<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
- - - - --------------------------------------------------------------------------------
(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)(1)
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>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MARCH 6, 1997
Notice is hereby given that an annual meeting of stockholders of In Home
Heath, Inc. will be held at the Minneapolis Hilton and Towers, 1001 Marquette
Avenue, Minneapolis, Minnesota on March 6, 1997 at 3:30 o'clock p.m. Central
Time for the following purposes:
1. To elect five directors;
2. To amend the Company's 1991 Employee Stock Purchase Plan to be
extended for three (3) years ending September 30, 1999 and to increase the
number of shares available under the 1991 Plan by 800,000 shares.
3. To ratify the selection of independent public accountants for the
Company for the current fiscal year; and
4. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on January 14, 1997
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting.
By Order of the Board of Directors,
/s/ Kari Schell
Kari Schell, Assistant Secretary
Minneapolis, Minnesota
January 30, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. Proxies are
revocable at any time prior to the time they are voted, and stockholders who are
present at the Meeting may withdraw their proxies and vote in person if they so
desire.
<PAGE>
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished to the stockholders of In Home Health,
Inc. (the "Company") in connection with the Board of Directors' solicitation of
proxies to be voted at the annual meeting of stockholders to be held on March 6,
1997, or any adjournment thereof (the "Meeting"). The mailing of this Proxy
Statement to stockholders commenced on or about January 30, 1997.
All expenses in connection with solicitation of proxies will be borne by the
Company. The Company will pay brokers, nominees, fiduciaries, or other
custodians their reasonable expenses for sending proxy material to, and
obtaining instructions from, persons for whom they hold stock of the Company.
The Company expects to solicit proxies by mail, but directors, officers, and
other employees of the Company may also solicit in person, by telephone, by
telegraph or by mail. The Company's principal offices are located at 601 Carlson
Parkway, Suite 500, Minnetonka, Minnesota 55305 and its telephone number is
(612) 449-7500.
Any proxy may be revoked at any time before it is voted by written notice,
mailed or delivered to the Assistant Secretary of the Company, or by revocation
in person at the Meeting; but if not so revoked, the shares represented by such
proxy will be voted in the manner directed by the stockholder. If no direction
is made, proxies received from stockholders will be voted "for" the proposals
set forth in the Notice of Meeting.
Only stockholders of record at the close of business on January 14, 1997
will be entitled to vote at the meeting. As of such date, the Company had
outstanding 16,295,897 shares of common stock, par value $.01 per share (the
"Common Stock") and 200,000 shares of Series A Preferred Stock, par value $1.00
per share (the "Preferred Stock"). Each share of Common Stock is entitled to one
vote and each share of Preferred Stock is entitled to 50 votes on each of the
matters brought before the Meeting. The holders of Common Stock and Preferred
Stock vote together as a single class on all issues presented to the holders of
Common Stock or as to which the holders of Common Stock are entitled to vote
upon. In addition, the holders of Preferred Stock are entitled to vote as a
separate class on (i) all matters as to which such holders are entitled to vote
under the Minnesota Business Corporation Act, (ii) any amendment, alteration or
repeal of any provision of the Company's Articles of Incorporation or the
Certificate of Designation filed with respect to the Preferred Stock, and (iii)
any proposed creation of a class or series of preferred stock ranking on a
parity with the Preferred Stock as to dividends or on liquidation.
The Company's articles of incorporation exclude cumulative voting. Thus
Manor Healthcare Corp. ("Manor Healthcare"), which controls approximately 64% of
the voting power of the Company's stockholders, is able to effectively control
the outcome of any stockholder votes, including the election of directors. Manor
Healthcare acquired all of the 200,000 shares of Preferred Stock which are
outstanding and 6,750,000 shares of Common Stock on October 24, 1995 pursuant to
a Securities Purchase and Sale Agreement between the Company and Manor
Healthcare dated as of May 2, 1995, as amended (the "Purchase Agreement").
The presence, in person or by proxy, of the holders of a majority of the
voting power of all shares of the Company entitled to vote at the Meeting will
constitute a quorum for the transaction of business. Under Minnesota law, if the
shares present and entitled to vote on an item of business would not constitute
a quorum for the transaction of business at the meeting, then the item must be
approved by a majority of the voting power of the minimum number of shares that
would constitute such a quorum. Votes
2
<PAGE>
cast by proxy or in person at the Meeting will determine whether or not a quorum
is present. Abstentions will be treated 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 the matter submitted to the
stockholders. Therefore abstentions are effectively a vote against the proposal.
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 with respect to that matter.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. These
insiders are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file, including
Forms 3, 4 and 5.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 30, 1996 all
Section 16(a) filing requirements applicable to its insiders were complied with.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information provided to the Company as to the
beneficial ownership of Common Stock as of January 14, 1997 by persons known to
the Company to hold 5% or more of such stock and by all current directors,
nominees, the Named Executive Officers from the table on page 7 and all
directors, nominees, and executive officers as a group. All shares represent
sole voting and investment power, unless indicated to the contrary.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP VOTING POWER
- - - - -------------------------------------------------------------------------------- ----------------------- ------------
<S> <C> <C>
Manor Healthcare (1)............................................................ 22,750,000(2) 70.4%
Mark L. Gildea (3)(4)........................................................... 24,000(5) *
Jeffrey M. Jasnoff (3).......................................................... 7,616(5) *
Judy M. and Kenneth J. Figge (3)................................................ 0(6) *
James J. Lynn (4)............................................................... 87,565(5) *
Donald C. Tomasso (4)........................................................... 0(7) *
Joseph R. Buckley (4)........................................................... 0(7) *
James H. Rempe (4).............................................................. 0(7) *
Cathy R. Reeves (3)(8).......................................................... 44,480 *
Margaret L. Maxon (3)(8)........................................................ 2,088 *
All Directors and Executive Officers as a Group (7 persons)..................... 167,471(5)(7) 1.0%
</TABLE>
- - - - ------------------------
* Less than one percent
(1) Manor Healthcare's address is 11555 Darnestown Road, Gaithersburg, Maryland
20878.
