<PAGE> 1
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 Section 240.14a-11(c) or Section
240.14a-12
ROCKY SHOES & BOOTS, 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:
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<PAGE> 2
ROCKY SHOES & BOOTS, INC.
39 East Canal Street
Nelsonville, Ohio 45764
April 9, 1999
Dear Shareholder:
I am pleased to invite you to the Annual Meeting of Shareholders of
Rocky Shoes & Boots, Inc. to be held on Tuesday, May 18, 1999, at 9:30 a.m., at
Stuarts Opera House, located at 34 Public Square, Nelsonville, Ohio. Parking is
available in Nelsonville at Rocky Shoes & Boots, Inc., at 39 East Canal Street,
and directions and transportation to Stuarts Opera House will be available. We
look forward to meeting all of our shareholders who are able to attend.
At the Annual Meeting, you will be asked to elect Class I Directors and
to ratify the selection of Deloitte & Touche LLP as the Company's independent
auditors for the fiscal year ending December 31, 1999. A copy of the Proxy
Statement and the proxy card are enclosed.
It is very important that your shares are represented and voted at the
meeting whether or not you plan to attend. Accordingly, please sign, date, and
return your proxy card in the enclosed envelope at your earliest convenience. If
you attend the meeting you may vote in person if you wish and your proxy will
not be used.
Your interest and participation in the affairs of the Company are
greatly appreciated. Thank you for your continued support.
Sincerely,
Mike Brooks
Chairman, President, and
Chief Executive Officer
<PAGE> 3
ROCKY SHOES & BOOTS, INC.
39 East Canal Street
Nelsonville, Ohio 45764
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 9, 1999
To Our Shareholders:
The Annual Meeting of Shareholders of Rocky Shoes & Boots, Inc. will be
held at Stuarts Opera House, located at 34 Public Square, Nelsonville, Ohio, on
Tuesday, May 18, 1999, at 9:30 a.m. local time, for the following purposes:
(1) To elect four Class I Directors of the Company each to serve for a two-year
term expiring at the 2001 Annual Meeting of Shareholders.
(2) To ratify the selection of Deloitte & Touche LLP as the Company's
independent public accountants for the fiscal year ending December 31,
1999.
(3) To transact any other business which may properly come before the meeting
or any adjournment thereof.
You will be most welcome at the meeting, and we hope you can attend.
Directors and officers of the Company and representatives of its independent
public accountants will be present to answer your questions and to discuss its
business.
We urge you to execute and return the enclosed proxy as soon as
possible so that your shares may be voted in accordance with your wishes. If you
attend the meeting, you may vote in person and your proxy will not be used.
By Order of the Board of Directors,
Curtis A. Loveland
Secretary
- ----------------------------------------------------------------------------
PLEASE SIGN AND MAIL THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES
- ----------------------------------------------------------------------------
<PAGE> 4
ROCKY SHOES & BOOTS, INC.
39 East Canal Street
Nelsonville, Ohio 45764
-----------------------------
PROXY STATEMENT
-----------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 1999
-----------------------------
This Proxy Statement is furnished to the shareholders of Rocky Shoes &
Boots, Inc. (the "Company") in connection with the solicitation of proxies to be
used in voting at the Annual Meeting of Shareholders to be held on May 18, 1999,
and at any adjournment thereof. The enclosed proxy is solicited by the Board of
Directors of the Company. This Proxy Statement and the enclosed proxy will be
first sent or given to the Company's shareholders on approximately April 9,
1999.
The Company will bear the cost of the solicitation of proxies,
including the charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of stock. Representatives of the
Company may solicit proxies by mail, telegram, telephone, or personal interview.
The shares represented by the accompanying proxy will be voted as
directed if the proxy is properly signed and received by the Company prior to
the meeting. The proxy will be voted FOR the nominees for director named herein
and FOR the ratification of the appointment of Deloitte & Touche LLP as
independent public accountants if no direction is made to the contrary. Any
shareholder giving a proxy has the power to revoke it at any time before it is
exercised by filing a written notice with the Secretary of the Company prior to
the meeting. Shareholders who attend the meeting may vote in person and their
proxies will not be used.
Holders of record of Common Stock of the Company at the close of
business on March 25, 1999, will be entitled to vote at the Annual Meeting. At
that time, the Company had 4,897,815 shares of Common Stock outstanding and
entitled to vote. Each share of Common Stock outstanding on the record date
entitles the holder to one vote on each matter submitted at the Annual Meeting.
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock of the Company is necessary to constitute a quorum for
the transaction of business at the Annual Meeting. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum. Broker non-votes occur when brokers, who hold their customers' shares in
street name, sign and submit proxies for such shares and vote such shares on
some matters, but not others. Typically, this would occur when brokers have not
received any instructions from their customers, in which case the brokers, as
the holders of record, are permitted to vote on "routine" matters, which
typically include the election of directors and ratification of independent
public accountants.
<PAGE> 5
The election of each director nominee requires the favorable vote of a
plurality of all votes cast by the holders of Common Stock at a meeting at which
a quorum is present. Proxies that are marked "Withhold Authority" and broker
non-votes will not be counted toward such nominee's achievement of a plurality
and thus will have no effect. Each other matter to be submitted to the
shareholders for approval or ratification at the Annual Meeting requires the
affirmative vote of the holders of a majority of the Common Stock present and
entitled to vote on the matter. For purposes of determining the number of shares
of Common Stock voting on the matter, abstentions will be counted and will have
the effect of a negative vote; broker non-votes will not be counted and thus
will have no effect.
ELECTION OF DIRECTORS
The Company's Code of Regulations provides for a classified board of
directors with two classes. Each class of directors consists, as nearly as
practical, of one-half of the total number of directors. The total number of
authorized directors has been fixed by the Board of Directors at eight. The
Board of Directors proposes the election of all four incumbent directors at the
1999 Annual Meeting of Shareholders to continue their service as Class I
Directors. The four incumbent Class II Directors will continue in office. The
nominees for Class I Directors, if elected, will serve for a two-year term
expiring at the 2001 Annual Meeting of Shareholders.
