<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
HYCOR BIOMEDICAL, 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] Fee not required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
HYCOR BIOMEDICAL INC.
[HYCOR LOGO] 18800 VON KARMAN AVENUE
IRVINE, CA 92612-1517
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Hycor
Biomedical Inc. (the "Company") will be held at its manufacturing facility
located at 7272 Chapman Avenue, Garden Grove, California 92641 on June 10, 1998
at 9:00 a.m., for the following purposes:
1. To approve an amendment to the Company's Nonqualified Stock
Option Plan for Non-Employee Directors to increase the number of
shares authorized under the Plan from 150,000 shares to 325,000
shares of common stock;
2. To elect the 7 nominees named in the accompanying Proxy Statement
as directors to serve for the ensuing year and until their
successors are elected and qualified; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 13, 1998
will be entitled to notice of and to vote at the meeting. A list of stockholders
will be available for inspection at the meeting and, for ten days prior thereto,
at Hycor's corporate offices at the address set forth above.
Your attention is directed to the proxy statement submitted with this
notice.
By order of the Board of Directors.
Reginald P. Jones
Secretary
Irvine, California
April 21, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHICH
DOES NOT REQUIRE ANY POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
HYCOR BIOMEDICAL INC.
18800 VON KARMAN AVENUE
IRVINE, CALIFORNIA 92612-1517
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1998
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Hycor Biomedical Inc. (the "Company") to
be voted at the Annual Meeting of Stockholders of the Company to be held on June
10, 1998, at the Company's manufacturing facility located at 7272 Chapman
Avenue, Garden Grove, California 92641 at 9:00 a.m. and at any adjournments
thereof (the "Annual Meeting"), for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders and described herein. The approximate
date on which this Proxy Statement and the enclosed form of proxy are first
being sent or given to stockholders is April 21, 1998.
Voting Rights and Solicitation of Proxies
- -----------------------------------------
The Board of Directors of the Company has fixed the close of business
on April 13, 1998, as the record date for the determination of stockholders
entitled to receive notice of, and to vote at, the Annual Meeting (the "Record
Date"). At the Record Date, the Company had outstanding 7,200,003 shares of
Common Stock, par value $.01 per share (the "Common Stock"). Each share of
Common Stock entitles the record holder on the Record Date to one vote on all
matters. With respect to the election of directors only, stockholders may vote
in favor of all nominees or withhold their votes as to all nominees or withhold
their votes as to specific nominees.
Any stockholder giving a proxy has the power to revoke it at any time
before it is voted. Revocation of a proxy is effective upon receipt by the
Secretary of the Company of either (i) an instrument revoking it or (ii) a duly
executed proxy bearing a later date. A stockholder who is present at the Annual
Meeting may revoke his proxy and vote in person if he so desires.
All shares represented by a properly executed proxy received in time
for the Annual Meeting and not revoked will be voted as directed. If no
directions are specified, the shares represented by such proxy will be voted (i)
"FOR" approval of the amendment to the Company's Nonqualified Stock Option Plan
for Non-Employee Directors to increase the number of shares of Common Stock
authorized under the Plan from 150,000 shares to 325,000 shares; (ii) "FOR" the
election of the Board of Directors' seven nominees for director and (iii) at the
discretion of the persons named as proxies on all other matters which may
properly come before the Annual Meeting.
A majority of the outstanding shares of Common Stock entitled to vote
must be represented in person or by proxy at the Annual Meeting in order to
constitute a quorum for the transaction of business. Abstentions and non-votes
will be counted for purposes of determining the existence of a quorum at the
Annual Meeting. The candidates for election as directors will be elected by the
affirmative vote of a plurality of the shares of Common Stock present in person
or by proxy, entitled to vote and actually voting at the Annual Meeting. The
affirmative vote of a majority of the shares of Common Stock present in person
or by proxy, entitled to vote and actually voting on each of the proposals
(other than the election of directors) is required for the adoption or
ratification for each proposal. Abstentions will be counted as votes against any
of the proposals as to which a stockholder abstains, but non-votes will have no
effect on the voting with respect to any proposal as to which there is a
non-vote. A non-vote
1
<PAGE> 4
may occur when a nominee holding shares of Common Stock for a beneficial owner
does not vote on a proposal because such nominee does not have discretionary
voting power and has not received instructions from the beneficial owner.
APPROVAL OF THE AMENDMENT OF THE NONQUALIFIED
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(PROPOSAL 1)
INTRODUCTION
- ------------
The Board of Directors has adopted and the stockholders have approved,
effective on June 4, 1992, the Company's Nonqualified Stock Option Plan for
Non-Employee Directors (the "Non-Employee Directors Plan"), a non-discretionary,
formula stock option plan in which only non-employee directors are eligible to
participate. Currently, the Non-Employee Directors Plan authorizes 150,000
shares of Common Stock to be issued upon the exercise of options granted under
such Plan. As of December 31, 1997, options to purchase 140,000 shares have been
granted leaving only 10,000 shares available for future grants. The Board of
Directors considers it prudent to increase the number of shares authorized for
issuance under the Non-Employee Directors Plan from 150,000 to 325,000. The
Non-Employee Directors Plan is designed to maintain the Company's ability to
attract and retain the services of experienced and highly qualified outside
directors and to increase their proprietary interest in the Company's continued
success.
Currently, there are five non-employee directors (each of whom is also
a nominee for director) of the Company: Samuel D. Anderson, David S. Gordon,
M.D., James R. Phelps, Esq., Richard E. Schmidt and David A. Thompson. No other
current director, nominee for director or associate of any such director is
currently eligible to participate in the Non-Employee Directors Plan. The
following table sets forth the number of options to be granted under the
Non-Employee Directors Plan to (i) each of the executive officers named in the
Summary Compensation Table herein; (ii) all current executive officers as a
group; (iii) all current directors who are not executive officers as a group;
and (iv) all current employees who are not executive officers as a group.
