<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ZILA, INC.
- - - - - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - - - - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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 transactions applies:
- - - - - - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- - - - - - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - - - - - --------------------------------------------------------------------------------
/ / 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 registrations 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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1 Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
ZILA, INC.
5227 NORTH 7TH STREET
PHOENIX, ARIZONA 85014-2800
(602) 266-6700
-----------------------------------------------------------------
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 8, 1995
-----------------------------------------------------------------
To the Holders of Our Common Stock:
The 1995 Annual Meeting of Stockholders of Zila, Inc. (the "Company")
will be held at Marriott's Camelback Inn, 5402 East Lincoln Drive, Scottsdale,
Arizona 85253 on December 8, 1995, at 9:00 a.m., local time. The Annual Meeting
will be for the following purposes:
1. To elect seven directors to the Company's Board to serve for
the next year or until their successors are elected.
2. To ratify the selection of Deloitte & Touche LLP as the
independent public accounting firm for the Company for the
fiscal year ending July 31, 1996.
3. To amend the Company's Stock Option Award Plan to increase the
number of authorized shares thereunder from 4,000,000 to
5,000,000.
4. To amend the Company's Non-Employee Directors Stock Option
Plan to increase the number of authorized shares thereunder
from 100,000 to 200,000.
5. To transact such other business as may properly come before
the Annual Meeting. Management is presently aware of no other
business to come before the Annual Meeting.
The Board of Directors has fixed the close of business on October 31,
1995 as the Record Date for the determination of Stockholders entitled to
receive notice of and to vote at the Annual Meeting or any adjournment thereof.
Shares of Common Stock can be voted at the Annual Meeting only if the holder is
present at the Annual Meeting in person or by valid proxy. A copy of the
Company's 1995 Annual Report to Stockholders, which includes the Company's
consolidated financial statements, was mailed with this Notice and Proxy
Statement on or about November 7, 1995 to all Stockholders of record on the
Record Date. The officers and directors of the Company cordially invite you to
attend the Annual Meeting.
Your attention is directed to the attached Proxy Statement.
By Order of the Board of Directors,
/s/ Janice L. Backus
--------------------------------
Janice L. Backus
Secretary
Phoenix, Arizona
November 7, 1995
IMPORTANT
Stockholders are earnestly requested to DATE, SIGN and MAIL the
enclosed proxy. A postage paid envelope is provided for mailing.
<PAGE> 3
ZILA, INC.
5227 NORTH 7TH STREET
PHOENIX, ARIZONA 85014-2800
(602) 266-6700
----------------------------------------------
PROXY STATEMENT
----------------------------------------------
This Proxy Statement is furnished to the stockholders of Zila, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies to be used in voting at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on December 8, 1995. The enclosed proxy is solicited by the
Board of Directors (the "Board") of the Company. The proxy materials were mailed
on or about November 7, 1995 to stockholders (the "Stockholders") of record at
the close of business on October 31, 1995 (the "Record Date").
A person giving the enclosed proxy has the power to revoke it at any
time before it is exercised by either: (i) attending the Annual Meeting and
voting in person; (ii) duly executing and delivering a proxy bearing a later
date; or (iii) sending written notice of revocation to the Secretary of the
Company at 5227 North 7th Street, Phoenix, Arizona 85014-2800.
The Company will bear the cost of the solicitation of proxies,
including the charges and expenses of brokerage firms and others who forward
solicitation material to beneficial owners of the Common Stock. In addition to
the use of the mail, proxies may be solicited by personal interview, telephone,
or telegraph. The Company has arranged for Corporate Investor Communications,
Inc. to serve as its proxy solicitation agent. In such capacity, Corporate
Investor Communications, Inc. will coordinate the distribution of proxy
materials to Stockholders and oversee the return of proxy cards. The fees for
these services is estimated to be $4,500.
VOTING SECURITIES OUTSTANDING
Only holders of record of Common Stock at the close of business on
October 31, 1995 will be entitled to vote at the Annual Meeting. At that date,
there were 24,481,913 shares of Common Stock outstanding. Each share of Common
Stock is entitled to one vote on all matters on which Stockholders may vote.
There is no cumulative voting in the election of directors.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the inspectors of election appointed for the meeting and will
determine whether or not a quorum is present. The inspectors of election will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum, but as unvoted for purposes of
determining the approval of any matter submitted to the Stockholders for a vote.
If a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
<PAGE> 4
BOARD OF DIRECTORS
IN GENERAL
At the Annual Meeting, seven directors will be elected, each to hold
office until the Company's next annual meeting of Stockholders or until his
successor is elected and qualified. Subject to the requirements of applicable
Delaware law, the Board may from time to time determine the number of directors
of the Company.
The shares represented by the enclosed proxy will be voted for the
election, as directors, of the seven nominees named below, unless a vote is
withheld from any individual nominee. If any nominee becomes unavailable for any
reason or if a vacancy should occur before election, which events are not
anticipated, the shares represented by the enclosed proxy may be voted for such
other person as may be determined by the holders of such proxy. The nominees
receiving the highest number of votes cast at the Annual Meeting will be
elected.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
Information regarding the names, ages, positions with the Company and
the Board, and business experience of each of the directors and nominees is set
forth below. Each director has served continuously with the Company since his
first election as indicated below.
DIRECTOR
NAME AGE POSITION(S) SINCE
---- --- ----------- -----
Joseph Hines 67 Chairman of the Board, 1983
President and Chief
Executive Officer
Clarence J. Baudhuin (1) 66 Executive Vice President of 1983
Finance and Administration,
Treasurer and Director
Dr. James E. Tinnell (1) 58 Director 1980
Carl A. Schroeder (1) 66 Director 1984
H. Ray Cox (2) 61 Director 1989
Patrick M. Lonergan (2) 60 Director 1992
Michael S. Lesser (2) 53 Director 1995
- - - - - - ---------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee.