(2) Manor Healthcare holds of record 6,750,000 shares of Common Stock, 200,000
shares of Preferred Stock (which are presently convertible into 10,000,000
shares of Common Stock) and currently exercisable warrants to purchase
6,000,000 shares of Common Stock at an exercise price of $3.75 per share
expiring on October 24, 1998.
(3) Named Executive Officer of the Company from the table on page 7.
(4) Director nominated for re-election.
(5) Includes 24,000 shares for Mr. Gildea, 6,000 shares for Mr. Jasnoff, 70,000
shares for Mr. Lynn, and 139,000 shares for all directors and officers as a
group which may be acquired pursuant to stock options which are presently
exercisable or become exercisable within sixty days of January 14, 1997.
(6) Judy M. and Kenneth J. Figge resigned as directors and officers of the
company effective October 22, 1996. In connection with their resignation,
the Company repurchased all outstanding shares of Common Stock held by the
Figges and their outstanding stock options were canceled.
(7) Each of Messrs. Tomasso, Buckley and Rempe are officers of Manor Healthcare,
and as such may be considered to control the shares held by Manor
Healthcare; each disclaims beneficial ownership of such shares.
(8) Cathy R. Reeves and Margaret L. Maxon resigned as officers of the Company on
October 24, 1996 and August 15, 1996, respectively.
4
<PAGE>
The following table also sets forth, as of January 14, 1997, the amount of
Manor Care, Inc. Common Stock beneficially owned by the current directors,
nominees, the Named Executive Officers from the table on page 7 and all
directors, nominees and Named Executive Officers as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
MANOR CARE, INC.
COMMON STOCK PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(1)
- - - - --------------------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Mark L. Gildea................................................................... 10,277(2) *
Judy M. and Kenneth J. Figge..................................................... 0 *
Jeffrey M. Jasnoff............................................................... 200 *
James J. Lynn.................................................................... 0 *
Donald C. Tomasso................................................................ 82,693(3) *
Joseph R. Buckley................................................................ 121,158(4) *
James H. Rempe................................................................... 134,506(5) *
Cathy R. Reeves.................................................................. 0 *
Margaret L. Maxon................................................................ 0 *
All Directors and Executive Officers as a group (7 persons)...................... 348,834(6) *
</TABLE>
- - - - ------------------------
* Less than 1%
(1) Percentages are based on 62,799,084 shares outstanding on January 14, 1997
plus shares which would be issued assuming that the person exercised all
options which are exercisable within 60 days thereafter.
(2) Includes 10,277 shares which Mr. Gildea has the right to acquire pursuant to
stock options which are presently exercisable or which become exercisable
within 60 days after January 14, 1997.
(3) Includes 40 shares held as custodian for children of Mr. Tomasso. Beneficial
ownership of such shares is disclaimed. Also includes 75,975 shares which
Mr. Tomasso has the right to acquire pursuant to stock options which are
presently exercisable or which become exercisable within 60 days after
January 14, 1997, and 82 shares and 96 shares, respectively, which Mr.
Tomasso has the right to receive upon termination of his employment with
Manor Care, Inc. present to the terms of Manor Care, Inc.'s Qualified
Retirement Savings and Investment Plan ("401(k) Plan") and its Nonqualified
Retirement Savings and Investment Plan ("Nonqualified Savings Plan").
(4) Includes 113,053 shares which Mr. Buckley has the right to acquire pursuant
to stock options which are presently exercisable or which become exercisable
within 60 days after January 14, 1997, and 467 shares and 138 shares,
respectively, which Mr. Buckley has the right to receive upon termination of
his employment with Manor Care, Inc. pursuant to the terms of Manor Care,
Inc.'s 401(k) Plan and Nonqualified Savings Plan.
(5) Includes 65,477 shares which Mr. Rempe has the right to acquire pursuant to
stock options which are presently exercisable or which become exercisable
within 60 days after January 14, 1997, and 551 shares which Mr. Rempe has
the right to receive upon termination of his employment with Manor Care,
Inc. pursuant to the terms of Manor Care, Inc.'s 401(k) Plan.
(6) Includes a total of 264,782 shares which the officers, directors and
nominees included in the group have the right to acquire pursuant to stock
options which are presently exercisable or become exercisable within 60 days
after January 14, 1997, and a total of 1,100 shares and 234 shares,
5
<PAGE>
respectively, which such officers have the right to receive upon termination
of employment from Manor Care, Inc. pursuant to the terms of Manor Care,
Inc.'s 401(k) Plan and Nonqualified Savings Plan.
