<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
ATRIX LABORATORIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[ATRIX LOGO]
ATRIX LABORATORIES, INC.
Dear Stockholder:
On behalf of the Board of Directors, I invite you to attend the Annual
Meeting of Shareholders of Atrix Laboratories, Inc. (the "Company") to be held
on April 25, 1999 at 6:00 p.m. local time, at The Fort Collins Marriott, 350
East Horsetooth Road, Fort Collins, Colorado.
At the meeting you are being asked (i) to elect directors, and (ii) to
ratify the Board of Directors' selection of Deloitte & Touche LLP as the
Company's independent auditors for the year ending December 31, 1999.
You are urged to vote your Proxy even if you currently plan to attend the
Annual Meeting. Please remember to sign and date the Proxy card, otherwise, it
is invalid. Returning your Proxy will not prevent you from voting in person but
will assure that your vote is counted if you are unable to attend the meeting.
This has been an eventful year for our Company. At the meeting, we will
review the Company's activities over the past year and its plans for the future.
An opportunity will be provided for questions by stockholders. I hope you will
be able to join us.
Sincerely,
[JOHN E. URHEIM SIGNATURE]
John E. Urheim,
Vice Chairman and Chief
Executive Officer
March 26, 1999
<PAGE> 3
ATRIX LABORATORIES, INC.
2579 MIDPOINT DRIVE
FORT COLLINS, COLORADO 80525
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 1999
---------------------
TO THE STOCKHOLDERS OF ATRIX LABORATORIES, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders (the
"Meeting") of Atrix Laboratories, Inc. (the "Company") will be held at The Fort
Collins Marriott, 350 East Horsetooth Road, Fort Collins, Colorado 80525 on
April 25, 1999 at 6:00 p.m. Fort Collins time, for the following purposes:
1. To elect directors.
2. To ratify the Board of Directors' selection of Deloitte & Touche LLP as
the Company's independent auditors for the year ending December 31,
1999.
3. To transact such other business as may properly come before the Meeting
and at any and all postponements, continuations or adjournments thereof.
Only stockholders of record at the close of business on March 5, 1999 are
entitled to notice of and to vote at the Meeting or any postponements,
continuations and adjournments thereof.
All stockholders, whether or not they expect to attend the Meeting in
person, are requested to complete, date and sign the enclosed form of proxy and
return it promptly in the postage paid, return-addressed envelope provided for
that purpose. By returning your proxy promptly you can help the Company avoid
the expense of follow-up mailings to ensure a quorum so that the Meeting can be
held. Stockholders who attend the Meeting may revoke a prior proxy and vote
their proxy in person as set forth in the Proxy Statement.
THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
PROPOSED ITEMS. YOUR VOTE IS IMPORTANT.
By Order of the Board of Directors
[JOHN E. URHEIM SIGNATURE]
John E. Urheim,
Vice Chairman and
Chief Executive Officer
Fort Collins, Colorado
Dated: March 26, 1999
<PAGE> 4
ATRIX LABORATORIES, INC.
2579 MIDPOINT DRIVE
FORT COLLINS, COLORADO 80525
---------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 1999
---------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors (the "Board") of Atrix
Laboratories, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Shareholders of the Company to be held at The Fort Collins
Marriott, 350 East Horsetooth Road, Fort Collins, Colorado, on April 25, 1999 at
6:00 p.m. Fort Collins time and at any postponements, continuations or
adjournments thereof (collectively the "Meeting"). This Proxy Statement, the
accompanying form of Proxy (the "Proxy") and the Notice of Annual Meeting will
be first mailed or given to the Company's stockholders on or about March 26,
1999.
All shares of the Company's $.001 par value common stock (the "Shares"),
represented by properly executed Proxies received in time for the Meeting will
be voted at the Meeting in accordance with the instructions marked thereon or
otherwise as provided therein, unless such Proxies have previously been revoked.
Unless instructions to the contrary are marked, or if no instructions are
specified, Shares represented by Proxies will be voted for the proposals set
forth on the Proxy, and in the discretion of the persons named as proxies, on
such other matters as may properly come before the Meeting. Any Proxy may be
revoked at any time prior to the exercise thereof by submitting another Proxy
bearing a later date or by giving written notice of revocation to the Company at
the address indicated above or by voting in person at the Meeting. Any notice of
revocation sent to the Company must include the stockholder's name and must be
received prior to the Meeting to be effective.
VOTING
Only holders of record of Shares at the close of business on March 5, 1999
(the "Record Date") will be entitled to receive notice of and to vote at the
Meeting. On the Record Date there were 11,415,075 Shares outstanding, each of
which will be entitled to one vote on each matter properly submitted for vote to
the stockholders at the Meeting. The presence, in person or by proxy, of holders
of a majority of Shares entitled to vote at the Meeting constitutes a quorum for
the transaction of business at the Meeting.
The election of each director nominee requires the affirmative vote of a
plurality of the Shares cast in the election of directors. An affirmative vote
of a majority of the votes cast at the Meeting is required to approve each other
proposal being presented to the stockholders for their approval at the Meeting.
