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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 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 (S) 240.14a-11(c) or (S) 240.14a-12
MIDCOAST ENERGY RESOURCES INC
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(Name of Registrant as Specified In Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
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MIDCOAST ENERGY RESOURCES, INC.
1100 LOUISIANA, SUITE 2950
HOUSTON, TEXAS 77002
--------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 16, 2000
10:00 A.M. - CENTRAL TIME
MIDCOAST BOARD ROOM
1100 LOUISIANA, 32/nd/ FLOOR
HOUSTON, TEXAS 77002
On behalf of our board of directors, we cordially invite you to attend the
2000 Midcoast Energy Resources, Inc. Annual Meeting of Shareholders. At the
meeting, we will:
1. Elect the board of directors;
2. Approve an amendment to the 1996 Incentive Stock Plan to increase the
number of shares authorized for issuance under the plan by 468,750
shares of common stock to an aggregate of 1,000,000 shares;
3. Conduct other business properly brought before the meeting.
Shareholders who owned our common stock at the close of business on
March 31, 2000 may attend and vote at the meeting. A shareholders' list will be
available at our offices listed above for a period of ten days prior to the
meeting. If you cannot attend the meeting, you may vote by mailing the proxy
card in the enclosed postage-prepaid envelope. Any shareholder attending the
meeting may vote in person, even though he or she has already returned a proxy
card.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND PROMPTLY RETURN THE PROXY IN THE ENCLOSED ENVELOPE. SHAREHOLDERS WHO
ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON.
You will notice that this year we have changed the format of the proxy
statement to make it easier to understand. The Securities and Exchange
Commission is encouraging companies to write documents for investors in plain
English and we support this effort.
We look forward to seeing you at the meeting.
By order of the board of directors,
/s/ Duane S. Herbst
---------------------------------------
Duane S. Herbst
Secretary
Houston, Texas
April 17, 2000
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MIDCOAST ENERGY RESOURCES, INC.
1100 LOUISIANA, SUITE 2950
HOUSTON, TEXAS 77002
-------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 2000
-------------------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
Our board of directors is soliciting proxies for the 2000 Annual Meeting of
Shareholders to be held on Tuesday, May 16, 2000 at 10:00 a.m. (Houston time) in
our boardroom located at 1100 Louisiana, 32/nd/ Floor, Houston, Texas 77002, and
at any adjournments or postponements of the meeting. This proxy statement
contains important information for you to consider when deciding how to vote on
the matters brought before the meeting. Please read it carefully.
Midcoast will pay the costs of soliciting proxies from shareholders.
Directors, officers and regular employees may solicit proxies on behalf of
Midcoast, without additional compensation, personally or by telephone. Voting
materials, which include the proxy statement, proxy card and 2000 Annual Report,
will be mailed to shareholders on or about April 17, 2000.
QUESTIONS AND ANSWERS
Q: Who can attend and vote at the meeting?
A: You can attend and vote at the meeting if you were a shareholder at the
close of business on the record date, March 31, 2000. On that date, there
were 12,494,124 shares outstanding and entitled to vote at the annual
meeting.
Q: What am I voting on?
A: You are voting on:
. The election of directors; and
. The approval of an amendment to the 1996 Incentive Stock Plan.
The six individuals receiving the highest number of "FOR" votes will be
elected to the board of directors. The approval of the amendment to the
1996 Incentive Stock Plan requires the affirmative "FOR" vote of a majority
of the shares present at the meeting and entitled to vote.
Q: How will the proxies vote on any other business brought up at the meeting?
A: By submitting your proxy card, you authorize the proxies to use their
judgment to determine how to vote on any other matter brought before the
meeting. We do not know of any other business to be considered at the
meeting.
The proxies' authority to vote according to their judgment applies only to
shares you own as a shareholder of record.
Q: How do I cast my vote?
A: If you hold your shares as a shareholder of record, you can vote in person
at the annual meeting or you can vote by mail. If you are a street-name
shareholder, you will receive instructions from your bank, broker or other
nominee describing how to vote your shares.
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The enclosed proxy card contains instructions for mail voting. The proxies
identified on the back of the proxy card will vote the shares of which you
are the shareholder of record in accordance with your instructions. If you
submit a proxy card without giving specific voting instructions, the
proxies will vote those shares as recommended by the board of directors.
Q: How does the board recommend I vote on the proposals?
A: The board recommends you vote "FOR" each of the nominees to the board of
directors and "FOR" the amendment to the 1996 Incentive Stock Plan.
Q: Can I revoke my proxy card?
A: Yes. You can revoke your proxy card by:
. Submitting a new proxy card;
. Giving written notice before the meeting to our Secretary stating that
you are revoking your proxy card; or
. Attending the meeting and voting your shares in person.
Q: Who will count the vote?
A: The inspector(s) of election, will count the vote. A representative of our
transfer agent, American Stock Transfer and Trust Company, will act as the
inspector of the election.
Q: What is a "quorum?"
A: A quorum is the number of shares that must be present to hold the meeting.
The quorum requirement for the meeting is one-half of the outstanding
shares as of the record date, present in person or represented by proxy.
If you submit a valid proxy card or attend the meeting, your shares will be
counted to determine whether there is a quorum. Abstentions and broker
non-votes count toward the quorum. "Broker non-votes" occur when nominees
(such as banks and brokers) that hold shares on behalf of beneficial owners
do not receive voting instructions from the beneficial owners by ten days
before the meeting and do not have discretionary voting authority to vote
those shares.
Q: Will broker non-votes or abstentions affect the voting results?
A: Although abstentions and broker non-votes count for quorum purposes, they
do not count as votes "FOR" or "AGAINST" a proposal. As a result,
abstentions and broker non-votes will not affect the voting results on the
election of directors or the amendment to the 1996 Incentive Stock Plan.
Q: What shares are included on my proxy card?
