<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
DESTRON FEARING CORPORATION
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(Name of Registrant as Specified In Its Charter)
N/A
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / 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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4) Date Filed:
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<PAGE>
DESTRON FEARING CORPORATION
490 Villaume Avenue
South St. Paul, Minnesota 55075
(612) 455-1621
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 26, 1998
-----------------
TO THE STOCKHOLDERS OF DESTRON FEARING CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Destron Fearing Corporation, a Delaware corporation (the
"Company"), will be held on Thursday, February 26, 1998 at 3:30 p.m.
(Minneapolis time) at The Marriott City Center, 30 South Seventh Street,
Minneapolis, Minnesota 55402 for the following purposes:
1. To elect six directors of the Company.
2. To consider and act upon a proposal to amend the Company's Stock
Option Plan adopted in 1992 to increase the number of shares for
which options may be issued.
3. To ratify the appointment of Arthur Andersen LLP as independent
auditors for the fiscal year ending September 30, 1998.
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only holders of record of the Company's common stock at the close of
business on January 2, 1998 are entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof.
Each of you is invited to attend the Annual Meeting in person, if possible.
Whether or not you plan to attend in person, please mark, date and sign the
enclosed proxy, and mail it promptly. A return envelope is enclosed for your
convenience.
By Order of the Board of Directors
/s/ Thomas J. Ahmann
Thomas J. Ahmann, SECRETARY
January 15, 1998
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WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING,
PLEASE SIGN THE PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
- ------------------------------------------------------------------------------
<PAGE>
DESTRON FEARING CORPORATION
490 Villaume Avenue
South St. Paul, Minnesota 55075
(612) 455-1621
---------------------------
PROXY STATEMENT
---------------------------
SOLICITATION OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Destron Fearing Corporation, a Delaware corporation ("Company"),
for use at the Annual Meeting of Stockholders ("Annual Meeting") to be held
on February 26, 1998, and any adjournment thereof. This Proxy Statement and
the accompanying form of proxy are being mailed to stockholders on or about
January 16, 1998.
The expense of the solicitation of proxies for the Annual Meeting,
including the cost of mailing, has been or will be borne by the Company.
Arrangements will be made with brokerage houses and other custodian nominees
and fiduciaries to send proxies and proxy materials to their principals, and
the Company will reimburse them for their expense in so doing. In addition
to solicitation by mail, proxies may be solicited by telephone, telegraph or
personally.
VOTING AND REVOCATION OF PROXY
Only holders of record of the Company's common stock at the close of
business on January 2, 1998 the record date for the Annual Meeting, are
entitled to notice of and to vote at the Annual Meeting. On the record date,
13,293,982 shares of the Company's common stock were outstanding. Each share
of common stock entitles the holder thereof to one vote upon each matter to
be presented at the Annual Meeting. A quorum, consisting of a majority of
the shares of the Company's common stock entitled to vote at the Annual
Meeting, must be present in person or by proxy before action may be taken at
the Annual Meeting.
Each proxy returned to the Company will be voted in accordance with the
instructions indicated thereon. If no instructions are indicated, the shares
will be voted (i) FOR the election of the nominees for the Board of Directors
named in this Proxy Statement, (ii) FOR the proposal to amend the Company's
Stock Option Plan adopted in 1992 (the "Option Plan") and (iii) FOR the
ratification of the appointment of Arthur Andersen LLP as independent
auditors for the fiscal year ending September 30, 1998. While the Board of
Directors knows of no other matters to be presented at the Annual Meeting or
any adjournment thereof, all proxies returned to the Company will be voted on
any such matter in accordance with the judgment of the proxy holders. If a
proxy is returned and the stockholder has abstained from voting on any
matter, the shares represented by such proxy will be considered present at
the meeting for purposes of determining a quorum and for purposes of
calculating the vote on the matter, but will not be considered to have been
voted in favor of such matter.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by
(i) giving written notice of such revocation to the Secretary of the Company
before or at the Annual Meeting, (ii) delivering another written proxy
bearing a later date, or (iii) attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy).
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The business and affairs of the Company are managed under the direction
of its Board of Directors. The Company's Bylaws provide that the Board of
Directors shall consist of one or more members. The Board of Directors
currently consists of six members. Each Director is elected to serve until
the next annual meeting of stockholders or until their earlier resignation,
death or removal.
Stockholders will be asked at the Annual Meeting to elect six Directors.
The Board has nominated the six individuals named below to serve as Directors
of the Company. Unless authority is withheld, all proxies received in
response to this solicitation will be voted for the election of the nominees
named below. Each of the nominees named below is now a Director of the
Company and has served continuously as a Director since the month indicated.
Such nominees collectively comprise the entire Board. All nominees have
indicated a willingness to serve if elected. If any nominee becomes unable
to serve prior to the Annual Meeting, the proxies received in response to
this solicitation will be voted for a replacement nominee selected in
accordance with the best judgment of the proxy holders named therein.
<TABLE>
<CAPTION>
NAME POSITIONS WITH THE COMPANY AGE DIRECTOR SINCE
- ---- -------------------------- --- --------------
<S> <C> <C> <C>
Randolph K. Geissler President, Chief Executive 37 November 1993
Officer, Chairman
and Director
David A. Henderson Director 45 April 1994
Kenneth D. Larson Director 57 August 1994
Richard E. Jahnke Director 49 April 1997
Stanley Goldberg Director 51 April 1997
Douglas M. Pihl Director 58 June 1997
</TABLE>
STOCKHOLDER APPROVAL
The affirmative vote of a plurality of the shares of common stock of the
Company represented at the Annual Meeting either in person or by proxy,
assuming a quorum is present, is required for the election of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS AS SET FORTH IN PROPOSAL 1.