2
<PAGE> 5
AMENDED PLAN BENEFITS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
FOR OPTION TERM (1)
NAME AND POSITION NUMBER OF SHARES 5% 10%
- ----------------- ---------------- ----------------------
<S> <C> <C> <C>
Richard D. Hamill, Chairman -0- -0- -0-
President & CEO
Reginald P. Jones -0- -0- -0-
Senior Vice President & CFO
Nelson F. Thune -0- -0- -0-
Senior Vice President
Operations & Planning
Mary Jo Deal -0- -0- -0-
Vice President, Marketing
Thomas M. Li -0- -0- -0-
Vice President, R&D
Executive Officer Group -0- -0- -0-
Non-Executive Director Group 30,000/year $33,000 $83,700
Non-Executive Officer Employee Group -0- -0- -0-
</TABLE>
- -----------------------------------
(1) Potential realizable value is based on an assumption that the stock
price of the Common Stock appreciates at the annual rate shown
(compounded annually) from the date of grant until the end of the
ten-year option term. Such amounts are based on the assumptions that (i)
such options are granted at an exercise price of $1.75, the fair market
value of a share of Common Stock on April 9, 1998, and (ii) the named
persons hold the options for their full term. These numbers are
calculated based on the requirements promulgated by the Securities and
Exchange Commission and do not reflect the Company's estimate of future
stock price growth.
The Board intends to cause the increased shares of Common Stock to be
issued under the Non-Employee Directors Plan to be registered on a Form S-8
Registration Statement to be filed with the Securities and Exchange Commission
at the Company's expense.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR APPROVAL OF THE AMENDMENT TO THE NON-EMPLOYEE DIRECTORS PLAN. THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK
PRESENT IN PERSON, OR REPRESENTED BY PROXY, AND ENTITLED TO VOTE AT THE ANNUAL
MEETING, ASSUMING THEY CONSTITUTE A MAJORITY OF A QUORUM, IS REQUIRED FOR
APPROVAL OF THIS PROPOSAL.
The following is a description of the material factors of the
Non-Employee Directors Plan.
Shares Available Under the Plan
- -------------------------------
Options may be granted covering a maximum of one hundred fifty thousand
shares (150,000) of Common Stock. This amendment will raise the maximum by
175,000 to 325,000 shares. Shares covered by options which terminate without
exercise are available for reissuance. The Non-Employee Directors Plan provides
for appropriate adjustment in the number of shares for which options may be
granted and which are subject to options previously granted in the event of a
stock dividend, recapitalization, reorganization, merger, consolidation,
split-up, combination, exchange of shares or any similar change affecting the
stock.
3
<PAGE> 6
Eligibility
- -----------
All non-employee directors of the Company shall be eligible to
participate in the Non-Employee Directors Plan. Commencing with the Company's
Annual Meeting of Stockholders held on June 4, 1992, each person who is elected
to serve as a non-employee director of the Company at an annual meeting of
stockholders is eligible to receive an option to purchase 6,000 shares of Common
Stock on the date of such annual meeting. With respect to each person who first
becomes a non-employee director of the Company after the Company's Annual
Meeting of Stockholders held June 4, 1992, such non-employee director will
receive an additional one-time grant of an option to purchase 4,000 shares of
Common Stock as of the date such person first becomes a non-employee director.
As of April 9, five non-employee directors were eligible to participate in the
Non-Employee Directors Plan.
Option Price
- ------------
The price per share at which an option may be exercised shall be equal
to the fair market value per share on the date the option is granted. For this
purpose, fair market value shall mean: (i) if the Common Stock is traded on an
exchange, the price at which a share trades at the close of business on the date
of valuation; (ii) if the Common Stock is traded over the counter on the NASDAQ
System, the mean between the bid and asked prices of a share on that system at
the close of business on the date of valuation, or, if the Common Stock is
designated a National Market System Security, the price at which a share trades
at the close of business on the date of valuation; and (iii) if neither (i) nor
(ii) applies, the fair market value as determined by the Committee. As of April
9, the fair market value of a share of Common Stock was $1.75.
Consideration for Shares Purchased
- ----------------------------------
Common Stock purchased upon the exercise of options shall be paid for
by the optionee (i) in cash or by check acceptable to the Company; (ii) with
previously acquired shares of Common Stock having a fair market value equal to
the option price; or (iii) by a combination of such methods of payment.
Terms of Exercise and Expiration of Options
- -------------------------------------------
The options shall become exercisable in three equal annual installments
commencing one year after the date of grant. Each option shall expire on the
tenth anniversary of the date of grant. Generally, an option will expire not
later than (i) three months after the date on which the optionee ceases to be a
non-employee director of the Company unless he ceases to be such director by
reason of death or disability, in which case, the option may be exercised for a
period of one year following such death or disability, or unless he becomes an
employee-director subsequent to the date the option was granted, or (ii) three
months after the date of a qualified domestic relations order, as defined by the
Code or Title I of the Employment Retirement Security Act ("ERISA"), or the
rules thereunder, requiring the transfer of all or a portion of the Option to
the spouse of the Optionee (the "Qualified Domestic Relations Order").
Certain Corporate Transactions
- ------------------------------
The Committee (as defined below) may make or provide for such
adjustments in the option price and in the number or kind of shares of Common
Stock or other securities covered by outstanding options as the Committee in its
sole discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of optionees that would otherwise
result from (a) any stock dividend, stock split, combination of shares,
4
<PAGE> 7
recapitalization or other change in the capital structure of the Company, or (b)
any merger, consolidation, reorganization, separation, partial or complete
liquidation, issuance of rights or warrants to purchase stock, or (c) any other
corporate transaction or event having an effect similar to any of the foregoing.