A: Your proxy card represents all shares registered to your account in the
same social security number and address.
Q: What does it mean if I get more than one proxy card?
A: Your shares are probably registered in more than one account. You should
vote each proxy card you receive. We encourage you to consolidate all your
accounts by registering them in the same name, social security number and
address.
Q: How many votes can I cast?
A: On all matters you are entitled to one vote per share.
Q: When are shareholder proposals due for the 2001 Annual Meeting of
Shareholders?
A: If you want to present a proposal from the floor at the 2001 Annual
Meeting, you must give us written notice of your proposal no later than
January 16, 2001. If the date of the 2001 Annual Meeting is more than 30
calendar days before or after the date of our 2000 Annual Meeting, your
written notice will be timely if we receive it by the close of business on
the tenth day following the date that we publicly announce the date of the
2001 Annual Meeting. Your notice should be sent to the Secretary, Midcoast
Energy Resources, Inc., 1100 Louisiana, Suite 2950, Houston, Texas 77002.
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If instead of presenting your proposal at the meeting you want your
proposal to be considered for inclusion in next year's proxy statement, you
must submit the proposal in writing to the Secretary so that it is received
at the above address by December 15, 2000.
Q: Where can I find the voting results of the meeting?
A: The preliminary voting results will be announced at the meeting. The final
results will be published in our quarterly report on Form 10-Q for the
second quarter of fiscal 2000.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ELECTION OF DIRECTORS................................................. 5
Nominees......................................................... 5
Director Compensation and Board Committees....................... 6
Agreements Regarding the Election of Directors................... 7
Vote Required for Election....................................... 7
APPROVAL OF THE 1996 INCENTIVE STOCK PLAN AMENDMENT................... 7
Vote Required for Approval....................................... 8
OTHER INFORMATION..................................................... 8
Principal Shareholders........................................... 8
Executive Officers............................................... 10
Executive Compensation........................................... 10
Executive Employment Agreements.................................. 12
Compensation Committee Interlocks and Insider Participation...... 13
Compensation Committee Report.................................... 13
Performance Graph................................................ 14
Certain Relationships and Related Transactions................... 15
OTHER MATTERS......................................................... 16
Auditors......................................................... 16
Section 16(a) Beneficial Ownership Reporting Compliance.......... 16
Shareholder Proposal Information................................. 16
Miscellaneous Matters............................................ 17
EXHIBIT A............................................................. 18
</TABLE>
A Copy of the Annual Report to Shareholders of Midcoast Energy Resources,
including financial statements, is being mailed with this proxy statement. You
may receive an additional copy of the Annual Report at no charge upon request
directed to: Duane S. Herbst, Secretary, Midcoast Energy Resources, Inc., 1100
Louisiana, Suite 2950, Houston, Texas 77002.
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ELECTION OF DIRECTORS
At the annual meeting, six directors will be elected. Each director is to
hold office until the next annual meeting or until a successor is elected and
qualified. The persons named below have been nominated by the board of
directors. If any nominee should become unavailable for election, your proxy may
be voted for a substitute nominee by the persons named in the proxy or the size
of the board may be reduced accordingly; however, the board is not aware of any
circumstances likely to make any nominee unavailable for election.
NOMINEES
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR
SINCE
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<S> <C> <C> <C>
Dan C. Tutcher................ 51 Chairman of the Board, President, and 1992
Chief Executive Officer
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I. J. Berthelot, II........... 40 Executive Vice President, Chief Operating 1996
Officer and Director
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Ted Collins, Jr. (1).......... 61 Director 1997
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Curtis J. Dufour, III......... 50 Director 1999
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Richard N. Richards (1)(2).... 53 Director 1996
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Bruce Withers (1)(2).......... 73 Director 1997
</TABLE>
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(1) Member, Compensation Committee of the board of directors.
(2) Member, Audit Committee of the board of directors.
For certain information regarding the beneficial ownership of our stock by
each of the Nominees, see "Other Information - Principal Shareholders."
DAN C. TUTCHER has been Chairman of the Board, President and Chief
Executive Officer since our formation in 1992 and served as Treasurer from 1995
to 1996. Since 1989, Mr. Tutcher has also been President and Chief Executive
Officer of Magic Gas Corp., a Texas corporation controlled by Mr. Tutcher. Prior
to its merger into the Company in 1992, Mr. Tutcher served as a Director of
Nugget Oil Corporation, from 1990 to 1992. He also serves on the board of the
Interstate Natural Gas Association of America and the Gas Processors
Association. Mr. Tutcher holds a Bachelor of Business Administration degree from
Washburn University.
I .J. (CHIP) BERTHELOT, II has been a Director since 1996 and serves as
Executive Vice President and Chief Operating Officer. Mr. Berthelot has been
with us since our formation in 1992. Mr. Berthelot joined Midcoast as Chief
Engineer and became Vice President of Operations in 1995, Chief Operating
Officer in 1996 and Executive Vice President in 1997. From 1991 to 1992 he was a
gas contracts representative with Mitchell Energy and Development Co. He is a
Professional Engineer, licensed in Texas and holds a Bachelor of Science degree
in Petroleum and Natural Gas Engineering from Texas A&I University.
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TED COLLINS, JR. has been a Director since 1997. Mr. Collins has served as
President since 1988 for Collins & Ware, Inc., a private corporation active in
oil and gas exploration, production and property acquisition. He served as
President of Enron Oil & Gas Company from 1986 to 1988 and prior to that held
positions as President with HNG/Internorth Exploration Company and HNG Oil
Company as well as Executive Vice President of American Quasar Petroleum
Company. Mr. Collins also serves on the boards of Hanover Compressor Company,
Queen Sand Resources, Inc. and Chaparral Resources, Inc. He graduated from the
University of Oklahoma with a Bachelor of Science degree in Geological
Engineering.
