SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
TREGA BIOSCIENCES, 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)(1) and 0-11.
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (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:
[_] Fee paid previously with preliminary materials:
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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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[GRAPHIC OMITTED]
9880 Campus Point Drive
San Diego, California 92121
(619) 410-6500
April 21, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Trega Biosciences, Inc. which will be held on Tuesday, May 18, 1999, at 9:00
a.m., Pacific Daylight Time, at the Company's headquarters located at 9880
Campus Point Drive, San Diego, California.
The formal notice of the Annual Meeting and the Proxy Statement have been
made a part of this invitation.
After reading the Proxy Statement, please mark, date, sign and return, at
your earliest convenience, the enclosed proxy in the enclosed prepaid envelope
to ensure that your shares will be represented. YOUR SHARES CANNOT BE VOTED
UNLESS YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING
IN PERSON.
A copy of the 1998 Annual Report to Stockholders is also enclosed.
The Board of Directors and management look forward to seeing you at the
meeting.
Sincerely yours,
/s/ MICHAEL G. GREY
Michael G. Grey
President and Chief Executive Officer
<PAGE>
TREGA BIOSCIENCES, INC.
--------------
Notice of Annual Meeting of Stockholders
to be held May 18, 1999
--------------
To the Stockholders of Trega Biosciences, Inc.:
The Annual Meeting of Stockholders of Trega Biosciences, Inc., a Delaware
corporation (the "Company"), will be held at the Company's headquarters located
at 9880 Campus Point Drive, San Diego, California, on Tuesday, May 18, 1999, at
9:00 a.m., Pacific Daylight Time, for the following purposes:
1. To elect two Directors (two Class II Directors);
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors; and
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
Stockholders of record as of the close of business on April 1, 1999, are
entitled to notice of and to vote at the Annual Meeting and any adjournment or
postponement thereof. A complete list of stockholders entitled to vote at the
Annual Meeting will be available for the ten days immediately preceding the
Annual Meeting at the Office of the Secretary, Trega Biosciences, Inc., 9880
Campus Point Drive, San Diego, California 92121.
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING.
EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, WE HOPE THAT YOU WILL PROMPTLY
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY. THIS WILL NOT LIMIT YOUR RIGHT
TO ATTEND OR VOTE AT THE ANNUAL MEETING.
By Order of the Board of Directors,
/s/ JOHN E. WEHRLI
John E. Wehrli
Secretary
April 21, 1999
<PAGE>
TREGA BIOSCIENCES, INC.
9880 Campus Point Drive
San Diego, California 92121
--------------
PROXY STATEMENT
--------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Trega Biosciences, Inc., a Delaware corporation (the
"Company"), of proxies in the accompanying form to be used at the Annual Meeting
of Stockholders of the Company to be held at the Company's headquarters located
at 9880 Campus Point Drive, San Diego, California, on Tuesday, May 18, 1999, at
9:00 a.m., Pacific Daylight Time, and any adjournment or postponement thereof
(the "Annual Meeting").
Shares represented by proxies received in response to this solicitation and
not revoked will be voted at the Annual Meeting. A stockholder who has given a
proxy may revoke it at any time before it is exercised by filing with the
Secretary of the Company a written revocation or a duly executed proxy bearing a
later date or by voting in person at the Annual Meeting; however, attendance at
the Annual Meeting will not in and of itself constitute revocation of a proxy.
On the matters coming before the Annual Meeting for which a choice has been
specified by a stockholder by means of the ballot on the proxy, the
stockholder's shares will be voted accordingly. If no choice is specified, the
stockholder's shares will be voted (i) "FOR" the election of the two nominees
for director listed in this Proxy Statement (two Class II Directors) and (ii)
"FOR" ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors. In the event that any other matters properly come before
the Annual Meeting, the holders of proxies solicited by the Board of Directors
will vote on those matters in accordance with their judgment, and discretionary
authority to do so is included in the proxy.
Stockholders of record at the close of business on April 1, 1999 (the
"Record Date") are entitled to vote at the Annual Meeting. As of the close of
business on such date, the Company had 18,026,471 shares of its Common Stock
("Common Stock") outstanding. Each holder of Common Stock is entitled to one
vote for each share held as of the Record Date.
The presence in person or by proxy of the holders of a majority of the
issued and outstanding shares of Common Stock constitutes a quorum for the
transaction of business at the Annual Meeting. Directors are elected by a
plurality vote. The other matters submitted for stockholder approval at the
Annual Meeting will be decided by the affirmative vote of a majority of the
shares of Common Stock represented in person or by proxy and entitled to vote on
each such matter. Abstentions with respect to any matter are treated as shares
present or represented and entitled to vote on that matter and thus have the
same effect as negative votes. If a broker who is the record holder of certain
shares indicates on a proxy that he or she does not have discretionary authority
to vote on a particular matter as to such shares, or if shares are not voted in
other circumstances in which proxy authority is defective or has been withheld
with respect to any matter, these non-voted shares will be counted for quorum
purposes but are not deemed to be present or represented for purposes of
determining whether stockholder approval of a particular matter has been
obtained.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may be
made by certain Directors, officers and other employees of the Company by
personal interview, telephone or facsimile. No additional compensation will be
paid to such persons for such solicitation. The Company will reimburse brokerage
firms and others for their reasonable expenses in forwarding solicitation
materials to beneficial owners of Common Stock.
This Proxy Statement and the accompanying form of proxy are first being
mailed to stockholders on or about April 21, 1999.
IMPORTANT
Please mark, sign and date the enclosed proxy and return it at your earliest
convenience in the enclosed postage prepaid return envelope so that, whether you
intend to be present at the Annual Meeting or not, your shares can be voted.
This will not limit your rights to attend or vote at the Annual Meeting.