2
<PAGE> 5
JOSEPH HINES has served as President and Chief Executive Officer of the
Company since 1983. From 1976 until 1983, Mr. Hines owned and operated Desert
Valley Companies, Inc., a management consulting firm headquartered in Phoenix,
Arizona. From 1966 until 1976, Mr. Hines served as Chief Executive Officer of
several subsidiaries of Dart Industries, formerly Rexall Drug and Chemical
Company.
CLARENCE J. BAUDHUIN has served the Company in his present capacity
since 1983. Mr. Baudhuin also served as Secretary of the Company from September
1983 until April 1989. From May 1981 until July 1983, Mr. Baudhuin acted as
Senior Vice President of Finance for Mattel Toy Company. Prior to that time, Mr.
Baudhuin was Senior Vice President of the Chemical-Plastics Group of Dart
Industries. Mr. Baudhuin is a certified public accountant.
DR. JAMES E. TINNELL graduated from the University of Arkansas School
of Medicine and has been engaged in private practice since 1965. Since 1979, Dr.
Tinnell has limited his professional practice to the treatment of herpes virus
patients at the Herpes Clinic in Las Vegas, Nevada. From 1974 until 1979, Dr.
Tinnell was the resident physician at a major hotel and casino in Las Vegas,
Nevada.
CARL A. SCHROEDER is, and since September 1991 has been, the President
of Dixon Capital Corp. Between 1982 and September 1991, Mr. Schroeder was a
private business consultant. Mr. Schroeder was also a principal in certain
mining, drilling and farming operations from 1987 to 1992. From 1977 to 1982, he
served as Chief Financial Officer with a high technology division of the MEAD
Corporation. Mr. Schroeder received an engineering degree from MIT and an MBA
degree from Harvard Business School.
H. RAY COX is, and since August 1, 1991 has been, President and Chief
Executive Officer of Broadcast Development LLC in Phoenix, Arizona. From 1984 to
1991 he served as Senior Vice President of Corporate Affairs of The Circle K
Corporation in Phoenix, Arizona. Prior to that time, Mr. Cox served as President
of Cox Investor Relations from 1981 to 1984, as Senior Vice President of Charter
Media Company from 1979 to 1981, and as Executive Vice President of Combined
Communications Corporation from 1968 to 1979.
PATRICK M. LONERGAN is the co-founder of Numark Laboratories, Inc. and
has served as its President since January 1989. Prior to co-founding Numark, Mr.
Lonergan was employed in various capacities by Johnson & Johnson Products Inc.,
or one of its affiliates, from 1973 through December 1989, most recently as Vice
President & General Manager.
MICHAEL S. LESSER is the founder of Lesser & Roffe Company, a business
development consulting company, and has served as its Chief Executive Officer
since 1990. Prior to founding Lesser and Roffe Company, Mr. Lesser served as
President of Ogilvy & Mather Co., Inc. from 1989 to 1990, as Chairman and Chief
Executive Officer of Lowe Marschalk Co., Inc. (a subsidiary of Revlon) from 1980
to 1989, and as Executive Vice President and General Manager of Norcliff Thayer,
Inc. (a subsidiary of Interpublic) from 1973 to 1979.
3
<PAGE> 6
MEETINGS AND COMPENSATION
During the fiscal year ended July 31, 1995, the Board of Directors of
the Company met on four occasions. All other actions taken by the Board of
Directors during the fiscal year ended July 31, 1995, were accomplished by means
of unanimous written consent. During the period in which he served as director,
each of the directors attended 75% or more of the meetings of the Board of
Directors and of the meetings held by committees of the Board on which he
served.
The Compensation Committee of the Board of Directors, which met once
during the fiscal year ended July 31, 1995, administers the Company's Stock
Option Award Plan, reviews all aspects of compensation of the Company's officers
and makes recommendations on such matters to the full Board of Directors. The
Audit Committee, which met once during the fiscal year ended July 31, 1995,
makes recommendations to the Board concerning the selection of outside auditors,
reviews the financial statements of the Company and considers such other matters
in relation to the internal and external audit of the financial affairs of the
Company as may be necessary or appropriate in order to facilitate accurate and
timely financial reporting. The Company does not maintain a standing nominating
committee or other committee performing similar functions.
DIRECTORS' COMPENSATION
Non-employee members of the Board of Directors receive no cash
compensation for serving on the Board; however, such members are reimbursed for
expenses incurred in connection with their attendance at meetings of the Board.
In 1989, the Board of Directors adopted and the Stockholders approved
the Company's Non-Employee Directors Stock Option Plan (the "Directors Plan").
Under the terms of the Directors Plan, immediately exercisable options to
purchase 2,500 shares of Common Stock are granted to each non-employee member of
the Board of Directors on the third trading day following the day the Company
publicly announces its year-end financial results for the immediately preceding
fiscal year; provided, however, that options may not be granted to any
non-employee director who, during the fiscal year immediately preceding the
grant date, attended less than 75% of the Board meetings and committee meetings
(if he is a member of such committee) held while he was a member of the Board of
Directors. The per share price at which the options may be exercised is the
average of the closing bid and asked prices of the Common Stock on the date of
grant. The term of each option granted under the Directors Plan is five years
from the date of grant. The Board may from time to time amend the Directors Plan
in whole or in part in such respects as the Board may deem advisable or may
terminate the Directors Plan. See Proposal No. 4--Proposed Increase in Shares
Authorized for Issuance under the Non-Employee Directors Stock Option Plan.