Mike Brooks, Stanley I. Kravetz, Robert D. Stix, and James L. Stewart are
currently Class I Directors of the Company and are being nominated by the Board
of Directors for re-election as Class I Directors.
It is intended that, unless otherwise directed, the shares represented by
the enclosed proxy will be voted FOR the election of Messrs. Brooks, Kravetz,
Stix, and Stewart as Class I Directors. In the event that any of the nominees
for director should become unavailable, the number of directors of the Company
may be decreased pursuant to the Company's Code of Regulations, or the Board of
Directors may designate a substitute nominee, in which event the shares
represented by the enclosed proxy will be voted for such substitute nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.
The following table sets forth for each nominee and each continuing
director of the Company, such person's name, age, the year in which he or she
became a director of the Company, and his or her position with the Company and
the Company's subsidiaries, Five Star Enterprises Ltd. ("Five Star") and
Lifestyle Footwear, Inc. ("Lifestyle"):
2
<PAGE> 6
<TABLE>
<CAPTION>
CLASS I DIRECTORS
(NOMINEES - TERMS EXPIRE IN 2001)
DIRECTOR
NAME AGE SINCE POSITION
- ---------------------------- -------- ---------- -----------------------------------------------
<S> <C> <C>
Mike Brooks 52 1992 Director, Chairman of the Board, President,
and Chief Executive Officer of the Company,
Five Star, and Lifestyle
Stanley I. Kravetz 66 1993 Director of the Company
Robert D. Stix 70 1993 Director of the Company
James L. Stewart 66 1996 Director of the Company
CLASS II DIRECTORS
(TERMS TO EXPIRE IN 2000)
DIRECTOR
NAME AGE SINCE POSITION
- ---------------------------- -------- ---------- -----------------------------------------------
Leonard L. Brown 67 1993 Director of the Company
David Fraedrich 49 1992 Director, Executive Vice President, Chief
Financial Officer, and Treasurer of the
Company, Five Star, and Lifestyle
Barbara Brooks Fuller 55 1992 Director of the Company; Vice President -
Retail Sales of the Company
Curtis A. Loveland 52 1993 Director and Secretary of the Company;
Secretary of Five Star and Lifestyle
</TABLE>
Mike Brooks has served as Chairman, President, and Chief Executive
Officer of the Company since August 1991. Mr. Brooks also has served Lifestyle
as President since November 1988 and as Chairman and Chief Executive Officer
since December 1992, and Five Star as President since March 1987, as Chairman
since August 1991, and as Chief Executive Officer since December 1992. Mr.
Brooks is a pattern engineering and shoe design graduate of the Ars Satoria in
Milan, Italy. After employment with U.S. Shoe Corporation and various tanning
companies, Mr. Brooks returned to the family shoe business in Nelsonville, Ohio,
in 1975, serving first as Manager of Product Development and a national salesman
and then, in 1984, as President. He has been a director of Footwear Industries
of America since April 1986 and currently serves on the Executive Board as
Chairman of that organization. He is the brother of Barbara Brooks Fuller.
3
<PAGE> 7
Stanley I. Kravetz has served as Chairman of The Kravetz Group since its
formation in December 1988. The Kravetz Group is a consulting company
specializing in marketing, advertising, product management, venture management,
and public relations. In addition, Mr. Kravetz has served as CEO of Thorlo,
Inc., a manufacturer and marketer of the world's premier sock, since August
1998. Mr. Kravetz began his career in the footwear industry in May 1976 as
National Sales Manager of The Timberland Company and was promoted to Executive
Vice President and became a director of The Timberland Company in 1977. In July
1985, Mr. Kravetz purchased The Frye Boot Company, which he sold to Reebok
International Ltd. in May 1987. He continued in his position as President of The
Frye Boot Company and also became President of The Rockport Company, another
subsidiary of Reebok International Ltd. In February 1988, Mr. Kravetz became
Corporate Vice President of Reebok International Ltd. and served in this
position until December 1988.
Robert D. Stix has been retired since December 1995. Prior thereto, he
served as General Manager of Operations of the Company from August 1994 through
December 1995. Mr. Stix previously had been associated with A.G. Edwards & Sons,
Inc. as an investment advisor from August 1992 to August 1994. Prior to that
time, Mr. Stix was an independent management consultant and public speaker on
Japanese management techniques. Mr. Stix began his career in the shoe industry
in 1953 when he joined U.S. Shoe Corporation. He held various positions,
including Director of Manufacturing, with responsibility for 17 plants producing
women's, men's, and children's shoes. In February 1973, Mr. Stix joined Stride
Rite Corporation, a footwear manufacturer, as Executive Vice President. From
November 1974 to March 1977, Mr. Stix was an executive officer of Gibson
Greeting Cards, Inc., serving first as Vice President of Operations, and then as
Executive Vice President of Operations and Finance. Mr. Stix returned to U.S.
Shoe Corporation in March 1977 as Director of Manufacturing and Operations, was
promoted in 1978 to Corporate Group Vice President, Manufacturing and
Operations, and was again promoted in 1986 to Corporate Senior Vice President,
Manufacturing and Operations. He served in this position until he formed his own
consulting business in September 1990.
James L. Stewart has served as the proprietor of Rising Wolf Ranch, Inc., a
summer resort and a winter rehabilitation center for teenage boys involved with
drug abuse. Mr. Stewart also consults various retail and catalog companies.
Between 1984 and 1991, Mr. Stewart served as the President and CEO of Dunns Inc.
and as the Vice President and General Manager of Gander Mountain Inc. Prior
thereto, he served Sears Roebuck & Co. for 28 years.
