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 Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Derma Sciences, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which 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:
(4) Date Filed:
<PAGE>
DERMA SCIENCES, INC.
NOTICE OF ANNUAL MEETING
and
PROXY STATEMENT
Annual Meeting of Shareholders
Hyatt Regency
U.S. 1 and Alexander Road
Princeton, New Jersey
May 12, 1998
<PAGE>
DERMA SCIENCES, INC.
214 CARNEGIE CENTER, SUITE 100
PRINCETON, NJ 08540
(800) 825-4325
------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 12, 1998
------------------------------------------------------------
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Derma
Sciences, Inc., a Pennsylvania corporation (the "Company"), will be held on May
12, 1998, at 10:00 a.m., at the Hyatt Regency, U.S. 1 and Alexander Road,
Princeton, New Jersey, for the following purposes:
1. To elect five directors for the year following the Annual Meeting
or until their successors are elected;
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent certified public accountants for the year ended
December 31, 1998; and
3. To transact such other business as may properly come before the
meeting and all adjournments thereof.
Only shareholders of record at the close of business on March 24, 1998,
the record date and time fixed by the Board of Directors, are entitled to notice
of, and to vote at, the meeting.
The Board of Directors unanimously recommends that shareholders vote
"FOR" (i) the election as directors of the nominees named in the accompanying
Proxy Statement, and (ii) the ratification of the selection of Ernst & Young LLP
as the Company's independent certified public accountants for the year ended
December 31, 1998.
You are cordially invited to attend the meeting. Whether or not you
plan to attend personally, and regardless of the number of shares you own, it is
important that your shares be represented. Accordingly, WE URGE YOU TO COMPLETE
THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. If you
attend the Annual Meeting and wish to vote in person, you may withdraw your
proxy at that time.
By Order of the Board of Directors,
EDWARD J. QUILTY
Chairman of the Board
<PAGE>
DERMA SCIENCES, INC.
214 CARNEGIE CENTER, SUITE 100
PRINCETON, NEW JERSEY 08540
(800) 825-4325
----------------------------------------
PROXY STATEMENT
----------------------------------------
This statement is furnished by the Board of Directors of Derma
Sciences, Inc. (the "Company") in connection with the Board's solicitation of
proxies for use at its Annual Meeting of Shareholders (the "Meeting") to be held
at 10:00 a.m. on Tuesday, May 12, 1998, at the Hyatt Regency, U.S. 1 and
Alexander Road, Princeton, New Jersey, 08540, and at any adjournments thereof.
The purpose of the Meeting and the matters to be acted upon are set forth in the
accompanying Notice of Annual Meeting of Shareholders.
If the accompanying form of Proxy is executed properly and returned,
shares represented by it will be voted at the Meeting in accordance with the
instructions on the Proxy. However, if no instructions are specified, shares
will be voted for the election as directors of those nominees named in the Proxy
and for ratification of the selection of Ernst & Young LLP as independent
certified public accountants for the year ended December 31, 1998. The Board
knows of no matters which are to be presented for consideration at the Meeting
other than those specifically described in the Notice of Annual Meeting of
Shareholders, but if other matters are properly presented, it is the intention
of the persons designated as proxies to vote on them in accordance with their
judgment.
A Proxy may be revoked at any time prior to the time it is voted by
written notice to the Secretary of the Company at the above address or by
delivery of a proxy bearing a later date. Any shareholder may attend the Meeting
and vote in person whether or not a Proxy was previously submitted.
The close of business on March 24, 1998, has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of, and to vote at, the Meeting. On the Record Date, the Company had
4,567,632 shares of Common Stock, par value $.01 per share ("Common Stock") and
1,750,000 shares of Series A Convertible Preferred Stock ("Preferred Stock"),
outstanding and entitled to vote. The foregoing shares of Common and Preferred
Stock are the only voting securities of the Company. Each share held of record
will be entitled to one vote at the Meeting. It is expected that the Notice of
Annual Meeting, Proxy Statement and form of Proxy will first be mailed to
shareholders on or about March 31, 1998.
The expense of solicitation will be borne by the Company. The
solicitation of Proxies will be largely by mail, but may include telephonic,
telegraphic or oral communications by officers or other representatives of the
Company. The Company will also reimburse brokers or other persons holding shares
in their names or in the names of their nominees for the reasonable
out-of-pocket expenses in forwarding Proxies and proxy materials to the
beneficial owners of such shares.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date certain
information regarding the current beneficial ownership of shares of the
Company's Common Stock by: (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) each
director of the Company, (iii) each officer of the Company, and (iv) all
directors and officers of the Company as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER (1) BENEFICIALLY OWNED BENEFICIALLY OWNED(13)
---------------------------------------- ------------------ ----------------------
<S> <C> <C>
Hambrecht & Quist California (2).......................... 1,225,000 21.15%
Galen III Partnerships (3)................................ 1,000,000 17.96%
Mary G. Clark, RN ........................................ 775,474 16.98%
Aries Funds (4)........................................... 750,000 14.10%
Edward J. Quilty (5)...................................... 670,500 13.34%
Redwood Asset Management (6).............................. 500,000 9.87%
John T. Borthwick (7)..................................... 339,414 7.30%
First Taiwan Investment Holding, Inc. (8)................. 248,000 5.43%
Charles F. Caudell, III (9) .............................. 160,000 3.41%
Richard S. Mink (9) ...................................... 157,500 3.36%
Stephen T. Wills, CPA(10)................................. 119,166 2.56%
Laurence F. Lane (11)..................................... 24,000 (*)
Timothy J. Patrick ....................................... 0 (*)
All directors and officers as a group (8 persons) (12) ... 2,293,929 41.70%
</TABLE>
- ---------------------
(*) Less than one percent
(1) Except as otherwise noted, the address of each of the persons listed is
214 Carnegie Center, Suite 100, Princeton, New Jersey 08540.
(2) Hambrecht & Quist California can be reached at: One Bush Street, San
Francisco, California 94104. Ownership consists of 612,500 shares of Class
A Convertible Preferred Stock ("Preferred Stock") which is directly
convertible to Common Stock and 612,500 warrants to purchase Common Stock
exercisable at $0.90 per share ("Warrants").
