<PAGE>
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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
FIRST CONSULTING GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(6) Amount Previously Paid:
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(7) Form, Schedule or Registration Statement No.:
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(8) Filing Party:
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(9) Date Filed:
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<PAGE>
[LOGO]
April 30, 1999
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
First Consulting Group, Inc. to be held at 111 W. Ocean Boulevard, 4th Floor,
Long Beach, California 90802 on Tuesday, June 8, 1999 at 9:00 a.m. local time.
The matters expected to be acted upon at the meeting are described in detail
in the following Notice of Annual Meeting of Stockholders and Proxy Statement.
It is important that you use this opportunity to take part in the affairs of
the Company by voting on the business to come before this meeting. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY
RETURN THE ACCOMPANY-ING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT
YOUR SHARES MAY BE REPRESENTED AT THE MEETING. Returning the Proxy does not
deprive you of your right to attend the meeting and to vote your shares in
person.
We look forward to seeing you at the meeting.
Sincerely,
/s/ LUTHER J. NUSSBAUM
Luther J. Nussbaum
CHIEF EXECUTIVE OFFICER
<PAGE>
[LOGO]
111 W. OCEAN BOULEVARD, 4TH FLOOR
LONG BEACH, CALIFORNIA 90802
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 8, 1999
TO THE STOCKHOLDERS OF FIRST CONSULTING GROUP, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of First
Consulting Group, Inc., a Delaware corporation ("FCG" or the "Company"), will be
held on June 8, 1999 at 9:00 a.m. local time at the Company's principal
executive offices at 111 W. Ocean Boulevard, 4th Floor, Long Beach, California
90802 for the following purposes:
1. To elect three directors to hold office until the 2002 Annual Meeting of
Stockholders.
2. To ratify the selection of Grant Thornton LLP as independent auditors of
the Company for its fiscal year ending December 31, 1999.
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Stockholders of record at the close of business on April 20, 1999 are
entitled to notice of, and to vote at, this Annual Meeting and any adjournment
or postponement thereof.
All stockholders are cordially invited to attend the Company's Annual
Meeting in person. Whether or not you expect to attend, WE URGE YOU TO COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED.
By Order of the Board of Directors
/s/ PATRICIA A. LOWERY
Patricia A. Lowery
SECRETARY
Long Beach, California
April 30, 1999
<PAGE>
[LOGO]
111 W. OCEAN BOULEVARD, 4TH FLOOR
LONG BEACH, CALIFORNIA 90802
PROXY STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD
ON JUNE 8, 1999
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of First
Consulting Group, Inc., a Delaware corporation ("FCG" or the "Company"), for use
at the Annual Meeting of Stockholders to be held on June 8, 1999 at 9:00 a.m.
local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Company's principal
executive offices at 111 W. Ocean Boulevard, 4th Floor, Long Beach, CA 90802.
The Company intends to mail this proxy statement and accompanying proxy card on
or about April 30, 1999 to all stockholders entitled to vote at the Annual
Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company.
No additional compensation will be paid to directors, officers or other regular
employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on April 20,
1999 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on April 20, 1999 the Company had outstanding and entitled to
vote 22,641,070 shares of Common Stock. Each holder of record of Common Stock on
such date will be entitled to one vote for each share held on all matters to be
voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same
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<PAGE>
effect as negative votes. Broker non-votes are counted towards a quorum, but are
not counted for any purpose in determining whether a matter has been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 111 W.
Ocean Boulevard, 4th Floor, Long Beach, CA 90802, a written notice of revocation
or a duly executed proxy bearing a later date, or it may be revoked by attending
the meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
SHAREHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy statement of FCG to be
issued in connection with the Company's 2000 Annual Meeting of FCG stockholders
must be delivered to or mailed and received at the principal executive offices
of FCG between the close of business on March 9, 2000 and the close of business
of April 10, 2000. However, in the event public announcement of the date of the
Company's 2000 Annual Meeting of FCG stockholders is first made by FCG fewer
than seventy days prior to the date of such annual meeting, proposals must be
delivered or received no later than the close of business on the tenth day
following the day on which public announcement is first made by FCG.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and Bylaws provide that the Board
of Directors shall be divided into three classes, each class consisting, as
nearly as possible, of one-third of the total number of directors, with each
class having a three-year term. Vacancies on the Board may be filled only by
persons elected by a majority of the remaining directors. A director elected by
the Board to fill a vacancy (including a vacancy created by an increase in the
Board of Directors) shall serve for the remainder of the full term of the class
of directors in which the vacancy occurred and until such director's successor
is elected and qualified.
The Board of Directors is presently composed of eleven members, with one
vacancy. Pursuant to the Company's bylaws, the remaining members of the
Company's Board of Directors shall fill the vacancy as soon as practicable.
There are three directors in the class whose term of office expires in 1999.