Votes cast by proxy will be tabulated by an automated system administered
by the Company's transfer agent. Votes cast by proxy or in person at the Meeting
will be counted by the persons appointed by the Company to act as election
inspectors for the Meeting. Abstentions, broker non-votes and Shares as to which
authority to vote on any proposal is withheld, are each included in the
determination of the number of Shares present and voting at the Meeting for
purposes of obtaining a quorum. Each will be tabulated separately. Abstentions
are counted in tabulations of the votes cast on proposals presented to
stockholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
<PAGE> 5
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation provides
for a board of directors made up of three classes. The members of each class
serve three-year staggered terms with one class to be elected at each annual
meeting. As provided in the Company's Bylaws, the Board has currently set the
total number of directors at nine, with four directors in Class A, two directors
in Class B and three directors in Class C. The current terms of the Class A and
Class B directors expire at the Company's Annual Meeting of Shareholders for the
years ended 1999 and 2000, respectively. The current term of the Class C
directors expires at the Meeting.
The Board has nominated Messrs. Stuart Campbell, C. Rodney O'Connor and Dr.
G. Lee Southard for election as Class C directors to serve for a three-year term
expiring at the Annual Meeting of Shareholders for the year ended 2001 and until
their successors are elected and qualified.
Each director nominee is currently a Class C director. Each of the nominees
has consented to be a nominee and to serve as a director if elected, and it is
intended that the Shares represented by properly executed Proxies will be voted
for the election of the nominees except where authority to so vote is withheld.
The Board has no reason to believe that any of the director nominees will be
unable to serve as directors or become unavailable for any reason. If, at the
time of the Meeting, any of the director nominees shall become unavailable for
any reason, the persons entitled to vote the Proxy will vote for such
substituted nominee or nominees, if any, as such persons shall determine in his
or her discretion.
Information is set forth below regarding the director nominees and the
directors who will continue in office after the Meeting, including the name and
age of each director and nominee, his principal occupation and business
experience during the past five years and the commencement of his term as a
director of the Company.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO ELECT
MESSRS. H. STUART CAMPBELL AND C. RODNEY O'CONNOR AND DR. G. LEE SOUTHARD FOR
ELECTION AS CLASS C DIRECTORS.
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING DIRECTOR
NAME AND AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS SINCE
------------ ----------------------------------------- --------
<S> <C> <C>
Dr. G. Lee Southard(1) President of the Company from 1987 to 1998, Chief 1986
(62) Scientific Officer of the Company from June 1993 to
December 1998, and Chief Executive Officer from 1987
to 1993. Dr. Southard also serves as a director of
Mesa Laboratories, Inc. Dr. Southard received his
Ph.D. in Organic Chemistry from the University of
North Carolina at Chapel Hill.
C. Rodney O'Connor Chairman and Chief Executive Officer of Cameron 1987
(66) Associates, Inc., a financial communications firm,
since 1976. Mr. O'Connor received a Masters Degree
in Finance from the Wharton School of Finance.
H. Stuart Campbell(2) Owner and Vice-President of Highland Packaging Labs, 1995
(69) Inc., a specialty packaging company for the
pharmaceutical industry, since 1983. Mr. Campbell
also serves as a director for Biomatrix, Inc. and
Mesa Laboratories, Inc. Mr. Campbell received a
Bachelor of Science degree from Cornell University.
</TABLE>
- ---------------
(1) Member of the Executive Committee
(2) Member of the Compensation Committee
2
<PAGE> 6
DIRECTORS WHOSE TERM OF OFFICE WILL CONTINUE AFTER THE MEETING
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING DIRECTOR
NAME AND AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS SINCE
------------ ----------------------------------------- --------
<S> <C> <C>
William C. O'Neil, Jr.(1)(2)** Chairman of the Company, since 1994. Chairman of 1988
(64) ClinTrials Research, Inc., a clinical research
services company, from 1989 to 1998, President and
Chief Executive Officer from 1989 to January 1998.
Mr. O'Neil also serves as a director of American
Healthcorp, Central Parking Systems, Sigma Aldrich
Corp. and Advocat, Inc. Mr. O'Neil received a
Bachelor of Arts degree from St. Bonaventure
University and a Masters of Business Administration
from Harvard University.
John E. Urheim(1)* Vice Chairman and Chief Executive Officer of the 1993
(58) Company since June 1993. Mr. Urheim received his
Masters degree in Economics from the University of
Iowa.
Dr. D. Walter Cohen(1)(3)* Chancellor of the Medical College of Pennsylvania 1992
(72) since 1993 and President of the Medical College of
Pennsylvania from 1986 to 1993. Since 1950, Dr.
Cohen has had a dental practice specializing in
periodontics. Dr. Cohen also serves as a director
of Crusader Bank of Philadelphia. Dr. Cohen
received his DDS from the University of
Pennsylvania School of Dentistry and served as its
Dean from 1972 to 1983.
Dr. Jere E. Goyan(3)* President and Chief Operating Officer of Alteon, 1986
(67) Inc., a pharmaceutical company, from May 1993 to
December 1998, and a member of the Board of
Directors since 1993. Dr. Goyan is currently the
President of Goyan & Hart Associates, a consulting
company. Dr. Goyan was professor of Pharmacy and
Pharmaceutical Chemistry at, and Dean of, the
School of Pharmacy at the University of California,
San Francisco, from 1965 and 1967, respectively, to
1993, and currently serves as Emeritus Dean of the
School of Pharmacy. Dr. Goyan also serves as a
director of Emisphere Technologies, Penwest
Pharmaceutical Co. and SciClone Pharmaceuticals,
Inc. Dr. Goyan received his Ph.D. degree in
Biochemistry from the University of California and
was a former FDA Commissioner.
Dr. R. Bruce Merrifield(3)* Professor at Rockefeller University since 1949 and 1986
(77) associate editor for the International Journal of
Peptide and Protein Research and a member of the
Editorial Board of Analytical Biochemistry. Dr.
