HANGER ORTHOPEDIC GROUP, INC.
7700 Old Georgetown Road
Bethesda, Maryland 20814
March 31, 1999
Dear Stockholder:
We are pleased to invite you to attend our Annual Meeting of
Stockholders. This year it will be on Tuesday, May 4, 1999, at 10:00 a.m.,
local time, at the Hyatt Regency Bethesda Hotel, One Bethesda Metro Center,
Bethesda, Maryland. The primary business of the meeting will be to elect
directors, vote on a proposed amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of common stock and
ratify the selection of independent accountants.
A Notice of the Annual Meeting and the Proxy Statement follow. You will
also find enclosed a proxy card. We invite you to attend the meeting in
person, but if this is not feasible, we think it advisable for you to be
represented by proxy. Therefore, if you cannot attend the meeting, we urge you
to sign the enclosed proxy card and mail it promptly in the return-addressed,
postage-prepaid envelope provided for your convenience.
Sincerely,
Ivan R. Sabel
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
HANGER ORTHOPEDIC GROUP, INC.
7700 Old Georgetown Road
Bethesda, Maryland 20814
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
Notice is hereby given that the Annual Meeting of Stockholders of Hanger
Orthopedic Group, Inc., a Delaware corporation ("Hanger" or the "Company"),
will be held at the Hyatt Regency Bethesda Hotel, One Bethesda Metro Center,
Bethesda, Maryland on Tuesday, May 4, 1999, at 10:00 a.m., local time, for the
following purposes:
1. To elect nine persons to serve as directors of the
Company for the ensuing year;
2. To approve a proposed amendment to the Company's
Certificate of Incorporation increasing the number of authorized
shares of the Company's Common Stock from 25 million to 40 million
shares;
3. To ratify the selection of PricewaterhouseCoopers LLP
as the independent accountants for the Company for the current
fiscal year; and
4. To transact such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on March 17, 1999,
are entitled to notice of, and to vote at, the Annual Meeting.
By order of the Board of Directors,
Richard A. Stein
Secretary
March 31, 1999
-----------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
Please date, sign and promptly return the enclosed proxy so that your
shares may be voted in accordance with your wishes.
Mail the proxy to us in the enclosed envelope, which requires no postage
if mailed in the United States.
The giving of the proxy does not affect your right to vote in person
should you attend the meeting.
-----------------------------------------------------------------------------
<PAGE>
HANGER ORTHOPEDIC GROUP, INC.
7700 OLD GEORGETOWN ROAD
BETHESDA, MARYLAND 20814
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Hanger Orthopedic Group, Inc., a Delaware
corporation ("Hanger" or the "Company"), of proxies of stockholders to be
voted at the Annual Meeting of Stockholders to be held at the Hyatt Regency
Bethesda Hotel, One Bethesda Metro Center, Bethesda, Maryland at 10:00 a.m.,
local time, on Tuesday, May 4, 1999, and any and all adjournments thereof.
Any stockholder executing a proxy retains the right to revoke it at any
time prior to its being exercised by giving notice to the Secretary of the
Company.
This Proxy Statement and the accompanying proxy are being mailed or
given to stockholders of the Company on or about March 31, 1999.
VOTING SECURITIES
As of March 17, 1999, a total of 18,823,797 shares of common stock of
the Company, par value $.01 per share ("Common Stock"), which is the only
class of voting securities of the Company, were issued and outstanding. At the
Annual Meeting or any adjournment thereof, all holders of record of the Common
Stock as of the close of business on March 17, 1999, will be entitled to one
vote for each share held upon the matters listed in the Notice of Annual
Meeting. Cumulative voting is not permitted.
Shares of Common Stock represented by proxy at the Annual Meeting will
be voted according to the instructions, if any, given in the proxy. Unless
otherwise instructed, the person or persons named in the proxy will vote (1)
FOR the election of the nine nominees for director listed herein (or their
substitutes in the event any of the nominees is unavailable for election); (2)
FOR the approval of the proposed amendment to Company's Certificate of
Incorporation increasing the number of authorized shares of Common Stock from
25 million to 40 million shares; (3) FOR the ratification of the selection of
PricewaterhouseCoopers LLP as the independent accountants for the Company for
the current fiscal year; and (4) in their discretion, with respect to such
other business as may properly come before the meeting.
Votes cast by proxy or in person at the Annual Meeting will be tabulated
by the inspectors of election appointed by the Company for the meeting. The
number of shares represented at the meeting in person or by proxy will
<PAGE>
determine whether or not a quorum is present. The inspectors of election will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as unvoted for purposes of
determining the approval of any matter submitted to the stockholders for a
vote. If a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares
will not be considered as present and entitled to vote by the inspectors of
election with respect to that matter.
The cost of soliciting proxies will be borne by the Company. Proxies may
be solicited by directors, officers or regular employees of the Company in
person or by telephone.
2
<PAGE>
PROPOSAL ONE--ELECTION OF DIRECTORS
Nine directors are to be elected at the Company's Annual Meeting of
Stockholders, each to serve for one year or until his successor is elected and
qualified. Proxies will be voted at the Annual Meeting, unless authority is
withheld, FOR the election of the nine persons named below, all of whom
currently are directors of the Company except C. Raymond Larkin, Jr. James G.
Hellmuth, who has served as a director since 1990, will retire from the Board
on May 4, 1999. The Company does not contemplate that any of the persons named
below will be unable or will decline to serve; however, if any such nominee is
unable or declines to serve, the persons named in the accompanying proxy will
vote for a substitute, or substitutes, in their discretion. The following
table sets forth information regarding the nominees.