Notwithstanding anything to the contrary, in the event of a merger or
consolidation in which the Company is not the surviving corporation and the
agreement of merger or consolidation provides for the assumption of options
granted, and the Company's obligations, under the Plan, the shares of Common
Stock or securities of the successor corporation may be issued under the Plan in
lieu of shares of Common Stock, subject to all the adjustments which the
Committee may determine are equitably required and such substitution of
securities shall not require the consent of any person who is granted options
pursuant to the Plan. The Committee may also make or provide for such
adjustments in the number or kind of shares of Common Stock or other securities
(including, but not limited to, shares of a successor referenced above) which
may be sold under the Plan, and in the number of shares granted to newly elected
Directors as such Committee in its sole discretion, exercised in good faith, may
determine is appropriate to reflect any transaction or event described in the
two preceding sentences.
In the event that the Company enters into a merger (other than a merger
in which the Company is the surviving corporation and under the terms of which
the Common Stock is unchanged) consolidation, sale or transfer of substantially
all of its assets, or liquidation during the term of an option, the option shall
become exercisable with respect to the full number of shares subject thereto
during the period of 30 days prior to the closing date of such transaction;
provided, however, the exercise of any portion of the option that would
otherwise not be exercisable at the closing date of such transaction shall be
contingent on the closing of the transaction.
Nontransferability of Options
- -----------------------------
Options are not transferable by the optionee other than (i) by will or
the laws of descent and distribution or (ii) pursuant to a Qualified Domestic
Relations Order.
Administration and Amendments
- -----------------------------
The Non-Employee Directors Plan is administered by a Committee of
members of the Board of Directors (the "Committee"). The Committee has authority
to interpret the Plan, to define terms used in the Plan to the extent not
otherwise defined therein, and to prescribe, amend and rescind rules for its
administration. Action by the Committee is taken by vote or written consent.
The Board of Directors may at any time amend the Non-Employee Directors
Plan; provided, however, (i) no amendment may (x) increase the aggregate number
of shares that may be issued and sold under the Plan, (y) change the class of
persons eligible to receive options under the Plan, or (z) cause Rule 16b-3 to
cease to be applicable to the Plan, without stockholder approval, and (ii) the
provisions of the Plan relating to (x) the number of shares of Common Stock for
which an option may be granted, (y) the option price and (z) the timing of the
grant and vesting of the option shall not be amended more than once every six
months, except for amendments required to comport with changes in the Code,
ERISA, or the rules promulgated thereunder.
Federal Income Tax Aspects
- --------------------------
The following is a brief summary of certain of the Federal income tax
consequences of certain transactions under the Plan based on Federal income tax
laws in effect on January 1, 1998. This summary is not intended to be exhaustive
5
<PAGE> 8
and does not describe state or local tax consequences.
In general, (i) no income will be recognized by an optionee at the time
a nonqualified stock option is granted; (ii) at exercise, ordinary income will
be recognized by the optionee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise; and (iii) at sale, appreciation (or
depreciation) after the date of exercise will be treated as either short-term or
long-term capital gain (or loss) depending on how long the shares have been
held.
In limited circumstances where the sale of stock received as a result
of a grant or award could subject an officer or director to suit under Section
16(b) of the Exchange Act, the tax consequences to the officer or director may
differ from the tax consequences described above. In these circumstances, unless
a special election has been made, the principal difference usually will be to
postpone valuation and taxation of the stock received so long as the sale of the
stock received could subject the officer or director to suit under Section 16(b)
of the Exchange Act, but no longer than six months.
To the extent that a participant recognizes ordinary income in the
circumstances described above, the participant's employer will be entitled to a
corresponding deduction, provided, among other things, that such income meets
the test of reasonableness, is an ordinary and necessary business expense, and
is not an "excess parachute payment" and that any applicable withholding
obligations are satisfied.
ELECTION OF DIRECTORS
(Proposal 2)
The Board of Directors has set at seven (7) the number of directors
constituting the Board of Directors for the ensuing year, and has nominated the
seven (7) individuals named in the table below to serve as members of the Board
of Directors until the next annual meeting and until their successors are
elected and qualified or until their earlier resignation or removal. All of the
nominees have consented to being named herein and have indicated their intention
to serve if elected. If at the time of the Annual Meeting of Stockholders any of
such nominees should be unable to serve, the persons named in the Proxy will
vote for the election of such person or persons as may be designated by the
present Board of Directors; alternatively, the Board of Directors may reduce the
number of authorized directors. The Board of Directors has no reason to believe
that any substitute nominee or nominees will be required. A plurality of the
votes of the shares present in person or represented by proxy at the Annual
Meeting, entitled to vote and actually voting, is required to elect each of the
nominees.
6
<PAGE> 9
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR ALL SEVEN NOMINEES.
<TABLE>
<CAPTION>
Year
First Principal Occupation and Other
Name Elected Information Concerning Nominee
- ---- ------- ------------------------------
<S> <C> <C>
Richard D. Hamill 1983 Chairman of the Board since September 1990,
Age 59 Chief Executive Officer since February
1985, President since August 1983, Hycor
Biomedical Inc.
Samuel D. Anderson 1987 General business consultant since May 1991;
Age 62 President, Trancel Corporation (a
pharmaceutical company) from March
1990 until April 1991; Director from
March 1984 until December 1991,
Chairman of the Board from October
1988 to March 1990, President and
Chief Executive Officer from March
1984 to October 1988, Alpha
Therapeutics Corporation (a pharma-
ceutical company).
