<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NPS PHARMACEUTICALS, 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):
-----------------------------------------------------------------------
(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:
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(4) Date Filed:
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<PAGE>
NPS PHARMACEUTICALS, INC.
420 CHIPETA WAY
SALT LAKE CITY, UT 84108-1256
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1997 AT 3:00 P.M. LOCAL TIME
AT THE
UNIVERSITY PARK HOTEL
500 SOUTH WAKARA WAY
SALT LAKE CITY, UTAH 84108-1256
------------------------
TO THE STOCKHOLDERS OF NPS PHARMACEUTICALS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of NPS
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), will be held on
Tuesday, May 20, 1997, at 3:00 p.m., local time, at the University Park Hotel,
500 South Wakara Way, Salt Lake City, Utah for the following purposes:
1. To elect seven members to the Board of Directors.
2. To ratify the selection of KPMG Peat Marwick LLP as independent auditors
of the Company for its fiscal year ending December 31, 1997.
3. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 3, 1997, as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting of Stockholders and at any adjournment thereof.
By Order of the Board of Directors
[SIGNATURE]
James U. Jensen
Secretary
Salt Lake City, Utah
April 10, 1997
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
NPS PHARMACEUTICALS, INC.
420 CHIPETA WAY
SALT LAKE CITY, UTAH 84108-1256
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board of Directors" or the "Board") of NPS Pharmaceuticals, Inc., a Delaware
corporation ("NPS" or the "Company"), for use at the Annual Meeting of
Stockholders to be held on May 20, 1997, at 3:00 p.m., local time and at any
adjournment thereof (the "Annual Meeting" or the "Meeting"), for the purposes
set forth herein and in the accompanying Notice of Annual Meeting. The Annual
Meeting will be held at the University Park Hotel, 500 South Wakara Way, Salt
Lake City, Utah.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this Proxy Statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of the Company's common stock, par
value $.001 (the "Common Stock") beneficially owned by others. The Company may
reimburse persons representing beneficial owners of Common Stock for their costs
of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or other
employees for such services.
The Company intends to mail this Proxy Statement and accompanying proxy card
on or about April 10, 1997, to all stockholders entitled to vote at the Annual
Meeting.
VOTING RIGHTS AND OUTSTANDING SHARES
April 3, 1997 is the record date (the "Record Date") for determining those
stockholders of Common Stock of the Company entitled to notice of and to vote at
the Annual Meeting. On the Record Date, the Company had outstanding and entitled
to vote 11,881,265 shares of Common Stock. Stockholders will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of elections appointed for the
Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any Stockholder giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company, at the Company's principal executive office, 420
Chipeta Way, Salt Lake City, Utah 84108-1256, a written notice of revocation or
a duly executed proxy bearing a later date, or it may be revoked by attending
the Meeting and voting in person. Attendance at the Meeting will not, by itself,
revoke a proxy.
<PAGE>
STOCKHOLDER PROPOSALS FOR 1997
Thursday, December 11, 1997, is the deadline for proposals of stockholders
that are intended to be presented at the Company's 1998 annual meeting of
stockholders. By that date any such proposal must be received by the Company in
order to be included in the proxy statement relating to that meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation
("Certificate of Incorporation") and the Amended and Restated Bylaws ("Bylaws")
provide that directors are to be elected at the Annual Meeting to serve for a
term of one year or until their respective successors are duly elected and
qualified or until their respective death, resignation or removal. Vacancies on
the Board may be filled by the affirmative vote of a majority of the directors
then in office, unless the Board of Directors determines by resolution that any
such vacancy shall be filled by the stockholders. A director elected by the
Board to fill a vacancy (including a vacancy created by an increase in the Board
of Directors) shall serve for the remainder of the full term of the director for
which the vacancy was created or occurred and until such director's successor is
elected and qualified.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the Meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the seven nominees below. In the event that any nominee should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as the Board may
propose. Each person nominated for election has agreed to serve if elected, and
the Board has no reason to believe that any nominee will be unable to serve. If
and when elected at the Annual Meeting, each of the nominees will be elected to
serve until his successor is duly elected and qualified, or until such
director's death, resignation or removal.
Set forth below, in alphabetical order, is biographical information for each
person nominated to serve on the Company's Board of Directors.
NOMINEES FOR ELECTION (IN ALPHABETICAL ORDER)
SANTO J. COSTA, J.D.
Mr. Costa, 52, has served as a director since January 1995 and as a member
of the Compensation Committee since 1996. Mr. Costa has served as President,
Chief Operating Officer and a director of Quintiles Transnational Corporation, a
publicly held global contract research organization, since April 1994. From 1986
to 1993, he was employed by Glaxo, Inc. where he served as Senior Vice
President, Administration and General Counsel and was a member of that company's
Board of Directors. From 1977 to 1986 he was employed by Merrell Dow
Pharmaceuticals (now Hoechst Marion Roussel) where he served as U.S. Area
Counsel and from 1971 to 1977 as Food & Drug Counsel for Norwich/Eaton
Pharmaceuticals. Mr. Costa received his B.S. in Pharmacy and his J.D. from St.
John's University.
JAMES G. GRONINGER
Mr. Groninger, 52, has served as a director since 1988 and as a member of
the Audit and Compensation Committees since 1994. Mr. Groninger founded in
January 1995 and is President of The Bay South Company, a Richmond,
Virginia-based provider of financial advisory and investment banking services.