<TABLE>
<CAPTION>
POSITION WITH BECAME
NAME THE COMPANY AGE DIRECTOR
---- ------------- --- --------
<S> <C> <C> <C>
Ivan R. Sabel, CPO Chairman of the Board,
President, Chief Executive 54 1986
Officer and Director
Mitchell J. Blutt, M.D. Director 42 1989
Edmond E. Charrette, M.D. Director 64 1996
Thomas P. Cooper, M.D. Director 55 1990
Robert J. Glaser, M.D. Director 80 1993
C. Raymond Larkin, Jr. Director -
Risa J. Lavizzo-Mourey, M.D. Director 44 1998
Brigadier General William L.
McCulloch (USMC Retired) Director 78 1991
H.E. Thranhardt, CPO Director 59 1996
</TABLE>
IVAN R. SABEL has been Chairman of the Board of Directors and Chief
Executive Officer of Hanger since August 1995 and President of Hanger since
November 1987. Mr. Sabel also served as the Chief Operating Officer of Hanger
from November 1987 until August 1995. Prior to that time, Mr. Sabel had been
Vice President - Corporate Development from September 1986 to November 1987.
From 1968 until joining Hanger in 1986, Mr. Sabel was the founder, owner and
President of Capital Orthopedics, Inc. before that company was acquired by
Hanger. Mr. Sabel is a Certified Prosthetist and Orthotist ("CPO"), a clinical
instructor in orthopedics at the Georgetown University Medical School in
3
<PAGE>
Washington, D.C., a member of the Board of Directors of the American Orthotic
and Prosthetic Association ("AOPA"), a former Chairman of the National
Commission for Health Certifying Agencies, a former member of the Strategic
Planning Committee and a current member of the Veterans Administration Affairs
Committee of AOPA and a former President of the American Board for
Certification in Orthotics and Prosthetics.
MITCHELL J. BLUTT, M.D. has served as an Executive Partner of Chase
Capital Partners (and its predecessor organizations), an affiliate of Chase
Manhattan Bank (and its predecessor corporations), since June 1991. He joined
that firm in July 1987 and became a General Partner in June 1988. Dr. Blutt
also has been engaged in the practice of medicine for over five years.
Previously, Dr. Blutt was a Robert Wood Johnson Foundation Fellow at the
University of Pennsylvania from July 1985 to June 1987. He is an adjunct
Assistant Professor at the New York Hospital/Cornell Medical Center. Dr. Blutt
is also a director of Urohealth Systems, Inc., a public company engaged in the
manufacture, marketing and distribution of products used by urologists and
gynecologists, and Landec Corp., a public company engaged in the design,
development, manufacture and sale of temperature-activated polymer products
for a variety of industrial, medical and agricultural applications, as well as
numerous privately-held companies.
EDMOND E. CHARRETTE, M.D. is the co-founder and Chairman of Health
Resources Corporation (principally engaged in occupational medicine services).
He also is a General Partner of Ascendant Healthcare International (an
investment group with equity investments in the Latin American healthcare
sector) and serves as a director and the President of Latin Healthcare
Investment Management Co., LLC (a group composed of Ascendant Healthcare
International and The Global Environmental Fund which manages and directs the
investment activities of the Latin Healthcare Investment Fund). Previously, he
was the Executive Vice President and Chief Medical Officer of Advantage-Health
Corporation (a multi-hospital rehabilitation and post-acute care system) from
June 1994 to March 1996. From 1988 to May 1994, Dr. Charrette served as the
Corporate Medical Director and Senior Vice President of Medical Affairs of
Advantage Health Corporation.
THOMAS P. COOPER, M.D. has been employed as the President and Chief
Executive Officer of Cove Healthcare, providing portable diagnostic services
to long term care facilities, since January 1997. From May 1989 to January
1997, Dr. Cooper served as the President and Chief Executive Officer of
Mobilex U.S.A., a provider of portable diagnostic services to long term care
facilities. Since June 1991, Dr. Cooper also has been employed as the
President and Chief Executive Officer of Senior Psychology Services
Management, Inc., which supplies psychologists to nursing home patients. Dr.
Cooper was the founder of Spectrum Emergency Care, a provider of emergency
room physicians to hospitals and clinics, and Correctional Medical Systems, a
provider of health services to correctional facilities. Dr. Cooper has served
as Director of Quality Assurance for ARA Living Centers, a company which
operates long-term healthcare facilities, and as Medical Director for General
Motors Corporation Assembly Division. He currently serves as a consultant to
4
<PAGE>
Chase Capital Partners and has served on the faculty of the University of
California, San Diego Medical School.
ROBERT J. GLASER, M.D. was the Director for Medical Science and a
Trustee of the Lucille P. Markey Charitable Trust, which provided major grants
in support of basic biomedical research, from 1984 to June 1997. He is a
Consulting Professor of Medicine Emeritus at Stanford University, where he
served as the Dean of the School of Medicine from 1965 to 1970. Dr. Glaser was
a founding member of the Institute of Medicine at the National Academy of
Sciences and is a director of Alza Corporation (principally engaged in
pharmaceutical research). He was a director of Hewlett-Packard Company from
1971 to 1991, and has continued to serve as a consultant to that company on
health matters.
C. RAYMOND LARKIN, JR. has served as principal of 3xNELL, LLC, a
partnership that invests in and provides consulting services to early stage
medical device, bio-technology and pharmaceutical companies, since July 1998.
He served as the President and Chief Executive Officer of Nellcor Puritan
Bennett, Inc., a medical instrumentation company, from February 1989 to March
1998 and earlier in various management capacities for that company. Prior to
joining that company in 1983, Mr. Larkin was employed in various sales
management positions by Bentley Laboratories, a manufacturer of specialized
monitoring and medical equipment.
RISA J. LAVIZZO-MOUREY, M.D., M.B.A., has been the Sylvan Eisman
Professor of Medicine at the University of Pennsylvania School of Medicine
since July 1997 and has served as the Director of the Institute on Aging at
the University of Pennsylvania since December 1995. From February 1998 to
present, Dr. Lavizzo-Mourey has served as a Member of the Institute of
Medicine; from August 1996 to present, on the American Board of Internal
Medicine; and from March 1995 to present, on the Board of Regents of the
American College of Physicians. From March 1997 to March 1998, Dr.