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INFORMATION CONCERNING DIRECTORS
AND EXECUTIVE OFFICERS
DIRECTORS
Each nominee for election to the Company's Board of Directors is
presently serving as a Director of the Company. The following discussion
sets forth certain information concerning the nominees for Directors of the
Company.
RANDOLPH K. GEISSLER has served as President and Chief Executive Officer
of the Company since November 12, 1993, as Chairman since February 1997, and
as Interim Chief Executive Officer from March 1, 1993 until November 12, 1993
pursuant to a transition services agreement in conjunction with the merger
(the "Merger") of a wholly-owned subsidiary of the Company and Fearing
Manufacturing Co., Inc. ("Fearing") in November 1993. See "Information
Concerning Directors and Executive Officers -- Certain Transactions."
Fearing is now a wholly-owned subsidiary of the Company. Mr. Geissler is
also the President and Chief Executive Officer of Fearing, a position that he
has held since 1987. Prior to 1987, he held a variety of positions with
Fearing, including sales representative, production manager and director of
research.
DAVID A. HENDERSON has been a Director of the Company since April 1994.
He has been President of Cherry Tree & Co., a privately-held investment
banking firm, since December 1997. He also is the Managing General Partner
of Founding Partners II Limited Partnership, a privately-held venture capital
firm, and has held that position since April 1990. Mr. Henderson was
previously an Executive Vice President of Cherry Tree Investment Company,
which manages approximately $87 million of venture capital funds. From 1986
to 1990, he was Chief Executive Officer of a bank holding company with $400
million in assets; and from 1982 to 1986, he was Chief Operating Officer of
Republic Telcom Corporation. In addition to the Company, he currently serves
as a Director of Coda Music Technologies, Inc. and Harmony Brook, Inc., which
are publicly-held companies, and as a Director of The Gift Certificate
Center, Inc., Cherry Tree & Co. and Transline Communications, Inc., which are
privately-held companies.
KENNETH D. LARSON has been a Director of the Company since August 1994.
Mr. Larson joined Polaris Industries Inc. ("Polaris") in September 1988 as
Executive Vice President/Operating Officer and was named President and Chief
Operating Officer and a Director in July 1989. Polaris is a publicly-held
company that designs, engineers, manufactures, and markets snowmobiles,
all-terrain vehicles (ATVs), and personal watercraft for recreational and
utility use. In addition to the Company and Polaris, Mr. Larson currently
serves as a Director of MVE, Inc., a private company, and Featherlite
Manufacturing, Inc., a publicly-held company.
RICHARD E. JAHNKE has been a Director of the Company since April 1997.
He has served as President and Chief Operating Officer of CNS, Inc. and has
been on the CNS, Inc. Board of Directors since 1993. CNS, Inc. is a
publicly-held company that designs, manufactures and markets consumer and
health care products. From 1991 to 1993, he was Executive Vice President and
Chief Operating Officer of Lemna Corporation, which manufactures and sells
waste water treatment systems. In addition to serving on the Boards of the
Company and CNS, Inc., Mr. Jahnke is a Director or Rehabilicare, Inc., a
publicly-held manufacturer of medical devices.
STANLEY GOLDBERG has been a Director of the Company since April 1997.
He is Chairman, President and Chief Executive Officer of Ringer Corporation
("Ringer"), which is a publicly-held company that develops, manufactures, and
markets pesticides for the retail and commercial marketplace. He has
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<PAGE>
served as Chief Executive Officer of Ringer since 1993 and became President
and began serving on the Ringer Board of Directors in 1992.
DOUGLAS M. PIHL has been a Director of the Company since June 1997. He
has been a private investor since August 1996. Mr. Pihl was President, Chief
Executive Officer, and a Director of NetStar, Inc. from May 1992 until it was
acquired by Ascend Communications, Inc. in August 1996. NetStar, Inc. was a
publicly-held company that designed, manufactured and marketed
high-performance computer networking equipment. In addition to the Company,
Mr. Pihl serves as a Director and Chairman of the Board of Vital Images, Inc.
and as a Director of Astrocom Corporation, both of which are publicly-held
companies, and as a Director of RocketChips, Inc. and LSC Corporation, which
are private companies.
Directors of the Company are elected annually to serve until the next
annual meeting of stockholders or until their earlier resignation, death or
removal. There is no family relationship between any of the directors or
executive officers of the Company.
BOARD COMMITTEES AND ACTIONS
During the twelve months ended September 30, 1997, the Board of
Directors met eight times and adopted unanimous written actions in lieu of
meetings three times. Each nominee Director attended at least 75% of the
total number of meetings of the Board held during fiscal 1997 while he was a
Director.
The Compensation Committee of the Board of Directors, established in
August 1994, reviews and makes recommendations to the Board regarding
salaries, compensation and benefits of executive officers and senior
management of the Company and administers the Option Plan. The Compensation
Committee met two times during fiscal 1997. The members of the Compensation
Committee in fiscal 1997 were Kenneth D. Larson, Chairman, and David A.
Henderson. For fiscal 1998, the Compensation Committee consists of Stanley
Goldberg, Chairman, Richard E. Jahnke and Douglas M. Pihl.
The Audit Committee of the Board of Directors, established in August
1994, reviews the scope and results of the Company's annual audit and other
accounting related matters. The Audit Committee met two times during fiscal
1997. The members of the Audit Committee in fiscal 1997 were David M.
Hyduke, Chairman (who did not stand for re-election to the Board in February
1997) and David A. Henderson. For fiscal 1998, the Audit Committee consists
of David A. Henderson, Chairman, and Kenneth D. Larson.
The Board of Directors presently does not have a nominating committee.
Nonemployee Directors of the Company each currently receives a $500 fee
for each Board meeting he attends and an additional $500 for each meeting he
attends of a Board committee of which he is a member. Under this
arrangement, the following nonemployee Directors received the following
amounts during fiscal 1997: Mr. Henderson - $5,500; Mr. Larson - $5,500; Mr.