<PAGE>
ITEM 1 - ELECTION OF DIRECTORS
The Company has three classes of Directors (designated Class I, Class II
and Class III) serving staggered three-year terms. Presently, three Directors
comprise each of Class I, Class II and Class III. However, following the Annual
Meeting the size of the Board of Directors will be reduced to eight, and the
number of Directors in Class II will be reduced to two in order to accommodate
this change. Accordingly, two Class II Directors are to be elected at the Annual
Meeting. Such Class II Directors will have terms expiring at the time of the
Annual Meeting of Stockholders to be held in 2002, or until each such Director's
successor shall have been elected and qualified. Class I and Class III Directors
will continue in office for their existing terms (which expire at the Annual
Meetings of Stockholders to be held in 2001and 2000, respectively, or until each
such Director's successor shall have been elected and qualified).
Unless authority to vote for Directors is withheld, it is intended that the
shares represented by the enclosed proxy will be voted "FOR" the election of Dr.
Muschek and Mr. Wiklund as Class II Directors. In the event that either nominee
becomes unable or unwilling to accept nomination or election, the shares
represented by the enclosed proxy will be voted for the election of the
remaining Director named and such other person as the Board of Directors may
select. The Board of Directors has no reason to believe that the nominees will
be unable or unwilling to serve.
Set forth below is information regarding the nominees for Class II
Directors, as well as information regarding the continuing Class I and Class III
Directors, including information furnished by the nominees and the continuing
Directors as to their principal occupations at present and for the past five
years, certain directorships held by each and their ages as of March 10, 1999.
Name Age
- ---- ---
CLASS II
Lawrence D. Muschek, Ph.D. ................................................ 55
Dr. Muschek has served as President, Research and Development of the
Company and as a Director of the Company since October 1997. Prior to
joining the Company, Dr. Muschek worked for Solvay Pharmaceuticals as
Senior Vice President, Research and Development worldwide from April
1994 to September 1997 and Senior Vice President, Research &
Development, United States from March 1990 to April 1994. Dr. Muschek
received a B.S. in Chemistry from the Philadelphia College of Pharmacy
and Science and a Ph.D. in Biochemistry from Michigan State
University.
Anders P. Wiklund ......................................................... 59
Mr. Wiklund has been an advisor to the biotechnology and
pharmaceutical industries since January of 1997 when he formed Wiklund
International Inc. In 1997, Mr. Wiklund was appointed Senior Vice
President of Biacore Holding, Inc., a supplier of analytical
instruments to the life sciences industry. Between 1993 and 1996, Mr.
Wiklund served as President of Pharmacia Development Corporation, as
Executive Vice President of Pharmacia U.S. Inc. and as Vice President,
Pharmacia & Upjohn. Prior to 1993, Mr. Wiklund held a series of
executive management positions within the Pharmacia group, including
President and CEO of Kabi Vitrum Inc. and Kabi Pharmacia Inc. Mr.
Wiklund is on the Board of Directors of InSite Vision, Inc., Ribozyme
Pharmaceuticals, Inc., Medivir AB. Mr. Wiklund also serves as a
Director for two private biotechnology companies, Esperion
Therapeutics, Inc. and Vascular Therapeutics, Inc. Mr. Wiklund
graduated from the Pharmaceutical Institute in Stockholm where he
received a Master of Pharmacy degree.
CLASS III
James C. Blair, Ph.D. ..................................................... 59
Dr. Blair has served as a Director of the Company since May 1992 and
served as Chairman of the Board of Directors of the Company from
September 1992 through January 1998. Dr. Blair has been a general
partner of Domain Associates L.L.C., a venture capital management
company, since 1985. Dr. Blair is on the Boards of Directors of Amylin
Pharmaceuticals, Inc., Aurora Biosciences, Inc., CoCensys, Inc., Dura
Pharmaceuticals, Inc.
2
<PAGE>
and Vista Medical Technologies, Inc. Dr. Blair received a B.S.E. from
Princeton University and an M.S.E. and Ph.D. from the University of
Pennsylvania, all in electronic engineering.
Harry D. Lambert .......................................................... 59
Mr. Lambert has served as a Director of the Company since April 1994.
He has been a general partner of InnoCal, L.P., a venture capital
partnership, since June 1993. Prior to joining InnoCal, Mr. Lambert
was a general partner of the Edison Venture Fund from January 1991 to
June 1993. Mr. Lambert received his B.S. from the U.S. Military
Academy at West Point, and is a graduate of the Columbia University
Graduate School of Business Administration Executive Program and the
Harvard Graduate School of Business Administration Advanced Management
Program.
Ronald R. Tuttle, Ph.D. ................................................... 62
Dr. Tuttle has served as a Director of the Company since May 1992. He
served as the Company's Executive Vice President, Research and
Development, from January 1992 to January 1996 and as Chief Scientific
Officer from January 1996 to December 1996. Dr. Tuttle received his
Ph.D. in Pharmacology from the University of Manitoba, Canada.
CLASS I
Michael G. Grey ........................................................... 46
Mr. Grey has served as a Director of the Company since December 1998.
As of January 1999, Mr. Grey also became the President and Chief
Executive Officer of the Company. Prior to joining the Company, Mr.
Grey was the President of BioChem Therapeutics, Inc., a subsidiary of
Biochem Pharma Inc. from November 1994 to August 1998. In that role,
he was responsible for all company operations including research,
development, sales and marketing, finance and human resources. During
1994, Mr. Grey was the President and Chief Operating Officer for
Ansan, Inc. From 1974 to 1993, Mr. Grey served in various roles with
Glaxo Inc. and Glaxo Holdings, p.l.c., culminating in his position as
Vice President, Corporate Development. Mr. Grey serves on the Board of
Directors of Cortex Pharmaceuticals, Inc. Mr. Grey received a B.Sc. in
Chemistry from the University of Nottingham, England.
Harvey S. Sadow, Ph.D. .................................................... 76
Dr. Sadow has served as a Director of the Company since October 1992.