EXECUTIVE COMPENSATION AND
OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ending September 30, 1996,
1995 and 1994, the cash compensation paid by the Company, as well as certain
other compensation paid or accrued for those years, to Mark L. Gildea, the
Company's Chief Executive Officer as of September 30, 1996, to Judy M. Figge,
the Company's Chief Executive Officer for a period in the fiscal year ended
September 30, 1996, to each of the other three most highly compensated executive
officers or other employees of the Company, other than Mr. Gildea and Ms. Figge,
and an additional person who served as an executive officer during the fiscal
year but resigned prior to September 30, 1996, each of whose total cash
compensation exceeded $100,000 during fiscal 1996 (the "Named Executive
Officers") in all capacities in which they served. Certain columns prescribed by
Securities and Exchange Commission proxy regulations have not been included in
this table because the information called for therein is not applicable to the
Company or the Named Executive Officers for the periods indicated.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION -------------
----------------------------------------------- STOCK OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER SHARES(#) COMPENSATION
- - - - ------------------------------ ----- ------------ ---------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Mark L. Gildea (1)............ 1996 $184,875(2) $22,715(3) $271,221(4) 120,000 0
Chief Executive Officer 1995 -- -- -- -- --
1994 -- -- -- -- --
Judy M. Figge (5)............. 1996 $313,629(6) 0 $ 66,153(7) 300,000 $ 925,061(8)
Chief Executive Officer; 1995 $286,284 0 $ 67,042(9) 50,000 0
President 1994 $286,284 0 $ 68,213(10) 50,000 0
Kenneth J. Figge (5).......... 1996 $236,351(11) 0 $ 62,989(12) 200,000 $ 610,353(13)
Executive Vice President; 1995 $210,696 0 $ 67,219(14) 30,000 0
Chief Financial Officer 1994 $210,696 0 $ 42,777(15) 30,000 0
Jeffrey M. Jasnoff (16)....... 1996 $116,408(17) $8,724(18) (19) 30,000 0
Vice President-- Human 1995 -- -- -- -- --
Resources 1994 -- -- -- -- --
Cathy R. Reeves (20).......... 1996 $138,821 0 $ 34,390(21) 50,000 $ 215,718(22)
Chief Operating Officer 1995 $130,800 0 (19) 10,000 0
1994 $130,800 0 (19) 10,000 0
Margaret L. Maxon (23)........ 1996 $112,838 0 (19) 50,000 $ 78,261(24)
Vice President-- Customer 1995 $123,120 0 $ 50,961(25) 20,000 0
Relations 1994 $ 81,966 0 $ 14,825(26) 5,000 0
</TABLE>
- - - - ------------------------
(1) Mark L. Gildea was named the Company's Chief Executive Officer effective
October 24, 1995.
(2) Includes $65,625 of salary paid by Manor Healthcare and reimbursed by the
Company.
(3) Consists of $22,715 paid by Manor Healthcare and reimbursed by the Company.
(4) Consists of $261,698 in relocation expenses, $7,762 of automobile expenses
paid by Manor Healthcare and reimbursed by the Company and $1,761 of
miscellaneous expenses.
(5) Effective October 24, 1995, Judy M. Figge resigned as Chief Executive
Officer and was appointed President. Effective October 22, 1996, Judy M. and
Kenneth J. Figge resigned as officers and directors of the Company.
(6) Includes $12,600 for administrative leave payments for the period between
October 1, 1996 and October 15, 1996 but accrued in fiscal year 1996.
(7) Consists of automobile expenses of $26,602, life insurance expenses of
$26,178 and other miscellaneous items totaling $13,373.
(8) Consists of $925,061 of severance and settlement payments in connection with
the resignation of Ms. Figge as an officer and director of the Company which
were accrued in fiscal year 1996.
7
<PAGE>
(9) Consists of automobile expenses of $24,420, life insurance expenses of
$27,510 and other miscellaneous items totaling $15,112.
(10) Consists of automobile expenses of $42,154 and other miscellaneous items
totaling $26,059.
(11) Includes $9,509 for administrative leave payments for the period between
October 1, 1996 and October 15, 1996, but accrued in fiscal year 1996.
(12) Consists of automobile expenses of $12,099, life insurance expenses of
$39,050 and other miscellaneous items totaling $11,840.
(13) Consists of $610,353 of severance and settlement payments in connection
with the resignation of Mr. Figge as an officer and director of the Company
which were accrued in fiscal year 1996.
(14) Consists of automobile expenses of $11,250, life insurance expenses of
$42,799 and miscellaneous items totaling $13,170.
(15) Consists of automobile expenses of $21,629, life insurance expenses of
$18,252 and miscellaneous items totaling $2,896.
(16) Jeffrey M. Jasnoff was named the Company's Vice President--Human Resources
effective January 16, 1996.
(17) Includes $50,377 of salary paid by Manor Healthcare and reimbursed by the
Company.
(18) Consists of $8,724 paid by Manor Healthcare and reimbursed by the Company.
(19) Other annual compensation in this fiscal year for the named executive
officer was less than 10% of the total salary and bonus.
(20) Ms. Reeves resigned from the Company on October 24, 1996.
(21) Consists of $28,980 in reimbursements for a relocation that was not
completed and miscellaneous items totaling $5,410.
(22) Consists of $215,718 in severance payments which were accrued in fiscal
year 1996.
(23) Ms. Maxon resigned from the Company on August 15, 1996.
(24) Consists of $78,261 in severance payments.
(25) Consists of expenses relating to relocation of Ms. Maxon's residence
totaling $48,220 and miscellaneous items totaling $2,741.
(26) Consists of relocation expenses of $14,825.