Goldberg -$1,500; Mr. Jahnke - $1,500; Mr. Pihl - $1,500. Additionally, all
Directors are reimbursed for expenses incurred in attending meetings of the
Board of Directors, the Compensation Committee and the Audit Committee (but
only if the meetings are held on different days). Nonemployee Directors of
the Company are granted stock options in connection with their service as
Directors. See "Information Concerning Directors and Executive Officers --
Stock Option Plans."
4
<PAGE>
EXECUTIVE OFFICERS AND SENIOR MANAGEMENT
The following discussion sets forth information about Messrs. Thomas J.
Ahmann, William J. Battista and Robert C. Calgren, who are executive officers
and members of senior management of the Company but are not Directors.
<TABLE>
<CAPTION>
NAME POSITIONS WITH THE COMPANY AGE EMPLOYED SINCE
- ---- -------------------------- --- --------------
<S> <C> <C> <C>
Thomas J. Ahmann Vice President -- Finance, 58 July 1993
Chief Financial Officer,
Secretary and Treasurer
William J. Battista Vice President -- North 48 August 1993
American Sales
Robert C. Calgren Controller 51 August 1993
</TABLE>
THOMAS J. AHMANN joined the Company as Vice President -- Finance, Chief
Financial Officer, Secretary and Treasurer in July 1993. From May 1991
through April 1994, he served as Vice President -- Finance and Chief
Financial Officer of SpectraScience, Inc., a company involved in medical
laser technology.
WILLIAM J. BATTISTA has been Vice President -- Fearing Division of the
Company since January 1997. He joined Fearing Corporation ("Fearing") in
October 1986, serving as Eastern Regional Sales Manager from October 1986 to
October 1989, as National Sales Manager from October 1989 to August 1993, and
as Vice President -- North American Sales from August 1993 January 1997.
Fearing was acquired by the Company in a merger transaction effective in
November 1993.
ROBERT C. CALGREN has been Controller of the Company since August 1993.
From February 1991 until August 1993, he served as Controller of Fearing.
5
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EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to Randolph J.
Geissler, the President and Chief Executive Officer of the Company, and the
other most highly compensated executive officer of the Company whose salary
exceeded $100,000 in fiscal 1997, for each of the years ended September 30,
1997, 1996 and 1995:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards
------------------------------------------- ----------------------
Other Restricted
Name and Annual Stock Other
Principal Position Year Salary($) Bonus($) Compensation($)(1) Award(s)($) Options(#) Compensation(2)
------------------ ---- --------- -------- ------------------ ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Randolph K. Geissler 1997 $126,875 N/A N/A N/A N/A $3,744
President and 1996 127,404 N/A N/A N/A N/A 3,641
Chief Executive 1995 125,750 N/A N/A N/A N/A 3,624
Officer
William J. Battista 1997 $108,016 N/A N/A N/A N/A $1,300
Vice President - 1996 99,161 N/A N/A N/A N/A 1,325
Fearing Division 1995 102,397 N/A N/A N/A N/A 1,285
</TABLE>
- --------------------------
(1) The aggregate amount of perquisites and other personal benefits,
securities or property received by Mr. Geissler was less than $50,000 or
10% of his annual salary.
(2) Consists of contributions made by the Company under its Section 401(k)
Deferred Compensation Plan. See "Information Concerning Directors and
Executive Officers -- Retirement Savings Plan."
The following information is furnished with respect to stock options
exercised in fiscal 1997 and held as of September 30, 1997 by Messrs.
Randolph K. Geissler and William J. Battista:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised in-
Options at the-Money Options at
September 30, 1997(3) September 30, 1997(3)(4)
Shares --------------------- ------------------------
Acquired on Value
Exercise Realized(2) Exercisable/ Exercisable/
Name (#) ($) Unexercisable(#) Unexercisable($)
---- ----------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C>
Randolph K. Geissler........ 0 0 82,500/62,500 $36,563/$0
William J. Battista......... 0 0 37,500/30,000 $5,156/$1,563
</TABLE>
- -----------------------------
(1) The information presented is as of and for the twelve months ended
September 30, 1997.
(2) Consists of the difference between the exercise price of the options and
the closing sales price of the shares of common stock underlying the
options as of the date of exercise as quoted on The
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<PAGE>
Nasdaq SmallCap Market and reported by the National Association of
Securities Dealers, Inc. ("NASD").
(3) The options were granted under the Option Plan. See "Information
Concerning Directors and Executive Officers -- Stock Option Plans." The
options vest and become exercisable in four equal installments on the
grant date and the first, second and third anniversaries of the grant date
during the term of employment with the Company and expire ten years from
the date of grant.
(4) Consists of the difference between the exercise price of the options and
the $2.188 per share closing sales price of the shares of common stock
underlying the options on September 30, 1997 as quoted on The Nasdaq
SmallCap Market and reported by the NASD.
RETIREMENT SAVINGS PLAN
All non-bargaining unit personnel of the Company are eligible to
participate in the Company's Section 401(k) Deferred Savings Plan ("401(k)
Plan") established on January 1, 1989. Salary deferrals not in excess of 15%
of the participant's annual compensation up to the maximum permitted by the
Internal Revenue Code of 1986, as amended ("Code") (presently $9,500), may be
contributed to the trust for the 401(k) Plan and invested in various
investment funds. The 401(k) Plan permits, but does not require,
contributions by the Company on behalf of all participants in the 401(k) Plan
equal to $0.50 for each $1.00 contributed by an employee up to a maximum
amount equal to 6% of the employee's wages. The contributions made under the
401(k) Plan by the Company during fiscal 1997 on behalf of the executive
officers in the Summary Compensation Table are described therein.
STOCK OPTION PLANS
OPTION PLAN
On July 31, 1992, the Company's stockholders approved the Option Plan.
