<PAGE>
SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
- ------------------------------------------------------------------------------
ARRHYTHMIA RESEARCH TECHNOLOGY, INC.
(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] 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:
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1
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3) Per unit price of 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:
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2
<PAGE>
[LETTERHEAD]
August 15, 1997
Dear Stockholder:
On behalf of the Board of Directors, I am pleased to extend to you an
invitation to attend the Annual Meeting of Stockholders of Arrhythmia Research
Technology, Inc. (the "Corporation") to be held in New York, New York at the
American Stock Exchange, on Thursday, September 18, 1997, beginning at 11:00
Eastern Time.
The notice of meeting and proxy statement which appear on the following
pages contain information about matters which are to be considered at the
meeting. During the meeting we will also review operating results for the past
year and present other information concerning the Corporation and its
subsidiary. The meeting should be interesting and informative and we hope you
will be able to attend.
In order to ensure that your shares are voted at the meeting, please
complete, date, sign and return the enclosed postage pre-paid envelope at
your earliest convenience. Every stockholder's vote is important, whether you
own a few shares or many.
Very truly yours,
/s/ Anthony A Cetrone
Anthony A. Cetrone
Chairman
<PAGE>
ARRHYTHMIA RESEARCH TECHNOLOGY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, SEPTEMBER 18, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Arrhythmia Research Technology, Inc., a Delaware corporation (the
"Company"), will be held at the American Stock Exchange, 86 Trinity Place, New
York, New York 10006, on Thursday, September 18, 1997 at 11:00 a.m., local time,
for the following purposes:
1. To elect three directors, each for a term of three years to expire at
the 2000 Annual Meeting;
2. To approve the Arrhythmia Research Technology, Inc. 1997 Stock Option
Plan;
3. To approve the appointment of Coopers & Lybrand to audit the
consolidated financial statements of the Company for the fiscal year
ending December 31, 1997; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment(s) thereof.
The close of business on August 15, 1997, has been fixed by the Board of
Directors of the Company as the record date for determining the stockholders
entitled to notice of, and to vote at, the Annual Meeting.
You are cordially invited to attend the Annual Meeting. Whether or not you plan
to attend the Annual Meeting, you may insure your representation by completing,
signing, dating and promptly returning the enclosed proxy card. A return
envelope, which requires no postage if mailed in the United States, has been
provided for your use. If you attend the Annual Meeting and inform the office
of the Secretary of the Company in writing that you wish to vote your shares in
person, your proxy will not be used.
By Order of the Board of Directors
/s/ NANCY C. GARBADE
Nancy C. Garbade
Secretary
<PAGE>
August 15, 1997
ARRHYTHMIA RESEARCH TECHNOLOGY, INC.
5910 COURTYARD DRIVE, SUITE 300
AUSTIN, TEXAS 78731
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 18, 1997
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited by the Board of Directors on behalf of
Arrhythmia Research Technology, Inc. (the "Company") for use at the Annual
Meeting of Stockholders to be held on September 18, 1997, at 11:00 a.m. at the
American Stock Exchange, 86 Trinity Place, New York, New York, or any
adjournment or adjournments thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting. When such Proxy is properly executed
and returned, the shares it represents will be voted at the meeting in
accordance with the directions noted thereon, or if no direction is indicated,
they will be voted in favor of the proposals set forth in the accompanying
Notice of Annual Meeting. Abstentions are counted as shares present in the
determination of whether the shares represented at the meeting constitute a
quorum, and are counted as votes against proposals to be acted on by the
Stockholders. Broker non-votes, however, will not be considered as present at
the meeting in determining the presence of a quorum and are not counted for or
against proposals to be acted on by the Stockholders. An automated system
administered by Continental Stock Transfer & Trust Company, the Company's
transfer agent, is used to tabulate the votes.
This Proxy Statement and the enclosed Proxy are being sent to Stockholders
beginning on August 15, 1997. The Company will also supply brokers or other
persons holding stock in their names or in the names of their nominees with such
number of Proxies and proxy materials as they may require for mailing to
beneficial owners, and will reimburse them for their reasonable expenses
incurred in connection therewith. In addition to solicitation by mail, certain
Directors, officers, and regular employees of the Company may solicit proxies by
facsimile transmission, telephone, and personal interview.
The cost of the solicitation of proxies for the 1997 Annual Meeting will be
borne by the Company, including expenses in connection with the preparation and
mailing of this Proxy Statement and all papers which now accompany or may
hereafter supplement it.
1
<PAGE>
The costs of the solicitation, preparation, and mailing of Proxies are
expected to be less than $10,000.
RIGHT TO REVOKE PROXY
Any Stockholder giving the Proxy enclosed with this Proxy Statement has the
power to revoke such Proxy at any time prior to the exercise thereof by filing
with the Company a written revocation thereof at or prior to the 1997 Annual
Meeting, by executing a Proxy bearing a later date, or by attending the Annual
Meeting and voting in person the shares of stock such Stockholder is entitled to
vote. Unless the persons named in the Proxy are prevented by circumstances
beyond their control from acting, the Proxy will be voted at the 1997 Annual
Meeting and at any adjournment thereof in the manner specified therein, but
unless otherwise indicated, such Proxy will be voted:
(1) FOR the election of the three nominees listed under "Election of
Directors" as Directors of the Company;
(2) FOR the approval of the 1997 Arrhythmia Research Technology, Inc.
Stock Option Plan;
(3) FOR the approval of appointment of Coopers & Lybrand to audit the
consolidated financial statements of Arrhythmia Research Technology,
Inc. for the fiscal year ending December 31, 1997; and
(4) At the discretion of the Proxy holders, on any other matter that may
properly come before the 1997 Annual Meeting or any adjournment
thereof.
VOTING SECURITIES
At the close of business on August 15, 1997, which is the record date for
the determination of Stockholders of the Company entitled to receive notice of
and vote at the 1997 Annual Meeting or any adjournment thereof, the Company had
outstanding 3,563,101 shares of Common Stock, $.01 par value per share (the
"Common Stock"), exclusive of 116,115 treasury shares which will not be
considered present or entitled to vote. Each share of Common Stock is entitled
to one vote.
The holders of record of a majority of the outstanding shares of Common
Stock will constitute a quorum for the transaction of business at the 1997
Annual Meeting, but if a quorum should not be present, the meeting may be
adjourned from time to time until a quorum is obtained.
2
<PAGE>
ITEM NO. 1
ELECTION OF DIRECTORS
GENERAL INFORMATION
The Company's By-Laws provide that the number of Directors, as determined
from time to time by the Board of Directors, shall not be less than one nor more
than nine. The Board of Directors has fixed the number at seven. The By-Laws
further provide that Directors shall be divided into three classes (Class I,
Class II, and Class III) serving staggered three-year terms, with each to be as
nearly equal as possible.
The Board of Directors has nominated Lawrence S. Black, Michael A.
McManus, Jr., and Paul F. Walter, M.D. for election as Class III Directors
for a three-year term expiring at the 2000 annual meeting and until their
successors are duly elected and qualified. Messrs. Black and McManus and Dr.
Walter are presently Directors of the Company whose terms expire at the
Annual Meeting.
The Board of Directors has inquired of each nominee and has ascertained
that each will serve, if elected. In the event that any of these nominees should
become unavailable for election (which is unexpected), the Board of Directors
may designate substitute nominees, in which event the shares represented by the
Proxy will be voted for such substitute nominees unless an instruction to the
contrary is indicated on the Proxy. In lieu thereof, the Board of Directors may
reduce the number of Directors in accordance with the By-Laws of the Company.
The affirmative vote of the holders of a majority of the shares of Common
Stock present (whether in person or by proxy) and entitled to vote is required
for the election of Mr. Black, Dr. Walter and Mr. McManus. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF MR. BLACK, DR. WALTER, AND
MR. MCMANUS AS CLASS III DIRECTORS OF THE COMPANY.
INFORMATION ABOUT NOMINEES AND DIRECTORS
Biographical information for each person nominated and for each person
whose term of office as a Director will continue after the 1997 Annual Meeting
is set forth below.
3
<PAGE>
NOMINEES
<TABLE>
PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE, DIRECTOR
NAME AND AGE PAST FIVE YEARS AND DIRECTORSHIPS SINCE
- ------------ --------------------------------------------------- --------
<S> <C> <C>
CLASS I (TERM EXPIRES 1999)
Anthony A. Cetrone Mr. Cetrone has been President and Chief 1992
AGE 68 Executive Officer of Micron Products Inc., a
wholly owned subsidiary of the Company, since June
1990. Mr. Cetrone was President and Chief
Executive Officer of the Company from January 1993
until March 1995. He served as President of Micron
Medical Products Inc., a manufacturer of
silver/silver chloride coated sensors, from 1988
until December 1993, when Micron Medical Products
Inc. was merged with and into Micron Products Inc.