Merrifield also serves as a director of Profile
Diagnostic Sciences, Inc. Dr. Merrifield received
his Ph.D. degree in Chemistry from the University
of California, Los Angeles.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING DIRECTOR
NAME AND AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS SINCE
------------ ----------------------------------------- --------
<S> <C> <C>
David R. Bethune(2)** President and Chief Operating Officer of IVAX 1995
(58) Corporation, a pharmaceutical holding company, from
1997 to 1998. Consultant to the pharmaceutical
industry from 1996 to 1997. President and Chief
Executive Officer of Aesgen, Inc., a generic
pharmaceutical drug company, from 1995 to 1996.
Group Vice President of American Cyanamid Company,
a pharmaceutical company, from 1992 to 1995. Mr.
Bethune also serves as a director of Female Health
Co. Mr. Bethune received a Bachelors degree in
Business from Lenoir Rhyne College.
</TABLE>
- ---------------
(1) Member of the Executive Committee
(2) Member of the Compensation Committee
(3) Member of the Audit Committee
* Class A Director
** Class B Director
BOARD MEETINGS
During 1998 the Board met seven times. No director attended fewer than 75%
of the aggregate of (i) the total number of meetings of the Board during 1998;
and (ii) the total number of meetings held by all Committees of the Board on
which he served during 1998.
COMMITTEES OF THE BOARD
Executive Committee. The Board has an Executive Committee and during 1998
its members were Mr. O'Neil, Chairman of the Executive Committee, Mr. Urheim,
and Drs. Southard and Cohen. The Executive Committee has the authority to
conduct the business and affairs of the Company, except where action of the
entire Board is specified by statute. The Executive Committee met once during
1998 and all members were in attendance.
Audit Committee. The Board has an Audit Committee and during 1998 its
members were Dr. Goyan, Chairman of the Audit Committee, and Drs. Merrifield and
Cohen. The Audit Committee's duties include the following: (i) making
recommendations to the Board as to the selection of the Company's independent
auditors; (ii) reviewing the results of the annual audit of the Company with the
independent auditors and appropriate management representatives; (iii) reviewing
with the independent auditors such major accounting policies of the Company as
are deemed appropriate for review by the Audit Committee; and (iv) reporting to
the Board at each meeting of the full Board following a meeting of the Audit
Committee concerning the Audit Committee's activities. The Audit Committee met
one time during 1998 and Dr. Goyan missed the meeting.
Compensation Committee. The Board has a Compensation Committee and during
1998 its members were Mr. Bethune, Chairman of the Compensation Committee, and
Messrs. Campbell and O'Neil. The Compensation Committee performs the following
duties: (i) considering and making recommendations to the Board with respect to
the overall compensation policies of the Company; (ii) approving the
compensation payable to all officers of the Company; (iii) reviewing proposed
compensation of executives as provided in the Company's executive compensation
plan; (iv) advising management on all other executive compensation matters as
requested; (v) construing and interpreting the Company's Amended and Restated
Performance Stock Option Plan (the "Stock Option Plan") and, subject to the
express provisions of the Stock Option Plan, determining the persons to whom
options are granted, the number of Shares subject to options, when options shall
be granted, the exercise price of Shares subject to options, the time during
which options shall be exercisable and the duration of the exercise period and
other terms and provisions thereof; and (vi) reporting
4
<PAGE> 8
to the Board as and when appropriate with respect to all of the foregoing. The
Compensation Committee met two times during 1998 and all members were present.
The Board does not presently have a separate nominating committee, the
function of which is performed by the Board as a whole.
EXECUTIVE OFFICERS
Information is set forth below regarding the executive officers of the
Company, including their age, principal occupation during the last five years
and the date each first became an executive officer of the Company.
<TABLE>
<CAPTION>
EXECUTIVE OFFICER
NAME AGE PRESENT EXECUTIVE OFFICE OF THE COMPANY SINCE
---- --- ------------------------ --------------------
<S> <C> <C> <C>
John E. Urheim 58 Vice Chairman and Chief Executive Officer since 1993
June 1993.
Dr. Richard Jackson 59 Senior Vice President for Drug Delivery since 1998
November 1998 and Senior Vice President of Research
and Development of American Home Products from 1993
to June 1998.
Dr. Richard L. Dunn 58 Senior Vice President, Drug Delivery Research since 1987
1992 and Vice President, Research and Development
from 1987 to 1992.
Dr. Charles P. Cox 46 Vice President, New Business Development since 1992
January 1996 and Vice President, Product
Development from September 1992 to January 1996.
Brian G. Richmond 47 Vice President, Finance since December 1997, 1997
Assistant Secretary since January 1997, Corporate
Controller from January 1997 to November 1997 and
Accounting Manager from 1991 to 1996.
Dr. J. Steven Garrett 54 Vice President, Clinical Research since April 1995. 1995
Professor of Periodontics at Loma Linda University
from 1986 to 1995 and in private practice
specializing in periodontics since 1978.
Michael R. Duncan 36 Vice President, Manufacturing since October 1995. 1995
Director of Production Operations and Packaging
Manager for Geneva Pharmaceuticals, Inc. from
October 1991 to October 1995.
Rees M. Orland 54 Vice President, Sales and Marketing since January 1996
1996. Owner of RMO Consulting Group, a healthcare
marketing consulting business, from October 1994 to
January 1996. President and Chief Executive Officer
of Unimed Pharmaceuticals from September 1993 to
October 1994.