(3) The Galen III Partnerships can be reached at: 610 Fifth Avenue, Fifth
Floor, New York, New York 10020. Includes shares owned by Galen Partners
III, L.P., Galen Partners International III, L.P. and Galen Employee Fund
III, L.P. Ownership consists of 250,000 shares of Common Stock, 375,000
shares of Preferred Stock and 375,000 Warrants. Srini Conjeevaram, a
general partner of the Galen III Partnerships, is a nominee for director
of the Company.
(4) The Aries Funds can be reached at: Paramount Capital, Inc., The Aries
Fund, 787 Seventh Avenue, 48th Floor, New York, New York 10019. Includes
shares owned by The Aries Fund, A Cayman Islands Trust and Aries Domestic
Fund, L.P. Ownership consists of 375,000 shares of Preferred Stock and
375,000 Warrants.
(5) Includes 412,500 shares subject to options and Warrants currently
exercisable and 47,500 additional shares subject to options that will
become exercisable within 60 days of the Record Date.
(6) Redwood Asset Management can be reached at: Ovre Ullorn Terrasse 32, 0358
Oslo, Norway. Ownership consists of 250,000 shares of Preferred Stock and
250,000 Warrants.
(7) Includes 70,000 shares subject to options currently xercisable and 10,000
additional shares subject to options that will become exercisable within
60 days of the Record Date.
(8) First Taiwan Investment Holding, Inc. can be reached at: 15/F, 563, Chung
Hsiao, East Road, Section 4 Taipei, Taiwan R.O.C.
(9) Includes 116,250 shares subject to options and Warrants currently
exercisable and 10,000 additional shares subject to options that will
become exercisable within 60 days of the Record Date.
(10) Includes 72,083 shares subject to options and Warrants currently
exercisable and 8,333 shares subject to options that will become
exercisable within 60 days of the Record Date.
2
<PAGE>
(11) Includes 16,000 shares subject to options currently exercisable. No
additional shares subject to options will become exercisable within 60
days of the Record Date.
(12) Includes 888,916 shares subject to options and Warrants currently
exercisable and exercisable within 60 days of the Record Date by directors
and officers of the Company.
(13) The percent beneficially owned by each entity or individual assumes the
exercise of all exercisable options (including those that would be
exercisable within 60 days of the Record Date) and the exercise of all
Warrants owned by such entity or individual.
PROPOSAL 1 - ELECTION OF DIRECTORS
A board of five directors will be elected at the Meeting by the
shareholders of the Company to hold office until their successors have been
elected and qualify. It is intended that, unless authorization to do so is
withheld, the proxies will be voted "FOR" the election of the director nominees
named below. Each nominee has consented to be named in this Proxy Statement and
to serve as a director if elected. However, if any nominee becomes unable to
stand for election as a director at the Meeting, an event not now anticipated by
the Board, the Proxy will be voted for a substitute designated by the Board.
The nominees are listed below with brief statements of their principal
occupation and other information:
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE DIRECTOR SINCE PRINCIPAL OCCUPATION
--------------- --- -------------- --------------------
<S> <C> <C> <C>
Edward J. Quilty 47 March, 1996 Chairman of the Board of the Company and Chairman of the
Board of Palatin Technologies, Inc.
John T. Borthwick 44 November, 1984 Director of Business Development of the Company
Laurence F. Lane 52 June, 1995 Vice President of Regulatory Affairs of NovaCare, Inc.
Timothy J. Patrick 39 February, 1998 President and Chief Executive Officer of Proxima
Therapeutics, Inc.
Srini Conjeevaram 39 Nominee General Partner and Chief Financial Officer of Galen
Associates
</TABLE>
The term of office of each person elected as director will continue
until the Company's next Annual Meeting of Shareholders or until his successor
has been elected and qualifies.
INFORMATION RELATIVE TO DIRECTORS
EDWARD J. QUILTY has served as Chairman of the Board since May, 1996
and as a director of the Company since March, 1996. Mr. Quilty has been the
Chairman of the Board of Palatin Technologies, Inc., a biopharmaceutical company
specializing in peptide drug design for diagnostic and therapeutic agents, since
November, 1995. From July, 1994 through November, 1995, he was President and
Chief Executive Officer of MedChem Products, Inc., a publicly traded developer
and manufacturer of specialty medical products which was acquired by C. R. Bard
in November, 1995. From March, 1992 through July, 1994 Mr. Quilty served as
President and Chief Executive Officer of Life Medical Sciences, Inc., a
developer and manufacturer of specialty medical products including wound healing
agents. The assets of Life Medical Sciences were purchased by MedChem Products,
Inc. Mr. Quilty has over 25 years of experience in the Healthcare industry
primarily in strategic planning, management and sales and marketing. Mr. Quilty
is a member of the Healthcare Manufacturing Marketing Council. He earned a
Bachelor of Science degree from Southwest Missouri State University,
Springfield, Missouri in 1972 and a Master of Business Administration degree
from Ohio University, Athens, Ohio in 1987.
3
<PAGE>
JOHN T. BORTHWICK has served as Director of Business Development of the
Company since November, 1997 and served as President and Chief Executive Officer
of the Company from February, 1991 to November, 1997 and February, 1991 to May,
1997, respectively. He has served as a director of the Company since November,
1984 and served as Vice Chairman of the Board from September, 1994 to June,
1995. Previously, he was Vice President for Marketing and National Sales Manager
of the Company from 1984 through 1990. During 1988 and 1989, Mr. Borthwick also
served as President of Wound Management Services, a Medicare billing service
specializing in wound care. In 1993, Mr. Borthwick served as a member of the
board of directors of the National Association for the Support of Long Term
Care, an organization which represents the legislative and regulatory interests
of the long term care industry. Mr. Borthwick earned a Bachelor of Arts degree
in Biology from Temple University in 1975.