The purpose of the Option Plan is to advance the interests of the Company
through the motivation, attraction and retention of its employees. The
Option Plan currently authorizes the grant of options to purchase an
aggregate of 1,300,000 shares of common stock. The Company's Board of
Directors has recommended that the number of shares of common stock for which
options may be granted under the Option Plan be increased to 2,300,000
shares. See "Proposal 2 -- Approval of Amendment to Option Plan to Increase
Number of Shares for Which Options May be Granted."
All persons who are employees of the Company, including directors who
are employees, are eligible to participate in the Option Plan. The Option
Plan provides for the grant of incentive (statutory) stock options ("ISOs"),
as defined in Section 422 of the Code and nonincentive (nonstatutory) stock
options ("NSOs"). The ISOs and NSOs issued under the Option Plan are
referred to herein as "Options."
The Option Plan provides that a committee of disinterested directors,
which is currently the Compensation Committee, will grant Options and
otherwise administer the Option Plan. The principal criteria for determining
the number of shares upon which Options are granted to an employee are the
amount of cash compensation paid to such employee, the employee's level of
responsibility and the employee's job performance. The terms of the Option
Plan are described in more detail in the portion of this Proxy Statement
entitled "Proposal 2 -- Approval of Amendment to Option Plan to Increase
Number of Shares for Which Options May Be Granted."
7
<PAGE>
During the twelve months ended September 30, 1997, Options to purchase
210,000 shares were granted under the Option Plan at an average exercise
price of $3.00. As of September 30, 1997, there were Options to purchase
672,250 shares outstanding under the Option Plan at an average exercise price
of $3.04 per share.
1992 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
On July 31, 1992, the Company's stockholders approved the Nonemployee
Director Stock Option Plan (the "Director Plan"). The Director Plan
authorizes the grant of options to purchase an aggregate of 300,000 shares of
the Company's common stock to Directors of the Company who are not employees
of the Company ("Nonemployee Directors"). The purpose of the Director Plan
is to advance the interests of the Company through the motivation, attraction
and retention of its Nonemployee Directors.
During the twelve months ended September 30, 1997, options to purchase
50,000 shares were granted under the Director Plan at an average exercise
price of $2.12. As of September 30, 1997, there were options to purchase
92,500 shares outstanding under the Director Plan at an average exercise
price of $2.29 per share.
Subject to the provisions of the Director Plan, it is administered by
the Compensation Committee of the Board of Directors, which determines the
terms of the options granted under the Plan and interprets the Director Plan.
Subject to the terms of the Director Plan, each option issued may
contain terms and provisions different from other options granted under the
Director Plan to the same optionee or other optionees. The Director Plan now
provides that upon election or appointment to the Company's Board of
Directors, each Nonemployee Director is automatically granted an option to
purchase 15,000 shares of the Company's common stock. After initial election
or appointment to the Board of Directors, each Nonemployee Director
automatically receives an option to purchase an additional 2,500 shares upon
each reelection to the Board of Directors.
The Director Plan provides that the exercise price is equal to the "fair
market value" of the common stock at the time the option is automatically
granted. Each option becomes exercisable during the term fixed by the Board
of Directors, with such term ending no later than ten years of the date of
grant of the option. Upon exercise of any option, payment for shares as to
which the option is exercised may be made in cash, in shares of the Company's
common stock having an aggregate fair market value on the date of exercise
which is not less than the exercise price of the option, by delivery of a
promissory note, or by any combination of cash, such shares, and a promissory
note, as the Board of Directors may determine.
If the term of a Nonemployee Director terminates for any reason other
than such individual's disability, any option then held by such optionee
under the Director Plan, to the extent then exercisable, will remain
exercisable after the termination of the Nonemployee Director's status as a
Director for a period of three months (but in no event beyond ten years from
the date of grant of the option). If the Director status of the Nonemployee
Director is terminated because the optionee is disabled within the meaning of
Section 22(e)(3) of the Code, any option then held by the optionee under the
Director Plan, to the extent then exercisable, will remain exercisable after
the termination of his status as a Director for a period of 12 months (but
again in no event beyond ten years from the date of grant of the option).
All options granted under the Director Plan are NSOs. Generally, upon
the grant of an NSO for which the exercise price is the fair market value of
the common stock on the date of grant, neither the
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<PAGE>
Company nor the optionee will experience any tax consequences. Upon exercise
of an NSO granted under the Director Plan, the optionee will realize ordinary
income in an amount equal to the excess of the fair market value of the
shares of common stock received over the exercise price paid by the optionee
with respect to such shares. The amount recognized as ordinary income by the
optionee will increase the optionee's basis in the stock acquired pursuant
to the exercise of the NSO. The Company will be allowed a federal income tax
deduction for the amount recognized as ordinary income by the optionee upon
the optionee's exercise of the NSO. Upon a subsequent sale of the stock, the
optionee will recognize short-term or long-term gain or loss depending upon
the holding period for the stock and upon the stock's subsequent appreciation
or depreciation in value.
CONSULTANTS' STOCK OPTION PLAN
The Board of Directors adopted a Consultants' Stock Option Plan
("Consultants' Plan") on October 16, 1992. Under the Consultants' Plan,
options may be granted to consultants of the Company, including Directors of
the Company who are not employees, at such prices (which may be less than the
fair market value on the date of grant) and on such terms as the Board of
Directors or the Committee administering the Consultants' Plan approves at
the time of grant. Options granted under the Consultants' Plan do not
qualify as incentive stock options under the Code. The aggregate maximum
number of shares as to which options may be granted under the Consultants'
Plan is 500,000. During the twelve months ended September 30, 1997, no
options were granted under the Consultants' Plan. As of September 30, 1997,
there were options to purchase 105,000 shares outstanding under the
Consultants' Plan at an average exercise price of $2.06 per share.
CERTAIN TRANSACTIONS
In March 1993, the Company entered into an agreement with Randolph K.