Lavizzo-Mourey also served as a Member of the United States Presidential
Advisory Commission on Consumer Protection and Quality of Care in Health Care.
From April 1992 to April 1994, Dr. Lavizzo-Mourey further served in each of
the following positions: Chairperson of the Quality of Care Working Group
White House Task Force on Health Care Reform; Deputy Administrator of the
Agency on Health Care Policy and Research of the U.S. Department of Health and
Human Services; and as a Member of the Senior Executive Service of the Public
Health Service of the U.S. Department of Health and Human Services. Dr.
Lavizzo-Mourey also currently serves on the Board of Directors of Kapson
Senior Quarters (assisted living health care company), Beverly Enterprises
(long-term and sub-acute health care company), Managed Care Solutions
(management services for long-term health care organizations) and Medicus
Systems (medical information software company).
BRIG. GEN. WILLIAM L. MCCULLOCH (USMC RETIRED) has served as the
President of Association Communication and Marketing Services, a public
relations firm, since October 1989. Previously, Gen. McCulloch was the
Executive Director of AOPA, the trade association of the orthotic and
prosthetic industry, from October 1976 to September 1989. In 1976, Gen.
5
<PAGE>
McCulloch retired from active military service after serving 30 years as a
U.S. Marine infantry officer.
H.E. THRANHARDT, CPO is the former President and Chief Executive Officer
of JEH. He served in that capacity from January 1, 1977 to November 1, 1996,
on which date JEH was acquired by Hanger. Mr. Thranhardt, who commenced his
employment with JEH in 1958, has occupied leadership positions in numerous
professional O&P associations, including Chairman of the Board of the
Orthotics and Prosthetics National Office in 1994 and 1995, President of the
American Orthotics and Prosthetics Association in 1992 and 1993, President of
the American Board for Certification in Orthotics and Prosthetics in 1979 and
1980 and President of The American Academy of Orthotics and Prosthetics in
1976 and 1977.
MANAGEMENT RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE ABOVE
NOMINEES AS DIRECTORS OF THE COMPANY.
There are no family relationships between any of the nominees.
The Board of Directors has an Audit Committee, which met one time during
1998 and presently consists of Mitchell J. Blutt, M.D., who has been nominated
for reelection to the Board, and James G. Hellmuth, who will be retiring is a
member of the Board. The Board plans to appoint two additional members to the
Committee at the Board's meeting following the Annual Meeting of Stockholders.
The Audit Committee is responsible for meeting with the Company's independent
accountants to review the proposed scope of the annual audit of the Company's
books and records, reviewing the findings of the independent accountants upon
completion of the annual audit, and reporting to the Board of Directors with
respect thereto. The Board of Directors also has a Compensation Committee,
which conducted three meetings during 1998, presently consists of Edmond E.
Charrette, M.D., William L. McCulloch and Robert J. Glaser, M.D., and is
responsible for advising the Board on matters relating to the compensation of
officers and key employees and certain of the Company's employee benefit
plans. The Board of Directors also has a Nominating Committee, which conducted
no meetings in 1998, consists of Robert J. Glaser M.D. and Thomas P. Cooper,
M.D., and is responsible for advising the Board on matters relating to the
identification of nominees to the Board of Directors. The Board of Directors
met eight times during 1998. Each incumbent director attended at least 75% of
the aggregate number of meetings of the Board and committee(s) on which he
served while he was a director and committee member during 1998.
6
<PAGE>
COMPENSATION AND RELATED MATTERS
The following Summary Compensation Table sets forth the annual salary
(column c) and bonus (column d) paid and options granted (column g) during
each of the past three years to the Company's Chief Executive Officer and the
other executive officer of the Company whose annual salary and bonus in 1998
exceeded $100,000.
<TABLE>
<CAPTION>
==================================================================================================================================
Summary Compensation Table
----------------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
-------------------------------------------
Annual Compensation Awards Payouts
----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
Other Annual Restricted Stock LTIP
Name and Principal Position Year Salary Bonus(1) Compensation(2) Award(s) Options Payouts
($) ($) ($) $ (#)(3) ($)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ivan R. Sabel 1998 $ 419,478 $ 260,000 - 100,000 -
Chairman, President & 1997 385,000 293,333 - - 167,667 -
Chief Executive Officer 1996 278,469 315,000 - - 134,000 -
----------------------------------------------------------------------------------------------------------------------------------
Richard A. Stein 1998 $ 201,567 $ 130,000 - 50,000 -
Vice President-Finance, 1997 185,000 146,667 - - 80,333 -
Secretary & Treasurer 1996 143,184 70,000 - - 66,000 -
==================================================================================================================================
<FN>
-----------------------
1 With respect to 1998, the above reported bonuses were paid on January 8,
1999 and related to 1998 performance. With respect to 1997, the above reported
bonuses were paid on September 23, 1997 and January 27, 1998 and related to
1997 performance. With respect to 1996, the above reported bonuses were paid
in November 1, 1996 and related to 1996 performance.
2 Does not report the approximate cost to the Company of an automobile
allowance furnished to the above persons, which amounts do not exceed the
lesser of either $50,000 or 10% of the total of the person's annual salary and
bonuses for 1998.
3 Reports the number of shares underlying options granted during each of
the respective years. For information relating to options previously granted
to the above persons by a principal stockholder of the Company, see "Other
Options" below.
</FN>
</TABLE>
7
<PAGE>
The following Option Grants Table sets forth, for each of the named
executive officers, information regarding individual grants of options granted
in 1998 and their potential realizable value. Information regarding individual
option grants includes the number of options granted, the percentage of total
grants to employees represented by each grant, the per-share exercise price
and the expiration date. The potential realizable value of the options are
based on assumed annual 0%, 5% and 10% rates of stock price appreciation over
the term of the option.