From October 1991 to December 1993, Mr. Cetrone
served as Chairman of the Board of Micron Medical
Products Inc. From October 1991 to the March
1995, Mr. Cetrone served as Chairman of the Board
of Micron Products Inc. Micron Products Inc. filed
a bankruptcy petition in November 1991.
Russell C. Chambers, M.D. Dr. Chambers served as the Company's Chairman of 1982
AGE 54 the Board until August 1990. For more than the past
five years, Dr. Chambers has been primarily engaged in
the management of his personal investments.
- ----------------------------------------------------------------------------------------------
Class II (term expires 1998)
E. P. Marinos Mr. Marinos has been President and Chief 1994
AGE 55 Executive Officer of Pipeline Co. since June 1997.
From March 1995 until June 1997, he was President
and Chief Executive Officer of the Company. Mr. Marinos
was appointed interim Vice President, Chief Financial
Officer and Chief Operating Officer of the Company in
June 1994. He was President and Chief Executive
Officer of AMT/EMP Associates, a consulting company
providing services in the areas of strategic planning,
mergers and acquisitions, and organizational restructuring
from March 1991 until March 1995.
Julius Tabin Since 1949, Dr. Tabin has been a partner in the law 1982
AGE 77 firm of Fitch, Even, Tabin & Flannery.
4
<PAGE>
Class III (term expires 2000)
Lawrence S. Black Mr. Black is the Chairman and founder of Black & Co., 1994
AGE 68 investment bankers. He is also a director of
International Yogurt Company and Mt. Bachelor Corp.
Michael A. McManus, Jr. Mr. McManus has been President and Chief Executive 1994
AGE 54 Officer of New York Bancorp, Inc. since 1991 and
a member of its Board of Directors since 1990. He was
elected Vice Chairman of the Board of Directors of New
York Bancorp, Inc. in 1991. Prior to becoming
associated with New York Bancorp, Inc., Mr. McManus was
President of Galwag Investment Group from July 1990
until October 1991. From December 1990 until October
1991, he was President of Jamcor Pharmaceutical and from
July 1986 until July 1990, he was Vice President of
Business Planning and Development, Consumer Division of
Pfizer, Inc.
Paul F. Walter, M.D. Dr. Walter is an electrophysiologist and Professor of 1982
AGE 59 Medicine at Emory University.
</TABLE>
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The business of the Company is managed by or under the direction of the
Board of Directors. The Board has established several committees whose
principal functions are briefly described below. During the fiscal year
ended December 31, 1996, the Board of Directors held six meetings. Various
committees of the Board met a total of four times. Average attendance by
incumbent directors at Board and committee meetings was 88% and all of them
attended 86% or more of the meetings of the Board and the committees on which
they served.
AUDIT COMMITTEE. The Audit Committee is composed of two non-employee
Directors, Michael A. McManus, Jr. and E. P. Marinos. Among its functions,
it reviews the scope and effectiveness of audits of the Company by the
independent public accountants; selects and recommends to the Board of
Directors the employment of independent public accountants for the Company,
subject to approval of the Stockholders; reviews the audit plan of the
independent public accountants; reviews and approves the fees charged by the
independent public accountants; reviews the Company's annual financial
statements before their release; reviews the adequacy of the Company's system
of internal controls and recommendations of the independent public
accountants with respect thereto; reviews and acts on comments and
suggestions by the independent public accountants and by the internal
auditors with respect to their audit activities; and monitors compliance by
employees of the Company with the Company's standards of business conduct
policies. The committee met one time in the 1996 fiscal year.
COMPENSATION COMMITTEE. The two members of the Compensation Committee,
Russell C. Chambers and Lawrence S. Black, are non-employee Directors and are
5
<PAGE>
ineligible to participate in any of the plans or programs which are
administered by the committee. The principal functions of the Compensation
Committee are to evaluate the performance of the Company's senior executives,
to consider the design and competitiveness of the Company's compensation
plans, to review and approve senior executive compensation and to administer
the Company's Employee Incentive Stock Option Plan. The committee met one
time during the 1996 fiscal year.
EXECUTIVE COMMITTEE. The Executive Committee is composed of four
members: Anthony A. Cetrone; Russell C. Chambers, E. P. Marinos and Michael
A. McManus, Jr. The principal functions of the Executive Committee are
reviewing and evaluating significant business and policy decisions and making
recommendations to the full Board of Directors. The Executive Committee met
two times in fiscal year 1996.
The Board has no standing Nominating Committee.
DIRECTORS' COMPENSATION
Each non-employee Director receives cash compensation of $1,000 per
quarter. Additionally, each non-employee Director receives $500 cash for
each meeting at which such Director is present in person and $250 for each
meeting at which such Director is present by telephone. Employee directors
do not receive cash compensation. In October 1994, the Stockholders approved
the grant of options to purchase 18,000 shares of the Company's Common Stock
to each non-employee Director. Such options became exercisable upon approval
and were granted for a term of ten years. The purchase price of each share
of Common Stock covered by an option is equal to the fair market value of a
share of Common Stock on the date the option was granted. In the event the
fair market value of the Common Stock reaches $6.00 per share, then the
option price for one share shall be the fair market value of the Common Stock
on the date the option is granted, less the difference between the average
closing price of the Common Stock for the 20 trading days immediately
preceding the date on which the Director gives notice of his intention to
exercise an option and $6.00 per share. Notwithstanding the foregoing, the
exercise price may never be less than $1 per share nor greater than the fair
market value on the date of grant.
Mr. Cetrone received options to purchase 24,000 shares of the Company's
Common Stock in March 1993. Such options vest at the rate of 1,000 shares
per month for so long as the optionee remains a Director and have an exercise
price of $4 per share ($1.75 below the market price of the Company's Common
Stock on the date the options were authorized.) All options are currently
vested. The options issued to Mr. Cetrone terminate in 1998.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth all persons known by the Company to be
the beneficial owners of more than five percent (5%) of the outstanding
Common Stock of the Company as of August 1, 1997:
BENEFICIAL OWNERSHIP
--------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------ --------------------
R.C. Chambers Irrevocable Trust (1) 222,350- 5.68
1807 Lake Street
Lake Charles, Louisiana 70601
1. The beneficiaries of the trust are Dr. Chambers' son and the estate of
Dr. Chambers' wife. Both Dr. Chambers' son and the estate of his wife
have a 50% interest in the assets of the trust. Dr. Chambers disclaims
any beneficial ownership of the Common Stock held by the trust.
The following table sets forth beneficial ownership of Common Stock as
of a recent date for each director of the Company, each executive officer
named in the Summary Compensation Table under "EXECUTIVE COMPENSATION" herein
and all directors and executive officers as a group. Unless otherwise stated
and subject to applicable community property laws, each beneficial owner has
sole voting and investment powers with respect to the shares shown.
BENEFICIAL OWNERSHIP (1)
------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT (2)
- ------------------------------------ ------------------------
Lawrence S. Black(5) 19,500- .50
Anthony A. Cetrone (4)(5) 126,167- 3.23
Russell C. Chambers, M.D. (3)(5) 83,450- 2.13
E.P. Marinos(5) 42,000- 1.07
Michael A. McManus, Jr(5) 18,000- .46
Julius Tabin, Ph.D(5) 38,375- .98
Paul F. Walter, M.D(5) 69,375- 1.77
All officers and directors as a
group (10 persons) (5) 432,675- 11.06
1. Unless otherwise noted, each person has sole voting and investment power
with respect to the shares of Common Stock beneficially owned.
2. The shares owned by each person, or by the group, and the shares included
in the total number of shares outstanding have been adjusted, and the
percentage owned has been computed in accordance with Rule 13d-3(d)(1)
under the Securities Exchange Act.
3. Includes 2,500 shares over which Dr. Chambers has voting power pursuant to
an agreement, 12,500 shares held as custodian for his son and 2,500 shares
held as custodian for a niece.
4. Includes 67,567 shares held by the Micron Employee Stock Ownership Plan
over which Mr. Cetrone shares voting power as Trustee.
5. Includes shares which may be acquired upon the exercise of outstanding
options within the next sixty days as follows:
Lawrence S. Black . . . . . . . . . . . . . . 18,000
Anthony A. Cetrone. . . . . . . . . . . . . . 58,600
Russell C. Chambers, M.D. . . . . . . . . . . 18,000
E. P. Marinos . . . . . . . . . . . . . . . . 42,000
Michael A. McManus, Jr. . . . . . . . . . . . 18,000
Julius Tabin. . . . . . . . . . . . . . . . . 18,000
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<PAGE>
Paul F. Walter, M.D . . . . . . . . . . . . . 18,000
Eric Chan . . . . . . . . . . . . . . . . . . 12,000
Nancy C. Garbade. . . . . . . . . . . . . . . 13,000
-------
Total . . . . . . . . . . . . . . . . . . . 215,600
-------
-------
EXECUTIVE OFFICERS
The following list sets forth the names, ages and offices of the
executive officers of the Company. The periods during which such persons
have served in such capacities are indicated in the description of business
experience of such persons below.