David Osborne 38 Vice President, Pharmaceutical Development since 1998
November 1998. Vice President of Drug Delivery for
Virotex Corporation from 1993 to November 1998.
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
EXECUTIVE OFFICER
NAME AGE PRESENT EXECUTIVE OFFICE OF THE COMPANY SINCE
---- --- ------------------------ --------------------
<S> <C> <C> <C>
Elaine M. Gazdeck 48 Vice President, Regulatory Affairs/Quality 1996
Assurance since June 1996, Director, Regulatory
Affairs from May 1994 to May 1996 and Manager,
Regulatory Affairs from May 1990 to April 1994.
</TABLE>
Officers serve at the discretion of the Board and are elected at the first
meeting of the Board after each annual meeting of stockholders. There are no
family relationships among any directors and executive officers of the Company.
6
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid by
the Company for each of the last three fiscal years to (i) the Company's Chief
Executive Officer and (ii) the Company's other five most highly compensated
executive officers whose total annual compensation exceeded $100,000 during 1998
(the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION AWARDS
--------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
- --------------------------- ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Mr. John E. Urheim, 1998 $230,000 $58,000(2) 15,000 $3,863(1)
Vice Chairman and CEO 1997 215,000 -0- 17,000 3,475(1)
1996 204,000 15,000(2) 5,100 3,293(1)
Dr. G. Lee Southard, 1998 $174,167 $40,000(2) -0- $4,489(1)
President and Chief Scientific Officer 1997 170,000 -0- 8,000 4,684(1)
(Retired December 1998) 1996 158,025 15,000(2) 4,000 4,511(1)
Dr. J. Steven Garrett 1998 $178,000 $40,000(2) 5,000 $4,620(1)
Vice President, Clinical Research 1997 165,000 -0- 25,000 4,620(1)
1996 156,000 13,000(2) 3,900 2,118(1)
Mr. Rees M. Orland, 1998 $160,000 $18,750(2) 7,500 $ -0-
Vice President, Sales & Marketing 1997 160,000 -0- -0- -0-
1996 150,000 10,000(2) 3,800 25,628(3)
Dr. Charles P. Cox, 1998 $145,000 $30,000(2) 7,500 $4,313(1)
Vice President, New Business Development 1997 130,000 $ -0- 15,000 3,891(1)
1996 123,000 13,000(2) 3,100 3,676(1)
Dr. Richard L. Dunn, 1998 $142,000 $30,000(2) 7,500 $4,251(1)
Senior Vice President, Drug Delivery Research 1997 135,000 $ -0- 10,000 4,037(1)
1996 125,804 10,000(2) 3,200 3,768(1)
</TABLE>
- ---------------
(1) Includes the Company's 50% matching contribution up to 6% of annual
compensation under the Company's 401(k) Plan.
(2) Performance bonus.
(3) Mr. Orland received $25,628 in relocation reimbursement.
The foregoing compensation table does not include certain fringe benefits
made available on a nondiscriminatory basis to all Company employees such as
group health insurance, dental insurance, long-term disability insurance,
vacation and sick leave. In addition, the Company makes available certain non-
monetary benefits to its executive officers with a view to acquiring and
retaining qualified personnel and facilitating job performance. The Company
considers such benefits to be ordinary and incidental business costs and
expenses. The aggregate value of such benefits in the case of the executive
officers, which cannot be precisely ascertained but which is the lesser of
either (a) ten percent of the salary and bonus paid to each such executive
officer or to the group, respectively, or (b) $50,000 or $50,000 times the
number of individuals in the group, as the case may be, is not included in such
table.
7
<PAGE> 11
OPTION GRANTS TABLE
The following table provides information relating to the grant of stock
options to the Company's CEO and the Named Executive Officers during the fiscal
year ended December 31, 1998 under the Stock Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
--------------------------------------------------------------- -----------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME GRANTED(#)(2) FISCAL YEAR PRICE ($/SH)(3) DATE 5%($) 10%($)
- ---- ------------- ------------ ---------------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Mr. John E. Urheim.............. 15,000 3.7% $10.125 11/13/08 95,513 242,050
Dr. G. Lee Southard............. 0 -- -- -- -- --
Dr. J. Steven Garrett........... 7,500 1.8% $10.125 11/13/08 47,757 121,025
Mr. Rees M. Orland.............. 7,500 1.8% $10.125 11/13/08 47,757 121,025
Dr. Charles P. Cox.............. 7,500 1.8% $10.125 11/13/08 47,757 121,025
Dr. Richard L. Dunn............. 7,500 1.8% $10.125 11/13/08 47,757 121,025
</TABLE>
- ---------------
(1) Potential realizable value is based on an assumption that the stock price of
the common stock appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the ten-year option term. These
numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's estimate
of future stock price growth.
(2) Vest and become exercisable at the rate of one-third on the first, second
and third anniversaries of the grant date.