David S. Gordon 1981 Senior Vice President, Medical Affairs,
Age 56 since April 1997, Aronex Pharmaceuticals,
Inc. (a pharmaceutical company);
Vice President, Business
Development, Physician Reliance
Network, Inc. (a physician practice
management company) from October
1995 until December 1996; Vice
President, U.S. Clinical Research,
The Liposome Company (a
pharmaceutical company) from March
1993 until September 1995;
Director, Clinical
Research-Hematologics, R. W.
Johnson Pharmaceutical Research
Institute (a pharmaceutical
company) from November 1990 until
February 1993; Chairman of the
Board from April 1981 to September
1990, Chief Scientific Officer from
February 1985 to November 1990,
Chief Executive Officer from April
1981 to February 1985, Hycor
Biomedical Inc.
Reginald P. Jones 1986 Senior Vice President since January 1988,
Age 51 Chief Financial Officer since May 1985,
Secretary since June 1985,
Treasurer since August 1982, Hycor
Biomedical Inc.
James R. Phelps 1984 Partner, Hyman, Phelps and McNamara, P.C.
Age 59 (a law firm) since January 1980.
Richard E. Schmidt 1996 Chairman from September 1991 to February
Age 66 1998, Chief Executive Officer and
President from September 1991 until
June 1996, Newport Corporation (a
precision research equipment
company).
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
Year
First Principal Occupation and Other
Name Elected Information Concerning Nominee
- ---- ------- ------------------------------
<S> <C> <C>
David A. Thompson 1995 Chief Executive Officer, Diagnostics
Age 56 Marketing Strategy, Inc. (a marketing
consulting firm) since October 1996;
President, Diagnostics Division, and
Senior Vice President, Diagnostic
Operations, Abbott Laboratories, Inc. (a
pharmaceutical and diagnostic company)
from 1990 until June 1995; various other
executive positions with Abbott
Laboratories since 1964. Mr. Thompson is a
director of NABI (a biopharmaceutical
company), Neopath, Inc. (an automated
imaging company) and Lifecell Corporation
(an automated imaging company).
</TABLE>
Board Meeting Attendance and Committees
- ---------------------------------------
The Board of Directors held a total of four meetings during 1997. All
directors attended at least 75% of all meetings of the Board and the committees
of the Board on which they served.
The Compensation Committee of the Board, composed of Messrs. Thompson,
Anderson and Phelps, acts for the Board in determining the executive
compensation program with respect to salary, bonuses, benefits and other
compensation matters. It also administers the Company's stock option plans. This
committee met once during 1997.
The Audit Committee of the Board, composed of Messrs. Schmidt and
Gordon, acts for the Board in overseeing the Company's accounting practices,
recommending the independent public accountants for appointment by the Board,
monitoring the adequacy of internal accounting practices and reviewing
significant changes in accounting policies. This committee met twice in 1997.
The Nominating Committee, composed of Messrs. Gordon, Hamill and
Phelps, considers and makes recommendations to the full Board of Directors for
its approval of individual candidates to be nominated by management for election
to the Board of Directors at the Annual Meeting of Stockholders. This committee
met once in 1997.
8
<PAGE> 11
The Nominating Committee will consider proposals for nominees for the
Board of Directors suggested by stockholders. Such recommendations should be
submitted in writing to the Corporate Secretary at the address set forth on the
first page of this proxy statement and must be received not less than 120
calendar days in advance of the date of the Company's proxy statement released
to stockholders in connection with the previous year's annual meeting of
stockholders. The stockholder should specify the name of each proposed nominee
and should set forth detailed biographical information. A person to be
considered for nomination to the Board of Directors should, among other things,
have the ability to exercise sound business judgment, have had such broad
personal and professional experience as to enable him or her to make productive
contributions to the deliberation of the Board of Directors, and be a recognized
leader in his or her profession.
Compensation of Directors
- -------------------------
All non-employee directors receive an annual retainer of $9,000 and a
fee of $500 for each Board, Audit and Compensation Meeting attended for services
as directors of the Company and are reimbursed for reasonable travel expenses
incurred in connection with each meeting attended.
Each non-employee director is eligible to receive stock options under
the Company's Nonqualified Stock Option Plan for Non-Employee Directors (the
"Plan"), a non-discretionary formula stock option plan. Each director who is a
non-employee director and who holds office immediately after the Company's
annual meeting of stockholders receives an option to purchase 6,000 shares of
Common Stock. The Plan also provides an automatic one-time only grant of an
option to purchase 4,000 shares of Common Stock to new non-employee directors on
the date such director first assumes the duties of a director. The price per
share at which an option may be exercised is the fair market value per share on
the date the option is granted, and each option granted shall vest pro rata over
a three-year period. In the event that the Company enters into a merger (other
than a merger in which the Company is the surviving corporation and under the
terms of which the Common Stock is unchanged), consolidation, sale or transfer
of substantially all of its assets, or liquidation during the term of an option,
the option shall become exercisable with respect to the full number of shares
subject thereto during the period of 30 days prior to the closing date of such
transaction; provided, however, the exercise of any portion of the option that
would otherwise not be exercisable at the closing date of such transaction shall
be contingent on the closing of the transaction.
9
<PAGE> 12
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to
shares of Common Stock of the Company beneficially owned by (1) all persons
known to the Company to own beneficially more than 5% of the Company's Common
Stock; (2) each person who is a director or a nominee for director; (3) each of
the executive officers named in the Summary Compensation Table herein; and (4)
all directors and executive officers of the Company as a group. The persons
named hold sole voting and investment power with respect to the shares shown
opposite their respective names, unless otherwise indicated in the footnotes.
The information with respect to each person specified is as supplied or
confirmed by such person.
