coulter \n \nhas been\nVice Chairman of J.P. Morgan Chase & Co. from December 2000 to the\npresent. Mr. Coulter was Vice Chairman of The Chase Manhattan\nCorporation from July 2000 to December 2000. Prior to joining Chase,\nfor several years Mr. Coulter led the West Coast operations of the\nBeacon Group, a private investment and strategic advisory firm, and\nprior to that, Mr. Coulter served as the Chairman and Chief Executive\nOfficer of the BankAmerica Corporation. Mr. Coulter is a member of the\nBoard of Directors of PG&E Corporation. Mr. Coulter is currently\nserving as the Presiding Outside Director of the Strayer Education,\nInc. Board of Directors. Mr. Coulter holds a bachelor's degree in\nmathematics and economics and a master's degree in industrial\nadministration, both from Carnegie Mellon\nUniversity. \n\n\n\n\n \n \n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\nMr. Gary\nGensler \n \nserved as Under Secretary of the U.S.\nDepartment of the Treasury from 1999 to 2001, and as Assistant\nSecretary of the Treasury from 1997 to 1999. From 1988 to 1997, Mr.\nGensler was a partner of The Goldman Sachs Group, LP, where he served\nin various capacities including co-head of finance, responsible for\ncontrollers and treasury worldwide. Mr. Gensler is co-author of\n\"The Great Mutual Fund Trap.\" He serves as a\nTrustee of the Baltimore Museum of Art, the Bryn Mawr School, and The\nEnterprise Foundation, and is a member of the Board of Visitors of the\nUniversity of Maryland, Baltimore County and the Board of The Johns\nHopkins Center for Talented Youth. Mr. Gensler also serves on the\nManagement Advisory Board of New Mountain Capital, LLC. Mr. Gensler is\nChair of the Audit Committee of the Board. Mr. Gensler holds a\nbachelor's degree in economics and a master's degree in\nbusiness administration from the Wharton School of the University of\nPennsylvania. \n\n\n\n\n \n \n \n\n\n\n\n\n\n \n \n \n\n\n\n\nMr. Robert R. Grusky \n \nis a\nco-founder and has been a Member of New Mountain Capital, LLC, since\nJanuary 2000. Mr. Grusky is also the founder and managing member of\nHope Capital Management, LLC., an investment manager, since 2000. From\n1998 to 2000, Mr. Grusky served as President of RSL Investments\nCorporation. From 1985 to 1997, with the exception of 1990 to 1991 when\nhe was on a leave of absence to serve as a White House Fellow and\nAssistant for Special Projects to the Secretary of Defense, Mr. Grusky\nserved in a variety of capacities, including Vice President at Goldman,\nSachs & Co., first in its Mergers & Acquisitions Department and\nthen in its Principal Investment Area. He is also on the Board of\nDirectors of Surgis, Inc. and National Medical Health Card Systems,\nInc., as well as a member of the Board of Trustees of Hackley School\nand the Multiple Myeloma Research Foundation. Mr. Grusky is a member of\nthe Audit Committee of the Board. He holds a bachelor's degree in\nhistory from Union College and a master's degree in business\nadministration from Harvard University. \n\n\n\n\n \n \n \n\n\n\n\n\n\n \n \n \n\n\n\n\nMr. Robert L.\nJohnson \n \nis the founder and Chief Executive Officer of\nBlack Entertainment Television (BET), a subsidiary of Viacom and the\nleading African-American operated media and entertainment company in\nthe United States. In 2002, Mr. Johnson became the first\nAfrican-American majority owner of a major sports franchise, the\nCharlotte Bobcats of the NBA. He is also the owner of the Charlotte\nSting of the WNBA. Mr. Johnson is also the founder of RLJ Companies\nwhere he owns or holds interests in companies operating in the\nprofessional sports, hospitality/restaurant, real estate, gaming, and\nrecording industries. From 1976 to 1979, he served as vice president of\ngovernmental relations for the National Cable & Telecommunications\nAssociation (NCTA). Mr. Johnson also served as press secretary for the\nHonorable Walter E. Fauntroy, Congressional Delegate from the District\nof Columbia. He also serves on the following boards:\n \n\n\n\n\n \n \n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n \n\nUS Airways, Hilton Hotels, NBA Board of\nGovernors, The Johns Hopkins University, Lowe's Companies and the\nAmerican Film Institute. Mr. Johnson is also a member of the\nBoard of Governors for the Rock and Roll Hall of Fame in Cleveland,\nOhio. Mr. Johnson is a member of the Compensation Committee of\nthe Board. He holds a bachelor's degree in social studies from\nthe University of Illinois and a master's degree in international\naffairs from the Woodrow Wilson School of Public and International\nAffairs at Princeton University. \n\n\n\n\n \n \n \n\n\n\n\n\n\n \n \n \n\n\n\n\nMr. Steven B.\nKlinsky \n \nis the Founder and has been the Managing Member\nand Chief Executive Officer of New Mountain Capital, LLC, since January\n2000. From 1987 to June 1999, Mr. Klinsky was a general partner of\nForstmann Little & Co., a private equity firm. Mr. Klinsky was\nnon-executive Chairman of the Board from March 2001 until February 2003\nand served as the Board's Presiding Outside Director from\nFebruary 2004 until February 2005. He is a member of the\nNominating/Governance Committee of the Board. He also serves on the\nBoard of Directors of Surgis, Inc., Overland Solutions, Inc., Apptis,\nInc., and National Medical Health Card Systems, Inc. Mr. Klinsky holds\na bachelor's degree in economics and political philosophy from\nthe University of Michigan, a master's degree in business\nadministration and a juris doctorate from Harvard\nUniversity. \n\n\n\n\n \n \n \n\n\n\n\n\n\n \n \n \n\n\n\n\nMr. Todd A. Milano \n \nhas been\nPresident and Chief Executive Officer of Central Pennsylvania College\nsince 1989. Mr. Milano is a member of the Compensation Committee of the\nBoard and is also a member of the Strayer University Board of Trustees.\nMr. Milano holds a bachelor's degree in industrial management\nfrom Purdue University. \n\n\n\n\n \n \n \n\n\n\n\n\n\n \n \n \n\n\n\n\nMr. G. Thomas Waite,\nIII \n \nhas been Treasurer and Chief Financial Officer of\nthe Humane Society of the United States since 1993. In 1992, Mr. Waite\nwas the Director of Commercial Management of The National Housing\nPartnership. Mr. Waite is a member of the Audit Committee of the Board\nand is also a member of the Strayer University Board of Trustees. Mr.\nWaite holds a bachelor's degree in commerce from the University\nof Virginia and is a Certified Public Accountant. \n\n\n\n\n \n \n \n\n\n\n\n\n\n \n \n \n\n\n\n\nMr. J.\nDavid Wargo \n \nis a co-founder and has been a Member of\nNew Mountain Capital, LLC since January 2000. Since 1993, Mr. Wargo has\nalso been President of Wargo and Company, Inc., an investment\nmanagement company. From 1989 to 1992, Mr. Wargo was a Managing\nDirector and Senior Analyst of The Putnam Companies, a Boston-based\ninvestment management company. From 1985 to 1989, Mr. Wargo was a\npartner and held other positions at Marble Arch Partners. Mr. Wargo is\na Director of Liberty Media International and OpenTV Corporation. Mr.\nWargo is Chair of the Compensation Committee of the Board. Mr. Wargo\nholds a bachelor's degree in \n\n\n\n\n \n \n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n \n\nphysics and a master's degree in nuclear\nengineering, both from the Massachusetts Institute of Technology. He\nalso holds a master's degree in management from the Sloan School\nof Management, Massachusetts Institute of\nTechnology. \n\n\n\n\n \n \n \n\n\n\n\nBoard Committees\n\n\nThe Board\nof Directors has established an Audit Committee, a Compensation\nCommittee and a Nominating/Governance Committee. The current Committee\nmembership is as follows:\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nDirector's\nName \n \nAudit \n \nCompensation \n \nNominating/\n\nGovernance \n\n\n\n\nRobert\nS.\nSilberman \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nCharlotte\nF.\nBeason \n \n \n \n \n \nX \n\n\n\n\nWilliam\nE.\nBrock \n \n \n \n \n \nX \n\n\n\n\nDavid\nA.\nCoulter \n \n \n \n \n \n \n\n\n\n\nGary\nGensler \n \nX \n \n \n \n \n\n\n\n\nRobert\nR.\nGrusky \n \nX \n \n \n \n \n\n\n\n\nRobert\nL.\nJohnson \n \n \n \nX \n \n \n\n\n\n\nSteven\nB.\nKlinsky \n \n \n \n \n \nX \n\n\n\n\nTodd\nA.\nMilano \n \n \n \nX \n \n \n\n\n\n\nG.\nThomas Waite,\nIII \n \nX \n \n \n \n \n\n\n\n\nJ.\nDavid Wargo \n \n \n \nX \n \n \n\n\n\n\n \n\n\n\n\n\n\n\n\nAudit\nCommittee. For the year ended December 31, 2004, the Audit\nCommittee was composed of Messrs. Gensler (Chair), Milano and\nWaite. The Committee is currently comprised of Messrs. Gensler (Chair),\nGrusky and Waite. Mr. Grusky was appointed to the Audit Committee in\nFebruary 2005. The Committee performs a variety of tasks, including\nbeing directly responsible for the appointment, compensation and\noversight of the Corporation's independent registered public\naccounting firm, reviewing the Corporation's accounting policies\nand reviewing the Corporation's unaudited quarterly earnings\nreleases and periodic filings with the Securities and Exchange\nCommission (the \"SEC\") that include financial\nstatements, and reporting to the Board of Directors. The Audit\nCommittee met four times during 2004; each member of the Audit\nCommittee (as it was constituted at those times) attended those\nmeetings. The Audit Committee has adopted a written charter, a copy of\nwhich the Corporation will provide to any person without charge, upon\nrequest. Persons wishing to make such a request should contact Sonya G.\nUdler, Vice President - Corporate Communications, 1100 Wilson\nBlvd., Suite 2500, Arlington, VA 22209, (703) 247-2500. In addition,\nthe Audit Committee charter is available on the Corporation's\nwebsite, www.strayereducation.com. The Board of Directors has\ndetermined that all of the members of the Audit Committee are\nindependent, as independence is defined in Rule 4200(a)(14) of The\nNational Association of Securities Dealers' Listing Standards and\nRule 10A-3(b)(1) of the 1934 Act. The Board of Directors has determined\nthat Gary Gensler qualifies as an \"audit committee\nfinancial expert\", as defined by Securities and Exchange\nCommission Rules, based on his education, experience and background. A\nreport of the Audit Committee is included below in this proxy\nstatement. A copy of the Audit Committee's charter is attached to\nthis proxy statement as Exhibit B.\n\n\n\nCompensation\nCommittee. For the year ended December 31, 2004, the\nCompensation Committee was composed of Messrs. Coulter (Chair), Johnson\nand Wargo. The Compensation Committee is currently composed of\nMessrs. Wargo (Chair), Johnson and Milano. Mr. Milano was\nappointed to the Compensation Committee in February 2005. The\nCompensation Committee, subject to the approval of the Board, has the\nauthority and performs all of the duties related to approving the\ncompensation of management of the Corporation, including determining\npolicies and practices, changes in compensation and benefits for\nmanagement, determination of employee benefits and all other matters\nrelating to \n\n\n\n\n\n\n\n\n\n\n\n\n\nemployee compensation, including matters\nrelating to the administration of the Option Plan. The Compensation\nCommittee met three times during the year ended December 31, 2004; all\nmembers of the Compensation Committee (as it was constituted at those\ntimes) attended all meetings. A report of the Compensation Committee is\nincluded below in this proxy statement. The Board has determined that\neach of the members of the Compensation Committee are independent, as\nindependence is defined in Rule 4200(a)(14) of The National Association\nof Securities Dealers' Listing Standards.\n\n\n\nNominating/Governance Committee. For the year ended\nDecember 31, 2004, the Nominating/Governance Committee (the\n\"Nominating Committee\") was composed of\nDr. Beason and Messrs. Brock (Chair) and Grusky. The\nNominating Committee is currently composed of Dr. Beason and\nMessrs. Brock (Chair) and Klinsky. The Board has determined that\neach of the members of the Nominating Committee are independent, as\nindependence is defined in Rule 4200(a)(14) of The National Association\nof Securities Dealers' Listing Standards. The Nominating\nCommittee is responsible for establishing qualifications for potential\ndirectors and considering and recommending prospective candidates for\nBoard membership. The Nominating Committee met once during the year\nended December 31, 2004; each member of the Nominating Committee (as it\nwas then constituted at that time) attended that meeting.\n\n\nThe\nNominating Committee has adopted a written charter. The Nominating\nCommittee charter will be made available to any person upon request\nwithout charge. Persons wishing to make such a request should contact\nSonya G. Udler, Vice President - Corporate Communications, 1100\nWilson Blvd., Suite 2500, Arlington, VA 22209, (703) 247-2500. In\naddition, the Nominating Committee charter is available on the\nCorporation's website, www.strayereducation.com.\n\n\nThe\nNominating Committee considers many factors when considering candidates\nfor the Board. The Nominating Committee strives for the Board to be\ncomprised of directors with a variety of experience and backgrounds and\nwho represent the interests of stockholders as a whole. Other important\nfactors in Board composition include diversity in its truest sense,\nskill, specialized expertise, level of education and/or business\nexperience, broad-based business acumen, and experience and\nunderstanding of strategy and policy-setting, as well as having a\ncommitment to maintaining the high academic quality of Strayer\nUniversity and maximizing stockholder value. (The Nominating Committee\nalso encourages all Board members to make an economic investment in the\nCorporation by purchasing shares directly.) Depending upon the current\nneeds of the Board, certain factors may be weighed more or less heavily\nby the Nominating Committee.\n\n\nIn considering candidates for the\nBoard, the Nominating Committee considers the entirety of each\ncandidate's credentials and does not have any specific minimum\nqualifications that must be met by a Nominating Committee recommended\nnominee. However, the Nominating Committee does believe that all\nmembers of the Board should have the highest character and integrity; a\nreputation for working constructively with others; sufficient time to\ndevote to Board matters; and no conflict of interest that would\ninterfere with performance as a director. In addition, it is\nanticipated that the Board as a whole be able to operate in an\natmosphere where the chemistry of the individuals is a key element.\n\n\nThe Nominating Committee does not evaluate candidates differently\nbased on who has made the proposal. The Nominating Committee has the\nauthority under its charter to hire and pay a fee to consultants or\nsearch firms to assist in the process of identifying and evaluating\ncandidates. No such consultants or search firms have been used to date\nand, accordingly, no fees have been paid to consultants or search firms\nin the past fiscal year.\n\n\nIn considering persons to nominate for\nelection as common stock directors, the Nominating Committee will\nentertain recommendations from common stockholders that are submitted\nin writing to the Corporation, provided that such common stockholders\n(i) beneficially own more than 5% of the Corporation's\ncommon stock or (ii) have beneficially owned more than 1% of the\nCorporation's common stock for at least one year. Stockholders\nmeeting such criteria may recommend candidates for consideration by the\nNominating Committee by writing to Steven A. McArthur, Corporate\nSecretary, 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209, giving\nthe candidate's name, contact information, biographical data and\nqualifications, as well as evidence of the stockholder satisfying the\ncriteria set forth above. A written statement from the candidate\nconsenting to be named as a candidate and, if nominated \n\n\n\n\n\n\n\n\n\n\n\n\n\nand elected, to serve as a director should\naccompany any such recommendation. All such recommendations will be\ntreated confidentially and brought to the attention of the Nominating\nCommittee.\n\n\nStockholders who wish to nominate a director for\nelection at an annual meeting of the stockholders of the Corporation\nmust also comply with the Corporation's By-laws regarding\nstockholder proposals and nominations. See \"Stockholder\nProposals\" contained in this proxy statement.\n\n\nAttendance at Meetings and Director Independence\n\n\nThe Board\nof Directors met five times during 2004. Each Director attended at\nleast 75% of the meetings of the Board and of the meetings of\nthe Board Committees on which he or she served as a member in 2004. At\neach regularly scheduled meeting of the Board, the independent\ndirectors met in executive session. The Board's Presiding Outside\nDirector, currently Mr. Coulter, presides at these meetings. The\nCorporation strongly encourages all incumbent directors and director\nnominees to attend each annual meeting of stockholders. All incumbent\ndirectors attended the Corporation's last annual meeting of\nstockholders held on May 4, 2004.\n\n\nThe Board of Directors\nconsists of a majority of independent directors, as independence is\ndefined in Rule 4200(a)(14) of The National Association of Securities\nDealers' Listing Standards. The Board of Directors has determined\nthat all members of the Board of Directors, except for Mr. Silberman,\nare independent under these standards.\n\n\nCode of Ethics\n\n\nThe Board of Directors adopted a Code of Ethics in February 2004,\nmeeting the requirements of Section 406 of the Sarbanes-Oxley Act of\n2002 and applicable NASDAQ requirements. The Corporation will provide\nto any person without charge, upon request, a copy of such Code of\nEthics. Persons wishing to make such a request should contact Sonya G.\nUdler, Vice President - Corporate Communications, 1100 Wilson\nBlvd., Suite 2500, Arlington, VA 22209, (703) 247-2500. (In addition,\nthe Code of Ethics is available on the corporate website,\nwww.strayereducation.com.) In the event that the Corporation makes any\namendment to, or grants any waiver from, a provision of the Code of\nEthics that applies to the Corporation's principal executive\nofficer, principal financial officer, principal accounting officer,\ncontroller or certain other senior officers and requires disclosure\nunder applicable SEC rules, the Corporation intends to disclose such\namendment or waiver and the reasons for the amendment or waiver on the\nCorporation's website, located at www.strayereducation.com and,\nas required by NASDAQ, file a Current Report on Form 8-K with the SEC\nreporting the amendment or waiver.\n\n\nStockholder Communication\nwith Directors\n\n\nThe Corporation has a process for stockholders\nto send communications to the Board of Directors. Any stockholder that\nwishes to communicate with the Board of Directors may do so by\nsubmitting correspondence in writing to the Board, in care of Steven A.\nMcArthur, Corporate Secretary, 1100 Wilson Blvd., Suite 2500,\nArlington, VA 22209. The mailing envelope must contain a clear notation\nindicating that the enclosed letter is a\n\"Stockholder-Board Communication.\" All such\nletters must identify the author as a stockholder. All correspondence\nfrom stockholders that (i) beneficially own more than 5% of the\nCorporation's common stock or (ii) have beneficially owned more\nthan 1% of the Corporation's common stock for at least one\nyear will be forwarded to the Board. Stockholder-board communications\nfrom all other stockholders will be reviewed by the Chief Executive\nOfficer and the Secretary of the Corporation who will forward all\nappropriate communications to the Board.\n\n\nDirectors'\nCompensation\n\n\nDirectors who are employees receive no additional\ncompensation for serving as directors. All directors are reimbursed for\nexpenses incurred in connection with their attendance at Board and\nCommittee meetings, and during 2004 non-employee directors received\n$4,000 in cash compensation for each regular Board of Directors meeting\nattended. Following the annual stockholders meeting occurring after new\ndirectors first join the Board, under the Corporation's Stock\nOption Plan, as amended in May \n\n\n\n\n\n\n\n\n\n\n\n\n\n2001, such new directors are also granted\noptions to purchase up to 10,000 shares of common stock pursuant to a\nmechanical pricing formula resulting in an exercise price set at a\npremium equal to the risk free rate of return above the then current\nmarket price. (Messrs. Klinsky, Grusky and Wargo elected not to\nreceive cash or option compensation for serving on the Board as\npreferred stock directors in 2001-2004.)\n\n\nSection 16(a)\nBeneficial Ownership Reporting Compliance\n\n\nThe Securities\nExchange Act of 1934 (the \"1934 Act\")\nrequires the Corporation's directors, executive officers and\n10% stockholders to file reports of beneficial ownership of\nequity securities of the Corporation and to furnish copies of such\nreports to the Corporation. Based on a review of such reports, and upon\nwritten representations from certain reporting persons, the Corporation\nbelieves that, during the fiscal year ended December 31, 2004, all such\nfiling requirements were met.\n\n\n\n\n\n\n\n\n\n\n\n\nBENEFICIAL OWNERSHIP OF COMMON\nSTOCK\n\n\nThe following table sets forth certain information\nregarding the ownership of the Corporation's common stock as of\nMarch 14, 2005 (except as otherwise indicated), by each person known by\nmanagement of the Corporation to be the beneficial owner of more than\nfive percent (5%) of the outstanding shares of the\nCorporation's common stock, each of the Corporation's\ndirectors, its CEO and the four next highest compensated executive\nofficers and all executive officers and directors as a group. The\ninformation presented in the table is based upon the most recent\nfilings with the Securities and Exchange Commission by those persons or\nupon information otherwise provided by those persons to the\nCorporation. The percentages reflected in the table for each beneficial\nowner are calculated based on the number of shares of common stock\noutstanding on the record date plus those common stock equivalents and\nexercisable options held by the applicable beneficial owner. Certain\nof the stockholders represent duplicate entries when more than one\nindividual or entity must report beneficial ownership as to the same\nshares, see footnote (c) below. \n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nName\nof Beneficial Owner \n \nCommon\nStock\n\nBeneficially\n\nOwned \n \nOptions\nCurrently\n\nExercisable or\n\nExercisable\n\nwithin 60\nDays \n \nTotal \n \nPercentage\n\nOwned \n\n\n\n\nStockholders: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nBaron\nCapital Group, Inc.\n(a) \n \n \n1,384,150 \n \n \n \n \n \n \n1,384,150 \n \n \n \n9.5 \n% \n\n\n\n\nLone\nPine Associates LLC\n(b) \n \n \n1,221,551 \n \n \n \n \n \n \n1,221,551 \n \n \n \n8.3 \n% \n\n\n\n\nNew\nMountain Partners, L.P.\n(c) \n \n \n1,192,120 \n \n \n \n \n \n \n1,192,120 \n \n \n \n8.1 \n% \n\n\n\n\nNorth\nSound Capital LLC\n(d) \n \n \n838,994 \n \n \n \n \n \n \n838,994 \n \n \n \n5.7 \n% \n\n\n\n\nWellington\nManagement Company, LLP\n(e) \n \n \n799,480 \n \n \n \n \n \n \n799,480 \n \n \n \n5.5 \n% \n\n\n\n\nDirectors: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nSteven\nB. Klinsky\n(c) \n \n \n1,192,120 \n \n \n \n \n \n \n1,192,120 \n \n \n \n8.1 \n% \n\n\n\n\nRobert\nS.\nSilberman \n \n \n6,152 \n \n \n \n366,667 \n \n \n \n372,819 \n \n \n \n2.5 \n% \n\n\n\n\nDr.\nCharlotte F.\nBeason \n \n \n3,450 \n \n \n \n \n \n \n3,450 \n \n \n \n \n* \n\n\n\n\nWilliam\nE.\nBrock \n \n \n \n \n \n10,000 \n \n \n \n10,000 \n \n \n \n \n* \n\n\n\n\nDavid\nA.\nCoulter \n \n \n \n \n \n10,000 \n \n \n \n10,000 \n \n \n \n \n* \n\n\n\n\nGary\nGensler \n \n \n3,000 \n \n \n \n10,000 \n \n \n \n13,000 \n \n \n \n \n* \n\n\n\n\nRobert\nR. Grusky\n(c) \n \n \n \n \n \n \n \n \n \n \n \n% \n\n\n\n\nRobert\nL.\nJohnson \n \n \n5,341 \n \n \n \n3,333 \n \n \n \n8,674 \n \n \n \n \n* \n\n\n\n\nTodd\nA.\nMilano \n \n \n9,106 \n \n \n \n \n \n \n9,106 \n \n \n \n \n* \n\n\n\n\nG.\nThomas Waite,\nIII \n \n \n3,128 \n \n \n \n \n \n \n3,128 \n \n \n \n \n* \n\n\n\n\nJ.\nDavid Wargo\n(c) \n \n \n \n \n \n \n \n \n \n \n \n% \n\n\n\n\nExecutive\nOfficers: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nMark\nC.\nBrown \n \n \n1,457 \n \n \n \n81,249 \n \n \n \n82,706 \n \n \n \n \n* \n\n\n\n\nLysa\nA.\nHlavinka \n \n \n \n \n \n20,000 \n \n \n \n20,139 \n \n \n \n \n* \n\n\n\n\nSteven\nA.\nMcArthur \n \n \n3,649 \n \n \n \n50,000 \n \n \n \n53,649 \n \n \n \n \n* \n\n\n\n\nPamela\nS.\nBell \n \n \n \n \n \n \n \n \n \n \n \n \n* \n\n\n\n\nJames\nF.\nMcCoy \n \n \n \n \n \n \n \n \n \n \n \n% \n\n\n\n\nKevin\nP.\nO'Reagan \n \n \n \n \n \n41,666 \n \n \n \n41,666 \n \n \n \n \n* \n\n\n\n\nDr.\nJ. Chris\nToe \n \n \n \n \n \n \n \n \n \n \n \n% \n\n\n\n\nSonya\nG.\nUdler \n \n \n \n \n \n6,666 \n \n \n \n6,718 \n \n \n \n \n* \n\n\n\n\nMichael\nJ.\nFortunato \n \n \n \n \n \n \n \n \n \n \n \n \n* \n\n\n\n\nAll\nExecutive Officers and Directors\n\n\n(20\npersons) \n \n \n1,228,064 \n \n \n \n599,581 \n \n \n \n1,827,645 \n \n \n \n12.0 \n% \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n* \nrepresents\namounts less than 1% \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(a) \nAs of December 31, 2004,\nbased on a Schedule 13G/A filed with the SEC on February 15, 2005.\nBaron Capital Management, Inc. and BAMCO, Inc. are investment advisers\nwith respect to these shares for the accounts of other persons who have\nthe right to receive, and the power to direct the receipt of dividends\nfrom, or the proceeds from the sale of, such shares of common stock.\nThe address is: 767 Fifth Avenue, New York, NY 10153. \n\n\n\n\n\n\n \n \n\n\n\n\n(b) \nAs of December 31, 2004, based on a Schedule 13G/A\nfiled with the SEC on February 11, 2005. According to the Schedule\n13G/A, Lone Pine Associates LLC is the general partner of each of Lone\nSpruce, L.P., Lone Balsam, L.P., and Lone Sequoia, L.P. and, as a\nresult, shares the power to vote or dispose of 155,837 shares of common\nstock held by those entities. Steven F. Mandel, Jr. shares the power to\nvote or dispose of shares of Strayer common stock through his role as\nmanaging member of Lone Pine Associates LLC. In addition, Lone Cypress,\nLtd., a client of Lone Pine Capital LLC of which Mr. Mandel is the\nmanaging member, has the power to direct the receipt of dividends from\nor the proceeds of the sale of 1,065,714 shares of Strayer common\nstock. The address is: Two Greenwich Plaza, Greenwich, CT\n06830. \n\n\n\n\n\n\n \n \n\n\n\n\n(c) \nAs of December 9, 2004, based on a\nSchedule 13D/A filed with the SEC on December 13, 2004. New Mountain\nPartners, L.P. (\"New Mountain Partners\")\naddress is 712 Fifth Avenue, 23rd Floor, New York, NY 10019. New\nMountain Investments, L.P. (\"NMI\") is New\nMountain Partners' general partner and New Mountain GP, LLC\n(\"NM\") is NMI's general partner.\nMr. Klinsky is the sole member of NM. Messrs. Grusky and Wargo\nare passive limited partners in NMI. Messrs. Klinsky, Grusky and\nWargo disclaim beneficial ownership of the shares owned by New Mountain\nPartners, except to the extent of their benefical ownership\ntherein. \n\n\n\n\n\n\n \n \n\n\n\n\n(d) \nAs of December 31, 2004, based on\nSchedule 13G/A filed with the SEC on January 26, 2005. According to the\nSchedule 13G/A, the ultimate managing member of North Sound Capital LLC\n(\"North Sound\") is Thomas McAuley. North\nSound may be deemed the beneficial owner of the shares in its capacity\nas the managing member of North Sound Legacy Fund LLC and North Sound\nLegacy Institutional Fund LLC and the investment advisor of North Sound\nLegacy International Ltd. (the \"Funds\"), who\nare the holders of such shares. As the managing member or investment\nadvisor, respectively, of the Funds, North Sound has voting and\ninvestment control with respect to the shares of Strayer common stock\nheld by the Funds. The address is: 53 Forest Avenue, Suite 202, Old\nGreenwich, CT 06870. \n\n\n\n\n\n\n \n \n\n\n\n\n(e) \nAs of December 31,\n2004, based on a Schedule 13G filed with the SEC on February 14, 2005.\nWellington Management Company is an investment advisor with respect to\nthese shares for the accounts of other persons who have the right to\nreceive or the power to direct the receipt of dividends from, or the\nproceeds from the sale of, such shares of common stock. The address is:\n75 State Street, Boston, MA\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nCOMPENSATION\n\n\nExecutive Compensation\n\n\nThe following table sets forth\nannual and long-term compensation for the fiscal years ended December\n31, 2002, 2003 and 2004 for services in all capacities to the\nCorporation of the Chief Executive Officer and the other four highest\ncompensated executive officers.\n\n\nSummary Compensation Table\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \nAnnual\nCompensation \n \nLong-Term\n\nCompensation\nAwards \n\n\n\n\n \n \nYear \n \nSalary \n \nBonus \n \nAll\nOther\n\nCompensation(a) \n \nSecurities\n\nUnderlying\n\nOptions/SAR's\n(b) \n\n\n\n\nRobert S.\nSilberman \n \n \n$ \n445,000 \n \n \n$ \n750,000 \n \n \n$ \n4,000 \n \n \n\n\n\n\nChairman\n&\nCEO \n \n \n$ \n420,000 \n \n \n$ \n550,000 \n \n \n$ \n4,000 \n \n \n100,000\nshares \n\n\n\n\n \n \n \n$ \n358,750 \n \n \n$ \n300,000 \n \n \n$ \n110,215 \n \n \n\n\n\n\nMark\nC.\nBrown \n \n \n$ \n198,500 \n \n \n$ \n250,000 \n \n \n$ \n3,970 \n \n \n\n\n\n\nSenior\nVP &\nCFO \n \n \n$ \n186,500 \n \n \n$ \n250,000 \n \n \n$ \n3,730 \n \n \n10,000\nshares \n\n\n\n\n \n \n \n$ \n179,375 \n \n \n$ \n135,000 \n \n \n$ \n94,161 \n \n \n\n\n\n\nLysa\nA.\nHlavinka \n \n \n$ \n134,750 \n \n \n$ \n135,000 \n \n \n$ \n2,695 \n \n \n10,000\nshares \n\n\n\n\nSenior VP Marketing &\nAdministration \n \n \n$ \n127,300 \n \n \n$ \n125,000 \n \n \n$ \n3,646 \n \n \n15,000\nshares \n\n\n\n\n \n \n \n$ \n102,500 \n \n \n$ \n55,000 \n \n \n$ \n2,850 \n \n \n\n\n\n\nSteven\nA.\nMcArthur \n \n \n$ \n196,000 \n \n \n$ \n250,000 \n \n \n$ \n3,920 \n \n \n\n\n\n\nSenior\nVP & General\nCounsel \n \n \n$ \n190,000 \n \n \n$ \n250,000 \n \n \n$ \n3,800 \n \n \n25,000\nshares \n\n\n\n\n \n \n \n$ \n179,375 \n \n \n$ \n150,000 \n \n \n$ \n70,755 \n \n \n\n\n\n\nKevin\nP.\nO'Reagan \n \n \n$ \n169,000 \n \n \n$ \n125,000 \n \n \n \nN/A \n \n \n\n\n\n\nVice\nPresident &\nCTO \n \n \n$ \n160,000 \n \n \n$ \n125,000 \n \n \n \nN/A \n \n \n10,000\nshares \n\n\n\n\n \n \n \n$ \n153,750 \n \n \n$ \n75,000 \n \n \n \nN/A \n \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(a) \nOther\nCompensation reflects, if applicable, Corporation 401(k) match of up to\n$4,000 and reimbursement for relocation expenses and associated tax\ngross-up. \n\n\n\n\n\n\n \n \n\n\n\n\n(b) \nThe following stock options were\ngranted on February 15, 2005 to the Chief Executive Officer and the\nother four highest compensated executive officers: Robert S. Silberman\n- 100,000 shares; Mark C. Brown - 25,417 shares; Lysa A.\nHlavinka - 15,000 shares; Steven A. McArthur - 16,666\nshares; and Kevin P. O'Reagan - 5,000 shares. \n\n\n\n\n\n\n\n\n\n\n\n\n\n\nOption Grants in Last Fiscal\nYear\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \nIndividual\nGrants \n\n\n\n\nName \n \nNumber\nof\n\n Securities\n\n Underlying\n\n Options\n\n\nGranted \n \n% of Total\n\n Options\n\n Grants to\n\n\nEmployees in\n\n Fiscal Year \n \nExercise\n\n Price\n\n\n($/Share) \n \nExpiration\n\n Date \n \nFair Value of\n\n Options\nat\n\n Grant Date (b) \n\n\n\n\nRobert S.\nSilberman \n \n \n \n \n \nN/A \n \n \n \nN/A \n \n \nN/A \n \n \nN/A \n \n\n\n\n\nChairman\n&\nCEO \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nMark\nC.\nBrown \n \n \n \n \n \nN/A \n \n \n \nN/A \n \n \nN/A \n \n \nN/A \n \n\n\n\n\nSenior\nVP &\nCFO \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nLysa\nA. Hlavinka \n \n \n10,000\n \n(a) \n \n \n11.8 \n% \n \n$ \n119.72 \n \n \nMay 10,\n \n$ \n477,000 \n \n\n\n\n\nSenior VP Marketing\n&\nAdministration \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nSteven\nA.\nMcArthur \n \n \n \n \n \nN/A \n \n \n \nN/A \n \n \nN/A \n \n \nN/A \n \n\n\n\n\nSenior\nVP & Gen.\nCounsel \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nKevin\nP.\nO'Reagan \n \n \n \n \n \nN/A \n \n \n \nN/A \n \n \nN/A \n \n \nN/A \n \n\n\n\n\nVice\nPresident &\nCTO \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(a) \nVesting\n100% on May 11, 2008. \n\n\n\n\n\n\n \n \n\n\n\n\n(b) \nFair value of\noptions at grant date is computed using Black-Scholes methodology and\nthe following assumptions: dividend yield of 0.24%, risk-free\ninterest rate of 3.8%, volatility of 34%, expected option\nterm of 6.1 years and a forfeiture rate of 10% resulting in a\nfair value of $47.70 per share. \n\n\n\n\nAggregated Option\nExercises in Last Fiscal Year and Fiscal Year-End Option\nValues*\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nName \n \nShares\nAcquired\n\non Exercise (#) \n \nValue\n\nRealized\n($)* \n \nNumber of\nSecurities\n\nUnderlying Unexercised\n\nOptions Held at\n\nFiscal\nYear End (#) \n \nValue of Unexercised\n\nin-the-Money\nOptions\n\nat Fiscal Year End\n($) \n\n\n\n\nExercisable \n \nUnexercisable \n \nExercisable \n \nUnexercisable \n \n\n\n\n\nRobert\nS.\nSilberman \n \n \n50,000 \n \n \n$ \n3,368,000 \n \n \n \n333,333 \n \n \n \n66,667 \n \n \n$ \n24,704,000 \n \n \n$ \n3,745,000 \n \n\n\n\n\nMark\nC.\nBrown \n \n \n10,417 \n \n \n$ \n558,000 \n \n \n \n77,916 \n \n \n \n6,667 \n \n \n$ \n4,837,000 \n \n \n$ \n375,000 \n \n\n\n\n\nLysa\nA.\nHlavinka \n \n \n \n \n$ \n \n \n \n15,000 \n \n \n \n20,000 \n \n \n$ \n922,000 \n \n \n$ \n562,000 \n \n\n\n\n\nSteven\nA.\nMcArthur \n \n \n8,333 \n \n \n$ \n395,000 \n \n \n \n41,667 \n \n \n \n16,667 \n \n \n$ \n3,171,000 \n \n \n$ \n936,000 \n \n\n\n\n\nKevin\nP.\nO'Reagan \n \n \n5,000 \n \n \n$ \n277,000 \n \n \n \n38,333 \n \n \n \n6,667 \n \n \n$ \n2,430,000 \n \n \n$ \n375,000 \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n* \nPre-tax\nvalue. \n\n\n\n\n\n\n\n\n\n\n\n\n\n\nPeer Group-Performance Graph\n\n\nThe\nfollowing performance graph compares the Corporation's cumulative\nstockholder return on its common stock since December 31, 1999 with The\nNASDAQ Stock Market (U.S.) Index and a self-determined peer group\nconsisting of Apollo Group, Inc. (APOL), Career Education Corporation\n(CECO), Corinthian Colleges, Inc. (COCO), DeVry, Inc. (DV), Education\nManagement Corporation (EDMC), and ITT Educational Services, Inc.\n(ESI). At present, there is no comparative index for the education\nindustry. This graph is not deemed to be \"soliciting\nmaterial\" or to be filed with the SEC or subject to the\nSEC's proxy rules or to the liabilities of Section 18 of the 1934\nAct, and the graph shall not be deemed to be incorporated by reference\ninto any prior or subsequent filing by the Corporation under the\nSecurities Act or the Securities Exchange Act.\n\n\nComparison of 60\nMonth Cumulative Total Return*\n\nAmong Strayer Education,\nInc.\n\nThe NASDAQ Stock Market (U.S.) Index and a Peer\nGroup\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nName \n \n12/31/99 \n \n12/31/00 \n \n12/31/01 \n \n12/31/02 \n \n12/31/03 \n \n12/31/04 \n\n\n\n\nStrayer\nEducation,\nInc. \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nNASDAQ\nStock Market\n(U.S.) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nPeer\nGroup \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n* \nThe\ncomparison assumes $100 was invested on December 31, 1999 in the\nCorporation's common stock, the NASDAQ Stock Market (U.S.) Index\nand the peer companies selected by the Corporation and assumes the\nreinvestment of all dividends, if any. \n\n\n\n\nNOTE: Peer\ngroup consists of Apollo Group, Inc., Career Education Corporation,\nCorinthian Colleges, Inc., DeVry, Inc., Education Management\nCorporation and ITT Educational Services, Inc.\n\n\n\n\n\n\n\n\n\n\n\n\nCOMPENSATION COMMITTEE REPORT ON\nEXECUTIVE COMPENSATION\n\n\nThe Compensation Committee of the Board\nof Directors has prepared the following report on the Committee's\npolicies with respect to the compensation of executive officers for\n2004. The Corporation's executive officer compensation is\ndetermined by the Compensation Committee, subject to the approval of\nthe Board. The Compensation Committee meets from time to time during\nthe year as may be required to address compensation and option issues\nassociated with new officer hires and director appointments, as well\nas, if applicable, making option grants as long-term compensation and\nmaking other determinations or recommendations with respect to employee\nbenefit plans and related matters. The Committee also meets\nspecifically at the February Board meeting (when audited year-end\nfinancials are available) to award bonuses with respect to the just\ncompleted fiscal year, and determine executive officer salaries with\nrespect to the next fiscal year.\n\n\nCompensation Principles\n\n\n\n\n \n \n\n\n\n\n1. \nThe Compensation Committee believes\nthat compensation of the Corporation's key executives should be\nsufficient to attract and retain highly qualified and productive\npersonnel, as well as to enhance productivity and encourage and reward\nsuperior performance. \n\n\n\n\n\n\n \n \n\n\n\n\n2. \nIt is the\npolicy of the Corporation that the three primary components of the\nCorporation's total compensation package (base salary, cash\nbonuses and grants of stock options) will be considered in the\naggregate in determining the amount of any one component. \n\n\n\n\n\n\n \n \n\n\n\n\n3. \nThe Committee believes the Corporation\nshould make initial option grants to executive officers upon\ncommencement of employment in order to more closely align their\ninterests with stockholders. \n\n\n\n\n\n\n \n \n\n\n\n\n4. \nThe\nCommittee seeks to reward achievement of specific long and short-term\nindividual and corporate performance goals by authorizing annual cash\nbonuses. \n\n\n\n\n\n\n \n \n\n\n\n\n5. \nThe Compensation\nCommittee's criteria for assessing executive performance in any\nyear is based on the Corporation meeting consolidated financial targets\nset by the Board against an approved budget, and the Committee's\nexercise of its judgment regarding the performance of executive\nofficers against other individual and corporate performance goals\napproved by the Board. \n\n\n\n\n\n\n \n \n\n\n\n\n6. \nThe\nCommittee's guiding principles are focused on encouraging\nofficers and directors to think like owners. To this end, the\nCommittee: \n\n\n\n\n\n\n \n \n \n\n\n\n\n \ni. \nGenerally\nrequires senior officers to purchase outright in the market and hold\nduring their term of employment a meaningful number of common\nshares; \n\n\n\n\n\n\n \n \n \n\n\n\n\n \nii. \nGenerally\nrequires commitment by senior officers to hold without exercise during\ntheir term of employment at least 75% of their granted stock\noptions or, upon exercise, to hold at least 75% of the resulting\ncommon shares acquired upon exercise; \n\n\n\n\n\n\n \n \n \n\n\n\n\n \niii. \nEncourages Board\nmembers to purchase common shares outright in the market and hold these\nduring their term; and \n\n\n\n\n\n\n \n \n \n\n\n\n\n \niv. \nRequires that those\nBoard members who receive option grants upon joining the Board will\nhave the exercise price of those options set at a premium above the\nthen current market price equal to the risk free rate of return. \n\n\n\n\nDuring 2004, the Corporation's executive compensation included\nbase salary, cash bonus and long-term compensation in the form of stock\noptions awarded under the Corporation's Employee Stock Option\nPlan. As described above, the cash bonus compensation of executives is\ndesigned to compensate executives for the Compensation\nCommittee's assessment of superior performance against\nconsolidated financial targets set by the Board and meritorious and\ndiligent individual efforts. The Committee did not specifically make\nthe basis of its recommendations the comparison with any companies in\nthe same industry. The long-term stock option grants made by the\nCompensation Committee are intended to align the interests of\nexecutives and the Corporation's stockholders and thereby to\nmotivate executives as equity owners to contribute at superior levels\nin the future and to allow them to share in increased value developed\nfor the Corporation's stockholders generally.\n\n\n\n\n\n\n\n\n\n\n\n\nRobert S. Silberman, the\nCorporation's Chairman and Chief Executive Officer, has an\nemployment agreement with the Corporation which had an initial term of\napproximately three years (ending on December 31, 2004), and\nthereafter, automatically extends for successive one-year periods\nunless either the Corporation or Mr. Silberman provide timely notice to\nthe contrary. Mr. Silberman's employment agreement currently\nprovides for a base salary of $600,000 per annum (subject to annual\nincreases for at least cost of living adjustments). Mr.\nSilberman is also eligible to receive a target award of at least\n75% of base salary, in the form of a bonus for each of the\nfiscal years during which he is employed, upon meeting certain\nindividual, corporate and financial goals annually approved by the\nBoard. In the event of termination without cause, the employment\ncontract also provides for the payment of three years base salary and,\nif such termination is in connection with a change of control, an\namount equal to three times the latest annual bonus award made to him\nunder the agreement prior to the event of termination without\ncause.\n\n\nAt its February 8, 2005 meeting, the Compensation\nCommittee recommended that the Board award Mr. Silberman a cash\nbonus of $750,000 in order to reflect Mr. Silberman's\nsuperior performance and significant accomplishments during the year\nbased on the Corporation meeting specified consolidated financial\ntargets approved by the Board against budget and viewed in the context\nof his own individual goals and the Corporation's overall\nperformance. In addition, at the Compensation Committee's\nFebruary 8, 2005 meeting, the Compensation Committee authorized salary\nincreases and cash bonuses to other executives based on the Corporation\nmeeting specified consolidated financial targets approved by the Board\nagainst budget and commensurate with the Compensation Committee's\nsubjective assessment of their relative individual performance and in\nthe context of the Corporation's overall performance.\n\n\nIn\nreviewing Mr. Silberman's compensation, the Compensation\nCommittee first noted the Corporation had met various annual\nconsolidated financial targets approved by the Board against budget and\nalso subjectively considered Mr. Silberman's significant\ncontribution to the management of the Corporation during the year,\nincluding: implementing a variety of new business development,\ncorporate sponsorship and online expansion activities, as well as\nmanaging the Corporation's successful expansion into Georgia and\nSouth Carolina; and successfully adding new campuses in Pennsylvania\nand Tennessee and obtaining regulatory approval to commence operations\nin Florida. In the Committee's view, Mr. Silberman\ncontributed very significantly to the Corporation, meeting the\nBoard's annual consolidated financial goals and these various\nother achievements and, accordingly, the Compensation Committee\nbelieves his overall compensation was wholly justified.\n\n\nCompensation Deductibility Policy\n\n\nUnder Section 162(m) of\nthe Internal Revenue Code of 1986, as amended, and applicable Treasury\nregulations, no deduction is allowed for annual compensation in excess\nof $1 million paid by a publicly traded corporation to its chief\nexecutive officer and four other most highly compensated officers.\nUnder those provisions, however, there is no limitation on the\ndeductibility of \"qualified performance-based\ncompensation.\" In general, the Corporation's policy\nis to maximize the extent of tax deductibility of executive\ncompensation under the provisions of Section 162(m) so long as doing so\nis compatible with its determination as to the most appropriate methods\nand approaches for the design and delivery of compensation to the\nCorporation's executive officers.\n\n\nCompensation\nCommittee:\n\n\nDavid A. Coulter, Chair\n\nRobert L.\nJohnson\n\nJ. David Wargo\n\n\nDated: February 8,\n\n\nOther Compensation Plans\n\n\nThe Corporation maintains\na retirement plan (the \"401(k) Plan\")\nintended to qualify under Sections 401(a) and 401(k) of the Internal\nRevenue Code of 1986, as amended. The 401(k) Plan is a defined\n\n\n\n\n\n\n\n\n\n\n\n\n\n\ncontribution plan that covers all full-time\nemployees of the Corporation of at least 21 years of age. Effective\nJanuary 1, 2005, employees may generally contribute up to $14,000 of\ntheir annual wages (subject to an annual limit prescribed by the\nInternal Revenue Code) as pretax, salary deferral contributions. The\nCorporation, in its discretion, matches employee contributions up to a\ncurrent maximum authorized amount under the plan of 3% of annual\nwages (increased from 2% to 3% effective January 1,\n2005). In 2004, the Corporation matched the full 2%. The\nCorporation also maintains an Employee Stock Purchase Plan (the\n\"Employee Purchase Plan\"). The purpose of the\nEmployee Purchase Plan is to enable eligible full-time employees of the\nCorporation, through payroll deductions, to purchase shares of our\ncommon stock at a 10% discount from the prevailing market price\nfrom time to time.\n\n\n\n\n\n\n\n\n\n\n\n\nAUDIT COMMITTEE REPORT\n\n\nThe Audit\nCommittee of the Strayer Education, Inc. Board of Directors is composed\nof three directors, all of whom are independent, as independence is\ndefined in Rule 4200(a)(14) of The National Association of Securities\nDealers' Listing Standards and Rule 10A-3(b)(1) of the 1934 Act.\nThe Audit Committee operates under a written charter first adopted in\n2001 and subsequently revised by the Committee to reflect regulatory\ndevelopments. The Audit Committee is currently composed of Messrs.\nGensler (Chair), Milano and Waite. The Audit Committee has adopted a\nwritten charter, a copy of which the Corporation will provide to any\nperson without charge, upon request. Persons wishing to make such a\nrequest should contact Sonya G. Udler, Vice President - Corporate\nCommunications, 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209,\n(703) 247-2500. In addition, the Audit Committee charter is available\non the Corporation's website, www.strayereducation.com. Under the\nAudit Committee Charter and the Committee's current policies, the\nCommittee performs a variety of tasks, including being directly\nresponsible for the appointment, compensation and oversight of the\nCorporation's independent registered public accounting firm,\nreviewing the Corporation's accounting policies and reviewing the\nCorporation's unaudited quarterly earnings releases and periodic\nfilings with the SEC that include financial statements, and reporting\nto the Board of Directors.\n\n\nThe management of the Corporation is\nresponsible for the Corporation's internal controls and financial\nreporting process and for maintaining the Corporation's\ncompliance with applicable accounting standards. PricewaterhouseCoopers\nLLP, the Corporation's independent registered public accounting\nfirm, is responsible for performing an independent audit of the\nCorporation's financial statements in accordance with generally\naccepted auditing standards and to provide a report thereon. The\nCommittee's responsibility is to monitor and oversee these\nprocesses.\n\n\nIn connection with this responsibility, during 2004\nthe Committee met and held discussions with management and the\nindependent registered public accounting firm four times. The Committee\nreviewed and discussed the audited financial statements with\nmanagement. Management represented to the Committee that the\nCorporation's consolidated financial statements were prepared in\naccordance with generally accepted accounting principles, and the\nCommittee reviewed and discussed the consolidated financial statements\nwith management and, independently with PricewaterhouseCoopers LLP. The\nCommittee also discussed with PricewaterhouseCoopers LLP the matters\nrequired to be discussed by Statement on Auditing Standards No. 61, as\namended (Communications with Audit Committees).\n\n\nDuring the year\n2004, management completed the documentation, testing and evaluation of\nthe Corporation's system of internal control over financial\nreporting in response to the requirements set forth in Section\n404 of the Sarbanes-Oxley Act of 2002 and related regulations. The\nAudit Committee was kept apprised of the progress of the evaluation and\nprovided oversight and advice to management during the process. In\nconnection with this oversight, the Committee received periodic updates\nprovided by management and PricewaterhouseCoopers LLP at each regularly\nscheduled Committee meeting. At the conclusion of the process,\nmanagement provided the Committee with a report on the effectiveness of\nthe Corporation's internal control over financial reporting. The\nCommittee also reviewed the report of management contained in the\nCorporation's Annual Report on Form 10-K for the fiscal\nyear ended December 31, 2004 filed with the SEC, as well as\nPricewaterhouseCoopers LLP's Report of Independent Registered\nPublic Accounting Firm (included in the Corporation's Annual\nReport on Form 10-K). This report related to its audit of\n(i) the consolidated financial statements, (ii)\nmanagement's assessment of the effectiveness of internal control\nover financial reporting, and (iii) the effectiveness of\ninternal control over financial reporting. The Committee continues to\noversee the Corporation's efforts related to its internal control\nover financial reporting and management's preparations for the\nevaluation in fiscal 2005.\n\n\nThe Committee has received from\nPricewaterhouseCoopers LLP the written disclosures and the letter\nrequired by Independence Standards Board Standard No. 1 (Independence\nDiscussions with Audit Committees) and has discussed with\nPricewaterhouseCoopers LLP its independence.\n\n\nBased upon the\nreview and discussions referred to above, the Committee, consisting of\nthe members for fiscal year ended December 31, 2004, recommended to the\nBoard of Directors that the audited financial statements for the year\n2004 be included in the Corporation's annual report on Form 10-K\nfor \n\n\n\n\n\n\n\n\n\n\n\n\n\nthe year ended December 31, 2004, filed with\nthe SEC, and that PricewaterhouseCoopers LLP be retained as the\nCorporation's independent registered public accounting firm for\nfiscal year 2005.\n\n\nAudit Committee:\n\n\nGary Gensler,\nChair\n\nTodd A. Milano\n\nG. Thomas Waite, III\n\n\nDated: February 14, 2005\n\n\nEmployment Agreements\nand Change in Control Arrangements\n\n\nIn April 2001, the\nCorporation entered into an employment agreement with Mr.\nSilberman. The employment agreement provided for an initial three-year\nterm, expiring on December 31, 2004, but is automatically extended for\nan additional year each January 1st, unless the Corporation or\nMr. Silberman has given written notice by September 30 of the\nimmediately preceding year that it or Mr. Silberman, as the case\nmay be, does not wish to extend the term of the agreement. The\nagreement was extended to December 31, 2005. For his services, Mr.\nSilberman is entitled to receive an annual salary of at least $600,000\nplus a performance bonus based on his overall performance.\n\n\nIn\nthe event that Mr. Silberman is terminated by the Corporation\nwithout cause, he is entitled to receive three years base salary and,\nif such termination is in connection with a change of control, an\namount equal to three times his latest bonus award made to him. The\nagreement also contains covenants restricting Mr. Silberman from\ncompeting with the Corporation for three years after his termination of\nemployment and requires Mr. Silberman to keep confidential the\nCorporation's proprietary information.\n\n\nNone of the\nCorporation's other executive officers have entered into\nemployment agreements with the Corporation.\n\n\nCertain\nTransactions with Former Management\n\n\nAs of December 31, 2004,\nthe Corporation had long-term operating leases for thirty-three of its\nvarious campus and other administrative locations. The rents on these\nleases are all at market rates. Of these thirty-three locations, one of\nthe Virginia campuses was in 2004 leased from a company which was\nwholly-owned by Mr. Ron K. Bailey, the Corporation's former\nPresident and Chief Executive Officer and former majority stockholder.\nRent paid to Mr. Bailey under this operating lease (involving a\ntotal of 17,500 square feet) for the year ended December 31, 2004\ntotaled $356,000. The Corporation currently believes that this campus\nlease with Mr. Bailey which expires in 2006 is on terms at least\nas favorable to the Corporation as terms reached in an arm's\nlength transaction.\n\n\nPROPOSAL 2\n\nRatification of Appointment\nof Independent Registered Public Accounting Firm\n\n\nThe Audit\nCommittee and the Board of Directors have appointed the independent\nregistered public accounting firm of PricewaterhouseCoopers LLP to\nserve as the Corporation's independent registered public\naccounting firm for the fiscal year ending December 31, 2005.\nPricewaterhouseCoopers LLP has acted as the Corporation's\nindependent registered public accounting firm for the fiscal year ended\nDecember 31, 2004. Representatives of PricewaterhouseCoopers LLP are\nexpected to be present at the Annual Meeting and will have an\nopportunity to make a statement if they desire and to respond to\nappropriate questions. The ratification of the appointment of\nPricewaterhouseCoopers LLP requires the approval of a majority of the\nvotes cast at the Annual Meeting.\n\n\n\nThe Board of Directors\nrecommends a vote for the proposal to ratify the appointment of\nPricewaterhouseCoopers LLP as the Corporation's independent\nregistered public accounting firm for the fiscal year ending December\n31, 2005.\n\n\n\n\n\n\n\n\n\n\n\n\n\nPrincipal Accounting Fees and\nServices\n\n\nSet forth below are the services rendered and related\nfees billed by PricewaterhouseCoopers LLP for 2003 and\n2004:\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \n \n\n\n\n\nAudit\nFees \n \n\n\n\n\nConsolidated financial statements\naudit \n \n$ \n150,980 \n \n \n$ \n474,368 \n \n\n\n\n\nConsent/comfort\nletter for filing of Form\nS-3 \n \n \n23,640 \n(a) \n \n \n45,160 \n \n\n\n\n\nOngoing\naccounting and assurance\nadvice \n \n \n- \n \n \n \n- \n \n\n\n\n\n \n \n \n174,620 \n \n \n \n519,528 \n \n\n\n\n\nTax\nFees \n \n\n\n\n\nPreparation of corporate tax\nreturns \n \n \n19,543 \n \n \n \n21,800 \n \n\n\n\n\nOther tax\nservices \n \n \n18,459 \n \n \n \n16,991 \n \n\n\n\n\n \n \n \n38,002 \n \n \n \n38,791 \n \n\n\n\n\nOther\nServices \n \n \n \n \n \n \n \n \n\n\n\n\nLicense fee for\naccounting\ndatabase \n \n \n \n \n \n \n\n\n\n\n \n \n$ \n213,462 \n \n \n$ \n559,219 \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(a) \nNew\nMountain Partners and other preferred shareholders agreed to reimburse\nthe Corporation for these expenses. \n\n\n\n\nIt is the Audit\nCommittee's policy to pre-approve all audit and non-audit related\nservices provided by the Corporation's independent registered\npublic accounting firm. All of the services described above were\npre-approved by the Corporation's Audit Committee.\n\n\nPROPOSAL 3\n\nAmendment of Employee Stock Option Plan to authorize\n500,000 additional shares for future issuance thereunder and to extend\nthe term of the Plan to 2020.\n\n\nThis section provides a summary\nof the terms of the Strayer Education, Inc. 1996 Stock Option Plan, as\namended (the \"Option Plan\"), and the proposal\nto approve the amendment to the Option Plan. The principal changes to\nthe Option Plan which are proposed to be implemented by the amendment\nare an increase in the number of shares reserved for issuance under the\nOption Plan by 500,000 shares of Common Stock and the extension of the\nterm of the Plan by nine years to 2020. At the present time, there are\n48,989 shares available for issuance under the Plan and the existing\nterm of the Plan would expire in 2011. If the proposed amendment to the\nOption Plan is approved, the existing limit of 2,500,000 shares of\nCommon Stock which were previously authorized to be reserved for\nissuance under the Option Plan during its entire term (1996-2011) will\nbe increased by 500,000 shares to a total of 3,000,000 shares and the\nPlan term will be extended by nine years to 2020. In addition, two\nclarifying changes are being proposed. The first clarifying change is\nto eliminate the sublimit on grants of restricted stock under the Plan,\nwhich is currently 20% of the overall number of shares reserved\nfor issuance under the Plan, which would have no practical effect under\nthe Plan at the present time since the number of shares that would be\navailable for issuance under the Plan, if the proposed amendment is\napproved is currently less than the 20% sublimit on grants of\nrestricted stock. The second clarifying change is to clarify that there\nwould be no repricing of options under the Plan without shareholder\napproval. A copy of the proposed amendment to the Option plan is\nattached as Exhibit C to this proxy statement.\n\n\nOn the\nrecommendation of the Compensation Committee of the Board, the Board of\nDirectors has determined that it is appropriate to amend the Option\nPlan to add 500,000 shares as there are currently 48,989 shares\nremaining available for grant under the Option Plan and to extend the\nterm of the Plan by nine years. The Board believes that equity awards\nin the form of options and/or restricted stock serve to \n\n\n\n\n\n\n\n\n\n\n\n\n\nalign the interests of managers with\nshareholders and are an important part of our recruitment process, and\nperiodic grants to current employees can be vital to retaining\nemployees.\n\n\nApproval of the amendment to Option Plan by\nstockholders to add additional shares and extend the term of the Option\nPlan is required by stock exchange rules and regulations. The Option\nPlan was last amended by the Board of Directors on April 23, 2001, and\nthat amendment was approved by our stockholders at the 2001 annual\nmeeting of stockholders.\n\n\nOn March 14, 2005, the Record Date, the\nclosing price of our Common Stock was $105.89 per share and a total of\n14,641,955 shares of Common Stock were outstanding and there were 27\nexisting participants in the Option Plan and 1,081,667 outstanding\noptions to purchase shares of Common Stock.\n\n\nSet forth in the\ntable below is information pertaining to securities authorized for\nissuance under our equity compensation plans. There are options but no\nwarrants or other rights existing under these plans.\n\n\nEquity\nCompensation Plan Information\n\nas of December 31,\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\nPlan\nCategory \n \nNumber of securities\n\n to be issued upon\n\n\nexercise of\n\n outstanding options,\n\n warrants and\nrights \n \nWeighted average\n\n exercise price of\n\n outstanding\noptions,\n\n warrants and rights \n \nNumber of\n\n securities\n\n\nremaining\n\n available for\n\n future issuance\n\n under equity\n\n\ncompensation\n\n plans (excluding\n\n securities\n\n reflected\n\n in\ncolumn\n(a)) \n\n\n\n\n \n \n(a) \n \n(b) \n \n(c) \n\n\n\n\n1. Equity\ncompensation plans previously approved by security\nholders \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n A. 1996\nStock Option Plan as amended at the May 2001 Annual Stockholders'\nMeeting \n \n \n854,584 \n \n \n$ \n49.22 \n \n \n \n276,072 \n \n\n\n\n\n2. Equity\ncompensation plans not previously approved by security\nholders \n \n \n- \n \n \n \n- \n \n \n \n- \n \n\n\n\n\n Total \n \n \n854,584 \n \n \n$ \n49.22 \n \n \n \n276,072 \n \n\n\n\n\n \n\n\n\n\n\n\n\nThe\nfollowing stock options were granted on February 15, 2005 to the Chief\nExecutive Officer and the other four highest compensated executive\nofficers: Robert S. Silberman - 100,000 shares; Mark C. Brown\n- 25,417 shares; Lysa A. Hlavinka - 15,000 shares; Steven\nA. McArthur - 16,666 shares; and Kevin P. O'Reagan -\n5,000 shares.\n\n\nBecause participation and the types of awards\nunder the Option Plan are subject to the discretion of the Compensation\nCommittee, the benefits or amounts that will be received by any\nparticipant or groups of participants if the Option Plan is approved\nare not currently determinable. In the judgment of the Board of\nDirectors, the availability of an initial or increased grant under the\nOption Plan will be a valuable incentive and will benefit our\nstockholders by aligning more closely the interests of Option Plan\nparticipants with those of our stockholders. The affirmative vote of a\nmajority of the shares of Common Stock voted at the Annual Meeting is\nrequired to approve the amendment to the Option Plan. Unless otherwise\nindicated, properly executed proxies will be voted\n\"FOR\" Proposal 3 to approve the amendment to\nthe Option Plan.\n\n\n\nTHE BOARD OF DIRECTORS RECOMMENDS THAT\nSTOCKHOLDERS VOTE \"FOR\" APPROVAL OF THE\nAMENDMENT TO THE OPTION PLAN.\n\n\n\n\n\n\n\n\n\n\n\n\n\nDESCRIPTION OF THE OPTION PLAN\n\n\nA\ndescription of the terms of the Option Plan as proposed to be amended\nis set forth below. The following summary is qualified in its entirety\nby the terms of the Option Plan, a copy of which is attached as Exhibit\nD to this proxy statement and the terms of the proposed amendment to\nthe Option Plan, a copy of which is attached as Exhibit C to this proxy\nstatement.\n\n\n\nPurpose. The purpose of the Option Plan\nis to advance our interests by providing eligible individuals an\nopportunity to acquire or increase a proprietary interest in the\nCorporation, which thereby will create a stronger incentive for those\nindividuals to expend maximum effort for the growth and success of the\nCorporation, and will encourage such eligible individuals to remain in\nthe employ of the Corporation.\n\n\n\nAdministration. The\nOption Plan is administered by the Compensation Committee of the Board\nof Directors. Subject to the terms of the plan, the Compensation\nCommittee may select participants to receive awards, determine the\ntypes of awards and terms and conditions of awards, and interpret\nprovisions of the Option Plan.\n\n\n\nCommon Stock Reserved for\nIssuance under the Option Plan. The Common Stock to be issued\nunder the Option Plan consists of authorized but unissued shares and\ntreasury shares, to the extent permitted by law. If any shares covered\nby an award are not purchased or are forfeited, or if an award\notherwise terminates without delivery of any Common Stock, then the\nnumber of shares of Common Stock counted against the aggregate number\nof shares available under the Option Plan with respect to the award\nwill, to the extent of any such forfeiture or termination, again be\navailable for making awards under the Option Plan.\n\n\n\nEligibility. Awards may be made under the Option Plan to\nemployees, consultants, officers and directors (including non-employee\ndirectors) of the Corporation or any of our affiliates, or to any other\nperson that the Board of Directors determines is in our best\ninterests.\n\n\n\nAmendment or Termination of the Option\nPlan. The Board of Directors may terminate or amend the Option\nPlan at any time and for any reason. The Option Plan shall terminate in\nany event on April 23, 2011 unless extended to 2020 pursuant to the\namendment. Amendments will be submitted for stockholder approval to the\nextent required by the Internal Revenue Code or other applicable laws,\nrules or regulations.\n\n\n\nOptions. The Option Plan\npermits the granting of options to purchase shares of Common Stock that\nare intended to qualify as incentive stock options under the Internal\nRevenue Code, as well as options that do not qualify as incentive stock\noptions or that are granted to non-employee directors of the\nCorporation or a subsidiary.\n\n\nThe exercise price of each stock\noption may not be less than 100% of the fair market value of our\nCommon Stock on the date of grant. The fair market value of our Common\nStock is generally the closing price of the Common Stock on the NASDAQ\nStock Market on the day the option is granted. In the case of certain\n10% stockholders who receive incentive stock options, the\nexercise price may not be less than 110% of the fair market\nvalue of the Common Stock on the date of grant. An exception to these\nrequirements is made for options that we grant in substitution for\noptions held by employees of companies that we acquire. In such a case,\nthe exercise price is adjusted to preserve the economic value of the\nemployee's stock option from his or her former employer. In no\nevent will the exercise price of an option be less than the market\nvalue of a share of Common Stock on the date of grant. However, the\nOption Plan has been amended to clarify that it expressly prohibits\nrepricing outstanding options without stockholder approval.\n\n\nThe\nterm of each option is fixed by the Compensation Committee and may not\nexceed 10 years from the date of grant. Options may be made exercisable\nin installments. The exercisability of options may be accelerated by\nthe Compensation Committee. The Compensation Committee determines at\nwhat time or times each option may be exercised and the period of time,\nif any, after termination of employment during which options may be\nexercised. In general, options may be exercised for a period of one\nyear if the grantee's termination of employment is due to the\ngrantee's death or permanent and total disability.\n\n\n\n\n\n\n\n\n\n\n\n\nIn general, a grantee may pay the\nexercise price of an option by cash, certified check, by tendering\nshares of Common Stock, or, under certain circumstances, by means of a\ncashless exercise.\n\n\nStock options granted under the Option Plan\nmay not be sold, transferred, pledged or assigned other than by will or\nunder applicable laws of descent and distribution.\n\n\n\nNon-Employee Director Option Grants. The Option Plan\nprovides that eligible directors are directors elected to serve at or\nafter the 2001 meeting of our stockholders who are not officers or\nother salaried employees of us or our subsidiaries. Partners and\nemployees of our preferred stockholders are not eligible directors.\nEach eligible director is granted an option to purchase 10,000 shares\non the tenth (10th) trading day after the date of the first\nannual meeting of our stockholders following the eligible\ndirector's initial election to the Board of Directors. This award\nof 10,000 shares is made automatically and does not require any further\nBoard of Director action. The option price of this award will be the\naverage of the closing prices of the Common Stock for the first ten\n(10) trading days after the annual meeting increased by the interest\nrate on five-year treasury notes applicable on that day. The number of\nshares to be granted to eligible directors is subject to adjustment in\nthe event of a stock split or other similar event.\n\n\n\nOther\nAwards. The Option Plan provides that the Compensation\nCommittee may also grant restricted stock, which are shares of stock\nsubject to restrictions, conditions or other terms, to persons eligible\nto receive grants under the Option Plan.\n\n\n\nEffect of Certain\nCorporate Transactions. Certain change of control transactions\ninvolving us, such as a sale of the Corporation, may cause awards\ngranted under the Option Plan to vest, unless the awards are continued\nor substituted for in connection with the change of control\ntransaction.\n\n\n\nAdjustments for Stock Dividends and Similar\nEvents. The Compensation Committee will make appropriate\nadjustments in outstanding awards and the number of shares available\nfor issuance under the Option Plan, including the individual\nlimitations on options, to reflect dividends in the form of Common\nStock, stock splits and other similar events.\n\n\n\nSection 162(m)\nof the Internal Revenue Code. Section 162(m) of the Internal\nRevenue Code limits publicly held companies, such as the Corporation,\nto an annual deduction for federal income tax purposes of $1 million\nfor compensation paid to their covered employees. However,\nperformance-based compensation is excluded from this limitation. The\nOption Plan is designed to permit the Compensation Committee to grant\noptions that qualify as performance-based upon satisfying the various\nconditions of Section 162(m).\n\n\nTo qualify as\nperformance-based:\n\n\n(i) the compensation must be paid\nsolely on account of the attainment of one or more pre-established,\nobjective performance goals;\n\n\n(ii) the performance goal\nunder which compensation is paid must be established by a compensation\ncommittee comprised solely of two or more directors who qualify as\noutside directors for purposes of the exception;\n\n\n(iii)\nthe material terms under which the compensation is to be paid must be\ndisclosed to and subsequently approved by stockholders of the\ncorporation before payment is made in a separate vote; and\n\n\n(iv) the compensation committee must certify in writing\nbefore payment of the compensation that the performance goals and any\nother material terms were in fact satisfied.\n\n\nIn the case of\ncompensation attributable to stock options, the performance goal\nrequirement (summarized in (i) above) is deemed satisfied, and the\ncertification requirement (summarized in (iv) above) is inapplicable,\nif the grant or award is made by the Compensation Committee; the plan\nunder which the option is granted states the maximum number of shares\nwith respect to which options may be granted during a specified period\nto an employee; and under the terms of the option, the amount of\ncompensation is based solely on an increase in the value of the common\nstock after the date of grant. The maximum number of shares of Common\nStock subject to options that can be awarded under the Option Plan to\nany person is 350,000 shares per year.\n\n\n\n\n\n\n\n\n\n\n\n\nFEDERAL INCOME TAX CONSEQUENCES\n\n\n\nIncentive Stock Options. The grant of an option will not\nbe a taxable event for the grantee or for us. A grantee will not\nrecognize taxable income upon exercise of an incentive stock option\n(except that the alternative minimum tax may apply), and any gain\nrealized upon a disposition of the Common Stock received pursuant to\nthe exercise of an incentive stock option will be taxed as long-term\ncapital gain if the grantee holds the shares of Common Stock for at\nleast two years after the date of grant and for one year after the date\nof exercise (the \"holding period\nrequirement\"). We will not be entitled to any business\nexpense deduction with respect to the exercise of an incentive stock\noption, except as discussed below. For the exercise of an option to\nqualify for the foregoing tax treatment, the grantee generally must be\nour employee or an employee of one of our subsidiaries from the date\nthe option is granted through a date within three months before the\ndate of exercise of the option.\n\n\nIf all of the foregoing\nrequirements are met except the holding period requirement mentioned\nabove, the grantee will recognize ordinary income upon the disposition\nof the Common Stock in an amount generally equal to the excess of the\nfair market value of the Common Stock at the time the option was\nexercised over the option exercise price (but not in excess of the gain\nrealized on the sale). The balance of the realized gain, if any, will\nbe capital gain. We will be allowed a business expense deduction to the\nextent the grantee recognizes ordinary income, subject to our\ncompliance with Section 162(m) of the Internal Revenue Code and to\ncertain reporting requirements.\n\n\n\nNon-Qualified\nOptions. The grant of an option will not be a taxable event\nfor the grantee or for us. Upon exercising a non-qualified option, a\ngrantee will recognize ordinary income in an amount equal to the\ndifference between the exercise price and the fair market value of the\nCommon Stock on the date of exercise. Upon a subsequent sale or\nexchange of shares acquired pursuant to the exercise of a non-qualified\noption, the grantee will have taxable gain or loss, measured by the\ndifference between the amount realized on the disposition and the tax\nbasis of the shares of Common Stock (generally, the amount paid for the\nshares plus the amount treated as ordinary income at the time the\noption was exercised).\n\n\nIf we comply with applicable reporting\nrequirements and with the restrictions of Section 162(m) of the\nInternal Revenue Code, we will be entitled to a business expense\ndeduction in the same amount and generally at the same time as the\ngrantee recognizes ordinary income.\n\n\n\nRestricted\nStock. A grantee who is awarded restricted stock will not\nrecognize any taxable income for federal income tax purposes in the\nyear of the award, provided that the shares of Common Stock are subject\nto restrictions (that is, the restricted stock is nontransferable and\nsubject to a substantial risk of forfeiture). However, the grantee may\nelect under Section 83(b) of the Internal Revenue Code to recognize\ncompensation income in the year of the award in an amount equal to the\nfair market value of the Common Stock on the date of the award,\ndetermined without regard to the restrictions. If the grantee does not\nmake such a Section 83(b) election, the fair market value of the Common\nStock on the date the restrictions lapse will be treated as\ncompensation income to the grantee and will be taxable in the year the\nrestrictions lapse. If we comply with applicable reporting requirements\nand subject to the restrictions of Section 162(m) of the Internal\nRevenue Code, we will be entitled to a business expense deduction in\nthe same amount and generally at the same time as the grantee\nrecognizes ordinary income. Dividends, if any, paid on restricted stock\nin the absence of a timely Section 83(b) election are taxed as\ncompensation income, subject to withholding taxes.\n\n\n\nTHE BOARD\nOF DIRECTORS BELIEVES THAT APPROVAL OF THE AMENDMENT TO THE OPTION PLAN\nIS IN THE BEST INTERESTS OF ALL STOCKHOLDERS AND, ACCORDINGLY,\nRECOMMENDS A VOTE FOR PROPOSAL 3.\n\n\n\nStockholder\nProposals\n\n\nAll stockholder proposals intended to be presented at\nthe 2006 Annual Meeting of Stockholders must be received by the\nCorporation no later than November 28, 2005 and must otherwise comply\nwith rules of the SEC for inclusion in the Corporation's proxy\nstatement and form of proxy relating to the meeting.\n\n\nSEC rules\nalso establish a different deadline for submission of stockholder\nproposals that are not intended to be included in the\nCorporation's proxy statement with respect to discretionary\nvoting. The \n\n\n\n\n\n\n\n\n\n\n\n\n\ndiscretionary voting deadline for the\nCorporation's 2006 Annual Meeting is February 11, 2006. If a\nstockholder gives notice of such a proposal after the discretionary\nvoting deadline, the Corporation's proxy holders will be allowed\nto use their discretionary voting authority to vote against the\nstockholder proposal when and if the proposal is raised at the\nCorporation's 2006 Annual Meeting of Stockholders.\n\n\nOther\nMatters\n\n\nThe Corporation knows of no other matters to be\npresented for action at the Annual Meeting other than those mentioned\nabove. However, if any other matters should properly come before the\nmeeting, it is intended that the persons named in the accompanying\nproxy card will vote on such matters in accordance with their best\njudgment.\n\n\n\n\n\n\n\n\n\n\n\n\n\nExhibit\nA\n\n\n\n□ \n\n\nREVOCABLE\nPROXY\n\n\nSTRAYER EDUCATION, INC.\n\n\n\nANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 3,\n\n THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF\nDIRECTORS\n\n\n\nThe undersigned stockholder hereby\nappoints Robert S. Silberman, Steven A. McArthur and Mark C. Brown or\nany of them, attorneys and proxies of the undersigned, with full power\nof substitution and with authority in each of them to act in the\nabsence of the other, to vote for the undersigned at the Annual Meeting\nof Stockholders of the Corporation to be held on Tuesday, May 3, 2005\nat 8:30 a.m. (Eastern time) at the Strayer University campus located at\n1133 15th Street, N.W., 3rd floor, Room 322,\nWashington, DC, and at any adjournments thereof, in respect of all\nshares of the Common Stock of the Corporation which the undersigned may\nbe entitled to vote, on the following matters:\n\n\n\nPLEASE MARK, SIGN AND DATE THIS PROXY AND\nRETURN IT PROMPTLY TO ENSURE A QUORUM AT THE MEETING. IT IS IMPORTANT\nWHETHER YOU OWN FEW OR MANY SHARES. DELAY IN RETURNING YOUR PROXY MAY\nSUBJECT THE CORPORATION TO ADDITIONAL EXPENSE.\n\n\n\n\n(Continued and to be signed on the reverse side)\n\n\n\n\n\n \n1 4 4 7\n\n\n\n\nA-1\n\n\n\n\n\n\n\n\n\n\nANNUAL MEETING OF STOCKHOLDERS\nOF\n\n\nSTRAYER EDUCATION, INC.\n\n\nMAY 3,\n\n\nPlease sign, date and mail\n\n your\nproxy card in the\n\n envelope provided as soon\n\n as possible.\n\n\n↓ Please detach along perforated line and mail in\nthe envelope provided. ↓\n\n\n\n\n\n\nTHE BOARD OF DIRECTORS\nRECOMMENDS A VOTE \"FOR\" THE ELECTION OF\nDIRECTORS AND \"FOR\" PROPOSALS 2 and 3.\n\n\nPLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE\nMARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE \n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \n \n \n \n \n \n \nFOR \n \nAGAINST \n \nABSTAIN \n\n\n\n\n1. Election of eleven Directors\nby all Common Stockholders: \n \n2. Proposal to\nratify the appointment of PricewaterhouseCoopers LLP as the independent\nregistered public accounting firm for the Corporation. \n \n \n \n \n \n \n\n\n\n\n \n \n \n \n \n \n \n \nFOR \n \n \nAGAINST \n \n \n \nABSTAIN \n \n\n\n\n\n \n \n3. Proposal\nto amend the Employee Stock Option Plan. \n \n \n \n \n \n \n\n\n\n\n \n \nNOMINEES: \n \n\n\n\n\n FOR\nALL NOMINEES \n \nO Robert S. Silberman\n\nO\nDr. Charlotte F. Beason \n \n \n \nThis proxy, when\nproperly executed, will be voted as directed herein by the undersigned\nshareholder. However, if no direction is given, this proxy will be\nvoted FOR the election of nominated directors, FOR the ratification of\nthe appointment of PricewaterhouseCoopers LLP as the\nCorporation's independent registered public accounting firm, and\nFOR the amendment of the Employee Stock Option Plan and on other\nmatters in the discretion of the proxyholder as he may deem\nadvisable.\n\n\n \n\n The undersigned hereby acknowledges\nprior receipt of a copy of the Notice of Annual Meeting of Stockholders\nand proxy statement dated March 28, 2005, and hereby revokes any proxy\nor proxies heretofore given. This Proxy may be revoked at any time\nbefore it is voted by delivering to the Secretary of the Corporation\neither a written revocation of proxy or a duly executed proxy bearing a\nlater date, or by appearing at the Annual Meeting and voting in\nperson.\n\n \n\n If you receive more than one proxy card,\nplease sign and return all cards in the accompanying envelope.\n\n\n \n\n\nPlease mark, sign and date this proxy and return it to\nensure a quorum at the meeting. It is important whether or not you own\nfew or many shares. Delay in returning your proxy may subject the\ncorporation to additional\nexpenses. \n\n\n\n\n WITHHOLD\nAUTHORITY\n\n FOR ALL NOMINEES \n \nO\nWilliam E. Brock\n\n O David A. Coulter\n\n O Gary\nGensler \n \n\n\n\n\n FOR ALL EXCEPT\n\n(See instructions\nbelow) \n \nO Robert R. Grusky\n\n O Robert\nL. Johnson\n\nO Steven B. Klinsky\n\n O Todd A. Milano\n\n O G.\nThomas Waite III\n\n O J. David\nWargo \n \n\n\n\n\nINSTRUCTION: To\nwithhold authority to vote for any individual nominee(s), mark\n\"FOR ALL EXCEPT\" and fill in the\ncircle next to each nominee you wish to withhold, as shown here:\n•\n\n\n \n \n\n\n\n\n \n \n \n \n \n \n\n\n\n\nTo\nchange the address on your account, please check the box at right and\nindicate your new address in the address space above. Please note that\nchanges to the registered name(s) on the account may not be submitted\nvia this\nmethod. \n \n \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\nSignature\nof Stockholder: \n \nDate: \n Signature of\nStockholder: \n \n Date: \n \n\n\n\n\n\n\n \n \n\n\n\n\nNote:\n \nPlease sign exactly as your name or names\nappear on this Proxy. When shares are held jointly, each holder should\nsign. When signing as executor, administrator, attorney, trustee or\nguardian, please give full title as such. If the signer is a\ncorporation, please have a duly authorized officer sign full corporate\nname, giving full title as such. If signer is a partnership, please\nhave an authorized person sign in partnership name. \n\n\n\n\n\n\n \n \n\n\n\n\nA-2\n\n\n\n\n\n\n\n\n\n\nExhibit\nB\n\n\nSTRAYER EDUCATION, INC.\n\n\nAUDIT COMMITTEE\nCHARTER\n\n\nPurpose\n\n\nThe Audit Committee of the Board of\nDirectors shall perform a variety of tasks as described herein,\nincluding being directly responsible for the appointment, compensation\nand oversight of the Company's independent auditors, reviewing\nthe Company's accounting policies and reviewing the\nCompany's unaudited quarterly earnings releases and periodic\nfilings with the Securities and Exchange Commission\n(\"SEC\") that include financial statements,\nand reporting to the Board of Directors. The Committee shall also\nmonitor (1) the integrity of the financial statements of the Company,\n(2) the Company's compliance with accounting, legal and\nregulatory requirements and (3) the independence and performance of the\nCompany's external auditors including the annual audit of the\nCompany's consolidated financial statements; and (4) the\neffective functioning and performance of the Company's internal\naudit functions.\n\n\nComposition\n\n\nThe membership of the\nAudit Committee shall consist of at least three members of the Board of\nDirectors, who shall serve at the pleasure of the Board of Directors\nand be designated by the full Board of Directors, and who shall meet\nthe following criteria:\n\n\n1. Each member of\nthe Audit Committee must be an independent director within the meaning\nof the applicable rules of the NASDAQ or any other securities exchange\non which the company's securities are traded, as well as\napplicable SEC rules.\n\n\n2. Each member of the\nAudit Committee must be able to read and understand fundamental\nfinancial statements, including the company's balance sheet,\nincome statement, and cash flow statement.\n\n\n3. At least one member of the Audit Committee\nshall have past employment experience in finance or accounting,\nrequisite professional certification in accounting, or other comparable\nexperience or knowledge which results in the individual's\nfinancial sophistication, and accordingly shall be designated by the\nBoard of Directors of the Company as the Committee's financial\nexpert.\n\n\nDuties\n\n\nThe Audit Committee, in addition to the\nprimary responsibilities set forth under\n\"Purpose\" above shall:\n\n\n1. Make regular reports to the Board of\nDirectors.\n\n\n2. Review and reassess the\nadequacy of this Charter annually and recommend any proposed changes to\nthe Board of Directors for approval.\n\n\n3. Review the annual audited financial\nstatements with management and the Company's independent\nauditors, including major issues regarding accounting and auditing\nprinciples and practices, including accounting policies and the use of\nsignificant estimates, as well as the Company's system of\ninternal controls.\n\n\n4. Determine whether to\nrecommend to the Board of Directors that the annual audited financial\nstatements be included in the Company's annual report on Form\n10-K.\n\n\n5. Review with management and the\nCompany's independent auditors any significant financial\nreporting issues raised by them in connection with the preparation of\nthe Company's financial statements.\n\n\n6. Review proposed major changes to the\nCompany's auditing and accounting principles and practices that\nare brought to the attention of the Audit Committee by independent\nauditors, internal auditors or management.\n\n\nB-1\n\n\n\n\n\n\n\n\n\n\n7. Recommend to the\nBoard of Directors the adoption of a Code of Business Conduct, setting\nforth rules and standards for the conduct of the Company's\nbusiness, including without limitation, internal control procedures,\nproper accounting and regulatory compliance procedures, conflict of\ninterest, confidentiality and insider trading requirements and a\nmechanism and process for reporting, investigating and resolving\ncomplaints regarding Code violations, and monitor the Company's\nperformance under such Code and suggest any applicable modifications to\nsuch Code.\n\n\n8. Confirm and assure the\nindependence of the independent auditors by:\n\n\na. Obtaining from the independent auditors a\nformal written statement delineating all relationships between the\nindependent auditors and the Company, consistent with Independence\nStandards Board Standard 1.\n\n\nb. Actively\nengaging in a dialogue with the independent auditors with respect to\nany disclosed relationships or services that may impact the objectivity\nand independence of the independent auditors.\n\n\nc. Taking appropriate action to oversee the\nindependence of the independent auditors.\n\n\n9. Review the performance of the independent\nauditors and, if so determined by the Audit Committee, replace the\nindependent auditors.\n\n\n10. Review accounting\nand financial human resources and succession planning with the Company,\nand the appointment and replacement of the senior internal auditing\nexecutive, if any.\n\n\n11. Review any\nsignificant reports to management prepared by the internal auditing\ndepartment, if any, and management's responses.\n\n\n12. Meet with the independent auditors prior to\nthe audit to review the planning and staffing of the audit.\n\n\n13. Discuss with the independent auditors the\nmatters required to be discussed by Statements on Auditing Standards\nNos. 61 and 90 relating to the conduct of the audit.\n\n\n14. Review with the independent auditors any\nmanagement letter provided by the auditors and management's\nresponse to that letter.\n\n\n15. Prepare and/or\nreview the report required by the rules of the Securities and Exchange\nCommission to be included in the Company's annual proxy\nstatement.\n\n\n16. Review the Company's\ninternal controls and policies and procedures regarding compliance with\napplicable laws and regulations and monitor the Company's\ncompliance with the Company's Code of Business Conduct and\noversee the Company's investigation and response to complaints of\nCode violations.\n\n\n17. Review with counsel\nlegal matters that are brought to the Audit Committee's attention\nand that may have a material impact on the financial statements, the\nCompany's compliance policies and material reports or inquiries\nreceived from regulatory bodies.\n\n\n18. Meet\nat least annually with the chief financial officer, the senior internal\nauditing executive, if any, and the independent auditor in separate\nexecutive sessions.\n\n\nPowers\n\n\nThe Audit Committee shall\nhave the power to appoint, compensate and replace the Company's\nindependent auditors, to approve audits, accounting policies, financial\ndisclosures and SEC filings, to adopt and modify a Company Code of\nBusiness Conduct and other internal control and compliance policies,\nand to conduct or authorize investigations into any matters within the\ncommittee's scope of responsibilities. The Audit Committee shall\nbe empowered to retain independent counsel, accountants, or others to\nassist it in the conduct of any investigation. The Audit Committee may\nask members of management or others to attend its meetings and provide\npertinent information as necessary.\n\n\nB-2\n\n\n\n\n\n\n\n\n\n\nRelationship with Auditors and Board of\nDirectors\n\n\nThe Company's independent auditors are\nultimately accountable to the Board of Directors of the Company and to\nthe Audit Committee, as representatives of the stockholders of the\nCompany. The Board of Directors and the Audit Committee, as\nrepresentatives of the Company's stockholders, have ultimate\nauthority and responsibility to select, evaluate, and, where\nappropriate, replace the independent auditors. While the Audit\nCommittee has the responsibilities and powers set forth in this\nCharter, it is not the duty of the Audit Committee to plan or conduct\naudits or to determine that the Company's financial statements\nare complete and accurate and are in accordance with generally accepted\naccounting principles. This is the responsibility of management and\nindependent auditors. Nor is it the duty of the Audit Committee to\nconduct investigations, to resolve disagreements, if any, between\nmanagement and independent auditors or to assure compliance with laws\nand regulations and the Company's code of conduct.\n\n\nAmended: May 4, 2004\n\n\nB-3\n\n\n\n\n\n\n\n\n\n\nExhibit\nC\n\n\nPROPOSED AMENDMENT TO THE 1996 STOCK OPTION PLAN, AS LAST\nAMENDED\n\n AND RESTATED ON APRIL 23, 2001\n\n\nThe Strayer\nEducation, Inc. 1996 Stock Option Plan (the\n\"Plan\") is hereby amended to (i) increase the\nnumber of shares of Company Common Stock reserved for issuance\nthereunder by 500,000 shares (increasing the existing limit for the\nentire term of the plan since 1996 until it expires from 2,500,000\nshares to 3,000,000 shares), (ii) to extend the term of the Plan from\n2011 to 2020, and (iii) to make certain other clarifying revisions of\nthe Plan, effective as of the date of adoption (the\n\"Adoption Date\") of this Amendment by the\nBoard of Directors of Strayer Education, Inc. (the\n\"Corporation\"), but subject to approval of\nthis Amendment by the stockholders of the Corporation at the May 2005\nAnnual Meeting, as provided below:\n\n\n\n\n \n \n\n\n\n\n1. \nSection\n3 of the Plan is hereby amended as follows: \n\n\n\n\n\n\n \n \n\n\n\n\n \nThe existing reference to the aggregate limit of\n\"2,500,000 shares\" that may be issued\npursuant to awards under the Plan in Section 3 is hereby amended to\nread \"3,000,000 shares\", and the clause\n\"provided further that no more than twenty percent\n(20%) of the shares of stock may be issued pursuant to the grant\nof \"Restricted Stock\" is hereby deleted. \n\n\n\n\n\n\n \n \n\n\n\n\n2. \nSection 5.2 of the Plan is hereby amended as\nfollows: \n\n\n\n\n\n\n \n \n\n\n\n\n \nThe existing reference to a Plan\ntermination date of \"April 23, 2011\" is\namended to read \"April 23, 2020\". \n\n\n\n\n\n\n \n \n\n\n\n\n3. \nSection 19 of the Plan is hereby amended by\nadding a new sentence at the end to read as\nfollows: \n\n\n\n\n\n\n \n \n\n\n\n\n \n\"In addition, no\namendment or modification may be made to an outstanding option or a\nstock appreciation right (\"SAR\") which\nreduces the option exercise price or SAR exercise price, either by\nlowering the option exercise price or SAR exercise price or by\ncanceling the outstanding option or SAR and granting a replacement\noption or SAR with a lower exercise price without the approval of the\nstockholders of the Company, provided, that, this shall not preclude\nthe appropriate adjustments to outstanding options and SARs in\nconnection with a corporate transaction such as a stock split. \n\n\n\n\n\n\n \n \n\n\n\n\n4. \nThe Plan shall otherwise be unchanged by this\nAmendment. \n\n\n\n\n\n\n \n \n\n\n\n\n5. \nThis Amendment is adopted\nsubject to approval within one year of the Adoption Date at a meeting\nof the Corporation's stockholders at which a quorum is present by\na vote of a majority of the shares present at such meeting in person or\nby proxy and entitled to vote thereon. If the stockholders fail to\napprove this Amendment within one year of the Adoption Date, no awards\nmay be granted under the Plan covering shares of stock in excess of the\nnumber permitted under the Plan as in effect before the Adoption Date\nand the term of the Plan will expire at the termination date as in\neffect before the Adoption Date. \n\n\n\n\n* * *\n\n\nThe foregoing\nAmendment to the Plan was duly adopted and approved by the Board of\nDirectors of the Corporation by resolution at a meeting held on\nFebruary 15, 2005, subject to approval of the Amendment by stockholders\nof the Corporation at the May 2005 Annual Meeting.\n\n\n\nSecretary\n\n\nThe foregoing Amendment to the Plan was duly adopted by the\nstockholders of the Corporation at a meeting held on May 3, 2005.\n\n\n\nSecretary\n\n\nC-1\n\n\n\n\n\n\n\n\n\n\nEXHIBIT\nD\n\n\nAMENDED\n\n STRAYER EDUCATION, INC.\n\nSTOCK OPTION PLAN\n\n April 23, 2001\n\n\nD-1\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \n \n \nPage \n\n\n\n\n 1. \n \nPURPOSE \n \n \nD-3 \n \n\n\n\n\n 2. \n \nADMINISTRATION \n \n \nD-3 \n \n\n\n\n\n \n \n2.1.\nBoard \n \n \nD-3 \n \n\n\n\n\n \n \n2.2.\nCommittee \n \n \nD-3 \n \n\n\n\n\n \n \n2.3. No\nLiability \n \n \nD-3 \n \n\n\n\n\n 3. \n \nSTOCK \n \n \nD-4 \n \n\n\n\n\n 4. \n \nELIGIBILITY \n \n \nD-4 \n \n\n\n\n\n 5. \n \nEFFECTIVE\nDATE AND TERM \n \n \nD-4 \n \n\n\n\n\n \n \n5.1. Effective\nDate \n \n \nD-4 \n \n\n\n\n\n \n \n5.2.\nTerm \n \n \nD-4 \n \n\n\n\n\n 6. \n \nGRANT OF\nOPTIONS \n \n \nD-4 \n \n\n\n\n\n \n \n6.1.\nGeneral \n \n \nD-4 \n \n\n\n\n\n \n \n6.2. Eligible Directors\n(Non-Employee\nDirectors) \n \n \nD-4 \n \n\n\n\n\n 7. \n \nLIMITATION\nON INCENTIVE STOCK\nOPTIONS \n \n \nD-5 \n \n\n\n\n\n 8. \n \nOPTION\nAGREEMENTS \n \n \nD-5 \n \n\n\n\n\n 9. \n \nOPTION\nPRICE \n \n \nD-5 \n \n\n\n\n\n10. \n \nTERM AND EXERCISE OF\nOPTIONS \n \n \nD-5 \n \n\n\n\n\n \n \n10.1.\nTerm \n \n \nD-5 \n \n\n\n\n\n \n \n10.2. Exercise by\nOptionee \n \n \nD-6 \n \n\n\n\n\n \n \n10.3. Option Period\nand Limitations on\nExercise \n \n \nD-6 \n \n\n\n\n\n \n \n10.4. Method of\nExercise \n \n \nD-6 \n \n\n\n\n\n11. \n \nTRANSFERABILITY OF\nOPTIONS \n \n \nD-7 \n \n\n\n\n\n12. \n \nTRANSFERABILITY OF\nSTOCK PURCHASED PURSUANT TO INCENTIVE\n\nSTOCK\nOPTION \n \n \nD-7 \n \n\n\n\n\n13. \n \nTERMINATION OF\nEMPLOYMENT \n \n \nD-7 \n \n\n\n\n\n14. \n \nRIGHTS IN THE\nEVENT OF DEATH OR\nDISABILITY \n \n \nD-7 \n \n\n\n\n\n \n \n14.1.\nDeath \n \n \nD-7 \n \n\n\n\n\n \n \n14.2.\nDisability \n \n \nD-8 \n \n\n\n\n\n15. \n \nRESTRICTED\nSTOCK \n \n \nD-8 \n \n\n\n\n\n \n \n15.1. Grant of Restricted\nStock \n \n \nD-8 \n \n\n\n\n\n \n \n15.2.\nRestrictions \n \n \nD-8 \n \n\n\n\n\n \n \n15.3. Restricted\nStock Certificates \n \n \nD-8 \n \n\n\n\n\n \n \n15.4. Rights\nof Holders of Restricted\nStock \n \n \nD-8 \n \n\n\n\n\n \n \n15.5. Termination of\nEmployment \n \n \nD-9 \n \n\n\n\n\n \n \n15.6. Purchase of\nRestricted Stock \n \n \nD-9 \n \n\n\n\n\n \n \n15.7. Delivery\nof Stock \n \n \nD-9 \n \n\n\n\n\n16. \n \nUSE OF\nPROCEEDS \n \n \nD-9 \n \n\n\n\n\n17. \n \nSECURITIES\nLAWS \n \n \nD-9 \n \n\n\n\n\n18. \n \nEXCHANGE ACT: RULE\n16b-3 \n \n \nD-10 \n \n\n\n\n\n19. \n \nAMENDMENT AND\nTERMINATION \n \n \nD-10 \n \n\n\n\n\n20. \n \nEFFECT OF\nCHANGES IN\nCAPITALIZATION \n \n \nD-10 \n \n\n\n\n\n \n \n20.1. Changes\nin Stock \n \n \nD-10 \n \n\n\n\n\n \n \n20.2. Reorganization\nWith Corporation\nSurviving \n \n \nD-10 \n \n\n\n\n\n \n \n20.3. Other\nReorganizations; Sale of Assets or\nStock \n \n \nD-11 \n \n\n\n\n\n \n \n20.4.\nAdjustments \n \n \nD-11 \n \n\n\n\n\n \n \n20.5. No\nLimitations on\nCorporation \n \n \nD-11 \n \n\n\n\n\n21. \n \nWITHHOLDING \n \n \nD-11 \n \n\n\n\n\n22. \n \nDISCLAIMER\nOF\nRIGHTS \n \n \nD-11 \n \n\n\n\n\n23. \n \nNONEXCLUSIVITY \n \n \nD-12 \n \n\n\n\n\n \n\n\n\n\n\n\n\nD-2\n\n\n\n\n\n\n\n\n\n\nAMENDED\n\n\nSTRAYER\nEDUCATION, INC.\n\n\n1996 STOCK OPTION\nPLAN\n\n\nSTRAYER EDUCATION,\nINC., a Maryland corporation (the\n\"Corporation\"), sets forth herein the terms\nof the 1996 Stock Option Plan, as amended as of April 23, 2001 (the\n\"Plan\") as follows:\n\n\n1. PURPOSE\n\n\nThe Plan is intended to advance the\ninterests of the Corporation by providing eligible individuals (as\ndesignated pursuant to Section 4 hereof) an opportunity to acquire or\nincrease a proprietary interest in the Corporation, which thereby will\ncreate a stronger incentive to expend maximum effort for the growth and\nsuccess of the Corporation and its subsidiaries and will encourage such\neligible individuals to remain in the employ of the Corporation or that\nof one or more of its subsidiaries. Each stock option granted under the\nPlan (an \"Option\") is intended to be an\n\"incentive stock option\"\n(\"Incentive Stock Option\") within the meaning\nof Section 422 of the Internal Revenue Code of 1986, or the\ncorresponding provision of any subsequently enacted tax statute, as\namended from time to time (the \"Code\"),\nexcept (a) to the extent that any such Option would exceed the\nlimitations set forth in Section 7 hereof, (b) for Options specifically\ndesignated at the time of grant as not being \"incentive\nstock options\" and (c) for Options granted to directors\nwho are not officers or other employees of the Corporation or any\nsubsidiary.\n\n\n2. ADMINISTRATION\n\n\n2.1. Board\n\n\nThe Plan shall be administered by the board\nof directors of the Corporation (the\n\"Board\"), which shall have the full power and\nauthority to take all actions and to make all determinations required\nor provided for under the Plan or any Award granted or Award Agreement\nentered into hereunder and all such other actions and determinations\nnot inconsistent with the specific terms and provisions of the Plan\ndeemed by the Board to be necessary or appropriate to the\nadministration of the Plan or any Award granted or Award Agreement\nentered into hereunder. The interpretation and construction by the\nBoard of any provision of the Plan or of any Award granted or Award\nAgreement entered into hereunder shall be final and conclusive. For\npurposes of the Plan an Award shall mean the grant of an Option or\nRestricted Stock and an Award Agreement shall mean an Option Agreement\n(as defined in Section 8) or a Restricted Stock Agreement (as defined\nin Section 15).\n\n\n2.2. Committee\n\n\nThe Board may from\ntime to time appoint a Stock Option Committee (the\n\"Committee\") which may, in the discretion of\nthe Board, be the Compensation Committee of the Board. The Board, in\nits sole discretion, may provide that the role of the Committee shall\nbe limited to making recommendations to the Board concerning any\ndeterminations to be made and actions to be taken by the Board pursuant\nto or with respect to the Plan, or the Board may delegate to the\nCommittee such powers and authorities related to the administration of\nthe Plan, as set forth in Section 2.1 hereof, as the Board shall\ndetermine, consistent with the Certificate of Incorporation and Bylaws\nof the Corporation and applicable law. In the event that the Plan or\nany Award granted or Award Agreement entered into hereunder provides\nfor any action to be taken by or determination to be made by the Board,\nsuch action may be taken by or such determination may be made by the\nCommittee if the power and authority to do so has been delegated to the\nCommittee by the Board as provided for in this Section 2.2. Unless\notherwise expressly determined by the Board, any such action or\ndetermination by the Committee shall be final and conclusive.\n\n\n2.3. No Liability\n\n\nNo member of the Board or of the\nCommittee shall be liable for any action or determination made, or any\nfailure to take or make an action or determination, in good faith with\nrespect to the Plan or any Award granted or Award Agreement entered\ninto hereunder.\n\n\nD-3\n\n\n\n\n\n\n\n\n\n\n3. STOCK\n\n\nThe stock that may\nbe issued pursuant to Awards granted under the Plan shall be shares of\nCommon Stock of the Corporation (the\n\"Stock\"), which shares may be treasury shares\nor authorized but unissued shares. The number of shares of Stock that\nmay be issued pursuant to Awards granted under the Plan shall not\nexceed in the aggregate two million five hundred thousand (2,500,000)\nshares of Stock, which number of shares is subject to adjustment as\nprovided in Section 20 hereof; provided further that no more than\ntwenty percent (20%) of the shares of Stock may be issued\npursuant to the grant of Restricted Stock. If any Award is forfeited,\nexpires, terminates or is terminated for any reason prior to exercise\nin full, the shares of Stock that were subject to the unexercised or\nforfeited portion of such Award shall be available for future Awards\ngranted under the Plan.\n\n\n4. ELIGIBILITY\n\n\nAwards may\nbe granted under the Plan to any: (i) officer or employee of the\nCorporation or any \"subsidiary corporation\"\nthereof within the meaning of Section 424(f) of the Code (a\n\"Subsidiary\"), (ii) director (including a\nnon-employee director), (iii) consultant, or (iv) other person\ndetermined to be in the best interests of the Corporation as the Board\nshall determine and designate from time to time prior to expiration or\ntermination of the Plan. An individual may hold more than one Award,\nsubject to such restrictions as are provided herein.\n\n\n5. EFFECTIVE DATE AND TERM\n\n\n5.1. Effective\nDate\n\n\nThe Plan shall become effective as of the date of adoption\nby the Board, subject to stockholders' approval of the Plan\nwithin one year of such effective date; provided, however, that\nupon approval of the Plan by the stockholders of the Corporation, all\nAwards granted under the Plan on or after the effective date shall be\nfully effective as if the stockholders of the Corporation had approved\nthe Plan on the effective date. If the stockholders fail to approve the\nPlan within one year of such effective date, any Awards granted\nhereunder shall be null, void and of no effect.\n\n\n5.2. Term\n\n\nThe Plan shall terminate on April 23,\n2011.\n\n\n6. GRANT OF OPTIONS\n\n\n6.1. General\n\n\nThe Plan shall become effective as of the date of adoption by the\nBoard. Subject to the terms and conditions of the Plan, the Board may,\nat any time and from time to time prior to the date of termination of\nthe Plan, grant to such eligible individuals as the Board may determine\n(\"Optionees\") Options to purchase such number\nof shares of the Stock on such terms and conditions as the Board may\ndetermine, including any terms or conditions which may be necessary to\nqualify such Options as \"incentive stock\noptions\" under Section 422 of the Code. Without limiting\nthe foregoing, the Board may at any time, with the consent of the\nOptionee, amend the terms of outstanding Options or issue new Options\nin exchange for the surrender and cancellation of outstanding Options.\nThe date on which the Board approves the grant of an Option (or such\nlater date as is specified by the Board) shall be considered the date\non which such Option is granted. The maximum number of shares of Stock\nsubject to Options that can be awarded under the Plan to any person in\na single calendar year is 350,000 shares; which number shall be subject\nto adjustment in accordance with Section 20.\n\n\n6.2. Eligible\nDirectors (Non-Employee Directors)\n\n\nFor purposes of this Section\n6.2 an \"Eligible Director\" means a person\nelected to serve on the Board at or after the 2001 meeting of the\nCorporation's stockholders who is not an officer or other\nsalaried \n\n\nD-4\n\n\n\n\n\n\n\n\n\n\n\nemployee of the Corporation or any Subsidiary;\nprovided, that, partners and employees of preferred stockholders\nof the Corporation shall not be Eligible Directors. Each Eligible\nDirector shall be granted an Option to purchase 10,000 shares on the\n10th trading day after the date of the first annual meeting of the\nCorporation's stockholders following the Eligible\nDirector's initial election to the Board. This Award of 10,000\nshares shall be made automatically and shall not require any further\nBoard action. The Option Price of this Award shall be the average of\nthe closing prices of the Corporation's Stock for the first 10\ntrading days after the annual meeting multiplied by the sum of one (1)\nplus the interest rate on five year treasury notes applicable on that\nday. The foregoing number of shares shall be subject to adjustment\npursuant to Section 20 below.\n\n\n7. LIMITATION ON INCENTIVE\nSTOCK OPTIONS\n\n\nAn Option (other than an Option described in\nSection 1(b) hereof) shall constitute an Incentive Stock Option only to\nthe extent that the aggregate fair market value (determined at the time\nthe Option is granted) of the Stock with respect to which Incentive\nStock Options are exercisable for the first time by any Optionee during\nany calendar year (under the Plan and all other plans of the\nOptionee's employer corporation and its parent and subsidiary\ncorporations within the meaning of Section 422(d) of the Code) does not\nexceed $100,000. This limitation shall be applied by taking Options\ninto account in the order in which such Options were granted.\n\n\n8. OPTION AGREEMENTS\n\n\nAll Options granted pursuant to\nthe Plan shall be evidenced by written agreements (\"Option\nAgreements\") to be executed by the Corporation and the\nOptionee, in such form or forms as the Board shall from time to time\ndetermine. Option Agreements covering Options granted from time to time\nor at the same time need not contain similar provisions; provided,\nhowever, that all such Option Agreements shall comply with all\nterms of the Plan and any applicable employment agreement.\n\n\n9. OPTION PRICE\n\n\nThe purchase price of each share of\nthe Stock subject to an Option (the \"Option\nPrice\") shall be fixed by the Board, shall be not less\nthan the fair market value of a share of the Stock covered by the\nOption and shall be stated in each Option Agreement. In the case of an\nOption that is intended to constitute an Incentive Stock Option, the\nOption Price shall be not less than the fair market value of a share of\nthe Stock covered by the Option; provided, however, that in the\nevent the Optionee would otherwise be ineligible to receive an\nIncentive Stock Option by reason of the provisions of Sections\n422(b)(6) and 424(d) of the Code (relating to stock ownership of more\nthan 10 percent), the Option Price of an Option which is intended to be\nan Incentive Stock Option shall be not less than the greater of par\nvalue or 110 percent of the fair market value of a share of the Stock\ncovered by the Option at the time such Option is granted.\n\n\nIn the\nevent that the Stock is listed on an established national or regional\nstock exchange, is admitted to quotation on the National Association of\nSecurities Dealers Automated Quotation System, or is publicly traded in\nan established securities market, in determining the fair market value\nof the Stock, the Board shall use the closing price of the Stock on\nsuch exchange or system or in such market (the highest such closing\nprice if there is more than one such exchange or market) on the date\nthe Option is granted (or, if there is no such closing price, then the\nBoard shall use the mean between the highest bid and lowest asked\nprices or between the high and low prices on such date), or, if no sale\nof the Stock has been made on such day, on the next preceding day on\nwhich any such sale shall have been made.\n\n\n10. TERM AND\nEXERCISE OF OPTIONS\n\n\n10.1. Term\n\n\nEach Option\ngranted under the Plan shall terminate and all rights to purchase\nshares thereunder shall cease upon the expiration of 10 years from the\ndate such Option is granted, or on such date prior thereto\n\n\n\nD-5\n\n\n\n\n\n\n\n\n\n\n\nas may be fixed by the Board and stated in the\nOption Agreement relating to such Option; provided, however,\nthat in the event the Optionee would otherwise be ineligible to\nreceive an Incentive Stock Option by reason of the provisions of\nSections 422(b)(6) and 424(d) of the Code (relating to stock ownership\nof more than 10 percent), an Option granted to such Optionee which is\nintended to be an Incentive Stock Option shall in no event be\nexercisable after the expiration of five years from the date it is\ngranted.\n\n\n10.2. Exercise by Optionee\n\n\nOnly the\nOptionee receiving an Option (or, in the event of the Optionee's\nlegal incapacity or incompetency, the Optionee's guardian or\nlegal representative, and in the case of the Optionee's death,\nthe Optionee's estate) may exercise the Option.\n\n\n10.3. Option Period and Limitations on Exercise\n\n\nEach\nOption granted under the Plan shall be exercisable in whole or in part\nat any time and from time to time over a period commencing on or after\nthe date of grant of the Option and ending upon the expiration or\ntermination of the Option, as the Board shall determine and set forth\nin the Option Agreement relating to such Option. Without limitation of\nthe foregoing, the Board, subject to the terms and conditions of the\nPlan, may in its sole discretion provide that an Option may not be\nexercised in whole or in part for any period or periods of time during\nwhich such Option is outstanding as the Board shall determine and set\nforth in the Option Agreement relating to such Option. Any such\nlimitation on the exercise of an Option contained in any Option\nAgreement may be rescinded, modified or waived by the Board, in its\nsole discretion, at any time and from time to time after the date of\ngrant of such Option, so as to accelerate the time at which the Option\nmay be exercised. Notwithstanding any other provisions of the Plan, no\nOption shall be exercisable in whole or in part prior to the date the\nPlan is approved by the stockholders of the Corporation as provided in\nSection 5.1 hereof.