NAME POSITION AGE
---------------------------------------------------------------------
Anthony A. Cetrone. . . . . Chairman of the Board 68
Sidney M. Barbanel. . . . . President 61
Eric Chan, Ph.D . . . . . . Vice President, Engineering 40
Nancy C. Garbade. . . . . . Executive Vice President, Secretary 50
MR. CETRONE has been Chairman of the Board since October 1996. He is
President of Micron Products Inc.
MR. BARBANEL was elected President in June 1997. He was President of
ABAS Associates, a medical consulting firm from 1996 to June 1997. Prior to
that time, he was Vice President of Cook Pacemakers.
DR. CHAN has been Vice President of Engineering since May 1992.
MS. GARBADE has been Secretary of the Company since 1988 and General
Counsel since 1990.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The aggregate of all plan and non-plan compensation awarded to, earned
by, or paid to the Company's Chief Executive Officer, its Chief Financial
Officer and Chief Operating Officer (the "Named Executive Officers") for
services during the three fiscal years ended December 31, 1996 by the Company
and its subsidiaries is shown in the following table:
8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ -------------------------
STOCK LONG-TERM ALL
OPTIONS INCENTIVE OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(1) (SH) PAYOUTS COMPENSATION
- --------------------------- ---- ------ ----- ---------- ------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
E.P. Marinos, President and
Chief Executive Officer 1996 $100,000 $ 2,000 - - $ - $ -
Anthony A. Cetrone, President
Micron Products, Inc. 1996 $ 98,000 $17,118 - - $ - $ -
E.P. Marinos, President and
Chief Executive Officer 1995 $ 92,300 $ - - 80,000(1) $ - $ -
Anthony A. Cetrone, President
Micron Products Inc. 1995 $ 98,000 $21,907 5,250 29,000(1) $ - $ -
E.P. Marinos, President and
Chief Executive Officer 1994 $ 38,215 $ - - 18,000(2) $ - $ -
Anthony A. Cetrone, President
Micron Products, Inc. 1994 $ 98,000 $22,075 21,000 - $ - $ 628(3)
Wayne Schroeder, Former Chief
Operating Officer 1994 $ 95,833 $ - 26,250 5,200 $ - $ 10,790(3)
</TABLE>
(1) Mr. Marinos and Mr. Cetrone were granted 60,000 and 20,000
options to purchase shares, respectively, under the Option Plan in
October 1995. The shares vest at the rate of 20% per year for five
years until fully vested. The exercise price approximated the market
price on the date of grant. Mr. Marinos and Mr. Cetrone were granted
20,000 and 9,000 options to purchase shares at an exercise price of
$3.00, respectively, outside the Option Plan. Twenty-five percent of
the shares vest immediately and the remainder vest at twenty-five
percent on each anniversary date, until fully vested. The shares
granted outside the Option Plan were approved by the Stockholders.
The market price at the date of grant was $3.00.
(2) Options for the purchase of 18,000 shares at $3.00 per share were
granted to all current directors of the Company, at the Annual Meeting
of Stockholders on October 25, 1994. The options were immediately
exercisable on the date of grant. In the event the value of the
Common Stock reaches $6.00 per share, then the exercise price of one
share of the Common Stock shall be the fair market value of the Common
Stock on the date the Option is granted less the difference between
the average closing price of the Common Stock for the twenty trading
days immediately preceding the date on which the Optionee gives notice
of his intention to exercise an option and $6.00 per share. There is
a floor of $1.00 per share.
(3) Represents certain perquisites, including travel and living
expenses.
OPTION GRANTS TABLE
There were no option grants/SARS in fiscal year 1996.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTIONS VALUES TABLE
The realized value of aggregated option exercises during 1995 and the
value of unexercised in-the-money options at December 31, 1995 held by the
Named Executive Officers are shown in the following table:
9
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
VALUE REALIZED NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY
SHARES (MARKET PRICE AT HELD AT DECEMBER 31, 1996 OPTIONS AT DECEMBER 31, 1996 (1)
ACQUIRED EXERCISE LESS ----------------------------- ---------------------------------
NAME ON EXERCISE EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ----------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
E.P. Marinos . . . . . . - - 40,000 58,000 $ - $ -
Anthony A. Cetrone . . . - $ - 66,700 31,300 $ - $ -
</TABLE>
- ----------
(1) Calculated on the basis of the closing sale price per share for the
Common Stock on the American Stock Exchange of $2.50 on December 31, 1996.
REPORT OF THE COMPENSATION COMMITTEE
The following report of the Compensation Committee (the "Committee"), as
well as the Performance Graph set forth herein, are not soliciting materials,
are not deemed filed with the Securities and Exchange Commission (the "SEC")
and are not incorporated by reference in any filing of the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), whether made before or after the date of
this Proxy Statement and irrespective of any general incorporation language
in any such filing.
The Compensation Committee is responsible for establishing and reviewing
the Company's executive compensation policies, advising the full Board of
Directors on all compensation matters and administering the Company's stock
option plans. The Committee is comprised exclusively of outside Directors
(see page 6). All decisions of the Committee relating to compensation of the
President and Chief Executive Officer are reviewed and approved by the other
non-employee Directors.
COMPENSATION POLICY
The Company's executive compensation policies are designed to foster the
Company's business goals of achieving profitable growth and premium returns
to Stockholders. The principal objectives of these policies are as follows:
(1) to attract, motivate and retain executives of outstanding ability and
character; (2) to provide rewards that are closely related to the performance
of the Company and the individual executive by placing a portion of
compensation at risk; and (3) to align the interests of executives and
Stockholders through long-term, equity-based incentives and programs to
encourage and reward stock ownership. The Committee utilizes the services of
an independent executive compensation consultant in developing and evaluating
compensation plans in order to achieve the foregoing objectives.
This report discusses the manner in which base salaries, short-term
incentive compensation and long-term, equity-based incentives for the
Company's President and Chief Executive Officer and other executive officers
were determined for the 1996 fiscal year.
10
<PAGE>
EXECUTIVE COMPENSATION
The key components of executive compensation are base salary, short-term
incentive compensation and long-term, equity-based incentives. Base salary
levels are generally targeted to be competitive with the average salaries paid
at other companies of similar size and complexity both within and outside the
medical device distribution and manufacturing industries. The Committee works
with an independent executive compensation consultant to analyze competitive
compensation levels at comparable companies.
BASE SALARY
Salary level targets are established so that the Company can attract and
retain the most qualified employees. The Compensation Committee approves the
individual salaries of executive officers. In determining an executive
officer's salary, the Compensation Committee considers, but does not assign
specific weights to, the following factors: internal factors involving the
executive's level of responsibility, experience, individual performance, and
equity issues relating to pay for other Company executives, as well as external
factors involving competitive positioning, overall corporate performance, and
general economic conditions. No specific formula is applied to determine the
weight of each factor.
INCENTIVE COMPENSATION PROGRAM
The Company maintains an incentive compensation program for substantially
all officers and executives designed to reward such individuals for their
contributions to corporate and individual objectives. In the past, the programs
have provided additional compensation based on performance and profits of those
operations for which the various executives have responsibility. During fiscal
1996, no amounts were paid to the Company's officers or executives under the
plans due to 1995 financial results.
LONG-TERM INCENTIVE COMPENSATION
The Company also grants stock options and other equity incentives under the
1987 Employee Stock Option Plan in order to link compensation to the Company's
long-term growth and performance and to increases in Stockholder value. Under
the 1987 Employee Incentive Stock Option Plan, the Committee may grant stock
options to eligible employees of the Company and its subsidiaries. The
Committee has broad discretion to establish the terms of such grants. It
typically grants awards on an annual basis and may also grant awards to
designated employees upon commencement of employment or following a significant
change in an employee's responsibility or title. Awards are based on guidelines
relating to the employee's position in the Company which are set by the
Committee, as well as the employee's current performance and anticipated future
contributions. The Committee also considers the amount and terms of stock
options previously granted to each of the employees. Each member of the
Committee individually
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evaluates these factors with respect to each executive and then the Committee
reaches a consensus on the appropriate award. During fiscal year 1996, the
Committee did not recommend the grant of any options to any Executive Officers.
COMPENSATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER
Mr. Marinos became President and Chief Executive Officer of the Company in
March 1995. In accordance with the terms of his Employment Contract, Mr.
