SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
CHRONIMED INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
[LOGO] CHRONIMED
10900 RED CIRCLE DRIVE
MINNETONKA, MINNESOTA 55343
------------------
To Our Shareholders:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders,
which will be at the Lutheran Brotherhood Auditorium, 625 Fourth Avenue South,
Minneapolis, Minnesota on Wednesday, February 23, 2000, at 3:30 p.m. Central
Standard Time.
At the Annual Meeting, shareholders will elect directors of the Company and
transact such other items of business as are listed in the Notice of Annual
Meeting and more fully described in the Proxy Statement. The Board of Directors
and Management hope that you will be able to attend the meeting in person.
The formal Notice of Annual Meeting and the Proxy Statement follow. It is
important that your shares be represented and voted at the meeting, regardless
of the size of your holdings. Accordingly, please mark, sign, and date the
enclosed proxy and return it promptly in the enclosed envelope to ensure that
your shares will be represented. If you do attend the Annual Meeting, you may,
of course, withdraw your proxy should you wish to vote in person.
Sincerely yours,
/s/ Maurice R. Taylor, II
Maurice R. Taylor, II
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
January 20, 2000
<PAGE>
CHRONIMED INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 23, 2000
TO THE SHAREHOLDERS OF CHRONIMED INC.:
Notice is hereby given to the holders of common shares of Chronimed Inc.
that the Annual Meeting of Shareholders of the Company will be held at the
Lutheran Brotherhood Auditorium, 625 Fourth Avenue South, Minneapolis,
Minnesota, on Wednesday, February 23, 2000, at 3:30 p.m. Central Standard Time,
or at any adjournments thereof, to consider and act upon the following matters:
1. To elect two directors to serve for terms of three years.
2. To ratify the appointment of Ernst & Young LLP as independent auditors
for the current fiscal year.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on January 14, 2000,
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the meeting or any adjournments thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. EVEN IF YOU PLAN TO
ATTEND THE MEETING, WE URGE YOU TO SIGN, DATE, AND RETURN THE PROXY AT ONCE IN
THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kenneth S. Guenthner
Kenneth S. Guenthner
SECRETARY
January 20, 2000
<PAGE>
CHRONIMED INC.
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 23, 2000
---------------------
PROXY STATEMENT
---------------------
GENERAL
The Annual Meeting of Shareholders of Chronimed Inc. ("Company") will be
held on Wednesday, February 23, 2000, at 3:30 p.m., Central Standard Time, at
the Lutheran Brotherhood Auditorium, 625 Fourth Avenue South, Minneapolis,
Minnesota, for the purposes set forth in the Notice of Annual Meeting of
Shareholders. This Proxy Statement, accompanying form of proxy, and Chronimed
Inc. annual report are first being mailed to shareholders on or about January
20, 2000.
The only matters the Board of Directors knows will be presented are those
stated in Items 1 and 2 of the notice. THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE IN FAVOR OF ITEMS 1 AND 2. Should any other matter properly
come before the meeting, it is intended that the persons named in the enclosed
proxy will have authority to vote such proxy in accordance with their judgment
on such matter.
OUTSTANDING SHARES AND VOTING RIGHTS
The enclosed proxy is solicited on behalf of the Board of Directors for use
at the Annual Meeting. Such solicitation is being made by mail and may also be
made by directors, officers, regular employees and agents of the Company
personally or by telephone. Any proxy given pursuant to such solicitation may be
revoked by the shareholder at any time prior to the voting thereof by so
notifying the Company in writing or by appearing in person at the meeting.
Subject to any such revocation, all shares represented by properly executed
proxies that are received prior to the meeting will be voted in accordance with
the directions on the proxy. If no direction is made, the proxy will be voted
(i) FOR the election of the Board of Directors' nominees named in this Proxy
Statement for the respective terms described in this Proxy Statement, (ii) FOR
ratification of the appointment of Ernst & Young LLP as the independent auditors
of the Company for the current fiscal year, and (iii) in the Proxy's discretion
on such other business as may come before the Annual Meeting. So far as the
management of the Company is aware, no matters other than those described in
this Proxy Statement will be acted upon at the Annual Meeting.
Each shareholder will be entitled to cast one vote in person or by proxy
for each share of Common Stock held by the shareholder. Only shareholders of
record at the close of business on January 14, 2000, will be entitled to vote at
the meeting. Common Stock, $.01 par value per share, of which there were
12,133,031 shares outstanding on the record date, constitutes the only class of
outstanding voting securities issued by the Company. Each share is entitled to
cast one vote on each proposal before the meeting.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether or
not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval of
any particular matter submitted to the shareholders for a vote. If a broker
indicates on the form of proxy that the broker does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
be considered to be present for the purpose of determining whether a quorum is
present, but will not be considered as present and entitled to vote with respect
to that particular matter.
All of the expenses involved in preparing, assembling, and mailing this
Proxy Statement and the material enclosed herewith will be paid by the Company.
The Company may reimburse banks, brokerage
1
<PAGE>
firms, and other custodians, nominees, and fiduciaries for reasonable expenses
incurred by them in sending proxy material to beneficial owners of stock.
PROPOSAL 1:
ELECTION OF DIRECTORS
As approved by the shareholders at the December 3, 1997 Annual Meeting, the
Company amended its Articles of Incorporation and Bylaws to divide the Board of
Directors into classes to allow for staggered terms of office, with one class of
directors elected each year and each director serving for a term of three years.