On November 3, 1995 and November 3, 1994 each non-employee director,
other than Mr. Lesser, was granted an option to purchase 2,500 shares of Common
Stock at per share exercise prices of $4.00 and $3.625, respectively. As of
September 30, 1995, options to purchase 10,000 shares of Common Stock granted
under the Directors Plan have been exercised.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The table below sets forth annual and long-term compensation for
services in all capacities to the Company for the fiscal years ended July 31,
1995, 1994 and 1993, of the persons who were, at July 31, 1995: (i) the Chief
Executive Officer and (ii) the other executive officers of the Company (the
"Named Officers") whose total annual salary and bonus exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- ------------
Name and Principal Position Year Salary Stock Options(#)
--------------------------- ---- ------ ----------------
<C> <C> <C>
Joseph Hines 1995 $158,292 22,430
President, Chief Executive Officer and 1994 156,504 21,290
Director 1993 151,344 20,220
Clarence J. Baudhuin 1995 150,372 21,640
Executive Vice President-Finance and 1994 148,252 20,530
Administration and Director 1993 143,780 19,470
Edwin Pomerantz 1995 124,368 18,840
Vice President-Regulatory and Technical 1994 122,613 17,820
Affairs 1993 118,912 16,840
</TABLE>
EMPLOYMENT AGREEMENTS
In February, 1992, the Company entered into five-year employment
agreements with Joseph Hines and Clarence Baudhuin and a three-year employment
agreement with Edwin Pomerantz. These agreements established minimum annual base
salaries for Mr. Hines, Mr. Baudhuin and Mr. Pomerantz of $148,176, $140,772 and
$116,424, respectively. The current salaries of the foregoing officers were
authorized by the Board of Directors at the 1993 Annual Meeting of the Board of
Directors. The employment agreements are automatically extended for successive
one year periods unless a nonrenewal notice is given by the Company or the
respective officer sixty days prior to the end of any renewal term. In the event
the Company terminates Mr. Hines or Mr Baudhuin without cause, their respective
employment agreements require that the Company give them a five year notice of
termination. Mr. Pomerantz is entitled to a three years notice. The employment
agreements define "cause" generally as refusal to follow the board's directions;
acts of willful misconduct, dishonesty, or reckless disregard of
responsibilities with respect to the Company; or conviction of a felony.
In the event of a change in control of the Company (as defined in the
employment agreement), Mr. Hines and Mr. Baudhuin may elect to terminate their
respective employment and receive a lump sum payment of an amount equal to five
times their current base salary. Mr Pomerantz has the same rights except that he
is entitled to three times his then current salary. Each of the agreements
prohibits the respective officers from competing with the Company for a period
equal to the then uncompleted term of their agreement, but in any event not less
than one year, if they voluntarily leave the employment of the Company.
5
<PAGE> 8
The following table sets forth information with respect to grants of
stock options pursuant to the Company's Stock Option Award Plan during the
fiscal year ended July 31, 1995 to the Named Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------- Potential Realizable
Value at
Assumed Annual
Rates of
Stock Price
% of Total Appreciation for
Options Option Term(3)
Granted to Exercise or --------------------
Option Employees in Base Price Expiration
Name Granted(1)(#) Fiscal Year (per share)(2) Date 5% ($) 10% ($)
---- ------------- ------------ -------------- ---------- ------- --------
<C> <C> <C> <C> <C> <C>
Joseph Hines 22,430 14.5 $3.21875 12/9/04 $45,404 $115,062
Clarence J. Baudhuin 21,640 14.0 $3.21875 12/9/04 43,804 111,010
Edwin Pomerantz 18,840 12.2 $3.21875 12/9/04 38,136 96,646
</TABLE>
- - - - - - ---------------
(1) All options granted in the fiscal year ended July 31, 1995 are fully
vested.
(2) All options were granted at the fair market value (the mean of the
final closing bid and asked prices of the Common Stock on the NASDAQ)
on the date of grant. The exercise price and tax withholding
obligations related to exercise may be paid by delivery of already
owned shares or by offset of the underlying shares, subject to certain
conditions.
(3) Potential gains are reported net of the option exercise price, but
before taxes associated with exercise. These amounts are based upon
certain assumed rates of appreciation. Actual gains, if any, on stock
option exercises are dependent on the future performance of the Common
Stock and overall stock market conditions, as well as the option
holder's continued employment. The amounts reflected in this table may
not necessarily be achieved.
6
<PAGE> 9
The following table sets forth information with respect to the exercise
of stock options pursuant to the Company's Stock Option Award Plan during the
fiscal year ended July 31, 1995 by the Named Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUE AS OF JULY 31, 1995
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Options at Options at
Fiscal Year End (#) Fiscal Year End ($)
--------------------------- --------------------------------
Shares
Acquired on Value
Name Exercise(#) Realized ($)(1) Exercisable Unexercisable Exercisable(2) Unexercisable(2)
- - - - - - ---- ----------- --------------- ----------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Joseph Hines -0- -0- 338,940 -- $611,480 $ --
Clarence J. -0- -0- 261,640 -- 444,385 --
Baudhuin
Edwin -0- -0- 203,500 -- 381,701 --
Pomerantz
</TABLE>
- - - - - - ---------------
(1) Represents the market value of the underlying securities on the date of
exercise, minus the exercise price of the options.
(2) Represents the difference between the bid and asked closing prices
($4.09) of the Company's Common Stock on July 31, 1995 and the exercise
price of the options.
7
<PAGE> 10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy. Decisions on compensation of the Company's
executive officers are made by the three member Compensation Committee of the
Board of Directors (the "Committee"). Each member of the Committee is a
non-employee director. The Committee is responsible for setting and
administering the policies which govern both annual compensation and stock
ownership programs. The Committee follows the belief that compensation should be
based upon the following subjective principles:
- Compensation programs should reflect and promote the Company's
values, and reward individuals for contributions to the
Company's success.
- Compensation should be related to the value created for
stockholders.
- Compensation programs should integrate the long- and
short-term strategies of the Company.
- Compensation programs should be designed to attract and retain
executives critical to the success of the Company.
- Stock ownership by management and stock-based compensation
plans are beneficial in aligning management's and the
stockholders' interest in the enhancement of stockholder
value.