(3) All options were granted at the fair market value of the Shares on the date
of grant based on the closing bid price for the Shares.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides information relating to the exercise of stock
options during the year ended December 31, 1998 by the CEO and each of the Named
Executive Officers and the 1998 fiscal year-end value of unexercised options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
FY-END AT FY-END
(#) ($)(1)
SHARES ACQUIRED -------------- --------------------
ON EXERCISE VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- -------------- -------------- --------------------
<S> <C> <C> <C> <C>
Mr. John E. Urheim....................... -0- $ -0- 216,375/28,033 $91,443/$0
Dr. G. Lee Southard...................... 60,000 $772,500 26,122/9,166 $12,994/$0
Dr. J. Steven Garrett.................... -0- $ -0- 62,702/25,467 $110,701/$0
Mr. Rees M. Orland....................... -0- $ -0- 33,680/22,100 $43,275/$16,660
Dr. Charles P. Cox....................... -0- $ -0- 62,975/18,533 $123,713/$0
Dr. Richard L. Dunn...................... -0- $ -0- 37,514/9,401 $64,470/$0
</TABLE>
- ---------------
(1) Market value of underlying Shares is (i) fair market value at December 31,
1998 ($8.875 per share) less the option exercise price, multiplied by (ii)
the number of Shares in the money.
EMPLOYMENT AGREEMENTS
On June 4, 1993, the Company entered into an employment agreement with Mr.
Urheim. Pursuant to the terms of the employment agreement, Mr. Urheim's duties
are to act as Vice Chairman of the Board and Chief
8
<PAGE> 12
Executive Officer. The employment agreement provides that Mr. Urheim receive a
starting annual base salary of $175,000 (which at the discretion of the Board,
upon recommendation by the Compensation Committee, may be increased annually).
Mr. Urheim's agreement provides for severance pay at full salary and benefits
until the earlier of one year from the date of termination or until
re-employment; and, for the immediate vesting of all unvested options, in the
case of termination other than for cause. Mr. Urheim's base salary was increased
to $255,000 effective January 1, 1999.
On April 17, 1995, the Company entered into an employment agreement with
Dr. Garrett. Pursuant to the terms of the agreement, Dr. Garrett's duties are to
act as Vice President of Dental Clinical Research. The employment agreement
provides that Dr. Garrett receive a starting annual base salary of $150,000
(which at the discretion of the Board, upon recommendation by the Compensation
Committee, may be increased annually). Dr. Garrett's agreement provides for
severance pay at full salary and benefits until the earlier of one year from the
date of termination or until re-employment; and, for the immediate vesting of
all unvested options, in case of termination other than for cause. Dr. Garrett's
base salary was increased to $190,000 effective January 1, 1999.
On January 1, 1996, the Company entered into an employment agreement with
Mr. Orland. Pursuant to the terms of the agreement, Mr. Orland's duties are to
act as Vice President of Marketing and Sales. The employment agreement provides
that Mr. Orland receive a starting annual base salary of $150,000 (which at the
discretion of the Board, upon recommendation by the Compensation Committee, may
be increased annually). Mr. Orland's agreement includes severance pay at full
salary and benefits until the earlier of nine months from the date of
termination or until re-employment; and, for the immediate vesting of all
unvested options, in case of termination other than for cause. Mr. Orland's base
salary was increased to $168,000 effective January 1, 1999.
COMPENSATION PURSUANT TO PLANS
Stock Option Plans. The Company has two stock option plans under which
options may currently be granted, the Stock Option Plan and a Non-Qualified
Stock Option Plan ("NQSOP"). All employees and directors are eligible to receive
options under the Stock Option Plan. The Company granted 235,347 options under
the Stock Option Plan to directors or executive officers and an aggregate of
3,000 options to one Scientific Advisory Board member under the NQSOP during the
year ended December 31, 1998.
401(k) Plan. The Company maintains a defined contribution savings plan (the
"401(k) Plan") to provide retirement income to employees of the Company,
including all executive officers. All employees who are over 21 years of age are
eligible to participate in the 401(k) Plan. It is funded by voluntary pre-tax
contributions from employees up to a maximum amount equal to 17% of annual
compensation up to $10,000 and by 50% matching contributions by the Company up
to 6% of annual compensation. Employees who have completed one year of service
are eligible for the 50% Company match. Participants are fully vested in all
pre-tax, after-tax and matching contributions as soon as they are made.
Employee Stock Purchase Plan. The Company maintains an employee stock
purchase plan (the "ESPP") which provides eligible employees the opportunity to
purchase shares of the Company's common stock through authorized payroll
deductions at 85% of the average market price on the last day of each quarter.
All employees who have completed six months of employment of 20 hours per week
or greater are eligible to participate in the ESPP. This plan qualifies as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code.
The total number of shares available for purchase under the ESPP is 300,000.
COMPENSATION OF DIRECTORS
Directors' fees are paid only to non-employee directors for Board meetings
attended at the rate of $1,500 per meeting ($2,000 per meeting attended for the
Chairman of the Board), plus reimbursement of the directors' travel expenses
relating to attendance at the meeting.
9
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board is responsible for establishing
compensation policy and administering the compensation programs of the Company's
executive officers. The Compensation Committee is currently comprised of three
independent outside directors. The Compensation Committee meets at least once a
year to review executive compensation policies, design of compensation programs,
and individual salaries and awards for the executive officers based on
performance criteria.
Pursuant to the rules regarding disclosure of Company polices concerning
executive compensation, this report is submitted by Messrs. Bethune, O'Neil and
Campbell in their capacity as members of the Compensation Committee for the year
ended December 31, 1998 and addresses the Company's compensation policies as
they affected Mr. Urheim, the CEO, and the Company's other executive officers,
including the Named Executive Officers.
EXECUTIVE COMPENSATION PHILOSOPHY
The Company applies a consistent philosophy to compensation for all
employees, including executive officers. This philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives.