8
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 1995 Stock Option Plan to the six Named Executive
Officers of the Company identified on the table on page 7 as of the end of the
last fiscal year:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- - - - -----------------------------------------------------------------------------------------------------------
% OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL
GRANTED RATES OF STOCK
TO MARKET PRICE APPRECIATION
EMPLOYEES EXERCISE PRICE FOR OPTION TERM (1)
OPTIONS IN FISCAL PRICE ON DATE EXPIRATION --------------------
NAME GRANTED YEAR PER SHARE OF GRANT DATE 5% (2) 10% (3)
- - - - ---------------------------- ------- --------- --------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Mark L. Gildea.............. 120,000 10.62% $2.3125 $ 2.3125 2/27/06 $174,516 $ 442,260
Jeffrey M. Jasnoff.......... 30,000 2.65% $2.3125 $ 2.3125 2/27/06 $ 43,629 $ 110,565
Judy M. Figge............... 300,000 26.55% $3.0938 $ 3.0938 10/24/05(4) $583,710 $1,479,210
Kenneth J. Figge............ 200,000 17.70% $3.0938 $ 3.0938 10/24/05(4) $389,140 $ 986,140
Cathy R. Reeves............. 50,000 4.42% $3.0938 $ 3.0938 10/24/05(4) $ 97,285 $ 246,535
Margaret L. Maxon........... 50,000 4.42% $3.0938 $ 3.0938 10/24/05(4) $ 97,285 $ 246,535
</TABLE>
- - - - ------------------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and therefore
are not intended to forecast future possible appreciation, if any, of the
Company's stock price. Since options are granted at market price, a zero
percent gain in the stock price will result in no realizable value to the
optionee.
(2) A 5% per year appreciation in stock price from $2.3125 per share yields
$3.7668 on the expiration date and from $3.0938 per share yields $5.0395 on
the expiration date.
(3) A 10% per year appreciation in stock price from $2.3125 per share yields
$5.998 on the expiration date and from $3.0938 per share yields $8.0245 on
the expiration date.
(4) Subsequent to the end of the fiscal year, Judy M. and Kenneth J. Figge and
Cathy Reeves resigned as officers of the Company and all outstanding options
were canceled on October 22, 1996 in the case of the Figges and on January
22, 1997 in the case of Ms. Reeves. Margaret Maxon resigned from the Company
prior to the end of the fiscal year and all outstanding options issued to
Ms. Maxon were canceled on November 13, 1996.
9
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
VALUE IN-THE-MONEY OPTIONS
REALIZED AT FY-END
(MARKET PRICE NUMBER OF UNEXERCISED (BASED ON FY-END CLOSING
SHARES AT EXERCISE OPTIONS AT FY-END PRICE OF $2.1875/SH)
ACQUIRED LESS EXERCISE -------------------------- --------------------------
NAME ON EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - - ------------------------------ ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark L. Gildea................ -0- -0- -0- 120,000 N/A -0-
Jeffrey M. Jasnoff............ -0- -0- -0- 30,000 N/A -0-
Judy M. Figge (1)............. -0- -0- 127,500 362,500 $ 4,718 $ 14,156
Kenneth J. Figge (1).......... -0- -0- 77,500 237,500 $ 2,831 $ 8,493
Cathy R. Reeves (2)........... 12,000 12,468 87,500 12,500 $ 944 $ 2,831
Margaret L. Maxon (2)......... -0- -0- 77,500 -0- -0- N/A
</TABLE>
- - - - ------------------------
(1) Judy M. and Kenneth J. Figge resigned as directors and officers of the
Company effective as of October 22, 1996. In connection with such
resignations, all outstanding options were canceled.
(2) Cathy R. Reeves and Margaret L. Maxon resigned from the Company on October
24, 1996 and August 15, 1996, respectively.
EMPLOYMENT AGREEMENTS
Pursuant to the terms of the Purchase Agreement with Manor Healthcare on May
2, 1995, the Company entered into an employment agreement with James Lynn under
the terms provided in the Purchase Agreement. Mr. Lynn's employment agreement
extends for a period of two years beginning October 24, 1995 and requires Mr.
Lynn to provide 60 to 80 hours of human resources/training services for the
Company each month, for which he is compensated at a rate of $90,000 per annum.
Mr. Lynn is also eligible to receive annual bonuses based on the Company's
financial performance up to a maximum amount equal to 50% of his base salary.
Mr. Lynn is also entitled to participate in the Company's benefit plans or
programs otherwise available to executives of the Company. Pursuant to Mr.
Lynn's employment agreement, he was granted options to purchase 50,000 shares of
Common Stock at an exercise price of $3.0938 per share, which was the fair
market value of the Common Stock on the date of grant. These options immediately
vested upon the grant thereof, are currently exercisable and have a term of 10
years from the date of grant, provided, however, that the options will expire
within three months after termination of employment.
The employment agreement with Mr. Lynn has a severance provision designed to
pay to the employee severance payments equal to the amount due for the remaining
term of the applicable employment agreement if such employee's employment is
terminated due to death, disability or resignation or retirement of the employee
for "Good Reason". "Good Reason" is defined to include any request that the
employee permanently relocate to a location not in the Minneapolis, Minnesota
metropolitan area or a failure or refusal by the Company to provide duties for
the employee to perform which are consistent with such employee's position.
10
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, the Compensation Committee included Donald C. Tomasso,
Joseph R. Buckley and James H. Rempe. Each of these individuals is an officer of
Manor Healthcare, the owner of a majority of the voting power of the
stockholders of the Company, although none of them are directly or indirectly
compensated by the Company.
BOARD COMPENSATION COMMITTEE REPORT
Decisions on compensation of the Company's executives for fiscal 1996 were
made by the Compensation Committee of the Board, which consisted during fiscal
1996 of Messrs. Tomasso, Buckley and Rempe. All decisions by the Compensation
Committee for fiscal 1996 were reviewed by the full Board, except for decisions
about awards under certain of the Company's stock-based compensation plans,
which were reviewed solely by the Committee in order for the grants or awards
under such plans to satisfy SEC Rule 16b-3. This report describes the
Compensation Committee's policies for fiscal 1996 as they affected Mr. Gildea,
Mr. Jasnoff, Ms. Figge, Mr. Figge, Ms. Maxon and Ms. Reeves (collectively, the
"Senior Executives"), who are named in the table on page 7 as the Company's most
highly paid officers in fiscal 1996.