From January 1988 through December 1990, Dr. Sadow served as Chairman
of the Board of Boehringer Ingelheim Corporation and Boehringer
Ingelheim Pharmaceuticals, Inc. Dr. Sadow served as the President and
Chief Executive Officer of Boehringer Ingelheim Corporation until his
retirement in January 1988. Dr. Sadow serves as the Chairman of the
Board of Cholestech Corp., and is a Director of Anika Therapeutics,
Inc. Dr. Sadow received a B.S. from the Virginia Military Institute,
an M.S. from the University of Kansas and a Ph.D. from the University
of Connecticut.
Robert S. Whitehead ....................................................... 49
Mr. Whitehead has served as Chairman of the Board of Directors of the
Company since February 1998 and as a Director since August 1993. From
August 1993 to December 1998, Mr. Whitehead served as President and
Chief Executive Officer of the Company and from February 1998 to
December 1998 as Acting Chief Financial Officer. Since July 1, 1998,
Mr. Whitehead has been the President of Dura Pharmaceuticals, Inc.
Prior to joining the Company in 1993, Mr. Whitehead was Senior Vice
President, Commercial Operations for Solvay Pharmaceuticals ("Solvay")
from February 1992 to April 1993. Mr. Whitehead graduated from Temple
University with a degree in pre-medicine.
Recommendation of the Board of Directors
3
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF EACH OF THE NOMINEES
FOR A CLASS II DIRECTORSHIP AS SET FORTH ABOVE.
Board Meetings and Committees
The Board of Directors held eight meetings during the year ended December
31, 1998. Each Director attended at least 75% of all meetings of (i) the Board
of Directors during the period in 1998 in which such person served as a
Director, and (ii) all committees of the Board of Directors during the period in
1998 in which such person served on such committees.
The Board of Directors has appointed a Compensation Committee and an Audit
Committee. It does not have a Nominating Committee or any committee performing a
similar function.
The members of the Compensation Committee from January 1998 to August 1998
were Dr. Blair, Mr. Lambert and Mr. Wiklund. Following the August 1998
Compensation Committee Meeting, Mr. Lambert resigned from this Committee and the
number of Directors serving on the Compensation Committee was decreased to two.
The Compensation Committee held six meetings during 1998. The Compensation
Committee administers the Company's 1996 Stock Incentive Plan, the Company's
1996 Employee Stock Purchase Plan and the Officer and Associate Bonus Plan,
determines compensation for the Company's executive officers and makes decisions
concerning salaries and incentive compensation for employees and consultants of
the Company.
The members of the Audit Committee from January 1998 to August 1998 were
Dr. Levin and Dr. Sadow. Effective September 1998, the number of members of the
Audit Committee increased to three and Mr. Lambert was appointed to the Audit
Committee. Following the Annual Meeting, the size of the Audit Committee will be
reduced to two (Mr. Levin, who is retiring from Board service as of the Annual
Meeting, will no longer be a member of the Audit Committee). The Audit Committee
held one meeting during 1998. The Audit Committee makes recommendations to the
Board of Directors regarding the selection of independent auditors, reviews the
results and scope of the audit and other services provided by the Company's
independent auditors, and reviews and evaluates the Company's audit and control
functions.
Compensation of Directors
Directors who are employees of the Company do not receive any fees for
service on the Board of Directors. Each non-employee Director of the Company
receives a per meeting fee of $1,000 for every Board meeting at which such
director is in attendance in person and $500 for every Board meeting at which
such director is in attendance by telephone (plus $500 for each committee
meeting attended by committee members in person and $250 by telephone). In
addition, each non-employee Director of the Company receives an initial grant of
a non-qualified option to purchase 15,000 shares of Common Stock (an "Initial
Option") and a yearly grant (following each Annual Meeting of Stockholders) of a
non-qualified option to purchase 5,000 shares of Common Stock (an "Annual
Option"). The exercise price for each Initial Option and Annual Option is equal
to the fair market value of Common Stock on the date of grant. Initial Options
become exercisable in 12 equal installments at three-month intervals over the
36-month period commencing on the date of grant. Annual Options vest in full on
the earlier of the first anniversary of the date of grant or the date of the
next Annual Meeting of Stockholders. Directors may also be reimbursed for
certain expenses in connection with attendance at meetings of the Company's
Board of Directors and its committees.
Other Information
The Employment Agreement dated as of November 6, 1998 between the Company
and Michael G. Grey provides that Mr. Grey will be a member of the Company's
Board of Directors.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 10, 1999 as
to shares of Common Stock beneficially owned by: (i) each person who is known by
the Company to own beneficially more than 5% of the issued and outstanding
Common Stock; (ii) each of the Company's Directors as well as certain affiliated
entities; (iii) each of the individuals named in "Executive
Compensation--Summary Compensation Table" below; and (iv) all directors and
executive officers of the Company as a group. Ownership information is based
upon information furnished by the respective individuals or entities, as the
case may be.
