SCHEDULE 14A INFORMATION
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Exogen, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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.
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
<PAGE>
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and 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>
January 8, 1997
To Our Shareholders:
As Exogen moves forward in its goal to become a leader in the non-invasive
treatment of musculoskeletal injury and disease, 1996 will be recognized as a
year of progress towards this goal. It was a year in which the Company faced the
reality of launching a new, innovative technology in a dynamic, but cautious
marketplace. As Exogen's SAFHS(R) device (Sonic Accelerated Fracture Healing
System) continued its growth both domestically and internationally, the
Company's core technology continued to exhibit the capability of meeting the
economic and clinical challenges required of emerging technologies. Through the
end of fiscal 1996, over 4,000 fractures have been treated by the SAFHS therapy
in the United States and Europe. With the significant economic and clinical
outcomes realized from patients thus far, Exogen believes that it is well
positioned for further advancement worldwide with its core technology.
Sales Growth
Revenues for fiscal year 1996 were $6,877,000 compared with $1,852,000 for
fiscal year 1995. This represented a year-to-year growth of 270%. With the
exception of a contractual payment of $1,100,000 from the Company's development
agreement with Teijin Ltd. of Japan, these sales were generated by Exogen's
SAFHS device. In 1996, the Company was represented in the United States by
direct sales representatives augmented by independent sales agencies and their
representatives. SAFHS has been prescribed for over 4,000 fractures by more than
2,000 physicians. The benefit of SAFHS therapy is recognized by major medical
teaching institutions, community physicians and professional and collegiate
sports physicians. Over 50 professional athletes have been treated with SAFHS.
Through Exogen's German subsidiary, Exogen (Europe) GmbH, we have launched SAFHS
in four European countries and plan to expand this effort in 1997. The Company's
Japanese partner, Teijin Ltd., made significant strides toward regulatory
approval for a future introduction of SAFHS in this important market.
Clinical and Technological Advancement
SAFHS was the subject of numerous papers presented throughout 1996 in leading
orthopaedic surgeon meetings such as the American Academy of Orthopaedic
Surgeons, SICOT International Triennial Orthopaedic Meeting, and the German
Society of Trauma. This year, several key peer-reviewed, orthopaedic scientific
journals have accepted papers on the SAFHS therapy for publication. Exogen has
sponsored pre-clinical and/or clinical investigations in the use of
non-invasive, low-intensity ultrasound for treatment of internally fixed
fractures, leg lengthening, cartilage repair and spine fusion. We believe these
scientific initiatives will lead to future market opportunities for Exogen
worldwide.
During 1996, the Company began pilot clinical studies with post-menopausal women
using its mechanical stress technology for non-invasive treatment for the
prevention of bone loss, or osteoporosis. This technology was supported by
further pre-clinical studies, which continue to demonstrate a positive effect on
the prevention of bone loss. From 1994 through 1996, Exogen's mechanical stress
technology has been the subject of 12 published peer-reviewed publications, 12
scientific reviews and book chapters, and 33 presentations.
<PAGE>
Reimbursement
All new medical technologies must meet the rigorous demands of economic scrutiny
by third party payors. To date, over 700 third party payors in the United States
have paid for SAFHS therapy. The benefit of treating fractures with SAFHS,
potentially avoiding the costs of long-term rehabilitation and/or surgery, is
becoming evident to certain payors. The Company must continue to record clinical
and economic outcomes and convey this data to payors to support their obligation
to provide cost-effective care to their covered patients. The present decision
by Medicare not to reimburse for SAFHS therapy was unexpected, but we will use
our substantial patient outcomes data to challenge this position and will
continue to press for ultimate coverage. The Company has recently been awarded a
Federal Supply Schedule (FSS) contract that makes SAFHS therapy available to the
Veteran's Administration and military hospitals and certain other providers of
health care to active government employees. Reimbursement will remain an
integral focus of our strategic plan as we move toward further market
penetration. The ability to treat fractures early and shorten the healing time
can return the patient to work more rapidly, thereby avoiding certain
rehabilitation, workers' compensation and surgical costs, which is important to
providers, physicians and patients.
Future Developments
Exogen must focus on three key objectives in 1997 and beyond:
o Continue to grow sales
o Meet reimbursement challenges
o Move toward profitability
The Company's domestic marketing activities will center on the clinical and
economic benefits of SAFHS. The international expansion of SAFHS will continue
through Exogen (Europe) GmbH's efforts to build confidence in the therapy for
treatment of difficult-to-heal, delayed and nonunion fractures. The Company may
also augment its domestic sales efforts with other products that complement
SAFHS and enhance the non-invasive management of bone fractures.