LAURENCE F. LANE has served as a director of the Company since June,
1995. Mr. Lane has been the Senior Vice President of Regulatory Affairs of
NovaCare, Inc., a publicly traded medical rehabilitation corporation, since
November, 1986. He has over twenty years of government relations and policy
experience. Mr. Lane has served as the Director for Special Programs of the
American Health Care Association, Director for Policy Development of the
American Association of Homes for the Aging and legislative representative of
the American Association of Retired Persons. He managed the 1980 White House
Mini-Conference on Long Term Care and served as a credentialed resource person
for the 1981 White House Conference on Aging. Mr. Lane is a member of the
following organizations: National Association for the Support of Long Term Care,
International Subacute Healthcare Association, National Association for
Rehabilitation Agencies, National Health Lawyers Association, and Healthcare
Financial Management Association. He earned Bachelor of Arts and Master of Arts
degrees from the School of Public and International Affairs of George Washington
University, Washington, D.C. Mr. Lane has pursued doctoral studies at the
Washington Public Affairs Center, University of Southern California and received
a Gerontology certificate from Andrus Gerontology Center, University of Southern
California in 1974.
TIMOTHY J. PATRICK has served as director of the Company since
February, 1998. Mr. Patrick has been the President and Chief Executive Officer
of Proxima Therapeutics, Inc., a medical device company developing proprietary
site-specific delivery systems for the treatment of solid tumors, since April,
1996. He previously served as President of Gesco International, a subsidiary of
MedChem Products that manufactured and marketed PICC vascular access catheters,
from July, 1994 to January, 1996. Mr. Patrick served McGaw, Inc. for 13 years in
various sales executive positions the last of which was President of Central
Admixture Pharmacy Services, a business unit of McGaw, Inc. that provided
patient-specific intravenous solution products to hospitals and home care
companies. Mr. Patrick earned a Bachelor of Arts degree in Biology from Miami
University, Oxford, Ohio in 1981.
SRINI CONJEEVARAM is a nominee for director of the Company. Mr.
Conjeevaram has been the General Partner and Chief Financial Officer of Galen
Associates, an investment banking firm, since January, 1991. Prior to his
affiliation with Galen Associates, he was an Associate in Corporate Finance at
Smith Barney from July, 1989 to December, 1990 and a Senior Project Engineer for
General Motors Corporation from April, 1982 to July, 1987. Mr. Conjeevaram
serves as a director of Halsey Drug Company, Inc., a publicly traded company. He
earned a Bachelor of Science degree in Mechanical Engineering from Madras
University, Madras, India, a Master of Science degree in Mechanical Engineering
from Stanford University, Stanford, California and a Master of Business
Administration in Finance from Indiana University, Bloomington, Indiana.
COMPENSATION OF DIRECTORS
All directors are reimbursed for expenses incurred in connection with
each board and committee meeting attended. Each outside director receives $500
for every board meeting and for each separately held committee meeting attended.
In addition, each outside director receives an annual retainer of $5,000. Inside
directors receive no compensation for their services as directors.
Certain directors of the Company resigned and were granted options to
purchase a total of 61,000 shares of Common Stock in April, 1997. The following
table sets forth information with respect to the grant of non-qualified stock
options to Laurence F. Lane, a current director of the Company, exclusive of the
Stock Option Plan:
4
<PAGE>
<TABLE>
<CAPTION>
OPTIONS EXERCISABLE OPTIONS AT EXERCISE PRICE
NAME GRANTED (#) DECEMBER 31, 1997 (#) ($/SHARE) EXPIRATION DATE
---- ----------- --------------------- --------- ---------------
<S> <C> <C> <C> <C>
Laurence F. Lane 10,000(1) 6,000 $1.125 November 21, 2006
10,000(2) 10,000 $1.125 April 7, 2007
</TABLE>
(1) These options began vesting at a rate of 20% per year on November 21,
1995 and were repriced by the Executive Committee on April 8, 1997.
(2) These options were granted on April 8, 1997.
BOARD COMMITTEES
The Company maintained an Executive Committee until May, 1997 composed
of Edward J. Quilty, Mary G. Clark and John T. Borthwick. The Executive
Committee was empowered to act on behalf of the Board of Directors save with
respect to certain "fundamental" transactions such as merger, bulk sale of
assets and dissolution. The Executive Committee held two meetings in 1997.
The Company maintained an Audit Committee that was composed of Laurence
F. Lane and Herbert Grossman until Mr. Grossman's death in December of 1997. The
Audit Committee reviews the results and scope of the audit and the financial
recommendations provided by the Company's independent auditors. The Audit
Committee held one meeting in 1997.
The Company maintains a Compensation Committee that was composed of
Edward J. Quilty, Laurence F. Lane and Herbert Grossman until Mr. Gorssman's
death in December of 1997. The Compensation Committee reviews the compensation
of management and recommends to the Board of Directors the amounts and types of
cash and equity incentives to be offered to management. The Compensation
Committee held two meetings in 1997.
The Company maintained a Nominating Committee that was composed of John
T. Borthwick, Laurence F. Lane and Margaret R. Spencer until Mrs. Spencer's
resignation in May of 1997. The Nominating Committee reviewed the qualifications
of prospective directors for consideration by the Board of Directors as
management's nominees for directors. The Nominating Committee held one meeting
in 1997.