<TABLE>
<CAPTION>
Directors, Nominees, Named Executive Percent
Officers, 5% Stockholders, and Directors Shares Beneficially Beneficially
and Executive Officers as a Group Owned (1)(2) Owned (1)(2)
- --------------------------------- ------------------- ------------
<S> <C> <C>
Biotechnology Investments Limited .............................................. 1,386,832 7.7%
Post Office Box 58
St. Julian's Court
St. Peter Port
Guernsey, Channel Islands
Domain Partners II, L.P. ....................................................... 1,444,084 8.0
One Palmer Square
Princeton, New Jersey 08542
Domain Partners III, L.P. ...................................................... 1,336,699 7.4
One Palmer Square
Princeton, New Jersey 08542
DP III Associates, L.P. ........................................................ 46,406 *
One Palmer Square
Princeton, New Jersey 08542
Domain Associates .............................................................. 6,966 *
One Palmer Square
Princeton, New Jersey 08542
Dura Pharmaceuticals, Inc. ..................................................... 775,193 4.3
7474 Lusk Boulevard
San Diego, California 92121
InnoCal, L.P. (3) .............................................................. 659,929 3.7
600 Anton Boulevard
Costa Mesa, California 92626
Novartis Pharma AG.............................................................. 1,866,667 10.4
Lichstrasse 35
Basel, CH-4002, Switzerland
James C. Blair (4) ............................................................. 3,651,706 20.3
Michael G. Grey (5) ............................................................ 50,000 *
Harry D. Lambert (6) ........................................................... 659,929 3.7
Jeremy M. Levin (7) ............................................................ 6,180 *
Lawrence D. Muschek (8) ........................................................ 95,000 *
Harvey S. Sadow (9) ............................................................ 26,301 *
Ronald R. Tuttle (10) .......................................................... 304,810 1.7
Robert S. Whitehead (11) ....................................................... 224,125 1.2
Anders P. Wiklund (12) ......................................................... 6,180 *
George M. Grass (13) ........................................................... 1,443,231 8.0
Michael J. Green (14) .......................................................... 54,547 *
Susan M. Hanan (15)............................................................. 12,880 *
All directors and executive officers as a group (15 persons)(17) ............... 6,744,762 37.4
</TABLE>
- ----------
* Less than 1%.
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have
sole voting and investment power with respect to all shares of Common
Stock.
5
<PAGE>
(2) The number of shares of Common Stock beneficially owned includes the shares
issuable pursuant to stock options that may be exercised within 60 days
after March 10, 1999. Shares issuable pursuant to such options are deemed
outstanding for purposes of computing the percentage ownership of the
person holding such options but are not deemed outstanding for purposes of
computing the percentage ownership of any other person.
(3) Includes 17,928 shares issuable upon exercise of options beneficially held
by InnoCal, L.P. that are exercisable within the 60-day period following
March 10, 1999.
(4) Includes 12,358 shares issuable upon exercise of options held by Dr. Blair
that are exercisable within the 60-day period following March 10, 1999.
Also includes 1,444,084 shares beneficially owned by Domain Partners II,
L.P., 1,336,699 shares beneficially owned by Domain Partners III, L.P.,
46,406 shares beneficially owned by DP III Associates, L.P. and 6,966
shares beneficially owned by Domain Associates, L.L.C. Dr. Blair is a
general partner of One Palmer Square Associates, II, L.P., which is the
general partner of Domain Partners II, L.P., and he is also a general
partner of One Palmer Square Associates, III, L.P., the general partner of
Domain Partners III, L.P. and DP III Associates, L.P. Dr. Blair is a
managing member of Domain Associates, L.L.C. Dr. Blair disclaims beneficial
ownership of shares held by One Palmer Square Associates, II, L.P. and One
Palmer Square Associates, III, L.P. which are not actually distributed to
him. Also includes 775,193 shares beneficially owned by Dura
Pharmaceuticals, Inc. ("Dura"). Dr. Blair is a director of Dura and
disclaims beneficial ownership of shares held by Dura.
(5) Includes 50,000 shares issuable upon exercise of options held by Mr. Grey
that are exercisable within the 60-day period following March 10, 1999.
(6) Includes 642,001 shares beneficially owned by InnoCal, L.P. Mr. Lambert is
a general partner of InnoCal Associates, L.P., the general partner of
InnoCal, L.P. Also includes 17,928 shares issuable upon exercise of options
beneficially held by InnoCal, L.P. that are exercisable within the 60-day
period following March 10, 1999. Mr. Lambert disclaims beneficial ownership
of the shares issued or issuable to InnoCal, L.P. except to the extent of
his pecuniary interest therein.
(7) Includes 6,180 shares issuable upon exercise of options held by Dr. Levin
that are exercisable within the 60-day period following March 10, 1999.
(8) Includes 94,000 shares issuable upon exercise of options held by Dr.
Muschek that are exercisable within the 60-day period following March 10,
1999.
(9) Includes 14,841 shares issuable upon exercise of options held by Dr. Sadow
that are exercisable within the 60-day period following March 10, 1999.
(10) Includes 43,731 shares issuable upon exercise of options held by Dr. Tuttle
that are exercisable within the 60-day period following March 10, 1999.
(11) Includes 215,813 shares issuable upon exercise of options held by Mr.
Whitehead that are exercisable within the 60-day period following March 10,
1999.
(12) Includes 6,180 shares issuable upon exercise of options held by Mr. Wiklund
that are exercisable within the 60-day period following March 10, 1999.
(13) Includes 15,000 shares issuable upon exercise of options held by Dr. Grass
that are exercisable within the 60-day period following March 10, 1999.
(14) Includes 29,534 shares issuable upon exercise of options held by Dr. Green
that are exercisable within the 60-day period following March 10, 1999.
(15) Includes 12,880 shares issuable upon exercise of options held by Ms. Hanan
that are exercisable within the 60-day period following March 10, 1999
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<PAGE>
(16) Includes 569,637 shares issuable upon exercise of options that are
exercisable within the 60-day period following March 10, 1999. Includes
1,444,084 shares held by Domain Partners II, L.P., 1,336,699 shares held by
Domain Partners III, L.P., 46,406 shares held by DP III Associates, L.P.,
and 6,966 shares held by Domain Associates. See footnote (4). Includes
775,193 shares held by Dura and 642,001 shares held by InnoCal, L.P. See
footnotes (3), (4) and (6).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's Directors,
executive officers and any persons holding more than 10% of the issued and
outstanding Common Stock are required to report their initial ownership of
Common Stock, any subsequent changes in that ownership and, in certain
instances, an annual statement of changes in ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been established
and the Company is required to identify those persons who failed to file these
reports in a timely manner. In making this disclosure the Company has relied
solely upon the written representations of its Directors and executive officers
and copies of the reports that have been filed with the SEC. Based upon the
Company's review of such representations and reports, the Company believes that
all such reports were filed on a timely basis for the year ended December 31,
1998.