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned as Percent of
Name of March 16, 1998 (1)(10) Class (1)
- ---- ------------------------- ----------
<S> <C> <C>
Fenimore Asset Mgmt, Inc. 1,022,500 (2) 14.2
Brinson Partners, Inc. 639,986 (3) 8.9
Dimensional Fund Advisors, Inc. 478,414 (4) 6.6
Richard D. Hamill 381,116 (5) 5.2
Samuel D. Anderson 82,000 1.1
David S. Gordon 254,864 (6) 3.5
Reginald P. Jones 313,355 (7) 4.3
James R. Phelps 69,400 *
Richard E. Schmidt 3,333 *
David A. Thompson 14,667 *
Nelson F. Thune 181,290 (8) 2.5
Thomas M. Li 18,830 *
Mary Jo Deal 106 *
All executive officers and 1,318,961 (9) 17.1
directors as a group
(10 persons)
</TABLE>
Footnotes
- -------------------------
* Indicates less than one percent.
(1) Includes shares subject to stock options which the following have the
right to acquire within sixty days of March 16, 1998; Dr. Hamill,
155,333 shares; Mr. Anderson, 54,000 shares; Dr. Gordon, 24,000 shares;
Mr. Jones, 106,250 shares; Mr. Phelps, 34,000 shares; Mr. Schmidt, 3,333
shares; Mr. Thompson, 4,667 shares; Mr. Thune, 114,434 shares; Dr. Li,
7,500 shares; and all executive officers and directors as a group,
503,517 shares.
(2) Fenimore Asset Management, Inc. ("FAM"), 118 N. Grand St., Cobleskill,
NY 12043, filed an amended Schedule 13G on or about February 19, 1998,
on behalf of itself, an investment advisor, registered under Section 203
of the Investment Advisors Act of 1940. FAM has shared voting and
disposition power over 1,022,500 shares.
(3) Brinson Partners, Inc. ("BPI"), 209 South LaSalle, Chicago, Illinois
60604, filed a joint amended Schedule 13G on or about February 11, 1998,
on behalf of (i) itself, an investment adviser registered under Section
203 of the Investment Advisors Act of 1940; (ii) Brinson Trust Company
("BTC"), a bank as defined in Section 3(a)(6) of the Securities Exchange
Act of 1934, and a wholly owned subsidiary of BPI; (iii) Brinson
Holdings, Inc. ("BHI"), a Parent Holding Company of which BPI is a
wholly owned subsidiary; (iv) SBC Holding (USA), Inc. ("SBCUSA"), a
Parent Holding Company of which BHI is a wholly owned subsidiary; and
(v) Swiss Bank Corporation ("SBC"), a Parent
10
<PAGE> 13
Footnotes for preceding page
- ----------------------------
Holding Company of which SBCUSA is a wholly owned subsidiary. All such
companies have shared voting and dispositive power over 639,986 shares.
(4) Dimensional Fund Advisors, Inc. ("DFA"), 1299 Ocean Avenue, 11th Floor,
Santa Monica, California 90401, filed an amended schedule 13G on or
about February 9, 1998 on behalf of (i) itself, an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940;
(ii) DFA Investment Dimension Group, Inc. ("Group"), a registered
open-end investment company; and (iii) DFA Investment Trust Company
("Trust"), a registered open-end investment company. DFA has sole voting
power over 325,198 shares, shared voting power over 153,216 shares and
sole dispositive power over 478,414 shares; Group and Trust have shared
voting power over 69,916 and 83,300 shares, respectively.
(5) Includes 179,180 shares held by R. D. Hamill and M. L. Hamill as
trustees for The Hamill Trust, 1996; 42,000 shares held by Dr. Hamill's
father-in-law's trust for which his spouse is a trustee; and 4,603
shares held by the Company's 401(k) Plan.
(6) Includes 11,400 shares held by Dr. Gordon's wife and dependent children.
(7) Includes 197,518 shares held by R. P. Jones and J. Jones as Trustees for
the Jones Family Trust; 6,000 shares held by dependent children; and
3,587 shares held by the Company's 401(k) Plan.
(8) Includes 3,244 shares held by the Company's 401(k) Plan.
(9) Includes 11,790 shares held by the Company's 401(k) Plan.
(10) Under the terms of the Company's 401(k) Plan, a committee of three
persons has the power to direct the trustee to vote all shares held
pursuant to the 401(k) Plan.
11
<PAGE> 14
EXECUTIVE OFFICERS
The following table identifies, and contains certain information
concerning, the Company's executive officers as of the date of this Proxy
Statement. Executive officers are appointed by and serve at the pleasure of the
Board of Directors. Each executive officer is currently serving pursuant to an
employment agreement. See "Executive Compensation - Employment Agreements."
<TABLE>
<CAPTION>
Name Age Information Concerning Officer
- ---- --- ------------------------------
<S> <C> <C>
Richard D. Hamill 59 Chairman of the Board since
September 1990, Chief Executive
Officer since February 1985,
President since August 1983. Dr.
Hamill is also a director of the
Company, a position which he has
held since 1983.
Reginald P. Jones 51 Senior Vice President since January
1988, Chief Financial Officer since
May 1985, Secretary since June 1985,
Treasurer since August 1982. Mr.
Jones is also a director of the
Company, a position which he has
held since 1986.
Nelson F. Thune 52 Senior Vice President, Operations
and Planning since February 1991,
Vice President, Operations from
January 1985 to February 1991.
Mary Jo Deal 42 Vice President, Marketing since
September 1997, Director of
Marketing from September 1995 to
August 1997; Marketing Manager from
July 1993 to August 1995, Technical
Assistance Manager from July 1991 to
June 1993, Dade International, Inc.
(a medical products company).