Each of the nominees for election to this class is currently a director of the
Company. Mr. Heck and Mr. Olson were previously elected by the stockholders of
the Company, and Mr. Baldino, Jr. was appointed by the Board of Directors on
December 15, 1998, pursuant to the terms of the Agreement and Plan of Merger and
Reorganization by and among FCG, Integrated Systems Consulting Group and Foxtrot
Acquisition Sub, Inc., a then wholly-owned subsidiary of FCG, dated September 9,
1998, as amended by the First Amendment dated as of November 11, 1998. If
elected at the Annual Meeting, each of the nominees would serve until the 2002
annual meeting and until his successor is elected and has qualified, or until
such director's earlier death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the three nominees named below. In the event that any nominee should
be unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected, and
management has no reason to believe that any nominee will be unable to serve.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
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NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2002 ANNUAL MEETING
FRANK BALDINO, JR., Ph.D., age 45, has served FCG as a director since
December 1998. Mr. Baldino founded and has served as President, Chief Executive
Officer and a director of Cephalon, Inc., an integrated specialty
biopharmaceutical company that discovers, develops and markets products to treat
neurological disorders, since 1987. Dr. Baldino's previous positions include
Senior Research Biologist in Neuroscience at E.I. DuPont de Nemours & Company,
as well as several research and instructional positions at UMDNJ-Rutgers Medical
School, A.I. DuPont Institute, and Temple University School of Medicine. Dr.
Baldino is on the Board of Directors of Pharmacopeia, Inc., ViroPharma, Inc.,
and certain other closely-held companies and charitable organizations.
STEVEN HECK, age 50, has served FCG as President since October 1998 and as
Executive Vice President, Practice since April 1995 and as a director since
April 1997. Mr. Heck served as Vice President, Practice from April 1991 to March
1995. From 1990 to 1991, Mr. Heck served as Chief Information Officer of
Evangelical Health Systems. Mr. Heck served FCG as Vice President, Midwest
Region from May 1987 to December 1989. Prior to joining FCG, Mr. Heck was the
managing Partner of the Great Lakes Health Care Practice at Price Waterhouse LLP
from 1985 to 1987.
STEPHEN E. OLSON, age 57, has served FCG as a director since April 1997.
Since 1988, Mr. Olson has served as Chairman of the Board of The Olson Company,
a developer of landmark residential communities within urban environments. Since
1992, Mr. Olson has also served as Chairman of the Board of Flowline, Inc., a
high-technology company specializing in intelligent sensors and controls. Mr.
Olson serves as a director of several private companies. Mr. Olson received a
B.A. from the University of Redlands and an M.B.A. from Pepperdine University.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2000 ANNUAL MEETING
DONALD R. CALDWELL, age 52, has served FCG as a director since December
1998. Mr. Caldwell has been President and Chief Operating Officer of Safeguard
Scientifics, Inc. since February 1996. He was an Executive Vice President of
Safeguard Scientifics, Inc. from December 1993 to February 1996. Prior to that
time, Mr. Caldwell was President of Valley Forge Capital Group, Ltd., a business
mergers and acquisition advisory firm that he founded, from April 1991 to
December 1993 and an executive officer of a predecessor company of Cambridge
Technology Partners (Massachusetts), Inc., a provider of information technology
consulting and software development, from December 1989 to March 1991. Mr.
Caldwell's prior positions included serving as a partner in the national office
of Arthur Young & Co. (a predecessor to Ernst & Young, LLP). Mr. Caldwell is a
director of Compucom, Diamond Technology Partners Consulting, inc., Quaker
Chemical Corporation, Drexel University and Safeguard Scientifics, Inc., as well
as two privately-held companies.
STANLEY R. NELSON, age 72, has served FCG as a director since April 1997.
From 1993 to August 1997, Mr. Nelson was President of the Center for Clinical
Integration, Inc., the predecessor of the Scottsdale Institute, formerly a
subsidiary of FCG. Since 1988, Mr. Nelson has been an independent healthcare
consultant to various organizations. Prior to 1988, Mr. Nelson served as the
President and Chief Executive Officer of the Henry Ford Healthcare Corp. in
Detroit, Michigan and, prior to that, the Abbott-Northwestern Hospital in
Minneapolis, Minnesota. Mr. Nelson currently serves as a director of the
Scottsdale Institute, formerly a subsidiary of FCG. Mr. Nelson received a B.S.
and an M.H.A. from the University of Minnesota.
3
<PAGE>
LUTHER J. NUSSBAUM, age 52, has served FCG as Chief Executive Officer since
October 1998 and as Executive Vice President, Worldwide Practice Support since
April 1995 and has been a director since November 1997. Prior to joining FCG,
Mr. Nussbaum was the President of Nussbaum & Associates, a strategic and
information consulting firm, from 1993 to 1995. From 1989 to 1993, Mr. Nussbaum
served as President and Chief Executive Officer of Evernet Systems, Inc., a
national network systems integration company. From 1986 to 1989, Mr. Nussbaum
was the President and Chief Operating Officer of Ashton-Tate Corp., a
microcomputer software development company. Mr. Nussbaum serves as a director of
First Consulting Group (UK) Ltd. and First Consulting Group (Ireland) Ltd.,
subsidiaries of FCG, and four private entrepreneurial companies. Mr. Nussbaum
received a B.A. from Rhodes College and an M.B.A. from Stanford University.
JACK O. VANCE, age 74, has served FCG as a director since April 1997. Mr.