From 1988 through 1994, he served as a Managing Director, Investment Banking
Division, of PaineWebber Incorporated. Currently he serves on the Board of
Directors of Designs, Inc., a specialty retailer, and Cygne Designs, Inc., a
manufacturer of apparel. Mr. Groninger received a B.S. in Industrial
Administration from Yale University and an M.B.A. from Harvard Business School.
2
<PAGE>
HUNTER JACKSON, PH.D.
Dr. Jackson, 46, has been Chief Executive Officer and Chairman of the Board
since founding the Company in 1986 and a member of the Nominating Committee
since 1997. He was appointed to the additional position of President in January
1994. Prior to founding the Company, he was an Associate Professor in the
Department of Anatomy at the University of Utah School of Medicine. Dr. Jackson
received a B.A. in English from the University of Illinois and a Ph.D. in
Psychobiology from Yale University. He received postdoctoral training in the
Department of Neurosurgery, University of Virginia Medical School.
JAMES U. JENSEN, J.D.
Mr. Jensen, 52, has been Vice President, Corporate Development and Legal
Affairs, and Corporate Secretary since August 1991. He has been Secretary and a
director of the Company since 1987. From 1986 to July 1991, he was a partner in
the law firm of Woodbury, Jensen, Kesler & Swinton, P.C. (or its predecessor
firm) concentrating on technology transfer and licensing and corporate finance.
From July 1985 until October 1986, he served as chief financial officer of
Cericor, a software company, and from 1983 to July 1985, as its outside general
counsel. From 1980 to 1983, he served as General Counsel and Secretary of
Dictaphone Corporation, a subsidiary of Pitney Bowes Inc. He serves as a
director of Wasatch Funds, Inc., a registered investment company, and of
Interwest Home Medical, Inc., a public home use medical equipment distributor.
Mr. Jensen received a B.A. in English/Linguistics from the University of Utah
and a J.D. and an M.B.A. from Columbia University.
DONALD E. KUHLA, PH.D.
Dr. Kuhla, 54, has been a director of the Company since 1991 and as a member
of the Audit Committee since 1996 and the Nominating Committee since 1997. Dr.
Kuhla also serves as a scientific consultant to NPS. Since 1994, he has been
Vice President of Plexus Ventures, Inc. ("Plexus"), a biotechnology investment
and consulting firm. From 1990 to 1994, Dr. Kuhla held senior management
positions with two venture capital backed, biotechnology start-up companies. His
early career was spent in research and development and operations management
positions with Pfizer Inc. and Rorer Group, Inc., his last position at Rorer
being Senior Vice President of Operations. Dr. Kuhla received a B.A. in
Chemistry from New York University and a Ph.D. in Organic Chemistry from Ohio
State University.
THOMAS N. PARKS, PH.D.
Dr. Parks, 46, has been a director of the Company since its founding in 1986
and a member of the Audit Committee since 1996 and the Nominating Committee
since 1997. Dr. Parks also serves as a scientific consultant to NPS. He is
currently the George and Lorna Winder Professor of Neuroscience and Chairman of
the Department of Neurobiology and Anatomy at the University of Utah Medical
School. Dr. Parks joined the faculty at the University of Utah Medical School in
1978 as an assistant professor. Dr. Parks received a B.S. in Biology from the
University of California at Irvine and a Ph.D. in Psychobiology from Yale
University. He was a postdoctoral fellow in Development Neurology at the
University of Virginia Medical School.
TIMOTHY J. RINK, M.D., SC.D.
Dr. Rink, 50, has been a director of the Company since 1991 and a member of
the Compensation Committee since 1994. Dr. Rink also serves as a scientific
consultant to the Company. Since February 1996, Dr. Rink has been Chairman,
Chief Executive Officer and President of Aurora Biosciences Corporation, a
biotechnology company focused on ultra high throughput drug screening. From 1990
through 1995 he was President, Chief Technical Officer and director of Amylin
Pharmaceuticals, Inc., a biotechnology company. He is also a director of
CoCensys, Inc., a publicly held biotechnology company.
3
<PAGE>
Previously Dr. Rink was a lecturer in physiology at the University of Cambridge,
United Kingdom, and then Vice President of Research at SmithKline Beecham, plc.
Dr. Rink received an M.D. and an Sc.D. from the University of Cambridge.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE
BOARD COMMITTEES AND MEETINGS
The Board has a standing Audit Committee, a standing Compensation Committee
and a standing Nominating Committee. The Audit Committee's functions include:
meeting with the Company's independent auditors at least annually to review the
results of the annual audit and discuss the financial results for the year as
reported in the Company's financial statements; recommending to the Board of
Directors the independent auditors to be retained for the ensuing year; and
receiving and considering the auditors' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial controls. The Audit Committee is composed of three non-employee
directors, Mr. Groninger, Dr. Kuhla and Dr. Parks. The Audit Committee met two
times during the fiscal year ended December 31, 1996.
The Compensation Committee's functions include: establishing, reviewing and
overseeing salaries, incentive compensation and other forms of compensation paid
to officers and employees of the Company; administering the Company's incentive
compensation and benefit plans, including the 1994 Employee Stock Purchase Plan,
the 1994 Equity Incentive Plan and the 1987 Stock Option Plan; and performing
such other functions regarding compensation as the Board of Directors may
delegate. The Compensation Committee is composed of three non-employee
directors, Mr. Costa, Mr. Groninger and Dr. Rink. The Compensation Committee met
twice during the fiscal year ended December 31, 1996.