<TABLE>
<CAPTION>
==================================================================================================================================
Option Grants Table
----------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed
Individual Grants Annual Rates of Stock Price
Appreciation for Option Term(4)
----------------------------------------------------------------------------------------------------------------------------------
% of Total Options
Options Granted to Employees in
Granted Fiscal Exercise Expiration
Name (#)(1) Year(2) Price($/SH)(3) Date 0% 5%($) 10%($)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ivan R. Sabel 100,000 38.6% $22.3125 12/15/08 $0 1,403,221 3,556,038
Richard A. Stein 50,000 19.3 22.3125 12/15/08 0 701,611 1,778,019
==================================================================================================================================
<FN>
--------------------
1 The stock options were granted on December 15, 1998 under the Company's
1991 Stock Option Plan and become exercisable cumulatively as to 25%, 50%, 75%
and 100% after the first, second, third and fourth anniversaries,
respectively, after the date of grant.
2 Based on options for a total of 258,750 shares granted to all employees
in 1998.
3 The exercise price is equal to the fair market value on the date of
grant of the option.
4 The potential realizable values shown in the columns are net of the
option exercise price. These amounts assume annual compounded rates of stock
price appreciation of 0%, 5%, and 10% from the date of grant to the option
expiration date, a term of ten years. These rates have been set by the U.S.
Securities and Exchange Commission and are not intended to forecast future
appreciation, if any, of the Company's Common Stock. Actual gains, if any, on
stock option exercises are dependent on several factors including the future
performance of the Company's Common Stock, overall stock market conditions,
and the optionee's continued employment through the vesting period. The
amounts reflected in this table may not actually be realized.
</FN>
</TABLE>
The following Aggregate Option Exercises and Fiscal Year-End Option
Value Table sets forth, for each of the named executive officers, information
regarding (i) the number of shares acquired during 1998 upon the exercise of
options and the value realized in connection therewith, and (ii) the number
and value of unexercised options held at December 31, 1998.
8
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================================
Aggregate Option Exercises and Fiscal
Year-End Option Value Table
--------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Number of Unexercised Value(of Unexercised In-The-
Shares Acquired Options at FY-End (#)(1) Money Options at FY-End ($)
on
Name Exercise Value Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable(4)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ivan R. Sabel 77,000 1,190,063 41,750/302,250 $529,750/$2,990,563
Richard A. Stein 21,500 336,844 20,750/150,250 $262,828/$1,480,297
==========================================================================================================================
<FN>
- ---------------------
1 The reported options were granted by the Company to the named executive
officers. Reference is made to "Other Options" below for information regarding
options previously granted to such persons by a principal stockholder of the
Company.
2 The above-reported options entitle Mr. Sabel to purchase from the
Company (i) 10,000 shares at a price of $2.75 per share through January 31,
2005 under an option granted on January 31, 1995; (ii) 33,500 shares at a
price of $3.50 per share through February 21, 2006 under an option granted on
February 21, 1996; (iii) 33,500 shares at a price of $6.125 per share through
November 1, 2006 under an option granted on November 1, 1996; (iv) 50,250
shares at a price of $6.125 per share through March 14, 2007 under an option
granted on March 14, 1997; (v) 37,500 shares at a price of $13.25 per share
through September 19, 2007 under an option granted on September 19, 1997; (vi)
37,500 shares at a price of $11.3125 per share through December 17, 2007 under
an option granted on December 17, 1997; and (vii) 100,000 shares at a price of
$22.3125 per share through December 15, 2008 under an option granted on
December 15, 1998.
3 The above-reported options entitle Mr. Stein to purchase from the
Company (i) 5,000 shares at a price of $2.75 per share through January 31,
2005 under an option granted on January 31, 1995; (ii) 16,500 shares at a
price of $3.50 per share through February 21, 2006 under an option granted on
February 21, 1996; (iii) 16,500 shares at a price of $6.125 through November
1, 2006 under an option granted on November 1, 1996; (iv) 24,750 shares at a
price of $6.125 through March 14, 2007 under an option granted on March 14,
1997; (v) 18,750 shares at a price of $13.25 per share through September 19,
2007 under an option granted on September 19, 1997; (vi) 18,750 shares at a
price of $11.3125 per share through December 17, 2007 under an option granted
on December 17, 1997; and (vii) 50,000 shares at a price of $22.3125 per share
through December 15, 2008 under an option granted on December 15, 1998.
4 Market value of underlying shares at December 31, 1998, minus the
exercise price.
</FN>
</TABLE>
No Long-Term Incentive Plan Awards Table is set forth herein because no
long-term incentive plan awards were made to the above-named executive
officers during 1998.
Employment Agreements and Arrangements
The employment and non-compete agreements, dated May 16, 1994, between
the Company and Ivan R. Sabel, Chairman, President and Chief Executive Officer
of the Company, and Richard A. Stein, Vice President - Finance Secretary and
Treasurer of the Company, provide for the continuation of their employment in
9
<PAGE>
those positions for a period of five years. Pursuant to those agreements,
Messrs. Sabel and Stein receive annual compensation equal to a base salary
plus an annual CPI-related adjustment and any bonus compensation as may be
determined by the Board of Directors based upon a formula established by the
Board relating to growth in revenues and pre-tax earnings, the targets for
which are established annually by the Board.
Compensation Committee Report
The following description of the Company's executive compensation
practices and policies is presented on behalf of the Compensation Committee of
the Company's Board of Directors (the "Committee"). The fundamental philosophy
of the Company's executive compensation program is to offer competitive
compensation reflecting both individual and Company performance.
The components of executive compensation consist of annual salaries,
short-term compensation incentives or bonuses and stock option grants as a
long-range incentive. The Committee seeks to reasonably compensate executives
in amounts that fairly reward the executive officers for their performance as
reflected by corporate accomplishments and create adequate incentives for
their continued contributions to the Company's success.