Vance is the Managing Director of Management Research, Inc., a management
consulting firm. From 1973 to 1989, Mr. Vance was the Managing Partner of the
Los Angeles office of McKinsey & Company and served on the Executive Committee
of that firm's Board of Directors from 1962 to 1989. Mr. Vance serves as a
director of International Rectifier Corporation, a supplier of power
semiconductor components, Semtech Corporation, a manufacturer of analog
semiconductor products, and several private companies. Mr. Vance received a B.S.
from the University of Louisville and an M.B.A. from the Wharton School of the
University of Pennsylvania.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING
STEVEN LAZARUS, age 67, has served FCG as a director since April 1997. Since
1986, Mr. Lazarus has served as a senior principal of various venture capital
funds associated with ARCH Venture, including President and Chief Executive
Officer of ARCH Development Corporation and Managing Director of ARCH Venture
Partners. From 1986 to 1994, Mr. Lazarus served as the Associate Dean of the
Graduate School of Business at the University of Chicago. He currently serves as
a director of Amgen Inc., a biotechnology company, Primark Corporation, an
information services company, Illinois Superconductor Corporation, which
develops radio frequency equipment for the wireless communications industry, and
New Era of Networks, Inc., which develops packaged solutions for application
integration. Mr. Lazarus received a B.A. from Dartmouth College and an M.B.A.
from the Harvard University Graduate School of Business.
DAVID S. LIPSON, age 45, has served FCG as a director since December 1998.
He co-founded ISCG and was Chairman of the ISCG Board of Directors and ISCG's
Chief Exectuive Officer, President and Treasurer since its inception. Mr. Lipson
has more than 30 years of industry experience in executive management and sales
and marketing. His previous employers include IBM, Control Data Corporation, Dun
& Bradstreet Computer Services, SunGuard Data Systems Inc. and Digital Equipment
Corporation. Mr. Lipson currently serves as a director of Prescient Systems.
SCOTT S. PARKER, age 64, has served FCG as a director since November 1997.
He has served as the President and Chief Executive Officer of Intermountain
Health Care since 1975. Mr. Parker serves as a director of First Security
Corporation MMI Companies, Inc., a community and commercial bank, and Questar
Corporation, a natural gas and energy services holding company. Mr. Parker
received a B.A. from the University of Utah and an M.H.A. from the University of
Minnesota.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1998, the Board of Directors held
eight meetings and passed six actions by unanimous written consent. The Board
has an Audit Committee and a Compensation Committee.
The Audit Committee of the FCG Board reviews the internal accounting
procedures of FCG and consults with and reviews the services provided by, FCG's
independent auditors. The Audit Committee is
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composed of three non-employee directors: Messrs. Olson, Lazarus and Nelson. It
did not meet during the fiscal year ending December 31, 1998.
The Compensation Committee of the FCG Board reviews and recommends to the
FCG Board the compensation and benefits of all officers of FCG and reviews
general policy relating to compensation and benefits of employees of FCG. The
Compensation Committee is composed of three non-employee directors: Messrs.
Olsen, Vance, and Nelson. It met once and passed four actions by unanimous
written consent during the fiscal year ending December 31, 1998.
During the fiscal year ended December 31, 1998, each Board member attended
75% or more of the aggregate of the meetings of the Board and of the committees
on which he served, held during the period for which he was a director or
committee member, respectively.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Grant Thornton LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Grant Thornton LLP
has audited the Company's financial statements since 1995. Representatives of
Grant Thornton LLP are expected to be present at the Annual Meeting, will have
an opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
Stockholder ratification of the selection of Grant Thornton LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Grant Thornton LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Audit Committee and the Board
will reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board in their discretion may direct the
appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the Company
and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Grant Thornton LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of FCG common stock as of December 31, 1998 by: (i) each stockholder who is
known by FCG to own beneficially more than 5% of FCG common stock; (ii) each
named executive officer of FCG; (iii) each director of FCG; and (iv) all
directors and executive officers of FCG as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
-----------------------
<S> <C> <C>
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- --------------------------------------------------------------------- ---------- -----------
James A. Reep (2).................................................... 2,858,700 12.77%
David S. Lipson...................................................... 2,246,767 10.03%
Associate 401(k) and Stock Ownership Plan (3)........................ 1,589,544 7.10%
Brent A. Hanson (4).................................................. 826,200 3.69%
</TABLE>
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<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
-----------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- --------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Thomas A. Reep (5)................................................... 632,872 2.83%
Frank I. Mueller..................................................... 301,896 1.35%
Roy A. Ziegler (6)................................................... 207,616 *
Steven Heck (7)...................................................... 173,142 *
Richard N. Kramer (8)................................................ 167,292 *
Luther J. Nussbaum (9)............................................... 135,120 *
Donald R. Caldwell................................................... 11,524 *
Stanley R. Nelson (10)............................................... 9,033 *
Steven Lazarus (10).................................................. 9,033 *
Stephen E. Olson (10)................................................ 9,033 *
Jack O. Vance (10)................................................... 9,033 *
Scott S. Parker (10)................................................. 3,277 *
Frank Baldino, Jr., Ph.D (10)........................................ 8,470 *
All directors and executive officers as a group (16 persons)
(3)(11)............................................................ 7,609,008 33.98%
</TABLE>
- ------------------------
* Represents beneficial ownership of less than 1% of the outstanding shares of
FCG common stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission") and generally includes
voting or investment power with respect to securities. Except as indicated
by footnote, and subject to community property laws where applicable, FCG
believes, based on information furnished by such persons, that the persons
named in the table above have sole voting and investment power with respect
to all shares of FCG common stock shown as beneficially owned by them.