CURTIS J. DUFOUR, III has been a Director since March 1999 and serves as
Chief Executive Officer of Dufour Petroleum, Inc., a wholly-owned subsidiary of
our company. Prior to its merger with and into our company in 1999, Mr. Dufour
served as President of DPI from 1988 until 1997 and as Chief Executive Officer
since 1996. DPI is a private corporation engaged in the natural gas liquids
("NGL") marketing and transportation business. Prior to forming DPI, Mr. Dufour
served as President of Choctaw Fuels, Inc., a company engaged in the marketing
and transportation of NGLs from 1978 until 1986. He graduated from the
University of Southern Mississippi with a Bachelor of Science degree in
Marketing.
RICHARD (DICK) N. RICHARDS has been a Director since 1996. Mr. Richards is
currently Director of New Reusable Systems for The Boeing Company. Prior to
1998, he had been with NASA where he served in several capacities since 1980.
Mr. Richards was an astronaut with NASA until 1995 and flew one mission as pilot
and commanded three other space shuttle missions. He also served as Manager of
Space Shuttle Program Integration and Mission Director of the third Hubble Space
Telescope Space Shuttle servicing mission. He holds a Bachelor of Science degree
in Chemical Engineering from the University of Missouri and a Master of Science
in Aeronautical Systems from the University of West Florida.
BRUCE WITHERS has served as director since 1997. From 1991 to 1996, Mr.
Withers served as Chairman and Chief Executive Officer of Trident NGL, Inc. and
Vice Chairman of Dynegy, Inc., formerly NGC Corporation. Dynegy is an
aggregator, processor, transporter and marketer of energy products and services.
Prior to joining Dynegy, Mr. Withers served as President of the Transmission and
Processing Division of Mitchell Energy for 17 years. Mitchell Energy is engaged
through its subsidiaries in the exploration for and production of oil and gas,
natural gas processing and gas gathering and transmission. He has also served as
President and Chief Operating Officer of Liquid Energy Corp. and Southwestern
Gas Pipeline, two affiliates of Mitchell Energy. Mr. Withers holds a Bachelor of
Science degree in Petroleum and Natural Gas Engineering from Texas A & I
University.
DIRECTOR COMPENSATION AND BOARD COMMITTEES
During the year ended December 31, 1999, the board met 10 times. Each
director attended more than 75% of the board and committee meetings on which he
served. Each non-employee director is currently paid a cash fee of $1,000 at the
end of each calendar quarter of service, $1,000 for each regular and special
meeting attended and $300 for each committee meeting attended, plus any travel
expenses. Under the 1997 Non-Employee Director Stock Option Plan, these cash
fees may be converted into shares of stock at the market price on the last day
of the quarter in which the fees are paid. Employee directors do not receive
additional compensation for service on the board or its committees. Employee
directors are eligible to participate in the 1996 Incentive Stock Plan. See
"Other Information--Compensation Committee Report."
The Non-Employee Director Plan entitles each newly-elected Director who is
neither (i) an employee, nor (ii) a director as a result of an acquisition or
financing transactions to receive options to purchase up to 15,000 shares of
Common Stock on his initial election. Further, such directors are also entitled
to receive an option to purchase 5,000 shares on each date they are reelected.
Mr. Richards and Mr. Withers were each issued options to purchase 6,250 shares
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and 5,000 shares upon their re-election in 1998 and 1999 respectively. The 1998
grants have been adjusted for the five-for-four stock split paid on March 1,
1999 to shareholders of record on February 11, 1999.
AUDIT COMMITTEE. The current members of the Audit Committee are Richard N.
Richards and Bruce Withers. The Audit Committee met two times during 1999. The
Audit Committee is responsible for recommending to the entire board of directors
engagement and discharge of independent auditors of our financial statements,
reviews the professional service provided by the independent auditors, reviews
the independence of independent auditors, reviews with the auditors the plan and
results of the auditing engagement, considers the range of audit and non-audit
fees and reviews the adequacy of our system of internal audit controls. In
addition, the Audit Committee directs and supervises special investigations as
deemed necessary by the Audit Committee.
COMPENSATION COMMITTEE. The current members of the Compensation Committee
are Ted Collins, Jr., Richard N. Richards and Bruce Withers. The Compensation
Committee met two times during 1999. The Compensation Committee administers the
1996 Incentive Stock Plan. In this capacity, the Compensation Committee
recommends all option grants or awards to our officers, executives, employees
and consultants. The Compensation Committee also recommends the establishment
of policies dealing with various compensation, including compensation of
executive officers, and any 401(k), pension and profit sharing plans which may
be created.
AGREEMENTS REGARDING THE ELECTION OF DIRECTORS
In connection with our acquisition of Republic Gas Partners, L.L.C., we
were required to take steps to elect Mr. Collins and another individual to the
Board for a period of two years. Effective October 1999, this agreement
expired.
In connection with the Company's acquisition of Dufour Petroleum, Inc. and
Flare, L.L.C., we were required to take steps to elect Mr. Dufour to the Board
for a period of two years. However, in the event that Mr. Dufour's stock
ownership in Midcoast falls below certain thresholds, we may request
Mr. Dufour's resignation as Director. In March 1999, Mr. Dufour was elected to
the Board. See "Certain Relationships and Related Transactions"
VOTE REQUIRED FOR ELECTION
Provided that a quorum is present at the Annual Meeting, the six Nominees
who receive the greatest number of votes cast for election by the shareholders
will be elected Directors.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL SIX NOMINEES TO OUR
BOARD OF DIRECTORS.
APPROVAL OF THE 1996 INCENTIVE STOCK PLAN AMENDMENT
On May 8, 1997, our shareholders approved the adoption of the 1996
Incentive Stock Plan. On February 24, 2000, the Compensation Committee adopted
an amendment to the Incentive Plan authorizing an increase in the number of
shares available for issuance from 531,250 shares to 1,000,000 shares. This
increase was expressly made subject to the approval of our shareholders.
