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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant (X)
Filed by party other than the registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
(X) Definitive Proxy Statement
( ) Definitive Additional Material
( ) Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
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TRICORD SYSTEMS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement)
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Payment of filing Fee (Check appropriate box):
(X) No fee required.
( ) $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 14a6(i)(4) and 0-11.
1 Title of each class of securities to which transaction applies:
---------------------------------
2 Aggregate number of securities to which transaction applies:
---------------------------------
3 Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: *
---------------------------------
4 Proposed maximum aggregate value of transaction:
---------------------------------
5 Total fee paid:
---------------------------------
* Set forth the amount on which the filing fee is calculated and state how its
determined.
( ) 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:
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2 Form, Schedule or Registration Statement No.:
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3 Filing Party:
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4 Date Filed:
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[LOGO]
April 10, 1997
Dear Stockholder:
The date for this year's Annual Meeting is Wednesday, May 21, 1997. It will
be held at the Ramada Plaza Hotel, 12201 Ridgedale Drive, Minnetonka, Minnesota,
beginning at 10:00 a.m., Minneapolis time.
The Annual Meeting is an opportunity for you to meet the directors of your
Company and some of the team that manage the Company.
It is very important that your shares be represented at the meeting, whether
you can attend or not, and I urge you to sign and return your proxy card in the
enclosed envelope.
[SIGNATURE]
John J. Mitcham
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
TRICORD SYSTEMS, INC.
[LOGO]
2800 Northwest Boulevard
Plymouth, Minnesota 55441
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1997
To the Stockholders of Tricord Systems, Inc.:
The Annual Meeting of the Stockholders of Tricord Systems, Inc. will be held
on Wednesday, May 21, 1997, at 10:00 a.m., Minneapolis time, at the Ramada Plaza
Hotel, 12201 Ridgedale Drive, Minnetonka, Minnesota, for the following purposes:
(1) To elect a director for a term of three years.
(2) To ratify the appointment of Coopers & Lybrand L.L.P., certified public
accountants, as independent auditors for the Company for the year ending
December 31, 1997.
(3) To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 28, 1997 will be
entitled to vote at the meeting or any adjournments.
By Order of the Board of Directors,
/s/ Gregory T. Barnum
Gregory T. Barnum
SECRETARY
April 10, 1997
<PAGE>
TRICORD SYSTEMS, INC.
[LOGO]
2800 Northwest Boulevard
Plymouth, Minnesota 55441
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1997
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of Tricord Systems, Inc. (the "Company") of
proxies in the accompanying form from holders of shares of Common Stock to be
voted at the Annual Meeting of Stockholders to be held on May 21, 1997, at 10:00
a.m., Minneapolis time, at the Ramada Plaza Hotel, 12201 Ridgedale Drive,
Minnetonka, Minnesota (the "Annual Meeting").
Stockholders of record as of the close of business on March 28, 1997 will be
entitled to vote at the meeting or any adjournments. On that date, the Company
had 13,431,130 shares of Common Stock outstanding. Each share is entitled to one
vote. The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting (6,715,566 shares) is required for a quorum for the transaction
of business. In general, shares of Common Stock represented by a properly signed
and returned proxy card will be counted as shares present and entitled to vote
at the Annual Meeting for the purposes of determining a quorum, without regard
to whether the card reflects votes withheld from the director nominee or an
abstention (or is left blank) or reflects a "broker non-vote" on a matter (i.e.,
a card returned by a broker on behalf of its beneficial owner customer that is
not voted on a particular matter because voting instructions have not been
received and the broker has no discretionary authority to vote).
Because the director nominee who receives the greatest number of votes cast
for the election of the director at the Annual Meeting will be elected as a
director, votes that are withheld from the election of the director nominee will
be excluded entirely from the vote and will have no effect. Each of the other
proposals described in this Proxy Statement requires the approval of a majority
of the shares present and entitled to vote in person or by proxy on that
proposal. Shares voted as abstaining on any of these proposals will be treated
as shares present and entitled to vote that were not cast in favor of the
proposals, and thus will be counted as votes against the particular proposal.
Shares represented by a proxy card that includes any broker non-votes on a
matter will be treated as shares not entitled to vote on that matter, and thus
will not be counted in determining whether that matter has been approved.
A proxy card is enclosed for your use. You are solicited on behalf of the
Board to SIGN AND RETURN THE PROXY CARD IN THE ACCOMPANYING ENVELOPE. No postage
is required if mailed within the United States. The cost of soliciting proxies,
including the preparation, assembly and mailing of the proxies and soliciting
material, as well as the cost of forwarding such material to the beneficial
owners of the Company's Common Stock, will be borne by the Company. Directors,
officers and regular employees of the Company may, without compensation other
than their regular compensation, solicit proxies by telephone, telegram or
personal conversation. The Company may reimburse brokerage firms and others for
expenses in forwarding proxy materials to the beneficial owners of Common Stock.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
PROPOSALS SET FORTH IN THE NOTICE OF MEETING.
This Proxy Statement and the enclosed form of proxy will be mailed to each
stockholder on or about April 10, 1997, together with the Annual Report to
Stockholders of the Company for the year ended December 31, 1996.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains information, as of February 28, 1997, regarding
the beneficial ownership of Common Stock of the Company, its only class of
voting securities, by each person known by the Company to own more than 5% of
such outstanding shares, each director and nominee for director, each of the
executive officers named in the "Summary Compensation Table" below, and the
executive officers and directors of the Company as a group (consisting of nine
persons). Except as otherwise indicated, the stockholders listed in the table
have sole voting and investment power with respect to the shares indicated.
Shares subject to options exercisable within 60 days are treated as outstanding
only when determining the amount and percentage owned by such individual or
entity.