On December 15, 1998, the Board of Directors approved the award of an
annual bonus of $260,000 to Mr. Ivan R. Sabel, Chairman, President and Chief
Executive Officer of the Company, and an annual bonus of $130,000 to Mr.
Richard A. Stein, Vice President-Finance, Secretary and Treasurer of the
Company. The Board of Directors also approved on that date the granting of
stock options to Messrs. Sabel and Stein to purchase 100,000 shares and 50,000
shares of Common Stock, respectively, at an exercise price of $22.3125 per
share, which was the closing sale price of the Company's Common Stock on the
date of grant of the options. In addition, the Board of Directors determined
to increase their annual salaries in 1999 by 3% over the levels paid in 1998.
The decisions by the Board of Directors to award bonuses and grant options to,
and increase the annual salaries of, Messrs. Sabel and Stein were primarily in
recognition of (i) the Company's improved results of operations in 1998, (ii)
the successful continuation of the Company's aggressive acquisition program,
(iii) the successful consummation on August 4, 1998 of an underwritten public
offering of the Company's Common Stock and (iv) the listing and commencement
of trading of the Company's Common Stock on the New York Stock Exchange on
December 15, 1998, as more fully discussed below.
RESULTS OF OPERATIONS. The Company's net sales in 1998 amounted to
$187.9 million, a 29.0% increase over 1997. The majority of the increase in
net sales was attributable to acquisitions consummated subsequent to December
31, 1997. In addition, contributing to the increase in net sales was a 11.1%
increase in same store sales by those patient-care centers operating
throughout both years. Net income in 1998 amounted to $13.8 million, or $0.75
10
<PAGE>
per diluted share, compared to $4.9 million, or $0.37 per diluted share, in
1997. (Income before extraordinary income in 1997 amounted to $7.6 million, or
$0.42 per diluted share.)
ACQUISITIONS. During 1998, the Company acquired 17 orthotic and
prosthetic companies and one prosthetic component manufacturing company. The
aggregate purchase price, excluding potential earn-out provisions, was $39.1
million. These companies operated 39 patient-care centers and employed 268
employees at December 31, 1998.
PUBLIC OFFERING. In an underwritten public offering that was consummated
on August 4, 1998, 3,300,000 shares of Common Stock of the Company were sold
at a price of $17.00 per share. Of that amount, 2,400,000 shares were sold by
the Company and 900,000 shares were sold by certain stockholders of the
Company. Of the approximately $37.8 million of net proceeds of the offering
received by the Company, the Company applied $24.7 million to the repayment of
senior indebtedness.
NEW YORK STOCK EXCHANGE LISTING. On December 15, 1998, the Company's
Common Stock was listed and commenced trading on the New York Stock Exchange.
Generally, decisions as to the payment of annual bonuses and the
granting of stock options are based on both company and individual performance
and involve a consideration of numerous factors, including revenue growth,
acquisitions by the Company, profitability increases (both as to total amount
and as a percent of revenue) and expense curtailment (both as to total amount
and as a percent of revenue) relevant to the corporate responsibilities borne
by the particular executive officer. The above described options granted to
Messrs. Sabel and Stein become exercisable cumulatively to the extent of 25%
per year during the first four years after grant and expire ten years after
grant. The employment agreements with Messrs. Sabel and Stein provide for the
possible payment of bonuses to them in the future based on a formula adopted
by the Board relating to growth and revenues and pre-tax earnings, the targets
for which are established annually by the Board.
By: The Compensation Committee of the
Board of Directors
Edmond E. Charrette, M.D., Chairman
Brigadier General William L. McCulloch (USMC Retired)
Robert J. Glaser, M.D.
11
<PAGE>
Stock Options
1991 STOCK OPTION PLAN. In December 1983, the Board of Directors adopted
and the stockholders of Hanger approved, and in September 1991 the
stockholders amended, a Stock Option Plan (the "1991 Plan"), which provides
for the grant of both "incentive stock options" under Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code"), as well as
nonqualified stock options. The 1991 Plan is administered by the Committee and
provides for the grant of options to officers and key employees of Hanger to
purchase up to an aggregate of 1,500,000 shares of Common Stock at not less
than 100% of fair market value on the date granted. As of March 17, 1999,
incentive stock options and nonqualified stock options granted under the 1991
Plan to purchase a total of 1,320,834 shares of Common Stock under the 1991
Plan, at prices ranging from $2.75 to $22.50 per share, were outstanding and
held by a total of 311 persons. Of such options, options relating to 435,397
shares of Common Stock are presently exercisable.
1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN. Under the Company's 1993
Non-Employee Directors Stock Option Plan (the "1993 Plan"), directors of the
Company who are not employed by the Company or any affiliate of the Company
are eligible to receive options under the 1993 Plan. A total of 250,000 shares
of Common Stock were reserved for possible issuance upon the exercise of
options under the 1993 Plan. On May 12, 1998, an option for 5,000 shares was
granted to each of the seven eligible directors, for a total of 35,000 shares,
at an exercise price of $18.625 per share (which was equal to the closing sale
price of the shares on the American Stock Exchange on the date of grant).
Under the 1993 Plan, an option to purchase 5,000 shares is granted
automatically on an annual basis to each eligible director on the third
business day following the date of each Annual Meeting of Stockholders at
which the eligible director is elected. The exercise price of each option is
equal to 100% of the closing sale price of the shares as reported by the
American Stock Exchange on the date the option is granted. Each option will
becomes exercisable in four equal annual installments, commencing on the first
anniversary of the date of grant.
NONQUALIFIED STOCK OPTIONS. Hanger has granted nonqualified stock
options other than pursuant to the 1991 Plan and the 1993 Plan to certain
officers and members of the Board of Advisors which permit such persons to
acquire shares of Common Stock generally at not less than 100% of fair market
value on the date granted. As of March 17, 1999, nonqualified stock options
granted other than pursuant to the 1991 Plan and the 1993 Plan to purchase a
total of 13,875 shares of Common Stock, at prices ranging from $3.00 to $12.00
per share, were outstanding and held by a total of 12 persons. All of such
nonqualified stock options are presently exercisable.