Thomas M. Li 51 Vice President, Research and
Development since April 1995; Senior
Development Manager, Syva Company (a
medical diagnostic company) from
January 1991 to March 1995.
</TABLE>
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
- ----------------------------------------------
The following table sets forth information concerning compensation paid
or accrued by the Company to or on behalf of the Company's Chief Executive
Officer and each of the four other most highly compensated executive officers
(the "named executive officers") for services in all capacities to the Company
for the fiscal years ended December 31, 1997, 1996 and 1995.
12
<PAGE> 15
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation (1) Awards
----------------------- ------------
Securities
Underlying All Other
Name and Salary Bonus Options/ Compensation
Principal Position Year ($)(2) ($) SARs (#) ($)(3)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Richard D. Hamill 1997 247,975 -0- -0- 12,011
Chairman, President, 1996 237,667 -0- 174,000 12,102
Chief Executive 1995 228,275 61,634 20,000 10,233
Officer
Reginald P. Jones 1997 182,736 -0- -0- 4,805
Senior Vice President, 1996 176,236 -0- 96,000 5,744
Chief Financial 1995 171,611 36,038 13,000 4,393
Officer
Nelson F. Thune 1997 160,507 -0- -0- 4,673
Senior Vice President, 1996 154,829 -0- 61,500 5,522
Operations & Planning 1995 150,793 31,667 12,000 4,601
Mary Jo Deal (4) 1997 107,118 -0- -0- 2,744
Vice President, 1996 99,006 1,800 15,000 461
Marketing 1995 28,741 -0- -0- -0-
Thomas M. Li 1997 157,140 -0- -0- 3,968
Vice President, 1996 149,852 -0- 58,500 1,500
Research & Development 1995 105,959 22,251 15,000 -0-
</TABLE>
Footnotes
- ---------------------------
(1) None of the named individuals received perquisites or other personal
benefits in excess of the lesser of $50,000 or 10% of the total of his
reported annual salary and bonus.
(2) Includes employee deferrals under the Company's Incentive Profit Sharing
Plan, a deferred compensation plan under Section 401(k) of the Internal
Revenue Code (the "401(k) Plan").
(3) The amounts disclosed in this column for 1997 include:
(a) Company contributions of cash and Common Stock under the 401(k)
Plan made on behalf of Hamill, Jones, Thune, Deal, and Li, in the
amounts of $4,178, $4,055, $3,923, $2,498 and $3,218,
respectively, and 250, 250, 250, 82 and 250 shares, respectively.
The dollar value of the shares is included in the table and was
calculated based on the fair market value of such shares at the
time acquired by the Plan.
(b) Payment by the Company of premiums for term life insurance on
behalf of Dr. Hamill in the amount of $7,083.
(4) Ms. Deal became employed by the Company in September 1995 and was
promoted to an executive officer in September 1997.
13
<PAGE> 16
Employment Agreements
- ---------------------
The Company is a party to employment agreements with Messrs. Hamill,
Jones, Thune and Li and Ms. Mary Jo Deal. The principal features of such
agreements are described below.
Dr. Hamill is employed as President and Chief Executive Officer of the
Company pursuant to an employment agreement which commenced June 20, 1997, and
which provides for an annual base salary of $250.000. The agreement
automatically renews for successive one-year terms after June 19 of each year
unless written notice of either party's intention not to renew is given at least
six months prior to expiration of the term. Dr. Hamill also receives $700,000 of
term life insurance payable to a beneficiary designated by him and is provided
the use of a Company owned automobile. In addition, under the terms of the
agreement, in the event of the termination of Dr. Hamill's employment (other
than on account of death or for cause as defined in the agreement), or Dr.
Hamill's election to resign with good cause (as defined in the agreement),
within two years after a change in control of the Company, Dr. Hamill will be
entitled to receive severance pay in an amount equal to 299% of the average of
the annual base salary plus bonuses paid to Hamill for the prior three years.
Such amount would be in addition to any other amounts otherwise payable to Dr.
Hamill under any benefit plans of the Company. A change in control of the
Company would be deemed to occur if any person is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company's then outstanding securities
or if specified changes in the composition of the Company's Board of Directors
occurs. The Company can also terminate the agreement at any time "without cause"
by paying Dr. Hamill a lump severance benefit equal to twenty months base salary
at the time of termination. The agreement also provides for certain payments
upon Dr. Hamill's death or incapacity.
The Company also has entered into three-year employment agreements with
Messrs. Jones, Thune and Li and Ms. Deal under which each is employed as a Vice
President of the Company. These agreements, which commenced June 20, 1997 for
Messrs. Jones, Thune and Li, and commenced September 1, 1997 for Ms. Deal,
provide for base salaries of $184,100, $161,700, $158,600 and $120,000 per
annum, respectively. Each agreement automatically renews for successive one-year
terms unless written notice of either party's intention not to renew is given at
least three months prior to expiration of the term. In addition, under the terms
of the agreement, in the event of the termination of employment (other than on
account of death or for cause as defined in the agreement), or election to
resign with good cause (as defined in the agreement), within two years after a
change in control of the Company, Messrs. Jones, Thune, or Li or Ms. Deal will
be entitled to receive severance pay in an amount equal to 200% of the average
of the annual base salary plus bonuses paid the prior three years. Such amount
would be in addition to any other amounts otherwise payable under any benefit
plans of the Company. A change in control of the Company would be deemed to
occur if any person is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities or if specified changes in
the composition of the Company's Board of Directors occurs. The Company can also
terminate the agreement at any time "without cause" by paying a lump severance
benefit equal to twelve months base salary at the time of termination. The
agreement also provides for certain payments upon death or incapacity.