The Company will consider nominations for directors submitted by
shareholders. Shareholder nominations for election to the Board of Directors
must be made by written notification received by the Company not later than
sixty days prior to the next annual meeting of shareholders. Such notification
shall contain, at a minimum, the following information:
1. The name and residential address ofv the proposed nominee and
of each notifying shareholder;
2. The principal occupation of the proposed nominee;
3. A representation that the notifying shareholder intends to
appear in person or by proxy at the meeting to nominate the
person specified in the notice;
4. The total number of shares of the Company owned by the notifying
shareholder;
5. A description of all arrangements or understandings between the
notifying shareholder and the proposed nominee and any other
person or persons pursuant to which the nomination is to be made
by the notifying shareholder;
6. Any other information regarding the nominee that would be
required to be included in a proxy statement filed with the SEC;
and
7. The consent of the nominee to serve as director of the Company,
if elected.
The Committee will return, without consideration, any notice of
proposed nomination which does not contain the foregoing information.
During 1997, there were six meetings of the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED ABOVE.
5
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company are:
<TABLE>
<CAPTION>
EXECUTIVE OFFICER
NAME AGE POSITIONS WITH THE COMPANY OF THE COMPANY SINCE
---- --- -------------------------- --------------------
<S> <C> <C> <C>
Edward J. Quilty 47 Chairman of the Board of Directors May, 1996
Richard S. Mink 45 Chief Operating Officer April, 1997
Charles F. Caudell, III 45 Executive Vice President for Field April, 1997
Operations
Stephen T. Wills 41 Vice President and Chief Financial July, 1997
Officer
</TABLE>
Additional information relative to Edward J. Quilty is included in the
preceding pages under "Election of Directors."
RICHARD S. MINK, has served as Chief Operating Officer of the Company
since November, 1997, having previously served the Company as Vice President for
Marketing since April, 1997. Prior to joining the Company, Mr. Mink was Senior
Vice President/General Manager, Marketing Information Services Division of Bio
Imaging Technologies, Inc., a medical image data and information management
company, from November, 1996 to April, 1997. He was a self-employed marketing
consultant from May, 1995 to October, 1996, Executive Vice President for Sales
and Marketing for MedChem, Inc. from August, 1994 to May, 1995, Vice President
for Sales and Marketing for Life Medical Sciences from July, 1993 to August,
1994, and had risen to the position of Director of Marketing for Becton
Dickinson Company during his tenure there from August, 1977 to July, 1993.
During May, 1996 through April, 1997, Mr. Mink was a member of the New Jersey
Technology Council Healthcare Advisory Board. He earned a Bachelor of Science
degree in Biology/Chemistry and a Master of Business Administration degree from
Rutgers University, Newark, New Jersey in 1975 and 1977, respectively.
CHARLES F. CAUDELL III, has served as Executive Vice President for
Field Operations of the Company since November, 1997 having previously served
the Company as Vice President for Sales since April, 1997. Prior to joining the
Company, Mr. Caudell was Division Director of CalgonVestal, a former Merck & Co.
wound care subsidiary, and later Division Director of ConvaTec upon the purchase
of this company by Bristol Myers-Squibb, from January, 1984 to April, 1997. He
has thirteen years experience in management and sales. Mr. Caudell earned a
Bachelor of Arts degree in Communications from Wake Forest University,
Winston-Salem, North Carolina in 1974 and a Master of Business Administration
from Ohio University, Athens, Ohio in 1993.
STEPHEN T. WILLS, CPA, MST has served as Chief Financial Officer of the
Company since July, 1997 and Vice President since November, 1997. Mr. Wills also
serves as President and Chief Operating Officer of Golomb, Wills & Company, PC,
a public accounting firm, and as Vice President and Chief Financial Officer of
Palatin Technologies, Inc., a publicly traded biopharmaceutical company. He has
eighteen years experience in financial and corporate accounting matters. Mr.
Wills is a member of the American Institute of Certified Public Accountants, New
Jersey Society of Certified Public Accountants and Pennsylvania Institute of
Certified Public Accountants. He earned a Bachelor of Science degree in
Accounting from West Chester University, West Chester, Pennsylvania in 1979 and
a Master of Science in Taxation from Temple University, Philadelphia,
Pennsylvania in 1994.
Officers are elected by and serve at the discretion of the Board of
Directors.
6
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
- --------------------------
The following table shows all compensation paid by the Company to its
Chairman, Chief Financial Officer and each of the Company's executive officers
whose compensation exceeded $100,000 for their services in all capacities during
the years 1995, 1996 and 1997:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION
- --------------------------- ---- ------ ----- ----------- ------------
<S> <C> <C> <C> <C> <C>
Edward J. Quilty(1) 1997 $149,986 -- 300,000(2) --
Chairman 1996 $ 59,615 -- 150,000 --
Richard S. Mink 1997 $100,961 $25,000(3) 200,000 --
Chief Operating Officer
Charles F. Caudell, III 1997 $100,961 -- 200,000 --
Executive Vice President
for Field Operations
Stephen T. Wills, CPA(4) 1997 $ 85,000 -- 75,000 --
Vice President and
Chief FInancial Officer
John T. Borthwick(5) 1997 $180,000 -- 50,000 $ 9,962 (6)
Director of Business Development 1996 $180,000 -- -- $ 10,861 (6)(7)
1995 $150,000 $40,000 100,000 $ 10,712 (6)(7)
Gary L. Borthwick(8) 1997 $ 67,500 -- 59,000(9) $216,762 (10)(11)
Vice President for Finance & Operations 1996 $135,000 -- -- $ 7,514 (11)
and Chief Financial Officer 1995 $119,000 $20,000 50,000 $ 7,514 (11)
</TABLE>
(1) Mr. Edward J. Quilty is the Principal Executive Officer of the Company.
(2) Includes 100,000 options granted in November 1997, 50,000 options to
members of senior management and 150,000 options originally granted in
1996 and repriced by the Executive Committee of the Board of Directors
on April 8, 1997.