Marinos earns a salary of $100,000 per annum. During fiscal year 1996, Mr.
Marinos received $100,000 in base compensation as an employee of the Company.
He also received a cash bonus in the amount of $2,000. The rate of compensation
established by Mr. Marinos' employment contract is the same as that of the
former Chief Operating Officer. No increase in salary was authorized due to
uncertainties in the marketplace and a continued effort to contain costs. The
authorization to grant to Mr. Marinos options to purchase 80,000 shares of
Common Stock, to a large extent, ties compensation to future long-term
performance.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m).
Section 162(m) of the Internal Revenue Code of 1986, as amended, currently
imposes a $1 million limitation on the deductibility of certain compensation
paid to the Company's five highest paid executives. Excluded from the
limitation is compensation that is "performance based". For compensation to be
performance based, it must meet certain criteria, including being based on
predetermined objective standards approved by the Stockholders of the Company.
The Committee intends to take into account the potential application of Section
162(m) with respect to incentive compensation awards and other compensation
decisions made by it in the future. The Committee does not currently anticipate
that Section 162(m) will limit the deductibility of any compensation paid by the
Company to its executive officers during 1995.
This report on executive compensation is made by and on behalf of the
Company's Compensation Committee.
Russell C. Chambers, M.D.
Lawrence S. Black
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STOCK PERFORMANCE GRAPH
The following Performance Graph compares the Company's cumulative total
shareholder return on its Common Stock for a five-year period (from January,
1990 to December 31, 1996), with the cumulative total return of the Standard &
Poor's 500 Stock Index ("S&P 500") (which does not include the Company), and the
Standard & Poor's Medical Products and Supplies Stock Index (which includes the
Company)("S&P Med"). Dividend reinvestment has been assumed. The Performance
Graph assumes $100 invested in December 31, 1991 in the Company's Common Stock,
S&P 500, and S&P Med.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ARRHYTHMIA RESEARCH TECHNOLOGY, INC., THE S & P 500 INDEX
AND THE S & P HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) INDEX
12/92 12/93 12/94 12/95 12/96
Arrhythmia Research Technology, Inc. ........ 146 169 51 87 51
S & P 500 Index.............................. 108 118 120 165 203
S & P Health Care Index...................... 86 65 77 131 150
* $100 INVESTED ONN 12/31/91 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
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CERTAIN TRANSACTIONS
Each transaction between the Company and its officers, Directors or their
affiliates have been approved by a majority of the Directors who had no interest
in and who were not employed by the Company at the time of such transaction.
The Company believes that all transactions entered into with affiliates of the
Company were on terms no less favorable than could have been obtained from
unaffiliated third parties.
In May 1983, the Company entered into an agreement with Cardiodigital
Industries, Inc. ("CDI") pursuant to which the Company granted an exclusive
license to CDI to utilize the technology covered by the Simson Patent in
connection with the research and development of signal-averaging devices. In
consideration of the license, CDI provided $175,000 in financing and granted the
Company the option to acquire any technology developed by CDI on an exclusive
basis in consideration of either a lump-sum payment of $1,250,000 or a royalty
of $150 per cardiac signal-averaging device sold by the Company, up to a maximum
of $1,250,000. The Company elected to pay to CDI a royalty of $150 per device
sold. Dr. Chambers is the son of the late G. Russell Chambers whose estate is a
shareholder in CDI. Julius Tabin, a Director of the Company, is a shareholder
of CDI. Royalty fees for the fiscal year ended December 31, 1996 were $10,500.
Dr. Tabin, a Director of the Company, is a Partner of Fitch, Even, Tabin &
Flannery, a law firm that represents the Company with respect to patent and
other intellectual property law matters. Fees for legal services rendered by
Fitch, Even, Tabin & Flannery were approximately $30,000 in 1996. Fitch, Even,
Tabin & Flannery received customary compensation in connection with its services
to the Company.
Dr. Russell C. Chambers, a director and shareholder of the Company, is
engaged as a consultant to the Company. For the year ended December 31, 1996,
health insurance premiums paid on Dr. Chambers' behalf amounted to approximately
$5,950.
CERTAIN FILINGS
Section 16(a) of the Securities Exchange Act of 1934 and the rules
thereunder require the Company's officers and Directors, and persons who own
more than 10 percent of a registered class of the Company's equity securities,
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission and the American Stock Exchange and to furnish the Company
with copies of such reports. Based on Company records and other information,
the Company believes that its executive officers, Directors, and 10 percent
Stockholders timely complied with such filing requirements with respect to the
fiscal year ended December 31, 1996.
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PROPOSAL NO. 2
PROPOSAL TO APPROVE THE ADOPTION OF THE
ARRHYTHMIA RESEARCH TECHNOLOGY, INC. 1997 STOCK OPTION PLAN
GENERAL
The Board of Directors adopted the Arrhythmia Research Technology, Inc.
1997 Stock Option Plan (the "Plan") on July 16, 1997, subject to the approval of
the Company's Stockholders. The Board believes that the Plan will further assist
the Company in attracting, retaining and motivating the best qualified
directors, officers and other key employees, and will further enhance the long-
term mutuality of interest between the Company's Stockholders and its directors,
officers and key employees. The principal features of the Plan are summarized
below, but such summary is qualified in its entirety by reference to the full
text of the Plan, which is attached as Exhibit A.
Under the Plan, the Compensation Committee (the "Committee") of the Board
may grant options to officers and other key employees of the Company and its
subsidiaries. The number of grantees and the number of Common Shares subject to
options awarded to each grantee may vary from year to year. The maximum number
of Common Shares for which an individual may receive awards of options is
limited to 50,000 Common Shares over a one-year period. As of the date of this
Proxy Statement, no determination has been made regarding the identity of the
officers and key employees to whom awards of options may be made under the Plan
or the number and type of such awards that will be made to any such officer or
key employee. The Company estimates that approximately 10 employees of the
Company and its subsidiaries will be eligible to receive options under the Plan,
including the current President.
Additionally, each year, on the first business day following the date of
the annual meeting of stockholders, each Non-employee Director will
automatically receive an option to acquire 3,000 Common Shares at the fair
market value thereof on the date the option is granted.
The maximum number of Common Shares that may be issued under the Plan is
100,000. The Common Shares may be unissued shares or treasury shares. If there
is a stock split, stock dividend, recapitalization, or other relevant change
affecting the Company's Common Shares, appropriate adjustments will be made by
the Committee in the number of shares that may be issued in the future and in
the number of shares and price under all outstanding grants made before the
event. If Common Shares under an option are not issued, those Common Shares
will again be available for inclusion in future grants. The awards authorized
under the Plan are subject to applicable tax withholding by the Company.
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GRANTS UNDER THE PLAN
OPTIONS FOR EMPLOYEES. The Committee may grant options qualifying as
incentive stock options under Section 422 of the Code and non-qualified stock
options. The exercise price of either a non-qualified stock option or an
incentive stock options will be equal to the fair market value of the Common
Shares on the date of grant. With respect to any individual who owns 10% or more
of the stock of the Company or one of its subsidiaries (a "10% Owner"), the
exercise price for an incentive stock option will be equal to 110% of the fair
market value of the Common Shares on the date of grant. For purposes of the
Plan, fair market value means, on any date, the closing price of the Common
Shares as reported on the American Stock Exchange (or on such other recognized
market or quotation system on which the trading prices of the Common Shares are
traded or quoted at the relevant time) on such date. On August 1, 1997, the
fair market value of the Common Shares was $2.125. To exercise an option, an
employee may pay the exercise price in cash, or if permitted by the Committee,
by delivering other Common Shares. The Committee may provide that if an
employee exercises an option by surrendering Common Shares, the Employee will be
granted a new option (a "Reload Option") for a number of Common Shares equal to
the number so surrendered, with such other terms and conditions as the Committee
determines.
The term of each option will be fixed by the Committee, but may not exceed
ten (10) years from the date of grant. With respect to a 10% Owner, the term of
any incentive stock option may not exceed five (5) years from the date of grant.
The Committee will determine the time or times when each option may be
exercised. Options may be made exercisable in installments, and the
exercisability of options may be accelerated by the Committee. In the event
that the Committee does not specify a specific exercise schedule at the time of
grant, each option will become exercisable in three approximately equal annual
installments beginning on the first anniversary of the date of grant.
OPTIONS FOR NON-EMPLOYEE DIRECTORS. Under the Plan, each Non-employee
Director who is a member of the Board on the first business day after each
annual meeting of stockholders during the term of the Plan will receive an
automatic annual grant of a non-qualified stock option to purchase 3,000 Common
Shares. The exercise price for each such option will be the fair market value
of a Common Share, on the date the option is granted. Each such option will
become exercisable six (6) months after the date it is granted, and will remain
exercisable until the earlier of (i) the tenth anniversary of the date of grant
or (ii) the first anniversary of the date the director ceases to be a member of
the Board; provided, however, that all options will be canceled on the date a
director ceases to be a member of the Board if the director leaves the Board
after having been convicted of, or pled guilty or NOLO CONTENDERE to, a felony.