14
<PAGE> 17
Stock Options
- -------------
No stock options were granted to the named executive officers under the
Company's stock option plans during the last fiscal year. The following table
sets forth information, with respect to the named executive officers, concerning
the exercise of options during the last fiscal year and the value of unexercised
options held as of the end of the fiscal year.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTIONS/SAR VALUES
<TABLE>
<CAPTION>
Shares Number of Securities
Acquired Underlying Unexercised Value of Unexercised
on Value Options/SARs In-the-Money Options/SARs
Exercise Realized at Fiscal Year-End (#) at Fiscal Year-End ($)(2)
Name (#) ($) (1) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
R.D.Hamill 20,000 28,800 145,333 189,000 -0- -0-
R.P.Jones 12,000 17,280 129,492 102,500 9,802 -0-
N.F.Thune 5,000 7,200 127,991 67,500 6,126 -0-
M.J. Deal -0- -0- -0- 15,000 -0- -0-
T.M. Li -0- -0- 7,500 66,000 -0- -0-
</TABLE>
(1) Calculated based upon the market value of Common Stock at the exercise
date, minus the option exercise price.
(2) Calculated based upon the closing price of Common Stock at
December 31, 1997 minus the option exercise price.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
report and the Performance Graph which follow shall not be deemed to be
incorporated by reference into any such filings.
The executive compensation program is administered by the Compensation
Committee of the Company's Board of Directors (the "Committee") which is
comprised of the individuals listed below. All of the members of the Committee
are outside directors of the Company. The Committee is responsible for all
compensation matters applicable to the Company's executive officers including
developing, administering and monitoring the compensation policies.
The Committee has retained the services of an independent compensation
consulting firm to assist in its evaluation of the key elements of the Company's
compensation program. The compensation consultant provides advice to the
Committee with respect to competitive practices and the reasonableness of
compensation paid to the executives of the Company. The Committee reviews
15
<PAGE> 18
surveys and other data supplied by the consultant in the course of its
deliberations relating to compensation proposals and in its evaluations of the
particular needs of the Company and each executive's performance.
Compensation and Overall Objectives. The general goals and objectives
of the Company's compensation program are to:
o Provide incentives for the Company's management to create value
for the Company's stockholders;
o To attract, retain and motivate a quality, performance-oriented
management team;
o Position executive compensation at the median levels when
compared to companies with similar size, organization structure,
product cycle and industry; and
o Create long-term incentives which are tied to the Company's
long-term growth, financial success and stockholder value.
In designing and administering the individual elements of the executive
compensation program, the Committee strives to balance short- and long-term
incentive objectives and employ prudent judgment in establishing performance
criteria, evaluating performance and determining actual incentive payments.
Section 162(m) of the Internal Revenue Code limits the Company's tax
deduction to $1 million in any taxable year for compensation paid to individual
executive officers, unless certain performance, disclosure, and stockholder
approval requirements are met. While the compensation program provides pay
levels unlikely to reach or exceed the limit for any of the executive officers,
the Committee believes a substantial portion of the compensation program would
be exempted from the $1 million deduction limitation. The Committee's present
intention is to qualify, to the extent reasonable, the substantial portion of
the executive officers' compensation for deductibility under applicable tax
laws.
Base Salaries. The base compensation levels were established to
compensate the executive officers for the functions they perform. The salary
levels are reviewed annually and may be increased by the Compensation Committee
in accordance with certain criteria determined to be relevant by the Committee,
which include (i) individual performance, (ii) the functions performed by the
executive officer, (iii) competitive base pay levels for similar functions, and
(iv) the Company's overall performance during the year. The weight given such
factors by the Committee may vary from individual to individual. With respect to
base salaries, the Committee generally intends to target base salary levels at
the median for medical device and biotechnology organizations comparable in size
and structure. Actual base salaries for 1997 were determined based on
contributions during fiscal 1996 with increases averaging 4.3%.
Annual Incentive Compensation Program. Awards may be earned under the
Company's Annual Executive Incentive Plan (the "Annual Incentive Plan"). The
objective of the Annual Incentive Plan is to deliver competitive levels of
compensation for the attainment of financial objectives that the Committee
believes are primary determinants of stock price over time. Targeted awards for
the executive officers of the Company, including the Chief Executive Officer,
under the Annual Incentive Plan range from 35% to 45% of base salary. Minimum
objectives of sales and pretax earnings must be achieved before any awards are
earned. Awards in any single year cannot exceed 150% of the target award
opportunity. No bonus awards were made for fiscal 1997.
16
<PAGE> 19
Long-Term Incentive Program. The long-term incentive program for senior
management consists of a stock-based compensation plan, the 1992 Incentive Stock
Plan (the "Plan"). The Committee believes that by providing those persons who
have substantial responsibility for the management and growth of the Company
with an opportunity to increase their ownership of Company stock, the interests
of the stockholders and executives will be closely aligned. The Committee, which
administers the Plans, may make grants under the Plans based on a number of
factors, including (i) the executive officer's position in the Company, (ii) the
executive officer's performance and responsibilities, (iii) the extent to which
the executive officer already holds an equity stake in the Company, (iv) equity
participation levels of comparable executives at other companies in the
compensation peer group, and (v) individual contribution to the success of the
Company's financial performance. Generally, stock options are granted each year
at 100% of current fair market value of the Company's stock. Stock options have
a ten-year term and typically become exercisable over a three- to four-year
period, as determined by the Committee. There were no options granted to
executives in 1997.
Chief Executive Officer Compensation. The Compensation of Richard D.