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENT OF
OF BENEFICIAL OWNER NUMBER OF SHARES CLASS
- -------------------------------------------- ----------------- ------------
<S> <C> <C>
CORAL Entities 1,105,191(1) 7.8%
60 South Sixth Street
Suite 3510
Minneapolis, MN 55402
Yuval Almog 1,172,023(2) 8.3%
Jeffrey O. Henley 71,110(3) *
Donald L. Lucas 100,827(4) *
John J. Mitcham 371,183(5) 2.6%
Gregory T. Barnum 117,583(6) *
Charles C. Devor 51,120(7) *
David S. Huyink 18,750(8) *
Joan M. Wrabetz 25,000(9) *
Thomas D. Robinson 670(10) *
Stephen R. Douty 4,000(11) *
All directors and executive officers as a 1,946,346(12) 13.8%
group (9 persons)
</TABLE>
- ------------------------
* Less than 1%.
(1) As reported in a Schedule 13G, dated February 3, 1997, filed with the
Securities and Exchange Commission, 838,525 shares are held of record by
Coral Partners I - Superior, a Minnesota limited partnership ("CP I"), and
266,666 shares are held of record by Coral Partners II, a limited
partnership ("CP II"). Coral Management Partners I, a limited partnership
("CMP I"), is the general partner of CP I, and Coral Management Partners II,
a limited partnership ("CMP II"), is the general partner of CP II. CMP I and
CMP II each have the following three general partners: Yuval Almog, Peter H.
McNerney and Linda L. Watchmaker. Pursuant to Rule 13d-3 of the Securities
Exchange Act of 1934, each of Mr. Almog, Mr. McNerney and Ms. Watchmaker may
be deemed to share beneficial ownership with respect to such shares;
however, as set forth in their Schedule 13G, these three individuals
disclaim beneficial ownership except to the extent of their pecuniary
interests therein.
(2) Includes 1,105,191 shares beneficially owned by CMP I and CMP II with
respect to which Mr. Almog may be deemed to share beneficial ownership. Mr.
Almog, however, disclaims beneficial ownership except to the extent of his
pecuniary interest therein. Also includes options to purchase 59,722 shares
that are exercisable on or before April 30, 1997.
(3) Includes options to purchase 50,000 shares that are exercisable on or
before April 30, 1997.
3
<PAGE>
(4) Includes 37,065 shares held by the Donald L. Lucas & Lygia S. Lucas Trust
DTD 12-3-84 and 15,000 shares held by the Donald L. Lucas Profit Sharing
Trust DTD 1-1-84. Also includes options to purchase 41,652 shares that are
exercisable on or before April 30, 1997.
(5) Includes options to purchase 339,583 shares that are exercisable on or
before April 30, 1997.
(6) Includes options to purchase 109,583 shares that are exercisable on or
before April 30, 1997.
(7) Includes options to purchase 50,000 shares that are exercisable on or
before April 30, 1997.
(8) Represents options to purchase 18,750 shares that are exercisable on or
before April 30, 1997.
(9) Represents options to purchase 25,000 shares that are exercisable on or
before April 30, 1997.
(10) Mr. Robinson resigned as Vice President, U.S. Sales and Service, of the
Company on May 17, 1996.
(11) Mr. Douty resigned as Vice President, Marketing, of the Company on August
9, 1996.
(12) Excludes Mr. Robinson and Mr. Douty. Includes options to purchase an
aggregate of 713,040 shares that are exercisable on or before April 30,
1997.
ELECTION OF DIRECTORS
NOMINATION
The Company's Certificate of Incorporation provides that the Board shall
consist of between one and nine members, as determined from time to time by the
Board, divided into three classes in as nearly equal number as possible. The
term of each class of directors is three years, and the term of one class
expires each year in rotation. The term of the sole director in Class A expires
with this Annual Meeting.
The Board has recommended that Mr. Lucas, the current Class A director, be
nominated for election as a director in Class A to serve for a three-year term
expiring at the 2000 Annual Meeting of Stockholders, or until his successor is
elected and qualified. Mr. Lucas has consented to serve for the new term, if
elected.
NOMINEE AND CONTINUING DIRECTORS
The nominee for election as a director and the continuing directors, their
ages (as of February 28, 1997), the year in which each first became a director,
and their principal occupations or employment are as follows:
<TABLE>
<CAPTION>
YEAR FIRST
NAMES OF NOMINEE AND DIRECTORS PRINCIPAL OCCUPATION AGE BECAME DIRECTOR
- ------------------------------ ---------------------------------------------------------- --- ---------------
<S> <C> <C> <C>
NOMINEE FOR THREE-YEAR TERM EXPIRING IN 2000:
Donald L. Lucas Private Investor 66 1992
DIRECTORS NOT STANDING FOR ELECTION THIS YEAR WHOSE TERMS EXPIRE IN 1998:
Yuval Almog President of CORAL Group, Inc., a venture capital 47 1987
management company
Jeffrey O. Henley Executive Vice President and Chief Financial Officer, 52 1993
Oracle Corporation, a computer software company
DIRECTOR NOT STANDING FOR ELECTION THIS YEAR WHOSE TERM EXPIRES IN 1999:
John J. Mitcham President and Chief Executive Officer of the Company 55 1995
</TABLE>
Except as indicated below, during the past five years, there has been no
change in the principal occupations or employment of the nominee for election as
a director or of the continuing directors.
4
<PAGE>
Mr. Mitcham has been President and Chief Executive Officer and a director of
the Company since May 2, 1995. From 1989 to May 1995, Mr. Mitcham served as
President and Chief Executive Officer of AT&T Paradyne Corporation.