Geissler for $40,000, on an annualized basis, to act as Interim Chief
Executive Officer of the Company. Effective November 12, 1993, the Company
entered into an Employment Agreement with Mr. Geissler, the Company's
President and Chief Executive Officer, which replaced the interim employment
agreement and provides for an annual base salary of $125,000 and an initial
term of employment expiring on November 12, 1995. The term will be extended
for successive one-year periods on November 12 of each year beginning in 1995
unless Mr. Geissler or the Company provides written notice to the other of
his or its intention not to extend. The Employment Agreement provides that
in the event of early termination by the Company for any reason other than
death, disability or termination for good cause during the initial two-year
term, the Company will pay severance compensation in an amount equal to 24
months' base salary. If the termination occurs after the initial two-year
period, the severance compensation will be equal to one and one-half months'
base salary for every year Mr. Geissler has been employed by the Company or
by Fearing up to a maximum of 24 months' base salary.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee")
is composed of two non-employee directors of the Company. For fiscal 1997,
the Committee consisted of Kenneth D. Larson, Chairman of the Committee, and
David A. Henderson. The Committee is responsible for assuring that
compensation for executives is consistent with the Company's compensation
philosophy. The Committee also administers and makes grants under the
Company's Option Plan with respect to the Company's executive officers.
9
<PAGE>
The Company's executive compensation program is based on a
pay-for-performance philosophy. Under the Company's program, an executive's
compensation consists of two components: base salary and long-term
incentives (consisting of stock options). Base salary is determined by an
assessment of the executive's sustained performance against his or her
individual job responsibilities, including the impact of such performance on
the business results of the Company, as well as the level of achievement of
annual performance targets, including pre-tax earnings and other performance
targets related to business functions under the executive's direction.
Annual performance targets are based upon the Company's annual strategic plan
as reviewed by the Board of Directors.
The Company's long-term incentives are in the form of stock options.
The objectives of these awards is to advance the longer term interests of the
Company and its stockholders, complement incentives tied to annual
performance, and align the interests of executives more closely with those of
stockholders. The Company also believes that the entrepreneurial character of
its executives makes the long-term incentives provided by its stock option
program especially significant in the motivation and retention of its
executives. The number of stock options awarded to an executive is based on
the executive's position and his or her performance in that position. The
stock options granted to the Company's executives, including those granted to
Mr. Geissler, vest over a four-year period, and each option is exercisable,
to the extent it has vested, over a ten-year period following the date of its
grant.
Mr. Geissler's base salary results from his participation in the same
compensation program as the other executives of the Company. His base salary
is reviewed periodically, and it was increased in 1996 and in 1997. The
stock option granted to Mr. Geissler in 1997 reflects the Company's
compensation philosophy of providing long-term incentives aligned with the
interests of stockholders.
The Committee believes that the Company's executives are focused on the
attainment of a sustained high rate of growth and profitability for the
benefit of the Company and its stockholders, and that the Company's
compensation program, with its emphasis on performance-based and long-term
incentive compensation, serves to reinforce this focus.
By the Compensation Committee
David A. Henderson
Kenneth D. Larson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Decisions and recommendations regarding compensation paid and options
granted to the Company's executive officers in fiscal 1997 were made by the
Compensation Committee consisting of Kenneth D. Larson and David A.
Henderson, each of whom is a non-employee director of the Company. See
"Report of the Compensation Committee." Randolph K. Geissler, the only
executive officer of the Company who serves on the Board of Directors,
abstains from voting on compensation matters affecting his compensation.
10
<PAGE>
PERFORMANCE GRAPH
The Company's common stock was quoted on The Nasdaq National Market from
April 1992 until September 1994, and it has been quoted on The Nasdaq
SmallCap Market since September 4, 1994. The following graph shows changes
during the period from September 30, 1992 to September 30, 1997 in the value
of $100 invested in: (1) the Company's common stock; (2) the Total Return
Index for The Nasdaq Stock Market (U.S.) compiled by the Center for Research
in Securities Prices ("CRSP") at the University of Chicago, Chicago,
Illinois; and (3) the CRSP Total Return Index for Nasdaq Non-Financial
Stocks. The values of each investment as of the dates indicated are based on
share prices plus any dividends paid in cash, with the dividends reinvested
on the date they were paid. The calculations exclude trading commissions and
taxes.
[CHART]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
09/30/92 09/30/93 09/30/94 09/30/95 09/30/96 09/30/97
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Destron Fearing Corporation $100.00 $242.86 $328.57 $1,200.00 $657.14 $500.00
- --------------------------------------------------------------------------------------------------------
CRSP Index for Nasdaq Stock Market (U.S.) $100.00 $130.98 $132.06 $ 182.41 $216.45 $297.08
- --------------------------------------------------------------------------------------------------------
CRSP Index for Nasdaq Non-Financial Stocks $100.00 $130.20 $129.47 $ 180.46 $210.70 $282.91
- --------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of December 31, 1997
regarding the beneficial ownership of shares of common stock of the Company
by (i) each stockholder who is known by the Company to own more than 5% of
the Company's common stock, (ii) each executive officer named in the Summary
Compensation Table, (iii) each Director of the Company, and (iv) all
Directors and executive officers of the Company as a group. Except as
otherwise indicated, the Company believes that the beneficial owners of the
common stock described below, based on information furnished by such owners,
have sole investment and voting power with respect to such shares, subject to
community property laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES(1)
- ---------------- ------------------ ---------------------
<S> <C> <C>
Randolph K. Geissler 611,047(2) 4.6%
Thomas J. Ahmann 89,050(3) *
David A. Henderson 59,000(4) *
William J. Battista 57,500(5) *
Kenneth D. Larson 22,500(6) *
Richard E. Jahnke 15,000(6) *
Stanley Goldberg 15,000(6) *
Douglas M. Pihl 15,000(6) *
Robert C. Calgren 30,500(7) *
All executive officers and
Directors as a group
(11 persons) 1,030,097(10) 7.4%
</TABLE>
- ------------------------
* Less than 1%.