CASH COMPENSATION POLICIES FOR SENIOR EXECUTIVES
The Compensation Committee's executive compensation policies are designed to
provide competitive levels of compensation, integrate pay with the Company's
annual and long-term performance goals, reward above-average corporate
performance, recognize individual initiative and achievements, and assist the
Company in attracting and retaining qualified executives. The overall cash
compensation of Senior Executives is intended to be consistent with other
publicly held companies in the health care industry that were selected as
comparable because of comparable revenues and focus on providing health care
services in the home.
The base compensation for each Senior Executive and the bonus potential as
set forth in a Management Incentive Plan are approved by the Compensation
Committee at the beginning of the fiscal year. Corporate officers other than the
Senior Executives were also eligible for selection as participants in the
Management Incentive Plan, but they typically receive a larger percentage of
their compensation as base salary and a smaller percentage as bonuses. For the
Senior Executives, the Management Incentive Plan for fiscal 1996 specified a
maximum bonus opportunity, which was 75% of base salary in the case of Mr.
Gildea, 75% for Ms. Figge, 70% for Mr. Figge and 60% for the other Senior
Executives. The bonus that each Senior Executive could earn for the fiscal year
is mathematically determined by comparing the Company's actual net income with
the operating plan for the fiscal year. There would be no bonus if results were
less than 80% of plan, and receiving the maximum bonus would depend on the
Company achieving 120% of plan.
FISCAL 1996 STOCK OPTION GRANTS
For fiscal 1996, the Compensation Committee granted stock options to various
key employees. Stock options are intended to focus Senior Executives on long
term Company performance which results in improvement in stockholder value and
provides a significant earning potential to the executives. In order to direct
the Senior Executives toward steady growth and to retain their services,
incentive stock options
11
<PAGE>
vest over a five year period. This was a change from the previous three year
vesting period. The number of options granted to the various Senior Executives
depends on the level and degree of responsibility of the position they hold.
OTHER COMPENSATION PLANS
At various times in the past the Company has adopted certain broad-based
employee benefit plans in which the Senior Executives have been permitted to
participate and has adopted certain executive officer retirement, life and
health insurance plans. Other than with respect to the Company's Employee Stock
Purchase Plan, which allows the Company's employees to purchase shares of the
Company's Common Stock through payroll deductions at a purchase price of the
lower of 85% of the fair market value of the shares on the first day or the last
day of the applicable period of the Plan, benefits under these plans are not
directly or indirectly tied to Company performance.
CHIEF EXECUTIVE OFFICER'S FISCAL 1996 COMPENSATION
The Compensation Committee based Mr. Gildea's cash compensation for fiscal
1996 in part on an analysis done by Future Sense Inc. of the compensation
historically paid to the CEOs of thirteen publicly owned companies of comparable
size in the health care industry. The Compensation Committee set Mr. Gildea's
base compensation at $204,750 per year. Furthermore, consistent with historical
practice, the Compensation Committee established a bonus opportunity for Mr.
Gildea that could have reached a maximum of 75% of base salary if the Company's
performance for fiscal 1996 exceeded 120% of the Company's plan for the fiscal
year. The bonus opportunity was also set such that if the Company's results were
on plan, then Mr. Gildea's bonus would be at a level which would cause his total
cash compensation to not exceed the average total cash compensation paid to the
CEOs in the comparison group. As a result of the Company's fiscal 1996
performance being less than 80% of plan, no bonus was paid to Mr. Gildea for
fiscal 1996.
In fiscal 1996, a stock option award of 120,000 shares was granted to Mr.
Gildea. The 1996 stock option was determined after reference to his current
compensation and the practices of other companies of comparable size and
operating characteristics, giving special consideration to the desirability of
establishing a significant alignment of his long-term economic interests with
those of the Company's shareholders.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS (AS
CONSTITUTED DURING FISCAL 1996):
Donald C. Tomasso Joseph R. Buckley James H. Rempe
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PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company include in
this proxy statement a line-graph presentation comparing cumulative, five-year
stockholder returns on an indexed basis with the S&P 500 Stock Index and either
a nationally recognized industry standard or an index of peer companies selected
by the Company. The Board of Directors has approved the use of the Dow Jones
Industry Group Index of Health Care Providers as its peer group index. The table
below compares the cumulative total return as of the end of each of the
Company's last five fiscal years on $100 invested in the Common Stock of the
Company, the Dow Jones Industry Group Index of Health Care Providers and the
NASDAQ Market Index, assuming the reimbursement of all dividends:
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
IN HOME HEALTH, INC. DOW JONES INDUSTRY GROUP NASDAQ MARKET INDEX
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 131.09 102.45 98.34
1993 107.56 128.03 127.89
1994 62.18 182.77 135.34
1995 83.19 186.46 164.32
1996 58.82 201.19 191.84
</TABLE>
13
<PAGE>
STRUCTURE AND FUNCTIONING OF THE BOARD OF DIRECTORS
MEETINGS; REMUNERATION
The Board of Directors met six times during fiscal 1996. Each director
attended more than 75% of the meetings of the Board of Directors and the
committees on which they serve. Non-employee directors receive annual retainers
of $15,000 plus reimbursement of out-of-pocket expenses incurred in connection
with attending Board meetings. For fiscal 1996, no directors received
non-employee director's fees.
COMMITTEES
The Board of Directors has an Audit Committee which consisted during fiscal
1996 of Mr. Buckley (Chairman), Mr. Rempe and Mr. Figge. The Audit Committee,
among other things, determines audit policies, reviews external audit reports
and reviews recommendations made by the Company's independent public
accountants. During fiscal 1996 the Audit Committee met once.