Mr. Almog is President of Coral Group, Inc., which provides management
services to CMP I and CMP II venture capital partnerships of which Mr. Almog is
Managing General Partner. As described in footnote 1 to the table entitled
"Security Ownership of Certain Beneficial Owners and Management," CMP I and CMP
II are the general partners of CP I and CP II. These entities were affiliated
with Investment Advisers, Inc. until November 1993 under the names "Superior
Ventures" and "IAI Venture Partners II." Until November 1993, Mr. Almog also
served as Senior Vice President of Investment Advisers, Inc.
The following Board members also serve as directors of the designated public
companies: Mr. Almog -- Delphi Information Systems, Inc. and Racotek, Inc.; Mr.
Lucas -- Amati Communications Corporation, Cadence Design Systems, Inc., Coulter
Pharmaceutical, Inc., Macromedia, Inc., Oracle Corporation, Racotek, Inc. and
Transcend Services, Inc.
COMMITTEES AND ATTENDANCE
The business and affairs of the Company are managed by the Board which met
on five occasions, held one telephonic meeting, held one meeting by video
conference and took action by written consent two times during 1996. All of the
directors attended at least 75% of all meetings of the Board and committees on
which they served during 1996, except for Mr. Henley who attended 67% of the
Board meetings and Mr. Robert J. Casale who attended 50% of the Board and
Compensation Committee meetings while he served as a director. Mr. Casale did
not stand for re-election at the May 22, 1996 Annual Meeting.
The Board maintains several standing committees of the Board including the
Finance and Audit Committee, Compensation Committee and Executive Committee.
There is no Nominating Committee of the Board.
The Finance and Audit Committee performs principally the following
functions: reviews the Company's current and long-range financial position,
financial policies and performance objectives; makes recommendations to the
Board on allocation of capital and banking relationships; evaluates retirement
plan investment management and fund performance; reviews the Company's business
insurance policies; recommends to the Board the engagement of the Company's
independent auditors; reviews with the independent auditors the plan and results
of the auditing engagement; reviews the adequacy of the internal accounting
controls; and reviews the range of audit and non-audit professional service
fees, approves such services and considers the independence of the Company's
independent auditors. The members of the Finance and Audit Committee are Messrs.
Henley and Lucas. The Committee held one telephonic meeting during 1996.
The Compensation Committee reviews and recommends for approval to the Board
the remuneration arrangements for the Company's executive officers and the
adoption of compensation and option plans in which these persons and other key
employees of the Company may participate. The Compensation Committee also serves
as the disinterested committee administering the Company's various stock option
plans. The members of the Compensation Committee are Messrs. Almog and Lucas.
Mr. Lucas was elected to the committee on April 25, 1996. Mr. Casale served as a
member of the committee until May 22, 1996. The Committee met on four occasions,
held one telephonic meeting and took action by written consent once during 1996.
The Executive Committee reviews and recommends for approval to the Board the
appointment of officers and agents of the Company, the borrowing of money and
the issuance of bonds, notes or other obligations and evidences of indebtedness,
and determines questions of general policy with regard to the business of the
Company. The members of the Executive Committee are Messrs. Almog, Lucas and
Mitcham. The Committee did not meet during 1996.
5
<PAGE>
DIRECTOR'S COMPENSATION
Non-employee directors receive an annual retainer of $10,000 plus $1,500 for
each Board meeting and committee meeting (if on a date other than a Board
meeting) attended and are reimbursed for travel and lodging expenses in
connection with attendance at Board and committee meetings. As described below,
effective May 22, 1996, the stockholders approved an amendment to the 1992 Non-
Employee Director Stock Option Plan (the "Director Plan") to provide for payment
of the directors' annual cash retainer in the form of Company stock. During
1996, the non-employee directors were reimbursed the following amounts for
expenses: Mr. Almog (none); Mr. Casale ($2,194); Mr. Henley ($1,993); and Mr.
Lucas ($1,472).
Non-employee directors are entitled to participate in the Director Plan. The
Director Plan provides for automatic grants of non-qualified options to the
Company's non-employee directors. Currently, three hundred fifty thousand
(350,000) shares are reserved for issuance under the Director Plan. In
accordance with the terms of the Director Plan, new non-employee directors of
the Company who are first elected or appointed to the Board to fill new
directorships or vacancies will automatically be granted, on a one-time basis on
the date of their election or appointment, non-qualified options to purchase
25,000 shares of Common Stock, at an exercise price equal to the fair market
value of the Common Stock on the date of grant. In addition, non-employee
directors who are appointed to serve on the Executive Committee receive, on a
one-time basis, a non-qualified option to purchase 10,000 shares, with an
exercise price equal to the fair market value on the date of grant. The Director
Plan further provides that, on January 5 of each year, each non-employee
director will automatically be granted additional options to purchase 10,000
shares, with an exercise price equal to the fair market value on the date of
grant. The one-time option grants to Board and Executive Committee members
become exercisable each month on a cumulative basis with respect to 2.78% of the
total shares covered by each such option, commencing one month after the date of
grant and terminating five years after the date of grant. Each annual option
grant becomes exercisable in full six months after its date of grant and
terminates five years after its date of grant.
Pursuant to the Director Plan, payment of the annual cash retainer to
non-employee directors is made in the form of Company stock on November 1 of
each year. Each non-employee director as of such dates, shall receive such
number of shares of Common Stock as equals $10,000 divided by the fair market
value of one share of Common Stock as of the immediately preceding October 31.
During 1996, the non-employee directors each received stock grants for 2,666
shares of the Company's Common Stock for their 1995 annual retainer and stock
grants for 4,444 shares of the Company's Common Stock for their 1996 annual
retainer.