Currently, the Incentive Plan provides that a maximum of 531,250 shares may
be issued under the plan. As of the Record Date, only 12,386 shares were
available for issuance upon the exercise of options granted under the plan.
Thus, additional shares must be authorized for us to be able to continue to
grant Incentive Awards under the plan. Furthermore, through our acquisition
strategy, we have added a significant number of employees who are eligible to
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receive options under the Incentive Plan; therefore, we believe a substantial
increase in the number of shares authorized to be issued under the plan is
warranted at this time.
The purpose of the plan is to (i) align the personal financial incentive of
our employees and consultants with our long-term growth and the interests of our
shareholders through the ownership and performance of our stock, and
(ii) enhance our ability to attract and retain qualified employees and
consultants who share primary responsibility for our management and growth. The
Compensation Committee believes that the Incentive Plan has fulfilled these
purposes and that the continued availability of equity incentives under the
Incentive Plan will be a significant factor in our ability to attract and retain
key management personnel who share primary responsibility for our management and
growth. The number of participants, including officers, (whether or not
Directors) currently eligible to participate in the Incentive Plan is
approximately 225 employees. Persons who are not in an employment or consulting
relationship with us, including non-employee Directors, are not eligible to
participate in the Incentive Plan.
The Incentive Plan provides that certain amendments may only be made with
the approval of our shareholders. One amendment that requires shareholder
approval is an amendment that increases the maximum number of shares of stock
that may be issued under the Incentive Plan. This summary of the Incentive Plan
Amendment is qualified in its entirety by reference to the full text of the
amendment, a copy of which is attached hereto as EXHIBIT A.
The Board believes that the continued availability of Incentive Awards
under the Incentive Plan is important to our ability to attract and retain
qualified management personnel and Consultants. Therefore, the Board strongly
believes that the adoption of the Incentive Plan Amendment is in the best
interest of our shareholders.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of our shares outstanding
on the Record Date, entitled to vote and represented at the Annual Meeting, in
person or by proxy, is required to approve this amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCENTIVE PLAN
AMENDMENT.
OTHER INFORMATION
PRINCIPAL SHAREHOLDERS
The following table presents certain information based on our records and
filings with the SEC as of March 31, 2000, as to:
. each shareholder known by us to be the beneficial owner of more than
five percent of our outstanding shares of common stock,
. each executive officer and each of the nominated directors, and
. all directors and executive officers as a group.
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<TABLE>
<CAPTION>
AMOUNT AND
NATURE PERCENTAGE OF
OF BENEFICIAL OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNERSHIP (2) OWNED
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<S> <C> <C>
Capital Guardian Trust Company (3).............. 1,822,750 14.6
11100 Santa Monica Blvd.
Los Angeles, CA 90025
State of Wisconsin Investment Board (4)......... 851,337 6.8
121 East Wilson St.
Madison, WI 53702
Fidelity Management & Research Company (5)...... 682,525 5.5
82 Devonshire Street
Boston, MA 02109
Dan C. Tutcher (6)(7)(8)........................ 872,022 7.0
Ted Collins, Jr. (9)............................ 541,097 4.3
Curtis J. Dufour, III (10)...................... 163,719 1.3
I. J. Berthelot, II (6)(7)...................... 69,747 *
Richard A. Robert (6)(7)........................ 55,308 *
Bill Bray (6)(7)................................ 35,693 *
Duane S. Herbst (6)(7).......................... 31,911 *
Bruce Withers (11).............................. 31,875 *
Richard N. Richards (11)(12).................... 21,652 *
All Nominees and Executive (6)(7)(11)........... 1,823,024 14.3
Officers as a group (9 persons)
</TABLE>
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* Denotes less than 1%.
(1) Unless otherwise noted, the address for all persons is 1100 Louisiana,
Suite 2950, Houston, Texas 77002.
(2) Except as otherwise noted, shares beneficially owned by each person as of
the record date were owned of record and each person had sole voting and
investment power with respect to all shares beneficially held.
(3) On February 10, 2000, Capital Guardian Trust Company filed a Schedule 13G,
denoting beneficial ownership of the shares shown above as of December 31,
1999.
(4) According to information provided to us by the State of Wisconsin Investment
Board, as of March 24, 2000, they reported beneficial ownership of the
shares shown above.
(5) According to information provided to us by Fidelity Management & Research
Company, as of March 1, 2000, they reported beneficial ownership of the
shares shown above.
(6) The ownership shown in the table includes shares which may be acquired
within 60 days on the exercise of options granted under the Incentive Plan
by each of the persons and group, as follows: Mr. Tutcher - 24,750 shares;
Mr. Berthelot - 24,750 shares; Mr. Robert - 18,150 shares; Mr. Bray -
11,562; Mr. Herbst - 14,437 shares and the group -93,649.
(7) The ownership shown in the table includes shares held through our 401(k)
Plan by each of the persons and group, as follows: Mr. Tutcher - 5,406
shares; Mr. Berthelot - 3,807 shares; Mr. Robert - 4,340 shares; Mr. Bray -
1,861; Mr. Herbst - 1,988 shares and the group - 17,402; and includes shares
held through our Employee Stock Purchase Plan by each of the persons and
group, as follows: Mr. Berthelot - 194 shares; Mr. Robert - 1,298 shares;
Mr. Herbst -153 shares and the group - 1,645 shares.
(8) Includes 840,455 shares of Common Stock held of record by Magic Gas
Corporation, an affiliate of Mr. Tutcher, 137 shares owned by Mr. Tutcher's
daughter and 1,274 shares held as custodian for minor children.
(9) Includes 401,601 shares of Common Stock and 139,496 shares of Common Stock
which may be acquired within 60 days on the exercise of warrants, both
issued in connection with an acquisition to Cortez Natural Gas, Inc., an
affiliate of Mr. Collins.