Leonard L. Brown has served as President of Leonard L. Brown, Inc., a
management consulting firm, since 1985, and as Managing Partner of L & O Realty
Co., a private real estate investment company, since 1980. From 1974 to 1985,
Mr. Brown served as Chief Executive Officer of Elmex Corp., a toy wholesale
company. From 1971 to 1978, the period during which Elmex Corp. was a unit of W.
R. Grace & Co., Mr. Brown also served as a Vice President and Division Executive
of W. R. Grace & Co.
David Fraedrich has served as Executive Vice President, Chief Financial
Officer, and Treasurer of the Company since October 1992. Mr. Fraedrich joined
the Company in 1971 after graduating from Miami University in Oxford, Ohio, with
a B.S. degree in Business Administration. He has served in various positions,
assuming executive officer responsibilities in July 1975. Mr. Fraedrich has also
served as an executive officer of Lifestyle and Five Star since November 1988
and March 1987, respectively, and currently serves as Executive Vice President,
Chief Financial Officer, and Treasurer of these corporations.
4
<PAGE> 8
Barbara Brooks Fuller has served as Vice President - Retail Sales of
the Company since September 1985. Ms. Fuller joined the Company in 1977, working
in the Company's factory outlet store in various positions prior to becoming an
executive officer in 1985. She is the sister of Mike Brooks.
Curtis A. Loveland has served as Secretary of the Company since October
1992 and of Five Star and Lifestyle since December 1992. Mr. Loveland has been a
practicing attorney for 26 years and has been a partner in the law firm of
Porter, Wright, Morris & Arthur, Columbus, Ohio since 1979. Mr. Loveland also
serves on the Board of Directors of Applied Innovation Inc., a
telecommunications products manufacturer.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche LLP, independent
public accountants, as auditors for the Company for the fiscal year ending
December 31, 1999. Although not required, the Board of Directors is submitting
its selection to the shareholders of the Company for ratification. Deloitte &
Touche LLP has served as the independent public accountants for the Company
since its formation in 1992. The Board of Directors believes that the
reappointment of Deloitte & Touche LLP for the fiscal year ending December 31,
1999, is appropriate because of the firm's reputation, qualifications, and
experience. The Board of Directors will reconsider the appointment of Deloitte &
Touche LLP if its selection is not ratified by the shareholders.
Representatives of Deloitte & Touche LLP will be present at the meeting
and will have an opportunity to make a statement if they desire to do so. Such
representatives will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR RATIFICATION OF ITS APPOINTMENT OF DELOITTE & TOUCHE LLP.
5
<PAGE> 9
INFORMATION CONCERNING THE DIRECTORS, EXECUTIVE OFFICERS,
AND PRINCIPAL SHAREHOLDERS
MEETINGS, COMMITTEES, AND COMPENSATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company had a total of five meetings
during 1998. During 1998, each of the directors attended 75% or more of the
total number of (i) meetings of the Board, and (ii) meetings of committees of
the Board on which such director served. The Company compensates each director
who is not an officer or employee of the Company in cash at a rate of $1,500 per
Board meeting, plus $750 for each committee meeting which does not occur on the
same day as a Board meeting. All directors receive reimbursement of reasonable
out-of-pocket expenses incurred in connection with the Board or committee
meetings. In addition, pursuant to the Company's 1995 Stock Option Plan, each of
the independent directors was granted an option to purchase 5,000 shares of the
Company's Common Stock on January 1st of each year. The exercise price of such
options equals 100% of the fair market value of the shares on the date of grant.
The options are not exercisable until a period of one year from the date of
grant and terminate on the sixth anniversary of the date of grant. Accordingly,
on January 1, 1998, nonqualified options to purchase 5,000 shares of Common
Stock were granted to each of Messrs. Stewart, Brown, Kravetz, and Loveland at
an exercise price of $15.25 per share. These nonqualified options became
exercisable on January 1, 1999 and expire on January 1, 2004.
The Company has a standing Audit Committee and Stock Option and
Compensation Committee. The members of the Audit Committee are Messrs. Brown
(Chairman), Loveland, and Kravetz. The Audit Committee met twice during 1998.
The Audit Committee recommends the annual appointment of the Company's auditors,
with whom the Committee will review the scope of the audit, any non-audit
assignments and related fees, the accounting principles used by the Company in
financial reporting, internal financial auditing procedures, and the adequacy of
the Company's internal control procedures. As of August 18, 1998, the members of
the Stock Option and Compensation Committee were Messrs. Stewart (Chairman),
Stix, and Brown. Prior to August 18, 1998, the members of the Stock Option and
Compensation Committee were Messrs. Kravetz (Chairman), Brown, and Loveland. The
Stock Option and Compensation Committee met once during 1998. This Committee
administers the 1995 Stock Option Plan and recommends to the Board of Directors
compensation for the Company's executive officers.
EXECUTIVE OFFICERS
Mike Brooks, David Fraedrich, and Barbara Brooks Fuller are the only
executive officers of the Company.
Officers are elected annually by the Board of Directors and serve at
its discretion. There are no family relationships among directors and executive
officers of the Company, except that Mike Brooks and Barbara Brooks Fuller are
siblings.