6
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total return during the period March
19, 1993, the date of the Company's initial public offering, to December 31,
1996 for the Company's Common Stock, the Nasdaq -- U.S. Index and the Nasdaq --
Computer Manufacturer Stock Index. This graph assumes the investment on March
19, 1993 of $100 in the Company's Common Stock and the stock in the companies
presented in the Nasdaq -- U.S. Index and the Nasdaq -- Computer Manufacturer
Stock Index on March 19, 1993 and the reinvestment of all dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TRICORD SYSTEMS,
NASDAQ - STOCK MARKET - US NASDAQ - COMPUTER MANUFACTURERS INC.
<S> <C> <C> <C>
3/19/93 100.000 100.000 100.000
3/31/93 101.153 99.049 115.909
6/30/93 103.095 95.175 200.000
9/30/93 111.784 85.153 190.909
12/31/93 113.979 99.204 240.909
3/31/94 109.185 96.175 134.091
6/30/94 104.081 77.978 97.727
9/30/94 112.698 94.809 46.591
12/31/94 111.412 108.956 47.727
3/31/95 121.457 114.852 46.591
6/30/95 138.926 139.673 34.091
9/30/95 155.659 168.054 41.473
12/31/95 157.558 171.625 27.273
3/31/96 164.918 176.917 37.500
6/30/96 178.379 198.958 40.909
9/30/96 184.731 219.671 24.432
12/31/96 193.809 230.458 13.636
</TABLE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Composed entirely of outside directors, the Compensation Committee of the
Board meets four to five times per year and is responsible for reviewing and
approving remuneration arrangements for the Company's executive officers and the
administration of compensation and stock option plans in which these individuals
and other key employees participate. In addition, the committee reviews and
provides direction for the development of future leadership to meet the
long-term organizational and growth objective requirements of the Company. A
more complete description of the functions of the Compensation Committee is set
forth under the caption "Election of Directors -- Committees and Attendance."
COMPENSATION PHILOSOPHY AND OBJECTIVES. The Company's executive
compensation philosophy is to pay for individual and Company results. The
objectives of the Company's executive compensation program are to:
- Reward the achievement of desired Company and individual performance
goals.
- Provide compensation that is competitive with other companies of
comparable size and complexity that will enable the Company to attract and
retain key executive talent.
- Align the interests of the Company's executives to stockholder return
through long-term opportunities for stock ownership.
In determining the compensation of the Company's executive officers, the
Compensation Committee considers a number of factors, including Company
performance, both separately and in relation to other companies competing in the
Company's markets, the individual performance of each executive officer,
comparative compensation surveys concerning compensation levels and stock grants
at other companies, historical compensation levels and stock awards at the
Company, and the overall
7
<PAGE>
competitive environment for executives and the level of compensation necessary
to attract and retain key executive talent.
For purposes of determining the competitiveness of the Company's executive
compensation program, the Compensation Committee takes into consideration base
salary, annual cash bonuses and stock awards. During 1996, the Company utilized
the 1996 Management Total Compensation Report for High Technology Industries
(the "Report") to obtain industry comparisons. This Report, which is published
by Radford Associates based on data effective April 1, 1996, provides
information on base salaries, bonus plans, stock plans and other benefits and
perquisites from 433 companies in the computer/peripheral, software,
semiconductor, data-telecommunications and medical/scientific equipment
industries. The Company compared its executive compensation program to that of
companies in the Report with revenues of between $40 million and $99.9 million.
The companies used in this comparative analysis included a number of the
companies in the peer group (the Nasdaq Computer Manufacturer Stock Index) used
in the Comparative Stock Performance Graph as well as other companies. The
Compensation Committee relies on a broad array of companies in various
industries for purposes of this comparative analysis, because the Compensation
Committee believes that competitors for key executives include companies that
are not included in the peer group chosen for comparing stockholder returns in
the Comparative Stock Performance Graph.
The Company's executive compensation program is comprised of base salary,
annual incentive opportunities in the form of cash bonuses and long-term
incentive opportunities in the form of stock options. The Compensation Committee
uses its discretion to establish executive compensation at levels which, in its
judgment, are warranted by external and internal factors, as well as an
executive's individual circumstances. As a result, actual compensation levels
may be greater or less than the compensation levels at the companies used in the
comparative analysis based upon annual and long-term Company performance as well
as individual performance.
BASE SALARY. The Compensation Committee regularly reviews each executive's
base salary. Base salaries are determined by taking into account an executive's
level of responsibility, prior experience and competitive market data. For
executives in sales and marketing, compensation includes a commission component
that takes into account individual and Company revenue goals as well as
competitive market data.
Base salaries are initially targeted to be within the median range of base
salaries paid by comparable companies included in the Report. The Compensation
Committee then reviews a number of factors, including individual and Company
performance, competitive market conditions, position tenure and internal
comparability considerations in determining merit increases. The annual merit
program for executives is the same as for all of the Company's employees. Upon a
review of the Company's 1996 performance and other factors described above, the
executive officers were granted base salary increases of between 0% and 25% for
1997.
The compensation of John J. Mitcham, the Company's President and Chief
Executive Officer, is determined in accordance with his employment agreement
with the Company, which was entered into in May 1995. Pursuant to this
employment agreement, Mr. Mitcham is paid an annual base salary that was
initially established at $300,000 in May 1995. Each year the Compensation
Committee conducts a performance and salary review of Mr. Mitcham's base salary
to determine whether it should be increased. Based on this review, the
Compensation Committee determined to maintain Mr. Mitcham's base salary at
$300,000. In addition, the employment agreement provides that the Company will
reimburse Mr. Mitcham for premiums on a term life insurance policy up to a
maximum of $3,500 per year. The Compensation Committee will conduct a
performance and salary review in May 1997 for the purpose of determining Mr.