(10) All shares were beneficially owned by Mr. Dufour and his wife and such
shares were acquired in connection with the Dufour/Flare Merger. See
"Certain Relationships and Related Transactions."
(11) The ownership shown in the table includes shares which may be acquired
within 60 days on the exercise of options granted under the Director Plan
by each of the persons and group as follows: Mr. Withers - 31,875 shares;
Mr. Richards - 18,125 shares and the group - 50,000 shares.
(12) All shares were beneficially owned by Mr. Richards and his wife.
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EXECUTIVE OFFICERS
We currently have five executive officers: Dan C. Tutcher, President and
Chief Executive Officer; I. J. Berthelot, II, Executive Vice President and Chief
Operating Officer; Richard A. Robert, Chief Financial Officer and Treasurer;
Bill Bray, Vice President of Business Development; and Duane S. Herbst, Vice
President of Corporate Affairs and Secretary (the "Executive Officers"). See
"Election of Directors-Information Regarding the Nominees" for biographical
information concerning Messrs. Tutcher and Berthelot.
RICHARD A. ROBERT (34) is Chief Financial Officer and Treasurer and has
been with us since our formation in 1992. Mr. Robert joined us as Controller and
became Chief Financial Officer and Treasurer in 1996. From 1988 to 1992 he was
an audit associate in the energy audit division of Arthur Andersen and Co.
Mr. Robert is a certified public accountant and is a member of the Texas Society
of Certified Public Accountants. He holds a Bachelor of Business Administration
degree in Accounting from Southwest Texas State University.
BILL BRAY (51) is Vice President of Business Development and has been with
us since 1990. Mr. Bray joined us as Director of Business Development and
became Vice President of Business Development in 1999. He holds a bachelor's
degree in business administration from Fort Hays State University.
DUANE S. HERBST (36) has been Secretary since our formation in 1992 and
Vice President of Corporate Affairs since 1996. From April 1992 until its
merger with us in September 1992 he held the office of President of Nugget.
Since 1989 he has been Vice President of Rainbow Investments Company, a
privately held corporation. He holds a Master of Business Administration degree
from the University of Texas and a Bachelor of Science degree in Finance from
Trinity University.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table reflects all forms of
compensation for services for the years ended December 31, 1999, 1998 and 1997
for our Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer and Vice President of Business Development (collectively the "Named
Executive Officers"). During this time no other executive officer received
compensation, including bonuses which exceeded $100,000.
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<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------- -------------------------------
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(1) OPTIONS/SARs(2) COMPENSATION(3)
- ---------------------- ---- --------- -------- ------------ ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dan C. Tutcher 1999 $162,500 $37,667 --- --- --- $11,471
Chief Executive 1998 $150,000 $30,000 --- --- -- $10,694
Officer 1997 $ 95,000 $ 5,000 --- --- 41,250 $11,662
I. J. Berthelot, II 1999 $155,833 $29,177 --- --- 12,000 $12,094
Executive Vice 1998 $135,000 $30,000 $22,168 $37,026 --- $11,961
President and COO 1997 $ 86,246 $ 7,500 $36,235 $49,840 41,250 $ 4,190
Richard A. Robert 1999 $137,500 $36,884 --- --- 8,000 $12,431
Chief Financial 1998 $125,000 $30,000 $22,168 $37,026 --- $11,963
Officer 1997 $ 77,162 $12,500 $16,896 $49,840 30,250 $ 8,809
Bill Bray 1999 $106,250 $ 3,131 --- --- --- $ 8,663
Vice President - 1998 $ 86,333 $11,167 $11,675 $22,216 6,250 $ 5,198
Business Dev. 1997 $ 64,727 $ 2,500 $10,799 $29,904 17,188 $ 4,134
</TABLE>
- ------------
(1) Includes amounts paid as reimbursement for taxes incurred on appreciation
of shares of stock issued as consideration for executing employment
agreements. See "Executive Employment Agreements."
(2) All numbers in this column reflect the 10% stock dividend paid on March 2,
1998 to shareholders of record on February 13, 1998 and the five-for-four
stock split in March 1999.
(3) Represents our matching contributions to the Midcoast Energy Resources,
Inc. Profit Sharing Plan and Trust (401(k) Plan) and certain personal
benefits, including car allowances.
EMPLOYEE OPTIONS. Under the Incentive Plan, options to purchase shares of
stock may be granted to executive officers and other employees. As of December
31, 1999, 464,689 shares were reserved for outstanding options and 63,511 shares
were reserved and remained available for future option grants pursuant to the
Incentive Plan.
OPTION GRANTS TABLE. The following table provides information concerning
stock options granted to the Named Executive Officers during the year ended
December 31, 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL RATES
OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM (1)
- --------------------------------------------------------------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/ SARs
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARs EMPLOYEES IN PRICE PER EXPIRATION
NAME GRANTED(2) FISCAL YEAR SHARE DATE 5% ($) 10% ($)
- ---------------------- ---------- ------------- --------- ---------- -------- --------
I. J. Berthelot, II (3)........ 12,000 18.6% $16.5625 8/05/09 $124,993 $316,756
Richard A. Robert (3).......... 8,000 12.4% $16.5625 8/05/09 $ 83,329 $211,171
</TABLE>
- -------------------------------
11
<PAGE>
(1) Under the terms of the Incentive Plan, the Compensation Committee retains
discretion, subject to plan limits, to modify the terms of outstanding
options and to reprice the options. Because the exercise price of all
options is at or above the market price per share of Common Stock at the
date of grant, the potential realizable value of the options assuming no
stock price appreciation is zero.
(2) Each option granted under the Incentive Plan becomes immediately
exercisable on the occurrence of a Change in Control (as defined in the
Incentive Plan). No stock appreciation rights were granted during 1999.
(3) These options vest 20% per year.