6
<PAGE> 10
OWNERSHIP OF COMMON STOCK BY MANAGEMENT
The following table sets forth information regarding beneficial ownership
of the Company's Common Stock by each director, each of the Company's executive
officers named in the Summary Compensation Table, and the directors and
executive officers of the Company as a group as of February 28, 1999:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED(1) CLASS(1)
- ---------------------------------------- ---------------------------- -----------------
<S> <C> <C> <C>
Mike Brooks 443,547 (2) 8.93%
Leonard L. Brown 17,500 (2) *
David Fraedrich 130,700 (2)(3) 2.92%
Barbara Brooks Fuller 276,028 (2) 5.59%
Stanley I. Kravetz 21,750 (2) *
Curtis A. Loveland 25,250 (2) *
Robert D. Stix 31,000 (2) *
James L. Stewart 11,000 (2) *
William S. Moore 26,500 (2)(4) *
Allen Sheets 24,000 (2)(5) *
All Directors and Executive 1,007,275 (2) 19.5%
Officers as a Group (10 persons)
- ----------------------
</TABLE>
*indicates less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and/or investment power with respect to those securities. Except as
otherwise noted, none of the named individuals shares with another person
either voting or investment power as to the shares reported. "Percentage of
Class" is calculated by dividing the number of shares beneficially owned by
the total number of outstanding shares of the Company on February 28, 1999,
plus the number of shares such person has the right to acquire within 60
days of February 28, 1999.
(2) Includes 51,500 shares of Common Stock for Mr. Brooks, 16,750 shares of
Common Stock for Mr. Brown, 28,000 shares of Common Stock for Mr.
Fraedrich, 13,000 shares of Common Stock for Ms. Fuller, 16,750 shares of
Common Stock for Mr. Kravetz, 16,750 shares of Common Stock for Mr.
Loveland, 31,000 shares of Common Stock for Mr. Stix, 8,000 shares of
Common Stock for Mr. Stewart, 26,500 shares of Common Stock for Mr. Moore,
22,000 shares of Common Stock for Mr. Sheets, and 230,250 shares of Common
Stock for all directors and executive officers as a group, which could have
been acquired under stock options exercisable within 60 days of February
28, 1999.
(3) Includes 400 shares of Common Stock owned by Mr. Fraedrich's spouse. Mr.
Fraedrich disclaims beneficial ownership of these shares.
(4) Mr. Moore resigned from his position as Senior Vice President - Sales and
Marketing of the Company effective December 22, 1998.
(5) Mr. Sheets resigned from his position as Senior Vice President -
Manufacturing and Operations of the Company effective March 16, 1999, but
he remains an employee of the Company.
7
<PAGE> 11
OWNERSHIP OF COMMON STOCK BY PRINCIPAL SHAREHOLDERS
<TABLE>
<CAPTION>
The following table sets forth information as of February 28, 1999
(except as noted below), relating to the beneficial ownership of Common Stock by
each person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock.
NUMBER OF SHARES PERCENT OF
NAME OF OF COMMON STOCK CLASS(1)
BENEFICIAL OWNER BENEFICIALLY OWNED(1)
- --------------------------------------------------------------- ------------------------------ ---------------
<S> <C> <C>
Mike Brooks 443,547(2) 8.93%
c/o Rocky Shoes & Boots, Inc.
39 East Canal Street
Nelsonville, Ohio 45764
Barbara Brooks Fuller 276,028(3) 5.59%
c/o Rocky Shoes & Boots, Inc.
39 East Canal Street
Nelsonville, Ohio 45764
Benson Associates, LLC 356,300(4) 7.23 %
111 S. W. Fifth Avenue, Suite 2130
Portland, Oregon 97204
Wellington Management Company, LLP 541,000(5) 10.97%
75 State Street
Boston, Massachusetts 02109
- ----------------------
</TABLE>
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting
power and/or investment power with respect to those securities. Except as
otherwise noted, none of the named individuals shares with another person
either voting or investment power as to the shares reported. "Percentage
of Class" is calculated by dividing the number of shares beneficially
owned by the total number of outstanding shares of the Company on
February 28, 1999, plus the number of shares such person has the right to
acquire within 60 days of February 28, 1999.
(2) Includes 51,500 shares of Common Stock for Mike Brooks which could have
been acquired under stock options exercisable within 60 days of February
28, 1999.
(3) Includes 13,000 shares of Common Stock for Barbara Brooks Fuller which
could have been acquired under stock options exercisable within 60 days
of February 28, 1999.
(4) Based on information filed on Schedule 13G with the Securities and
Exchange Commission on February 16, 1999.
(5) Based on information filed on Schedule 13G with the Securities and
Exchange Commission on February 10, 1999.
8
<PAGE> 12
<TABLE>
<CAPTION>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid during each of the Company's last three complete fiscal years to the
Company's Chief Executive Officer and the only other executive officers of the
Company whose combined salary and bonus exceeded $100,000 for 1998.
SUMMARY COMPENSATION TABLE
NAME AND FISCAL YEAR LONG TERM ALL OTHER
PRINCIPAL POSITION ENDED ANNUAL COMPENSATION COMPENSATION COMPENSATION
----------------------------- ---------------
SALARY BONUS OPTIONS (#)
- --------------------------- --------------- ------------ --------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Mike Brooks(1) 12/31/98 $177,000 -- 25,000 $ 10,746(2)(3)
Chairman, President, and 12/31/97 $167,000 $ 101,520 8,000 $ 9,994(2)(3)
Chief Executive Officer 12/31/96 $160,000 $ 56,000 5,000 $ 3,897(2)
of the Company, Five Star, and
Lifestyle
David Fraedrich(1) 12/31/98 $133,000 -- 15,000 $ 6,517(2)(3)
Executive Vice President, 12/31/97 $125,000 $ 63,000 5,000 $ 6,217(2)(3)
Chief Financial Officer and 12/31/96 $120,000 $ 28,800 4,000 $ 2,557(2)
Treasurer of the
Company, Five Star, and
Lifestyle
William S. Moore(1)(4) 12/31/98 $143,000 -- 15,000 $ 1,418(2)(3)
Senior Vice President - 12/31/97 $130,000 $ 57,200 5,000 $ 1,444(2)(3)
Sales and Marketing of 12/31/96 $125,000 $ 30,000 2,000 --
the Company
Allen Sheets(5) 12/31/98 $ 94,500 -- 8,000 $ 2,110(2)
Senior Vice President - 12/31/97 $ 90,000 $ 31,500 4,000 $ 3,514(2)
Manufacturing and 12/31/96 $ 75,000 $ 15,000 3,000 $ 234(2)
Operations of the Company
----------------------
</TABLE>
(1) The Company has entered into employment agreements with Messrs. Brooks,
Moore, and Fraedrich (see "Employment Agreements" below).