Percentage of beneficial ownership is based on 22,394,170 shares of FCG
common stock outstanding as of December 31, 1998. Certain shares are subject
to repurchase at the original issuance price plus a growth factor. The
growth factor is equal to the average interest rate compounded quarterly
which FCG pays to a commercial lending institution in a calendar quarter
(the "growth factor"). In the event that FCG has no borrowings for a
particular quarter then the growth factor shall be the prime rate on the
first day of the quarter, as announced in the Wall Street Journal, or if the
Wall Street Journal discontinues such announcements, then it shall be the
prime rate as announced by Bank of America.
(2) The business address of the named stockholder is c/o First Consulting Group,
Inc., 111 West Ocean Blvd., 4th Floor, Long Beach, California 90802. All
shares are held by the Reep Family LLC, of which Fatima Reep is the Managing
Member.
(3) The business address of the named stockholder is c/o First Consulting Group,
Inc., 111 West Ocean Blvd., 4th Floor, Long Beach, California 90802. The
shares are held by Union Bank as trustee of the ASOP. FCG allocates shares
of FCG common stock as matching contributions to certain of its executive
officers. These executive officers have the right to acquire the fair market
value of the stock allocated to their respective accounts upon termination
of employment. Such stockholders also have the right to vote such shares of
FCG common stock allocated under the ASOP with respect to the approval or
disapproval of any FCG merger or consolidation, recapitalization,
reclassification, liquidation, dissolution, sale of substantially all assets
of a trade or business, or such similar transaction. Of the shares held by
the ASOP, 9,180 shares have been allocated to the accounts of the following
named executive officers: Steven Heck (1,520 shares); Richard N. Kramer
(1,500 shares); Frank I. Mueller (1,540 shares); James A. Reep (1,540
shares); Thomas A. Reep (1,540 shares) and Roy A. Ziegler (1,540 shares).
All other executive officers as a group have been allocated a total of 9,280
shares.
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(4) The business address of the named stockholder is c/o First Consulting Group,
Inc., 6903 Rockledge Drive, Suite 920, Bethesda, Maryland 20817. The shares
are held by The Brent A. Hanson Inter Vivos Trust, dated March 24, 1995, of
which Mr. Hanson is trustee.
(5) The business address of the named stockholder is c/o First Consulting Group,
Inc., 111 West Ocean Blvd., 4th Floor, Long Beach, California 90802. The
shares are held by The Reep Family Inter Vivos Trust, dated May 27, 1992, of
which Mr. Reep and his wife, Patricia A. Reep, are trustees. Of the shares
held, 73,864 are unvested shares as of October 30, 1998. Of such unvested
shares, 36,932 are subject to repurchase by FCG at a price equal to $2.38
per share plus the growth factor and 36,932 shares are subject to repurchase
by FCG at a price equal to $4.76 per share plus the growth factor.
(6) Of the shares held, 124,569 are unvested shares as of December 31, 1998. Of
such unvested shares, 30,594 are subject to repurchase by FCG at a price
equal to $0.44 per share plus the growth factor, 24,866 are subject to
repurchase by FCG at a price equal to $0.53 per share plus the growth
factor, 46,073 are subject to repurchase by FCG at a price equal to $0.57
per share plus the growth factor, and 23,036 are subject to repurchase by
FCG at a price equal to $2.80 per share plus the growth factor.
(7) Of the shares held, 19,238 are unvested shares as of December 31, 1998. Of
such unvested shares, 7,200 are subject to repurchase by FCG at a price
equal to $0.22 per share plus the growth factor, 5,656 are subject to
repurchase by FCG at a price equal to $0.53 per share plus the growth
factor, 4,254 are subject to repurchase by FCG at a price equal to $0.57 per
share plus the growth factor and 2,128 are subject to repurchase by FCG at a
price equal to $2.80 per share plus the growth factor.
(8) Of the shares held, 117,104 are unvested as of December 31, 1998. Of such
unvested shares, 78,069 are subject to repurchase by FCG at a price equal to
$0.57 per share plus the growth factor and 39,035 are subject to repurchase
by FCG at a price equal to $2.80 per share plus the growth factor.
(9) The shares are held by The Nussbaum Family Trust, a Revocable Living Trust,
dated March 2, 1992, of which Mr. Nussbaum is trustee. Of the shares held,
94,583 are unvested shares as of December 31, 1998. Of such unvested shares,
63,055 are subject to repurchase by FCG at a price equal to $0.57 per share
plus the growth factor and 31,528 are subject to repurchase by FCG at a
price equal to $2.80 per share plus the growth factor.
(10) Includes options exercisable within 60 days of December 31, 1998, issued by
the Company to the following directors and executive officers: Frank
Baldino, Jr. (4,620); Steven Lazarus (6,933); Stanley R. Nelson (6,933);
Stephen E. Olson (6,933); Scott S. Parker (1,933); and Jack O. Vance
(6,933).
(11) Of the shares held, 763,998 are unvested shares as of December 31, 1998. In
general, such unvested shares are subject to repurchase by FCG at a price
equal to the original purchase price plus the growth factor.
COMPLIANCE UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership with the Commission and the Nasdaq
National Market. Such persons are required by Commission regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms furnished to the
Company and representations by the executive officers and directors, the Company
believes that all Section 16(a) filing requirements were met during the fiscal
year ending December 31, 1998, except for the filing of certain Form 4's
relating to distributions of the Company's common stock by the Company's
Associate 401(k) and Stock Ownership Plan in 1998. Under the Company's Associate
401(k) and Stock Ownership Plan, employee contributions are matched with
distributions of the Company's common stock.