OPTION EXERCISES AND YEAR-END OPTION VALUES. The following table sets
forth information with respect to options exercised by the Named Executive
Officers during 1999, and with respect to unexercised options which have been
granted to the Named Executive Officers and held by them at December 31, 1999.
No stock appreciation rights are held by any Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS EXERCISED OPTIONS/SARs AT OPTIONS/SARs AT
DURING 1999 FISCAL YEAR END (1) FISCAL YEAR END (2)
---------------------- --------------------------- ----------------------------
SHARES VALUE
NAME ACQUIRED # REALIZED $ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ---------- ---------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dan C. Tutcher............ -- -- 16,500 24,750 $137,775 $206,663
I. J. Berthelot, II....... -- -- 16,500 36,750 $150,381 $227,822
Richard A. Robert......... -- -- 12,100 26,150 $110,279 $166,919
Bill Bray................. -- -- 8,125 15,313 $ 63,503 $ 97,366
</TABLE>
- ----------
(1) In February 2000, the following additional options of each Named Executive
Officer's options vested and became exercisable: Mr. Tutcher - 8,250;
Mr. Berthelot - 8,250; Mr. Robert - 6,050; Mr. Bray - 3,348.
(2) Calculated by multiplying the number of shares underlying outstanding
in-the-money options by the difference between the last sales price of our
stock on December 31, 1999 ($16.75 per share) and the exercise price, which
ranges between $7.636 and $16.80 per share. Options are in-the-money if the
fair market value of the underlying stock exceeds the exercising price of
the option.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Named Executive Officers have entered into employment contracts, as
amended, which provide for employment terms of varying lengths, the longest of
which expires in April 2001 and which contain certain minimum annual base
salaries, with actual salaries determined by the Compensation Committee. Two of
the Named Executive Officers, Messrs. Berthelot and Robert, were awarded 79,737
and 12,267 shares of stock, respectively, as consideration for their entry into
such agreements. These agreements may be terminated by mutual consent, at our
option for cause, or by death or disability. In the event termination is due to
death, disability or certain changes in our ownership, the full amount of
compensation remaining to be paid during the term of the agreement will be paid
to the employee or his estate, after discounting at 12% to reflect the current
value of unpaid amounts. See "--Compensation Committee Report."
In August 1997, we entered into Executive Severance Agreements with our
executive officers, excluding Mr. Bray, under which they are entitled to certain
severance benefits in the event of a change in control of Midcoast,
12
<PAGE>
and in conjunction with a termination of the officer. These severance benefits
include payment of an amount equal to three times the officer's annual base
salary and bonus and the continuation for 36 months of any life and healthcare
related benefits under which the officer and/or the officer's family is covered
as of the effective date of the change in control. The terms are of these
severance agreements are 18 months, but they are automatically extended an
additional year unless the Board delivers written notice of termination three
months prior to the end of the term.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee has ever served as one of our
executive officers. We issued options to Messrs. Richards and Withers upon
their reelection and appointment to the board, respectively. See "Director
Compensation and Board Committees." We also issued securities to Cortez Natural
Gas, Inc. which is controlled by Mr. Collins, and granted certain registration
rights regarding such shares, in connection with the acquisition of Republic
Gas Partners, L.L.C. Cortez received the following consideration as part of
this acquisition: $2,678,629 in cash, 401,601 shares of stock and warrants for
139,496 shares of stock. In addition, we agreed to grant Cortez and the other
Republic owners certain demand and piggyback registration rights regarding the
shares and warrants issued them.
COMPENSATION COMMITTEE REPORT
The compensation committee of the board has furnished the following report
on executive compensation for fiscal 1999:
Under the supervision of the board, we seek to relate a significant portion
of potential total executive compensation to our financial performance. In
general, executive financial rewards may be segregated into the following
significant components: base compensation, bonus and stock-based benefits.
We intend the base compensation for our executive officers to afford a
reasonable degree of financial security and flexibility to those individuals who
were regarded by the Compensation Committee as having acceptably discharged the
levels and types of responsibilities implicit in the various executive
positions. Each named executive officer has executed an employment contract
with the Company. Base compensation for 1999, as adjusted, if applicable, for
mid-year escalations, for each named executive officer was as follows:
Mr. Tutcher $165,000, Mr. Berthelot $160,000, Mr. Robert $140,000 and Mr. Bray
$106,250. In the case of Mr. Herbst, base compensation of $65,000 for fiscal
1999 was set by the Committee. Base pay reflected in the employment contracts
held by those certain executive officers was set based on arms-length
negotiations of each officer's employment contract. In negotiating the base pay
for the executive officers, consideration was given to the compensation plans of
executives in other pipeline companies. The committee believes such base pay is
reasonable in light of the average compensation for executive officers of our
competitors. In addition, the committee considered the salary history, past
performance, credentials, age and experience of each executive officer, as well
as his perceived future utility to us.
Annual bonuses are intended to reflect a policy of requiring a minimum
level of financial performance before any bonuses are earned by the executive
officers, with bonuses for achieving higher levels of performance directly tied
to the level achieved. The following bonuses were awarded and paid in 1999 to
executive officers for their performance in 1999: Mr. Tutcher $37,667;
Mr. Berthelot $29,177; Mr. Robert $36,884, Mr. Bray $3,131; and Mr. Herbst
$13,702.
13
<PAGE>
The board is of the view that the periodic grant of stock options to the
executive officers is calculated to align the executive's economic interests
with those of shareholders and to provide a direct and continuing focus upon the
goal of increasing shareholder value. We granted options covering an aggregate
of 25,000 shares of stock to executive officers during 1999 at 100% of the
market price on the date of grant. These options were issued as follows: Mr.
Berthelot - 12,000; Mr. Robert - 8,000; Mr. Herbst - 5,000. The options vest
over a five-year period with a ten-year term. The Compensation Committee
presently anticipates that such grants in the future will be considered only as
appropriate.