12
<PAGE>
Directors' Fees
Directors who are not officers or employees of the Company receive an
annual fee of $7,500 plus $1,000 for each meeting attended. In addition,
directors serving on committees of the Board receive a fee of $1,000 per
committee meeting attended.
Warrants
In connection with the Company's purchase on November 8, 1990, of the
Manufacturing Division of Ralph Storrs, Inc. ("Storrs"), the Company effected
a $2.45 million, seven-year loan (the "Loan") from Chemical Venture Capital
Associates, L.P., a predecessor to Chase Venture Capital Associates, L.P.
("CVCA"), in connection with which the Company was required to issue to CVCA
warrants to purchase shares of the Company's Common Stock in the event the
Loan was not repaid prior to certain dates. Because the Loan was not repaid
prior to August 6, 1991 (i.e., 271 days after the date of the Loan), the
Company, pursuant to its loan agreement with CVCA dated November 8, 1990,
issued warrants to CVCA entitling it to purchase 225,914 shares of Common
Stock at a price of $4.16 per share. Because the Loan was not repaid prior to
November 5, 1991 (i.e., 361 days after the date of the Loan), the Company,
pursuant to its November 8, 1990 loan agreement with CVCA, issued to CVCA
additional warrants entitling it to purchase 244,735 shares of Common Stock at
a price of $7.65 per share. The warrants are exercisable on or before December
31, 2001, and the exercise prices are equal to the market value of the Common
Stock on the dates of grant of the warrants.
On November 1, 1996, in connection with the Company's acquisition of
J.E. Hanger, Inc. of Georgia, the Company entered into a Senior Subordinated
Note Purchase Agreement with CVCA providing for the issuance of a Senior
Subordinated Note (the "Senior Subordinated Note") in the principal amount of
$4 million and detachable warrants to purchase 800,000 shares of Common Stock.
The fair market value of the Common Stock on the date of grant on the warrants
was $6.125 per share. The Company used the net proceeds of its public offering
of Common Stock in July 1997 to repay the Senior Subordinated Note, as a
result of which the warrants were amended to reduce the number of underlying
shares to 360,000 shares. These detachable warrants, which are exercisable on
or before November 1, 2004, have an exercise price of $4.01 as to 209,183
shares and an exercise price of $6.38 as to 150,818 shares.
13
<PAGE>
PROPOSAL TWO - PROPOSED AMENDMENT TO CERTIFICATE OF
INCORPORATION INCREASING NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK
On February 16, 1999, the Company's Board of Directors adopted a
resolution amending, subject to stockholder approval at the Annual Meeting,
Article FOURTH of the Company's Certificate of Incorporation to increase the
number of authorized shares of Common Stock from 25,000,000 to 40,000,000
shares (the "Amendment"). The par value of the Common Stock will remain at
$0.01 per share and the additional shares will have the same rights and
privileges as the shares of Common Stock presently outstanding. As of March
17, 1999, (i) 18,823,797 shares of Common Stock were outstanding, (ii)
2,152,512 shares of Common Stock were reserved for issuance upon the exercise
of outstanding options and options to be granted under the Company's 1991
Stock Option Plan, (iii) 223,750 shares of Common Stock were reserved for
issuance upon the exercise of outstanding options and options to be granted
under the Company's 1993 Stock Option Plan for Non-Employee Directors, (iv)
14,125 shares of Common Stock were reserved for issuance upon the exercise of
outstanding non-qualified options issued outside of any stock option plan, (v)
830,650 shares of Common Stock were reserved for issuance upon the exercise of
outstanding warrants and (vi) 2,955,166 shares of Common Stock were
authorized, unissued and unreserved.
The proposed amendment to the Certificate of Incorporation will be
effected by deleting the first sentence of Article FOURTH of the Company's
Certificate of Incorporation and substituting a new sentence that reads as
follows:
"FOURTH: The authorized capital stock of the Corporation shall consist
of forty million (40,000,000) shares of Common Stock, one cent ($0.01)
par value per share, and ten million ($10,000,000) shares of Preferred
Stock, one cent ($0.01) par value per share."
The only change in the above sentence is the change from 10,000,000 authorized
shares of Common Stock to 40,000,000 authorized shares.
The Board of Directors believes that the proposed increase in the number
of authorized shares of Common Stock is in the best interest of the Company
and its stockholders. The Board of Directors believes that the Company should
have sufficient authorized but unissued shares for issuance in connection with
possible future financing transactions, stock splits and stock dividends,
implementation of employee benefit plans, mergers and acquisitions and other
proper business purposes. In many such situations, prompt attention may be
required which would not permit seeking stockholder approval to authorize
additional shares for the specific transaction on a timely basis. The Board of
Directors believes that it is important for it to have the flexibility to act
promptly in the best interests of stockholders.
The additional shares of Common Stock sought by the proposed Amendment
will be available for issuance without further action by stockholders, unless
such action is required by applicable law or the rules of the New York Stock
Exchange, on which the Common Stock was listed and commenced trading on
December 15, 1998. Generally, the New York Stock Exchange rules require
stockholder approval of proposed issuances of additional shares which would
result in an increase of 20% or more in the number of shares of Common Stock
outstanding, subject to exemptions for certain public and private offerings
for cash.
Although the Board of Directors' purpose for seeking an increase in the
number of authorized shares of Common Stock is not intended for anti-takeover
purposes, it should be noted that the authorized but unissued shares of Common
Stock, if issued, could be used by incumbent management to make more
difficult, and thereby discourage, an attempt to acquire control of the
Company even though stockholders of the Company might deem such an acquisition
desirable. For example, the shares could be privately placed with purchasers
who might support the Board of Directors in opposing a hostile takeover bid.