(3) Sign-on bonus.
(4) Represents compensation earned during the period July through December,
1997.
(5) Mr. John T. Borthwick resigned as Chief Executive Officer and President
in May, 1997 and November, 1997, respectively.
(6) The Company enrolled John T. Borthwick in a split-dollar life insurance
program on July 1, 1993. The monthly premiums are $830.18 for $500,000
coverage.
(7) Matching contributions made pursuant to the Company's 401(k) plan.
(8) Mr. Gary L. Borthwick resigned as of July 1, 1997.
(9) Options to purchase 59,000 shares of Common Stock were granted to Mr.
Borthwick during 1997. However only 19,000 of these options had vested
prior to his resignation.
(10) This amount consists of $135,000 consulting fees and $74,248 in debt
forgiveness. For additional information relative to Mr. Borthwick's
severance, please refer to the Company's Form 8-K filed with the
Securities and Exchange Commission on July 1, 1997.
(11) The Company enrolled Gary L. Borthwick in a split-dollar life insurance
program on February 1, 1993. The monthly premiums were $626.15 for
$500,000 coverage.
7
<PAGE>
Option Grants Table
- -------------------
The following table sets forth information regarding grants of stock
options to the named executive officers made for the year ended December 31,
1997:
<TABLE>
<CAPTION>
PERCENT OF TOTAL EXERCISE
OPTIONS OPTIONS GRANTED TO PRICE
NAME GRANTED (#) EMPLOYEES IN 1997 ($/SHARE) EXPIRATION DATE
------ ------------- ------------------ --------- ---------------
<S> <C> <C> <C> <C>
Edward J. Quilty 50,000 (1) 6.4% $1.125 April 8, 2007
100,000 (2) 12.8% $0.80 January 29, 2007
150,000 (3) N/A(3) $1.125 May 22, 2007
Richard S. Mink 50,000 (1) 6.4% $1.125 April 8, 2007
118,000 (4) 15.1% $1.125 April 14, 2007
32,000 (5) 4.1% $1.125 April 14, 2007
Charles F. Caudell, III 50,000 (1) 6.4% $1.125 April 8, 2007
118,000 (6) 15.1% $1.125 April 21, 2007
32,000 (7) 4.1% $1.125 April 21, 2007
Stephen T. Wills, CPA 45,000 (8) 5.7% $1.00 July 22, 2007
30,000 (9) 3.8% $1.00 July 22, 2007
John T. Borthwick 50,000 (1) 6.4% $1.125 April 8, 2007
Gary L. Borthwick 50,000 (1)(10) 6.4% $1.125 July 1, 2002
</TABLE>
- -------------------
(1) These non-qualified options to purchase Common Stock were granted to
members of the Company's Senior Management on April 8, 1997. Options to
purchase 10,000 shares were vested upon the grant and the remainder of
the options vest in 10,000 increments on April 8 of each year through
April 8, 2001 at which time the options will be fully vested. Vesting
may accelerate as follows: (a) 25,000 of the options will vest if either
net sales exceed $6,000,000 in a 12 consecutive month period or the
Company's Common Stock price for 180 consecutive days exceeds $3.00 per
share; and (b) all 50,000 of the options will vest if either net sales
exceed $8,000,000 in a 12 consecutive month period or the Company's
Common Stock price for 180 consecutive days exceeds $5.00 per share. For
further information relative to these options, please refer to the
Company's Form 8-K filed with the Securities and Exchange Commission on
May 6, 1997.
(2) These incentive stock options to purchase Ccommon Stock were granted
in November, 1997 and are vested.
(3) These non-qualified options to purchase Common Stock were granted in
1996 pursuant to Mr. Quilty's Employment Agreement at a price of $2.50
per share. These options were repriced by the Executive Committee of the
Board of Directors on April 8, 1997.
(4) These options to purchase Common Stock were part of an April 14, 1997
grant of 150,000 non-qualified options pursuant to Mr. Mink's Employment
Agreement. Of the original grant, 118,000 options were converted from
non-qualified to incentive stock options on November 5, 1997. Options to
purchase 59,000 shares vested on November 14, 1997. Options to purchase
two additional increments of 29,500 shares each will vest on November
14, 1998 and April, 14, 1999, respectively. For further information
relative to these options, please refer to "Employment Arrangements"
below.
(5) These options to purchase Common Stock constitute the non-qualified
options component of the 150,000 options grant discussed in note (3)
above. Options to purchase 16,000 shares vested on November 14, 1997.
Options to purchase two additional increments of 8,000 shares each will
vest on November 14, 1998 and April, 14, 1999, respectively. For further
information relative to these options, please refer to the Company's
Form 8-K filed with the Securities and Exchange Commission on May 6,
1997.
8
<PAGE>
(6) These options to purchase Common Stock were part of an April 21, 1997
grant of 150,000 non-qualified options pursuant to Mr. Caudell's
employment Agreement. Of the original grant, 118,000 options were
converted from non-qualified to incentive stock options on November 5,
1997. Options to purchase 59,000 shares vested on November 21, 1997.
Options to purchase two additional increments of 29,500 shares each will
vest on November 21, 1998 and April, 21, 1999, respectively. For further
information relative to these options, please refer to "Employment
Arrangements" below.
(7) These options to purchase Common Stock constitute the non-qualified
options component of the 150,000 options grant discussed in note (5)
above. Options to purchase 16,000 shares vested on November 21, 1997.
Options to purchase two additional increments of 8,000 shares each will
vest on November 21, 1998 and April, 21, 1999, respectively. For further
information relative to these options, please refer to the Company's
Form 8-K filed with the Securities and Exchange Commission on May 6,
1997.
(8) These options to purchase Common Stock were part of a July 23, 1997
grant of 75,000 non-qualified options pursuant to Mr. Wills' Stock
Option Agreement. Of the original grant, 45,000 options were converted
from non-qualified to incentive stock options on November 5, 1997. These
options vest over the period March 22, 1998 through January 22, 1999 at
an average rate of 4,090 shares per month.