The Nominating Committee's functions include: evaluating directors'
performance on at least an annual basis; providing information and materials
relating to the nomination of directors; interviewing, nominating and
recommending individuals for membership on the Company's Board of Directors and
committees; and performing such other functions as the Board of Directors may
delegate. The Nominating Committee will consider nominees for directors
nominated by stockholders upon submission in writing to the Secretary of the
Company of the names of such nominees, together with their qualifications for
service as a director of the Company. In order for any nominees for directors
nominated by stockholders to be considered by the Nominating Committee, such
nominations must be submitted no later than December 1st of the year preceding
the Annual Meeting. The Nominating Committee was formed in 1997. The members of
the Nominating Committee are Dr. Kuhla, Dr. Jackson and Dr. Parks.
During the fiscal year ended December 31, 1996, the Board of Directors held
seven meetings. All Board members attended 75 percent or more of the aggregate
of the meetings held by the Board and by the respective committees on which such
Board member served during the period for which he was a director or committee
member, respectively.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP ("KPMG") as the
Company's independent auditors for the fiscal year ending December 31, 1997, and
has further directed that management submit the selection of independent public
auditors for ratification by the stockholders at the Annual Meeting. KPMG has
audited the Company's financial statements since the Company's inception in
1986. Representatives of KPMG are expected to be present at the Annual Meeting,
will have an opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
4
<PAGE>
Stockholder ratification of the selection of KPMG as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of KPMG to the stockholders for
ratification as a matter of good corporate practice. If the stockholders fail to
ratify the selection, the Board will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Board in its discretion may direct
the appointment of a different independent accounting firm at any time if the
Board determines that such a change would be in the best interest of the Company
and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2
(The balance of this page is intentionally left blank.)
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of March 3, 1997 by: (i) all those known by the
Company to be beneficial owners of more than 5 percent of the Company's Common
Stock; (ii) each director and nominee for director; (iii) each of the executive
officers named in the Summary Compensation Table; and (iv) all executive
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNERSHIP (2) TOTAL (2)
- ------------------------------------------------------------- ------------------- ------------
<S> <C> <C>
T. Rowe Price Associates, Inc. .............................. 1,340,000 11.28%
100 E. Pratt Street
Baltimore, MD 21202
S. R. One, Limited (3) ...................................... 1,293,801 10.88
Bay Colony Executive Park
565 East Swedesford Road, Suite 315
Wayne, PA 08542
Amgen Inc. .................................................. 1,000,000 8.42
1840 DeHavilland Drive
Thousand Oaks, CA 91320-1789
State of Wisconsin Investment Board ......................... 735,000 6.19
P.O. Box 7842
Madison, WI 53707
Strome Susskind Investment Management, L.P .................. 628,000 5.29
100 Wilshire Blvd., 15th Floor
Santa Monica, CA 90401
Hunter Jackson, Ph.D. (4) ................................... 553,728 4.60
Thomas N. Parks, Ph.D. (5)................................... 355,560 2.99
James G. Groninger (6)....................................... 179,772 1.51
Edward F. Nemeth, Ph.D. (7).................................. 163,656 1.36
James U. Jensen, J.D. (8).................................... 111,605 *
Thomas B. Marriott (9)....................................... 90,960 *
Donald E. Kuhla, Ph.D. (10).................................. 44,960 *
Timothy J. Rink, M.D., Sc.D. (11)............................ 44,360 *
Douglas Reed, M.D. (12)...................................... 28,782 *
Santo J. Costa, J.D. (13).................................... 15,940 *
All directors and executive officers (12 persons) as a group
(14)....................................................... 1,663,030 13.32
</TABLE>
- ------------------------
* Less than 1 percent.
(1) Except as set forth herein, the address of the persons set forth above is
the address of the Company appearing elsewhere in this Proxy Statement.
(2) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "Commission"). Beneficial ownership is
determined in accordance with the rules of the Commission and generally
includes voting or investment power with respect to securities. Except as
indicated by footnotes and
6
<PAGE>
subject to community property laws, where applicable, the persons named
above have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them. Beneficial ownership also
includes shares of stock subject to options and warrants exercisable or
convertible within 60 days.
(3) Includes 5,700 shares subject to options held by Dr. Reed. Dr. Reed was a
Vice President of S.R. One before becoming a full time employee with the
Company on April 15, 1996. Upon exercise, such shares will be transferred to
and held by S.R. One. See also footnote (12) below.
(4) Includes 75,000 shares held in a trust and 2 shares held by Dr. Jackson's
children, of which he disclaims beneficial ownership. Also includes 165,550
shares subject to options exercisable within 60 days of March 3, 1997.
(5) Includes 9,660 shares subject to options exercisable within 60 days of
March 3, 1997.
(6) Includes 63,450 shares held by Mr. Groninger's children, of which he
disclaims beneficial ownership. Also includes 22,410 shares subject to
options exercisable within 60 days of March 3, 1997.
(7) Includes 130,700 shares subject to options exercisable within 60 days of
March 3, 1997.
(8) Includes 31,250 shares held by a trust. Also includes 21,850 shares subject
to options exercisable within 60 days of March 3, 1997.
(9) Includes 78,822 shares subject to options exercisable within 60 days of
March 3, 1997.
(10) Includes 26,160 shares subject to options exercisable within 60 days of
March 3, 1997.
(11) Includes 41,160 shares subject to options exercisable within 60 days of
March 3, 1997.