The Board of Directors also has a Compensation Committee which consisted
during fiscal 1996 of Mr. Tomasso (Chairman), Mr. Rempe and Mr. Buckley. During
fiscal 1996 the Compensation Committee met four times.
The Board of Directors also has a Nominating Committee which consisted
during fiscal 1996 of Ms. Figge, Mr. Tomasso and Mr. Gildea. The Nominating
Committee did not meet during fiscal 1996.
ITEM I
NOMINATION AND ELECTION OF DIRECTORS
The five current members of the Board of Directors will be elected to serve
until the next Annual Meeting of Stockholders of the Company and until their
successors are duly elected and qualified. It is anticipated that proxies will
be voted for the management slate, and that each nominee will serve if elected.
Should any nominee be unable to serve, the persons named in the proxies may in
their discretion vote for a substitute. Management is currently seeking
candidates to fill the two vacant positions on the Board of Directors. It is
anticipated that when suitable candidates are found, the Board of Directors will
fill such vacancies and the replacement directors will serve until the next
Annual Meeting of Stockholders.
The names and ages of the management slate of nominees, their principal
occupations and other information is set forth below, based upon information
furnished to the Company by the nominees. All of the nominees have been
previously elected by the stockholders of the Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE OCCUPATION SINCE
- - - - ------------------------------------------ ----------------------------------------------------------- -----------
<S> <C> <C>
Mark L. Gildea (44)....................... Chief Executive Officer of the Company 1995
James J. Lynn (54)........................ Director of Management Development of the Company and 1987
President of Lynn & Associates (business consultant)
Donald C. Tomasso (51).................... President, Manor Healthcare Corp.; Executive Vice 1995
President, Manor Care, Inc; Chairman and Chief Executive
Officer of Vitalink Pharmacy Services, Inc.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE OCCUPATION SINCE
- - - - ------------------------------------------ ----------------------------------------------------------- -----------
<S> <C> <C>
Joseph R. Buckley (49).................... Executive Vice President, Manor Healthcare Corp.; Executive 1995
Vice President, Manor Care, Inc.
James H. Rempe (66)....................... Senior Vice President, General Counsel and Secretary of 1995
each of Manor Care, Inc. and Manor Healthcare Corp.;
Secretary of Vitalink Pharmacy Services, Inc.
</TABLE>
BUSINESS EXPERIENCE; DIRECTORSHIPS
Mr. Gildea has served as Chief Executive Officer of the Company since
October 24, 1995. Previously, he served as President, Alternate Site Services
Division of Manor Healthcare from December 1994 until February 1996. Previously
he served as Vice President of Managed Care of Manor Healthcare from December
1993 to December 1994. Prior to joining Manor Healthcare, he was employed as
Executive Vice President of Option Care, Inc. from October 1992 to December
1993. He was previously employed by CareMark, Inc. for over 10 years, including
as Area Vice President.
Mr. Lynn has been a director of the Company since 1987 and has served as
Director of Management Development of the Company since October 1995. He served
as Vice President--Marketing and Human Resources of the Company from April 1986
to April 1990. Since 1981 Mr. Lynn has been a principal of Lynn & Associates, a
management consulting company of which Mr. Lynn is the founder and President.
Mr. Tomasso has served as President of Manor Healthcare since September
1996, and previously as President, Long-Term Care Division of Manor Healthcare
since February 1995, as President and Chief Operating Officer of Manor
Healthcare from May 1991 to February 1995 and as a Director of Manor Healthcare
since June 1991. He has been Chairman and Chief Executive Officer of Vitalink
Pharmacy Services, Inc. since February 1995 and was its Vice Chairman from
September 1991 to February 1995. He is currently a Director of Vitalink Pharmacy
Services, Inc. Mr. Tomasso was previously employed by Marriott Corporation for
more than five years, including as Executive Vice President/General Manager of
the Roy Rogers Division.
Mr. Buckley has served as Executive Vice President of Manor Healthcare and
Manor Care, Inc. since March 1996, a Director of Vitalink Pharmacy Services,
Inc. since July 1996 and was President, Assisted Living Division of Manor
Healthcare from February 1995 until March 1996 and Senior Vice President--
Information Resources and Development of Manor Care, Inc. from June 1990 to
February 1995. He previously served as Vice President--Information Resources of
Manor Care, Inc. from July 1989 to June 1990 and as Vice President--Real Estate
of Manor Care, Inc. from September 1983 to July 1989. He has been a Director of
In Home Health, Inc. since October 1995.
Mr. Rempe has served as Senior Vice President, General Counsel and Secretary
of Manor Care, Inc. since August 1981. He has served in the same capacity with
Manor Healthcare since December 1980 and with Choice Hotels International, Inc.
from February 1981 until November 1996. He has been a Director of Vitalink
Pharmacy Services, Inc. since 1994 and has served as its Secretary since January
1983 and a Director of In Home Health, Inc. since October 1995.
15
<PAGE>
CERTAIN TRANSACTIONS
Each of Messrs. Tomasso, Buckley and Rempe are executive officers of Manor
Healthcare, which beneficially owns shares constituting approximately 64% of the
voting power of the Company's stockholders, Mr. Gildea was an executive officer
of Manor Healthcare during part of fiscal year 1996. The Company and Manor
Healthcare entered into the Purchase Agreement as of May 2, 1995 and the
transactions contemplated thereby were consummated on October 24, 1995. The
Purchase Agreement contains extensive representations, warranties, covenants and
other agreements between the Company and Manor Healthcare which extend beyond
the consummation of the transactions contemplated therein. The Purchase
Agreement also contemplates that the Company and Manor Healthcare may enter into
agreements or arrangements which they deem prudent and mutually beneficial for
the provision of services between them on terms that are fair to each party.