The goals of the executive compensation program are to align compensation
with business objectives and performance, and to enable the Company to attract,
retain and reward executive officers who contribute to the long-term success of
the Company. The Company's compensation program for executive officers is based
on the same principles applicable to compensation decisions for all employees of
the Company and generally consists of two compensation elements: cash and
equity. The process used by the Compensation Committee in determining executive
officer compensation levels for each of these components takes into account both
qualitative and quantitative factors. Among the factors considered by the
Compensation Committee are the recommendations of the CEO with respect to the
compensation of the Company's other key executive officers. However, the
Compensation Committee makes the final compensation decisions concerning such
officers.
In making compensation decisions, the Compensation Committee considers
compensation practices and financial performance of the Peer Group (as defined
below). This information provides guidance to the Compensation Committee, but
the Compensation Committee does not target total executive compensation or any
component thereof to any particular point within, or outside, the range of Peer
Group results. However, the Compensation Committee believes that compensation at
or near the weighted average of the Peer Group for base salaries is generally
appropriate for the Compensation Committee to use as a guideline for
compensation decisions. The specified weighted averages are considered on both
an absolute basis and a size-adjusted basis (i.e., reflecting compensation
levels that are commensurate with the Company's size relative to the sizes of
the Peer Group companies). Specific compensation for individual executive
officers will vary from these levels as the result of other factors considered
by the Compensation Committee unrelated to compensation practices of the Peer
Group.
The Peer Group is comprised of biotech and pharmaceutical companies that
are among those entities who participate in an annual biotechnological survey
(the "Survey") conducted by Radford Associates in conjunction with Aon
Consulting Group. The 1998 Survey included information on 401 public and private
companies from the group of 50-149 employees.
The Compensation Committee does not believe that Internal Revenue Code
Section 162(m), which denies a deduction for compensation payments in excess of
$1,000,000 to the CEO or a Named Executive Officer, is likely to be applicable
to the Company in the near future but will reconsider the implication of Section
162(m) if and when it appears that the section may become applicable.
COMPENSATION ELEMENTS
For the year ended December 31, 1998 the Company's executive compensation
program included a base salary, grants of stock options, and a performance
bonus.
10
<PAGE> 14
Base Salary. Salaries for executive officers are determined by evaluating
subjectively the responsibilities of the position held and the experience and
performance of the individual and comparing base salaries for comparable
positions at Peer Group entities. Subject to an executive officer's individual
performance, the Compensation Committee sets salaries at or about the median as
reflected by such information. The Compensation Committee believes that such
salaries were competitive within a range that the Compensation Committee
believes to be reasonable and necessary to accomplish the Company's compensation
objectives.
In determining the base salaries for 1999, the Peer Group data was reviewed
with the CEO for each executive position. In addition, the responsibility level
of each position was reviewed, together with the executive officer's individual
performance for the prior year and objectives for the current year. In addition,
the Company's performance was compared to objectives for the prior year and
performance targets for the current year. Based on these criteria, the CEO
recommended to the Compensation Committee a percentage range increase to the
base salary for the current year for each executive level position.
In determining the CEO's base salary for 1999, the Compensation Committee
reviewed Peer Group data from the Survey concerning the salary of chief
executive officers at companies of similar size and in a similar industry. In
addition, the Compensation Committee reviewed the CEO's performance during the
previous year.
Stock Options. The long-term incentive component of the CEO's and the
executive officers' compensation is stock options. The Company believes that
providing executive officers with opportunities to acquire significant equity
positions in the Company and thus, the opportunity to share in its growth and
prosperity, through the grant of stock options will enable the Company to
attract and retain qualified and experienced executive officers. Stock options
represent a valuable portion of the compensation program for the Company's
executive officers. The exercise price of stock options is the fair market value
of the Shares on the date of the grant based on the closing bid price of the
Shares on the date of grant, and will only provide a benefit if the value of the
Shares increases. Grants of stock options to executive officers are made by the
Compensation Committee upon the recommendation of the CEO and are based upon a
review of Peer Group and the Company's relative size data within the 1998
Survey. Each executive officer's position is compared to grants of officers in
similar positions. An evaluation of the executive officer's past and expected
future performance, the number of outstanding and previously granted options,
and discussions with the executive officer are also considered when granting
options.
Performance Bonus. The Compensation Committee awarded a bonus for the
members of the executive management group based on the numerous corporate goals
which were met during the 1998 calendar year. Peer group data indicated that
over 70% of companies use a bonus plan to compensate executive level management
in addition to base salary and stock options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In fiscal 1998, the members of the Compensation Committee were Messrs.
David R. Bethune, William C. O'Neil, Jr. and H. Stuart Campbell. No member of
the Compensation Committee was previously an officer or an employee of the
Company or any of its subsidiaries.
In fiscal 1996, Highland Packaging Labs, Inc. ("Highland"), of which Mr.
Campbell, together with his wife, are the sole owners, entered into an agreement
(the "Manufacturing Agreement") to manufacture a powder filling machine for the
Company. Under the Manufacturing Agreement, Highland received a final payment of
$34,045 in fiscal 1998. See "Certain Relationships and Related Transactions."
COMPENSATION COMMITTEE
David R. Bethune, Chairman
William C. O'Neil, Jr.
H. Stuart Campbell
11
<PAGE> 15
PERFORMANCE GRAPH
The graph and table below compare the total stockholder returns (assuming
reinvestment of dividends) of the Shares, the Nasdaq Pharmaceutical Index and
the Nasdaq Index. The graph assumes $100 invested on September 30, 1993 in the
Shares and each of the indices. The stock price performance shown on the graph
below is not necessarily indicative of the future price performance.