TERMINATION OF EMPLOYMENT. In the event of termination of employment by
reason of retirement, long-term disability or death, any option held by an
employee may thereafter be exercised in full for a period of five (5) years (or
such shorter period as the Committee
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will determine at grant), subject in each case to the stated term of the
option. In the case of an incentive stock option, this five-year period is
shortened to three months after termination of employment by reason of
retirement and to one year after termination of employment by reason of death
or long-term disability. In the event of an employee's termination of
employment for cause, any options held by him will be forfeited. In the
event of an employee's termination of employment for any reason other than
retirement, long-term disability, death or cause, any options held by him
will be exercisable, to the extent exercisable on the date of termination,
for a period of thirty (30) days.
CHANGE IN CONTROL PROVISIONS. The Plan provides that, except as provided
below, in the event of a "Change in Control" (as defined in the Plan), the
vesting date of each option granted to an employee will be accelerated to permit
the employee to exercise such option immediately upon the occurrence of the
Change in Control. Notwithstanding the foregoing, if the Committee determines
that the grantee of such award will receive a new award (or have his prior award
honored) in a manner which preserves its value and eliminates the risk that the
value of the award will be forfeited due to involuntary termination, no
acceleration will occur as a result of a Change in Control. The exercise date
of options granted to a non-employee director will be accelerated unless the
Common Shares remain publicly traded, and the director remains a director of the
Company, immediately following the Change in Control.
OTHER INFORMATION. Awards under the Plan are not transferable except by
will or the laws of descent and distribution and may be exercised only by the
grantee during his or her lifetime. The Board may terminate or suspend the Plan
at any time but such termination or suspension will not affect any options then
outstanding under the Plan. Unless terminated by action of the Board, the Plan
will continue in effect until September 18, 2007, but awards granted prior to
such date will continue in effect until they expire in accordance with their
terms. The Board or the Committee may also amend the Plan as it deems
advisable; however, it is presently intended that all material amendments to the
Plan will be submitted to the Stockholders for their approval to the extent
required by Rule 16b-3 promulgated under the Securities Exchange Act of 1934 as
time to time in effect and the Internal Revenue Code. The Committee may amend
the term of any award or option theretofore granted, retroactively or
prospectively, but no such amendment will adversely affect any such award or
option without the holder's consent. No amendment which affects the provisions
of the Plan pertaining to the options granted to Non-employee Directors may be
adopted within six (6) months of any prior amendment relating to such provisions
of the Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences to the Company and participants in the Plan based on federal income
tax laws currently in effect.
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NON-QUALIFIED STOCK OPTIONS. An individual will not recognize income
upon the grant of a non-qualified stock option. The individual may recognize
ordinary income upon the exercise of a non-qualified stock option, in which
event the Company will receive a tax deduction equal to the amount of income
recognized, provided that any applicable withholding requirements are
satisfied. Generally, the amount of such ordinary income and deduction is the
excess, if any, of the fair market value on the exercise date of the Common
Shares acquired over the aggregate exercise price paid. Any ordinary income
recognized by an individual upon the exercise of a non-qualified stock option
will increase his tax basis for the Common Shares received. Upon a
subsequent sale or exchange of such Common Shares, the individual will
recognize capital gain or loss to the extent of the difference between the
selling price of such Common Shares and his tax basis in such Common Shares.
Such gain or loss will be long-term or short-term capital gain or loss,
depending upon the individual's holding period for such Common Shares.
If the holder of a non-qualified stock option pays the exercise price, in
whole or in part, with previously acquired Common Shares, the holder will
recognize ordinary income in the amount by which the fair market value of the
Common Shares received exceeds the exercise price. The individual will not
recognize gain or loss upon delivery of the previously acquired Common Shares to
the Company. The Common Shares received by the holder equal in number to the
previously acquired Common Shares exchanged therefor will have the same basis
and holding period for capital gain purposes as the previously acquired Common
Shares. Common Shares received by the holder of the non-qualified stock option
in excess of the number of previously acquired Common Shares will have a basis
equal to the fair market value of such additional shares as of the date ordinary
income is recognized. The holding period for such additional Common Shares will
commence as of the date of exercise.
INCENTIVE STOCK OPTIONS. An employee will not recognize income upon either
the grant of an incentive stock option or upon the exercise of the incentive
stock option. The employee will recognize gain or loss, depending on his basis
in the Common Shares (which is generally equal to the exercise price paid for
the Common Shares), upon the sale or other disposition of the Common Shares
acquired upon exercise. If certain statutory holding periods are met, such gain
or loss will be long-term capital gain or loss and the Company will not be
entitled to any Federal income tax deduction. If the holding periods are not
met, the employee must be required to recognize ordinary income and the Company
will be entitled to a tax deduction equal to the amount of ordinary income, if
any, recognized, provided that applicable withholding tax requirements are
satisfied.
Incentive stock options will be treated as non-qualified stock options to
the extent that the aggregate fair market value of the Common Shares (determined
at the time the options are granted) with respect to which incentive stock
options are exercisable for the first time by an individual during a calendar
year (whether as a result of acceleration of exercisability or otherwise)
exceeds $100,000.
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An employee who exercises an incentive stock option maybe subject to an
alternative minimum tax since, for purposes of the alternative minimum tax, the
option will be treated as a non-qualified stock option. Accordingly, the
taxable event for alternative minimum tax purposes will generally occur on the
exercise of the option.
OTHER MATTERS. The Plan is intended to comply with Section 162(m) of the
Code which was enacted as part of the Omnibus Budget Reconciliation Act of 1993.
Section 162(m) of the Code prohibits a publicly-held corporation, such as the
Company, from claiming a deduction on its federal income tax return for
compensation in excess of $1 million paid for a given fiscal year to the chief
executive officer (or person acting in that capacity) at the close of the
corporation's fiscal year and the four most highly compensated officers of the
corporation, other than the chief executive officer, at the end of the
corporation's fiscal year. Upon the approval of the Plan by the Stockholders,
options awarded under the Plan will qualify as performance-based compensation,
as defined in Code Section 162(m) and the regulations issued by the Department
of the Treasury under such section. As such, the income attributable to such
options is not subject to the deduction limit of Code Section 162(m).
RECOMMENDATION AND VOTE
To be approved, this proposal requires the affirmative vote of the holders
of a majority of the voting stock of the Company present in person or
represented by proxy at the Annual Meeting and entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS YOU FOR FOR THE APPROVAL OF THE ADOPTION
OF THE ARRHYTHMIA RESEARCH TECHNOLOGY, INC. 1997 STOCK OPTION PLAN AND YOUR
PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE. ABSTENTIONS ON THIS
PROPOSAL WILL BE COUNTED FOR QUORUM PURPOSES BUT NOT VOTED.
PROPOSAL NO. 3
INDEPENDENT ACCOUNTANTS
The Directors of the Company have selected the firm of Coopers & Lybrand as
the auditors of the Company for the fiscal year ending December 31, 1997,
subject to the approval of the stockholders. Coopers & Lybrand has acted for
the Company as auditors since 1987.
Before the Audit Committee recommended to the full Board the appointment of
Coopers & Lybrand, it carefully considered the qualifications of that firm,
including their performance in prior years and their reputation for integrity
and for competence in the fields of accounting and auditing.
The amount of the fees for audit and tax services performed by Coopers &
Lybrand relating to fiscal year 1996 was approximately $74,862. Representatives
of Coopers &
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Lybrand are expected to be present at the meeting to respond to appropriate
questions and to make a statement if they desire to do so.
RECOMMENDATION AND VOTE
To be approved, this proposal requires the affirmative vote of the holders
of a majority of the voting stock of the Company present in person or
represented by proxy at the Annual Meeting entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE APPOINTMENT OF COOPERS &
LYBRAND AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1997 AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Stockholders are entitled to submit proposals on matters appropriate for
Stockholder action consistent with regulations of the Securities and Exchange
Commission. Should a Stockholder intend to present a proposal at the 1998
Annual Meeting, it must be received by the Secretary of the Company (5910
Courtyard Drive, Suite 300, Austin, Texas 78731) not later than April 30, 1998
and must comply with all of the requirements of Rule 14a-8 under the Securities
Exchange Act of 1934 in order to be included in the Company's Proxy Statement
and form of Proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other matters to be voted upon at the
Annual Meeting. However, if any other matters properly come before the meeting,
it is the intention of the persons named in the enclosed form of Proxy to vote
such Proxy in accordance with their judgment on such matters.