Hamill during fiscal 1997 was determined on the same basis as discussed above
for the executive officers. In 1997 Dr. Hamill received compensation based on
the annual base salary amount of $250,000 which reflected a 4.4% increase from
his fiscal 1996 base salary. Dr. Hamill received a salary increase in 1997 on
the basis of the Committee's evaluation of his salary as compared to competitive
salary data, his performance and the Company's performance. Dr. Hamill did not
receive any annual bonus under the Annual Incentive Plan and was not granted any
options under the Plan in 1997. Dr. Hamill's base salary and award levels under
the stock incentive Plan will be reviewed annually. In 1997, the Company
contributed $4,928 to Dr. Hamill's 401(k) account under the terms and conditions
of that plan. Dr. Hamill does not participate in or otherwise influence
deliberations of the Committees relating to his compensation.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Samuel D. Anderson David A. Thompson James R. Phelps
(Chairman)
17
<PAGE> 20
STOCK PRICE PERFORMANCE GRAPH
- -----------------------------
Set forth below is a graph comparing cumulative total stockholder
return on the Company's Common Stock, the S&P 500 Index and the S&P Medical
Products and Supplies Index for the period commencing December 31, 1992 and
ended December 31, 1997. The graph assumes that the value of the investment in
the Company's Common Stock and each index as $100 at December 31, 1992 and that
all dividends were reinvested.
The stockholder return shown on the following graph is not necessarily
indicative of future performance.
(Chart)
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
12/92 12/93 12/94 12/95 12/96 12/97
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Hycor Biomedical Inc. HYBD 100 78 70 76 52 27
S&P 500 I500 100 110 112 153 189 252
S&P Medical Prod.& Supply IMDP 100 76 90 153 175 219
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
10% stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1997, the
Company's officers, directors and greater than 10% beneficial owners complied
with all Section 16(a) filing requirements.
18
<PAGE> 21
INDEPENDENT AUDITORS
Deloitte & Touche LLP served as the Company's independent auditors for
the fiscal year ended December 31, 1997. Representatives of Deloitte & Touche
LLP are expected to be present at the Annual Meeting, will be given the
opportunity to make a statement, if they desire, and are expected to be
available to respond to appropriate questions. Auditors for the current fiscal
year will be selected by the Board of Directors in June 1998.
ANNUAL REPORT
The Annual Report of the Company including financial statements for the
year ended December 31, 1997 is enclosed with this Proxy Statement.
STOCKHOLDER PROPOSALS
Stockholders who intend to submit proposals to the Company's
stockholders at the 1999 Annual Meeting must submit such proposals to the
Company no later than December 22, 1998 in order for them to be included in the
proxy statement and form of proxy to be distributed by the Board of Directors in
connection with that meeting. Stockholder proposals should be submitted to Hycor
Biomedical Inc., 7272 Chapman Avenue, Garden Grove, 92641, Attention: Corporate
Secretary.
EXPENSES OF SOLICITATION
The expense of preparing, assembling, printing and mailing this Proxy
Statement and the materials used in the solicitation of proxies for the Annual
Meeting will be borne by the Company. Solicitation of proxies may be made by
means of personal calls upon, or telephonic or telegraphic communications with,
stockholders or their personal representatives by directors, officers and
employees of the Company who will not be specially compensated for such
services. Although there is no formal agreement to do so, the Company may
reimburse banks, brokerage houses and other custodians, nominees and fiduciaries
for their reasonable expenses in forwarding this Proxy Statement to stockholders
whose Common Stock is held of record by such entities.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the Annual Meeting. However, if any other matter properly comes before
the Annual Meeting or any adjournment thereof, it is intended that the persons
named in the enclosed form of proxy will vote on such matter in accordance with
their best judgment.
Reginald P. Jones
April 21, 1998 Secretary
19
<PAGE> 22
HYCOR BIOMEDICAL INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE JUNE 10, 1998 ANNUAL MEETING OF STOCKHOLDERS
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
The undersigned hereby appoints RICHARD HAMILL and REGINALD JONES, and each
of them, as proxy or proxies, with full power of substitution and
resubstitution, for and in the name or names of the undersigned, to vote all
shares of Common Stock of Hycor Biomedical Inc. (the "Company"), which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders to be held on June 10, 1998, at 9:00 a.m., local time,
at the Company's offices located at 7272 Chapman Avenue, Garden Grove,
California 92641, and at any adjournment thereof, upon the matters described in
the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement,
receipt of which is hereby acknowledged, and upon any other business that may
properly come before the meeting or any adjournment thereof. SAID PROXIES ARE
DIRECTED TO VOTE ON THE MATTERS DESCRIBED IN THE NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT AS FOLLOWS, AND OTHERWISE ARE DIRECTED TO VOTE IN THEIR
DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND
ANY ADJOURNMENT THEREOF.
1. Approval of Amendment to the Nonqualified Stock Option Plan for
Non-Employee Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Election of Directors
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as marked to the contrary) all nominees listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S),
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
Richard D. Hamill, Samuel D. Anderson, David S. Gordon, Reginald P. Jones,
James R. Phelps, Richard E. Schmidt and David A. Thompson.
3. The proxies are authorized to vote in their discretion upon such other
business as may properly come before the meeting.
(Continued and to be signed and dated on the reverse side)
<PAGE> 23
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED "FOR" PROPOSAL 1, "FOR" EACH NOMINEE NAMED IN PROPOSAL 2, AND IN
ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDER(S) ON SUCH MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING.
Date , 1998
-------------
------------------------
(Signature)
------------------------
(Signature)
Please date this proxy and sign exactly as your name or names appear hereon.
When more than one owner is shown above, each should sign. When signing in a
fiduciary or representative capacity, please give full title. If this proxy is
submitted by a corporation, it should be executed in the full corporate name by
a duly authorized officer. If this proxy is submitted by a partnership, it
should be executed in the partnership name by an authorized person.