(9) These options to purchase Common Stock constitute the non-qualified
options component of the 75,000 options grant discussed in note (7)
above. Options to purchase 20,833 shares were vested on December 22,
1997. Options to purchase an additional 9,167 shares were vested on
March 22, 1998.
(10) Pursuant to Mr. Borthwick's severance agreement, these options ceased
vesting at 10,000 shares. For further information relative to this
agreement, please refer to the Company's Form 8-K filed with the
Securities and Exchange Commission on July 1, 1997.
Aggregate Year End Option Value Table
- -------------------------------------
The following table sets forth information regarding the aggregate
number and value of options to purchase Common Stock held by the named executive
officers as of December 31, 1997. No options have been exercised:
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 31, 1997 (#) AT DECEMBER 31, 1997 ($)(1)
-------------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Edward J. Quilty ............... 112,500 37,500 0 0
10,000 40,000 0 0
100,000 0 $32,500
Richard S. Mink ................ 10,000 40,000 0 0
59,000 59,000 0 0
16,000 16,000 0 0
Charles F. Caudell, III ........ 10,000 40,000 0 0
59,000 59,000 0 0
16,000 16,000 0 0
Stephen T. Wills, CPA .......... 0 45,000 0 $ 5,625
20,833 9,167 $ 2,604 $ 1,146
John T. Borthwick............... 60,000 40,000 0 0
10,000 40,000 0 0
Gary L. Borthwick............... 10,000 0 0 0
20,000 0 0 0
9,000 0 0 0
</TABLE>
- -------------------
(1) Determined based on a fair market value for the Company's Common Stock
at December 31, 1997 of $1.125 per share.
9
<PAGE>
REPORT ON REPRICING STOCK OPTIONS
On May 22, 1996, Edward J. Quilty, Chairman of the Board, was granted
150,000 nonqualified stock options at an exercise price of $2.50 per share. The
foregoing options vest to the extent of 50%, 75% and 100% on April 8, 1997,
October 8, 1997 and April 8, 1998, respectively. The Executive Committee on
April 8, 1997, repriced the foregoing options to the fair market value of the
Company's Common Stock on April 8, 1997, to wit: $1.125.
EMPLOYMENT ARRANGEMENTS
The Company entered into a three-year employment agreement on August 1,
1996, as amended on May 2, 1997, (the "Agreement") with Edward J. Quilty, its
Chairman of the Board. The Agreement provides that Mr. Quilty will receive base
salary of $150,000 per year, together with such additional incentive
compensation as may be awarded upon the recommendation of the Compensation
Committee of the Board of Directors; provided, however, additional incentive
compensation, if any, shall be predicated upon the extent to which the Company
attains its earnings goals and the extent of Mr. Quilty's contributions thereto.
As additional compensation, the Agreement grants Mr. Quilty 150,000
non-qualified stock options, exercisable at a price of $1.125 per share, of
which 112,500 were vested as of October 8, 1997 and the remaining 37,500 will
vest on April 8, 1998. These options become 100% exercisable if Mr. Quilty
becomes disabled, the Agreement is terminated by the Company other than "for
cause," the Agreement is terminated by Mr. Quilty for the Company's breach, or
in the event of the sale of substantially all of the stock or assets of the
Company, or upon the merger or consolidation of the Company in which the Company
is not the surviving entity. If the Company sells additional Common Stock during
the term of the Agreement in a transaction, or related series of transactions,
the result of which is to increase the number of shares of Common Stock
outstanding by 40%, then Mr. Quilty will be granted such additional stock
options, exercisable at $1.125 per share, as may be necessary to enable him to
purchase the same percentage of outstanding Common Stock as he maintained prior
to such sale or issuance. In addition, in the event of the sale of substantially
all of the stock or assets of the Company, or upon the merger or consolidation
of the Company in which the Company is not the surviving entity, the Company
shall pay Mr. Quilty a severance payment equal to the greater of his salary for
the remaining term of the Agreement or $125,000. Mr. Quilty may not disclose any
confidential information of the Company during or after the term of the
Agreement, and may not compete with the Company during the term of the Agreement
and for a period of one year thereafter.
The Company entered into a two-year employment agreement on April 14,
1997, as amended on November 5, 1997, (the "Agreement") with Richard S. Mink,
its Chief Operating Officer and former Vice President for Marketing. The
Agreement provides that Mr. Mink receive the following: (1) base salary of
$150,000 per year, together with a $25,000 sign-on bonus; (2) incentive
compensation as may be awarded upon the recommendation of the Office of the
Chief Executive and approved by the Board of Directors; provided, however,
incentive compensation, if any, shall be predicated upon the extent to which the
Company attains its earnings goals and the extent of Mr. Mink's contributions
thereto; and (3) 118,000 incentive and 32,000 non-qualified stock options,
exercisable at $1.125, which options become exercisable to the extent of 50%,
75% and 100% upon completion of six, eighteen and twenty-four months of
employment, respectively. These options become 100% exercisable if Mr. Mink
becomes disabled, the Agreement is terminated by the Company other than "for
cause," the Agreement is terminated by Mr. Mink for the Company's breach, upon
the sale of substantially all of the stock or assets of the Company, or upon the
merger or consolidation of the Company in which the Company is not the surviving
entity. Upon the sale of substantially all of the stock or assets of the
Company, or upon the merger or consolidation of the Company in which the Company
is not the surviving entity, the Company shall pay Mr. Mink a severance payment
equal to the greater of his salary for the remaining term of the Agreement or
$150,000. Mr. Mink may not disclose any confidential information of the Company
during or after the term of the agreement, and may not compete with the Company
during the term of the Agreement and for a period of one year thereafter.