No person is authorized to give any information or to make any
representation other than that contained in this Proxy Statement, and if given
or made, such information may not be relied upon as having been authorized.
Copies of the Company's 1996 Annual Report on Form 10-K are being sent to
all Stockholders along with this Proxy Statement. Additional copies will be
furnished without charge to Stockholders upon written request. All written
requests should be directed to Arrhythmia Research Technology, Inc., Secretary,
5910 Courtyard Drive, Suite 300, Austin, Texas 78731.
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ARRHYTHMIA RESEARCH TECHNOLOGY, INC.
1997 STOCK OPTION PLAN
SECTION 1
PURPOSE
The purpose of the Plan is to foster and promote the long-term financial
success of the Company and materially increase shareholder value by (a)
encouraging and providing for the acquisition of an ownership interest in the
Company by Employees and Eligible Directors and (b) enabling the Company to
attract and retain the services of an outstanding management team upon whose
judgment, interest and special effort the successful conduct of its operations
is largely dependent.
SECTION 2
DEFINITIONS
2.1 DEFINITIONS. Whenever used herein, the following terms shall have
the respective meanings set forth below:
(a) "ACT" means the Securities Exchange Act of 1934, as amended.
(b) "AWARD" means any Option.
(c) "BOARD" means the Board of Directors.
(d) CAUSE" means (i) the willful failure by a Participant to
perform substantially his duties as an Employee of the Company
(other than due to physical or mental illness) after reasonable
notice to the Participant of such failure, (ii) the
Participant's engaging in serious misconduct that is injurious
to the Company or any Subsidiary, (iii) the Participant's
having been convicted of, or entered a plea of NOLO CONTENDERE
to, a crime that constitutes a felony or (iv) the breach by the
Participant of any written covenant or agreement with the
Company or any Subsidiary not to disclose any information
pertaining to the Company or any Subsidiary or not to complete
or interfere with the Company or any Subsidiary.
(e) "CHANGE IN CONTROL" means the occurrence of any of the following
events:
(i) the members of the Board at the beginning of any
consecutive twenty-four calendar month period (the
"Incumbent Directors") cease for any reason other
than due to death to
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constitute at least a majority of the members of the
Board, provided that any director whose election, or
nomination for election by the Company's
shareholders, was approved by a vote of at least a
majority of the members of the Board then still in
office who were members of the Board at the beginning
of such twenty-four calendar month period, shall be
treated as an Incumbent Director, or
(ii) any "person," including a "group" (as such terms are
used in Sections 13(d) and 14(d)(2) of the Act, but
excluding the Company, any of its Subsidiaries, or
any employee benefit plan of the Company or of any of
its Subsidiaries) is or becomes the "beneficial
owner" (as defined in Rule 13(d)(3) under the Act),
directly or indirectly, of securities of the Company
representing more than 25% of the combined voting
power of the Company's then outstanding securities;
or
(iii) the shareholders of the Company shall approve a
definitive agreement (1) for the merger or other
business combination of the Company with or into
another corporation, a majority of the directors of
which were not directors of the Company immediately
prior to the merger and in which the shareholders of
the Company immediately prior to the effective date
of such merger own less than 50% of the voting power
in such corporation; or (2) for the sale or other
disposition of all or substantially all of the assets
of the Company; or
(iv) the purchase of Stock pursuant to any tender or
exchange offer made by any "person," including a
"group" (as such terms are used in Sections 13(d) and
14(d)(2) of the Act), other than the Company, any of
the its subsidiaries, or an employee benefit plan of
the Company or any of its Subsidiaries, for more than
25% of the Stock of the Company.
(f) "CODE" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the Compensation Committee of the Board which
shall have the meaning ascribed to a "compensation committee"
in Section 1.162-27(c)(4) of the final regulations promulgated
under Section 162(m) of the
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Code and which shall consist of three or more members, each of
whom shall be (i) a person from time to time permitted by the
rules promulgated under Section 16 of the Act in order for
grants of Awards to be exempt transactions under said Section
16 and (ii) receiving remuneration in no other capacity than as
a director, except as permitted under Section 1.162-27(e)(3) of
the final regulations promulgated under Section 162(m) of the
Code and the rulings thereunder.
(h) "COMPANY" means Arrhythmia Research Technology, Inc. a Delaware
corporation, and any successor thereto.
(i) "DIRECTOR OPTION" means a Nonstatutory Stock Option granted to
each Eligible Director pursuant to Section 6.7 without any
action by the Board or the Committee.
(j) "DISABILITY" means the inability of the Participant to perform
his duties for a period of at least six months due to a
physical or medical infirmity. Notwithstanding the foregoing,
with respect to Incentive Stock Options, the term "Disability"
shall be defined as such term is defined in Section 22(e)(3) of
the Code.
(k) "ELIGIBLE DIRECTOR" means, on any date, a person who is serving
as a member of the Board and who is not and has never been an
Employee.
(l) "EMPLOYEE" means any officer or other key executive and
management employee of the Company or of any of its
Subsidiaries.
(m) "FAIR MARKET VALUE" means, on any date, the closing price of
the Stock as reported on the American Stock Exchange (or on
such other recognized market or quotation system on which the
trading prices of the Stock are traded or quoted at the
relevant time) on such date. In the event that there are no
Stock transactions reported on the American Stock Exchange (or
such other market or system) on such date, Fair Market Value
shall mean the closing price on the immediately preceding date
on which Stock transactions were so reported.
(n) "OPTION" means the right to purchase Stock at a stated price
for a specified period of time. For purposes of the Plan, an
Option may be either in "Incentive Stock Option" (ISO) within
the meaning of Section 422 of the Code or (ii) a "Nonstatutory
Stock Option (NSO) which does not qualify for treatment as an
"Incentive Stock Option."
(o) "PARTICIPANT" means any Employee designated by the Committee to
participate in the Plan.
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(p) "PLAN" means the Arrhythmia Research Technology, Inc. 1997
Stock Option Plan, as in effect from time to time.
(q) "RETIREMENT" means termination of a Participant's employment on
or after the normal retirement date or, with the Committee's
approval, on or after any early retirement date established
under any retirement plan maintained by the Company or a
Subsidiary in which the Participant participates.
(r) "STOCK" means the Common Shares, without par value, of the
Company.
(s) "SUBSIDIARY" means any corporation or partnership in which the
Company owns, directly or indirectly, 50% or more of the total
combined voting power of all classes of stock of such
corporation or of the capital interest or profits interest of
such partnership.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the
plural shall include the singular.
SECTION 3.
ELIGIBILITY AND PARTICIPATION
Except as otherwise provided in Section 6.7, the only persons eligible to
participate in the Plan shall be those Employees selected by the Committee as
Participants.
SECTION 4.
POWERS OF THE COMMITTEE
4.1 POWER TO GRANT. The Committee shall determine the Participants to
whom Awards shall be granted, the type or types of Awards to be
granted and the terms and conditions of any and all such Awards.
The Committee may establish different terms and conditions for
different types of Awards, for different Participants receiving the
same type of Award and for the same Participant for each Award such
participant may receive, whether or not granted at different times.
4.2 ADMINISTRATION. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action
thereof, is authorized to prescribe, amend, and rescind rules and
regulations relating to the Plan, to provide for conditions deemed
necessary or advisable to protect the interests of the Company, and
to make all other determinations (including, without
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<PAGE>
limitation, whether a Participant has incurred a Disability)
necessary or advisable for the administration and interpretation of
the Plan in order to carry out its provisions and purposes.
Determinations, interpretations, or other actions made or taken by
the Committee pursuant to the provisions of the Plan shall be final,
binding, and conclusive for all purposes and upon all persons.
SECTION 5.
STOCK SUBJECT TO PLAN
5.1 NUMBER. Subject to the provisions of Section 5.3, the number of
shares of Stock subject to Awards under the Plan may not exceed
100,000 shares of Stock. Subject to the provisions of Section 5.3,
no Employee shall receive Awards for more than 30,000 shares of
Stock over any one-year period. For this purpose, to the extent
that any Award is cancelled (as described in Section
1.162-27(e)(2)(vi)(B) of the final regulations promulgated under
Section 162(m) of the Code), such cancelled Award shall continue to
be counted against the maximum number of shares of Stock for which
Awards may be granted to an Employee under the Plan. The shares of
Stock to be delivered under the Plan may consist, in whole or in
part, of treasury Stock or authorized but unissued Stock, not
reserved for any other purpose.
5.2 CANCELLED, TERMINATED, OR FORFEITED AWARDS. Except as provided in
Section 5.1, any shares of Stock subject to an Award which for any
reason is cancelled, terminated or otherwise settled without the
issuance of any Stock shall again be available for Awards under the
Plan.