Mitcham's base salary for the ensuing year, which review is based upon both
individual and Company performance. In making its determination of base salary
for Mr. Mitcham, the Compensation Committee will consider the same factors as
described above with respect to all other executive officers.
8
<PAGE>
ANNUAL CASH BONUSES. The philosophy of the Compensation Committee is to
provide executives with direct financial incentives in the form of annual cash
bonuses to achieve Company, business unit and individual performance goals. The
Compensation Committee does not have a fixed formula or criteria for determining
annual cash bonuses. Instead, the Compensation Committee, in its discretion,
establishes bonuses at year-end, based upon the extent to which the Company has
achieved its annual business plan, the Company's performance versus that of
other companies in the peer group used in the Comparative Stock Performance
Graph and the competitive level of bonuses for comparable companies. Upon a
review of these factors, the executive officers of the Company received bonuses
for 1996 ranging from $0 to $20,000.
Under the terms of Mr. Mitcham's employment agreement, a bonus option (the
"Bonus Option") to purchase 200,000 shares of the Company's common stock was
granted at the time the employment agreement was entered into on May 2, 1995
(the "Grant Date"), at an exercise price equal to $4.19 (the fair market value
of the Company's Common Stock on the Grant Date). The Bonus Option is
exercisable in full five years after the Grant Date or earlier upon the
satisfaction of certain performance goals and expires 10 years after the Grant
Date. On April 25, 1996, based upon progress made towards the Company's goals,
the Compensation Committee immediately vested 100,000 of the Bonus Option and
granted Mr. Mitcham an option to purchase an additional 100,000 at $4.69 per
share (the fair market value of the Company's Common Stock on the Grant Date),
subject to the same vesting provisions as the Bonus Option.
LONG-TERM INCENTIVES. The 1995 Stock Incentive Plan (the "1995 Plan") is a
broad "omnibus" plan that provides the Compensation Committee with significant
flexibility to award key executives stock options, restricted stock awards,
stock appreciation rights, performance units and stock bonuses. To date,
long-term incentives have been provided in the form of stock options, which are
granted with an exercise price equal to the fair market value of the Common
Stock at the date of grant and become exercisable proportionately over a period
of time. Grants of all awards under the 1995 Plan are made by the Compensation
Committee in its discretion based upon an executive's contribution toward
Company performance and expected contribution toward meeting the Company's long-
term strategic goals. Because the value to an executive of the various stock
awards depends on increases in the market price of the Common Stock, the
Compensation Committee believes that this form of compensation aligns an
executive's compensation more closely with increases in stockholder value.
During 1996, the Compensation Committee granted stock options to all of its
executive officers, including the option grant to purchase 100,000 shares to Mr.
Mitcham as described above. Although the Compensation Committee's decision to
grant options and its determination of the size of such grants were based upon
many of the same factors considered in granting annual cash bonuses as described
above, the Compensation Committee also considered the need to continue to
provide executives with the proper incentives and the impact of the decline in
the Company's stock price on existing options held by executives. In addition,
the Compensation Committee considered the level of prior stock option grants to
such executives.
TAX LAW CHANGES. The Omnibus Reconciliation Act of 1993 added Section
162(m) to the Internal Revenue Code of 1986, as amended (the "Code"), which
generally precludes the Company and other public companies from taking a tax
deduction for compensation over $1 million which is not "performance-based" and
is paid, or otherwise taxable, to executives named in the Summary Compensation
Table and employed by the Company at the end of the applicable tax year. No
named executive is likely to earn over $1 million in 1996. Therefore, the
Company does not have a policy at this time regarding qualifying the
compensation paid to its executive officers for deductibility under Section
162(m), but will formulate such a policy if compensation levels ever approach $1
million.
Compensation Committee
Yuval Almog, CHAIRMAN
Donald L. Lucas
9
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
---------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) COMPENSATION (2) OPTIONS COMPENSATION (3)
- ----------------------------------- --------- ----------- --------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
John J. Mitcham (4) 1996 $ 300,000 $ -- $ 13,316 100,000 $ 1,000
President and Chief 1995 197,884 -- -- 700,000 --
Executive Officer 1994 -- -- -- -- --
Gregory T. Barnum 1996 159,174 20,000 -- 100,000 1,000
Sr. Vice President of 1995 150,000 33,750 -- 50,000 1,000
Finance and CFO 1994 150,000 -- -- 65,000 --
Charles C. Devor (5) 1996 158,674 20,000 -- 150,000 1,000
Vice President and 1995 65,155 13,527 53,950 200,000 1,000
General Manager -- 1994 -- -- -- -- --
Server Unit
David S. Huyink (6) 1996 111,840 14,000 -- 15,000 1,000
Vice President and 1995 21,295 5,274 -- 75,000 1,000
Chief Quality Officer 1994 -- -- -- -- --
Joan M. Wrabetz (7) 1996 111,007 14,000 -- 130,000 1,000
Vice President and 1995 -- -- -- -- --
General Manager -- 1994 -- -- -- -- --
Storage Unit
Thomas D. Robinson (8) 1996 68,289 12,500 63,785 -- 43,750
Former Vice President of 1995 6,731 -- -- 200,000 --
U.S. Sales and Service 1994 -- -- -- -- --
Stephen R. Douty (9) 1996 85,574 -- 2,531 50,000 45,000
Former Vice President of 1995 51,663 13,041 -- 75,000 --
Marketing 1994 -- -- -- -- --
</TABLE>
- ------------------------
(1) Bonuses for services rendered have been included as compensation for the
year earned, even though such bonuses were actually paid in the following
year.
(2) "Other Annual Compensation" consists of the pay-out of accrued vacation upon
resignation of employment for Mr. Robinson and Mr. Douty and relocation
assistance for Mr. Mitcham, Mr. Devor and Mr. Robinson.