Total compensation for each member of senior management is set by the
Committee at levels which it believes are competitive in relation to companies
of similar type and size; however, no independent investigation of such levels
has been conducted by the Committee. The components of executive compensation
include salary, equity participation in the Company in the form of options to
purchase common stock, and a bonus plan. Compensation for executive officers of
the Company is usually set by the Committee in December of each fiscal year. Due
to the level of compensation received by the officers of the Company, the
Committee has not yet deemed it necessary to adopt a policy regarding the one
million dollar cap on deductibility of certain executive compensation under
Section 162(m) of the Internal Revenue Code.
Base Salary. Messrs. Hines, Baudhuin, and Pomerantz each have an
employment agreement with the Company establishing an annual base salary that is
subject to increase, but not decrease, at the discretion of the Board of
Directors. See Executive Compensation--Employment Agreements. Salary
recommendations are submitted annually to the Committee by senior management. In
evaluating such recommendations, the Committee takes into account management's
efforts to improve net sales and expand the number of markets into which the
Company's products are distributed and sold. The Committee also takes into
account management's consistent commitment to the long-term success of the
Company through the development of new and improved products, as well as
management's innovative financing arrangements for the Company's marketing
programs. Such efforts have permitted the Company to initiate marketing programs
more extensive than what might otherwise be available to a
8
<PAGE> 11
company of similar size and with similar resources. These unique marketing
programs link the repayment of the marketing funds to the success of the
products being marketed.
Based upon its evaluation of these factors, the Committee believes that
senior management is dedicated to achieving long-term financial improvements,
and that the compensation policies, plans and programs administered by the
Committee contribute to management's commitment. The Committee attempts to
assimilate all of the foregoing factors when it renders its compensation
decisions; however, the Committee recognizes that its decisions are primarily
subjective in nature due to the subjective nature of the criteria. The Committee
does not assign any specified weight to the criteria it considers.
Base salary recommendations are fixed at levels which the Committee
believes is paid to management with comparable qualifications, experience and
responsibilities at other corporations of similar size engaged in similar
business as the Company; however, no independent investigation of such levels
has been conducted by the Committee. The Committee's recommendations are offered
to the full Board of Directors. The Committee's recommendation is ultimately
ratified, changed, or rejected by the full Board of Directors. In the past three
fiscal years, the average annual salary increase for the Chief Executive Officer
has been approximately 1.7%, and the average annual salary increase for other
senior management has been approximately 1.55%.
Options. The Committee administers the Company's Stock Option Award
Plan (the "Award Plan"). All employees of the Company are eligible to
participate in the Award Plan. The exercise price of options granted under the
Award Plan is never less than the fair market value of the Company's common
stock on the day of grant. The number of options granted by the Committee are
based upon the Committee's evaluation of the same factors described above under
"Base Salary." The Committee also takes into account the relative scope of
accountability and the anticipated performance requirements and contributions of
each employee, as well as each employee's current equity participation in the
Company. In addition, the Committee seeks the recommendation of senior
management with respect to options granted to all employees of the Company,
including the Chief Executive Officer and senior management. During the fiscal
year ending July 31, 1995, the Committee granted options representing 154,280
shares of Common Stock under the Award Plan.
Bonus. Bonus compensation is paid under the Company's Performance Bonus
Plan (the "Bonus Plan"). The Performance Bonus Plan was adopted by the Board of
Directors and the Committee during fiscal 1993 and, as of the date of this
report, no bonuses have been awarded. Bonuses awarded under the Bonus Plan may
not exceed 30% of an employee's annual base salary. The components which are
considered under the terms of the Bonus Plan are the Company's net sales, the
Company's sales volume, and the employee's job performance. All employees are
eligible for a bonus of up to 15% of their respective base salaries if the
Company's annual net profits improve by 25% over the prior year and a bonus of
up to 7.5% of their respective base salaries if the Company's annual sales
volume increases by more than 75% over the prior year. Performance components of
the employee's bonus may be as great as 7.5% and are based upon subjective
criteria.
Chief Executive Officer. Mr. Hines has served as President and Chief
Executive Officer of the Company since 1983. As Chief Executive Officer, Mr.
Hines receives a base salary as
9
<PAGE> 12
well as stock options under the Award Plan and is eligible to participate in the
Bonus Plan. In February 1992, the Company entered into an employment agreement
with Mr. Hines that establishes his annual base salary at $148,176, subject to
increase, but not decrease at the discretion of the Board of Directors. See
Executive Compensation--Employment Agreements. This annual base salary was the
result of negotiations between Mr. Hines and the Company and was based upon the
factors and criteria discussed above. The Committee's evaluation process of the
Chief Executive Officer's compensation is comprised of the exact same components
that are utilized in evaluating other members of senior management. Mr. Hines'
current base salary was set at the 1993 Annual Meeting of the Board of
Directors. Mr Hines's salary was not increased by the Board at its 1994 Annual
Meeting. During the fiscal year ended July 31, 1995, the Committee granted Mr.
Hines options to purchase a total of 22,430 shares of the Company's Common Stock
under the Award Plan. All the options were granted at fair market value, were
immediately exercisable, and expire ten years after the date of grant.
Compensation Committee
Patrick M. Lonergan, Chairman
H. Ray Cox
Michael S. Lesser
10
<PAGE> 13
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
The following table sets forth, as of September 30, 1995, the number
and percentage of outstanding shares of Common Stock beneficially owned by (a)
each person known by the Company to beneficially own more than 5% of such stock,
(b) each director of the Company, (c) each of the Named Officers, and (d) all
directors and executive officers of the Company as a group.