\n\n\n10.4. Method of Exercise\n\n\nAn\nOption that is exercisable hereunder may be exercised by delivery to\nthe Corporation on any business day, at its principal office addressed\nto the attention of the Board, of written notice of exercise, which\nnotice shall specify the number of shares for which the Option is being\nexercised, and shall be accompanied by payment in full of the Option\nPrice of the shares for which the Option is being exercised. Payment of\nthe Option Price for the shares of Stock purchased pursuant to the\nexercise of an Option shall be made, as determined by the President and\nset forth in the Option Agreement pertaining to an Option, (a) in cash\nor by certified check payable to the order of the Corporation; (b)\nthrough the tender to the Corporation of shares of Stock, which shares\nshall be valued, for purposes of determining the extent to which the\nOption Price has been paid thereby, at their fair market value\n(determined in the manner described in Section 9 hereof )\n(\"Fair Market Value\") on the date of\nexercise; or (c) by a combination of the methods described in Sections\n10.4(a) and 10.4 (b) hereof; provided, however, that the Board\nmay in its discretion impose and set forth in the Option Agreement\npertaining to an Option such limitations or prohibitions on the use of\nshares of Stock to exercise Options as it deems appropriate. Payment in\nfull of the Option Price need not accompany the written notice of\nexercise provided the notice directs that the Stock certificate or\ncertificates for the shares for which the Option is exercised be\ndelivered to a licensed broker acceptable to the Corporation as the\nagent for the individual exercising the Option and, at the time such\nStock certificate or certificates are delivered, the broker tenders to\nthe Corporation cash (or cash equivalents acceptable to the\nCorporation) equal to the Option Price; provided, further, that\nadditional shares of Stock may be withheld upon a broker-assisted\ncashless exercise for the purpose of paying withholding taxes in\naccordance with Section 21. An attempt to exercise any Option granted\nhereunder other than as set forth above shall be invalid and of no\nforce and effect.\n\n\nPromptly after the exercise of an Option and\nthe payment in full of the Option Price of the shares of Stock covered\nthereby, the individual exercising the Option shall be entitled to the\nissuance of a Stock certificate or certificates evidencing such\nindividual's ownership of such shares. A separate Stock\ncertificate or certificates shall be issued for any shares purchased\npursuant to the exercise of an Option \n\n\nD-6\n\n\n\n\n\n\n\n\n\n\n\nwhich is an Incentive Stock Option, which\ncertificate or certificates shall not include any shares which were\npurchased pursuant to the exercise of an Option which is not an\nIncentive Stock Option. An individual holding or exercising an Option\nshall have none of the rights of a stockholder until the shares of\nStock covered thereby are fully paid and issued to such individual and,\nexcept as provided in Section 20 hereof, no adjustment shall be made\nfor dividends or other rights for which the record date is prior to the\ndate of such issuance.\n\n\n11. TRANSFERABILITY OF OPTIONS\n\n\nNo Option shall be assignable or transferable by the Optionee to\nwhom it is granted, other than by will or the laws of descent and\ndistribution.\n\n\n\n\n \n \n\n\n\n\n12. \nTRANSFERABILITY OF\nSTOCK PURCHASED PURSUANT TO INCENTIVE STOCK OPTION \n\n\n\n\nAn Optionee\nshall be required to give notice to the Corporation if Stock acquired\npursuant to an Incentive Stock Option is sold, pledged, assigned,\ntransferred or otherwise disposed of by the Optionee within two years\nfrom the date of grant of such Incentive Stock Option or within one\nyear after the transfer of such Stock to the Optionee; provided,\nhowever, that a transfer to a trustee, receiver, or other fiduciary\nin any insolvency proceeding, as described in Section 422(c)(3) of the\nCode shall not be deemed to be such a disposition.\n\n\n13. TERMINATION OF EMPLOYMENT\n\n\nThe Board may provide,\nby inclusion of appropriate language in any Option Agreement or\napplicable employment agreement, that an Optionee may (subject to the\ngeneral limitations on exercise set forth in Section 10.3 hereof), in\nthe event of termination of employment of the Optionee with the\nCorporation or a Subsidiary, exercise an Option, in whole or in part,\nat any time subsequent to such termination of employment and prior to\ntermination of the Option pursuant to Section 10.2 hereof, either\nsubject to or without regard to any installment limitation on exercise\nimposed pursuant to Section 10.3 hereof, as the Board, in its sole and\nabsolute discretion, shall determine and set forth in the Option\nAgreement. Whether a leave of absence or leave on military or\ngovernment service shall constitute a termination of employment for\npurposes of the Plan shall be determined by the Board, which\ndetermination shall be final and conclusive. For purposes of the Plan\nonly and unless otherwise stated in the applicable Award Agreement, an\nOptionee's change in position or duties shall not result in\ninterrupted or terminated employment, so long as such Grantee continues\nto be an employee, officer, director of, or consultant to the\nCorporation or a Subsidiary.\n\n\n14. RIGHTS IN THE EVENT OF\nDEATH OR DISABILITY\n\n\n14.1. Death\n\n\nIf an Optionee\ndies while employed by the Corporation or a Subsidiary or within the\nperiod following the termination of employment during which the Option\nis exercisable under Section 13 or 14.2 hereof, the executors,\nadministrators, legatees or distributees of such Optionee's\nestate shall have the right (subject to the general limitations on\nexercise set forth in Section 10.3 hereof), at any time within one year\nafter the date of such Optionee's death and prior to termination\nof the Option pursuant to Section 10.1 hereof, to exercise any Option\nheld by such Optionee at the date of such Optionee's death, to\nthe extent such Option was exercisable immediately prior to such\nOptionee's death; provided, however, that the Board may\nprovide by inclusion of appropriate language in any Option Agreement or\napplicable employment agreement that, in the event of the death of an\nOptionee, the executors, administrators, legatees or distributees of\nsuch Optionee's estate may exercise an Option (subject to the\ngeneral limitations on exercise set forth in Section 10.3 hereof), in\nwhole or in part, at any time subsequent to such Optionee's death\nand prior to termination of the Option pursuant to Section 10.1 hereof,\neither subject to or without regard to any installment limitation on\nexercise imposed pursuant to Section 10.3 hereof, as the Board, in its\nsole and absolute discretion, shall determine and set forth in the\nOption Agreement.\n\n\nD-7\n\n\n\n\n\n\n\n\n\n\n14.2. Disability\n\n\nIf an\nOptionee terminates employment with the Corporation or a Subsidiary by\nreason of the \"permanent and total\ndisability\" (within the meaning of Section 22(e) (3) of\nthe Code) of such Optionee, then such Optionee shall have the right\n(subject to the general limitations on exercise set forth in Section\n10.3 hereof), at any time within one year after such termination of\nemployment and prior to termination of the Option pursuant to Section\n10.1 hereof, to exercise, in whole or in part, any Option held by such\nOptionee at the date of such termination of employment, to the extent\nsuch Option was exercisable immediately prior to such termination of\nemployment; provided, however, that the Board may provide, by\ninclusion of appropriate language in any Option Agreement or applicable\nemployment agreement, that an Optionee may (subject to the general\nlimitations on exercise set forth in Section 10.3 hereof), in the event\nof the termination of employment of the Optionee with the Corporation\nor a Subsidiary by reason of the \"permanent and total\ndisability\" (within the meaning of Section 22(e)(3) of the\nCode) of such Optionee, exercise an Option, in whole or in part, at any\ntime subsequent to such termination of employment and prior to\ntermination of the Option pursuant to Section 10.1 hereof, either\nsubject to or without regard to any installment limitation on exercise\nimposed pursuant to Section 10.3 hereof, as the Board, in its sole and\nabsolute discretion, shall determine and set forth in the Option\nAgreement. Whether a termination of employment is to be considered by\nreason of \"permanent and total disability\"\nfor purposes of the Plan shall be determined by the Board, which\ndetermination shall be final and conclusive.\n\n\n15. RESTRICTED STOCK\n\n\n15.1. Grant of Restricted\nStock\n\n\nThe Board may from time to time grant shares of Stock\nsubject to restrictions (\"Restricted Stock\")\nto persons eligible to receive Awards under Section 4 hereof\n(\"Grantees\"), subject to such restrictions,\nconditions and other terms, if any, as the Board may determine. Awards\nof Restricted Stock may be made for no consideration (other than par\nvalue of the shares which is deemed paid by services already\nrendered).\n\n\n15.2. Restrictions.\n\n\nAt the time a grant\nof Restricted Stock is made, the Board may, in its sole discretion,\nestablish a period of time (a \"restricted\nperiod\") applicable to such Restricted Stock. Each Award\nof Restricted Stock may be subject to a different restricted period.\nThe Board may, in its sole discretion, at the time a grant of\nRestricted Stock is made, prescribe restrictions in addition to or\nother than the expiration of the restricted period, including the\nsatisfaction of corporate or individual performance objectives.\nRestricted Stock may not be sold, transferred, assigned, pledged or\notherwise encumbered or disposed of during the restricted period or\nprior to the satisfaction of any other restrictions prescribed by the\nBoard with respect to such Restricted Stock.\n\n\n15.3. Restricted Stock Certificates.\n\n\nThe Corporation\nshall issue, in the name of each Grantee to whom Restricted Stock has\nbeen granted, stock certificates representing the total number of\nshares of Restricted Stock granted to the Grantee, as soon as\nreasonably practicable after the Grant Date. The Board may provide in\nan Award Agreement that either (i) the Secretary of the Corporation\nshall hold such certificates for the Grantee's benefit until such\ntime as the Restricted Stock is forfeited to the Corporation or the\nrestrictions lapse, or (ii) such certificates shall be delivered to the\nGrantee, provided, however, that such certificates shall bear a\nlegend or legends that comply with the applicable securities laws and\nregulations and makes appropriate reference to the restrictions imposed\nunder the Plan and the Award Agreement.\n\n\n15.4. Rights of\nHolders of Restricted Stock.\n\n\nUnless the Board otherwise\nprovides in an Award Agreement, holders of Restricted Stock shall have\nthe right to vote such Stock and the right to receive any dividends\ndeclared or paid with respect to such \n\n\nD-8\n\n\n\n\n\n\n\n\n\n\n\nStock. The Board may provide that any\ndividends paid on Restricted Stock must be reinvested in shares of\nStock, which may or may not be subject to the same vesting conditions\nand restrictions applicable to such Restricted Stock. All\ndistributions, if any, received by a Grantee with respect to Restricted\nStock as a result of any stock split, stock dividend, combination of\nshares, or other similar transaction shall be subject to the\nrestrictions applicable to the original Grant.\n\n\n15.5. Termination of Employment.\n\n\nUnless the Board\notherwise provides in an Award Agreement, in applicable employment\nagreement, or in writing after the Award Agreement is issued, upon the\ntermination of a Grantee's employment with the Corporation or a\nSubsidiary, any shares Restricted Stock held by such Grantee that have\nnot vested, or with respect to which all applicable restrictions and\nconditions have not lapsed, shall immediately be deemed forfeited. Upon\nforfeiture of Restricted Stock, the Grantee shall have no further\nrights with respect to such Award, including but not limited to any\nright to vote Restricted Stock or any right to receive dividends with\nrespect to shares of Restricted Stock.\n\n\n15.6. Purchase of\nRestricted Stock.\n\n\nThe Grantee shall be required, to the extent\nrequired by applicable law, to purchase the Restricted Stock from the\nCorporation at a purchase price equal to the greater of (i) the\naggregate par value of the shares of Stock represented by such\nRestricted Stock or (ii) the purchase price, if any, specified in the\nAward Agreement relating to such Restricted Stock.\n\n\n15.7. Delivery of Stock.\n\n\nUpon the expiration or\ntermination of any restricted period and the satisfaction of any other\nconditions prescribed by the Board, the restrictions applicable to\nshares of Restricted Stock, and, unless otherwise provided in the Award\nAgreement, a stock certificate for such shares shall be delivered, free\nof all such restrictions, to the Grantee or the Grantee's\nbeneficiary or estate, as the case may be.\n\n\n16. USE OF\nPROCEEDS\n\n\nThe proceeds received by the Corporation from the sale\nof Stock pursuant to Options or Restricted Stock granted under the Plan\nshall constitute general funds of the Corporation.\n\n\n17. SECURITIES LAWS\n\n\nThe Corporation shall not be\nrequired to sell or issue any shares of Stock under any Award if the\nsale or issuance of such shares would constitute a violation by the\nindividual exercising the Award or by the Corporation of any provisions\nof any law or regulation of any governmental authority, including,\nwithout limitation, any federal or state securities laws or\nregulations. If at any time the Corporation shall determine, in its\ndiscretion, that the listing, registration or qualification of any\nshares subject to the Award upon any securities exchange or under any\nstate or federal law, or the consent of any government regulatory body,\nis necessary or desirable as a condition of, or in connection with, the\nissuance or purchase of shares, the Award may not be exercised in whole\nor in part unless such listing, registration, qualification, consent or\napproval shall have been effected or obtained free of any conditions\nnot acceptable to the Corporation, and any delay caused thereby shall\nin no way affect the date of termination of the Award. Specifically in\nconnection with the Securities Act of 1933, as amended (the\n\"Securities Act\"), upon exercise of any Award\nor the lapse of restrictions of any Award, unless a registration\nstatement under the Securities Act is in effect with respect to the\nshares of Stock covered by such Award, the Corporation shall not be\nrequired to sell or issue such shares unless the Corporation has\nreceived evidence satisfactory to the Corporation that the Optionee may\nacquire such shares pursuant to an exemption from registration under\nthe Securities Act. Any determination in this connection by the\nCorporation shall be final and conclusive. The Corporation may, but\nshall in no event be obligated to, register any securities covered\nhereby pursuant to the Securities Act. The Corporation shall not be\nobligated to take any affirmative action in order to cause the exercise\nof an Award or the issuance of \n\n\nD-9\n\n\n\n\n\n\n\n\n\n\n\nshares pursuant to an Award to comply with\nany law or regulation of any governmental authority. As to any\njurisdiction that expressly imposes the requirement that an Option\nshall not be exercisable unless and until the shares of Stock covered\nby such Option are registered or are subject to an available exemption\nfrom registration, the exercise of such Option (under circumstances in\nwhich the laws of such jurisdiction apply) shall be deemed conditioned\nupon the effectiveness of such registration or the availability of such\nan exemption.\n\n\n18. EXCHANGE ACT: RULE 16b-3\n\n\nDuring\nany time when the Corporation has a class of equity security registered\nunder Section 12 of the Securities Exchange Act of 1934 it is the\nintent of the Company that Awards pursuant to the Plan and the exercise\nof Options granted hereunder will qualify for the exemption provided by\nRule 16b-3 under the Exchange Act. To the extent that any provision of\nthe Plan or action by the Board does not comply with the requirements\nof Rule 16b-3, it shall be deemed inoperative to the extent permitted\nby law and deemed advisable by the Board, and shall not affect the\nvalidity of the Plan. In the event that Rule 16b-3 is revised or\nreplaced, the Board may exercise its discretion to modify this Plan in\nany respect necessary to satisfy the requirements of, or to take\nadvantage of any features of, the revised exemption or its\nreplacement.\n\n\n19. AMENDMENT AND TERMINATION\n\n\nThe\nBoard may, at any time and from time to time, amend, suspend or\nterminate the Plan as to any shares of Stock as to which Awards have\nnot been granted. The Corporation also may retain the right in an Award\nAgreement to cause a forfeiture of the shares or gain realized by an\nOptionee or Grantee on account of the Optionee taking actions in\n\"competition with the Corporation,\" as\ndefined in the applicable Award Agreement. Furthermore, the Corporation\nmay, in the Award Agreement, retain the right to annul the grant of an\nOption if the holder of such grant was an employee of the Corporation\nor a Subsidiary and is terminated \"for\ncause,\" as defined in the applicable Award Agreement.\nExcept as permitted under Section 20 hereof, no amendment, suspension\nor termination of the Plan shall, without the consent of the Optionee\nor Grantee, alter or impair rights or obligations under any Award\ntheretofore granted under the Plan.\n\n\n20. EFFECT OF CHANGES\nIN CAPITALIZATION\n\n\n20.1. Changes in Stock\n\n\nIf the\nnumber of outstanding shares of Stock is increased or decreased or\nchanged into or exchanged for a different number or kind of shares or\nother securities of the Corporation by reason of any recapitalization,\nreclassification, stock split-up, combination of shares, exchange of\nshares, stock dividend or other distribution payable in capital stock,\nor other increase or decrease in such shares effected without receipt\nof consideration by the Corporation, occurring after the effective date\nof the Plan, a proportionate and appropriate adjustment shall be made\nby the Corporation in the number and kind of shares for which Awards\nare outstanding, so that the proportionate interest of the Optionee or\nGrantee immediately following such event shall, to the extent\npracticable, be the same as immediately prior to such event. Any such\nadjustment in outstanding Options shall not change the aggregate Option\nPrice payable with respect to shares subject to the unexercised portion\nof the Option outstanding but shall include a corresponding\nproportionate adjustment in the Option Price per share.\n\n\n20.2. Reorganization With Corporation Surviving\n\n\nSubject to Section 20.3 hereof, if the Corporation shall be the\nsurviving corporation in any reorganization, merger or consolidation of\nthe Corporation with one or more other corporations, any Award\ntheretofore granted pursuant to the Plan shall pertain to and apply to\nthe securities to which a holder of the number of shares of Stock\nsubject to such Award would have been entitled immediately following\nsuch reorganization, merger or consolidation, with a corresponding\nproportionate adjustment of the Option Price per share so that the\naggregate Option Price thereafter shall be the same as the aggregate\nOption Price of the shares remaining subject to the Option immediately\nprior to such reorganization, merger or consolidation.\n\n\nD-10\n\n\n\n\n\n\n\n\n\n\n20.3. Other Reorganizations; Sale\nof Assets or Stock\n\n\nUpon the dissolution or liquidation of the\nCorporation, or upon a merger, consolidation or reorganization of the\nCorporation with one or more other corporations in which the\nCorporation is not the surviving corporation, or upon a sale of\nsubstantially all of the assets of the Corporation to another\ncorporation, or upon any transaction (including, without limitation, a\nmerger or reorganization in which the Corporation is the surviving\ncorporation) approved by the Board that results in any person or entity\n(other than persons who are holders of stock of the Corporation at the\ntime the Plan is approved by the Stockholders and other than an\nAffiliate) owning 80 percent or more of the combined voting power of\nall classes of stock of the Corporation, the Plan and all Options\noutstanding hereunder shall terminate, except to the extent provision\nis made in connection with such transaction for the assumption of the\nOptions theretofore granted, or for the substitution for such Options\nof new options covering the stock of a successor corporation, or a\nparent or subsidiary thereof, with appropriate adjustments as to the\nnumber and kinds of shares and exercise prices, in which event the Plan\nand Options theretofore granted shall continue in the manner and under\nthe terms so provided.\n\n\nIn the event of any such termination of\nthe Plan, each Optionee shall have the right (subject to the general\nlimitations on exercise set forth in Section 10.3 hereof and except as\notherwise specifically provided in the Option Agreement relating to\nsuch Option), immediately prior to the occurrence of such termination\nand during such period occurring prior to such termination as the Board\nin its sole discretion shall designate, to exercise such Option in\nwhole or in part, whether or not such Option was otherwise exercisable\nat the time such termination occurs, but subject to any additional\nlimitations that the Board may, in its sole discretion, include in any\nOption Agreement. The Board shall send written notice of an event that\nwill result in such a termination to all Optionees not later than the\ntime at which the Corporation gives notice thereof to its stockholders.\nUnless otherwise provided in the applicable Restricted Stock Agreement,\nall restrictions applicable to Awards of Restricted Stock shall lapse\nimmediately prior to the occurrence of an event described in the first\nparagraph of this Section 20.3.\n\n\n20.4. Adjustments\n\n\nAdjustments under this Section 20 relating to stock or securities of\nthe Corporation shall be made by the Board, whose determination in that\nrespect shall be final and conclusive. No fractional shares of Stock or\nunits of other securities shall be issued pursuant to any such\nadjustment, and any fractions resulting from any such adjustment shall\nbe eliminated in each case by rounding downward to the nearest whole\nshare or unit.\n\n\n20.5. No Limitations on Corporation\n\n\nThe grant of an Award pursuant to the Plan shall not affect or limit\nin any way the right or power of the Corporation to make adjustments,\nreclassifications, reorganizations or changes of its capital or\nbusiness structure or to merge, consolidate, dissolve or liquidate, or\nto sell or transfer all or any part of its business or assets.\n\n\n21. WITHHOLDING\n\n\nThe Corporation shall have the right\nto withhold, or require an Optionee or Grantee to remit to the\nCorporation, an amount sufficient to satisfy any applicable federal,\nstate or local withholding tax requirements imposed with respect to\nexercise of Options or lapse of restrictions or other taxable event\nwith respect to Restricted Stock. To the extent permissible under\napplicable tax, securities and other laws and authorized by the\nCorporation in the Award Agreement or at the time of such payment, the\nOptionee or Grantee may satisfy a tax withholding requirement by\ndirecting the Corporation to apply shares of Stock to which the\nOptionee or Grantee is entitled as a result of the exercise of an\nOption or grant of Restricted Stock to satisfy withholding requirements\nunder this Section 21.\n\n\n22. DISCLAIMER OF RIGHTS\n\n\nNo\nprovision in the Plan or in any Award granted or Award Agreement\nentered into pursuant to the Plan shall be construed to confer upon any\nindividual the right to remain in the employ of the Corporation\n\n\n\nD-11\n\n\n\n\n\n\n\n\n\n\n\nor any Subsidiary, or to interfere in any\nway with the right and authority of the Corporation or any Subsidiary\neither to increase or decrease the compensation of any individual at\nany time, or to terminate any employment or other relationship between\nany individual and the Corporation or any Subsidiary. The obligation of\nthe Corporation to pay any benefits pursuant to the Plan shall be\ninterpreted as a contractual obligation to pay only those amounts\ndescribed herein, in the manner and under the conditions prescribed\nherein. The Plan shall in no way be interpreted to require the\nCorporation to transfer any amounts to a third party trustee or\notherwise hold any amounts in trust or escrow for payment to any\nparticipant or beneficiary under the terms of the Plan.\n\n\n23. NONEXCLUSIVITY\n\n\nNeither the adoption of the Plan\nnor the submission of the Plan to the stockholders of the Corporation\nfor approval shall be construed as creating any limitations upon the\nright and authority of the Board to adopt such other incentive\ncompensation arrangements (which arrangements may be applicable either\ngenerally to a class or classes of individuals or specifically to a\nparticular individual or individuals) as the Board in its discretion\ndetermines desirable, including, without limitation, the granting of\nstock options or restricted stock otherwise than under the Plan.\n\n\n* * *\n\n\nThe Plan was duly adopted and approved by the\nBoard on July 24, 1996 and was duly approved by the stockholders of the\nCorporation on July 24, 1996. On March 16, 2001, the Board and\nstockholders of the Corporation approved an amendment to the Plan\nincreasing the maximum number of shares of Common Stock that may be\nissued pursuant to awards granted under the Plan to 2,500,000. The Plan\nwas further amended by the Board on April 23, 2001, and approved by the\nstockholders of the Corporation on May 16,\n2001.\n\n\nD-12\n\n\n\n\n\n\n\n\n\n\n"},"accession_number":{"kind":"string","value":"0000950136-05-001611"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":92,"cells":{"_id":{"kind":"string","value":"1020347_DEF 14A_2005_0001193125-05-059400"},"cik":{"kind":"string","value":"1020347"},"company":{"kind":"string","value":"COMMUNITYCORP"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-03-24T00:00:00","string":"2005-03-24T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-04-27T00:00:00","string":"2005-04-27T00:00:00"},"sic":{"kind":"string","value":"6021"},"state_of_inc":{"kind":"string","value":"NULL"},"state_location":{"kind":"string","value":"SC"},"fiscal_year_end":{"kind":"string","value":"1231"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1020347/0001193125-05-059400-index.html"},"htm_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1020347/000119312505059400/ddef14a.htm"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1020347/0001193125-05-059400.txt"},"filename":{"kind":"string","value":"1020347_DEF 14A_2005_0001193125-05-059400.htm"},"text":{"kind":"string","value":"\nDEF 14A\nddef14a.htm\nDEFINITIVE NOTICE AND PROXY STATEMENT\n\nDEFINITIVE NOTICE AND PROXY STATEMENT\nUNITED STATES \n\n SECURITIES AND EXCHANGE COMMISSION \n\n Washington, D.C. 20549 \n\n \n\n \n\n SCHEDULE 14A \n\n \n\n Proxy Statement Pursuant to\nSection 14(a) of the \n\n Securities Exchange Act of 1934 \n\n (Amendment No. ) \n\n \n\n \n\n Filed by the Registrant x Filed by a Party other than the\nRegistrant ¨\n\n \n\n Check the appropriate box: \n\n \n\n\n\n\n¨ \nPreliminary Proxy Statement \n\n \n\n\n\n\n¨ \nConfidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) \n\n \n\n\n\n\nx \nDefinitive Proxy Statement \n\n \n\n\n\n\n¨ \nDefinitive Additional Materials \n\n \n\n\n\n\n¨ \nSoliciting Material Pursuant to §240.14a-12 \n\n \n\n \n\n \n\n CommunityCorp \n\n (Name of Registrant as Specified In Its Charter)\n\n\n \n\n \n\n \n\n (Name of Person(s) Filing Proxy Statement, if other than the Registrant) \n\n \n\n \n\n Payment of Filing Fee (Check the appropriate box): \n\n \n\n\n\n\nx \nNo fee required. \n\n \n\n\n\n\n¨ \nFee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. \n\n \n\n\n\n\n \n(1) \nTitle of each class of securities to which transaction applies: \n\n \n\n\n\n\n \n \n\n\n\n\n \n(2) \nAggregate number of securities to which transaction applies: \n\n \n\n\n\n\n \n \n\n\n\n\n \n(3) \nPer 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\ndetermined): \n\n \n\n\n\n\n \n \n\n\n\n\n \n(4) \nProposed maximum aggregate value of transaction: \n\n \n\n\n\n\n \n \n\n\n\n\n \n(5) \nTotal fee paid: \n\n \n\n\n\n\n \n \n\n\n\n\n \n\n \n\n\n\n\n¨ \nFee paid previously with preliminary materials. \n\n \n\n\n\n\n¨ \nCheck 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\nprevious filing by registration statement number, or the Form or Schedule and the date of its filing. \n\n \n\n\n\n\n \n(1) \nAmount Previously Paid: \n\n \n\n\n\n\n \n \n\n\n\n\n \n(2) \nForm, Schedule or Registration Statement No.: \n\n \n\n\n\n\n \n \n\n\n\n\n \n(3) \nFiling Party: \n\n \n\n\n\n\n \n \n\n\n\n\n \n(4) \nDate Filed: \n\n \n\n\n\n\n \n \n\n\n\n\n\n\nCOMMUNITYCORP \n\n 1100 NORTH JEFFERIES BOULEVARD \n\n WALTERBORO, SOUTH CAROLINA 29488 \n\n (843) 549-2265 \n\n \n\n \n\n NOTICE OF ANNUAL MEETING OF SHAREHOLDERS\n\n\n TO BE HELD ON APRIL 27, 2005 \n\n \n\n \n\n NOTICE IS HEREBY GIVEN\nthat, pursuant to call of its Directors, the annual meeting (the “Annual Meeting”) of the shareholders of Communitycorp (the “Company”) will be held at the Bank of Walterboro building located at 1100 North Jefferies\nBoulevard, Walterboro, South Carolina on Wednesday, April 27, 2005 at 6:00 p.m. Eastern time for the following purposes: \n\n \n\n\n\n\n \n1. \nELECTION OF DIRECTORS: The election of three (3) Class II Directors to serve until the annual meeting of shareholders in 2008. \n\n \n\n\n\n\n \n2. \nOTHER BUSINESS: Such other business as properly may come before the Annual Meeting or any adjournment thereof. \n\n \n\n A Proxy Card and Proxy Statement for the Annual Meeting are enclosed\nherewith. \n\n \n\n NOTE: The Board of Directors is not aware of any\nother business to come before the Annual Meeting. \n\n \n\n Any action\nmay be taken on the foregoing proposals at the Annual Meeting or any adjournment thereof. Only shareholders of record of the Company at the close of business on March 14, 2005 are the shareholders entitled to receive notice of and to vote at the\nAnnual Meeting and any adjournment thereof. \n\n \n\n Please read the\nattached Proxy Statement carefully. You are requested to fill in and sign the enclosed form of Proxy, which is solicited by the Board of Directors, and to mail it promptly in the enclosed envelope. The Proxy will not be used if you attend and vote\nat the Annual Meeting in person. \n\n \n\n\n\n\n \n \n \n \n \n\n\n\nBY ORDER OF THE BOARD OF DIRECTORS \n \n \n \n \n\n\n\n \n \n \n\n\n\n \n \n \n \n \n\n\n\nPEDEN B. MCLEOD \n \n \n \nW. ROGER CROOK \n\n\n\nCHAIRMAN OF THE BOARD \n \n \n \nPRESIDENT AND CHIEF EXECUTIVE OFFICER \n\n\n \n\n Walterboro, South Carolina \n\n March 31, 2005 \n\n \n\n YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY. YOUR PROXY CAN BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE. IF YOU\nPLAN TO ATTEND THE ANNUAL MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON. YOUR PROXY MAY ALSO BE REVOKED BY WRITTEN NOTIFICATION, OR BY A PROXY OF A LATER DATE. \n\n \n\n\n\n\n\n\nVOTING AT THE MEETING AND PROXIES \n\n \n\n The accompanying form of proxy is for use at the Annual Meeting. A shareholder may use this proxy if he/she is unable to\nattend the meeting in person or if he/she wishes to have his/her shares voted by proxy even if he/she attends the Annual Meeting. The proxy may be revoked in writing by the person giving it any time before the proxy is exercised by giving notice to\nthe Company’s secretary, or by submitting a proxy having a later date, or by such person appearing at the Annual Meeting and voting in person. All shares represented by valid proxies received pursuant to this solicitation, and not revoked prior\nto their exercise, will be voted in the manner specified therein. If no specification is made in the proxy, the proxy will be voted “FOR” the election of the nominees for directors listed herein. The Board of Directors is not aware of any\nother matter which may be presented for action at the Annual Meeting, but if other matters do come properly before the Annual Meeting it is intended that shares represented by proxies in the accompanying form will be voted by the person named in the\nproxy in accordance with the recommendation of management. \n\n \n\n The\nBoard of Directors has fixed the close of business on March 14, 2005 as the record date for the determination of shareholders entitled to receive notice of and to vote at the Annual Meeting. On that date, there were a total of 245,985 shares of\nCompany’s Common Stock outstanding. Each shareholder is entitled to one vote on each matter to come before the Annual Meeting for each share of Company Common Stock held of record by such shareholder. The presence at the Annual Meeting, in\nperson or by proxy, of shareholders, holding in the aggregate a majority of the outstanding shares of the Company’s Common Stock entitled to vote shall constitute a quorum for the transaction of business. Article Eight of the Articles of\nIncorporation of the Company provide that in the election of directors each shareholder entitled to vote shall be entitled to cast as many votes for each director as shall equal the number of shares held by him/her, but shall not be entitled to\naccumulate his/her votes to cast more votes for any one director than the number of shares held by him/her. Those nominees receiving the highest number of votes cast at the meeting will be elected directors. \n\n \n\n\n\n\n\n\n\n\nPROPOSAL I - ELECTION OF DIRECTORS \n\n \n\n The business and affairs of the Company are managed by its Board of Directors. Except as expressly limited by law, all\ncorporate powers of the Company are vested in and may be exercised by the Board of Directors. \n\n \n\n The Company’s Bylaws provide for a Board of Directors consisting of not less than five and not more than 15 directors as determined from time to time by the Board pursuant to a resolution adopted by a majority of\nthe entire Board. The Board of Directors has set the number of Directors for 2005 at seven. \n\n \n\n The Company’s Articles of Incorporation provide that the Directors shall be divided into three classes, Class I, Class II, and Class III, which shall be as nearly equal in number as possible. At the Annual\nMeeting, three Class II directors will be elected for three year terms expiring at the 2008 Annual Meeting. All of the nominees are currently serving as directors of the Company. \n\n \n\n Should any nominee for the office of director become unable to serve, which is not anticipated, it is the intention of the\npersons named in the proxy, unless otherwise instructed therein, to vote for the election in his stead of such other person as the Board of Directors may recommend. \n\n \n\n If any vacancies occur on the Board of Directors after the Annual Meeting has taken place, such vacancies may be filled by\nthe remaining directors at any regular or special meeting thereof. Individuals selected to fill such vacancies shall serve until the next annual meeting. \n\n \n\n The Board of Directors recommends a vote “FOR” the nominees named below for directors of the Company. \n\n \n\n The following table sets forth certain information as to the Board of\nDirectors’ nominees for election as director and of those directors who will continue to serve as such after the Annual Meeting. \n\n \n\n BOARD NOMINESS \n\n \n\n\n\n\n \n \n \n \n \n \n \n \n \n \n\n\n\n Name\n\n \n \nAge\n\n(1)\n\n \n \n Principal Occupation During Past Five\n\n Years\nand Other Information\n\n \n \nYear First\n\nElected\n\nDirector\n\n \n \nYear\n\nTerm\n\nExpires\n\n \n \n\n\n\n \n \n \n \n \n\n\n\n George W. Cone\n\n \n \n \nPartner in Law Firm of McLeod, Fraser & Cone \n \n \n(2) \n\n\n\n \n \n \n \n \n\n\n\n J. Barnwell Fishburne\n\n \n \n \nOwner, Fishburne & Company Real Estate Sales and Rentals \n \n \n(2) \n\n\n\n \n \n \n \n \n\n\n\n Steven D. Murdaugh\n\n \n \n \nOwner, Accounting Firm Steven D. Murdaugh, PA, CPA \n \n \n(2) \n\n\n \n\n\n\n\n\n\n\n\nPROPOSAL I - ELECTION OF DIRECTORS, Continued \n\n \n\n CONTINUING DIRECTORS \n\n \n\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n\n Name\n\n \n \nAge\n\n(1)\n\n \n \n Principal Occupation During Past Five\n\n Years\nand Other Information\n\n \n \nYear First\n\nElected\n\nDirector\n\n \n \nYear\n\nTerm\n\nExpires\n\n \n\n\n\n \n \n \n \n \n\n\n\n Peden B. McLeod\n\n \n \n \nRetired Code Commissioner and Director South Carolina Legislative Council Partner in McLeod, Fraser & Cone Law Firm \n \n \n\n\n\n \n \n \n \n \n\n\n\n Harold M. Robertson\n\n \n \n \nRetired, Previous Owner of Robertson Electric Company. Retired Member of Board of Directors South Carolina Public Service Authority \n \n \n\n\n\n \n \n \n \n \n\n\n\n W. Roger Crook\n\n \n \n \nChief Executive Officer and President of the Bank since its incorporation on October 11, 1988. \n \n \n\n\n\n \n \n \n \n \n\n\n\n Harry L. Hill\n\n \n \n \nRetired, Former Vice President and Resident Manager, Asten Dryer Fabrics, Inc., manufacturer of dryer felts \n \n \n\n\n\n\n\n(1) \nAt December 31, 2004 \n\n \n\n\n\n\n(2) \nAssuming re-election at the Annual Meeting \n\n \n\n EXECUTIVE OFFICERS \n\n \n\n W. Roger Crook, age 63, is Director, CEO and President of Communitycorp. He is also CEO and President of the Bank since its incorporation on October 11, 1988. Mr.\nCrook was actively involved in organizing the Bank. Prior to February 1988, Mr. Crook was Vice President of Citizens & Southern National Bank, Walterboro, South Carolina, for more than five years. \n\n \n\n M. Ellison Young, age 67, is Vice President of Communitycorp. He has also been Vice\nPresident since joining the Bank in October 1991. Prior to October 1991, Mr. Young was Vice President and Branch Manager for The First Savings Bank, Walterboro Branch, for more than five years. \n\n \n\n Gwendolyn P. Bunton, age 51, Vice President and Treasurer of Communitycorp. Also for\nthe Bank, she has been Vice President and Cashier since December 1993, Assistant Vice President and Cashier since April 1990, Cashier and Operations Officer since May 1989. Mrs. Bunton joined Bank of Walterboro in February 1989. Prior to February\n1989, Mrs. Bunton was Loan Administrative Assistant III at Citizens & Southern National Bank, Walterboro, South Carolina, for more than five years. \n\n \n\n William F. Steadman, age 50, Executive Vice President. Prior to joining the Bank in October 2002, Mr. Steadman was President and CEO of Midstate Bank, Newberry, SC\nfrom October 1996 until its merger with Capital Bank. From 1984 to 1996 he was employed in various positions with Davidson Savings Bank, Lexington, NC, most recently as President and COO. Mr. Steadman remained President of Davidson Savings Bank\nuntil its 1996 merger with Southern National Bank. From 1983-1985 he was Vice President and City Executive of Security Bank in Lexington, NC. Mr. Steadman began his banking career in Walterboro in 1979 with the former First National Bank of\nOrangeburg. \n\n \n\n\n\n\n\n\n\n\nMEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS \n\n \n\n The Company’s Board of Directors holds regular meetings monthly. The\nBoard of Directors has established an Audit Committee, an Executive Committee, an Investment Committee and a Loan Committee. The Board does not have a Compensation Committee and functions normally performed by a Compensation Committee are performed\nby the Executive Committee. During the fiscal year ended December 31, 2004, the Board held a total of 45 regular and special meetings. Each director attended at least 75% of the aggregate of (i) the total number of meetings of the Board of Directors\nand (ii) the total number of meetings held by all Committees, of the Board of Directors on which he served. \n\n \n\n The Executive Committee established and monitors the Company’s major policies, reviews all proposed changes to policies prior to submission to the\nBoard, and monitors the Company’s employee compensation and benefit programs. The Executive Committee may act on behalf of the Board of Directors between meetings. Members of the Executive Committee are George W. Cone, W. Roger Crook, Peden B.\nMcLeod and Harold M. Robertson. The Executive Committee met 3 times during 2004. \n\n \n\n The Investment Committee establishes and monitors the Bank’s investment policy to insure the safety and liquidity of the Bank’s investments and monitors the Bank’s assets, liabilities and interest rate\npolicies and exposure. Members of the Investment Committee are George W. Cone, W. Roger Crook and Peden B. McLeod. The Investment Committee met 50 times during 2004. \n\n \n\n The Loan Committee establishes and monitors the Bank’s lending policies, reviews compliance with policy, reviews loans\nwhere the borrower’s liability exceeds certain limits, monitors loans for credit quality and reviews all loans over 30 days past due. Members of the Loan Committee are George W. Cone, W. Roger Crook, Peden B. McLeod, John B. Fishburne and\nHarold M. Robertson. The Loan Committee met 42 times during 2004. \n\n \n\n The Board of Directors nominates candidates for election as directors; it has no nominating committee. The Board of Directors will consider individuals recommended by shareholders. Shareholders may make recommendations by writing to Peden\nB. McLeod, Chairman of the Board, Communitycorp, Post Office Box 1707, Walterboro, South Carolina 29488. \n\n \n\n The Audit Committee selects the Company’s independent auditors, determines the scope of the Annual Audit, determines whether the Company has adequate\nadministrative, operational and internal accounting controls and determines whether the Company is operating according to established policies and procedures. The members of the Audit Committee are J. Barnwell Fishburne, Harry L. Hill, Steven D.\nMurdaugh and Harold Robertson. The Audit Committee met 6 times during 2004. \n\n \n\n INDEPENDENT PUBLIC ACCOUNTANTS \n\n \n\n Since 2002 the Company has engaged Elliott Davis, LLC as its independent accountants. The Company had no relationship with Elliott Davis, LLC prior to January 2002. All services the Company received from them were pre-authorized and\nrequested by the Audit Committee of the Company prior to the services being performed. \n\n \n\n\n\n\n\n\n\n\nINDEPENDENT PUBLIC ACCOUNTANTS, continued \n\n \n\n Below is a schedule of fees billed by related service for Elliott Davis, LLC during 2004 and\n2003. \n\n \n\n\n \n\n The Audit Committee is required to\napprove all audit and non-audit services, if any, provided by Elliott Davis, LLC prior to such services being rendered. Non-audit services can only be provided by the Company’s independent accountant to the extent permitted by law. There were\nno services provided by Elliott Davis pursuant to the de minimus exception to the pre-approval requirement contained in the rules of the Securities and Exchange Commission. \n\n \n\n REPORT OF THE AUDIT COMMITTEE OF THE BOARD \n\n \n\n The Audit Committee of the Board of Directors has reviewed and discussed with management the Company’s audited financial statements for\nthe year ended December 31, 2004. The Audit Committee has discussed with the Company’s independent auditors, Elliott Davis, LLC, the matters required to be discussed by Statement on Auditing Standards 61, as modified or supplemented. The Audit\nCommittee has also received the written disclosures and the letter from Elliott Davis, LLC, required by Independence Standards Board Standard No. 1, as modified or supplemented, and has discussed with Elliott Davis, LLC, their independence. Based on\nthe review and discussions referred to above, the Audit Committee Recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10KSB for the year ended December 31, 2004.\n\n\n \n\n\n\n\n \n \n \n \n \n \n \n\n\n\n J. Barnwell Fishburne\n\n \n \nHarry L. Hill \n \nSteven D. Murdaugh \n \nHarold Robertson \n\n\n \n\n DIRECTORS\nCOMPENSATION \n\n \n\n Members of the Board of Directors of the\nCompany received a monthly fee of $650 plus an extra month’s fee in December of 2004. Committee members receive no fees. Total fees paid to directors in the fiscal year ended December 31, 2004 were $50,700. In addition, the Chairman of the\nBoard and the Attorney for Communitycorp were paid $32,500 and $31,450 respectively, for the year ended December 31, 2004. \n\n \n\n TRANSACTIONS WITH CERTAIN RELATED PERSONS \n\n \n\n The Company has had, and expects to have in the future, banking transactions in the ordinary course of its business with principal officers, directors,\nand their associates on substantially the same terms including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with others, and did not involve more than normal risk of collectibility or\npresent other unfavorable features. During 2004, the largest aggregate amount of indebtedness of principal officers, directors and their associates to the Company was $3,133,790, which represented 25.11% of the Company’s equity capital at the\ntime. During 2004, the law firm of McLeod, Fraser & Cone provided legal services to the Company in its ordinary course of business and it is expected to continue to do so in the future. George W. Cone, director of Communitycorp, is a partner of\nthe McLeod, Fraser and Cone law firm. Peden B. McLeod, Director and Chairman of the Board of Communitycorp, is also partner in the law firm of McLeod, Fraser and Cone. \n\n \n\n\n\n\n\n\n\n\nAMOUNT AND NATURE OF BENEFICIAL OWNERSHIP \n\n \n\n\n\n\n\n(1) \nIncludes 2,600 shares held by family members. \n\n \n\n\n\n\n(2) \nIncludes 500 shares held by family members. \n\n \n\n\n\n\n(3) \nIncludes 1,561 shares held by family members. \n\n \n\n\n\n\n(4) \nIncludes 16,534 shares held by family members. \n\n \n\n\n\n\n(5) \nIncludes 2,534 shares held by family members. \n\n \n\n\n\n\n(6) \nIncludes 100 shares held by family members. \n\n \n\n\n\n\n\n\n\n\nEXECUTIVE COMPENSATION \n\n \n\n The following information is furnished for the Chief Executive Officer of the Company. No other executive officer of the Company received\nsalary and bonuses in excess of $100,000 during the fiscal year ended December 31, 2004. \n\n \n\n SUMMARY COMPENSATION TABLE \n\n \n\n Annual Compensation \n\n \n\n\n \n\n\n\n\n(1) \nIncluded deferred compensation of $22,500, $26,500, and $30,000 in 2004, 2003 and 2002, respectively, and profit sharing contribution of $11,332, $10,312 and $9,942 in 2004, 2003,\nand 2002, respectively. \n\n \n\n Retirement Plans\n\n\n \n\n Profit Sharing Plan. The Company has a qualified Profit Sharing\nPlan with 401(K) features. The plan is intended to meet the qualification requirements under the Internal Revenue Code and serve as a reward to employees for productivity and profitability. All full-time employees who have attained age 21 and have\none year of service are eligible to participate in the plan. Contributions to the plan are computed each year on a discretionary basis by the Board of Directors with consideration for annual profits, retained earnings and reserve requirements. The\nprofit sharing plan is administered by First Sun Trust Administrators, LLC, an independent third party administrator in Columbia, South Carolina. The Trustees of the plan are members of the Board of Directors and are as follows: J. Barnwell\nFishburne and George Cone. The Board of Directors has the authority to add, delete, or replace Trustees as deemed necessary to ensure adequate oversight and direction of the plan operations. \n\n \n\n The profit sharing plan is designed to provide a source of additional\nretirement income that will supplement Social Security benefits at age 65 for each eligible career employee. Employees or their beneficiaries have the right to withdraw their funds in the plan upon early separation of service, death, disability,\nnormal retirement (age 65), early retirement (age 59 1/2) or late retirement (age 70). Distributions from the plan will be made in either monthly installments or as a lump sum payment. \n\n \n\n The profit sharing plan includes special provisions as outlined in the Internal Revenue Code, Section 401(K), which permits\nemployees to make voluntary pre-tax contributions to the retirement plan trust. Employees meeting the eligibility requirements of the profit sharing plan described above may also make voluntary contributions under 401(K) plan provisions up to 10% of\nannual salary. \n\n \n\n The employer has decided to waive its option of\nmatching employee contributions since the profit sharing plan will potentially provide eligible employees with a retirement benefit. All employee voluntary contributions are 100% vested. Withdrawal features in the 401(K) plan are the same as the\nprofit sharing plan. Expenses for the profit sharing plan were $65,139 for the year ending December 31, 2004. \n\n \n\n\n\n\n\n\n\n\nEXECUTIVE COMPENSATION, continued \n\n \n\n Deferred Compensation Plan. The Company has a Deferred Compensation Plan, which covers\nthe Chief Executive Officer. This plan is a non-qualified voluntary deferral salary program with participation limited to the Bank’s senior management \n\n \n\n Contributions to the plan are voluntary and may be changed from year to year based upon the income needs of eligible participants. Amounts deferred are\nassets of the Bank and income derived from the investment of these assets are also reflected as assets of the Bank. These assets are subject to the claims of creditors of the corporation. Deferred funds will be invested and reinvested by the\ncorporation until such time the employee separates from service and elects to receive the deferral amounts plus accumulated earnings. The corporation has the right to invest bank assets in cash, cash equivalents, marketable securities, common stock,\nlife insurance, annuities or savings instruments as deemed appropriate by the Trustees and Board of Directors. Expenses for this plan were $22,500 for the year ending December 31, 2004. \n\n \n\n COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT \n\n \n\n Section 16(a) of the Exchange Act requires certain officers of the Company and its directors, and persons who beneficially\nown more than 10% of any registered class of the Company’s common stock, to file reports of ownership and changes in ownership with the SEC. Based solely on a review of the reports and written representations provided to the Company by the\nabove referenced persons, the Company believes that during the fiscal year ended December 31, 2004 all filing requirements applicable to its reporting officers, directors and greater than ten percent beneficial owners were properly and timely\ncomplied with. \n\n \n\n OTHER MATTERS \n\n \n\n The Board of Directors is not aware of any business to come before the Annual\nMeeting other than those matters described above in this Proxy Statement. However, if any other matters should properly come before the Annual Meeting, it is intended that proxies in the accompanying form will be voted in respect thereof in\naccordance with the judgment of the person or persons voting the proxies, including matters relating to the conduct of the Annual Meeting. \n\n \n\n SHAREHOLDER PROPOSALS \n\n \n\n Proposals of shareholders intended to be presented at the next Annual Meeting of Shareholders to be held in April 2006, should be received by the Company\nno later than January 31, 2006, in order to be considered for inclusion in the Company’s proxy statement and form of proxy relating to that meeting. Such proposals should be sent in writing to Communitycorp, Post Office Box 1707, Walterboro,\nSouth Carolina 29488, Attention: Corporate Secretary. Any such proposals must comply in all respect with the rules and regulations of the Securities and Exchange Commission. \n\n \n\n EXPENSE OF SOLICITATION \n\n \n\n The cost of solicitation of proxies will be borne by the Company. In addition to solicitations by mail, directors, officers and regular employees of the\nCompany may solicit proxies personally or by telephone at their regular salary or hourly compensation. \n\n \n\n\n\n\n\n\n\n\nFORM 10-KSB \n\n \n\n The Company will provide without charge to each person solicited herein, upon the written request of such person, a copy of\nthe Company’s Annual Report on Form 10-KSB, including the financial statements and schedules thereto. Such a written request should be directed to Communitycorp, Post Office Box 1707, Walterboro, South Carolina, 29488, Attention: Corporate\nSecretary. \n\n \n\n BY ORDER OF THE BOARD OF DIRECTORS \n\n \n\n\n\n\n \n \n \n \n \n\n\n\n \n \n \n\n\n\n \n \n \n \n \n\n\n\nPEDEN B. MCLEOD \n \n \n \nW. ROGER CROOK \n\n\n\nCHAIRMAN OF THE BOARD \n \n \n \nPRESIDENT AND CHIEF EXECUTIVE OFFICER \n\n\n \n\n Walterboro, South Carolina \n\n\nMarch 22, 2005 \n\n \n\n\n\n\n\n\n\n\nPROXY \n\n \n\n KNOW ALL MEN BY THESE PRESENT that I, the undersigned shareholder of Communitycorp, Walterboro, South Carolina, do hereby nominate, constitute and appoint Peden B.\nMcLeod and Harold M. Robertson or\n \n \n or any one or more of them, my true and lawful attorney(s) with full power of substitution, for me\nand in my name, place and stead to vote all of the stock of said Company, standing in my name on its books as of March 14, 2005 at the meeting of its shareholders to be held at the Bank of Walterboro building located at 1100 North Jefferies\nBoulevard, Walterboro, South Carolina, on Wednesday, April 27, 2005 at 6:00 p.m. Eastern time or at any adjournment thereof, as follows: \n\n \n\n\n\n\n \n \n \n \n \n\n\n\n FOR\n\n \n \nWITHHOLD \n \n1. ELECTION OF DIRECTORS: \n\n\n\n \n \n \n\n\n\n ¨\n\n \n \n¨ \n \nThe Election of Three (3) Class II directors listed in the accompanying Statement. The names of the nominees are as follows: George W. Cone, J. Barnwell Fishburne, and Steven D.\nMurdaugh \n\n\n\n \n \n \n\n\n\n FOR\n\n \n \nWITHHOLD \n \n2. OTHER BUSINESS: \n\n\n\n \n \n \n\n\n\n ¨\n\n \n \n¨ \n \nSuch other business that may properly be brought before the meeting or any adjournment thereof. Management at the present time knows of no other business to be brought before the meeting other\nthan that of a routine nature. \n\n\n \n\n I hereby ratify and confirm all that\nsaid attorney(s) may do or cause to be done by virtue hereof, receipt of the notice of said Annual Meeting being hereby acknowledged. Said attorney(s) is (are) hereby authorized to exercise all of the powers that I would possess if present\npersonally at said meeting or any adjournment thereof. I hereby revoke all proxies by me heretofore given for any meeting of shareholders of said Company. \n\n \n\n IN THE ABSENCE OF A CONTRARY DIRECTION, THE SHARES REPRESENTED HEREBY SHALL BE VOTED IN FAVOR OF THE MATTERS SPECIFICALLY SET FORTH ABOVE ANY IF ANY OTHER BUSINESS IS\nPRESENTED AT SAID MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF MANAGEMENT. \n\n \n\n THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY RE REVOKED PRIOR TO ITS EXERCISE. THE BOARD OF DIRECTORS RECOMMENDS A VOTE ¨ FOR ¨ THE LISTED PROPOSITIONS.\n\n\n \n\n In Witness whereof I have hereunto set my hand and seal this\n day of 2005.\n\n\n \n\n\n\n\n \n\n\n\n \n\n\n\n \n\n\n\n Signature\n\n \n\n\n\n \n\n\n\n \n\n\n\n Signature if held jointly\n\n \n\n\n\n\n \n\n\n\n"},"accession_number":{"kind":"string","value":"0001193125-05-059400"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":93,"cells":{"_id":{"kind":"string","value":"1020861_DEF 14A_2005_0001145443-05-000227"},"cik":{"kind":"string","value":"1020861"},"company":{"kind":"string","value":"SUNAMERICA FOCUSED SERIES INC"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-02-11T00:00:00","string":"2005-02-11T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-02-11T00:00:00","string":"2005-02-11T00:00:00"},"sic":{"kind":"string","value":"NULL"},"state_of_inc":{"kind":"string","value":"MD"},"state_location":{"kind":"string","value":"NJ"},"fiscal_year_end":{"kind":"string","value":"1031"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1020861/0001145443-05-000227-index.html"},"htm_filing_link":{"kind":"string","value":"NULL"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1020861/000114544305000227/0001145443-05-000227.txt"},"filename":{"kind":"string","value":"1020861_DEF 14A_2005_0001145443-05-000227.txt"},"text":{"kind":"string","value":"\nDEF 14A\nd16241.txt\n\n SCHEDULE 14A\n\n INFORMATION REQUIRED IN PROXY STATEMENT\n\n SCHEDULE 14A INFORMATION\n\n Proxy Statement Pursuant to Section 14(a) of the\n Securities Exchange Act of 1934\n (Amendment No. 1)\n\nFiled by the Registrant [X]\nFiled by a Party other than the Registrant [ ]\n\nCheck the appropriate box:\n\n[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission\n[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))\n[ ] Definitive Additional Materials\n[ ] Soliciting Material Pursuant to Rule 14a-12\n\n ----------\n\n SunAmerica Senior Floating Rate Fund, Inc.\n (Name of Registrant as Specified in its Charter)\n\n ----------\n\nPayment of Filing Fee (Check the appropriate box):\n\n[X] No fee required.\n[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.\n\n (1) Title of each class of securities to which transaction applies:\n (2) Aggregate number of securities to which transaction applies:\n (3) Per unit price or other underlying value of transaction computed\n pursuant to Exchange Act Rule 0-11:\n (4) Proposed maximum aggregate value of transaction:\n (5) Total fee paid:\n\n[ ] Fee paid previously with preliminary materials.\n[ ] Check box if any part of the fee is offset as provided by Exchange\n Act Rule 0-11(a)(2) and identify the filing for which the offsetting\n fee was paid previously. Identify the previous filing by registration\n statement number, or the form or schedule and the date of its filing.\n\n (1) Amount Previously Paid:\n (2) Form, Schedule or Registration Statement No.:\n (3) Filing Party:\n (4) Date Filed:\n\n\n\n [LOGO]\n AIG SunAmerica SunAmerica Senior\n Asset Management Floating Rate Fund, Inc.\n Harborside Financial Center\n 3200 Plaza 5\n Jersey City, NJ 07311\nFebruary 11, 2005\n\nDear Shareholder:\n\n SunAmerica Senior Floating Rate Fund, Inc.(the \"Fund\") has called a\nSpecial Meeting of Shareholders (the \"Meeting\") to approve a new sub-advisory\nagreement with AIG Global Investment Corp. (\"AIGGIC\") following the resignation\nof Stanfield Capital Partners LLC (\"Stanfield\"). The Investment Company Act of\n1940 requires shareholder approval of the sub-advisory agreement with AIGGIC.\nAs a result, a new sub-advisory agreement is being submitted for approval at\nthe Meeting.\n\n The Board of Directors of the Fund believes that the proposal set forth in\nthe Notice of Special Meeting and accompanying Proxy Statement is important and\nrecommends that you read the enclosed materials carefully and then provide a\nvote in favor of the proposal.\n\n You will receive a proxy card. There are several ways to vote your shares\nincluding mail, telephone, and the Internet. Please refer to the proxy card for\nmore information on how to vote. Your vote is important. If we do not receive a\nresponse by one of these methods, you may receive a telephone call from our\nproxy solicitor, ADP Investor Communication Services, reminding you to vote.\n\n Shareholders are urged to vote using any of the available options to\nensure a quorum at the meeting. Your vote is important regardless of the size\nof your shareholding.\n\n We appreciate your cooperation and continued support.\n\n Sincerely,\n\n /s/ Vincent Marra\n President\n SUNAMERICA SENIOR FLOATING\n RATE FUND, INC.\n\n\n IMPORTANT NEWS FOR SHAREHOLDERS OF\n SUNAMERICA SENIOR FLOATING RATE FUND, INC.\n\n While we encourage you to read the full text of the enclosed Proxy\nStatement, here is a brief overview of the matter affecting the SunAmerica\nSenior Floating Rate Fund, Inc. (the \"Fund\") that requires a shareholder vote.\n\nQ: WHO IS ASKING FOR MY VOTE?\n\nA: The Board of Directors (the \"Board\") of the Fund has requested your vote at\n a special shareholders meeting to be held at 10:00 a.m., Eastern time, on\n March 31, 2005 (the \"Meeting\") at Harborside Financial Center, 3200 Plaza\n 5, Jersey City, NJ 07311.\n\nQ: WHY DID YOU SEND ME THIS BOOKLET?\n\nA: You are receiving these proxy materials because you have the right to vote\n on an important proposal concerning your investment in the Fund.\n\nQ. WHAT PROPOSAL AM I BEING ASKED TO VOTE ON?\n\nA. You are being asked to vote on the approval of a new sub-advisory agreement\n (the \"New Agreement\") between AIG SunAmerica Asset Management Corp.\n (\"SAAMCo\") and AIG Global Investment Corp. (\"AIGGIC\"). Because the Fund's\n former sub-adviser, Stanfield Capital Partners, LLC (\"Stanfield\"), decided\n to withdraw from the sub-advisory business, the Fund needed to find and\n hire a new sub-adviser.\n\n The resignation of Stanfield took effect on December 31, 2004. To ensure\n the uninterrupted receipt by the Fund of sub-advisory services during the\n period between the resignation of Stanfield and the Meeting, the Fund's\n Board, at a meeting held on December 20, 2004, approved an interim\n sub-advisory agreement between SAAMCo and AIGGIC (the \"Interim Agreement\"),\n which became effective as of the resignation of Stanfield and will remain\n in effect for 150 days or until the approval of a new agreement that will\n replace it. On January 12, 2005, for the reasons described in the Proxy\n Statement, the Board approved the New Agreement that provides for the\n engagement of AIGGIC as the Fund's sub-adviser on a continuing basis. You\n are being asked to approve the New Agreement.\n\n The terms of the New Agreement (and the Interim Agreement) are\n substantially similar in all material respects to the previously existing\n sub-advisory agreement with Stanfield (the \"Former Agreement\"), except for\n the identity of the sub-adviser (AIGGIC), the effective date, and the\n termination date. The New Agreement will, have, as is customary for\n investment advisory agreements, an initial term of two years and a\n provision that it wll continue thereafter if approved annually by a vote of\n either the Board or the shareholders of the Fund. If the New Agreement is\n approved, it will take effect immediately.\n\n\nQ. WILL THE FEES PAID FOR SUB-ADVISORY SERVICES CHANGE?\n\nA. No. The fees payable by SAAMCo to AIGGIC under the New Agreement are the\n same as those payable by SAAMCo to Stanfield under the Former Agreement.\n\nQ. HOW MANY VOTES ARE NEEDED TO APPROVE THE PROPOSAL?\n\nA. Approval of the New Agreement requires approval by a majority of the\n outstanding voting shares of the Fund. This majority is defined by the\n Investment Company Act as the lesser of (1) 67% or more of the voting\n shares of the Fund present at the Meeting, provided that holders of more\n than 50% of the Fund's outstanding voting shares are present or represented\n by proxy, or (2) more than 50% of the Fund's outstanding voting shares.\n\nQ. WHAT IF YOU DO NOT HAVE ENOUGH VOTES TO MAKE THIS DECISION BY THE SCHEDULED\n MEETING DATE?\n\nA. If we do not receive sufficient votes to hold the Meeting, we, or a proxy\n solicitation firm, may contact you by mail or telephone to encourage you to\n vote. Shareholders should review the proxy materials and cast their vote to\n avoid additional mailings or telephone calls. If we do not have enough\n votes to approve the proposals by the time of the shareholder meeting at\n 10:00 a.m. on March 31, 2005, the meeting may be adjourned to permit\n further solicitation of proxy votes.\n\nQ. HOW DOES THE FUND'S BOARD RECOMMEND THAT I VOTE?\n\nA. After careful consideration, the Fund's Board, including the non-interested\n directors, recommends that you vote FOR the proposal.\n\nQ. HOW CAN I VOTE MY SHARES?\n\nA. Please choose one of the following options to vote your shares:\n\n o By mail, with the enclosed proxy card;\n\n o By touch-tone telephone, with a toll-free call to the telephone number\n that appears on your proxy card;\n\n o Through the Internet, by using the Internet address located on your\n proxy card and following the instructions on the site; or\n\n o In person at the Meeting.\n\n Your proxy is important and will help avoid the additional expense of\n another solicitation. Thank you for promptly submitting your vote.\n\n ii\n\n\n SUNAMERICA SENIOR FLOATING RATE FUND, INC.\n Harborside Financial Center\n 3200 Plaza 5\n Jersey City, NJ 07311\n ----------------------------\n\n NOTICE OF SPECIAL MEETING OF SHAREHOLDERS\n TO BE HELD ON MARCH 31, 2005\n ----------------------------\n\nTo Our Shareholders:\n\n NOTICE IS HEREBY GIVEN that a Special Meeting (the \"Meeting\") of\nShareholders of the SunAmerica Senior Floating Rate Fund, Inc. (the \"Fund\")\nwill be held on March 31, 2005 at 10:00 a.m., Eastern time, at the Fund's\noffices at Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311,\nfor the purpose of considering the proposals set forth below:\n\n 1. To approve the investment sub-advisory agreement between AIG\n SunAmerica Asset Management Corp. (\"SAAMCo\") and AIG Global Investment\n Corp. (\"AIGGIC\") as sub-adviser.\n\n 2. To transact such other business as may properly come before the\n Meeting or any adjournments thereof.\n\n Only shareholders of record at the close of business on January 13, 2005,\nare entitled to vote at the Meeting and any adjournment thereof. You may vote\nby mail, touch-tone telephone, Internet or in person. Please provide your vote\npromptly.\n\n By order of the Board of Directors,\n\n /s/ Vincent Marra\n President\n SUNAMERICA SENIOR FLOATING\n RATE FUND, INC.\n\n\n SUNAMERICA SENIOR FLOATING RATE FUND, INC.\n Harborside Financial Center\n 3200 Plaza 5\n Jersey City, NJ 07311\n ----------------------------\n\n PROXY STATEMENT\n ----------------------------\n\n Special Meeting of Shareholders\n March 31, 2005, 10:00 A.M.\n\n This Proxy Statement is furnished in connection with the solicitation of\nproxies by the Board of Directors (the \"Board\") of the SunAmerica Senior\nFloating Rate Fund, Inc. (the \"Fund\") for use at the special meeting\n(\"Meeting\") of shareholders of the Fund (\"Shareholders\") to be held at the\nFund's offices at Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ,\n07311 on March 31, 2005, at 10:00 A.M., Eastern time, and at any adjournment\nthereof. This Proxy Statement is being mailed to Shareholders on or about\nFebruary 11, 2005 on behalf of the Board.\n\n Execution of a proxy will not in any way affect a Shareholder's right to\nattend the Meeting and vote in person, and any Shareholder giving a proxy has\nthe right to revoke it at any time by written notice addressed to and received\nby the Secretary of the Fund prior to the exercise of the proxy or by attending\nthe Meeting and revoking the proxy in person.\n\n The Board has fixed the close of business on January 13, 2005 as the\nrecord date (the \"Record Date\") for the determination of Shareholders entitled\nto notice of and to vote at the Meeting.\n\n As of the Record Date, 24,610,445 shares of the Fund were issued and\noutstanding, including 23,841 Class A shares, 2,930,789 Class B shares,\n18,691,282 Class C shares, and 2,964,533 Class D shares.\n\n\n\n The name, address and percentage of ownership of Shareholders that owned\nof record 5% or more of each class of shares of the Fund as of the Record Date\nare as follows:\n\n\n\n To the knowledge of management, members of the Board, both individually\nand as a group, owned less than 1% of the outstanding shares of each class of\nthe Fund as of the Record Date.\n\n While not expected, the Fund may solicit proxies from Shareholders by mail\nor by telephone communications from officers or employees of AIG SunAmerica\nAsset Management Corp. (\"SAAMCo\"), the Fund's adviser, or its affiliates, who\nwill not receive any compensation for their solicitation services from the\nFund. In addition, a professional proxy solicitation firm may also assist in\nthe solicitation of voting instructions. In connection with the solicitation of\nproxies, the Fund will furnish a copy of this Proxy Statement to all\nShareholders. The estimated cost of solicitation is $25,000.\n\n Shareholders may also provide their proxies through telephone touch-tone\nvoting or Internet voting. These options require Shareholders to input a\ncontrol number, which is located on each proxy card. Subsequent to inputting\nthese numbers, Shareholders will be prompted to provide their vote on the\nproposal. Shareholders will have an opportunity to review their vote and make\nany necessary changes before submitting their vote and terminating their\ntelephone call or Internet connection.\n\n If a Shareholder wishes to participate in the Meeting, but does not wish\nto give his or her proxy by telephone or Internet, the Shareholder may submit\nthe proxy card originally sent with the Proxy Statement or attend in person.\nProxies executed by Shareholders may be revoked by: (i) a written instrument\nreceived by the Secretary of the Fund at any time before they are exercised;\n(ii) delivery of a later-dated proxy; or (iii) by attendance at the Meeting and\nvoting in person.\n\n\n\n Each Shareholder shall be entitled to exercise the voting rights of shares\nowned of which he is a Shareholder (\"Shares\"). All outstanding full Shares,\nirrespective of class, are entitled to one vote and each fractional Share is\nentitled to the corresponding fractional vote. Shares of the Fund will be voted\nin the aggregate with respect to the approval of the sub-advisory agreement.\n\n The proposal described in this Proxy Statement and the fund affected are\nshown in the table below.\n\n\n\n A quorum for the transaction of business at the Meeting is constituted\nwith respect to the Fund by the presence in person or by proxy of holders of a\nmajority of the shares of the Fund entitled to vote at the Meeting. If a proxy\nis properly executed and returned accompanied by instructions to withhold\nauthority, or is marked with an abstention, the shares represented thereby will\nbe considered to be present at the Meeting for determining the existence of a\nquorum for the transaction of business with respect to the Fund.\n\n Approval of Proposal No. 1 requires approval by the lesser of (1) 67% or\nmore of the voting shares of the Fund present at the Meeting, provided that\nholders of more than 50% of the Fund's outstanding voting shares are present or\nrepresented by proxy, or (2) more than 50% of the Fund's outstanding voting\nshares.\n\n Abstentions and \"broker non-votes\" (i.e., shares held by brokers or\nnominees as to which (i) instructions have not been received from the\nbeneficial owners or the persons entitled to vote or (ii) the broker or nominee\ndoes not have discretionary voting power on a particular matter) will have the\nsame effect on Proposal No. 1 as a vote \"AGAINST\". Unmarked voting instructions\nfrom Shareholders will be voted in favor of the proposal. The Fund may adjourn\nthe Meeting to the extent permitted by law, if necessary to obtain additional\nproxies from Shareholders. The Fund and SAAMCo will split evenly the costs of\npreparing and distributing to Shareholders additional proxy materials, if\nrequired in connection with any adjournment.\n\n The Fund is a closed-end, non-diversified management investment company\norganized in Maryland in 1998 and registered under the Investment Company Act\nof 1940, as amended (the \"1940 Act\"). The Fund consists of multiple classes.\n\n The costs of the Meeting, including the solicitation of proxies, will be\nsplit evenly between the Fund and SAAMCo. In addition to the solicitation of\nproxies by mail, directors and agents of the Fund may solicit proxies in person\nor by telephone.\n\n\n\n Copies of the Fund's Annual Report for the most recently completed fiscal\nyear and Semi-Annual Report are available without charge to Shareholders. To\nobtain a copy, call the Funds at (800) 858-8850 ext. 5660, or write to the\nFunds at Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311.\n\n AIG SunAmerica Capital Services, Inc. (\"SACS\"), the Fund's distributor,\nand SAAMCo, the Fund's adviser, are both located at Harborside Financial\nCenter, 3200 Plaza S, Jersey City, NJ 07311.\n\n PROPOSAL NO. 1\n\n Approval of a Sub-Advisory Agreement with AIGGIC\n\n SAAMCo is the administrator and investment adviser of the Fund. As such,\nSAAMCo has overall responsibility for the general management and day-to-day\noperations of the Fund, but may employ one or more investment sub-advisers to\nmake the investment decisions for all or a portion of the Fund. SAAMCo\npreviously contracted with Stanfield Capital Partners LLC (\"Stanfield\") to\nmanage the investment and reinvestment of the Fund's assets (the \"Former\nAgreement\"). On December 31, 2004, Stanfield resigned as a sub-adviser to the\nFund due to its retirement from the sub-advisory business.\n\n At a telephone meeting held on December 20, 2004, the Board unanimously\napproved the interim sub-advisory agreement between SAAMCo and AIGGIC (the\n\"Interim Agreement\"). The Interim Agreement was approved by the Board pursuant\nto Rule 15a-4 under the 1940 Act, to ensure the uninterrupted receipt by the\nFund of investment advisory services during the period between the resignation\nof Stanfield, which took effect on December 31, 2004, and the Meeting. This\nRule, under certain circumstances, allows interim sub-advisory agreements to\ntake effect, and to remain in effect for up to 150 days, without receiving\nprior shareholder approval, as long as the fees payable under such agreement do\nnot exceed the fees payable under the predecessor agreement that had been\napproved by the shareholders. The Interim Agreement will terminate on the\nearlier of the effective date of the new sub-advisory agreement between SAAMCo\nand AIGGIC (the \"New Agreement\") or 150 days after the resignation of\nStanfield.\n\n At an in-person meeting held on January 12, 2005, the Board approved the\nNew Agreement. The 1940 Act requires Shareholder approval of the New Agreement.\nThe New Agreement will replace the Interim Agreement with AIGGIC on behalf of\nthe Fund. A copy of the form of New Agreement is attached as Exhibit A to this\nProxy Statement.\n\n\n\n THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS\n VOTE TO APPROVE THE NEW AGREEMENT WITH AIGGIC.\n\nTerms of the Former Agreement\n\n The date of the Former Agreement is November 16, 2001. The Board,\nincluding a majority of the non-interested directors, last approved the Former\nAgreement, on August 31, 2004. The Former Agreement was last approved by\nShareholders on October 19, 2001. Under the Former Agreement, SAAMCo paid\nStanfield, a sub-advisory fee based on the Fund's average daily net asset\nvalue, computed and paid monthly, at the following rates:\n\n Senior Floating Rate Fund\n\n\n\n For the Fund's most recent fiscal year ended December 31, 2004, SAAMCo\nreceived $1,663,171 in advisory fees of which $489,192 was paid to Stanfield in\nsub-advisory fees for rendering sub-advisory services to the Fund under the\nFormer Agreement and of which SAAMCo retained $ 1,173,979. During the same\nperiod, no commissions on portfolio transactions were paid to any affiliated\nbrokers.\n\n The Former Agreement was terminated on December 31, 2004 due to\nStanfield's resignation. Stanfield decided to withdraw from the sub-advisory\nbusiness and resigned from its position as sub-adviser to the Fund effective\nDecember 31, 2004.\n\nInformation about AIGGIC\n\n AIGGIC is a corporation organized under the laws of the State of New\nJersey, with its principal place of business at 70 Pine Street, New York, New\nYork 10270. AIGGIC is an indirect, wholly-owned subsidiary of American\nInternational Group, Inc. (\"AIG\") and is part of the AIG Global Investment\nGroup (\"AIGGIG\"). AIGGIG comprises a group of international investment adviser\ncompanies (including AIGGIC), which provide advice, investment products and\nasset management services to clients around the world. As of September 30,\n2004, AIGGIG managed approximately $450 billion, of which approximately $384\nbillion relates to AIG affiliates and $66 billion relates to client assets.\n\n AIGGIC is a registered investment adviser that has provided investment\nmanagement services to corporations, foundations, endowments, pension and\nprofit sharing plans, trusts, estates and other institutions and individuals\nsince 1983.\n\n\n\n The directors and principal executive officer(s) of AIGGIC are listed\nbelow. Unless otherwise indicated, the address for each is 70 Pine Street, New\nYork, New York 10270. No officers or directors of the Fund are officers,\ndirectors, employees, shareholders or general partners of AIGGIC. No officers or\ndirectors of the Fund have any material interest in AIGGIC, or in any material\ntransaction in which AIGGIC or an affiliate is a party.\n\n\n\n\nTerms of the New Agreement\n\n Under the specific terms of the New Agreement, AIGGIC would be\nresponsible, subject to oversight by SAAMCo as the Fund's primary investment\nadviser, and by the Board of the Fund, for managing the investment and\nreinvestment of the Fund's assets in a manner consistent with the Fund's\ninvestment objectives, policies and restrictions, and applicable federal and\nstate law. As such, AIGGIC's investment authority would include whatever powers\nthe Fund may possess with respect to its assets, including the power to\nexercise rights, options, warrants, conversion privileges, redemption\nprivileges, and to tender securities pursuant to a tender offer. AIGGIC would\nnot, however, be responsible for voting proxies or participating in class\nactions and/or other legal proceedings on behalf of the Fund, but would provide\nsuch assistance as is reasonably requested by SAAMCo.\n\n The terms of the New Agreement further specify that AIGGIC would make\ndecisions with respect to all purchases, sales, and other transactions of\nsecurities and\n\n\n\nother investment assets for the Fund. To carry out such decisions, AIGGIC would\nhave full discretion and be authorized to place orders and issue instructions\nwith respect to those transactions for the Fund.\n\n For providing ongoing services under the New Agreement, AIGGIC would be\nentitled to receive ongoing sub-advisory fees based on the Fund's average daily\nnet asset value, computed and paid monthly, at the rates in the chart below.\nSAAMCo would be solely responsible for paying these fees.\n\n\n\n The proposed sub-advisory fees and asset breakpoint levels under the New\nAgreement are the same as those under the Former Agreement. Any change would\nnot have affected Shareholder fees because AIGGIC is paid solely out of the\nadvisory fees from SAAMCo.\n\n The New Agreement also requires AIGGIC to report to the Board important\ndevelopments affecting the Fund or AIGGIC. On its own initiative, AIGGIC should\nprovide any other information to the Board or SAAMCo that it may believe is\nappropriate, such as information relating to the individual companies whose\nsecurities are held by the Fund, the industries in which they engage, or the\neconomic, social or political conditions prevailing in each country in which\nthe Fund maintains investments. In addition, the New Agreement requires that\nAIGGIC furnish the Board and SAAMCo with statistical and analytical information\nregarding securities held by the Fund, as AIGGIC may believe appropriate or\nupon reasonable request by the Board or SAAMCo.\n\n Under the terms of the New Agreement, AIGGIC is responsible for the\npurchase and sale of securities for the Fund, broker-dealer selection, and\nnegotiation of brokerage commission rates. The New Agreement specifies that\nAIGGIC's primary consideration in effecting a security transaction will be to\nobtain for the Fund the best price and execution available under the\ncircumstances. However, the price to the Fund in any transaction may be less\nfavorable than that available from another broker-dealer if AIGGIC determines\nin good faith that the amount of commission is reasonable in relation to the\nvalue of the brokerage and research services provided by such broker or dealer,\nviewed in terms of either that particular transaction or the overall\nresponsibilities of AIGGIC with respect to the Fund and to other clients of\nAIGGIC. Accordingly, AIGGIC will not be deemed to have acted unlawfully or to\nhave breached any duty under the New Agreement, subject to any policies\ndetermined by the Board, solely because AIGGIC may cause the Fund to pay a\nbroker who provides certain research and brokerage services to AIGGIC an amount\nof commission for effecting a portfolio investment transaction that exceeds\n\n\n\nthe amount of commission that another broker or dealer would have charged for\neffecting that transaction. AIGGIC would also be responsible for the\nmaintenance of documents and records required by the 1940 Act relating to the\norders for purchase and sale of portfolio securities of the Fund, as well as\nfor other records that SAAMCo reasonably requests to be maintained.\n\n Provided the investment objective of the Fund is adhered to, the New\nAgreement also provides that AIGGIC may aggregate sales and purchase orders of\nsecurities held in the Fund with similar orders for other portfolios that\nAIGGIC manages that are made simultaneously, if, in AIGGIC's reasonable\njudgment, such aggregation will result in an overall economic benefit to the\nFund and AIGGIC acknowledges sole responsibility for complying with all\napplicable pronouncements and interpretations of the Securities and Exchange\nCommission (the \"SEC\") regarding the aggregation of trades. The allocation of\nsecurities so purchased or sold shall be made by AIGGIC in the manner that it\nconsiders to be the most equitable and consistent with its fiduciary duties to\nthe Fund and other clients. AIGGIC may from time to time employ or sub-contract\ncertain persons appropriate or necessary to assist in the execution of its\nduties at its expense, so long as such persons do not relieve AIGGIC of its\nresponsibilities or liabilities under the New Agreement.\n\n AIGGIC will pay its own expenses for services to be provided by it under\nthe New Agreement. Except for expenses assumed by AIGGIC or by SAAMCo under the\nprimary advisory agreement, the Fund is responsible for all of the ordinary\nbusiness expenses incurred in its operations and in the offering of its shares,\nincluding, but not limited to: brokerage commissions; taxes; legal, auditing or\ngovernmental fees; the cost of preparing share certificates; custodian,\ntransfer agent and shareholder service agent costs; expenses of issue, sale,\nredemption and repurchase of shares; expenses of registering and qualifying\nshares for sale; expenses relating to Board and Shareholder meetings; the fees\nand other expenses incurred by the Fund in connection with membership in\ninvestment company organizations; the cost of preparing and distributing\nreports and notices to Shareholders, and the cost of printing prospectuses and\nother materials to Shareholders.\n\n In carrying out its obligations under the New Agreement, AIGGIC would be\nobligated to comply with investment guidelines, policies and restrictions\nestablished by the Board that have been communicated in writing to AIGGIC; all\napplicable provisions of the 1940 Act and the Investment Advisers Act of 1940\n(the \"Advisers Act\"), and any rules and regulations adopted by the SEC\nthereunder; the registration statement of the Fund as it may be amended from\ntime to time; the provisions of the Internal Revenue Code of 1986, as amended\n(the \"Internal Revenue Code\"); and any other applicable provisions of state or\nfederal law and any rules and regulations adopted thereunder, to the extent\nthat such laws, rules or regulations impact AIGGIC's provision of services as\ndescribed herein.\n\n\n\n If approved by Shareholders, the New Agreement will continue in effect for\ntwo years (unless terminated earlier) from the date of shareholder approval,\nand will thereafter continue from year to year, provided that the continuance\nof the New Agreement is approved annually by vote of the Board including a\nmajority of the \"non-interested\" directors, or by a vote of \"a majority of the\noutstanding voting securities\" of the Fund (as defined in Section 2(a)(42) of\nthe 1940 Act). The New Agreement may be terminated at any time without penalty\nby vote of the Board, vote of a majority of the Fund's outstanding voting\nsecurities, or by SAAMCo or AIGGIC upon 60 days written notice to the other\nparty. Consistent with the federal securities laws, the New Agreement also\nwould terminate upon any \"assignment\" (as defined in the 1940 Act). If\nShareholders fail to approve the New Agreement, the Board will consider what\nfurther action is appropriate.\n\nBoard Consideration and Approval of the New Agreement\n\n At a meeting held on January 12, 2005, the Board approved the New\nAgreement succeeding Stanfield with AIGGIC.\n\n In approving the New Agreement and selecting AIGGIC as the new\nsub-adviser, and the fees to be paid under the New Agreement, the Board,\nincluding the independent directors advised by independent legal counsel,\nconsidered and concluded the following:\n\nReasons for Replacing Stanfield with AIGGIC\n\n The Board considered SAAMCo's reasons for proposing that AIGGIC succeed\nStanfield as the sub-adviser to the Fund, including: AIGGIC's experience and\nabove-average investment performance record using an income investment style in\nmanaging other funds and accounts with similar investment objectives as the\nFund, including its U.S. Leveraged Loan Composite, which measures\ncollateralized loan obligations and leveraged loan products managed by AIGGIC,\nand the potential for enhanced performance of the Fund using such a management\nstyle. The Board also took into consideration the risk adjusted performance and\nportfolio risk statistics of AIGGIC's account and that it compared favorably to\nthe peer average. In addition, the Board considered that a new sub-advisory\nrelationship with AIGGIC would provide an opportunity for the Fund to continue\nto be managed in close alignment with an income investment style. The Board\nfurther considered the experience level and tenure of the AIGGIC portfolio\nmanagement team.\n\n The Board concluded that these reasons supported its selection of AIGGIC.\n\n\n\nInvestment Sub-Advisory Fee Rates\n\n The Board considered that the proposed sub-advisory fee rate payable by\nSAAMCo to AIGGIC under the New Agreement is the same as the sub-advisory fee\nrate payable by SAAMCo to Stanfield under the Former Agreement. The Board noted\nthat any change in the investment sub-advisory fee rate payable to AIGGIC would\nhave no direct impact on Fund or Shareholders because these fees are payable by\nSAAMCo and there is no change in the investment advisory fee rate payable by\nthe Fund to SAAMCo.\n\n The Board received comparative analysis of sub-advisory fees paid by other\nfloating rate funds. The Board reviewed the advisory fees of these other funds,\nwhich ranged from 0.80% to 0.95% and found that while neither the highest nor\nthe lowest, the advisory fees of the Fund fell within the range of fees\nreviewed. In addition, the Board reviewed information that these other funds\npaid sub-advisory fees, to an affiliated sub-adviser, which ranged from 0.36%\nto 0.40%. The Board noted that the proposed sub-advisory fee rates to AIGGIC\nfell below this range.\n\n The Board also compared AIGGIC's proposed sub-advisory fee rate with the\nsub-advisory fee rates applicable to other similar funds in the SunAmerica\nFunds complex.\n\n As a result of the above considerations, the Board concluded that AIGGIC's\nproposed sub-advisory fee rates under the New Agreement were reasonable in\ncomparison to other sub-advisory fee rates.\n\nNature, Extent and Quality of Services\n\n The Board received and considered information regarding the nature and\nextent of services provided to the Fund by Stanfield under the Former Agreement\nand those that would be provided to the Fund by AIGGIC under the New Agreement,\nnoting that the nature and extent of services under the Former Agreement and\nNew Agreement were substantially similar in that Stanfield and AIGGIC were each\nrequired to provide day-to-day portfolio management services and comply with\nall Fund policies and applicable rules and regulations. The Board also received\nand considered information regarding the nature and extent of services\ncurrently being provided by AIGGIC to other SunAmerica funds under an existing\ninvestment sub-advisory agreement and those that would be provided to the Fund\nby AIGGIC under the New Agreement, noting that the nature and extent of\nservices under both agreements were substantially similar in that AIGGIC was\nrequired to provide day-to-day portfolio management services and comply with\nall Fund policies and applicable rules and regulations.\n\n With respect to the quality of services, the Board considered, among other\nthings, the background and experience of AIGGIC's senior management and the\nexpertise of, and amount of attention expected to be given to the Fund by,\n\n\n\ninvestment analysts and both junior and senior investment personnel of AIGGIC.\nThe Board noted that the AIGGIC Leveraged Loan Group manages $3.7 billion of\ninstitutional bank loans invested in approximately 295 issuers. The Board also\nreviewed the qualifications, backgrounds and responsibilities of the team\nmembers primarily responsible for day-to-day portfolio management services for\nthe Fund. AIGGIC's Leverage Loan Group consists of 20 dedicated leveraged loan\ninvestment and operation professionals. This group brings together professional\ninvestment managers with diverse experience in commercial banking, accounting,\ninvestment banking, distressed debt, sell-side analysis, private placements and\ngeneral corporate management. In further evaluating the quality of services\nanticipated to be provided by AIGGIC, the Board was informed that, in\nmanagement's judgment, AIGGIC has the size, visibility and resources to attract\nand retain highly qualified investment professionals, including research and\nadvisory personnel. In particular, the Board was informed that AIGGIC's\nportfolio management team members have an average industry experience of\napproximately nine years, the average tenure with AIGGIC of the portfolio\nmanagement team members is three years. As of September 30, 2004, AIGGIG (which\nincludes AIGGIC) managed approximately $450 billion, of which approximately\n$384 billion relates to AIG affiliates and $66 billion relates to client\nassets.\n\n The Board concluded that it was satisfied with the nature, extent and\nquality of the investment sub-advisory services anticipated to be provided to\nthe Fund by AIGGIC and that there was a reasonable basis on which to conclude\nthat the quality of investment sub-advisory services to be provided by AIGGIC\nunder the New Agreement should equal or exceed the quality of investment\nsub-advisory services provided by Stanfield under the Former Agreement. The\nBoard also concluded that the services anticipated to be provided by AIGGIC to\nthe Fund compared favorably to those provided by Stanfield to the Fund under\nthe Former Agreement and those currently being provided by AIGGIC to funds of\nSunAmerica, based on the above considerations.\n\nFund Performance\n\n The Board received and considered information about the Fund's historical\nperformance and noted that the Fund's performance, over the relevant periods,\nwas close but somewhat below the median of the group of funds that was most\nsimilar to the Fund (the \"Peer Group\"), as well as lagged an appropriate\nbenchmark index, the Credit Suisse First Boston (\"CSFB\") Leveraged Loan Index,\nover relevant periods. (The CSFB Leveraged Loan Index is an unmanaged\nrepresentative index of tradable, senior, secured, U.S. dollar-denominated\nleveraged loans. It is not possible to invest directly in an Index.)\n\n In addition, the Board received and considered information about the\nperformance of AIGGIC's U.S. Leveraged Loan CLO Composite. The Board noted\n\n\n\nthat for the 1-year, 2-year and 3-year periods, the account outperformed the\nCSFB Leveraged Loan Index. Also, the Board considered that the performance of\nAIGGIC's U.S. Leveraged Loan Composite adjusted to reflect the Fund's current\nexpense ratio of 1.75% was in line with the CSFB Leveraged Loan Index and\nperformed better than the Fund over the various periods.\n\n While aware that past performance is not necessarily indicative of future\nresults, the Board concluded that the historical performance of registered\ninvestment companies and private accounts advised by AIGGIC was in line with\nthat of the Fund and that it was reasonable to believe that AIGGIC would\nprovide satisfactory performance in the future.\n\nAIGGIC Profitability\n\n Because the engagement of AIGGIC is new, there is no historical\nprofitability with regard to its arrangements with the Fund. The Board\nconsidered that any projection of profitability would be uncertain, given that\nsuch a projection would depend on many assumptions, which are by their nature,\nspeculative. Accordingly, the Board did not request or consider AIGGIC's\nprofitability with regard to its approval of the New Agreement.\n\nEconomies of Scale\n\n The Board received and considered information about the potential of both\nSAAMCo and AIGGIC to experience economies of scale as the Fund grows in size.\n\n The Board noted that SAAMCo's advisory fee rate and AIGGIC's proposed\nsub-advisory fee rate contain breakpoints and, accordingly, each reflects the\npotential to share economies of scale. Even though the asset levels at which\nbreakpoints were provided in the sub-advisory fee rate did not directly\ncorrespond to the asset levels at which breakpoints were provided in the\nadvisory fee rate, the Board concluded that the breakpoint structure and levels\nestablished the potential for the sharing of economies of scale among SAAMCo,\nAIGGIC and Shareholders as the Fund grows.\n\n The Board also noted the voluntary fee waiver and/or expense reimbursement\narrangements currently provided by SAAMCo for the Fund, that the Fund's net\ntotal annual operating expense ratio was capped at 1.45% of its average daily\nnet assets for Class A and Class B shares, at 1.50% for Class C shares, and at\n1.25% for Class D shares, and that such expense caps would continue\nindefinitely but may be terminated at any time. The Board also considered that\nit annually reviews the Fund's net operating expense ratios and compares them\nto those of other funds in its Peer Group.\n\n\n\nOther Benefits to AIGGIC\n\n The Board considered potential \"fall-out\" or ancillary benefits\nanticipated to be received by AIGGIC and its affiliates as a result of AIGGIC's\nrelationship with the Fund. Such benefits are expected to include benefits\nattributable to the Fund's relationship with AIGGIC (such as soft-dollar\ncredits, which are credits obtained with portfolio brokerage commissions that\nare used to purchase research products and services from brokers) and benefits\npotentially derived from an increase in AIGGIC's business as a result of\nAIGGIC's relationship with the Fund (such as the ability to market to other\nprospective clients).\n\n The Board concluded that other ancillary benefits that AIGGIC and its\naffiliates could be expected to receive with regard to providing investment\nadvisory and other services to the Fund, such as those noted above, were not\nunreasonable.\n\nConclusion\n\n Considering all of these factors, the Board approved the selection of\nAIGGIC as sub-adviser and concluded that the sub-advisory fees to be paid to\nAIGGIC were reasonable.\n\n The Board unanimously recommends that you vote for approval of\n the New Agreement with AIGGIC.\n\n If the proposal passes, AIGGIC will become the Fund's New Sub-Adviser and\nwill be paid the sub-advisory fee described above. If the proposal fails, the\nBoard will consider the selection of an alternative sub-adviser and the\nsubmission of a new sub-advisory contract to shareholders for approval. The\nInterim Agreement will expire on its 150th day (May 19, 2005). If a contract\nwith a new sub-adviser is not approved prior to the expiration of the Interim\nAgreement, SAAMCo, the Fund's primary investment adviser, will provide\ninvestment advice to the Fund.\n\n\n\n\n\nPROXY TABULATOR\nP.O. BOX 9132\nHINGHAM, MA 02043-9132\n\n- --------------------------\n999 999 999 999 99 <-\n- --------------------------\n\n EVERY SHAREHOLDER'S VOTE IS IMPORTANT\n *** THREE EASY WAYS TO VOTE YOUR PROXY. ***\n\n\n\nSUNAMERICA SENIOR FLOATING RATE FUND\n SPECIAL MEETING OF SHAREHOLDERS\n MARCH 31, 2005\n PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS\n\nThe undersigned holder of shares of beneficial interest of the above-referenced\nFund (the \"Fund\"), hereby appoints PETER A. HARBECK and JOSEPH P. KELLY, and\neach of them, with full power of substitution and revocation, as proxies to\nrepresent the undersigned at the Special Meeting of Shareholders of the Fund to\nbe held at the principal office of the Fund, Harborside Financial Center, 3200\nPlaza 5, Jersey City, NJ 07311, on Thursday, March 31, 2005 at 10:00 A.M.,\nEastern Standard Time, and at any and all adjournments thereof, and to vote all\nshares of beneficial interest of the Fund which the undersigned would be\nentitled to vote, with all powers the undersigned would possess if personally\npresent, in accordance with the instructions on this proxy. The Fund shall vote\nas indicated on the reverse side, and in its own discretion, upon such other\nbusiness as may properly come before the meeting.\n\n Dated:____________________\n\n PLEASE VOTE, DATE, SIGN AND PROMPTLY RETURN IN\n THE ACCOMPANYING ENVELOPE. NO POSTAGE\n REQUIRED IF MAILED IN THE U.S.\n -----------------------------------------------\n\n\n -----------------------------------------------\n Signature (Sign in the Box)\n\n\n Note: Please sign this proxy as your name appears\n on the books of the Fund. Joint owners should each\n sign personally. Trustees and other fiduciaries\n should indicate the capacity in which they sign,\n and where more than one name appears, a majority\n must sign. If a corporation, this signature should\n be that of an authorized officer who should state\n his or her title.\n\n\n\n\n SunAmerica Senior Floating Rate Fund - SP\n\n MIS EDITS: # OF CHANGES___/___PRF1___PRF 2___\n\n OK TO PRINT AS IS*_______________*By signing this form you are\n authorizing MIS to print this form in its current state.\n\n ________________________________________________________________\n SIGNATURE OF PERSON AUTHORIZING PRINTING DATE\n\nLABEL BELOW FOR MIS USE ONLY!\nPO#M9648\nSUNAMERICA #994\nSENIOR FLOATING RATE FUND\nORIGINAL 2UP OVERSIZE 1/24/05 TD\nSCOTT P.(SUNAMERICA SENIOR FLOATING RATE FUND MAR 2005 SP)\n\n\n\nPlease fill in box(es) as shown using black or blue ink or number 2 pencil. [X]\nPLEASE DO NOT USE FINE POINT PENS.\n\nWHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE\nVOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR\nTHE PROPOSALS SET FORTH BELOW AND IN THE DISCRETION OF THE PROXIES WITH RESPECT\nTO ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE SPECIAL MEETING AND ANY\nADJOURNMENTS THEREOF. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE ACCOMPANYING\nNOTICE OF SPECIAL MEETING AND PROXY STATEMENT.\n\n1 To approve a new sub-advisory agreement FOR AGAINST ABSTAIN\n between AIG SunAmerica Asset Management [ ] [ ] [ ]\n Corp. and AIG GlobalInvestment Corp.\n\n Note Address Change:__________________________\n\n __________________________\n\n __________________________\n\n\n PLEASE SIGN AND DATE ON THE REVERSE SIDE.\n\n SunAmerica Senior Floating Rate Fund - SP\n\n\n\n SunAmerica Senior Floating Rate Fund - SP\n\n MIS EDITS: # OF CHANGES___/___PRF1___PRF 2___\n\n OK TO PRINT AS IS*_______________*By signing this form you are\n authorizing MIS to print this form in its current state.\n\n ________________________________________________________________\n SIGNATURE OF PERSON AUTHORIZING PRINTING DATE\n\nLABEL BELOW FOR MIS USE ONLY!\nPO#M9648\nSUNAMERICA #994\nSENIOR FLOATING RATE FUND\nORIGINAL 2UP OVERSIZE 1/24/05 TD\nSCOTT P.(SUNAMERICA SENIOR FLOATING RATE FUND MAR 2005 SP)\n\n\n\n"},"accession_number":{"kind":"string","value":"0001145443-05-000227"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":94,"cells":{"_id":{"kind":"string","value":"1021010_DEF 14A_2005_0001206774-05-000441"},"cik":{"kind":"string","value":"1021010"},"company":{"kind":"string","value":"EDGE PETROLEUM CORP"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-03-25T00:00:00","string":"2005-03-25T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-04-27T00:00:00","string":"2005-04-27T00:00:00"},"sic":{"kind":"string","value":"1311"},"state_of_inc":{"kind":"string","value":"DE"},"state_location":{"kind":"string","value":"TX"},"fiscal_year_end":{"kind":"string","value":"1231"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1021010/0001206774-05-000441-index.html"},"htm_filing_link":{"kind":"string","value":"NULL"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1021010/000120677405000441/0001206774-05-000441.txt"},"filename":{"kind":"string","value":"1021010_DEF 14A_2005_0001206774-05-000441.txt"},"text":{"kind":"string","value":"\nDEF 14A\nd16601_def14a.txt\n\n\n UNITED STATES\n SECURITIES AND EXCHANGE COMMISSION\n Washington, D.C. 20549\n\n SCHEDULE 14A\n\n Proxy Statement Pursuant to Section 14(a) of the Securities\n Exchange Act of 1934 (Amendment No. )\n\nFiled by the Registrant [X]\nFiled by a Party other than the Registrant [ ]\n\nCheck the appropriate box:\n\n[ ] Preliminary Proxy Statement\n[ ] Confidential, for Use of the Commission Only (as permitted by Rule\n 14a-6(e)(2))\n[X] Definitive Proxy Statement\n[ ] Definitive Additional Materials\n[ ] Soliciting Material Pursuant to Section 240.14.a-11(c) or Section\n 240.14a-12\n\n EDGE PETROLEUM CORPORATION\n- --------------------------------------------------------------------------------\n (Name of Registrant as Specified In Its Charter)\n\n- --------------------------------------------------------------------------------\n (Name of Person(s) Filing Proxy Statement, if other than the Registrant)\n\nPayment of Filing Fee (Check the appropriate box):\n[X] No fee required.\n[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.\n\n 1) Title of each class of securities to which transaction applies:\n\n- --------------------------------------------------------------------------------\n\n 2) Aggregate number of securities to which transaction applies:\n\n- --------------------------------------------------------------------------------\n\n 3) Per unit price or other underlying value of transaction computed\n pursuant to Exchange Act Rule 0-11 (set forth the amount on which\n the filing fee is calculated and state how it was determined):\n\n- --------------------------------------------------------------------------------\n\n 4) Proposed maximum aggregate value of transaction:\n\n- --------------------------------------------------------------------------------\n\n 5) Total fee paid:\n\n- --------------------------------------------------------------------------------\n\n PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED\n IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A\n CURRENTLY VALID OMB CONTROL NUMBER.\n\n[ ] Fee paid previously with preliminary materials.\n\n[ ] Check box if any part of the fee is offset as provided by Exchange Act\n Rule 0-11(a)(2) and identify the filing for which the offsetting fee was\n paid previously. Identify the previous filing by registration statement\n number, or the Form or Schedule and the date of its filing.\n\n 1) Amount Previously Paid:\n\n- --------------------------------------------------------------------------------\n\n 2) Form, Schedule or Registration Statement No:\n\n- --------------------------------------------------------------------------------\n\n 3) Filing Party:\n\n- --------------------------------------------------------------------------------\n\n 4) Date Filed:\n\n- --------------------------------------------------------------------------------\n\n\n March 24, 2005\n\n\n\nDear Stockholder:\n\n You are cordially invited to attend the annual meeting of stockholders of\nEdge Petroleum Corporation to be held at the Doubletree Hotel, 400 Dallas\nStreet, Houston, Texas 77002, on Wednesday, April 27, 2005 at 10:00 a.m.\nHouston time.\n\n This booklet includes the notice of the meeting and the Proxy Statement,\nwhich contains information about the Board and its committees and personal\ninformation about each of the nominees for the Board. Other matters on which\naction is expected to be taken during the meeting are also described.\n\n If you plan to attend the meeting in person, please follow the advance\nregistration instructions in the back of this Proxy Statement which will\nexpedite your admission to the meeting. Whether or not you plan to attend the\nannual meeting in person, it is important that you complete, sign, date and\npromptly return the enclosed proxy card or that you give your proxy by\ntelephone or the Internet. To vote by phone or the Internet, please follow the\ninstructions on your proxy card.\n\n It is important that your shares are represented at the meeting, whether\nor not you are able to attend personally. Accordingly, we urge you to vote your\nshares at your earliest convenience.\n\n Our Board and employees mourn the death of Joe Musolino, a good friend and\nvalued director of the Company, who passed away on March 20th of this year. On\nbehalf of the Company and our stockholders, we extend our deepest sympathies to\nhis wife, Kathy, and his entire family. Mr. Musolino faithfully served for three\nyears on the Company's Board of Directors. He was a member of the Audit\nCommittee and the chairman of the Corporate Governance/Nominating Committee. Mr.\nMusolino served as an advisory director of First American Bank, SSB. He also\nserved on the boards of Bank of America, as well as Pool Energy Services Company\nand Justin Industries. His philanthropic activities included serving as chairman\nof the Greater Houston Partnership, chairman of the Dallas United Way, chairman\nof Baylor University Medical Center Foundation and a director of various other\ncivic and professional organizations. Joe was a graduate of the University of\nOklahoma and served his country in the U.S. Navy. He will be greatly missed.\n\n On behalf of the Board of Directors, thank you for your continued support\nof the Company. I look forward to greeting as many of our stockholders as\npossible at the annual meeting.\n\n\n /s/ John W. Elias\n\n\n JOHN W. ELIAS\n Chairman of the Board, President\n and Chief Executive Officer\n\n\n\n\n\n\n\n NOTICE OF ANNUAL MEETING OF STOCKHOLDERS\n TO BE HELD ON APRIL 27, 2005\n\n\nTo the Stockholders of\nEdge Petroleum Corporation\n\n\n The annual meeting of stockholders of Edge Petroleum Corporation will be\nheld at the Doubletree Hotel, 400 Dallas Street, Houston, Texas 77002, on\nWednesday, April 27, 2005 at 10:00 a.m. Houston time, for the following\npurposes:\n\n 1. To elect one director.\n\n 2. To consider and vote upon the proposed Charter amendment to increase the\n number of authorized shares of Common Stock from 25 million to 60 million.\n\n 3. To ratify the selection of BDO Seidman, LLP as the Company's independent\n registered public accounting firm for 2005.\n\n 4. To transact such other business as may properly come before the meeting\n or any adjournment thereof.\n\n The Board of Directors has fixed the close of business on March 17, 2005\nas the record date for determining stockholders entitled to notice of, and to\nvote at, this meeting.\n\n You are cordially invited to attend the meeting in person. Whether or not\nyou plan to attend the annual meeting in person, it is important that you\ncomplete, sign, date and promptly return the enclosed proxy card or that you\ngive your proxy by telephone or the Internet. Submitting your proxy early by\nany of these methods will not prevent you from voting your shares at the\nmeeting if you desire to do so, as your proxy is revocable at your option.\n\n By Authorization of the Board of Directors\n\n /s/ Robert C. Thomas\n\n ROBERT C. THOMAS\n Vice President, General Counsel and\n Corporate Secretary\n\n\nMarch 24, 2005\n1301 Travis Street, Suite 2000\nHouston, Texas 77002\n\n\n\n\n\n\n\n PROXY STATEMENT\n\n\n This Proxy Statement and the accompanying proxy card are being mailed to\nstockholders beginning on or about March 24, 2005. They are furnished in\nconnection with the solicitation by the Board of Directors of Edge Petroleum\nCorporation (the \"Company\") of proxies from the holders of the Company's common\nstock, par value $0.01 per share (\"Common Stock\"), for use at the 2005 annual\nmeeting of stockholders (the \"Annual Meeting\") to be held at the time and place\nand for the purposes set forth in the accompanying notice. In addition to the\nsolicitation of proxies by mail, proxies may also be solicited by telephone,\ntelegram or personal interview by regular employees of the Company. The Company\nwill pay all costs of soliciting proxies. The Company will also reimburse\nbrokers or other persons holding stock in their names or in the names of their\nnominees for their reasonable expenses in forwarding proxy material to\nbeneficial owners of such stock.