(3) "All Other Compensation" consists of the Company's matching contribution to
the employees accounts in the Company's 401K Retirement Plan for Mr.
Mitcham, Mr. Barnum, Mr. Devor, Mr. Huyink and Ms. Wrabetz and severance
paid to Mr. Robinson and Mr. Douty.
(4) Mr. Mitcham joined the Company in May 1995.
(5) Mr. Devor joined the Company in July 1995.
(6) Mr. Huyink joined the Company in October 1995.
(7) Ms. Wrabetz joined the Company in January 1996.
(8) Mr. Robinson joined the Company in December 1995 and resigned from the
Company in May 1996.
(9) Mr. Douty joined the Company in August 1995 and resigned from the Company in
August 1996.
10
<PAGE>
OPTIONS
The following tables provide certain information regarding option grants and
exercises during 1996 to or by the executive officers named in the Summary
Compensation Table above and the number and value of the options held by such
persons at the end of 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1) POTENTIAL REALIZED VALUE
-------------------------------------------------------- AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED FOR OPTION TERM (2)
OPTIONS TO EMPLOYEES EXERCISE OR EXPIRATION ------------------------
NAME GRANTED IN 1996 BASE PRICE DATE 5% 10%
- ------------------------- ----------- ----------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
John J. Mitcham 100,000 5.10% $ 4.69 4/24/06 $ 294,826 $ 747,146
Gregory T. Barnum 100,000 5.10% 2.81 7/23/06 176,908 448,320
Charles C. Devor 150,000 7.65% 2.81 7/23/06 265,362 672,480
David S. Huyink 15,000 .76% 2.81 7/23/06 26,536 67,248
Joan M. Wrabetz 100,000 5.10% 3.00 1/1/06 188,668 478,123
30,000 1.53% 2.81 7/23/06 53,072 134,496
Thomas D. Robinson -- -- -- -- -- --
Stephen R. Douty -- -- -- -- -- --
</TABLE>
- ------------------------
(1) All of the options granted to executives were granted under the 1995 Plan.
Options become exercisable under such plans so long as executives remain in
the employ of the Company or one of its subsidiaries. To the extent not
already exercisable, options under the 1995 Plan become immediately
exercisable in full upon certain changes in control of the Company and
remain exercisable for the remainder of their terms. See "Change in Control
Arrangements". Mr. Mitcham's option becomes exercisable in full after five
years or earlier upon the satisfaction of certain performance goals (see
"Compensation Committee Report on Executive Compensation -- Annual Cash
Bonuses"). All other options become exercisable with respect to 25% of the
shares upon each anniversary of the grants.
(2) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent upon the future
performance of the Company's Common Stock, overall market conditions and the
executive's continued employment with the Company. The amounts represented
in this table may not necessarily be achieved.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES END OF 1996 AT END OF 1996 (1)
ACQUIRED ON VALUE -------------------------- ------------------------------
NAME EXERCISE (2) REALIZED (3) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ------------- ------------- ----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John J. Mitcham -- $ -- 297,916 502,084 $ -- $ --
Gregory T. Barnum -- -- 100,833 171,667 -- --
Charles C. Devor -- -- 50,000 300,000 -- --
David S. Huyink -- -- 18,750 71,250 -- --
Joan M. Wrabetz -- -- -- 130,000 -- --
Thomas D. Robinson -- -- -- -- -- --
Stephen R. Douty -- -- -- -- -- --
</TABLE>
- ------------------------
(1) Value calculated as the excess of the market value of the Common Stock at
December 31, 1996 ($1.36) over the exercise price per share. The market
value of the Common Stock at December 31,
11
<PAGE>
1996 represents the average of the high and low sales price as reported on
the Nasdaq, National Market System. Options are in-the-money if the market
price of the shares exceeds the option exercise price. As of December 31,
1996, none of the options held by these officers were in-the-money.
(2) The exercise price may be paid in cash or, in the Compensation Committee's
discretion, by delivery of a promissory note or shares of Common Stock
valued at the fair market value on the date of exercise or pursuant to a
cashless exercise procedure under which the executive provides irrevocable
instructions to a brokerage firm to sell the purchased shares and remit to
the Company, out of the sale proceeds, an amount equal to the exercise price
plus applicable withholding taxes.
(3) Value calculated as the excess of the market value at the date of exercise
over the option exercise price.
CHANGE IN CONTROL ARRANGEMENTS
Under the Company's option plans, in the event a "change in control" of the
Company occurs, all outstanding options held by a participant for at least six
months will become immediately exercisable in full and will remain exercisable
for the remainder of their terms, regardless of whether the participant remains
in the employ or service of the Company or any subsidiary. A "change in control"
for purposes of the Company's option plans will generally occur upon the
following events: (a) the sale or other transfer of substantially all of the
assets of the Company; (b) the liquidation or dissolution of the Company; (c) a
merger or consolidation involving the Company if 70% or less of the voting stock
of the surviving company is held by persons who were stockholders of the Company
immediately before the merger or consolidation; (d) any person becomes the
beneficial owner of 30% or more of the combined voting power of the Company's
outstanding securities ordinarily having the right to vote at elections of
directors; (e) the continuity directors (directors as of the date the applicable
plan was adopted and additional directors nominated or elected by the
"continuity directors") of the Company cease to constitute at least a majority
of the Board; or (f) any change of control that is required to be reported under
Section 13 or 15 (d) of the Securities Exchange Act of 1934 (the "Exchange
Act").