(12) Includes 20,860 shares subject to options exercisable within 60 days of
March 3, 1997. Upon exercise, 5,700 of such shares will be transferred to,
and be held by, S.R. One.
(13) Includes 13,140 shares subject to options exercisable within 60 days of
March 3, 1997.
(14) Includes an aggregate of 599,662 shares subject to options exercisable
within 60 days of March 3, 1997. See footnotes (4) through (13) above.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
directors and executive officers, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file with the Commission
reports of ownership and changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than 10 percent
stockholders are required by Commission regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company or written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10 percent beneficial owners have been complied with.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
The Company's directors do not currently receive any cash compensation for
service on the Board or any Committee thereof. Directors may be reimbursed for
certain expenses in connection with attendance at Board and Committee meetings.
Directors are eligible to receive stock options and stock bonuses under the
stock plans described below.
7
<PAGE>
In January 1994, the Board adopted, and the stockholders subsequently
approved, the 1994 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"). An amendment to increase the number of shares available for grant under
the Directors' Plan from 90,000 shares to 160,000 shares was approved by the
stockholders in July 1996. Under the Directors' Plan, non-employee directors of
the Company are eligible to receive options. Options granted under the
Directors' Plan are non-discretionary and do not qualify as Incentive Stock
Options ("ISOs") under the Internal Revenue Code of 1986, as amended (the
"Code"). Pursuant to the terms of the Directors' Plan, each person who is
elected for the first time to be a director of the Company and who is not
otherwise employed by the Company or an affiliate of the Company (a
"Non-Employee Director") will automatically be granted an option to purchase
15,000 shares of Common Stock (subject to adjustment as provided in the
Directors' Plan) upon the date of his or her election to the Board. On December
1 of each year, beginning in 1994, each person who is then a Non-Employee
Director and has been a Non-Employee Director for at least three months will
automatically be granted an option to purchase 3,000 shares of Common Stock
(subject to adjustment as provided in the Directors' Plan) pursuant to the
Directors' Plan.
No option granted under the Directors' Plan may be exercised after the
expiration of ten years from the date such option was granted. Options granted
under the Directors' Plan vest at a rate of 28% of the shares subject to the
option one year after date of grant and 3% of the shares become exercisable each
month thereafter, provided that the optionee has, during the entire period prior
to such vesting date, continuously served as a Non-Employee Director. If the
optionee's service as a Non-Employee Director terminates for any reason other
than death, the option will remain exercisable for 12 months after the date of
termination, or until the option's expiration date, if earlier. If the optionee
dies, the option will remain exercisable for 18 months following the date of
death or until the expiration date of the option, whichever is earlier. The
exercise price of options granted under the Directors' Plan is 100% of the fair
market value of the Common Stock on the date of grant. Options granted under the
Directors' Plan are generally non-transferable. Unless otherwise terminated by
the Board, the Directors' Plan automatically terminates in January 2004.
As of December 31, 1996, options to purchase a total of 69,000 shares of
Common Stock had been granted under the Directors' Plan at exercise prices from
$3.00 to $10.25 per share, and a weighted average exercise price of $6.17 per
share. As of that date, options for 1,470 shares had been exercised under the
Directors' Plan. Prior to the adoption of the Directors' Plan, the Company
granted options to directors under the 1987 Stock Option Plan.
In December 1994, the Board adopted the Non-Employee Directors' Stock Bonus
Program under the 1994 Equity Incentive Plan (the "Stock Bonus Program"). Under
the Stock Bonus Program, Non-Employee Directors are eligible to receive grants
of shares of Common Stock for attendance at Board and Committee meetings. The
Stock Bonus Program provides each Non-Employee Director of the Company with a
non-discretionary award of 200 shares of Common Stock for each Board and/or
Committee meeting attended by such Non-Employee Director. A total of 10,600
shares was granted under the Stock Bonus Program for meetings attended in 1996.
The right to receive awards under the Stock Bonus Program is generally
non-transferable. The stock awards are made at the end of each calendar year.
Non-Employee Directors entitled to stock bonus awards shall not possess any
rights of a stockholder of the Company until such shares are delivered to the
Non-Employee Director. Unless otherwise terminated by the Board, the Stock Bonus
Program terminates in January 2004.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows for the fiscal years ended December 31, 1996,
December 31, 1995 and December 31, 1994, certain compensation awarded or paid
to, or earned by, the Company's Chief
8
<PAGE>
Executive Officer and its other four most highly compensated executive officers
(the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
CASH COMPENSATION
LONG-TERM
-------------------- COMPENSATION AWARDS
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) STOCK OPTIONS GRANTED(#)
- ---------------------------------------------------------- --------- --------- ----------- -------------------------
<S> <C> <C> <C> <C>
Hunter Jackson, Ph.D...................................... 1996 214,884 22,659 45,000
Chief Executive Officer, 1995 189,033 45,000
President and Chairman 1994 180,000 45,000
of the Board
James U. Jensen, J.D...................................... 1996 152,592 17,624 25,000
Vice President, Corporate 1995 147,072 25,000
Development and Legal 1994 140,000 15,000
Affairs and Secretary
Thomas B. Marriott, Ph.D.................................. 1996 165,758 18,883 25,000
Vice President, Development 1995 157,629 25,000
Research 1994 150,000 30,000
Edward F. Nemeth, Ph.D.................................... 1996 150,038 16,365 30,000
Vice President, Research 1995 136,603 30,000
1994 130,000 30,000
Douglas Reed, M.D.(1)..................................... 1996 139,718 70,000
Vice President, Business Development
</TABLE>
- ------------------------
(1) Dr. Reed was appointed as a Vice President of the Company in April 1996. Dr.