\n\n All duly executed proxies received prior to the meeting will be voted in\naccordance with the choices specified thereon. As to any matter for which no\nchoice has been specified in a duly executed proxy, the shares represented\nthereby will be voted FOR the election as a director of the nominee listed\nherein, FOR the approval of the proposed amendment to the Company's Restated\nCertificate of Incorporation to increase the number of authorized shares of\nCommon Stock from 25 million to 60 million, FOR approval of the appointment of\nBDO Seidman, LLP as the Company's independent registered public accounting firm\nfor 2005 and at the discretion of the persons named in the proxy in connection\nwith any other business that may properly come before the Annual Meeting. See\n\"Other Business\" on page 22 for information concerning the voting of proxies if\nother matters are properly brought before the Annual Meeting. A stockholder\ngiving a proxy may revoke it at any time before it is voted at the Annual\nMeeting by filing with the Corporate Secretary an instrument revoking it, by\ndelivering a duly executed proxy bearing a later date or by appearing at the\nAnnual Meeting and voting in person.\n\n As of March 17, 2005, the record date for determining stockholders\nentitled to vote at the Annual Meeting, the Company had outstanding and\nentitled to vote 17,100,555 shares of Common Stock. The Common Stock is the\nonly class of stock of the Company outstanding at the record date and entitled\nto vote at the Annual Meeting. Each share entitles the holder to one vote on\neach matter submitted to a vote of stockholders. Cumulative voting is not\npermitted. The requirement for a quorum at the Annual Meeting is the presence\nin person or by proxy of holders of a majority of the outstanding shares of\nCommon Stock.\n\n In addition to voting in person at the Annual Meeting, stockholders of\nrecord may vote by proxy by calling a toll-free phone number, by using the\nInternet or by mailing their signed proxy cards. The telephone and Internet\nvoting procedures are designed to authenticate stockholders' identity, to allow\nstockholders to give their voting instructions and to confirm that\nstockholders' instructions have been recorded properly. Specific instructions\nfor stockholders of record who wish to use the telephone or Internet voting\nprocedures are set forth on the enclosed proxy card.\n\n If your shares are held in the name of a bank, broker or other holder of\nrecord, you will receive instructions from the holder of record that you must\nfollow in order for your shares to be voted. Certain of these institutions\noffer telephone and Internet voting.\n\n A broker non-vote occurs when a broker submits a proxy card with respect\nto shares of common stock held in a fiduciary capacity (typically referred to\nas being held in \"street name\"), but declines to vote on a particular matter\nbecause the broker has not received voting instructions from the beneficial\nowner. Abstentions, shares with respect to which authority is withheld and\nbroker non-votes that are voted on any matter are included in determining\nwhether a quorum is present. Abstentions are treated as shares that are present\nand entitled to vote for purposes of determining the outcome of any matter\nsubmitted to the stockholders for a vote. Abstentions, however, do not\nconstitute a vote \"for\" or \"against\" any matter and thus will be disregarded in\nthe calculation of a plurality of \"votes cast\". Under the rules that govern\nbrokers who are voting with respect to shares held in street name, brokers have\nthe discretion to vote such shares on routine matters, but not on non-routine\nmatters. Routine matters include the election of directors, increases in\nauthorized common stock and ratification of auditors. Votes are counted, and\nthe count is certified, by an inspector of elections. Information regarding the\nvote required for approval of particular matters is set forth in the discussion\nof those matters appearing elsewhere in this Proxy Statement.\n\n The Annual Report to Stockholders, which includes financial statements of\nthe Company for the year ended December 31, 2004, has been mailed to all\nstockholders entitled to vote at the Annual Meeting on or before the\n\n\n\n\ndate of mailing this Proxy Statement. The Securities and Exchange Commission\n(\"SEC\") permits a single set of annual reports and proxy statements to be sent\nto any household at which two or more stockholders reside if they appear to be\nmembers of the same family. Each stockholder continues to receive a separate\nproxy card. This procedure, referred to as householding, reduces the volume of\nduplicate information stockholders receive and reduces mailing and printing\nexpenses. A number of brokerage firms have instituted householding.\n\n As a result, if you hold your shares through a broker and you reside at an\naddress at which two or more stockholders reside, you will likely be receiving\nonly one annual report and proxy statement unless any stockholder at that\naddress has given the broker contrary instructions. However, if any such\nbeneficial stockholder residing at such an address wishes to receive a separate\nannual report or proxy statement in the future, that stockholder should contact\ntheir broker or send a request to the Company's corporate secretary at the\nCompany's principal executive offices, 1301 Travis, Suite 2000, Houston, Texas\n77002, telephone number (713) 654-8960. The Company will deliver, promptly upon\nwritten or oral request to the corporate secretary, a separate copy of the 2004\nAnnual Report and this Proxy Statement to a beneficial stockholder at a shared\naddress to which a single copy of the documents was delivered. The Annual\nReport is not a part of the proxy solicitation material.\n\n Attendance at the annual meeting is limited to the Company's stockholders\nor their designated representative or proxy, members of their immediate family\nand the Company's employees and guests. In order to attend as a stockholder or\nimmediate family member, you or your family member must be a stockholder of\nrecord as of March 17, 2005, or you must provide a copy of a brokerage\nstatement or other evidence of beneficial ownership showing ownership of common\nstock on March 17, 2005. If you or your designated representative or proxy plan\nto attend the meeting, please follow the advance registration instructions in\nthe back of this Proxy Statement which will expedite your admission to the\nmeeting.\n\n PROPOSAL I\n\n Election of Director\n\n The Company's Board of Directors is divided into three classes, with\nstaggered terms of office. The term for each class expires on the date of the\nthird annual stockholders' meeting for the election of directors following the\nmost recent election of directors for such class. Each director holds office\nuntil the next annual meeting of stockholders for the election of directors of\nhis class and until his successor has been duly elected and qualified.\n\n One director is to be elected to the class of directors whose current term\nwill end in 2005. The name of Mr. Vincent S. Andrews will be placed in\nnomination, and the persons named in the proxy will vote in favor of such\nnominee unless authority to vote in the election of director is withheld. Mr.\nAndrews is currently a director of the Company. Joseph R. Musolino, who had\nserved as a director of the Company since May 2002, passed away on March 20,\n2005. He had been nominated for reelection as a director at the Annual Meeting.\nIn addition to his service to the Company, he was the retired Vice Chairman,\nTexas, of Bank of America, N.A., and its corporate predecessors, and served as\nan advisory director of First American Bank, SSB. Mr. Musolino was also a\nmember of the Audit and Corporate Governance/Nominating (chairman) Committees\nof the Board. Mr. Musolino was a good friend and valued director who served our\nCompany faithfully. He will be greatly missed.\n\n The persons named in the proxy may act with discretionary authority in the\nevent the nominee should become unavailable for election, although management\nis not currently aware of any circumstances likely to result in such nominee\nbecoming unavailable for election. In accordance with the Company's Bylaws,\nthe director will be elected by a plurality of the votes cast; accordingly,\nabstentions and broker non-votes will have no effect. A stockholder may, in the\nmanner set forth in the enclosed proxy card, instruct the proxy holder not to\nvote that stockholder's shares for the named nominee.\n\n Nominee -- The following summary sets forth information concerning the\nnominee for election as a director at the Annual Meeting, including such\nnominee's age, position with the Company, if any, and business experience\nduring the past five years.\n\n Vincent S. Andrews has served as a director of the Company since December\n1996 and served as a director of the Company's corporate predecessor from April\n1991 until the Company's initial public offering in March 1997 (the\n\"Offering\"). Mr. Andrews has been an active investor in the Company's corporate\npredecessor since 1988. Mr. Andrews has, for more than five years, served as\npresident of Vincent Andrews Management Corporation, a\n\n\n\n\nprivately held management company primarily involved in personal financial\nmanagement. Mr. Andrews is a member of the Audit Committee of the Board. He is\n64 years old.\n\n The Board of Directors recommends that stockholders vote FOR the election\nof Mr. Andrews as a director of the Company whose term will expire in 2008.\n\n Directors with Terms Expiring in 2006 and 2007 -- The following summaries\nset forth information concerning six directors of the Company whose present\nterms of office will continue until 2006 or 2007, including each director's\nage, position with the Company, if any, and business experience during the past\nfive years.\n\n Thurmon M. Andress has served as a director of the Company since November\n2002. For the past five years he has been the president of Andress Oil & Gas\nCompany, a private company located in Houston, Texas, engaged in the business\nof oil and gas exploration and development. He also serves as the managing\ndirector-Houston of Breitburn Energy Company LLC, a private company\nheadquartered in Los Angeles, California, engaged in oil and gas production\nwith operations primarily in California. Mr. Andress has over 40 years\nexperience in the oil and gas industry. He is the chairman of the Compensation\nCommittee. He is 71 years old. Mr. Andress' current term as a director expires\nin 2006.\n\n John W. Elias has served as the Chief Executive Officer and Chairman of\nthe Board of the Company since November 1998 and as President since January\n2000. From April 1993 to September 1998, he served in various senior management\npositions, including Executive Vice President of Seagull Energy Corporation, a\ncompany engaged in oil and gas exploration, development and production and\npipeline marketing. Prior to April 1993, Mr. Elias served in various positions\nfor more than 30 years, including senior management positions with Amoco\nCorporation, a major integrated oil and gas company. Mr. Elias has more than 40\nyears of experience in the oil and natural gas exploration and production\nbusiness. He is 64 years old. Mr. Elias' current term as a director expires in\n2006.\n\n John Sfondrini has served as a director of the Company since December 1996\nand prior to that as director of the Company's corporate predecessors from\n1986, when he arranged for the capitalization of a predecessor partnership. For\nmore than five years, he has been self-employed as a consultant that assists\nhis clients in raising and investing private capital for growth-oriented\ncompanies in multiple industry segments, including oil and gas. Mr. Sfondrini\nis a member of the Corporate Governance/Nominating Committee of the Board. He\nis 56 years old. Mr. Sfondrini's current term as a director expires in 2006.\n\n Stanley S. Raphael has served as a director of the Company since December\n1996 and prior to that served as a director of the Company's corporate\npredecessor from April 1991 until the Offering. For more than five years, Mr.\nRaphael has been primarily engaged as a management consultant and is presently\nthe sole owner and director of Trade Consultants, Inc., a management consulting\nfirm. He is also a director and the retired Chairman of American Polymers Inc.,\na polystyrene manufacturer and plastics distributor. Previously, he was active\nin trading crude oil, petroleum products, LPG, petrochemicals, and plastics\nworldwide. Mr. Raphael is a member of the Corporate Governance/Nominating\nCommittee of the Board. He is 69 years old. Mr. Raphael's current term as a\ndirector expires in 2007.\n\n Robert W. Shower has served as a director of the Company since March 1997.\nFrom December 1993 until his retirement in April 1996, Mr. Shower served as\nExecutive Vice President and Chief Financial Officer of Seagull Energy\nCorporation, a company engaged in oil and gas exploration, development and\nproduction and pipeline marketing. From March 1992 to December 1993, he served\nas such company's Senior Vice President and Chief Financial Officer. Until May\n2002, Mr. Shower served as a director of Lear Corporation and Nuevo Energy\nCompany. Mr. Shower is a member of the Compensation and Audit (chairman)\nCommittees of the Board. He is 67 years old. Mr. Shower's current term as a\ndirector expires in 2007.\n\n David F. Work has served as a director of the Company since November 2002.\nFor more than five years prior to October 2000, he served in various management\ncapacities with BP Amoco and BP, including North American vice president of BP.\nSince his retirement from BP in 2000 and until October 2003, he served as the\nchairman of Energy Virtual Partners, Inc., a private company engaged in the\nbusiness of managing under-resourced oil and gas properties. Mr. Work is a\nmember of the Compensation and Corporate Governance/Nominating Committees of\nthe Board. He is 60 years old. Mr. Work's current term as a director expires in\n2007.\n\n\n\n\n There are no family relations, of first cousin or closer, among the\nCompany's directors or executive officers by blood, marriage or adoption. The\nBoard had determined that all directors of the Company are independent\ndirectors within the meaning of Marketplace Rule 4200(a)(15) of the Nasdaq\nStock Market, except that Mr. Elias is not independent because he is an\nemployee of the Company. While Mr. Sfondrini has a number of relationships and\nhe or his affiliates are parties to certain transactions that could be viewed as\ntransactions involving the Company, as described under \"Certain Transactions\"\nlater in this Proxy Statement, the Board does not view these relationships and\ntransactions as precluding a finding of his independence under the Nasdaq\nrequirements.\n\n Standing Committees, Board Organization, Director Nominations and Meetings\n\n Compensation Committee. The members of the Compensation Committee of the\nBoard are Messrs. Andress (chairman), Shower and Work, each of whom has been\ndetermined to be independent within the meaning of Marketplace Rule 4200(a)(15)\nof the Nasdaq Stock Market. The Board of Directors adopted a charter for the\nCompensation Committee effective January 1, 2004 (the \"Compensation Committee\nCharter\"). The duties and functions performed by the Compensation Committee are\n(a) to review and recommend to the Board of Directors or determine the annual\nsalary, bonus, stock options and other benefits, direct and indirect, of the\nexecutive officers; (b) to review new executive compensation programs, review\non a periodic basis the operation of the Company's executive compensation\nprograms to determine whether they are properly coordinated, establish and\nperiodically review policies for the administration of executive compensation\nprograms, and take steps, consistent with the contractual obligations of the\nCompany, to modify any executive compensation programs that yield payments and\nbenefits that are not reasonably related to executive performance; (c) to\nestablish and periodically review policies in the area of management\nperquisites; and (d) to exercise all of the powers of the Board of Directors\nwith respect to any other matters involving the compensation of employees and\nthe employee benefits of the Company as may be delegated to the Compensation\nCommittee from time to time.\n\n Audit Committee. The members of the Audit Committee of the Board are\nMessrs. Andrews and Shower (chairman). In addition, Mr. Musolino served as a\nmember of the Audit Committee until his recent death on March 20, 2005. Each of\nMessrs. Andrews, Shower and Musolino has been determined to be independent\nwithin the meaning of Marketplace Rules 4200(a)(15) and 4350(d)(2)(A) of the\nNasdaq Stock Market. On March 22, 2005, the Company notified the Nasdaq Stock\nMarket of the death of Mr. Musolino. The Company further advised Nasdaq that as\na result of Mr. Musolino's death, the Company is not in compliance with the\naudit committee composition requirement set forth in Rule 4350(d)(2)(A) of\nNasdaq's Marketplace Rules, which requires a listed issuer to have at least\nthree members on its audit committee. The Company received a letter in response\nfrom the Nasdaq Stock Market on March 22, 2005 to the same effect. The Company\nhas also notified the Nasdaq Stock Market that it will rely on the cure period\nprovision of Nasdaq Marketplace Rule 4350(d)(4)(B), which permits the Audit\nCommittee to be composed of only two members on a temporary basis. The Board of\nDirectors will appoint a third independent director to serve as a member of the\nAudit Committee to fill the vacancy by the date of the 2005 Annual Meeting of\nStockholders in accordance with the terms of the cure period rule. In addition,\nthe Board has determined that at least one member of the Audit Committee, Mr.\nRobert W. Shower, is an \"audit committee financial expert.\" In addition to the\npositions described in Mr. Shower's biography earlier in this Proxy Statement,\nhe has experience as a public accountant and chief financial officer and has\nserved on the audit committees of other public companies.\n\n The Audit Committee has direct responsibility for the appointment,\nretention, compensation and oversight of the independent registered public\naccounting firm for the purpose of preparing the Company's annual audit report\nor performing other audit, review or attest services for the Company. The Audit\nCommittee has sole authority to approve all engagement fees and terms of the\nindependent registered public accounting firm and to establish policies and\nprocedures for pre-approval of audit and non-audit services. The Audit\nCommittee conducts a review of the annual audit with management and the\nindependent registered public accounting firm prior to filing or distribution,\nreviews filings with the SEC and other published documents containing the\nCompany's financial statements, reviews with the Company's legal counsel any\nlegal or regulatory matters that may have a material impact on the Company's\nfinancial statements, related corporate compliance policies, and programs and\nreports received from regulators. The Committee also reviews on an annual\nbasis, or more frequently as such Committee may from time to time deem\nappropriate, the policies and practices of the Company dealing with various\nmatters relating to the financial condition and auditing procedures of the\nCompany, including financial information to be provided to stockholders\n\n\n\n\nand others, the Company's systems of internal controls established by\nmanagement and oversight of the annual audit and review of the annual and\nquarterly financial statements, as well as any duties that may be assigned by\nthe Board of Directors from time to time. The Audit Committee operates under a\nwritten charter that was last amended by the Board of Directors in December\n2003 (as amended, the \"Audit Committee Charter\").\n\n Corporate Governance/Nominating Committee. The members of the Corporate\nGovernance/Nominating Committee of the Board are Messrs. Raphael, Sfondrini and\nWork, each of whom has been determined to be independent within the meaning of\nMarketplace Rule 4200(a)(15) of the Nasdaq Stock Market. Until his recent death,\nMr. Musolino was a member and chairman of the Corporate Governance/Nominating\nCommittee. The Board of Directors will designate a new chairman of the Corporate\nGovernance/Nominating Committee by the date of the 2005 Annual Meeting of\nStockholders. In December 2003, the Board established a charter for the\nCorporate Governance/Nominating Committee (the \"Corporate Governance/Nominating\nCommittee Charter\") setting forth the purpose, goals and responsibilities of the\nCorporate Governance/Nominating Committee. The functions performed by the\nCommittee are to make non-binding recommendations with respect to the nomination\nof directors to serve on the Board of Directors of the Company for the Board's\nfinal determination and approval, review the Board's corporate governance\nguidelines annually, undertake CEO succession planning and any other duties that\nmay be assigned by the Board from time to time.\n\n In December 2003, the Corporate Governance/Nominating Committee\nrecommended and the full Board approved a set of corporate governance\nguidelines for guiding the Board in fulfilling its duties to the Company,\nincluding guidelines for the size of the Board, monitoring and safeguarding the\nindependence of the Board, term limits, mandatory retirement, other\ndirectorships, change in occupation or business of a director, recusal when\nconflicts of interest arise, selection and qualification of director\ncandidates, director continuing education, Board meetings, executive sessions\nwith only non-employee directors, attendance, committees, Board and committee\nevaluations, CEO evaluation (by the Compensation Committee), management\nsuccession, procedures for communication by interested parties with\nnon-employee directors, procedures for handling concerns regarding accounting,\ncontrols over financial reporting or other audit matters, non-employee director\nremuneration, certain shareholder voting matters and procedures for candidates\nrecommended by shareholders and other matters (the \"Corporate Governance\nGuidelines\").\n\n The Corporate Governance/Nominating Committee Charter provides, among\nother things, that any candidate for the Board nominated by the Board must meet\nthe minimum qualifications specified in the charter and in the Company's\nCorporate Governance Guidelines, including that the director candidate possess\npersonal and professional integrity, has good business judgment, relevant\nexperience and skills and will be an effective director in conjunction with the\nfull Board in collectively serving the long-term interests of the Company's\nstockholders. In addition, for a director to serve on the Audit, Compensation\nor Corporate Governance/Nominating Committee, he or she must meet the\nindependence standards applicable to such committees in accordance with Nasdaq,\nthe Internal Revenue Code and SEC rules. The Company's Bylaws provide that no\nperson shall be eligible for nomination for election as a director if that\nperson is or will become 70 years of age or older on or prior to the date of\nthe annual meeting at which they would be considered for election. A director\nwho becomes 70 years of age during his or her term may complete the term. The\nCompany's Bylaws also provide that directors who are also employees of the\nCompany are deemed to resign from the Board on their 65th birthday and may not\nthereafter be nominated for election. The Board may waive either or both of\nthese Bylaw provisions by majority vote if the Board in its judgment determines\nthat such waiver would be in the best interests of the Company. Inasmuch as Mr.\nElias will turn 65 years of age in 2005, the Board considered and approved a\nresolution at its February 2005 meeting waiving the employee-director age\nrestriction as it relates to Mr. Elias for the remainder of his term and\nproviding that Mr. Elias shall remain eligible to be nominated for election to\nthe Board in the future until he reaches the age of 70.\n\n Director Nominations. All director nominations must be recommended by the\nCorporate Governance/ Nominating Committee and approved by a majority of the\nindependent directors of the Board. The Corporate Governance/Nominating\nCommittee's policy is that it will consider candidates recommended by\nstockholders on the same basis as other candidates, provided the recommended\ncandidate meets all of the minimum requirements and qualifications for being a\ndirector as specified in the Company's Corporate Governance Guidelines, the\nCorporate Governance/Nominating Committee Charter and the Company's Bylaws. Any\nsuch recommendations should include the candidate's name and qualifications for\nBoard membership and should be sent in writing to the\n\n\n\n\nCorporate Secretary of the Company at Edge Petroleum Corporation, 1301 Travis,\nSuite 2000, Houston, Texas 77002. The Corporate Governance/Nominating Committee\nwill consider candidates for Board membership suggested by its members and\nother Board members, as well as management and stockholders. Once the Committee\nidentifies a prospective nominee, it will make an initial determination as to\nwhether to conduct a full evaluation of the candidate. This initial\ndetermination will be based on whatever information is provided to the\nCommittee with the recommendation of the prospective candidate, as well as the\nCommittee's own knowledge of the prospective candidate, which may be\nsupplemented by inquiries to the person making the recommendation or others.\nThe initial determination will be based primarily on the need for Board members\nto fill vacancies or expand the size of the Board and the likelihood that the\nprospective nominee can satisfy the minimum qualifications described above. In\naddition, as the Company evolves, the experience and diversity required on its\nBoard may change. Therefore, the expertise that a prospective nominee possesses\nwill be thoroughly examined to determine whether there is an appropriate fit.\nIf the initial determination indicates that the Committee should pursue the\nprospect, the Committee will evaluate the prospective nominee against the\nminimum qualifications in full and consider such other relevant factors as it\ndeems appropriate. In connection with this evaluation, one or more members of\nthe Committee and others as appropriate, may interview the prospective nominee.\nAfter completing this evaluation, the Committee will determine whether to\nrecommend the individual for nomination by the Board. The Board, acting on the\nrecommendations of the Corporate Governance/Nominating Committee, will nominate\na slate of director candidates for election at each annual meeting of\nstockholders and will appoint directors to fill vacancies between annual\nmeetings, including vacancies created as a result of any increase in size of\nthe Board. The Company does not pay a fee to any third party or parties to\nidentify, evaluate or assist in identifying or evaluating any potential\nnominees.\n\n In addition, the Company's Bylaws permit stockholders to nominate persons\nfor election to the Board at an annual stockholders meeting, without regard to\nwhether the stockholder has submitted a recommendation to the Corporate\nGovernance/Nominating Committee as to such nominee. To nominate a director\nusing this process, the stockholder must follow the procedures described under\n\"Additional Information.\"\n\n Board Meetings. The Company expects each director to make every effort to\nattend each Board meeting, each meeting of any committee on which he or she\nsits and the annual stockholder's meeting. Attendance in person at board and\ncommittee meetings is preferred, but attendance by teleconference is permitted,\nif necessary. All of the Company's directors attended last year's annual\nmeeting of stockholders.\n\n During 2004, the Board of Directors held seven meetings and acted by\nwritten consent five times. During 2004, the Compensation Committee met three\ntimes, the Audit Committee met six times and the Corporate Governance/\nNominating Committee met two times. During 2004, all members of the Board of\nDirectors attended at least 75% of the total of all Board meetings and\napplicable committee meetings held during the time they served as directors. In\naddition, the Company's non-employee Directors meet at regularly scheduled\nexecutive sessions without management present. In 2004, the Board held four\nregularly scheduled executive sessions in which only the independent,\nnon-employee Directors were present.\n\n The Compensation Committee, Audit Committee and Corporate\nGovernance/Nominating Committee Charters, as well as the Corporate Governance\nGuidelines are all available on the Company's website, http://www.edgepet.com.\nWe make our website content available for information purposes only. It should\nnot be relied upon for investment purposes, nor is it incorporated by reference\nin this Proxy Statement.\n\n Director Remuneration -- Prior to June 1, 2004, the annual compensation of\neach director who was not an employee of the Company or a subsidiary (a\n\"Non-employee Director\") consisted of (1) an annual retainer of $10,000, up to\nhalf of which could be paid in unrestricted shares of Common Stock and (2) a\ngrant of non-qualified stock options (\"NSOs\") to purchase 3,000 shares of Common\nStock. The shares of Common Stock and options for Common Stock were issued\npursuant to the Edge Petroleum Corporation Incentive Plan.\n\n Effective beginning June 1, 2004, the annual compensation for Non-employee\nDirectors was revised to eliminate the stock option grant component and\nincrease the annual retainer, all or a portion of which may be paid in shares\nof Common Stock. If the Board elects to pay all or some of the retainer in\nshares of Common Stock, all or a portion of those shares may be subject to\nrestriction, in the discretion of the Board. The Edge Petroleum Corporation\nIncentive Plan was amended and restated effective June 1, 2004 accordingly (as\namended and restated,\n\n\n\n\nthe \"Incentive Plan\"). Under the Incentive Plan, the Board has the discretion\nto reinstate the annual option grant. In accordance with the new annual\ncompensation arrangement, in 2004 Non-employee Directors were paid an annual\nretainer equal to the sum of (1) $10,000 (paid in cash) and (2) the value of\n2,400 shares of Common Stock (paid in kind). The shares vest ratably over three\nyears beginning on the first anniversary of the grant date. The fair market\nvalue of the shares on the June 1, 2004 award date was $32,640 per director. No\noption awards were made to Non-employee Directors in 2004.\n\n In addition, each Non-employee Director is to receive a $1,000 cash\npayment for in-person attendance at a meeting of the Board of Directors ($400\nif such attendance is telephonic) and $750 ($1,200 in the case of a chairman of\na Committee even if such attendance is telephonic) for each meeting of a\nCommittee of the Board of Directors attended ($400 if telephonic). All\ndirectors are reimbursed for out-of-pocket expenses incurred in attending\nmeetings of the Board or Board committees and for other expenses incurred in\ntheir capacity as directors.\n\n At its February 2005 meeting, the Corporate Governance/Nominating\nCommittee reviewed the director's compensation and determined that such\ncompensation should be increased in light of the increased duties,\nresponsibilities and complexities of Board service. The committee deferred\ntaking any action to increase director compensation, however, until after\nreviewing certain competitive information and surveys of director compensation\nof the Company's peers and competitors. Increases, if any, in director\ncompensation will be finally reviewed and approved by the Corporate\nGovernance/Nominating Committee at a meeting later in 2005, submitted to the\nfull Board for approval and reported in the proxy statement for the 2006 annual\nmeeting.\n\n Audit Committee Report -- As noted above, the Audit Committee is currently\ncomposed of two directors, Messrs. Andrews and Shower, and, until his recent\ndeath, Mr. Musolino, each of whom is independent as defined by the Nasdaq Stock\nMarket's listing standards. Management is responsible for the Company's internal\ncontrols and financial reporting process. The independent registered public\naccounting firm was responsible for performing an independent audit of the\nCompany's consolidated financial statements in accordance with auditing\nstandards generally accepted in the United States of America and to issue a\nreport thereon. The Audit Committee's responsibility is to monitor and oversee\nthese processes.\n\n In connection with these responsibilities, the Audit Committee met with\nmanagement and the independent registered public accounting firm to review and\ndiscuss the December 31, 2004 financial statements. Management represented to\nthe Audit Committee that the Company's consolidated financial statements were\nprepared in accordance with generally accepted accounting principles. The Audit\nCommittee also discussed with the independent registered public accounting firm\nthe matters required to be discussed by Statement on Auditing Standards No. 61\n(Communication with Audit Committees, as amended). The Audit Committee also\nreceived written disclosures from the independent registered public accounting\nfirm required by Independence Standards Board Standard No. 1 (Independence\nDiscussions with Audit Committees), and the Audit Committee discussed with the\nindependent registered public accounting firm that firm's independence.\n\n Based upon the Audit Committee's discussions with management and the\nindependent registered public accounting firm and the Audit Committee's review\nof the representations of management and the independent registered public\naccounting firm, the Audit Committee recommended that the Board of Directors\ninclude the audited consolidated financial statements in the Company's Annual\nReport on Form 10-K for the year ended December 31, 2004, to be filed with the\nSecurities and Exchange Commission.\n\n The Audit Committee:\n\n\n Robert W. Shower, Chair\n Vincent S. Andrews\n Joseph R. Musolino*\n\n * The Audit Committee, including Mr. Musolino, approved this report prior\n to his death.\n\n Pursuant to the Securities and Exchange Commission Rules, the foregoing\nAudit Committee Report is not deemed \"soliciting material\", is not \"filed\" with\nthe Commission and is not incorporated by reference with the Company's Annual\nReport on Form 10-K, whether made before or after the date hereof and\nirrespective of any general incorporation language in such report.\n\n\n\n\n Security Ownership of Certain Beneficial Owners and Management -- The\nfollowing table sets forth information as of February 2, 2005 (except as\nindicated below) with respect to beneficial ownership of the Common Stock by:\n(i) all persons who are the beneficial owner of 5% or more of the outstanding\nCommon Stock; (ii) each director or nominee for director; (iii) each executive\nofficer of the Company; and (iv) all executive officers and directors of the\nCompany as a group. As of February 2, 2005, 17,063,410 shares of Common Stock\nwere issued and outstanding.\n\n\n\n\n\n- ------------\n\n * Less than one percent.\n\n (1) Except as otherwise noted, each stockholder has sole voting and\n investment power with respect to the shares beneficially owned,\n subject to community property laws, where applicable.\n\n (2) Shares shown include (i) 424,000 shares of Common Stock that could\n be acquired pursuant to stock options exercisable within 60 days of\n February 2, 2005, (ii) 215,000 shares purchased by Mr. Elias\n pursuant to the Company's 1999 private placement on the same terms\n as were applicable to unrelated parties; such shares are held in an\n IRA account for his benefit, and (iii) 2,370 shares that Mr. Elias\n will receive within 60 days of February 2, 2005 pursuant to a\n restricted stock award made on April 2, 2004.\n\n (3) Shares shown include (i) 42,000 shares of Common Stock that could be\n acquired pursuant to stock options exercisable within 60 days of\n February 2, 2005, and (ii) 3,592 shares that Mr. Long will receive\n within 60 days of February 2, 2005, pursuant to restricted stock\n awards made in 2003 and 2004.\n\n (4) Shares shown include (i) 37,000 shares of Common Stock that could be\n acquired pursuant to stock options exercisable within 60 days of\n February 2, 2005, and (ii) 3,592 shares that Mr. Tugwell will\n receive within 60 days of February 2, 2005, pursuant to restricted\n stock awards made in 2003 and 2004.\n\n (5) Shares also include 5,000 shares of Common Stock that could be\n acquired pursuant to stock options exercisable within 60 days of\n February 2, 2005.\n\n (6) Shares shown include (i) 15,000 shares of Common Stock beneficially\n owned by Mr. Andrews' wife, (ii) 3,568 shares held by Mr. Andrews'\n children, and (iii) 18,300 shares that could be acquired pursuant to\n stock options exercisable within 60 days of February 2, 2005. Mr.\n Andrews may be deemed the beneficial owner of the shares of Common\n Stock beneficially owned by his wife and children. Mr. Andrews\n disclaims such beneficial ownership.\n\n (7) Shares also include 3,000 shares of Common Stock that could be\n acquired pursuant to stock options exercisable within 60 days of\n February 2, 2005.\n\n\n\n\n (8) Shares shown include (i) 103,455 shares of Common Stock held by the\n Trade Consultants, Inc. Pension Plan, of which Mr. Raphael is the\n trustee, (ii) 50,986 shares held by the Stanley Raphael Trust, a\n trust controlled by Mr. Raphael, (iii) 47,208 shares held by a trust\n for the benefit of Mr. Raphael's wife, (iv) 15,000 shares held by\n Trade Consultants Inc. of which Mr. Raphael is sole owner and\n director, and (v) 18,300 shares that could be acquired pursuant to\n stock options exercisable within 60 days of February 2, 2005. Mr.\n Raphael may be deemed the beneficial owner of shares of Common Stock\n held by Trade Consultants, Inc. Pension Plan, Trade Consultants Inc.\n and the trust for the benefit of his wife. Mr. Raphael disclaims\n such beneficial ownership.\n\n (9) Shares shown include (i) 450 shares of Common Stock held by Edge\n Holding Company, a limited partnership of which Mr. Sfondrini and a\n corporation wholly owned by him are the general partners, (ii) 809\n shares held by Napamco, Ltd., a corporation wholly owned by Mr.\n Sfondrini of which he is the President, (iii) 4,998 shares held by\n Mr. Sfondrini's children, and (iv) 9,000 shares that could be\n acquired pursuant to stock options exercisable within 60 days of\n February 2, 2005. Mr. Sfondrini may be deemed the beneficial owner\n of the shares held by Edge Holding Company and his children. Mr.\n Sfondrini disclaims such beneficial ownership.\n\n (10) Shares shown include (i) 16,500 shares of Common Stock that could be\n acquired pursuant to stock options exercisable within 60 days of\n February 2, 2004, (ii) 7,697 shares held jointly by Mr. Shower and\n his spouse and (iii) 5,000 shares held in an IRA rollover account\n for the benefit of Mr. Shower.\n\n (11) Shares also include 5,000 shares of Common Stock that could be\n acquired pursuant to stock options exercisable within 60 days of\n February 2, 2005.\n\n (12) The business address of each of these beneficial holders is 875 N.\n Michigan Ave., Suite 3412, Chicago, Illinois 60611. Mark G. Egan is\n the sole shareholder and president of Marlin Capital Corp. and is a\n limited partner of The Private Investment Fund. Marlin Capital Corp.\n is the general partner of The Private Investment Fund. Marlin\n Capital Corp. has the authority to direct the investments of The\n Private Investment Fund and consequently to authorize the\n disposition and vote of the shares of Common Stock held by The\n Private Investment Fund. Mr. Egan may be deemed to have indirect\n beneficial ownership of the shares of Common Stock owned by The\n Private Investment Fund. The information regarding The Private\n Investment Fund, Marlin Capital Corp. and Mr. Egan (included in\n Notes 12 and 13), is based on a filing made with the SEC reflecting\n beneficial ownership of the Common Stock as of December 21, 2004.\n\n (13) Shares shown consist of 925,000 shares of Common Stock owned by The\n Private Investment Fund and 25,700 shares of Common Stock owned by\n Mr. Egan.\n\n (14) Shares shown include (i) 578,100 shares of Common Stock that may be\n acquired pursuant to stock options exercisable within 60 days of\n February 2, 2005, and (ii) 9,554 shares of restricted Common Stock\n that executive officers will receive within 60 days of February 2,\n 2005.\n\n Compliance with Section 16(a) of the Exchange Act -- Section 16(a) of the\nSecurities Exchange Act of 1934, as amended (the \"Exchange Act\"), requires the\nCompany's directors, executive officers and persons who beneficially own 10% or\nmore of the Company's Common Stock to file with the SEC initial reports of\nownership and reports of changes in ownership of Common Stock. Based solely on\na review of the copies of such reports furnished to the Company and written\nrepresentations that no other reports were required, the Company believes that\nduring 2004 all its directors and executive officers and 10% or greater holders\ncomplied on a timely basis with all applicable filing requirements under\nSection 16(a) of the Exchange Act.\n\n\n\n\n Executive Compensation -- Set forth below is information regarding the\ncompensation of the Company's Chief Executive Officer (the \"CEO\") and the other\nexecutive officers of the Company (together with the CEO, the \"named\nofficers\").\n\n Summary Compensation Table. The summary compensation table set forth below\ncontains information regarding the combined salary, bonus and other\ncompensation of each of the named officers for services rendered to the Company\nin 2004, 2003 and 2002.\n\n SUMMARY COMPENSATION TABLE\n\n\n\n- ------------\n\n (1) Other annual compensation for the named individuals during each of\n 2004, 2003 and 2002 did not exceed the lesser of $50,000 or 10% of the\n annual compensation earned by such individual.\n\n (2) Reflects restricted stock awards made pursuant to the Incentive Plan.\n The dollar value included in the table reflects the valuation at the\n time of the award. An award of 7,110 shares of restricted stock was made\n to Mr. Elias on April 1, 2004. The shares were not issued at the time of\n the award and will be issued ratably over three years beginning April 1,\n 2005. An award of 3,576 shares of restricted stock was made to each of\n Messrs. Long and Tugwell on April 1, 2004. The shares were not issued at\n the time of the award and will be issued ratably over three years\n beginning April 1, 2005 in accordance with the vesting schedule for the\n award. An award of 7,200 shares of restricted stock was made to each of\n Messrs. Long and Tugwell on April 1, 2003. The shares were not issued at\n the time of the award and will be issued ratably over three years\n beginning April 1, 2004 in accordance with the vesting schedule for the\n award. Awards of restricted stock, all of which provide that actual\n shares are issued only upon vesting, have also been made in prior\n periods. If actual shares had been issued at grant for the restricted\n stock awards made in 2004 and all prior periods, the number and value of\n restricted shares held by the named officers at December 31, 2004 would\n be as follows: Mr. Elias: 7,110 shares ($103,664); Mr. Long: 8,376\n shares ($122,122); and Mr. Tugwell: 8,376 shares ($122,122).\n\n (3) In the case of Mr. Elias, amounts shown represent payments by the\n Company for life insurance on his account. In the case of Messrs. Long\n and Tugwell, amounts shown represent the Company's contributions under\n its 401(k) Plan. No amounts are included for Mr. Tugwell for payments\n received by him in respect of overriding royalty interests granted prior\n to his becoming an executive officer.\n\n (4) Bonus awards for 2004 performance are not determined as of the date of\n this Proxy Statement and will be reported in the proxy statement for the\n 2006 Annual Meeting. Bonuses consist of a targeted percentage of the\n executive officer's annual salary, subject to a maximum targeted\n percentage, and are determined by formula that is based 80% on\n achievement of the Company's performance objectives for the\n\n\n\n\n year as established by the Compensation Committee and 20% on achievement\n of the individual's objectives. The Company's performance objectives are\n measured by certain operational and financial objectives, and the\n individual performance objectives are mutually agreed to by the Company\n and the executive officer and assessed by the Chief Executive Officer\n who makes recommendations to the Compensation Committee. See discussion\n under \"Compensation Committee Report on Executive Compensation\", below.\n\n Option/SAR Grants. Shown below is further information on grants of stock\noptions during 2004 to the named officers.\n\n\n\n- ------------\n\n (1) Based on the Black-Scholes option-pricing model adapted for use in\n valuing executive stock options. The actual value, if any, that may be\n realized will depend on the excess of the underlying stock price over\n the exercise price on the date the option is exercised, so that there is\n no assurance the value realized will be at or near the value estimated\n by the Black-Scholes model. The estimated values under the model are\n based on the following assumptions: expected volatility based on\n historical volatility of daily Common Stock price of 72%, a risk-free\n rate of return based on a discount rate equal to a U.S. Treasury rate at\n the time of grant of 3.76%, no dividend yields, an expected option\n exercise period of eight years (with the exercise occurring at the end\n of such period) and no adjustment for the risk of forfeiture over the\n applicable vesting period.\n\n (2) Mr. Elias was granted options for the purchase of 50,000 shares of\n Common Stock effective April 1, 2004 pursuant to the terms of his\n employment agreement. These options vest and become exercisable on April\n 1, 2006. Of the options, options for 37,000 shares were issued to Mr.\n Elias outside of the Incentive Plan and options for 13,000 shares were\n issued from the Incentive Plan. See discussion under \"Equity\n Compensation Plan Information,\" below.\n\n Option/SAR Exercises and 2004 Year-End Option/SAR Values. Shown below is\ninformation with respect to option exercises and the value of the outstanding\noptions held by the named officers for the year ended December 31, 2004.\n\n\n\n- ------------\n\n (1) The excess, if any, of the market value of Common Stock at fiscal year\n end ($14.58 per share) over the option exercise price, expressed in\n dollars.\n\n\n\n\n 401(k) Employee Savings Plan -- The Company has a tax-qualified 401(k)\nEmployee Savings Plan (the \"401(k) Plan\") for its employees generally, in which\nthe executive officers also participate. Under the 401(k) Plan, eligible\nemployees are permitted to defer receipt of their compensation up to the maximum\namount allowed by law, with the employee's contribution not to exceed $14,000\nfor the current year (subject to certain limitations imposed under the Internal\nRevenue Code of 1986, as amended (the \"Code\")). The 401(k) Plan provides that a\ndiscretionary match of employee deferrals may be made by the Company in cash or\nstock. Pursuant to the 401(k) Plan, the Company has elected to match 50% of the\nfirst 8% of employee deferral, subject to limitations imposed by the Internal\nRevenue Service. The amounts held under the 401(k) Plan (except for matching\ncontributions by the Company in Common Stock) are invested among various\ninvestment funds maintained under the 401(k) Plan in accordance with the\ndirections of each participant. Except for customary \"blackout\" periods imposed\nfrom time to time by the Company on all employees including executive officers,\nthe 401(k) Plan does not restrict employees from selling vested shares of the\nCompany's Common Stock held in the plan. Salary deferral contributions by\nemployees under the 401(k) Plan are 100% vested. Company contributions vest 50%\nat the completion of the first year of employment with the remaining 50% vesting\nat the completion of the second year of employment. All company contributions\nafter the completion of the second year of employment are fully vested.\nParticipants or their beneficiaries are entitled to payment of vested benefits\nupon termination of employment.\n\n Employment Agreements and Change of Control Agreements -- Mr. Elias\nentered into an employment agreement with the Company effective November 1998.\nThe initial term of his employment agreement ended December 31, 2001. The\nagreement automatically renewed for a one-year term and will continue to do so\nat the end of each calendar year unless either party gives advance notice of\nnon-renewal. Mr. Elias' employment agreement calls for a minimum base salary of\n$350,000 per year during the first three years of the employment agreement and\nmay be increased thereafter at the discretion of the Compensation Committee.\nHis employment agreement did not provide for an annual bonus for 1999.\nThereafter he is afforded a bonus opportunity of up to 100% of base salary with\na target incentive bonus of 50% of base salary keyed to specific performance\nobjectives established by the Compensation Committee. In addition, the\nagreement provided for a January 1999 initial grant of NSOs for the purchase of\n200,000 shares of Common Stock exercisable at fair market value of the Common\nStock on the date of grant, having a ten-year term and becoming exercisable 1/3\nupon issue, and 1/3 upon each of January 1, 2000 and January 1, 2001. The\nagreement also provides for subsequent grants of NSOs, at the discretion of the\nBoard of Directors, on January 1 of the years 2000 through 2004 for 50,000\nshares each exercisable at the fair market value of the Common Stock on the\ndate of each subsequent grant. These subsequent options have a ten-year term\nand vest 100% on the second anniversary of the grant date. Such agreement also\nprovides that the Company will provide a $1,000,000 term life insurance policy\nfor Mr. Elias, together with a tax gross-up payment in the amount necessary to\noffset any applicable taxes imposed on him by reason of such insurance policy\nand gross-up. Upon termination of employment by the Company (except under\ncertain limited circumstances defined as \"for cause\" in the agreement or upon\ncertain material breaches of the agreement by Mr. Elias) or by Mr. Elias for\ncertain reasons, such as the Company's material breach of the agreement or the\nassignment to Mr. Elias of duties inconsistent with his position as set forth\nin the agreement (\"for good reason\"), Mr. Elias will generally be entitled to\ncertain benefits (the \"Termination Benefits\") including: (1) continued payment\nof his base salary then in effect for the unexpired portion of the term of the\nagreement; (2) immediate vesting of all outstanding stock options granted by\nthe Company to him which will remain exercisable for a period of 12 months\nafter such termination (but in no event beyond the expiration of the original\nterm of such stock option grants); (3) a lump sum cash payment equal to his\nprorated incentive target bonus in the year of termination; (4) life insurance\ncoverage and annual tax gross-up of premium payments shall continue to be\nprovided for the unexpired portion of the term of the agreement; (5) cash\npayments equal to the amount credited to his account under any employee profit\nsharing plan or stock ownership plans that are forfeitable in accordance with\nthe terms of such plans; and (6) participation for a period of 18 months after\nthe date of termination in the Company's group health plan. The employment\nagreement of Mr. Elias provides for a covenant limiting competition with the\nCompany during employment with the Company and, if the employment ends by\nreason of Mr. Elias' disability or his terminating his employment for good\nreason, for as long as the Company is providing him with Termination Benefits.\n\n\n\n\n Messrs. Long and Tugwell are both employees at will of the Company.\n\n All current employees of the Company, including Messrs. Elias, Long and\nTugwell, are parties to a severance agreement that provides for certain benefits\nin the event of a \"change of control\" as defined in the agreement. Pursuant to\nsuch agreements if the named officers' employment by the Company is subject to\nan involuntary termination (which includes a voluntary resignation within sixty\n(60) days after, among other things, a significant reduction in duties of the\nemployee or a reduction in annual salary, bonus or benefits) occurring within\ntwo (2) years after a change in control of the Company, the officer is entitled\nto receive a lump sum severance amount, which is 2.99 times annual salary and\ntargeted annual bonus in Mr. Elias' case and 2.0 times annual salary and\ntargeted annual bonus in the case of each of Messrs. Long and Tugwell. In\naddition, the employee would be entitled to the remaining portion of any prior\nyears' incentive bonus award, continued coverage in Company welfare and benefit\nplans for up to thirty-six (36) months, certain outplacement services up to a\nmaximum cost to the Company of $6,000, and a tax gross-up payment designed to\nkeep the employee whole with respect to any taxes imposed by Section 4999 of the\nCode. Under the severance plan, a \"change of control\" occurs if: (i) the Company\n(A) shall not be the surviving entity in any merger, consolidation or other\nreorganization (or survives only as a subsidiary of an entity other than a\npreviously wholly-owned subsidiary of the Company) or (B) is to be dissolved and\nliquidated, and as a result of or in connection with such transaction, the\npersons who were directors of the Company before such transaction shall cease to\nconstitute a majority of the Board; (ii) any person or entity, including a\n\"group\" as contemplated by Section 13(d)(3) of the Exchange Act acquires or\ngains ownership or control (including, without limitation, power to vote) of 20%\nor more of the outstanding shares of the Company's voting stock (based upon\nvoting power), and as a result of or in connection with such transaction, the\npersons who were directors of the Company before such transaction shall cease to\nconstitute a majority of the Board; or (iii) the Company sells all or\nsubstantially all of the assets of the Company to any other person or entity\n(other than a wholly-owned subsidiary of the Company) in a transaction that\nrequires stockholder approval pursuant to the Texas Business Corporation Act. It\nis estimated that in the event all of the Company's employees were terminated at\nMarch 14, 2005 pursuant to a change of control, the total severance payments\nowed for all employees pursuant to these severance agreements would be\n$8,258,689 (not including the costs of outplacement services and taxes),\nincluding $1,569,750 for Mr. Elias, $506,940 for Mr. Long and $519,720 for Mr.\nTugwell.\n\n Compensation Committee Interlocks and Insider Participation -- The members\nof the Compensation Committee of the Board of Directors are Messrs. Andress\n(chairman), Shower and Work. Mr. Sfondrini served on the Compensation Committee\nuntil March 2004. During 2004, Mr. Sfondrini was subject to certain\ntransactions and relationships with the Company relating to certain oil and\nnatural gas business matters. These transactions and relationships are\ndescribed under \"Certain Transactions,\" later in this Proxy Statement. None of\nthe Company's executive officers has served as a member of a compensation\ncommittee or board of directors of any other entity that has an executive\nofficer serving as a member of the Company's Board of Directors.\n\n\n\n\n Performance Graph -- The following performance graph compares the\ncumulative total stockholder return on the Common Stock to the cumulative total\nreturn of the Standard & Poor's 500 Stock Index and an index composed of all\npublicly traded oil and gas companies identifying themselves by primary\nStandard Industrial Classification (SIC) Code 1311 (Crude Petroleum and Natural\nGas) for the period beginning December 31, 1999 and ending December 31, 2004.\n\n\n COMPARE 5-YEAR CUMULATIVE TOTAL RETURN\n AMONG EDGE PETROLEUM CORP.,\n S&P 500 INDEX AND SIC CODE INDEX\n\n\n\n\n\n Pursuant to Securities and Exchange Commission Rules, the foregoing\nPerformance Graph and the Compensation Committee Report that follows are not\n\"soliciting material\", are not deemed filed with the Commission and are not\nincorporated by reference with the Company's Annual Report on Form 10-K,\nwhether made before or after the date hereof and irrespective of any general\nincorporation language in such report.\n\n Compensation Committee Report on Executive Compensation -- The members of\nthe Compensation Committee consist of Messrs. Andress, Shower and Work. The\nCompany's executive compensation has as its objectives to (a) further the\nachievement of the Company's financial objectives, (b) focus executives on\nattainment of growth and the creation of stockholder value over time and (c)\nattract and retain talented and motivated executives. The executive\ncompensation program is intended to provide an overall level of compensation\nthat the Compensation Committee believes, based on its own judgment and\nexperience, is competitive with levels of compensation provided by other\ncompanies in the industry. The programs link each executive's compensation\ndirectly to individual and Company performance. A significant portion of each\nexecutive's total compensation is variable and dependent upon the attainment of\noperating and financial goals, individual performance objectives and the\nappreciation in value of the Common Stock.\n\n\n\n\n Executive compensation primarily consists of three components: (a) base\nsalary, (b) annual incentive compensation in the form of a cash bonus payment\nand (c) long-term equity-based incentive compensation. Each component is\naddressed in the context of individual and Company performance and competitive\nconditions. In determining competitive compensation levels, the Company\nanalyzes data that includes information regarding compensation levels and\nprograms in the oil and natural gas exploration and production industry, which\nwas provided by a company that surveys and compiles annual energy compensation\ninformation. The Company's compensation scheme focuses on both short-term\ngoals, through the awarding of annual bonuses, and long-term goals, through the\nawarding of stock options and restricted stock.\n\n Individual salary levels, bonus awards and changes in remuneration of the\nindividual executives are determined by the Compensation Committee or the Board\nas a whole, subject in the case of Mr. Elias, to the terms of his employment\nagreement. The Chief Executive Officer makes recommendations to the\nCompensation Committee regarding the salaries of and awards to employees.\nActual grants or awards of stock, including stock options, as well as changes\nin salaries are individually determined and administered by the Compensation\nCommittee or the Board as a whole (acting on the recommendation of the\nCompensation Committee), in each case taking into account recommendations from\nthe Chief Executive Officer.\n\n Base Salary. Base salaries of the executive officers (including that set\nforth in Mr. Elias' employment agreement) are determined based on the\nCompensation Committee's review of a number of factors, including comparable\nindustry data and individual factors such as an executive's specific\nresponsibilities, experience, individual performance and growth potential as\nwell as independently obtained salary surveys. The Compensation Committee's\nsalary recommendations are subject to approval of the full Board. Base salaries\nare designed so that salary opportunities for a given position will generally\nbe between 90% and 100% of the competitive base salary midpoint established for\neach position. The employment contract of Mr. Elias requires the Compensation\nCommittee to annually review his base salary and make a recommendation to the\nBoard of Directors regarding possible increases. Such recommendations are made\nafter careful review of the Company's and Mr. Elias' performance. Under the\nterms of Mr. Elias' employment agreement, the Board of Directors may, in its\nsole discretion, increase but not decrease his salary. No salary increase was\nrecommended by the Compensation Committee or granted by the Board for Mr. Elias\nduring 2004. The last merit increase for Messrs. Long and Tugwell was April\n2004 and such increase was based on their performance.\n\n Bonus. Under the Company's bonus program, the annual bonus of the\nexecutive officers is determined by recommendation of the Compensation\nCommittee, after reviewing recommendations of the Chairman and Chief Executive\nOfficer, which is then submitted to the full Board for approval. The amount of\nbonus that may be earned is based on a targeted percentage of the executive\nofficer's annual salary, subject to a maximum-targeted percentage. The bonuses\nof the executive officers for 2004 are based 80% on achievement of the\nCompany's performance objectives as established by the Compensation Committee\nand 20% on achievement of the individual's performance objectives. The\nCompany's overall performance objectives are measured by certain operational\nand financial objectives. The operational objectives for the Company for 2004\nconsisted of targeted annual increases in reserves (weighted 40%) and\nproduction (weighted 30%), competitive finding and development costs (weighted\n15%) and operating expenses (weighted 15%), as compared with those projected in\nthe Company's annual budget for the applicable period. The financial goals for\nthe Company for 2004 were: (1) to ensure that funds were available to execute\nthe Company's overall recommended case capital spending program as projected in\nits 2004 annual budget and plan (the \"Recommended Case\") while maintaining a\nprudent financial structure with a debt-to-total capital ratio of less than\n30%, subject to adjustment due to acquisitions; (2) to fund the Recommended\nCase, excluding acquisitions, from internal cash flow rather than taking on\nmore debt; and (3) building pre-tax cash flow from our exploration and\nproduction activities to a level sufficient to provide the necessary funds to\nconduct a program that will provide consistent physical (reserve and\nproduction) and fiscal (cash flow and net income) growth for the Company.\n\n Individual performance is assessed by a performance management process\nbased on mutually defined expectations for each employee, including executive\nofficers. The process includes individual appraisal components that are both\nobjective and subjective. The objective components include quantifiable\nobjectives and the subjective performance components include roles and\naccountabilities, performance attributes and behaviors. Individual performance\nof the executive officers, except the Chief Executive Officer, is first\nassessed by the Chief Executive Officer, who makes recommendations to the\nCompensation Committee for its consideration. Bonus opportunities for Messrs.\nLong and Tugwell for 2004 ranged from 0% to 80% of base salary. Mr. Elias'\nemployment agreement\n\n\n\n\nprovides a bonus opportunity ranging from 0% to 100% of his base salary subject\nto the achievement of specific objective and subjective performance criteria\nestablished mutually between the Compensation Committee and Mr. Elias on an\nannual basis. For 2004, the Board determined that a bonus for Mr. Elias would\nbe determined based 80% on the achievement of the same Company performance\ncriteria applicable to the other executive officers and 20% on the achievement\nof certain individual performance objectives as determined by the Compensation\nCommittee and approved by the full Board. Bonus awards to be paid, if any, for\n2004 performance are not determined as of the date of this Proxy Statement and\nwill be reported in the Proxy Statement for the 2006 Annual Meeting.\n\n Under the bonus program, the 2004 bonuses will be paid in cash. All\nbonuses are subject to the final approval of the Board of Directors.\n\n Long-Term Equity-Based Compensation. The Company has relied on grants of\nstock options and grants of restricted stock under its Incentive Plan and, in\nthe case of Mr. Elias, outside of the Incentive Plan, to provide long-term\nincentive-based compensation. The objectives of the Incentive Plan are to (i)\nattract and retain the services of key employees, qualified independent\ndirectors and qualified consultants and other independent contractors and (ii)\nencourage the sense of proprietorship and stimulate the active interest of\nthose persons in the development and financial success of the Company. At\nDecember 31, 2004, options under the Incentive Plan had been granted to 58\ncurrent and former employees and directors, at exercise prices ranging from\n$2.11 per share to $13.99 per share. In 2004 the Company determined not to\ngrant to employees any options to purchase shares of stock of the Company\n(except as required under the terms of employment agreements). Pursuant to the\nterms of his employment agreement, Mr. Elias was granted options to purchase\n50,000 shares of Common Stock in April 2004 at an exercise price equal to the\nfair market value of the Common Stock on the date of grant. These options vest\nin full on the second anniversary of the date of grant and 13,000 of these\nshares subject to the options are issuable under the Incentive Plan, with the\nremaining 37,000 shares issuable under the Elias Plan, as defined below under\n\"Equity Compensation Plan Information\".\n\n Restricted stock awards are made to executive officers as part of their\nlong-term equity-based compensation. Such awards are made by the Compensation\nCommittee. Relevant factors in the determination of grants include data\nregarding stock grants at comparable companies and recommendations of the Chief\nExecutive Officer. In determining the amount of shares to award executive\nofficers, the Compensation Committee also considers, among other things, the\nrelative grade levels of the officers. The restricted stock awards are designed\nto encourage executive officers to retain an ownership interest in the Company,\nto align their interests with those of stockholders and to reward increases in\nthe Company's share price over time. A restricted stock award is a grant of a\nright to receive shares that vests over time. As the stock award vests, the\nshares are owned outright. The currently outstanding restricted stock held by\nexecutive officers vests and is issued in equal one-third increments on the\nfirst, second and third anniversary of the date of grant. In the last two\nyears, the Compensation Committee has recommended the award of restricted stock\ninstead of, or in addition to, options because in the view of the Compensation\nCommittee, restricted stock is a better way to provide significant equity\ncompensation that can generate more predictable long-term rewards than stock\noptions.\n\n Grants of stock options to executive officers may be made by the\nCompensation Committee. The employment agreement of Mr. Elias sets forth the\nnumber and terms of his initial and subsequent option grants through 2004. All\nother grants are made at the discretion of the Compensation Committee or the\nBoard as a whole. Awards of options are determined on the basis of factors\nsimilar to those used to determine awards of restricted stock. The exercise\nprice of all stock options has been equal to at least the fair market value of\nthe Common Stock on the date of grant; accordingly, executives receiving stock\noptions are rewarded only if the market price of the Common Stock appreciates.\nStock options are thus designed to align the interests of the Company's\nexecutives with those of its stockholders by encouraging executives to enhance\nthe value of the Company and hence, the price of the Common Stock and each\nstockholder's return.\n\n Since the Company's initial public offering, certain non-executive\nemployees of the Company received grants of overriding royalty interests in oil\nand gas prospects of the Company where such interests had been earned pursuant\nto employment agreements between such employees and the Company. Effective June\n1, 1999 all employment agreements which provided for overriding royalty\ninterests were terminated. Pursuant to a policy adopted as of that date, no\nemployee of the Company is entitled to an overriding royalty interest on any\nprospect that is defined and leased after July 1, 2000. Overrides which were\nearned in prospects prior to July 1, 2000 or assigned of record\n\n\n\n\nremain valid. Executive officers of the Company have not been entitled to\nreceive overriding royalty grants since the Company's initial public offering.\nPrior to becoming an executive officer, Mr. Tugwell received overriding royalty\ninterests under the Company's prior practice and has, and will in the future,\nreceive payments pursuant to such interests.\n\n Section 162(m) of the Internal Revenue Code. Section 162(m) of the\nInternal Revenue Code of 1986, as amended, generally limits (to $1 million per\ncovered executive) the deductibility for federal income tax purposes of annual\ncompensation paid to company's executive officers in a taxable year.\nCompensation above $1 million may be deducted if it is \"performance-based\ncompensation\" within the meaning of the Code. Options grants that are made\noutside of stockholder-approved plans, such as most of the options grants made\nto Mr. Elias, are generally subject to the deductibility limits of Section\n162(m). The Compensation Committee seeks to qualify compensation for\ndeductibility in certain instances, but retains the discretion to authorize the\npayment of nondeductible amounts.\n\n Compensation of Chief Executive Officer. Mr. Elias' compensation, as\ndescribed above, is generally determined in part by the terms of his employment\nagreement, which was approved by the Board as a whole and the Compensation\nCommittee. In doing so, the Board and Compensation Committee considered a\nvariety of factors, including a review of comparable industry data, the\ncompensation package of Mr. Elias' predecessor at the Company and negotiations\nbetween Mr. Elias and the Compensation Committee. In addition to the\ncompensation contemplated by his employment agreement, Mr. Elias was awarded\n7,110 shares of restricted stock in 2004. The Compensation Committee\nrecommended this award in recognition of his leadership in moving the Company\nforward in a positive manner and his expected future contributions.\n\n The Compensation Committee:\n\n\n Thurmon Andress, Chair\n Robert W. Shower\n David F. Work\n\n Equity Compensation Plan Information -- The following table provides\ncertain information with respect to all of the Company's equity compensation\nplans in effect as of December 31, 2004.\n\n\n\nAll amounts set forth opposite \"Equity compensation plans approved by security\nholders\" relate to the Incentive Plan. Amounts set forth opposite \"Equity\ncompensation plan not approved by security holders\" relate to the Amended and\nRestated Edge Petroleum Corporation Elias Stock Incentive Plan (the \"Elias\nPlan\"), which is described below.\n\n- ------------\n(1) The shares set forth in column (a) are comprised of shares of Common Stock\n that may be issued in the future pursuant to currently outstanding options\n for the purchase of Common Stock and shares of Common Stock that may be\n issued in the future pursuant to currently outstanding restricted stock\n awards. In the case of restricted stock awards, the Company does not\n actually issue shares of Common Stock until and to the extent the awards\n vest. The amounts set forth in column (a) include 147,785 shares with\n respect to the Incentive Plan that may be issued in the future pursuant to\n currently outstanding restricted stock awards.\n\n\n\n\n(2) The calculations of weighted average exercise prices are exclusive of\n restricted stock awards. In the case of equity compensation plans approved\n by security holders, the amount is based solely on options to purchase\n 361,050 shares of Common Stock pursuant to the Incentive Plan. In the case\n of equity compensation plans not approved by security holders, the amount\n is based on options to purchase 461,000 shares of Common Stock pursuant to\n the Elias Plan.\n\n(3) All of the shares set forth in column (c) with respect to the Incentive\n Plan may be issued pursuant to stock awards, including stock options,\n restricted stock grants and stock appreciation rights.\n\n The Elias Plan was approved by the Board of Directors of the Company and\n475,000 shares of Common Stock were reserved for issuance thereunder, of which\nno shares remain available for additional awards at December 31, 2004. Under\nthe Elias Plan, awards may be made to Mr. Elias of options for the purchase of\nCommon Stock and of restricted stock. As of December 31, 2004, options for the\npurchase of 461,000 shares of Common Stock and a restricted stock award\nrelating to 14,000 shares of Common Stock had been made to Mr. Elias under the\nElias Plan. The Elias Plan was adopted to induce and retain the employment of\nMr. Elias and to stimulate his active interest in the development and financial\nsuccess of the Company. Mr. Elias' employment agreement contemplates the\nissuance to him of options for the purchase of up to 450,000 shares of Common\nStock, all of which options had been issued under the Elias Plan as of December\n31, 2004. The Elias Plan provides for the issuance of an initial option award\nto Mr. Elias for the purchase of 200,000 shares of Common Stock effective\nJanuary 8, 1999, which became exercisable in increments of one-third of the\nshares subject thereto annually beginning on the date of grant, has a term of\nten years and an exercise price equal to the fair market value of the Common\nStock on the date of grant. The Elias Plan provides that all subsequent option\nawards under the Elias Plan, which may be made in the sole discretion of the\nBoard, be of options with a ten-year term, becoming exercisable in full upon\nthe second anniversary of the date of grant and with an exercise price not less\nthan the fair market value of the Common Stock on the date of grant. Pursuant\nto the Elias Plan, the Board approved grants of NSOs to purchase 50,000 shares\nof Common Stock effective on or about January 1 of each of the years 2000\nthrough and including 2003. For 2004, options for the purchase of 37,000 shares\nwere issued to Mr. Elias under the Elias Plan and options for the purchase of\n13,000 shares were issued to him under the Incentive Plan. All options were\ngranted at an exercise price equal to the fair market value of the Common Stock\non the date of grant. The Elias Plan provides for an award of 14,000 shares of\nrestricted stock to Mr. Elias effective March 1, 2001, which vests in\nincrements of one-third of the shares subject thereto annually beginning on the\nfirst anniversary of grant. An option award to Mr. Elias for the purchase of\n24,000 shares of Common Stock was made from the Elias Plan on April 1, 2002,\nwhich becomes exercisable in full upon the second anniversary of the date of\ngrant at an exercise price equal to the fair market value of the Common Stock\non the date of grant.\n\nCertain Transactions\n\n The transactions described below were carried out on terms at least as\nfavorable to the Company as could have been obtained from unaffiliated third\nparties in arm's length negotiations, however, because the transactions were\nwith parties that may be deemed to be affiliates, it is possible that the\nCompany would have obtained different terms from a truly unaffiliated\nthird-party.\n\n Affiliates' Ownership in Prospects. Edge Group Partnership, a general\npartnership composed of limited partnerships of which Mr. Sfondrini and a\ncompany controlled by Mr. Sfondrini are general partners, Edge Holding Company,\nL.P., a limited partnership of which Mr. Sfondrini and a corporation wholly\nowned by him are the general partners, Andex Energy Corporation and Texedge\nEnergy Corporation, corporations of which Mr. Andrews is an officer and members\nof his immediate family hold ownership interests, Mr. Raphael, Essex Royalty\nJoint Venture I (\"Essex I\") and Essex Royalty Joint Venture II (\"Essex II\"),\nboth being joint venture partnerships of which Mr. Sfondrini and a company\nwholly owned by Mr. Sfondrini are managers, own certain working interests in\nthe Company's Nita and Austin Prospects and certain other wells and prospects\noperated by the Company. These working interests aggregate 7.19% in the Austin\nProspect, 6.27% in the Nita Prospect and are negligible in other wells and\nprospects. These working interests bear their share of lease operating costs\nand royalty burdens on the same basis as the Company. Amounts paid to these\nentities and individual by the Company represent their respective pro-rata\nownership shares in the particular properties involved. In addition, Bamaedge,\nL.P., a limited partnership of which Andex Energy Corporation is the general\npartner, and Mr. Raphael also hold overriding royalty interests with respect to\nthe Company's working interest in certain wells and prospects. Neither Mr.\nRaphael nor Bamaedge L.P. has an overriding interest in excess of .075% in any\none well or prospect. Essex I and Essex II own royalty\n\n\n\n\nand overriding royalty interests in various wells operated by the Company. The\ncombined royalty and overriding royalty interests of Essex I and Essex II do\nnot exceed 6.2% in any one such well or prospect. The gross amounts distributed\nor accrued to these persons and entities by the Company in 2004 on account of\ntheir proportionate ownership interests (including net revenue, royalty and\noverriding royalty interests) and the amounts these same persons and entities\npaid to the Company for their respective share of lease operating expenses and\nother costs is set forth in the following table:\n\n\n\n- ------------\n\n* In the case of Essex I and II Joint Ventures, amounts include royalty\n income in addition to working interest income\n\nCode of Ethics\n\n The Company has adopted a code of ethics that applies to all Company\nemployees including executive officers, as well as each member of the Company's\nBoard of Directors. The code of ethics is available at the Company's website at\nhttp://www.edgepet.com. The code includes policies on employment, conflicts of\ninterest, and the protection of confidential information and requires adherence\nto all laws and regulations applicable to the conduct of our business.\n\n PROPOSAL II\n\n Proposed Charter Amendment\n to Increase the Number of Authorized Shares of Common Stock\n\n The Board has approved a resolution proposing that the Company's Restated\nCertificate of Incorporation, as amended to date (the \"Charter\"), be further\namended to increase the number of authorized shares of Common Stock of the\nCompany to Sixty Million (60,000,000) shares (the \"Amendment\").\n\n The proposed Amendment would replace the first sentence of Article Four of\nthe Charter with the following sentence:\n\n \"The aggregate number of shares of capital stock that the Corporation shall\n have authority to issue is Sixty-five Million (65,000,000), divided into\n Sixty Million (60,000,000) shares of common stock, par value $0.01 per\n share (\"Common Stock\"), and Five Million (5,000,000) shares of preferred\n stock, par value $0.01 per share (\"Preferred Stock\").\"\n\nCurrent Capital Structure\n\n Under Delaware law, the Company may only issue shares of capital stock to\nthe extent such shares have been authorized for issuance under the Charter. The\nCharter currently authorizes the Company to issue Twenty-five Million\n(25,000,000) shares of Common Stock and Five Million (5,000,000) shares of\npreferred stock, par value $0.01 per share (\"Preferred Stock\"). As of March 1,\n2005, 17,063,910 shares of Common Stock were issued and outstanding and\n4,792,831 shares of Common Stock were reserved for issuance. After taking into\naccount such reserved shares, a balance of 3,143,259 authorized but unissued\nshares of Common Stock would be available for issuance under the Charter as it\nnow exists. No shares of Preferred Stock as of such date were issued and\noutstanding or reserved for issuance.\n\n\n\n\nReasons for Amendment\n\n The number of issued and outstanding shares of Common Stock has increased\nfrom 7,461,361 in March 1997 to 17,063,910 on March 1, 2005. As a result, the\nCompany's available Common Stock has been reduced. In this light, the Board\ndeems it advisable and in the best interest of stockholders to increase the\nnumber of shares of Common Stock authorized for issuance by the Company from 25\nmillion to 60 million. The additional 35 million shares of Common Stock to be\nauthorized would be available for possible future financing and acquisition\ntransactions, stock dividends or stock splits, employee benefit plans and other\ncorporate purposes. Having such shares available for issuance in the future\nwould give the Company greater flexibility and would generally allow shares of\nCommon Stock to be issued without the expense and delay of a special\nstockholders' meeting.\n\n Immediately after its initial public offering in March 1997, the Company\nhad 7,461,361 shares of Common Stock issued and outstanding, all of which were\nissued in the initial public offering and the combination transactions effected\nconcurrently therewith. Since then, the Company has issued (i) 1,171,945 shares\nof Common Stock in connection with various benefit and incentive plans, (ii)\n2,240,000 shares of Common Stock pursuant to a private placement of Common\nStock and warrants (all of which have been exercised) in June 1999, (iii)\n2,165,604 shares of Common Stock in connection with the December 2003\nacquisition of Miller Exploration Company and (iv) 4,025,000 shares of Common\nStock in connection with a December 2004 public offering of Common Stock, for a\ntotal of 17,063,910 shares issued and outstanding as of March 1, 2005.\n\n If the Amendment is approved by the stockholders, the Board does not\nintend to solicit further stockholder approval prior to the issuance of any\nadditional shares of Common Stock, except as may be required by applicable law\nor the rules of any stock exchange or quotation system on which the Common\nStock may be listed or quoted. The Nasdaq Stock Market, on which the Common\nStock is quoted, currently requires stockholder approval in certain instances,\nincluding in connection with acquisition transactions where the present or\npotential issuance of shares is or will be equal to or in excess of 20% of the\nnumber of shares of Common Stock outstanding before the issuance of the stock.\n\n The proposed Amendment could, under certain circumstances, have an\nanti-takeover effect, although this is not the intention of this proposal. For\nexample, in the event of a hostile attempt to take over control of the Company,\nit may be possible for the Company to endeavor to impede the attempt by issuing\nshares of Common Stock, which would dilute the voting power of the other\noutstanding shares and increase the potential cost to acquire control of the\nCompany. The proposed Amendment therefore may have the effect of discouraging\nunsolicited takeover attempts and potentially limiting the opportunity for the\nCompany's stockholders to dispose of their shares at a premium, which is often\noffered in takeover attempts, or that may be available under a merger proposal.\nThe proposed Amendment may have the effect of permitting the Company's current\nmanagement, including the current Board, to retain its position, and place it\nin a better position to resist changes that stockholders may wish to make if\nthey are dissatisfied with the conduct of the Company's business. However, the\nBoard is not aware of any attempt to take control of the Company, and the Board\nhas not presented this proposal with the intent that it be utilized as a type\nof anti-takeover device. The Board has no current plans for the issuance of the\nadditional shares of Common Stock for which authorization is being sought,\nexcept in connection with equity compensation plans.\n\n To the extent that additional authorized shares are issued in the future,\nthey may decrease the existing stockholders' percentage equity ownership and\ndepending on the price at which they are issued, could be dilutive to the\nexisting stockholders. The holders of Common Stock have no preemptive rights\nand the Board of Directors has no plans to grant such rights with respect to\nany such shares.\n\n If the proposed Amendment is adopted, it will become effective upon filing\nof a Certificate of Amendment to the Charter with the Secretary of State of the\nState of Delaware.\n\nRequired Vote and Board of Directors Recommendation\n\n Approval of the Amendment will require the affirmative vote of the holders\nof at least a majority of the outstanding shares of Common Stock outstanding on\nthe record date. The persons named in the accompanying proxy will vote in\naccordance with the choice specified thereon, or, if no choice is properly\nindicated, in favor of the adoption of the Amendment. Abstentions and broker\nnon-votes will be counted as present for the purposes of determining if a\nquorum is present, but will have the same effect as a vote against the\nAmendment. A failure to vote shares will also have the effect of a vote against\nthe Amendment.\n\n The Board of Directors recommends that stockholders vote FOR the adoption\nof the proposed Amendment.\n\n\n\n\n PROPOSAL III\n\n Approval of Appointment of Independent Registered Public Accounting Firm\n\n The Board of Directors, upon recommendation of its Audit Committee, has\napproved and recommends the appointment of BDO Seidman, LLP as an independent\nregistered public accounting firm to conduct an audit of the Company's\nfinancial statements for the year 2005. Although the selection and appointment\nof an independent registered public accounting firm is not required to be\nsubmitted to a vote of stockholders, the Board of Directors has decided to ask\nour stockholders to approve this appointment. In accordance with the Company's\nBylaws, approval of the appointment of an independent registered public\naccounting firm will require the affirmative vote of a majority of the shares\nof Common Stock voted at the meeting. Accordingly, abstentions and broker\nnon-votes applicable to shares present at the meeting will not be included in\nthe tabulation of votes cast on this matter.\n\n Representatives of BDO Seidman, LLP will attend the Annual Meeting and\nwill be available to respond to questions that may be asked by stockholders.\nSuch representatives will also have an opportunity to make a statement at the\nmeeting if they desire to do so.\n\n The Board of Directors recommends that stockholders vote FOR the\nappointment of BDO Seidman, LLP as the Company's independent registered public\naccounting firm.\n\nChange in Independent Registered Public Accounting Firm\n\n On June 25, 2004, the Company dismissed its independent accountant, KPMG\nLLP and engaged BDO Seidman, LLP as its new independent registered public\naccounting firm and auditor. The decision to engage BDO Seidman, LLP and\ndismiss KPMG LLP was approved by the Audit Committee.\n\n As noted in the Company's Current Report on Form 8-K filed on June 30,\n2004, none of the reports of KPMG LLP on the financial statements of the\nCompany during their engagement contained an adverse opinion or was qualified\nor modified as to uncertainty, audit scope or accounting principles except as\nfollows: KPMG LLP's audit reports on the consolidated financial statements of\nEdge Petroleum Corporation and subsidiaries as of and for the years ended\nDecember 31, 2003 and 2002, contained a separate paragraph stating that \"As\ndiscussed in Note 2 to the consolidated financial statements, effective January\n1, 2003, the Company changed its method of accounting for asset retirement\nobligations and effective January 1, 2001, the Company changed its method of\naccounting for derivative instruments.\" These changes were made and this\nexplanatory language was included pursuant to the required adoption on January\n1, 2003 of Statement of Financial Accounting Standard (\"SFAS\") No. 143,\n\"Accounting for Asset Retirement Obligations,\" and the required adoption on\nJanuary 1, 2001 of SFAS No. 133, \"Accounting for Derivative Instruments and\nHedging Activities,\" as amended.\n\n Further, during the Company's two fiscal years ended December 31, 2003 and\nfor the period from January 1, 2004 to June 25, 2004, there were no\ndisagreements between the Company and KPMG LLP on any matter of accounting\nprinciples or practices, financial statement disclosure, or auditing scope or\nprocedure, which disagreement, if not resolved to the satisfaction of such\naccountants, would have caused them to make reference to the subject matter of\nthe disagreements in connection with their report on the financial statements\nfor such years. There were no reportable events (as defined in Regulation S-K,\nItem 304 (a)(1)(v)) during the Company's two fiscal years ended December 31,\n2003 and for the period from January 1, 2004 to June 25, 2004. During the\nCompany's two fiscal years ended December 31, 2003 and for the period from\nJanuary 1, 2004 to June 25, 2004, the Company did not consult with BDO Seidman,\nLLP regarding any of the matters or events set forth in Item 304(a)(2)(i) or\n(ii) of Regulation S-K.\n\nIndependent Public Accountants' Fees\n\n BDO Seidman, LLP billed the Company as set forth in the table below for\nprofessional services rendered for the audit of the Company's annual financial\nstatements for the years ended December 31, 2004 and 2003 (reaudit) and for the\nreviews of the Company's quarterly financial statements included in the\nCompany's Quarterly Reports on Form 10-Q for such periods and for work on other\nSEC filings. BDO Seidman, LLP provided non-audit services for the Company\nduring 2004 as follows (1) the preparation of current and amended corporate tax\nreturns, (2) tax planning and advice for mergers and acquisitions, and (3) tax\ncompliance consultations. All amounts billed by BDO Seidman, LLP were for work\nperformed subsequent to its engagement during 2004 and are reflected in the\n\"Fiscal 2004\" column below. KPMG LLP, the predecessor auditor, billed the\nCompany for the audit of the Company's\n\n\n\n\nannual financial statements for the year ended December 31, 2003 and other\naudit services, as set forth in the \"Fiscal 2003\" column below. KPMG LLP did\nnot provide any non-audit services for the Company during 2003.\n\n\n\nPolicy on Audit Committee Pre-Approval of Audit and Non-Audit Services\n\n The Audit Committee has established a policy for the pre-approval of audit\nand non-audit services performed for the Company by the independent registered\npublic accounting firm, which also specifies the types of services that the\nindependent registered public accounting firm may and may not provide to the\nCompany. The policy provides for general pre-approval of services and specific\ncase-by-case approval of certain services. The services that are pre-approved\ninclude audit services and audit-related services such as due diligence\nservices pertaining to potential business acquisitions and dispositions, tax\nservices and may also include other services. The term of any pre-approval is\n12 months and is generally subject to certain specific budgeted amounts or\nratios as determined by the Committee. The Committee may revise the list of\ngeneral pre-approved services from time to time based on subsequent\ndeterminations. Unless a type of service has received general pre-approval, it\nwill require specific pre-approval by the Audit Committee. Any proposed\nservices which were addressed in the pre-approval, but exceed pre-approved cost\nlevels or budgeted amounts will also require specific pre-approval by the\nCommittee. The Audit Committee does not delegate its responsibilities\nconcerning pre-approval of services to management. The independent registered\npublic accounting firm and management are required to periodically report to\nthe Audit Committee regarding the extent of services provided by the\nindependent registered public accounting firm in accordance with this\npre-approval, and the fees for services performed to date.\n\n PROPOSAL IV\n\n Other Business\n\n Management does not intend to bring any business before the meeting other\nthan the election of a director, the proposed Amendment to the Charter and\nappointment of BDO Seidman, LLP referred to in the accompanying notice. No\nother matter or nomination for director has been timely submitted to the\nCompany in accordance with the provisions of the Company's Bylaws. If, however,\nany other matters properly come before the meeting, it is intended that the\npersons named in the accompanying proxy will vote pursuant to discretionary\nauthority granted in the proxy in accordance with their best judgment on such\nmatters. The discretionary authority includes matters that the Board of\nDirectors does not know are to be presented at the meeting by others.\n\nAdditional Information\n\n Stockholder Communications -- The Company's Board of Directors has\nprovided for a process for security holders to send communications to the Board\nof Directors. Any security holder can send communications to the Board by mail\nas follows:\n\n Board of Directors of Edge Petroleum Corporation\n c/o Corporate Secretary\n 1301 Travis, Suite 2000\n Houston, Texas 77002\n\n All security-holder communications will be relayed to all Board members.\nCommunications from an officer or director of the Company will not be viewed as\nsecurity holder communications for purposes of the procedure. Communications\nfrom an employee or agent of the Company will be viewed as security holder\ncommunications for purposes of the procedure only if those communications are\nmade solely in such employee's or agent's capacity as a security holder.\n\n\n\n\n Stockholder Proposals -- The Company's Bylaws require written notice to be\ndelivered to the Secretary of the Company by a stockholder:\n\n o in the event of business to be brought by a stockholder before an\n annual meeting, not less than 120 days prior to the anniversary date\n of the immediately preceding annual meeting of stockholders of the\n Company (with certain exceptions if the date of the annual meeting\n is different by more than specified amounts from the anniversary\n date), and\n\n o in the event of nominations of persons for election to the board of\n directors by any stockholder,\n\n o with respect to an election to be held at the annual meeting of\n stockholders, not less than 120 days prior to the anniversary date\n of the immediately preceding annual meeting of stockholders of the\n Company (with certain exceptions if the date of the annual meeting\n is different by more than specified amounts from the anniversary\n date), and\n\n o with respect to an election to be held at a special meeting of\n stockholders for the election of directors, not later than the close\n of business on the tenth day following the day on which notice of\n the date of the special meeting was mailed to stockholders or public\n disclosure of the date of the special meeting was made, whichever\n first occurs.\n\n If the date of the 2006 annual meeting of stockholders is not more than 30\ndays before, nor more than 60 days after, the first anniversary of the date of\nthe 2005 Annual Meeting, stockholders who wish to nominate directors or to\nbring business before the 2006 Annual Meeting of stockholders must notify the\nCompany no later than December 28, 2005. Such notice must set forth specific\ninformation regarding such stockholder and such business or director nominee,\nas described in the Company's Bylaws. The Company's Bylaws also provide for\ncertain procedures to be followed by stockholders in nominating persons for\nelection to the Board of Directors of the Company.\n\n Compliance with the above will generally result in a proposal that is\nproper business (or director nomination) being eligible to be brought before\nthe stockholders for voting upon at the annual meeting. However, compliance\nwith these requirements does not mean that the Company is required to include\nthe proposal in the proxy solicitation material that the Company prepares and\ndistributes. In order for a stockholder to require that a proposal be included\nby the Company in its proxy statement and proxy card, the stockholder must\nsatisfy the requirements of Rule 14a-8 under the Securities Exchange Act of\n1934, as amended, in addition to the requirements of the Bylaws. Rule 14a-8\naddresses when a company must include a stockholder's proposal in its proxy\nstatement and identify the proposal in its form of proxy when the company holds\nan annual or special meeting of stockholders. Under Rule 14a-8, proposals that\nstockholders intend to have included in the Company's proxy statement and form\nof proxy for the 2006 Annual Meeting of stockholders must be received by the\nCompany no later than November 24, 2005. However, if the date of the 2006\nAnnual Meeting of stockholders changes by more than 30 days from the first\nanniversary of the date of the 2005 Annual Meeting of stockholders, the\ndeadline by which proposals must be received is a reasonable time before the\nCompany begins to print and mail its proxy materials, which deadline will be\nset forth in a quarterly report on Form 10-Q or will otherwise be communicated\nto stockholders. Stockholder proposals must also be otherwise eligible for\ninclusion.\n\n By Authorization of the Board of Directors\n\n /s/ Robert C. Thomas\n\n Robert C. Thomas\n Vice President, General Counsel &\n Corporate Secretary\n\nMarch 24, 2005\n\n\n\n\n EDGE PETROLEUM CORPORATION ANNUAL MEETING OF STOCKHOLDERS\n\n 10:00 a.m., April 27, 2005\n\n Doubletree Hotel\n 400 Dallas Street\n Houston, Texas 77002\n\n ---------------------\n\n ADVANCE REGISTRATION\n\n Attendance at the Annual Meeting is limited to Edge stock owners (or a\ndesignated representative or proxy) with proof of ownership and members of\ntheir immediate family and employees and guests of the Company. In order to\nattend as a stockholder or immediate family member, you or your family member\nmust be a stockholder of record as of March 17, 2005, or you must provide a\ncopy of a brokerage statement or other evidence of beneficial ownership showing\nyour ownership of Common Stock on March 17, 2005. Attendees may register at the\ndoor on the day of the meeting; however, advance registration for the Edge\nAnnual Meeting will expedite your entry into the meeting.\n\n o If you hold your Edge shares directly with the Company and you/or a\n member of your immediate family plan to attend the Annual Meeting,\n please follow the Advance Registration instructions on the top\n portion of your Proxy Form, which was included in the mailing from\n the Company.\n\n o If you desire to appoint a person to attend the meeting and vote\n your shares on your behalf, you may do so by inserting that person's\n name in the blank space provided at the top of your Proxy Form. Such\n person need not be a stockholder of the Company. At the meeting,\n such person must present to the inspector of elections a proxy\n signed by the stockholder, or by his or her attorney authorized in\n writing, as his or her name appears on our register of stockholders.\n If the stockholder is a corporation, the proxy must be executed by a\n duly authorized officer or attorney thereof.\n\n o If your Edge shares are held for you in a brokerage, bank or other\n institutional account and you wish to register in advance, please\n direct your request to:\n\n Edge Petroleum Corporation\n 1301 Travis, Suite 2000\n Houston, Texas 77002\n Attention: Corporate Secretary\n\n Please include the following in your request:\n\n o Your name and complete mailing address;\n\n o The name(s) of any immediate family members who will accompany you;\n and\n\n o Proof that you own Edge shares (e.g., a photocopy of a brokerage or\n other account statement).\n\n No cameras, video recorders or tape recorders of any type will be\npermitted in the meeting. We realize that many cellular phones have built-in\ncameras, and while these phones may be brought into the meeting venue, the\ncamera function may not be used at any time. Inappropriate or disorderly\nbehavior will result in expulsion from the meeting.\n\n\n\nPROXY EDGE PETROLEUM CORPORATION PROXY\n PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS\n ANNUAL MEETING OF STOCKHOLDERS TO BE HELD WEDNESDAY, APRIL 27, 2005\n\n[ ] Advance Registration: Check here if you or your designated representative or\nproxy and/or a member of your immediate family plan to attend the meeting. Write\nin space below the name of any such intended attendee.\n\nThe undersigned hereby appoints Michael G. Long and Robert C. Thomas, jointly\nand severally, proxies, with full power of substitution and with discretionary\nauthority, to represent and to vote, in accordance with the instructions set\nforth below, all shares of Common Stock which the undersigned is entitled to\nvote at the 2005 annual meeting of stockholders of Edge Petroleum Corporation\n(the \"Company\"), to be held on Wednesday, April 27, 2005, at the Doubletree\nHotel, 400 Dallas, Houston, Texas 77002, at 10:00 a.m. (the \"Annual Meeting\") or\nat any adjournment thereof, hereby revoking any proxy heretofore given. THIS\nPROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IN\nTHE ABSENCE OF SPECIFIC DIRECTIONS TO THE CONTRARY, THIS PROXY WILL BE VOTED FOR\nTHE ELECTION OF EACH OF THE DIRECTORS NAMED BELOW, FOR THE APPROVAL OF THE\nPROPOSED CHARTER AMENDMENT TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON\nSTOCK AND FOR THE APPROVAL OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT\nREGISTERED PUBLIC ACCOUNTING FIRM FOR 2005, AND IN THE DISCRETION OF THE\nPROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.\n\n YOUR VOTE IS IMPORTANT. If you will not be voting by telephone or the\nInternet, you are urged to complete, sign, date amd promptly return the\naccompanying proxy in the enclosed envelope, which is postage prepaid if mailed\nin the United States. If you will be voting by telephone or the Internet, there\nis no need for you to mail back the accompanying proxy.\n\nINSTRUCTIONS ON HOW TO VOTE BY TELEPHONE OR THE INTERNET\n\n To Vote By Telephone--On a touch-tone phone, call 1-866-396-1518. Please\nhave this proxy card ready when you call and follow the simple recorded\ninstructions the vote voice provides to you.\n\n To Vote By Internet--Log on to the Internet and go to\nhttp://www.computershare.com/us/proxy. Please have this proxy card ready when\nyou access the simple instructions that appear on your computer screen.\n\n Your vote by telephone or the Internet authorizes the named proxies in the\nsame manner as if you marked, signed, dated and returned the accompanying proxy.\nThe telephone and Internet voting facilities are available 24 hours a day, 7\ndays a week, but they will close at 5:30 p.m. Central Daylight Time on\nApril 26, 2005.\n\n\n (Continued and to be dated and signed on reverse side)\n\n The undersigned hereby acknowledges receipt of the notice of, and Proxy\nStatement for, the aforesaid Annual Meeting.\n\n(1) ELECTION OF DIRECTOR [ ] FOR the nominee [ ] WITHHOLD AUTHORITY\n listed below to vote for all\n (except as marked nominees listed\n to the contrary below\n below)\n\n(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR THE NOMINEE, STRIKE A LINE\nTHROUGH SUCH NOMINEE'S NAME BELOW.)\n\nNOMINEE: VINCENT S. ANDREWS\n\n(2) PROPOSAL TO APPROVE THE AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF\n INCORPORATION to increase the number of authorized shares of Common Stock\n from 25 million to 60 million.\n\n [ ] FOR [ ] AGAINST [ ] ABSTAIN\n\n(3) PROPOSAL TO APPROVE THE APPOINTMENT OF BDO SEIDMAN, LLP as the independent\n registered public accounting firm for the Company for 2005.\n\n [ ] FOR [ ] AGAINST [ ] ABSTAIN\n\n(4) With discretionary authority as to such other matters as may properly come\n before the meeting.\n\n ________________________________________\n Signature\n\n Date:________________________, 2005\n\n (If signing as Attorney, Administrator,\n Executor, Guardian, Trustee or Corporate\n Officer, please add your title as such.)\n\n PLEASE SIGN, DATE AND RETURN PROMPTLY.\n\n\nMR A SAMPLE MMMMMMMMMMMM\nDESIGNATION (IF ANY) 000000000.000 ext\nADD 1 000000000.000 ext\nADD 2 000000000.000 ext\nADD 3 000000000.000 ext\nADD 4 000000000.000 ext\nADD 5 000000000.000 ext\nADD 6 000000000.000 ext\n\n C 1234567890 J N T\n\n [BAR CODE]\n\n [ ] Mark this box with an X if you have\n made changes to your name or address\n details above.\n\n\n\n\n\n\n\n\n"},"accession_number":{"kind":"string","value":"0001206774-05-000441"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":95,"cells":{"_id":{"kind":"string","value":"1019779_DEF 14A_2005_0001193125-05-018015"},"cik":{"kind":"string","value":"1019779"},"company":{"kind":"string","value":"CUNO INC"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-02-03T00:00:00","string":"2005-02-03T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-03-03T00:00:00","string":"2005-03-03T00:00:00"},"sic":{"kind":"string","value":"3569"},"state_of_inc":{"kind":"string","value":"DE"},"state_location":{"kind":"string","value":"CT"},"fiscal_year_end":{"kind":"string","value":"1031"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019779/0001193125-05-018015-index.html"},"htm_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019779/000119312505018015/ddef14a.htm"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019779/0001193125-05-018015.txt"},"filename":{"kind":"string","value":"1019779_DEF 14A_2005_0001193125-05-018015.htm"},"text":{"kind":"string","value":"\nDEF 14A\nddef14a.htm\nNOTICE AND PROXY STATEMENT\n\nNotice and Proxy Statement\nUNITED STATES \n\n SECURITIES AND EXCHANGE COMMISSION \n\n \n\n SCHEDULE 14A \n\n (Rule 14a-101) \n\n INFORMATION REQUIRED IN PROXY STATEMENT \n\n SCHEDULE 14A INFORMATION\n\n\n Proxy Statement Pursuant to Section 14(a) of the \n\n Securities Exchange Act of 1934 \n\n (Amendment No. ) \n\n \n\n Filed by the Registrant x\n\n\n \n\n Filed by a Party other than the\nRegistrant ¨ \n\n \n\n Check the appropriate box: \n\n \n\n\n\n\n \n \n \n \n \n \n \n\n\n\n¨ \n \nPreliminary Proxy Statement \n \n¨ \n \nConfidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) \n\n\n\nx \n \nDefinitive Proxy Statement \n \n \n \n \n\n\n\n¨ \n \nDefinitive Additional Materials \n \n \n \n \n\n\n\n¨ \n \nSoliciting Material Under Rule 14a-12 \n \n \n \n \n\n\n \n\n CUNO Incorporated\n\n\n (Name of Registrant as Specified in Its Charter) \n\n \n\n (Name of Person(s) Filing\nProxy Statement, if Other Than the Registrant) \n\n \n\n Payment of Filing Fee (Check\nthe appropriate box): \n\n \n\n\n\n\n \nx \nNo fee required. \n\n \n\n\n\n\n \n¨ \nFee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11. \n\n \n\n\n\n\n \n(1) \n \nTitle of each class of securities to which transaction applies: \n\n \n\n\n\n\n \n(2) \n \nAggregate number of securities to which transaction applies: \n\n \n\n\n\n\n \n(3) \n \nPer 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\ndetermined): \n\n \n\n\n\n\n \n(4) \n \nProposed maximum aggregate value of transaction: \n\n \n\n\n\n\n \n(5) \n \nTotal fee paid: \n\n \n\n\n\n\n \n¨ \nFee paid previously with preliminary materials: \n\n \n\n\n\n\n \n¨ \nCheck 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\nprevious filing by registration statement number, or the Form or Schedule and the date of its filing. \n\n \n\n\n\n\n \n(1) \n \nAmount previously paid: \n\n \n\n\n\n\n \n(2) \n \nForm, Schedule or Registration Statement No.: \n\n \n\n\n\n\n \n(3) \n \nFiling Party: \n\n \n\n\n\n\n \n(4) \n \nDate Filed: \n\n\n\n\n\n\n \n\n [GRAPHIC] \n\n\n \n\n Notice of Annual Meeting of Stockholders March 3, 2005 and Proxy Statement \n\n \n\n CUNO Incorporated 400 Research Parkway Meriden, Connecticut 06450 \n\n\n\n\n\n\n \n\n [GRAPHIC] \n\n\n \n\n NOTICE OF ANNUAL MEETING OF STOCKHOLDERS \n\n TO BE HELD MARCH 3, 2005 \n\n \n\n To our Stockholders: \n\n \n\n You are cordially invited to attend the Annual Meeting of the Stockholders of CUNO Incorporated at the Four Points by Sheraton Meriden, 275 Research\nParkway, Meriden, Connecticut on March 3, 2005, at 10:00 a.m. At the Annual Meeting, the Stockholders will vote to: \n\n \n\n\n\n\n \n1. \nElect two Class III Directors, each for a three-year term expiring in 2008. \n\n \n\n\n\n\n \n2. \nReapprove the performance goals in the Company’s Executive Management Incentive Plan (“EMIP”). \n\n \n\n\n\n\n \n3. \nApprove the appointment of PricewaterhouseCoopers LLP as independent auditors. \n\n \n\n\n\n\n \n4. \nTransact other business which may be properly brought before the meeting. \n\n \n\n The Board of Directors has determined that stockholders of record at the close of business on January 20, 2005, are entitled to notice of and to vote at\nthe meeting. A list of stockholders of the Company as of the close of business on January 20, 2005 will be available for inspection during business hours commencing February 22, 2005 at the Company’s offices at 400 Research Parkway, Meriden,\nConnecticut and will also be available at the Annual Meeting. \n\n \n\n YOUR VOTE IS IMPORTANT \n\n \n\n Please vote all\nproxies you receive. Stockholders of record can vote any one of three ways: \n\n \n\n\n\n\n \n• \nBy Telephone: Call the toll-free number on your Proxy Card to vote by phone. \n\n \n\n\n\n\n \n• \nVia Internet: Visit the website on your Proxy Card to vote via the Internet. \n\n \n\n\n\n\n \n• \nBy Mail: Mark, sign, date and mail your Proxy Card in the enclosed postage-paid envelope. \n\n \n\n The method by which you decide to vote will not limit your right to vote at the Annual Meeting. If you later decide to\nattend the Annual Meeting in person, you may vote your shares even if you previously have submitted a proxy. \n\n \n\n An admission ticket, which is required for entry into the Annual Meeting, is attached to your Proxy Card. If you plan to attend the Annual Meeting,\nplease vote your proxy but keep the admission ticket and bring it to the Annual Meeting. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to\nbe able to vote at the Meeting. \n\n \n\n\n\n\n \n\n\n\n BY ORDER OF THE BOARD OF DIRECTORS\n\n \n\n\n\n \n\n\n\n/s/ JOHN A. TOMICH \n\n\n\nJOHN A. TOMICH \n\n\n\nGeneral Counsel and Secretary \n\n\n\n\n \n\n February 2, 2005 \n\n \n\n\n\n\n\n\n\n\n \n\n PROXY STATEMENT\n\n\n Annual Meeting of Stockholders \n\n March 3, 2005 \n\n \n\n This\nProxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of CUNO Incorporated (the “Company”) to be used at the Company’s 2005 Annual Meeting of Stockholders (the “Annual\nMeeting”) and at any adjournments or postponements thereof. The meeting will be held at the Four Points by Sheraton Meriden, 275 Research Parkway, Meriden, Connecticut on March 3, 2005, at 10:00 a.m. The accompanying Notice of Annual Meeting of\nStockholders and this Proxy Statement are first being mailed to stockholders on or about February 2, 2005. \n\n \n\n VOTING SHARES \n\n \n\n The Board of Directors has fixed the close of business on January 20, 2005, as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting. Only stockholders of\nrecord at the close of business on that date will be entitled to vote at the Annual Meeting or any adjournments or postponements thereof. The Company’s voting securities outstanding on January 20, 2005, consisted of 17,168,249 shares of its\n$.001 par value common stock (“Common Stock”). Each share of Common Stock is entitled to one vote on all matters to come before the Annual Meeting. A plurality of the votes cast in person or by proxy is required to elect the nominees for\ndirector. The affirmative vote of a majority of the shares present in person or by proxy is required to (i) reapprove the performance goals in the Company’s Executive Management Incentive Plan (“EMIP”); and (ii) approve the\nappointment of PricewaterhouseCoopers LLP as independent auditors of the Company’s financial statements for fiscal year ending October 31, 2005. \n\n \n\n You may revoke your proxy at any time before it is actually voted at the Annual Meeting by (i) delivering written notice of revocation to the Secretary of\nthe Company, (ii) submitting a subsequently dated proxy, or (iii) attending the meeting and withdrawing the proxy. Each unrevoked Proxy Card properly executed and received prior to the close of the voting will be voted as indicated. Where specific\ninstructions are not indicated, the proxy will be voted FOR the election of all directors as nominated, FOR the reapproval of the performance goals in the EMIP, and FOR the approval of PricewaterhouseCoopers LLP as auditors.\n\n\n \n\n All shares represented by effective proxies marked\n“abstain” will be counted as present for purposes of reaching a quorum at the Annual Meeting or any adjournments or postponements thereof. Abstentions will be treated as shares present and entitled to vote for any proposal presented at the\nAnnual Meeting or any adjournments or postponements thereof. With respect to any matter brought before the Annual Meeting or any adjournments or postponements thereof, other than for the election of directors, an abstention will have the same effect\nas a vote cast against a proposal. If a broker indicates on a proxy that it does not have discretionary authority as to certain shares to vote on a particular matter, those shares will not be considered as present and entitled to vote with respect\nto that matter and will have no effect on the vote on such matter. \n\n \n\n\n\n\n\n\n\n\n \n\n PROPOSAL 1 \n\n\nELECTION OF DIRECTORS \n\n \n\n The Company’s Board of Directors is divided into three classes that serve staggered three-year terms and are as nearly equal in number as possible.\n\n\n \n\n Directors of Class III, whose terms of office expire at the\nAnnual Meeting on March 3, 2005, are Mr. C. Edward Midgley and Mr. Frederick C. Flynn, Jr. The Board has nominated these candidates for reelection as directors for a term ending at the 2008 Annual Meeting based upon the outstanding service each has\nrendered to the Company; and they have consented to serve if elected. It is the intention of the persons named in the enclosed form of proxy to vote such proxy as specified and, if no specification is made on a signed and returned proxy, to vote\nsuch proxy FOR the election as directors the nominees listed in the table below to serve for a term of three years and until a successor shall be elected and qualified. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR\nOF THE ELECTION OF THE NOMINEES NAMED IN THIS PROXY STATEMENT TO SERVE AS DIRECTORS OF THE COMPANY. \n\n \n\n The Board of Directors has no reason to believe that the persons nominated will not be available. If a vacancy or vacancies among the original nominees\noccurs prior to the Annual Meeting, shares represented by the proxies so appointed may be voted for a substitute nominee or nominees designated by the Board of Directors and will be voted for the remaining nominee, if any. In any event, the shares\nrepresented by the proxy will be voted for the election of the nominees unless instructed to the contrary. \n\n \n\n Each stockholder will be entitled to vote the number of shares of Common Stock held as of the record date by such stockholder for the number of directors\nto be elected. Stockholders will not be allowed to cumulate their votes in the election for directors. \n\n \n\n INFORMATION ABOUT THE NOMINEES \n\n \n\n C. Edward Midgley, age 68 - Director since 1995 \n\n Class III Director (present term expires in 2005)\n\n\n \n\n Mr. Midgley has been a director of the Company since\n1995, when the Company was a subsidiary of Commercial Intertech Corp. Mr. Midgley is an independent financial consultant. He retired as a Senior Advisor with UBS Warburg in 2002. From 1995 until November 2000, he was an Advisory Director of\nPaineWebber Incorporated. From 1992 until 1995, he was Co-Head of Investment Banking, Executive Managing Director, Head of Mergers and Acquisitions and a Member of the Board of Directors of Kidder, Peabody & Co. Incorporated. He holds a bachelor\nof arts degree in Economics from Princeton University and a master’s degree in Business Administration from Harvard Business School. \n\n \n\n Frederick C. Flynn, Jr., age 54 - Director since 1999 \n\n Class III Director (present term expires in 2005) \n\n \n\n Mr. Flynn has been a director of the Company, Senior Vice President - Finance and Administration, Chief Financial Officer, and Assistant Secretary of the Company since January 1999. From 1997 through 1998, he\nserved as Senior Vice President - Finance and Chief Financial Officer of GE Capital Information Technology Solutions, a computer systems distributor and service provider. In 1996 he was Senior Vice President - Finance of National Medical\nCare, Inc., a healthcare services provider, and from 1979 to 1995 he was with United Technologies Corporation, the last six years as Vice President - Treasurer. He holds a bachelor of science degree in Economics from Boston College and a\nmaster’s degree in Business Administration from the University of Connecticut. \n\n \n\n\n\n\n\n\n\n\nINFORMATION ABOUT THE OTHER DIRECTORS \n\n \n\n Joel B. Alvord, age 66 - Director since 1996 \n\n Class I Director (present term expires in 2006) \n\n \n\n Mr. Alvord has been a director of the Company since August 1996. He is President and Managing Director of Shawmut Capital Partners. Prior to joining\nShawmut Capital Partners, he was Chairman of Fleet Financial Group for two years, after it was merged with Shawmut National Corporation. Mr. Alvord served as Chief Executive Officer of Shawmut National Corporation from 1987 to 1995. He was educated\nat Loomis Chaffee School and Dartmouth College, where he holds a bachelor’s degree in History and a master’s degree in Business Administration from the Amos Tuck School of Business Administration. He has been a member of the Board of the\nFederal Reserve Bank of Boston, FleetBoston Financial, HSB Group, and Swiss Reinsurance Company of North America. He is a trustee of the Wang Center for the Performing Arts and the American Repertory Theater. \n\n \n\n Dr. Charles L. Cooney, age 60 - Director since 1996 \n\n Class I Director (present term expires in 2006) \n\n \n\n Dr. Cooney has been a director of the Company since August 1996. He has been a Professor of Chemical and Biochemical Engineering at the Massachusetts\nInstitute of Technology (“MIT”) since 1982. At MIT he is the Faculty Director of the Deshpande Center for Technological Innovation and co-director of the Program on the Pharmaceutical Industry. In 1992, Dr. Cooney became a founding Fellow\nfor the American Institute for Medical and Biological Engineering. He holds a bachelor of science degree in Chemical Engineering from the University of Pennsylvania and a master’s degree and a Ph.D. in Biochemical Engineering from MIT. Dr.\nCooney is also a director of Genzyme Corporation and Biocen Limited. \n\n \n\n John M. Galvin, age 72 - Director since 1993 \n\n Class I Director (present term expires in 2006) \n\n \n\n Mr. Galvin has been a director of the Company since 1993, when the Company\nwas a subsidiary of Commercial Intertech Corp. Since his retirement in 1992 from The Irvine Company, a major landowner and developer that also owns a major portfolio of income property, Mr. Galvin has been a private investor and consultant. From\n1987 until 1992, he was Vice Chairman and Director of The Irvine Company. He holds a bachelor’s degree in Business Administration from Indiana University. \n\n \n\n\nMark G. Kachur, age 61 - Director since 1996 \n\n Class II (present term expires in 2007) \n\n \n\n Mr.\nKachur has been a director of the Company since July 1996, Chairman of the Board since November 1, 1999, President and Chief Executive Officer of the Company since December 1, 1997, and President and Chief Operating Officer of the Company from\nSeptember 1996 until December 1, 1997. Since joining the Company in 1994, Mr. Kachur has been President of the Company. From 1992 until 1994, he was President and CEO of Biotage, Inc., and from 1971 to 1991, he was with Pall Corporation, the last\nseven years as a Group Vice President. He holds a bachelor of science degree in Mechanical Engineering from Purdue University and a master’s degree in Business Administration from the University of Hartford. Mr. Kachur is also a director of\nConnecticut Water Service, Inc. \n\n \n\n\n\n\n\n\n\n\nDavid L. Swift, age 68 - Director since 1996 \n\n Class II (present term expires in 2007) \n\n \n\n Mr. Swift has been a director of the Company since August 1996. Mr. Swift retired in 1996 from Acme-Cleveland Corporation, a manufacturer of\ncommunications, motion control and measurement products, where he served as Chairman of the Board since 1993 and Chief Executive Officer and President since 1988. He holds a bachelor of science degree from Ball State University and a juris doctorate\nfrom the Salmon P. Chase College of Law. Mr. Swift is also a director of Twin Disc, Incorporated. \n\n \n\n BOARD MEETINGS AND COMMITTEE INFORMATION \n\n \n\n The Board of Directors held seven meetings during fiscal 2004 and established committees to assist in the discharge of its responsibilities. The attendance at the meetings of the Board of Directors and committee\nmeetings during the year was 96%. All directors attended 85% or more of the aggregate meetings of the Board and the Board committees to which they were assigned. \n\n \n\n During fiscal 2004, the Board had the following committees: Audit, Compensation and Pension and Corporate Governance and\nNominating. Membership and principal responsibilities of the Board committees are described below. \n\n \n\n The Audit Committee consisted of the following four members: Messrs. Galvin (Chairman), Midgley, Swift, and Dr. Cooney. During the fiscal year, the Audit\nCommittee held two meetings and two teleconferences with the auditors to review the Company’s quarterly financial results. The Audit Committee has the primary responsibility of overseeing the Company’s financial reporting process on behalf\nof the Board and reports the results of its activities to the Board. In fulfilling its oversight responsibilities, the Audit Committee selects and evaluates the qualifications and performance of the independent auditors; preapproves all auditing and\nnon-audit services provided by the independent auditors; reviews with such auditors, prior to the commencement of or during such audit for each fiscal year, the scope of the audit to be made; reviews with such auditors and with management the\nresults of the audits, any changes in accounting policies and the services rendered by such auditors (including management consulting fees, if any, and the effect of such services on the independence of such auditors); reviews the Company’s\ninternal audit and control functions; reviews financial statements and reports with management and the auditors; considers such matters relating to the audits and to the accounting procedures employed by the Company, as the Audit Committee may deem\nappropriate; and reports to the full Board of Directors regarding all of the foregoing. The Audit Committee is required to have at least three directors, all of whom are financially literate, and at least one member who has accounting or related\nfinancial management expertise. The Board of Directors has determined that Mr. Galvin qualifies as a financial expert. In addition, Mr. Galvin has been designated as the Audit Committee Financial Expert, as defined by SEC rules and regulations. Each\nof the members of the Audit Committee is independent (as defined in Rule 4200(a)(15) of the National Association of Securities Dealers’ listing standards and 10A-3 (b) under the Securities Exchange Act of 1934, as amended). See the “Audit\nCommittee Report.” The Audit Committee operates under a written charter adopted by the Company’s Board of Directors, which is attached hereto as Appendix A along with a policy for pre-approval of audit and non-audit services, which is\nattached hereto as Appendix B. \n\n \n\n The Corporate Governance and\nNominating Committee, which met two times during the fiscal year, consisted of the following five members: Messrs. Swift (Chairman), Alvord, Galvin, Midgley, and Dr. Cooney. Each of the members of the Corporate Governance and Nominating Committee is\nindependent, as defined by NASDAQ. The Committee has the responsibility to review and administer the corporate governance guidelines of the Company. In addition, the Committee has the responsibility to identify the criteria for Board membership;\nidentify, recruit, review and nominate prospective members of the Board of Directors; evaluate the effectiveness of the Board on a continuing basis and report to the Board any observed deficiency; recommend to the Board the assignment of Board\nmembers and Committee chairmen to various Committees; and periodically review the compensation for the Board and make recommendations to the Board regarding any changes in such compensation. The Committee considers matters of corporate \n\n\n \n\n\n\n\n\n\n\n\n\ngovernance and reviews and publishes, periodically, to the extent required or considered desirable, the Company’s corporate governance guidelines, Code\nof Conduct and Code of Ethics for Senior Financial Officers (as required by applicable NASDAQ listing requirements and rules adopted by Securities and Exchange Commission); and reviews, periodically, any plans adopted by the Company that might\nimpact the rights of shareholders or the election of directors. The Committee makes recommendations on the structure of Board meetings and oversees the Company’s processes for providing information to the Board. The Committee will consider\ndirector candidates nominated by stockholders on the same basis as other candidates. Any stockholder may nominate a person for election to the Board of Directors by giving written notice to the Chairman of the Corporate Governance and Nominating\nCommittee at the executive offices of the Company and making a recommendation or through written notice given to the Secretary of the Company at the executive offices of the Company not fewer than 45 nor more than 75 days prior to the first\nanniversary of the date on which the Company first mailed its proxy materials for the previous year Annual Meeting of Stockholders. \n\n \n\n The Compensation and Pension Committee, which met four times during the fiscal year, consisted of the following five members: Messrs. Midgley (Chairman),\nAlvord, Galvin, Swift and Dr. Cooney. The Committee has the authority to determine annual salaries and bonuses for all elected officers and senior management, except the Chairman and Chief Executive Officer; has the authority to approve incentive\nand deferred compensation plans, and funding arrangements related thereto, for elected officers and senior management; and administers such plans. The Committee recommends to the non-employee members of the Board of Directors the annual salary,\nbonus, stock options, performance shares and restricted shares for the Chairman and Chief Executive Officer. Each of the members of the Committee is independent, as defined by NASDAQ; and none of the members of the Compensation Committee were an\nemployee or former employee of the Company. See “Compensation Committee Report on Executive Compensation.” The Committee also has the responsibility of overseeing and evaluating the investments of the Company’s pension plan trusts,\nselecting fund managers and reviewing their performance and designating the proportion of pension contributions to be assigned to such managers. \n\n \n\n The Charters for the Audit Committee, Corporate Governance and Nominating Committee, and Compensation and Pension Committee are available on the\nCompany’s website at www.cuno.com. Stockholders may communicate with the Board of Directors by sending a letter to the Chairman of the Board of Directors at the executive offices of the Company. All members of the Board of Directors attended\nlast year’s Annual Meeting of Stockholders. \n\n \n\n Directors’\nCompensation \n\n \n\n All Directors who are not employees or\nofficers of the Company receive an annual retainer fee in the amount of $36,000. The Chairman of the Audit Committee receives an additional annual retainer fee in the amount of $5,000. The retainer fees are paid quarterly on the last day of each\nfiscal quarter. Non-employee directors have the option to make an election to receive the retainer in deferred stock units instead of cash. Those directors who opt for the stock unit alternative for a 3-year deferral period will receive a 20%\npremium in stock units versus the cash option, a 25% premium for a 4-year deferral period, and a 30% premium for a 5-year deferral period. Directors are also reimbursed for reasonable travel and other expenses related to meetings of the Board and\ncommittees. Non-employee directors receive non-qualified stock options to purchase 2,000 shares of Common Stock and 250 shares of restricted stock with a 4-year vesting period, annually. Directors who are employees or officers of the Company do not\nreceive compensation for serving as directors or members of committees. Mr. Kachur and Mr. Flynn, as officers of the Company, are not compensated for serving as directors or members of committees of the Company. \n\n \n\n Section 16(a) Beneficial Ownership Reporting Compliance \n\n \n\n Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange\nAct”) requires the Company’s directors, executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the Securities and Exchange Commission (the “SEC”) initial\nreports of beneficial ownership and reports of changes in beneficial ownership of Common Stock. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they\nfile. \n\n \n\n\n\n\n\n\n\n\nTo the Company’s knowledge, based solely on review of the copies of such reports furnished to the\nCompany and written representations that no other reports were required, during the fiscal year ended October 31, 2004, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were met.\n\n\n \n\n EXECUTIVE COMPENSATION \n\n \n\n This table shows the compensation paid to the Chief Executive Officer and the\nother four most highly paid executive officers for the past three fiscal years ending October 31 (each, a “Named Executive Officer”). \n\n \n\n Summary Compensation Table \n\n \n\n\n\n\n\nThis column shows the market value of restricted share awards on the date of grant. The aggregate holdings/value of restricted stock held on October 31, 2004, by the\nindividuals listed in this table, not including awards which were earned after the end of the fiscal year as part of the Company’s EMIP or the Company’s Management Incentive Plan (“MIP”) and were elected to be taken in the form\nof restricted stock, as described in the Compensation Committee Report on Executive Compensation were: Mark G. Kachur - 113,371 shares/$3,387,038; Frederick C. Flynn, Jr., - 44,570 shares/$1,364,958; Thomas J. Hamlin - 8,305\nshares/$282,654; Timothy B. Carney - 4,175 shares/$133,383; and Anthony C. Doina 982 shares/$29,161. \n\n \n\n\n\n\nCompany matching contributions pursuant to the Company 401(k) Plan. \n\n\n \n\n\n\n\nPursuant to the Company’s EMIP and MIP, Mr. Flynn elected to take 100% of his bonus in restricted stock. Pursuant to the Company’s MIP, Mr. Carney elected\nto take 30% of his bonus in restricted stock, and Mr. Doina took 10% of his bonus in restricted stock. \n\n \n\n\n\n\n\n\n\n\nThe following table sets forth, for each of the Named Executive Officers, options granted on Common Stock\nduring fiscal year 2004 pursuant to the CUNO Incorporated 1996 Stock Incentive Plan. \n\n \n\n Option Grants In Last Fiscal Year \n\n \n\n\n\n\n\nThe options were granted subject to a three-year vesting period, with 50% of the options granted becoming exercisable on the second anniversary of the grant date and\n50% on the third anniversary. No stock appreciation rights were granted. The exercisability of the options may be accelerated in the event of a change in control. \n\n \n\n\n\n\nThe dollar amounts indicated in these columns are the result of calculations assuming 5% and 10% growth rates as required by the rules of the Securities and Exchange\nCommission (“SEC”). These growth rates are not intended by CUNO Incorporated to forecast future appreciation, if any, of the price of CUNO Incorporated Common Stock. The actual value, if any, realized by an executive officer will depend on\nthe excess of the market price of the shares over the exercise price on the date the option is exercised. \n\n \n\n\n\n\n\n\n\n\nThe following table sets forth, for each of the Named Executive Officers, information regarding the\nexercise of options on the Common Stock during fiscal year 2004 and unexercised options held as of the end of fiscal year 2004 pursuant to the CUNO Incorporated 1996 Stock Incentive Plan. \n\n \n\n Aggregated Option Exercises In Fiscal Year 2004 And \n\n Fiscal Year-End 2004 Option Values \n\n \n\n\n \n\n\n\n\nThe value per option is calculated by subtracting the exercise price from the October 29, 2004 (last business day of Fiscal 2004), closing price of the Common Stock\non the NASDAQ National Market of $57.50. \n\n \n\n The\nfollowing table sets forth, for each of the Named Executive Officers, long-term incentive awards made during fiscal year 2004 pursuant to the CUNO Incorporated 1996 Stock Incentive Plan. \n\n \n\n Long-Term Incentive Plan Awards In Last Fiscal Year \n\n \n\n The Company made no long term incentive awards during fiscal year 2004.\n\n\n \n\n\n\n\n\n\n\n\nEmployees may retire from the Company with unreduced benefits under the Company’s retirement plans\nat age 65 or older with 25 or more years of service. The table below shows the estimated annual pension benefits provided under the Company’s defined benefit retirement plans for employees in higher salary classifications retiring at age 65 or\nlater. \n\n \n\n Estimated Total Annual Retirement Benefits Under\nThe Pension Plan For \n\n Salaried Employees And Supplemental Executive Retirement Plan \n\n \n\n\n \n\n Benefits under the\nplans are calculated generally under a formula of 50% of the participant’s final average compensation reduced by 50% of the participant’s estimated social security benefits, reflected in the table in the form of a straight life annuity.\nThe compensation covered by the pension plan is base salary as set forth in the Salary column of the Summary Compensation Table above. The compensation covered by the supplemental executive retirement plan is also base salary plus bonus for Mr.\nKachur, the only participant in such plan. As of December 31, 2004, Mr. Kachur had ten years of credited service, Mr. Flynn, Jr. had five years of credited service, Mr. Hamlin had twenty-one years of credited service, Mr. Carney had twenty years of\ncredited service, and Mr. Doina had ten years of credited service with the Company. \n\n \n\n REPORT ON EXECUTIVE COMPENSATION \n\n \n\n Overall Policy and Administration \n\n \n\n The\nCompany’s executive compensation as developed and administered by the Compensation and Pension Committee of the Board of Directors (the “Compensation Committee”) is designed to preserve and enhance stockholder value in the context of\na progressive, global technology and manufacturing company. The executive compensation program links executive and stockholder financial interests by: \n\n \n\n\n\n\n \n• \nMotivating executives toward longer term strategic management of assets and operations through stock programs that focus executive attention on increasing stockholder value;\n \n\n \n\n\n\n\n \n• \nRecognizing and rewarding individual contributions and achievements as well as overall business performance via annual incentives tied to the achievement of annual operating,\nfinancial and strategic objectives; and \n\n \n\n\n\n\n \n• \nProviding a competitive base salary structure and total compensation opportunity to attract and retain the executive, research, technical and other management talent necessary to\nensure the Company’s continued profitable growth and maintenance of high technological standards. \n\n \n\n The Compensation Committee establishes salaries for corporate officers and administers the Company’s Executive Management Incentive Plan\n(“EMIP”), Management Incentive Plan (“MIP”), and the 1996 Stock Incentive Plan. In its decision-making process, the Compensation Committee selects and \n\n\n \n\n\n\n\n\n\n\n\n\nuses independent compensation consultants and may periodically seek input from appropriate Company executives. \n\n \n\n Base Salaries \n\n \n\n In the aggregate, the Compensation Committee establishes base salaries at or near the market median (50th percentile) of\nsenior executives and other corporate officers in comparably sized technology and manufacturing companies. In addition, other factors may be considered when setting individual salary levels, which may result in salaries above or below the stated\ntarget. These factors may include: \n\n \n\n\n\n\n \n• \nAvailability of talent. \n\n \n\n\n\n\n \n• \nThe recruiting requirements of the particular situation. \n\n \n\n\n\n\n \n• \nSpecific research and technical backgrounds. \n\n \n\n\n\n\n \n• \nExperience. \n\n \n\n\n\n\n \n• \nAnticipated performance. \n\n \n\n Any adjustments in the base salaries of senior executives and other corporate officers will normally occur as of December 1 each year and are dependent on such factors as: \n\n \n\n\n\n\n \n• \nThe executive’s current responsibilities, experience, and performance. \n\n \n\n\n\n\n \n• \nCompetitive compensation practices at comparably sized technology and manufacturing companies. \n\n \n\n\n\n\n \n• \nThe Compensation Committee’s assessment regarding the executive’s overall contribution. \n\n \n\n Annual Incentive Compensation \n\n \n\n The Compensation Committee administers two annual incentive plans covering management participants. The EMIP was approved by stockholders in 1996 and is a\nperformance-based plan in which payouts are set in accordance with the requirements of Internal Revenue Code (“IRC”) Section 162(m). It provides annual incentive compensation opportunities to the Company’s Chief Executive Officer and\nChief Financial Officer based solely on the achievement of predetermined financial performance objectives. For a description of the proposal to reapprove the performance goals in the EMIP, see Proposal 2. Target awards, as a percent of base salary,\nrange from 45 to 75% for the participants. In addition to being participants in the EMIP, the Chief Executive Officer and Chief Financial Officer are participants in the MIP. \n\n \n\n The Compensation Committee also administers the MIP, which provides compensation that is not performance based as defined in\nCode Section 162(m), but which is based on Company performance as well as objective and subjective evaluations of individual executive performance. The MIP provides opportunities for Company executives to earn annual incentives based on the\nachievement of a combination of important financial goals (such as operating and net income, earnings per share, return on sales, return on assets and/or cash flow) for the Company as well as individual objectives. A threshold net income level must\nbe achieved before any payments are made. Bonus targets, as a percent of base salary, range from 10% to 60% for plan participants. \n\n \n\n Participants for fiscal 2004 included 150 individuals with target incentive award opportunities primarily based on: \n\n \n\n\n\n\n \n• \nIndividual responsibility levels. \n\n \n\n\n\n\n \n• \nMarket median data for comparably sized technology and manufacturing companies. \n\n \n\n To enhance the Company’s objectives of encouraging additional stock ownership by management and increasing Company cash flow, certain\nparticipants in the EMIP and the MIP may elect to receive up to 100% of their award in restricted stock. If the participant elects to receive restricted stock, the Company \n\n\n \n\n\n\n\n\n\n\n\n\nincreases the award by 20% for a 3 year deferral period, 25% for a 4 year deferral period and 30% for a 5 year deferral period, as selected by the\nparticipant. The vesting period associated with the stock award is equal to the deferral period selected and the shares are forfeited in the event a participant voluntarily leaves the Company or is terminated “for cause” prior to the\nvesting date. \n\n \n\n The 1996 Stock Incentive Plan \n\n \n\n The 1996 Stock Incentive Plan allows for the grant of a variety of stock\nincentive instruments, including non-qualified and incentive stock options, stock appreciation rights, restricted stock and performance shares. The Compensation Committee has made grants of stock options to the Company’s key executives to\ncreate a direct link between stockholder and executive interests, specifically by focusing executive attention on increasing stockholder value. The Committee also made a grant of stock options to key executives in fiscal 2004 in furtherance of\naligning the executives’ interests with those of the stockholder. \n\n \n\n Also in\nfiscal 2004, the Compensation Committee granted restricted stock to Messrs. Kachur, Flynn and Hamlin. The restricted stock contains a four-year or five year vesting period, and is forfeitable if the recipient leaves the Company under certain\nconditions. The restricted stock grant is intended to provide a long-term retention incentive to the recipient. \n\n \n\n In determining stock option and restricted stock awards, the Committee considers such factors as: \n\n \n\n\n\n\n \n• \nMedian competitive award levels for comparable companies. \n\n \n\n\n\n\n \n• \nThe need to attract, motivate, and retain managers, technical, and research and development talent as well as other professionals. \n\n \n\n\n\n\n \n• \nCompany and individual performance. \n\n \n\n The Company also awards time-lapse restricted stock grants in special circumstances, such as to attract and retain newly hired executives and in other\nsimilar non-recurring situations. \n\n \n\n Chief Executive Officer Compensation\n\n\n \n\n Mr. Kachur was paid a base salary of $494,766 for fiscal\n2004. \n\n \n\n For performance in fiscal 2004, Mr. Kachur received a\npayment under the EMIP of $450,800. This payment was calculated from a predetermined formula based on Corporate net income set by the Compensation Committee and certified by the Compensation Committee in accordance with the provisions of IRC Section\n162(m). In addition, Mr. Kachur received a payment from the MIP of $350,000 based on the Compensation Committee’s judgment on his achievement of individual goals and objectives during 2004. \n\n \n\n Mr. Kachur received 23,000 time-lapsed restricted shares in fiscal 2004 and\nis forfeitable if he leaves the Company under certain conditions. In determining this grant, the Compensation Committee wanted to ensure that Mr. Kachur’s long-term incentive compensation was delivered through stock price appreciation in order\nto establish a strong financial link between Mr. Kachur and the Company’s shareholders. \n\n \n\n Internal Revenue Code Section 162(m) \n\n \n\n A 1993 IRC amendment caps the allowable federal income tax deduction for compensation paid to each of the proxy-reported officers of a public company. The deduction limit, effective since 1994, does not apply to\ncompensation paid under a plan that meets certain requirements for performance-based compensation. These requirements include: \n\n \n\n\n\n\n \n• \nCompensation payable based upon the attainment of one or more pre-established objective performance goals; \n\n \n\n\n\n\n\n\n\n\n\n\n \n• \nPerformance goals established by a Compensation Committee of the Board of Directors that is comprised solely of two or more “outside directors;” \n\n\n \n\n\n\n\n \n• \nThe terms of the compensation and the performance criteria are disclosed to and approved by stockholders before payment; \n\n \n\n\n\n\n \n• \nThe Compensation Committee certifies in writing that the performance goals have been satisfied before payment. \n\n \n\n The Compensation Committee’s general policy is to structure the major\ncomponents of the Company’s incentive compensation programs to satisfy the requirements of performance-based compensation and preserve the deductibility of compensation paid to executive officers on an ongoing basis. \n\n \n\n To implement the above policy, the Company sought and received stockholder\napproval of the 1996 Stock Incentive Plan and the EMIP. Furthermore, in 1999 and 2003, the Company sought and received stockholder approval to increase the number of shares available for awards under the 1996 Stock Incentive Plan. Such approvals\npreserved the tax deductibility of stock options, performance shares and annual incentive awards awarded to the Company’s executive officers under the EMIP. The 1996 Stock Incentive Plan links compensation to the achievement of key financial\nobjectives to motivate employees and increase stockholder value. \n\n \n\n\n\n\nBy: \nThe Compensation and Pension Committee \n\n \n\n\n\n\n \n \n \n \n \n\n\n\n C. Edward Midgley, Chairman\n\n \n \nDr. Charles L. Cooney \n \nDavid L. Swift \n\n\n\n Joel B. Alvord\n\n \n \nJohn M. Galvin \n \n \n\n\n \n\n Employment Agreements\n\n\n \n\n On December 1, 2000, the Company entered into a written\nagreement to employ Mark G. Kachur as President and Chief Executive Officer. Mr. Kachur’s Employment Agreement was amended, effective November 30, 2004, and will expire on June 1, 2005. The Employment Agreement, as amended, provides for the\npayment of a base salary of $550,000 which can be increased at the discretion of the Company. Additionally, Mr. Kachur will be eligible to (1) receive annual incentives as part of the EMIP and the MIP; and (2) participate in other incentive, stock\noption, profit sharing and similar plans maintained by the Company for the benefit of its executives. In addition, the Employment Agreement with Mr. Kachur provides that, in the event of his termination without cause (as defined in his Employment\nAgreement), Mr. Kachur will receive a lump sum payment equal to two times his then recent annual cash compensation. Finally, Mr. Kachur will be included in all other employee benefit plans to the extent that he is eligible. Such plans include, but\nare not limited to, group life insurance plans, hospitalization and medical plans and long-term disability plans. \n\n \n\n On June 1, 2004, the Company entered into a written agreement to employ Timothy B. Carney as Senior Vice President - Worldwide Water Group. Mr.\nCarney’s Employment Agreement expires on November 30, 2008. The Employment Agreement provides for the payment of a base salary of $225,000, which can be increased at the discretion of the Company. Additionally, Mr. Carney will be eligible to\n(1) receive annual cash incentives as part of the MIP; and (2) participate in other incentive, stock option, profit sharing and similar plans maintained by the Company for the benefit of its executives. In addition, the Employment Agreement with Mr.\nCarney provides that, in the event of his termination without cause (as defined in his Employment Agreement), Mr. Carney will receive a lump sum payment equal to two times his then recent annual cash compensation. Finally, Mr. Carney will be\nincluded in all other employee benefit plans to the extent that he is eligible. Such plans include, but are not limited to, group life insurance plans, hospitalization and medical plans, and long-term disability plans. \n\n \n\n\n\n\n\n\n\n\nOn December 1, 2001, the Company entered into a written agreement to employ Frederick C. Flynn, Jr. as\nSenior Vice President-Finance & Administration and Chief Financial Officer. Mr. Flynn’s Employment Agreement expires on November 30, 2005. The Employment Agreement provides for the payment of a base salary of $277,160, which can be\nincreased at the discretion of the Company. Additionally, Mr. Flynn will be eligible to (1) receive annual cash incentives as part of the EMIP and the MIP; and (2) participate in other incentive, stock option, profit sharing and similar plans\nmaintained by the Company for the benefit of its executives. In addition, the Employment Agreement with Mr. Flynn provides that, in the event of his termination without cause (as defined in his Employment Agreement), Mr. Flynn will receive a lump\nsum payment equal to two times his then recent annual cash compensation. Finally, Mr. Flynn will be included in all other employee benefit plans to the extent that he is eligible. Such plans include, but are not limited to, group life insurance\nplans, hospitalization and medical plans, and long-term disability plans. \n\n \n\n On December 1, 2001, the Company entered into a written agreement to employ Thomas J. Hamlin as Senior Vice President-Research & Development. Mr. Hamlin’s Employment Agreement expires on November 30, 2005.\nThe Employment Agreement provides for the payment of a base salary of $186,500, which can be increased at the discretion of the Company. Additionally, Mr. Hamlin will be eligible to (1) receive annual cash incentives as part of the MIP; and (2)\nparticipate in other incentive, stock option, profit sharing and similar plans maintained by the Company for the benefit of its executives. In addition, the Employment Agreement with Mr. Hamlin provides that, in the event of his termination without\ncause (as defined in his Employment Agreement), Mr. Hamlin will receive a lump sum payment equal to two times his then recent annual cash compensation. Finally, Mr. Hamlin will be included in all other employee benefit plans to the extent that he is\neligible. Such plans include, but are not limited to, group life insurance plans, hospitalization and medical plans, and long-term disability plans. \n\n \n\n Change of Control Agreements \n\n \n\n The Company has entered into change of control agreements (“Agreements”) with Messrs. Kachur, Flynn, Hamlin, Carney, Doina and eight other key\nexecutives (the “Executives”). Under the Agreements, following a “Change of Control” (as defined in the Agreements), if the Executives are terminated without cause or if the Executives terminate their own employment for certain\nreasons, the Executives could receive (in addition to certain other benefits described below) (i) accrued and unpaid base salary and a pro rata portion of either their current annual incentive or the average of their two highest annual incentives\nduring the five preceding years; (ii) one and one-half to three times the sum of their base salary and either their current annual incentive or the average of their two highest annual incentives during the five preceding years; (iii) the value of\nany shares, dividends or other property payable assuming maximum performance with respect to any performance shares held by the Executives; (iv) the actuarial value of accrued benefits under the supplemental executive retirement plan; (v) all vested\nnonforfeitable amounts owing under any comprehensive benefit plans; (vi) continuation of certain benefits for two or three years, such as medical benefits; and (vii) certain other benefits and payments. If a Change of Control occurs, the Company is\nobligated to set aside, in trust, sufficient assets to fund all obligations under the Agreements. In addition, payments received by the Executives in connection with a Change of Control could be “grossed up” for any excise taxes imposed by\nthe “parachute payment” provisions of the IRC. Under the Agreements, each of the Executives has agreed not to compete with the Company for a stated period of time or to reveal proprietary information. \n\n \n\n Relationships and Related Transactions \n\n \n\n Mr. Kachur’s son, Matthew Kachur, is an employee of the Company. In\nfiscal 2004, Matthew Kachur’s compensation, including salary and bonus, totaled $60,885. \n\n \n\n AUDIT COMMITTEE REPORT \n\n \n\n The Audit Committee of the Board of directors (the “Audit Committee”) is comprised of the four directors named below. Each member of the Committee is an independent director as defined by the NASDAQ rules. The Committee has a\nwritten charter which has been approved by the Board of Directors. The Audit Committee has reviewed and discussed the audited financial statements with \n\n\n \n\n\n\n\n\n\n\n\n\nmanagement, which has the primary responsibility for the financial statements, and also with the independent auditors. The Committee has discussed with the\nindependent auditors the matters that are required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees). The Audit Committee has received written disclosures and a letter from the independent auditors\nregarding the auditors’ independence, as required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and the Committee has discussed with the auditors their independence. Based upon the review and\ndiscussions of the foregoing, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the last fiscal year. \n\n \n\n\n\n\nBy: \nThe Audit Committee \n\n \n\n\n\n\n \n \n \n\n\n\n John M. Galvin, Chairman\n\n \n \nC. Edward Midgley \n\n\n\n Dr. Charles L. Cooney\n\n \n \nDavid L. Swift \n\n\n \n\n\n\n\n\n\n\n\n \n\n PERFORMANCE\nGRAPH \n\n \n\n The following graph shows a\ncomparison of cumulative total returns during the period commencing on October 31, 1999 and ending on October 31, 2004, for the Company, the Russell 2000 Index, and the Company’s Peer Group. The comparison assumes $100 was invested on October\n31, 1999, in the Common Stock, the Russell 2000, and the Peer Group and assumes the reinvestment of all dividends, if any. \n\n \n\n CUNO vs. RUSSELL 2000; PEER GROUP \n\n Comparison of Cumulative Total Return \n\n \n\n \n \n\n \n\n\n\n\n\nThe Russell 2000 Index is a market-weighted index comprising approximately 2,000 common stocks issued by a wide range of smaller capitalization U.S. companies.\n \n\n \n\n\n\n\nThe Peer Group Index represents public companies against which the Company competes and includes Calgon Carbon Corporation, Ionics Inc., Millipore Corp., Osmonics,\nInc., and Pall Corporation. From the second quarter of fiscal year 2003 forward, the Peer Group Index excludes Osmonics, Inc., as Osmonics, Inc. shares were no longer publicly-traded following the acquisition of Osmonics, Inc. by GE Specialty\nMaterials, a unit of General Electric Company, effective February 28, 2003. \n\n \n\n\n\n\n\n\n\n\n \n\n SECURITY OWNERSHIP OF\nMANAGEMENT \n\n \n\n The directors, nominees for the office of\ndirector, the Named Executive Officers, and all directors and executive officers as a group were the beneficial owners of Common Stock, as of December 31, 2004, as set forth below: \n\n \n\n\n\n\n\n* \nLess than 1%. \n\n \n\n\n\n\n(1) \nIncludes the following number of shares of Common Shares (fractional shares not shown) credited to the accounts of the above-mentioned beneficial owners by the\ntrustee acting under the provisions of the Company 401(k) Plan: Mr. Carney 2,757 shares, Mr. Doina 1, 632 shares; Mr. Flynn 2,852 shares; Mr. Hamlin 390 shares; and Mr. Kachur 1,723 shares. \n\n \n\n\n\n\n(2) \nIncludes shares of Common Stock acquirable within 60 days of December 31, 2004, upon exercise of options issued under the Company’s 1996 Stock Incentive Plan as\nfollows: Mr. Alvord 12,000 shares; Mr. Carney 38,532 shares; Dr. Cooney 8,000 shares; Mr. Doina 34,522 shares; Mr. Flynn 76,026 shares; Mr. Galvin 12,000 shares; Mr. Hamlin 28,533 shares; Mr. Kachur 101,038 shares’ Mr. Midgley 12,000 shares;\nand Mr. Swift 12,000 shares. \n\n \n\n\n\n\n(3) \nDoes not include 500 shares of Common Stock owned by Mr. Carney’s wife. \n\n \n\n\n\n\n(4) \nDoes not include 10,000 shares of Common Stock owned by Mr. Midgley’s wife. \n\n \n\n The following table provides information as of October 31, 2004 related to our equity compensation plans in effect at that\ntime. \n\n \n\n Equity Compensation Plan Information(1) \n\n \n\n\n \n\n\n\n\n\n\n\n\n \n\n SECURITY OWNERSHIP OF\nCERTAIN BENEFICIAL OWNERS \n\n \n\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n\n Title of Class\n\n \n \n Name and Address of Beneficial Owner\n\n \n \n Amount and Nature of\n\n Beneficial Ownership (1)\n\n \n \n \n Percent\n\n of Class\n\n \n \n\n\n\n \n \n \n \n\n\n\n Common\n\n \n \n Columbia Wanger Asset Management LP\n\n 227 West\nMonroe\n\n Suite 3000\n\n Chicago, IL 60606\n\n \n \n1,287,400 \n(2) \n \n7.64 \n% \n\n\n\n \n \n \n \n\n\n\n Common\n\n \n \n Brown Capital Management\n\n 1201 North Calvert\nStreet\n\n Baltimore, MD 21202\n\n \n \n1,231,090 \n(3) \n \n7.30 \n% \n\n\n\n \n \n \n \n\n\n\n Common\n\n \n \n Neuberger Berman LLC\n\n 605 Third Avenue\n\n New York, NY 10158\n\n \n \n528,880 \n(4) \n \n6.42 \n% \n\n\n \n\n\n\n\n(1) \nThe information contained in this Table was obtained from SEC filings made by the above persons. \n\n \n\n\n\n\n(2) \nColumbia Wanger Asset Management LP has sole investment authority over all shares and shared voting power over all shares. \n\n \n\n\n\n\n(3) \nBrown Capital Management has sole investment authority over all shares. Shared voting power over 625,390 shares. \n\n \n\n\n\n\n(4) \nNeuberger Berman LLC has sole investment authority over all shares. Sole voting power over 357,480 shares and shared voting power over 171,400 shares.\n \n\n \n\n PROPOSAL 2 \n\n REAPPROVAL OF PERFORMANCE GOALS IN THE EMIP \n\n \n\n As described under “Executive Compensation - Annual Incentive Compensation,” the EMIP is a performance-based plan in which payouts are set in\naccordance with the requirements of Section 162(m) of the IRC. In accordance with the requirements of regulations under Section 162(m) of the IRC, the performance goals are being submitted to the stockholders for reapproval. \n\n \n\n The EMIP provides annual incentive compensation opportunities to selected\nsenior executives based solely on the achievement of predetermined financial performance objectives, including corporate operating and net income, return on net sales, return on assets and/or cash flow. The Compensation Committee is responsible for\nselecting the financial performance objective or objectives to be used for each award under the EMIP. The Compensation Committee establishes the specific target to be achieved for each goal specified in an award in order for a payment to be made and\nthe percentage (up to 100%) of base salary that would be paid if that goal is achieved (the “Award Target”). If 80% of the pre-established goal is achieved, the minimum payment of 25% of the Award Target would be paid. For performance\nabove the target for the goal, the Compensation Committee can increase the percentage of the Award Target paid to the participant up to a maximum of 200% of the Award Target in respect to any fiscal year for achievement of 150% of the goal for that\nfinancial performance objective. Messrs. Kachur and Flynn are currently the only participants in the EMIP. \n\n \n\n If this proposal is approved, the performance goals described in the preceding paragraph will continue to be used by the Compensation Committee in\nadministering the EMIP. \n\n \n\n THE BOARD OF DIRECTORS RECOMMENDS\nTHAT THE STOCKHOLDERS VOTE IN FAVOR OF REAPPROVAL OF THE PERFORMANCE GOALS IN THE EMIP. \n\n \n\n\n\n\n\n\n\n\n \n\n PROPOSAL 3 \n\n\nSELECTION OF INDEPENDENT AUDITORS \n\n \n\n The Board of Directors has selected PricewaterhouseCoopers LLP to audit the consolidated financial statements of the Company and its subsidiaries for the\nfiscal year ending October 31, 2005. A representative of PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting with the opportunity to make a statement if such representative so desires and will also be available to respond to\nappropriate questions from stockholders. \n\n \n\n Unless contrary\ninstructions are noted on the proxy, it will be voted to ratify the selection by the Audit Committee of PricewaterhouseCoopers LLP as independent auditors for the fiscal year ending October 31, 2005. The affirmative vote of the holders of a majority\nof the voting shares represented at the Annual Meeting is required for such ratification. THE AUDIT COMMITTEE RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF RATIFICATION OF THE SELECTION OF AUDITORS. \n\n \n\n Fees paid for services provided by PricewaterhouseCoopers LLP, the Company’s independent\naccountant, during the fiscal year ended October 31, 2004 were as follows: \n\n \n\n Audit Services \n\n \n\n The aggregate fees billed by\nPricewaterhouseCoopers LLP for professional services rendered for the audit of the Company’s annual consolidated financial statements for the fiscal year ended October 31, 2004, for the reviews of the financial statements included in the\nCompany’s Quarterly Reports on Form 10-Q for that fiscal year, and for statutory audits of certain international subsidiaries were $474,080. \n\n \n\n Audit Related Services \n\n \n\n Fees for audit related services billed to the Company by PricewaterhouseCoopers LLP for the fiscal year ended October 31, 2004 amounted to $76,100.\n\n\n \n\n Tax Services \n\n \n\n Tax fees billed to the Company by PricewaterhouseCoopers LLP for the fiscal\nyear ended October 31, 2004 amounted to $85,800. The Audit Committee has determined that the fees paid to PricewaterhouseCoopers LLP for tax services are compatible with maintaining PricewaterhouseCoopers’ independence. \n\n \n\n All Other Services \n\n \n\n For services other than those that qualify as audit services, audit related services or tax services billed to the Company\nby PricewaterhouseCoopers LLP for the fiscal year ended October 31, 2004 amount to $15,000. The Audit Committee has determined that the fees paid to PricewaterhouseCoopers LLP for such other services are compatible with maintaining\nPricewaterhouseCoopers’ independence. \n\n \n\n ANNUAL REPORT TO\nSTOCKHOLDERS \n\n \n\n The annual report of the Company and its\nsubsidiaries for the fiscal year ended October 31, 2004, including financial statements reflecting the financial position and operations of the Company and its subsidiaries for that year, is being mailed to stockholders simultaneously with this\nProxy Statement. The annual report is not deemed to have been filed with the Securities and Exchange Commission and is not part of this proxy. \n\n \n\n\n\n\n\n\n\n\n \n\n 2006 ANNUAL MEETING OF\nSTOCKHOLDERS \n\n \n\n The deadline for receipt by the Company of\nstockholders’ proposals for inclusion in the Company’s Proxy Statement and form of proxy for its 2006 annual meeting of stockholders (the “2006 Meeting”) is September 27, 2005. No stockholder proposal will be considered at the\n2005 Meeting unless proper notice is received by the Company between November 11, 2005 and December 11, 2005 in compliance with the Company’s Bylaws. The Company form of proxy for the 2006 Meeting will confer discretionary authority upon the\npersons named as proxies to vote on any untimely stockholder proposals; and, the Proxy Statement will advise how the proxies intend to vote on any timely stockholder proposals which are not included in the Company’s Proxy Statement and form of\nproxy. \n\n \n\n FORM 10-K \n\n \n\n A COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR\nENDED OCTOBER 31, 2004, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED BY STOCKHOLDERS, WITHOUT CHARGE, ON WRITTEN REQUEST DIRECTED TO THE SECRETARY, CUNO INCORPORATED, 400 RESEARCH PARKWAY, MERIDEN, CONNECTICUT 06450.\n\n\n \n\n OTHER MATTERS \n\n \n\n The Board of Directors does not know of any matters of business to be\npresented for action at the Annual Meeting other than as set forth above. The enclosed proxy does, however, confer discretionary authority upon the persons named therein, or their substitutes, to take action with respect to any other matters that\nmay properly be brought before the Annual Meeting. \n\n \n\n SOLICITATION OF PROXIES \n\n \n\n The enclosed form of\nproxy is solicited by the Board of Directors. Shares represented by the proxy will be voted at the Annual Meeting in accordance with the shareholder’s written instructions. The cost of preparing, printing, assembling and mailing will be paid by\nthe Company. Officers, directors or other employees of the Company, without additional remuneration, may solicit proxies personally or by other appropriate means, if deemed advisable. The Company will also request brokers, banks and other nominees\nto send proxy material to and obtain proxies from their principals, and it will reimburse such persons for their expenses in so doing. In addition, the Company has retained Morrow & Co., Inc. to assist in the solicitation of proxies. Morrow\n& Co., Inc. will request brokerage houses and other nominees, fiduciaries and custodians nominally holding shares of the Company’s Common Stock of record to forward proxy solicitation material to the beneficial owners of such shares. For\nthese services, the Company will pay Morrow & Co., Inc. a fee estimated not to exceed $6,000 plus reimbursement of expenses. \n\n \n\n Please promptly vote your proxy to ensure that your shares will be voted at the Annual Meeting. Your proxy may be voted by telephone, Internet, or mail,\nas indicated on the Proxy Card. We also hope that you will attend the Annual Meeting. \n\n \n\n\n\n\n \n\n\n\nBY THE ORDER OF THE BOARD OF DIRECTORS \n\n\n\n \n\n\n\n/s/ JOHN A. TOMICH \n\n\n\nJOHN A. TOMICH \n\n\n\nGeneral Counsel and Secretary \n\n\n\n\n \n\n Meriden, Connecticut \n\n\nFebruary 2, 2005 \n\n \n\n\n\n\n\n\n\n\n \n\n Appendix A\n\n\n \n\n CUNO Incorporated \n\n AUDIT COMMITTEE CHARTER \n\n \n\n Organization \n\n \n\n This Charter governs the operations of the Audit Committee (the “Committee”) in fulfilling its oversight responsibilities by reviewing the financial reports and\nother financial information prepared by CUNO Incorporated (the “Company”) in a timely manner. The Committee shall review and reassess the Charter and obtain the approval of the Board of Directors at least annually. The Committee shall be\nappointed by the Board of Directors and shall comprise at least three directors, each of whom are independent of management and the Company. Members of the Committee shall meet the independence requirements of NASDAQ and the Securities Exchange Act\nof 1934 (the “Exchange Act”) in effect from time to time, and in the event of any conflict between the foregoing standards and NASDAQ, the standards of NASDAQ shall govern the composition of the Committee. All Committee members shall be\nfinancially literate, and at least one member shall have accounting or related financial management expertise. \n\n \n\n Statement of Policy \n\n \n\n The Committee shall provide assistance to the Board of Directors in fulfilling its oversight responsibility to the stockholders, potential stockholders, the investment\ncommunity, and others relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function, the annual independent audit of the Company’s\nfinancial statements, and the legal compliance and ethics programs as established by management and the Board. It shall also have such functions as are provided by NASDAQ, the Securities and Exchange Commission (“SEC”) and the Federal\nSecurities laws. \n\n \n\n It is the responsibility of the Committee to maintain free\nand open communication between the Committee, independent auditors, the internal auditors, and management of the Company. In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full\naccess to all books, records, facilities, and personnel of the Company and the power to retain outside counsel or other experts for this purpose. \n\n \n\n Relationship with Outside Auditors \n\n \n\n The outside auditors are accountable to the Audit Committee, as representatives of the Company’s stockholders and the Board, and shall report directly to the\nCommittee. The Committee shall be directly responsible for the appointment, compensation and oversight of the work of the outside auditors (including resolution of disagreements between management of the Company and the outside auditors regarding\nfinancial reporting) for the purpose of preparing or issuing an audit report or related work. All auditing services and non-audit services provided to the Company by the outside auditors shall be preapproved by the Committee in accordance with such\nrules or limitations the Committee adopts. In no event shall the Committee or the Company use the outside auditors for prohibited services. The Committee may delegate, subject to any rules or limitations it may deem appropriate, to one or more\ndesignated members of the Committee the authority to grant such preapprovals; provided, however, that the decisions of any member to whom authority is so delegated to preapprove an activity shall be presented to the full Committee at its next\nmeeting. \n\n \n\n Responsibilities and Processes\n\n\n \n\n The primary responsibility of the Committee is to oversee the\nCompany’s financial reporting process on behalf of the Board and report the results of its activities to the Board. The Audit Committee stands at \n\n\n \n\n\n\n\n\n\n\n\n\nthe intersection of management, independent auditors, internal auditors and the Board. The Audit Committee plays an important role in the financial reporting\nprocess and in assisting the Company’s management and the independent auditors. Management is responsible for preparing the Company’s financial statements and the independent auditors are responsible for auditing those financial\nstatements. The Committee in carrying out its responsibilities believes its policies and procedures should remain flexible in order to best react to changing conditions and circumstances. The Committee will take the appropriate actions to set the\noverall corporate tone for quality financial reporting, sound business risk practices, and ethical behavior, and shall meet at least four times annually, or more frequently as circumstances dictate. \n\n \n\n The following shall be the principal recurring processes of the Committee in carrying out its\noversight responsibilities. The processes are set forth as a guide with the understanding that the Committee may supplement them as appropriate. The Committee shall: \n\n \n\n Outside Auditors \n\n \n\n\n\n\n \n• \nHave a clear understanding with management and the independent auditors that the independent auditors are ultimately accountable to the Audit Committee, as representatives of the\nCompany’s stockholders and the Board. The Committee shall have the ultimate authority and responsibility to evaluate and, where appropriate, replace the independent auditors. The Committee shall discuss with the auditors their independence from\nmanagement and the Company and the matters included in the written disclosures required by the Independence Standards Board or its equivalent. Annually, the Committee shall select the Company’s independent auditors.\n \n\n \n\n\n\n\n \n• \nDiscuss with the persons responsible for the internal audit function (“internal auditors”) and the independent auditors the overall scope and plans for their respective\naudits including the adequacy of staffing and compensation. Also, the Committee shall discuss with management, the internal auditors, and the independent auditors the adequacy and effectiveness of the accounting and financial controls, including the\nCompany’s system to monitor and manage business risk, and legal and ethical compliance programs. Further, the Committee shall meet separately with the internal auditors and the independent auditors, with and without management present, to\ndiscuss the results of their audits. \n\n \n\n\n\n\n \n• \nObtain and review a report from the outside auditors at least annually as to (a) all critical accounting policies to be used, (b) all alternative treatments of financial information\nwithin generally accepted accounting principles that have been discussed with management of the Company, the ramifications of the use of such alternative disclosures and treatments and the treatment preferred by the outside auditors, and (c) other\nmaterial written communications between the outside auditors and management of the Company, including management letters and schedules of unadjusted differences. \n\n \n\n\n\n\n \n• \nRequire the rotation of the partners of the outside auditors in accordance with the requirements of the Exchange Act and SEC rules. \n\n \n\n\n\n\n \n• \nReview the Company’s hiring of employees or former employees of the outside auditors who participated in any capacity in the audits of the Company. \n\n \n\n\n\n\n \n• \nHave the authority to engage and determine funding for outside legal, accounting or other advisors as it determines necessary to carry out its functions. \n\n\n \n\n Documents/Reports Review \n\n \n\n\n\n\n \n• \n Review the interim financial statements with management and the independent auditors prior to the filing of the Company’s Quarterly Report on Form 10-Q. Also,\nthe Committee shall discuss the \n\n\n \n\n \n\n\n\n\n\n\n\n\n\n\n \n \nresults of the quarterly review and any other matters required to be communicated to the Committee by the independent auditors under generally accepted\nauditing standards. The Chair of the Committee may represent the entire Committee for the purposes of this review. \n\n \n\n \n\n\n\n\n \n• \nReview with management and the independent auditors the financial statements to be included in the Company’s Annual Report on Form 10-K (or the annual report to stockholders if\ndistributed prior to the filing of Form 10-K), including its judgment about the quality, not just acceptability, of accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements.\nAlso, the Committee shall discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards. \n\n \n\n\n\n\n \n• \nReview the disclosures concerning the Committee and its operations as may be required for inclusion in proxy materials distributed by the Company in connection with meetings of its\nstockholders. \n\n \n\n Financial\nReporting/Internal Controls \n\n \n\n\n\n\n \n• \nConsult with the outside auditors concerning the completeness and accuracy of the Company’s financial statements and the quality of the Company’s accounting principles as\napplied in its financial statements and reporting. Review any significant judgments made in management’s preparation of the financial statements and the view of the outside auditors as to the appropriateness of such judgments.\n \n\n \n\n\n\n\n \n• \nReview any significant difficulties encountered during the course of the audit or review, including any restrictions on the scope of the outside auditors’ work or access to\nreviewed information. \n\n \n\n\n\n\n \n• \nReview any disagreements between management and the outside auditors in connection with any public announcements of financial results and quarterly and annual financial statements\nand reports. \n\n \n\n\n\n\n \n• \nReview changes to the Company’s accounting principles as recommended by the outside auditors or management. \n\n \n\n\n\n\n \n• \nReview with the outside auditors and internal audit staff the adequacy of the Company’s system of internal controls and disclosure controls and procedures, including\ncomputerized information system controls and security, and any related significant findings and recommendations of the outside auditors, together with management’s responses thereto. \n\n \n\n\n\n\n \n• \nEstablish procedures for (a) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and\n(b) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. \n\n \n\n Other \n\n \n\n\n\n\n \n• \nInvestigate any other matter brought to its attention within the scope of its duties which it deems appropriate for investigation. \n\n \n\n\n\n\n \n• \nPerform any other activities consistent with this Charter, the Company’s By-laws, or governing law as the Committee or the Board deems necessary or appropriate.\n \n\n \n\n\n\n\n \n• \nPerform an annual self-assessment. \n\n \n\n\n\n\n\n\n\n\n \n\n Appendix B\n\n\n \n\n CUNO Incorporated \n\n AUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY \n\n \n\n I. Statement of Principles \n\n \n\n Under the Sarbanes-Oxley Act of 2002 (the “Act”), the Audit Committee of the Board of Directors is responsible for the appointment, compensation and oversight\nof the work of the independent auditor. As part of this responsibility, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent auditor in order to assure that they do not impair the\nauditor’s independence from the Company. \n\n \n\n Proposed services either: may be\npre-approved without consideration of specific case-by-case services by the Audit Committee (“general pre-approval”); or require the specific pre-approval of the Audit Committee (“specific pre-approval”). The Audit Committee\nbelieves that the combination of these two approaches in this Policy will result in an effective and efficient procedure to pre-approve services performed by the independent auditor. As set forth in this Policy, unless a type of service has received\ngeneral pre-approval, it will require specific pre-approval by the Audit Committee if it is to be provided by the independent auditor. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific\npre-approval by the Audit Committee. \n\n \n\n For both types of pre-approval, the Audit\nCommittee will consider whether such services are consistent with the SEC’s rules on auditor independence. The Audit Committee will also consider whether the independent auditor is best positioned to provide the most effective and efficient\nservice, for reasons such as its familiarity with the Company’s business, people, culture, accounting systems, risk profile and other factors, and whether the service might enhance the Company’s ability to manage or control risk or improve\naudit quality. All such factors will be considered as a whole, and no one factor should necessarily be determinative. \n\n \n\n The appendices to this Policy describe the Audit, Audit-related, Tax and All Other services that have the general pre-approval of the Audit Committee. The Audit Committee\nwill annually review and pre-approve the services that may be provided by the independent auditor without obtaining specific pre-approval from the Audit Committee. \n\n \n\n II. Delegation \n\n \n\n The Audit Committee may delegate either type of pre-approval authority to one or more of its members. The member to whom such authority is\ndelegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. \n\n \n\n III. Audit Services \n\n \n\n The annual Audit services engagement terms and fees will be subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial\nstatement audit (including required quarterly reviews), subsidiary audits, and other procedures required to be performed by the independent auditor to be able to form an opinion on the Company’s consolidated financial statements. These other\nprocedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit or quarterly review. Audit services \n\n\n \n\n\n\n\n\n\n\n\n\nalso include the attestation engagement for the independent auditor’s report on management’s report on internal controls for financial reporting.\n\n\n \n\n In addition to the annual Audit services engagement approved by the Audit\nCommittee, the Audit Committee may grant general pre-approval to other Audit services, which are those services that only the independent auditor reasonably can provide. Other Audit services may include statutory audits or financial audits for\nsubsidiaries or affiliates of the Company and services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings. \n\n \n\n IV. Audit-related Services \n\n \n\n Audit-related services are assurance and related services that are reasonably related to the\nperformance of the audit or review of the Company’s financial statements or that are traditionally performed by the independent auditor. The Audit Committee may grant general pre-approval to Audit-related services. Audit-related services\ninclude, among others, due diligence services pertaining to potential business acquisitions/dispositions; accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit services”;\nassistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; financial audits of employee benefit plans; and assistance with internal control reporting requirements. \n\n \n\n V. Tax Services \n\n \n\n The independent auditor can provide Tax services to the Company such as tax compliance, tax\nplanning and tax advice without impairing the auditor’s independence, and the SEC has stated that the independent auditor may provide such services. Hence, the Audit Committee believes it may grant general pre-approval to those Tax services\nthat have historically been provided by the auditor, that the Audit Committee has reviewed and believes would not impair the independence of the auditor, and that are consistent with the SEC’s rules on auditor independence. \n\n \n\n All Tax services involving large and complex transactions must be specifically pre-approved\nby the Audit Committee, including: tax services proposed to be provided by the independent auditor to any executive officer or director of the Company, in his or her individual capacity, where such services are paid for by the Company. \n\n\n \n\n VI. All Other Services \n\n \n\n Based on the SEC’s rules prohibiting the independent auditor from providing specific\nnon-audit services, certain other types of non-audit services are permitted. Accordingly, the Audit Committee may grant general pre- approval to those permissible non-audit services classified as All Other services that are routine and recurring\nservices, would not impair the independence of the auditor and are consistent with the SEC’s rules on auditor independence. \n\n \n\n A list of the SEC’s prohibited non-audit services is attached to this policy as Exhibit I. The SEC’s rules and relevant guidance should be consulted to\ndetermine the precise definitions of these services and the applicability of exceptions to certain of the prohibitions. \n\n \n\n\n\n\n\n\n\n\nVII. Pre-Approval Fee Levels or Budgeted Amounts \n\n \n\n Pre-approval fee levels or budgeted amounts for all services to be provided by the\nindependent auditor will be established annually by the Audit Committee. Any proposed services exceeding these levels or amounts will require specific pre-approval by the Audit Committee. The Audit Committee is mindful of the overall relationship of\nfees for audit and non-audit services in determining whether to pre-approve any such services. For each fiscal year, the Audit Committee may determine the appropriate ratio between the total amount of fees for Audit, Audit-related and Tax services,\nand the total amount of fees for services classified as All Other services. \n\n \n\n VIII. Procedures \n\n \n\n All requests or\napplications for services to be provided by the independent auditor that do not require specific approval by the Audit Committee will be submitted to the Controller and must include a detailed description of the services to be rendered. The\nController will determine whether such services are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee will be informed on a timely basis of any such services rendered by the\nindependent auditor. \n\n \n\n Requests or applications to provide services that require\nspecific approval by the Audit Committee will be submitted to the Audit Committee by both the independent auditor and the Controller. \n\n \n\n The Audit Committee has designated the Internal Auditor to monitor the performance of all services provided by the independent auditor and to determine whether such\nservices are in compliance with this policy. The Internal Auditor will report to the Audit Committee on a periodic basis on the results of its monitoring. Both the Internal Auditor and management will immediately report to the chairman of the Audit\nCommittee any breach of this policy that comes to the attention of the Internal Auditor or any member of management. \n\n \n\n The Audit Committee will also review the Internal Auditor’s annual internal audit plan to determine that the plan provides for the monitoring of the independent\nauditor’s services. \n\n \n\n\n\n\n\n\n\n\nExhibit I \n\n \n\n Prohibited Non-Audit Services \n\n \n\n\n\n\n \n \n \n \n \n \n \n\n\n\n \n \n \n \n\n\n\n1. \n \nBookkeeping \n \n- \n \nThe rule prohibits maintaining or preparing the audit client’s accounting records, and preparing the client’s financial statements or the source data underlying the financial\nstatements. \n\n\n\n \n \n \n \n\n\n\n2. \n \nFinancial Information Systems Design and Implementation \n \n- \n \nThe rule prohibits operating or supervising the operation of an audit client’s information system or managing the audit client’s local area network. \n\n\n\n \n \n \n \n\n\n\n3. \n \nAppraisal or Valuation, Fairness Opinion, or Contribution-in-Kind Reports \n \n- \n \nThe rule generally prohibits these services, although the SEC continues to permit valuations for non-financial reporting purposes, including transfer-pricing studies, cost segregation studies,\nand other tax-only valuations. \n\n\n\n \n \n \n \n\n\n\n4. \n \nActuarial Services \n \n- \n \nThe rule prohibits services involving the determination of amounts recorded in the financial statements and related accounts. \n\n\n\n \n \n \n \n\n\n\n5. \n \nInternal Audit Outsourcing \n \n- \n \nThe rule prohibits any internal audit service that has been outsourced by an audit client that relates to the audit client’s internal accounting controls, financial systems, or financial\nstatements. \n\n\n\n \n \n \n \n\n\n\n6. \n \nManagement Functions \n \n- \n \nThe rule prohibits acting, temporarily or permanently, as a director, officer, or employee of an audit client, or performing any decision-making, supervisory, or ongoing monitoring function for\nthe audit client. \n\n\n\n \n \n \n \n\n\n\n7. \n \nHuman Resources \n \n- \n \nAlthough titled “Human Resources”, the rule solely prohibits executive recruiting services and does not represent a significant change from the 2000 rules. \n\n\n\n \n \n \n \n\n\n\n8. \n \nBroker-Dealer \n \n- \n \nThe rule prohibits: acting as a broker/dealer (registered or unregistered), promoter, or underwriter on behalf of an audit client; making investment decisions on behalf of the audit client or\notherwise having discretionary authority over an audit client’s investments; executing a transaction to buy or sell an audit client’s investment; or having custody of assets of the audit client, such as taking temporary possession of\nsecurities purchased by the audit client. \n\n\n\n \n \n \n \n\n\n\n9. \n \nLegal Services \n \n- \n \nThe rule prohibits providing a service to an audit client that, under the circumstances in which the service is provided, could be provided only by someone licensed, admitted, or otherwise\nqualified to practice law in the jurisdiction in which the service is provided. \n\n\n\n \n \n \n \n\n\n\n10. \n \nExpert Services \n \n- \n \nThe rule prohibits expert services - such as providing expert testimony or opinions - where the purpose of the engagement is to advocate the client’s position in an adversarial proceeding\nor where the accountant is part of the “team” that “has been assembled to advance or defend the client’s interests” in an adversarial proceeding. \n\n\n \n\n\n\n\n\n\n\n\n\n \n\n \n\n C/O EQUISERVE TRUST COMPANY, N.A. \n\n\nP.O. BOX 8694 \n\n EDISON, NJ 08818-8694 \n\n \n\n Admission Ticket \n\n \n\n You must present this ticket to gain entry into the Annual Meeting.\n\n\n \n\n \n\n \n\n Your vote is important. Please vote\nimmediately. \n\n \n\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n\nVote-by-lnternet \n \n\n \n \n \n \nVote-by-Telephone \n \n\n \n\n\n\nLog on to the Internet and go to\n\nhttp://www.eproxyvote.com/cuno \n \n \nOR \n \n Call toll-free\n\n 1-877-PRX-VOTE\n(1-877-779-8683)\n\n \n \n\n\n \n\n If you vote over the\nInternet or by telephone, please do not mail your card. \n\n \n\n [CUNCM-CUNO INCORPORATED] [FILE NAME: ZCUN41.ELX] [ZCUNOI] [VERSION-(2)] [01/12/05] [orig. 01/10/05] \n\n \n\n\n\n\n \n \n \n\n\n\nDETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL \n \nZCUN41 \n\n\n \n\n\n\n\n \n \n \n \n \n \n \n\n\n\nx \n \nPlease mark votes as in this example. \n \n \n \n \n\n\n \n\n THIS PROXY WILL BE VOTED AS\nDIRECTED BELOW, OR IF RETURNED EXECUTED WITH NO DIRECTION GIVEN, WILL BE VOTED FOR THE ELECTION OF ALL THE NOMINEES AS DIRECTORS, AND FOR RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS AUDITORS. \n\n \n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\nThe Board of Directors recommends a vote FOR the election of all the nominees as directors and FOR Proposals 2 and 3. \n \n 2. REAPPROVE THE PERFORMANCE GOALS IN THE EXECUTIVE MANAGEMENT\nINCENTIVE PLAN.\n\n \n \nFOR \n \nAGAINST \n \nABSTAIN \n\n\n\n 1. Election of Directors.\n\n \n \n \n \n \n \n \n \n\n\n\n \n \n \n¨ \n \n¨ \n \n¨ \n\n\n\n \n \n \n \n \n\n\n\n \n \n 3. RATIFY SELECTION OF PRICEWATERHOUSE- COOPERS, LLP AS INDEPENDENT AUDITORS.\n\n \n \n¨ \n \n¨ \n \n¨ \n\n\n\n Nominees: (01) C. Edward Midgley and (02) Frederick C. Flynn, Jr.\n\n \n \n \n \n \n\n\n\n \n \n \n \n \n \n\n\n\n \n \nFOR\n\nALL\n\nNOMINEES \n \n¨ \n \n ¨ \n \nWITHHELD FROM ALL NOMINEES \n \n 4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME\nBEFORE THE MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.\n\n \n\n\n\n \n \n \n \n \n \n \n \n \n \n\n\n \n\n\n\n\n \n \n \n \n \n\n\n\n ¨\n\n \n \n \n \n \n\n\n\nIf you wish to withhold authority to vote for any individual nominee, write that nominee’s name in the space provided above. \n \n \n\n\n\n \n \n\n\n\n \n \nPLEASE SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE. \n\n\n\n \n \n\n\n\n \n \nTHIS PROXY SHOULD BE SIGNED EXACTLY AS NAME APPEARS HEREON. Executors, administrators, trustees, attorneys, etc. should give full title as such. If the signer is a corporation or\npartnership, please sign full corporate or partnership name by duly authorized officer. \n\n\n \n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n Signature: \n\n \n \n \n \n Date: \n\n \n \n \n \n Signature: \n\n \n \n \n \n Date: \n\n \n \n \n\n\n \n\n\n\n\n\n\n\n\n \n \n \n\n\n\n Annual Meeting of Shareholders of\n\n \n\n CUNO INCORPORATED\n\n \n\n\nMarch 3, 2005\n\n \n\n \n \n\n \n\n\n\n Four Points by Sheraton Meriden\n\n 275 Research Parkway,\n\n Meriden, Connecticut\n\n beginning at 10:00 a.m.\n\n \n \n \n\n\n \n\n Directions to the Four Points By\nSheraton Meriden: \n\n \n\n Traveling North: Interstate 91 to Exit 16. At end of ramp,\nturn right. Turn right at first light onto Pomeroy Ave. Hotel is 0.5 miles on the right. \n\n Traveling South: Interstate 91 to Exit 17. At end of ramp, turn\nleft. Turn right at second light onto Pomeroy Ave. Hotel is 0.5 miles on the right. \n\n Traveling East: Interstate 84 to Exit 27. Take Interstate 691 E to Exit\n10. Stay in right lane and take the first Exit 67 W, East Main St. Turn left at the end of the exit. Turn right at the second right onto Pomeroy Ave. Hotel is 0.5 miles on the right. \n\n Traveling West: Interstate 84 W into Hartford to Exit 86 (Interstate 91 S). Travel Interstate 91 S to Exit 17. At end of the ramp, turn left. Turn Right at second right onto Pomeroy Ave. Hotel is 0.5 miles on the\nright. \n\n \n\n\n\n\n \n \n \n\n\n\nDETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL \n \nZCUN42 \n\n\n \n\n PROXY\n\n\n CUNO INCORPORATED \n\n \n\n 400 Research Parkway \n\n Meriden,\nConnecticut 06450 \n\n \n\n Solicited on Behalf of the Board of\nDirectors \n\n For the Annual Meeting of Stockholders, March 3, 2005 \n\n \n\n The undersigned hereby appoints Mark G. Kachur, Thomas J. Hamlin, and Timothy B. Carney, and each or any of them, attorneys\nand proxies with full power of substitution, to represent the undersigned and to vote all shares of stock of CUNO Incorporated which the undersigned is entitled to vote at the Annual Meeting of Stockholders of CUNO Incorporated to be held at the\nFour Points By Sheraton Meriden, 275 Research Parkway, Meriden, Connecticut on Thursday, March 3, 2005, at 10:00 a.m., or any adjournments or postponements thereof, upon all matters as set forth in the Notice of Annual Meeting and Proxy Statement,\nreceipt of which is hereby acknowledged. \n\n \n\n\n\n\n \n \n \n \n \n\n\n\nSEE REVERSE SIDE \n \nCONTINUED AND TO BE SIGNED ON REVERSE SIDE \n \nSEE REVERSE SIDE \n\n\n \n\n\n\n"},"accession_number":{"kind":"string","value":"0001193125-05-018015"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":96,"cells":{"_id":{"kind":"string","value":"1019849_DEF 14A_2005_0000950124-05-001489"},"cik":{"kind":"string","value":"1019849"},"company":{"kind":"string","value":"UNITED AUTO GROUP INC"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-03-15T00:00:00","string":"2005-03-15T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-04-14T00:00:00","string":"2005-04-14T00:00:00"},"sic":{"kind":"string","value":"5500"},"state_of_inc":{"kind":"string","value":"DE"},"state_location":{"kind":"string","value":"MI"},"fiscal_year_end":{"kind":"string","value":"1231"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019849/0000950124-05-001489-index.html"},"htm_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019849/000095012405001489/k91379def14a.htm"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1019849/0000950124-05-001489.txt"},"filename":{"kind":"string","value":"1019849_DEF 14A_2005_0000950124-05-001489.htm"},"text":{"kind":"string","value":"\nDEF 14A\nk91379def14a.htm\nDEFINITIVE PROXY STATEMENT\n\ndef14a\n\n\n\n\n\n\n \n \n \n \n \n\n\n\n\n \n \nOMB APPROVAL \n\n\n\n\n \n \n \n\n\n\n\n \n \n\nOMB Number:\n \n \n3235-0059 \n\n\n\n\n \n \n\nExpires:\n \n \nFebruary 28, 2006 \n\n\n\n\n \n \nEstimated average burden\n\nhours per\n\nresponse \n12.75 \n\n\n\n\n\nUNITED STATES\n\nSECURITIES AND EXCHANGE COMMISSION\n\n\nWashington, D.C. 20549\n\n\n\nSCHEDULE 14A\n\n\n\nProxy Statement Pursuant to Section 14(a) of the Securities\n\n\nExchange Act of 1934 (Amendment No. )\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \nFiled by the Registrant\n o \n\n\n\n\n \nFiled by a Party other than the Registrant o \n\n\n\n \n\n\n\n \nCheck the appropriate box: \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \no Preliminary Proxy Statement \n\n\n\n\n \no \nConfidential, for Use of the Commission Only (as permitted by\nRule 14a-6(e)(2)) \n\n\n\n\n \nþ Definitive Proxy Statement \n\n\n\n\n \no Definitive Additional Materials \n\n\n\n\n \no \nSoliciting Material Pursuant to §240.14a-12 \n\n\n\n\n\n\n\n\nUnited Auto Group, Inc.\n(Name of Registrant as Specified In Its Charter)\n\n\n\n\n\n\n\n\n(Name of Person(s) Filing Proxy\nStatement, if other than the Registrant)\n\n\n\n\n Payment of Filing Fee (Check the appropriate box):\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \nþ No fee required. \n\n\n\n\n \no \nFee computed on table below per Exchange Act Rules 14a-6(i)(4) and\n0-11. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n 1) Title of each class of securities to which transaction applies: \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n 2) Aggregate number of securities to which transaction applies: \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n 3) Per unit price or other underlying value of transaction computed\npursuant to Exchange Act Rule 0-11 (set forth the amount on which the\nfiling fee is calculated and state how it was determined): \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n 4) Proposed maximum aggregate value of transaction: \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n 5) Total fee paid: \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n o Fee paid previously with preliminary materials. \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n o Check box if any part of the fee is offset as provided by Exchange Act\nRule 0-11(a)(2) and identify the filing for which the offsetting fee\nwas paid previously. Identify the previous filing by registration\nstatement number, or the Form or Schedule and the date of its filing. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n 1) Amount Previously Paid: \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n 2) Form, Schedule or Registration Statement No.: \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n 3) Filing Party: \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n 4) Date Filed: \n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nSEC 1913 (02-02) \nPersons who are to respond to the collection of information\ncontained in this form are not required to respond unless the form displays a currently valid\nOMB control number. \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n\n\n\n\nTo Our Stockholders:\n\n\n\n \nWe are pleased to invite you to attend the annual meeting of\nstockholders of United Auto Group, Inc. to be held at our\noffices located at 2555 Telegraph Road, Bloomfield Hills,\nMichigan 48302, on April 14, 2005, at 8:30 a.m.,\nEastern Daylight Time.\n\n\n\n \nThe accompanying Notice of Annual Meeting and Proxy Statement\ndescribe the specific matters to be voted upon at the meeting. I\nbelieve the annual meeting provides an excellent opportunity for\nstockholders to become better acquainted with UnitedAuto and its\ndirectors and officers. I hope that you will be able to attend.\n\n\n\n \nWhether or not you plan to attend, we ask that you cast your\nvote as soon as possible. This will both assure your shares are\nrepresented at the meeting and minimize the cost of proxy\nsolicitation. Thank you for your continued support of UnitedAuto.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n\n Sincerely, \n\n\n\n\n \n\n\n\n\n \n\n \n\n\n\n\n \n\n\n\n\n \n\nRoger S. Penske\n \n\n\n\n\n \n\nChairman of the Board and \n\n\n\n\n \n\nChief Executive Officer \n\n\n\n\n\nBloomfield Hills, Michigan\n\n\n\n\nMarch 14, 2005\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n\n\n\n\nNOTICE OF ANNUAL MEETING OF STOCKHOLDERS\n\n\n\n\nApril 14, 2005\n\n\n\n\n \n\n\n\n\n\n \nWe will hold our annual meeting of stockholders at our offices\nlocated at 2555 Telegraph Road, Bloomfield Hills, Michigan\n48302, on April 14, 2005, at 8:30 a.m., Eastern\nDaylight Time, for the following purposes:\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n(1) \n\n to elect twelve directors to serve until the next annual meeting\n of stockholders, or until their successors are duly elected and\n qualified; and \n\n\n\n\n \n\n\n\n\n \n(2) \n\n to transact such other business as may properly come before the\n meeting. \n\n\n\n\n \nStockholders of record as of February 25, 2005 can vote at\nthe annual meeting and any adjournments of our annual meeting.\nWe will make available for inspection a list of holders of our\ncommon stock as of the record date during business hours from\nApril 1, 2005 through April 14, 2005 at our principal\nexecutive offices, located at 2555 Telegraph Road, Bloomfield\nHills, Michigan 48302. This proxy statement is being distributed\non or about March 14, 2005.\n\n\n\n \nYour vote is very important. Please complete, date and sign the\nenclosed proxy card and return it promptly in the enclosed\npostage prepaid envelope or otherwise cast your vote. Your\nprompt voting will ensure a quorum. You may revoke your proxy\nand vote personally on all matters brought before the annual\nmeeting.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n\n By Order of the Board of Directors, \n\n\n\n\n \n\n\n\n\n \n\n \n\n\n\n\n \n\nShane M. Spradlin\n \n\n\n\n\n \n\nSecretary \n\n\n\n\n\nBloomfield Hills, Michigan\n\n\n\n\nMarch 14, 2005\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n\n\n\n\n \n \nPg # \n\n\n\n\n\n\n About the Meeting\n\n\n \n \n \n \n\n\n\n\n\n\n Proposal 1 - Election of\n Directors\n\n\n \n \n \n \n\n\n\n\n\n\n The Board of Directors and Its\n Committees\n\n\n \n \n \n \n\n\n\n\n\n\n Executive Officers\n\n\n \n \n \n \n\n\n\n\n\n\n Executive Compensation\n\n\n \n \n \n \n\n\n\n\n\n\n Report of the Compensation and Management\n Development Committee on Executive Compensation\n\n\n \n \n \n \n\n\n\n\n\n\n Security Ownership of Certain Beneficial\n Owners and Management\n\n\n \n \n \n \n\n\n\n\n\n\n Share Investment Performance\n\n\n \n \n \n \n\n\n\n\n\n\n Audit Committee Report\n\n\n \n \n \n \n\n\n\n\n\n\n Independent Auditors\n\n\n \n \n \n \n\n\n\n\n\n\n Related Party Transactions\n\n\n \n \n \n \n\n\n\n\n\n\n Other Matters\n\n\n \n \n \n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nABOUT THE MEETING\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nQ. \n\nWhat am I voting on? \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nA. Proposal 1: \n\n Election of twelve directors to serve until the next annual\n meeting of stockholders, or until their successors are duly\n elected and qualified. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nQ. \n\nWho can vote? \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nA. \n\n Common stockholders of UnitedAuto as of the close of business on\n the record date, February 25, 2005, can vote at the annual\n meeting. Each share of our common stock gets one vote. Votes may\n not be cumulated. As of February 25, 2005, there were\n 46,530,699 shares of our common stock outstanding. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nQ. \n\nHow do I vote before the meeting? \n\n\n\n\n\nA. By completing, signing and returning the enclosed\nproxy card.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nQ. \n\nMay I vote at the meeting? \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nA. \n\n You may vote at the meeting if you attend in person. If you hold\n your shares through an account with a bank or broker, you must\n obtain a legal proxy from the bank or broker in order to vote at\n the meeting. Even if you plan to attend the meeting, we\n encourage you to vote your shares by proxy. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nQ. \n\nCan I change my mind after I vote? \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nA. \n\n You may change your vote at any time before the polls close at\n the meeting by (1) signing another proxy card with a later\n date and returning it to us prior to the meeting or\n (2) voting at the meeting if you are a registered\n stockholder or have obtained a legal proxy from your bank or\n broker. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nQ. \n\nWhat if I return my proxy card but do not provide voting\n instructions? \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nA. \n\n Proxies that are signed and returned but do not contain\n instructions will be voted (1) FOR the election of the\n twelve nominees for director, and (2) in accordance with\n the best judgment of the named proxies on any other matters\n properly brought before the meeting. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nQ. \n\nWill my shares be voted if I do not provide my proxy\n instruction form? \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nA. \n\n If you are a registered stockholder and do not provide a proxy,\n you must attend the meeting in order to vote your shares. If you\n hold shares through an account with a bank or broker, your\n shares may be voted even if you do not provide voting\n instructions on your instruction form. Brokerage firms have the\n authority under New York Stock Exchange rules to vote shares for\n which their customers do not provide voting instructions on\n certain “routine” matters. The election of directors\n is considered a routine matter for which brokerage firms may\n vote without specific instructions. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nQ. \n\nMay stockholders ask questions at the meeting? \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nA. \n\n Yes. Representatives of the Company will answer\n stockholder’s questions of general interest at the end of\n the meeting. In order to give a greater number of stockholders\n an opportunity to ask questions, individuals or groups will be\n allowed to ask only one question and no repetitive or follow-up\n questions will be permitted. \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nQ. \n\nHow many votes must be present to hold the meeting? \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nA. \n\n Your shares are counted as present at the meeting if you attend\n the meeting and vote in person or if you properly return a\n proxy. In order for us to conduct our meeting, a majority of our\n outstanding shares of common stock as of February 25, 2005\n must be present in person or by proxy at the meeting\n (23,265,350 shares). This is referred to as a quorum.\n Abstentions and broker non-votes will be counted for purposes of\n establishing a quorum at the meeting. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nQ. \n\nHow many votes are needed to approve the Company’s\n proposal? \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nA. \n\n The nominees receiving the highest number of “For”\n votes will be elected as directors. This number is called a\n plurality. Shares not voted, whether by marking\n “Abstain” on your proxy card or otherwise, will have\n no impact on the election of directors. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nQ. \n\nWhat is the Company’s policy regarding director\n attendance at the annual meeting? \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\nA. \n\n We encourage all of our directors to attend the annual meeting.\n In 2004, all of our directors attended the annual meeting. \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nPROPOSAL 1 - ELECTION OF DIRECTORS\n\n\n\n \nProposal 1 to be voted on at the annual meeting is the\nelection of the following twelve director nominees, each of whom\nis recommended by our Board of Directors. Biographical\ninformation about each of these nominees is included below. If\nelected, each of these nominees will be elected to serve a\none-year term and will be subject to reelection at next\nyear’s annual meeting. Pursuant to a stockholders\nagreement, certain of our stockholders affiliated with Roger S.\nPenske and Mitsui & Co., Ltd. have agreed to vote\ntogether to elect members of our Board of Directors. See\n“Related Party Transactions” for a description of this\nstockholders agreement.\n\n\n\n\nOur Board of Directors Recommends a Vote “FOR” Each\nof The Following Nominees:\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\nJohn D. Barr - \n\n\n Chairman, \n\n\n Performance Logistics Group \n \n\nMr. Barr, 56, has served as a director since\n December 2002. Mr. Barr has been the Chairman of\n Performance Logistics Group, a vehicle transportation service\n provider, since 1999 and Vice Chairman of Papa Murphy’s\n International, Inc., a take-and-bake pizza chain, since July\n 2004. Prior thereto, Mr. Barr was President and Chief\n Operating Officer, as well as a member of the Board of\n Directors, of the Quaker State Corporation from June 1995 to\n 1999. Prior to joining Quaker State, Mr. Barr spent\n 25 years with the Valvoline Company, a subsidiary of\n Ashland, Inc., where he was President and Chief Executive\n Officer from 1987 to 1995. Mr. Barr is a director of Clean\n Harbors, Inc., James Hardie Industries, NV and UST, Inc. \n\n\n\n\n \n\n\n\n\n\nMichael R. Eisenson - \n\n\n Managing Director and \n\n\n CEO of Charlesbank Capital \n\n\n Partners, L.L.C \n \n\nMr. Eisenson, 49, has served as a director since\n December 1993. He is a Managing Director and CEO of Charlesbank\n Capital Partners L.L.C., a private investment firm and the\n successor to Harvard Private Capital Group, Inc., which he\n joined in 1986. Mr. Eisenson is also a director of Catlin\n Group Limited, CCC Information Services Group, Inc., Playtex\n Products, Inc., Universal Technical Institute, Inc. and Xenogen\n Corporation \n\n\n\n\n \n\n\n\n\n\nJames A. Hislop - \n\n\n Managing Director of \n\n\n Transportation \n\n\n Resource Partners, LP \n \n\nMr. Hislop, 47, has served as a director since May\n 1999. Mr. Hislop has been Managing Director of\n Transportation Resource Partners since January 2003. He has been\n a managing member of Penske Capital Partners, L.L.C., since its\n inception in June 1997. Penske Capital Partners and\n Transportation Resources Partners are organizations formed to\n undertake acquisitions and strategic investments in the\n transportation and transportation services industry.\n Mr. Hislop served as a Managing Director in the Investment\n Banking Group of Merrill Lynch & Co. from 1991 to 1997.\n Mr. Hislop is a director of Penske Corporation. \n\n\n\n\n \n\n\n\n\n\nHiroshi Ishikawa - \n\n\n Executive Vice President - \n\n\n International Business \n\n\n Development of the Company \n \n\nMr. Ishikawa, 42, has served as a director since May\n 2004 and our Executive Vice President - International\n Business Development since June 2004. Previously,\n Mr. Ishikawa served as the President of Mitsui Automotive\n North America, Inc. from June 2003 to May 2004. From October\n 2001 to May 2003, Mr. Ishikawa served as Vice President,\n Secretary & Treasurer for Mitsui Automotive North\n America, Inc. From March 1997 to October 2001, Mr. Ishikawa\n served as the Assistant General Manager, Machinery &\n Automotive Department of Mitsui & Co. (U.S.A.), Inc.\n Detroit Office. \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\nWilliam J. Lovejoy - \n\n\n Manager of \n\n\n Lovejoy & Associates \n \n\nMr. Lovejoy, 64, has served as a director since\n March 2004. Since September 2003, Mr. Lovejoy has served as\n Manager of Lovejoy & Associates, an automotive\n consulting firm. From January 2000 until December 2002,\n Mr. Lovejoy served as Group Vice President, North American\n vehicle sales, service and marketing for General Motors\n Corporation. From 1994 until December 1999, Mr. Lovejoy\n served as Vice President of General Motors service and parts\n operation. From 1962 until 1992, Mr. Lovejoy served in\n various capacities for General Motors Acceptance Corporation\n (“GMAC”) and ultimately President of GMAC in 1990. \n\n\n\n\n \n\n\n\n\n\nKimberly J. McWaters - \n\n\n CEO of Universal Technical \n\n\n Institute, Inc. \n \n\nMs. McWaters, 40, has served as a director since\n December 2004. Since October 2003, Ms. McWaters has served\n as CEO of Universal Technical Institute, Inc. (“UTI”),\n a nationwide provider of technical educational training for\n students seeking careers as professional automotive technicians.\n Since February 2000, Ms. McWaters has served as President\n of UTI. From 1984 until 2000, Ms. McWaters held several\n positions at UTI including vice president of marketing and vice\n president of sales and marketing. \n\n\n\n\n \n\n\n\n\n\nEustace W. Mita - \n\n\n Chairman of Achristavest, LLC \n \n\nMr. Mita, 50, has served as a director since August\n 1999. Since October 2002, Mr. Mita has been chairman of\n Achristavest, LLC and CEO of Mita Management, L.L.P. From April\n 2000 until October 2001, Mr. Mita served as the Executive\n Vice President of The Reynolds and Reynolds Company, an\n integrated solutions provider for the automotive industry, and\n had been General Manager of Reynolds Transformation Services\n since May 2000. Prior thereto, Mr. Mita served as President\n and Chief Executive Officer of HAC Group, LLC, and President of\n Half-A-Car II, Inc., each automobile training and\n consulting companies, since 1990. Mr. Mita is also a\n director of The Reynolds and Reynolds Company. \n\n\n\n\n \n\n\n\n\n\nLucio A. Noto - \n\n\n Retired Vice Chairman of \n\n\n ExxonMobil Corporation \n \n\nMr. Noto, 66, has served as a director since March\n 2001. Mr. Noto retired as Vice Chairman of ExxonMobil\n Corporation in January 2001, a position he held since the merger\n of Exxon and Mobil companies in November 1999. Before the\n merger, Mr. Noto was Chairman and CEO of Mobil Corporation\n where he had been employed since 1962. Mr. Noto is a\n managing partner of Midstream Partners LLC, an investment\n company specializing in energy and transportation projects. He\n is also a director of International Business Machines\n Corporation and the Altria Group, Inc. Mr. Noto is a member\n of the Mitsubishi Corp. (Japan) International Advisory Counsel\n and the Tamasek Technologies (Singapore) International Advisory\n Counsel. \n\n\n\n\n \n\n\n\n\n\nRoger S. Penske - \n\n\n Chairman of the Board and \n\n\n CEO of the Company and \n\n\n Penske Corporation \n \n\nMr. Penske, 68, has served as our Chairman and CEO\n since May 1999. Mr. Penske has also been Chairman of the\n Board and CEO of Penske Corporation since 1969. Penske\n Corporation is a privately-owned diversified transportation\n services company that holds, through its subsidiaries, interests\n in a number of businesses. Mr. Penske has also been\n Chairman of the Board of Penske Truck Leasing Corporation since\n 1982. Mr. Penske serves as a member of the Boards of\n Directors of CarsDirect.com, Inc., a private company offering\n online retail automotive services, General Electric Company, UTI\n and Home Depot, Inc. Mr. Penske has declined to stand for\n re-election for the board of Home \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\n \n \n\n Depot at its May 2005 annual meeting. Mr. Penske also is a\n director of Detroit Renaissance and a member of The Business\n Council. \n\n\n\n\n \n\n\n\n\n\nRichard J. Peters - \n\n\n Managing Director of \n\n\n Transportation Resource \n\n\n Partners, LP \n \n\nMr. Peters, 57, has served as a director since May\n 1999. Since January 2003, Mr. Peters has been Managing\n Director of Transportation Resource Partners. From January 2000\n to December 2002, Mr. Peters was President of Penske\n Corporation. Since 1997, Mr. Peters has also served as\n President and CEO of R.J. Peters & Company, LLC, a\n private investment company. Mr. Peters has also served as\n an officer and director of various subsidiaries of Penske\n Corporation since 1990. Mr. Peters has been a member of the\n Board of Directors of Penske Corporation since 1990. \n\n\n\n\n \n\n\n\n\n\nRonald G. Steinhart - \n\n\n Retired Chairman and \n\n\n CEO, Commercial Banking \n\n\n Group, Bank One Corporation \n \n\nMr. Steinhart, 64, has served as a director since\n March 2001. Mr. Steinhart served as Chairman and CEO,\n Commercial Banking Group of Bank One Corporation from December\n 1996 until his retirement in January 2000. From January 1995 to\n December 1996, Mr. Steinhart was Chairman and CEO of Bank\n One, Texas, N.A. Mr. Steinhart joined Bank One in\n connection with the merger of Team Bank, which he founded in\n 1988. Mr. Steinhart also serves as a director of Carreker\n Corporation and as a Trustee of Prentiss Properties Trust. \n\n\n\n\n \n\n\n\n\n\nH. Brian Thompson - \n\n\n Chairman of Comsat \n\n\n International \n \n\nMr. Thompson, 66, has served as a Director since\n March 2002. Mr. Thompson is currently Chairman of Comsat\n International, a telecommunications services provider, and heads\n his own private equity investment and advisory firm, Universal\n Telecommunications, Inc., in Vienna, Virginia. Mr. Thompson\n was previously Chairman and CEO of Global TeleSystems Group,\n Inc. from March 1999 through September of 2000. From 1991 to\n 1998, Mr. Thompson served as chairman and CEO of LCI\n International. Subsequent to the merger of LCI with Qwest\n Communications International Inc. in June 1998,\n Mr. Thompson became Vice Chairman of the Board for Qwest\n until his resignation in December 1998. Mr. Thompson was\n Chairman of the Irish telephone company, Telecom Eirann, in 1999\n and Executive Vice President of MCI Communications Corporation\n from 1981 to 1990. Mr. Thompson currently serves as a\n member of the Board of Directors of Axcelis Technologies, Inc.,\n Bell Canada International Inc., and Sonus Networks, Inc. \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nTHE BOARD OF DIRECTORS AND ITS COMMITTEES\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n \n \n \n \n \nCompensation & \n \nNominating & \n \n \n\n\n\n\n \n \n \n \n \n \nManagement \n \nCorporate \n \n \n\n\n\n\nName \n \nBOD \n \nAudit \n \nDevelopment \n \nGovernance \n \nExecutive \n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n John D. Barr\n\n\n \n \n \nX \n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n Michael R. Eisenson\n\n\n \n \n \nX \n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \nX \n \n\n\n\n\n\n\n James A. Hislop\n\n\n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n Hiroshi Ishikawa\n\n\n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n William J. Lovejoy\n\n\n \n \n \nX \n \n \n \n \n \n \n \nX \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n Kimberly J. McWaters\n\n\n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n Eustace W. Mita\n\n\n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \nX \n \n \n \n \n \n\n\n\n\n\n\n Lucio A. Noto\n\n\n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nX \n \n\n\n\n\n\n\n Roger S. Penske\n\n\n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nX \n \n\n\n\n\n\n\n Richard J. Peters\n\n\n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nX \n \n\n\n\n\n\n\n Ronald G. Steinhart\n\n\n \n \n \nX \n \n \n \nX \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n\n H. Brian Thompson\n\n\n \n \n \nX \n \n \n \n \n \n \n \nX \n \n \n \nX \n \n \n \n \n \n\n\n\n\n\n\n No. of Meetings 2004\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n\n \nOur Board of Directors has four standing committees: the Audit\nCommittee, the Compensation and Management Development\nCommittee, the Executive Committee and the Nominating and\nCorporate Governance Committee. The Board of Directors approved\na charter for each of the Audit, Compensation and Management\nDevelopment, and Nominating and Corporate Governance committees,\nwhich charters are available on our website, www.unitedauto.com\nunder the tab “Investor Relations.” The principal\nresponsibilities of each committee are described in the\nfollowing paragraphs. All of our directors attended over 75% of\nour board and committee meetings and the average attendance was\nover 95%.\n\n\n\n \nAudit Committee. The purpose of this committee is to\nassist the Board of Directors in fulfilling its oversight\nresponsibility relating to (i) the integrity of our\nfinancial statements and financial reporting process and our\nsystems of internal accounting and financial controls;\n(ii) the performance of the internal audit function;\n(iii) the annual independent audit of our financial\nstatements, the engagement of the independent auditors and the\nevaluation of the independent auditors’ qualifications,\nindependence and performance; and (iv) the fulfillment of\nthe other responsibilities set out in the Audit Committee\ncharter. The Board of Directors has confirmed that all members\nof the Audit Committee are “independent” and\n“financially literate” within the meaning of the New\nYork Stock Exchange rules and applicable law and each is an\n“audit committee financial expert”.\n\n\n\n \nCompensation and Management Development Committee. The\npurpose of this committee is to assist the Board of Directors in\ndischarging its responsibility relating to compensation of the\nCompany’s directors, executive officers and such other\nemployees as this committee may determine, succession planning\nand related matters. Each of the Committee members is\nindependent under New York Stock Exchange rules and our more\nstringent guidelines for director independence.