(1) Based on 13,293,982 shares outstanding as of December 31, 1997, which does
not include 1,500,079 shares of common stock issuable upon exercise of
stock options and warrants vested at December 31, 1997. However, each
figure showing the percentage of outstanding shares owned beneficially has
been calculated by treating as outstanding and owned the shares which
could be purchased by each beneficial owner within 60 days upon the
exercise of stock options and warrants.
(2) Includes 124,167 shares issuable upon exercise of options held by Mr.
Geissler that were exercisable as of December 31, 1997 or that will become
exercisable within 60 days of that date.
(3) Includes 83,750 shares issuable upon exercise of options held by Mr.
Ahmann that were exercisable as of December 31, 1997 or that will become
exercisable within 60 days of that date.
(4) Includes 25,000 shares issuable upon exercise of options directly owned by
Mr. Henderson. Also includes 30,000 shares issuable upon exercise of
warrants owned of record by Founding Partners
12
<PAGE>
II Limited Partnership, an entity controlled by Mr. Henderson and
Mr. Donald R. Brattain (a former Director).
(5) Consists of 57,500 shares issuable upon exercise of options held by Mr.
Battista that were exercisable as of December 31, 1996 or that will become
exercisable within 60 days of that date.
(6) Consists of shares issuable upon exercise of vested options.
(7) Consists of shares issuable upon exercise of options held by Mr. Calgren
that were exercisable as of December 31, 1997 or that will become
exercisable within 60 days of that date.
(8) Includes 505,917 shares issuable upon exercise of vested options and
warrants, or options that are exercisable within 60 days of December 31,
1997, held by all executive officers and Directors as a group.
SECTION 16 (a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
As required by rules adopted by the Securities and Exchange Commission
("SEC") under Section 16 of the Securities Exchange Act of 1934, directors
and executive officers of the Company are required to file with the SEC an
Initial Report of Beneficial Ownership on Form 3 within a certain period
after becoming an executive officer or director stating the number of shares
of common stock owned, a Report of Change in Beneficial Ownership on Form 4
to report transactions in the Company's common stock, and an Annual Statement
of Beneficial Ownership of Securities on Form 5 to report other transactions
in securities of the Company that are not required to be reported on a Form
4. Based upon the Company's review of such Forms furnished to it by the
directors and executive officers required to file such Forms, the Company
believes that, with the exception of isolated incidents of late filings
reported by the Company in previous Proxy Statements and one other exception
hereinafter reported, all of these filing requirements have been satisfied.
On December 16, Randolph K. Geissler filed a Form 5 that was due on November
14, 1997 with respect to a single exempt gift transaction.
PROPOSAL 2
APPROVAL OF AMENDMENT TO OPTION
PLAN TO INCREASE NUMBER OF SHARES
FOR WHICH OPTIONS MAY BE GRANTED
The Company's Option Plan was adopted by the Board of Directors and
approved by the stockholders of the Company in 1992. An aggregate of
1,300,000 shares was reserved for issuance under the Option Plan at the time
of its adoption. Effective November 12, 1997, the Board of Directors
increased the number of shares reserved for issuance under the Option Plan to
2,300,000 shares, subject to the approval of the Company's stockholders on or
before November 12, 1998.
The Option Plan is intended to assist the Company in hiring and
retaining well-qualified employees by allowing them to participate in the
ownership and growth of the Company through the grant of incentive and
non-statutory stock options ("Options"). Management believes that the
granting of Options will serve as partial consideration for and give
well-qualified employees an additional inducement to remain in the service of
the Company and provide them with an increased incentive to work for the
Company's success.
13
<PAGE>
The principal features and effects of the Option Plan are discussed
below.
ADMINISTRATION
The Option Plan is administered by the Compensation Committee of the
Board of Directors, which selects the employees who will be granted Options
under the Option Plan. Subject to the provisions of the Option Plan, the
Compensation Committee also determines the type, amount, size and terms of
Options; the time when Options should be granted; whether any restrictions
should be placed on shares purchased pursuant to any Option; and all other
determinations necessary or advisable for the administration of the Option
Plan. The determinations by the Compensation Committee are final and
conclusive. Grants of Options and other decisions of the Compensation
Committee are not required to be made on a uniform basis.
SHARES SUBJECT TO OPTION PLAN
The Option Plan, as amended, provides that the total number of shares of
the Company's common stock that may be purchased pursuant to the exercise of
Options shall not exceed 2,300,000 shares, subject to adjustment as provided
in the Option Plan. The shares to be issued upon the exercise of Options
granted under the Option Plan will be currently authorized but unissued
shares of common stock of the Company. The number of shares of the Company's
common stock available under the Option Plan or the exercise price of an
Option may be adjusted by the Compensation Committee in its sole discretion
upon any stock dividend or split, recapitalization, reclassification,
combination, exchange of shares, or other similar corporate change, if the
Compensation Committee determines that such change necessarily or equitably
requires such an adjustment.
ELIGIBILITY
All employees of the Company and any of its subsidiaries (as such term
is defined in Section 424 of the Code) are eligible for selection to receive
Options qualified as incentive stock options ("ISOs") under Section 422 of
the Code and nonstatutory (non-qualified) Options ("NSOs").
The following table sets forth certain information regarding the
allocation of the additional shares under the Option Plan, to the extent such
allocation is presently determinable.
14
<PAGE>
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
NAME AND POSITION OPTIONS EXERCISE EXPIRATION
- -----------------
GRANTED(3) PRICE PER SHARE DATE
---------- --------------- ----------
<S> <C> <C> <C>
Randolph K. Geissler (President and Chief 50,000(1) $1.6875 12/28/07
Executive Officer)
William J. Battista (Vice President - North 20,000(1) $1.6875 12/28/07
American Sales)
All current executive officers as a group 150,000(1) $1.6875 12/28/07
(11 persons, including those named above)
All other employees 115,000(1) $1.6875 12/28/07
</TABLE>
- ---------------------------
(1) The options vest and become exercisable in four equal installments on
the grant date and the first, second and third anniversaries of the grant
date during the term of employment with the Company and expire ten years
from the date of grant.
The additional shares which are not currently allocated, together with
shares previously authorized and available for issuance under the Option
Plan, may be allocated to such employees as the Compensation Committee may
determine. No Options under the Option Plan will be allocated to directors
who are not employees of the Company. At January 14, 1997, the closing price
for the Company's common stock as reported on The Nasdaq SmallCap Market was
$1.625 per share.
TERMS OF OPTIONS
Upon the grant of an Option, the Compensation Committee fixes the number
of shares of the Company's common stock that the optionee may purchase upon
exercise of the Option and the price at which the shares may be purchased.
With regard to ISOs, the exercise price cannot be less than the "fair market
value" of the common stock at the time the ISO is granted or 110% of such
fair market value in certain cases (as set forth below). NSOs may be granted
at less than the fair market value of the common stock. See "Federal Income
Tax Consequences."
With regard to ISOs only, the aggregate fair market value of common
stock (determined at the time the ISO is granted) subject to ISOs granted to
an employee under all stock option plans of the Company and any subsidiary of
the Company that become exercisable for the first time by such employee
during any calendar year may not exceed $100,000. Furthermore, no ISO may be
granted to any employee who, immediately after the grant of such ISO, would
own more than 10% of the total combined voting power of all classes of the
Company's stock unless such ISO has an exercise price equal to at least 110%
of the common stock's fair market value at the time of grant and the term of
the ISO is no longer than five years.
Each Option will be exercisable by the optionee only during the term
fixed by the Compensation
15
<PAGE>
Committee, with such term ending not later than ten years after the date of
grant. Upon exercise of any Option, payment for shares as to which the
Option is exercised may be made in cash, in shares of the Company's common
stock having an aggregate fair market value on the date of exercise which is
not less than the exercise price of the Option, by delivery of a promissory
note, or by a combination of such means of payment, as the Compensation
Committee may determine.
TRANSFERABILITY OF OPTIONS; TERMINATION OF EMPLOYMENT
Options granted under the Option Plan are non-transferable except to the
extent permitted by the agreement evidencing such Option. However, no Option
will be transferable by any optionee other than by will or the laws of
descent and distribution. If, pursuant to the agreement evidencing any
Option, such Option remains exercisable after the optionee's death, it may be
exercised to the extent permitted by such agreement by the personal
representative of the optionee's estate or by any person who acquired the
right to exercise such option by bequest, inheritance, or otherwise, by
reason of the optionee's death.
IMMEDIATE ACCELERATION OF AWARDS
The Option Plan provides that, notwithstanding any other provisions
contained in the Option Plan or the agreement evidencing any Option, all
outstanding Options will become exercisable immediately if the Company or its
stockholders enter into an agreement to dispose of all, or substantially all,
of the assets or outstanding capital stock of the Company by means of a sale
or liquidation, or a merger or reorganization in which the Company is not the
surviving corporation.
TERMINATION AND AMENDMENT
The Option Plan will terminate on the earlier of the date on which the
Option Plan is terminated by the Board of Directors of the Company or May 21,
2002. Options outstanding at the termination of the Option Plan may continue
to be exercised in accordance with their terms after such termination. The
Option Plan may be amended at any time by the Board of Directors. However,
without the approval of a majority of the Company's stockholders voting at a
meeting at which a quorum is present, no such amendment may (i) materially
increase the benefits accruing to participants under the Option Plan; (ii)
increase the number of shares available for issuance or sale pursuant to the
Option Plan (other than as permitted in certain circumstances provided by the
Option Plan); or (iii) materially modify the requirements as to eligibility
for participation in the Option Plan, without the affirmative vote of
stockholders holding at least the majority of the voting stock of the Company
represented in person or by proxy at a duly held stockholders' meeting.
FEDERAL INCOME TAX CONSEQUENCES
The following description is a general summary of the current federal
income tax provisions relating to the grant and exercise of ISOs and NSOs
under the Option Plan and the sale of shares of common stock acquired upon
exercise of Options. The provisions summarized below are subject to changes
in federal income tax laws and regulations, and the effects of such
provisions may vary with individual circumstances.
16
<PAGE>
INCENTIVE STOCK OPTIONS
ISOs granted under the Option Plan are intended to be "incentive stock
options" as defined by Section 422 of the Code. Under present law, the
recipient of an ISO will not realize taxable income upon the grant or the
exercise of an ISO; and the Company will not receive an income tax deduction
at either such time. Generally, if an optionee exercises an ISO at any time
prior to three months after termination of the optionee's employment and does
not sell the shares acquired upon exercise of an ISO within either (i) two
years after the grant of the ISO or (ii) one year after the date of exercise
of the ISO, the gain upon a subsequent sale of the shares will be taxed as
long-term capital gain. If the optionee does not satisfy these requirements,
the optionee generally will recognize ordinary income in an amount equal to
the difference between the exercise price paid in connection with exercise of
the ISO and the fair market value of the shares acquired as of the date of
exercise of the ISO, and will recognize capital gain on the difference
between the sale price of the shares and the fair market value of the shares
as of the date of exercise. In such event, the Company would be entitled to
a corresponding income tax deduction equal to the amount recognized as
ordinary income by the optionee.
Upon the exercise of an ISO, the excess of the stock's fair market value
on the date of exercise over the exercise price will be included in the
optionee's alternative minimum taxable income ("AMTI") and may result in the
imposition of a tax on such AMTI. Liability for the alternative minimum tax
is complex and depends upon an individual's overall tax situation.