<TABLE>
<CAPTION>
Measurement Period Company Nasdaq
(Fiscal Year Covered) Index Pharmaceutical Nasdaq Total
<S> <C> <C> <C>
9/30/93 100.00 100.00 100.00
12/31/94 86.79 81.87 99.67
12/31/95 116.98 150.17 140.97
12/31/96 162.26 150.63 173.36
12/31/97 222.64 155.54 212.68
12/31/98 133.96 199.10 298.97
</TABLE>
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 PRECEDING REPORT OF THE
COMPENSATION COMMITTEE AND PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board, upon the recommendation of the Audit Committee, has selected
Deloitte & Touche LLP as independent auditors of the Company for the year ending
December 31, 1999. Representatives of Deloitte & Touche LLP will be present at
the Meeting and will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
stockholders.
Although it is not required to do so, the Board is submitting its selection
of the Company's independent auditors for ratification by the stockholders at
the Meeting in order to ascertain the views of stockholders regarding such
selection. A majority of the votes cast at the Meeting, if a quorum is present,
will be sufficient to ratify the selection of Deloitte & Touche LLP as the
Company's independent auditors for the year ending December 31, 1999. Whether
the proposal is approved or defeated, the Board may reconsider its selection.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL NO. 2.
12
<PAGE> 16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of outstanding Shares as of the Record Date, by (i) each person who is
known by the Company to own beneficially five percent or more of the outstanding
Shares, (ii) each director of the Company, (iii) the CEO and each Named
Executive Officer, and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
NAME OWNED(1) CLASS
- ---- ------------ -------
<S> <C> <C>
Mr. David R. Bethune........................................ 18,666 *
Mr. H. Stuart Campbell...................................... 18,780(2) *
Dr. D. Walter Cohen......................................... 21,684 *
Dr. Charles P. Cox.......................................... 62,975 *
Dr. Richard L. Dunn......................................... 109,630 *
Dr. J. Steven Garrett....................................... 64,622 *
Dr. Jere E. Goyan........................................... 74,249 *
Dr. R. Bruce Merrifield..................................... 71,666 *
Mr. C. Rodney O'Connor...................................... 85,026 *
Mr. William C. O'Neil, Jr................................... 136,088(3) 1.13%
Mr. Rees M. Orland.......................................... 36,680 *
Dr. G. Lee Southard......................................... 261,716 2.17%
Mr. John E. Urheim.......................................... 241,375 2.00%
All executive officers and directors as a group (18
persons).................................................. 1,330,810 11.05%
</TABLE>
- ---------------
* Less than 1%
(1) Shares are considered beneficially owned, for purposes of this table, only
if held by the person indicated, or if such person, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise
has or shares the power to vote, to direct the voting of and/or to dispose
of or to direct the disposition of such security, or if the person has the
right to acquire beneficial ownership within 60 days, unless otherwise
indicated. The foregoing share amounts include the following number of
Shares of the Company's common stock which may be acquired pursuant to stock
options exercisable within 60 days of the Record Date: Mr. Bethune, 18,666
shares, Mr. Campbell, 18,666 shares; Dr. Cohen, 14,666 shares; Dr. Cox,
62,975 shares; Dr. Dunn, 37,514 shares; Dr. Garrett, 62,702 shares; Dr.
Goyan, 6,666 shares; Dr. Merrifield, 6,666 shares; Mr. O'Connor, 12,026
shares; Mr. O'Neil, Jr., 20,000 shares; Mr. Orland, 33,680 shares; Dr.
Southard, 26,122 shares; Mr. Urheim, 216,375 shares; and all executive
officers and directors as a group, 626,477 shares.
(2) Includes 57 shares held by Mr. Campbell's wife. Mr. Campbell disclaims any
beneficial interest in all Shares held by this wife.
(3) Includes 40,000 shares held by Mr. O'Neil's wife. Mr. O'Neil disclaims any
beneficial interest in all Shares held by his wife.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, and the
rules thereunder require the Company's executive officers and directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
(i) the Securities and Exchange Commission, (ii) the NASD, and (iii) the
Company.
Based solely on its review of Section 16(a) forms received by it and
written representations that no other reports were required, the Company
believes that, during the last fiscal year, all Section 16(a) filing
requirements applicable to its executive officers, directors and ten-percent
beneficial owners, were complied with, except as follows: on one occasion Dr.
Osborne was inadvertently late in reporting a transaction on
13
<PAGE> 17
Form 3, and Messrs. Cox, Duncan, Dunn, Garrett, Orland, Richmond, and Urheim and
Ms. Gazdeck were each late in the reporting of one transaction each on Form 4.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is a party to a manufacturing agreement (the "Manufacturing
Agreement") with Highland Packaging Labs, Inc. ("Highland"), of which Mr.
Campbell, a director of the Company, together with his wife, are the sole
owners. Under the Manufacturing Agreement, Highland contracted with the Company
to design and build a powder filling machine to fill syringes used with
Doxycycline powder for several new products of the Company. The machine was
completed and delivered to the Company in 1997. Periodic payments in 1996 and
1997, totaled $40,100 and $95,011, respectively. A final payment in the amount
of $34,045 was paid in 1998. Highland established the price for this machine
based on its costs plus ten percent.
SOLICITATION OF PROXIES
This solicitation is being made by mail on behalf of the Board, but may
also be made without additional remuneration by officers or employees of the
Company by telephone, telegraph, facsimile transmission or personal interview.