Reed was paid $32,900 as "other" compensation for moving expenses incurred
in connection with commencing employment. Upon commencement of employment
with the Company, Dr. Reed was granted an option to acquire 40,000 shares of
Common Stock of the Company. He was also granted 6,000 shares of NPS Common
Stock (valued at $79,500 on the date of grant) of which 2,000 shares vested
immediately. The remaining 4,000 shares are restricted and are subject to
vesting based upon Dr. Reed's continued employment with the Company at the
following rate: 2,000 shares upon completion of the first year of employment
(April 15, 1997) and the remaining 2,000 shares upon completion of the
second year of employment (April 15, 1998). All shares are eligible for
dividends on the same basis as all other outstanding shares of Common Stock.
As of December 31, 1996, Dr. Reed held 4,000 restricted shares with an
aggregate value on that date of $44,000.00.
1987 STOCK OPTION PLAN
The 1987 Stock Option Plan (the "1987 Plan") was adopted in June 1987. The
purposes of the 1987 Plan were to attract and retain qualified personnel, to
provide additional incentives to employees, officers, advisors, directors and
consultants of the Company and to promote the success of the Company's business.
No options have been granted under the 1987 Plan since December 1993, and the
Company will not make any future grants under the 1987 Plan. As of December 31,
1996, options to purchase a total of 659,200 shares of Common Stock had been
exercised for cash and services under the 1987 Plan at a weighted average
exercise price of $0.71 per share. As of December 31, 1996, options to purchase
a total of 651,417 shares of Common Stock were outstanding, with exercise prices
ranging from $0.34 to $4.00 per share and a weighted average exercise price per
share of $1.36.
9
<PAGE>
Options granted under the 1987 Plan generally became exercisable at a rate
of one-third of the shares subject to the option on the first anniversary of the
option grant and one-third of the remaining shares subject to the option on each
of the second and third anniversary of the option grant. The maximum term of a
stock option under the 1987 Plan was 10 years; however, if the optionee at the
time of grant had voting power over more than 10% of the Company's outstanding
capital stock (a "10% Holder"), the maximum term of any incentive stock option
granted under the 1987 Plan was five years. The aggregate fair market value of
the stock with respect to which incentive stock options are exercisable for the
first time by an optionee in any calendar year may not exceed $100,000. The
exercise prices of incentive stock options granted under the 1987 Plan were at
least equal to 100% or 110% with respect to 10% Holders, of the fair market
value of the stock subject to the option on the date of grant. Although no
minimum exercise price of non-qualified stock options was required under the
1987 Plan, the exercise price of non-qualified stock options previously granted
under the 1987 Plan generally has been at least equal to the fair market value
of the stock subject to the option on the date of the grant. Any option that is
exercisable at the time of grant and which expires no sooner than three years
from the grant date is subject to an option exercise price equal to the fair
market value of the option on the grant date.
1994 EQUITY INCENTIVE PLAN
In January 1994, the Board adopted the 1994 Equity Incentive Plan (the "1994
Plan"), which was subsequently approved by the stockholders in February 1994. An
amendment to increase the number of shares available for grant under the 1994
Plan from 942,503 shares to 1,702,503 shares was approved by the stockholders in
July 1996. The purposes of the 1994 Plan are to attract and retain qualified
personnel, to provide additional incentives to employees, officers, directors
and consultants of the Company and its affiliates and to promote the success of
the Company's business. Under the 1994 Plan, the Company may grant non-qualified
stock options to employees, officers, directors and consultants to the Company
and its affiliates and may grant incentive stock options to employees of the
Company and its affiliates. As of December 31, 1996, options to purchase a total
of 62,203 shares of Common Stock had been exercised for cash and services under
the 1994 Plan at a weighted average exercise price of $7.30 per share. As of
December 31, 1996, options to purchase 1,116,387 shares of Common Stock with
exercise prices ranging from $3.00 to $16.63 per share, and a weighted a verage
exercise price per share of $8.17 were outstanding.
Options granted under the 1994 Plan generally become exercisable at a rate
of 28% of the shares subject to the option at the end of the first year and 3%
of the shares subject to the option at the end of each calendar month
thereafter. The maximum term of a stock option under the 1994 Plan is 10 years;
however, if the optionee who is granted an incentive stock option at the time of
grant is a 10% Holder, the maximum term of any incentive stock option granted
under the 1994 Plan is five years. If an optionee terminates his or her service
to the Company, the optionee may exercise only those option shares vested as of
the date of termination and must effect such exercise within three months of
termination of service for any reason other than death or disability, one year
after termination due to disability, and 18 months after termination due to
death. The aggregate fair market value with respect to which incentive stock
options are exercisable for the first time by an optionee in any calendar year
may not exceed $100,000. The exercise price of incentive stock options granted
under the 1994 Plan must be at least 100% or 110% with respect to 10% Holders,
of the fair market value of the Common Stock of the Company on the date of
grant. Upon completion of this Offering, no employee will be a 10% Holder. The
exercise price of non-qualified stock options granted under the 1994 Plan is the
fair market value of the Company's Common Stock on the date of grant or such
other exercise price as is set by the Board at the date of grant. Payment of the
exercise price may be made in cash or by shares of the Company's Common Stock
valued at the fair market value of such shares on the date of exercise or in any
other form acceptable to the Board. The 1994 Plan also allows the Company to
grant stock bonuses, reload options, rights to purchase restricted stock and
stock appreciation rights.