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<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes all compensation paid in the fiscal years
ended December 31, 1998, 1997 and 1996 to (i) the Company's Chief Executive
Officer and (ii) certain of the Company's other most highly compensated
executive officers during 1998.
<TABLE>
<CAPTION>
LongTerm
Compensation
Awards
----------
Annual Compensation Number of
----------------------------------------- Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary(1) Bonus Compensation Options Compensation(2)
- --------------------------- ---- --------- ----- ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Whitehead 1998 $300,000 $ 74,320 $ 100,272(3) -- $ 2,000
Chairman and Chief Executive Officer 1997 290,625 62,550 31,250(3) -- 2,000
1996 254,167 24,300 25,000(3) 151,627(4) 1,333
Lawrence D. Muschek 1998 250,000 25,100 -- 50,000 --
President, Research and Development 1997 52,083 --# -- 200,000 20,841
1996 -- --# -- -- -
Michael J. Green 1998 186,875 15,100 -- 50,000 2,000
Vice President, Chemistry 1997 175,000 96,837 -- 25,000 13,820
1996 141,288 -- -- 30,232 38,080
Susan M. Hanan 1998 133,750 100 -- 23,000 --
Vice President, Organizational and 1997 -- 36,850 -- 17,000 --
Strategic Development 1996 -- -- -- -- --
</TABLE>
- ----------
(1) Includes amounts deferred pursuant to the Company's 401(k) Plan.
(2) Includes reimbursement for relocation expenses paid to Dr. Muschek ($20,841
in 1997) and Dr. Green ($11,820 in 1997 and $36,080 in 1996). The balance
of these amounts reflect the Company's matching contributions pursuant to
the Company's 401(k) plan.
(3) In 1994, the Company loaned Mr. Whitehead $100,000, which was evidenced by
a promissory note. The loan bore simple interest at prime rate plus 1% per
annum, with interest payable quarterly. The original principal amount of
the loan was forgiven at a rate of 25% per year on the anniversary date of
the note (with the final amount of principal forgiven in the first quarter
of 1998). In 1997, the Company loaned Mr. Whitehead an additional $100,000
which was evidenced by a promissory note having the same terms as the first
loan. Amounts for 1996, 1997 and 1998 represent the recognition of
compensation for the forgiveness of principal and interest on the loans;
however, the amount for 1998 also reflects the forgiveness of all of the
outstanding principal and interest on the loans as of December 1998 in
exchange for a consulting agreement between Mr. Whitehead and the Company
(see "Certain Transactions").
(4) In January 1996, the unvested portions of certain options granted under the
Company's Amended and Restated 1992 Stock Plan to Mr. Whitehead were
canceled and options exercisable for share amounts equivalent to such
canceled portions were granted under the Company's 1995 Stock Plan (the
"Regranted Options"). Although the exercise price of the Regranted Options
($2.15 per share of Common Stock) represented an increase over the exercise
price of the canceled options ($.7525 per share of Common Stock), the
Company agreed to distribute to Mr. Whitehead, at the time of any exercise
of a Regranted Option, an amount equal to the increase in exercise price
incurred. The Regranted Options retain the vesting schedule of the canceled
options. The Regranted Options include options to acquire 58,604 shares for
Mr. Whitehead.
8
<PAGE>
Stock Options
The following tables set forth certain information as of December 31, 1998
and for the fiscal year then ended with respect to options to acquire Common
Stock granted to and exercised by the individuals named in the Summary
Compensation Table above. No stock appreciation rights have been granted to
date.
Option Grants in 1998
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
------------------------------------------------------------- Value at Assumed
Number of Percentage of Annual Rates of Stock
Securities Total Options Price Appreciation
Underlying Granted to Exercise for Option Term (4)
Options Employees in Price Expiration ---------------------------
Name Granted(#) Fiscal Year ($/Sh)(2) Date(3) 5%($) 10%($)
---- ---------- ----------- --------- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Lawrence D. Muschek 50,000(1) 2.6 3.38 2/24/08 106,126 268,944
Michael J. Green 50,000(1) 2.6 3.38 2/24/08 106,126 268,944
Susan M. Hanan 23,000(1) 1.2 3.38 2/24/08 48,818 123,714
</TABLE>
- ----------
(1) The options granted to Dr. Muschek, Dr. Green and Ms. Hanan are subject to
the following vesting schedule: (i) 4% of the shares subject to the option
immediately vested upon grant; and (ii) 6% of the shares subject to the
option vest at the end of each successive three-month period following the
date of the grant (thus permitting 100% vesting over the course of 48
months); provided that these options, subject to certain conditions,
immediately vest upon a merger, reorganization or other change in control
of the Company.
(2) The exercise price on the date of grant was equal to 100% of the per share
fair market value of Common Stock on the date of grant.
(3) The options have a term of 10 years, subject to earlier termination in
certain events related to termination of employment.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are suggested by rules of the Securities and Exchange Commission and do not
represent Company estimates or projections regarding the future price of
Common Stock. There can be no assurance provided to any executive officer
or any other holder of the Company's securities that actual stock price
movement over the 10-year option term will be at the assumed 5% and 10%
levels of appreciation, or any other defined level.
9
<PAGE>
Aggregated Option Exercises in 1998
and 1998 Year-End Option Values
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Shares Unexercised Options in-the-Money Options
Acquired at December 31, 1998 at December 31, 1998(1)
on Value -------------------------------- ----------------------------
Name Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Whitehead -- $ -- 182,325 50,232 $347,843 $ 64,674
Lawrence D. Muschek -- -- 67,000 183,000 -- --
Michael J. Green -- -- 42,162 63,070 -- --
Susan M. Hanan -- -- 11,860 28,140 -- --
</TABLE>
- ----------
(1) Calculated on the basis of (i) the fair market value of Common Stock at
December 31, 1998 ($2.125 per share) minus (ii) the ----- exercise price.