(2) The Company has also entered into deferred compensation agreements with
Messrs. Brooks, Fraedrich, and Sheets (individually, an "Employee"). Each
agreement provides that certain benefits will be paid to the Employee or a
designated beneficiary upon retirement, death, or termination of employment
with the Company (or an affiliate). Under the agreements, the Employee
qualifies for the benefits after 15 years of service with the Company or a
predecessor corporation. If the Employee retires after age 65, the Employee
or his beneficiary will receive monthly payments ranging from $1,250 to
$2,500 for a ten-year period commencing 90 days after retirement. If the
Employee dies prior to age 55, but after qualifying for the benefits, the
Employee's beneficiary
9
<PAGE> 13
will receive $17,250 annually for ten years. If the Employee dies after age
55, but before age 65, the beneficiary will receive the greater of $17,250
annually or the amount the Employee would have received had he terminated
his employment after age 65, reduced by an amount equal to 5/9ths of one
percent times the number of months remaining before the Employee would have
reached age 65. If the Employee terminates his employment with the Company
for any reason prior to age 65, the Employee will be entitled to receive
the greater of the cash surrender value of a policy of insurance purchased
by the Company on the life of the Employee or the amount the Employee would
have received had he terminated his employment after age 65, reduced by an
amount equal to 5/9ths of one percent times the number of months remaining
before the Employee would have reached age 65. Finally, the agreement
provides that the Employee will not, during or after his employment with
the Company, directly or indirectly, compete with the Company or disclose
any confidential information relative to the business of the Company. If
the Employee breaches this or any other covenant under the agreement, no
further payments are due or payable by the Company to the Employee or his
beneficiary and the Company has no further liability under the agreement.
The benefits under these agreements have vested for Messrs. Brooks,
Fraedrich and Sheets. The amounts shown under "All Other Compensation" for
Messrs. Brooks, Fraedrich and Sheets include $3,897, $2,557 and $234,
respectively for 1996, $4,221, $2,768 and $3,514, respectively for 1997,
and $4,571, $2,998 and $2,110, respectively for 1998, reflecting the
present value of the benefits earned during the years indicated.
(3) The amounts shown under "All Other Compensation" for Messrs. Brooks,
Fraedrich and Moore include $5,773, $3,449 and $1,444, respectively for
1997, and $6,175, $3,519 and $1,418, respectively for 1998, representing
the dollar value of the benefit of premiums paid for a split-dollar life
insurance policy reflecting the present value of the economic benefit of
the premiums paid by the Company during the fiscal year indicated.
(4) Mr. Moore resigned from the Company effective December 22, 1998.
(5) Mr. Sheets resigned from his position as Senior Vice President -
Manufacturing and Operations of the Company effective March 16, 1999, but
he remains an employee of the Company.
10
<PAGE> 14
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain information regarding stock
options granted during 1998 to each of the executive officers named in the
Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------------------ AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
FOR OPTION TERM(1)
--------------------------
% OF TOTAL
OPTIONS
GRANTED TO
OPTIONS EMPLOYEES EXERCISE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#) YEAR ($/SHARE) DATE 0%($) 5%($) 10%($)
- ---------------------------- ---------- ------------ ---------- ----------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Mike Brooks 25,000(2) 14.3% $15.25 1/1/06 $0 $239,766 $607,614
David Fraedrich 15,000(2) 8.6% $15.25 1/1/06 $0 $143,860 $364,569
William S. Moore(3) 15,000(2) 8.6% $15.25 1/1/06 $0 $143,860 $364,569
Allen Sheets(4) 8,000(2) 4.6% $15.25 1/1/06 $0 $ 76,725 $194,437
- --------------------------------
</TABLE>
(1) The amounts under the columns labeled "5%($)" and "10%($)" are included by
the Company pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation,
if any, in the price of the Company's Common Stock. Such amounts are based
on the assumption that the option holders hold the options granted for
their full term. The actual value of the options will vary in accordance
with the market price of the Company's Common Stock. The column headed
"0%($)" is included to illustrate that the options were granted at fair
market value and option holders will not recognize any gain without an
increase in the stock price, which increase benefits all shareholders
commensurately.
(2) On January 1, 1998, incentive options to purchase 25,000, 15,000, 13,000,
and 8,000 shares of Common Stock were granted to Mr. Brooks, Mr. Fraedrich,
Mr. Moore and Mr. Sheets, respectively, and a nonqualified option to
purchase 2,000 shares of Common Stock was granted to Mr. Moore, all at an
exercise price equal to the fair market value of the Company's Common Stock
on the date of grant. These options vest and become exercisable at a rate
of 25% per year employed after January 1, 1998, and terminate on January 1,
2006.
(3) Mr. Moore resigned from the Company effective December 22, 1998.
(4) Mr. Sheets resigned from his position as Senior Vice President -
Manufacturing and Operations of the Company effective March 16, 1999, but
he remains an employee of the Company.
11
<PAGE> 15
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides certain information regarding the exercise of
stock options during 1998, and the number and value of stock options held by the
executive officers named in the Summary Compensation Table as of December 31,
1998.