Name and Address of Shares Beneficially Percent of
Beneficial Owner Owned Common Stock
- - - - - - ------------------ ------------------- ------------
Joseph Hines(1) 1,348,942(2) 5.5%
Clarence J. Baudhuin(1) 1,135,290(3) 4.6%
Edwin Pomerantz(1) 486,233(4) 2.0%
James E. Tinnell, M.D.(1) 420,477(5) 1.7%
Carl Schroeder(1) 20,000(6) *
H. Ray Cox(1) 16,831(7) *
Patrick M. Lonergan(1) 12,331(8) *
Michael S. Lesser(1) -0- *
All officers and directors as a group
(9 persons) 3,676,452(9) 14.5%
- - - - - - -----------------------------------
* Represents less than one percent.
(1) The address of this stockholder is c/o Zila, Inc., 5227 North 7th
Street, Phoenix, Arizona 85014-2800.
(2) Includes 338,940 shares of Common Stock which are subject to
unexercised options that were exercisable on September 30, 1995 or
within sixty days thereafter.
(3) Includes 261,640 shares of Common Stock which are subject to
unexercised options that were exercisable on September 30, 1995 or
within sixty days thereafter and 9,000 shares of Common Stock held in
trust for the benefit of Mr. Baudhuin's son.
(4) Includes 203,500 shares of Common Stock which are subject to
unexercised options that were exercisable on September 30, 1995 or
within sixty days thereafter.
11
<PAGE> 14
(5) Includes 10,000 shares of Common Stock which are subject to unexercised
options that were exercisable on September 30, 1995 or within sixty
days thereafter.
(6) Includes 10,000 shares of Common Stock which are subject to unexercised
options that were exercisable on September 30, 1995 or within sixty
days thereafter and 10,000 shares of Common Stock which are subject to
warrants that were exercisable on September 30, 1995 or within sixty
days thereafter.
(7) Includes 250 shares of Common Stock held jointly with Mr. Cox's wife,
and 10,000 shares of Common Stock which are subject to unexercised
options that were exercisable on September 30, 1995 or within sixty
days thereafter.
(8) Includes 7,500 shares of Common Stock which are subject to unexercised
options that were exercisable on September 30, 1995 or within sixty
days thereafter.
(9) Includes the shares of Common Stock subject to the options and warrants
to purchase described above and 161,090 shares of Common Stock which
are subject to unexercised options that were exercisable on September
30, 1995 or within sixty days thereafter.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission and the National Association of
Securities Dealers Automated Quotation System. Officers, directors and greater
than ten-percent stockholders are required by Exchange Act regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms were
required for such persons, the Company believes that during the fiscal year
ended July 31, 1995, all filing requirements applicable to its officers,
directors, and greater than ten-percent beneficial owners were complied with.
CERTAIN TRANSACTIONS
On July 16, 1980, Dr. Tinnell, a member of the Company's Board of
Directors, assigned to the Company's predecessor his rights in a patent
application covering the original formulation for ZILACTIN(R), and all rights to
any improvements to the ZILACTIN(R) formulation, and to any patents granted by
the United States or foreign countries. In consideration for the assignment, the
Board agreed to pay Dr. Tinnell a royalty of five percent of the Company's gross
sales of the treatment composition. For the fiscal year ended July 31, 1995, Dr.
Tinnell earned royalties of $263,311, and was paid royalties of $254,485 by the
Company, which included $22,408 accrued as of July 31, 1994. As of July 31,
1995, the Company accrued royalties of $31,234 attributable to Dr. Tinnell.
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<PAGE> 15
[STOCK PRICE PERFORMANCE GRAPH]
The graph below compares the cumulative total return of the Company's
Common Stock with the NASDAQ stock market index (U.S. companies) and the NASDAQ
pharmaceutical index from July 31, 1990 to July 31, 1995.
Measurement Period NASDAQ
(Fiscal Year Covered) Zila, Inc. NASDAQ Stock Market-US Pharmaceutical
7/90 100 100 100
7/91 144 118 185
7/92 112 139 214
7/93 150 169 171
7/94 182 174 152
7/95 191 243 214
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ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the Annual Meeting, the Company will seek the election of Joseph
Hines, Clarence J. Baudhuin, Dr. James E. Tinnell, Carl A. Schroeder, H. Ray
Cox, Patrick M. Lonergan, and Michael S. Lesser as directors, each to hold
office until the Company's next annual meeting of Stockholders or until his
successor is elected and qualified.
REQUIRED VOTE
The seven nominees receiving the highest number of votes cast at the
Annual Meeting will be elected.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF JOSEPH HINES,
CLARENCE J. BAUDHUIN, DR. JAMES E. TINNELL, CARL A. SCHROEDER, H. RAY
COX, PATRICK M. LONERGAN, AND MICHAEL S. LESSER.
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
The principal independent public accounting firm utilized by the
Company during the fiscal years ended July 31, 1993, 1994, and 1995 was Deloitte
& Touche LLP, independent certified public accountants (the "Auditors"). It is
presently contemplated that the auditors will be retained as the principal
accounting firm to be utilized by the Company throughout the fiscal year ending
July 31, 1996. The Company anticipates that a representative of the Auditors
will attend the Annual Meeting for the purpose of responding to appropriate
questions. At the Annual Meeting, a representative of the Auditors will be
afforded an opportunity to make a statement if the Auditors so desire.
REQUIRED VOTE
Ratification of the selection of the Auditors requires the affirmative
vote of a majority of the voting power of Common Stock present at the Annual
Meeting in person or by proxy.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
SELECTION OF THE AUDITORS.
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PROPOSED INCREASE IN SHARES
AUTHORIZED FOR ISSUANCE UNDER
THE STOCK OPTION AWARD PLAN
(PROPOSAL NO. 3)
GENERAL
At the Annual Meeting, the Company will seek stockholder approval of an
amendment to the Company's Stock Option Award Plan (the "Award Plan") to
increase the number of shares authorized for issuance under the Award Plan from
4,000,000 to 5,000,000. The Award Plan provides officers and other employees
with an incentive to achieve and sustain a superior level of performance by
enabling them to acquire a proprietary interest in the Company. The Company's
Board of Directors approved the amendment to the Award Plan on October 25, 1995,
and directed that the amendment be submitted as a proposal for shareholder
approval at the Annual Meeting. The Award Plan was originally adopted in 1988.