In addition to the change in control provisions under its option plans, the
Company has also entered into change in control agreements with certain of its
officers and key employees, including Gregory T. Barnum, the Company's Sr. Vice
President of Finance and Chief Financial Officer, Charles C. Devor, the
Company's Vice President and General Manager -- Server Unit, David S. Huyink,
the Company's Vice President and Chief Quality Officer, and Joan M. Wrabetz, the
Company's Vice President and General Manager -- Storage Unit. Pursuant to these
agreements (the "Change in Control Agreements"), in the event of a Change in
Control Termination (as defined below), the Company agrees (a) to make a
lump-sum cash payment to the employee in an amount equal to one and one-half
times such employee's annual base salary, plus one and one-half times such
employee's target annual cash bonus for the year during which the termination
occurs, (b) to provide to the employee continued coverage under the Company's
group health plan for up to 18 months, (c) to provide to the employee a
"gross-up" payment sufficient to pay any excise tax imposed under Section 4999
of the Code (or any comparable state or local law) resulting from any Change in
Control (as defined below), and (d) to provide to the employee outplacement
counseling services costing up to 5% of such employee's annual base salary.
For purposes of the Change in Control Agreements, a "Change in Control
Termination" is deemed to occur if the Company terminates such employee's
employment for any reason other than for Cause (which includes gross misconduct,
willful and continued failure to perform, or conviction of a felony or gross
misdemeanor) or the employee's death or the employee terminates his or her
employment for Good Reason (which includes an adverse change in the employee's
position with the Company, reduction in base salary or benefits, forced
relocation, or failure by the Company to observe certain requirements of the
Change in Control Agreement) and any such termination occurs either
12
<PAGE>
within 12 months after the last day of the month in which the Change in Control
occurred or prior to the Change in Control if the employee's termination was a
condition of or related to the Change in Control. For purposes of the Change in
Control Agreements, a "Change in Control" is defined to include (a) a merger
involving the Company where the pre-merger stockholders own at least 50% but
less than 80% of the surviving Company's voting stock (unless approved by the
Board of Directors) or less than 50% of the surviving Company's voting stock
(whether or not approved by the Board of Directors), (b) a transfer of
substantially all of the Company's assets or a liquidation of the Company, (c)
the acquisition by any person or group of 20% or more but less than 50% of the
Company's voting stock (unless approved by the Board of Directors) or 50% or
more of the Company's voting stock (whether or not approved by the Board of
Directors), (d) the "continuity directors" (the current directors and their
future nominees) ceasing to constitute a majority of the Board of Directors, and
(e) any other change in control that would be required by the Securities and
Exchange Commission (the "SEC").
The change in control provisions of the Company's option plans, as well as
the Change in Control Agreements, are designed to attract and retain valued
employees of the Company and to ensure that the performance of these employees
is not undermined by the possibility, threat or occurrence of a change in
control. While these measures were not adopted to deter takeovers, they may have
an incidental anti-takeover effect by making it more expensive for a bidder to
acquire control of the Company.
SEVERANCE AGREEMENTS
Under agreements dated February 8, 1997 entered into with each of Mr. Barnum
and Mr. Devor (the "Severance Agreements"), the Company has agreed, within 10
business days following a Triggering Termination (as defined below) of the
employee (a) to make a lump-sum cash payment to such employee equal to his
annual base salary and (b) for 12 months following such termination (or until
the employee becomes covered under another comparable plan) to maintain a group
health plan that covers such employee (and eligible family members and
dependents) under the same terms and at the same cost to the employee as to
similarly situated individuals who continue to be employees of the Company.
For purposes of the Severance Agreements, a "Triggering Termination" is
defined as termination of employment by the Company for any reason other than
the employee's death or for Cause or termination by the employee for Good Reason
(with such terms defined similarly as in the Change in Control Agreements), in
each case so long as such termination by either the Company or the employee
would not entitle the employee to receive benefits pursuant to such employee's
Change in Control Agreement. To the extent that the employee incurs a tax
liability in connection with such health benefits that he would not have
incurred had he been an active employee of the Company, the Company will
reimburse the employee in an amount equal to such tax liability. The Severance
Agreements have an initial term of two years.
MITCHAM EMPLOYMENT AGREEMENT
Pursuant to the terms of an employment agreement, dated as of May 2, 1995,
Mr. Mitcham is paid an annual base salary that is determined each year by the
Compensation Committee based on a performance and salary review of Mr. Mitcham.
The base salary was initially fixed at $300,000. In addition to base salary, the
employment agreement provided for the grant to Mr. Mitcham on May 2, 1995 of an
option to purchase 500,000 shares of the Company's common stock (the "Base
Option") at an exercise price equal to $4.19 (the fair market value of the
Company's Common Stock on the Grant Date). The Base Option becomes exercisable
with respect to six forty-eighths of the shares subject to such option six
months after the Grant Date and with respect to an additional one forty-eighth
of the shares subject to such option at the end of each month thereafter. The
Base Option expires 10 years after the Grant Date. In addition to the Base
Option, the employment agreement provided for the grant to Mr. Mitcham on the
Grant Date of a Bonus Option to purchase 200,000 shares of the
13
<PAGE>
Company's common stock at an exercise price equal to $4.19. The Bonus Option
becomes exercisable in full five years after the Grant Date (or earlier upon the
satisfaction of certain performance goals) and will expire 10 years after the
Grant Date. Both the Bonus Option and Base Option become immediately exercisable
in full upon a Change in Control, as defined in the stock option plans, and will
remain exercisable for the remainder of their terms. Mr. Mitcham is also
entitled to customary benefits, reimbursements of business expenses and
reimbursement for premiums on a term life insurance policy up to a maximum of
$3,500 per year. In addition, pursuant to the employment agreement, the Company
will reimburse Mr. Mitcham for his relocation expenses (up to a maximum of
$100,000) plus amounts for any taxes on such reimbursement amounts.