SHARES VALUE OF UNEXERCISED
ACQUIRED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
ON VALUE OPTIONS AT FISCAL YEAR END FISCAL YEAR END ($)(1)
EXERCISE REALIZED --------------------------- ------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- --------- ----------- ----------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Mike Brooks 2,000 $11,250 42,000 36,000 $ 0 $ 0
David Fraedrich 2,000 $11,250 22,000 22,000 $ 0 $ 0
William S. Moore(2) -- -- 21,000 26,000 $2,344 $781
Allen Sheets(3) 2,000 $11,250 15,000 13,750 $ 0 $ 0
- --------------------------------
</TABLE>
(1) Represents the total gain which would have been realized if all
in-the-money options held at fiscal year-end had been exercised, determined
by multiplying the number of shares underlying the options by the
difference between the per share option exercise price and per share fair
market value at year-end. An option is in-the-money if the fair market
value of the underlying shares exceeds the exercise price of the option.
(2) Mr. Moore resigned from the Company effective December 22, 1998.
(3) Mr. Sheets resigned from his position as Senior Vice President -
Manufacturing and Operations of the Company effective March 16, 1999, but
he remains an employee of the Company.
12
<PAGE> 16
RETIREMENT PLAN
The Company's Restated Retirement Plan for Non-Union Employees (the
"Retirement Plan") is a defined benefit pension plan which is intended to
qualify under Sections 401(a) and 501(a) of the Internal Revenue Code of 1986,
as amended (the "Code"). Employees, excluding leased employees and those
employees covered by a collective bargaining agreement, are eligible to
participate in the Retirement Plan if they are at least 21 years old and have
worked at least 1,000 hours for the Company over a period of one year.
The Retirement Plan provides for the payment of a monthly retirement
benefit commencing at age 65, subject to certain early and late retirement
options. The amount of the monthly benefit is determined pursuant to a formula
contained in the Retirement Plan which takes the greater of 1.25% of the
employee's average monthly compensation, or $10.00, and multiplies it by the
employee's number of years of credited service up to a maximum of 35 years. The
average monthly compensation is determined for the three consecutive years which
gives the participant the highest average. Compensation for this purpose means
wages which are subject to federal income tax withholding.
The following table illustrates the operation of the Retirement Plan by
showing various annual retirement benefits payable to participating employees in
the compensation and years of service classifications indicated, assuming that
participants retire at age 65 and that each participant elects a joint and
survivor annuity for the lives of the participant and his or her spouse. There
is no reduction of benefits for Social Security retirement income.
<TABLE>
<CAPTION>
YEARS OF SERVICES
-------------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------------- ------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 80,000 $15,000 $20,000 $25,000 $30,000 $35,000
100,000 18,750 25,000 31,250 37,500 43,750
125,000 23,438 31,250 39,063 46,875 54,688
150,000 28,125 37,500 46,875 56,250 65,625
175,000* 28,125 37,500 46,875 56,250 65,625
</TABLE>
*The maximum pay level recognized at this time is $160,000. This maximum is
indexed with the COLA % each year, with $10,000 incremental increases.
For each of the executive officers named in the Summary Compensation
Table, the compensation covered by the Retirement Plan for 1998, was $160,000
for Mr. Brooks, $133,000 for Mr. Fraedrich, $143,000 for Mr. Moore and $94,500
for Mr. Sheets. The Code imposes limitations on the amount of annual benefits
payable to an individual under the Retirement Plan. This limit for the 1998 Plan
Year is $160,000. The estimated years of service for each of the executive
officers named in the Summary Compensation Table as of December 31, 1998 was
23.4 years for Mr. Brooks, 26.5 years for Mr. Fraedrich, 3.3 for Mr. Moore and
19.5 for Mr. Sheets.
13
<PAGE> 17
EMPLOYMENT AGREEMENTS
On July 1, 1995, Messrs. Brooks and Fraedrich entered into employment
agreements with the Company. Each of these employment agreements provides for a
minimum base salary and a covenant not-to-compete. The employment agreements are
substantially identical, except with respect to minimum annual base salary,
which is $187,000 for Mr. Brooks and $140,000 for Mr. Fraedrich for fiscal 1999.
The employment agreements are "at will" and, therefore, do not have a stated
term.
The covenant not-to-compete contained in each employment agreement is
for the time of employment, plus a one-year period following termination of
employment; provided, that if the employee's employment is terminated following
a change in control (as defined in the employment agreements), the covenant
not-to-compete will terminate immediately. If the agreement is terminated as a
result of a change in control, or if the employee resigns after a change in
control, the employee is entitled to receive 2.99 times his average annual
compensation, including bonuses and taxable fringe benefits, over the last five
taxable years immediately preceding the date of change in control, but in no
event will such payments constitute excess parachute payments within the meaning
of the Code. Under the employment agreements, a change in control is deemed to
have occurred if (i) the Company or 50% or more of its assets or earning power
is acquired and less than a majority of the outstanding voting shares of the
survivor of such acquisition is owned, immediately after such acquisition, by
the owners of the voting shares of the Company outstanding immediately prior to
such acquisition, or (ii) there is a change in a majority of the Board of
Directors of the Company over any two-year period, which has not been approved
in advance by at least two-thirds of the directors of the Company in office at
the beginning of the period.
On September 7, 1995, Mr. Moore entered into an employment agreement
with the Company. The employment agreement sets Mr. Moore's minimum annual base
salary at $143,000 for fiscal 1998. The employment agreement contains a covenant
not-to-compete during his employment and for a three month period following
termination of the agreement. The Company may extend the non-compete period an
additional six months by continuing to pay Mr. Moore's severance benefits. The
employment agreement is "at will" and, thereafter, does not have a stated term.
Mr. Moore resigned from the Company effective December 22, 1998.
14
<PAGE> 18
The following Compensation Committee Report and Performance Graph shall
not be deemed incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any of the Company's filings under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Stock Option and Compensation Committee (the "Compensation
Committee") has the authority and responsibility to determine and administer the
Company's officer compensation policies and to establish the salaries of
executive officers, the formula for bonus awards to executive officers, and the
grant of stock options to executive officers and other key employees under the
Company's 1995 Stock Option Plan. The Compensation Committee consists solely of
independent directors of the Company. In general, the philosophy of the
Compensation Committee is to attract and retain qualified executives, reward
current and past individual performance, provide short-term and long-term
incentives for superior future performance, and relate total compensation to
individual performance and performance of the Company.