NON-STATUTORY STOCK OPTIONS
Generally, upon the grant of an NSO, neither the Company nor the
optionee will experience any tax consequences. Upon exercise of an NSO
granted under the Option Plan, or upon the exercise of an Option initially
intended to be an ISO that does not qualify for the tax treatment described
above, the optionee will realize ordinary income in an amount equal to the
excess of the fair market value of the shares of common stock received over
the exercise price paid by the optionee with respect to such shares. The
amount recognized as ordinary income by the optionee will increase the
optionee's basis in the stock acquired pursuant to the exercise of the NSO.
The Company will be allowed a federal income tax deduction for the amount
recognized as ordinary income by the optionee upon the optionee's exercise of
the NSO. Upon a subsequent sale of the stock, the optionee will recognize
short-term or long-term gain or loss depending upon the holding period for
the stock and upon the stock's subsequent appreciation or depreciation in
value.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the shares of common stock of the
Company represented at the Annual Meeting either in person or by proxy,
assuming a quorum is present, is required to approve the amendment to the
Option Plan increasing the number of share reserved for issuance thereunder.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
APPROVAL OF THE AMENDMENT TO THE STOCK OPTION PLAN AS SET FORTH IN PROPOSAL 2.
17
<PAGE>
PROPOSAL 3
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Arthur Andersen LLP as
independent auditors for the fiscal year ending September 30, 1998, subject
to the ratification of the holders of the Company's common stock. If the
holders of the common stock do not ratify the selection of Arthur Andersen
LLP, other independent accountants will be considered and selected by the
Board of Directors. All proxies received in response to this solicitation
will be voted in favor of the ratification of the appointment of Arthur
Andersen LLP as the Company's independent accountants, unless other
instructions are indicated thereon. A representative of Arthur Andersen LLP
will be present at the Annual Meeting, will have an opportunity to make a
statement if he or she desires to do so, and will be available to respond to
appropriate questions from stockholders.
Arthur Andersen LLP has served as the Company's independent auditors
since the fiscal year ended September 30, 1994.
All proxies received in response to this solicitation will be voted in
favor of the ratification of the appointment of the independent auditors,
unless other instructions are indicated thereon.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the shares of common stock of the
Company represented at the Annual Meeting either in person or by proxy,
assuming a quorum is present, is required to ratify the appointment of Arthur
Andersen LLP as independent auditors for the Company for the year ending
September 30, 1998.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
AUDITORS AS SET FORTH IN PROPOSAL 3.
PROPOSALS OF STOCKHOLDERS
Any stockholder wishing to have a proposal considered for inclusion in
the Company's proxy solicitation materials for the 1998 Annual Meeting of
Stockholders must set forth such proposal in writing and file it with the
Secretary of the Company no later than September 14, 1998.
OTHER BUSINESS
At the date of this Proxy Statement, management knows of no other
business that may properly come before the Annual Meeting. However, if any
other matters properly come before the meeting, the persons named in the
enclosed form of proxy will vote the proxies received in response to this
solicitation in accordance with their best judgment on such matters.
FINANCIAL INFORMATION
The Company's Report to Shareholders for fiscal 1997 and the Company's
balance sheets as of September 30, 1995, 1996 and 1997 and related statements
of income, changes in stockholders' equity and cash flows for the periods
ended September 30, 1996 and 1997, accompanies these materials. In addition,
18
<PAGE>
the Company will provide without charge to any stockholder solicited hereby,
upon written request of such stockholder, a copy of its Annual Report on Form
10-K for the year ended September 30, 1997. Requests should be directed to
the Chief Financial Officer, Destron Fearing Corporation, 490 Villaume
Avenue, South St. Paul, Minnesota 55075.
Dated: January 15, 1998 BY ORDER OF THE BOARD
OF DIRECTORS
/s/ Thomas J. Ahmann
Thomas J. Ahmann, SECRETARY
19
<PAGE>
PROXY
DESTRON FEARING CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 26, 1998
The undersigned, revoking all prior proxies, hereby appoints Randolph K.
Geissler and Thomas J. Ahmann, and either of them, as proxy or proxies, with
full power of substitution and revocation, to vote all shares of common stock of
Destron Fearing Corporation (the "Company") of record in the name of the
undersigned at the close of business on January 2, 1998, at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held on Thursday, February 26,
1998, or at any adjournment thereof, upon the following matters:
1. Election of the following directors: Randolph K. Geissler, David A.
Henderson, Kenneth D. Larson, Richard E. Jahnke, Stanley Goldberg, Douglas
M. Pihl
/ / FOR ALL NOMINEES / / WITHHOLD FOR ALL NOMINEES
FOR ALL NOMINEES EXCEPT THE FOLLOWING:
(Mark no box and write the name(s) of the nominee(s) withheld in the space
provided below.)
________________________________________________________________________________
(CONTINUED ON REVERSE SIDE)
<PAGE>
2. Proposal to amend the Company's Stock Option Plan adopted in 1992 to
increase the number of shares for which options may be granted from
1,300,000 shares to 2,300,000 shares.
/ / For / / Against / / Abstain
3. Ratification of appointment of Arthur Andersen LLP as independent auditors
for fiscal 1998.
/ / For / / Against / / Abstain
In their discretion, the Proxies are authorized to vote upon such matters as
may properly come before the Annual Meeting, or any adjournments thereof.
Please mark, date, sign, and mail this proxy promptly in the enclosed
envelope.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposals 1, 2 and 3. The Board of Directors recommends a vote FOR
Proposals 1, 2 and 3.
Please sign your name exactly as it appears below. In the case of shares
owned in joint tenancy or as tenants in common, all should sign. Fiduciaries
should indicate their title and authority.
Dated: _____________________, 1998.
___________________________________
___________________________________
___________________________________
Signature(s)