5.2 ADJUSTMENTS IN CAPITALIZATION. In the event of any Stock dividend
or Stock split, recapitalization (including, without limitation, the
payment of an extraordinary dividend) merger, consolidation,
combination, spin-off, distribution of assets to shareholders,
exchange of shares, or other similar corporate change, the aggregate
number of shares of Stock available for Awards under Section 5.1 or
subject to outstanding Awards and the respective prices and/or
limitations applicable to outstanding Awards may be appropriately
adjusted by the Committee, whose determination shall be conclusive.
If, pursuant to the preceding sentence, an adjustment is made to the
number of shares subject to outstanding Options held by Participants
a corresponding adjustment shall be made to the number of shares
subject to outstanding Director Options and if an adjustment is made
to the number of shares of Stock authorized for issuance under the
Plan, a corresponding adjustment shall be made to the number of
shares subject to each Director Option thereafter granted pursuant
to Section 6.7.
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SECTION 6.
OPTIONS
6.1 GRANT OF OPTIONS. Options may be granted to Participants at such
time or times as shall be determined by the Committee. Options
granted under the Plan may be of two types: (i) Incentive Stock
Options and (ii) Nonstatuatory Stock Options. The Committee shall
have complete discretion in determining the number of Options, if
any, to be granted to a Participant. Without limiting the
foregoing, the Committee may grant Options containing provisions for
the issuance to the Participant, upon exercise of such Option and
payment of the exercise price therefor with previously owned shares
of Stock, of an additional Option for the number of shares so
delivered, having such other terms and conditions not inconsistent
with the Plan as the Committee shall determine. Each Option shall
be evidenced by an Option agreement that shall specify the type of
Option granted, the exercise price, the duration of the Option, the
number of shares of Stock to which the Option pertains, and such
other terms and conditions not inconsistent with the Plan as the
Committee shall determine.
6.2 OPTION PRICE. Nonstatutory Stock Options and Incentive Stock
Options granted pursuant to the Plan shall have an exercise price
which is not less than the Fair Market Value of the Stock on the
date the Option is granted. To the extent that an Incentive Stock
Option is granted to a Participant who owns (actually or
constructively under the provisions of Section 424(d) of the Code)
Stock possessing more than 10% of the total combined voting power of
all classes of Stock of the Company or of any Subsidiary, such
Incentive Stock Option shall have an exercise price which is not
less than 110% of the Fair Market Value on the date the Option is
granted.
6.3 EXERCISE OF OPTIONS. Options awarded to a Participant under the
Plan shall be exercisable at such times and shall be subject to such
restrictions and conditions including the performance of a minimum
period of service, as the Committee may impose, either at or after
the time of grant of such Options; provided, however, that if the
Committee does not specify another exercise schedule at the time of
grant, each Option shall become exercisable in three approximately
equal installments on each of the first three anniversaries of the
date of grant, subject to the Committee's right to accelerate the
exercisability of such Option in its discretion. Notwithstanding the
foregoing, no Option shall be exercisable for more than 10 years
after the date on which it is granted; provided, however, in the
case of an Incentive Stock Option granted to a Participant who owns
(actually or constructively under the provisions of Section 424(d)
of the Code) Stock possessing more
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than 10% of total combined voting power of all classes of Stock of
the Company or any Subsidiary, such Incentive Stock Option shall not
be exercisable for more than five (5) years after the date on which
it is granted.
6.4 PAYMENT. The Committee shall establish procedures governing the
exercise of Options, which shall require that written notice of
exercise be given and that the Option price be paid in full in cash
or equivalents, including by personal check, at the time of exercise
or pursuant to any arrangement that the Committee shall approve.
The Committee may, in its discretion, permit a Participant to make
payment in stock already owned by him, valued at its Fair Market
Value on the date of exercise, as partial or full payment of the
exercise price. As soon as practicable after receipt of a written
exercise notice and full payment of the exercise price, the Company
shall deliver to the Participant a certificate or certificates
representing the acquired shares of Stock.
6.5 INCENTIVE STOCK OPTIONS. Notwithstanding anything in the Plan to
the contrary, no term of this Plan relating to Incentive Stock
Options shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be so exercised, so
as to disqualify the Plan under Section 422 of the Code, or, without
the consent of any Participant affected thereby, to cause any
Incentive Stock Option previously granted to fail to qualify for the
federal income tax treatment afforded under Section 421 of the Code.
Further, the aggregate Fair Market Value (determined as of the time
an Incentive Stock Option is granted) of the Stock with respect to
which Incentive Stock Options are exercisable for the
first time any Participant during any calendar year (under all option
plans of the Company and all Subsidiaries of the Company) shall not
exceed $100,000.
6.6 DIRECTOR OPTIONS. Nothwithstanding anything else contained herein
to the contrary, on the first business day following the date of
each annual meeting of shareholders during the term of the Plan,
each Eligible Director shall receive a Director Option to purchase
3,000 shares of Stock at an exercise price per share equal to the
Fair Market Value of the Stock on the date of grant. Each Director
Option shall be exercisable six months after the date of grant and
shall remain exercisable until the earlier to occur of (i) the tenth
anniversary of the date of the grant or (ii) the first anniversary
of the date the Eligible Director ceases to be a member of the
Board, except that if the Eligible Director ceases to be a member of
the Board after having been convicted of, or pled guilty or NOLO
CONTENDERE to, a felony, his Director Options shall be cancelled on
the date he ceases to be a director. An Eligible Director may
exercise a Director Option in the manner described in Section 6.4
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SECTION 7.
TERMINATION OF EMPLOYMENT
7.1 TERMINATION OF EMPLOYMENT DUE TO RETIREMENT. Unless otherwise
determined by the Committee at the time of grant, in the event a
Participant's employment terminates by reason of Retirement, any Options
granted to such Participant which are then outstanding (whether or not
exercisable prior to the date of such termination) may be exercised at
any time prior to the expiration of the term of the Options or within
five (5) years (or such shorter period the Committee shall determine at
the time of grant) following the Participant's termination of
employment, whichever period is shorter. Notwithstanding any provision
contained herein, with respect to any Incentive Stock Option, a
Participant who terminates his employment by reason of Retirement may
exercise such Incentive Stock Option at any time prior to the expiration
of the term of the Option or within three (3) months following the
Participant's termination of employment, whichever period is shorter.
7.2 TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABILITY. Unless otherwise
determined by the Committee at the time of grant, in the event a
Participant's employment terminates by reason of death or Disability, any
Options granted to such participant which are then outstanding (whether
or not exercisable prior to the date of such termination) may be
exercised by the participant or the Participant's designated beneficiary,
and if none is named, in accordance with Section 10.2, at any time prior
to the expiration date of the term of the Options or within five (5)
years (or such shorter period as the Committee shall determine at the
time of grant) following the Participant's termination of employment,
whichever period is shorter. Notwithstanding any provision contained
herein, with respect to any Incentive Stock Option, a Participant whose
employment terminates by reason of death or Disability may exercise (or
his designated beneficiary may exercise, in the case of death) such
Incentive Stock Option at any time prior to the expiration of the term of
the Option or within one (1) year following the Participant's termination
of employment, whichever period is shorter.
7.3 TERMINATION OF EMPLOYMENT FOR CAUSE. Unless otherwise determined
by the Committee at the time of grant, in the event a Participant's
employment is terminated for Cause, any Options granted to such
Participant which are then outstanding (whether or not exercisable prior
to the date of such termination) shall be forfeited.
7.4 TERMINATION OF EMPLOYMENT FOR ANY OTHER REASON. Unless otherwise
determined by the Committee at or after the time of
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grant, in the event the employment of the Participant shall terminate
for any reason other than one described in Section 7.1, 7.2 or 7.3, any
Options granted to such Participant which are exercisable at the date of
the Participant's termination of employment shall remain exercisable
until the earlier to occur of (i) the expiration of the term of such
Options or (ii) the thirtieth day following the Participant's
termination of employment whichever period is shorter.
SECTION 8.
CHANGE IN CONTROL
8.1 ACCELERATED VESTING AND PAYMENT. Subject to the provisions of Section
8.2 below, in the event of a Change in Control, each Option (excluding
any Director Option) shall vest immediately and become exercisable.