10
<PAGE>
The 1994 Plan may be amended at any time by the Board, although certain
amendments require stockholder approval. The 1994 Plan will terminate in January
2004, unless earlier terminated by the Board.
The following table sets forth each grant of options to purchase Common
Stock made during the year ended December 31, 1996 to each of the Named
Executive Officers. Grants of options to each of the Named Executive Officers
were made under the 1994 Plan:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OR OPTION TERM($)(4)
OPTIONS TO EMPLOYEES IN BASE PRICE PER EXPIRATION ----------------------
NAME GRANTED(#)(1) FISCAL YEAR(2) SHARE ($/SH) DATE(3) 5% 10%
- ------------------------------ ------------- --------------- --------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Hunter Jackson................ 45,000 8.49 10.125 12/01/06 286,540 726,149
James U. Jensen............... 25,000 4.72 10.125 12/01/06 159,189 403,416
Thomas B. Marriott............ 25,000 4.72 10.125 12/01/06 159,189 403,416
Edward F. Nemeth.............. 5,000 .94 13.375 07/07/06 42,057 106,582
25,000 4.72 10.125 12/01/06 159,189 403,416
Douglas Reed.................. 40,000 7.55 13.25 04/15/96 333,314 844,683
30,000 5.66 10.125 12/01/06 191,027 484,099
</TABLE>
- ------------------------
(1) Options granted under the 1994 Plan become exercisable at the rate of 28% of
the shares subject to the option one year after the date of grant and 3% of
the shares subject to the option each month thereafter.
(2) Based on an aggregate of 529,750 options granted through December 31, 1996,
under the 1994 Plan to employees of the Company, including the Named
Executive Officers.
(3) These options have a 10-year term, subject to earlier termination upon
death, disability or termination of employment.
(4) The potential realizable value is calculated based on the term of the option
at its time of grant (10 years). It is calculated by assuming that the stock
price on the date of grant appreciates at the indicated annual rate
compounded annually for the entire term of the option and that the option is
exercised and sold on the last day of its term for the appreciated stock
price. No gain to the optionee is possible unless the stock price increases
over the option term, which will benefit all stockholders.
The following table sets forth information with respect to (i) the exercise
of stock options by the Named Executive Officers during the fiscal year ended
December 31, 1996; (ii) the number of unexercised options held by the Named
Executive Officers as of December 31, 1996; and (iii) the value as of December
31, 1996 of unexercised in-the-money options.
11
<PAGE>
OPTION EXERCISES IN 1996 AND YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
VALUE UNDERLYING UNEXERCISED IN- THE-MONEY
SHARES ACQUIRED ON REALIZED OPTIONS(#) EXERCISABLE/ OPTIONS($)(2)
NAME EXERCISE(#) ($)(1) UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------- ------------------- ------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Hunter Jackson............. 8,000 $ 110,270 153,400/93,600 $1,317,080/258,075
James U. Jensen............ 30,500 406,250 16,600/48,400 102,050/114,575
Thomas B. Marriott......... 10,603 129,992 75,597/53,800 656,983/157,775
Edward F. Nemeth........... -- -- 122,600/57,400 1,043,400/167,675
Douglas Reed............... -- -- --/70,000 --/26,250
</TABLE>
- ------------------------
(1) Value realized is based on the fair market value of the Company's Common
Stock on the date of exercise (the closing sales price reported on the
Nasdaq National Market on such date) minus the exercise price, and does not
necessarily indicate that the optionee sold such stock.
(2) Represents the difference between the option exercise price and the closing
price of the Company's Common Stock as reported on the Nasdaq National
Market on December 31, 1996 ($11.00) times the corresponding number of
shares.
EMPLOYMENT AGREEMENTS
The Company has no employment agreements with any of its executive officers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dr. Kuhla, a director of the Company since 1991, is Vice President of
Plexus. The Company had a consulting agreement with Plexus through December 31,
1995, whereunder Plexus assisted the Company with its effort to establish a
collaboration for NPS R-568. During the years ended December 31, 1994, 1995 and
1996, the Company paid fees to Plexus totaling $34,000, $84,500, and $400,000,
respectively. Plexus may earn an additional $400,000 in fees as payments are
received from Amgen. The Company also granted Plexus an option to purchase
20,000 shares of NPS Common Stock at $10.50 per share with vesting contingent
upon milestone payment from Amgen. The Company has also entered into a
Consultant Services Agreement with Dr. Kuhla, effective November 1, 1996,
whereunder Dr. Kuhla will provide scientific consulting services to the Company.
In return for such services, Dr. Kuhla will receive from the Company 400 shares
of Common Stock for each Research Review Committee meeting attended and 200
shares for each Medicinal Chemistry Committee meeting attended.
S.R. One, an affiliate of SmithKline Beecham, is a stockholder of the
Company and has entered into various stockholder agreements with the Company.