Executive Employment Agreements and Termination of Employment and Change in
Control Arrangements
Pursuant to the terms of an Executive Employment Agreement dated August 16,
1993 between the Company and Robert S. Whitehead, the Company agreed to retain
Mr. Whitehead as President and Chief Executive Officer of the Company at an
annual salary of $225,000. In May 1997, this amount was increased to $300,000
per year. The Agreement also provided that Mr. Whitehead would be entitled to a
continuation of 75% of his base salary for up to 180 days if he was terminated
without cause. In connection with the Agreement, Mr. Whitehead was granted
options to acquire 139,534 shares of Common Stock at $0.75 per share (vesting
over four years). Of this amount, options to acquire 58,604 shares were canceled
under the original grant and regranted in January 1996, but with an exercise
price of $2.15 per share (although arrangements have been made by the Company to
distribute to Mr. Whitehead an amount equal to the difference in exercise prices
upon any exercise - see "Certain Transactions" below).
In March 1994, the Company made a loan in the principal amount of $100,000
to Mr. Whitehead. The principal amount of the loan was forgiven on a quarterly
basis over a four-year term, which ended in the first quarter of 1998. In July
1997, the Company made an additional loan to Mr. Whitehead in the principal
amount of $100,000 with the same terms as the first loan. Effective December
1998, and in exchange for a consulting agreement between Mr. Whitehead and the
Company, the Board of Directors agreed to forgive the outstanding principal and
interest remaining on the loans (see "Certain Transactions" below). In addition,
for his continued service as a Director, effective December 1998, the Board of
Directors amended the August 23, 1993 Stock Option Agreement between Mr.
Whitehead and the Company. As a result, the expiration date of his outstanding
options subject to that grant will now be the earliest of either (i) 10 years
following August 23, 1993; (ii) the date 90 days after the termination of his
service as a Director for any reason other than total and permanent disability;
or (iii) the date 12 months after the termination of Mr. Whitehead's service as
a Director by reason of total and permanent disability.
Pursuant to the terms of an Executive Employment Agreement dated October 6,
1997 between the Company and Lawrence D. Muschek, the Company agreed to retain
Dr. Muschek as President, Research & Development of the Company at an annual
salary of $250,000. The Agreement also provides that if Dr. Muschek is
terminated without cause, he is entitled to the balance of his base salary
during the period from the date of termination through October 6, 1999, the end
of the term of the Agreement. In connection with the Agreement, Dr. Muschek was
granted options to acquire 200,000 shares of Common Stock at $4.625 per share
(vesting over four years).
Options granted to officers and directors of the Company vest fully in the
event the Company is subject to a change in control (as defined in the
respective stock option plans under which such options are granted).
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
This Report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement
(or any specific statement incorporating by reference any other
portion of this Proxy Statement) into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates
this Report by reference, and this Report shall not otherwise be
deemed filed under such Acts.
This report on executive compensation is provided by the Compensation
Committee of the Board of Directors (the "Compensation Committee") to assist
stockholders in understanding the Compensation Committee's objectives and
procedures in establishing the compensation of the Company's executive officers
and describes the basis on which 1998 compensation determinations were made by
the Compensation Committee. From January 1998 to August 1998, the Compensation
Committee was comprised of three non-employee Directors (Dr. Blair, Mr. Lambert
and Mr. Wiklund). However, following August 1998, the Compensation Committee was
comprised of two non-employee Directors (Dr. Blair and Mr. Wiklund). In making
its determinations, the Compensation Committee relied, in part, on independent
surveys and public disclosures of compensation of management of companies in the
biotechnology and biopharmaceutical industries.
Compensation Philosophy and Objectives
The Compensation Committee believes the compensation of the Company's
executive officers should:
o Encourage creation of stockholder value and achievement of strategic
corporate objectives.
o Integrate compensation with the Company's annual and long-term
objectives and strategy, and focus executive behavior on the
fulfillment of those objectives.
o Enable the Company to attract and retain, on a long-term basis, high
caliber personnel by providing a total compensation opportunity that
is competitive with companies in the biopharmaceutical and
biotechnology industries, taking into account relative company size,
performance and geographic location, as well as individual
responsibilities and performance.
o Align the interests of management and stockholders by providing
management with longer term incentives through equity ownership.
Key Elements of Executive Compensation
The compensation of the Company's executive officers is based, in
substantial part, on the Company's achievement of key corporate objectives
including the closing of equity financings, the execution of collaborative
agreements, the development or acquisition of drug discovery technologies and
development progress of compounds proprietary to the Company, as well as the
achievement of individual business objectives by each executive officer. The
Company's existing compensation structure for executive officers includes a
combination of salary and stock options and may include cash bonuses for
performance determined to be deserving by the Compensation Committee.
Salary. Salary levels are largely determined through comparisons with
companies of similar headcount and market capitalization and/or complexity in
the biopharmaceutical and biotechnology industries. Actual salaries are based on
individual performance contributions within a competitive salary range for each
position that is established through evaluation of responsibilities and market
comparisons. The Compensation Committee, on the basis of its knowledge of
executive compensation in the industry, believes that the Company's salaries for
its executive officers are at levels that the Compensation Committee, at the
time such salary determinations were made, considered to be reasonable and
appropriate given the Company's financial resources and the stage of its
development.
Stock Options. The Compensation Committee believes that by providing those
persons who have substantial responsibility for the management and growth of the
Company with an opportunity to increase their ownership of Company stock, the
best interests of stockholders and executive officers will be closely aligned.
11
<PAGE>
Therefore, executive officers are eligible to receive stock options when the
Compensation Committee performs its annual salary review; although the
Compensation Committee, at its discretion, may grant options at other times in
recognition of exceptional achievements. The number of shares underlying stock
options granted to executive officers is based on competitive practices in the
industry as determined by independent surveys and the Compensation Committee's
knowledge of industry practice. The Company's 1996 Stock Incentive Plan is
administered by the Compensation Committee.