The committee intends, with any necessary concurrence of the Board, to
continue to consider alternate forms of stock or other incentive-based
compensation with a view to affording the maximum possible long-term
performance-based benefits to senior executives, at the least possible cost, and
with the greatest attainable economic efficiency to Midcoast. Such benefits
will be designed, as nearly as practicable, to align directly the economic
interest of our executive officers with those of our shareholders.
COMPOSITION OF THE COMMITTEE. No committee member is a member of
management. Collectively, the committee members owned, controlled or
represented an aggregate of 594,624 shares (including shares that may be
acquired pursuant to outstanding stock options or warrants within 60 days), or
approximately 4.8% of the Common Stock outstanding and, accordingly, also
maintain a substantial interest in the Company's performance.
The Compensation Committee
Ted Collins, Jr., Richard N. Richards and Bruce Withers
PERFORMANCE GRAPH
The following performance graph, prepared by Standard & Poor's Compustat
Group, compares our stock's performance to the S&P SmallCap 600 Index and to an
index of peer companies. The graph covers the period from August 9, 1996 (the
date on which the our stock was registered under Section 12(g) of the Securities
Exchange Act of 1934) to December 31, 1999. The graph assumes that the value of
the investment in our stock and each index was $100 at August 9, 1996 and that
all dividends were reinvested. The Peer Group is weighted by market
capitalization. Past financial performance should not be considered to be a
reliable indicator of future performance, and investors should not use
historical trends to anticipate results or trends in future periods.
[graph appears here]
14
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
AUGUST 9, 1996 1996 1997 1998 1999
-------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Midcoast Energy Resources, Inc.[Legend] $100 $ 95.07 $201.39 $221.66 $221.83
S&P SmallCap 600 Index [Legend] $100 $112.52 $141.31 $139.46 $156.76
Peer Group [Legend] (1) $100 $108.84 $142.94 $149.15 $147.14
</TABLE>
- -------------------
(1) Consists of Atmos Energy Corp., Cascade Natural Gas, Connecticut Energy,
Energen Corp., New Jersey Resources, Northwest Natural Gas, Pennsylvania
Enterprises, Piedmont Natural Gas, Public Service of North Carolina,
Southwest Gas, Southwestern Energy and WICOR, Inc. Such companies comprise
the Natural Gas Group of the S&P Small Cap 600 Index.
The foregoing price performance comparisons 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, ("Securities Act") or under the Securities Exchange Act of 1934, as
amended, except to the extent that the Company specifically incorporates this
graph by reference, and shall not otherwise be deemed filed under such acts.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February 1999, we completed the acquisition of DPI and Flare.
Mr. Dufour was the principal owner of DPI/Flare, along with several other
persons. As a result of the acquisition, Mr. Dufour, received $2,985,250 in cash
and 163,719 shares of stock. In addition, we agreed to elect Mr. Dufour to the
Board and to grant Mr. Dufour certain piggyback registration rights as to the
shares of stock he received as consideration in the merger. Under the terms of
the agreement and plan of merger, all of the DPI/Flare partners received a total
of $3,151,642 cash and 163,719 shares of stock. We also repaid approximately
$5.5 million in DPI/Flare indebtedness and agreed to pay up to $2.5 million in
cash and stock based on the future performance of DPI and Flare. The
consideration we paid was based on arms length negotiations among the parties.
In addition, Mr. Dufour received compensation from us of $91,933 in 1999.
This included salary of $89,423 and matching contributions to our 401(k) plan of
$2,510.
In October 1997, we acquired Republic Gas Corporation by merger. In
connection with this merger, Cortez Natural Gas Corp., an affiliate of
Mr. Collins that owned 90% of Republic, received the following consideration:
$2,678,629 in cash, 401,601 shares of stock and warrants for 139,496 shares of
stock. In addition, we agreed to grant Cortez and the other Republic owners
certain demand and piggyback registration rights regarding the shares and
warrants issued them. The consideration we paid was based on arms length
negotiations among the parties.
Stevens G. Herbst, the father of Duane S. Herbst, received total
compensation from us of $117,324 in 1999. This included salary and bonus of
$88,067, matching contributions to our 401(k) plan of $5,257 and payments under
a non-compete agreement of $24,000. In addition, a corporation owned by
Mr. Herbst received $4,554 under a net revenue interest agreement.
15
<PAGE>
OTHER MATTERS
AUDITORS
On October 11, 1999, we engaged PricewaterhouseCoopers LLP as independent
accountant to audit our financial statements for the year ended December 31,
1999. In connection with the hiring of PricewaterhouseCoopers LLP, on October
11, 1999, we and Hein + Associates LLP, our prior principal independent
accountant, mutually agreed that Hein + Associates LLP would be replaced by
PricewaterhouseCoopers LLP as our principal independent accountant. The decision
to replace Hein + Associates LLP and engage PricewaterhouseCoopers LLP was
approved by our board of directors. We do not anticipate that representatives
of PricewaterhouseCoopers LLP will be present at the annual meeting.
Hein + Associates LLP served as our independent accountant from March 17,
1994 until we replaced them on October 11, 1999. We and Hein have not, in
connection with the audit of our financial statements for each of the prior two
years ended December 31, 1998 and December 31, 1997, or for any subsequent
interim period prior to and including October 11, 1999, had any disagreement on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement, if not resolved
to Hein's satisfaction, would have caused Hein to make reference to the subject
matter of the disagreement in connection with its reports.
The reports of Hein on our financial statements for the past two fiscal
years did not contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
We had no relationship with PricewaterhouseCoopers LLP required to be reported
according to Regulation S-K item 304(a)(2) during the two fiscal years ended
December 31, 1998 and December 31, 1997 or for any subsequent interim period
prior to and including October 11, 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers and
Directors and persons who own more than 10% of any registered class of our
equity securities, to file reports of ownership and changes in ownership with
the SEC as well as to furnish us with a copy of each such report. Additionally,
SEC regulations require us to identify in our Proxy Statement any individual for
whom one of the above referenced reports was not filed on a timely basis during
the most recent fiscal year or prior fiscal years.