PLAN PROVISIONS
Under the Award Plan, the Company is authorized to grant options
qualifying as "incentive stock options" or "nonstatutory stock options" to
purchase shares of the Company's Common Stock. As more fully described below,
incentive stock options have tax attributes that differ from nonstatutory stock
options. Incentive and nonstatutory stock options are collectively referred to
below as "Options."
The Award Plan is administered by the Board of Directors or a committee
of the Board of Directors that satisfies the disinterested administration
requirements of Rule 16b-3 of the Securities Exchange Act of 1934 (the "Exchange
Act") (hereinafter referred to as the "Board"). Among other things, the Board
has the authority to (i) select the employees to whom Options will be granted,
(ii) determine the number of Options (and shares subject to such Options) to be
granted to each employee, (iii) determine the exercise price per share of
Options granted, (iv) determine whether such Options are to be incentive or
nonstatutory stock options, and (v) interpret and administer the Award Plan.
Options may be granted to employees of the Company and its
subsidiaries, including officers who are members of the Board of Directors.
Officers and other employees of the Company and its subsidiaries who, in the
opinion of the Board, are responsible for the continued growth and development
and financial success of the business of the Company or its subsidiaries are
eligible to be granted Options under the Award Plan.
Options are evidenced by written agreements between the Company and the
holder of the Option containing provisions determined by the Board. Options will
become exercisable within such period or periods as set forth in the stock
option agreement relating to such grant (the "Option Period"), but not to exceed
ten years (not to exceed five years for incentive stock options granted to ten
percent stockholders). The exercise price of an incentive stock option will be
set by the Board, but will in no instance be less than the fair market value
(the mean of the final closing bid and asked prices of the Common Stock on the
NASDAQ) on the date of grant
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<PAGE> 18
(110% of the fair market value in the case of incentive stock options granted to
ten percent stockholders). An Option may be exercised as to such number of
shares of Common Stock as set forth in the stock option agreement; provided,
however, no Option may be exercised for less than the lesser of 100 shares or
the full number of shares for which the Option is then exercisable.
The exercise price of Options may be satisfied with (i) cash, (ii)
shares of the Company's Common Stock having an aggregate fair market value at
the time the Option is exercised equal to the exercise price (with the prior
approval of the Company), (iii) a manner acceptable to the Company, or (iv) a
combination of the foregoing. With the prior approval of the Company, optionees
may elect to have the Company satisfy its withholding tax obligations by
retaining such number of the shares subject to the Option having an aggregate
fair market value on the exercise date equal to the Company's withholding tax
obligations.
The exercise price of an Option, number of shares of Common Stock
subject to the Plan, and the number of shares issuable upon the exercise of each
Option will be increased or decreased, as appropriate, to reflect any stock
merger, consolidation, stock split, stock dividend, or other similar capital
adjustment.
An Option granted under the Award Plan may not be transferred except by
bequest or inheritance and, during the lifetime of the optionee to whom granted,
the Option may only be exercised by such optionee.
Unless earlier terminated by the expiration of the Option Period,
unexercised Options expire three months after an optionee's employment is
terminated for any reason other than retirement or death. If termination is due
to retirement, the optionee may exercise his or her Options at any time prior to
the earlier of the expiration of the Option Period or the date twelve months
after the optionee's date of retirement (three months after retirement in the
case of an incentive stock option). If an optionee dies within the Option
Period, any Options held by such optionee may be exercised at any time prior to
the earlier of the expiration of the Option Period or the date twelve months
after the date of optionee's death, by the executors or administrators of the
optionee's estate, or by any person who acquired the Option directly from the
optionee by bequest or inheritance. However, the Options of an optionee who
retires or dies may be exercised within thirty days of such optionee's
retirement or death even if the Option Period expires during such time. In no
event may an Incentive Stock option be exercised more than ten years after the
date of grant. None of the foregoing, however, applies to an Option to the
extent otherwise provided in the Option Agreement relating thereto.
The Board of Directors may amend or terminate the Award Plan at any
time. No amendment of the Award Plan may increase the number of shares reserved
under the Award Plan, materially increase the benefits accruing to participants
under the Award Plan, or change the designation of employees eligible to
participate in the Award Plan without prior shareholder approval. No amendment
or termination of the Award Plan may alter or impair any rights or obligations
under any Option previously granted under the Award Plan, without the consent of
the holder thereof.
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FEDERAL INCOME TAX CONSEQUENCES FOR OPTIONS UNDER THE AWARD PLAN
The Award Plan is not a "qualified plan" as defined in Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), nor is it subject
to the Employee Retirement Income Security Act of 1974, as amended.
Stock options granted under the Award Plan may include both "incentive
stock options" qualifying under Section 422 of the Code ("ISO") and nonstatutory
stock options ("NSO"). Neither the grant of an ISO nor the exercise of an ISO by
an optionee will result in income to the optionee. The ultimate sale or other
disposition by the optionee of the shares of Common Stock obtained upon exercise
of an ISO will result in capital gain or loss equal to the difference between
the fair market value on the date of sale and the exercise price. A disposition
of shares acquired pursuant to an ISO that results in a net capital gain will be
taxed at the ordinary income rate (but not more than 28%). If the stock is
disposed of at a price less than the exercise price, the loss will be a capital
loss. In 1994, capital losses were deductible for individuals to the extent of
capital gains plus an amount not exceeding $3,000 ($1,500 for married
individuals filing separately).
The Company will not be allowed a deduction with regard to an ISO at
the time of its grant, its exercise or the ultimate sale of the Common Stock.