10
<PAGE>
The Company entered into a two-year employment agreement on April 21,
1997, as amended on November 5, 1997, (the "Agreement") with Charles F. Caudell,
III, its Executive Vice President for Field Operations and former Vice President
for Sales. The Agreement provides that Mr. Caudell receive the following: (1)
base salary of $150,000 per year; (2) incentive compensation as may be awarded
upon the recommendation of the Office of the Chief Executive and approved by the
Board of Directors; provided, however, incentive compensation, if any, shall be
predicated upon the extent to which the Company attains its earnings goals and
the extent of Mr. Caudell's contributions thereto; and (3) 118,000 incentive and
32,000 non-qualified stock options, exercisable at $1.125, which options become
exercisable to the extent of 50%, 75% and 100% upon completion of six, eighteen
and twenty-four months of employment, respectively. These options become 100%
exercisable if Mr. Caudell becomes disabled, the Agreement is terminated by the
Company other than "for cause," the Agreement is terminated by Mr. Caudell for
the Company's breach, upon the sale of substantially all of the stock or assets
of the Company, or upon the merger or consolidation of the Company in which the
Company is not the surviving entity. Upon the sale of substantially all of the
stock or assets of the Company, or upon the merger or consolidation of the
Company in which the Company is not the surviving entity, the Company shall pay
Mr. Caudell a severance payment equal to the greater of his salary for the
remaining term of the Agreement or $150,000. Mr. Caudell may not disclose any
confidential information of the Company during or after the term of the
agreement, and may not compete with the Company during the term of the Agreement
and for a period of one year thereafter.
The Company entered into a five-year employment agreement on December
29, 1995, as amended on March 5, 1997, (the "Agreement") with John T. Borthwick,
its Director of Business Development and former President and Chief Executive
Officer. The Agreement provides that Mr. Borthwick will receive base
compensation of $180,000 during the calendar years 1996, 1997 and 1998 and base
compensation for the calendar years 1999 and 2000 to be determined by the Board
of Directors upon the recommendation of the Compensation Committee, together
with such incentive and/or bonus compensation as may be awarded upon the
recommendation of the Compensation Committee; provided, however, incentive
and/or bonus compensation, if any, will be predicated upon the extent to which
the Company attains its earnings goals and the extent of Mr. Borthwick's
contributions thereto. As additional compensation, the Agreement grants Mr.
Borthwick 100,000 non-qualified stock options, exercisable at a price of $2.31
per share, of which 20,000 were vested as of January 1, 1996 and the remaining
80,000 vest at a rate of 20% per year. If the Company sells additional Common
Stock during the term of the Agreement in a transaction, or related series of
transactions, the result of which is to increase the number of shares of Common
Stock outstanding by 40%, then Mr. Borthwick will be granted such additional
stock options, exercisable at $2.31 per share, as may be necessary to enable him
to purchase the same percentage of outstanding Common Stock as he maintained
prior to such sale or issuance. In addition, in the event of a sale of
substantially all of the stock or assets of the Company, or a merger or
consolidation of the Company in which the Company is not the surviving entity,
or upon the written agreement of the Company to effect such sale, merger or
consolidation, Mr. Borthwick will have the option of completing the remaining
term of his employment under the Agreement or receiving severance compensation
equal to his total compensation accrued during the twelve-month period
immediately preceding such sale, merger or consolidation. Further, in the event
of such sale, merger or consolidation: (1) the stock options granted pursuant to
the Agreement will become exercisable in their entirety and will remain
exercisable for a period of not less than thirty (30) days; and (2) the
promissory note between Mr. Borthwick and the Company dated January 17, 1995 in
the original principal amount of $99,530.34 will be forgiven. The Agreement
further provides that Mr. Borthwick will receive a severance payment of 100% of
his total compensation accrued during the twelve-month period immediately
preceding the expiration of the Agreement if the Company does not renew or
extend the term of the Agreement upon expiration thereof. The Agreement also
provides that Mr. Borthwick will receive: (i) a vehicle for use primarily (but
not exclusively) in the conduct of Company business, (ii) split-dollar life
insurance in the face amount of $500,000, and (iii) disability income insurance
providing for payments of 50% of compensation. Mr. Borthwick may not disclose
any confidential information of the Company during or after the term of the
Agreement, and may not compete with the Company during the term of the Agreement
and for a period of one year thereafter.
The Company entered into a three-year employment agreement on December
29, 1995, as amended on April 30, 1997, (the "Agreement") with Robert P.
DiGiovine, RPh, its Director of Regulatory and Clinical Affairs and former
Director of Regulatory Compliance and Product Development. The Agreement
provides that Mr. DiGiovine will receive base salary of $100,000, together with
such incentive and/or bonus compensation as may be awarded upon the
recommendation of the Office of the Chief Executive and approved by the Board of
Directors; provided, however, incentive and/or bonus compensation, if any, shall
11
<PAGE>
be predicated upon the extent to which the Company attains its earnings goals
and the extent of Mr. DiGiovine's contributions thereto; provided, further, that
such incentive and/or bonus compensation shall not exceed 35% of Mr. DiGiovine's
base compensation for a given year. In addition, as further compensation under
the Agreement, the Company has granted Mr. DiGiovine 15,000 non-qualified stock
options which vest in three installments during the period January 1, 1996
through January 1, 1998 at an exercise price of $2.50 per share. These options
become 100% exercisable if Mr. DiGiovine becomes disabled, the Agreement is
terminated by the Company other than "for cause," the Agreement is terminated by
Mr. DiGiovine for the Company's breach, upon the sale of substantially all of
the stock or assets of the Company, or upon the merger or consolidation of the
Company in which the Company is not the surviving entity. Upon the sale of
substantially all of the stock or assets of the Company, or upon the merger or
consolidation of the Company in which the Company is not the surviving entity,
the Company shall pay Mr. DiGiovine a severance payment equal to the greater of
his salary for the remaining term of the Agreement or $100,000. Mr. DiGiovine
may not disclose any confidential information of the Company during or after the
term of the Agreement, and may not compete with the Company during the term of
the Agreement and for a period of one year thereafter.