The expense of the preparation, printing and mailing of the enclosed form of
Proxy, Notice of Annual Meeting and this Proxy Statement and any additional
material relating to the Meeting which may be furnished to stockholders by the
Board subsequent to the furnishing of this Proxy Statement has been or will be
borne by the Company. The Company will reimburse banks and brokers who hold
Shares in their name or custody, or in the name of nominees for others, for
their out-of-pocket expenses incurred in forwarding copies of the Proxy
materials to those persons for whom they hold such Shares. To obtain the
necessary representation of stockholders at the Meeting, supplementary
solicitations may be made by mail, telephone or interview by officers of the
Company or selected securities dealers. It is anticipated that the cost of such
supplementary solicitations, if any, will not be material.
ANNUAL REPORT
The Annual Report of the Company for 1998 has been mailed to stockholders
along with this Proxy Statement. THE COMPANY WILL, UPON WRITTEN REQUEST AND
WITHOUT CHARGE, PROVIDE TO ANY PERSON, SOLICITED HEREUNDER, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998,
INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. Requests should be addressed to Investor
Relations, 2579 Midpoint Drive, Fort Collins, Colorado 80525.
OTHER MATTERS
The Company is not aware of any business to be presented for consideration
at the Meeting, other than those specified in the Notice of Annual Meeting. If
any other matters are properly presented at the Meeting, it is the intention of
the persons named in the enclosed Proxy to vote in accordance with their best
judgment.
14
<PAGE> 18
STOCKHOLDER PROPOSALS
Any stockholder who intends to submit a proposal at the Annual Meeting of
Shareholders for the year ended 1999 and who wishes to have the proposal
considered for inclusion in the proxy statement and form of proxy for that
meeting must, in addition to complying with the applicable laws and regulations
governing submission of such proposals, deliver the proposal to the Company for
consideration no later than November 25, 1999. Any stockholder proposal
submitted with respect to the Company's Annual Meeting of Shareholders for the
year ended 1999, which proposal is submitted outside the requirements of Rule
14a-8 under the Securities Exchange Act of 1934 will be considered untimely for
purposes of Rule 14a-4 and Rule 14a-5 of the Securities Exchange Act of 1934 if
notice of such proposal is received by the Company after February 10, 2000. Such
proposal should be sent to the Corporate Secretary of the Company at 2579
Midpoint Drive, Fort Collins, Colorado 80525.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Company whether other persons are the beneficial owners
of the Shares for which proxies are being solicited from you, and, if so, the
number of copies of this Proxy Statement and other soliciting materials you wish
to receive in order to supply copies to the beneficial owners of the Shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS,
WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON, ARE REQUESTED TO
COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED FOR THAT PURPOSE. BY RETURNING YOUR PROXY PROMPTLY YOU CAN
HELP THE COMPANY AVOID THE EXPENSE OF FOLLOW-UP MAILINGS TO ENSURE A QUORUM SO
THAT THE MEETING CAN BE HELD. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE A
PRIOR PROXY AND VOTE THEIR PROXY IN PERSON AS SET FORTH IN THIS PROXY STATEMENT.
By Order of the Board of Directors
[JOHN E. URHEIM]
John E. Urheim
Vice Chairman and
Chief Executive Officer
Fort Collins, Colorado
March 26, 1999
15
<PAGE> 19
- --------------------------------------------------------------------------------
PROXY ATRIX LABORATORIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 25, 1999
The undersigned stockholder of Atrix Laboratories, Inc. hereby constitutes
and appoints Desiree Calvelage and Brian G. Richmond and each of them, proxies,
with full power of substitution, for and on behalf of the undersigned to vote,
as designated below, according to the number of shares of the Company's $.001
par value common stock held of record by the undersigned on March 5, 1999, and
as fully as the undersigned would be entitled to vote if personally present at
the Annual Meeting of Shareholders of the Company to be held at The Fort Collins
Marriott, 350 East Horsetooth Road, Fort Collins, Colorado on April 25, 1999 at
6:00 p.m. local time, and at any and all postponements, continuations and
adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF PROPERLY EXECUTED AND NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF PROPOSED NOMINEES TO THE BOARD OF
DIRECTORS OF THE COMPANY AND FOR EACH OTHER PROPOSAL.
<TABLE>
<S> <C> <C>
1. Proposal to elect the following nominees to the Board of
Directors:
</TABLE>
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote all nominees listed below
</TABLE>
Mr. Stuart Campbell Mr. C. Rodney O'Connor Dr. G. Lee Southard
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below:)
- --------------------------------------------------------------------------------
2. Proposal for ratification of selection of Deloitte & Touche LLP as the
Company's independent auditors for the year ending December 31, 1999:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In the discretion of such proxies, upon such other business as may properly
come before the Meeting or any and all postponements, continuations or
adjournments thereof.
- --------------------------------------------------------------------------------
<PAGE> 20
- --------------------------------------------------------------------------------
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders dated March 26, 1999 and the Proxy Statement furnished therewith.
Please sign exactly as your name appears hereon. When shares are held by joint
tenants, both should sign. Executors, administrators, trustees and other
fiduciaries, and persons signing on behalf of corporations or partnerships,
should so indicate.
Dated __________________ , 1999
-------------------------------
Authorized Signature
-------------------------------
Title
-------------------------------
Authorized Signature
-------------------------------
Title
Please mark boxes [X] in ink.
Sign, date and return this
Proxy Card promptly using the
enclosed envelope.
- --------------------------------------------------------------------------------