However, if an optionee sells or disposes of the Common Stock prior to two years
after the date of the grant of an ISO or one year after the date of exercise,
the optionee will recognize compensation income on the sale to the extent the
value of the Common Stock on the date of exercise exceeds the exercise price.
The excess of the amount received on the sale over the value on the date of
exercise (if any) will be capital gain. In the case of such a premature
disposition of the Common Stock, the Company may deduct the amount of income
recognized as compensation income. A person entitled to exercise an ISO after
the death of an optionee may sell the Common Stock obtained on the exercise of
the ISO at any time without regard to the foregoing holding period requirements.
In the event the Board permits an ISO to be exercised with Common Stock
of the Company acquired by the exercise of an ISO, the use of such stock to
exercise an ISO prior to completion of the minimum holding periods applicable to
such stock will be treated as a premature disposition resulting in ordinary
income to the employee.
While the exercise of an ISO will not generate compensation income at
the time of exercise, the excess of the fair market value of the stock on the
date of exercise over the exercise price is treated as a tax preference item for
purposes of the alternative minimum tax. The impact of the alternative minimum
tax rules will depend upon the individual circumstances of each employee.
With respect to NSO's, because such options are not readily marketable,
an optionee does not realize any compensation income upon the grant.
Additionally, the Company may not take a tax deduction at the time of the grant.
Upon exercise of a NSO, an option realizes and must report as compensation
income an amount equal to the difference between the fair market value of the
shares on the date of exercise and the exercise price. The Company is entitled
to take a deduction at the same time and in the same amount, provided the
Company withholds federal income tax in accordance with the Code and the
applicable Treasury regulations.
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<PAGE> 20
Subject to the approval of the Board, an optionee may make an
irrevocable election to have the Company withhold from those shares that would
otherwise be received upon the exercise of the Option, a number of shares having
a fair market value equal to the minimum amount necessary to satisfy the
Company's federal, state, local and foreign tax withholding obligations and FICA
and FUTA obligations with respect to the exercise of such Option by the
optionee. The Company shall be entitled if necessary or desirable to pay or
withhold the amount of any tax attributable to the delivery of Common Stock
under the Award Plan from other amounts payable to the optionee after giving the
person entitled to receive such Common Stock notice as far in advance as
practical, and may defer making delivery of such Common Stock if any such tax
may be pending unless and until indemnified to its satisfaction.
In addition to the foregoing federal tax considerations, the exercise
of an Option and the ultimate sale of the shares of Common Stock acquired
thereby will in most cases be subject to state income taxation. The impact of
state income taxation laws will depend upon the residence and individual
circumstances of each optionee.
REQUIRED VOTE
Approval of the amendment to the Award Plan requires the affirmative
vote of a majority of voting power of Common Stock present at the Annual Meeting
in person or by proxy.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE INCREASE IN SHARES AUTHORIZED
FOR ISSUANCE UNDER THE STOCK OPTION AWARD PLAN.
PROPOSED INCREASE IN SHARES
AUTHORIZED FOR ISSUANCE UNDER
THE NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
(PROPOSAL NO. 4)
GENERAL
At the Annual Meeting, the Company will seek shareholder approval of an
amendment to the Company's Non-Employee Directors Stock Option Plan (the
"Directors Plan") to increase the number of shares authorized for issuance under
the Directors Plan from 100,000 to 200,000. The Directors Plan provides
non-employee directors with an incentive to achieve and sustain a superior level
of performance by enabling them to acquire a proprietary interest in the
Company. The Company's Board of Directors approved the amendment to the
Directors Plan on October 25, 1995 and directed that the amendment be submitted
as a proposal for shareholder approval at the Annual Meeting. The Directors Plan
was originally adopted in 1989.
PLAN PROVISIONS
The Directors Plan provides for the non-discretionary grant of
nonstatutory stock options ("Options") to the Company's non-employee directors.
Under the Directors Plan, an Option to purchase 2,500 shares of Common Stock
shall be granted annually to each non-employee director on the third trading day
after the Company publicly announces its year-end financial results for the
immediately preceding fiscal year. However, such Options shall not be granted to
any non-employee director of the Company who during the fiscal year immediately
preceding
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<PAGE> 21
such grant date (or the period that he or she served as a director of the
Company, if less than the full fiscal year) attended fewer than 75 percent of
the aggregate of (i) the total number of the regularly scheduled and special
meetings of the Board of Directors and (ii) the total number of meetings held by
all committees of the Board on which he or she served.
The exercise price of an Option will be the fair market value (the mean
of the final closing bid and asked prices of the Common Stock on the NASDAQ) on
the date of grant. The exercise price of Options may be satisfied with (i) cash,
(ii) shares of the Company's Common Stock having an aggregate fair market value
at the time the Option is exercised equal to the exercise price, or (iii) a
combination of the foregoing. Pursuant to the terms of the Directors Plan, all
of the shares subject to an Option will be immediately exercisable upon grant.
All Options granted under the Directors Plan will expire five years from the
date of grant. Options are not transferrable other than by will or the laws of
descent and distribution.
The exercise price of each Option, number of shares of Common Stock
subject to the Directors Plan, and the number of shares issuable upon the
exercise of each Option will be increased or decreased, as appropriate, to
reflect any stock merger, consolidation, stock split, stock dividend or other
similar capital adjustment.
The Board of Directors may amend or terminate the Directors Plan at any
time. However, amendments to the Directors Plan relating to the amount, price,
or timing of the option grants may not be made more than once in any six-month
period. No amendment of the Directors Plan may increase the number of shares
reserved under the Directors Plan, materially increase the benefits accruing to
participants under the Directors Plan, or change the designation of employees
eligible to participate in the Directors Plan without prior stockholder
approval. Any amendment or termination of the Directors Plan will not affect
Options already granted and such Options shall remain in full force and effect
as if the Directors Plan had not been amended or terminated.