The employment agreement continues until terminated and may be terminated in
the following circumstances: (i) by the Company upon written notice with or
without cause; (ii) by Mr. Mitcham upon 30 days' written notice; or (iii) upon
Mr. Mitcham's death or disability. If the Company terminates the employment
agreement other than for cause or if Mr. Mitcham terminates the agreement due to
a material breach by the Company that is not cured within 30 days of notice, the
Company will be obligated to continue to pay Mr. Mitcham his then current Base
Salary for a period of two years following such termination, if such termination
occurs within two years after the effective date of the agreement, or for a
period of one year following such termination, if termination occurs thereafter.
Such payments, however, will continue only so long as Mr. Mitcham
conscientiously and aggressively seeks new employment and complies with his
continuing obligations under the employment agreement and will be reduced to
reflect any payments received during such period from another employer.
Pursuant to the employment agreement, Mr. Mitcham has agreed that, during
his employment and for a period of one year thereafter, he will not: (i) compete
in the network server business within any state or country in which the Company
markets or services products or provides services; (ii) interfere in any way
with the Company's relationship with any of its current or potential customers;
or (iii) employ or attempt to employ any of the Company's employees. In
addition, the employment agreement prohibits the disclosure of confidential
information to anyone outside of the Company during and subsequent to Mr.
Mitcham's employment and requires disclosure to the Company of ideas,
discoveries or inventions relating to or resulting from Mr. Mitcham's work for
the Company and assignment to the Company of all proprietary rights to such
ideas, discoveries or inventions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the Company's Common
Stock, to file with the SEC initial reports of ownership and reports of changes
in ownership of Common Stock and other equity securities of the Company.
Executive officers, directors and greater than 10% shareholders are required by
SEC regulations to furnish the Company with all Section 16(a) reports they file.
To the Company's knowledge, based upon a review of the copies of such reports
furnished to the Company during, or with respect to, the period ended December
31, 1996, and based on representations by such persons, all of the Company's
executive officers, directors and greater than 10% stockholders complied with
all Section 16(a) filing requirements.
SELECTION OF INDEPENDENT AUDITORS
The Board has appointed Coopers & Lybrand L.L.P., independent certified
public accountants, as auditors of the Company for the year ending December 31,
1997. Coopers & Lybrand L.L.P. has audited the financial statements of the
Company since incorporation and has no other relationship with or interest in
the Company.
Unless a contrary choice is specified, proxies solicited by the Board will
be voted FOR ratification of the appointment of Coopers & Lybrand L.L.P. as
auditors for the Company for the year ending December 31, 1997.
14
<PAGE>
Representatives of Coopers & Lybrand L.L.P. will be present at the meeting,
will have an opportunity to make a statement if they so desire, and will be
available to respond to appropriate questions.
PROPOSALS FOR THE NEXT ANNUAL MEETING
Stockholder proposals intended to be presented in the proxy material
relating to the next Annual Meeting of Stockholders must be received by the
Company on or before December 11, 1997.
OTHER BUSINESS
The Company knows of no other matters that will be presented at this year's
Annual Meeting of Stockholders. If any other matter properly arises at the
meeting, it is intended that the shares represented by proxies in the
accompanying form will be voted in accordance with the judgment of the persons
named in the proxies.
15
<PAGE>
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1996 accompanies this Notice of Annual Meeting and Proxy Statement.
The Annual Report describes the financial condition of the Company as of
December 31, 1996.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM
10-K (EXCLUSIVE OF EXHIBITS) FOR THE YEAR ENDED DECEMBER 31, 1996 TO EACH PERSON
WHO IS A STOCKHOLDER OF THE COMPANY AS OF MARCH 28, 1997, UPON RECEIPT FROM ANY
SUCH PERSON OF A WRITTEN REQUEST FOR SUCH AN ANNUAL REPORT ON FORM 10-K. SUCH
REQUESTS SHOULD BE SENT TO: TRICORD SYSTEMS, INC., 2800 NORTHWEST BOULEVARD,
PLYMOUTH, MINNESOTA 55441, ATTENTION: INVESTOR RELATIONS.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gregory T. Barnum
Gregory T. Barnum
SECRETARY
April 10, 1997
Plymouth, Minnesota
16
<PAGE>
TRICORD SYSTEMS, INC.
2800 NORTHWEST BOULEVARD
PLYMOUTH, MINNESOTA 55441
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, having duly received the Notice of Annual Meeting of
Stockholders and Proxy Statement dated April 10, 1997, appoints John J. Mitcham
and Gregory T. Barnum as proxies (each with power to act alone and with powers
of substitution) to represent the undersigned and to vote, as designated below,
all shares of common stock of Tricord Systems, Inc. held of record by the
undersigned on March 28, 1997, at the Annual Meeting of Stockholders of Tricord
Systems, Inc. to be held at 10:00 a.m., local time, on May 21, 1997, at the
Ramada Plaza Hotel, 12201 Ridgedale Drive, Minnetonka, Minnesota and any
adjournments thereof.
1. ELECTION OF DIRECTOR
<TABLE>
<S> <C> <C>
/ / For the nominee listed below / / Withhold Authority to vote for
(except as marked to the contrary below) the nominee listed below
</TABLE>
NOMINEE FOR ELECTION
Donald L. Lucas
2. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS
INDEPENDENT AUDITORS FOR THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(CONTINUED AND TO BE COMPLETED AND SIGNED ON THE REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSAL 2 ABOVE AND TO GRANT AUTHORITY TO VOTE FOR THE
NOMINEE NAMED IN PROPOSAL 1 ABOVE.
PLEASE SIGN exactly as the name appears on
this card. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, 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.
Dated: ___________________________________
__________________________________________
Name of Stockholder(s)
__________________________________________
Signature
__________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