Cash Bonuses. Certain of the bonuses paid to the Company's executive
officers in 1998 were based upon the achievement of specific objectives pursuant
to the Company's Officer and Associate Bonus Plan. The Officer and Associate
Bonus Plan utilized in 1998 was approved by the Compensation Committee in 1997
and the Compensation Committee approved the specific awards made under that
plan.
The Compensation Committee may, at its discretion, award cash bonuses in
recognition of performance deemed to be deserving by the Compensation Committee.
Any such bonuses will be determined by the Compensation Committee to be in
amounts that the Compensation Committee, at the time such determinations are
made, considers to be reasonable given the Company's financial resources and
stage of development as well as achievement of Company-wide and individual
goals.
Chief Executive Officer Compensation
Robert S. Whitehead is the Company's Chairman and until December 31, 1998,
was the Chief Executive Officer and the Company's acting Chief Financial
Officer. Mr. Whitehead effectively resigned as Chief Executive Officer and
President on January 1, 1999, but will continue his service as the Company's
Chairman. Prior to his resignation, Mr. Whitehead's annual salary was $300,000
pursuant to the Executive Employment Agreement which existed between Mr.
Whitehead and the Company. (See "Executive Employment Agreements and Termination
of Employment and Change in Control Arrangements" above.)
Mr. Whitehead received bonuses totaling $74,220 in 1998 under the Company's
Officer and Associate Bonus Plan based upon the achievement of certain
objectives pursuant to such plan.
Compensation Committee
James C. Blair, Ph.D.
Harry D. Lambert (until August 1998)
Anders P. Wiklund
Compensation Committee Interlocks and Insider Participation
During 1998, the Compensation Committee consisted of Dr. Blair, Mr. Lambert
(until August 1998) and Mr. Wiklund, each of whom is an outside Director of the
Company. None of the members of the Compensation Committee had any "interlock"
relationship to report during the Company's fiscal year ended December 31, 1998.
12
<PAGE>
CERTAIN TRANSACTIONS
Other Arrangements
In February 1996, the Company entered into an agreement with Dura
Pharmaceuticals, Inc. which requires, among other things, the Company to pay
Dura $6,000,000 over four years for product development (the "Dura Agreement").
As of December 31, 1998, $4,650,000 had been funded under the Dura Agreement. As
of July 1, 1998, Robert S. Whitehead, Chairman of the Board of Directors and
former Chief Executive Officer of the Company, became President of Dura. James
C. Blair, a member of the Board of Directors of Dura, is a member of the Board
of Directors of the Company. In connection with the Dura Agreement, Dura
invested $5,000,000 in the Company's stock (originally shares of Series G
Preferred Stock which converted into 775,193 shares of Common Stock upon the
consummation of the Company's initial public offering).
In December 1998, Mr. Whitehead resigned from his position as Chief
Executive Officer, President and Acting Chief Financial Officer of the Company.
In exchange for a consulting agreement between the Company and Mr. Whitehead,
the Company's Board of Directors agreed to forgive the outstanding principal and
interest amount remaining with respect to the $100,000 forgivable loan made to
Mr. Whitehead in July 1997 (see "Executive Compensation--Summary Compensation
Table" above). As a result of Mr. Whitehead's continued service to the Company
as a Director, the Board of Directors also amended his Stock Option Agreement,
dated August 23, 1993 (see "Executive Employment Agreements and Termination of
Employment and Change in Control Arrangements," above).
On January 7, 1999, the Company advanced to its Chief Executive Officer,
Michael G. Grey, a forgivable loan in the amount of $150,000 due on or before
January 8, 2003 and secured by a pledge of Company securities. The interest rate
on the loan is 4.44% and is payable quarterly, with the principal balance to be
forgiven in equal quarterly installments of $9,375 until either the loan is
forgiven in full or the total amount of the forgiveness and principal paid in
lawful money equals the original principal amount of the note. The note, to the
extent unpaid or unforgiven, becomes due and payable upon the termination of Mr.
Grey's employment.
On February 1, 1999, the Company advanced to its Sr. Director, Legal
Affairs and Corporate Secretary, John E. Wehrli, a loan in the amount of
$120,000 which is secured by a pledge of Company securities. Interest will
accumulate on the outstanding principal balance at the rate of 4.64%, and all
unpaid principal and interest will become due and payable on the earlier of
February 1, 2001 or the termination of Mr. Wehrli's employment.
In May 1998, the Company entered into a Research, Development and License
Agreement with Novartis Pharma AG ("Novartis") pursuant to which the companies
are focused on the identification and development of orally-active small
molecules for the treatment of certain diseases believed to be mediated by the
melanocortin-4 receptor pathway, including obesity, Type II diabetes and
Syndrome X. The Agreement provides for (i) an equity investment at the Company's
option, which the Company exercised in November 1998 and received $7 million in
exchange for approximately 1.9 million shares of the Company's Common Stock
(representing in excess of 10% of the Company's issued and outstanding capital
stock); (ii) an additional $12 million in committed funding (consisting of $2
million received upon the execution of the Agreement for past research
activities and $10 million over a three-year period); and (iii) potential
milestone payments and royalties from the successful development and
commercialization of products (for which Novartis has worldwide rights).
13
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
This Graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement
(or any specific statement incorporating by reference any other
portion of this Proxy Statement) into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates
this Graph by reference, and this Graph shall not otherwise be
deemed filed under such Acts.
The following graph illustrates a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of (a) the
Company's Common Stock with (b) each of (i) the CRSP Total Return Index for The
Nasdaq Stock Market (U.S.) and (ii) the CRSP Total Return Index for Nasdaq
Pharmaceutical Stocks (the "Nasdaq Pharmaceutical Index"), assuming an
investment of $100 in each on April 1, 1996 (the first date of trading in the
Company's Common Stock following the Company's initial public offering). The
comparisons in the graph are required by the Securities and Exchange Commission
and are not intended to forecast or be indicative of the possible future
performance of an investment in the Company's Common Stock.