Upon their initial election at the 1997 Annual Meeting, the Class I directors
held office for a term expiring at the November 18, 1998 Annual Meeting of
shareholders. Similarly, the Class II directors will hold office for a term
expiring at the upcoming 1999 Annual Meeting of shareholders, and the Class III
directors will hold office for a term expiring at the 2000 Annual Meeting of
shareholders.
Commencing with the November 18, 1998 Annual Meeting of shareholders, the
shareholders began electing only one class of directors each year, with each
director so elected to hold office for a term expiring at the third annual
meeting of shareholders following their election. This same procedure is being
repeated each year, with the result that approximately one-third of the whole
Board of Directors are being elected each year.
Shares represented by proxy will be voted, if authority to do so is not
withheld, for the election of the two nominees named below, unless one or more
of such nominees should become unavailable for service by reason of death or
other unexpected occurrence, in which event such shares may be voted for the
election of such substitute nominee as the Board of Directors may propose. The
affirmative vote of the holders of a majority of the shares of Common Stock,
present or represented at the meeting and entitled to vote on Proposal 1, is
required to approve Proposal 1. For this purpose, a shareholder (including a
broker) who does not give authority to a proxy to vote, or withholds authority
to vote, on the election of directors shall not be considered present and
entitled to vote on the election of directors.
NOMINEES FOR DIRECTOR
CLASS II DIRECTORS
(THREE YEAR TERM)
Henry F. Blissenbach
Charles V. Owens, Jr.
Set forth below is information regarding the two nominees and the existing
directors not currently up for election, including information furnished by them
as to their principal occupations for the last five years, certain other
directorships held by them, and their ages as of the date hereof. The following
table also sets forth the Common Stock ownership of each of the Company's
directors. Unless otherwise indicated, all persons have sole or joint with
spouse voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them. Nominees may be contacted at the
headquarters of the Company.
2
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF COMMON
NAME AND STOCK OWNED PERCENT
POSITIONS WITH THE BENEFICIALLY AS OF OF
COMPANY AGE PRINCIPAL OCCUPATION DEC. 31, 1999(1) CLASS
- ------------------ --- -------------------- ---------------- -----
<S> <C> <C> <C>
NOMINEES FOR DIRECTOR (Class II Directors - Three Year Term ending at the 2002 Annual Meeting)
Henry F. Blissenbach, 57 Dr. Blissenbach has served as 127,661 1.0%
Pharm.D President and Chief Operating
DIRECTOR, PRESIDENT AND Officer of the Company since May
CHIEF OPERATING OFFICER 1997. He became a director of
the Company in September 1995.
From 1992 to 1997, he served as
President of Diversified
Pharmaceutical Services, Inc.
(DPS), a United HealthCare
subsidiary until 1994, then a
subsidiary of SmithKline Beecham
Corp. DPS is a pharmacy benefit
management firm. Dr. Blissenbach
also serves as a director of
Ligand Pharmaceuticals Inc., a
publicly-held biomedical
development company.
Charles V. Owens, Jr. 72 Mr. Owens has served as a 52,185 *
DIRECTOR director of the Company since
1991. Since 1988, Mr. Owens has
served as a consultant to
several medical device and
diagnostic firms in the United
States and Japan. From 1985 to
1988, he was Chief Executive
Officer of Genesis Labs, Inc.,
(which included DiaScreen
Corporation as a subsidiary) a
diagnostics manufacturing
company. Before his employment
with Genesis Labs, Inc., Mr.
Owens was an executive officer
with various medical device
companies, including Miles
Laboratories, Inc. Mr. Owens is
a past director of St. Jude
Medical, Inc., a medical device
company, and was a director of
Genesis Labs, Inc., from which
the Company acquired the assets
of DiaScreen Corporation in
March 1998.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF COMMON
NAME AND STOCK OWNED PERCENT
POSITIONS WITH THE BENEFICIALLY AS OF OF
COMPANY AGE PRINCIPAL OCCUPATION DEC. 31, 1999(1) CLASS
- ------------------ --- -------------------- ---------------- -----
<S> <C> <C> <C>
EXISTING DIRECTORS (Not Currently up for Election)
Maurice R. Taylor, II(3) 54 Mr. Taylor, a co-founder of the 416,920 3.3%
CHAIRMAN OF THE BOARD OF Company, has served since 1985
DIRECTORS AND CHIEF as Chief Executive Officer and a
EXECUTIVE OFFICER director of the Company and
since June 1994 as Chairman. He
served as President from 1985
through April 1997, until the
hiring of Dr. Blissenbach. Prior
to Chronimed, Mr. Taylor held
various management positions in
companies whose principal
activities were manufacturing,
distribution and international
trade. Mr. Taylor is Chairman of
Linguistic Technologies, Inc., a
privately-held company
specializing in the application
and integration of speech
recognition technology into the
healthcare market. He is
Chairman of the Scripps/Whittier
Institute for Diabetes, a
non-profit organization
dedicated to research, education
and patient care in the field of
diabetes. He is also a director
of the Minnesota Zoological
Garden, a public-private
partnership established by the
Minnesota legislature.
John Howell Bullion(3) 47 Mr. Bullion is a co-founder of 199,125 1.6%
DIRECTOR the Company and has served as a
director since 1985. He has been
Chief Executive Officer and a
director of Orphan Medical,
Inc., a publicly-held
pharmaceutical development
company, since its formation in
June 1994.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF COMMON
NAME AND STOCK OWNED PERCENT
POSITIONS WITH THE BENEFICIALLY AS OF OF
COMPANY AGE PRINCIPAL OCCUPATION DEC. 31, 1999(1) CLASS
- ------------------ --- -------------------- ---------------- -----
<S> <C> <C> <C>
John H. Flittie(2) 63 Mr. Flittie was elected as a 800 *
DIRECTOR director in 1998. He most
recently served as President and
Chief Operating Officer of
ReliaStar Financial Corporation,
a NYSE-listed financial services
holding company, retiring June
30, 1999. He is currently a
director of ReliaStar. He joined
ReliaStar (then Northwestern
National Life) in 1985 as Senior
Vice President and Chief
Financial Officer. Mr. Flittie
is also a director of Community
First Bankshares, Inc., a
Nasdaq-listed financial services
company. Mr. Flittie is a Fellow
of the Society of Actuaries and
on the Advisory Board of the
College of Business
Administration at Drake
University. He is an adjunct
faculty member of the University
of St. Thomas, and is a
self-employed consultant.
Travers H. Wills(2) 56 Mr. Wills was elected as a 1,000 *
DIRECTOR director in 1998. He most
recently served as Chief
Operating Officer and Executive
Vice President of United
HealthCare Corporation, retiring
in 1998. He joined United
HealthCare Corporation in 1992
as Senior Vice President of
Specialty Operations. Prior to
1992, Mr. Wills served in
various executive positions at
CIGNA.
</TABLE>
- ----------------------
* Less than 1%
(1) Includes the following options exercisable within 60 days to acquire shares
of Common Stock: Mr. Taylor, 295,400; Dr. Blissenbach, 108,280; Mr.
Bullion, 16,000; and Mr. Owens, 16,000.
(2) Class I Directors -- will be up for shareholder election at the 2001 Annual
Meeting of shareholders.
(3) Class III Directors -- will be up for shareholder election at the 2000
Annual Meeting of shareholders.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
Messrs. Bullion, Owens and Flittie are the current members of the Audit
Committee of the Board of Directors. During fiscal 1999, the Committee met eight
times. The Audit Committee represents the Board in discharging its
responsibilities relating to the accounting, reporting, and financial control
practices of the Company. The Committee has general responsibility for review
with management of the financial controls, accounting, and audit and reporting
activities of the Company. The Committee annually reviews the qualifications and
objectivity of the Company's independent auditors, makes recommendations to the
Board as to their selection, reviews the scope, fees, and results of their
audit, and reviews their management comment letters.
Messrs. Owens, Flittie and Wills are the current members of the
Compensation Committee, which oversees compensation for directors, officers and
key employees of the Company. During fiscal 1999, the Compensation Committee met
five times.
During fiscal 1999, the Board of Directors met thirteen times, including
six telephone board meetings. Each director attended 75% or more of the meetings
of the Board of Directors and its
5
<PAGE>
committees on which he served during the times of his appointment. The Board of
Directors does not have a standing nominating committee.
DIRECTOR COMPENSATION
For fiscal 1999, directors who were not employees of the Company received
an annual retainer of $20,000 plus fees of $1,000 for each board meeting
attended in person; $1,000 for each telephone board meeting attended; and $500
for each committee meeting attended whether in person or by telephone. Committee
chairmen received an additional $200 per meeting. In fiscal 1999, directors were
also reimbursed for out-of-pocket expenses incurred in attending Board of
Directors and committee meetings.
Pursuant to the Company's 1994 Stock Option Plan for Directors, each
non-employee director automatically receives an option to purchase 30,000 shares
on the date of the director's initial election to the Board of Directors. Each
option has an exercise price equal to the fair market value of the Company's
Common Stock on the date of grant. The option vests on the seventh anniversary
of the date of grant unless vesting is accelerated based on increases in share
price. The option will vest as to 5,000 shares if the Company's share price
becomes 20 percent greater than the exercise price on or before the third
anniversary of the grant. The option will vest as to an additional 10,000 shares
if the price per share becomes 60 percent greater than the exercise price on or
before the fourth anniversary of the grant. The option will vest as to the final
15,000 shares if the price per share becomes 100 percent greater than the
exercise price on or before the fifth anniversary of the grant. Acceleration
requires the maintenance of share-price benchmarks for at least five trading
days during any consecutive 30-day period. Further, these options may become
immediately exercisable upon certain change-in-control events as described in
the Company's 1994 Stock Option Plan for Directors. The options expire ten years
after date of grant.
In addition to the above, each non-employee director receives an annual
option to purchase 5,000 shares pursuant to the existing available Stock Option
Plan. The option vests on the seventh anniversary of the date of grant unless
vesting is accelerated. This accelerated vesting is similar to the vesting
schedule noted above for the initial option to purchase 30,000 shares. The
options expire ten years after date of grant.
Based on the above-noted terms and the price of the Company's Common Stock
during fiscal 1999, the following is a chart reflecting the unexercised
non-employee director option grants and related vesting as of December 31, 1999.
<TABLE>
<CAPTION>
OPTION GRANT EXERCISE PRICE # OPTIONS # OPTIONS
NAME DATE ($/SHARE) GRANTED(1) VESTED
- ---- ------------ -------------- ---------- ---------
<S> <C> <C> <C> <C>
John Howell Bullion ........... 9/29/94 12.500 30,000 15,000
11/13/96 14.625 5,000 0
12/3/97 11.750 5,000 1,000
11/18/98 10.750 5,000 0
John H. Flittie ............... 8/11/98 11.250 30,000 0
11/18/98 10.750 5,000 0
Charles V. Owens, Jr. ......... 9/29/94 12.500 30,000 15,000
11/13/96 14.625 5,000 0
12/3/97 11.750 5,000 1,000
11/18/9 10.750 5,000 0
Travers H. Willis ............. 8/11/98 11.250 30,000 0
11/18/98 10.750 5,000 0
</TABLE>
- ------------------
(1) All non-qualified options are transferable by each director to his
immediate family members and family trusts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors of the Company
consists of three non-employee directors. Mr. Owens is the committee chair and
Mr. Flittie and Mr. Wills are the other members.
6
<PAGE>
Mr. Taylor, in addition to being a director of the Company, was also a
director of Orphan Medical, Inc. (OMI). Mr. Taylor resigned as a director of
OMI effective October 15, 1998. Mr. Bullion is a director of the Company and
OMI. The Company incorporated OMI in June 1994 to engage in the development of
pharmaceutical products. The Company subsequently declared a dividend of all of
the OMI Common Stock to Company shareholders. Mr. Taylor had served on the
Compensation Committee of the Board of OMI. Mr. Taylor and Mr. Bullion are the
Chief Executive Officers of the Company and OMI, respectively.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
COMPENSATION COMMITTEE CHARTER. The purpose of the Compensation Committee
of the Board of Directros is to oversee compensation of directors, officers, and
key employees of the Company. The Committee's policy is to insure that
compensation programs contribute directly to the success of the Company,
including enhanced share value. The Company's Compensation Committee is
comprised of three outside directors.
EXECUTIVE COMPENSATION POLICIES AND PROGRAMS. The Company's executive
compensation programs are designed to attract and retain highly qualified
executives and to motivate them to maximize shareholder value by achieving the
Company's strategic goals. There are three basic components to the Company's
executive compensation program: base pay, annual incentive bonus, and long-term,
equity-based incentive compensation in the form of stock options. Each component
is established in light of Company and individual performance, compensation
levels at comparable companies, equity among employees, and cost effectiveness.
In addition, employees are eligible to participate in the Company's 401(k) plan
and certain insurance plans, as well as the Company's Employee Stock Purchase
Plan.
BASE PAY. Base pay is designed to be competitive as compared to salary
levels for equivalent positions at comparable companies. An executive's
actual salary within this competitive framework will depend on the
individual's performance, responsibilities, experience, leadership, and
potential future contribution. Base pay is administered to remain
competitive with the market, yet allow for significant emphasis on
incentive bonus compensation in proportion to total annual cash
compensation.
ANNUAL INCENTIVE BONUS. In addition to base pay, each executive is
eligible to receive an annual cash bonus based on a mix of the Company's
and the executive's performance. Performance targets are intended to
motivate the Company's executives by providing bonus payments for the
achievement of specific financial goals within the Company's business plan.
Bonuses were paid to all named executive officers with respect to fiscal
1999 performance.
LONG-TERM, EQUITY-BASED INCENTIVE COMPENSATION. The long-term,
equity-based compensation program is tied directly to shareholder return.
Long-term incentive compensation consists of stock options that generally
do not fully vest until after five years and are exercisable only if an
executive is then an employee of the Company. Stock options are awarded
with an exercise price equal to the fair market value of the Common Stock
on the date of grant. Accordingly, an executive is rewarded only if Company
shareholders receive the benefit of appreciation in the price of the Common
Stock. Because long-term options vest over time, the Company periodically
grants new options to provide continuing incentives for future performance.
The size of periodic option grants is a function of the breadth of an
executive's scope of accountability, recent performance as determined by
the Committee, and other factors.
SAVINGS AND INVESTMENT PLAN; BENEFITS. The Company maintains a 401(k)
Savings Plan ("Savings Plan"), which is funded by elective salary deferrals
by employees. The Savings Plan covers executive officers and substantially
all employees meeting minimum eligibility requirements. The Savings Plan
requires that the Company match up to 40% of the first 5% of an employee's
pay and provides for additional discretionary contributions by the Company.
Through July 2, 1999, the Company had not made any additional discretionary
contributions to the Savings Plan. In addition, the Company provides
medical and other miscellaneous benefits to its officers, including a
7
<PAGE>
diagnostic services plan that provides significant coverage for annual
physicals and a financial services plan that reimburses officers for
various financial and tax services.
ANNUAL REVIEWS. Each year the Committee reviews its executive compensation
policies and programs and determines what changes, if any, are appropriate for
the following year. In addition, the Committee reviews the performance of the
Chief Executive Officer and, with the assistance of the Chief Executive Officer,
the individual performance of the other executive officers. The Committee makes
recommendations to the Board of Directors for final approval of all material
compensation matters.
CHIEF EXECUTIVE OFFICER. Mr. Taylor received a base salary of $304,500 in
fiscal 1998, a base salary of $325,800 in fiscal 1999, and will receive a base
salary of $325,800 in fiscal 2000. Base salaries were determined at the time of
entering into the employment agreement when the Committee considered
compensation programs of comparable companies, Mr. Taylor's individual
performance and salary history, and the Company's historical and planned
performance. For fiscal 1999, Mr. Taylor earned a bonus of $50,000 in
recognition of his and Chronimed's performance against criteria established by
the Compensation Committee of the Board of Directors at the beginning of the
year. In fiscal 1998, Mr. Taylor was awarded a bonus of $123,000. With respect
to stock options, Mr. Taylor received options to purchase 100,000 shares in July
1999 related to his performance in fiscal 1999. He received options to purchase
116,800 shares in November 1998 related to his performance in fiscal 1998.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the Internal
Revenue Code of 1986, as amended, should not affect the deductibility of
compensation paid to the Company's executive officers for the foreseeable
future. The majority of the options available for grant under the Company's
stock option plans will comply with Section 162(m), so that compensation
resulting from these stock options will not be counted toward the $1,000,000
limit on deductible compensation under Section 162(m). The Compensation
Committee has not formulated any policy with respect to qualifying other types
of compensation for deductibility under Section 162(m).
Members of the Compensation Committee: Charles V. Owens, Jr., Chairman
John H. Flittie
Travers H. Wills
8
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid for the Company's
fiscal year ended July 2, 1999, and for fiscal 1998 and 1997, where applicable,
to the Company's Chairman of the Board of Directors and Chief Executive Officer,
and the six other most highly paid executive officers (collectively, "named
executive officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
-------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY ($) BONUS($)(1) OPTIONS(#)(6) ($)(7)
- --------------------------- ----------- ---------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Maurice R. Taylor, II (2) 1999 325,800 50,000 116,800 4,900
CHAIRMAN OF THE BOARD 1998 304,500 123,000 -- 4,000
AND CHIEF EXECUTIVE OFFICER ......... 1997 290,000 50,000 223,000 4,100
Henry F. Blissenbach(3) 1999 232,200 25,000 116,800 5,900
PRESIDENT AND CHIEF OPERATING 1998 200,000 65,000 -- 500
OFFICER ............................. 1997 33,000 -- 129,000 --
Steven A. Crees 1999 170,300 13,900 58,400 2,900
SENIOR VICE PRESIDENT ............... 1998 157,500 40,000 -- 2,600
1997 149,000 32,000 56,600 3,500
Steven B. Russek(4) 1999 114,000 40,500 70,000 60,000
SENIOR VICE PRESIDENT ............... 1998 -- -- -- --
1997 -- -- -- --
Perry L. Anderson 1999 145,000 58,500 46,720 3,600
VICE PRESIDENT ...................... 1998 135,000 34,000 -- 3,000
1997 110,000 15,000 51,725 2,100
Patrick L. Taffe 1999 145,000 25,000 46,720 3,600
VICE PRESIDENT ...................... 1998 130,000 33,000 -- 2,800
1997 112,800 20,500 60,000 --
Norman A. Cocke(5) 1999 196,800 16,850 31,540 2,100
SENIOR VICE PRESIDENT ............... 1998 172,500 45,000 -- 2,800
1997 164,300 32,000 62,700 4,100
</TABLE>
- ------------------
(1) Bonus amounts were earned for the fiscal year shown but paid in the next
fiscal year.
(2) Mr. Taylor received no additional cash compensation for service as a
director.
(3) Dr. Blissenbach was hired as President and Chief Operating Officer in May
1997. He was not a participant in the fiscal 1997 bonus plan. Prior to his
hire date in May 1997, Dr. Blissenbach received $26,800 for his services as
director in fiscal 1997. In fiscal 1998 and going forward as an employee,
Dr. Blissenbach will receive no additional cash compensation for service as
a director.
(4) Mr. Russek was hired as Senior Vice President in November 1998.
(5) Mr. Cocke ended his employment with Chronimed in March 1999. He served as
Senior Vice President, Chief Financial Officer, and Secretary.
(6) Upon shareholder approval of the Company's 1999 Stock Option Plan,
executive officers were granted options in November 1998, and then in June
1999 for fiscal 1999. (Executive officers were not granted options in
fiscal 1998 due to the lack of options available in the Company's
then-existing stock option plans.) Also, all non-qualified stock options
are transferable by each officer to his immediate family members and family
trusts.
(7) All other compensation consists of Company 401(k) contribution matches, and
relocation expenses in the amount of $60,000 for Mr. Russek.
9
<PAGE>
STOCK OPTIONS
The following tables summarize stock option grants and exercises during
fiscal 1999 to or by the named executive officers and the value of all options
held by the named executive officers at July 2, 1999.
Executive officers were not granted options in fiscal 1998 due to the lack
of options available in the Company's then-existing stock option plans. Upon
shareholder approval of the Company's 1999 Stock Option Plan in November 1998,
executives were granted fiscal 1998 options for service in fiscal 1999. In June
1999, executives were granted fiscal 1999 options.
Total options granted during fiscal 1999 are noted below.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE AT
SECURITIES PERCENT OF ASSUMED ANNUAL RATES OF STOCK
UNDERLYING TOTAL OPTIONS EXERCISE APPRECIATION FOR OPTION TERM
OPTIONS GRANTED TO PRICE EXPIRATION ----------------------------
NAME GRANTED(1) EMPLOYEES ($/SHARE) DATE 5%($) 10%($)
- ---- ---------- --------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Maurice R. Taylor, II (2) .... 116,800 11.7% 10.75 11/17/05 511,155 1,191,209
Henry F. Blissenbach ......... 58,400 10.75 11/17/05 255,578 595,605
58,400 8.28 7/01/06 196,854 458,754
------- ------- ---------
116,800 11.7% 452,432 1,054,359
Steven A. Crees .............. 29,200 10.75 11/17/05 127,789 297,802
29,200 8.28 7/01/06 98,427 229,377
------- ------- ---------
58,400 5.8% 226,216 527,179
Steven B. Russek ............. 40,000 10.063 11/29/05 163,866 381,878
30,000 8.281 7/01/06 101,136 235,690
------- ------- ---------
70,000 7.0% 265,002 617,567
Perry L. Anderson ............ 23,360 10.75 11/17/05 102,231 238,242
23,360 8.28 7/01/06 78,742 183,502
------- ------- ---------
46,720 4.7% 180,973 421,743
Patrick L. Taffe ............. 23,360 10.75 11/17/05 102,231 238,242
23,360 8.28 7/01/06 78,742 183,502
------- ------- ---------
46,720 4.7% 180,973 421,743
Norman A. Cocke .............. 31,540 3.2% 10.75 11/17/05 38,029 321,667
</TABLE>
- ------------------
(1) The options were granted under the Company's 1994 and 1999 Stock Option
Plans. These options generally vest with respect to 20% of such shares on
the first year anniversary date and become exercisable with respect to an
additional 20% of the shares on each of the next four anniversary dates.
The options may become immediately exercisable upon certain
change-in-control events as described in the Company's 1994 and 1999 Stock
Option Plans. Mr. Russek received 10,000 options upon hiring with immediate
vesting; all other option grants to Mr. Russek follow the standard vesting
schedule.
(2) Mr. Taylor was granted an additional 100,000 options at an exercise price
of $9.25 per share as of July 26, 1999.
10
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1999
AND OPTION VALUES AT JULY 2, 1999
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
AT JULY 2, 1999 JULY 2, 1999(1)
SHARES -------------------- --------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE (#) UNEXERCISABLE ($)
- ---- ------------ ------------ -------------------- --------------------
<S> <C> <C> <C> <C>
Maurice R. Taylor, II ......... 0 0 274,400/399,400 43,971/65,958
Henry F. Blissenbach .......... 0 0 96,600/184,200 24,255/34,057
Steven A. Crees ............... 0 0 96,160/108,840 69,055/17,244
Steven B. Russek .............. 0 0 10,000/60,000 0/0
Perry L. Anderson ............. 0 0 23,690/74,755 8,677/13,017
Patrick L. Taffe .............. 0 0 16,000/82,720 5,748/17,244
Norman A. Cocke ............... 0 0 116,271/0 6,179/0
</TABLE>
- ------------------
(1) The value of unexercised in-the-money options was determined by multiplying
the number of shares subject to such options by the favorable difference
between the exercise price per share and $8.2810, the closing price per
share on July 2, 1999.
The Company's stock option plans generally provide that upon the occurrence
of certain "acceleration events," the options will become fully vested. An
acceleration event occurs (i) when a person, or group of persons acting
together, becomes the beneficial owner of 20 percent or more of the Company's
outstanding shares; (ii) when a change in a majority of the Board occurs without
the approval of at least 60% of the prior Board; or (iii) upon the approval by
shareholders of a sale of all or substantially all the assets or of a
liquidation or dissolution of the Company.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company has an employment agreement with Maurice R. Taylor, II,
Chronimed's Chairman and Chief Executive Officer, under which he receives a base
salary of $325,800 in fiscal 2000. Base salary is based on corporation and
employee performance prior to each year. Mr. Taylor's employment agreement
expires on June 30, 2002, and includes automatic two year renewals subject to
termination provisions. It also includes a non-competition provision for up to
two years following termination of employment. Upon a termination without cause,
Mr. Taylor is entitled to receive (i) base salary payments for a period of
twelve months after such termination at the rate in effect prior to such
termination and (ii) a bonus payment equal to the average bonus payment for the
two most recent fiscal years and (iii) a pro rata share of other benefits as
specified in the contract and (iv) all unvested options held by Mr. Taylor shall
immediately vest. Upon termination due to change in control, if termination
occurs within two years subsequent to the change in control, Mr. Taylor will
receive payment of base salary equal to thirty six (36) months of current
annualized base salary, and the average of bonus compensation paid in the three
most recent fiscal years.
The Company has an employment agreement with Henry F. Blissenbach,
Chronimed's President and Chief Operating Officer, under which he receives a
base salary of $232,200 in fiscal 2000. Base salary is based on corporation and
employee performance prior to each year. The agreement provides for a three-year
term expiring June 30, 2002, with automatic two year renewals subject to
termination provisions. Dr. Blissenbach's employment agreement includes a
non-competition provision for up to two years following termination of
employment. Upon a termination without cause, Dr. Blissenbach is entitled to
receive (i) base salary payments for a period of twelve months after such
termination at the rate in effect prior to such termination and (ii) the average
of any incentive compensation paid or payable by the Company for the most recent
two fiscal years, plus (iii) all unvested options held by Dr. Blissenbach shall
immediately vest. Upon termination due to change in control, if termination
occurs within two years subsequent to the change in control, Dr. Blissenbach
will receive payment of base salary equal to thirty six (36) months of current
annualized base salary, and the average bonus compensation paid in the three
most recent fiscal years.
The Company has an employment agreement with Steven B. Russek, Chronimed's
Senior Vice President, Disease Management, under which he received a base annual
salary of $182,000 in fiscal 1999,
11
<PAGE>
starting December 1998. The agreement began December 1, 1998 and expires on
November 30, 2000. Under the agreement, Mr. Russek receives an annualized base
salary of $182,000, subject to periodic review by the Compensation Committee
based on Company and individual performance. He also participates in the
Company's incentive bonus and stock option plans. At commencement of employment,
thirty thousand (30,000) options were granted per the agreement under the
regular stock option plan, and an additional ten thousand (10,000) were granted
with immediate vesting as well as stock price performance stipulations that, if
not met, ensure that Mr. Russek would be compensated in cash at a specified
level. The agreement also provides an initial loan of $50,000 to be repaid
within one year and bearing interest per the terms of a promissory note. The
severance terms and conditions are such that if the Company terminates Mr.
Russek's employment without cause during the two year agreement, he will receive
severance pay in the form of his continuing base salary until contract
expiration.
The Company has a severance agreement with Norman A. Cocke, Chronimed's
former Chief Financial Officer, under which he will receive a monthly base
salary of $15,094 from March 15, 1999 through January 31, 2000, for a total of
$158,487. Under the agreement, Mr. Cocke also received a prorata bonus for
fiscal 1999 of $16,853, and the ability to exercise his vested options as of
March 15, 1999, until December 31, 1999.
COMPARABLE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Company's Common Stock for the last five fiscal years with the cumulative total
return of the NASDAQ Total Return Index (U.S. Companies) and the NASDAQ Health
Services Stock Index for the period June 30, 1994 through June 30, 1999. The
graph and table assume the investment of $100 on June 30, 1994, in the Company's
Common Stock, the NASDAQ Total Return Index, and the NASDAQ Health Services
Stock Index. The cumulative return calculations were performed by the Center for
Research in Security Prices, University of Chicago.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
[PLOT POINTS CHART]
<TABLE>
<CAPTION>
JUNE 30, JUNE 30, JUNE 30, JUNE 28, JUNE 30, JUNE 30,
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Chronimed(1) .................... 100.0 106.5 158.1 72.6 110.8 66.7
NASDAQ Health Services Stock .... 100.0 108.9 166.2 152.6 148.5 139.5
NASDAQ Total Return Index ....... 100.0 133.5 171.4 208.4 274.4 392.5
</TABLE>
(1) Share prices have been adjusted to reflect a three-for-two stock split in
the form of a stock dividend effective as of February 21, 1994.
12
<PAGE>
OWNERSHIP OF CHRONIMED COMMON STOCK BY CERTAIN
BENEFICIAL OWNERS AND EXECUTIVE OFFICERS
The following table shows information concerning each person who to the
knowledge of the Company was the beneficial owner of more than 5% of the
Company's Common Stock and the number of shares of Common Stock beneficially
owned by the Company's named executive officers and directors and executive
officers as a group, as of December 31, 1999. All persons have sole or joint
with spouse voting and investment power with respect to all shares shown as
beneficially owned by them.
AMOUNT AND NATURE PERCENT OF
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) CLASS
- ------------------------ -------------------------- ----------
Maurice R. Taylor, II ................ 416,920 3.3%
Henry F. Blissenbach ................. 127,661 1.0%
Steven A. Crees ...................... 132,171 1.0%
Steven B. Russek ..................... 16,000 *
Perry L. Anderson .................... 33,031 *
Patrick L. Taffe ..................... 25,923 *
Norman A. Cocke ...................... 141,930 1.1%
All directors and executive officers
as a group (12 persons) ............. 1,033,317 8.1%
- -----------------------
* Less than 1%
(1) Includes the following options exercisable within 60 days to acquire shares
of Common Stock: Mr. Taylor, 295,400; Dr. Blissenbach, 108,280; Mr. Crees,
99,400; Mr. Russek, 16,000; Mr. Anderson, 30,507; Mr. Taffe, 24,672; and
all directors and executive officers as a group, 631,393.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors, and certain shareholders to file reports of
ownership and changes in ownership of the Company's Common Stock with the
Securities and Exchange Commission. To the Company's knowledge, based on a
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, all Section 16(a) filing
requirements were met during fiscal 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ORPHAN MEDICAL, INC.
The Company incorporated Orphan Medical, Inc. (OMI) in July 1994 and on
July 2, 1994, declared a dividend of all of the OMI Common Stock to Company
shareholders (the "spin-off"). Directors of the Company John Howell Bullion and
Dr. Lawrence C. Weaver (resigned as a director of the Company in August 1998)
are also directors of OMI. Mr. Taylor resigned as a director of OMI effective
October 15, 1998. Mr. Taylor and Mr. Bullion are the Chief Executive Officers
of the Company and OMI, respectively. The following is a brief summary of the
material continuing arrangements between the Company and OMI. Although the
Company believes these arrangements with OMI are on commercially reasonable
terms, they were not the product of arms-length negotiations.
In June 1994, the Company initially retained the rights to market and
distribute in the United States and its territories those products being
developed by OMI at the time of the spin-off. The products under development are
for "orphan" drug populations where the population in the United States expected
to benefit from the drug is limited. Chronimed determined that the products for
which it had initial rights could be more effectively distributed by others.
Accordingly, on June 27, 1997, Chronimed sold its rights to market and
distribute orphan drugs back to OMI (see Related Party Transactions noted
below). At that time, the Marketing and Distribution Agreement between Chronimed
and OMI was terminated, along with certain other agreements that secured OMI's
obligations under the marketing agreement.
Under the marketing agreement, OMI had the right to designate one
individual to hold a seat on the Company's Board of Directors, or alternatively,
to have a representative attend at all Company
13
<PAGE>
Board meetings. The Company had the right to designate two directors on OMI's
Board or, alternatively, the right to have a representative attend all of OMI's
Board meetings. With the termination of the marketing agreement effective June
27, 1997, these rights no longer exist.
RELATED PARTY TRANSACTIONS
On April 9, 1997, the Company entered into a guarantee of indebtedness of
Mr. Maurice R. Taylor, II, Chronimed's Chairman and Chief Executive Officer.
Such indebtedness permits Mr. Taylor to continue to hold Company stock. There
was $699,900 of indebtedness under the guarantee as of December 31, 1999. The
Company is charging Mr. Taylor an arm's-length fee for this guarantee and has
obtained security from Mr. Taylor for this guarantee. Mr. Taylor has committed
to a repayment program.
On June 27, 1997, the Company entered into an agreement to sell its
exclusive rights to market and distribute certain Orphan Medical, Inc. products
back to Orphan Medical for cash, royalties, and Orphan Medical stock totaling
$2.5 million. The Company received final payment in fiscal 1999.
PROPOSAL 2:
APPOINTMENT OF INDEPENDENT AUDITORS
Based on the recommendation of the Audit Committee, the Board of Directors
has unanimously voted to retain Ernst & Young LLP to serve as independent
auditors for the Company for fiscal year 2000 and is submitting its appointment
of such firm to the shareholders for ratification. Ernst & Young LLP has served
as the Company's independent auditors since the Company's inception. If the
appointment is not ratified, the Board of Directors will reconsider its
selection. Ernst & Young LLP will have a representative at the meeting who will
have an opportunity to make a statement if he or she so desires and who will be
available to answer appropriate questions. The affirmative vote of a majority of
the voting power of the shares of Common Stock, present or represented at the
meeting and entitled to vote on Proposal 2, is required to approve Proposal 2.
Unless otherwise instructed, shares represented by proxy will be voted for
ratification of the appointment of Ernst & Young LLP.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
FOR THE CURRENT FISCAL YEAR.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be considered for inclusion in the
Proxy Statement for presentation at the 2000 Annual Meeting must be received by
the Company by June 15, 2000. The proposal must be in accordance with the
provisions of Rule 14a-8 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934. It is suggested the proposal be
submitted by certified mail, return receipt requested. Shareholders who intend
to present a proposal at the 2000 Annual Meeting without including such proposal
in the Company's proxy statement must provide the Company notice of such
proposal no later than August 25, 2000. The Company reserves the right to
reject, rule out of order, or take other appropriate action with respect to any
proposal that does not comply with these and other applicable requirements.
ANNUAL REPORT
The Company's Annual Report to shareholders for fiscal year 1999 is being
mailed with this Proxy Statement to shareholders entitled to notice of the
Annual Meeting.
The Company will furnish without charge to each person whose proxy is being
solicited, upon the written request of any such person, a copy of the Company's
Annual Report on Form 10-K for fiscal year 1999, as filed with the Securities
and Exchange Commission. Requests for copies of such Annual Report on Form 10-K
should be directed to Investor Relations at the address below.
Any statements contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein (or in any
14
<PAGE>
other subsequently filed document that also is incorporated by reference herein)
modifies or supersedes such statement. Any statement so modified or superseded
shall be deemed to constitute a part hereof except as so modified or superseded.
OTHER MATTERS
Your Board of Directors does not intend to bring before the meeting any
business other than the election of directors and the ratification of our
independent auditors as set forth in this Proxy Statement and has not been
informed that any other business is to be presented at the meeting. However, if
any matters other than those referred to above should properly come before the
meeting, it is the intention of the persons named in the enclosed proxy to vote
such proxy in accordance with their best judgment.
If any matters properly come before our 2000 Annual Meeting, but we did not
receive notice of it prior to August 25, 2000, the persons named in our proxy
card for that Annual Meeting will have the discretion to vote the proxies on
such matters in accordance with their best judgment.
Please vote, sign and return promptly the enclosed proxy in the envelope
provided. The signing of a proxy will not prevent you from attending the meeting
and voting in person.
By Order of the Board of Directors
/s/ Kenneth S. Guenthner
Kenneth S. Guenthner
SECRETARY
Chronimed Inc.
10900 Red Circle Drive
Minnetonka, MN 55343
January 20, 2000
15
<PAGE>
[LOGO] CHRONIMED
CHRONIMED INC.
ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, FEBRUARY 23, 2000
3:30 P.M. CENTRAL STANDARD TIME
LUTHERAN BROTHERHOOD AUDITORIUM
625 FOURTH AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55415
CHRONIMED INC.
10900 RED CIRCLE DRIVE, MINNETONKA, MN 55343 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON WEDNESDAY, FEBRUARY 23, 2000.
The shares of stock you hold in your account will be voted as you specify below.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF ITEMS 1
AND 2.
The undersigned, having duly received the Notice of Annual Meeting and the Proxy
Statement dated January 20, 2000, hereby appoints the Chairman and Chief
Executive Officer, Maurice R. Taylor, II, and the Secretary, Kenneth S.
Guenthner, as proxies (each with the power to act alone and with the power of
substitution and revocation), to represent the undersigned and to vote, as
designated below, all common shares of Chronimed Inc. held of record by the
undersigned on January 14, 2000, at the Annual Meeting of Shareholders to be
held on Wednesday, February 23, 2000, at the Lutheran Brotherhood Auditorium,
625 Fourth Avenue South, Minneapolis, Minnesota, at 3:30 p.m. Central Standard
Time, and at any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED BUSINESS REPLY ENVELOPE.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
[ARROW] PLEASE DETACH [ARROW]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
<TABLE>
<S> <C>
1. Election of directors: 01 Henry F. Blissenbach 02 Charles V. Owens, Jr. [ ] Vote FOR [ ] Vote WITHHELD
Class II (Three all nominees from all nominees
Year Term) (except as marked)
______________________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, | |
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |______________________________________|
2. Proposal to ratify the appointment of Ernst & Young LLP as the independent
auditors for the 2000 fiscal year. [ ]For [ ] Against [ ] Abstain
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner directed on the
Proxy by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ELECTION OF EACH OF THE NOMINEES TO THE BOARD LISTED IN PROPOSAL 1
AND FOR PROPOSAL 2.
Address Change? Mark Box [ ] Indicate changes below: Date _____________________, 2000
______________________________________
| |
| |
|______________________________________|
Signature(s) in Box
Please sign exactly as the name appears on
this card. When shares are held by joint
tenants, both should sign. If signing as
attorney, executor, administator, 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 an
authorized person.
</TABLE>