STOCK OPTION PLAN
The Company adopted the Stock Option Plan, (the "Plan") in July 1991,
and amended the Plan in January, 1994 and November 21, 1995. The number of
shares of common stock ("Common Stock") reserved for issuance pursuant to the
Plan is 450,000 shares. The Plan authorizes the Company to grant two types of
equity incentives: (i) options intended to qualify as "incentive stock options"
("ISOs") as defined in Section 422 of the Internal Revenue Code of 1986, as
amended, and (ii) non-qualified stock options ("NQSOs"). The Plan authorizes
options to be granted to directors, officers, key employees and consultants of
the Company, except that ISOs may be granted only to employees. The Plan is
administered by a committee of disinterested directors designated by the Board
of Directors (the "Compensation Committee"). Subject to the restrictions of the
Plan, the Compensation Committee determines who is eligible to receive stock
options, the nature, amount and timing of options granted under the Plan, the
exercise price and vesting schedule of any options granted, and all other terms
and conditions of the options to be granted.
Under the Plan, ISOs and NQSOs may have a term of up to ten years.
Stock options are not assignable or transferable except by will or the laws of
descent and distribution. Stock options granted under the Plan which have lapsed
or terminated revert to the status of "unissued" and become available for
reissuance.
At December 31, 1997, options to purchase 381,000 shares of Common
Stock had been granted under the Plan with exercise prices ranging from $0.80 to
$1.125 per share.
CERTAIN TRANSACTIONS
The Company has entered into a five-year consulting agreement with its
founder and former President and director, Mary G. Clark. In 1997 annual
compensation under this agreement was $99,000.
PROPOSAL 2 - RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP as independent
certified public accountants for the Company for the year ended December 31,
1998. Ernst & Young LLP has served as the Company's auditors since 1990. The
ratification of the selection of independent certified public accountants is to
be voted upon at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE YEAR ENDED DECEMBER 31, 1998.
12
<PAGE>
OTHER BUSINESS
Management of the Company knows of no other business which will be
presented for consideration at the Meeting, but should any other matters be
brought before the Meeting it is intended that the persons named in the
accompanying proxy will vote at their discretion.
SHAREHOLDER PROPOSALS
Any shareholder desiring to present a proposal to other shareholders at
the next Annual Meeting must transmit such proposal to the Company so that it is
received by the Company on or before January 17, 1999. All such proposals should
be in compliance with applicable regulations of the Securities and Exchange
Commission.
ANNUAL REPORT
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH BENEFICIAL HOLDER OF
COMMON STOCK ON THE RECORD DATE, UPON WRITTEN REQUEST OF ANY SUCH PERSON, A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER
31, 1997 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY SUCH REQUEST
SHOULD BE MADE IN WRITING TO THE CORPORATE SECRETARY, DERMA SCIENCES, INC., 214
CARNEGIE CENTER, SUITE 100, PRINCETON, NEW JERSEY 08540.
By Order of the Board of Directors,
EDWARD J. QUILTY
Chairman
March 31, 1998
13
<PAGE>
DERMA SCIENCES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 12, 1998
The undersigned hereby constitutes and appoints Edward J. Quilty as proxy of the
undersigned to vote all of the shares of Derma Sciences, Inc. that the
undersigned may be entitled to vote at the Annual Meeting of Shareholders of
Derma Sciences, Inc. to be held at the Hyatt Regency, U.S. 1 and Alexander Road,
Princeton, New Jersey on May 12, 1998, at 10:00 a.m., and any adjournments
thereof. This proxy shall be voted on the proposals described in the Proxy
Statement as specified below.
The Board of Directors recommends a vote "FOR" each of the following:
1. ELECTION OF DIRECTORS
Election of nominees: Edward J. Quilty, John T. Borthwick, Laurence F. Lane,
Timothy J. Patrick and Srini Conjeevaram. TO WITHHOLD AUTHORITY TO VOTE FOR AN
INDIVIDUAL NOMINEE, PLACE A LINE THROUGH SUCH NOMINEE'S NAME.
[_] FOR all nominees [_] WITHHOLD AUTHORITY for all nominees
2. RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS CERTIFIED PUBLIC
ACCOUNTANTS FOR YEAR ENDED DECEMBER 31, 1998
[_] FOR [_] AGAINST [_] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION AS DIRECTORS OF THOSE NOMINEES NAMED IN THE PROXY AND
FOR RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS FOR THE YEAR ENDED DECEMBER 31, 1998. THIS PROXY ALSO
DELEGATES DISCRETIONARY AUTHORITY TO VOTE WITH RESPECT TO ANY OTHER BUSINESS
THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
<PAGE>
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF THE MEETING AND THE
PROXY STATEMENT. The undersigned also hereby ratifies all that the proxy named
herein may do by virtue hereof and hereby confirms that this proxy shall be
valid and may be voted regardless of whether the undersigned's name is signed as
set forth below or a seal is affixed or the description, authority or capacity
of the person signing is given or other defect of signature exists.
________________________
Signature of Shareholder
_______________________
Signature of Co-Owner
Dated: ______________, 1998
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE. Please sign this
proxy exactly as your name appears in the
address at the left. If shares are registered in
more than one name, all owners should sign. If
you are signing in a fiduciary or representative
capacity, such as attorney-in-fact, executor,
administrator, trustee or guardian, please give
full title and attach evidence of authority.
Corporations, please sign with full corporate
name by a duly authorized officer or officers
and affix the corporate seal. If a partnership,
please sign in partnership name by an authorized
person.
I/WE PLAN TO ATTEND THE MEETING [_]