On July 1, 1995, the Company entered into employment contracts,
approved by the Company's Board of Directors, with Mr. Brooks and certain other
executive officers. The base salaries under the employment contracts are subject
to review by the Compensation Committee and may be increased periodically.
The determination of executive officer base salaries for the fiscal
year ended December 31, 1998, including increases to the minimum base salaries
fixed by the employment contracts of certain executive officers (see EMPLOYMENT
AGREEMENTS above), was based primarily on subjective factors, such as the
Compensation Committee's perception of individual performance and the executive
officer's contribution to the overall performance of the Company, and not on
specific criteria. No specific weight was given to any of these factors because
each of these factors was considered significant and the relevance of each
varies depending upon an officer's responsibilities. These factors were also
taken into account when the Compensation Committee established Mike Brooks'
salary at $177,000 for the fiscal year ended December 31, 1998.
The Company established an executive bonus program for 1998. The
bonuses payable under the executive bonus program were based on percentages of a
participant's salary. The amount of the percentage bonus depended on the
Company's pre-tax profits, which had to be at least $6,584,620 for any bonuses
to be paid under the program. The percentages ranged from 15% to 56%. Six of the
Company's executive officers, including Mike Brooks, were eligible to
participate in the executive bonus pool for 1998. The percentage of bonuses
issued under the program were allocated at the beginning of 1998 among these six
executive officers based upon the Compensation Committee's subjective perception
of each executive officer's contribution to the overall profitability of the
Company. No bonuses were paid to any executive officers by the Company in 1998,
because the Company's profitability was below the minimum set for bonuses.
The purpose of the Company's 1995 Stock Option Plan is to provide
long-term incentives to key employees and motivate key employees to improve the
performance of the Company's Common Stock. Stock option awards are considered
annually by the Compensation Committee. The value of the stock options awarded
is entirely dependent upon the Company's stock performance over a period of
time.
15
<PAGE> 19
The number of shares of Common Stock subject to the options granted
during 1998, was determined based on a subjective evaluation of the past
performance of the individual, the total compensation being paid to the
individual, the individual's scope of responsibility, and the anticipated value
of the individual's contribution to the Company's future performance. No
specific weight was given to any of these factors. Although information as to
the options awarded to each executive officer during previous years was reviewed
by the Compensation Committee, the Compensation Committee did not consider the
total amount of options held by an officer in determining the size of an option
awarded for 1998.
Options were granted under the 1995 Stock Option Plan by the Company
during 1998 to five executive officers, including Mike Brooks, and 27 other key
employees. Each stock option awarded during 1998 had an exercise price equal to
the fair market value of the underlying Common Stock of the Company on the date
of the grant. The options granted during 1998 vest and become exercisable at the
rate of 25% per year if the option holder remains employed at the time of
vesting and terminate eight years from the date of grant. All options granted
during 1998 to employees are subject to certain forfeiture restrictions in the
1995 Stock Option Plan. Mike Brooks received 25,000 option shares, 14.3% of all
option shares granted to employees during 1998.
The Budget Reconciliation Act of 1993 amended the Code to add Section
162(m) which bars a deduction to any publicly held corporation for compensation
paid to a "covered employee" in excess of $1,000,000 per year. The Compensation
Committee does not believe that this law will impact the Company because the
current level of compensation for each of the Company's executive officers is
well below the $1,000,000 salary limitation.
STOCK OPTION AND COMPENSATION COMMITTEE
James L. Stewart
Robert D. Stix
Leonard L. Brown
16
<PAGE> 20
ROCKY SHOES & BOOTS, INC.
Closing Price Index
[GRAPH]
- -------------------------------------------------------------------------------
* Composite Nasdaq o S&P Footwear # RCKY
- -------------------------------------------------------------------------------
Dec-93 100 100 100
Dec-94 96.8 127.4 52.1
Dec-95 135.4 170.5 33.8
Dec-96 166.2 281.4 50
Dec-97 203.5 188.2 85.9
Dec-98 282.3 182.3 33.1
<PAGE> 21
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE NASDAQ STOCK MARKET COMPOSITE INDEX
AND THE STANDARD & POOR'S FOOTWEAR INDEX
The following Performance Graph compares the performance of the Company
with that of the NASDAQ Stock Market Composite Index and the Standard & Poor's
Footwear Index, which is a published industry index. The comparison of the
cumulative total return to shareholders for each of the periods assumes that
$100 was invested on February 3, 1993 (the effective date the Company's Common
Stock was registered under the Securities Exchange Act of 1934, as amended), in
the Common Stock of the Company, and in the NASDAQ Stock Market Composite Index
and the Standard & Poor's Footwear Index and that all dividends were reinvested.
17
<PAGE> 22
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of August 18, 1998, the members of the Stock Option and Compensation
Committee were Messrs. Stewart (Chairman), Stix, and Brown. Prior to August 18,
1998, the members of the Stock Option and Compensation Committee were Messrs.
Kravetz (Chairman), Brown, and Loveland. None of these members was an executive
officer or employee of the Company or its subsidiaries during or prior to his
service as a member of the Stock Option and Compensation Committee. Certain
other directors, executive officers, and principal shareholders of the Company,
or members of their immediate families, have participated in transactions with,
or have had certain business relationships with, the Company during 1998.
The Company leases its 41,000 square foot manufacturing facility in
Nelsonville, Ohio, from the William Brooks Real Estate Company, an Ohio
corporation, which is owned by Mike Brooks, Barbara Brooks Fuller, Charles
Stuart Brooks, Jay W. Brooks, and Patricia H. Robey. The lease expires in April
2003 and is renewable for one five-year term. The lease currently provides for
rent at the rate of $7,000 per month, which increases to $7,500 per month for
the last two years of the lease term. The Company believes, based on its
knowledge of comparable properties, that this lease was made on terms no less
favorable to the Company or its affiliates than it could have obtained from
unrelated parties.