The issuance of the new shares could also be used to dilute the stock
14
<PAGE>
ownership and voting power of a third party seeking to remove directors,
replace incumbent directors, accomplish certain business combinations or alter
or amend provisions of the Company's Certificate of Incorporation. To the
extent that it impedes any such attempts, the issuance of shares following
effectiveness of the Amendment may serve to perpetuate existing management.
The Amendment does not alter the Company's present ability to issue up
to 10,000,000 shares of Preferred Stock in such series with such special
rights (including voting rights), preferences, restrictions, qualifications
and limitations as the Board of Directors may designate. The Company would not
be required to obtain approval of the holders of Common Stock to issue
authorized but unissued shares of Preferred Stock, unless required to do so by
applicable law or the rules of the New York Stock Exchange. The Board of
Directors could use its authority to make such designations and to issue
Preferred Stock in a manner that would create impediments or to otherwise
discourage persons attempting to gain control of the Company.
The affirmative votes of the holders of a majority of the outstanding
shares of Common Stock are required for approval of the Amendment. If the
proposed Amendment is approved by the stockholders, the Company intends to
promptly effect the Amendment by filing an appropriate amendment to the
Certificate of Incorporation with the State of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO
THE CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK OF THE COMPANY.
15
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of Common Stock
beneficially owned as of March 17, 1999 by: (i) each person known by Hanger to
be the beneficial owner of 5% or more of such class of securities, (ii) each
director and nominee for director of Hanger and (iii) all directors, nominees
and officers of Hanger as a group.
<TABLE>
<CAPTION>
Number of Percent of
Directors and 5% Shares of Outstanding
Stockholders Common Stock(1) Common Stock(1)
---------------- --------------- ---------------
<S> <C> <C>
Chase Venture Capital
Associates, L.P.(2) .......................... 1,626,689 8.28%
The TCW Group, Inc. (3) ........................ 986,730 5.24
Mitchell J. Blutt, M.D.(4) ..................... - -
Thomas P. Cooper, M.D.(5) ...................... 24,250 .13
Edmond E. Charrette, M.D.(6) ................... 23,750 .13
Robert J. Glaser, M.D.(7) ...................... 23,500 .13
James G. Hellmuth(8) ........................... 17,750 .09
C. Raymond Larkin, Jr .......................... - -
Risa J. Lavizzo-Mourey, M.D.(9) ................ 2,000 .01
Brigadier General William L. McCulloch
(USMC Retired)(10) ........................... 20,500 .10
Ivan R. Sabel, CPO(11) ......................... 129,219 .69
H.E. Thranhardt, CPO(12) ....................... 377,525 2.00
All directors, nominees and officers
as a group (10 persons)(13) ................. 666,360 3.50
-----------------------------------------------------------------------------
<FN>
* Holding constitutes less than .1% of the outstanding shares of the
class.
(1) Assumes in the case of each stockholder listed in the above list that
all presently exercisable warrants or options held by such stockholder were
fully exercised by such stockholder, without the exercise of any warrants or
options held by any other stockholders.
(2) Includes 830,649 shares subject to exercisable warrants to purchase
shares from the Company. Reference is made to notes (4) and (5) below for
information relating to two directors of the Company that are affiliated with
CVCA. The address of CVCA and its sole general partner, Chase Capital
Partners, is 380 Madison Avenue (12th Floor), New York, New York 10017.
16
<PAGE>
(3) The address of The TCW Group, Inc. is 865 South Figueroa Street, Los
Angeles, California 90017.
(4) Does not include the shares reported above as owned by CVCA. Dr. Blutt
is an Executive Partner of Chase Capital Partners, the sole general partner of
CVCA. He disclaims beneficial ownership of the shares beneficially owned by
CVCA.
(5) Includes 17,750 shares subject to exercisable options to purchase shares
from the Company and excludes 12,500 shares subject to unvested options that
have not yet become exercisable. Dr. Cooper currently serves as a consultant
to Chase Capital Partners.
(6) Includes 3,750 shares subject to exercisable options to purchase shares
from the Company and excludes 11,250 shares subject to unvested options that
have not yet become exercisable.
(7) Includes 22,500 shares subject to exercisable options to purchase shares
from the Company and excludes 12,500 shares subject to unvested options that
have not yet become exercisable.
(8) Includes 17,500 shares subject to exercisable options to purchase shares
from the Company and excludes 12,500 shares subject to unvested options that
have not yet become exercisable.
(9) Excludes 5,000 shares subject to unvested options that have not yet
become exercisable.
(10) Includes 10,000 shares subject to exercisable options to purchase shares
from the Company and excludes 12,500 shares subject to unvested options that
have not yet become exercisable.
(11) Includes 33,500 shares subject to exercisable options to purchase shares
from the Company and excludes 258,750 shares subject to unvested options that
have not yet become exercisable.
(12) Consists of 184,027 shares owned directly by Mr. Thranhardt, 101,250
shares subject to exercisable options to purchase shares from the Company,
35,543 shares owned indirectly by him as trustee for members of his family,
and 56,705 shares owned indirectly by him as general partner of a family
partnership; does not include 58,750 shares subject to unvested options that
have not yet become exercisable.
(13) Includes a total of 205,250 shares subject to exercisable options held
by directors and officers of the Company to purchase shares from the Company
and excludes a total of 500,000 shares subject to unvested options held by
such persons that have not yet become exercisable.