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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
FCG currently provides annual cash compensation in the amount of $10,000 to
directors for services in such capacity. Directors are also reimbursed for
certain expenses in connection with attendance at Board of Director and
committee meetings. Directors receive automatic grants of nonstatutory stock
options under the 1997 Non-Employee Directors' Stock Option Plan and are
eligible for grants of nonstatutory stock options under the 1997 Equity
Incentive Plan. Currently, under the Non-Employee Director Restricted Stock
Plan, each non-employee director is required to purchase and hold shares with an
aggregate fair market value equal to the annual fees paid to the directors.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows, for the fiscal years ended December 31, 1998,
December 31, 1997, and December 31, 1996, certain compensation awarded or paid
to, or earned by, the Company's named executive officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) ---------------------
SECURITIES
FISCAL ----------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS (#) COMPENSATION ($)(1)
- -------------------------------------------- ----------- ----------- ---------- --------------------- --------------------
<S> <C> <C> <C> <C> <C>
James A. Reep............................... 1998 $ 410,000 $ 140,000 -- --
Chairman of the Board 1997 379,500 120,435 -- $ 47,634(2)(3)
1996 379,500 129,654 -- --
Luther J. Nussbaum.......................... 1998 370,000 94,500 -- --
Chief Executive Officer and Executive Vice 1997 324,500 127,533 -- 49,009(3)
President, Worldwide Practice Support 1996 289,500 88,200 -- 38,095(4)
Steven Heck................................. 1998 370,000 66,150 -- --
President and Executive Vice President, 1997 344,360 109,043 -- 171,425(3)
Practice 1996 344,360 105,525 -- 276,679(4)
Don M. Tompkins............................. 1998 350,000 89,250 -- --
Vice President and Managing Director, 1997 323,760 110,250 -- 57,328(3)
Implementation Services 1996 258,760 80,000 -- 36,195(4)
Richard W. Kramer........................... 1998 350,000 89,250 -- 49,564(5)
Vice President and Managing Director, East 1997 324,240 99,225 -- 44,560(3)
Region 1996 284,240 95,288 -- --
Roy A. Ziegler.............................. 1998 350,000 89,250 -- --
Vice President and Managing Director, West 1997 324,500 99,225 -- 51,111(3)
Region 1996 259,500 139,200 -- --
</TABLE>
- ------------------------
(1) In accordance with the Commission rules, other annual compensation in the
form of perquisites and other personal benefits has been omitted where the
aggregate amount of such perquisites and other personal benefits constitutes
less than the lesser of $50,000 or 10% of the total annual salary and bonus
for the named executive officer for the fiscal year.
(2) Reflects a premium of $28,674 paid by FCG for a life insurance policy of
which Mr. Reep is the beneficiary.
8
<PAGE>
(3) Includes (i) imputed interest on interest-free loans by FCG to each of the
named executive officers (except Mr. Reep) for the purchase of shares of FCG
common stock under the 1994 Restricted Stock Plan; (ii) supplemental
executive retirement plan contributions made on behalf of each of the named
executive officers (except Mr. Reep); (iii) an allocation of 1,000 shares to
each of the named executive officers' accounts under the ASOP at an
aggregate valuation of $1,190 per named executive officer; (iv) FCG's 50%
matching contribution of FCG common stock under the ASOP for the account of
Messrs. Reep, Heck, Nussbaum, Tompkins, Kramer and Ziegler with an estimated
valuation of $4,750, $4,680, $4,750, $4,380, $4,620 and $4,750,
respectively; and (vi) $90,700 in relocation expenses paid to Mr. Heck in
1997 and 1996, respectively.
(4) Includes (i) imputed interest on interest-free loans by FCG to each of the
named executive officers (except Mr. Reep) for the purchase of shares of FCG
common stock under the 1994 Restricted Stock Plan; (ii) supplemental
executive retirement plan contributions made on behalf of each of the named
executive officers (except Mr. Reep); (iii) term life insurance premiums
paid by FCG; (iv) an allocation of 200 shares to each of the named executive
officers' accounts under the ASOP at an aggregate valuation of $957 per
named executive officer; (v) FCG's 50% matching contribution of FCG common
stock under the ASOP for the account of Messrs. Reep, Heck, Nussbaum,
Tompkins, Kramer and Ziegler with an estimated valuation of $4,750, $4,680,
$4,750, $4,380, $4,620 and $4,750, respectively; and (vi) $90,700 in
relocation expenses paid to Mr. Heck in 1997 and 1996, respectively.
(5) Includes (i) imputed interest on interest-free loans by FCG for the purchase
of shares of FCG common stock under the 1994 Restricted Stock Plan; (ii) a
supplemental executive retirement plan contribution made on behalf of Mr.
Kramer; (iii) FCG's 50% matching contribution of FCG common stock under the
ASOP for the account of Mr. Kramer with an estimated valuation of $5,000;
(iv) a taxable fringe benefit in the amount of $1,192; and (v) a term life
insurance premium paid by FCG.
OPTION/STOCK APPRECIATION RIGHTS GRANTS AND EXERCISES
No options or stock appreciation rights were granted to or exercised by any
named executive officer during the fiscal year ending December 31, 1998.