\n\n\n\n \nExecutive Committee. Our Executive Committee’s\nprimary function is to assist our Board of Directors by acting\nupon matters when the Board of Directors is not in session. The\nExecutive Committee has the full power and authority of the\nBoard of Directors, except to the extent limited by law or our\ncertificate of incorporation or bylaws. This Committee did not\nmeet in 2004.\n\n\n\n \nNominating and Corporate Governance Committee. The\npurpose of this committee is to identify individuals qualified\nto become members of the Board of Directors, to recommend\nDirector nominees for each annual meeting of stockholders and\nnominees for election to fill any vacancies on the Board of\nDirectors and to address related matters. This committee also\ndevelops and recommends to the Board of Directors corporate\ngovernance principles and is responsible for leading the annual\nreview of our corporate governance policies and\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nthe Board’s performance. Each of the Committee members is\nindependent under New York Stock Exchange rules and our more\nstringent guidelines for director independence.\n\n\n\n \nCorporate Governance Guidelines. The Nominating and\nCorporate Governance Committee also makes recommendations\nconcerning our corporate governance guidelines, which are posted\non our website, www.unitedauto.com under the tab “Investor\nRelations.” These guidelines, and the other documents\nreferenced in this section, are also available in print to any\nstockholder who requests them by calling our investor relations\ndepartment at 248-648-2500.\n\n\n\n \nLead Director. One of our governance principles is that\nwe must have a “Lead Director,” who shall be\nresponsible for coordinating the activities of the other outside\nDirectors, including the establishment of the agenda for\nexecutive sessions of the outside Directors and who shall\npreside at their meetings. These sessions generally occur as\npart of each Board meeting and include, at least annually, a\nsession comprised of only our independent directors. Our Lead\nDirector is currently H. Brian Thompson. He may be contacted by\nleaving a message at the following telephone number:\n800-469-1634. All messages will be reviewed by our General\nCounsel’s office and all (other than frivolous messages)\nwill be forwarded to the Lead Director. Any written\ncommunications to the Board of Directors may be sent care of the\nCorporate Secretary to our principal executive office. These\ncommunications (other than frivolous messages) also will be\nforwarded to the Lead Director.\n\n\n\n \nCode of Conduct. We have also adopted a Code of Business\nConduct and Ethics, applicable to all of our employees and\ndirectors, which is posted on our website at www.unitedauto.com\nunder the tab “Investor Relations.” This code also is\navailable in print to any stockholder who requests it by calling\nour investor relations department at 248-648-2500. We plan to\ndisclose waivers for our executive officers or directors from\nthe code on our website, www.unitedauto.com.\n\n\n\n \nIndependence. A majority of our Board of Directors is\nindependent. The Board of Directors has determined that\nMs. McWaters and Messrs. Barr, Eisenson, Lovejoy,\nMita, Steinhart and Thompson are each independent in accordance\nwith the listing requirements of the New York Stock Exchange as\nwell as with the more stringent requirements of our guidelines\nfor independent directors found in our corporate governance\nguidelines and which are discussed below. As required by NYSE\nrules, our Board made an affirmative determination as to each\nindependent director that no material relationship exists which,\nin the opinion of the Board, would interfere with the exercise\nof independent judgment in carrying out the responsibilities of\na director. In making these determinations, the Board reviewed\nand discussed information provided by the directors and the\nCompany with regard to each director’s business and\npersonal activities as they may relate to the Company and its\nmanagement.\n\n\n\n \nFor a director to be considered independent under our corporate\ngovernance guidelines, the Board of Directors must determine\nthat the director does not have any direct or indirect material\nrelationship with us (including any parent or subsidiary in a\nconsolidated group with us). In addition to applying these\nguidelines, the Board of Directors considers all relevant facts\nand circumstances in making an independence determination, and\nnot merely from the standpoint of the director, but also from\nthat of persons or organizations with which the director has an\naffiliation. In accordance with NYSE rules, independence\ndeterminations under these guidelines will be based upon a\ndirector’s relationships with us during the 36 months\npreceding the determination unless otherwise mentioned.\n\n\n\n \nUnder our guidelines, a director will not be independent if:\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n1. \n\n the director is employed by us, or an immediate family member is\n one of our executive officers; \n\n\n\n\n \n\n\n\n\n \n2. \n\n the director receives any direct compensation from us, other\n than director and committee fees and forms of deferred\n compensation for prior service (provided such compensation is\n not contingent in any way on continued service); \n\n\n\n\n \n\n\n\n\n \n3. \n\n the director is affiliated with or employed by our independent\n auditors (or internal auditors), or an immediate family member\n is affiliated with or employed in a professional capacity by our\n independent auditors (or internal auditors); or \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n4. \n\n an executive officer of ours serves on the compensation\n committee of the board of directors of a company which employs\n the director or an immediate family member as an executive\n officer. \n\n\n\n\n \nA director also will not be independent if, at the time of the\nindependence determination, the director is an executive officer\nor employee, or if an immediate family member is an executive\nofficer, of another company that does business with us and the\nsales by that company to us or purchases by that company from\nus, in any single fiscal year during the evaluation period, are\nmore than the greater of one percent of the annual revenues of\nthat company or $1 million. Furthermore, a director will\nnot be independent if, at the time of the independence\ndetermination, the director is an executive officer or employee,\nor an immediate family member is an executive officer, of\nanother company which is indebted to us, or to which we are\nindebted, and the total amount of either company’s\nindebtedness to the other at the end of the last completed\nfiscal year is more than one percent of the other company’s\ntotal consolidated assets. Finally, a director will not be\nindependent if, at the time of the independence determination,\nthe director serves as an officer, director or trustee of a\ncharitable organization, and our charitable contributions to the\norganization are more than one percent of that\norganization’s total annual charitable receipts during its\nlast completed fiscal year.\n\n\n\n \nUnder the New York Stock Exchange rules, if a company is\n“controlled” it need not have a majority independent\nBoard of Directors or solely independent compensation or\nnominating committees. We are a “controlled company”\nbecause Penske Corporation and its affiliates, and\nMitsui & Co. and its affiliates, collectively own more\nthan fifty percent of our voting stock. These entities are\nconsidered a group due to the provisions of the stockholders\nagreement between these parties described under “Related\nParty Transactions.” Even though we are a “controlled\ncompany”, we are fully compliant with the New York Stock\nExchange rules for non-controlled companies. A majority of our\nBoard is independent and each of our nominating, audit and\ncompensation committees are comprised solely of independent\ndirectors.\n\n\n\n \nDirector Nominees. The Nominating and Corporate\nGovernance Committee believes that director candidates should\nhave certain minimum qualifications, including having personal\nintegrity, loyalty to UnitedAuto and concern for its success and\nwelfare, willingness to apply sound and independent business\njudgment and time available for UnitedAuto matters. Experience\nin at least one of the following is also desired: high level of\nleadership experience in business or administration, breadth of\nknowledge concerning issues affecting UnitedAuto, willingness to\ncontribute special competence to board activities,\naccomplishments within the director’s respective field and\nsome basic experience reading and understanding financial\nstatements. The Committee retains the right to modify these\nqualifications from time to time.\n\n\n\n \nThe Nominating and Corporate Governance Committee’s process\nfor identifying and evaluating nominees is as follows: in the\ncase of incumbent directors whose terms of office are set to\nexpire, the Committee reviews such directors’ overall\nservice to the Company during their term. In the case of new\ndirector candidates, the Committee uses its network of contacts\nto compile potential candidates, but may also engage, if it\ndeems appropriate, a professional search firm. The Committee\ndetermines whether the nominee would be independent. The\nCommittee then meets with each candidate individually to discuss\nand consider his or her qualifications and, if approved,\nrecommends the candidate to the Board for election.\nMs. McWaters joined our Board in December 2004. Due to her\nsubstantial automotive experience, several of our directors\n(including our Chairman and Chief Executive Officer) recommended\nMs. McWaters as a candidate for Board membership.\n\n\n\n \nThe Nominating and Corporate Governance Committee will consider\ndirector candidates nominated by stockholders. Stockholder\nproposals for nominees should be addressed to Corporate\nSecretary, United Auto Group, 2555 Telegraph Road, Bloomfield\nHills, MI 48302 and must comply with the procedures outlined\nimmediately below. The committee’s evaluation of\nstockholder proposed candidates will be the same as for any\nother candidates.\n\n\n\n \nStockholders who wish to recommend individuals for consideration\nby the committee to become nominees for election to the Board\nmay do so by submitting a written submission to the Corporate\nSecretary. Submissions must include sufficient biographical\ninformation concerning the recommended individual, including\nage, five-year employment history with employer names and a\ndescription of the employer’s business, whether such\nindividual can read and understand basic financial statements\nand a list of board\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nmemberships and other affiliations of the nominee. The\nsubmission must be accompanied by a written consent of the\nindividual to stand for election and serve if elected by the\nstockholders, a statement of any relationships between the\nperson recommended and the person submitting the recommendation,\nand a statement of any relationships between the candidate and\nany automotive retailer, manufacturer or supplier.\nRecommendations received by September 30, 2005, will be\nconsidered for nomination at the 2006 annual meeting of\nstockholders. Recommendations received after September 30,\n2005, will be considered for nomination at the 2007 annual\nmeeting of stockholders.\n\n\n\n \nDirector Compensation. We have established a Non-Employee\nDirector Compensation Plan to compensate our directors who are\nnot our paid employees, who we call “Outside\nDirectors.” Pursuant to the Non-Employee Director\nCompensation Plan, each Outside Director receives an annual\nretainer of $40,000, except for Audit Committee members who\nreceive $45,000. These fees are payable, at the option of each\nOutside Director, in cash or in common stock at the current\nmarket price. Our Outside Directors also receive an annual grant\nof 1,000 shares of restricted stock generally in the first\nquarter. These restricted shares vest ratably and annually over\nthree years. These amounts may be deferred in either the form of\ncash (for the annual retainer) and/or deferred stock units. Each\ndeferred stock unit is equal in value to a share of common stock\nand ultimately paid in cash after a director retires. These\nstock units do not have voting rights but do generate dividend\nequivalents in the form of additional stock units and are\ncredited to the director’s account on the date the\ndividends are paid. Any fees deferred in cash will be held in\nthe general funds of the Company. Interest on deferred fees is\ncredited quarterly to the account at the then current\nU.S. 90-day Treasury Bill rate.\n\n\n\n \nEach Outside Director is also entitled to the use of one of our\nvehicles. All directors are entitled to reimbursement for their\nreasonable out-of-pocket expenses in connection with their\ntravel to, and attendance at, meetings of the Board of Directors\nor its committees. We have ten Outside Directors and two\nemployee directors. Directors who are also our employees receive\nno cash compensation for serving as directors or as members of\ncommittees. In July 2004, Roger Penske and Hiroshi Ishikawa were\ngranted 7,500 and 1,000 shares, respectively, of restricted\ncommon stock in their capacity as company officers.\n\n\n\n \nCompensation Committee Interlocks and Insider\nParticipation. As of March 2005, the Compensation and\nManagement Development Committee was comprised of H. Brian\nThompson (Chairman) and William Lovejoy. Previously in 2004, the\nCommittee was comprised of Mr. Lucio Noto (Chairman), an\ninvestor in Transportation Resource Partners, Mr. Thompson\nand Motokazu Yoshida, an officer of a subsidiary of\nMitsui & Co. Mr. Penske is the Chairman of our\nBoard of Directors and Chief Executive Officer. Mr. Penske\nis also the Chairman of the Board, Chief Executive Officer and a\nmember of the compensation committee of Penske Corporation.\nMr. Penske is also a managing member of Penske Capital\nPartners and Transportation Resource Partners. See the section\nentitled “Related Party Transactions” for descriptions\nof further transactions involving Penske Capital Partners,\nPenske Corporation, Transportation Resource Partners and\nMr. Penske, as well as descriptions of transactions\nrelating to the March 2004 sale of our common stock to\nMitsui & Co. and one of its affiliates.\n\n\n\n \nSince April 2003, an entity controlled by one of our directors\n(and a former member of the Compensation and Management\nDevelopment Committee), Lucio A. Noto (the\n“Investor”), has owned an interest in one of our\nsubsidiaries, UAG Connecticut I, LLC, which entitles the\nInvestor to 20% of the operating profits of UAG Connecticut I.\nFrom time to time, we provide UAG Connecticut I with working\ncapital and other debt financing and make periodic pro rata\ndistributions from UAG Connecticut I to the Investor, which in\n2004 totaled $358,000. In addition, in October 2004, the\nInvestor paid us $150,000 pursuant to its option to purchase up\nto a 20% interest in UAG Connecticut I. The Investor currently\nowns 7.1% of UAG Connecticut I. The Investor had previously\nguaranteed 20% of UAG Connecticut I’s lease obligation to\nAGR, our previous landlord of the dealership property. In\nexchange for that guarantee, the Investor was entitled to 20% of\nany appreciation of the property value, which appreciation would\notherwise accrue to AGR at the time of sale, and the Investor\nwas responsible to AGR for any corresponding loss of the\nproperty value at the time of sale, which obligation was secured\nsolely by the Investor’s ownership interest in UAG\nConnecticut I, LLC. In October 2004, we sold the underlying\nproperty to a third party and no appreciation or loss of the\nproperty value had occurred. Therefore, no amounts were paid or\nreceived by Investor at that time and the related property\nagreements were terminated.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nEXECUTIVE OFFICERS\n\n\n\n \nOur named executive officers are elected by the Board of\nDirectors and hold office until their successors have been duly\nelected and qualified or until their earlier resignation or\nremoval from office. A brief biography of Mr. Penske is set\nforth above. Brief biographies of our other named executive\nofficers are provided below.\n\n\n\n \nJames R. Davidson, 59, has served as our Executive\nVice President - Finance since May 1999, as our\nExecutive Vice President - Accounting and Treasurer\nfrom August 1997 to May 1999, and as our Senior Vice\nPresident - Finance from February 1997 to August 1997.\nPrior to joining us, Mr. Davidson was an audit partner for\nErnst & Young LLP, an accounting and financial advisory\nservices firm, which he joined in 1973.\n\n\n\n \nSamuel X. DiFeo, 55, has served as our President\nand Chief Operating Officer since February 1998. Mr. DiFeo\nwas also a director from February 1998 to May 2004 and\npreviously served as Executive Vice President of some of our\nsubsidiaries whose assets were formerly owned by Mr. DiFeo\nand members of his family from October 1992 to January 1998.\n\n\n\n \nRobert H. Kurnick, Jr., 43, has served as our\nExecutive Vice President and General Counsel since February\n2000. Since January 2003, Mr. Kurnick has served as\nPresident of Penske Corporation. Employed by Penske Corporation\nsince January 1995, Mr. Kurnick has served in various\ncapacities including Executive Vice President of Penske\nCorporation and General Counsel of Penske Capital from August\n1999 to December 2002 and Senior Vice President and General\nCounsel of Penske Auto Centers, Inc. from November 1995 to\nJanuary 2001. Mr. Kurnick is also a director of Penske\nCorporation.\n\n\n\n \nPaul F. Walters, 61, has served as our Executive\nVice President - Human Resources since August 1999.\nSince July 1997, Mr. Walters has also served as Executive\nVice President - Administration of Penske Corporation.\nMr. Walters served as Senior Vice President of Detroit\nDiesel Corporation from August 1997 to December 2000.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nEXECUTIVE COMPENSATION\n\n\n\n\nSummary Compensation Table\n\n\n\n \nThe following table contains information concerning annual and\nlong-term compensation of each individual who served as our\nchief executive officer during 2004 and each of our other named\nexecutive officers who served during 2004 for services rendered\nin all capacities during 2004, 2003 and 2002.\n\n\n\n\nSummary Compensation Table\n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(1) \n\n Represents the value of the award based on the closing price of\n our common stock on the date of grant. The restricted stock\n awarded on July 1, 2004 vests annually over four years at a\n rate of 15%, 15%, 20% and 50%. The restricted stock awarded on\n May 16, 2003 vests ratably and annually over three years.\n We pay dividend equivalents on our outstanding and unvested\n restricted stock. The aggregate total number and value of\n restricted stock holdings as of December 31, 2004, based on\n the market closing price of $29.59 on such date, for our named\n executive officers was as follows: Roger Penske:\n 15,833 shares ($468,498), Sam DiFeo: 8,500 shares\n ($251,515), each of James Davidson, Paul Walters and Robert\n Kurnick, Jr.: 7,000 shares ($207,130). \n\n\n\n\n \n\n\n\n\n(2) \n\n Messrs. Kurnick and Walters are paid directly by Penske\n Corporation. The amounts shown reflect that portion of the\n salary compensation and bonus of Messrs. Kurnick and\n Walters that was paid by us to Penske Corporation. \n\n\n\n\n \n\n\n\n\n(3) \n\n Represents tax allowance for life insurance sponsored by us as\n part of our company wide plan. In addition, Mr. DiFeo uses\n company vehicles in the ordinary course of his employment, which\n use cannot be measured. \n\n\n\n\n \n\n\n\n\n(4) \n\n Represents the use of and tax allowance for a company vehicle\n and life insurance sponsored by us as part of our company wide\n plan. \n\n\n\n\n \n\n\n\n\n(5) \n\n Represents an allowance for a company vehicle. \n\n\n\n\n\nOption Grants\n\n\n\n \nThe Company did not grant any options to purchase common stock\nduring 2004 to our named executive officers.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nAggregated Option Exercises in 2004 and Year-End Option\nValues\n\n\n\n \nThe following table sets forth information concerning the number\nand value of options held by our named executive officers on\nDecember 31, 2004 and 2004 option exercises.\n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(1) \n\n The closing price of our common stock on December 31, 2004\n was $29.59 \n\n\n\n\n\nEmployment Contracts\n\n\n\n \nWe entered into a letter agreement with Samuel DiFeo in August\n1999. Pursuant to that letter as amended, if\nMr. DiFeo’s employment is terminated as a result of\ndeath, Mr. DiFeo’s estate is entitled to receive,\namong other things, any accrued salary and bonus and a cash\npayment of $0.8 million. If Mr. DiFeo is terminated\nwithout “cause” as defined in the agreement or for\nvarious reasons outlined in the agreement including his\nresignation upon a change of control or his termination within\nsix months of a change of control other than for cause,\nMr. DiFeo is entitled to these same payments as well as the\nbenefit of the consulting agreement described below. We agreed\nto retain Mr. DiFeo as a consultant after the letter\nagreement expires unless he has been terminated for cause or he\nvoluntarily resigns. The consulting agreement is to continue for\nfive years from the date of his termination. While a consultant,\nMr. DiFeo is entitled to compensation of $0.4 million\nper year, plus use of an automobile, reimbursement of expenses\nincurred on behalf of the Company and health benefits comparable\nto those available to company management. The agreement\nprohibits Mr. DiFeo from seeking or obtaining employment in\nthe automotive industry while the consulting agreement is in\neffect. We are not a party to employment contracts with the\nremaining named executive officers.\n\n\n\n\n\n\n\n\n\n\nREPORT OF THE COMPENSATION AND MANAGEMENT\n\n\n\n\nDEVELOPMENT COMMITTEE ON EXECUTIVE COMPENSATION\n\n\n\n \nOur Compensation and Management Development Committee’s\nresponsibilities include establishing our policies regarding the\ncompensation of our executive officers and other key employees.\nThe Compensation and Management Development Committee approves\nall elements of compensation for our executive officers and is\nresponsible for the administration of our incentive equity\nplans. The Committee is comprised only of independent directors\nas set forth in the listing requirements of the New York Stock\nExchange as well as in the more stringent requirements of our\ncorporate governance guidelines. The members of the Committee\nalso qualify as “non-employee directors” within the\nmeaning of Rule 16b-3 of the Securities Exchange Act and as\n“outside directors” within the meaning of\nSection 162(m) of the Internal Revenue Code.\n\n\n\n \nExecutive Compensation. Our compensation program consists\nof base salary, annual incentive payments, equity-based awards\nand employee health care and other benefits, such as the use of\na company vehicle. The goal of our compensation program is to\nmotivate and reward our executive officers and other key\nemployees to improve long-term stockholder value and to attract\nand retain the highest quality executive and key employee talent\navailable. Our executive compensation program is designed to\nalign executive compensation practices with increasing the value\nof our common stock and to foster adherence to, and promotion\nof, our business mission, values, strategic goals and annual\nobjectives.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \nOur Compensation and Management Development Committee reviews\nand counsels with management relative to the appropriate\ncompensation for management given their role in the corporate\nstructure. It reviews salary levels as well as salary increases\nfor the current year in order to maintain internal compensation\nconsistency and external compensation competitiveness. It\nreviews and recommends incentive payments to be made in\nconnection with the previous year’s performance considering\nthe executive’s scope of responsibilities, level of\nexperience and individual performance, as well as our corporate\nobjectives, business plan and general economic factors. In\nmaking its decisions regarding non-CEO compensation, the\nCommittee receives input from our Chief Executive Officer to\nassure congruity with our long-term performance goals.\n\n\n\n \nBase Salary and Bonus. The salary levels for our officers\nare determined by level of job responsibility and experience,\njob performance and attainment of corporate objectives. Bonus\npayouts to our executive officers and other key employees are\nbased on the evaluation of each person’s individual\nperformance in the prior year and the assessment of the annual\nperformance of that person’s business unit. Bonus payments\nare also influenced by the attainment of corporate earnings\ngoals.\n\n\n\n \nEquity Incentives. Our Compensation and Management\nDevelopment Committee believes strongly that the interests of\nsenior management must be closely aligned with those of our\nstockholders. Therefore in 2004, we issued compensation to our\nsenior management team in the form of restricted stock. We have\nextended the vesting period of our restricted stock grants to\nfour years and weighted the vesting so that a majority of the\naward vests in the third and fourth years. We believe this\nprovides a long-term incentive and more closely aligns the\nincentives for management with the interests of our stockholders.\n\n\n\n \nWe grant restricted stock on a discretionary basis within a\nguideline range that takes into account the responsibilities of\nexecutive officers and key employees whose contributions and\nskills are important to our long-term success. During 2004, the\nCommittee granted approximately 164,000 shares of\nrestricted stock to our management group, some of which has\nreverted back to us as employees have departed from the Company.\n\n\n\n \nEmployee Benefits. Our employees generally are entitled\nto a number of benefits such as health benefits. In addition,\nsenior management is provided the use of a company vehicle and\ncompany sponsored automobile insurance. The Compensation and\nManagement Development Committee believes that our employees\nshould receive benefits commensurate with those of our peer\ncompanies, recognizing the corporate cost of those benefits.\n\n\n\n \nManagement Incentive Plan. Section 162(m) of the\nInternal Revenue Code of 1986, as amended, generally imposes a\n$1,000,000 per year ceiling on tax-deductible remuneration\npaid to any one of the five most highly compensated executive\nofficers of a publicly-held corporation, unless the remuneration\nis treated as performance based or is otherwise exempt from the\nprovisions of Section 162(m). In 2004, our stockholders\napproved the United Auto Group Management Incentive Plan,\ndesigned to provide for the payment of performance-based\ncompensation that is qualified within the meaning of\nSection 162(m) of the Internal Revenue Code and that we may\ndeduct for tax purposes. While the Compensation and Management\nDevelopment Committee intends to maximize the tax-efficiency of\nits compensation programs generally, it retains the flexibility\nin its membership and in the manner in which it awards\ncompensation to act in the best interests of the Company and its\nstockholders, including awarding compensation which may not be\ntax deductible.\n\n\n\n \nChief Executive Officer. In 2004, we substantially\nincreased our gross revenues and net income from 2003 levels. We\nsuccessfully accomplished our targeted level of acquisitions and\nmade significant strides toward integrating those operations\ninto our business. We made significant progress toward\nincreasing the performance of our fixed operations, improving\nstore appearances and developing dealership campuses. We also\ncontinued to be the industry leader in same-store sales.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \nIn determining the compensation of Mr. Penske, the\nCommittee considers these factors and also monitors the\ncompensation and performance of the Company’s peers. For\n2004, our Compensation and Management Development Committee\nawarded Mr. Penske a cash bonus of $900,000. The bonus was\nbased on our strong financial performance including our strong\nsame-store sales growth, growth in earnings per share, and\nreturn on equity as well as operational performance such as\nachievements in reducing employee turnover and customer\nsatisfaction. While the Committee believes that the\nCompany’s successes noted above are in large part due to\nthe contributions of Mr. Penske, it has noted that\nMr. Penske’s compensation is generally on par or less\nthan those of our peer companies’ chief executive officers.\nMr. Penske does not participate in the approval of his own\ncompensation.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n\nThe Compensation & Management Development \n\n\n\n\n \n\nCommittee of the Board of Directors \n\n\n\n\n \n\n\n\n\n \n\n H. Brian Thompson (Chairman) \n\n\n\n\n \n\n William J. Lovejoy \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nSECURITY OWNERSHIP OF CERTAIN\n\n\n\n\nBENEFICIAL OWNERS AND MANAGEMENT\n\n\n\n \nThe following table sets forth information with respect to the\nbeneficial ownership of our common stock as of March 1,\n2005 by (1) each person known to us to own more than five\npercent of our common stock, (2) each of our directors,\n(3) our Chief Executive Officer and four other most highly\ncompensated executive officers and (4) all of our directors\nand executive officers as a group.\n\n\n\n \nBeneficial ownership is determined in accordance with the rules\nof the Securities & Exchange Commission and includes\nvoting and investment power with respect to shares. The\npercentage of ownership is based on 46,530,699 shares of\nour common stock outstanding on February 25, 2005. Unless\notherwise indicated, each person identified in the table below\nhas sole voting and dispositive power with respect to the common\nstock beneficially owned by that person.\n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n \n* \n\n Less than 1% \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(1) \n\n Pursuant to the regulations of the Commission, shares are deemed\n to be “beneficially owned” by a person if such person\n directly or indirectly has or shares the power to vote or\n dispose of such shares. Each person is deemed to be the\n beneficial owner of securities which may be acquired within\n sixty days \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n\n through the exercise of options, warrants, and rights, if any,\n and such securities are deemed to be outstanding for the purpose\n of computing the percentage of the class beneficially owned by\n such person. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(2) \n\n Penske Corporation is the beneficial owner of\n 10,694,021 shares of common stock, of which it has shared\n power to vote and dispose together with a wholly owned\n subsidiary, and the beneficial owner of up to\n 7,478,386 shares that are held by International Motor Cars\n Group I, L.L.C. (“IMCGI”). This number will be\n reduced in connection with each distribution of shares to Penske\n Corporation by the number of shares representing any carried\n interest attributable to the managing member pursuant to the\n operating agreement of IMCGI. Penske Corporation also has shared\n voting power over 449,470 shares under voting agreements.\n Penske Corporation also has the right to vote the shares owned\n by the Mitsui entities (see note 5) under certain\n circumstances discussed under “Related Party\n Transactions - Shareholders Agreement”. If these\n shares were deemed to be beneficially owned by Penske\n Corporation, its beneficial ownership would be\n 25,843,226 shares or 55.5%. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(3) \n\n Penske Capital, IMCGI, IMCGII, and Penske Corporation each\n disclaim beneficial ownership of the shares owned by the others\n that may be deemed to exist. \n\n\n\n\n \n\n\n\n\n(4) \n\n Penske Capital has voting power with respect to\n 7,657,282 shares of common stock, consisting of\n 7,592,792 shares of common stock held by IMCGI and\n 64,490 shares of common stock held by International Motor\n Cars Group II, L.L.C. (“IMCGII”). Penske Capital\n is the managing member of each of IMCGI and IMCGII. The managing\n members of Penske Capital are Roger Penske and James A. Hislop.\n Penske Capital is obligated to cause IMCGI and IMCGII to make\n special distributions to each of their members in connection\n with the sale of those securities by the members. The\n non-managing member of IMCGI is Penske Corporation. \n\n\n\n\n \n\n\n\n\n(5) \n\n Represents the 1,444,070 shares held by Mitsui &\n Co., (U.S.A.), Inc. and 5,777,279 shares held by\n Mitsui & Co., Ltd. \n\n\n\n\n \n\n\n\n\n(6) \n\n Such information was reported on Schedule 13G as of\n December 31, 2004 and filed with the Commission\n February 9, 2005. \n\n\n\n\n \n\n\n\n\n(7) \n\n Includes the 7,657,282 shares deemed to be beneficially\n owned by Penske Capital. Mr. Hislop is a managing member of\n Penske Capital. Mr. Hislop disclaims beneficial ownership\n of the shares beneficially owned by Penske Capital, except to\n the extent of his pecuniary interest. \n\n\n\n\n \n\n\n\n\n(8) \n\n Includes the 7,657,282 shares deemed to be beneficially\n owned by Penske Capital, for which shares Mr. Penske may be\n deemed to have shared voting and dispositive power, an\n additional 11,143,491 shares deemed to be beneficially\n owned by Penske Corporation, for which shares Mr. Penske\n may be deemed to have shared voting and dispositive power, and\n options to purchase 460,000 shares that are\n exercisable within 60 days. Mr. Penske is a managing\n member of Penske Capital and the Chairman and Chief Executive\n Officer of Penske Corporation. Mr. Penske disclaims\n beneficial ownership of the shares beneficially owned by Penske\n Capital and Penske Corporation. \n\n\n\n\n \n\n\n\n\n(9) \n\n Includes options to purchase 180,000 shares of common\n stock that are exercisable within 60 days. \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(10) \n\n Includes 7,334 shares issuable upon the exercise of options\n that are exercisable within 60 days and 500 shares\n held by Mr. Davidson’s wife. Mr. Davidson\n disclaims beneficial ownership of all shares held by his wife. \n\n\n\n\n \n\n\n\n\n(11) \n\n Includes 25,000 shares issuable upon the exercise of\n options that are exercisable within 60 days. \n\n\n\n\n \n\n\n\n\n(12) \n\n Includes 20,000 shares issuable upon the exercise of\n options that are exercisable within 60 days. \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nSHARE INVESTMENT PERFORMANCE\n\n\n\n \nThe following graph compares the cumulative total stockholder\nreturns on our common stock based on an investment of $100 on\nDecember 31, 1999 and the close of the market on\nDecember 31 of each year thereafter against (i) the\nStandard & Poor’s Index and (ii) an\nindustry/peer group consisting of Asbury Automotive Group, Inc.,\nAutoNation, Inc., Group 1 Automotive, Inc., Lithia Motors Inc.\nand Sonic Automotive Inc. The graph also assumes the\nreinvestment of all dividends.\n\n\n\n\nCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*\n\n\n\n\nAMONG UNITED AUTO GROUP, INC., THE S & P 500\nINDEX\n\n\n\n\nAND A PEER GROUP\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n \n \nCumulative Total Return \n \n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n \n12/99 \n \n12/00 \n \n12/01 \n \n12/02 \n \n12/03 \n \n12/04 \n \n \n\n\n\n\n \n\n\n\n\n\n\n United Auto Group, Inc. \n\n\n \n \n \n100.00 \n \n \n \n74.83 \n \n \n \n288.77 \n \n \n \n139.52 \n \n \n \n351.57 \n \n \n \n337.29 \n \n \n \n\n\n\n\n \n\n\n\n\n\n\n S&P 500\n\n\n \n \n \n100.00 \n \n \n \n90.89 \n \n \n \n80.09 \n \n \n \n62.39 \n \n \n \n80.29 \n \n \n \n86.09 \n \n \n \n\n\n\n\n \n\n\n\n\n\n\n Peer Group\n\n\n \n \n \n100.00 \n \n \n \n71.27 \n \n \n \n157.75 \n \n \n \n148.65 \n \n \n \n225.45 \n \n \n \n228.10 \n \n \n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\nAUDIT COMMITTEE REPORT\n\n\n\n \nThe Audit Committee of the Board of Directors is responsible for\nproviding independent, objective oversight of our accounting\nfunctions and internal controls. The Audit Committee acts under\na written charter adopted and approved by the Board of\nDirectors. The Audit Committee is comprised only of independent\ndirectors as set forth in the listing requirements of the New\nYork Stock Exchange, the more stringent requirements of our\ncorporate governance guidelines and the Securities &\nExchange Commission’s additional independence requirements.\nIn addition, our Board has determined that each of our Committee\nmembers is an “audit committee financial expert,” as\ndefined by Commission rules.\n\n\n\n \nIn accordance with the Audit Committee charter, the Audit\nCommittee has the sole authority to retain and terminate our\nindependent accountants. The Audit Committee is responsible for\nrecommending to the Board of Directors that our financial\nstatements be included in our Annual Report on Form 10-K.\n\n\n\n \nThe Audit Committee took a number of steps in making this\nrecommendation for our 2004 annual report. First, the Audit\nCommittee discussed with our independent auditors those matters\nrequired to be discussed by\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nStatement on Auditing Standards No. 61, including\ninformation regarding the scope and results of the audit. These\ncommunications and discussions are intended to assist the Audit\nCommittee in overseeing the financial reporting and disclosure\nprocess. Second, the Audit Committee discussed with the\nindependent auditors their independence and received letters and\nwritten disclosures from the independent accountants required by\nIndependence Standards Board Standard No. 1 (Independence\nStandards Board Standard No. 1, Independence Discussions\nwith Audit Committees). This discussion and disclosure assisted\nthe Audit Committee in evaluating such independence. Finally,\nthe Audit Committee reviewed and discussed the annual audited\nand quarterly unaudited financial statements with our management\nand the independent auditors in advance of the public release of\noperating results, and the filing of our annual and quarterly\nreports with the Securities and Exchange Commission.\n\n\n\n \nBased on the discussions with the independent auditors\nconcerning the audit, and their independence, and the financial\nstatement review, and such other matters deemed relevant and\nappropriate by the Audit Committee, the Audit Committee\nrecommended to the Board of Directors that our financial\nstatements be included in our 2004 Annual Report on\nForm 10-K.\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n \n\nThe Audit Committee of the Board of Directors \n\n\n\n\n \n\n\n\n\n \n\n Michael R. Eisenson (Chairman) \n\n\n\n\n \n\n John Barr \n\n\n\n\n \n\n Ronald G. Steinhart \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nINDEPENDENT AUDITORS\n\n\n\n \nDeloitte & Touche LLP, the member firms of Deloitte\nTouche Tohmatsu, and their respective affiliates (collectively,\n“Deloitte”) will audit our consolidated financial\nstatements for 2005 and perform other services. Deloitte did not\naudit certain of our subsidiaries holding our international\noperations and their opinions insofar as they relate to those\noperations are based solely on the reports of the independent\nauditor of those operations, KPMG Audit PLC (“KPMG”).\nWe refer to Deloitte and KPMG collectively as our independent\nauditors. We paid the independent auditors the following fees\nfor the enumerated services in 2004, all of which services were\napproved by our Audit Committee.\n\n\n\n \nAudit Fees. Audit Fees in the table below include the\naggregate fees for professional services rendered by the\nindependent auditors in connection with the audits of our\nconsolidated financial statements, including audits of\nmanagement’s assessment of internal control over financial\nreporting, reviews of the consolidated condensed financial\nstatements included in our quarterly reports on Form 10-Q\nand other services normally provided in connection with\nstatutory or regulatory engagements.\n\n\n\n \nAudit Related Fees. Audit Related Fees in the table below\ninclude the aggregate fees for professional services rendered by\nthe independent auditors in connection with acquisition due\ndiligence, their assurance services related to benefit plans and\naccounting research and consultation.\n\n\n\n \nTax Fees. Tax Fees in the table below include aggregate\nfees for professional services rendered by the independent\nauditors in connection with tax compliance, planning and advice.\n\n\n\n \nAll Other Fees. All Other Fees in the table below include\naggregate fees for all other services rendered by the\nindependent auditors. These fees related primarily to a review\nof certain operational processes at our dealerships.\n\n\n\n\n\n\n \nThe Audit Committee has considered the nature of the\nabove-listed services provided by the independent auditors and\ndetermined that they are compatible with their provision of\nindependent audit services. The Audit Committee has discussed\nthese services with the independent auditors and management to\ndetermine that they are permitted under the Code of Professional\nConduct of the American Institute of Certified Public\nAccountants and the auditor independence requirements of the\nSecurities and Exchange Commission.\n\n\n\n \nPre-approval Policy. The Audit Committee has adopted a\npolicy requiring pre-approval of audit and non-audit services\nprovided by the independent auditors. The primary purpose of\nthis policy is to ensure that we engage our public accountants\nto only provide audit and non-audit services that are compatible\nwith maintaining independence. The Audit Committee is required\nto pre-approve all services performed for us by our independent\nauditors and the related fees for such services. The Audit\nCommittee must also approve fees incurred for pre-approved\nservices that are in excess of the approved amount prior to\npayment, except as provided below. The Company’s\nindependent auditors are prohibited from performing any service\nprohibited by applicable law.\n\n\n\n \nPre-approval of audit and non-audit services may be given at any\ntime up to a year before commencement of the specified service.\nEngagement of the independent auditors and their fees for the\nannual audit must be approved by the entire Audit Committee. The\nChairman of the Audit Committee may independently approve\nservices if the estimated fee for the service is less than 10%\nof the total estimated audit fee, or if the excess fees for\npre-approved services are less than 20% of the approved fees for\nthat service; provided,\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nhowever, that no such pre-approval may be granted with respect\nto any service prohibited by applicable law or that otherwise\nappears reasonably likely to compromise the independent\nauditor’s independence. Any pre-approval granted pursuant\nto this delegation of authority will be reviewed with the Audit\nCommittee at its next regularly scheduled meeting. Non-audit\nservices for which the estimated fee is greater than 10% of the\naudit fee must be approved by the entire Audit Committee before\ncommencement of the service.\n\n\n\n \nIt is anticipated that a representative of Deloitte will be\npresent at the annual meeting with the opportunity to make a\nstatement and to answer questions.\n\n\n\n\n\n\n\n\n\n\nRELATED PARTY TRANSACTIONS\n\n\n\n \nEntities affiliated with Roger S. Penske, our Chairman of the\nBoard and Chief Executive Officer, are parties to a stockholders\nagreement described below. Mr. Penske is also Chairman of\nthe Board and Chief Executive Officer of Penske Corporation,\nand, through entities affiliated with Penske Corporation, our\nlargest stockholder. The parties to the stockholders agreement\nare International Motor Cars Group, I., L.L.C.\n(“IMCGI”), International Motor Cars Group, II,\nL.L.C. (“IMCGII”), Mitsui & Co., Ltd.,\nMitsui & Co, (USA), Inc. (collectively,\n“Mitsui”), Penske Corporation and Penske Automotive\nHoldings Corp. We refer to IMCGI, IMCGII, Penske Corporation and\nPenske Automotive Holdings Corp. as the Penske affiliated\ncompanies.\n\n\n\n \nIn March 2004, we issued and sold 4,050,000 shares of our\ncommon stock to Mitsui in exchange for $119 million under\nthe terms of a purchase agreement between us, Mitsui and the\nPenske affiliated companies. This purchase agreement also\ncontains other agreements between the parties. The Penske\naffiliated companies and Mitsui have agreed to certain\n“standstill” provisions. Until termination of the\nstockholders agreement discussed below, among other things and\nwith some exceptions, the parties have agreed not to acquire or\nseek to acquire any of our capital stock or assets, enter into\nor propose business combinations involving us, participate in a\nproxy contest with respect to us or initiate or propose any\nstockholder proposals with respect to us. Notwithstanding the\nprior sentence, the purchase agreement permits (1) any\ntransaction approved by either a majority of disinterested\nmembers of the Board of Directors or a majority of the\ndisinterested stockholders, (2) in the case of Mitsui, the\nacquisition of securities if, after giving effect to such\nacquisition, its beneficial ownership in us is less than or\nequal to 49%, (3) in the case of the Penske affiliated\ncompanies, the acquisition of securities if, after giving effect\nto such acquisition, their aggregate beneficial ownership in us\nis less than or equal to 65%, and (4) the acquisition of\nsecurities resulting from equity grants by the Board of\nDirectors to individuals for compensatory purposes.\n\n\n\n \nWe have also agreed to grant Mitsui the right to an observer to\nour Board of Directors as long as they own at least 2.5% of our\noutstanding common stock, and the right to have an appointee\ndesignated as a senior vice president of the Company, as long as\nthey own at least 10% of our outstanding common stock.\nMr. Hiroshi Ishikawa, one of our Board members has been\nappointed as our Executive Vice President -\nInternational Business Development. We also agreed not to take\nany action that would restrict the ability of a stockholder to\npropose, nominate or vote for any person as a director of us,\nsubject to certain limitations.\n\n\n\n \nStockholders Agreement. Simultaneously with this\npurchase, Mitsui and the Penske affiliated companies entered\ninto a stockholders agreement. Under this stockholders\nagreement, the Penske affiliated companies agreed to vote their\nshares for one director who is a representative of Mitsui. In\nturn, Mitsui agreed to vote their shares for up to fourteen\ndirectors voted for by the Penske affiliated companies. In\naddition, the Penske affiliated companies agreed that if they\ntransfer any of our shares of common stock, Mitsui would be\nentitled to “tag along” by transferring a pro rata\namount of their shares upon similar terms and conditions,\nsubject to certain limitations. This agreement terminates on its\ntenth anniversary, upon the mutual consent of the parties or\nwhen either party no longer owns any of our common stock.\n\n\n\n \nRegistration Rights Agreements. In May 1999, we and IMCGI\nand IMCGII entered into a registration rights agreement and in\nDecember 2000, we and Penske Automotive Holdings Corp. entered\ninto a registration rights agreement. Pursuant to these\nagreements, IMCGI and IMCGII and Penske Corporation each may\nrequire us on three occasions to register all or part of our\ncommon stock held by them, subject to\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nspecified limitations. They are also entitled to request\ninclusion of all or any part of their common stock in any\nregistration of securities by us on Forms S-1, S-2 and S-3\nunder the Securities Act.\n\n\n\n \nIn connection with the purchase of shares discussed above, in\nMarch 2004, we entered into a registration rights agreement with\nMitsui. Under this agreement, Mitsui may require us on two\noccasions to register all or part of their common stock, subject\nto specified limitations. Mitsui also is entitled to request\ninclusion of all or any part of their common stock in any\nregistration of securities by us on Forms S-1, S-2 and S-3\nunder the Securities Act of 1933, as amended.\n\n\n\n \nPrior Stockholders Agreement. In March 2004, we\nterminated a stockholders agreement between us, the Penske\naffiliated companies and Mitsui. All rights and obligations\nunder this agreement have terminated. Pursuant to that\nnow-terminated agreement, the parties agreed to vote their\nshares of common stock to elect Roger S. Penske, four additional\npersons nominated by some of the Penske affiliated companies,\none person nominated by Mitsui and three independent persons as\nour directors. The Penske entities only nominated three members\nto the Board of Directors under this agreement even though they\nwere entitled to four nominees. The parties also agreed to use\ntheir reasonable best efforts to have our compensation committee\nof the Board of Directors consist of Roger S. Penske, one\nadditional designee of the Penske entities and two independent\ndirectors. The Penske entities did not designate a member of the\ncompensation committee and Mr. Penske did not serve on the\ncompensation committee.\n\n\n\n \nOther Related Party Interests. James A. Hislop, one of\nour directors, is a managing member of Penske Capital Partners\n(who is the managing member of IMCGI and IMCGII), a director of\nPenske Corporation and a managing director of Transportation\nResource Partners, an organization which undertakes investments\nin transportation related industries. Mr. Penske also is a\nmanaging member of Penske Capital Partners and Transportation\nResource Partners. Richard J. Peters, one of our directors, is a\ndirector of Penske Corporation and a managing director of\nTransportation Resource Partners. Eustace W. Mita and Lucio A.\nNoto are investors in Transportation Resources Partners. Robert\nH. Kurnick, Jr., our Executive Vice President and General\nCounsel, is also the President and a director of the Penske\nCorporation and Paul F. Walters, our Executive Vice\nPresident - Human Resources serves in a similar human\nresources capacity for Penske Corporation. In 2004,\nMr. Ishikawa, one of our board members, received $150,000\nin compensation from us for his services as Executive Vice\nPresident - International Business Development and he\nalso served in a similar capacity for Penske Corporation.\n\n\n\n \nCarsDirect.com. In May 2000, we, along with Penske\nAutomotive Group, Inc. (“PAG”), an automobile\ndealership company controlled by Roger S. Penske, entered into\nan operating agreement with CarsDirect.com, Inc. whereby PAG and\nwe supply vehicles to CarsDirect.com at pre-negotiated prices\nthrough PAG’s and our respective franchised vehicle\ndealers. During the term of the operating agreement,\nCarsDirect.com will offer the franchised vehicle dealers of PAG\nor the Company with the closest geographic proximity to the\ncustomer the first opportunity to supply the vehicle purchased\nthrough their website. As consideration for entering into the\noperating agreement, CarsDirect.com granted to PAG and us\nwarrants to purchase 3,650,000 shares of preferred\nstock of CarsDirect.com, which are exercisable varying through\n2007 to 2009. We and PAG have agreed to allocate the warrants in\nproportion to our relative sales to CarsDirect.com under the\noperating agreement.\n\n\n\n \nOther Transactions. From time to time, we pay and/or\nreceive fees from Penske Corporation and its affiliates for\nservices rendered in the normal course of business, including\nrents paid to Automotive Group Realty, LLC (“AGR”), as\ndescribed below, payments to third parties made by Penske\nCorporation on behalf of us, for which we then reimburse Penske\nCorporation, payments relating to the use of aircraft from\nPenske Aviation Services, and payment of a racing sponsorship to\nPenske Racing. These transactions reflect the provider’s\ncost or an amount mutually agreed upon by both parties. We\nbelieve that the payments relating to these transactions are on\nterms at least as favorable as those that could be obtained from\nan unaffiliated third party negotiated on an arm’s length\nbasis. Aggregate payments relating to such transactions amounted\nto $5.8 million in 2004, excluding the payments to AGR\ndiscussed below.\n\n\n\n \nWe are currently a tenant under a number of non-cancelable lease\nagreements with Samuel X. DiFeo and members of his family.\nMr. DiFeo is our President and Chief Operating Officer.\nDuring 2004, we paid\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n$5.5 million to Mr. DiFeo and his family under these\nlease agreements. We believe that the terms of these\ntransactions are at least as favorable as those that could be\nobtained from an unaffiliated third party negotiated on an\narm’s length basis. In addition, in 2004 we paid two of\nMr. DiFeo’s family members $50,000 each under\nmulti-year consulting arrangements.\n\n\n\n \nWe are currently a tenant under a number of non-cancelable lease\nagreements with AGR. AGR is a wholly-owned subsidiary of Penske\nCorporation. During 2004, we paid $5.6 million to AGR under\nthese lease agreements. In addition, in 2004 we sold AGR real\nproperty and improvements for $30.8 million which were\nsubsequently leased by AGR to us. The sale of each parcel of\nproperty was valued at a price which was either independently\nconfirmed by a third party appraiser or at the price for which\nwe purchased the property from an independent third party. We\nbelieve that the terms of these transactions are at least as\nfavorable as those that could be obtained from an unaffiliated\nthird party negotiated on an arm’s length basis.\n\n\n\n \nWe are also party to operating agreements with Roger S.\nPenske, Jr., the son of Roger S. Penske, relating to his\n(1) 10% ownership investment in one of our subsidiaries,\nHBL, LLC, and (2) his 4.7% ownership interest in of one of\nour subsidiaries, United Auto do Brasil, Ltda., of which we own\nabout 91%. From time to time, we provide these subsidiaries with\nworking capital and other debt financing and make periodic pro\nrata distributions from these subsidiaries to\nMr. Penske, Jr., which in 2004 totaled one million one\nhundred and fifty four thousand dollars. For 2004,\nMr. Penske, Jr., received total compensation from us\nof one million nine hundred and twenty thousand dollars in his\ncapacity as Executive Vice President - Eastern\nOperations.\n\n\n\n \nIn 2004, we employed the sons of Eustace Mita, one of our\ndirectors, and James Davidson, our Executive Vice\nPresident - Finance, at our dealerships as managers\nfor which each was compensated in excess of $60,000. We employ\nthe son-in-law of Paul Walters, our Executive Vice President,\nHuman Resources, as Senior Vice President Manufacturer Relations\nfor which he received compensation in excess of $60,000 in 2004.\nIn April, 2002, we invested $2.5 million in Worldwide\nTraining Group (“WTG”) in order to make an\ninvestment in Universal Technical Institute, Inc.\n(“UTI”). Penske Capital Partners is the managing\nmember of WTG. WTG has since sold or distributed its shares of\nUTI. In 2004, we recognized $7.2 million of net\nincome from the sale of our investment.\n\n\n\n \nSince April 2003, an entity controlled by one of our directors\n(and a former member of the Compensation and Management\nDevelopment Committee), Lucio A. Noto (the\n“Investor”), has owned an interest in one of our\nsubsidiaries, UAG Connecticut I, LLC, which entitles the\nInvestor to 20% of the operating profits of UAG Connecticut I.\nFrom time to time, we provide UAG Connecticut I with working\ncapital and other debt financing and make periodic pro rata\ndistributions from UAG Connecticut I to the Investor, which in\n2004 totaled $358,000. In addition, in October 2004, the\nInvestor paid us $150,000 pursuant to its option to purchase up\nto a 20% interest in UAG Connecticut I. The Investor currently\nowns 7.1% of UAG Connecticut I. The Investor had previously\nguaranteed 20% of UAG Connecticut I’s lease obligation to\nAGR, our previous landlord of the dealership property. In\nexchange for that guarantee, the Investor was entitled to 20% of\nany appreciation of the property value, which appreciation would\notherwise accrue to AGR at the time of sale, and the Investor\nwas responsible to AGR for any corresponding loss of the\nproperty value at the time of sale, which obligation was secured\nsolely by the Investor’s ownership interest in UAG\nConnecticut I, LLC. In October 2004, we sold the underlying\nproperty to a third party and no appreciation or loss of the\nproperty value had occurred. Therefore, no amounts were paid or\nreceived by Investor at that time and the related property\nagreements were terminated.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nOTHER MATTERS\n\n\n\n\nSecurities Authorized for Issuance Under Equity Compensation\nPlans.\n\n\n\n \nThe following table provides details regarding the shares of\ncommon stock issuable upon the exercise of outstanding options,\nwarrants and rights granted under the Company’s equity\ncompensation plans (including individual equity compensation\narrangements) as of December 31, 2004.\n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n(1) \n\n Consists of options to purchase an aggregate amount of\n 400,000 shares of common stock granted to Roger S. Penske,\n our Chairman and Chief Executive Officer (at an exercise price\n of $10.00 per share). \n\n\n\n\n \n\n\n\n\n(2) \n\n Does not include shares eligible to be issued under the\n Non-Employee Director Compensation Plan, under which plan\n directors may receive shares of common stock in lieu of their\n cash annual retainer fee. See “Compensation of\n Directors” for a summary of the material features of this\n plan. \n\n\n\n\n\nSection 16(a) Beneficial\nOwnership Reporting Compliance.\n\n\n\n \nSection 16(a) of the Securities Exchange Act of 1934, as\namended, requires our executive officers and directors and\npersons who beneficially own more than 10% of our common stock\nto file initial reports of ownership and reports of changes of\nownership with the Commission. Executive officers, directors and\ngreater than 10% beneficial owners are required by Commission\nregulations to furnish us with copies of all Section 16(a)\nforms they file. To our knowledge, based solely on our review of\nthe copies of the Section 16(a) forms furnished to us and\nrepresentations from our executive officers, directors and\ngreater than 10% beneficial owners, all Section 16(a)\nreports were timely filed in 2004.\n\n\n\n\nStockholder Nominations and Proposals for 2005.\n\n\n\n \nWe must receive any proposals intended to be presented to\nstockholders at our 2006 annual meeting of stockholders at our\nprincipal executive offices at 2555 Telegraph Road, Bloomfield\nHills, Michigan 48302-0954 for inclusion in the proxy statement\nby November 14, 2005. These proposals must also meet other\nrequirements of the rules of the Commission relating to\nstockholder proposals. Stockholders who intend to present an\nitem of business at the annual meeting of stockholders in 2005\n(other than a proposal submitted for inclusion in our proxy\nstatement) must provide us notice of the business no later than\nJanuary 28, 2006.\n\n\n\n\nProxy Information.\n\n\n\n \nWe do not anticipate that there will be presented at the annual\nmeeting any business other than as discussed in the above\nproposals and the Board of Directors was not aware of any other\nmatters which might properly be presented for action at the\nmeeting. If any other business should properly come before the\nannual meeting, the persons named on the enclosed proxy card\nwill have discretionary authority to vote all proxies in\naccordance with their best judgment.\n\n\n\n \nProxies in the form enclosed are solicited by or on behalf of\nour Board of Directors. We will bear the cost of this\nsolicitation. In addition to the solicitation of the proxies by\nuse of the mails, some of our officers and\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nregular employees, without extra remuneration, may solicit\nproxies personally, or by telephone or otherwise. In addition,\nwe will make arrangements with brokerage houses and other\ncustodians, nominees and fiduciaries to forward proxies and\nproxy material to their principals, and we will reimburse them\nfor their expenses in forwarding soliciting materials, which are\nnot expected to exceed an aggregate of $5,000.\n\n\n\n \nIt is important proxies be returned promptly. Therefore, you are\nurged to sign, date and return the enclosed proxy card in the\naccompanying stamped and addressed envelope as soon as possible.\n\n\n\n \nWe will provide without charge to each or our stockholders, on\nthe written request of such stockholder, a copy of our\nForm 10-K for the year ended December 31, 2004 and any\nof the other documents referenced herein. Copies can be obtained\nfrom United Auto Group, Inc., Investor Relations, 2555 Telegraph\nRoad, Bloomfield Hills, Michigan 48302-0954 (248/648-2500).\n\n\n\n\nDated: March 14, 2005\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nFOLD AND DETACH HERE\n\n\n\n\n\nPROXY SOLICITED ON BEHALF\n\n\nOF THE BOARD OF DIRECTORS OF\n\n\nUNITED AUTO GROUP, INC.\n\n\nThe undersigned hereby revokes all prior proxies and appoints Roger S. Penske, Robert H. Kurnick,\nJr., and Shane M. Spradlin and each of them, as proxies with full power of substitution, to vote on\nbehalf of the undersigned the same number of shares of Voting Common Stock, par value $0.0001 per\nshare, of United Auto Group, Inc. which the undersigned is then entitled to vote, at the Annual\nMeeting of Stockholders to be held on Thursday, April 14, 2005 at 8:30 a.m., Eastern Daylight Time,\nat United Auto Group, Inc., 2555 Telegraph Rd., Bloomfield Hills, MI 48302, and at any\npostponements or adjournments thereof, on any matter properly coming before the meeting, and\nspecifically the matters described on the reverse side hereof:\n\n\n\n\nTHE PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, IT WILL BE VOTED FOR THE\nELECTION OF THE NOMINEES NAMED HEREIN AND ACCORDING TO THE DISCRETION OF THE PROXY HOLDERS ON ANY\nOTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENTS OR ADJOURNMENTS\nTHEREOF. THE PROPOSALS HEREIN ARE PROPOSED BY THE BOARD OF DIRECTORS.\n\n\n\n\n\n\n \n \n \n \n \n\n\n\n\n\n\n \n\n\n\n\n \n\n\n\n\nSEE REVERSE\n\n\nSIDE\n\n\n \n \nCONTINUED AND TO BE SIGNED ON REVERSE SIDE\n \n \nSEE REVERSE\n\n\nSIDE \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nUNITED AUTO GROUP\n\n\nC/O EQUISERVE TRUST COMPANY, N.A.\n\n\nP.O. BOX 8694\n\n\nEDISON, NJ 08818-8694\n\n\nDETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL\n\n\n\n\n\nUAG\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\n\n\n\n\n \n \nPlease mark \n\n\n\n\n[X]\n\n\n \n \nvotes as in \n\n\n\n\n\n\n\n \n \nthis example \n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\n\n\n1.\n\n\n \n \nElection of Directors to serve until 2006: \n\n\n\n\n\n\n\n \n \nNominees: \n\n\n\n\n\n\n\n \n \n(01) John Barr \n\n\n\n\n\n\n\n \n \n(02) Michael Eisenson \n\n\n\n\n\n\n\n \n \n(03) James Hislop \n\n\n\n\n\n\n\n \n \n(04) Hiroshi Ishikawa \n\n\n\n\n\n\n\n \n \n(05) William Lovejoy \n\n\n\n\n\n\n\n \n \n(06) Kimberly McWaters \n\n\n\n\n\n\n\n \n \n(07) Eustace Mita \n\n\n\n\n\n\n\n \n \n(08) Lucio Noto \n\n\n\n\n\n\n\n \n \n(09) Roger Penske \n\n\n\n\n\n\n\n \n \n(10) Richard Peters \n\n\n\n\n\n\n\n \n \n(11) Ronald Steinhart \n\n\n\n\n\n\n\n \n \n(12) Brian Thompson \n\n\n\n\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n\nFOR \n \nWITHHOLD \n\n\n\n\n\n\no\n\n\n \n \no \n\n\n\n\n\n\n\n\n\n\n\n\n\no\n \n \n \n\n\n\n\nFor, except vote withheld from the above nominee(s):\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n\n\n2. \nTo transact such other business as may properly come before the meeting \n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n\n\n\n\n\n\nMARK HERE FOR ADDRESS\n\n\nCHANGE/COMMENTS AND NOTE ON REVERSE\n\n\n \n \no\n \n \nMARK HERE IF YOU\n\n\nPLAN TO ATTEND THE\n\n\nMEETING\n \n \no \n\n\n\n\n\n\n\n\nPlease sign this proxy exactly as name appears hereon.\nWhen shares are held by joint tenants, both should sign.\nWhen signing as attorney, administrator, trustee or guardian,\nplease give full title as such.\n\n\n\n\n\n\n\n\n \n \n \n \n \n \n \n\n\n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\nSignature:\n\n\n \n \n \n \n \nDate:\n \n \n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n"},"accession_number":{"kind":"string","value":"0000950124-05-001489"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":97,"cells":{"_id":{"kind":"string","value":"1021435_DEF 14A_2005_0001021435-05-000013"},"cik":{"kind":"string","value":"1021435"},"company":{"kind":"string","value":"GRAPHON CORP/DE"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-02-25T00:00:00","string":"2005-02-25T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-02-10T00:00:00","string":"2005-02-10T00:00:00"},"sic":{"kind":"string","value":"7372"},"state_of_inc":{"kind":"string","value":"DE"},"state_location":{"kind":"string","value":"CA"},"fiscal_year_end":{"kind":"string","value":"1231"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1021435/0001021435-05-000013-index.html"},"htm_filing_link":{"kind":"string","value":"NULL"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1021435/000102143505000013/0001021435-05-000013.txt"},"filename":{"kind":"string","value":"1021435_DEF 14A_2005_0001021435-05-000013.txt"},"text":{"kind":"string","value":"\nDEF 14A\nspclprxy.txt\nDEFINITIVE SPECIAL MEETING PROXY\n\n\n SCHEDULE 14A INFORMATION\n Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of\n (Amendment No.__)\n\nFiled by the Registrant |X|\nFiled by a Party other than the Registrant |_|\n\nCheck the appropriate box:\n\n| | Preliminary Proxy Statement\n|_| Confidential, for Use of the Commission Only (as permitted by Rule\n 14a-6(e)(2))\n|X| Definitive Proxy Statement\n|_| Definitive Additional Materials\n|_| Soliciting Material Pursuant to ss. 240.14a-12\n\n GraphOn Corporation\n- -------------------------------------------------------------------------------\n (Name of Registrant as Specified In Its Charter)\n\n- -------------------------------------------------------------------------------\n (Name of Person(s) Filing Proxy Statement if Other Than the Registrant)\n\n\nPayment of Filing Fee (Check the appropriate box)\n\n|X| No fee required.\n|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.\n\n1. Title of each class of securities to which transaction applies:\n\n- -------------------------------------------------------------------------------\n2. Aggregate number of securities to which transaction applies:\n\n- -------------------------------------------------------------------------------\n3. Per unit price or other underlying value of transaction computed pursuant\n to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is\n calculated and state how it was determined):\n\n- -------------------------------------------------------------------------------\n4. Proposed maximum aggregate value of transaction:\n\n- -------------------------------------------------------------------------------\n5. Total fee paid:\n\n- -------------------------------------------------------------------------------\n\n\n|_| Fee paid previously with preliminary materials.\n\n|_| Check box if any part of the fee is offset as provided by Exchange Act\n Rule 0-11(a)(2) and identify the filing for which the offsetting fee was\n paid previously. Identify the previous filing by registration statement\n number, or the Form or Schedule and the date of its filing.\n\n6. Amount Previously Paid:\n\n- -------------------------------------------------------------------------------\n7. Form, Schedule or Registration Statement No.:\n\n- -------------------------------------------------------------------------------\n8. Filing Party:\n\n- -------------------------------------------------------------------------------\n9. Date Filed:\n\n- -------------------------------------------------------------------------------\n\n\n\n\n\n\n GRAPHON CORPORATION\n 3130 Winkle Avenue\n Santa Cruz, California 95065\n\n NOTICE OF SPECIAL MEETING OF STOCKHOLDERS\n\n To Be Held On March 29, 2005\n\nDear Stockholder:\n\n You are cordially invited to attend a Special Meeting of Stockholders of\nGraphOn Corporation, a Delaware corporation (\"GraphOn\"). The meeting will be\nheld on Tuesday, March 29, 2005 at 10:00 a.m., local time, at The Scottsdale\nMarriott, 1670 N. Perimeter Drive, Scottsdale, Arizona 85260 for the purpose of\nconsidering and approving an amendment to GraphOn's Certificate of Incorporation\nto increase the authorized number of shares of common stock from 45,000,000 to\n195,000,000 shares, as well as conducting any other business that may properly\ncome before the meeting or any adjournment thereof.\n This item of business is more fully described in the Proxy Statement\naccompanying this Notice.\n\n The record date for the Special Meeting is February 22, 2005. Only\nstockholders of record at the close of business on that date may vote at the\nmeeting or any adjournment thereof.\n\n By Order of the Board of Directors\n\n /s/ WILLIAM SWAIN\n\n William Swain, Secretary\n\nSanta Cruz, California\nFebruary 24, 2005\n\n\n\n- -------------------------------------------------------------------------------\nYou are cordially invited to attend the meeting in person. Whether or not you\nexpect to attend the meeting, please complete, date, sign and return the\nenclosed proxy as promptly as possible in order to ensure your representation at\nthe meeting. A return envelope (which is postage prepaid if mailed in the United\nStates) is enclosed for your convenience. Even if you have voted by proxy, you\nmay still vote in person if you attend the meeting. Please note, however, that\nif your shares are held of record by a broker, bank or other nominee and you\nwish to vote at the meeting, you must obtain a proxy issued in your name from\nthat record holder.\n- -------------------------------------------------------------------------------\n\n\n\n\n\n\n\n\n\n\n\n\n\n GRAPHON CORPORATION\n 3130 Winkle Avenue\n Santa Cruz, California 95065\n\n PROXY STATEMENT\n FOR SPECIAL MEETING OF STOCKHOLDERS\n\n March 29, 2005\n\n QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING\n\nWhy am I receiving these materials?\n\n We sent you this proxy statement and the enclosed proxy card because the\nBoard of Directors of GraphOn Corporation (\"GraphOn\") is soliciting your proxy\nto vote at the Special Meeting of Stockholders. You are invited to attend the\nspecial meeting to vote on the proposal described in this proxy statement.\nHowever, you do not need to attend the meeting to vote your shares. Instead, you\nmay simply complete, sign and return the enclosed proxy card.\n\n We intend to mail this proxy statement and accompanying proxy card on or\nabout February 24, 2005 to all stockholders of record entitled to vote at the\nspecial meeting.\n\nWho can vote at the special meeting?\n\n Only stockholders of record at the close of business on February 22, 2005\nwill be entitled to vote at the special meeting. On this record date, there were\n31,330,299 shares of common stock and 148,148 shares of Series A preferred\nstock outstanding and entitled to vote.\n\n Stockholder of Record: Shares Registered in Your Name\n\n If on February 22, 2005, your shares were registered directly in your name\nwith our transfer agent, American Stock Transfer and Trust Company, then you are\na stockholder of record. As a stockholder of record, you may vote in person at\nthe meeting or vote by proxy. Whether or not you plan to attend the meeting, we\nurge you to fill out and return the enclosed proxy card to ensure your vote is\ncounted.\n\n Beneficial Owner: Shares Registered in the Name of a Broker or Bank\n\n If on February 22, 2005, your shares were not registered in your name, but\nrather in an account at a brokerage firm, bank, dealer or other similar\norganization, then you are the beneficial owner of shares held in \"street name\"\nand these proxy materials are being forwarded to you by that organization. The\norganization holding your account is considered to be the stockholder of record\nfor purposes of voting at the special meeting. As a beneficial owner, you have\nthe right to direct your broker or other agent on how to vote the shares in your\naccount. You are also invited to attend the special meeting. However, since you\nare not the stockholder of record, you may not vote your shares in person at the\nmeeting unless you request and obtain a valid proxy from your broker or other\nagent.\n\nWhat am I voting on?\n\n There is only one matter scheduled for a vote: the approval of a proposed\namendment to our Certificate of Incorporation to increase the authorized number\nof shares of common stock from 45,000,000 to 195,000,000 shares.\n\n\n\n\n\n\n\nHow do I vote?\n\n For each matter to be voted on, you may vote \"For,\" \"Against\" or \"Abstain\"\nfrom voting. The procedures for voting are fairly simple:\n\n Stockholder of Record: Shares Registered in Your Name\n\n If you are a stockholder of record, you may vote in person at the special\nmeeting or vote by proxy using the enclosed proxy card. Whether or not you plan\nto attend the meeting, we urge you to vote by proxy to ensure your vote is\ncounted. You may still attend the meeting and vote in person if you have already\nvoted by proxy.\n\n>> To vote in person, come to the special meeting and we will give you a ballot\n when you arrive.\n\n>> To vote using the proxy card, simply complete, sign and date the enclosed\n proxy card and return it promptly in the envelope provided. If you return\n your signed proxy card to us before the annual meeting, we will vote your\n shares as you direct.\n\n Beneficial Owner: Shares Registered in the Name of Broker or Bank\n\n If you are a beneficial owner of shares registered in the name of your\nbroker, bank or other agent, you should have received a proxy card and voting\ninstructions with these proxy materials from that organization rather than from\nus. Simply complete and mail the proxy card to ensure that your vote is counted.\nAlternatively, you may vote by telephone or over the Internet as instructed by\nyour broker or bank, if these options are offered by your broker or bank. To\nvote in person at the special meeting, you must obtain a valid proxy from your\nbroker, bank or other agent. Follow the instructions from your broker or bank\nincluded with these proxy materials or contact your broker or bank to request a\nproxy form.\n\nHow many votes do I have?\n\n You have one vote for each share of common stock you own as of February\n22, 2005 and one thousand votes for each share of Series A preferred stock you\nown as of February 22, 2005. For any other matter, you have one hundred votes\nfor each share of Series A preferred stock you own as of February 22, 2005.\n\nWhat if I return a proxy card but do not make a specific choice?\n\n If you return a signed and dated proxy card without marking any voting\nselection, your shares will be voted \"For\" the amendment of our Certificate of\nIncorporation. If any other matter is properly presented at the meeting, your\nproxy (one of the individuals named on your proxy card) will vote your shares\nusing his or her best judgment.\n\nWho is paying for this proxy solicitation?\n\n We will pay for the entire cost of soliciting proxies. In addition to\nthese mailed proxy materials, our directors and employees may also solicit\nproxies in person, by telephone or by other means of communication. Directors\nand employees will not be paid any additional compensation for soliciting\nproxies. We may also reimburse brokerage firms, banks and other agents for the\ncost of forwarding proxy materials to beneficial owners.\n\nWhat does it mean if I receive more than one proxy card?\n\n If you receive more than one proxy card, your shares are registered in\nmore than one name or are registered in different accounts. Please complete,\nsign and return each proxy card to ensure that all of your shares are voted.\n\nCan I change my vote after submitting my proxy?\n\n Yes. You can revoke your proxy at any time before the final vote at the\nmeeting. If you are the record holder of your shares, you may revoke your proxy\nin any one of three ways:\n\n>> You may submit another properly completed proxy card with a later date.\n\n\n\n>> You may send a written notice that you are revoking your proxy to GraphOn's\n Secretary at 3130 Winkle Avenue, Santa Cruz, California, 95065.\n\n>> You may attend the special meeting and vote in person. Simply attending the\n meeting will not, by itself, revoke your proxy.\n\nIf your shares are held by your broker or bank as a nominee or agent, you should\nfollow the instructions provided by your broker or bank.\n\nWhen are stockholder proposals due for next year's annual meeting?\n\n To be considered for inclusion in next year's proxy materials, your\nproposal must be submitted in writing to William Swain, our Secretary, at our\naddress, by July 27, 2005. If you wish to submit a proposal that is not to be\nincluded in next year's proxy materials or nominate a director, you must do so\nby notifying our Secretary not fewer than 120 days prior to next year's annual\nmeeting. You are also advised to review our Bylaws, which contain additional\nrequirements about advance notice of stockholder proposals and director\nnominations.\n\nHow are votes counted?\n\n Votes will be counted by the inspector of election appointed for the\nmeeting, who will separately count \"For,\" \"Against\" and \"Abstain\" votes and\nbroker non-votes. Abstentions and broker non-votes will be counted towards the\nvote total for the proposal and will have the same effect as \"Against\" votes.\n\n If your shares are held by your broker as your nominee (that is, in\n\"street name\"), you will need to obtain a proxy form from the institution that\nholds your shares and follow the instructions included on that form regarding\nhow to instruct your broker to vote your shares. If you do not give instructions\nto your broker, your broker cannot vote your shares at the special meeting in\nthe absence of your voting instructions.\n\nHow many votes are needed to approve the proposal?\n\n To be approved, the proposal to amend our Certificate of Incorporation to\nincrease the authorized number of shares of common stock from 45,000,000 to\n195,000,000 shares, must receive a \"For\" vote from the majority of the voting\npower of the outstanding shares either in person or by proxy. If you do not\nvote, or \"Abstain\" from voting, it will have the same effect as an \"Against\"\nvote. Broker non-votes will have the same effect as \"Against\" votes. In\nconnection with the private placement, Robert Dilworth, our Chairman and Chief\nExecutive Officer, William Swain, our Chief Financial Officer, and each member\nof our board of directors has agreed to vote all shares of our capital stock\nthat he holds and that are eligible to be voted at the special meeting in favor\nof the approval of the amendment to our Certificate of Incorporation set forth\nin Proposal 1. As of February 2, 2005, the signatories to this voting agreement\nheld an aggregate of 327,780 shares of our common stock.\n\nWhat is the quorum requirement?\n\n A quorum of stockholders is necessary to hold a valid meeting. A quorum\nwill be present if a majority of the voting power of the outstanding shares are\nrepresented by stockholders present at the meeting in person or by proxy. On the\nrecord date, there were 31,330,299 shares of common stock and 148,148 shares\nof Series A preferred stock outstanding and entitled to vote.\n\n Your shares will be counted towards a quorum only if you submit a valid\nproxy (or one is submitted on your behalf by your broker, bank or other nominee)\nor if you vote in person at the meeting. Abstentions and broker non-votes will\nbe counted towards the quorum requirement. If there is no quorum, a majority of\nthe votes present at the meeting may adjourn the meeting to another date.\n\nHow can I find out the results of the voting at the special meeting?\n\n Preliminary voting results will be announced at the special meeting. Final\nvoting results will be published in our quarterly report on Form 10-Q for the\nfirst quarter of 2005.\n\n\n\n\n\n\n PROPOSAL 1\n\n APPROVAL OF INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK\n\n The Board of Directors is requesting stockholder approval of an amendment\nto our Restated Certificate of Incorporation to increase our authorized number\nof shares of common stock from 45,000,000 shares to 195,000,000 shares.\n\n The additional common stock to be authorized by adoption of the amendment\nwould have rights identical our currently outstanding common stock. Adoption of\nthe proposed amendment would not affect the rights of the holders of our\ncurrently outstanding common stock, except for effects incidental to increasing\nthe number of shares of our common stock outstanding, such as dilution of the\nearnings per share and voting rights of current holders of common stock. If the\namendment is adopted, it will become effective upon the acceptance for filing of\na Certificate of Amendment of our Restated Certificate of Incorporation by the\nSecretary of State of the State of Delaware.\n\n In February 2005, we issued and sold to certain individuals and entities,\nin a private placement, 148,148 shares of Series A preferred stock at a price\nper share of $27.00, warrants to acquire 14,815 shares of Series A preferred\nstock at an exercise price of $27.00 per share, exercisable for five years, and\nwarrants to acquire 81,477 shares of Series B preferred stock at an exercise\nprice of $40.00 per share, exercisable for five years. Upon the effectiveness of\nthe Certificate of Amendment submitted at the Special Meeting for stockholder\napproval, each share of Series A preferred stock will automatically convert into\n100 shares of our common stock and each warrant will automatically convert into\na warrant to purchase that number of shares of common stock equal to the number\nof shares of preferred stock subject to the warrant multiplied by 100. As a\nresult, of the 150,000,000 additional shares of common stock proposed to be\nauthorized, upon the effectiveness of the Certificate of Amendment,\napproximately 14,814,800 will be issued to the holders of outstanding shares of\nSeries A preferred stock upon the automatic conversion of such shares. In\naddition, upon the effectiveness of the Certificate of Amendment, all\noutstanding warrants to purchase shares of Series A preferred stock and Series B\npreferred stock will be converted into warrants to purchase shares of common\nstock. Approximately 9,629,000 of the newly authorized shares will be reserved\nfor issuance upon the exercise of such common stock warrants.\n\n If the Certificate of Amendment is not effective before July 1, 2005, the\nholders of Series A preferred stock and Series B preferred stock will be\nentitled to a 10% annual cumulative dividend that begins to accrue on such date.\nIn addition, one of our agreements with the private placement investors provides\nthat if we fail to use our best efforts to cause the Special Meeting of\nStockholders to take place within 90 days after the closing of the private\nplacement, we shall pay to the investors in the private placement a cash penalty\nequal to 25% of the aggregate amount invested by each investor in the private\nplacement. If the meeting occurs as currently scheduled, no such penalty would\nbe payable.\n\n In connection with the private placement, Messrs. Dilworth and Swain, as\nwell as each member of our board of directors, have agreed to vote all shares of\nour capital stock that they hold and that are eligible to be voted at the\nspecial meeting in favor of the approval of the amendment to our Certificate of\nIncorporation set forth in this Proposal 1. As of February 2, 2005, the\nsignatories to this voting agreement held an aggregate of 327,780 shares of our\ncommon stock.\n\n In addition to the 31,330,299 shares of common stock outstanding on\nFebruary 22, 2005, the Board has reserved 6,042,900 shares for issuance upon\nexercise of options, including options granted or to be granted under GraphOn's\nstock option and stock purchase plans, and up to approximately 13,305,689\nshares of common stock that may be issued upon exercise of warrants to purchase\nour common stock.\n\n Although at present our board of directors has no other plans to issue the\nnewly authorized shares of common stock, it desires to have the shares available\nto provide additional flexibility to use its capital stock for business and\nfinancial purposes in the future. The additional shares may be used for various\npurposes without further stockholder approval. These purposes may include:\nraising capital; providing equity incentives to employees, officers or\ndirectors; establishing strategic relationships with other companies; expanding\nour business or product lines through the acquisition of other businesses or\nproducts; and other purposes.\n\n\n\n The additional shares of common stock that would become available for\nissuance if the proposal is adopted could also be used by us to oppose a hostile\ntakeover attempt or to delay or prevent changes in control or management. For\nexample, without further stockholder approval, our board of directors could\nadopt a \"poison pill\" that would, under certain circumstances related to an\nacquisition of shares not approved by our board of directors, give certain\nholders the right to acquire additional shares of common stock at a low price,\nor our board of directors could strategically sell shares of common stock in a\nprivate transaction to purchasers who would oppose a takeover or favor our\ncurrent board of directors. Although this proposal to increase the authorized\ncommon stock has been prompted by business and financial considerations and not\nby the threat of any hostile takeover attempt (nor is our board of directors\ncurrently aware of any such attempts directed at us), nevertheless, stockholders\nshould be aware that approval of this proposal could facilitate future efforts\nby us to deter or prevent changes in control, including transactions in which\nour stockholders might otherwise receive a premium for their shares over then\ncurrent market prices.\n\n The affirmative vote of the holders of a majority of the voting power of\nthe outstanding shares of common stock and preferred stock, voting together as a\nsingle class, will be required to approve this amendment to our Restated\nCertificate of Incorporation. As a result, abstentions and broker non-votes will\nhave the same effect as negative votes. With respect to the vote on this\nProposal 1, holders of Series A preferred stock will have one thousand votes for\neach share of Series A preferred stock owned on the record date.\n\n OUR BOARD OF DIRECTORS RECOMMENDS\n A VOTE IN FAVOR OF PROPOSAL 1.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n PRINCIPAL STOCKHOLDERS\n\n The following table sets forth certain information as of February 3, 2005,\nwith respect to the beneficial ownership of shares of our common stock or\npreferred stock held by: (i) each director; (ii) each person known by us to\nbeneficially own 5% or more of our common stock or preferred stock; (iii) each\nexecutive officer named in the Summary Compensation Table contained in the proxy\nstatement for GraphOn's 2004 Annual Meeting of Stockholders; and (iv) all\ndirectors and executive officers as a group. Unless otherwise indicated, the\naddress for each stockholder is c/o GraphOn Corporation, 3130 Winkle Avenue,\nSanta Cruz, California 95065.\n\n\n\n\n(1) As used in this table, beneficial ownership means the sole or shared power\n to vote, or direct the voting of, a security, or the sole or shared power\n to invest or dispose, or direct the investment or disposition, of a\n security. Except as otherwise indicated, based on information provided by\n the named individuals, all persons named herein have sole voting power and\n investment power with respect to their respective shares of our common\n stock, except to the extent that authority is shared by spouses under\n applicable law, and record and beneficial ownership with respect to their\n respective shares of our common stock. With respect to each stockholder,\n any shares issuable upon exercise of all options and warrants held by such\n stockholder that are currently exercisable or will become exercisable\n within 60 days of February 3, 2005 are deemed outstanding for computing\n the percentage of the person holding such options, but are not deemed\n outstanding for computing the percentage of any other person. Percentage\n ownership of our common stock is based on 31,332,247 shares of common\n stock outstanding as of February 3, 2005. Percentage ownership of our\n preferred stock is based on 148,148 shares of our Series A preferred stock\n outstanding as of February 3, 2005. Upon the effectiveness of the\n Certificate of Amendment that is the subject of Proposal 1, each share of\n our Series A preferred stock will be converted into 100 shares of our\n common stock and each warrant that is exercisable for shares of our Series\n A or Series B preferred stock will be converted into a warrant exercisable\n for that number of shares of our common stock equal to the number of\n shares of Series A or Series B preferred stock subject to the warrant\n multiplied by 100. The effects of the conversion of our preferred stock\n into common stock are reflected in the \"Common Stock Post-Conversion\"\n column of this table, but are not reflected in the \"Common Stock\" columns\n of this table.\n\n(2) Assumes the conversion of each share of our Series A preferred stock into\n 100 shares of our common stock and the conversion of each warrant that is\n exercisable for shares of our Series A or Series B preferred stock into a\n warrant exercisable for that number of shares of our common stock equal to\n the number of shares of Series A or Series B preferred stock subject to\n the warrant multiplied by 100. Percentage is based on 46,147,047 shares of\n common stock outstanding post-conversion.\n\n(3) Based on information contained in a Schedule 13D/A filed by Orin Hirschman\n on February 17, 2005. Includes 1,521,739 shares of common stock issuable\n upon the exercise of outstanding warrants. Also includes 30,368 shares of\n Series A preferred stock held by AIGH Investment Partners, LLC (\"AIGH\")\n and 15,184 shares of Series B preferred stock upon the exercise of a\n warrant held by AIGH. Mr. Hirschman is the managing member of AIGH and has\n sole voting and dispositive power with respect to the shares held by AIGH.\n\n(4) Includes 640,000 shares of common stock issuable upon the exercise of\n outstanding options.\n\n(5) Includes 295,000 shares of common stock issuable upon the exercise of\n outstanding options.\n\n(6) Includes 260,000 shares of common stock issuable upon the exercise of\n outstanding options.\n\n(7) Includes 280,000 shares of common stock issuable upon the exercise of\n outstanding options.\n\n(8) Based on information contained in a Schedule 13G filed by Mr. Wesinger\n on February 10, 2005. Includes 1,569,816 shares held in escrow pursuant\n to the terms of an escrow agreement (the \"NES Escrow Agreement\") entered\n into in connection with the acquisition by GraphOn of Network\n Engineering Systems, Inc. (\"NES\"). For the duration of the escrow, Mr.\n Wesinger has the right to vote, but not to dispose of, such shares.\n Does not included 1,000,000 of common stock issuable upon the exercise\n of an option, which is not exercisable within 60 days of February 3,\n 2005.\n\n(9) Includes 185,625 shares held in escrow pursuant to the terms of the NES\n Escrow Agreement. Nicholas Sprinkel is the managing member of Crystal Bay\n Capital, LLC (\"CBC\") and has sole voting and dispositive power with\n respect to the shares held by CBC. For the duration of the escrow, Mr.\n Sprinkel has the right to vote, but not to dispose of, such shares.\n\n(10) Based in part on information contained in a Schedule 13D filed by IDT\n Capital, Inc. on February 15, 2005. Includes 18,518 shares of Series B\n preferred stock issuable upon the exercise of a warrant. Howard Jonas\n exercises sole voting and dispositive power with respect to the listed\n shares.\n\n(11) Includes 2,778 shares of Series B preferred stock issuable upon the\n exercise of a warrant. Sisel Klurman exercises sole voting and dispositive\n power with respect to the listed shares.\n\n\n\n(12) Includes 3,703 shares of Series B preferred stock issuable upon the\n exercise of a warrant. Reuven Dessler and Jack Koval exercise shared\n voting and dispositive power with respect to the listed shares.\n\n(13) Based in part on information contained in a Schedule 13G/A filed by Mr.\n Berkowitz on February 17, 2005.Includes 326,087 shares of common stock\n issuable upon the exercise of a warrant and 3,333 shares of Series B\n preferred stock issuable upon the exercise of a warrant.\n\n(14) Includes 2,948 shares of Series B preferred stock issuable upon the\n exercise of a warrant.\n\n(15) Mr. Packer is the Managing Member of Globis Capital Partners (\"Globis\")\n and is the Managing Member of the general partner of the manager of Globis\n Overseas Fund, Ltd. (\"Globis Overseas\"). Mr. Packer exercises sole voting\n and dispositive power with respect to the shares beneficially owned by\n Globis and Globis Overseas. Mr. Packer's beneficial ownership figures\n include 5,555 shares of Series B preferred stock issuable upon the\n exercise of a warrant held by Globis, 1,852 shares of Series B preferred\n stock issuable upon the exercise of a warrant held by Globis Overseas,\n 11,111 shares of Series A preferred stock held by Globis and 3,704 shares\n of Series A preferred stock held by Globis Overseas.\n\n(16) Includes 12,962 shares of Series B preferred stock issuable upon the\n exercise of a warrant. Tzvi Levy exercises sole voting and dispositive\n power with respect to the listed shares.\n\n(17) Includes 187,500 shares of common stock issuable upon the exercise of\n warrants, 14,815 shares of Series A preferred stock issuable upon the\n exercise of warrants and 7,407 shares of Series B preferred stock issuable\n upon the exercise of warrants. Mr. Adrian Stecyk, the Chief Executive\n Officer of Griffin Securities, exercises voting and investment power over\n the shares held by this entity. Mr. Stecyk disclaims beneficial ownership\n of the shares, except to the extent of his pecuniary interest therein.\n\n(18) Includes 4,629 shares of Series B preferred stock issuable upon the\n exercise of a warrant. Charles Alpert exercises sole voting and\n dispositive power with respect to the listed shares.\n\n(19) Includes 2,055,000 shares of common stock issuable upon the exercise of\n outstanding options.\n\n\n\n\n\n\n\n\n HOUSEHOLDING OF PROXY MATERIALS\n\n The SEC has adopted rules that permit companies and intermediaries (e.g.,\nbrokers) to satisfy the delivery requirements for proxy statements and annual\nreports with respect to two or more stockholders sharing the same address by\ndelivering a single proxy statement addressed to those stockholders. This\nprocess, which is commonly referred to as \"householding,\" potentially means\nextra convenience for stockholders and cost savings for companies.\n\n This year, a number of brokers with account holders who are GraphOn\nstockholders will be \"householding\" our proxy materials. A single proxy\nstatement will be delivered to multiple stockholders sharing an address unless\ncontrary instructions have been received from the affected stockholders. Once\nyou have received notice from your broker that they will be \"householding\"\ncommunications to your address, \"householding\" will continue until you are\nnotified otherwise or until you revoke your consent. If, at any time, you no\nlonger wish to participate in \"householding\" and would prefer to receive a\nseparate proxy statement and annual report, please notify your broker, direct\nyour written request to William Swain, our Secretary, at our address or contact\nWilliam Swain at (800) 472-7466. Stockholders who currently receive multiple\ncopies of the proxy statement at their address and would like to request\n\"householding\" of their communications should contact their broker.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n OTHER MATTERS\n\n The Board of Directors knows of no other matters that will be presented\nfor consideration at the Annual Meeting. If any other matters are properly\nbrought before the meeting, it is the intention of the persons named in the\naccompanying proxy to vote on such matters in accordance with their best\njudgment.\n\n By Order of the Board of Directors\n\n /S/ WILLIAM SWAIN\n\n William Swain, Secretary\n\nFebruary 24, 2005\n\n\n\n PROXY\n\n GRAPHON CORPORATION\n\n PROXY SOLICITED BY THE BOARD OF DIRECTORS\n FOR THE SPECIAL MEETING OF STOCHOLDERS\n TO BE HELD ON MARCH 29, 2005\n\n The undersigned hereby appoints Robert Dilworth and William Swain, and\neach of them, as attorneys and proxies of the undersigned, with full power of\nsubstitution, to vote all shares of stock of GraphOn Corporation that the\nundersigned may be entitled to vote at the Special Meeting of Stockholders of\nGraphOn Corporation to be held at 3130 Winkle Avenue, Santa Cruz, California on\nTuesday, March 29, 2005 at 9:00 a.m. local time, and at any and all\npostponements, continuations and adjournments thereof, with all powers that the\nundersigned would possess if personally present, upon and in respect of the\nfollowing matters and in accordance with the following instructions, with\ndiscretionary authority as to any and all other matters that may properly come\nbefore the meeting.\n\n[X] Please mark votes as in this example.\n\nMANAGEMENT RECOMMENDS A VOTE \"FOR\" PROPOSAL 1.\n\nUNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSAL\n1, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC\nINSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.\n\n FOR AGAINST ABSTAIN\n\n1. To approve an amendment to GraphOn's Certificate [ ] [ ] [ ]\n of Incorporation to increase the authorized number\n of shares of common stock from 45,000,000\n to 195,000,000 shares.\n\n\n\n Please vote, date and promptly return\n this proxy in the enclosed return\n envelope which is postage prepaid if\n mailed in the United States.\n\n Please sign exactly as your name appears\n hereon. If stock is registered in the\n names of two or more persons, each should\n sign. Executors, administrators,\n trustees, guardians and attorneys-in-fact\n should add their titles. If signer is a\n corporation, please give full corporate\n name and have a duly authorized officer\n sign, stating that if signer is a\n partnership, please sign in partnership\n name by authorized person.\n\n\n\nSignature: Date:\n ------------------- -----------\n\n\nSignature: Date:\n ------------------ -----------\n\n\n\n\n\n"},"accession_number":{"kind":"string","value":"0001021435-05-000013"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":98,"cells":{"_id":{"kind":"string","value":"1018399_DEF 14A_2005_0001104659-05-012634"},"cik":{"kind":"string","value":"1018399"},"company":{"kind":"string","value":"ENTERPRISE BANCORP INC /MA/"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-03-24T00:00:00","string":"2005-03-24T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-05-03T00:00:00","string":"2005-05-03T00:00:00"},"sic":{"kind":"string","value":"6022"},"state_of_inc":{"kind":"string","value":"MA"},"state_location":{"kind":"string","value":"MA"},"fiscal_year_end":{"kind":"string","value":"1231"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1018399/0001104659-05-012634-index.html"},"htm_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1018399/000110465905012634/a05-5241_1def14a.htm"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1018399/0001104659-05-012634.txt"},"filename":{"kind":"string","value":"1018399_DEF 14A_2005_0001104659-05-012634.htm"},"text":{"kind":"string","value":"\nDEF 14A\na05-5241_1def14a.htm\nDEF 14A\n\n\n\n \n\n\n\n\n\n\n\n\nUNITED STATES\n\n\n \n\n\n\n\n\nSECURITIES\n AND EXCHANGE COMMISSION\n\n\n \n\n\n\n\n\nWashington,\n D.C. 20549\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\nSCHEDULE\n 14A\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\nProxy Statement\n Pursuant to Section 14(a) of\n\n\n the Securities Exchange Act of 1934 (Amendment No. )\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\nFiled by the Registrant ý\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\nFiled by a Party other than the Registrant o\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\nCheck the appropriate box:\n\n\n \n\n\n\n\n\no\n\n\n \n\nPreliminary Proxy Statement\n\n\n \n\n\n\n\n\no \n\n\n \n\nConfidential, for Use of the Commission Only (as\n permitted by Rule 14a-6(e)(2))\n\n\n \n\n\n\n\n\ný\n\n\n \n\nDefinitive Proxy Statement\n\n\n \n\n\n\n\n\no\n\n\n \n\nDefinitive Additional Materials\n\n\n \n\n\n\n\n\no\n\n\n \n\nSoliciting Material Pursuant to §240.14a-12\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\nEnterprise Bancorp,\n Inc.\n\n\n \n\n\n\n\n\n(Name of Registrant\n as Specified In Its Charter)\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\n(Name of Person(s)\n Filing Proxy Statement, if other than the Registrant)\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\nPayment of Filing Fee (Check the appropriate box):\n\n\n \n\n\n\n\n\ný\n\n\n \n\nNo fee required.\n\n\n \n\n\n\n\n\no\n\n\n \n\nFee computed on table below per Exchange Act Rules 14a-6(i)(1)\n and 0-11.\n\n\n \n\n\n\n\n\n \n\n\n \n\n(1)\n\n\n \n\nTitle of each class of securities to which transaction applies:\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n(2)\n\n\n \n\nAggregate number of securities to which transaction applies:\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n(3)\n\n\n \n\nPer unit price or other underlying value of transaction computed\n pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing\n fee is calculated and state how it was determined):\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n(4)\n\n\n \n\nProposed maximum aggregate value of transaction:\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n(5)\n\n\n \n\nTotal fee paid:\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\no\n\n\n \n\nFee paid previously with preliminary materials.\n\n\n \n\n\n\n\n\no \n\n\n \n\nCheck box if any part of the fee is offset as provided by\n Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting\n fee was paid previously. Identify the previous filing by registration statement\n number, or the Form or Schedule and the date of its filing.\n\n\n \n\n\n\n\n\n \n\n\n \n\n(1)\n\n\n \n\nAmount Previously Paid:\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n(2)\n\n\n \n\nForm, Schedule or Registration Statement No.:\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n(3)\n\n\n \n\nFiling Party:\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n(4)\n\n\n \n\nDate Filed:\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\nPersons who are to respond to the\n collection of information contained in this form are not required to respond\n unless the form displays a currently valid OMB control number.\n\n\n \n\n\n\n\n \n \n \n \n\n\n\n\n \n\n\n\n \n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nENTERPRISE\nBANCORP, INC.\n\n\n \n\n\n222 MERRIMACK\nSTREET\n\n\nLOWELL, MASSACHUSETTS 01852\n\n\nTELEPHONE: (978) 459-9000\n\n\n \n\n\nMarch 24, 2005\n\n\n \n\n\nDear Stockholder:\n\n\n \n\n\n You are cordially invited to\nattend the 2005 Annual Meeting of stockholders (the “Annual Meeting”) of\n\n\nEnterprise\nBancorp, Inc. (the “Company”), the parent holding company of Enterprise Bank\nand Trust Company, to be held on Tuesday, May 3, 2005, at 4:00 p.m. local time, at the American\nTextile Museum, 491 Dutton Street, Lowell, Massachusetts.\n\n\n \n\n\n The Annual Meeting has been\ncalled for the following purposes:\n\n\n \n\n\n1. To elect six Directors of the Company,\neach for a three-year term;\n\n\n \n\n\n2. To ratify the Audit Committee’s\nappointment of KPMG LLP as the Company’s independent registered public\naccounting firm for the fiscal year ending December 31, 2005; and\n\n\n \n\n\n3. To transact such other business as may\nproperly come before the meeting or any adjournments or postponements thereof.\n\n\n \n\n\n The accompanying proxy statement\nof the Company provides information concerning the matters to be voted on at\nthe Annual Meeting. Also enclosed is the Company’s 2004 annual report to\nstockholders, which contains additional information and results for the year\nended December 31, 2004, including the Company’s Annual Report on Form 10-K as filed\nwith the Securities and Exchange Commission.\n\n\n \n\n\n It is important that your shares\nbe represented at the Annual Meeting. Whether or not you plan to attend the Annual\nMeeting, you are requested to complete, date, sign and return the enclosed\nproxy card in the enclosed postage paid envelope.\n\n\n \n\n\n Thank you in advance for\nreturning your proxy. We appreciate your continuing support of the Company.\n\n\n \n\n\n\n\n\nSincerely,\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n \n\n \n\n\n \n\n\n\n\n\nGeorge L. Duncan\n\n\n \n\n\n\n\n\nChairman\n of the Board\n\n\n \n\n\n\n\n\nand\n Chief Executive Officer\n\n\n \n\n\n\n\n \n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nENTERPRISE\nBANCORP, INC.\n\n\n \n\n\n222 MERRIMACK\nSTREET\n\n\nLOWELL, MASSACHUSETTS 01852\n\n\nTELEPHONE: (978) 459-9000\n\n\n \n\n\n\n\n\n\n\n \n\n\nNOTICE OF\nANNUAL MEETING OF STOCKHOLDERS\n\n\n \n\n\nTo Be Held at 4:00 p.m. on Tuesday, May 3, 2005\n\n\n \n\n\n NOTICE IS HEREBY GIVEN that the Annual\nMeeting of stockholders (the “Annual Meeting”) of Enterprise Bancorp, Inc. (the\n“Company”) will be held at the American Textile Museum, 491 Dutton Street, Lowell,\nMassachusetts at 4:00 p.m. local time on Tuesday, May 3, 2005 for the following\npurposes:\n\n\n \n\n\n1. To elect six Directors of the Company,\neach to serve for a three-year term (Proposal One);\n\n\n \n\n\n2. To ratify the Audit Committee’s\nappointment of KPMG LLP as the Company’s independent registered public\naccounting firm for the fiscal year ending December 31, 2005 (Proposal Two);\nand\n\n\n \n\n\n3. To transact such other business as may\nproperly come before the meeting or any adjournments or postponements thereof.\n\n\n \n\n\n The Board of\nDirectors has fixed the close of business on March 15, 2005 as the record date\nfor determination of stockholders entitled to notice of, and to vote at, the\nAnnual Meeting and any adjournments or postponements thereof. Only holders of\nthe Company’s common stock of record at the close of business on that date will\nbe entitled to notice of, and to vote at, the Annual Meeting and any\nadjournments or postponements thereof.\n\n\n \n\n\n In the event there\nare not sufficient votes to approve any of the foregoing proposals at the time\nof the Annual Meeting, the Annual Meeting may be adjourned in order to permit\nfurther solicitation of proxies by the Company.\n\n\n \n\n\n\n\n\nBy Order of the Board of Directors\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\nMichael A. Spinelli\n\n\n \n\n\n\n\n\nClerk\n\n\n \n\n\n\n\n \n\n\n222 Merrimack Street\n\n\nLowell, Massachusetts 01852\n\n\nMarch 24, 2005\n\n\n \n\n\nEVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE\nCOMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE\nENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF\nYOU ATTEND THE ANNUAL MEETING AND DESIRE TO WITHDRAW YOUR PROXY AND VOTE IN PERSON,\nYOU MAY DO SO.\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nPROXY\nSTATEMENT\n\n\n \n\n\nENTERPRISE\nBANCORP, INC.\n\n\n \n\n\n222 MERRIMACK\nSTREET\n\n\nLOWELL, MASSACHUSETTS 01852\n\n\nTelephone:\n(978) 459-9000\n\n\n \n\n\nANNUAL\nMEETING OF STOCKHOLDERS\n\n\nTo Be Held\non Tuesday, May 3, 2005\n\n\n \n\n\nGeneral\n\n\n \n\n\n This Proxy\nStatement is furnished in connection with the solicitation of proxies by the\nBoard of Directors of Enterprise Bancorp, Inc. (the “Company”), the parent\nholding company of Enterprise Bank and Trust Company (the “Bank”), for the 2005\nAnnual Meeting of stockholders of the Company (the “Annual Meeting”), to be\nheld on Tuesday, May 3, 2005 at 4:00 p.m. local time, at the American Textile\nMuseum, 491 Dutton Street, Lowell, Massachusetts and at any adjournments or\npostponements thereof. This Proxy Statement, the accompanying Notice of Annual\nMeeting and the accompanying proxy card are first being mailed to stockholders\non or about March 24, 2005.\n\n\n \n\n\n The Annual Meeting\nhas been called for the following purposes: (1) to elect six Directors of the Company,\neach to serve for a three-year term; (2) to ratify the Audit Committee’s\nappointment of KPMG LLP as the Company’s independent registered public\naccounting firm for the fiscal year ending December 31, 2005; and (3) to\ntransact such other business as may properly come before the Annual Meeting or\nany adjournments or postponements thereof.