Dr. Reed, Vice President, Business Development of the Company since April 1996,
was also a director of the Company from 1992 until July 1996, and, until April
1996, a Vice President of S.R. One. In November 1993, the Company entered into a
three-year collaborative research and license agreement with SmithKline Beecham
to collaborate on the discovery, development and marketing of drugs to treat
osteoporosis and other bone metabolism disorders. In 1992, S.R. One, an
affiliate of SmithKline Beecham, purchased $2.0 million of the Company's
Preferred Stock. In November 1993, at the time NPS entered into the SmithKline
Beecham Agreement, S.R. One purchased an additional $7.0 million of Preferred
Stock, and it acquired $495,000 of Common Stock (90,000 shares) in the Company's
initial public offering. The 869,049 shares of Preferred Stock purchased by S.R.
One converted into 1,701,301 shares of Common Stock upon the closing of the
Company's initial public offering in May 1994. SmithKline Beecham has paid
license fees of $6.0 million to the Company under the SmithKline Beecham
Agreement and may be required to make additional payments upon the occurrence of
certain milestones (of which $3.0 million was paid to NPS in January 1996). In
addition, SmithKline Beecham is scheduled to fund all clinical development under
the SmithKline Beecham
12
<PAGE>
Agreement, has dedicated a scientific team to the program, and since July 1,
1995 has supported the Company's research efforts in osteoporosis and will
continue to do so through the scheduled expiration of the research term in
October 1997, if not previously terminated. SmithKline Beecham is required to
pay NPS royalties on sales of any products for treating osteoporosis and other
bone metabolism disorders developed under the SmithKline Beecham Agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Costa, Mr. Groninger and Dr. Rink served on the Compensation Committee
for fiscal year 1996. No officer or employee of the Company sits on the
Compensation Committee. No member of the Compensation Committee has at any time
been an officer or employee of the Company.
Mr. Groninger is a brother-in-law of Dr. Jackson, the Company's Chief
Executive Officer, President and Chairman of the Board. Mr. Groninger abstains
from participating in the determination of the proper compensation package for
Dr. Jackson.
(The balance of this page is intentionally left blank.)
13
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE(1)
COMPENSATION PHILOSOPHY
The Company's compensation policies and programs seek to achieve three
fundamental goals: (i) to enhance stockholder value by aligning compensation of
executive officers and employees with the Company's progress toward achievement
of its business objectives and performance, (ii) to reward executive officers
and employees with compensation incentives adequate to retain them in the future
in the face of considerable competition for talent within the pharmaceutical
industry, and (iii) to attract and successfully recruit qualified, talented
personnel essential to the Company's achievement of its business objectives.
COMPENSATION COMMITTEE
To ensure clear and centralized focus on all aspects of compensation, the
Compensation Committee was formed by the Board of Directors in January 1994. For
1996, the Compensation Committee was composed of Mr. Costa, Mr. Groninger and
Dr. Rink. The Compensation Committee is authorized by the Board of Directors,
among other things, to establish and review annually the general compensation
policies applicable to the Company's executive officers and employees generally
(including the relationship of Company performance to compensation) and the
bases for the Chief Executive Officer's compensation in particular. The
Compensation Committee is also authorized to review and approve the level of
compensation paid to the Chief Executive Officer and the Company's other
executive officers during each fiscal year. Finally, the Compensation Committee
administers the Company's incentive compensation and benefit plans, including
the 1994 Employee Stock Purchase Plan, the 1994 Equity Incentive Plan and the
1987 Stock Option Plan. No member of the Compensation Committee during fiscal
year 1996 was a former or current officer or employee of the Company.
COMPENSATION COMPONENTS
In order to link compensation with the enhancement of stockholder value, the
Board has adopted a compensation package for each of the Company's employees and
executive officers which consists of a base salary and long-term incentive
compensation in the form of stock option grants.
SALARY
Base salaries represent the fixed component of the Company's executive
compensation package. Generally, salary compensation is determined by evaluating
the compensation of employees and executives in similar positions in other
similar pharmaceutical companies, the experience of the particular employee or
executive officer and the employee's or executive officer's specific
responsibilities. The Compensation Committee also evaluated the achievement of
Company objectives in determining base salaries for the employees and executive
officers. The Compensation Committee has reviewed outside surveys of employee
and executive officer compensation and benefits in the biopharmaceutical
industry. The base salaries for employees and executive officers were then set
at competitive levels of the surveys reviewed.
LONG-TERM INCENTIVES
The purpose of long-term incentive compensation is to encourage employees,
including executive officers, to remain in the long-term employ of the Company
and to reward them for maximizing shareholder value. Long-term compensation
awards are discretionary and are primarily based on individual performance as
well as Company achievement of goals and objectives. In general, the performance
factors utilized by the Compensation Committee to evaluate the grant of stock
options to Company executive officers during the 1996 fiscal year were
subjective and included, but were not limited to, the following: progress in
clinical trials, regulatory matters and capitalization of the Company; the
planning and implementation of appropriate collaborative arrangements with
pharmaceutical and biotechnology
14
<PAGE>
companies; the securing of working capital; the officer's overall individual
performance in his or her position and relative contribution during the year;
and the Board of Directors' desire to retain the executive officer in face of
considerable competition for executive talent within the industry. The
Compensation Committee may modify the foregoing criteria or select other
performance factors with respect to other executive bonus awards during a given
fiscal year.
BONUS
A portion of the cash compensation paid to the Company's employees and
executive officers, including the Chief Executive Officer, for 1996 included a
discretionary cash bonus payment. The bonus payment was expressly linked to the
attainment of specified Company goals including the finalization of the Kirin
Agreement in 1995 and the Amgen Agreement in 1996. Bonus awards are
discretionary and are evaluated on a year-by-year basis.