To our knowledge, based solely on review of the copies of such reports
furnished to us and written representations that no other reports were required,
during and with respect to the fiscal year ended December 31, 1999, all
applicable Section 16 (a) filing requirements were complied with, except that
Dan Tutcher was late in filing a Form 4 pertaining to the purchase of 1,000
shares of stock.
SHAREHOLDER PROPOSAL INFORMATION
If you want to present a proposal from the floor at the 2001 Annual
Meeting, you must give us written notice of your proposal no later than January
16, 2001. If the date of the 2001 Annual Meeting is more than 30 calendar days
before or after the date of our 2000 Annual Meeting, your written notice will be
timely if we receive it by the close of business on the tenth day following the
date that we publicly announce the date of the 2001 Annual Meeting. Your notice
should be sent to our Secretary at 1100 Louisiana, Suite 2950, Houston, Texas
77002.
16
<PAGE>
If instead of presenting your proposal at the meeting you want your
proposal to be considered for inclusion in next year's proxy statement, you must
submit the proposal in writing to the Secretary so that it is received at the
above address by December 15, 2000.
MISCELLANEOUS MATTERS
We have included a copy of our annual report on Form 10-K, covering the
fiscal year ended December 31, 1999, which has been filed with the SEC. We will
bear the cost of soliciting proxies in the accompanying form, including the
reimbursement of banks, brokers and other custodians, nominees, and fiduciaries
for expenses in forwarding solicitation material to the beneficial owners of our
stock. In addition to solicitations by mail, a number of our regular employees
may, if necessary to assure the presence of a quorum, solicit proxies in person
or by telephone.
By order of the board of directors,
/s/ Duane S. Herbst
----------------------------------------
Duane S. Herbst
Secretary
Houston, Texas
April 17, 2000
17
<PAGE>
EXHIBIT A
AMENDMENT TO THE
1996 INCENTIVE STOCK PLAN
The 1996 Incentive Stock Plan of Midcoast Energy Resources, Inc. is hereby
amended as follows, effective February 24, 2000, subject to shareholder
approval:
1. The second paragraph of Section 3 is amended to read as follows in its
entirety:
The Committee may grant Options, shares of Restricted Stock, Performance
Awards, shares of Phantom Stock and Stock Bonuses under the Plan with
respect to a number of shares of Common Stock that in the aggregate at any
time does not exceed 1,000,000 shares of Common Stock, subject to
adjustment pursuant to Section 12 hereof. The grant of a Cash Bonus shall
not reduce the number of shares of Common Stock with respect to which
Options, shares of Restricted Stock, Performance Awards, shares of Phantom
Stock or Stock Bonuses may be granted pursuant to the Plan. Notwithstanding
any provision in the Plan to the contrary, the maximum number of shares of
Common Stock that may be subject to Incentive Awards granted to any one
individual during any calendar year shall be 50,000 shares of Common Stock,
subject to adjustment under Section 12 hereof. The limitation set forth in
the preceding sentence shall be applied in a manner which will permit
compensation generated in connection with the exercise of Options and the
payment of Performance Awards to constitute "qualified performance-based
compensation" for purposes of Section 162(m) of the Code, including,
without limitation, counting against such maximum number of shares, to the
extent required under Section 162(m) of the Code and applicable
interpretive authority thereunder, any shares subject to Options that are
canceled or repriced.
18
<PAGE>
MIDCOAST ENERGY RESOURCES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL STOCKHOLDERS' MEETING
TO BE HELD ON MAY 16, 2000
The undersigned stockholder of Midcoast Energy Resources, Inc. (the
"Company") hereby appoints Dan C. Tutcher and Duane S. Herbst or either of them,
attorneys and proxies of the undersigned, each with full power of substitution,
to vote on behalf of the undersigned at the Annual Meeting of Stockholders to be
held in the Company's Boardroom located at 1100 Louisiana, 32nd Floor, Houston,
Texas at 10:00 a.m., local time, and at any adjournments of said meeting, all of
the shares of common stock in the name of the undersigned or which the
undersigned may be entitled to vote.
(Please sign on Reverse Side) SEE REVERSE
SIDE
<PAGE>
* Please Detach and Mail in the Envelope Provided *
[X] Please mark your
votes as in this
example using
dark ink only.
Withhold
For all Authority
nominees to vote
(except as all nominees
indicated listed at
below) right
1. Election of [ ] [ ] NOMINEES: Dan C. Tutcher
Directors I.J. Berthelot,II
Ted Collins, Jr.
Instructions: To withhold authority to vote for Curtis J. Dufour,III
any individual nominee, write that nominee's Richard N. Richards
name on the line provided below: Bruce Withers
- -------------------------------------------------
FOR AGAINST ABSTAIN
2. To approve the amendment to the 1996 Incentive [ ] [ ] [ ]
Stock Plan.
3. In their discretion, upon such other matters as may properly come before the
Annual Meeting, hereby revoking any proxy or proxies heretofore given by the
undersigned.
The board of directors recommends a vote FOR the nominees and proposals above
and if no contrary specification is made, the shares will be voted FOR the
election of the nominees named herein and FOR the approval of Proposal 2.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Stockholders, the Proxy Statement and the Company's annual report on
Form 10-K furnished herewith.
PLEASE SIGN AND RETURN IN THE ENVELOPE ENCLOSED
Stockholder's Signature ____________________________________________________
Stockholder's Signature ____________________________________________________
Dated ______________________, 2000
Note: Signatures should agree with the name printed hereon. If stock is held in
the name of more than one person. EACH joint owner should sign. Executors,
administrators, trustees, guardians, and attorneys should indicate the capacity
in which they sign. Attorneys should submit powers of attorney.