Pursuant to the terms of the Purchase Agreement, Mr. Gildea was elected as
Chief Executive Officer of the Company effective October 24, 1995. The terms of
the Purchase Agreement require that Mr. Gildea devote at least approximately 75%
of his entire working time to the affairs of the Company, while the balance of
his working time will be devoted to Manor Healthcare and its affiliates other
than the Company. Manor Healthcare is responsible for the payment of his
compensation, but will be reimbursed by the Company for the costs associated
with the employment of Mr. Gildea by the Company. By February 1996, Mr. Gildea
was devoting 100% of his working time to the affairs of the Company and, except
for use of a company car through Manor Healthcare, was being compensated solely
by the Company.
Pursuant to the Purchase Agreement, the Company and Manor Healthcare entered
into a Registration Rights Agreement covering the securities purchased by Manor
Healthcare from the Company. Manor Healthcare has the right to require the
Company to use its best efforts to register for sale in an underwritten public
offering under the Securities Act of 1933, at the Company's expense, all or any
portion of the Common Stock acquired by Manor Healthcare, the Common Stock
purchasable upon exercise of a warrant issued to Manor Healthcare or the Common
Stock into which the Preferred Stock held by Manor Healthcare is convertible
("Registerable Securities"). The Company will not be entitled to sell its
securities in any such registration for its own account without the consent of
Manor Healthcare. In addition, if the Company at any time seeks to register
under the Securities Act of 1933 for sale to the public any of its securities,
the Company must include, at Manor Healthcare's request, Manor Healthcare's
Registerable Securities in the Registration Statement, subject to underwriter
cutback provisions.
Pursuant to a Settlement Agreement entered into as of October 22, 1996 among
the Company, Manor Care, Manor Healthcare and Judy M. Figge and Kenneth J.
Figge, the Figges resigned as directors and officers of the Company. The
Settlement Agreement also provided for the cancellation of all stock options
granted to the Figges, the cancellation of Employment Agreements between the
Company and the Figges, and the payment of an aggregate of $2.0 million by the
Company to the Figges, which includes the repurchase by the Company of 244,805
shares of Common Stock held by the Figges at the closing market price of the
Common Stock on October 22, 1996.
Manor Care and the Company entered into an Administrative Services Agreement
effective as of February 27, 1996, pursuant to which Manor Care provides the
Company certain corporate, administrative and management services. The original
term of the Agreement was retroactive to November 1, 1995 and expired on June
30, 1996. Thereafter, the term is on a quarter-to-quarter basis until terminated
by either party upon 90 days prior written notice. Under the original terms of
the Agreement, the Company paid Manor Care a fee of $40,000 per month for
corporate, administrative and management services, $3,000 per
16
<PAGE>
month for services rendered by the Manor Care Reimbursement Department and a fee
equal to 5% of the expenses incurred by the Manor Care Managed Care Center.
Additionally, the Company reimburses Manor Care for expenses incurred within
certain departments of Manor Care from November 1, 1995 forward. The amount
payable to Manor Care in fiscal 1996 was $1,006,000. Effective June 1, 1996, the
total fees payable to Manor Care under the Administrative Services Agreement was
reduced to $7,000 per month.
In September 1996, the Company loaned Mark Gildea $200,000 in connection
with his relocation to Minneapolis which necessitated the sale of his prior
residence in Maryland. The loan was an advance on the equity Mr. Gildea had in
his prior residence. The interest rate under the loan is 8.25% and the balance
becomes due upon either the sale of the prior residence or his termination of
employment with the Company.
STOCKHOLDER NOMINATIONS
Under the Company's Bylaws a stockholder who wishes to make a nomination at
the Meeting of one or more persons for election as directors must give written
notice of their intent to make such nominations to the Company's Assistant
Secretary within 15 days after the date that the Notice of the Meeting was
mailed. The notice must state: the name and address of record of the stockholder
who intends to make the nomination; a representation that the stockholder is a
holder of record of Company shares entitled to vote at the Meeting and intends
to appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice; the name, age, business and residence address, and
principal occupation or employment of each nominee; a description of all
arrangements or understanding between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission; and the consent of each nominee to
serve as a director of the corporation if so elected. The Company may require
any proposed nominee to furnish such other information as may reasonably be
required by the Company to determine the eligibility of such proposed nominee to
serve as a director of the Company. The presiding officer of the Meeting may, if
the facts warrant, determine that a nomination was not made in accordance with
the foregoing procedure and if he should so determine and declare to the
Meeting, the effective nomination will be disregarded.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" ELECTION OF THE MANAGEMENT SLATE OF NOMINEES.
ITEM II
AMENDMENTS TO 1991 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors of the Company has adopted, subject to stockholder
approval, amendments to the Company's 1991 Employee Stock Purchase Plan (the
"1991 Plan") to provide for (i) an increase of 800,000 shares available under
the 1991 Plan from 700,000 to 1,500,000 and (ii) the extension of the 1991 Plan
for three years ending September 30, 1999.
17
<PAGE>
SUMMARY OF THE 1991 PLAN
The purpose of the 1991 Plan is to encourage stock ownership by employees of
the Company as an incentive to them to remain in employment, improve operations,
increase profits and contribute more significantly to the Company's success. The
original term of the 1991 Plan was from November 1, 1991 to September 30, 1996.