REPORT OF THE COMPENSATION AND STOCK OPTION
COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
RESPONSIBILITIES AND COMPOSITION OF THE COMMITTEE
The Compensation and Stock Option Committee (the "Compensation Committee")
of the Company's Board of Directors (the "Board") is responsible for (i)
recommending the type and level of compensation for directors, officers and
employees of the Company, (ii) administering the Company's equity incentive
plans, and (iii) granting incentive stock options and nonstatutory stock options
which are not pursuant to the Company's equity incentive plans. The Compensation
Committee is also responsible for reviewing the performance of the Company's
executive officers. Compensation for directors, officers and employees of the
Company are approved by the Board.
The Compensation Committee is composed of three members of the Board:
Stephen E. Olsen, Jack O. Vance, and Stanley R. Nelson. Messrs. Olsen and Vance
have never served as employees of the Company or its subsidiaries. Mr. Nelson is
the Chairman and Chief Executive Officer of The Scottsdale Informatics
Institute, formerly a wholly owned subsidiary of the Company. As of December
1998, the Scottsdale Institute is a separate entity organized under section
501(c)(3) of the Internal Revenue Code.
This report describes the philosophy that underlies the components of the
Company's executive compensation programs. It also describes the details of the
key elements of such programs, as well as the rationale for compensation paid to
the Company's Chief Executive Officer and its other officers.
9
<PAGE>
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Compensation Committee believes that all officers and employees should
be compensated based on their contribution to the firm and to building
sustainable long-term value for the Company's stockholders. In determining
specific compensation programs, the Compensation Committee considers individual
and group performance, including successful achievement of business, management
and research objectives, maintenance of strong relationships with the firm's
clients, new business generation and teamwork. The Compensation Committee
strives to design compensation programs that will tie individual rewards to the
Company's success and align interests between officers, employees and
stockholders of the Company. The Compensation Committee also strives to design
compensation programs that help retain its officers and employees and encourage
personal and professional development and growth.
COMPENSATION OF OFFICERS GENERALLY
Officer compensation programs typically consist of four components: base
salaries, bonuses, equity incentives and other compensation. Base salaries are
established on the basis of the officer's experience, salary history and
contribution to the Company. Bonuses are established on the basis of individual
achievement of established objectives, overall corporate performance and other
factors. Equity incentives typically consist of stock purchases and stock option
grants under the Company's equity incentive plans. The Company requires minimum
stock purchases when a person becomes an officer with the Company. In addition,
officers must hold a minimum number of shares of the Company's common stock
throughout employment. Stock options are granted as inducements to employment
with the Company, to aid in retention and to align the interest of such officers
with those of the Company's stockholders. Other compensatory components
typically consist of no-interest loans granted to vice presidents in connection
with purchases of shares of the Company's common stock under the Company's
equity incentive plans, relocation expenses, insurance premiums and similar
payments. All components are evaluated annually to ensure that such components
are appropriate and consistent with the strategic business objectives of the
Company, corporate culture, and with enhancing stockholder value.
BASE SALARY
Base salary ranges and base salaries for the Company's officers are
established at competitive levels according to the salaries attributable to
comparable positions at comparable companies within the healthcare, management
consulting and information services industries. The Compensation Committee
reviews the base salary of each officer annually. The Compensation Committee
considers each officer's level of responsibility, experience and overall
contribution to the Company. The Compensation Committee also considers equity
and fairness in setting the base salary of its officers. In making salary
recommendations, the Compensation Committee exercises discretion based on the
foregoing criteria. The Compensation Committee does not apply a specific formula
to determine the weight of each factor considered.
BONUSES
Bonuses for the Company's officers are determined based on the attainment of
specific business, management and research objectives. These objectives vary
depending upon the position or role of the individual officer. The Compensation
Committee also considers each officer's contribution to the Company's financial
performance and organizational growth, including typical measurements of
operational performance such as client continuity, utilization, employee
turnover and professional development and growth. The Board establishes specific
objectives for each officer the beginning of each year.
STOCK OPTIONS AND OTHER EQUITY INCENTIVES
The Compensation Committee administers the following equity incentive plans
for the Company: (i) the 1997 Equity Incentive Plan, (ii) 1997 Non-Employee
Directors' Stock Option Plan, (iii) 1994
10
<PAGE>
Restricted Stock Purchase Plan, (iv) Non-Employee Directors' Restricted Stock
Purchase Plan, and (v) Associate 401(k) and Stock Ownership Plan. The
Compensation Committee also administers the equity incentive plans of the
Company's subsidiaries. The Company's officers can receive stock option grants
and other equity-based incentives under the 1997 Equity Incentive Plan, 1994
Restricted Stock Purchase Plan and the Associate Profit Sharing 401(k) and Stock
Ownership Plan. The Company's officers may also receive non-statutory stock
option grants that are inducements to employment and not pursuant to any of the
Company's equity incentive plans.
The Compensation Committee believes that all officers should hold an equity
stake in the Company and requires its officers to purchase and hold a minimum
number of shares of the Company's common stock. Under the Company's 1994
Restricted Stock Purchase Plan, each of the Company's vice presidents must sign
a Restricted Stock Agreement (the "RSA"). The RSA requires each vice president
to purchase and hold a minimum number of shares of the Company's common stock
throughout employment with the Company. The number of shares required to be
purchased and held under the RSA is equal in value to a specified multiple of
such vice president's base salary. Shares of common stock purchased under the
RSAs are subject to specified vesting periods, during which the Company retains
the right to repurchase unvested shares at cost plus an amount equal to the
original aggregate purchase price multiplied by a designated interest rate.