SUMMARY
Based on its evaluation of these factors, the Compensation Committee
believes that the Company's employees and executive officers are committed to
achieving positive long-term performance and enhanced stockholder value, and
that the compensation policies and programs discussed in this report have
motivated the Company's employees and executive officers to work toward these
goals.
CEO COMPENSATION
The Chief Executive Officer was a founder of the Company in 1986 and has
served in such capacity since that time. The Chief Executive Officer's
compensation package has traditionally been based below that of other chief
executive officers in comparable companies in the industry. In order to
determine the appropriate salary increase and stock option grant for the Chief
Executive Officer, the Compensation Committee considered the salaries of other
chief executive officers in the pharmaceutical industry and more specifically
the following factors: Dr. Jackson's leading role in negotiating and finalizing
the Agreement with Amgen, Inc., managing the Company's relationships with key
strategic partners including SmithKline Beecham and Kirin, and the progress in
research and development which resulted in the receipt of $3 million and $2
million milestone payments respectively from such parties; successful completion
of a secondary offering of the Company's Common Stock with net proceeds to the
Company of $48 million; Dr. Jackson's continued management responsibilities as
President and Chief Executive Officer of a public company with over 90
employees; and Dr. Jackson's overall performance as President and Chief
Executive Officer.
POLICY REGARDING DEDUCTIBILITY.
The Company is required to disclose its policy regarding qualifying
executive compensation for deductibility under Section 162(m) of the Code which
provides that, for purposes of the regular income tax and the alternative
minimum tax, the otherwise allowable deduction for compensation paid or accrued
with respect to a covered employee of a publicly-held corporation is limited to
no more than $1 million per year. The Company does not anticipate that
compensation payable to any executive officer will exceed $1 million for fiscal
1996. The Committee will continue to evaluate the advisability of qualifying the
deductibility of such compensation in the future.
Compensation Committee for fiscal year
1996
Santo J. Costa, Chairman
James G. Groninger
Timothy J. Rink
March 1997
15
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON(1)
COMPARISON OF 31 MONTH CUMULATIVE TOTAL RETURN*
AMONG NPS PHARMACEUTICALS, INC., THE NASDAQ STOCK MARKET-
US INDEX AND THE NASDAQ PHARMACEUTICALS INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NPS PHARMACEUTICALS, INC. NASDAQ STOCK MARKET-US NASDAQ PHARMACEUTICALS
<S> <C> <C> <C>
05/26/1994 100 100 100
06-94 82 96 93
09-94 73 104 104
12-94 68 103 98
03-95 59 112 106
06-95 86 128 123
09-95 145 144 154
12-95 314 146 179
03-96 232 152 187
06-96 241 165 181
09-96 205 171 185
12-96 200 179 180
</TABLE>
* $100 INVESTED ON 05/26/94 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
- ------------------------------
(1) This Section is not "soliciting material," is not deemed filed with the
Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act or the Exchange Act, whether made before or
after the date hereof and irrespective of any general incorporation language
in any such filing.
16
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
[SIGNATURE]
James U. Jensen
Secretary
April 10, 1997
17
<PAGE>
NPS PHARMACEUTICALS, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned constitutes and appoints Hunter Jackson and James U. Jensen
and each of them (acting jointly or, if one be present, then by that one alone),
his attorneys and proxies, with full power of substitution and revocation to
each, for and in the name, place and stead of the undersigned, to vote, and act
with respect to all shares of Common Stock, par value $.001 per share of NPS
Pharmaceuticals, Inc. (the "Company") standing in the name of the undersigned or
with respect to which the undersigned is entitled to vote and to act at the
Annual Meeting of Stockholders to be held at the University Park Hotel located
at 500 South Wakara Way, Salt Lake City, Utah on May 20, 1997 at 3:00 p.m.
Mountain Time, and at any adjournment(s) thereof, and especially to vote as
follows:
<TABLE>
<S> <C>
1. In the election of seven (7) directors as set forth in the Proxy Statement:
/ / FOR all nominees listed below (except as marked to the contrary below) / / WITHHOLD AUTHORITY to vote for all
nominees
listed below
Santo J. Costa, James G. Groninger, Hunter Jackson, James U. Jensen, Donald E. Kuhla, Thomas N. Parks, Timothy J. Rink
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on the space provided
below)
2. With respect to the appointment of KPMG Peat Marwick LLP as independent auditors for the Company for the 1997 fiscal
year:
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion in any other matters as may properly come before the meeting or any adjournment(s) hereof.
</TABLE>
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED ABOVE. IF NO
DIRECTION IS INDICATED, IT WILL BE VOTED FOR THE ELECTION OF THE SEVEN (7)
DIRECTORS AS SET FORTH IN THE PROXY STATEMENT AND TO RATIFY THE BOARD'S
APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE 1997 FISCAL YEAR.
Dated _____________________________
___________________________________
___________________________________
Please sign here
Do you plan to attend the Annual
Meeting?
/ / Yes / / No
Please date this proxy and sign
your name exactly as it appears
hereon. When there is more than one
owner, each should sign. When
signing as an agent, attorney,
administrator, executor, guardian,
or trustee, please indicate your
title as such. If executed by a
corporation, the proxy should be
signed in the corporate name by a
duly authorized officer who should
indicate his title. Please date,
sign, and mail this proxy card in
the enclosed envelope.