Eligible participants elect to make contributions in the 1991 Plan by payroll
deductions in an aggregate amount not in excess of 10% of the participant's base
pay. At the commencement of each plan year, participants are granted options to
purchase a number of shares of Common Stock as determined by dividing the total
amount of a participant's payroll deductions by the option price, which is 85%
of the fair market value of such shares on either the commencement or
termination of the plan year, whichever is lower. However, no participant shall
have the right to purchase shares of Common Stock under the 1991 Plan at a rate
of more than $25,000 in value in any calendar year.
Seven hundred thousand shares of Common Stock were originally reserved for
issuance under the 1991 Plan, of which 616,885 shares have been issued. If the
proposed amendments to the 1991 Plan are approved by stockholders, an additional
800,000 shares will be reserved for issuance.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" APPROVAL OF THE PROPOSED
AMENDMENTS TO THE 1991 EMPLOYEE STOCK PURCHASE PLAN.
ITEM III
APPROVAL OF ACCOUNTANTS
Deloitte & Touche LLP, independent certified public accountants, have been
the Company's auditors since 1984. They have been reappointed by the Board of
Directors as the Company's auditors for the fiscal year ending September 30,
1997. Although stockholder approval is not required, the Board of Directors
requests it. In the event the appointment should not be approved by the
stockholders, the Board of Directors will make another appointment to be
effective at the earliest possible time.
A representative of Deloitte & Touche LLP is expected to be present at the
Meeting, will be given the opportunity to make a statement and will be available
to answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" RATIFICATION OF THE SELECTION OF
DELOITTE & TOUCHE LLP.
OTHER BUSINESS
The management of the Company knows of no matter other than the foregoing to
be brought before the Meeting. However, the enclosed proxy gives discretionary
authority in the event any additional matters should be presented.
Under the Company's Bylaws any stockholder who wishes to present proposals
for stockholder action at the Meeting must give written notice to the Company's
Assistant Secretary within 15 days after the date that the Notice of the Meeting
was mailed. The notice must state a brief description of the other business
proposed to be raised, the reason for conducting that business at the Meeting,
the name and address of the
18
<PAGE>
stockholder proposing such business, the number of Company shares owned by the
stockholder, and any material interest of the stockholder in the business.
The proxy rules of the Securities and Exchange Commission permit
stockholders, after timely notice to issuers, to present proposals for
stockholder action in issuer proxy statements where such proposals are
consistent with applicable law, pertain to matters appropriate for stockholder
action and are not properly omitted by issuer action in accordance with the
proxy rules. The Company's next meeting of stockholders (for the fiscal year
ending September 30, 1997) is expected to be held on or about February 25, 1998
and proxy materials in connection with that meeting are expected to be mailed on
or about January 15, 1998. Any stockholder proposals prepared in accordance with
the proxy rules for inclusion in the Company's proxy materials must be received
by the Company on or before September 14, 1997.
THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1996 IS BEING MAILED TO STOCKHOLDERS WITH THIS PROXY STATEMENT.
STOCKHOLDERS MAY RECEIVE WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, BY WRITING TO: IN HOME HEALTH, INC., 601
CARLSON PARKWAY, SUITE 500, MINNETONKA, MINNESOTA 55305, ATTENTION: KARI SCHELL,
OR BY CALLING THE COMPANY AT (612) 449-7500.
By Order of the Board of Directors
/s/ Kari Schell
Kari Schell, Assistant Secretary
19
<PAGE>
PROXY--IN HOME HEALTH, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
MARCH 6, 1997
The undersigned hereby appoints Mark L. Gildea and Thomas R. Gross, or
either one of them, as proxies with full power of substitution to vote all of
the shares of common stock which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of In Home Health, Inc.
to be held March 6, 1997 at 3:30 p.m. at Minneapolis Hilton and Towers, 1001
Marquette Avenue, Minneapolis, Minnesota or at any adjournments thereof, upon
any and all matters which may properly be brought before the meeting or
adjournments thereof, hereby revoking all former proxies.
<TABLE>
<S> <C> <C>
(1) ELECTION OF DIRECTORS
/ / FOR all nominees listed below / / WITHOUT AUTHORITY to vote
(except as indicated below) for all nominees listed below
Mark L. Gildea, James J. Lynn, Donald C. Tomasso, Joseph R. Buckley and James H. Rempe.
</TABLE>
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
a line through that nominee's name in the list above.)
<TABLE>
<S> <C> <C> <C>
(2) PROPOSAL TO AMEND THE COMPANY'S 1991 EMPLOYEE STOCK PURCHASE PLAN TO (i) INCREASE THE NUMBER OF SHARES AVAILABLE UNDER
THE 1991 PLAN BY 800,000 SHARES AND (ii) EXTEND THE 1991 PLAN FOR THREE YEARS ENDING SEPTEMBER 30, 1999.
/ / For / / Against / / Abstain
(3) PROPOSAL TO RATIFY THE SELECTION OF DELOITTE & TOUCHE AS THE COMPANY'S INDEPENDENT ACCOUNTANTS
/ / For / / Against / / Abstain
(4) In their discretion, the proxies are authorized to vote upon such other business as may properly come before the
meetings.
</TABLE>
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON PROPOSALS (1), (2) AND
(3) IN ACCORDANCE WITH THE SPECIFICATIONS MADE AND "FOR" SUCH PROPOSALS IF THERE
IS NO SPECIFICATION.
PLEASE DATE AND SIGN exactly as your name(s) appears below indicating, where
proper, the official position or representative capacity in which you are
signing. When signing as executor, administrator, trustee or guardian, give full
title as such; when shares have been issued in names of two or more persons, all
should sign.
Dated _____________________, 1997
---------------------------------------
Signature of Stockholder
---------------------------------------
Signature of Stockholder
(if joint signature is required)