</FN>
</TABLE>
17
<PAGE>
STOCK PERFORMANCE CHART
The following chart compares the Company's cumulative total stockholder
return with the S&P 500 Index, a performance indicator of the overall stock
market, and Company-determined peer group index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN1
AMONG HANGER ORTHOPEDIC GROUP, INC., S&P 500 INDEX &
PEER GROUP INDEX
<TABLE>
<CAPTION>
=============================================================================================================
1993 1994 1995 1996 1997 1998
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hanger Orthopedic Group, Inc. $100.00 $ 48.00 $ 44.00 $104.00 $206.00 $360.00
Common Stock
-------------------------------------------------------------------------------------------------------------
S&P 500 Index 100.00 101.32 139.40 171.40 228.59 293.91
-------------------------------------------------------------------------------------------------------------
Peer Group Index 100.00 98.87 146.32 182.87 247.00 154.55
=============================================================================================================
Assumes $100 invested on January 1, 1993.
<FN>
1 Total return assumes reinvestment of dividends and based on market
capitalization.
2 Fiscal year ending December 31.
3 The eight issuers of common stock included in the peer group index are
American Homepatient, Inc., American Oncology Resources, Inc., Concentra
Managed Care Inc., Healthsouth Corporation, NovaCare, Inc., Orthodontic
Centers of America, Inc., Renal Care Group, Inc. and Total Renal Care
Holdings, Inc.
</FN>
</TABLE>
18
<PAGE>
PROPOSAL THREE - INDEPENDENT ACCOUNTANTS
The Company's Board of Directors has appointed the accounting firm of
PricewaterhouseCoopers LLP to serve as the Company's independent accountants
for the current fiscal year ending December 31, 1999. The firm has served in
that capacity for the Company's past eleven fiscal years. A resolution will be
presented at the Annual Meeting to ratify the appointment by the Company's
Board of Directors of PricewaterhouseCoopers LLP to serve as the Company's
independent public accountants for the current fiscal year. A majority vote is
required for ratification. A representative of PricewaterhouseCoopers LLP may
be present at the Annual Meeting to answer any questions concerning the
Company's financial statements and to make a statement if he desires to do so.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than
10% of a registered class of the Company's equity securities, to file reports
of securities ownership and changes in such ownership with the Securities and
Exchange Commission. Statements of Changes of Beneficial Ownership of
Securities on Form 4 are required to be filed by the tenth day of the month
following the month during which the change in beneficial ownership of
securities occurred. The Company believes that all reports of securities
ownership and changes in such ownership required to be filed during 1998 were
timely filed.
YEAR 2000 STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2000 Annual
Meeting, which presently is expected to be held in May 2000, must be received
by the Secretary of the Company, 7700 Old Georgetown Road, Bethesda, Maryland
20814, no later than December 1, 1999, in order for them to be considered for
inclusion in the 2000 Proxy Statement. A shareholder desiring to submit a
proposal to be voted on at next year's Annual Meeting, but not desiring to
have such proposal included in next year's Proxy Statement relating to that
meeting, should submit such proposal to the Company by February 16, 2000
(i.e., at least 45 days prior to the expected date of the mailing of the Proxy
Statement). Failure to comply with that advance notice requirement will permit
management to use its discretionary voting authority if and when the proposal
is raised at the Annual Meeting without having had a discussion of the
proposal in the Proxy Statement.
OTHER MATTERS
Management is not aware of any other matters to be considered at the
Annual Meeting. If any other matters properly come before the Annual Meeting,
19
<PAGE>
the persons named in the enclosed Proxy will vote said Proxy in accordance
with their discretion.
By Order of the Board of Directors
HANGER ORTHOPEDIC GROUP, INC.
Richard A. Stein
Secretary
March 31, 1999
20
<PAGE>
PROXY
HANGER ORTHOPEDIC GROUP, INC.
7700 OLD GEORGETOWN ROAD
BETHESDA, MARYLAND 20814
This proxy is solicited by the Board of Directors for the ANNUAL MEETING
OF STOCKHOLDERS of Hanger Orthopedic Group, Inc. (the "Company"), a Delaware
corporation, on May 4, 1999, 10:00 a.m., local time.
The undersigned appoints Ivan R. Sabel and Richard A. Stein, and each of
them, a proxy of the undersigned, with full power of substitution, to vote all
shares of Common Stock, par value $.01 per share, of the Company which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held on March 17, 1998, or at any adjournment thereof, with all powers the
undersigned would have if personally present.
-----------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE FOLLOWING PROPOSALS:
Please mark your votes as indicated in this example [X]
-----------------------------------------------------------------------------
1. To Elect Directors FOR all nominees listed to the right (except as
marked to the contrary) [ ]
WITHHOLD AUTHORITY to vote for all nominees listed to the right [ ]
MITCHELL J. BLUTT, M.D., EDMOND E. CHARRETTE, M.D., THOMAS P. COOPER,
M.D., ROBERT J. GLASER, M.D., C. RAYMOND LARKIN, JR., RISA J.
LAVIZZO-MOUREY, M.D., BRIG. GEN. WILLIAM L. MCCULLOCH (USMC RET.), IVAN
R. SABEL, CPO, AND H.E. THRANHARDT, CPO.
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.
-----------------------------------------------------------------------------
2. Proposal to amend the Company's Certificate of Incorporation increasing
number of authorized shares of Common Stocks from 25 million to 40
million.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
-----------------------------------------------------------------------------
3. Proposal to ratify the selection of PricewaterhouseCoopers LLP as the
independent accountants for the Company for the current fiscal year.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
-----------------------------------------------------------------------------
4. In their discretion, the Proxies are authorized to vote upon such other
business as properly may come before the meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
-----------------------------------------------------------------------------
Sign exactly as your name appears hereon. When signing in a representative or
fiduciary capacity, indicate title. If shares are held jointly, each holder
should sign.
Date ________________, 1999
---------------------------
---------------------------
Signature of Stockholder(s)
THE SHARES WILL BE VOTED AS DIRECTED ABOVE, AND WITH RESPECET TO OTHER MATTERS
OF BUSINESS PROPERLY BEFORE THE MEETING AS THE PROXIES SHALL DECIDE. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, AND 3.
<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
HANGER ORTHOPEDIC GROUP, INC.
-----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
-----------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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:
-----------------------------------------------------------------------------