\n\n\n \n\n\n The Company is a\nMassachusetts corporation and a registered bank holding company. All of the Company’s\nmaterial business activities are conducted through the Bank.\n\n\n \n\n\nRecord Date\n\n\n \n\n\n The Board of\nDirectors has fixed the close of business on March 15, 2005 as the record date\nfor the determination of stockholders entitled to notice of, and to vote at,\nthe Annual Meeting and any adjournments or postponements thereof (the “Record\nDate”). Only holders of record of the Company’s common stock (the “Common Stock”)\nat the close of business on the Record Date will be entitled to notice of, and\nto vote at, the Annual Meeting and any adjournments or postponements thereof.\nAt the close of business on the Record Date, there were 3,691,410 shares of the\nCommon Stock issued and outstanding and entitled to vote at the Annual Meeting\nand any adjournments or postponements thereof. As of such date there were\napproximately 772 holders of record of the Common Stock. The holders of shares\nof the Common Stock outstanding as of the close of business on the Record Date\nwill be entitled to one vote for each share held of record upon each matter\nproperly submitted to the Annual Meeting or any adjournments or postponements\nthereof.\n\n\n \n\n\nProxies\n\n\n \n\n\n Holders of the\nCommon Stock are requested to complete, date, sign and promptly return the\naccompanying proxy card in the enclosed envelope, which requires no postage if\nmailed in the United States. If the enclosed form of proxy is properly executed\nand returned to the Company in time to be voted at the Annual Meeting, the\nshares represented thereby will, unless such proxy has previously been revoked,\nbe voted in accordance with the instructions marked thereon. Properly executed\nproxies with no instructions indicated thereon will be voted as follows: (1)\nFOR the election of Kenneth S. Ansin, John R. Clementi, Carole A. Cowan, Eric\nW. Hanson, Arnold S. Lerner and Richard W. Main, the six nominees of the Board\nof Directors, as Directors of the Company; (2) FOR the ratification of the\nAudit Committee’s appointment of KPMG LLP as the Company’s independent\nregistered public accounting firm for the fiscal year ending December 31, 2005;\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nand (3) in such manner as management’s proxy-holders shall decide on\nsuch other matters as may properly come before the Annual Meeting or any\nadjournments or postponements thereof.\n\n\n \n\n\n The presence of a\nstockholder at the Annual Meeting will not automatically revoke a stockholder’s\nproxy. A stockholder may, however, revoke a proxy at any time prior to the\nvoting thereof on any matter (without, however, affecting any vote taken prior\nto such revocation) by filing with the Clerk of the Company a written notice of\nrevocation, or by delivering to the Company a duly executed proxy bearing a\nlater date, or by attending the Annual Meeting and voting in person. All\nwritten notices of revocation and other communications with respect to\nrevocation of proxies in connection with the Annual Meeting should be addressed\nas follows: Enterprise Bancorp, Inc., 222 Merrimack Street, Lowell,\nMassachusetts 01852, Attention: Michael A. Spinelli, Clerk.\n\n\n \n\n\n It is not\nanticipated that any matters other than those set forth in the foregoing\nproposals (1) and (2) contained in this Proxy Statement will be brought before\nthe Annual Meeting. If any other matters properly come before the Annual\nMeeting, the persons named as proxies will vote upon such matters in their\ndiscretion in accordance with their best judgment.\n\n\n \n\n\n In addition to use\nof the mails, proxies may be solicited personally or by telephone or fax by\nofficers, Directors and employees of the Company, none of whom will be\nspecially compensated for such solicitation activities. Arrangements will also\nbe made with brokerage houses and other custodians, nominees and fiduciaries\nfor forwarding solicitation materials to the beneficial owners of shares held\nof record by such persons, and the Company will reimburse such persons for their\nreasonable out-of-pocket expenses incurred in that connection. The cost of\nsoliciting proxies will be borne by the Company.\n\n\n \n\n\nQuorum; Vote Required\n\n\n \n\n\n The presence, in\nperson or by proxy, of at least a majority of the total number of outstanding\nshares of the Common Stock is necessary to constitute a quorum at the Annual\nMeeting for the transaction of business. Abstentions and “broker non-votes” (as\ndefined below) will be counted as present for purposes of determining the\npresence or absence of a quorum for the transaction of business at the Annual\nMeeting. A quorum being present, the affirmative vote of a plurality of the\nvotes cast at the Annual Meeting is required for the election of Directors of\nthe Company (Proposal One). Neither abstentions nor broker non-votes will be\ncounted as “votes cast” for purposes of electing Directors of the Company and,\ntherefore, they will not affect the election of Directors of the Company. The\napproval of the proposal to ratify the appointment of KPMG LLP as the Company’s\nindependent registered public accounting firm for the fiscal year ending\nDecember 31, 2005 (Proposal Two) requires the affirmative vote of a majority of\nthe shares present and voting, in person or by proxy, at the Annual Meeting.\nNeither abstentions nor broker non-votes will be included among the shares that\nare considered to be present and voting on this proposal and, therefore, they\nwill have no effect on the voting for this proposal.\n\n\n \n\n\n A “broker non-vote”\nis a proxy from a broker or other nominee indicating that such person has not received\ninstructions from the beneficial owner or other person entitled to vote the\nshares which are the subject of the proxy on a particular matter with respect\nto which the broker or other nominee does not have discretionary voting power.\n\n\n \n\n\n The Directors and\nexecutive officers of the Company have indicated that they intend to vote all\nshares of the Common Stock that they are entitled to vote in favor of each of\nproposals (1) and (2) presented herein. On the Record Date, the Directors and\nexecutive officers of the Company in the aggregate had the right to vote 1,257,541\nshares of the Common Stock representing approximately 34.07% of the outstanding\nshares of the Common Stock as of such date.\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nPROPOSAL\nONE\n\n\n \n\n\nELECTION OF\nCLASS OF DIRECTORS\n\n\n \n\n\n The Company’s\nBy-Laws provide that the number of Directors shall be set by a majority vote of\nthe entire Board of Directors. The number of Directors for the Company has\nbeen accordingly set at 18. Under the Company’s Articles of\nOrganization and By-Laws, this number shall be divided into three classes, as\nnearly equal in number as possible, with the Directors in each class serving a\nterm of three years and until their respective successors are\nduly elected and qualified, or until his or her earlier resignation, death or\nremoval. As the term of one class expires, a successor class is elected at the\nannual meeting of stockholders for that year.\n\n\n \n\n\n At the Annual\nMeeting, there are six Directors to be elected to serve until the 2008 annual\nmeeting of stockholders and until their respective successors are duly elected and\nqualified, or until his or her earlier resignation, death or\nremoval. The Board of Directors has nominated, upon the recommendation of the\nBoard’s Corporate Governance/Nominating Committee, each of Kenneth S. Ansin,\nJohn R. Clementi, Carole A. Cowan, Eric W. Hanson,\nArnold S. Lerner and Richard W. Main, for election as a Director for a\nthree-year term.\n\n\n \n\n\n Unless authority\nto do so has been withheld or limited in the proxy, it is the intention of the\npersons named in the proxy to vote the shares represented by each properly\nexecuted proxy for the election as a Director of each of the\nnominees named above. The Board of Directors believes that all of the nominees\nwill stand for election and will serve as a Director if elected. However, if\nany person nominated by the Board of Directors fails to stand for\nelection or is unable or refuses to accept election, the proxies will be voted\nfor the election of such other person or persons as the Board of Directors may\nrecommend.\n\n\n \n\n\nRecommendation of Directors\n\n\n \n\n\n The\nBoard of Directors recommends that the stockholders vote FOR the election of\nKenneth S. Ansin, John\nR. Clementi, Carole A. Cowan, Eric W. Hanson, Arnold S. Lerner and Richard W.\nMain, the six nominees proposed by the\nBoard of Directors, as Directors of the Company to serve until the 2008 annual meeting of stockholders and until their successors are duly\nelected and qualified.\n\n\n \n\n\nInformation Regarding Directors and Nominees\n\n\n \n\n\n The following\ntable sets forth certain information for each of the six nominees for election\nas Directors at the Annual Meeting and for those\ncontinuing Directors whose terms expire at the annual meetings of the Company’s stockholders\nin 2006 and 2007. Each individual has been engaged in his or her principal occupation for\nat least five years, except as otherwise indicated.\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nNominees\n\n\n \n\n\n(Term to Expire in 2008)\n\n\n \n\n\n \n\n\n\n \n\n\n \n\n\nContinuing\nDirectors\n\n\n \n\n\n \n\n\n(Term to Expire in 2006)\n\n\n \n\n\n \n\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n\n \n\n\n \n\n\n(Term to Expire in 2007)\n\n\n \n\n\n \n\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n\n \n\n\n \n\n\n\n\n\n\n\n(1) All of the\nDirectors are also Directors of the Bank. The years listed in the foregoing\ntables are the respective years in which each named\nindividual first became a Director of the Company and the Bank.\n\n\n \n\n\nMeetings of Board of Directors and Committees of\nEnterprise Bancorp, Inc.\n\n\n \n\n\n There were eight\nmeetings of the Company’s (i.e., Enterprise Bancorp, Inc.) Board of Directors\nduring the calendar year ended December 31, 2004. During such period, each\nDirector attended more than 75% in the aggregate of the total\nnumber of meetings of the Board of Directors and of each of the committees of\nthe Board of Directors on which he or she served.\n\n\n \n\n\n The Company’s\n(i.e., Enterprise Bancorp, Inc.) Board of Directors maintains five standing committees, an\nexecutive committee, an audit committee, an asset liability committee, a\ncompensation/personnel committee, and a corporate governance/nominating\ncommittee. The executive committee, composed of Messrs. Clementi, Conway,\nDuncan, Hanson, Lerner and Main (chair of the committee) and Ms. Cowan, together with\ntwo to three additional members chosen to serve on a three-month rotating basis\nfrom among the remaining members of the Board of Directors,\nis authorized to manage and transact the business of the Company. The\nexecutive committee did not meet in 2004. The audit committee, composed of Ms.\nBradley, Ms. Cowan, Ms. Flynn, Mr. Harrington and Mr. Stavropoulos (chair of the\ncommittee), is directly responsible for the appointment,\ncompensation and oversight of the work of the Company’s independent registered public accounting\nfirm. Among other responsibilities, the audit committee also oversees and\nreviews all internal audit examinations and reports of the\nCompany, and reviews all audit reports of the Company prepared by the Company’s\nindependent registered public accounting firm and all reports of examination of\nthe Company prepared by regulatory authorities. The audit committee met eight times\nin 2004, including five times with the Company’s independent\nregistered public accounting firm, KPMG LLP. The asset liability committee, composed of\nMessrs. Ansin (chair of the committee), Clancy, Clementi, Conway, Duncan,\nHarrington, Lerner, Main and Spinelli, together with two to three\nadditional members chosen to serve on a three-month rotating basis from\namong the remaining members of the Board of Directors, is responsible for Board oversight of the Company’s\ninterest rate risk, capital adequacy and liquidity. Through the Company’s\nasset-liability and investment policies, the committee monitors,\nevaluates and controls interest rate risk, as a whole, within certain\ntolerance levels while ensuring adequate liquidity and adequate capital. The\nasset liability committee met eight times in 2004. The\ncompensation/personnel committee, composed of Messrs. Clementi, Conway (chair of the\ncommittee), Hanson and Lerner, and Ms. Cowan, is responsible for establishing\nthe Company’s executive compensation standards and\noverseeing the administration of the Company’s compensation and benefits\nprograms, including its equity compensation programs. The\ncompensation/personnel committee met nine times in 2004. The\ncorporate governance/nominating committee, composed of Ms. Flynn and Messrs. Clementi,\nConway, Harrington, Lerner (chair of the committee) and Stavropoulos, is\nresponsible for developing and recommending to the Board the\ncorporate governance principles applicable to the overall governance of\nthe Company. The corporate governance/nominating committee’s specific\nresponsibilities include developing and recommending to the Board independence\nstandards for Board members, evaluating the performance of the Board\nand its various committees, recommending to the Board the appointment of individual\ndirectors to the Board’s various committees, recommending to the Board the\ndirector nominees for\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nelection at the Company’s annual meeting of shareholders, developing\nand recommending criteria for the selection of new directors\nand reviewing and making recommendations on shareholder proposals. The corporate\ngovernance/nominating committee met three times in 2004.\n\n\n \n\n\nMeetings of Board of Directors and Committees of\nEnterprise Bank\n\n\n \n\n\n The Bank’s (i.e.,\nEnterprise Bank and Trust Company) Board of Directors, which met eight times during the year\nended December 31, 2004, has an executive committee, audit committee, compensation/personnel\ncommittee, asset liability committee, marketing and business development\ncommittee, banking technology committee, investment management and trust group\ncommittee, loan committee, and corporate\ngovernance/nominating committee.\n\n\n \n\n\n Executive\nCommittee. The executive committee is authorized to manage and\ntransact the business of the Bank. In addition, loans over certain\namounts must be approved by at least two independent members of the executive\ncommittee. The current members of the committee are Ms. Cowan and Messrs.\nClementi, Conway, Duncan, Hanson, Lerner and Main (chair of the committee). Two\nto three additional members are chosen to serve on a\nthree-month rotating basis from among the remaining members of the Board of\nDirectors. The committee held nine meetings in 2004.\n\n\n \n\n\n Audit\nCommittee. The audit committee oversees and reviews all\ninternal audit examinations and reports of the Bank and\nreviews all reports of examination of the Bank prepared by bank regulatory\nauthorities. The current members of the committee are Ms.\nBradley, Ms. Cowan, Ms. Flynn, Mr. Harrington and Mr. Stavropoulos\n(chair of the committee). The committee held eight meetings in 2004, including\nfive meetings with KPMG LLP, the Company’s independent\nregistered public accounting firm.\n\n\n \n\n\n Compensation/Personnel\nCommittee. The compensation/personnel committee is responsible\nfor overseeing the administration of the employee benefit and compensation\nprograms of the Bank. Ms. Cowan and Messrs. Clementi, Conway\n(chair of the committee), Hanson and Lerner serve on the committee. The committee held\nnine meetings in 2004.\n\n\n \n\n\n Asset\nLiability Committee. The asset liability committee is responsible\nfor Board oversight of the Bank’s interest rate risk,\ncapital adequacy and liquidity. Through the Bank’s asset-liability and\ninvestment policies, the committee monitors, evaluates and controls interest rate\nrisk, as a whole, within certain tolerance levels while ensuring\nadequate liquidity and adequate capital. Messrs. Ansin (chair of the\ncommittee), Clancy, Clementi, Conway, Duncan, Harrington, Lerner,\nMain and Spinelli serve on the committee. Two to three additional\nmembers are chosen to serve on a three-month rotating basis from among the\nremaining members of the Bank’s Board of Directors. The committee\nheld eight meetings in 2004.\n\n\n \n\n\n Marketing\nand Business Development Committee. The marketing and business\ndevelopment committee reviews the Bank’s marketing activities and business\ndevelopment activities. The current members of the committee are Ms.\nBradley, Ms. Donahue (chair of the committee), and Messrs. Ansin, Armstrong, Bousquet,\nClancy, Duncan, Harrington, Main, Sarantos and Spinelli. The committee held two\nmeetings in 2004.\n\n\n \n\n\n Banking\nTechnology Committee. The banking technology committee is\nresponsible for overseeing the administration of the Bank’s\ndata processing function. The current members of the committee are Ms. Cowan (chair of the\ncommittee), Ms. Donahue, Ms. Flynn and Messrs. Armstrong, Clancy and Sarantos.\nThe committee held three meetings in 2004.\n\n\n \n\n\n Investment\nManagement and Trust Group Committee. The investment management\nand trust group committee is responsible for overseeing the\nBank’s trust and investment management activities, including administering\ntrust policy and reviewing trust accounts. Ms. Donahue and Messrs. Bousquet,\nClancy, Clementi (chair of the committee), Duncan, Lerner,\nMain and Spinelli serve on the committee. Two to three additional members are\nchosen to serve on a three-month rotating basis from among the remaining\nmembers of the Bank’s Board of Directors. The committee held\nnine meetings in 2004.\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n Loan\nCommittee. The Loan Committee reviews and discusses loans being\nproposed for charge-off, as well as Watch Asset and\nother problem loans. The Committee additionally reviews and discusses various reports on the\ncommercial loan portfolio and certain larger commercial relationships, with a\nparticular focus on larger construction lending relationships.\nThe current members of the committee are Ms. Bradley, Ms. Cowan, Ms. Donahue and\nMessrs. Ansin, Armstrong, Bousquet, Clancy, Hanson (chair of the committee),\nHarrington, Main and Sarantos. The committee held six meetings in 2004.\n\n\n \n\n\n Corporate\nGovernance/Nominating Committee. The corporate\ngovernance/nominating committee is responsible for developing\nand recommending to the Board the corporate governance principles applicable to the overall\ngovernance of the Bank. The current members of the committee are Ms. Flynn and\nMessrs. Clementi, Conway, Harrington, Lerner (chair of the committee) and\nStavropoulos. The committee met three times in 2004.\n\n\n \n\n\nInformation Regarding Executive Officers and Other\nSignificant Employees\n\n\n \n\n\n Set forth below is\ncertain information regarding the executive officers of the Company (including\nthe Bank), other than those executive officers who are also Directors of\nthe Company and for whom such information has been\nprovided above. Each individual named below has held his or her position for at\nleast five years, except as otherwise indicated.\n\n\n \n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nExecutive Compensation\n\n\n \n\n\n Summary\nCompensation Table. The following table sets forth the compensation paid\nby the Company (through the Bank) for services rendered in\nall capacities during the year ended December 31, 2004, to the chief executive\nofficer and each of the four most highly compensated executive officers of the\nBank (the “Named Executive Officers”). The Company does not employ any persons,\nother than through the Bank. \n\n\n \n\n\nSummary Compensation Table\n\n\n \n\n\n \n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n(1)\n\n\n \n\n \n\n\n \n\nThere was an additional pay period in 2004. Officers are paid\n bi-monthly and this resulted in 54 weeks of salary in 2004, as compared to 52\n weeks in 2003 and 2002.\n\n\n \n\n\n\n\n \n\n\n\n\n\n(2)\n\n\n \n\n \n\n\n \n\nFor each of Messrs. Duncan, Main and Gilman, the 2004 bonus does not\n reflect an incentive compensation payment, but rather was paid to the\n executive to offset personal tax liability incurred for the year ended December\n 31, 2003 in connection with the executive’s supplemental retirement plan.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(3)\n\n\n \n\n \n\n\n \n\nIncludes the matching contribution by the Bank to the Bank’s 401(k)\n plan for the named executive officer.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(4)\n\n\n \n\n \n\n\n \n\nFor each of Messrs. Duncan, Main, and Gilman, reflects the benefit\n attributable to the executive’s supplemental retirement plan, which equaled\n $381,532 in 2004, $200,100 in 2003, and $163,821 in 2002 for Mr. Duncan;\n $80,774 in 2004, $70,500 in 2003, and $69,039 in 2002 for Mr. Main; and $73,940\n in 2004, $24,750 in 2003, and $24,086 in 2002 for Mr. Gilman.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(5)\n\n\n \n\n \n\n\n \n\nMr. Marcotte began employment with the Company on May 17, 2003.\n\n\n \n\n\n\n\n \n\n\n \n\n\nDirector Compensation\n\n\n \n\n\n The Company pays\nno separate compensation to the Directors for their service as members of the Company’s\n(i.e., Enterprise Bancorp, Inc.) Board of Directors. The Bank pays $350 to\nDirectors for Board of Directors meetings, $350 to Directors for executive\ncommittee meetings, $350 to Directors for audit committee meetings, $250 to\nDirectors for all other committee meetings, a $500 monthly retainer to all Directors\nand a $200 monthly retainer to executive committee members. The Bank also pays\nquarterly retainers of $1,250 to the chairpersons of the asset liability,\ninvestment management and trust group, and audit committees, $1,000 to the\nchairperson of the compensation/personnel committee, $750 to the chairperson of\nthe loan committee, $625 to the chairperson of the corporate\ngovernance/nominating committee, $500 to the chairperson of the banking\ntechnology committee and $250 to the chairperson of the marketing and business development\ncommittee. Directors who are also full-time salaried officers of the Bank are\nnot paid for attending Board of Directors or committee meetings and do not\nreceive retainers of any kind for their services in any capacity as Directors.\n\n\n \n\n\n For the year 2004,\nDirectors had the right to make an irrevocable election (by December 31, 2003)\nto receive shares of Common Stock in lieu of receiving an elected portion of\ncash fees. The number of shares issued to Directors pursuant to this election\nwas based on a valuation analysis of the Common Stock as of January 2, 2004.\nPursuant to the terms of the election, shares were not considered earned, and\nwere not issued to a Director, until the Director had actually earned the cash\nfees in lieu of which the shares were to be issued. If a Director who had\nelected to receive shares of Common Stock in lieu of cash fees pursuant to this\nelection had ceased to serve as a member of the Board of Directors for any\nreason prior to his or her having earned the fees in lieu of which shares were\nto be issued, the Director would have received a cash amount (and no shares) equal\nto the fees earned through the date on which he or she ceased to serve as a\nDirector. For the year 2004, the Company issued a total of 5,933 shares of\nCommon Stock to fourteen Directors at a per share issuance price of $30.68.\nThis per share price reflects the value of the Common Stock at January 2, 2004,\nbased on a valuation analysis performed by an outside financial advisor, which\nwas used to determine the fair market value of the Common Stock in connection\nwith employee stock options that were granted as of such date. For the year\n2005, Directors have the same option to receive shares of Common Stock in lieu\nof cash fees at a per share issuance price of $32.85, which reflects the value\nof the Common Stock at January 3, 2005, based on a replication by management of\na valuation analysis that has been performed in June of each year by an outside\nfinancial advisor, which has been used to determine the fair market value of\nthe Common Stock in connection with the Company’s administration of its\ndividend reinvestment plan.\n\n\n \n\n\n The Company\nbelieves that giving Directors the option to receive stock in lieu of cash fees\nfurther aligns Directors’ interests with those of the Company’s shareholders.\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nAgreements with Named Executive Officers\n\n\n \n\n\n The Company and\nthe Bank are parties to employment agreements with Messrs. Duncan, Main and Clancy\nand are parties to a change in control/noncompetition agreement with Mr.\nGilman. The term of Mr. Duncan’s agreement is a “rolling” three years, subject\nto earlier termination as described below. Under the agreement, Mr. Duncan\nserves as chairman and chief executive officer for both the Company and the\nBank and he is entitled to a minimum base salary of $203,900, plus an annual\nbonus as determined by the Board of Directors as well as all other benefits\nthat the Company may provide at any time to its officers and employees. The\nCompany may terminate Mr. Duncan’s employment at any time and for any reason,\nwhether or not for cause (as defined in the agreement). Likewise, Mr. Duncan\nmay choose to terminate his employment at any time and for any reason. The\namount of severance payments and benefits that may be due to Mr. Duncan following\nany termination of his employment depends upon whether the Company terminates\nhis employment with or without cause or whether Mr. Duncan chooses to terminate\nhis employment with or without good reason (as defined in the agreement) or\nwhether any such termination occurs before or after the Company or the Bank\nundergoes a change in control (as defined in the agreement).\n\n\n \n\n\n Mr. Duncan may\nterminate his employment for “good reason” if any of the following events has occurred:\nMr. Duncan is relieved of the office of either chairman or chief executive\nofficer, for either the Company or the Bank, or Mr. Duncan’s functions, duties\nor responsibilities are otherwise reduced, in either case without his consent;\nthe Company commits a material breach of the agreement or any successor to the Company\nfails to assume the Company’s obligations under the agreement; or the Company\nor the Bank undergoes a change in control.\n\n\n \n\n\n If the Company\nterminates Mr. Duncan’s employment for cause prior to a change in control, then\nMr. Duncan would receive no severance payments or benefits. If the Company\nterminates Mr. Duncan’s employment without cause or Mr. Duncan chooses to\nterminate his employment for good reason, in either case prior to a change in\ncontrol, then Mr. Duncan will receive an amount equal to his previous highest\nannual compensation (as defined in the agreement) for each of the next three\nyears, plus continuing employee benefits at no increased expense for the next\nthree years.\n\n\n \n\n\n If the Company,\nincluding any successor, terminates Mr. Duncan’s employment without cause or\nMr. Duncan chooses to terminate his employment for any reason, in either case\nafter a change in control, then Mr. Duncan will receive a lump sum payment\nequal to three times his previous highest annual compensation, plus continuing\nemployee benefits at no increased expense for the next three years.\n\n\n \n\n\n If Mr. Duncan\nchooses to terminate his employment without good reason prior to a change in\ncontrol, and subject to the provisions described below regarding termination as\na result of death, disability or retirement, he will not receive any severance\npayments, although he will receive, as described further below, annual payments\nequal to 70% of his previous highest annual compensation for up to the next two\nyears, during which time he will be subject to noncompete restrictions.\n\n\n \n\n\n Subject to the\none-year “look back” described below, if Mr. Duncan dies before a change in\ncontrol, his estate will receive six-months of base salary continuation and his\nspouse and any other minor dependents will continue to receive employee\nbenefits in accordance with certain conditions specified in the agreement. If Mr.\nDuncan dies while the agreement is in effect after a change in control, his\nestate will receive the three-year lump sum payment described above.\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n If Mr. Duncan\nbecomes disabled at any time while the agreement is in effect, whether before\nor after a change in control, and he qualifies for long-term disability\nbenefits, then he will receive on an annual basis up to 75% of his previous\nhighest annual compensation for the remaining term of the agreement.\n\n\n \n\n\n Subject to the one-year\n“look back” described below, if Mr. Duncan chooses to retire at any time while the\nagreement is in effect he will not receive any severance payments, but will be\nentitled to receive continuing employee benefits for one year following the\ndate of retirement.\n\n\n \n\n\n If the Company\nterminates Mr. Duncan’s employment without cause or Mr. Duncan chooses to terminate\nhis employment for any reason, or his employment is otherwise terminated as a\nresult of his death or retirement or during a period of long-term disability,\nand a change in control occurs within one year after any such termination, then\nMr. Duncan (or his estate if he has died) will receive the three-year lump sum\npayment described above (taking into account any amounts that have been paid\nprior to the change in control).\n\n\n \n\n\n In lieu of the\nCompany terminating Mr. Duncan’s employment without cause or Mr. Duncan\nchoosing to terminate his employment for any reason, at any time while the\nagreement is in effect, whether before or after a change in control, the\nparties may agree to enter into a consulting arrangement for the remaining term\nof the agreement. During any such consulting period, Mr. Duncan will be paid on\nan annual basis 50% of his previous highest annual compensation and will\ncontinue to receive full benefits. Either the Company (including any successor)\nor Mr. Duncan may terminate this consulting arrangement at any time and for any\nreason. The amounts that may be due to Mr. Duncan following any termination of\nthe consulting arrangement will be based upon whether the termination occurs\nbefore or after a change in control and whether the termination is by the\nCompany for cause or without cause or by Mr. Duncan for good reason or without\ngood reason.\n\n\n \n\n\n Mr. Duncan will be\nsubject to noncompete restrictions for up to two years after the termination of\nhis employment for any reason, including the termination of any consulting\narrangement, if the termination occurs before a change in control. These\nnoncompete restrictions do not apply following any termination of Mr. Duncan’s\nemployment that occurs after a change in control. Any noncompete restrictions\nthat may be in effect at the time of a change in control automatically expire\nupon such change in control.\n\n\n \n\n\n During the period\nof any noncompete restrictions under the agreement, Mr. Duncan will receive on\nan annual basis an amount equal to 70% of his previous highest annual\ncompensation or 50% of his previous highest annual compensation if the\nnoncompete period follows the termination of any consulting period; provided,\nhowever, that if the termination that precedes the noncompete period is either\na termination by the Company without cause or a termination by Mr. Duncan for\ngood reason, then Mr. Duncan will receive on an annual basis during the\nnoncompete period the full 100% of his previous highest annual compensation\nthat he is otherwise entitled to receive.\n\n\n \n\n\n The terms of both\nMr. Main’s and Mr. Clancy’s agreements are substantially equivalent to those of\nMr. Duncan’s agreement, except that (i) the term of Mr. Main’s and Mr. Clancy’s\nagreements are for a “rolling” two years; (ii) Mr. Main’s minimum annual base\nsalary is $161,600 and Mr. Clancy’s minimum annual base salary is $158,400;\n(iii) the offices to be held by Mr. Main under the agreement are president of the\nCompany and president and chief lending officer of the Bank and the offices to\nbe held by Mr. Clancy under the agreement are executive vice president and\nchief operating officer of the Company and of the Bank; (iv) if Mr. Main’s or\nMr. Clancy’s employment is terminated at any time prior to a change in control\nby the Company without cause or by Mr. Main or Mr. Clancy for good reason, then\nthat executive shall be entitled to receive an amount equal to his previous\nhighest annual compensation for each of the next two years; and (v) if Mr. Main’s\nor Mr. Clancy’s employment is terminated at any time after a change in control\nby the Company, or any successor, without cause or by Mr. Main or Mr. Clancy\nfor any reason, then that executive shall be entitled to receive a cash lump\nsum payment equal to two times his previous highest annual compensation.\n\n\n \n\n\n Under the terms of\nthe change in control/non-competition agreement among the Company, the Bank and\nMr. Gilman, if the executive’s employment is terminated for any reason, whether\nat the initiative of the\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nCompany or of the executive and whether or not for cause (as defined in\nthe agreement), at any time prior to a change in control (as defined in the\nagreement), then the executive shall be prohibited from competing directly or\nindirectly with the Company for a period of one year following the date of such\ntermination (and assuming that no change in control occurs at any time during\nsuch one-year period). During any such non-compete period, if the termination\nof the executive’s employment was initiated by the Company for any reason other\nthan for cause, then the executive shall receive severance payments equal in\nthe aggregate on an annualized basis to 75% of the sum of (i) his annual base\nsalary as of the date of termination, (ii) the amount of any commission or\nother compensation not otherwise included in base salary or other bonus amounts\npaid to the executive with respect to the most recently completed fiscal year\nprior to the date of termination, and (iii) the amount of any annual incentive\nor other bonus paid to the executive with respect to the most recently completed\nfiscal year prior to the date of termination.\n\n\n \n\n\n If Mr. Gilman’s\nemployment is terminated for any reason, whether at the initiative of the\nCompany or of the executive and whether or not for cause, within two years\nafter the date of a change in control, then the executive shall be entitled to\nreceive severance payments over an 18-month period equal in the aggregate to 1.5\ntimes his previous highest annual compensation (as defined in the agreement),\ntogether with certain other specified severance payments and benefits.\n\n\n \n\n\n If Mr. Gilman’s\nemployment is terminated for any reason within one year prior to the date on\nwhich a change in control occurs, other than for cause, then the executive\nshall be entitled to receive all of the payments and benefits that he would\nhave been entitled to receive if such termination had occurred within two years\nafter the date of such change in control.\n\n\n \n\n\nOption Grants in Last Fiscal Year\n\n\n \n\n\n The following\ntable sets forth information concerning individual grants of stock options made\nduring 2004 to each of the Named Executive Officers.\n\n\n \n\n\n \n\n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n(1)\n\n\n \n\n \n\n\n \n\nOne-fourth of\n the total number of shares of Common Stock subject to the options granted\n becomes exercisable on an annual basis on January 2nd of each year beginning\n in 2005 and ending in 2008, except for the options granted to Mr. Duncan,\n which were fully exercisable as of the original grant date of January 2,\n 2004.\n\n\n \n\n\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n\n\n\n(2)\n\n\n \n\n \n\n\n \n\nThe amounts\n shown as potential realizable values are based on arbitrarily assumed\n annualized rates of appreciation of five percent and ten percent of the\n Common Stock over the full seven year term of the options, in accordance with\n applicable Securities and Exchange Commission (“SEC”) regulations. No gain\n for the optionee is possible without an increase in the price of the Common\n Stock, which will benefit all of the Company’s shareholders proportionately.\n Actual gains on options exercised are dependent on the future performance of\n the Common Stock. There can be no assurance that the potential realizable\n values shown in this table will be achieved.\n\n\n \n\n\n\n\n \n\n\nAggregated Option Exercises in Last Fiscal Year\nand Fiscal Year-End Option Values\n\n\n \n\n\n The following\ntable shows each exercise of stock options by the Named Executive Officers\nduring the year ended December 31, 2004 and the unexercised stock options held\nby such persons as of such date:\n\n\n \n\n\n \n\n\n\n \n\n\n\n\n\n\n\n (1) The value realized calculations in\nthe third column from the left above are based upon the difference between the\nvalue of the Common Stock on the option exercise date and the per share\nexercise price of the options. The value on the exercise date was based on a\nreplication by management of the annual valuation analysis that has been\nperformed by an outside financial advisor for dividend reinvestment plan purposes,\nwhich is described further in the second paragraph under the heading “Director\nCompensation” at page eleven above. The dollar values of the unexercised\noptions shown in the fifth column from the left above are based upon the\ndifference between $32.85, which was the value of the Common Stock as of\nJanuary 3, 2005, based on a replication by management of the annual valuation\nanalysis referred to in the immediately preceding sentence, and the per share\nexercise price of the options. Prior to February 14, 2005, on which date the\nCompany’s shares began trading on the Nasdaq Stock Market, there was no active\ntrading market for the Common Stock and the Board of Directors received\nperiodic advice from an outside financial advisor regarding the fair market\nvalue of the Common Stock for purposes of the Company’s equity compensation and\ndividend reinvestment plans.\n\n\n \n\n\nAudit Committee Report\n\n\n \n\n\n The Audit\nCommittee of the Company’s Board of Directors (the “Audit Committee”) is\ncomposed of five independent directors and operates under a written charter\nadopted by the Board of Directors. A copy of\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nthe Audit Committee’s Charter can be found on the Company’s website\n(www.ebtc.com). The Audit Committee reviews and reassesses the adequacy of the\nAudit Committee charter on an annual basis. The Board of Directors has\ndetermined that Nickolas Stavropoulos, who is one of these five independent\ndirectors, qualifies to serve as the Company’s Audit Committee Financial Expert\n(as such term is defined under applicable SEC rules). The Audit Committee is\ndirectly responsible for the appointment, compensation, retention and oversight\nof the work of the Company’s independent registered public accounting firm,\nwhich reports directly to the Audit Committee.\n\n\n \n\n\n In determining the\nindependence of the Audit Committee members, the Board of Directors has used, as\nrequired for a company with shares listed on the Nasdaq National Market, the\ndefinition of independence contained in Section 4350(d)(2)(A) of the NASD\nlisting standards and has applied this definition consistently to all members\nof the Audit Committee.\n\n\n \n\n\n Management is\nresponsible for the Company’s internal controls and the financial reporting\nprocess. The Company’s independent registered public accounting firm is\nresponsible for performing an independent audit of the Company’s consolidated\nfinancial statements in accordance with the standards of the Public Company\nAccounting Oversight Board (United States) and for assessing management’s\nevaluation of the company’s internal controls and procedures for financial\nreporting and for issuing reports there on. The Audit Committee’s\nresponsibility is to monitor and oversee these processes. The Audit Committee’s\nresponsibilities also include resolving any disagreements that may arise\nbetween management and the Company’s independent registered public accounting\nfirm regarding financial reporting and establishing procedures for the receipt,\nretention and treatment of any complaints that may be received by the Company\nregarding accounting, internal accounting controls or auditing matters and the\nconfidential, anonymous submission by employees of the Company of any concerns\nthat may arise regarding questionable accounting or auditing matters.\n\n\n \n\n\n The Audit\nCommittee has met and held discussions with management and the Company’s\nindependent registered public accounting firm. Management has represented to\nthe Audit Committee that the Company’s consolidated financial statements were\nprepared in accordance with U.S. generally accepted accounting principles, and\nthe Audit Committee has reviewed and discussed the consolidated financial\nstatements with management and the Company’s independent registered public\naccounting firm. The Audit Committee has discussed with the Company’s\nindependent registered public accounting firm the matters required to be discussed\nby Statement on Auditing Standards No. 61 (Communication with Audit\nCommittees).\n\n\n \n\n\n The Company’s\nindependent registered public accounting firm has also provided to the Audit Committee\nthe written disclosures and the letter required by Independence Standards Board\nStandard No. 1 (Independence Discussions with Audit Committees), and the Audit\nCommittee has discussed with the Company’s independent registered public\naccounting firm that firm’s independence.\n\n\n \n\n\n Based upon the\nAudit Committee’s discussions with management and the Company’s independent registered\npublic accounting firm, and the Audit Committee’s review of the representation\nof management and\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nthe reports of the Company’s independent registered public accounting\nfirm to the Audit Committee, the Audit Committee recommended that the Board of\nDirectors include the audited consolidated financial statements in the Company’s\nAnnual Report on Form 10-K for the year ended December 31, 2004 as filed with\nthe SEC.\n\n\n \n\n\nNickolas Stavropoulos\n(Chairperson)\n\n\nKathleen M. Bradley\n\n\nCarole A Cowan\n\n\nLucy A. Flynn\n\n\nJohn P. Harrington\n\n\n \n\n\n \n\n\nCompensation/Personnel Committee Report on Executive\nCompensation\n\n\n \n\n\nIntroduction\n\n\n \n\n\n The\nCompensation/Personnel Committee of the Board of Directors (the “Compensation\nCommittee”) is comprised entirely of non-employee, independent members of the\nBoard of Directors. It is the responsibility of the Compensation Committee to\nreview the performance and set the compensation of the Company’s chief executive\nofficer, and to review and approve all compensation arrangements for the\nCompany’s remaining executive officers, including annual base salary, the\nannual incentive opportunity level, the long-term incentive opportunity level,\nany employment or severance agreements, and any special or supplemental\nretirement benefits. All actions by the Compensation Committee are reported to,\nand considered for ratification by, the full Board of Directors. A copy of the\nCompensation/Personnel Committee’s Charter can be found on the Company’s\nwebsite (www.ebtc.com).\n\n\n \n\n\n During 2004, the\nBoard of Directors did not modify or reject any proposed action or\nrecommendation presented by the Compensation Committee.\n\n\n \n\n\nKey Principles\n\n\n \n\n\n The Compensation\nCommittee has adopted the following principles to use for guidance in setting executive\ncompensation:\n\n\n \n\n\n Pay\nCompetitively\n\n\n \n\n\n The Compensation\nCommittee maintains a philosophy that total annual compensation should be competitive\nrelative to that found in other commercial banking organizations of comparable\nasset size and performance. The Compensation Committee believes that this is\nnecessary to attract, motivate and retain highly qualified executives, who in\nturn are essential to the Company’s achieving the financial goals set by the Board\nof Directors and sustaining long-term value for shareholders.\n\n\n \n\n\n Consistent with\nthis philosophy, the Compensation Committee obtains information regarding compensation\nlevels in the Company’s industry through various sources, including\ncompensation surveys conducted by banking industry associations and independent\ncompensation consultants.\n\n\n \n\n\n The Compensation\nCommittee generally attempts to set total attainable compensation at or above\nthe midpoint range of peer compensation (subject to individual and Company\nfinancial performance).\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n Tie Incentive\nCompensation to Company Financial Performance\n\n\n \n\n\n The Committee\nsupports a “pay for performance” philosophy, which is intended to enhance\nlong-term shareholder value. Total incentive compensation paid to the Company’s\nexecutive officers is calculated using incentive models. Through the use of\nincentive models, the compensation structure for employees in management\npositions includes a “risk/reward” component. The Compensation Committee\nbelieves that when performance targets are achieved, total compensation earned\nby executive officers will reach a level competitive with the total compensation\npaid to executive officers with similar responsibilities at other comparable\ncommercial banking organizations. All employees, including executive officers,\nare eligible to receive an annual incentive bonus based upon the attainment of\nvarious predetermined financial performance goals. This plan is referred to in\nthis summary as the “stakeholder plan” and is based upon a methodology provided\nto the Company by an independent, outside consultant. In addition to their\ninclusion in the stakeholder plan, the Company’s executive officers, including\nMessrs. Duncan, Main, Gilman, Clancy and Marcotte, are eligible to receive an\nadditional annual incentive bonus based solely upon the attainment of predetermined\nnet income levels. This additional bonus plan is referred to in this summary as\nthe “supplemental plan”.\n\n\n \n\n\n Grant Stock\nOptions\n\n\n \n\n\n The Committee\naligns the interests of the Company’s executives with the long-term interests\nof stockholders through the granting of stock options at fair market value.\nStock options were granted in January 2004 as detailed in the section titled “Option\nGrants in Last Fiscal Year”.\n\n\n \n\n\n Supplemental\nRetirement Benefit\n\n\n \n\n\n The Bank maintains\na supplemental retirement plan for each of Messrs. Duncan, Main, and Gilman. Subject\nto vesting provisions, each plan provides for annual cash payments to be paid\nto the executive for 20 years following the date of the executive’s defined\nretirement age. Assuming that each executive is fully vested under his plan at\nthe time of retirement, the Bank will be obligated to pay the following amounts\nunder these plans: $149,500 per year for Mr. Duncan; $95,300 per year for Mr.\nMain; and $31,000 per year for Mr. Gilman.\n\n\n \n\n\n Other\n\n\n \n\n\n In addition to\ntheir participation in the Company’s general employee benefits plan, the\nCompany also provides company owned vehicles for the use of Messrs. Duncan,\nMain and Clancy and the Company pays dues related to a club membership for Mr.\nDuncan and Mr. Main. The total of these benefits for 2004, which are not listed\nin the Summary Compensation Table at page ten, were $7,032 for Mr. Duncan,\n$8,535 for Mr. Main and $4,087 for Mr. Clancy.\n\n\n \n\n\n In summary,\nexecutive compensation is composed of base salary, annual incentive cash\nbonuses, long term equity compensation in the form of stock options and, for\ncertain members of senior management, supplemental retirement benefits and\nother immaterial benefits.\n\n\n \n\n\n2004 Executive Compensation Program\n\n\n \n\n\nExecutive Officers\n\n\n \n\n\n In determining\ntotal 2004 compensation (including base salary, supplemental retirement\nbenefits, incentive cash bonus and stock option grants), the Compensation\nCommittee reviewed compensation data for other commercial banking organizations\nof similar size, which are located in similar markets or otherwise in areas in\nwhich the Company competes for talent. Specific bank officers are “matched” as\nclosely as possible with officers from the other commercial banking\norganizations with similar functional responsibilities.\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nExecutive officers did not receive an incentive cash bonus for 2004 due\nmainly to the Company’s realizing net income growth of 8% in 2004, as compared\nto 10% in 2003.\n\n\n \n\n\nChief Executive Officer\n\n\n \n\n\n At the beginning\nof the year, the Compensation Committee set Mr. Duncan’s total compensation\nplan for 2004. Mr. Duncan’s 2004 total compensation is comprised of base\nsalary, annual incentive cash bonus, stock option grants and a supplemental\nretirement benefit. Mr. Duncan did not receive an incentive cash bonus for\n2004, and received an incentive bonus of $70,223 in 2003. The reduction for\n2004 was directly related to the Company’s realizing net income growth of 8% in\n2004, as compared to 10% in 2003.\n\n\n \n\n\nClosing\n\n\n \n\n\n The Compensation\nCommittee believes that the Executive Compensation Program for 2004 successfully\nlinked executive compensation to the Company’s financial performance. This\nreport has been submitted by the Compensation Committee:\n\n\n \n\n\nJames F. Conway III\n(Chairperson)\n\n\nJohn R. Clementi\n\n\nCarole A. Cowan\n\n\nEric W. Hanson\n\n\nArnold S. Lerner\n\n\n \n\n\n \n\n\nDirector Nominations and Shareholder Communications\n\n\n \n\n\n Proposed director\nnominees are recommended to the Board of Directors for its approval by the Company’s\nCorporate Governance/Nominating Committee (“CGNC”), which was established in\n2003. The CGNC is comprised of six independent directors. In determining the\nindependence of the CGNC members, the Board of Directors has used the\ndefinition of independence contained in Rule 4200 (a)(15) of the NASD’s listing\nstandards and has applied this definition consistently to all members of the\nCGNC.\n\n\n \n\n\n A copy of the CGNC’s\nCharter and the Company’s Corporate Governance Guidelines can be found on the\nCompany’s website (www.ebtc.com). The Charter and Guidelines outline director\nqualifications, appointment to and removal from the Board of Directors and its\nvarious committees, structure and operations of the Board of Directors and its\nvarious committees and the CGNC’s reporting function to the Board of Directors.\n\n\n \n\n\n The CGNC has\nreviewed, refined and formalized criteria for the selection of new directors to\nthe Board of Directors. These criteria include independence, experience\nrelevant to the needs of the Company, leadership qualities and the ability to\nrepresent the broad interests of shareholders. In selecting new directors, consideration\nis given to both the personal qualities and abilities of individual candidates\nand the collective skills and aptitudes of the Board of Directors as a whole.\n\n\n \n\n\n Nominees for\nelection to the Board of Directors may be identified and submitted to the CGNC\nfor its consideration by directors, shareholders and/or management. The CGNC\nmaintains a policy of considering nominees submitted by shareholders, provided\nthat such shareholder nominees are submitted in accordance with the applicable\nrequirements contained in the Company’s by-laws. The CGNC may also retain a professional\nsearch firm to assist with the identification of qualified candidates, although\nno such outside assistance has been retained with respect to any existing\ndirectors or current nominees.\n\n\n \n\n\n The Chairman of\nthe CGNC and the Chairman of the Board of Directors shall extend an invitation\nto join the Board of Directors, subject to election by the Company’s\nshareholders, to those nominees who are\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nrecommended by the CGNC and approved by the Board of Directors. The\nBoard of Directors also retains the right, as outlined in the Company’s\nby-laws, to appoint directors as needed throughout the year.\n\n\n \n\n\n Directors are\nrequired to attend the Company’s annual meeting. Absences will be allowed for\nserious personal or business obligations that cannot be re-scheduled. All of\nthe Company’s directors, excluding Mr. Spinelli, attended the 2004 annual\nmeeting.\n\n\n \n\n\n Shareholders may\nsubmit nominations for candidates for election to the Board of Directors in accordance\nwith the applicable requirements contained in the Company’s by-laws to the\nattention of the Company’s Clerk at the Company’s principal office located at\n222 Merrimack Street, Lowell, Massachusetts 01852. Shareholders may also\ncommunicate directly with members of the Board of Directors by sending such communications\nto a specified director or group of directors or to the Board of Directors in\nits entirety, addressed c/o the Clerk of the Company at the Company’s principal\noffice at the foregoing address.\n\n\n \n\n\nCompensation/Personnel Committee Interlocks and\nInsider Participation\n\n\n \n\n\n As described in\nfurther detail below, under the heading “Transactions with Certain Related\nPersons”, the members of the Compensation/Personnel Committee, as well as\nbusinesses and other entities with which they may be affiliated, are customers\nof the Bank and/or have entered into loan transactions with the Bank in the\nordinary course of business.\n\n\n \n\n\nComparative Performance Graph\n\n\n \n\n\n Under applicable\nrules of the SEC, the Company is required to present a chart comparing the cumulative\ntotal return (which assumes the reinvestment of all dividends) on the Common\nStock with the cumulative total return of (i) a broad based equity market index\nand (ii) a published industry index or peer group. The following graph shows\nthe changes over the five-year period ended on December 31, 2004 in the value\nof $100 invested in (i) the Common Stock, (ii) the Standard & Poors 500\nIndex and (iii) the NASDAQ Bank Index. As of December 31, 2004, there was no\nactive trading market for the Common Stock, although shares were traded\nperiodically on a privately negotiated basis. As of February 14, 2005, the\nCompany’s shares began trading on the Nasdaq National Market under the trading\nsymbol “EBTC”. The increase in the value of the Common Stock over the five-year\nperiod shown on the following performance graph is based on the actual prices\nknown to the Company at which shares of the Common Stock were traded as of the\nmost recent date prior to December 31 of each of the years shown. The most\nrecent trade between two private, unaffiliated parties involving the Common\nStock prior to December 31, 2004, of which the Company is aware, was completed\nat a price of $32.00 per share. For purposes of the graph, the reinvestment of\ndividends paid since the inception of the Company’s dividend reinvestment plan\nis based upon the annual valuation analysis of the Common Stock that has been\nundertaken pursuant to the plan in connection with the Company’s payment of\nsuch dividends; for dividends paid prior to inception of the plan, the\nreinvestment is based upon the actual prices known to the Company at which\nshares of the Common Stock were traded as of the most recent date prior to the\nCompany’s payment of such dividends.\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n\n\n\n \n\n\nTransactions with Certain Related Persons\n\n\n \n\n\n The Bank leases\nits headquarters and certain other space for operations from realty trusts, the\nbeneficiaries of which include various Directors of the Company. The leases\nbetween the Bank and each of these trusts were reviewed and approved by a\ncommittee of independent Directors who had no financial or other interest in\nany of the trusts. The Board of Directors believes that the terms of each of\nthese leases, including lease rates, are substantially similar to such terms as\nwould be included in comparable lease transactions entered into at the time of\nsuch leases with persons who are not affiliated with the Bank.\n\n\n \n\n\n Certain Directors\nand executive officers of the Company are also customers of the Bank and have entered\ninto loan, trust and brokerage and deposit transactions with the Bank in the\nordinary course of business. In addition, certain Directors are also directors,\ntrustees, officers or stockholders of corporations and non-profit entities or\nmembers of partnerships that are customers of the Bank and that enter into loan\nand other transactions with the Bank in the ordinary course of business. Such\nloan transactions with Directors and executive officers of the Bank and with\nsuch corporations, non-profit entities and partnerships are on such terms,\nincluding interest rates, repayment terms and collateral, as those prevailing\nat the time for comparable transactions with persons who are not affiliated\nwith the Bank and do not involve more than a normal risk of collectibility or\npresent other features unfavorable to the Bank.\n\n\n \n\n\nSECURITIES\nOWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS\n\n\n \n\n\n The following\ntable sets forth stock ownership information with respect to Directors, Named\nExecutive Officers, all Directors and executive officers as a group and all\nother persons known to the Company who are the beneficial owners of more than\n5% of the Common Stock. All such information is as of March 15, 2005. This\ninformation includes the total number of shares of the Common Stock known by\nthe Company to be beneficially owned by each such person and group and the\npercentage of the Common Stock each such person and group beneficially owns.\nAll shares are owned of record and beneficially, and each person and group identified\nhas sole voting and investment power with respect to such shares, except as\notherwise noted.\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n \n\n\n \n\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n\n \n\n\n\n\n\n\n\n\n\n\n*\n\n\n \n\n \n\n\n \n\nNamed individual beneficially owns less than 1% of total Common\n Stock.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(1)\n\n\n \n\n \n\n\n \n\nThe information as to the Common Stock beneficially owned has been\n furnished by each such stockholder. All persons\n have sole voting and investment power over the shares, unless otherwise indicated.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(2)\n\n\n \n\n \n\n\n \n\nIncludes shares subject to options exercisable within sixty days as\n follows: Mr. Ansin, 1,160; Mr. Bousquet,\n 1,160; Ms. Bradley, 1,160; Mr. Clancy, 12,875; Mr. Clementi, 1,160; Mr.\n Conway, 1,160; Ms. Donahue, 1,160; Mr.\n Duncan, 70,500; Mr. Hanson, 1,160; Mr. Harrington, 1,160; Mr. Lerner, 1,160; Mr. Main,\n 14,750; Mr. Sarantos, 1,160; Mr. Spinelli, 1,160; Mr. Gilman, 8,500; Mr.\n Marcotte, 750; Mr. Irish, 11,500; and all Directors and named executive\n officers as a group, 131,635.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(3)\n\n\n \n\n \n\n\n \n\nIncludes 20,166 shares owned jointly with Mr. Ansin’s wife, 1,000 shares\n owned by Mr. Ansin’s children and 1,000 shares\n for which Mr. Ansin is the trustee.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(4)\n\n\n \n\n \n\n\n \n\nIncludes 65,316 shares owned jointly with Mr. Armstrong’s wife.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(5)\n\n\n \n\n \n\n\n \n\nIncludes 2,658 shares owned by Mr. Clancy’s children and 10,270\n shares owned jointly with Mr. Clancy’s\n wife.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(6)\n\n\n \n\n \n\n\n \n\nIncludes 4,441 shares held by Mr. Clementi through a trust.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(7)\n\n\n \n\n \n\n\n \n\nIncludes 2,981 shares owned jointly with Mr. Conway’s wife.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(8)\n\n\n \n\n \n\n\n \n\nIncludes 5,000 shares for which Ms. Donahue’s husband is the trustee.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(9)\n\n\n \n\n \n\n\n \n\nIncludes 1,108 shares owned jointly with Mr. Duncan’s adult children,\n 7,153 shares owned by Mr. Duncan’s wife and 8,870\n shares owned jointly by Mr. Duncan’s wife and his adult children.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(10)\n\n\n \n\n \n\n\n \n\nIncludes 2,000 shares owned by Ms. Flynn’s husband.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(11)\n\n\n \n\n \n\n\n \n\nIncludes 128,710 shares owned jointly with Mr. Hanson’s wife.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(12)\n\n\n \n\n \n\n\n \n\nIncludes 540 shares owned jointly with Mr. Harrington’s wife.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(13)\n\n\n \n\n \n\n\n \n\nIncludes 109,323 shares owned by a trust and controlled by Mr. Lerner\n in his capacity as trustee, and 147,401\n shares owned by a trust and controlled by Mr. Lerner’s wife in her capacity\n as trustee.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(14)\n\n\n \n\n \n\n\n \n\nIncludes 41,059 shares held by Mr. Main through a trust, and 39,000\n shares owned jointly with Mr. Main’s wife.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n(15)\n\n\n \n\n \n\n\n \n\nIncludes 5,540 shares held by Mr. Sarantos through a trust, 10,026\n shares owned jointly with Mr. Sarantos’\n wife, 2,095 shares owned jointly by Mr. Sarantos’ wife and daughter and 1,541\n shares owned by Mr. Sarantos’ wife as trustee.\n\n\n \n\n\n\n\n \n\n\n\n\n\n(16)\n\n\n \n\n \n\n\n \n\nIncludes 135,814 shares held by Mr. Spinelli through a trust.\n\n\n \n\n\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n\n\n\n(17)\n\n\n \n\n \n\n\n \n\nIncludes 17,500 shares owned jointly with Mr. Gilman’s wife.\n\n\n \n\n\n\n\n \n\n\n \n\n\nPROPOSAL\nTWO\n\n\n \n\n\nRATIFICATION\nOF APPOINTMENT OF INDEPENDENT\n\n\nREGISTERED\nPUBLIC ACCOUNTING FIRM\n\n\n \n\n\n The Audit\nCommittee has appointed KPMG LLP to serve as the independent registered public accounting\nfirm of the Company for the fiscal year ending December 31, 2005.\n\n\n \n\n\n The Company is not\nrequired to submit the ratification of the Audit Committee’s appointment of KPMG\nLLP as the Company’s independent registered public accounting firm to a vote of\nstockholders. In the event a majority of the votes cast are against the\nappointment of KPMG LLP, the Audit Committee may consider the vote and the\nreasons therefor in future decisions on its appointment of the Company’s independent\nregistered public accounting firm.\n\n\n \n\n\n Representatives of\nKPMG LLP are expected to attend the annual meeting at which time they will have\nan opportunity to make a statement if they wish to do so and will be available\nto answer any appropriate questions from stockholders.\n\n\n \n\n\n Audit Fees\n\n\n \n\n\n The aggregate fees\nbilled by KPMG LLP for professional services rendered for the audit of the Company’s\nannual consolidated financial statements for the year ended December 31, 2004\nand the review of the consolidated financial statements\nincluded in the Company’s quarterly reports on Form 10-Q as filed with the SEC during\nthe year ended December 31, 2004 were $280,000. The same fees for the year\nended December 31, 2003 were $137,000. The increase was primarily due to\ninternal control testing required by Section 404 of the\nSarbanes-Oxley Act in 2004.\n\n\n \n\n\n Audit-Related\nFees\n\n\n \n\n\n In addition to the\naudit fees billed by KPMG LLP, as referred to above, the aggregate fees billed\nto the Company for audit-related fees for the years ended December 31, 2004\nand December 31, 2003 were $27,252 and $34,000, respectively.\nFees paid in 2004 and 2003 were related to audits of the Company’s 401(k) plan.\n\n\n \n\n\n Tax Fees\n\n\n \n\n\n The Company paid\n$16,500 in 2004 and $24,798 in 2003 to KPMG LLP for tax preparation services performed in\neach of these two years.\n\n\n \n\n\n All Other Fees\n\n\n \n\n\n No other fees were\npaid to KPMG LLP in 2004 or 2003.\n\n\n \n\n\n The Audit\nCommittee must approve in advance any audit or permissible non-audit engagement\nor relationship between the Company and its independent registered public\naccounting firm. The Audit Committee has delegated to\nits chairman this approval authority, subject to the requirement that the\nchairman report the terms of any such engagement or relationship to the full\nAudit Committee at its next regularly scheduled meeting. All of the services\ndescribed above, including those described under the headings, “Audit-Related\nFees” and “Tax Fees”, were provided in conformance with such pre-approval requirements.\nThe Audit Committee has determined that providing the services described above\nunder the headings, “Audit-Related Fees” and “Tax Fees”, is\ncompatible with maintaining the independence of KPMG LLP.\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nRecommendation of Directors\n\n\n \n\n\n The\nBoard of Directors recommends that the stockholders vote FOR the ratification\nof the Audit Committee’s appointment of KPMG LLP as the independent registered\npublic accounting firm of the Company for the fiscal year ending December 31,\n2005.\n\n\n \n\n\nSTOCKHOLDER\nPROPOSALS\n\n\n \n\n\n Under applicable\nrules of the SEC, proposals of stockholders of the Company intended to be\npresented at the Company’s 2006 annual meeting of stockholders must be received\nby the Company no later than November 25, 2005 to be\nincluded in the Company’s proxy statement and form of proxy relating to that meeting. If the\n2006 annual meeting of stockholders is advanced or delayed by more than 30 days\nfrom the date of the Annual Meeting, the date by which stockholder proposals to\nbe presented at the 2006 meeting must be received by the Company\nto be included in the Company’s proxy statement and form of proxy relating to that meeting\nwill change from the date indicated in the preceding sentence. If this occurs,\nthe Company will inform stockholders of such change by\nincluding a notice to such effect in its earliest possible quarterly report on Form 10-Q as\nfiled by the Company with the SEC.\n\n\n \n\n\n In addition to the\nforegoing SEC rules, pursuant to the Company’s articles of organization and by-laws, any stockholder\nwishing to have any Director nomination or stockholder proposal considered at\nthe Annual Meeting (although not otherwise included in this Proxy\nStatement) must provide written notice of such nomination or proposal to\nthe Clerk of the Company in accordance with the requirements of the articles of organization\nand by-laws of the Company at its principal executive offices by no later than\nApril 4, 2005.\n\n\n \n\n\nSECTION\n16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE\n\n\n \n\n\n Section 16(a) of\nthe Exchange Act requires that the Company’s Directors and executive officers\nand any other persons who own more than 10% of the outstanding shares of\nthe Common Stock file with the SEC initial reports of ownership\nand subsequent reports of changes of ownership with respect to their beneficial ownership of\nthe Common Stock. Such persons are required by SEC regulations to furnish the\nCompany with copies of all such Section 16(a) reports that\nthey may be required to file. Each of the following Directors received a\nstock award in lieu of cash fees on December 31, 2003, for which a report on\nForm 4 was filed after the required filing date of January 5,\n2004: Ms. Bradley, Ms. Donahue, Ms.\nFlynn, and Messrs. Ansin, Bousquet, Clementi, Conway,\nHanson, Harrington, Lerner, Sarantos, and Spinelli. Each of the following executive\nofficers received a stock option grant on January 2, 2004, for which a report\non Form 4 was filed after the required filing date of January 6,\n2004: Messrs. Duncan, Main, Clancy, Gilman,\nIrish, and Marcotte.\n\n\n \n\n\n All of these late\nfilings were previously disclosed in the Company’s proxy statement for its 2004\nannual meeting of shareholders. To the Company’s knowledge, all other reports\nunder Section 16(a) of the Exchange Act that any of its Directors or executive\nofficers has been required to file during the year ended December 31, 2004,\nhave been filed on a timely basis.\n\n\n \n\n\nOTHER\nMATTERS\n\n\n \n\n\n Shares represented\nby proxies in the enclosed form will be voted as stockholders direct. Properly executed\nproxies that contain no directions to the contrary will be voted (1) FOR the\nelection of the six nominees to serve as Directors of the Company and (2) FOR\nthe ratification of the appointment of KPMG LLP as the Company’s independent\nregistered public accounting firm for the fiscal year ending December 31, 2005. At the time of\npreparation of this Proxy Statement, the Board of Directors knows of no other\nmatters to be presented for action at the Annual Meeting.\nAs stated in the accompanying proxy card, if any other business should properly\ncome before the Annual Meeting, the proxies named therein have discretionary\nauthority to vote the shares according to their best\njudgment.\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nANNUAL\nREPORT ON FORM 10-K\n\n\n \n\n\n The Company’s\nAnnual Report on Form 10-K (without exhibits) is included with the Company’s Annual Report\nto Stockholders, and is being furnished to shareholders of record together with\nthis Proxy Statement. Requests for additional copies may be directed to:\nEnterprise Bancorp, Inc., 222 Merrimack Street, Lowell, Massachusetts 01852,\nAttention: Michael A Spinelli, Clerk.\n\n\n \n\n\nADDITIONAL\nCOPIES OF ANNUAL REPORT AND PROXY STATEMENT\n\n\nAVAILABLE\nTO SHAREHOLDERS SHARING COMMON MAILING ADDRESS\n\n\n \n\n\n Two or more\nshareholders of record who share a common mailing address may receive one\nAnnual Report to Stockholders and one copy of this Proxy Statement, together\nwith a separate proxy card for each such shareholder, in a\nsingle package addressed to such shareholders. Any shareholder of record who\nshares a common mailing address with one or more other shareholders of record,\nwhere such shareholders receive a single Annual Report to\nStockholders and Proxy Statement as provided herein, may request a separate\nAnnual Report to Stockholders and Proxy Statement either by directing such\nrequest in writing to the Clerk of the Company at the address given\nin the preceding paragraph or by making such request by phone, directed to Jim Marcotte at\n(978) 656-5614.\n\n\n \n\n\nWHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL\nMEETING, PLEASE COMPLETE,\nSIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY WITHDRAW ANY PROXY GIVEN BY YOU AND VOTE YOUR SHARES IN PERSON.\n\n\n \n\n\nMarch 24, 2005\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\n[3799 - ENTERPRISE BANCORP, INC.] [FILE NAME:\nZEBC42.ELX] [VERSION - (1)] [01/20/05] [orig. 01/20/05]\n\n\n \n\n\n\n\n\n \n\n\n \n\nDETACH HERE\n\n\n \n\nZEBC42\n\n\n \n\n\n\n\n \n\n\nPROXY\n\n\n \n\n\nENTERPRISE BANCORP, INC.\n\n\n \n\n\nThis\nproxy is solicited on behalf of the Board of Directors of Enterprise Bancorp,\nInc. The Board of Directors recommends a vote FOR Proposals 1 and 2. This\nproxy, when properly executed on the reverse side, will be voted in the manner\ndirected herein by the undersigned. If no direction is given, this proxy, if\notherwise properly executed, will be voted FOR Proposals 1 and 2.\n\n\n \n\n\nThe undersigned, a stockholder of Enterprise Bancorp, Inc. (the\n“Company”), revoking all prior proxies, hereby appoint(s) Richard W. Main and\nArnold S. Lerner, and each of them with full power of substitution, the\nattorneys, agents and proxies of the undersigned to represent and vote all\nshares of stock of the Company which the undersigned would be entitled to vote\nif personally present at the annual meeting of stockholders of the Company and\nany adjournments or postponements thereof, to be held at the American Textile\nMuseum, 491 Dutton Street, Lowell, Massachusetts, on Tuesday, May 3, 2005, at\n4:00 P.M. as specified herein as to each of the proposals.\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\n\nENTERPRISE BANCORP, INC.\n\n\n \n\n\nC/O EQUISERVE TRUST COMPANY, N.A.\n\n\nP.O. BOX 8694\n\n\nEDISON, NJ 08818-8694\n\n\n \n\n\n \n\n\n[3799\n- ENTERPRISE BANCORP, INC.] [FILE NAME: ZEBC41.ELX] [VERSION - (3)] [03/15/05]\n[orig. 01/20/05]\n\n\n \n\n\n\n\n\n \n\n\n \n\nDETACH HERE IF YOU ARE\n RETURNING YOUR PROXY CARD BY MAIL\n\n\n \n\n \n\n\n \n\nZEBC41\n\n\n \n\n\n\n\n \n\n\n\n\n\ný\n\n\n \n\n \n\n\n \n\nPlease mark\n\n\n votes as in\n\n\n this example.\n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n \n\n\n\n\n \n\n\nThis Proxy is solicited on behalf of\nthe Board of Directors of Enterprise Bancorp, Inc. The Board of Directors\nrecommends a vote FOR Proposals 1 and 2. This proxy, when properly executed,\nwill be voted in the manner directed herein by the undersigned. If no direction is given, this\nproxy, if otherwise properly executed, will be voted FOR Proposals 1 and 2.\n\n\n \n\n\n\n\n\n1. \n\n\n \n\nElection of Directors.\n\n\n \n\n\n\n\n\n \n\n\n \n\nNominees: \n\n\n \n\n(01) Kenneth S. Ansin, (02) John R. Clementi,\n\n\n \n\nFOR\n\n\n \n\nAGAINST\n\n\n \n\nABSTAIN\n\n\n \n\n\n\n\n\n \n\n\n \n\n(03) Carole A. Cowan, (04) Eric W. Hanson,\n\n\n(05) Arnold S. Lerner and (06) Richard W. Main\n\n\n \n\n2. \n\n\n \n\nRatification of appointment of KPMG LLP as the\n Company’s independent registered public accounting firm for the fiscal year\n ending December 31, 2005.\n\n\n \n\no\n\n\n \n\no\n\n\n \n\no\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\nFOR\n\n\n ALL\n\n\n NOMINEES\n\n\n \n\n o\n\n\n \n\no\n\n\n \n\nWITHHELD\n\n\n FROM ALL\n\n\n NOMINEES\n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\no\n\n\n \n\n\n\n\n ______________________________________\n\n\n FOR ALL NOMINEES except as noted\n\n\non the line above\n\n\n (Write name(s) of nominee(s) in the space\n\n\nprovided above)\n\n\n \n\nBy execution and delivery of this proxy, the\n undersigned acknowledge(s) and agree(s) that the proxies named herein\n are authorized to vote, in their\n discretion and in accordance with their best judgment, upon such other\n matters as may properly come before the meeting or any adjournments or\n postponements thereof.\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\nI plan to attend the Meeting.\n\n\n \n\no\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\nMark here for address change. Please note address\n change to the left.\n\n\n \n\no\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\nPlease date and sign exactly as name appears herein\n and return in the enclosed envelope. When shares are held by joint owners,\n both should sign. Executors, administrators, trustees and others signing in a\n representative capacity should give their full title as such. If a\n corporation, please sign in full corporate name by president or other\n authorized officer. If a partnership, please sign in partnership name by\n authorized person.\n\n\n \n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n\n\n\n\nSignature:\n\n\n \n\n \n\n\n \n\n \n\n\n \n\nDate:\n\n\n \n\n \n\n\n \n\n \n\n\n \n\nSignature:\n\n\n \n\n \n\n\n \n\n \n\n\n \n\nDate:\n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n"},"accession_number":{"kind":"string","value":"0001104659-05-012634"},"year":{"kind":"number","value":2005,"string":"2,005"}}},{"rowIdx":99,"cells":{"_id":{"kind":"string","value":"1022079_DEF 14A_2005_0000950117-05-001192"},"cik":{"kind":"string","value":"1022079"},"company":{"kind":"string","value":"QUEST DIAGNOSTICS INC"},"filing_type":{"kind":"string","value":"DEF 14A"},"filing_date":{"kind":"timestamp","value":"2005-03-31T00:00:00","string":"2005-03-31T00:00:00"},"period_of_report":{"kind":"timestamp","value":"2005-05-10T00:00:00","string":"2005-05-10T00:00:00"},"sic":{"kind":"string","value":"8071"},"state_of_inc":{"kind":"string","value":"DE"},"state_location":{"kind":"string","value":"NJ"},"fiscal_year_end":{"kind":"string","value":"1231"},"filing_html_index":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1022079/0000950117-05-001192-index.html"},"htm_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1022079/000095011705001192/a39144.htm"},"complete_text_filing_link":{"kind":"string","value":"https://www.sec.gov/Archives/edgar/data/1022079/0000950117-05-001192.txt"},"filename":{"kind":"string","value":"1022079_DEF 14A_2005_0000950117-05-001192.htm"},"text":{"kind":"string","value":"\nDEF 14A\na39144.htm\nQUEST DIAGNOSTICS INCORPORATED\n\n\n\n\n Information required in proxy statement.\n\n\n Schedule 14A Information\n\n\n Proxy Statement Pursuant to Section 14(a) of the Securities\n\n\n Exchange Act of 1934\n\n\n(Amendment No. )\n\n\nFiled by the Registrant [ X ]\n\n\n Filed by a party other than the Registrant [ ]\n\n\n Check the appropriate box:\n\n\n [ ] Preliminary Proxy Statement\n\n\n [ ] Confidential, for Use of the Commission Only (as\n permitted by Rule 14a-6(e)(2))\n\n\n[ X ] Definitive Proxy Statement\n\n\n [ ] Definitive Additional Materials\n\n\n [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12\n\n\nQUEST DIAGNOSTICS\n\n\n\n(Name of Registrant as Specified In Its Charter) \n\n\n \n\n\n\n(Name of Person(s) Filing Proxy Statement,\n if other than the Registrant) \n\n\n\n\n\n\n\n\nPayment of Filing Fee (Check the appropriate\n box): \n\n\n\n\n[ X ] \n \nNo fee required. \n\n\n\n[ ] \n \nFee computed on table below per Exchange Act Rules\n 14a-6(i)(1) and 0-11. \n\n\n\n\n \n \n \n\n\n\n\n \n \n(1) Title of each class of securities to which\n transaction applies: \n\n\n\n\n \n \n \n\n\n\n\n \n \n\n\n \n\n\n\n\n \n \n(2) Aggregate number of securities to which\n transaction applies: \n\n\n\n\n \n \n \n\n\n\n\n \n \n\n\n \n\n\n\n\n \n \n(3) Per unit price or other underlying value of\n transaction computed pursuant to Exchange Act Rule 0-11 (set forth the\n\n\n amount on which the filing fee is calculated and state how it was determined): \n\n\n\n\n \n \n \n\n\n\n\n \n \n\n\n \n\n\n\n\n \n \n(4) Proposed maximum aggregate value of transaction: \n\n\n\n\n \n \n \n\n\n\n\n \n \n\n\n \n\n\n\n\n \n \n(5) Total fee paid: \n\n\n\n\n \n \n \n\n\n\n\n \n \n\n\n \n\n\n\n\n \n \n \n\n\n\n\n[ ] \n \nFee paid previously with preliminary materials. \n\n\n\n\n \n \n \n\n\n\n\n[ ] \n \nCheck box if any part of the fee is offset as provided\n by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting\n fee was paid previously. Identify the previous filing by registration statement\n number, or the Form or Schedule and the date of its filing. \n\n\n\n\n \n \n \n\n\n\n\n \n \n(1) Amount Previously Paid: \n\n\n\n\n \n \n \n\n\n\n\n \n \n\n\n \n\n\n\n\n \n \n(2) Form, Schedule or Registration Statement No. \n\n\n\n\n \n \n \n\n\n\n\n \n \n\n\n \n\n\n\n\n \n \n(3) Filing Party: \n\n\n\n\n \n \n \n\n\n\n\n \n \n\n\n \n\n\n\n\n \n \n(4) Date Filed: \n\n\n\n\n \n \n \n\n\n\n\n \n \n\n\n \n\n\n\n\n \n \n \n\n\n\n\n \n\n\n\n\n\n\n\nQuest Diagnostics Incorporated\n\n\n1290 Wall Street West\n\n\nLyndhurst, New Jersey 07071\n\n\n(201) 393-5000\n\n\n\n\n\nMarch 31, 2005\n\n\nDear Fellow Shareholder:\n\n\nIt is my pleasure to invite you to attend the 2005 Annual Meeting of Shareholders of Quest Diagnostics Incorporated. The meeting will be held at 10:30 a.m. EDT on Tuesday, May 10, 2005, at The Waldorf Astoria, 301 Park Avenue, New York, New York.\n\n\nAttendance at the meeting will be limited to shareholders of record at the close of business on March 14, 2005, or their duly appointed proxy holders (not to exceed one proxy per shareholder). If you plan to attend the meeting, please review, “How can I attend the annual meeting?” on page 3, for information about our admittance procedures.\n\n\nAt the meeting, you will vote on a number of important matters described in the attached proxy statement.\n\n\nYour vote is very important. Whether you plan to attend the meeting or not, I urge you to vote your shares. Most shareholders have a choice of voting by signing and returning your proxy card or by voting by telephone or the internet. Instructions on how to vote are included with your proxy card and these proxy materials.\n\n\nThank you for your continued support of Quest Diagnostics.\n\n\n\n\n\n \nSincerely, \n\n\n\n\n\n\n\n\n\n \n \n\n\n\n\n\n\n \nSurya N. Mohapatra, Ph.D.\n\n\nChairman, President and\n\n\nChief Executive Officer \n\n\n\n\n\n\n\n\n\n\n\nNOTICE OF ANNUAL MEETING OF SHAREHOLDERS\n\n\nMarch 31, 2005\n\n\nTo the Shareholders of\n\n\nQuest Diagnostics Incorporated:\n\n\n\nDate:\n\n \n \nTuesday, May 10, 2005 \n\n\n\nTime:\n\n \n \n10:30 a.m. EDT \n\n\n\nPlace:\n\n \n \nThe Waldorf Astoria\n\n\n301 Park Avenue\n\n\nNew York, New York 10022 \n\n\n\nItems of Business:\n\n \n \n• \n \nElect one class of directors for a three-year term; \n\n\n\n \n\n \n \n• \n \nRatify the selection of our independent registered public accounting firm for 2005; \n\n\n\n \n\n \n \n• \n \nAct on a proposal to approve an amended employee long-term incentive plan; \n\n\n\n \n\n \n \n• \n \nAct on a proposal to approve an amended director long-term incentive plan; and \n\n\n\n \n\n \n \n• \n \nConsider any other business properly brought before the meeting. \n\n\n\nRecord Date:\n\n \n \nMarch 14, 2005. Holders of Quest Diagnostics Common Stock of record at the close of business on that date are entitled to vote at the meeting. \n\n\n\n\n \nBy order of the Board of Directors,\n\n\n \n\n\n\n \n \n\n\n\n \nSirisha Gummaregula\n\n\nCorporate Secretary \n\n\n\n\n \n\n\n\n \nIt is important that your shares be represented and voted\n\n\nwhether or not you plan to attend the meeting. \n \n\n\n\n \nYOU CAN VOTE BY PROXY IN ONE OF THREE WAYS: \n \n\n\n\n \n1. \n \nVIA THE INTERNET:\n\n\nVisit www.votefast.com. \n \n\n\n\n \n2. \n \nBY PHONE:\n\n\nCall 1-800-542-1160. \n \n\n\n\n \n3. \n \nBY MAIL:\n\n\nPromptly return your signed and dated proxy card/voting form in the enclosed postage pre-paid envelope. \n \n\n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \nPage\n\n\n \n\n\n\nInformation About Our 2005 Annual Meeting\n\n \n \n \n \n\n\n\nInformation About Shareholder Proposals and Nominations for Our 2006 Annual Meeting\n\n \n \n \n \n\n\n\nMatters To Be Considered at the 2005 Annual Meeting\n\n \n \n \n \n\n\n\nElection of Directors\n\n \n \n \n \n\n\n\nRatification of PricewaterhouseCoopers LLP as the Company's Independent Registered Public Accounting Firm for 2005\n\n \n \n \n \n\n\n\nApproval of Amended Employee Long-Term Incentive Plan\n\n \n \n \n \n\n\n\nApproval of Amended Director Long-Term Incentive Plan\n\n \n \n \n \n\n\n\nOur Corporate Governance\n\n \n \n \n \n\n\n\nGovernance Practices\n\n \n \n \n \n\n\n\nIndependence of the Board of Directors\n\n \n \n \n \n\n\n\nShareholder Access and Rights\n\n \n \n \n \n\n\n\nBoard Nomination Process\n\n \n \n \n \n\n\n\nBoard Practices\n\n \n \n \n \n\n\n\nCode of Business Ethics and Stock Ownership of Directors and Officers\n\n \n \n \n \n\n\n\nBoard Membership Changes During 2004\n\n \n \n \n \n\n\n\nBoard Committees\n\n \n \n \n \n\n\n\nAudit and Finance Committee\n\n \n \n \n \n\n\n\nCompensation Committee\n\n \n \n \n \n\n\n\nGovernance Committee\n\n \n \n \n \n\n\n\nQuality, Safety & Compliance Committee\n\n \n \n \n \n\n\n\nExecutive Committee\n\n \n \n \n \n\n\n\nLead Independent Director\n\n \n \n \n \n\n\n\nDirector Independence\n\n \n \n \n \n\n\n\nRelated Transactions\n\n \n \n \n \n\n\n\nStock Ownership Information\n\n \n \n \n \n\n\n\nDirectors' Compensation\n\n \n \n \n \n\n\n\nAdditional Information Regarding Executive Compensation\n\n \n \n \n \n\n\n\nSummary Compensation Table\n\n \n \n \n \n\n\n\nOption Grants\n\n \n \n \n \n\n\n\nOption Exercises and Fiscal Year-End Values\n\n \n \n \n \n\n\n\nEquity Compensation Plan Information\n\n \n \n \n \n\n\n\nPension Plans\n\n \n \n \n \n\n\n\nEmployment Agreements\n\n \n \n \n \n\n\n\nSeverance Arrangements\n\n \n \n \n \n\n\n\nCompensation Committee Report on Executive Compensation\n\n \n \n \n \n\n\n\nCompensation Committee Interlocks and Insider Participation\n\n \n \n \n \n\n\n\nPerformance Comparison\n\n \n \n \n \n\n\n\nSection 16(a) Beneficial Ownership Reporting Compliance\n\n \n \n \n \n\n\n\nReport of the Audit and Finance Committee\n\n \n \n \n \n\n\n\nFees and Services of PricewaterhouseCoopers LLP\n\n \n \n \n \n\n\n\nAudit and Finance Committee Pre-Approval Policies and Procedures\n\n \n \n \n \n\n\n\nAdditional Information\n\n \n \n \n \n\n\n\nAppendix A-Amended and Restated Employee Long-Term Incentive Plan\n\n \n \n \n \n \n\n\n\nAppendix B-Amended and Restated Director Long-Term Incentive Plan\n\n \n \n \n \n \n\n\n\n\n\n\n\n\n\n\nPROXY STATEMENT\n\n\n QUEST DIAGNOSTICS INCORPORATED\n\n\n1290 Wall Street West\n\n\nLyndhurst, New Jersey 07071\n\n\n(201) 393-5000\n\n\nINFORMATION ABOUT OUR 2005 ANNUAL MEETING\n\n\n This proxy statement and form of proxy and voting instructions are being mailed, starting March 31, 2005.\n\n\nWho is soliciting my vote?\n\n\n The Board of Directors of Quest Diagnostics Incorporated, a Delaware corporation (“Quest Diagnostics,” the “Company,” “we” or “our”) is soliciting your vote for our 2005 annual meeting.\n\n\nWhat will I vote on?\n\n\n You are being asked to vote on:\n\n\n\n \n• \nthe election of four directors for a three-year term; \n\n\n\n \n\n\n\n \n• \nthe ratification of the selection of our independent registered public accounting firm for 2005; \n\n\n\n \n\n\n\n \n• \na proposal to approve an amended employee long-term incentive plan; and \n\n\n\n \n\n\n\n \n• \na proposal to approve an amended director long-term incentive plan. \n\n\n\nWhat is the record date for the annual meeting?\n\n\n The close of business on March 14, 2005 is the record date for determining those shareholders who are entitled to vote at the annual meeting and at any adjournment or postponement.\n\n\nHow many votes can be cast by all shareholders?\n\n\n Holders of our common stock, par value $0.01 per share, as of the close of business on the record date will be entitled to vote at the annual meeting of shareholders. On that date, there were 101,292,682 shares of our common stock outstanding, each of which is entitled to one vote for each matter to be voted on at the annual meeting. There is no cumulative voting.\n\n\nHow many votes must be present to hold the annual meeting?\n\n\n A majority of the votes that may be cast, or 50,646,342 votes, present in person or represented by proxy, is needed to hold the annual meeting. We urge you to vote by proxy even if you plan to attend the annual meeting. That will help us to know as soon as possible that enough votes will be present to hold the annual meeting.\n\n\nHow do I vote?\n\n\n You may vote at the annual meeting by proxy or in person.\n\n\n If you are a holder of record (that is, if your shares are registered in your own name with our transfer agent), you may vote by mail using the enclosed proxy card, by telephone, on the internet or by attending the annual meeting and voting in person as described below.\n\n\n If you hold your shares in street name (that is, you hold your shares through a broker, bank or other holder of record), please refer to the information on the voting instruction form forwarded to you by your bank, broker or other holder of record to see which voting options are available to you.\n\n\n\n\n\n\n\n\n\nVote by Mail\n\n\n If you choose to vote by mail, simply mark, sign and date your proxy card and return it in the enclosed postage pre-paid envelope.\n\n\nVote by Telephone\n\n\n You can vote by calling 1-800-542-1160.\n\n\nVote on the Internet\n\n\n You can also choose to vote on the internet by visiting www.votefast.com. The directions for internet voting are on your proxy card or voting instruction form.\n\n\nVote at the Annual Meeting\n\n\n If you want to vote in person at the annual meeting and you hold your shares in street name, you must obtain an additional proxy from your bank, broker or other holder of record authorizing you to vote. You must bring this proxy to the annual meeting.\n\n\nHow many votes will be required to elect a director or to adopt the proposals?\n\n\n\n \n• \nTo elect directors to the Board, a plurality of the votes cast at the annual meeting is needed. A plurality means that the four nominees receiving the largest number of votes cast will be elected. \n\n\n\n \n\n\n\n \n• \nTo ratify the selection of our independent registered public accounting firm, approve the amended employee long-term incentive plan, approve the amended director long-term incentive plan and any other matters properly raised at the annual meeting, a majority of the shares represented at the annual meeting and entitled to vote is needed. \n\n\n\nCan I change or revoke my proxy?\n\n\n Yes, you may change your vote or revoke your proxy at any time before it is exercised. To do so, you should:\n\n\n\n \n• \nsend in a new proxy card with a later date; \n\n\n\n \n\n\n\n \n• \nsend a written revocation to the Corporate Secretary; \n\n\n\n \n\n\n\n \n• \ncast a new vote by telephone or the internet; or \n\n\n\n \n\n\n\n \n• \nattend the annual meeting and vote in person. \n\n\n\n Written revocations of a prior vote must be sent by mail to Sirisha Gummaregula, Corporate Secretary, at Quest Diagnostics Incorporated, 1290 Wall Street West, Lyndhurst, New Jersey 07071. If you attend the annual meeting and vote in person, your vote will revoke any previously submitted proxy.\n\n\nWhat if I do not indicate my vote for one or more of the matters on my proxy card?\n\n\n If you return a signed proxy card without indicating your vote, your shares will be voted:\n\n\n\n \n• \nfor the election of the four persons named under the caption “Election of Directors;” \n\n\n\n \n\n\n\n \n• \nfor the ratification of the selection of the independent registered public accounting firm; \n\n\n\n \n\n\n\n \n• \nfor the approval of the amended employee long-term incentive plan; and \n\n\n\n \n\n\n\n \n• \nfor the approval of the amended director long-term incentive plan. \n\n\n\nWhat if I withhold my vote or I vote to abstain?\n\n\n In the election of directors, you can vote for the four directors named on the proxy card, or you can indicate that you are withholding your vote from one or more of the directors. Withheld votes will not affect the vote on the election of directors.\n\n\n\n\n\n\n\n\n\n\n\n In connection with the proposals to ratify the selection of our independent registered public accounting firm, approve the amended employee long-term incentive plan and approve the amended director long-term incentive plan, you may vote for or against the proposals, or you may abstain from voting on the proposals. Abstentions on the proposal to ratify the selection of our independent registered public accounting firm, approve the amended employee long-term incentive plan or approve the amended director long-term incentive plan will have the same effect as a vote against the\nproposals.\n\n\nWhat happens if I do not vote?\n\n\n If you do not vote shares held in your name, those shares will not be voted.\n\n\n If your shares are held through a broker, your shares can be voted on the election of directors and the ratification of the selection of our independent registered public accounting firm in your broker's discretion.\n\n\n No broker may vote your shares on the proposal to approve the amended employee long-term incentive plan or the proposal to approve the director long-term incentive plan without your specific instructions.\n\n\n If your broker votes your shares on some, but not all, of the proposals, the votes will be “broker non-votes” for any proposal on which they do not vote. Broker non-votes will have no effect on the election of directors and the ratification of the selection of the independent registered public accounting firm, the proposal to approve the amended employee long-term incentive plan or the proposal to approve the amended director long-term incentive plan.\n\n\nWhat if there is voting on other matters?\n\n\n Our by-laws require prior notification of a shareholder's intent to vote on other matters at the annual meeting. The deadline has passed and we have not received any notifications. If other matters properly arise at the annual meeting for consideration, the persons named in the proxy will have the discretion to vote on those matters for you.\n\n\nWill the Company's independent registered public accounting firm be present at the annual meeting?\n\n\n Yes, representatives of PricewaterhouseCoopers LLP will attend the annual meeting to answer your questions and will have the opportunity to make a statement, if they desire to do so. The Audit and Finance Committee of the Board of Directors of the Company has approved the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2005 fiscal year, subject to ratification by shareholders.\n\n\nWill the directors attend the annual meeting?\n\n\n Our policy is, where practical, to schedule the annual meeting of shareholders on a day on which we also schedule a regular meeting of the Board. This year, we have scheduled a regular meeting of the Board on the date of the annual meeting of shareholders. We encourage our directors to attend each annual meeting of shareholders and expect that all of our directors will attend the annual meeting this year. All of our directors, other than two directors who retired from the Board as of the date of our last annual meeting, attended the 2004 annual meeting of shareholders.\n\n\nHow can I attend the annual meeting?\n\n\n Only shareholders as of the record date, March 14, 2005 (or their proxy holders), may attend the annual meeting. If you plan to attend the annual meeting or appoint someone to attend as your proxy, please check the box on your proxy card, or, if you are voting by telephone or the internet, follow the instructions provided to indicate your plan to attend. You or your proxy holder will then need to show photo identification to pickup your admittance card at the shareholders' admittance desk at the annual meeting.\n\n\n If you do not inform us in advance that you plan to attend the annual meeting, you will need to bring with you:\n\n\n\n \n• \nphoto identification; and \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n• \nif you hold your shares in street name, proof of ownership of your shares as of the record date, such as a letter or account statement from your broker or bank. \n\n\n\nWhat happens if the annual meeting is postponed or adjourned?\n\n\n Your proxy will still be valid and may be voted at the postponed or adjourned annual meeting. You will still be able to change or revoke your proxy until it is voted.\n\n\nDo any shareholders beneficially own more than 5% of our common stock?\n\n\n Yes. According to public filings, as of March 15, 2005, GlaxoSmithKline plc is the only holder known to us to be the beneficial owner of more than 5% of our common stock. For further information, please see “Stock Ownership Information” on page 22.\n\n\nHow can I review the list of shareholders eligible to vote?\n\n\n A list of shareholders as of the record date will be available for inspection and review upon request of any shareholder to our Corporate Secretary at 1290 Wall Street West, Lyndhurst, New Jersey 07071. We will also make the list available at the annual meeting.\n\n\nWho will pay the expenses incurred in connection with the solicitation of my vote?\n\n\n The Company pays the cost of preparing proxy materials and soliciting your vote. Proxies may be solicited on our behalf by our directors, officers or employees by telephone, electronic or facsimile transmission or in person. We have hired Georgeson Shareholder Communications, Inc. to distribute and solicit proxies and we will pay for their distribution and solicitation services an estimated fee of $12,000, plus expenses.\n\n\nINFORMATION ABOUT SHAREHOLDER PROPOSALS AND NOMINATIONS FOR OUR 2006 ANNUAL MEETING\n\n\nHow do I submit a proposal for the 2006 annual meeting?\n\n\n If you want your proposal to be included in next year's proxy statement, you should send it to the Corporate Secretary at the Company's principal executive offices at 1290 Wall Street West, Lyndhurst, New Jersey 07071. We must receive your proposal by the close of business on December 1, 2005.\n\n\n If you want to present your proposal for consideration at the 2006 annual meeting, but do not meet the deadline for inclusion in the proxy statement, our by-laws require that notice of your proposal be received by the Corporate Secretary at the Company's principal executive offices between January 1, 2006 and February 15, 2006 and conform to the requirements in our by-laws.\n\n\nHow do I nominate a candidate for director at the 2006 annual meeting?\n\n\n You must notify the Lead Independent Director by sending an e-mail to LeadIndependentDirector@quest diagnostics.com or by writing to the Board of Directors or any independent board member c/o the Corporate Secretary at the Company's principal executive offices at 1290 Wall Street West, Lyndhurst, New Jersey 07071 of your nominations between January 1, 2006 and February 15, 2006. Your notice must also conform to the requirements in our by-laws.\n\n\n\n\n\n\n\n\n\n\n\nMATTERS TO BE CONSIDERED AT THE 2005 ANNUAL MEETING\n\n\nProposal No. 1 Election of Directors\n\n\n The Company's Restated Certificate of Incorporation, as amended, requires the Company to have at least three directors but not more than twelve directors. The number of directors is set by the Board of Directors of the Company (the “Board of Directors” or the “Board”). The Board presently consists of ten directors. The Board is divided into three classes with three-year terms. New directors elected by the Board serve until the first annual meeting and are then assigned to a class for election by shareholders. At this meeting, four directors are seeking election for a three-year term expiring in 2008. Certain information as of March 15, 2005 concerning each of the nominees and continuing directors and their business experience during the past five years is provided below.\n\n\nNominees for Election\n\n\n Each nominee is currently a director of the Company. Each nominee has consented to serve if elected. The terms of these four directors seeking election expire at the adjournment of the 2005 annual meeting.\n\n\nNominees for the Board with Terms Expiring at the 2008 Annual Meeting\n\n\n\n\n\n\n \n \nWilliam F. Buehler, 65, retired in 2001 as Vice Chairman of Xerox Corporation, which he joined in 1991. At Xerox, Mr. Buehler was responsible for five business groups, Production Systems, Office Document Products, Document Services, Channels and Supplies. He also oversaw Corporate Strategic Services, Business Development and Systems Software and Architecture. Prior to joining Xerox, Mr. Buehler spent 27 years with AT&T, primarily in sales, marketing and general management positions. Mr. Buehler is a director of A.O. Smith. Mr. Buehler has been a director of Quest Diagnostics since July 1998. \n\n\n\n\n\n\n \n \nRosanne Haggerty, 44, is the founder and Executive Director of Common Ground Community, a not-for-profit housing development and management organization in New York City. Prior to founding Common Ground Community in 1990, she was the coordinator of housing development at Brooklyn Catholic Charities. Ms. Haggerty is a 2001 MacArthur Foundation Fellow. Ms. Haggerty has been a director of Quest Diagnostics since February 2002. \n\n\n\n \n \nGary M. Pfeiffer, 55, is the Senior Vice President and Chief Financial Officer of E.I. du Pont de Nemours and Company. Mr. Pfeiffer joined DuPont in 1974, where he has held positions of increasing responsibility in finance and international operations, as well as in various Dupont divisions. Mr. Pfeiffer is a director of Talbots, Inc. Mr. Pfeiffer has been a director of Quest Diagnostics since December 2004. \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n \nDaniel C. Stanzione, Ph.D., 59, retired from Lucent Technologies Incorporated in 2000 and is President Emeritus of Bell Laboratories. Dr. Stanzione began his career in 1972 with Bell Laboratories, where he led the teams working on the first microprocessors and digital signal processors. He was appointed president of Network Systems, Lucent's largest business unit, in 1996 and was appointed Chief Operating Officer of Lucent in 1997. Dr. Stanzione is a director of Avaya Inc. and InterNAP Network Services Corporation. Dr. Stanzione has been a director of Quest Diagnostics since January 1997. \n\n\n\nDirectors Not Up for Election\n\n\nMembers of the Board Continuing in Office with Terms Expiring at the 2006 Annual Meeting\n\n\n\n\n\n\n \n \nJames F. Flaherty III, 47, is President, Chief Executive Officer and a member of the Board of Directors of Health Care Property Investors, a qualified real estate investment trust specializing in healthcare real estate. Mr. Flaherty joined Health Care Property Investors in October 2002 following a nineteen-year career with Merrill Lynch & Co. Mr. Flaherty served in a variety of investment banking, capital markets and private equity functions for Merrill Lynch in its New York, London, and Los Angeles offices. Mr. Flaherty was elected Managing Director of Merrill Lynch in January 1991 and was responsible for a number of investment banking industry groups. Most significantly, Mr. Flaherty was head of Merrill Lynch's Global Healthcare Group. Mr. Flaherty has been a director of Quest Diagnostics since February\n2003. \n\n\n\n\n\n\n \n \nGail R. Wilensky, Ph.D., 61, is a Senior Fellow at Project HOPE, an international non-profit health foundation, which she joined in 1993. From 1997 to 2001, she was the chair of the Medicare Payment Advisory Commission, which advises Congress on all issues relating to Medicare. From 1995 to 1997 she chaired the Physician Payment Review Commission, which advised Congress on physician payment and other Medicare issues. In 1992 and 1993, Dr. Wilensky served as a deputy assistant to the President for policy development relating to health and welfare issues. From 1990 to 1992, she was the administrator of the Health Care Financing Administration where she directed the Medicare and Medicaid programs. Dr. Wilensky is a director of Cephalon Inc., Gentiva Health Services, Inc., Manor Care Inc. and United Healthcare Corporation.\nDr. Wilensky has been a director of Quest Diagnostics since January 1997. \n\n\n\n \n \nJohn B. Ziegler, 59, is the President, Worldwide Consumer Healthcare, of GlaxoSmithKline plc (the parent of SmithKline Beecham plc). Mr. Ziegler joined SmithKline Beecham in 1991 as the head of SB Consumer Healthcare-North American Division. He became Executive Vice President of SmithKline Beecham in 1996 and assumed his current responsibilities in 1998. He has been a director of Quest Diagnostics since May 2000. Mr. Ziegler was designated by SmithKline Beecham as a director of Quest Diagnostics pursuant to the Stockholders Agreement with SmithKline Beecham. See “Related Transactions-Stockholders Agreement.” \n\n\n\n\n\n\n\n\n\n\n\n\nMembers of the Board continuing in office with Terms Expiring at the 2007 Annual Meeting\n\n\n\n\n\n\n \n \nJohn C. Baldwin, M.D., 56, is the President and Chief Executive Officer of CBR Institute for Biomedical Research. From 1998 to 2005, Dr. Baldwin was the Associate Provost for Health Affairs at Dartmouth College and Professor of Surgery at Dartmouth Medical School. From 1994 to 1998, Dr. Baldwin was the head of the surgical programs at Baylor College of Medicine and its affiliated hospitals. Dr. Baldwin was also the Governor of the American College of Surgeons from 1991 through 1997 and the President of the International Society of Cardiothoracic Surgeons in 1999. Dr. Baldwin has served as the Vice-Chair of the Board of Overseers of Harvard University. Dr. Baldwin is a director of Massey Energy Co. Mr. Baldwin has been a director of Quest Diagnostics since May 2004. \n\n\n\n\n\n\n \n \nWilliam\n R. Grant, 80, has been Chairman of Galen\n Associates, a New York investment firm, since 1989. From 1987 to 1989 he\n was Chairman of New York Life International and from 1979 to 1987 he was\n President and Chairman of MacKay-Shields Financial Corp. He is also a former\n director and Vice Chairman of SmithKline Beecham plc, and is currently a\n director of Advanced Medical Optics, Inc. (non-executive Chairman), Massey\n Energy Co., and Vasogen Inc (non-executive Chairman). He has been a director\n of Quest Diagnostics since August 1999. \n\n\n\n\n \n \nSurya N. Mohapatra, Ph.D., 55, is Chairman of the Board, President and Chief Executive Officer of Quest Diagnostics. Prior to joining the Company in February 1999 as Senior Vice President and Chief Operating Officer, he was Senior Vice President of Picker International, a worldwide leader in advanced medical imaging technologies, where he served in various executive positions during his 18-year tenure. Dr. Mohapatra is a director of Vasogen Inc. Dr. Mohapatra was appointed President and Chief Operating Officer in June 1999, the Chief Executive Officer in May 2004, and Chairman of the Board in December 2004. Dr. Mohapatra has been a director of Quest Diagnostics since October 2002. \n\n\n\nTHE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH NOMINEE FOR DIRECTOR.\n\n\n\nProposal No. 2 \n \nRatification of PricewaterhouseCoopers LLP as the Company's\n\n\nIndependent Registered Public Accounting Firm for 2005 \n\n\n\n The Audit and Finance Committee has approved the selection of PricewaterhouseCoopers LLP (“PWC”) to serve as our independent registered public accounting firm for 2005.\n\n\n Our by-laws do not require that our shareholders ratify the selection of PWC as the independent registered public accounting firm. The Audit and Finance Committee will consider the outcome of this vote in its decision to appoint an independent registered public accounting firm next year, but is not bound by the shareholders' vote. Even if the selection of PWC is ratified, the Audit and Finance Committee may change the appointment at any time during the year if it determines that a change would be in the best interest of the Company and its shareholders.\n\n\n Representatives of PWC are expected to be present at the annual meeting to answer questions, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.\n\n\n\n\n\n\n\n\n\n\n\n For information concerning the selection of PWC, see “Report of the Audit and Finance Committee” on page 38. For information concerning fees paid to PWC, see “Fees and Services of PricewaterhouseCoopers LLP” on page 39.\n\n\nTHE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2005.\n\n\n\nProposal No. 3\n\n \n \nApproval of Amended Employee Long-Term Incentive Plan \n\n\n\n On February 23, 2005, upon the recommendation of our Compensation Committee of the Board (the “Compensation Committee”), our Board of Directors unanimously approved the Amended and Restated Long-term Incentive Plan (the “Plan”), subject to approval by our shareholders at the 2005 annual meeting of shareholders. The Plan is an amendment and restatement of the Company's 1999 Employee Equity Participation Program (the “1999 Plan”). The Plan will be applicable only to awards granted on or after the date it is approved by shareholders (the “Plan Effective Date”), and will then replace the 1999 Plan for all awards granted on or after the Plan Effective Date. The 1999 Plan was approved by the shareholders in 1999, and amendments were approved by shareholders in 2001. The\nPlan is administered by the Compensation Committee, which is composed solely of independent directors. The Plan is intended to benefit the shareholders of Quest Diagnostics by providing a means to attract, retain and reward individuals who can and do contribute to the longer term financial success of the Company and we believe that the 1999 Plan has been effective for such purpose as reflected on the performance graph contained on page 37. Further, the purpose of the Plan is that the recipients of stock-based awards under the Plan identify their success with that of the Company's shareholders and therefore be encouraged to increase their proprietary interest in the Company. The Plan allows for awards to be provided in the form of stock options, stock appreciation rights (“SARs”), incentive stock awards and other types of equity awards.\n\n\n During 2004, with the assistance of a compensation consultant, the Compensation Committee reviewed the overall structure of the Company's compensation programs. The comprehensive review was made in light of various factors, including the pending expensing of stock options. The Compensation Committee, with the assistance of the compensation consultant, also compared the Company's compensation programs to that of the compensation peer group described under “Compensation Committee Report on Executive Compensation” on page 33. Following this review, the Compensation Committee determined to approve a shift from the sole utilization of stock options to that of a mix of stock options and performance shares. The restructured equity programs will reduce the use of stock options and expand the use of\nperformance shares to reinforce the Company's goals for long-term financial performance and shareholder return.