These vesting provisions currently require that vice presidents remain with the
Company for at least three years prior to vesting in a portion of the shares
purchased under the RSA.
Options to purchase shares of the Company's common stock are granted as
incentives to the Company's officers to become employees of the Company, to aid
in the retention of such officers and to align the interests of such officers
with those of the stockholders. Options are granted when the officer first joins
the Company, in connection with a significant change in an officer's
responsibility and, occasionally, to achieve equity within an officer's peer
group.
In 1998, the Compensation Committee established an automatic stock option
grant program to grant options to the Company's vice presidents based on the
number of shares of the Company's common stock purchased under the RSAs. In
1998, the Company's vice presidents were granted an option to purchase one share
of common stock for each share of common stock purchased under the RSAs. The
Compensation Committee also granted options to purchase 100 shares of the
Company's common stock to all non-officer employees of the Company as of January
1, 1998. The purpose of this grant was to provide an additional incentive to all
non-officer employees to assist the Company in achieving financial growth and
client satisfaction.
The Compensation Committee grants incentive stock options to officers and
employees of the Company. Individuals employed in foreign jurisdictions are
typically granted non-statutory stock options. Options generally become
exercisable over a six-year period (20% at the end of one year and 1.67% each
month thereafter). Options granted during 1998 were granted at a price equal to
the fair market value of the Company's common stock on the date of grant.
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), provides in general that companies may not deduct in any taxable year
compensation in excess of $1,000,000 paid to any Named Executive Officer, except
to the extent such excess constitutes performance-based compensation. In order
for incentive compensation to qualify as performance based compensation under
Section 162(m), the Company's discretion to grant awards must be strictly
limited. The Company does not currently intend to qualify its incentive
compensation plans under Section 162(m). The policy of the Company is to qualify
future compensation arrangements to ensure deductibility, except in those cases
where stockholder value is maximized by an alternative approach.
11
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's salary, bonus and other compensation follow
the policies set forth above.
James Reep served as the Company's Chief Executive Officer from March 1991
to October 1998. For the 1998 fiscal year, Mr. Reep's base salary was $400,000.
Mr. Reep received a bonus of $140,000. Mr. Reep also received $5,000 in profit
sharing under the Company's Associate Profit Sharing 401(k) and Stock Ownership
Plan. Mr. Reep did not receive any option grants, purchase any restricted stock
or other incentives under the Company's equity incentive plans.
Luther Nussbaum has served as the Company's Chief Executive Officer since
October 1998. Mr. Nussbaum's compensation was established in connection with his
prior position as Executive Vice President, Worldwide Practice Support. No
additional compensation was paid to Mr. Nussbaum upon his appointment as the
Chief Executive Officer of the Company. For the 1998 fiscal year, Mr. Nussbaum's
base salary was $360,000. Mr. Nussbaum received a bonus of $94,500. Mr. Nussbaum
also received $5,000 in profit sharing under the Company's Associate Profit
Sharing 401(k) and Stock Ownership Plan. Mr. Nussbaum did not receive any option
grants, purchase any restricted stock or other incentives under the Company's
equity incentive plans.
The foregoing report has been approved by all of the members of the
Committee.
THE COMPENSATION COMMITTEE
Stephen E. Olsen
Jack O. Vance
Stanley R. Nelson
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPEN-SATION
DECISIONS
The Company has a Compensation Committee of the Board, of which Stanley R.
Nelson, Stephen E. Olson, and Jack O. Vance are members. During fiscal year
1998, Mr. Nelson also served as director of the Scottsdale Informatics
Institute, which was a subsidiary of the Company at that time.
COMPANY STOCK PRICE PERFORMANCE
The stock price performance graph below includes companies required by the
Securities and Exchange Commission and shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or under
the Securities Exchange Act of 1934, as amended, except to the extent the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed solicitating material or filed under such Acts.
The following graph demonstrates a comparison of cumulative total returns
based upon an initial investment of $100.00 in the Company's common stock as
compared with the Hambrecht & Quist Technology Index and Nasdaq Composite. The
stock price performance shown on the graph below is not necessarily indicative
of future price performance and only reflects the Company's relative stock price
on February 13, 1998 (the date the Company's common stock began trading on the
Nasdaq National Market) through December 31, 1998.
[LOGO]
13
<PAGE>
CERTAIN TRANSACTIONS
FCG and its vice presidents have entered into certain agreements relating to
the issuance of FCG's securities. Under the provisions of the 1994 Restricted
Stock Plan, FCG's vice presidents have entered into restricted stock agreements
("RSAs") that require each vice president to purchase a minimum number of shares
of FCG common stock. Shares of FCG common stock are purchased under the RSAs at
a price per share equal to the price as quoted on Nasdaq. On and prior to July
30, 1997, FCG also provided certain of its vice presidents with non-qualified
stock options to purchase shares of FCG common stock based on the number of
shares purchased under the RSAs. These options were granted with exercise prices
below the then-prevailing market value for shares of FCG common stock as
determined by an independent valuation firm. In connection with the RSAs and
stock option agreements entered into between FCG and its vice presidents FCG
has, from time to time, made certain loans to its vice presidents equal to the
following: (1) the aggregate purchase price for shares of FCG common stock
purchased by a vice president under the 1994 Restricted Stock Plan; (2) the
aggregate exercise price for stock options exercised by a vice president in
connection with the 1994 Restricted Stock Plan; and (3) the aggregate amount of
medicare and income taxes payable by a vice president as a result of the
exercise of stock options granted in connection with the 1994 Restricted Stock
Plan.