FEDERAL INCOME TAX CONSEQUENCES FOR OPTION UNDER THE DIRECTORS PLAN
The Directors Plan is not a "qualified plan" as defined in Section
401(a) of the Code. The options granted under the Directors Plan will be
nonstatutory stock options ("NSO's"), which do not qualify as "incentive stock
options" under Section 422 of the Code.
An optionee does not realize any compensation income upon the grant of
a NSO because such options are not readily marketable. Additionally, the Company
may not take a tax deduction at the time of the grant. Upon exercise of a NSO,
an optionee realizes and must report as compensation income an amount equal to
the difference between the fair market value of the Common Stock on the date of
exercise and the exercise price. The Company is entitled to take a deduction at
the same time and in the same amount as the optionee reports as compensation
income, provided the Company withholds federal income tax in accordance with the
Code and applicable Treasury regulations.
When an optionee disposes of the shares of Common Stock received upon
exercise of a NSO, he or she will realize capital gain income if the amount
realized on the sale exceeds the optionee's basis in the shares. If the
optionee's basis in the shares exceeds the amount realized on the sale, the
optionee will realize a capital loss. A disposition of shares of Common Stock
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<PAGE> 22
that results in a net capital gain will be taxed at the ordinary income rate
(but not more than 28%). If the stock is disposed of at a price less than the
exercise price, the loss will be a capital loss. In 1994, capital losses were
deductible for individuals to the extent of capital gains plus an amount not
exceeding $3,000 ($1,500 for married individuals filing separately). There is no
tax impact to the Company upon the sale of shares by an optionee. The optionee's
basis in the optioned shares will be equal to the exercise price.
Special rules apply with respect to shares of Common Stock transferred
directly to or acquired upon exercise of a NSO by an individual who is subject
to the"short-swing profits" provisions of the Exchange Act (an "Insider").
"Insiders" include officers, directors, and ten-percent stockholders of the
Company.
In addition to the foregoing federal tax considerations, the exercise
of an Option and the ultimate sale or other disposition of the shares of Common
Stock acquired thereby will in most cases be subject to state income taxation.
The impact of state income taxation laws will depend upon the residence and
individual circumstances of each optionee.
REQUIRED VOTE
Approval of the amendment to the Directors Plan requires the
affirmative vote of a majority of voting power of Common Stock present at the
Annual Meeting in person or by proxy.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE INCREASE IN SHARES AUTHORIZED FOR
ISSUANCE UNDER THE NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
PROPOSALS BY STOCKHOLDERS
Any Stockholder proposal that is intended to be presented at the
Company's 1996 Annual Meeting of Stockholders must be received at the Company's
principal executive offices by no later than July 13, 1996, if such proposal is
to be considered for inclusion in the Company's proxy statement and form of
proxy relating to such meeting.
OTHER BUSINESS
The Annual Meeting is being held for the purposes set forth in the
Notice that accompanies this Proxy Statement. The Board is not presently aware
of any business to be transacted at the Annual Meeting other than as set forth
in the Notice.
By Order of the Board of Directors,
/s/Janice L. Backus
--------------------------------
Janice L. Backus
Secretary
Phoenix, Arizona
November 7, 1995
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ZILA, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints JOSEPH HINES, CLARENCE J.
BAUDHUIN and JANICE L. BACKUS, or any of them acting in the absence of the
others, with full power of substitution, the true and lawful attorneys and
proxies of the undersigned, to attend the Annual Meeting of the Stockholders of
ZILA, INC. (the "Company") to be held at Marriott's Camelback Inn, 5402 East
Lincoln Drive, Scottsdale, Arizona 85253 on December 8, 1995, at 9:00 a.m.,
local time, and any adjournments thereof, and to vote the shares of Common Stock
of the Company standing in the name of the undersigned, as directed below, with
all the powers the undersigned would possess if personally present at the
meeting.
PROPOSAL NO. 1: To elect seven directors to the Company's Board to serve for the
next year or until their successors are elected.
NOMINEES: JOSEPH HINES, CLARENCE J. BAUDHUIN, H. RAY COX, CARL A. SCHROEDER, DR.
JAMES E. TINNELL, PATRICK M. LONERGAN and MICHAEL S. LESSER
- - - - - - --------- VOTE for all nominees except those whose names are written on the line
provided below (if any).
- - - - - - --------- VOTE WITHHELD on all nominees.
PROPOSAL NO. 2: Ratification of the selection of Deloitte & Touche as the
independent public accounting firm for the Company for the fiscal year ending
July 31, 1996. (Mark only one.)
- - - - - - --------- VOTE FOR
- - - - - - --------- VOTE AGAINST
- - - - - - --------- VOTE WITHHELD
PLEASE PROMPTLY DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE.
<PAGE> 24
PROPOSAL NO. 3: Approval of an amendment to the Company's Stock Option Award
Plan to increase the number of authorized shares thereunder from 4,000,000 to
5,000,000. (Mark only one.)
- - - - - - --------- VOTE FOR
- - - - - - --------- VOTE AGAINST
- - - - - - --------- VOTE WITHHELD
PROPOSAL NO. 4: Approval of an amendment to the Company's Non-Employee Directors
Stock Option Plan to increase the number of authorized shares thereunder from
100,000 to 200,000. (Mark only one.)
- - - - - - --------- VOTE FOR
- - - - - - --------- VOTE AGAINST
- - - - - - --------- VOTE WITHHELD
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS INDICATED HEREIN.
IF NO SPECIFIC DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR APPROVAL OF
ALL NOMINEES LISTED HEREIN, FOR APPROVAL OF THE PROPOSALS LISTED HEREIN AND,
WITH RESPECT TO ANY OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING, IN
ACCORDANCE WITH THE DISCRETION OF THE PROXIES.
DATED: , 1995.
(Signature)
----------------------------------------------
(Signature)
----------------------------------------------
When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership, please sign in
partnership name by authorized person. If a joint tenancy, please have both
joint tenants sign.