\n\n\n As of March 15, 2005, there were approximately 1,900,000 shares reserved for future issuance under the 1999 Plan of which only approximately 1,700,000 shares may be used to grant restricted stock and other awards that are not stock options or SARs. We expect to utilize approximately 400,000 additional shares for stock option awards and performance share grants during 2005 for newly hired and promoted employees and certain special recognition grants awarded to employees other than management. The remaining 1,500,000 shares will not be sufficient to cover expected future awards under the Plan. Therefore, the Company is requesting that shareholders approve an additional 6,000,000 shares under the Plan. If approved, the additional 6,000,000 plus the remaining 1,900,000 shares will provide a total of approximately 7,900,000\nshares available for further grants under the Plan, of which 4,700,000 shares will be available for restricted shares, including grants of performance-based restricted stock, as well as awards of stock options and SARs. We believe that the utilization of stock-based awards under the Plan is generally at or below the average rate of companies in our peer group. Therefore, we anticipate that, at the current utilization, this amendment would enable the Company to continue issuing awards under the Plan through 2008. This amendment will not have any effect on the administration, operations, or distributions under the Plan, other than providing the Company with additional shares.\n\n\n The Plan generally updates the 1999 Plan to (1) increase the number of shares of the Company's common stock that may be delivered pursuant to awards under the Plan by 6,000,000 shares, (2) permit 3,000,000 more shares to be available for awards of restricted stock and other stock-based awards that are not stock options or SARs, (3) permit 1,000,000 more shares to be available for grants as options or\n\n\n\n\n\n\n\n\n\n\n\nSARS to any one individual over the life of the Plan, (4) extend the term of the Plan to the tenth anniversary of the Plan Effective Date, (5) reduce the term of any award of stock options or SARs granted under the Plan on or after the Plan Effective Date from eleven years to seven years and (6) permit certain awards to continue to be considered “qualified performance-based compensation” as defined under regulations interpreting Section 162(m) of the Internal Revenue Code. Notwithstanding the adoption of the Plan and its submission to shareholders, the Company reserves the right to pay employees, including recipients of awards under the Plan, amounts which may or may not be deductible under Section 162(m) or other provisions of the Internal Revenue Code. We are asking shareholders to approve an amended Plan reflecting\nthe amendments described above.\n\n\n The following summary describes the principal features of the amended Plan. The summary does not purport to be complete and is qualified in its entirety by reference to the terms of the amended Plan, a copy of which is attached as Appendix A.\n\n\n\n\n\n \nEligibility. All employees of the Company and its subsidiaries (approximately 38,600 as of December 31, 2004), as determined by the Compensation Committee or its delegates, are eligible to receive awards under the Plan. \n\n\n\n\n\n\n\n\n\n \nShares Underlying Awards. The shares underlying awards granted under the Plan are shares of Quest Diagnostics Incorporated common stock, par value $0.01 per share. The market value of the 6,000,000 additional shares included in the amended Plan, as of December 31, 2004, was $573,300,000. \n\n\n\n\n\n\n \nStock Available for the Plan. The Plan will permit up to an additional 6,000,000 shares to be delivered pursuant to awards under the Plan, together with any shares previously authorized by shareholders under the Plan that have not yet been issued or have been forfeited and any remaining shares available under the Company's 1996 Employee Equity Participation Program (the “1996 Plan”). Shares covered by awards which are not earned, which are settled in cash or which are forfeited, and options which expire unexercised or are exchanged for other awards, are again available for grant. \n\n\n\n\n\n\n \nAdjustments. The Plan allows the Compensation Committee to make such adjustment or adjustments to the number and kind of shares subject to outstanding awards under the Plan, the exercise price of outstanding stock options and SARs under the Plan and the share limits referred to below in connection with any corporate transaction (such as, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, spin-off or similar occurrence) as the Compensation Committee determines may be required to preserve (or prevent enlargement of) the benefits or potential benefits intended under the Plan. \n\n\n\n\n\n\n \nShare Limits. Subject to any adjustments, (1) the maximum number of shares that may be delivered in connection with awards of restricted stock and other stock-based awards under the Plan that are not stock options or SARs on or after the Plan Effective Date will be 4,700,000 (which is 3,000,000 shares plus any unused amounts of shares available under earlier plans), (2) no one individual may receive awards granted as options or SARs covering more than 3,000,000 shares of the Company common stock under the Plan over the life of the Plan and (3) no one individual may receive awards granted as incentive stock awards covering more than 600,000 shares of the Company common stock under the Plan after the Plan Effective Date. \n\n\n\n\n\n\n \nAwards. The Plan permits the grant of stock options (incentive and non-qualified), SARs, incentive stock awards and other types of equity awards. An award may be granted separately or with another award. Awards may also be granted in tandem, so that the exercise or vesting of one award cancels another award held by the same participant. \n\n\n\n\n\n\n \nStock Option Awards. Stock options may be in the form of incentive stock options (within the meaning of Section 422 of the U.S. Internal Revenue Code) or options which do not qualify as incentive stock options (“nonqualified stock options”). The Compensation Committee determines the recipients of stock options, the number of shares covered by these awards, and the other terms and conditions of the options, except that the exercise price cannot be less than the fair market value of a share of the Company's common stock at the time of award grant, except for awards made in connection with the assumption of, or in substitution for, outstanding awards previously granted by an acquired entity. Each stock option granted on or after the Plan Effective Date will expire on the applicable date designated by the Compensation\nCommittee but no later than seven years from the \n\n\n\n\n\n\n\n\n\n\n\n\n\n \ndate the stock option is granted. No incentive stock options have been awarded under the Plan. At the discretion of the Compensation Committee, SARs may be granted separately or in combination with options granted under the Plan. The longest term a stock appreciation award granted on or after the Plan Effective Date will be outstanding will be seven years. Options may be exercised by such means as the Compensation Committee may determine, including payment of the option price in cash, by delivering stock of the Company or by authorizing a third party to sell shares of the Company common stock acquired by the exercise of a stock option and pay an appropriate portion of the proceeds to the Company. At the discretion of the Compensation Committee, a plan participant who exercises any option may receive a replacement option in accordance with the terms and conditions\nof each option award. \n\n\n\n\n\n\n \nIncentive Stock Awards. Incentive stock awards are shares of our common stock which may be awarded subject to various conditions as determined by the Compensation Committee, e.g., based on achieving certain financial performance goals. A maximum of 4,700,000 shares of the Company common stock may be issued as stock awards under the Plan, including shares currently available under the Plan. To the extent that a grant of shares is intended to be deductible by the Company under Section 162(m) of the Internal Revenue Code, the grant will be awarded based on the achievement of such performance measures as the Compensation Committee will determine. The performance measures that may be used by the Compensation Committee under the Plan for these grants include operating profits (including EBITDA), net profits, earnings per share,\nprofit returns and margins, revenues, shareholder return and/or value, stock price, customer service and quality metrics. The Plan allows these performance measures to be measured solely on a corporate, subsidiary or business unit basis or on a combination of these bases. The performance criteria specified by the Plan may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure of the selected performance criteria. Under the Plan, profits, earnings and revenues used for any performance measurement may exclude: gains or losses on operating asset sales or dispositions, asset write-downs, litigation or claim judgments or settlements, accruals for historic environmental obligations, effect of changes in tax law or the rate of deferred tax liabilities, accruals for reorganization and restructuring\nprograms, uninsured catastrophic property losses, the effect of changes in accounting standards, the cumulative effect of changes in accounting principles and any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30, Statement of Financial Accounting Standards No. 145 and/or in management's discussion and analysis of financial performance appearing in the Company's annual report to shareholders for the applicable year. \n\n\n\n\n\n\n\n\n\n \nProhibition on repricing. Except for adjustments described above, Quest Diagnostics may not lower the exercise price of outstanding stock options or SARs. \n\n\n\n\n\n\n \nAmendments. The Board of Directors may amend the Plan as it deems necessary without shareholder approval. However, except for adjustments described above, any amendment to increase the total number of shares for which awards and stock options may be granted under the Plan, to reprice any SAR or stock option of which the exercise price is in excess of the value of the underlying stock, or to decrease the price at which options may be granted cannot be effective without shareholder approval. \n\n\n\n\n\n\n \nTerm. The Plan has a term that ends on the tenth anniversary of the Plan Effective Date and no awards or other rights may be granted after termination. \n\n\n\n\n\n\n \nPlan Benefits. Future grants under the Plan, if any, that will be made to eligible participants are subject to the discretion of the Compensation Committee or its delegates and, therefore, are not determinable at this time. \n\n\n\n\n\n\n \nFederal Income Tax Consequences. The following discussion is a summary of the material U.S. federal income tax consequences of stock options granted under the Plan under U.S. federal income tax laws as currently in effect. \n\n\n\n\n\n\n \nIncentive Stock Options. Neither the grant nor the exercise of an incentive stock option will be a taxable event to the optionee, except that the alternative minimum tax may apply at the time of exercise. The optionee will recognize long-term capital gain or loss on a disposition of shares acquired upon exercise of an incentive stock option, provided that the optionee does not dispose of \n\n\n\n\n\n\n\n\n\n\n\n\n\n \nsuch shares within two years from the date the incentive stock option was granted and within one year after the shares were acquired by the optionee. For purposes of determining such gain or loss, the optionee's basis in such shares will, in general, be the exercise price of the incentive stock option. If the optionee satisfies both of the holding periods described above, then the Company will not be allowed a deduction by reason of the exercise of the incentive stock option. If the optionee disposes of the shares acquired upon exercise before satisfying the holding period requirements discussed above (a “disqualifying disposition”), his or her gain recognized on the disqualifying disposition will be taxed as ordinary income to the extent of the difference between the fair market value of the shares on the date of exercise and exercise price\nof the incentive stock option, and the Company will be entitled to a deduction in this amount. The gain (if any) in excess of the amount recognized as ordinary income on a disqualifying disposition will be long-term or short-term capital gain, depending upon the length of time the optionee held the shares. \n\n\n\n\n\n\n \nNon-Qualified Stock Options. The grant of a non-qualified stock option will not be a taxable event to the optionee. The optionee generally will recognize ordinary income upon exercise of the non-qualified stock option, in an amount equal to the excess of the fair market value of the shares received at the time of exercise (including any option shares withheld by the Company to satisfy tax withholding obligations) over the exercise price of the non-qualified stock option, and the Company will generally be allowed a deduction in this amount. Upon disposition of the shares received upon exercise of the non-qualified stock option, the optionee will recognize long-term or short-term capital gain or loss, depending upon the length of time he or she held such shares. The amount of long-term or short-term capital gain or loss recognized by\nthe optionee upon disposition of the shares will be an amount equal to the difference between the amount realized on the disposition and the optionee's basis in the shares (which basis is ordinarily the fair market value of the shares on the date the option was exercised). Special tax rules may apply if an optionee uses previously owned shares to pay the exercise price of an option. \n\n\n\n\n\n\n\n\n\n \nSection 162(m) of the Internal Revenue Code imposes certain limitations on the deductibility of compensation paid to “covered employees” and that is not “qualified performance-based compensation”. Under Treasury Regulations promulgated pursuant to Section 162(m) of the Internal Revenue Code, at least three conditions must be satisfied in order for compensation to qualify as performance-based: (1) the compensation must be payable on account of the attainment of one or more pre-established, objective performance goals, or, in the case of non-qualified stock options, upon the exercise of the stock option if the exercise price at least equals the market value of the stock on the date of grant of the stock option, (2) the material terms of the compensation and the performance measures must be disclosed to and approved by shareholders\nbefore payment and (3) a committee of the board of directors that is comprised solely of two or more “outside directors” must certify that the performance goals have been satisfied before payment. Certain features of the Plan were designed to allow awards made to covered employees to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code. Notwithstanding the adoption of the Plan and its submission to shareholders, the Company reserves the right to pay its employees, including participants in the Plan, amounts which may or may not be deductible under Section 162(m) or other provisions of the Internal Revenue Code. \n\n\n\nTHE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.\n\n\n\nProposal No. 4\n\n \n \nApproval of Amended Director Long-Term Incentive Plan \n\n\n\n On March 17, 2005, upon the recommendation of our Compensation Committee, our Board of Directors unanimously approved the Amended and Restated Director Long-term Incentive Plan (the “Director Plan”), subject to approval by our shareholders at the 2005 annual meeting of shareholders. The Director Plan is an amendment and restatement of the Company's Stock Option Plan for Non-Employee Directors (the “Prior Director Plan”). The Director Plan will be applicable only to awards granted on or after the date it is approved by shareholders (the “Director Plan Effective Date”), and will then replace the Prior Director Plan for all awards granted on or after the Director Plan Effective Date. The Prior Director Plan was approved by the shareholders in 1998. The Compensation Committee administers\nthe Director Plan. The Director Plan is intended to serve as a long-term incentive component of the\n\n\n\n\n\n\n\n\n\ncompensation paid to non-employee directors, providing a feature that the Board believes is competitive with that offered by other public companies to their directors. In that regard, it is the purpose of the Director Plan to secure for the Company and its shareholders the benefits of the incentive inherent in increased common stock ownership by members of the Board who are not employees of the Company or any of its subsidiaries. The intention of the Director Plan is to encourage persons to become and remain directors of the Company by affording them a greater proprietary interest in the Company's success through stock ownership.\n\n\n As described above, during 2004, following a comprehensive review by the Compensation Committee of the overall structure of the Company's compensation programs, the Compensation Committee approved a shift from the sole utilization of stock options to that of a mix of stock options and other types of equity awards. The Compensation Committee also determined that the Director Plan be amended to provide for the issuance of equity awards in addition to stock options in order to have a similar approach with respect to executive compensation.\n\n\n As of March 15, 2005, there were approximately 250,000 shares reserved for future issuance under the Prior Director Plan. This amendment will not have any effect on the administration, operations, or distributions under the Director Plan, other than (1) providing for issuance of equity awards such as restricted stock and other stock-based awards that are not stock options, (2) providing for the issuance of a one-time grant upon the initial election of a director to the Board, (3) extending the term of the Director Plan to the tenth anniversary of the Director Plan Effective Date and (4) reducing the term of any options granted under the Director Plan on or after the Effective Date from ten to seven years . The Director Plan also generally updates the Prior Director Plan. We are asking shareholders\nto approve an amended Director Plan reflecting the amendments described above.\n\n\n The following summary describes the principal features of the amended Director Plan. The summary does not purport to be complete and is qualified in its entirety by reference to the terms of the amended Director Plan, a copy of which is attached as Appendix B.\n\n\n\n\n\n \nEligibility. All of the non-employee directors of the Company are eligible to receive awards under the Director Plan. As of December 31, 2004, nine directors were eligible to participate in the Director Plan. \n\n\n\n\n\n\n\n\n\n \nShares Underlying Awards. The shares underlying awards granted under the Director Plan are shares of Quest Diagnostics Incorporated common stock, par value $0.01 per share. \n\n\n\n\n\n\n \nStock Available for the Director Plan. The Director Plan permits up to 1,000,000 shares to be delivered pursuant to awards under the Director Plan. Shares covered by awards which expire or are cancelled, are again available for grant. \n\n\n\n\n\n\n \nAdjustments. The Director Plan provides that in the event of any change in the common stock of the Company by reason of any stock dividend recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or any similar change affecting the Company common stock, the number and kind of shares which thereafter may be optioned, awarded and sold under the Director Plan and the number and kind of shares subject to stock awards in outstanding stock award agreements or subject to option in outstanding option agreements and the exercise price per share of such options shall be appropriately adjusted consistent with such change in such manner as the Board or a committee of the Board may deem equitable to prevent substantial dilution or enlargement of the right granted to, or available for, participants\nin the Director Plan. \n\n\n\n\n\n\n \nAwards. The Director Plan permits the grant to each non-employee director of stock options and equity-based stock awards covering an aggregate of no more than 10,000 shares of common stock of the Company on the Director Plan Effective Date and the date of the annual meeting of stockholders of each year commencing on January 1, 2006. The Director Plan also permits a one-time grant to a non-employee director of stock options and equity-based stock awards covering an aggregate of no more than 20,000 shares of common stock of the Company upon the initial election of such non-employee director by the Board. Options or stock awards may be granted separately or in combination under the Director Plan. \n\n\n\n\n\n\n \nStock Option Awards. Options granted under the Director Plan on or after the Effective Date have a term of seven years from the date of grant. Annual option grants become exercisable in three equal \n\n\n\n\n\n\n\n\n\n\n\n\n\n \nannual installments beginning on the first anniversary of the date of grant. Options elected in lieu of director retainer fees and meeting fees are exercisable immediately. In respect of any options granted on or after the Director Plan Effective Date, a participant under the Director Plan may exercise his or her option up to the seventh anniversary of the date of grant whether or not he or she ceases to be a director. The exercise price for common stock of the Company purchased pursuant to an option granted under the Director Plan is the “fair market value” (as defined in the Director Plan) at the time the option is granted. The exercise price of the shares of common stock as to which an option is exercised is paid to the Company as determined by the Compensation Committee, but no later than the date on which any shares are issued on exercise\nof the option. The Compensation Committee may authorize payment of the exercise price through delivery of shares of common stock of the Company already owned by the participant and having a fair market value on the date of such delivery equal to the exercise price; delivery of a combination of cash and common stock of the Company having a total fair market value on the date of such delivery equal to the exercise price; or by delivery of a notice of cancellation of options held by the participant having a “spread” equal to the exercise price for the number of shares being exercised (including any tax withheld by the Company in connection with the exercise). “Spread” means the difference between the fair market value of the common stock of the Company on the date of exercise and the option price multiplied by the number of shares covered by the option being cancelled. \n\n\n\n\n\n\n \nStock Awards. The Director Plan permits the grant of stock awards. Stock awards are shares of our common stock which may be awarded subject to various conditions as determined by the Compensation Committee, e.g., based on achieving certain performance goals. Stock awards under the Director Plan may be settled in various ways, including through cash payments and the delivery of shares of common stock of the Company. \n\n\n\n\n\n\n\n\n\n \nProhibition on repricing. Except for adjustments described above, Quest Diagnostics may not lower the exercise price of outstanding stock options. \n\n\n\n\n\n\n \nAmendments. The Board of Directors may amend the Director Plan as it deems necessary without shareholder approval. However, except for adjustments described above, any amendment to increase the total number of shares which may be issued or transferred under the Director Plan, change the exercise price, change the maximum period during which options may be exercised, extend the period during which options or stock awards may be granted under the Director Plan or expand the class of individuals eligible to receive stock awards or options under the Director Plan cannot be effective without shareholder approval. \n\n\n\n\n\n\n \nTerm. The Director Plan has a term that ends on the tenth anniversary of the Director Plan Effective Date and no awards or other rights may be granted after termination. \n\n\n\n\n\n\n \nPlan Benefits. Future grants under the Director Plan, if any, that will be made to eligible participants are subject to the discretion of the Board or a committee of the Board and, therefore, are not determinable at this time. \n\n\n\n\n\n\n \nFederal Income Tax Consequences. The following discussion is a summary of the material U.S. federal income tax consequences of stock options granted under the Director Plan under U.S. federal income tax laws as currently in effect. The grant of a stock option will not be a taxable event to the director and no deduction is allowed to the Company upon the grant of such option. The director generally will recognize ordinary income upon exercise of the stock option, in an amount equal to the excess of the fair market value of the shares received at the time of exercise over the exercise price of the stock option, and a deduction is allowed to the Company for the same amount. Upon disposition of the shares received upon exercise of the stock option, the director will recognize long-term or short-term capital gain or loss, depending\nupon the length of time he or she held such shares. The amount of long-term or short-term capital gain or loss recognized by the director upon disposition of the shares will be an amount equal to the difference between the amount realized on the disposition and the director's basis in the shares (which basis is ordinarily the fair market value of the shares on the date the option was exercised). Special tax rules may apply if a director uses previously owned shares to pay the exercise price of an option. \n\n\n\nTHE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.\n\n\n\n\n\n\n\n\n\nOUR CORPORATE GOVERNANCE\n\n\nGovernance Practices\n\n\n The Board of Directors believes that good corporate governance is critical to achieve business success. The Board has adopted a set of Corporate Governance Guidelines to enhance its own effectiveness and to implement best practices for the Company's corporate governance. These principles are reviewed from time to time for possible revision to respond to changing regulatory requirements, evolving best practices, and the concerns of our shareholders. Our Corporate Governance Guidelines are published on our website at www.questdiagnostics.com. Highlights of our corporate governance practices are described below.\n\n\nIndependence of the Board of Directors\n\n\n\n \n• \nA substantial majority of the Board are independent directors (7 of 10 members) as defined under the New York Stock Exchange listing standards. See “Director Independence” on page 20 for further information regarding the independence of the directors. \n\n\n\n \n\n\n\n \n• \nThe Audit and Finance Committee, Compensation Committee, Governance Committee and the Quality, Safety & Compliance Committee are composed solely of independent directors. \n\n\n\n \n\n\n\n \n• \nEach standing committee, other than the Executive Committee, is chaired by an independent director. \n\n\n\n \n\n\n\n \n• \nNone of the independent directors receives any consulting or other non-director fees from the Company. \n\n\n\nShareholder Access and Rights\n\n\n\n \n• \nShareholders are asked to ratify the selection of the independent registered public accounting firm at our annual meeting. \n\n\n\n \n\n\n\n \n• \nAll equity compensation plans, other than our Employee Stock Purchase Plan, have been approved by shareholders. \n\n\n\n \n\n\n\n \n• \nThe Company provides a process for shareholders to send communications to the Board of Directors. Shareholders may communicate directly with the full Board or any of the independent board members by sending an email to our Lead Independent Director at LeadIndependentDirector@questdiagnostics.com or writing to the full Board or any independent board member c/o Corporate Secretary, 1290 Wall Street West, Lyndhurst, New Jersey 07071. Communications received at the email address are automatically routed to the Company's Lead Independent Director with a copy to the Company's General Counsel and Corporate Secretary. The Lead Independent Director determines whether any such communication received from a shareholder should be distributed to other members of the Board. All communications received by the Corporate Secretary involving the interest\nof the Company or its shareholders, are forwarded to the intended directors. \n\n\n\n \n\n\n\n \n• \nThe Audit and Finance Committee and the Board of Directors have established a procedure whereby complaints and concerns with respect to accounting, internal controls and auditing matters may be submitted to the Audit and Finance Committee. All communications received by a director from a shareholder relating to the Company's accounting, internal controls or auditing matters are immediately forwarded to the Chairman of the Audit and Finance Committee and are investigated and responded to in accordance with the procedures established by the Audit and Finance Committee. In addition, the Company has established a hotline (known as CHEQline) pursuant to which employees can anonymously report accounting, internal controls and financial irregularities (as well as compliance concerns on other laws). \n\n\n\n \n\n\n\n \n• \nOur policy is, where practical, to schedule the annual meeting of shareholders on a day on which we also schedule a regular meeting of the Board. This year, we have scheduled a regular meeting of the Board on the date of the annual meeting of shareholders. We encourage our directors to attend each annual meeting of shareholders and expect that all of our directors will attend the annual meeting this year. All of our directors, other than two directors who retired as of such date, attended the 2004 annual meeting of shareholders. \n\n\n\n\n\n\n\n\n\n\n\n\nBoard Nomination Process\n\n\n\n \n• \nThe Governance Committee is responsible for reviewing with the Board, on an annual basis, the composition of the Board as a whole and whether the Company is being well served by the directors taking into account each director's independence, skills, experience, availability for service to the Company and other factors the Governance Committee deems appropriate. The Governance Committee is responsible for recommending director nominees to the Board, including renomination of persons who are already directors. The Governance Committee does not set specific, minimum qualifications that nominees must meet in order for the Governance Committee to recommend them to the Board, but rather believes that each nominee should be evaluated based on his or her own merits, taking into account the needs of Quest Diagnostics and the composition of the Board.\nRecommendations are made by the Governance Committee in accordance with the policies and principles of its charter and taking into account the following key qualifications and factors established by the Governance Committee and the Board: \n\n\n\n\n \n\n\n\n \n™ \nQualifications: \n\n\n\n\n \n\n\n\n \n¡ \nReputation for highest ethical standards and integrity consistent with Quest Diagnostics' values of Quality, Integrity, Innovation, Accountability, Collaboration and Leadership; and \n\n\n\n \n\n\n\n \n¡ \nRelevant experience such as: \n\n\n\n\n \n\n\n\n \n• \nChief Executive Officer or Chief Operating Officer (or similar responsibilities) current or past; or \n\n\n\n \n\n\n\n \n• \nDemonstrated expertise in business function(s) such as sales, operations, finance, strategy, legal or human resources; or \n\n\n\n \n\n\n\n \n• \nMedical practitioners and/or science and health thought leaders. \n\n\n\n\n \n\n\n\n \n™ \nOther factors considered by the Governance Committee and the Board are the following: \n\n\n\n\n \n\n\n\n \n¡ \nAt least a majority of the directors meet the criteria for independence under the New York Stock Exchange listing standards and any categorical standards established by the Board. \n\n\n\n \n\n\n\n \n¡ \nPrior experience as a director or executive officer of a public company. \n\n\n\n \n\n\n\n \n¡ \nNumber of current board positions and other time commitments. \n\n\n\n \n\n\n\n \n¡ \nOverall range of skills, experience and seniority represented by the Board as a whole. \n\n\n\n\n \n\n\n\n \n• \nThe Governance Committee considers suggestions from many sources, including shareholders, regarding possible candidates for director. Shareholders may recommend candidates for consideration as director to the Governance Committee by sending an email to our Lead Independent Director or writing to the Board at the address specified under “Our Corporate Governance-Shareholder Access and Rights”. See “Information About Shareholder Proposals and Nominations for our 2006 Annual Meeting” for the deadlines and process by which you may submit director nominees for consideration by the Governance Committee for the 2006 annual meeting of shareholders. The notice should contain the proposed nominee's full name, biographical information regarding the proposed nominee and the proposed nominee's relationship to the shareholder\nand should be submitted in compliance with our by-laws. The Governance Committee expects to consider qualified shareholder nominees for director in the same manner as recommendations it receives from any other source. \n\n\n\n \n\n\n\n \n• \nThe process of nominating directors is as follows. First, the Governance Committee identifies a need to add a new board member who meets specific criteria or to fill a vacancy on the Board. The Governance Committee then identifies candidates by seeking input from Board members and considering recommendations for nominees submitted by shareholders. The Governance Committee also hires third party search firms to assist in identifying and evaluating candidates for nomination. After the Governance Committee ranks the candidates, the Chairman of the Board and the Chief Executive Officer interview the candidates selected by the Governance Committee. The Lead Independent Director (who is the Chair of the Governance Committee) and other board members conduct subsequent interviews of these candidates. After the interview process, the Governance Committee\nre-assesses the candidates and determines which candidates the Governance Committee will recommend to the Board for nomination as a director. The Governance Committee then makes its recommendation to the entire Board, which determines which candidates are nominated by the Board of Directors or elected to fill a vacancy. A formal offer is then extended by the Chairman of the Board and the Lead Independent Director to the candidate(s) nominated or elected to fill a vacancy by the Board of Directors. \n\n\n\n\n\n\n\n\n\n\n\n\nBoard Practices\n\n\n\n \n• \nNon-management directors meet privately in executive sessions at all regularly scheduled meetings with the Lead Independent Director presiding. Independent directors meet privately in executive sessions at least once per year with the Lead Independent Director presiding. \n\n\n\n \n\n\n\n \n• \nThe Board performs an annual assessment of its structure and performance, including reviewing the Board's activities against those set out in its Corporate Governance Guidelines and committee charters and making recommendations for changes or improvements in practices or structure. \n\n\n\n \n\n\n\n \n• \nThe Board reviews annually senior management succession planning, and reviews Company policies for the development of management personnel. \n\n\n\n \n\n\n\n \n• \nIndependent directors have unlimited access to officers and employees of the Company. \n\n\n\n \n\n\n\n \n• \nDirector training sessions are scheduled regularly with senior management, our independent registered public accounting firm and compensation consultants to keep the Board updated on changes in the Company's businesses, its markets and best practices in general. Directors are also offered the opportunity to attend director education programs offered by third parties. \n\n\n\n \n\n\n\n \n• \nIndependent directors receive a significant portion of their annual compensation in equity to further align our directors with the interest of our shareholders. \n\n\n\n \n\n\n\n \n• \nIndependent directors have unlimited access to independent legal, financial or other advisors as they may deem necessary, without obtaining management approval. \n\n\n\n \n\n\n\n \n• \nThe Governance Committee reviews incumbent directors prior to recommending the slate for election. The review emphasizes directors' commitment to serving the Company, attendance at meetings and commitment to shareholders, employees and other constituencies served by the Company. \n\n\n\n \n\n\n\n \n• \nCommittee chairs and members are rotated from time to time to give the directors a broader knowledge of the Company's affairs. \n\n\n\n \n\n\n\n \n• \nCommittees report on their activities to the Board at each Board meeting. \n\n\n\n \n\n\n\n \n• \nMaterials related to agenda items are provided to directors sufficiently in advance of meetings to allow the directors to prepare for discussion of the items. \n\n\n\nCode of Business Ethics and Stock Ownership of Directors and Officers\n\n\n\n \n• \nThe Company has adopted a Code of Business Ethics (the “Code”) applicable to all directors, officers and employees. The Code is posted on the Investor Relations-Corporate Governance section of our website at www.questdiagnostics.com. Any waivers from any provisions of the Code for executive officers, senior financial officers and directors will be promptly disclosed to shareholders. In addition, any amendments to the Code, as well as any waivers from certain provisions of the Code relating to our Chief Executive Officer and senior financial officers will be posted at the above website address. \n\n\n\n \n\n\n\n \n• \nThe Board's stock ownership guidelines require each non-management director to own at least 3,000 shares of common stock of the Company before they can receive full cash settlement for their stock option exercises. \n\n\n\n \n\n\n\n \n• \nThe Company's stock ownership guidelines require officers to maintain a minimum ownership position in the Company stock before they can receive full cash settlement for their stock option exercises. See “Compensation Committee Report on Executive Compensation.” \n\n\n\n \n\n\n\n \n• \nStock ownership information of directors and executive officers is shown in the table entitled “Stock Ownership Information” on page 22. \n\n\n\n\n\n\n\n\n\n\n\n\nBoard Membership Changes During 2004\n\n\n Mr. Kenneth W. Freeman retired as Chairman of the Board on December 14, 2004 after more than nine years of service to the Company. Mr. Kenneth D. Brody and Ms. Mary Cirillo retired from the Board on May 4, 2004, after more than seven years of service to the Company. Mr. John C. Baldwin, M.D. was elected to the Board on May 4, 2004. Mr. Gary M. Pfeiffer was elected to the Board on December 14, 2004.\n\n\nBoard Committees\n\n\n In order to fulfill its responsibilities, the Board has delegated certain authority to its committees. There are five standing committees. During 2004, the Board held eight regular meetings. Each of our directors attended at least 75% of the total number of meetings of the Board of Directors and the committees on which he or she served. All of our directors may attend meetings of any committee in which such director is not a member. Mr. Grant attended some of the meetings of the Audit and Finance committee in 2004 as a guest. The following table shows the membership of, and the number of meetings held by, each of the committees during 2004.\n\n\n\n\n* \nChairman of the committee. \n\n\n\nKenneth D. Brody and Mary A. Cirillo retired from the Board as of May 4, 2004. \n\n\n\nKenneth W. Freeman retired from the Board as of December 14, 2004. \n\n\n\n A brief description of the Board committees and their functions is set forth below. Additional information about the committees can be found in the committee charters, which are available on the Investor Relations-Corporate Governance section of our website at www.questdiagnostics.com. Printed copies of these charters, the Corporate Governance Guidelines or the Code may be obtained without charge by writing to the Corporate Secretary at the Company's principal executive offices.\n\n\nAudit and Finance Committee\n\n\n The Audit and Finance Committee:\n\n\n\n \n• \nAssists the Board in monitoring the quality and integrity of the financial statements of the Company and financial reporting procedures and the Company's compliance with legal and regulatory requirements. \n\n\n\n \n\n\n\n \n• \nOversees management's accounting for the Company's financial results and reviews the timeliness and adequacy of the reporting of those results and related judgments. \n\n\n\n \n\n\n\n \n• \nOversees the internal audit function and makes inquiry into the audits of the Company's books made internally and by outside independent registered public accounting firms. \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n• \nAssists the Board in monitoring the independent registered public accounting firm's qualifications and independence and appoints and replaces the independent registered public accounting firm, oversees the independent registered public accounting firm and is responsible for the compensation of the independent registered public accounting firm. \n\n\n\n \n\n\n\n \n• \nPre-approves services to be performed by the independent registered public accounting firm. \n\n\n\n \n\n\n\n \n• \nInforms the Board of any significant accounting matters, including critical accounting policies and judgments. \n\n\n\n \n\n\n\n \n• \nAdvises and makes recommendations with regard to certain financing transactions and other significant financial policies and actions. \n\n\n\n \n\n\n\n \n• \nEstablishes procedures for the receipt, retention and treatment of complaints relating to accounting, internal accounting controls, and for the confidential, anonymous submission by employees of concerns regarding accounting or auditing matters. \n\n\n\n \n\n\n\n \n• \nMay, to the extent it deems necessary or appropriate, retain independent legal, accounting or other advisors. \n\n\n\n \n\n\n\n \n• \nReviews and reports to the Board on the Company's management of its financial resources. \n\n\n\n \n\n\n\n \n• \nReviews the performance of the Audit and Finance Committee. \n\n\n\n Each member of our Audit and Finance Committee is independent under the rules of the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange listing standards. Each of James F. Flaherty and Gary M. Pfeiffer qualifies as an “audit committee financial expert” as defined by the SEC. Each member of our Audit and Finance Committee is “financially literate” as required by the New York Stock Exchange listing standards. For descriptions of the experience of Mr. Flaherty and Mr. Pfeiffer see “Election of Directors” on page 5.\n\n\nCompensation Committee\n\n\n The Compensation Committee:\n\n\n\n \n• \nRecommends to the Board the compensation of the Chief Executive Officer based on the directors' evaluation of the Chief Executive Officer and the Company's financial performance, shareholder return, competitive compensation data and other factors. \n\n\n\n \n\n\n\n \n• \nAnnually reviews and approves for other executive officers of the Company annual base salary, annual incentive compensation, and long-term incentive compensation. \n\n\n\n \n\n\n\n \n• \nHas the authority to retain and terminate consultants to assist in the evaluation and compensation of directors, the Chief Executive Officer and elected officers; and has the authority to approve consultants' fees and other retention terms. \n\n\n\n \n\n\n\n \n• \nReviews and recommends to the Board the compensation of Company directors. \n\n\n\n \n\n\n\n \n• \nSupports the Board in the senior management succession planning process. \n\n\n\n \n\n\n\n \n• \nRecommends to the Board the equity based, incentive compensation and retirement plans, policies and programs of the Company. \n\n\n\n \n\n\n\n \n• \nReviews and approves employment agreements, severance agreements and change in control agreements, and any additional special or supplemental benefits for executive officers. \n\n\n\n \n\n\n\n \n• \nAdministers the equity-based and incentive compensation plans of the Company. \n\n\n\n \n\n\n\n \n• \nReviews the performance of the Compensation Committee. \n\n\n\n Each member of our Compensation Committee is independent under the New York Stock Exchange listing standards.\n\n\n\n\n\n\n\n\n\n\n\nGovernance Committee\n\n\n The Governance Committee:\n\n\n\n \n• \nActively seeks individuals qualified to become Board members, and reviews and recommends possible candidates for Board membership, taking into account such criteria as independence, diversity, age, skills, occupation and experience in the context of the needs of the Board. \n\n\n\n \n\n\n\n \n• \nReviews the structure of the Board, its committee structure and overall size. \n\n\n\n \n\n\n\n \n• \nAdvises the Board regarding significant developments in corporate governance matters as well as the Company's compliance with the corporate governance guidelines. \n\n\n\n \n\n\n\n \n• \nRecommends for Board approval assignments of Board members to committees. \n\n\n\n \n\n\n\n \n• \nReviews relationships and transactions of directors, executive officers and senior financial officers for possible conflicts of interest. \n\n\n\n \n\n\n\n \n• \nMonitors compliance with the Company's Code of Business Ethics. \n\n\n\n \n\n\n\n \n• \nDetermines a schedule for regular executive sessions of the Board in which non-management directors meet without management participation. \n\n\n\n \n\n\n\n \n• \nOversees and assesses the processes by which management provides information to the Board, as well as the quality and timeliness of the information received. \n\n\n\n \n\n\n\n \n• \nLeads the Board and each committee of the Board in its annual performance self-evaluation. \n\n\n\n \n\n\n\n \n• \nReviews the performance of the Governance Committee. \n\n\n\n Each member of our Governance Committee is independent under the New York Stock Exchange listing standards.\n\n\nQuality, Safety & Compliance Committee\n\n\n The Quality, Safety & Compliance Committee:\n\n\n\n \n• \nReviews the Company's policies, programs and performance relating to billing compliance, environmental health and safety, equal opportunity employment practices, fraud and abuse, and medical quality assurance to insure continuous improvement and compliance with applicable rules and regulations. \n\n\n\n \n\n\n\n \n• \nReviews legal matters pertinent to the Company, and the Company's compliance with its legal and regulatory obligations. \n\n\n\n \n\n\n\n \n• \nReviews and recommends to the Board action with respect to significant external and internal investigations as they relate to possible violations of law by the Company or its directors, officers, employees or agents. \n\n\n\n \n\n\n\n \n• \nMonitors and reports to the Board status of significant regulatory, legislative and legal developments affecting the business of the Company. \n\n\n\n \n\n\n\n \n• \nReports to the Audit and Finance Committee regarding material legal matters and compliance with legal and regulatory requirements. \n\n\n\n \n\n\n\n \n• \nReviews the performance of the Quality, Safety & Compliance Committee. \n\n\n\n Each member of our Quality, Safety & Compliance Committee is independent under the New York Stock Exchange listing standards.\n\n\nExecutive Committee\n\n\n The Executive Committee:\n\n\n\n \n• \nActs for the Board when Board action is required except with respect to certain major corporate matters, such as mergers, election of directors, removal of directors or the Chief Executive Officer, amendment of the Company's charter or by-laws, declaration of dividends, incurring indebtedness in excess of $20 million and such matters as are delegated to other committees of the Board. \n\n\n\n\n\n\n\n\n\n\n\n\nLead Independent Director\n\n\n The Board of Directors has elected Daniel C. Stanzione, Ph.D., as the Lead Independent Director. The principal responsibilities of the Lead Independent Director are to:\n\n\n\n \n• \npreside over any executive session of the non-management directors or the independent directors; \n\n\n\n \n\n\n\n \n• \nparticipate with the Chairman of the Board and Chief Executive Officer in the preparation of the agenda for Board meetings; \n\n\n\n \n\n\n\n \n• \nserve as a member of the Executive Committee; \n\n\n\n \n\n\n\n \n• \ncoordinate providing timely feedback from the directors to the Chairman of the Board and Chief Executive Officer; \n\n\n\n \n\n\n\n \n• \nbe identified on the Company's website and in the Company's annual proxy statement as the principal contact for shareholder communications with the Board; and \n\n\n\n \n\n\n\n \n• \nmonitor on behalf of, and discuss with, the non-management directors of the Company any shareholder communications received by such non-management directors. \n\n\n\nDirector Independence\n\n\n The Board of Directors assesses the independence of each director annually in accordance with the Company's Corporate Governance Guidelines, the New York Stock Exchange listing standards and with respect to members of the Audit and Finance Committee, the rules of the SEC. No director is considered independent unless the Board of Directors determines that the director has no direct or indirect material relationship with the Company.\n\n\n The Board has determined that, following the 2005 annual meeting of shareholders, assuming election of the Board's four nominees for director, seven of the ten directors are independent in accordance with the standards specified above. The directors that the Board has determined to be independent are William F. Buehler, Rosanne Haggerty, Gary M. Pfeiffer, Daniel C. Stanzione, Gail R. Wilensky, John B. Ziegler and John C. Baldwin. The three directors who the Board has determined are not independent are Surya N. Mohapatra, the Chairman of the Board, President and Chief Executive Officer of the Company, James F. Flaherty and William R. Grant. Dr. Mohapatra was not deemed independent as he is the President and Chief Executive Officer of the Company. Mr. Flaherty's brother-in-law is a tax partner with\nPricewaterhouseCoopers LLP, independent registered public accounting firm of the Company and under the New York Stock Exchange listing standards, Mr. Flaherty is not deemed independent. To the best knowledge of the Company, the Company has never had any professional relationship or contact with Mr. Flaherty's brother-in-law. Under the New York Stock Exchange's transition rules implementing its independence standards, Mr. Flaherty was eligible to serve on the Audit and Finance Committee and the Governance Committee during 2004 but he will no longer be eligible after the Company's 2005 annual meeting of shareholders. Mr. Grant does not have any relationships that fall within the scope of the “bright line” tests under the New York Stock Exchange listing standards. However, the Company has made investments in several companies in which Mr. Grant and/or\nGalen Associates, of which Mr. Grant is the Chairman, has made investments. In light of these investments and additional investment opportunities that Mr. Grant brings to the attention of the Company from time to time, the Board has determined that Mr. Grant should not be considered independent. In accordance with the Company's Corporate Governance Guidelines and the Governance Committee Charter, all such transactions are reviewed by the Governance Committee before they are consummated.\n\n\n The Board has determined that John M. Ziegler is independent notwithstanding that he has certain relationships with the Company that the Board believes are not material. Mr. Ziegler is the President, Worldwide Consumer Healthcare of GlaxoSmithKline plc, which beneficially owns approximately 18% of the outstanding common stock of the Company. The common stock of Quest Diagnostics that GlaxoSmithKline beneficially owns was issued in August 1999 in connection with the acquisition of SmithKline Beecham Clinical Laboratories, Inc. (“SBCL”). In connection with the acquisition, the Company entered into a clinical trials agreement. These transactions are described below under “Related Transactions.” Mr. Ziegler was not involved with the negotiation of any of these arrangements.\n\n\n\n\n\n\n\n\n\n\n\n As part of its assessment of the independence of the directors, the Board has reviewed the commercial relationships between Quest Diagnostics and each company with which any non-employee director of Quest Diagnostics is affiliated or is an employee or a director. The Board has determined that none of these relationships is material based on a broad review of the facts and circumstances of each relationship, including the fact that, in each case, the aggregate amount of any commercial transactions between Quest Diagnostics and any such company in any of the last three fiscal years of such company was not in excess of 1% of the consolidated gross revenues of the such other company.\n\n\nRelated Transactions\n\n\nGlaxoSmithKline\n\n\n SmithKline Beecham Corporation, a subsidiary of GlaxoSmithKline, owns 18,252,154 shares of Quest Diagnostics' common stock as of March 15, 2005, which it obtained on August 16, 1999 as consideration, together with $1.025 billion in cash (prior to giving effect to a $95 million post-closing purchase price reduction), for its sale of SBCL to Quest Diagnostics. SmithKline Beecham Corporation (“SmithKline Beecham”) originally received 25,128,672 shares in the transaction (adjusted for the stock split in May 2001). On June 25, 2004, Quest Diagnostics repurchased 1,176,518 shares from SmithKline for $86.13 per share. On December 14, 2004, Quest Diagnostics repurchased 2,700,000 shares from SmithKline Beecham for $94.19 per share. The purchase price for each of these stock trades was a\nnegotiated discount to the then current market price of Quest Diagnostics' common stock. In addition to the two agreements discussed below, in connection with the purchase of SBCL, SmithKline Beecham agreed to indemnify Quest Diagnostics, on an after tax basis, against certain matters primarily related to taxes and billing and professional liability claims. At December 31, 2004, accounts payable and accrued expenses included $28 million due to SmithKline Beecham, primarily related to tax benefits associated with indemnifiable matters.\n\n\nStockholders Agreement\n\n\n At the closing of the acquisition of SBCL, SmithKline Beecham and Quest Diagnostics entered into a stockholders agreement. During the ten-year term of the stockholders agreement, SmithKline Beecham has the right to designate two nominees to the Quest Diagnostics' Board of Directors (or, if required by UK GAAP, three nominees if the Company's Board of Directors consists of more than ten directors) as long as SmithKline Beecham owns at least 20% of the outstanding common stock of Quest Diagnostics and one nominee to the Quest Diagnostics Board of Directors as long as SmithKline Beecham owns at least 10% of the outstanding common stock of Quest Diagnostics. The stockholders agreement imposes limitations on the right of SmithKline Beecham to sell or vote its shares and prohibits SmithKline Beecham from acquiring\nin excess of 29.5% of the outstanding common stock of Quest Diagnostics.\n\n\nClinical Trials Agreement\n\n\n At the closing of the acquisition of SBCL, SmithKline Beecham and Quest Diagnostics entered into a global clinical trials testing agreement, under which Quest Diagnostics would serve as the primary provider of SmithKline Beecham's clinical trials testing requirements for ten years. In December 2002, Quest Diagnostics entered into a new long-term agreement with GlaxoSmithKline plc (formed from the SmithKline Beecham and Glaxo Wellcome merger in December 2000) under which Quest Diagnostics will be the exclusive provider of central laboratory testing services to support GlaxoSmithKline's global clinical testing requirements. In addition, on a selected basis, Quest Diagnostics will provide support for other early stage research and development activity. GlaxoSmithKline will pay Quest Diagnostics based upon a fee\nschedule attached to the global clinical trials agreement, subject to adjustment. During 2004, Quest Diagnostics billed approximately $74 million to GlaxoSmithKline with respect to services primarily performed under the clinical trials agreement. This amount represents approximately 1.5% of Quest Diagnostics' net revenues for 2004 and about 0.2% of GlaxoSmithKline's net revenues for 2004.\n\n\n\n\n\n\n\n\n\n\n\nSTOCK OWNERSHIP INFORMATION\n\n\n The following table shows, as of March 15, 2005, the number of shares of Quest Diagnostics' common stock beneficially owned by (1) each person who is known to Quest Diagnostics to own beneficially more than 5% of the Company common stock, (2) each director of Quest Diagnostics and each nominee, (3) each named executive officer and (4) all directors, nominees and executive officers of Quest Diagnostics as a group.\n\n\n\n * Less than 1%.\n\n\n\n\n\n\n(1) \n \nThe business address of GlaxoSmithKline plc is Glaxo Wellcome House, Berkeley Avenue, Greenford, Middlesex UB6/ONN, England. The ownership information is based solely on the information contained on a Schedule 13D filed by GlaxoSmithKline plc with the SEC in December 2004, as amended. SmithKlineBeecham Corporation, a wholly owned subsidiary of GlaxoSmithKline plc, holds the shares of record. \n\n\n\n \n \n \n\n\n\n(2) \n \nIncludes options issued under the Stock Option Plan for Non-Employee Directors that are presently exercisable or exercisable within 60 days. Mr. Baldwin, Mr. Buehler, Mr. Flaherty, Mr. Grant, Ms. Haggerty, Dr. Stanzione, Dr. Wilensky, and Mr. Ziegler have the right to purchase 3,333; 49,537; 15,939; 69,014; 22,499; 29,999; 35,999; and 39,696 shares, respectively, pursuant to such presently exercisable options. \n\n\n\n \n \n \n\n\n\n(3) \n \nIncludes shares of common stock of the Company which are subject to options issued under the 1999 Plan that are presently exercisable or exercisable within 60 days. Dr. Mohapatra, Mr. Freeman, Mr. Hagemann, Mr. Prevoznik, Mr. Zewe and Mr. Marrone have the right to purchase 383,536; 963,888; 201,873; 131,189; 150,526; and 134,112 shares, respectively, pursuant to such presently exercisable options. \n\n\n\n \n \n \n\n\n\n(4) \n \nMr. Ziegler was nominated to be a director of the Company by SmithKline Beecham plc, a subsidiary of GlaxoSmithKline plc, pursuant to the Shareholders Agreement discussed above. Mr. Ziegler, President, Worldwide Consumer Healthcare of GlaxoSmithKline, disclaims beneficial ownership of the shares of common stock of the Company owned by SmithKline Beecham. \n\n\n\n \n \n \n\n\n\n(5) \n \nIncludes 1,432 shares of common stock of the Company owned by the children of certain directors as to which they disclaim beneficial ownership. \n\n\n\n \n \n \n\n\n\n(6) \n \nExcept as discussed in footnote 1 above, all directors and other executive officers have sole voting power and sole dispositive power over all shares of common stock of the Company beneficially owned by them. \n\n\n\n \n \n \n\n\n\n(7) \n \nIncludes 20,000 shares of common stock of the Company directly beneficially owned by Dr. Mohapatra as grantor/trustee of a qualified Grantor Retained Annuity Trust. \n\n\n\n \n \n \n\n\n\n(8) \n \nMr. Freeman and Mr. Marrone are no longer executive officers of the Company. The ownership information is based solely on information contained in Form 4's filed by Mr. Freeman on December 14, 2004 and by Mr. Marrone on February 28, 2004. \n\n\n\n\n\n\n\n\n\n\n\n\nDIRECTORS' COMPENSATION\n\n\n The following table sets forth the compensation of the non-employee directors of the Company during 2004.\n\n\n2004 Compensation of Non-Employee Directors\n\n\n\n\n \n \n \n\n\n\n(1) \n \nElected as a director on May 4, 2004. \n\n\n\n \n \n \n\n\n\n(2) \n \nRetired as a director on May 4, 2004. \n\n\n\n \n \n \n\n\n\n(3) \n \nElected as a director on December 13, 2004. The annual option grant is prorated. \n\n\n\n \n \n \n\n\n\n(4) \n \nThese amounts represent the annual retainer fee, committee chair fees and meeting fees paid to non-employee directors. As more fully described below, directors may elect to receive these amounts in cash or options. In addition, directors may also elect to defer these amounts pursuant to the Deferred Compensation Plan for Directors. Stock option grants issued in lieu of director's fees vest on the date of grant and are immediately exercisable. \n\n\n\n \n \n \n\n\n\n(5) \n \nThe option vests in three equal annual installments, beginning on the first anniversary date of the grant of the option. \n\n\n\n \n \n \n\n\n\n(6) \n \nDoes not include options issued to directors in lieu of director fees. \n\n\n\nFees and Benefit Plans for Non-Employee Directors\n\n\n Annual Cash Retainer Fees. Non-employee directors receive an annual cash retainer fee of $35,000, payable in quarterly installments of $8,750 each.\n\n\n Meeting Fees. Non-employee directors receive a meeting fee of $1,500 for attending each regularly scheduled Board or committee meeting at which a majority of directors attend in person and $750 for attending a Board or committee meeting at which a majority of directors attend by telephone. Each director who serves as chair of a committee receives an additional $6,000 annual fee, except the Chair of the Audit and Finance Committee and the Chair of the Governance Committee, who each receive an additional $30,000 annual fee.\n\n\n Non-Employee Director Stock Option Plan. Each non-employee director also participates in the Prior Director Plan described under “Matters to be considered at the 2005 Annual Meeting-Approval of Amended Director Long-Term Incentive Plan.” The Prior Director Plan currently authorizes (on the date of the annual meeting of shareholders) the grant of non-qualified stock options to acquire 10,000 shares of common stock of Quest Diagnostics to each non-employee director. The Prior Director Plan, as approved by shareholders in 1998, had authorized the issuance of options to acquire 18,000 shares of common stock of Quest Diagnostics as adjusted for the stock split in May 2001, to each non-employee director. However, the Board of Directors subsequently amended the Prior Director\nPlan to reduce the number of options issued in connection with the annual meeting of shareholders. Under the Prior Director Plan, in the event that a person is elected as a director of Quest Diagnostics other than on the date of the annual meeting of shareholders, the Board of Directors may grant to such director, on his/her election, an option to acquire a number of shares (not to exceed 10,000) that is proportional to the fraction of a year remaining until the next annual meeting of shareholders consistent with the most recent annual option grant to other directors at the previous annual meeting of shareholders. The annual option grants vest in three equal installments beginning on the first anniversary of the date of the grant.\n\n\n\n\n\n\n\n\n\n\n\n On the Director Plan Effective Date and the date of the annual meeting of stockholders of each year commencing on January 1, 2006, all of the Company's non-employee directors who continue as directors may be granted an option and/or a stock award, in such proportions as the Compensation Committee may determine, covering an aggregate of not more than 10,000 shares of common stock of the Company.\n\n\n A director may elect to receive his or her annual retainer and meeting fees in options in lieu of cash. The number of options issued in lieu of cash for the retainer and meeting fees is based on the estimated value of such options using the Lattice pricing model. Currently, three directors have elected to receive options in lieu of cash. An option grant issued in lieu of the retainer and meeting fees vests immediately on grant. All options granted under the Prior Director Plan, once vested, are exercisable through the tenth anniversary of the date of grant even if the director's service on the Board terminates for any reason. The aggregate number of shares of common stock of Quest Diagnostics, which may be issued pursuant to the exercise of options granted under the Prior Director Plan, may not exceed 1,000,000\n(subject to adjustments in certain circumstances). The exercise price of all stock options issued under the Prior Director Plan is the fair market value of Quest Diagnostics' common stock on the date of grant.\n\n\n Deferred Compensation Plan for Directors. Under the Quest Diagnostics deferred compensation plan for directors, each director may elect to defer, until a date specified by him or her or until his or her termination of service as a director, receipt of all or a portion of his or her cash compensation. Such plan provides that amounts deferred may be allocated to (i) a cash account under which amounts deferred may earn interest, compounded quarterly, at the base rate of Citibank, N.A. in effect on certain specified dates, (ii) a market value account, the value of which will be based upon the market value of Quest Diagnostics' common stock from time to time, or (iii) a combination of such accounts. All non-employee directors are eligible to participate in such plan.\nCurrently, three directors have elected to defer compensation pursuant to such plan.\n\n\n Dr. Mohapatra and Mr. Freeman, the only employee directors, received no additional compensation for serving on the Board or any committee of the Board.\n\n\n\n\n\n\n\n\n\n\n\nADDITIONAL INFORMATION REGARDING EXECUTIVE COMPENSATION\n\n\n The compensation of the Company's executive officers (other than the Chief Executive Officer) is approved by the Compensation Committee. The Chief Executive Officer's Compensation is first approved by the Compensation Committee and then also approved by the Board of Directors.\n\n\nSummary Compensation Table\n\n\n The following table shows the compensation for the past three years of the two people who served as Chief Executive Officer during 2004 and each of Quest Diagnostics' other four most highly compensated executive officers (the “named executive officers”).\n\n\nSummary Compensation Table\n\n\n\n\n \n \n \n\n\n\n(1) \n \nAmounts shown represent perquisites provided to the named executive officers valued at their incremental cost to the Company. \n\n\n\n \n \n \n\n\n\n(2) \n \nAs of December 31, 2004, there was no unvested restricted stock for any of the named executive officers. \n\n\n\n \n \n \n\n\n\n(3) \n \nAll other compensation for 2004 consists of the following: \n\n\n\n\n\n \n \n \n\n\n\n(4) \n \nAmounts shown represent perquisites provided to Dr. Mohapatra valued at their incremental cost to the Company, including legal fees for negotiating Dr. Mohapatra's employment agreement of $111,283. \n\n\n\n \n \n \n\n\n\n(5) \n \nMr. Freeman's bonus in 2004 includes a special cash bonus of $500,000. Amounts shown in the “Other Annual Compensation” for 2004 represent perquisites provided to Mr. Freeman valued at their incremental cost to the Company, including legal fees for negotiating amendments to Mr. Freeman's employment agreement of $77,199. In addition, Mr. Freeman's “All Other Compensation” for 2004 includes the amounts shown for Mr. Freeman in footnote 3 and the following severance payments: $630,000 for a pro rated target bonus for the period from December 14, 2004 to May 3, 2005, $476,164 relating to Corning Transferee Pension Plan costs and $450,000 in additional severance pay. \n\n\n\n \n \n \n\n\n\n(6) \n \nMr. Marrone retired from the Company on May 1, 2004. \n\n\n\n\n\n\n\n\n\n\n\n\nOption Grants\n\n\n The following table sets forth certain information regarding options granted in 2004 to the named executive officers pursuant to stock option plans. No stock appreciation rights (SARs) were granted in 2004.\n\n\nOption/SAR Grants in 2004\n\n\n\n\n \n \n \n\n\n\n(1) \n \nThe option vests in three equal annual installments beginning February 19, 2005 and vests immediately upon a change in control (as defined below under “Employment Agreements” with respect to Surya N. Mohapatra) or termination of employment by reason of death or disability. In addition, upon a termination without “cause” by the Company or by Dr. Mohapatra for “good reason” (as both terms are defined in his employment agreement), the option shall continue to vest until the second anniversary of such termination (or the third anniversary if such termination is within 90 days prior to or two years following a “change in control”) and upon a notice of non-renewal following the expiration of the initial term of Dr. Mohapatra's employment agreement on December 31, 2006, the remaining\noptions shall vest. The option may not be exercised prior to February 19, 2008 except in the case of a termination of employment (other than for “cause” or without “good reason”), in which case the option may be exercised beginning on the earlier of the one year after the option is vested or one year after the date of termination. \n\n\n\n \n \n \n\n\n\n(2) \n \nRepresent reload option granted under the terms of option agreements issued prior to 2003. The reload option is exercisable on or after the first anniversary of the date of grant. \n\n\n\n \n \n \n\n\n\n(3) \n \nThe option vests in three equal annual installments beginning February 19, 2005, and vests immediately upon a change of control (as defined below under “Severance Arrangements” with respect to the other named executive officers) or termination of employment by reason of death or disability. In addition, on a termination of employment prior to February 19, 2008 (other than for cause), the executive will vest in an additional percentage of the option as if the option had vested on a monthly basis. The option may not be exercised prior to February 19, 2008. \n\n\n\nOption Exercises and Fiscal Year-End Values\n\n\n The following table sets forth certain information regarding stock option exercises by the named executive officers during 2004 and the number of shares of Quest Diagnostics' common stock covered by both exercisable and unexercisable stock options as of December 31, 2004, for the named executive officers.\n\n\n\n\n\n\n\n\n\n\n\nAggregate Option/SAR Exercises in Fiscal Year 2004\n\n\n& 2004 Fiscal Year-End Option/SAR Values(1)\n\n\n\n\n \n \n \n\n\n\n(1) \n \nThere are no SARs presently outstanding. \n\n\n\n \n \n \n\n\n\n(2) \n \n“Value of Unexercised In-the-Money Options” is the aggregate, calculated on a grant-by-grant basis, of the product of the number of unexercised options at the end of fiscal 2004 (taking into account grants made in respect of the 2004 fiscal year) multiplied by the difference between the exercise price for the grant and the closing price of a share of Company common stock on December 31, 2004 ($95.55). Grants for which the exercise price is greater than the closing price of a share of Company common stock on that day are valued at zero. \n\n\n\n \n \n \n\n\n\n(3) \n \n“Value Realized” is calculated by determining the difference between the fair market value of the securities underlying the options and the exercise price of the options at exercise. \n\n\n\nEquity Compensation Plan Information\n\n\n The following table provides information as of December 31, 2004 about our common stock that may be issued upon of the exercise of options, warrants and rights under our existing equity compensation plans:\n\n\n\n The only equity compensation plan that has not been approved by the Company's shareholders is the Company's Employee Stock Purchase Plan, or ESPP. The ESPP was adopted prior to the spin-off of the Company in 1996 and, as a result of action taken by the Board in 2001, has a term ending on December 31, 2006. The ESPP permits employees to purchase the Company's common stock each calendar quarter through payroll deductions. The purchase price is 85% of the closing market price on the last business day of the calendar quarter (or, if lower, the closing market price on the first business day of the calendar quarter). In 2005, the Company's ESPP was amended such that effective July 1, 2005, the purchase price of the stock will be 85% of the market price of the Company's common stock on the last\nbusiness day of each calendar month. In certain cases, such as a subdivision of stock or payment of a stock dividend, the number of shares approved for the program and share limitations will be increased proportionately, and such other adjustment will be made as may be deemed equitable by the Board of Directors. In the event of any other change affecting the common stock of the Company, the Board of Directors will make an adjustment that it deems equitable to give proper effect to that event. The ESPP authorizes the issuance of 4,000,000 shares of the Company's common stock. The number of securities reflected in the table above for the ESPP includes the share allocation for the fourth quarter of 2004, which were issued in January 2005.\n\n\n\n\n\n\n\n\n\n\n\nPension Plans\n\n\n None of the executive officers of Quest Diagnostics is currently an active participant in a qualified defined benefit plan of Quest Diagnostics.\n\n\n Effective as of January 1, 1997, Quest Diagnostics adopted the Executive Retirement Supplemental Plan (“SRP”), a nonqualified, unfunded defined benefit plan for the benefit of certain key employees of Quest Diagnostics who are former employees of Corning Incorporated (“Corning”), including Mr. Freeman. No other executive officers are covered under the SRP. The SRP is intended to provide benefits approximately equal to the difference between the benefits provided for under Corning's qualified and non-qualified pension plans and the benefits which would have been payable thereunder but for the termination of employment with Corning of such employees.\n\n\n Prior to June 1, 1995, Mr. Freeman was eligible to participate in, and accrue benefits under, Corning's Pension Plan for Salaried Employees, a qualified defined benefit plan. Benefits paid under this plan are based upon career earnings (regular salary and cash bonus) and years of credited service. Corning maintains non-qualified supplemental pension plans pursuant to which it will pay amounts approximately equal to the difference between the benefits provided under the Corning's Pension Plan for Salaried Employees and benefits which would have been paid thereunder but for the limitations of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. Certain employees including Mr. Freeman, participate in the Corning Executive Supplemental Pension Plan, which pays benefits based upon\nfinal average compensation (the highest five consecutive calendar years in the ten calendar years immediately preceding termination) and years of service.\n\n\n Under Mr. Freeman's employment agreement, Mr. Freeman's benefits under the SRP (together with the benefits under the Corning defined benefit plans) were modified to provide that his benefit would generally be calculated based on (a) 37 years of credited service in the event of his termination other than for cause, (b) final average compensation of the three highest calendar years' annual cash compensation; and (c) a life annuity commencing on his 55th birthday (or, if later, his termination of employment) without any actuarial reduction to take into account that the benefit begins before his 60th birthday. The employment agreement also provided for the payment of cash bonuses that are reflected in the “Summary Compensation Table.” Based on these modifications and based on Mr. Freeman's\nsalary and bonus for all prior years, including 2004, Mr. Freeman would receive under the SRP (together with the benefits under the Corning defined benefit plans), an annual benefit of approximately $1,468,344 payable as a straight life annuity commencing at age 55. The employment agreement also provides Mr. Freeman the right to a lump sum payment option payable on his 55th birthday (or, if later, his termination of employment). Under Mr. Freeman's employment agreement, as amended, which is described in more detail below, the Company agreed to pay a cash amount of $78,745 (subject to withholding for all applicable withholding taxes) in settlement of a disagreement with respect to the impact on Mr. Freeman's benefit under the SRP of mandatory contribution requirements under the Corning plan.\n\n\n On December 14, 2004, the Board adopted a Supplemental Executive Retirement Plan covering our Chairman of the Board, President and Chief Executive Officer, Surya N. Mohapatra, Ph.D. (the “SERP”). Adoption of the SERP was mandated under the employment agreement with Dr. Mohapatra. The SERP provides Dr. Mohapatra with a retirement benefit should he leave the Company after eight full years of service, taking into account all service since his employment in February 1999. However, if his employment is terminated by the Company for any reason other than for “cause” (as defined in the SERP) (including a notice of non-renewal of the employment agreement by the Company) or by Dr. Mohapatra for “good reason” (as defined in the SERP) or upon his “disability” (as\ndefined in the SERP) or death before he completes eight full years of service, he will be deemed to have the eight years of service. Under the SERP, Dr. Mohapatra will be entitled to an annual retirement benefit equal to 1.5% times the average of his final three years pay (base salary plus regular annual bonus) times his Years of Credited Service. Under the SERP, “Years of Credited Service” is equal to 1.13 times the number of completed calendar months of employment with the Company, whether or not consecutive, divided by 12 (1.29 is used as a multiple instead of 1.13 if before Dr. Mohapatra attains the age of 60, the Company provides Dr. Mohapatra with a notice of non-renewal of his employment agreement or his employment is terminated by the Company other than for “cause” or by Dr. Mohapatra for “good reason”). If the benefit is payable\nbefore he attains age 62, the amount may be actuarially reduced. Unless Dr. Mohapatra elects\n\n\n\n\n\n\n\n\n\n\n\notherwise, his benefit will be payable in a lump sum. The benefits received by Dr. Mohapatra under the SERP are not subject to reduction for Social Security or to any other offset. In addition, with the adoption of the SERP, Dr. Mohapatra waived participation in the Supplemental Deferred Compensation Plan of the Company for 2005 and thereafter.\n\n\n The following table shows the estimated maximum retirement benefit under the SERP for Dr. Mohapatra at various combinations of pay and years of service at retirement or termination under the circumstances described above, stated as an annual pension payment beginning at age 62.\n\n\nPension Plan Table\n\n\n\n In the table above, “Final Average Total Compensation” is calculated based on the average of Dr. Mohapatra's most recent three years pay (base salary and annual bonus) and assumes that Dr. Mohapatra is fully vested in his retirement benefit under the SERP (i.e., for the purpose of the table, Dr. Mohapatra is deemed to have completed the eight years of service). In determining the maximum retirement benefit provided in the table above, we have used the multiple of 1.13 to calculate the benefit with respect to the “Years of Credited Service” of Dr. Mohapatra. The “Final Average Total Compensation” for the most recent years(s) considered in the calculations reported here will be found in the “Summary Compensation Table” on page 25 in the columns\nlabeled “Salary” and “Bonus”. As of March 1, 2005, Dr. Mohapatra has six years of service, as rounded to the nearest full year.\n\n\nEmployment Agreements\n\n\nEmployment Agreement of Dr. Mohapatra\n\n\n In November 2003, Dr. Mohapatra entered into an employment agreement with Quest Diagnostics (the “Agreement”). The initial term of the Agreement ends on December 31, 2006. The Agreement provides:\n\n\n\n \n• \nAn annual base salary of no less than $875,000, which base salary may be increased at the discretion of the Board of Directors or the Compensation Committee and shall be reviewed annually and be adjusted to reflect (among other factors) increases generally granted to other senior executives of Quest Diagnostics and Dr. Mohapatra's performance. \n\n\n\n \n\n\n\n \n• \nAn annual target cash bonus not less than 120% of annual base salary as in effect from time to time, in accordance with the Management Incentive Plan and its financial performance targets. The target bonus as a percentage of base salary shall be reviewed annually for increase by the Board of Directors or the Compensation Committee. \n\n\n\n \n\n\n\n \n• \nThe participation by Dr. Mohapatra in all employee and welfare plans offered by Quest Diagnostics to its senior executive officers (“Benefit Plans”) on a basis that is no less favorable than that made available to other senior executive officers. \n\n\n\n \n\n\n\n \n• \nThe entitlement by Dr. Mohapatra to perquisites at least as favorable as those provided to other senior executive officers of Quest Diagnostics, including reimbursement for reasonable business expenses, the costs of an executive driver for business purposes, limited relocation expenses and such other additional compensation or benefits approved by the Board of Directors. \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n• \nA grant of 170,000 stock options for 2004 subject to the same terms and conditions as options granted to other executive officers, except as otherwise noted in the Agreement. \n\n\n\n \n\n\n\n \n• \nUpon a “change in control” (as defined in the Agreement), that all outstanding equity awards shall immediately vest; upon a termination by death, that all outstanding stock options, earned shares of incentive stock and other awards granted by the Company to Dr. Mohapatra shall immediately vest; upon a termination by “disability” (as defined in the Agreement), that outstanding stock options shall immediately vest; upon a termination without “cause” (as defined in the Agreement) by the Company or by Dr. Mohapatra for “good reason” (as defined in the Agreement), that outstanding stock options shall continue to vest until the second anniversary of such termination (or the third anniversary if such termination is within 90 days prior to or two years following a “change in control”);\nand upon a notice of non-renewal following the expiration of the initial term of the Agreement on December 31, 2006, that outstanding stock options shall continue to vest for 18 months. In all such cases, vested stock options shall remain exercisable for their original term. \n\n\n\n \n\n\n\n \n• \nThe establishment of a SERP, the terms of which are described above under “Pension Plans”. \n\n\n\n \n\n\n\n \n• \nUpon a termination by death or “disability”, that three years of salary and target bonus and Dr. Mohapatra's target annual bonus award (including the stock and cash component) earned during employment but unpaid shall be payable in a lump sum in the case of death and in equal monthly installments in the case of “disability”, that a pro-rata target bonus for the year of termination shall be payable in a lump sum following termination of employment and that Dr. Mohapatra and his eligible dependents shall have continued coverage under Benefit Plans for three years in the case of death and for the earlier of the third anniversary of the date of termination and the date on which Dr. Mohapatra obtains comparable coverage from subsequent employment in the case of “disability”. \n\n\n\n \n\n\n\n \n• \nUpon a termination without “cause” by the Company or by Dr. Mohapatra for “good reason,” that salary and target bonus shall be payable in equal monthly installments for the longer of two years and the remaining period of the employment term of Dr. Mohapatra under the Agreement, that his target annual bonus award (including the stock and cash components) earned during employment but unpaid shall be payable in monthly installments and that Dr. Mohapatra and his eligible dependents shall have continued coverage under Benefit Plans for the earlier of the second anniversary of the date of termination and the date on which he obtains comparable coverage from subsequent employment; provided that if such termination is within 90 days prior to or two years following a “change in control,” the benefit coverage\nperiod shall be three years, Dr. Mohapatra shall receive a lump sum payment of three times base salary and target bonus in lieu of monthly payments, plus his target annual bonus award earned during employment (including the stock and cash component) and he shall be entitled to gross-up payments for excise taxes, if applicable. \n\n\n\n \n\n\n\n \n• \nA one-year non-compete and a one-year nonsolicit of customers and employees following termination for any reason; provided that if Dr. Mohapatra is receiving severance following a notice of non-renewal of the initial term of the Agreement ending on December 31, 2006, the restriction period shall be 18 months. \n\n\n\n \n\n\n\n \n• \nUnder the Agreement: \n\n\n\n\n \n\n\n\n \n\n\n\n \n¡ \n“cause” means (i) conviction of Dr. Mohapatra for a felony or (ii) the commission by Dr. Mohapatra of fraud or theft against, or embezzlement from, Quest Diagnostics. \n\n\n\n \n\n\n\n \n¡ \n“good reason” includes, without Dr. Mohapatra's prior written consent (except in the case of a “change in control”, as described below), the occurrence of one or more of the following circumstances which is not remedied by the Company within 30 days of receipt of a notice of termination from Dr. Mohapatra, (1) an assignment to him of any duties materially inconsistent with his position, duties, responsibilities, and status with Quest Diagnostics, or any material limitation of his powers not consistent with his powers as contemplated in the section of the Agreement describing the duties of Dr. Mohapatra, (2) removal of, or a failure to re-elect Dr. Mohapatra to, the position of President, Chief Executive Officer or as a member of the Board of Directors (unless in the case of the failure to re-elect\nhim to the Board of Directors, the Board of Directors nominated him as a director and used its best efforts to have him re-elected to the Board of Directors), (3) any change of Dr. Mohapatra's title of President and Chief Executive officer, (4) requiring him to be based at any office or location more than 75 miles commuting distance from the Company's principal executive offices in Teterboro, New Jersey, Lyndhurst, New Jersey or New York, New York, (5) a reduction in base salary or annual target bonus opportunity as in effect from time to time or benefits under the Agreement, (6) a “change in control” (whether or not Dr. Mohapatra consents), (7) a material breach by the Company of the Agreement, (8) the occurrence of an irreconcilable difference with the non-executive Chairman of the Board of Directors (should such position be established)\nsuch that Dr. Mohapatra is unable to effectively carry out his duties and responsibilities under the Agreement or (9) a failure by the Company to secure written assumption of the Agreement by a successor of the Company after a merger, consolidation or transfer of substantially all of its assets. \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n¡ \n“change in control” includes, (1) shareholder approval of any transaction contemplated to result in a sale or disposition of all or substantially all of Quest Diagnostics' assets or business or a plan of partial or complete liquidation of Quest Diagnostics or similar transactions, (2) shareholder approval of any transaction contemplated to result in (i) a merger or consolidation in which the surviving entity ceases to be a publicly traded company and Dr. Mohapatra is not the Chief Executive Officer of the publicly traded parent (if any) of the surviving entity or (ii) a merger or consolidation in which the surviving entity is a publicly traded and Dr. Mohapatra is not the Chief Executive Officer of such surviving entity or (iii) a merger or consolidation in which the shareholders of the Company immediately\nprior to such transaction hold less than 50% of the voting power of the Company (and, in the case of the transactions in (1) and (2) above, the transaction is completed substantially in accordance with the terms approved by the shareholders and Dr. Mohapatra is not required to be identified in any United States securities law filing solely as a result of being a person or member of a group acquiring, holding or disposing of beneficial ownership of the Company's securities and/or assets and effecting a “change in control”), (3) the acquisition by any third party of at least 40% of the voting power of the outstanding shares of capital of Quest Diagnostics in a transaction not covered by clause (2) following which Quest Diagnostics ceases to be an independent public company or there is material diminution of Dr. Mohapatra's position, duties or responsibilities,\na breach of the Agreement or an event giving rise to a “good reason” for termination by Dr. Mohapatra, or (4) during any period of not more than two consecutive years, individuals who at the beginning of such period were the Board of Directors and new directors who have entered into an agreement with the Company to effect a transaction described in (1), (2) or (3) above whose election was approved in a Board resolution by Dr. Mohapatra or whose election by the Board or nomination for election by the shareholders was approved by at least a majority of the directors still in office who either were directors at the beginning of the period or whose election or nomination was previously approved as described above, cease for any reason to constitute at least a majority of the Board. \n\n\n\nEmployment Agreement of Mr. Freeman\n\n\n Mr. Freeman's employment agreement with Quest Diagnostics dated January 1, 2003, as amended on April 21, 2004 and August 26, 2004 provides for:\n\n\n\n \n• \nrelinquishment of the position of Chief Executive Officer of the Company on May 4, 2004; \n\n\n\n \n\n\n\n \n• \na term ending on December 14, 2004, upon which date Mr. Freeman would cease to be Chairman of the Board and a director of the Company and upon which date Mr. Freeman's employment would terminate; \n\n\n\n \n\n\n\n \n• \nan annual base salary of no less than $1,100,000, with any increases subject to the discretion of the Board of Directors or the Compensation Committee; \n\n\n\n \n\n\n\n \n• \na special bonus of $500,000 to be paid on December 14, 2004; \n\n\n\n \n\n\n\n \n• \npayment of the target bonus of 140% of annual base salary for 2004 (through December 14, 2004) and for the post-termination period from December 15, 2004 to May 3, 2005; \n\n\n\n\n\n\n\n\n\n\n\n\n\n \n• \ncoverage under an SRP as described above under “Pension Plans”; and \n\n\n\n \n\n\n\n \n• \na one-year non-compete and a one-year non-solicit of customers and employees following termination for any reason. \n\n\n\nSeverance Arrangements\n\n\n Quest Diagnostics has a severance policy for all executive officers, other than Mr. Freeman and Dr. Mohapatra, whereby:\n\n\n\n \n• \nSeverance is paid to an executive officer if his or her employment is terminated by Quest Diagnostics other than for cause prior to a change of control, in an amount equal to two times the executive officer's annual base salary at the annual rate in effect on the date of termination of employment and two times the annual award of variable compensation at the most recent target level. The executive would also be entitled to participate in Quest Diagnostics' health and welfare plans, to the extent permitted by the terms of the plans and applicable law, for a period of up to two years or until the officer is covered by a successor employer's benefit plans, whichever occurs first. \n\n\n\n \n\n\n\n \n• \nIf, however, an executive officer's employment is terminated by Quest Diagnostics, other than for cause, during the 12-month period following a change in control, or the ninety-day period prior to a change of control in anticipation of a change of control, the severance benefit will be equal to three times the executive officer's annual base salary at the annual rate in effect on the date of termination of employment and three times the annual award of variable compensation at the most recent target level. These executive officers may receive gross-up payments in the event there are applicable excise taxes. The executive officer would also be entitled to participate in Quest Diagnostics' health and welfare programs, to the extent permitted by the terms of these plans and applicable law, for a period of up to three years or until the\nofficer is covered by a successor employer's benefit plans, whichever is first. A “Change of Control” is defined in the policy to include the following: the acquisition by a person of 40% or more of the voting stock of the Company; the membership of the Board of Directors changes as a result of a contested election such that a majority of the Board members at any particular time was initially placed on the Board as a result of such contested election; approval by the Company's shareholders of a merger or consolidation in which the Company ceases to be an independent public company; or a sale or disposition of all or substantially all of the Company's assets or a plan of partial or complete liquidation. \n\n\n\n\n\n\n\n\n\n\n\n\nCOMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION\n\n\n The Compensation Committee of the Board of Directors determines the compensation of Quest Diagnostics' executive officers, approves and recommends to the Board for approval the compensation of the Chief Executive Officer and makes recommendations to the Board on the compensation of the non-employee directors. The Board approves all compensation actions regarding the Chief Executive Officer. A more complete description of the Committee functions is set forth under the heading “Our Corporate Governance: Board Committees-Compensation Committee”. Currently, the Compensation Committee has three members, each of whom is independent of management under the NYSE listing standards. None of the Committee members has any insider or interlocking relationship with the Company, and each of them is a non-employee\ndirector, as these terms are defined in applicable SEC rules. The Committee meets in executive session on a regular basis to discuss pay adjustments for members of senior management.\n\n\nCompensation Philosophy\n\n\n The Compensation Committee is responsible for ensuring that executive compensation is aligned with Quest Diagnostics' values and strategic objectives and is based on corporate, applicable business unit, and individual performance measures. The Committee intends to design and administer its compensation plans to:\n\n\n\n \n• \nBe competitive in design and potential to attract and retain talented executives who have the skills and experience required to achieve our strategic objectives; \n\n\n\n \n\n\n\n \n• \nIncent executives to balance appropriately the long-term interests of our employees, customers and shareholders; \n\n\n\n \n\n\n\n \n• \nPay for performance, with above-market pay opportunity for performance that exceeds targets and delivers significant value to shareholders; \n\n\n\n \n\n\n\n \n• \nBe flexible to adjust for changing business conditions as well as the growth and diversification of the Company; \n\n\n\n \n\n\n\n \n• \nBe fiscally responsible and aligned with the Company's budget; and \n\n\n\n \n\n\n\n \n• \nCreate long-term value for the Company and its shareholders. \n\n\n\n The key elements of executive compensation are base salary, annual incentive awards, and equity-based compensation. Each year the Committee evaluates Quest Diagnostics' performance and executive target and actual compensation levels compared to an executive compensation peer group. To assist in designing the Company's compensation programs, the Committee retains the services of independent compensation consultants who report directly to the Committee. In 2004, with the assistance of a compensation consultant, the Committee evaluated the competitiveness of senior management's total compensation relative to the pay of executives at two different peer groups. One of the two peer groups represents the same companies in the Standard & Poor's 500 Healthcare Equipment & Services Index used for total\nshareholder return comparison purposes in the performance graph shown on page 37. The other peer group was developed by the compensation consultant in recognition of the fact that Quest Diagnostics is the largest company within its specific industry and that it draws upon a broad range of companies when looking to fill senior positions. The criteria used to develop this secondary peer group were: healthcare-related or respective industry leader; revenue range between $3-11 billion; four-year compound annual sales growth greater than 10%; market capitalization between $3-20 billion; and positive three or five-year compound annual growth in total shareholder return. Companies that met at least three of the five criteria were included in the group. These companies were: Amgen Inc., Baxter International Inc., Becton Dickinson and Company, Chiron Corporation, Darden Restaurants Inc., Genentech\nInc., General Mills, Inc., Genzyme Corporation, Guidant Corp., H&R Block Inc., Henry Schein, Inc., Laboratory Corporation of America, Inc., Lexmark International, Medtronic Inc., Pitney-Bowes Inc., Rockwell Automation, St. Jude Medical, 7-Eleven Inc., and Starbucks Company. We refer to these two peer groups collectively as the compensation peer group.\n\n\nBase Salary\n\n\n The Committee annually reviews and determines the base salaries of the Chief Executive Officer and executive officers, with its determination with respect to the Chief Executive Officer being subject to\n\n\n\n\n\n\n\n\n\n\n\napproval by the entire Board. Quest Diagnostics sets salaries for most executive officers to approximate median levels in the compensation peer group. Base salary adjustments are determined following an assessment of each executive officer's position, performance, potential, and current salary level in relation to market data for similar positions with comparable scope of responsibilities.\n\n\nAnnual Incentives\n\n\n Annual bonuses for the Chief Executive Officer and executive officers are designed to reward continuous improvement in both financial performance as well as other key performance drivers. The Company's annual cash bonus incentives are paid in accordance with the Company's Senior Management Incentive Plan (“SMIP”), which was approved by the shareholders of the Company at the 2003 annual meeting of shareholders. The SMIP is designed to reward executives for the achievement of objectives linked to the Company's critical success factors. Individual incentive targets are established for plan participants based on competitive levels in the compensation peer group of companies. Incentive target levels are set within the limitations of the plan so as to result in total annual cash compensation in the\nrange of 50th to 75th percentile of competitive practice depending upon on an executive's responsibilities, future potential, individual performance, and Quest Diagnostics' performance. Each year the Compensation Committee selects the executive officers who participate in the SMIP for the year, subject to a maximum number of ten participants for any year. For 2004, the Compensation Committee selected the Company's six executive officers as participants.\n\n\n Under the SMIP, each participant may be paid a bonus of up to 1% of the Company's Earnings (as defined in the SMIP) in the fiscal year, reduced at the discretion of the Compensation Committee by such amount, if any, as the Compensation Committee deems appropriate. For 2004, the maximum bonus payable under the Incentive Plan to each participant was $8,483,000. However, consistent with the compensation philosophy described above, the Compensation Committee reduced the bonus payable to each named executive officer to the amount indicated in the Summary Compensation Table under the caption “Bonus” (ranging from $239,660 to $2,068,700). The actual amounts paid for 2004 were determined by performance, based on two factors: first, financial performance (which accounts for 78%), which was measured against\nobjectives established for earnings per share, revenue growth and operating margin; and, second, the Company's performance against other specific targets (which accounts for 22%), such as Six Sigma quality, customer retention, and achievement against certain program targets. For 2004, the financial objectives were weighted as follows: EPS 60%; revenue growth and operating margin 18%, in determining the Company-wide incentive compensation pools. The types and relative importance of specific financial and other business objectives varied among Quest Diagnostics' executives depending upon their positions and the particular operation or functions for which they were responsible.\n\n\nLong-Term Incentives\n\n\n Each year the Committee reviews and approves the issuances of long-term incentive awards to eligible employees who participate in the Company's long-term incentive plans, and makes recommendations to the Board with respect to the Chief Executive Officer. From 2001 through 2004, long-term incentive compensation has been based solely on annual grants of stock options under the terms of the 1999 Plan. Based partially on a recommendation from the Compensation Committee's outside compensation consultant as well as to create greater alignment with the Company's pay for performance philosophy, for 2005, long-term incentive awards will be a combination of stock options and performance shares under the Plan. Performance shares will be earned based on the performance of the Company over a multi-year period, and\nwill be paid out in shares of common stock of Quest Diagnostics at the end of the term. The Committee believes that these grants directly align shareholder and management interests. The portion of the equity award granted in 2005 in the form of stock options will vest over a three-year period and have a seven-year term. All options are granted with an exercise price equal to the fair market value of Quest Diagnostics common stock on the date of grant, and option re-pricing is prohibited by the terms of the Plan except if the Compensation Committee determines that one or more specified corporate transactions has affected the price per share such that an adjustment of outstanding awards is required to preserve (or prevent an enlargement of) the benefit or potential benefit intended at the time of the grant. Equity grant levels and terms are established to deliver executive total compensation\nranging from 50th to 90th\n\n\n\n\n\n\n\n\n\n\n\npercentile of competitive levels, depending upon an executive's responsibilities, future potential, individual performance, and Company performance.\n\n\nSupplemental Deferred Compensation Plan\n\n\n Quest Diagnostics maintains a Supplemental Deferred Compensation Plan (“SDCP”) that allows certain employees, including the named executive officers, to defer up to 50% of their eligible compensation in excess of their contributions under the Company's Profit Sharing Plan. In addition, certain members of management, including the named executive officers, have an additional opportunity to defer up to 95% of their variable incentive compensation. The compensation deferred under the SDCP, together with Company matching amounts, is credited with earnings or losses measured by the mirrored rate of return on investments elected by plan participants. With the adoption of the SERP, Dr. Mohapatra waived participation in the SDCP for 2005 and thereafter.\n\n\nChief Executive Officer Compensation\n\n\n The year 2004 was a year of transition for Quest Diagnostics. Mr. Freeman served as Chairman of the Board and Chief Executive Officer for the first four months of the year and served as Chairman of the Board until December 14, 2004. Dr. Mohapatra became the Chief Executive Officer in May 2004 and the Chairman of the Board on December 14, 2004. The fiscal year compensation for Mr. Freeman and Dr. Mohapatra consisted of base salary, annual bonus and long-term incentives. The Committee approved, and recommended to the Board for approval, Chief Executive Officer compensation using methods consistent with those used for other senior executives.\n\n\n Mr. Freeman received salary at the rate of $1,170,000 per year and a target incentive award of 140% of salary. He did not receive any additional equity awards during 2004. The bonus paid to Mr. Freeman was based both on his target incentive as well as his success in helping to execute a smooth Chief Executive Officer transition to Dr. Mohapatra.\n\n\n In accordance with the terms of his employment agreement, effective January 1, 2004, Dr. Mohapatra received a base salary rate of $875,000 per year, an annual incentive target award, payable under the SMIP, of 120% of base pay, and on February 19, 2004, he received a stock option award equal to 170,000 shares. In February 2005, the Committee approved an annual incentive bonus for 2004 performance to Dr. Mohapatra equal to $1,163,400. This bonus award was based on achievement relative to the factors described in the section above titled “Annual Incentives.” The Committee's decision was based on the Company's overall financial performance, as well as the leadership displayed by Dr. Mohapatra during the year. With respect to the financial performance of the Company, the Committee focused\non the Company's reported 8.2% revenue growth (including 6.7% of organic revenue growth) and 16% earnings per share growth for the year, as well as the Company's strong cash from operations, overall balance sheet strength and improvements in operating income of the Company over the prior year. Also, in February 2005, the Committee approved a stock option award for Dr. Mohapatra of 123,333 shares. This option has a three-year vesting schedule. This stock option award was based on achievement relative to the factors described in the section above titled “Annual Incentives” and on the equity grant levels described in the section above titled “Long-Term Incentives”. The Committee determined the amount of this award after reviewing competitive market data and Dr. Mohapatra's individual performance described above. It is the Committee's expectation\nthat an additional long-term incentive award in the form of Performance Shares will be granted later this fiscal year.\n\n\n The Committee also reviewed perquisites and other compensation paid to Dr. Mohapatra for 2004, and found these amounts, in the aggregate, appropriate.\n\n\nOther Executive Officers\n\n\n In 2004, each executive officer received adjustments to his base salary in accordance with the philosophy described above. The salary increases for each executive officer (other than Dr. Mohapatra and Mr. Freeman) ranged from 3.0% to 5.0%. For 2004 performance, each executive officer received a bonus award under the SMIP. These bonus awards were based on achievement relative to the factors described in the section above titled “Annual Incentives”. Additionally, each executive officer received an award of stock options during 2004.\n\n\n\n\n\n\n\n\n\n\n\nThese options are shown in the Summary Compensation Table on page 25. For 2005, the Committee approved bonus awards for 2004 performance as shown in the Summary Compensation Table and option awards for Mr. Hagemann, Mr. Zewe and Mr. Prevoznik equal to 50,000, 26,667, and 24,000 options. Each of these options vests over three years. Finally, it is the Committee's expectation that an additional long-term incentive award in the form of Performance Shares will be granted later this fiscal year to Mr. Hagemann, Mr. Zewe and Mr. Prevoznik. The Committee also reviewed perquisites and other compensation paid to each executive officer for 2004, and found these amounts, in the aggregate, appropriate.\n\n\nExecutive Share Retention Guidelines\n\n\n In order to promote equity ownership and further align the interests of management with Quest Diagnostics' shareholders, the Committee has adopted share retention and ownership guidelines for senior management in February 2005. Under these guidelines, certain officers are expected to maintain a minimum ownership position equal to the lesser of an amount which approximates 33% of their 2004 stock option award or the number of shares shown below.\n\n\n\n The Committee periodically reviews these guidelines, and may adjust them, as appropriate.\n\n\nDeductibility of Executive Compensation\n\n\n Section 162(m) of the Internal Revenue Code of 1986, as amended, precludes a public corporation from taking a tax deduction for annual compensation in excess of $1 million paid to its chief executive officer and the next four most highly paid executive officers, unless certain specific and detailed criteria are satisfied. The Committee considers the anticipated tax treatment to Quest Diagnostics and to the executive officers in its review and establishment of compensation programs and payments. The deductibility of compensation payments can depend upon numerous factors, including the nature of the payment and the time when income is recognized under various awards. Certain compensation paid or awarded in prior years may not be fully deductible. Interpretations of and changes in applicable tax laws and regulations\nas well as other factors beyond the control of the Committee also can affect deductibility of compensation. Quest Diagnostics' general policy is to preserve the tax deductibility of compensation paid to its executive officers, including annual incentive awards paid under the SMIP and the grants of stock options and shares of incentive stock under the terms of the Plan. The Committee will continue to monitor developments and assess alternatives for preserving the deductibility of compensation payments and benefits to the extent reasonably practicable, consistent with its compensation policies and as determined to be in the best interests of Quest Diagnostics and its shareholders.\n\n\nSummary\n\n\n The Committee believes that the Company's compensation philosophy and programs are designed to foster a performance-oriented culture that aligns employees' interests with those of it shareholders. The Committee believes that the compensation of the Company's executives is both appropriate and responsive to the goal of improving shareholder returns.\n\n\nTHE COMPENSATION COMMITTEE:\n\n\nWilliam F. Buehler, Chairman\n\n\nDaniel C. Stanzione, Ph.D.\n\n\nJohn B. Ziegler\n\n\nCompensation Committee Interlocks and Insider Participation\n\n\n No executive officer or other employee of the Company served as a member of the Compensation Committee or as a member of the compensation committee on the board of any company where an executive officer of such company is a member of the Committee.\n\n\n\n\n\n\n\n\n\n\n\nPerformance Comparison\n\n\n Set forth below is a line graph comparing the cumulative total shareholder return on Quest Diagnostics' common stock since December 31, 1999, based on the market price of the Company's common stock and assuming reinvestment of dividends, with the cumulative total shareholder return of companies on the Standard & Poor's 500 Stock Index and the S&P 500 Healthcare Equipment & Services Index.\n\n\nQuest Diagnostics Incorporated Performance Graph\n\n\n\n\n\n\n\n\nCOMPARISON OF CUMULATIVE\n FIVE YEAR TOTAL\n\n\n RETURN\n\n\n\n$700\n\n\n\n$0\n\n\n\n$200\n\n\n\n$300\n\n\n\n$400\n\n\n\n$500\n\n\n\n$600\n\n\n\n$100\n\n\n\nDec99\n\n\n\nDec00\n\n\n\nDec01\n\n\n\nDec02\n\n\n\nDec03\n\n\n\nDec04\n\n\n\nQUEST DIAGNOSTICS INC\n\n\n\nS&P 500 INDEX\n\n\n\nS&P 500 HEALTH CARE\n EQUIPMENT & SERVICES\n\n\n\n\n\n\n\n\n \n \n \n\n\n\n(1) \n \nAll values are adjusted to reflect the Company's two-for-one stock split that occurred on May 31, 2001. \n\n\n\nSection 16(a) Beneficial Ownership Reporting Compliance\n\n\n Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers, directors and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership of Company stock with the SEC and the New York Stock Exchange. Copies of these reports must also be furnished to the Company. As a result of an administrative oversight, each of Dr. Mohapatra, Mr. Hagemann, Mr. Zewe, Mr. Prevoznik and Mr. Marrone inadvertently omitted to timely report one transaction in February 2004 under the revised rules of the SEC relating to reporting such transaction. They subsequently reported the transaction in February 2004 under Form 4. Based solely upon a review of the copies of the forms filed under Section 16(a) and furnished to the Company, or written\nrepresentations from reporting persons, the Company believes that all other filing requirements applicable to its executive officers, directors and persons who own more than 10% of our common stock were complied with during 2004.\n\n\n\n\n\n\n\n\n\n\n\nREPORT OF THE AUDIT AND FINANCE COMMITTEE\n\n\n The primary purpose of the Audit and Finance Committee of the Board of Directors is (1) to assist in the Board's oversight of (a) the quality and integrity of the Company's financial statements and related disclosure, (b) the Company's compliance with legal and regulatory requirements, (c) the independent registered public accounting firm's qualifications and independence, and (d) the performance of the Company's internal audit function and independent registered public accounting firm, and (2) to provide advice to the board on financing activities and other financial matters.\n\n\n The Audit and Finance Committee meets with management periodically to consider the adequacy of Quest Diagnostics' internal controls and the objectivity of its financial reporting. The Committee also regularly meets privately with the Quest Diagnostics' independent registered public accounting firm and with the appropriate Quest Diagnostics personnel and internal auditors to discuss these matters. The Company's internal auditors and independent registered public accounting firm each have unrestricted access to the Committee. In addition, as part of the Committee's finance activities, the Committee reviews Quest Diagnostics' financing plans and other significant financial policies and actions, and makes recommendations to the full Board of Directors for approval of certain actions. The Committee\nalso appoints the independent registered public accounting firm and periodically reviews their performance and independence from management and pre-approves all audit and non-audit services, if any, provided by the independent registered public accounting firm.\n\n\n The Board of Directors has adopted a written charter setting out the functions the Committee is to perform, a copy of which is available on the Investor Relations-Corporate Governance section of our website at www.questdiagnostics.com.\n\n\n Quest Diagnostics management has responsibility for Quest Diagnostics' financial statements and the overall reporting process, including the effectiveness of Quest Diagnostics' system of internal controls over financial reporting. Management and the internal auditing department are responsible for maintaining the Company's accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations.\n\n\n The independent registered public accounting firm audits the annual financial statements prepared by management, expresses an opinion as to whether those financial statements fairly present the financial position, results of operations and cash flows of Quest Diagnostics in conformity with accounting principles generally accepted in the United States of America and discusses with the Committee any issues they believe should be raised. The independent registered public accounting firm also annually audits management's assessment of the effectiveness of internal control over financial reporting and audits the effectiveness of internal control over financial reporting (commencing in the fiscal year ending December 31, 2004). In the performance of its oversight role, the Committee reviewed Quest Diagnostics'\naudited financial statements and met with both management and PricewaterhouseCoopers LLP, the independent registered public accounting firm, to discuss those financial statements. The members of the Committee are not full-time employees of Quest Diagnostics and are not, and do not represent to be, performing the functions of auditors or accountants. Management has represented to the Committee that the financial statements were prepared in accordance with generally accepted accounting principles.\n\n\n The Committee has received from and discussed with PricewaterhouseCoopers LLP the written disclosure and the letter required by Independence Standards Board Standard No. 1 (Independence Discussion with Audit Committees), as it may be modified or supplemented, and has discussed the independence of PricewaterhouseCoopers LLP with PricewaterhouseCoopers LLP. These items relate to that firm's independence from Quest Diagnostics. In addition, the Committee reviewed all services provided by PricewaterhouseCoopers LLP to Quest Diagnostics, and the corresponding fees, in considering whether non-audit services were compatible with maintaining PricewaterhouseCoopers' independence from Quest Diagnostics. The Committee also discussed with PricewaterhouseCoopers LLP any matters required to be discussed by Statement on\nAuditing Standards No. 61 (Communication with Audit Committees).\n\n\n\n\n\n\n\n\n\n\n\n Based on these reviews and discussions, the Committee recommended to the Board of Directors that Quest Diagnostics' audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and the Board of Directors gave its approval.\n\n\nTHE AUDIT AND FINANCE COMMITTEE:\n\n\nJames F. Flaherty III, Chairman\n\n\nJohn C. Baldwin, M.D.\n\n\nRosanne Haggerty\n\n\nGary M. Pfeiffer\n\n\nDaniel C. Stanzione, Ph.D.\n\n\nFees and Services of PricewaterhouseCoopers LLP\n\n\n Aggregate fees for professional services rendered for Quest Diagnostics by PricewaterhouseCoopers LLP for the years ended December 31, 2004 and 2003 were:\n\n\n\n The Audit Fees for the years ended December 31, 2004 and 2003, respectively, were for professional services rendered by PricewaterhouseCoopers LLP for the audits of the consolidated financial statements of the Company; statutory audits and subsidiary audits; issuance of comfort letters related to financing transactions; and assistance with review of documents filed with the SEC. For 2004, audit fees also included professional services rendered for the audit of management's assessment of internal control over financial reporting and the audit of the Company's internal control over financial reporting.\n\n\n The Audit Related Fees for the years ended December 31, 2004 and 2003, respectively, were for assurance and related services related to employee benefit plan audits; due diligence related to mergers and acquisitions; and internal control reviews.\n\n\n Tax Fees for the years ended December 31, 2004 and 2003, respectively, were for services related to tax compliance, including preparation of tax returns and claims for refund. Such services are primarily for non-US tax matters.\n\n\n Other Tax Fees for the years ended December 31, 2004 and 2003, respectively, were for services related to tax planning and tax advice, including assistance with and representation before certain non-US tax authorities. None of these fees related to tax planning for any of the executive officers.\n\n\n All Other Fees for the year ended December 31, 2004 were for software licenses related to electronic internal audit work papers and access to on-line technical accounting and reporting updates.\n\n\n The Audit and Finance Committee of the Board of Directors has considered all services rendered and does not believe that they are incompatible with PricewaterhouseCoopers LLP remaining independent.\n\n\nAudit and Finance Committee Pre-Approval Policies and Procedures\n\n\n Effective January 1, 2003, it is the policy of the Audit and Finance Committee to pre-approve each audit or non-audit service provided by the Company's independent registered public accounting firm. Requests for pre-approval are considered at each regularly scheduled Audit and Finance Committee meeting, or if necessary, are approved by unanimous written consent of all members of the Audit and Finance Committee. For the year ended December 31, 2004, there was less than $1,000 of fees paid to the independent registered public accounting firm for which the de minimis exception from the Audit and Finance Committee pre-approval was used.\n\n\n\n\n\n\n\n\n\n\n\nADDITIONAL INFORMATION\n\n\n Quest Diagnostics files annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information that we file at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. The Company's SEC filings are also available to the public from commercial document retrieval services and at the internet website maintained by the SEC at www.sec.gov. Reports, proxy statements and other information should also be available for inspection at the offices of the New York Stock Exchange.\n\n\n To the extent that this proxy statement is incorporated by reference into any other filing by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, the sections of this proxy statement entitled “Compensation Committee Report on Executive Compensation,” “Report of the Audit and Finance Committee” (to the extent permitted by the rules of the SEC) and “Performance Comparison” will not be deemed incorporated, unless specifically provided otherwise in such filing.\n\n\n The annual report to shareholders is being sent in connection with this proxy statement and includes (other than the exhibits thereto) the entire annual report on Form 10-K for the year ended December 31, 2004. Upon request, the Company will provide without charge a copy of its annual report on Form 10-K for the year ended December 31, 2004 to each record or beneficial owner of its common stock. Such requests should be directed to:\n\n\nQuest Diagnostics Incorporated\n\n\n1290 Wall Street West\n\n\nLyndhurst, New Jersey 07071\n\n\nAttn: Investor Relations\n\n\n(201) 393-5030\n\n\n\n\n\n\n\n\n\n\n\nAPPENDIX A\n\n\nAMENDED AND RESTATED\n\n\nQuest Diagnostics Incorporated\n\n\nEmployee Long-Term Incentive Plan\n\n\n(Proposed changes are indicated in bold italics)\n\n\n1. THE PROGRAM\n\n\n a) Purpose. This Amended and Restated Quest Diagnostics Incorporated Employee Long-Term Incentive Plan (the “Program”) is intended to benefit the stockholders of Quest Diagnostics Incorporated (the “Company”) by providing a means to attract, retain and reward individuals who can and do contribute to the longer term financial success of the Company. Further, the recipients of stock-based awards under the Program should identify their success with that of the Company's stockholders and therefore will be encouraged to increase their proprietary interest in the Company.\n\n\n b) Effective Date. To serve this purpose, the Program will become effective upon its approval by the holders of stock entitled to vote at the Company's 2005 Annual Meeting of Stockholders (the “Effective Date”).\n\n\n2. ADMINISTRATION\n\n\n a) Committee. The Program shall be administered by a Committee, appointed by the Board of Directors of the Company (the “Board”), which shall consist of no less than two of its members, all of whom shall not be (or formerly have been) employees of the Company (the “Committee”); provided, however, that from time to time the Board may assume, at its sole discretion, administration of the Program. Except with regard to awards to employees subject to Section 16 of the Securities Exchange Act of 1934, the Committee may delegate certain responsibilities and powers to any executive officer or officers selected by it. Any such delegation may be revoked\nby the Committee at any time.\n\n\n b) Powers and authority. The Committee's powers and authority include, but are not limited to: selecting individuals, who are employees of the Company and any subsidiary of the Company or other entity in which the Company has a significant equity or other interest as determined by the Committee, to receive awards; determining the types and terms and conditions of all awards granted, including performance and other earnout and/or vesting contingencies; permitting transferability of awards to eligible third parties; interpreting the Program's provisions; and administering the Program in a manner that is consistent with its purpose. The Committee's decision in carrying out the Program and its interpretation and construction\nof any provisions of the Program or any award granted or agreement or other instrument executed under it shall be final and binding upon all persons. No members of the Board shall be liable for any action or determination made in good faith in administering the Program.\n\n\n c) Award Prices. Except for awards made in connection with the assumption of, or in substitution for, outstanding awards previously granted by an acquired entity, all awards denominated or made in Shares shall use as the per Share price the mean between the high and low selling prices of a share of the Common Stock of the Company (“Share”) on the applicable date as reported in The New York Times, or if Shares are not traded on such date, the mean between the high and low selling prices on the next preceding day on which such Shares are traded; provided, however,\nthat the Committee may in its discretion establish a higher price as the per Share price; and provided further, however, that where a “reload” option is issued to an optionee who exercises an option by tendering (either actually or by attestation) Shares previously owned by the optionee, then the per Share exercise price of the reload option (which shall be for the same number of shares tendered for payment) shall be the market price at which the Shares tendered are valued in accordance with Section 4(b). The applicable date shall be the day on which the award is granted. Except as provided for in Section 3(d), the per Share exercise price of any stock option or stock appreciation right may not be decreased after the grant of the award, and a stock option or stock appreciation right may not be surrendered as\nconsideration in exchange for the grant of a new award with a lower per Share exercise price.\n\n\nA-1\n\n\n\n\n\n\n\n\n\n3. SHARES SUBJECT TO THE PROGRAM AND ADJUSTMENTS\n\n\n a) Maximum Shares Available for Delivery. Subject to adjustments under Section 3(d), the maximum number of Shares that may be delivered to participants and their beneficiaries under the Program shall be equal to (i) 24,000,000 Shares; (ii) any Shares that were available for future awards under the Company's 1996 Employee Equity Participation Program (the “Prior Program”) as of June 29, 1999; and (iii) any Shares that were represented\nby awards granted under the Prior Program of the Company, which are or may be forfeited, which expire or are canceled without the delivery of Shares or which have or may result in the forfeiture of Shares back to the Company after June 29, 1999. In addition, any Shares delivered under the Program or the Prior Program of the Company which are forfeited back to the Company because of the failure to meet an award contingency or condition shall again be available for delivery pursuant to new awards granted under the Program. Any Shares covered by an award (or portion of an award) granted under the Program or the Prior Program\nof the Company, which is forfeited or canceled, expires or is settled in cash, including the settlement of tax withholding obligations using Shares, shall be deemed not to have been delivered for purposes of determining the maximum number of Shares available for delivery under the Program. Likewise, if any stock option is exercised by tendering Shares, either actually or by attestation, to the Company as full or partial payment for such exercise under this Program or the Prior Program of the Company, only the number of Shares issued net of the Shares tendered shall be deemed delivered for purposes of determining the maximum number of Shares available for delivery under the Program. Further, Shares issued under the Program through the settlement, assumption or substitution of outstanding awards or obligations to grant future awards as a condition of the Company acquiring another entity shall\nnot reduce the maximum number of Shares available for delivery under the Program.\n\n\n b) Other Program Limits. Subject to adjustment under Section 3(d), the following additional maximums are imposed under the Program. The maximum number of Shares that may be delivered in conjunction with awards granted pursuant to Section 4(d) on or after the Effective Date, shall be 4,700,000. The maximum aggregate number of Shares that may be covered by awards granted to any one individual over the life of the Program pursuant to Sections 4(b)\nand 4(c) shall not exceed 3,000,000 Shares. The aggregate maximum payments that can be made for awards granted to any one individual pursuant to Section 4(d) on or after the Effective Date shall not exceed 600,000 Shares.\n\n\n c) Payment Shares. Subject to the overall limitation on the number of Shares that may be delivered under the Program, the Committee may, in addition to granting awards under Section 4, use available Shares as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of the Company.\n\n\n d) Adjustments for Corporate Transactions.\n\n\n (i) The Committee may determine, in connection with any corporate transaction, to make such adjustment or adjustments to outstanding awards or to the share limits described in Sections 3(a) or 3(b) as it determines may be required to preserve (or prevent enlargement of) the benefits or potential benefits intended under the Program. For this purpose a corporate transaction will include, but is not limited to, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares, or other similar occurrence. In the event of\nsuch a corporate transaction, the Committee may, in such manner as the Committee deems equitable, adjust (i) the number and kind of shares which may be delivered under the Program pursuant to Sections 3(a) and 3(b); (ii) the number and kind of shares subject to outstanding awards; and (iii) the exercise price of outstanding stock options and stock appreciation rights. Similar adjustments may be made in situations where the Company assumes or substitutes for outstanding awards held by employees and other persons of an entity acquired by the Company.\n\n\n (ii) In the event that the Company is not the surviving company of a merger, consolidation or amalgamation with another company, or in the event of a liquidation or reorganization of the Company, and in the absence of the surviving corporation's assumption of outstanding awards made under the Program, the Committee may provide for appropriate adjustments and/or settlements of such grants either at the time of grant or at a subsequent date. The Committee may also provide for adjustments and/or settlements of outstanding awards as it deems appropriate and consistent with the Program's purpose in the event of any other change-in-control of the Company.\n\n\nA-2\n\n\n\n\n\n\n\n\n\n4. TYPES OF AWARDS\n\n\n a) General. An award may be granted singularly, in combination with another award(s) or in tandem whereby exercise or vesting of one award held by a participant cancels another award held by the participant. Subject to the limitations of Section 2(c), an award may be granted as an alternative or successor to or replacement of an existing award under the Program or under any other compensation plan or arrangement of the Company, including the plan of any entity acquired by the Company. The types of awards that may be granted under the Program include:\n\n\n b) Stock Option. A stock option represents a right to purchase a specified number of Shares during a specified period at a price per Share which is no less than one hundred percent (100%) of the per Share amount stipulated by Section 2(c). A stock option may be in a form intended to comply with Section 422 or any other similar provision of the Internal Revenue Code (the “Code”) or in another form which may or may not qualify for favorable federal income tax treatment. Each stock option granted on or after the Effective Date shall expire on the applicable date designated by the Committee but in no event may such date be more than seven years from the date the stock option is granted. The Shares covered by a stock option may be purchased by means of a cash payment or such other means as the Committee may from time-to-time permit, including (i) tendering (either actually or by attestation) Shares valued using the market price at the time of exercise, (ii) authorizing a third party to sell Shares (or a sufficient portion thereof) acquired upon exercise of a stock option and to remit to the Company a sufficient portion of the sale proceeds to pay for all the Shares acquired through such exercise and any tax withholding obligations resulting from such exercise; or (iii) any combination of the above.\n\n\n c) Stock Appreciation Right. A stock appreciation right is a right to receive a payment in cash, Shares or a combination, equal to the excess of the aggregate market price at time of exercise of a specified number of Shares over the aggregate exercise price of the stock appreciation right being exercised. The longest term a stock appreciation right granted on or after the Effective Date may be outstanding shall be seven years. Such exercise price shall be no less than one hundred percent (100%) of the per Share amount stipulated by Section 2(c).\n\n\n d) Stock Award. A stock award is a grant of Shares or of a right to receive Shares (or their cash equivalent or a combination of both) in the future. Each stock award shall be earned and vest over such period and shall be governed by such conditions, restrictions and contingencies as the Committee shall determine. These may include continuous service and/or the achievement of performance goals. The performance goals that may be used by the Committee for such awards granted to persons who may become subject to Code Section 162(m) shall consist of operating profits (including EBITDA), net profits, earnings per share, profit returns and margins, revenues, shareholder return and/or value, stock price, customer\nservice and quality metrics. Performance goals may be measured solely on a corporate, subsidiary or business unit basis, or a combination thereof. Further, performance criteria may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure of the selected performance criteria. Profit, earnings and revenues used for any performance goal measurement may exclude: gains or losses on operating asset sales or dispositions; asset write-downs; litigation or claim judgments or settlements; accruals for historic environmental obligations; effect of changes in tax law or rate on deferred tax liabilities; accruals for reorganization and restructuring programs; uninsured catastrophic property losses; the effect of changes in accounting standards; the cumulative effect of changes in accounting principles; and any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and Statement of Financial Accounting Standards No. 145 and/or in management's discussion and analysis of financial performance appearing in the Company's annual report to stockholders for the applicable year.\n\n\n5. AWARD SETTLEMENTS AND PAYMENTS\n\n\n a) Dividends and Dividend Equivalents. An award may contain the right to receive dividends or dividend equivalent payments which may be paid either currently or credited to a participant's account. Any such crediting of dividends or dividend equivalents may be subject to such conditions, restrictions and contingencies as the Committee shall establish, including the reinvestment of such credited amounts in Share equivalents.\n\n\nA-3\n\n\n\n\n\n\n\n\n\n b) Payments. Awards may be settled through cash payments, the delivery of Shares, the granting of awards or combination thereof as the Committee shall determine. Any award settlement, including payment deferrals, may be subject to such conditions, restrictions and contingencies as the Committee shall determine. The Committee may permit or require the deferral of any award payment, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest, or dividend equivalents, including converting such credits into deferred Share equivalents.\n\n\n6. PROGRAM AMENDMENT AND TERMINATION\n\n\n a) Amendments. The Board may amend this Program as it deems necessary and appropriate to better achieve the Program's purpose provided, however, that except as provided in Section 3(d): (i) the Share and other award limitations set forth in Sections 3(a) and 3(b) cannot be increased and (ii) the minimum stock option and stock appreciation right exercise prices set forth in Sections 2(c) and 4(b) and (c) cannot be changed unless such a plan amendment is properly approved by the Company's stockholders.\n\n\n b) Program Suspension and Termination. The Board may suspend or terminate this Program at any time. However, in no event may any awards be granted under the Program after the tenth anniversary of the Effective Date. Any such suspension or termination shall not of itself impair any outstanding award granted under the Program or the applicable participant's rights regarding such award.\n\n\n7. MISCELLANEOUS\n\n\n a) Assignability. Except by will or by the laws of descent and distribution and, if permitted by the Committee, as a gift to a family member or a trust or similar entity for the benefit of one or more family members, no award granted under the Program shall be assignable or transferable.\n\n\n b) No Individual Rights. No person shall have any claim or right to be granted an award under the Program. Neither the Program nor any action taken hereunder shall be construed as giving any employee or other person any right to continue to be employed by or to perform services for the Company, any subsidiary or related entity. The right to terminate the employment of or performance of services by any Program participant at any time and for any reason is specifically reserved to the employing entity.\n\n\n c) Unfunded Program. The Program shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Program shall not establish any fiduciary relationship between the Company and any participant or beneficiary of a participant. To the extent any person holds any obligation of the Company by virtue of an award granted under the Program, such obligation shall merely constitute a general unsecured liability of the Company and accordingly shall not confer upon such person any right, title or interest in any assets of the Company.\n\n\n d) Use of Proceeds. Any proceeds from the sale of shares under the Program shall constitute general funds of the Company.\n\n\n e) Other Benefit and Compensation Programs. Unless otherwise specifically determined by the Committee, settlements of awards received by participants under the Program shall not be deemed a part of a participant's regular, recurring compensation for purposes of calculating payments or benefits from any Company benefit plan or severance program. Further, the Company may adopt any other compensation programs, plans or arrangements as it deems appropriate.\n\n\n f) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Program or any award, and the Committee shall determine whether cash shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled.\n\n\n g) Governing Law. The validity, construction and effect of the Program and any award, agreement or other instrument issued under it shall be determined in accordance with the laws of the state of New Jersey without reference to principles of conflict of law.\n\n\nA-4\n\n\n\n\n\n\n\n\n\nAPPENDIX B\n\n\nAMENDED AND RESTATED\n\n\nQUEST DIAGNOSTICS INCORPORATED\n\n\nLONG-TERM INCENTIVE PLAN FOR\n\n\nNON-EMPLOYEE DIRECTORS\n\n\n(Proposed changes are indicated in bold italics)\n\n\n Section 1. Purpose. The purpose of the Amended and Restated Quest Diagnostics Incorporated Long-Term Incentive Plan for Non-Employee Directors is to secure for the Company and its stockholders the benefits of the incentive inherent in increased common stock ownership by the members of the Board of Directors who are not employees of the Company or any of its subsidiaries.\n\n\n Section 2. Definitions. When used herein, the following terms shall have the following meanings:\n\n\n “Administrator” means the Board, or a committee of the Board, duly appointed to administer the Plan.\n\n\n “Board” means the Board of Directors of the Corporation.\n\n\n “Code” means the Internal Revenue Code of 1986, as amended.\n\n\n “Common Stock” means ($.01 par value) common stock of the Corporation.\n\n\n “Corporation” means Quest Diagnostics Incorporated, a Delaware corporation.\n\n\n “Effective Date” shall mean the date of approval of the Plan by the holders of stock entitled to vote at the Corporation's 2005 Annual Meeting of Stockholders.\n\n\n “Exercise Price” means the price per share specified in the Option agreement at which the Participant may purchase Common Stock through the exercise of his/her Option, as the same may be adjusted in accordance with Section 9.\n\n\n “Fair Market Value” means, as of any date, the mean of the high and low sales price of a share of Common Stock on The New York Stock Exchange Composite list on such date (or if no sale took place on such exchange on such date, the mean between the high and the low on such exchange on the most recent preceding date on which a sale took place) provided, however, that for the purposes of Section 7(d), if on the date of exercise of an Option, a Participant sells through a broker designated by the Corporation any of the shares purchased as a result of the exercise of the Option, then the shares shall be valued at the average sales price of such shares sold on such date as reported to the Corporation by such broker.\n\n\n “Option” means a right granted under the Plan to a Participant to purchase shares of Common Stock as a Nonqualified Stock Option which is not intended to qualify as an Incentive Stock Option under Section 422 of the Code.\n\n\n “Option Period” means the period within which the Option may be exercised pursuant to the Plan.\n\n\n “Participant” means a member of the Board of Directors of Quest Diagnostics Incorporated who is not an employee of Quest Diagnostics Incorporated or any subsidiary thereof.\n\n\n “Plan” means the Amended and Restated Quest Diagnostics Incorporated Long-Term Incentive Plan for Non-Employee Directors.\n\n\n “Stock Awards” means a grant under the Plan to a Participant of shares of Common Stock or of a right to receive shares of Common Stock (or their cash equivalent or a combination of both) in the future.\n\n\n Section 3. Administration. The Plan shall be administered by the Administrator who shall establish from time to time regulations for the administration of the Plan, interpret the Plan, delegate in writing administrative matters to committees of the Board or to other persons, and make such other determinations and take such other action as it deems necessary or advisable for the administration of the Plan. All decisions, actions and interpretations of the Administrator shall be final, conclusive and binding upon all parties.\n\n\nB-1\n\n\n\n\n\n\n\n\n\n Section 4. Participation. All Non-Employee Directors who become members of the Board shall automatically be Participants in the Plan.\n\n\n Section 5. Shares Subject to the Plan. The maximum number of shares of Common Stock that may be delivered in conjunction with grants of Options and Stock Awards under the Plan shall be 1,000,000, and 1,000,000 shares of Common Stock shall be reserved for this purpose under the Plan (subject to adjustment as provided in Section 9). The shares issued upon the grant of Stock Awards or exercise of Options granted under the Plan may be authorized and unissued shares or shares held in the treasury of the Corporation including shares purchased on the open market by the Corporation (at such time or times and in such manner\nas it may determine). The Corporation shall be under no obligation to acquire Common Stock for distribution to Participants before payment in shares of Common Stock is due. If any Stock Award or Option granted under the Plan shall be canceled or expire, new Stock Awards or Options may thereafter be granted covering such shares.\n\n\n Section 6. Grants of Options and Stock Awards.\n\n\n (a) On the Effective Date and on the date of the Annual Meeting of Shareholders of each year commencing on January 1, 2006, the Administrator may grant to each Participant an Option and/or a Stock Award, in such proportions as the Administrator may determine, covering an aggregate of not more than 10,000 shares of Common Stock. In the event that a Participant is elected as a director of the Company other than on the date of the Annual Meeting of Shareholders, the Board may grant to such director, on his/her election, an Option and/or a Stock Award, in such proportions as the Administrator may determine, covering such number\nof shares of Common Stock (not to exceed 10,000) that is proportional to the fraction of a year remaining until the next Annual Meeting of Shareholders. In addition, upon a Participant's initial election as a director of the Company by the Board, the Administrator may make a one-time grant to such Participant of an Option and/or a Stock Award, in such proportions as the Administrator may determine, covering an aggregate of not more than 20,000 shares of Common Stock.\n\n\n (b) Each Stock Award shall be earned and vest over such period and shall be governed by such conditions, restrictions and contingencies as the Administrator shall determine. These may include the achievement of performance goals.\n\n\n (c) As may be permitted from time to time by the Administrator, each Participant may elect to receive an Option or Stock Award in lieu of the cash compensation payable to such director in any year. The number of shares of Common Stock underlying the Option available to such director shall be computed using the same option valuation methodology (or any subsequent methodology as may be adopted by the Company) as is used for reporting compensation expense in the Company's financial statements so as to achieve a value equal to the cash compensation that would otherwise have been paid. Any such election shall be irrevocable\nand shall be made by December 31, effective for the fees payable during the following year and with an Option being granted on each day on which the fees would otherwise have been payable (generally expected to be the first day of each calendar quarter).\n\n\n Section 7. Terms and Conditions of Options. Each Option granted under the Plan shall be evidenced by a written agreement, in form approved by the Administrator and executed by the Chairman of the Board, President, Vice President of Human Resources or Secretary of the Corporation, which shall be subject to the following express terms and conditions and to such other terms and conditions as the Administrator may deem appropriate. Options may be granted singularly or in combination with a Stock Award.\n\n\n (a) Option Period. Each Option agreement entered into on or after the Effective Date shall specify that the Option granted thereunder is granted for a period of seven (7) years from the date of grant and shall provide that the Option shall expire on such seven-year anniversary.\n\n\n (b) Exercise Price. The Exercise Price per share shall be the Fair Market Value at the time the Option is granted.\n\n\n (c) Exercise of Option. Subject to Section 7(e), Options granted under Section 6(a) hereof shall become exercisable in three equal annual installments beginning on the first anniversary of the date of grant. Options granted under Section 6(c) vest and become exercisable immediately on the date of grant.\n\n\nB-2\n\n\n\n\n\n\n\n\n\nThe exercisability of these Options may be limited by the Corporation's restrictions on exercise resulting from provisions of its non-employee director stock ownership guidelines program.\n\n\n (d) Payment of Exercise Price Upon Exercise. The Exercise Price of the shares as to which an Option shall be exercised shall be paid to the Corporation at such time (but in no event later than the date on which any shares are issued on exercise of an Option) as is determined by the Administrator. The Administrator may authorize in its sole discretion, the payment of the Exercise Price by (i) delivering Common Stock of the Corporation already owned by the Participant and having a total Fair Market Value on the date of such delivery equal to the Exercise Price, (ii) delivering a combination of cash and Common Stock\nof the Corporation having a total Fair Market Value on the date of such delivery equal to the Exercise Price, or (iii) by delivery of a notice of cancellation of vested Options held by the Participant having a spread equal to the Exercise Price of the number of shares being exercised, including any taxes required to be withheld by the corporation in connection with such exercise. For purposes of the preceding sentence “spread” shall mean the difference between the Fair Market Value of the Common Stock on the date of exercise and the Exercise Price multiplied by the number of shares covered by the vested Options being canceled.\n\n\n (e) Termination of Service on the Board. In the event service on the Board of a Participant terminates for any reason, all Options previously granted to such Participant under the Plan may be exercised by the Participant (or, if the Participant is deceased, by his/her representative) at any time, from time to time, for the remaining term of the Option.\n\n\n (f) Transferability of Options. No Option granted under the Plan and no right arising under such Option shall be transferable other than by will or by the laws of descent and distribution. During the lifetime of the optionee, an Option shall be exercisable only by him/her.\n\n\n (g) Participants to Have No Rights as Stockholders. No Participant shall have any rights as a stockholder with respect to any shares subject to his or her Option prior to the date on which he or she is recorded as the holder of such shares on the records of the Corporation.\n\n\n (h) Other Option Provisions. The form of Option agreement authorized by the Plan may contain such other provisions as the Board may, from time to time, determine.\n\n\n Section 8. Terms and Conditions of Stock Awards. Each Stock Award granted under the Plan shall be evidenced by a written agreement, in form approved by the Administrator and executed by the Chairman of the Board, President, Vice President of Human Resources or Secretary of the Corporation, which shall be subject to the following express terms and conditions and to such other terms and conditions as the Administrator may deem appropriate. Stock Awards may be granted singularly or in combination with an Option.\n\n\n (a) Dividends and Dividend Equivalents. A grant of Stock Awards may contain the right to receive dividends or dividend equivalent payments which may be paid either currently or credited to a Participant's account. Any such crediting of dividends or dividend equivalents may be subject to such conditions, restrictions and contingencies as the Administrator shall establish, including the reinvestment of such credited amounts in Common Stock equivalents.\n\n\n (b) Payments. Stock Awards may be settled through cash payments, the delivery of shares of Common Stock, the granting of Stock Awards or Options or combination thereof as the Administrator shall determine. Any Stock Award settlement, including payment deferrals, may be subject to such conditions, restrictions and contingencies as the Administrator shall determine. The Administrator may permit or require the deferral of any award payment, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest, or dividend equivalents, including converting such credits into deferred share equivalents.\n\n\n (c) Transferability of Stock Awards. Except by will or by the laws of descent and distribution and, if permitted by the Administrator, as a gift to a family member or a trust or similar entity for the benefit of one or more family members, no Stock Award granted under the Plan shall be assignable or transferable.\n\n\nB-3\n\n\n\n\n\n\n\n\n\n (d) Participants to Have No Rights as Stockholders. No Participant shall have any rights as a stockholder with respect to any shares subject to his or her Stock Award prior to the date on which he or she is recorded as the holder of such shares on the records of the Corporation.\n\n\n (e) Other Stock Award Provisions. The form of Stock Award agreement authorized by the Plan may contain such other provisions as the Board may, from time to time, determine.\n\n\n Section 9. Adjustments in Event of Change in Common Stock. In the event of any change in the Common Stock by reason of any stock dividend recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting the Common Stock, the number and kind of shares which thereafter may be optioned, awarded and sold under the Plan and the number and kind of shares subject to Stock Awards in outstanding Stock Award Agreements or subject to Option in outstanding Option agreements and the Exercise Price per share of such Options shall be appropriately adjusted consistent with such change in such manner as the Administrator may deem equitable to prevent substantial dilution or enlargement of\nthe right granted to, or available for, Participants in the Plan.\n\n\n Section 10. Listing and Qualification of Shares. The Plan, the grant of Stock Awards, the grant and exercise of Options thereunder, and the obligation of the Corporation to sell and deliver shares under such Stock Awards and Options, shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Corporation, in its discretion, may postpone the issuance or delivery of shares upon any grant of a Stock Award or exercise of an Option until completion of any stock exchange listing, or other qualification of such shares under\nany state or federal law, rule or regulation as the Corporation may consider appropriate, and may require any Participant, beneficiary or legal representative to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares in compliance with applicable laws, rules and regulations.\n\n\n Section 11. Taxes. The Corporation may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all federal, state, local and other taxes required by law to be withheld with respect to Options and Stock Awards granted under the Plan including, but not limited to (a) reducing the number of shares of Common Stock otherwise deliverable to permit deduction of the amount of any such withholding taxes from the amount otherwise payable under the Plan, (b) deducting the amount of any such withholding taxes from any other amount then or thereafter payable to a Participant, or (c) requiring a Participant, beneficiary or legal representative to pay in cash to the Corporation the amount required to be withheld\nor to execute such documents as the Corporation deems necessary or desirable to enable it to satisfy its withholding obligations as a condition of releasing the Common Stock.\n\n\n Section 12. No Liability of Board Members. No member of the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his/her capacity as a member of the Board or the Administrator nor for any mistake of judgment made in good faith, and the Corporation shall indemnify and hold harmless to the fullest extent permitted by the Corporation's Restated Certificate of Incorporation and By-Laws and Delaware General Corporation Law, each employee, officer or director of the Corporation to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement\nof a claim with the approval of the Board) arising out of any act or omission to act in connection with the Plan.\n\n\n Section 13. Amendment or Termination. The Board may, with prospective or retroactive effect, amend, suspend or terminate the Plan or any portion thereof at any time; provided, however, that no amendment, suspension or termination of the Plan shall deprive any Participant of any right with respect to any Stock Award or Option granted under the Plan without his written consent; and provided, further, that unless duly approved by the holders of stock entitled to vote thereon at a meeting (which may be the annual meeting) duly called and held for such purpose, except as provided\nin Section 9, no amendment or change shall be made in the Plan (i) increasing the total number of shares which may be issued or transferred under the Plan; (ii) changing the exercise price specified for the shares subject to Options; (iii) changing the maximum period during which Options may be exercised; (iv) extending the period during which\n\n\nB-4\n\n\n\n\n\n\n\n\n\nOptions or Stock Awards may be granted under the Plan; or (v) expanding the class of individuals eligible to receive Stock Awards or Options under the Plan.\n\n\n Section 14. Captions. The captions preceding the sections of the Plan have been inserted solely as a matter of convenience and shall not in any manner define or limit the scope or intent of any provisions of the Plan.\n\n\n Section 15. Governing Law. The Plan and all rights thereunder shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within such State.\n\n\n Section 16. Effective Date and Duration of Plan. The Plan shall become effective as of the Effective Date. This Plan shall terminate on the tenth anniversary of the Effective Date, and no Stock Awards or Option may be granted under the Plan after such date, but such termination shall not affect any Stock Award or Option previously granted.\n\n\nB-5\n\n\n\n\n\n\n\n\n\n \n\n\n\n\n\nMI1539\n\n\n\n\n\n\n\n Appendix\n I \n\n\nQUEST DIAGNOSTICS INCORPORATED\n\n\nOne\n Malcolm Avenue\n\n\nTeterboro,\n New Jersey 07608\n\n\nQuest Diagnostics Incorporated will be holding its Annual Meeting of Stockholders on May 10, 2005. The enclosed Notice of Annual Meeting provides information regarding the matters that are expected to be voted on at the meeting. Your vote is important to us. Even if you plan to attend the meeting, please read the enclosed materials and vote through the Internet, by telephone or by mailing the Proxy Card below.\n\n\nTelephone\n and Internet Voting\n\n\nOn the reverse side of this card are instructions on how to vote through the Internet or by telephone. Please consider voting through one of these methods. Your vote is recorded as if you mailed in your Proxy. We believe voting through the Internet or by telephone is convenient, and it also saves money.\n\n\nThank you in advance for your participation in our 2005 Annual Meeting.\n\n\n \n\n\nQuest Diagnostics Incorporated\n\n\n \n\n\n \n\n\n \n\n\n \n\n\n \n\n\n \n\n\n \n\n\n \n\n\n \n\n\n \n\n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\n\n\n \n\nPlease\n fold and detach card at perforation before mailing.\n\n\n \n\n\n\n\n\n\n\n \n\n \n\n\n \n\n\n\n\n \n\n\n\n\n\nQUEST\n DIAGNOSTICS INCORPORATED\n\n\n \n \n \n\n \n\n\n \n\nPROXY\n / VOTING INSTRUCTION FORM\n\n\n \n\n\n\n\n \n \n \n \n \n \n \n \n \n\n\n\n\n \n\n1.\n\n \n\nELECTION\n OF DIRECTORS \n\n \n\n\n\n\n\n \n\n\n \n\nNominees:\n\n\n \n\n(01)\n William F. Buehler\n\n\n \n\n(02)\n Rosanne Haggerty\n\n\n \n\n(03)\n Gary M. Pfeiffer\n\n\n \n\n(04) Daniel\n C. Stanzione, Ph.D.\n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n \n\n\n \nFOR\n all \n \n\n\n\n\n \n\n\n\n \nWITHHOLD all \n\n\n\n \n\n FOR\n all except (*)\n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n*(INSTRUCTION: To\n withhold authority to vote for any individual nominee, strike that\n nominee’s\n name in the list above.)\n\n\nYour\n Board of Directors Recommends that You Vote FOR\n ALL THE LISTED NOMINEES for\n terms expiring in 2008.\n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\nFOR\n\n\n \n\nWITHHOLD\n\n\n \n\nABSTAIN\n\n\n \n\n\n\n\n\n2.\n\n\n \n\nProposal\n to ratify the appointment of PricewaterhouseCoopers LLP as independent\n registered public accounting firm for the fiscal year ending December\n 31, 2005.\n\n\nYour Board of Directors Recommends that You Vote FOR\n this Proposal.\n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\nFOR\n\n\n \n\nWITHHOLD\n\n\n \n\nABSTAIN\n\n\n \n\n\n\n\n\n3.\n\n\n \n\nProposal\n to approve the amended Employee Long-Term Incentive Plan.\n\n\nYour Board of Directors Recommends that You Vote FOR\n this Proposal.\n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\nFOR\n\n\n \n\nWITHHOLD\n\n\n \n\nABSTAIN\n\n\n \n\n\n\n\n\n4.\n\n\n \n\nProposal\n to approve the amended Director Long-Term Incentive Plan.\n\n\nYour Board of Directors Recommends that You Vote FOR\n this Proposal.\n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n \n\nPlease\n mark this box if you plan to attend the Annual Meeting.\n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n \n \n \n \n \n \n \n \n \n \n \n \n\n\n\n\n(CONTINUED\n AND TO BE SIGNED ON REVERSE SIDE.)\n\n\n\n\n\n\n \n\n\n \n\n\n\n\n\n\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\nV\n O T E B Y T E L E P H O N E\n\n\n \n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\nHave\n your proxy card available when you call\n the Toll-Free number 1-800-542-1160\n using\n a\n touch-tone phone and follow the simple\n instructions to record your vote.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\nV O T E \n B Y I N T E R N E T\n\n\n \n\n\n\n\n\nc/o\n National City Bank\n\n\n Corporate Trust Operations\n\n\nLocator 5352\n\n\nP. O. Box 94509\n\n\nCleveland, OH 44101-4509\n\n\n \n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\nHave\n your proxy card available when you access the website http://www.votefast.com\n\n and follow the simple instructions to record your vote.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\nV O T E \n B Y M A I L\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\nPlease\n mark, sign and date your proxy card and return it in the postage-paid\n envelope provided or return\n it to: National City Bank, P.O. Box 535600, Pittsburgh, PA 15253. Mailed\n proxies must be received on or before\n 12:00 midnight, E.D.T. on May 9, 2005.\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n \n\n\n\n\n\n\nVote\n by Telephone\n\n\n Call toll-free using a\n\n\n touch-tone phone:\n\n\n1-800-542-1160\n\n\n \n\n \n\n\n \n\nVote\n by Internet\n\n\n Access the website and\n\n\n cast your vote:\n\n\nhttp://www.votefast.com\n\n\n \n\n \n\n\n \n\nVote\n by Mail\n\n\n Return your proxy\n\n\n in the postage-paid\n\n\nenvelope provided.\n\n\n \n\n\n\n\n\nVote\n 24 hours a day, 7 days a week!\n\n\nYour telephone or Internet vote must be received by 12:00 midnight,\n E.D.T.\n\n\non May 9, 2005, to assure that it is counted in the final tabulation.\n\n\n\n\n\nPLEASE DO NOT VOTE BY MORE THAN ONE METHOD. THE LAST VOTE RECEIVED\n WILL BE THE OFFICIAL\n\n\nVOTE. DO NOT RETURN THIS PROXY IF YOU ARE VOTING BY THE INTERNET\n OR BY TELEPHONE.\n\n\n \n\n\n\n\n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n \n\n\n\n\n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n\n\n\n \n\n \n\n\n \n\n \n\n\n \n\n\n\n\n\n\n\n \n\n\n\n\n\n \n\n\n \n\n\n\n\n\n\n \n\nThis Proxy must be signed and dated below.\n\n\nPlease fold and detach card at perforation before mailing.\n\n\n\n \n\n\n\n\n\n\n \n\n \n\n\n \n\n\n \n\n\n\n\n\nQUEST\nDIAGNOSTICS\nINCORPORATED\n\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPROXY\n/ VOTING\nINSTRUCTION\nFORM \n\n\n \n\n\nThis proxy is solicited on behalf of the Board of Directors.\n\n\nThe\n undersigned stockholder hereby appoints Michael E. Prevoznik, Sirisha Gummaregula\n and Leo C. Farrenkopf, Jr., and each of them, each with full power of substitution,\n proxies to represent the undersigned stockholder and to vote all shares of Common\n Stock of Quest Diagnostics Incorporated that the stockholder would be entitled\n to vote on all matters which come before the Annual Meeting of Stockholders\n to be held at The Waldorf Astoria, 301 Park Avenue, New York, NY 10022 on Tuesday,\n May 10, 2005, at 10:30 a.m. E.D.T., and any adjournment of that meeting. \n\n\nIf\n this Proxy is properly executed, the shares represented by this Proxy will be\n voted as specified. If no specification is made, the shares represented by this\n Proxy will be voted for Items 1, 2, 3 and 4 identified on this Proxy. The shares\n represented by this Proxy will be voted in the discretion of the proxies on\n any other matters that may come before the meeting.\n\n\n \n\n\n\n\n\n\n\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSignature(s)\n\n \n\n \n\n\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n\n\n\n\n\n\n\n\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSignature(s)\n\n\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDate:\n\n \n\n \n\n\n \n\n,\n\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nIMPORTANT - Please sign exactly as your name(s) appears on this Proxy. When signing on behalf of a corporation, partnership, estate or trust, indicate title or capacity of person signing. If shares are held jointly, each holder must sign.\n\n \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n"},"accession_number":{"kind":"string","value":"0000950117-05-001192"},"year":{"kind":"number","value":2005,"string":"2,005"}}}],"truncated":false,"partial":false},"paginationData":{"pageIndex":0,"numItemsPerPage":100,"numTotalItems":109087,"offset":0,"length":100}},"jwt":"eyJhbGciOiJFZERTQSJ9.eyJyZWFkIjp0cnVlLCJwZXJtaXNzaW9ucyI6eyJyZXBvLmNvbnRlbnQucmVhZCI6dHJ1ZX0sImlhdCI6MTc3NzI2NzMwNywic3ViIjoiL2RhdGFzZXRzL3BpZXJqb2UvU0VDLURFRjE0QS0yMDA1LTIwMjIiLCJleHAiOjE3NzcyNzA5MDcsImlzcyI6Imh0dHBzOi8vaHVnZ2luZ2ZhY2UuY28ifQ.b8YMvVI42Nop78tDtfVQ2YEoUH2TlA4HiCPMYCbNmT5eZGALulqFrsDBFV6W9HmlNhfzFGKu6uAwZPytQFM7CA","displayUrls":true,"splitSizeSummaries":[{"config":"default","split":"train","numRows":109087,"numBytesParquet":7781901266}]},"discussionsStats":{"closed":1,"open":1,"total":2},"fullWidth":true,"hasGatedAccess":true,"hasFullAccess":true,"isEmbedded":false,"savedQueries":{"community":[],"user":[]}}">
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Definitive Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ... | 0001193125-05-002118 | 2,005 |
1000623_DEF 14A_2005_0001104659-05-009821 | 1000623 | SCHWEITZER MAUDUIT INTERNATIONAL INC | DEF 14A | 2005-03-07T00:00:00 | 2005-04-28T00:00:00 | 2621 | DE | GA | 1231 | https://www.sec.gov/Archives/edgar/data/1000623/0001104659-05-009821-index.html | https://www.sec.gov/Archives/edgar/data/1000623/000110465905009821/a05-4483_1def14a.htm | https://www.sec.gov/Archives/edgar/data/1000623/0001104659-05-009821.txt | 1000623_DEF 14A_2005_0001104659-05-009821.htm |
DEF 14A
a05-4483_1def14a.htm
DEF 14A
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 oth... | 0001104659-05-009821 | 2,005 |
1001868_DEF 14A_2005_0001193125-05-000442 | 1001868 | FIBERNET TELECOM GROUP INC\ | DEF 14A | 2005-01-03T00:00:00 | 2005-01-25T00:00:00 | 4813 | DE | NY | 1231 | https://www.sec.gov/Archives/edgar/data/1001868/0001193125-05-000442-index.html | https://www.sec.gov/Archives/edgar/data/1001868/000119312505000442/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1001868/0001193125-05-000442.txt | 1001868_DEF 14A_2005_0001193125-05-000442.htm |
DEF 14A
ddef14a.htm
NOTICE AND PROXY STATEMENT
NOTICE AND PROXY STATEMENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
... | 0001193125-05-000442 | 2,005 |
1001916_DEF 14A_2005_0001193125-05-062159 | 1001916 | SECURE COMPUTING CORP | DEF 14A | 2005-03-28T00:00:00 | 2005-05-09T00:00:00 | 3577 | DE | MN | 1231 | https://www.sec.gov/Archives/edgar/data/1001916/0001193125-05-062159-index.html | https://www.sec.gov/Archives/edgar/data/1001916/000119312505062159/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1001916/0001193125-05-062159.txt | 1001916_DEF 14A_2005_0001193125-05-062159.htm |
DEF 14A
ddef14a.htm
DEFINITIVE PROXY STATEMENT
Definitive Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
x
Filed by the registrant
¨
Filed by a party other than the registrant
Check the appropriate bo... | 0001193125-05-062159 | 2,005 |
1001838_DEF 14A_2005_0001104659-05-013127 | 1001838 | SOUTHERN PERU COPPER CORP/ | DEF 14A | 2005-03-28T00:00:00 | 2005-04-28T00:00:00 | 1000 | DE | AZ | 1231 | https://www.sec.gov/Archives/edgar/data/1001838/0001104659-05-013127-index.html | https://www.sec.gov/Archives/edgar/data/1001838/000110465905013127/a05-5161_2def14a.htm | https://www.sec.gov/Archives/edgar/data/1001838/0001104659-05-013127.txt | 1001838_DEF 14A_2005_0001104659-05-013127.htm |
DEF 14A
a05-5161_2def14a.htm
DEF 14A
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy Statement Pursuant
to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
... | 0001104659-05-013127 | 2,005 |
1002517_DEF 14A_2005_0000950135-05-000353 | 1002517 | SCANSOFT INC | DEF 14A | 2005-01-28T00:00:00 | 2005-03-14T00:00:00 | 7372 | DE | MA | 0930 | https://www.sec.gov/Archives/edgar/data/1002517/0000950135-05-000353-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1002517/000095013505000353/0000950135-05-000353.txt | 1002517_DEF 14A_2005_0000950135-05-000353.txt |
DEF 14A
b53038sidef14a.txt
SCANSOFT, INC.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriat... | 0000950135-05-000353 | 2,005 |
1002037_DEF 14A_2005_0001193125-05-008764 | 1002037 | LEARNING TREE INTERNATIONAL INC | DEF 14A | 2005-01-20T00:00:00 | 2005-03-08T00:00:00 | 8200 | DE | VA | 1001 | https://www.sec.gov/Archives/edgar/data/1002037/0001193125-05-008764-index.html | https://www.sec.gov/Archives/edgar/data/1002037/000119312505008764/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1002037/0001193125-05-008764.txt | 1002037_DEF 14A_2005_0001193125-05-008764.htm |
DEF 14A
ddef14a.htm
NOTICE & PROXY STATEMENT
Notice & Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
... | 0001193125-05-008764 | 2,005 |
1002556_DEF 14A_2005_0000897069-05-000717 | 1002556 | VAN WAGONER FUNDS INC | DEF 14A | 2005-03-21T00:00:00 | 2005-05-03T00:00:00 | NULL | NULL | CA | 1231 | https://www.sec.gov/Archives/edgar/data/1002556/0000897069-05-000717-index.html | https://www.sec.gov/Archives/edgar/data/1002556/000089706905000717/sdc953.htm | https://www.sec.gov/Archives/edgar/data/1002556/0000897069-05-000717.txt | 1002556_DEF 14A_2005_0000897069-05-000717.htm |
DEF 14A
sdc953.htm
DEFINITIVE PROXY STATEMENT
SCHEDULE 14A
INFORMATION
Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ]
Preliminary
Proxy Statement
... | 0000897069-05-000717 | 2,005 |
1001838_DEF 14A_2005_0001047469-05-004703 | 1001838 | SOUTHERN PERU COPPER CORP/ | DEF 14A | 2005-02-25T00:00:00 | 2005-03-28T00:00:00 | 1000 | DE | AZ | 1231 | https://www.sec.gov/Archives/edgar/data/1001838/0001047469-05-004703-index.html | https://www.sec.gov/Archives/edgar/data/1001838/000104746905004703/a2152163zdef14a.htm | https://www.sec.gov/Archives/edgar/data/1001838/0001047469-05-004703.txt | 1001838_DEF 14A_2005_0001047469-05-004703.htm |
DEF 14A
a2152163zdef14a.htm
DEF 14A
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1... | 0001047469-05-004703 | 2,005 |
1002531_DEF 14A_2005_0000950152-05-001859 | 1002531 | TOLLGRADE COMMUNICATIONS INC \PA\ | DEF 14A | 2005-03-08T00:00:00 | 2005-05-05T00:00:00 | 7385 | PA | PA | 1231 | https://www.sec.gov/Archives/edgar/data/1002531/0000950152-05-001859-index.html | https://www.sec.gov/Archives/edgar/data/1002531/000095015205001859/j1269401def14a.htm | https://www.sec.gov/Archives/edgar/data/1002531/0000950152-05-001859.txt | 1002531_DEF 14A_2005_0000950152-05-001859.htm |
DEF 14A
j1269401def14a.htm
TOLLGRADE COMMUNICATIONS, INC.
TOLLGRADE COMMUNICATIONS, INC.
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
Filed by the Registrant þ
... | 0000950152-05-001859 | 2,005 |
1002637_DEF 14A_2005_0001047469-05-007295 | 1002637 | MILLENNIUM PHARMACEUTICALS INC | DEF 14A | 2005-03-22T00:00:00 | 2005-05-05T00:00:00 | 2834 | DE | MA | 1231 | https://www.sec.gov/Archives/edgar/data/1002637/0001047469-05-007295-index.html | https://www.sec.gov/Archives/edgar/data/1002637/000104746905007295/a2153536zdef14a.htm | https://www.sec.gov/Archives/edgar/data/1002637/0001047469-05-007295.txt | 1002637_DEF 14A_2005_0001047469-05-007295.htm |
DEF 14A
a2153536zdef14a.htm
DEF 14A
Use these links to rapidly review the document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the... | 0001047469-05-007295 | 2,005 |
1002577_DEF 14A_2005_0001104659-05-001838 | 1002577 | TJT INC | DEF 14A | 2005-01-19T00:00:00 | 2005-02-22T00:00:00 | 3790 | WA | ID | 0930 | https://www.sec.gov/Archives/edgar/data/1002577/0001104659-05-001838-index.html | https://www.sec.gov/Archives/edgar/data/1002577/000110465905001838/a05-1650_1def14a.htm | https://www.sec.gov/Archives/edgar/data/1002577/0001104659-05-001838.txt | 1002577_DEF 14A_2005_0001104659-05-001838.htm |
DEF 14A
a05-1650_1def14a.htm
DEF 14A
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy Statement Pursuant
to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
... | 0001104659-05-001838 | 2,005 |
1002902_DEF 14A_2005_0001193125-05-015045 | 1002902 | VELOCITY EXPRESS CORP | DEF 14A | 2005-01-31T00:00:00 | 2005-02-14T00:00:00 | 4513 | DE | X1 | 0629 | https://www.sec.gov/Archives/edgar/data/1002902/0001193125-05-015045-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1002902/000119312505015045/0001193125-05-015045.txt | 1002902_DEF 14A_2005_0001193125-05-015045.txt |
DEF 14A
ddef14a.txt
DEFINITIVE NOTICE AND 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 ... | 0001193125-05-015045 | 2,005 |
1003344_DEF 14A_2004_0001038838-05-000083 | 1003344 | HEADWATERS INC | DEF 14A | 2005-01-24T00:00:00 | 2004-09-30T00:00:00 | 2990 | DE | UT | 0930 | https://www.sec.gov/Archives/edgar/data/1003344/0001038838-05-000083-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1003344/000103883805000083/0001038838-05-000083.txt | 1003344_DEF 14A_2004_0001038838-05-000083.txt |
DEF 14A
def14a.txt
DEFINITIVE PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant
Check the appropriate b... | 0001038838-05-000083 | 2,005 |
1002663_DEF 14A_2005_0000950134-05-001566 | 1002663 | PHOTON DYNAMICS INC | DEF 14A | 2005-01-28T00:00:00 | 2005-03-07T00:00:00 | 3825 | CA | CA | 0930 | https://www.sec.gov/Archives/edgar/data/1002663/0000950134-05-001566-index.html | https://www.sec.gov/Archives/edgar/data/1002663/000095013405001566/f04013dedef14a.htm | https://www.sec.gov/Archives/edgar/data/1002663/0000950134-05-001566.txt | 1002663_DEF 14A_2005_0000950134-05-001566.htm |
DEF 14Adedef14a.htm
DEFINITIVE PROXY STATEMENT
def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
þ... | 0000950134-05-001566 | 2,005 |
1003632_DEF 14A_2005_0001047469-05-006916 | 1003632 | SEI ASSET ALLOCATION TRUST | DEF 14A | 2005-03-17T00:00:00 | 2005-03-29T00:00:00 | NULL | MA | PA | 1231 | https://www.sec.gov/Archives/edgar/data/1003632/0001047469-05-006916-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1003632/000104746905006916/0001047469-05-006916.txt | 1003632_DEF 14A_2005_0001047469-05-006916.txt |
DEF 14A
a2153734zdef14a.txt
DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFOR... | 0001047469-05-006916 | 2,005 |
1003638_DEF 14A_2005_0000820083-05-000017 | 1003638 | TEXTAINER EQUIPMENT INCOME FUND VI LP | DEF 14A | 2005-03-14T00:00:00 | 2005-03-11T00:00:00 | 7359 | CA | CA | 1231 | https://www.sec.gov/Archives/edgar/data/1003638/0000820083-05-000017-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1003638/000082008305000017/0000820083-05-000017.txt | 1003638_DEF 14A_2005_0000820083-05-000017.txt |
DEF 14Asupplltr2.txt
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
... | 0000820083-05-000017 | 2,005 |
1003986_DEF 14A_2004_0001003986-05-000004 | 1003986 | TAYLOR CALVIN B BANKSHARES INC | DEF 14A | 2005-03-30T00:00:00 | 2004-12-31T00:00:00 | 6022 | MD | MD | 1231 | https://www.sec.gov/Archives/edgar/data/1003986/0001003986-05-000004-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1003986/000100398605000004/0001003986-05-000004.txt | 1003986_DEF 14A_2004_0001003986-05-000004.txt |
DEF 14A
r14a2005.txt
PROXY
CALVIN B. TAYLOR BANKSHARES, INC.
P. O. Box 5, 24 North Main Street, Berlin, Maryland 21811
To the Shareholders of Calvin B. Taylor Bankshares, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of
Calvin B. Taylor Bankshares, Inc. of Berlin, Maryland (the "Company"... | 0001003986-05-000004 | 2,005 |
1002910_DEF 14A_2005_0001193125-05-050922 | 1002910 | AMEREN CORP | DEF 14A | 2005-03-15T00:00:00 | 2005-04-26T00:00:00 | 4931 | MO | MO | 1231 | https://www.sec.gov/Archives/edgar/data/1002910/0001193125-05-050922-index.html | https://www.sec.gov/Archives/edgar/data/1002910/000119312505050922/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1002910/0001193125-05-050922.txt | 1002910_DEF 14A_2005_0001193125-05-050922.htm |
DEF 14A
ddef14a.htm
DEFINITIVE PROXY STATEMENT
Definitive Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.
)
Filed by the Re... | 0001193125-05-050922 | 2,005 |
1004411_DEF 14A_2005_0000909567-05-000262 | 1004411 | OSPREY GOLD CORP | DEF 14A | 2005-02-02T00:00:00 | 2005-02-11T00:00:00 | 1040 | NV | FL | 1231 | https://www.sec.gov/Archives/edgar/data/1004411/0000909567-05-000262-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1004411/000090956705000262/0000909567-05-000262.txt | 1004411_DEF 14A_2005_0000909567-05-000262.txt |
DEF 14A
t15444def14a.txt
DEF 14A
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-... | 0000909567-05-000262 | 2,005 |
1003607_DEF 14A_2005_0001104659-05-000560 | 1003607 | ALTIGEN COMMUNICATIONS INC | DEF 14A | 2005-01-06T00:00:00 | 2005-02-10T00:00:00 | 3661 | DE | CA | 0930 | https://www.sec.gov/Archives/edgar/data/1003607/0001104659-05-000560-index.html | https://www.sec.gov/Archives/edgar/data/1003607/000110465905000560/a05-1110_1def14a.htm | https://www.sec.gov/Archives/edgar/data/1003607/0001104659-05-000560.txt | 1003607_DEF 14A_2005_0001104659-05-000560.htm |
DEF 14A
a05-1110_1def14a.htm
DEF 14A
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 o
Check the appropriate ... | 0001104659-05-000560 | 2,005 |
1004608_DEF 14A_2005_0001193125-05-051245 | 1004608 | PINNACLE DATA SYSTEMS INC | DEF 14A | 2005-03-15T00:00:00 | 2005-05-05T00:00:00 | 7371 | OH | OH | 1231 | https://www.sec.gov/Archives/edgar/data/1004608/0001193125-05-051245-index.html | https://www.sec.gov/Archives/edgar/data/1004608/000119312505051245/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1004608/0001193125-05-051245.txt | 1004608_DEF 14A_2005_0001193125-05-051245.htm |
DEF 14A
ddef14a.htm
DEFINITIVE NOTICE & PROXY STATEMENT
Definitive Notice & Proxy Statement
SCHEDULE 14A
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... | 0001193125-05-051245 | 2,005 |
1004702_DEF 14A_2005_0001193125-05-050668 | 1004702 | OCEANFIRST FINANCIAL CORP | DEF 14A | 2005-03-15T00:00:00 | 2005-04-21T00:00:00 | 6035 | DE | NJ | 1231 | https://www.sec.gov/Archives/edgar/data/1004702/0001193125-05-050668-index.html | https://www.sec.gov/Archives/edgar/data/1004702/000119312505050668/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1004702/0001193125-05-050668.txt | 1004702_DEF 14A_2005_0001193125-05-050668.htm |
DEF 14A
ddef14a.htm
NOTICE AND PROXY STATEMENT
Notice and Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant ... | 0001193125-05-050668 | 2,005 |
1004155_DEF 14A_2005_0001193125-05-055903 | 1004155 | AGL RESOURCES INC | DEF 14A | 2005-03-21T00:00:00 | 2005-04-27T00:00:00 | 4924 | GA | GA | 1231 | https://www.sec.gov/Archives/edgar/data/1004155/0001193125-05-055903-index.html | https://www.sec.gov/Archives/edgar/data/1004155/000119312505055903/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1004155/0001193125-05-055903.txt | 1004155_DEF 14A_2005_0001193125-05-055903.htm |
DEF 14A
ddef14a.htm
NOTICE & PROXY STATEMENT
Notice & Proxy Statement
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
Filed by the Registrant þ
Filed by a ... | 0001193125-05-055903 | 2,005 |
1004740_DEF 14A_2005_0001206774-05-000380 | 1004740 | CAPITAL CORP OF THE WEST | DEF 14A | 2005-03-17T00:00:00 | 2005-04-26T00:00:00 | 6022 | CA | CA | 1231 | https://www.sec.gov/Archives/edgar/data/1004740/0001206774-05-000380-index.html | https://www.sec.gov/Archives/edgar/data/1004740/000120677405000380/d16476_def14a.htm | https://www.sec.gov/Archives/edgar/data/1004740/0001206774-05-000380.txt | 1004740_DEF 14A_2005_0001206774-05-000380.htm |
DEF 14A
d16476_def14a.htm
UNITED
STATES
OMB APPROVAL
SECURITIES
AND EXCHANGE COMMISSION
OMB Number: 3235-00595
Washington,
D.C. 20549
Expires: February 28, 2006
SCHEDULE
14A
Estimated average burden
hours per response.... | 0001206774-05-000380 | 2,005 |
10048_DEF 14A_2005_0001104659-05-001979 | 10048 | BARNWELL INDUSTRIES INC | DEF 14A | 2005-01-20T00:00:00 | 2005-03-07T00:00:00 | 1311 | DE | HI | 0930 | https://www.sec.gov/Archives/edgar/data/10048/0001104659-05-001979-index.html | https://www.sec.gov/Archives/edgar/data/10048/000110465905001979/a05-1546_1def14a.htm | https://www.sec.gov/Archives/edgar/data/10048/0001104659-05-001979.txt | 10048_DEF 14A_2005_0001104659-05-001979.htm |
DEF 14A
a05-1546_1def14a.htm
DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
... | 0001104659-05-001979 | 2,005 |
1005020_DEF 14A_2005_0000949377-05-000022 | 1005020 | PHOENIX SENECA FUNDS | DEF 14A | 2005-01-06T00:00:00 | 2005-02-15T00:00:00 | NULL | DE | MA | 0930 | https://www.sec.gov/Archives/edgar/data/1005020/0000949377-05-000022-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1005020/000094937705000022/0000949377-05-000022.txt | 1005020_DEF 14A_2005_0000949377-05-000022.txt |
DEF 14A
kayne_seneca70271-def14a.txt
PROXY STATEMENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)... | 0000949377-05-000022 | 2,005 |
1005188_DEF 14A_2005_0000927797-05-000060 | 1005188 | NORTH CENTRAL BANCSHARES INC | DEF 14A | 2005-03-21T00:00:00 | 2005-04-22T00:00:00 | 6035 | IA | IA | 1231 | https://www.sec.gov/Archives/edgar/data/1005188/0000927797-05-000060-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1005188/000092779705000060/0000927797-05-000060.txt | 1005188_DEF 14A_2005_0000927797-05-000060.txt |
DEF 14A
ncb-def14a_042205.txt
NCB PROXY 04-22-05
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
... | 0000927797-05-000060 | 2,005 |
1004960_DEF 14A_2005_0000950134-05-005922 | 1004960 | CONNETICS CORP | DEF 14A | 2005-03-24T00:00:00 | 2005-04-22T00:00:00 | 2834 | DE | CA | 1231 | https://www.sec.gov/Archives/edgar/data/1004960/0000950134-05-005922-index.html | https://www.sec.gov/Archives/edgar/data/1004960/000095013405005922/f05870dedef14a.htm | https://www.sec.gov/Archives/edgar/data/1004960/0000950134-05-005922.txt | 1004960_DEF 14A_2005_0000950134-05-005922.htm |
DEF 14Adedef14a.htm
DEFINITIVE PROXY STATEMENT
def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 ... | 0000950134-05-005922 | 2,005 |
1006240_DEF 14A_2005_0001206774-05-000002 | 1006240 | LUCENT TECHNOLOGIES INC | DEF 14A | 2005-01-03T00:00:00 | 2005-02-16T00:00:00 | 3661 | DE | NJ | 0930 | https://www.sec.gov/Archives/edgar/data/1006240/0001206774-05-000002-index.html | https://www.sec.gov/Archives/edgar/data/1006240/000120677405000002/d15644_def14a.htm | https://www.sec.gov/Archives/edgar/data/1006240/0001206774-05-000002.txt | 1006240_DEF 14A_2005_0001206774-05-000002.htm |
DEF 14A
d15644_def14a.htm
SCHEDULE 14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ý
Filed by a Party other than the Registrant o
Check the appropriate box:
o
Preliminary Proxy... | 0001206774-05-000002 | 2,005 |
1006424_DEF 14A_2005_0001104659-05-012482 | 1006424 | FIRST FEDERAL BANCSHARES OF ARKANSAS INC | DEF 14A | 2005-03-23T00:00:00 | 2005-04-27T00:00:00 | 6035 | TX | AR | 1231 | https://www.sec.gov/Archives/edgar/data/1006424/0001104659-05-012482-index.html | https://www.sec.gov/Archives/edgar/data/1006424/000110465905012482/a05-4884_1def14a.htm | https://www.sec.gov/Archives/edgar/data/1006424/0001104659-05-012482.txt | 1006424_DEF 14A_2005_0001104659-05-012482.htm |
DEF 14A
a05-4884_1def14a.htm
DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
... | 0001104659-05-012482 | 2,005 |
1004980_DEF 14A_2005_0000950149-05-000065 | 1004980 | PG&E CORP | DEF 14A | 2005-03-11T00:00:00 | 2005-04-20T00:00:00 | 4931 | CA | CA | 1231 | https://www.sec.gov/Archives/edgar/data/1004980/0000950149-05-000065-index.html | https://www.sec.gov/Archives/edgar/data/1004980/000095014905000065/f04451adef14a.htm | https://www.sec.gov/Archives/edgar/data/1004980/0000950149-05-000065.txt | 1004980_DEF 14A_2005_0000950149-05-000065.htm |
DEF 14Aadef14a.htm
DEFINITIVE PROXY STATEMENT
def14a
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.___)
Filed by the Registrant [ü]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
... | 0000950149-05-000065 | 2,005 |
1007029_DEF 14A_2005_0001015402-05-000676 | 1007029 | GATEWAY BANCSHARES INC /GA/ | DEF 14A | 2005-02-11T00:00:00 | 2005-03-16T00:00:00 | 6022 | GA | GA | 1231 | https://www.sec.gov/Archives/edgar/data/1007029/0001015402-05-000676-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1007029/000101540205000676/0001015402-05-000676.txt | 1007029_DEF 14A_2005_0001015402-05-000676.txt |
DEF 14A
doc1.txt
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
... | 0001015402-05-000676 | 2,005 |
1007456_DEF 14A_2005_0001193125-05-061323 | 1007456 | ELECTRONIC DATA SYSTEMS CORP /DE/ | DEF 14A | 2005-03-28T00:00:00 | 2005-04-22T00:00:00 | 7370 | DE | TX | 1231 | https://www.sec.gov/Archives/edgar/data/1007456/0001193125-05-061323-index.html | https://www.sec.gov/Archives/edgar/data/1007456/000119312505061323/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1007456/0001193125-05-061323.txt | 1007456_DEF 14A_2005_0001193125-05-061323.htm |
DEF 14A
ddef14a.htm
DEFINITIVE PROXY STATEMENT
DEFINITIVE PROXY STATEMENT
SCHEDULE 14A
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: ... | 0001193125-05-061323 | 2,005 |
1008654_DEF 14A_2005_0001047469-05-007855 | 1008654 | TUPPERWARE CORP | DEF 14A | 2005-03-25T00:00:00 | 2005-05-11T00:00:00 | 3089 | DE | FL | 1231 | https://www.sec.gov/Archives/edgar/data/1008654/0001047469-05-007855-index.html | https://www.sec.gov/Archives/edgar/data/1008654/000104746905007855/a2153377zdef14a.htm | https://www.sec.gov/Archives/edgar/data/1008654/0001047469-05-007855.txt | 1008654_DEF 14A_2005_0001047469-05-007855.htm |
DEF 14A
a2153377zdef14a.htm
DEF 14A
-- Click here to rapidly navigate through this document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by t... | 0001047469-05-007855 | 2,005 |
1009976_DEF 14A_2005_0000950123-05-003305 | 1009976 | COMMERCIAL BANCSHARES INC \OH\ | DEF 14A | 2005-03-18T00:00:00 | 2005-04-13T00:00:00 | 6022 | OH | OH | 1231 | https://www.sec.gov/Archives/edgar/data/1009976/0000950123-05-003305-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1009976/000095012305003305/0000950123-05-003305.txt | 1009976_DEF 14A_2005_0000950123-05-003305.txt |
DEF 14A
l12865adef14a.txt
COMMERCIAL BANCSHARES, INC. DEF 14A
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
... | 0000950123-05-003305 | 2,005 |
100885_DEF 14A_2005_0001193125-05-056582 | 100885 | UNION PACIFIC CORP | DEF 14A | 2005-03-21T00:00:00 | 2005-05-05T00:00:00 | 4011 | UT | NE | 1231 | https://www.sec.gov/Archives/edgar/data/100885/0001193125-05-056582-index.html | https://www.sec.gov/Archives/edgar/data/100885/000119312505056582/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/100885/0001193125-05-056582.txt | 100885_DEF 14A_2005_0001193125-05-056582.htm |
DEF 14A
ddef14a.htm
DEFINATIVE NOTICE & PROXY STATEMENT
Definative Notice & Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to
Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
... | 0001193125-05-056582 | 2,005 |
1009672_DEF 14A_2005_0000950134-05-005056 | 1009672 | CARBO CERAMICS INC | DEF 14A | 2005-03-15T00:00:00 | 2005-04-19T00:00:00 | 3290 | DE | TX | 1231 | https://www.sec.gov/Archives/edgar/data/1009672/0000950134-05-005056-index.html | https://www.sec.gov/Archives/edgar/data/1009672/000095013405005056/d23109def14a.htm | https://www.sec.gov/Archives/edgar/data/1009672/0000950134-05-005056.txt | 1009672_DEF 14A_2005_0000950134-05-005056.htm |
DEF 14A
d23109def14a.htm
DEFINITIVE PROXY STATEMENT
def14a
OMB APPROVAL
OMB Number:
3235-0059
Expires:
February 28, 2006
Estimated average burden
hours per
response
12.75
UNITED STATES
SECURITIES... | 0000950134-05-005056 | 2,005 |
1009626_DEF 14A_2005_0000950134-05-003906 | 1009626 | BROCADE COMMUNICATIONS SYSTEMS INC | DEF 14A | 2005-02-28T00:00:00 | 2005-04-22T00:00:00 | 3576 | DE | CA | 1028 | https://www.sec.gov/Archives/edgar/data/1009626/0000950134-05-003906-index.html | https://www.sec.gov/Archives/edgar/data/1009626/000095013405003906/f05831dedef14a.htm | https://www.sec.gov/Archives/edgar/data/1009626/0000950134-05-003906.txt | 1009626_DEF 14A_2005_0000950134-05-003906.htm |
DEF 14Adedef14a.htm
DEFINITIVE PROXY STATEMENT
def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x
File... | 0000950134-05-003906 | 2,005 |
1010398_DEF 14A_2005_0001193125-05-057564 | 1010398 | TRI STATE 1ST BANK INC | DEF 14A | 2005-03-22T00:00:00 | 2005-04-20T00:00:00 | 6021 | OH | OH | 1231 | https://www.sec.gov/Archives/edgar/data/1010398/0001193125-05-057564-index.html | https://www.sec.gov/Archives/edgar/data/1010398/000119312505057564/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1010398/0001193125-05-057564.txt | 1010398_DEF 14A_2005_0001193125-05-057564.htm |
DEF 14A
ddef14a.htm
NOTICE AND PROXY STATEMENT
Notice and Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
x
Filed by the Registran... | 0001193125-05-057564 | 2,005 |
1010961_DEF 14A_2005_0001010961-05-000032 | 1010961 | FNB CORP \VA\ | DEF 14A | 2005-03-31T00:00:00 | 2005-05-10T00:00:00 | 6021 | VA | VA | 1231 | https://www.sec.gov/Archives/edgar/data/1010961/0001010961-05-000032-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1010961/000101096105000032/0001010961-05-000032.txt | 1010961_DEF 14A_2005_0001010961-05-000032.txt |
DEF 14A
one.txt
PROXY DOCUMENT
[FNB Corporation Letterhead]
March 31, 2005
Dear Fellow Shareholders:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Shareholders of FNB Corporation. The meeting will be held
at 2:00 p.m. on Tuesday, May 10, 2... | 0001010961-05-000032 | 2,005 |
1011452_DEF 14A_2005_0001011452-05-000006 | 1011452 | MEDICAL INFORMATION TECHNOLOGY INC | DEF 14A | 2005-03-25T00:00:00 | 2005-03-31T00:00:00 | 7372 | MA | MA | 1231 | https://www.sec.gov/Archives/edgar/data/1011452/0001011452-05-000006-index.html | https://www.sec.gov/Archives/edgar/data/1011452/000101145205000006/def14a.htm | https://www.sec.gov/Archives/edgar/data/1011452/0001011452-05-000006.txt | 1011452_DEF 14A_2005_0001011452-05-000006.htm |
DEF 14A
def14a.htm
2005 DEFINITIVE PROXY STATEMENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check ... | 0001011452-05-000006 | 2,005 |
1010305_DEF 14A_2005_0000950129-05-000938 | 1010305 | EN POINTE TECHNOLOGIES INC | DEF 14A | 2005-02-07T00:00:00 | 2005-03-17T00:00:00 | 5045 | DE | CA | 0930 | https://www.sec.gov/Archives/edgar/data/1010305/0000950129-05-000938-index.html | https://www.sec.gov/Archives/edgar/data/1010305/000095012905000938/a04901dedef14a.htm | https://www.sec.gov/Archives/edgar/data/1010305/0000950129-05-000938.txt | 1010305_DEF 14A_2005_0000950129-05-000938.htm |
DEF 14A
a04901dedef14a.htm
EN POINTE TECHNOLOGIES, INC. - MARCH 17, 2005
def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
Of the Securities Exchange Act of 1934
x Filed by the registrant
o Filed by... | 0000950129-05-000938 | 2,005 |
1010002_DEF 14A_2005_0000950124-05-001519 | 1010002 | COLUMBIA BANCORP \OR\ | DEF 14A | 2005-03-15T00:00:00 | 2005-04-28T00:00:00 | 6022 | OR | OR | 1231 | https://www.sec.gov/Archives/edgar/data/1010002/0000950124-05-001519-index.html | https://www.sec.gov/Archives/edgar/data/1010002/000095012405001519/v06704def14a.htm | https://www.sec.gov/Archives/edgar/data/1010002/0000950124-05-001519.txt | 1010002_DEF 14A_2005_0000950124-05-001519.htm |
DEF 14A
v06704def14a.htm
DEFINITIVE PROXY STATEMENT
def14a
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:
[ ]... | 0000950124-05-001519 | 2,005 |
1010296_DEF 14A_2005_0000950117-05-000575 | 1010296 | HSBC ADVISOR FUNDS TRUST | DEF 14A | 2005-02-10T00:00:00 | 2005-03-04T00:00:00 | NULL | MA | OH | 1031 | https://www.sec.gov/Archives/edgar/data/1010296/0000950117-05-000575-index.html | https://www.sec.gov/Archives/edgar/data/1010296/000095011705000575/a39201.htm | https://www.sec.gov/Archives/edgar/data/1010296/0000950117-05-000575.txt | 1010296_DEF 14A_2005_0000950117-05-000575.htm |
DEF 14A
a39201.htm
HSBC ADVISOR FUNDS TRUST
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
x
Filed by a Party other than the Regist... | 0000950117-05-000575 | 2,005 |
1011570_DEF 14A_2005_0001193125-05-066462 | 1011570 | KNOLL INC | DEF 14A | 2005-03-31T00:00:00 | 2005-05-03T00:00:00 | 2590 | DE | PA | 1231 | https://www.sec.gov/Archives/edgar/data/1011570/0001193125-05-066462-index.html | https://www.sec.gov/Archives/edgar/data/1011570/000119312505066462/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1011570/0001193125-05-066462.txt | 1011570_DEF 14A_2005_0001193125-05-066462.htm |
DEF 14A
ddef14a.htm
NOTICE & PROXY STATEMENT
Notice & Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
(Amendment No. )
Filed by the Registrant x
... | 0001193125-05-066462 | 2,005 |
1012128_DEF 14A_2005_0001188112-05-000355 | 1012128 | DUPONT PHOTOMASKS INC | DEF 14A | 2005-02-28T00:00:00 | 2005-03-28T00:00:00 | 3559 | DE | TX | 0630 | https://www.sec.gov/Archives/edgar/data/1012128/0001188112-05-000355-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1012128/000118811205000355/0001188112-05-000355.txt | 1012128_DEF 14A_2005_0001188112-05-000355.txt |
DEF 14A
tdef14a-5049.txt
DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
t... | 0001188112-05-000355 | 2,005 |
1011659_DEF 14A_2005_0001047469-05-007795 | 1011659 | UNIONBANCAL CORP | DEF 14A | 2005-03-25T00:00:00 | 2005-04-27T00:00:00 | 6021 | CA | NY | 1231 | https://www.sec.gov/Archives/edgar/data/1011659/0001047469-05-007795-index.html | https://www.sec.gov/Archives/edgar/data/1011659/000104746905007795/a2153561zdef14a.htm | https://www.sec.gov/Archives/edgar/data/1011659/0001047469-05-007795.txt | 1011659_DEF 14A_2005_0001047469-05-007795.htm |
DEF 14A
a2153561zdef14a.htm
DEF 14A
-- Click here to rapidly navigate through this document
As filed with the Securities and Exchange Commission on March , 2005
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a)... | 0001047469-05-007795 | 2,005 |
1012734_DEF 14A_2005_0001144204-05-004171 | 1012734 | TRAVIS BOATS & MOTORS INC | DEF 14A | 2005-02-11T00:00:00 | 2005-03-09T00:00:00 | 5531 | TX | TX | 0930 | https://www.sec.gov/Archives/edgar/data/1012734/0001144204-05-004171-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1012734/000114420405004171/0001144204-05-004171.txt | 1012734_DEF 14A_2005_0001144204-05-004171.txt |
DEF 14A
v012592_def14a.txt
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
SCHEDULE ... | 0001144204-05-004171 | 2,005 |
1011737_DEF 14A_2005_0001193125-05-053666 | 1011737 | D&E COMMUNICATIONS INC | DEF 14A | 2005-03-17T00:00:00 | 2005-04-28T00:00:00 | 4813 | PA | AR | 1231 | https://www.sec.gov/Archives/edgar/data/1011737/0001193125-05-053666-index.html | https://www.sec.gov/Archives/edgar/data/1011737/000119312505053666/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1011737/0001193125-05-053666.txt | 1011737_DEF 14A_2005_0001193125-05-053666.htm |
DEF 14A
ddef14a.htm
DEFINITIVE PROXY STATEMENT
Definitive Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
... | 0001193125-05-053666 | 2,005 |
1013272_DEF 14A_2005_0000946275-05-000360 | 1013272 | NORWOOD FINANCIAL CORP | DEF 14A | 2005-03-22T00:00:00 | 2005-04-26T00:00:00 | 6022 | PA | PA | 1231 | https://www.sec.gov/Archives/edgar/data/1013272/0000946275-05-000360-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1013272/000094627505000360/0000946275-05-000360.txt | 1013272_DEF 14A_2005_0000946275-05-000360.txt |
DEF 14A
def14a_042805-0160.txt
SCHEDULE 14A
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 [ ]
N... | 0000946275-05-000360 | 2,005 |
1013266_DEF 14A_2005_0001193125-05-060428 | 1013266 | YADKIN VALLEY CO | DEF 14A | 2005-03-25T00:00:00 | 2005-04-25T00:00:00 | 6311 | NC | NC | 1231 | https://www.sec.gov/Archives/edgar/data/1013266/0001193125-05-060428-index.html | https://www.sec.gov/Archives/edgar/data/1013266/000119312505060428/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1013266/0001193125-05-060428.txt | 1013266_DEF 14A_2005_0001193125-05-060428.htm |
DEF 14A
ddef14a.htm
DEFINITIVE 14A NOTICE & PROXY
Definitive 14A Notice & Proxy
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to
Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by ... | 0001193125-05-060428 | 2,005 |
1013351_DEF 14A_2005_0001047469-05-001137 | 1013351 | MAXIM PHARMACEUTICALS INC | DEF 14A | 2005-01-19T00:00:00 | 2005-02-18T00:00:00 | 2833 | DE | CA | 0930 | https://www.sec.gov/Archives/edgar/data/1013351/0001047469-05-001137-index.html | https://www.sec.gov/Archives/edgar/data/1013351/000104746905001137/a2150099zdef14a.htm | https://www.sec.gov/Archives/edgar/data/1013351/0001047469-05-001137.txt | 1013351_DEF 14A_2005_0001047469-05-001137.htm |
DEF 14A
a2150099zdef14a.htm
DEF 14A
-- Click here to rapidly navigate through this document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Sect... | 0001047469-05-001137 | 2,005 |
1012482_DEF 14A_2005_0001193125-05-022071 | 1012482 | NETOPIA INC | DEF 14A | 2005-02-08T00:00:00 | 2005-03-18T00:00:00 | 3576 | DE | CA | 0930 | https://www.sec.gov/Archives/edgar/data/1012482/0001193125-05-022071-index.html | https://www.sec.gov/Archives/edgar/data/1012482/000119312505022071/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1012482/0001193125-05-022071.txt | 1012482_DEF 14A_2005_0001193125-05-022071.htm |
DEF 14A
ddef14a.htm
DEFINITIVE PROXY STATEMENT
Definitive Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of
(Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the approp... | 0001193125-05-022071 | 2,005 |
1013556_DEF 14A_2005_0001015325-05-000007 | 1013556 | COMMODORE APPLIED TECHNOLOGIES INC | DEF 14A | 2005-01-04T00:00:00 | 2005-01-04T00:00:00 | 4955 | DE | WA | 1231 | https://www.sec.gov/Archives/edgar/data/1013556/0001015325-05-000007-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1013556/000101532505000007/0001015325-05-000007.txt | 1013556_DEF 14A_2005_0001015325-05-000007.txt |
DEF 14A
proxystatement.txt
PROXY STATEMENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
SCHEDULE 14A INFORMATION
Proxy Statement
Pursuant to Section 14(a)... | 0001015325-05-000007 | 2,005 |
1012771_DEF 14A_2005_0000897101-05-000823 | 1012771 | FBL FINANCIAL GROUP INC | DEF 14A | 2005-03-31T00:00:00 | 2005-05-20T00:00:00 | 6311 | IA | IA | 1231 | https://www.sec.gov/Archives/edgar/data/1012771/0000897101-05-000823-index.html | https://www.sec.gov/Archives/edgar/data/1012771/000089710105000823/fbl050898s3_def14a.htm | https://www.sec.gov/Archives/edgar/data/1012771/0000897101-05-000823.txt | 1012771_DEF 14A_2005_0000897101-05-000823.htm |
DEF 14A
fbl050898s3_def14a.htm
FBL Financial Group, Form DEF 14A, Dated: 3/20/2005
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x
... | 0000897101-05-000823 | 2,005 |
1013462_DEF 14A_2005_0001193125-05-055222 | 1013462 | ANSYS INC | DEF 14A | 2005-03-18T00:00:00 | 2005-05-10T00:00:00 | 7372 | DE | PA | 1231 | https://www.sec.gov/Archives/edgar/data/1013462/0001193125-05-055222-index.html | https://www.sec.gov/Archives/edgar/data/1013462/000119312505055222/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1013462/0001193125-05-055222.txt | 1013462_DEF 14A_2005_0001193125-05-055222.htm |
DEF 14A
ddef14a.htm
NOTICE AND PROXY STATEMENT
Notice and Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of t... | 0001193125-05-055222 | 2,005 |
1013786_DEF 14A_2005_0001193125-05-061841 | 1013786 | ZONES INC | DEF 14A | 2005-03-28T00:00:00 | 2005-05-05T00:00:00 | 5961 | WA | WA | 0305 | https://www.sec.gov/Archives/edgar/data/1013786/0001193125-05-061841-index.html | https://www.sec.gov/Archives/edgar/data/1013786/000119312505061841/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1013786/0001193125-05-061841.txt | 1013786_DEF 14A_2005_0001193125-05-061841.htm |
DEF 14A
ddef14a.htm
DEFINITIVE PROXY STATEMENT
Definitive Proxy Statement
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 Regist... | 0001193125-05-061841 | 2,005 |
1013467_DEF 14A_2005_0000950137-05-000409 | 1013467 | REMEDYTEMP INC | DEF 14A | 2005-01-14T00:00:00 | 2005-03-01T00:00:00 | 7363 | CA | CA | 0930 | https://www.sec.gov/Archives/edgar/data/1013467/0000950137-05-000409-index.html | https://www.sec.gov/Archives/edgar/data/1013467/000095013705000409/a04674def14a.htm | https://www.sec.gov/Archives/edgar/data/1013467/0000950137-05-000409.txt | 1013467_DEF 14A_2005_0000950137-05-000409.htm |
DEF 14A
a04674def14a.htm
DEF 14A
def14a
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 þ
Filed by a Party other than the Re... | 0000950137-05-000409 | 2,005 |
101382_DEF 14A_2005_0001193125-05-056773 | 101382 | UMB FINANCIAL CORP | DEF 14A | 2005-03-21T00:00:00 | 2005-04-26T00:00:00 | 6021 | MO | MO | 1231 | https://www.sec.gov/Archives/edgar/data/101382/0001193125-05-056773-index.html | https://www.sec.gov/Archives/edgar/data/101382/000119312505056773/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/101382/0001193125-05-056773.txt | 101382_DEF 14A_2005_0001193125-05-056773.htm |
DEF 14A
ddef14a.htm
DEFINITIVE NOTICE AND PROXY STATEMENT
Definitive Notice and Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement
Purs... | 0001193125-05-056773 | 2,005 |
1014133_DEF 14A_2005_0000950124-05-001774 | 1014133 | COMMUNITY CENTRAL BANK CORP | DEF 14A | 2005-03-22T00:00:00 | 2005-04-19T00:00:00 | 6022 | MI | MI | 1231 | https://www.sec.gov/Archives/edgar/data/1014133/0000950124-05-001774-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1014133/000095012405001774/0000950124-05-001774.txt | 1014133_DEF 14A_2005_0000950124-05-001774.txt |
DEF 14A
k93323ddef14a.txt
DEFINITIVE PROXY STATEMENT
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) ... | 0000950124-05-001774 | 2,005 |
1013796_DEF 14A_2005_0000950144-05-003242 | 1013796 | TIB FINANCIAL CORP. | DEF 14A | 2005-03-30T00:00:00 | 2005-04-26T00:00:00 | 6022 | FL | FL | 1231 | https://www.sec.gov/Archives/edgar/data/1013796/0000950144-05-003242-index.html | https://www.sec.gov/Archives/edgar/data/1013796/000095014405003242/g93540ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1013796/0000950144-05-003242.txt | 1013796_DEF 14A_2005_0000950144-05-003242.htm |
DEF 14A
g93540ddef14a.htm
TIB FINANCIAL CORP.
TIB Financial Corp.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities
Exchange Act of 1934 (Amendment No.
)
Filed by the
Registrantþ
Filed by a Par... | 0000950144-05-003242 | 2,005 |
1014111_DEF 14A_2005_0000950134-05-005568 | 1014111 | IMATION CORP | DEF 14A | 2005-03-22T00:00:00 | 2005-05-04T00:00:00 | 3695 | DE | NY | 1231 | https://www.sec.gov/Archives/edgar/data/1014111/0000950134-05-005568-index.html | https://www.sec.gov/Archives/edgar/data/1014111/000095013405005568/c92384def14a.htm | https://www.sec.gov/Archives/edgar/data/1014111/0000950134-05-005568.txt | 1014111_DEF 14A_2005_0000950134-05-005568.htm |
DEF 14A
c92384def14a.htm
DEFINITIVE PROXY STATEMENT
def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant þ
Filed by a party other than the registrant o
Check the appropriate box:
... | 0000950134-05-005568 | 2,005 |
1014733_DEF 14A_2005_0001144204-05-009192 | 1014733 | POINT 360 | DEF 14A | 2005-03-30T00:00:00 | 2005-05-04T00:00:00 | 7819 | CA | CA | 1231 | https://www.sec.gov/Archives/edgar/data/1014733/0001144204-05-009192-index.html | https://www.sec.gov/Archives/edgar/data/1014733/000114420405009192/form_def.htm | https://www.sec.gov/Archives/edgar/data/1014733/0001144204-05-009192.txt | 1014733_DEF 14A_2005_0001144204-05-009192.htm |
DEF 14A
form_def.htm
54118 - Point 360 - DEF14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant ý
Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨
Preliminary Proxy... | 0001144204-05-009192 | 2,005 |
1015593_DEF 14A_2005_0000908834-05-000229 | 1015593 | RIVER VALLEY BANCORP | DEF 14A | 2005-03-16T00:00:00 | 2005-04-20T00:00:00 | 6035 | IN | IN | 1231 | https://www.sec.gov/Archives/edgar/data/1015593/0000908834-05-000229-index.html | https://www.sec.gov/Archives/edgar/data/1015593/000090883405000229/rvb_def14a.htm | https://www.sec.gov/Archives/edgar/data/1015593/0000908834-05-000229.txt | 1015593_DEF 14A_2005_0000908834-05-000229.htm |
DEF 14A
rvb_def14a.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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
Regi... | 0000908834-05-000229 | 2,005 |
1014669_DEF 14A_2005_0000950129-05-002929 | 1014669 | STERLING CHEMICALS INC | DEF 14A | 2005-03-29T00:00:00 | 2005-04-15T00:00:00 | 2860 | DE | TX | 1231 | https://www.sec.gov/Archives/edgar/data/1014669/0000950129-05-002929-index.html | https://www.sec.gov/Archives/edgar/data/1014669/000095012905002929/h22651ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1014669/0000950129-05-002929.txt | 1014669_DEF 14A_2005_0000950129-05-002929.htm |
DEF 14A
h22651ddef14a.htm
STERLING CHEMICALS, INC. - APRIL 15, 2005
def14a
OMB APPROVAL
OMB Number:
3235-0059
Expires:
February 28, 2006
Estimated average burden
hours per
response
12.75
UNITED ST... | 0000950129-05-002929 | 2,005 |
1015293_DEF 14A_2005_0000950129-05-002601 | 1015293 | HOUSTON EXPLORATION CO | DEF 14A | 2005-03-18T00:00:00 | 2005-04-26T00:00:00 | 1382 | DE | TX | 1231 | https://www.sec.gov/Archives/edgar/data/1015293/0000950129-05-002601-index.html | https://www.sec.gov/Archives/edgar/data/1015293/000095012905002601/h22331def14a.htm | https://www.sec.gov/Archives/edgar/data/1015293/0000950129-05-002601.txt | 1015293_DEF 14A_2005_0000950129-05-002601.htm |
DEF 14A
h22331def14a.htm
THE HOUSTON EXPLORATION COMPANY - APRIL 26, 2005
def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
... | 0000950129-05-002601 | 2,005 |
1015610_DEF 14A_2005_0001089355-05-000032 | 1015610 | GOLD BANC CORP INC | DEF 14A | 2005-03-23T00:00:00 | 2005-04-19T00:00:00 | 6021 | KS | KS | 1231 | https://www.sec.gov/Archives/edgar/data/1015610/0001089355-05-000032-index.html | https://www.sec.gov/Archives/edgar/data/1015610/000108935505000032/a8838_def14.htm | https://www.sec.gov/Archives/edgar/data/1015610/0001089355-05-000032.txt | 1015610_DEF 14A_2005_0001089355-05-000032.htm |
DEF 14A
a8838_def14.htm
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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
Filed by the Registrant [X]
Filed by a Party othe... | 0001089355-05-000032 | 2,005 |
1016100_DEF 14A_2005_0001193125-05-000894 | 1016100 | DIGITAL LIGHTWAVE INC | DEF 14A | 2005-01-04T00:00:00 | 2005-02-10T00:00:00 | 3663 | DE | FL | 1231 | https://www.sec.gov/Archives/edgar/data/1016100/0001193125-05-000894-index.html | https://www.sec.gov/Archives/edgar/data/1016100/000119312505000894/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1016100/0001193125-05-000894.txt | 1016100_DEF 14A_2005_0001193125-05-000894.htm |
DEF 14A
ddef14a.htm
DEFINITIVE PROXY STATEMENT
Definitive Proxy Statement
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. )
File... | 0001193125-05-000894 | 2,005 |
1016169_DEF 14A_2004_0001016169-05-000007 | 1016169 | ANTARES PHARMA INC | DEF 14A | 2005-03-18T00:00:00 | 2004-12-31T00:00:00 | 3841 | MN | NJ | 1231 | https://www.sec.gov/Archives/edgar/data/1016169/0001016169-05-000007-index.html | https://www.sec.gov/Archives/edgar/data/1016169/000101616905000007/finalproxy05.htm | https://www.sec.gov/Archives/edgar/data/1016169/0001016169-05-000007.txt | 1016169_DEF 14A_2004_0001016169-05-000007.htm |
DEF 14A
finalproxy05.htm
DEFINITIVE 14 A
UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A
INFORMATION
Proxy Statement
Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed
by the Registrant [X]
... | 0001016169-05-000007 | 2,005 |
1016831_DEF 14A_2005_0001193125-05-061022 | 1016831 | DOCUMENT SCIENCES CORP | DEF 14A | 2005-03-25T00:00:00 | 2005-04-28T00:00:00 | 7372 | DE | CA | 1231 | https://www.sec.gov/Archives/edgar/data/1016831/0001193125-05-061022-index.html | https://www.sec.gov/Archives/edgar/data/1016831/000119312505061022/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1016831/0001193125-05-061022.txt | 1016831_DEF 14A_2005_0001193125-05-061022.htm |
DEF 14A
ddef14a.htm
DEFINITIVE PROXY STATEMENT FOR DOCUMENT SCIENCES CORPORATION
Definitive Proxy Statement for Document Sciences Corporation
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A ... | 0001193125-05-061022 | 2,005 |
1016577_DEF 14A_2005_0001193125-05-014134 | 1016577 | SUNTERRA CORP | DEF 14A | 2005-01-28T00:00:00 | 2005-02-25T00:00:00 | 6532 | MD | NV | 1231 | https://www.sec.gov/Archives/edgar/data/1016577/0001193125-05-014134-index.html | https://www.sec.gov/Archives/edgar/data/1016577/000119312505014134/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1016577/0001193125-05-014134.txt | 1016577_DEF 14A_2005_0001193125-05-014134.htm |
DEF 14A
ddef14a.htm
DEFINITIVE PROXY
Definitive Proxy
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to
Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant x
Filed by a
Party other than... | 0001193125-05-014134 | 2,005 |
1017008_DEF 14A_2005_0001047469-05-006511 | 1017008 | UNIVISION COMMUNICATIONS INC | DEF 14A | 2005-03-15T00:00:00 | 2005-05-11T00:00:00 | 4833 | DE | CA | 1231 | https://www.sec.gov/Archives/edgar/data/1017008/0001047469-05-006511-index.html | https://www.sec.gov/Archives/edgar/data/1017008/000104746905006511/a2152184zdef14a.htm | https://www.sec.gov/Archives/edgar/data/1017008/0001047469-05-006511.txt | 1017008_DEF 14A_2005_0001047469-05-006511.htm |
DEF 14A
a2152184zdef14a.htm
SCHEDULE 14A
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SCHEDULE 14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ý
Filed by a Party other than the Registra... | 0001047469-05-006511 | 2,005 |
1017673_DEF 14A_2005_0001193125-05-064436 | 1017673 | DOVER MOTORSPORTS INC | DEF 14A | 2005-03-30T00:00:00 | 2005-04-27T00:00:00 | 7900 | DE | DE | 1231 | https://www.sec.gov/Archives/edgar/data/1017673/0001193125-05-064436-index.html | https://www.sec.gov/Archives/edgar/data/1017673/000119312505064436/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1017673/0001193125-05-064436.txt | 1017673_DEF 14A_2005_0001193125-05-064436.htm |
DEF 14A
ddef14a.htm
DOVER MOTORSPORTS INC
Dover Motorsports Inc
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement
Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant x
Filed... | 0001193125-05-064436 | 2,005 |
101778_DEF 14A_2005_0001047469-05-006063 | 101778 | MARATHON OIL CORP | DEF 14A | 2005-03-10T00:00:00 | 2005-04-27T00:00:00 | 2911 | DE | TX | 1231 | https://www.sec.gov/Archives/edgar/data/101778/0001047469-05-006063-index.html | https://www.sec.gov/Archives/edgar/data/101778/000104746905006063/a2153333zdef14a.htm | https://www.sec.gov/Archives/edgar/data/101778/0001047469-05-006063.txt | 101778_DEF 14A_2005_0001047469-05-006063.htm |
DEF 14A
a2153333zdef14a.htm
DEF 14A
Use these links to rapidly review the document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the... | 0001047469-05-006063 | 2,005 |
1018593_DEF 14A_2005_0000949377-05-000022 | 1018593 | PHOENIX-KAYNE FUNDS | DEF 14A | 2005-01-06T00:00:00 | 2005-02-15T00:00:00 | NULL | DE | MA | 0930 | https://www.sec.gov/Archives/edgar/data/1018593/0000949377-05-000022-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1005020/000094937705000022/0000949377-05-000022.txt | 1018593_DEF 14A_2005_0000949377-05-000022.txt |
DEF 14A
kayne_seneca70271-def14a.txt
PROXY STATEMENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)... | 0000949377-05-000022 | 2,005 |
101829_DEF 14A_2005_0001193125-05-037477 | 101829 | UNITED TECHNOLOGIES CORP /DE/ | DEF 14A | 2005-02-25T00:00:00 | 2005-04-13T00:00:00 | 3724 | DE | VA | 1231 | https://www.sec.gov/Archives/edgar/data/101829/0001193125-05-037477-index.html | https://www.sec.gov/Archives/edgar/data/101829/000119312505037477/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/101829/0001193125-05-037477.txt | 101829_DEF 14A_2005_0001193125-05-037477.htm |
DEF 14A
ddef14a.htm
DEFINITE PROXY STATEMENT
Definite 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... | 0001193125-05-037477 | 2,005 |
1019361_DEF 14A_2004_0001019361-05-000001 | 1019361 | ROFIN SINAR TECHNOLOGIES INC | DEF 14A | 2005-01-28T00:00:00 | 2004-09-30T00:00:00 | 3690 | DE | MI | 0930 | https://www.sec.gov/Archives/edgar/data/1019361/0001019361-05-000001-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1019361/000101936105000001/0001019361-05-000001.txt | 1019361_DEF 14A_2004_0001019361-05-000001.txt |
DEF 14A
proxy04.txt
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the approp... | 0001019361-05-000001 | 2,005 |
1019650_DEF 14A_2005_0001019056-05-000358 | 1019650 | UNIONBANCORP INC | DEF 14A | 2005-03-29T00:00:00 | 2005-03-29T00:00:00 | 6021 | DE | IL | 1231 | https://www.sec.gov/Archives/edgar/data/1019650/0001019056-05-000358-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1019650/000101905605000358/0001019056-05-000358.txt | 1019650_DEF 14A_2005_0001019056-05-000358.txt |
DEF 14A
ubc_2005proxy.txt
DEF 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] ... | 0001019056-05-000358 | 2,005 |
1018963_DEF 14A_2005_0000950152-05-002078 | 1018963 | ALLEGHENY TECHNOLOGIES INC | DEF 14A | 2005-03-14T00:00:00 | 2005-04-22T00:00:00 | 3317 | DE | TX | 1231 | https://www.sec.gov/Archives/edgar/data/1018963/0000950152-05-002078-index.html | https://www.sec.gov/Archives/edgar/data/1018963/000095015205002078/j1035101def14a.htm | https://www.sec.gov/Archives/edgar/data/1018963/0000950152-05-002078.txt | 1018963_DEF 14A_2005_0000950152-05-002078.htm |
DEF 14A
j1035101def14a.htm
ALLEGHENY TECHNOLOGIES INCORPORATED
ALLEGHENY TECHNOLOGIES INCORPORATED
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
Filed by the Regis... | 0000950152-05-002078 | 2,005 |
1019737_DEF 14A_2005_0001193125-05-061541 | 1019737 | NAVIGANT CONSULTING INC | DEF 14A | 2005-03-28T00:00:00 | 2005-05-04T00:00:00 | 8742 | DE | IL | 1231 | https://www.sec.gov/Archives/edgar/data/1019737/0001193125-05-061541-index.html | https://www.sec.gov/Archives/edgar/data/1019737/000119312505061541/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1019737/0001193125-05-061541.txt | 1019737_DEF 14A_2005_0001193125-05-061541.htm |
DEF 14A
ddef14a.htm
DEFINITIVE SCHEDULE 14A
Definitive Schedule 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement
Pursuant to Section 14(a) of
... | 0001193125-05-061541 | 2,005 |
1013934_DEF 14A_2005_0000950136-05-001611 | 1013934 | STRAYER EDUCATION INC | DEF 14A | 2005-03-28T00:00:00 | 2005-05-03T00:00:00 | 8200 | MD | VA | 1231 | https://www.sec.gov/Archives/edgar/data/1013934/0000950136-05-001611-index.html | https://www.sec.gov/Archives/edgar/data/1013934/000095013605001611/file001.htm | https://www.sec.gov/Archives/edgar/data/1013934/0000950136-05-001611.txt | 1013934_DEF 14A_2005_0000950136-05-001611.htm |
DEF 14A
file001.htm
DEFINITIVE PROXY STATEMENT
SCHEDULE 14A
INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
[X] Filed by a Party other than the Registrant
[ ]
Check the appropriate box:
[ ]
Preliminary Proxy
Statem... | 0000950136-05-001611 | 2,005 |
1020347_DEF 14A_2005_0001193125-05-059400 | 1020347 | COMMUNITYCORP | DEF 14A | 2005-03-24T00:00:00 | 2005-04-27T00:00:00 | 6021 | NULL | SC | 1231 | https://www.sec.gov/Archives/edgar/data/1020347/0001193125-05-059400-index.html | https://www.sec.gov/Archives/edgar/data/1020347/000119312505059400/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1020347/0001193125-05-059400.txt | 1020347_DEF 14A_2005_0001193125-05-059400.htm |
DEF 14A
ddef14a.htm
DEFINITIVE NOTICE AND PROXY STATEMENT
DEFINITIVE NOTICE AND PROXY STATEMENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to
Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
... | 0001193125-05-059400 | 2,005 |
1020861_DEF 14A_2005_0001145443-05-000227 | 1020861 | SUNAMERICA FOCUSED SERIES INC | DEF 14A | 2005-02-11T00:00:00 | 2005-02-11T00:00:00 | NULL | MD | NJ | 1031 | https://www.sec.gov/Archives/edgar/data/1020861/0001145443-05-000227-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1020861/000114544305000227/0001145443-05-000227.txt | 1020861_DEF 14A_2005_0001145443-05-000227.txt |
DEF 14A
d16241.txt
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
... | 0001145443-05-000227 | 2,005 |
1021010_DEF 14A_2005_0001206774-05-000441 | 1021010 | EDGE PETROLEUM CORP | DEF 14A | 2005-03-25T00:00:00 | 2005-04-27T00:00:00 | 1311 | DE | TX | 1231 | https://www.sec.gov/Archives/edgar/data/1021010/0001206774-05-000441-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1021010/000120677405000441/0001206774-05-000441.txt | 1021010_DEF 14A_2005_0001206774-05-000441.txt |
DEF 14A
d16601_def14a.txt
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
... | 0001206774-05-000441 | 2,005 |
1019779_DEF 14A_2005_0001193125-05-018015 | 1019779 | CUNO INC | DEF 14A | 2005-02-03T00:00:00 | 2005-03-03T00:00:00 | 3569 | DE | CT | 1031 | https://www.sec.gov/Archives/edgar/data/1019779/0001193125-05-018015-index.html | https://www.sec.gov/Archives/edgar/data/1019779/000119312505018015/ddef14a.htm | https://www.sec.gov/Archives/edgar/data/1019779/0001193125-05-018015.txt | 1019779_DEF 14A_2005_0001193125-05-018015.htm |
DEF 14A
ddef14a.htm
NOTICE AND PROXY STATEMENT
Notice and Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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 1... | 0001193125-05-018015 | 2,005 |
1019849_DEF 14A_2005_0000950124-05-001489 | 1019849 | UNITED AUTO GROUP INC | DEF 14A | 2005-03-15T00:00:00 | 2005-04-14T00:00:00 | 5500 | DE | MI | 1231 | https://www.sec.gov/Archives/edgar/data/1019849/0000950124-05-001489-index.html | https://www.sec.gov/Archives/edgar/data/1019849/000095012405001489/k91379def14a.htm | https://www.sec.gov/Archives/edgar/data/1019849/0000950124-05-001489.txt | 1019849_DEF 14A_2005_0000950124-05-001489.htm |
DEF 14A
k91379def14a.htm
DEFINITIVE PROXY STATEMENT
def14a
OMB APPROVAL
OMB Number:
3235-0059
Expires:
February 28, 2006
Estimated average burden
hours per
response
12.75
UNITED STATES
SECURITIES... | 0000950124-05-001489 | 2,005 |
1021435_DEF 14A_2005_0001021435-05-000013 | 1021435 | GRAPHON CORP/DE | DEF 14A | 2005-02-25T00:00:00 | 2005-02-10T00:00:00 | 7372 | DE | CA | 1231 | https://www.sec.gov/Archives/edgar/data/1021435/0001021435-05-000013-index.html | NULL | https://www.sec.gov/Archives/edgar/data/1021435/000102143505000013/0001021435-05-000013.txt | 1021435_DEF 14A_2005_0001021435-05-000013.txt |
DEF 14A
spclprxy.txt
DEFINITIVE SPECIAL MEETING PROXY
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
(Amendment No.__)
Filed by the Registrant |X|
Filed by a Party ot... | 0001021435-05-000013 | 2,005 |
1018399_DEF 14A_2005_0001104659-05-012634 | 1018399 | ENTERPRISE BANCORP INC /MA/ | DEF 14A | 2005-03-24T00:00:00 | 2005-05-03T00:00:00 | 6022 | MA | MA | 1231 | https://www.sec.gov/Archives/edgar/data/1018399/0001104659-05-012634-index.html | https://www.sec.gov/Archives/edgar/data/1018399/000110465905012634/a05-5241_1def14a.htm | https://www.sec.gov/Archives/edgar/data/1018399/0001104659-05-012634.txt | 1018399_DEF 14A_2005_0001104659-05-012634.htm |
DEF 14A
a05-5241_1def14a.htm
DEF 14A
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy Statement
Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
... | 0001104659-05-012634 | 2,005 |
1022079_DEF 14A_2005_0000950117-05-001192 | 1022079 | QUEST DIAGNOSTICS INC | DEF 14A | 2005-03-31T00:00:00 | 2005-05-10T00:00:00 | 8071 | DE | NJ | 1231 | https://www.sec.gov/Archives/edgar/data/1022079/0000950117-05-001192-index.html | https://www.sec.gov/Archives/edgar/data/1022079/000095011705001192/a39144.htm | https://www.sec.gov/Archives/edgar/data/1022079/0000950117-05-001192.txt | 1022079_DEF 14A_2005_0000950117-05-001192.htm |
DEF 14A
a39144.htm
QUEST DIAGNOSTICS INCORPORATED
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 Registra... | 0000950117-05-001192 | 2,005 |
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