The promissory notes evidencing such loans are generally non-recourse,
non-interest bearing, and have a stated term of ten years. FCG records a
compensation expense and FCG's vice presidents recognize income on the imputed
interest attributable to these notes. Shares of FCG common stock purchased under
the RSAs or pursuant to the exercise of stock options, for which purchase or
exercise a loan was granted, are pledged as security for the outstanding
principal amounts of the loans. Each vice president is required to pledge that
number of shares having a market value equal to 120% of the amount remaining due
under the loans. The RSAs require FCG's vice presidents to repay the outstanding
principal amounts of such loans at the greater of (1) one-tenth ( 1/10) of the
face amount of such loans, and (2) one-half ( 1/2) of the vice presidents' net
after tax annual bonus. FCG's vice presidents may repay the outstanding
principal amounts in advance without penalty. As of December 31, 1997, all of
the outstanding options under these arrangements have been exercised and the
outstanding aggregate principal amount under these loans equaled approximately
$9.3 million. In the future, FCG plans to grant all stock options at market
value and to match employee 401(k) contributions with shares of FCG common stock
based on the market value of the shares at the time of grant.
FCG has an ongoing, non-contractual business relationship with First Ticket
Travel, whose sole proprietor is Fatima Reep, the wife of James A. Reep,
Chairman of the Board, and former Chief Executive Officer and President of FCG.
For the year ended December 31, 1998, FCG purchased travel services from First
Ticket Travel in the amount of approximately $186,000.
FCG entered into a consulting agreement with Stanley R. Nelson on September
1, 1997. The agreement provides that Mr. Nelson will be paid up to a maximum of
$11,115 per month, for consulting services related to the administration of and
strategic planning for the Scottsdale Institute. For the year ended December 31,
1998, FCG paid an aggregate of approximately $122,000 for such services.
FCG has entered into indemnification agreements with its directors and
officers for the indemnification of and advancement of expenses to such persons
to the full extent permitted by law. FCG also intends to execute such agreements
with its future directors and officers.
FCG believes that the foregoing transactions were in its best interest. As a
matter of policy the transactions were, and all future transactions between FCG
and any of its officers, directors or principal stockholders will be, approved
by a majority of the independent and disinterested members of the FCG Board,
will be on terms no less favorable to FCG than could be obtained from
unaffiliated third parties and will be in connection with bona fide business
purposes of FCG.
14
<PAGE>
OTHER BUSINESS
The Board does not presently intend to bring any other business before the
Annual Meeting, and, so far as is known to the Board, no matters are to be
brought before the Annual Meeting except as specified in the notice of the
Annual Meeting. As to any business that may properly come before the Annual
Meeting, however, it is intended that proxies, in the form enclosed, will be
voted in accordance with the judgment of the persons voting such proxies.
By Order of the Board of Directors
/s/ PATRICIA A. LOWERY
Patricia A. Lowery
SECRETARY
Long Beach, California
April 30, 1999
15
<PAGE>
FOLD AND DETACH HERE
- ------------------------------------------------------------------------------
FIRST CONSULTING GROUP, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 8, 1999
The undersigned hereby appoints Luther J. Nussbaum and Patricia A.
Lowery and each of them, as attorneys and proxies of the undersigned, with
full power of substitution, to vote all of the shares of stock of First
Consulting Group, Inc., which the undersigned may be entitled to vote at the
Annual Meeting of Stockholders of First Consulting Group, Inc. to be held at
111 W. Ocean Boulevard, Long Beach, CA 90802 on Tuesday, June 8, 1999 at 9:00
a.m. (local time, and at any and all postponements, continuations and
adjournments thereof), with all powers that the undersigned would possess if
personally present, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as
to any and all other matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED,
THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
(Continued and to be signed on other side)
<PAGE>
Please Detach and Mail in the Envelope Provided
- ------------------------------------------------------------------------------
/X/ PLEASE MARK YOUR
VOTE AS INDICATED
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
FOR all nominees WITHHOLD
listed below (except AUTHORITY
as marked to the to vote for all
contrary below). nominees listed below.
/ / / /
PROPOSAL 1:
To elect two directors to hold office until the 2002 Annual Meeting of
Stockholders.
NOMINEES:
Frank Baldino, Jr., Steven Heck, Steven E. Olson
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE WRITE SUCH NOMINEE'S NAME BELOW:
- ------------------------------------------------------------------------------
PROPOSAL 2: To ratify the selection of Grant Thornton LLP as independent
auditors of the Company for its fiscal year ending December 31,
1999.
FOR AGAINST ABSTAIN
/ / / / / /
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
DATED , 1999
- --------------------- --------------------- ------------
Signature Signature
Please sign exactly as your name appears hereon. If the stock is registered
in the names of two or more persons, each should sign. Executors,
administrators, trustees, guardians and attorneys-in-fact should add their
titles. If signer is a corporation, please give full corporate name and have
a duly authorized officer sign, stating title. If signer is a partnership,
please sign in partnership name by authorized person.