Mr. Loveland, a director of the Company, is a partner in the law firm of
Porter, Wright, Morris & Arthur, which provides legal services to the Company.
Pursuant to an August 3, 1994, agreement with The Kravetz Group, a company
controlled by Stanley I. Kravetz, a member of the Board of Directors, the
Company has employed The Kravetz Group as the Company's exclusive worldwide
trademark licensing agent to locate prospective licensees to offer non-footwear
products consistent with the Company's brand image and bearing the Company's
trademarks. The agreement continues from year to year and may be terminated by
either party upon two months written notice. The Kravetz Group is to receive
one-third of the license fees received by the Company from licensees introduced
by The Kravetz Group. The Kravetz Group is responsible for its own expenses,
except expenses for mailing marketing materials, travel to and from the Company,
and attendance at trade shows at the request of the Company.
Pursuant to a September 14, 1998, agreement with Philip's Kids, LLC
("Philip's Kids"), a company controlled by Mr. Kravetz, the Company has employed
Philip's Kids as the Company's exclusive trademark licensee for the production
and sale of children's footwear and non-footwear products consistent with the
Company's brand image and bearing the Company's trademarks. Philip's Kids pays
to the Company an earned royalty of six percent of the net sales price of
licensed products sold or otherwise disposed of by Philip's Kids. Under the
agreement, Philip's Kids is required to pay a minimum guaranteed royalty to the
Company during each year of the term of the agreement. The agreement provides
that, after four years, the Company shall have the option to acquire all of
Philip's Kids' rights under the agreement.
The Company believes that all terms of the transactions and existing
arrangements set forth above are no less favorable to the Company than similar
transactions and arrangements which might have been entered into with unrelated
parties.
18
<PAGE> 23
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and greater than 10%
shareholders, to file reports of ownership and changes in ownership of the
Company's securities with the Securities and Exchange Commission. Copies of the
reports are required by SEC regulation to be furnished to the Company. Based on
its review of such reports and written representations from reporting persons,
the Company believes that all filing requirements were complied with during
fiscal 1998.
PROPOSALS BY SHAREHOLDERS FOR 1999 ANNUAL MEETING
Any shareholder proposal submitted outside the processes of Rule 14a-8
under the Securities Exchange Act of 1934, as amended (the "1934 Act") for
presentation to the Company's 2000 Annual Meeting of Shareholders will be
considered untimely for purposes of Rules 14a-4 and 14a-5 of the 1934 Act if
notice thereof is received by the Company after February 20, 2000.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no other
business that will come before the meeting. Should any other matter requiring a
vote of the shareholders arise, the proxy in the enclosed form confers upon the
persons designated to vote the shares discretionary authority to vote with
respect to such matter in accordance with their best judgment.
The Company's Annual Report to Shareholders for the fiscal year ending
December 31, 1998, including financial statements, was furnished to shareholders
concurrently with the mailing of this proxy material.
By order of the Board of Directors,
Curtis A. Loveland
Secretary
19
<PAGE> 24
ROCKY SHOES & BOOTS, INC.
39 EAST CANAL STREET, NELSONVILLE, OHIO 45764
---------------------------------------------
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- MAY 18, 1999
The undersigned hereby appoints MIKE BROOKS, DAVID FRAEDRICH, and
CURTIS A. LOVELAND, or any one of them acting alone, my attorneys and proxies,
with full power of substitution to each, to vote all shares of Common Stock
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
of said corporation to be held on May 18, 1999, at 9:30 a.m., local time, at
Stuarts Opera House, 34 Public Square, Nelsonville, Ohio 45764, and at any
adjournment thereof, with all of the powers I would have if personally present,
for the following purposes:
1. ELECTION OF CLASS I DIRECTORS
[] FOR all nominees listed below (except as marked to the contrary).
[] WITHHOLD AUTHORITY to vote for all nominees below.
Mike Brooks Stanley I. Kravetz Robert D. Stix James L. Stewart
(INSTRUCTIONS: Do not check "WITHHOLD AUTHORITY" to vote for only a
certain individual nominee. To withhold authority to vote for any
individual nominee, strike a line through the nominee's name and check
"FOR").
2. TO RATIFY the selection of Deloitte & Touche LLP as the Company's
independent public accountants for the fiscal year ending December 31, 1999.
[] FOR [] AGAINST [] ABSTAIN
3. TO TRANSACT such other business as may properly come before the meeting and
any adjournment thereof.
<PAGE> 25
giving unto said attorneys and proxies, or substitutes, full power and authority
to do whatsoever in their opinion may be necessary or proper to be done in the
exercise of the power hereby conferred, including the right to vote for any
adjournment, hereby ratifying all that said attorneys and proxies, or
substitutes, may lawfully do or cause to be done by virtue hereof. Any of the
said attorneys and proxies, or substitutes, who shall be present and shall act
at the meeting shall have and may exercise all the powers of said attorneys and
proxies hereunder.
THIS PROXY, WHEN EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Shareholders, dated April 9, 1999, the Proxy Statement and the Annual
Report of the company furnished therewith. Any proxy heretofore given to vote
said shares is hereby revoked.
Please sign and date this Proxy below and return it in the enclosed
envelope.
Dated________________________________, 1999
----------------------------------------------------------------
(Signature)
----------------------------------------------------------------
(Signature)
SIGNATURE(S) SHALL AGREE WITH THE NAME(S) PRINTED ON THIS PROXY.
IF SHARES ARE REGISTERED IN TWO NAMES, BOTH SHAREHOLDERS SHOULD
SIGN THIS PROXY. IF SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR FULL TITLE AS SUCH. THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