8.2 ALTERNATIVE AWARDS. Nothwithstanding Section 8.1, no acceleration of the
vesting period shall occur with respect to any Award or any class of
Awards if the Committee reasonably determines in good faith prior to the
occurrence of a Change in Control that such Award or Awards shall be
honored or assumed, or new rights substituted therefor (such honored,
assumed or substituted award hereinafter called an "Alternative Award"),
by a Participant's employer (or the parent or a subsidiary of such
employer) immediately following the Change in Control, provided that any
such Alternative Award must:
(i) be based on stock which is traded on an established securities
market,or which will be so traded within 60 days of the Change in
Control;
(ii) provided such Participant (or each Participant in a class of
Participants) with rights and entitlements substantially equivalent
to or better than the rights, terms and conditions applicable under
such Award, including, but not limited to, an identical or better
exercise or vesting schedule and identical or better timing and
methods of payment;
(iii) have substantially equivalent economic value to such Award
(determined at the time of the Change in Control); and
(iv) have terms and conditions which provide that in the event that the
Participant's employment is involuntarily terminated or
constructively terminated, any conditions on Participant's rights
under, or any restrictions on transfer or exercisability applicable
to, each such Alternative Award shall be waived or shall lapse, as
the case may be.
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For this purpose, a constructive termination shall mean a termination by
a Participant following a material reduction in the Participant's
compensation, a material reduction in the Participant's responsibilities
or the relocation of the Participant's principal place of employment to
another location, in each case without the Participant's written consent.
8.3 DIRECTOR OPTIONS. Upon a Change in Control, each Director Option granted
to an Eligible Director shall be vest immediately and become exercisable
unless (i) the Stock remains traded on an established securities market
following the Change in Control and (ii) such Eligible Director remains on
the Board following the Change in Control.
SECTION 9.
AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
The Board or the Committee may at any time terminate or suspend the
Plan, and from time to time may amend or modify the Plan; provided,
however, that no amendment may be made to Section 6.6 or any other
provision of the Plan relating to Director Options within six months of
the last date on which any such provision was amended. Any such
amendment, termination or suspension may be made without the approval
of the shareholders of the Company except as such shareholder approval
may be required (a) to satisfy the requirements of Rule 16b-3 under the
Act, or any successor rule or regulation, (b) to satisfy applicable
requirements of the Code or (c) to satisfy applicable requirements of
any securities of the Code or (c) to satisfy applicable requirements of
any securities exchange on which are listed any of the Company's equity
securities. No amendment of the Plan shall result in any Committee
member's losing his status as a "disinterested person" as defined in
Rule 16b-3 under the Act, or any successor rule or regulation, with
respect to any employee benefit plan of the Company or result in the
Plan's losing its status as a plan satisfying the requirements of said
Rule 16b-3. No amendment, modification, or termination of the Plan
shall in any manner adversely affect any Award theretofore granted
under the Plan, without the consent of the Participant.
SECTION 10.
MISCELLANEOUS PROVISIONS
10.1 NONTRANSFERABILITY OF AWARDS. No Awards granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. All rights with respect to Awards granted to a
Participant under the Plan shall be exercisable during his lifetime
only by such Participant and all rights with respect to any Director
Options granted to an Eligible Director shall be exercisable during his
lifetime only by such Eligible Director.
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10.2 BENEFICIARY DESIGNATION. Each Participant and each Eligible
Director under the Plan may from time to time name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom
any benefit under the Plan is to be paid or by whom any right under the
Plan is to be exercised in case of his death. Each designation shall
revoke all prior designations by the same participant or Eligible
Director, shall be in a form prescribed by the Committee, and shall be
effective only when filed in writing with the Committee. In the
absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to or exercised by his surviving
spouse, if any, or otherwise to or by his estate and Director Options
outstanding at the Eligible Director's death shall be exercised by his
surviving spouse, if any, or otherwise by his estate.
10.3 NO GUARANTEE OF EMPLOYMENT OR PARTICIPATION. Nothing in the Plan
shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment at any time,
nor confer upon any Participant any right to continue in the employ of
the company or any Subsidiary. No Employee shall have a right to be
selected as a Participant, or, having been so selected, to receive any
future Awards. Nothing in the Plan shall confer upon an Eligible
Director a right to continue to serve on the Board or to be nominated
for reelection to the Board.
10.4 TAX WITHHOLDING. The Company shall have the power to withold, or
require a Participant or Eligible Director to remit to the company, an
amount sufficient to satisfy Federal, State, and local withholding tax
requirements on any Award under the Plan, and the Company may defer
payment of cash or issuance of Stock until such requirements are
satisfied. The Committee may, in its discretion, permit a Participant
to elect, subject to such conditions as the committee shall impose, (i)
to have shares of Stock otherwise issuable under the Plan withheld by
the Company or (ii) to deliver to the Company previously acquired
shares of Stock having a Fair Market Value sufficient to satisfy all or
part of the Participant's estimated total Federal, State, and local tax
obligation associated with the transaction.
10.5 INDEMNIFICATION. Each person who is or shall have been a member
of the Committee or of the Board shall be indemnified and held harmless
by the Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him in connection
with or resulting from any claim, action, suit, or proceeding to which
he may be made a party or in which he may be involved by reason of any
action taken or failure to act under the Plan and against and from any
and all amounts paid by him in settlement thereof, with the Company's
approval, or paid by him in satisfaction of any judgement in any such
action, suit, or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and
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defend the same before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification shall not be exclusive
and shall be independent of any other rights of indemnification to which
such persons may be entitled under the Company's Articles of
Incorporation or By-Laws, by contract, as a matter of law, or otherwise.
10.6 NO LIMITATION ON COMPENSATION. Nothing in the Plan shall be construed
to limit the right of the Company to establish other plans or
pay compensation to its Employees or directors, in cash or property, in
a manner which is not expressly authorized under the Plan.
10.7 REQUIREMENTS OF LAW. The granting of Awards and the issuance of shares of
Stock shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national
securities exchanges as may be required. Notwithstanding the foregoing,
no Stock shall be issued under the Plan unless the Company is satisfied
that such issuance will be in compliance with applicable federal and
state securities laws. Certificates for Stock delivered under the Plan
may be subject to such stock transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed or traded, the Nasdaq
National Market or any applicable federal or state securities law. The
Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.
10.8 TERM OF PLAN. The Plan shall be effective upon its adoption by the
Committee, subject to approval by the Board and approval by the
affirmative vote of he holders of a majority of the shares of voting
stock present in person or represented by proxy at the 1997 Annual
Meeting of Shareholders. The Plan shall continue in effect, unless
sooner terminated pursuant to Section 9, until the tenth anniversary of
the date on which it is adopted by the Board.
10.9 GOVERNING LAW. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of
Delaware.
10.10 NO IMPACT ON BENEFITS. Plan Awards are not compensation for purposes of
calculating an Employee's rights under any employee benefit plan.
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ARRHYTHMIA RESEARCH TECHNOLOGY, INC.
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
FOR STOCKHOLDERS MEETING ON SEPTEMBER 18, 1997
The undersigned hereby appoints Carolyn S. Mullins and Kathleen Watt and
each or either of them, as true and lawful agents and proxies with full power of
substitution in each to represent the undersigned in all matters coming before
the 1997 Annual Meeting of Stockholders of Arrhythmia Research Technology, Inc.
to be held at the American Stock Exchange, 86 Trinity Place, New York, New York
on Thursday, September 18, 1997 at 11:00 p.m. local time, and any adjournment
thereof, and to vote as follows:
1. ELECTION OF DIRECTORS:
Nominees: Lawrence S. Black, Michael A. McManus, Jr. and Paul F. Walter.
/ / VOTE FOR all nominees listed above, except withhold from following
nominees (if any): _________________________________________________________
OR
/ / VOTE WITHHELD from all nominees listed above.
2. APPROVAL OF THE ARRHYTHMIA RESEARCH TECHNOLOGY, INC. 1997 STOCK OPTION PLAN
/ / VOTE FOR / / VOTE AGAINST / / ABSTAIN
3. APPROVAL OF THE APPOINTMENT OF COOPERS & LYBRAND, L.L.P.
/ / VOTE FOR / / VOTE AGAINST / / ABSTAIN
4. OTHER MATTERS
In their discretion, to vote with respect to any other matters that may come
before the Meeting or any adjournment thereof, including matters incident to its
conduct.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AND WILL BE VOTED IN THE
MANNER SPECIFIED ABOVE BY THE STOCKHOLDER. TO THE EXTENT CONTRARY SPECIFICATIONS
ARE NOT GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN ITEM 1, WITH
THE DISCRETIONARY AUTHORITY SET FORTH IN THE ACCOMPANYING PROXY STATEMENT FOR
ITEMS 2, 3 AND 4.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
<PAGE>
PLEASE SIGN AND DATE:
Dated: , 1997
--------------------------
--------------------------------------
Signature
--------------------------------------
Printed Name
--------------------------------------
Signature
--------------------------------------
Printed Name
(Joint Owners Should Each Sign,
Attorneys-in-Fact, Executors,
Administrators, Custodians, Partners,
or Corporate Officers Should Give
Their Full Title.)
<PAGE>
PLEASE DATE, SIGN AND RETURN THIS PROXY
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES