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
4/1/96 12/31/96 12/31/97 12/31/98
------ -------- -------- --------
Trega Biosciences, Inc. ............ $100.00 65.63 42.97 26.56
Nasdaq Stock Market ................ 100.00 117.50 143.95 202.85
Nasdaq Pharmaceutical Index ........ 100.00 96.41 99.54 127.42
The Nasdaq Pharmaceutical Index includes all companies listed on The Nasdaq
Stock Market within SIC Code 283. A list of the companies included in the Nasdaq
Pharmaceutical Index may be obtained upon request to Office of the Secretary,
Trega Biosciences, Inc., 9880 Campus Point Drive, San Diego, California 92121
(or call (619) 410-6500).
14
<PAGE>
ITEM 2 - RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending December 31, 1999,
subject to ratification by the stockholders. Ernst & Young LLP has audited the
Company's financial statements since the Company's inception. Representatives of
Ernst & Young LLP are expected to be present at the Annual Meeting. Such
representatives will have an opportunity to make a statement, if they desire to
do so, and are expected to be available to respond to appropriate questions.
In the event ratification is not provided, the Board of Directors will
review its future selection of the Company's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF ERNST & YOUNG LLP
AS THE COMPANY'S INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the proxy statement for presentation at
the Annual Meeting of Stockholders to be held in 2000 a stockholder proposal
must be received at the offices of the Company no later than December 24, 1999.
If a stockholder wishes to have a proposal considered at the Annual Meeting
of Stockholders to be held in 2000, but does not seek to have the proposal
included in the Company's Proxy Statement and form of Proxy for that meeting,
and if the stockholder does not notify the Company of the proposal no less than
50 days nor more than 75 days prior to the date of the Annual Meeting of
Stockholders to be held in 2000, then the persons appointed as proxies by
management may use their discretionary voting authority to vote on the proposal
when the proposal is considered at the Annual Meeting of Stockholders to be held
in 2000, even though there is no discussion of the proposal in the Proxy
Statement for that meeting; provided, however, that if less than 65 days' notice
or prior public disclosure of the date of the Annual Meeting is given or made to
stockholders, a stockholder will have until the 15th day following the day on
which such notice of the date of the Annual Meeting was mailed or public
disclosure of the meeting date was given to notify the Company of the proposal
before the persons appointed as proxies may use their discretionary voting
authority to vote on such proposal. It is recommended that stockholders
submitting proposals or notices of proposals direct them to the Secretary of the
Company and utilize certified mail-return receipt requested. Stockholders'
proposals should be submitted to the Company's office at 9880 Campus Point
Drive, San Diego, CA 92121.
ANNUAL REPORT AND AVAILABILITY OF FORM 10-K
The Company's 1998 Annual Report to Stockholders accompanies this Proxy
Statement. The Company's Annual Report on Form 10-K for 1998, which has been
filed with the Securities and Exchange Commission, will be provided to
stockholders of the Company, without charge, upon written request to John
Wehrli, Office of the Secretary, Trega Biosciences, Inc., 9880 Campus Point
Drive, San Diego, California 92121.
15
<PAGE>
OTHER MATTERS
The Company knows of no other business that will be presented at the Annual
Meeting. If any other business is properly brought before the Annual Meeting, it
is intended that proxies in the enclosed form will be voted in accordance with
the judgment of the persons voting the proxies.
Whether you intend to be present at the Annual Meeting or not, we urge you
to return your signed proxy promptly.
By order of the Board of Directors,
/s/ MICHAEL G. GREY
Michael G. Grey
President and Chief Executive Officer
April 21, 1999
16
<PAGE>
TREGA BIOSCIENCES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For Annual Meeting - May 18, 1999
MICHAEL G. GREY, LAWRENCE D. MUSCHEK and JOHN E. WEHRLI, or any of them, each
with the power of substitution, are hereby authorized to represent as proxies
and vote all shares of stock of Trega Biosciences, Inc. (the "Company") that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Company's headquarters located at 9880 Campus Point
Drive, San Diego, California, on Tuesday, May 18, 1999, at 9:00 a.m., Pacific
Daylight Time or at any postponement or adjournment thereof, and the undersigned
instructs said proxies to vote as follows (with reference to the Proxy Statement
of the Company dated April 21, 1999):
(continued and to be signed on reverse side)
^ FOLD AND DETACH HERE ^
<PAGE>
The Board of Directors recommends a vote FOR the election of all nominees
indicated below and FOR Item 2.
Please mark
your votes as |X|
indicated in
this example
FOR all
Class II listed Withhold
(except as Authority
indicated to to vote for all
contrary) nominees listed
|_| |_|
1. Election of Directors
Nominees: Lawrence D. Muschek and Anders P. Wiklund
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
----------------------------------------------------------------
2. To ratify the appointment of Ernst & Young LLP as the Company's independent
auditors:
|_| |_| |_|
FOR AGAINST ABSTAIN
3. In their discretion, upon such other business as may properly come before
the Annual Meeting.
Shares represented by this proxy will be voted as directed by the stockholder.
If no such directions are indicated, the proxies will have authority to vote FOR
the election of all nominees and FOR Item 2.
Dated: ___________________________________________________________________, 1999
- --------------------------------------------------------------------------------
Signature of Stockholder
- --------------------------------------------------------------------------------
Signature of Stockholder
Please sign exactly as your name or names appear on the proxy. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If shares are held jointly, each holder should sign. By your signature
you acknowledge receipt of the Company's Proxy Statement dated April 21, 1999
and the related Notice of Annual Meeting.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE.
^ FOLD AND DETACH HERE ^