Exogen plans to aggressively address reimbursement challenges by strengthening
its internal resources, building clinical and economic outcomes data, and
disseminating this information to third party payors directly and through
published papers. We plan to maintain our focus on managed care and workers'
compensation as we reinforce the message of the effective treatment of
fractures, avoidance of costs and return to work and normal function.
Domestically, Exogen plans to seek expansion of its SAFHS device label claims on
several fronts, thus ultimately contributing to further reimbursement support.
With the opportunity to introduce a new technology internationally and build on
the Company's expertise in non-invasive treatment of musculoskeletal conditions,
Exogen must aggressively move toward profitability. The Company must focus on
the clinical programs that deliver the most immediate return on investment. Our
programs to reduce the cost of manufacturing and to develop future lower-cost
generations will accelerate. Exogen must manage its resources wisely while
taking advantage of the significant proprietary technological opportunity that
exists for the Company in many markets throughout the world.
<PAGE>
This letter contains forward-looking statements. All forward-looking statements
involve risks and uncertainties, including, without limitation, the risks
detailed in the Company's filings and reports with the Securities and Exchange
Commission. Such statements are only predictions, and actual events or results
may differ materially.
Exogen appreciates your continued support as we pursue our goal of becoming a
leading company in the non-invasive treatment of musculoskeletal injury and
disease.
Patrick A. McBrayer John P. Ryaby
Chief Executive Officer, Chairman of the Board of Directors
President and Director and Vice President of Research
and Development and Regulatory Affairs
<PAGE>
EXOGEN, INC.
10 Constitution Avenue
Piscataway, New Jersey 08855
Notice of Annual Meeting of Stockholders
February 7, 1997
The Annual Meeting of Stockholders of Exogen, Inc. (the
"Company") will be held at The Holiday Inn Somerset, 195 Davidson Avenue,
Somerset, New Jersey 08873, telephone number (908) 356-1700 on February 7, 1997
at 9:00 a.m. (eastern standard time) for the following purposes:
(1) To elect six Directors to serve until the next Annual
Meeting of Stockholders or until their respective successors
shall have been duly elected and qualified;
(2) To ratify the selection of Arthur Andersen LLP, independent
public accountants, as auditors of the Company for the
fiscal year ending September 30, 1997; and
(3) To transact such other business as may properly come before
the Annual Meeting.
Only stockholders of record at the close of business on December
19, 1996 will be entitled to notice of, and to vote at, the Annual Meeting of
Stockholders. A list of stockholders eligible to vote at the meeting will be
available for inspection at the meeting and for a period of ten days prior to
the meeting during regular business hours at the corporate headquarters at the
address above.
Whether or not you expect to attend the Annual Meeting, your
proxy vote is important. To assure your representation at the meeting, please
sign and date the enclosed proxy card and return it promptly in the enclosed
envelope, which requires no additional postage if mailed in the United States or
Canada.
By Order of the Board of Directors
/s/ Patrick A. McBrayer
-----------------------
Patrick A. McBrayer
Chief Executive Officer and President
January 8, 1997
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY
<PAGE>
EXOGEN, INC.
PROXY STATEMENT
January 8, 1997
This Proxy Statement is furnished to stockholders of record of
Exogen, Inc. (the "Company") as of December 19, 1996 in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board of
Directors" or "Board") for use at the Annual Meeting of Stockholders to be held
on February 7, 1997 (the "Annual Meeting").
Shares cannot be voted at the meeting unless the owner is present
in person or by proxy. All properly executed and unrevoked proxies in the
accompanying form that are received in time for the meeting will be voted at the
meeting or any adjournment thereof in accordance with instructions thereon, or
if no instructions are given, will be voted "FOR" the election of the named
nominees as Directors of the Company and "FOR" the ratification of Arthur
Andersen LLP, Independent Public Accountants, as auditors of the Company and
will be voted in accordance with the best judgment of the persons appointed as
proxies with respect to other matters which properly come before the Annual
Meeting. Any person giving a proxy may revoke it by written notice to the
Company at any time prior to exercise of the proxy. In addition, although mere
attendance at the Annual Meeting will not revoke the proxy, a stockholder who
attends the meeting may withdraw his or her proxy and vote in person.
Abstentions and broker non-votes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business at the Annual
Meeting. Abstentions will be counted in tabulations of the votes cast on each of
the proposals presented at the Annual Meeting, whereas broker non-votes will not
be counted for purposes of determining whether a proposal has been approved.
The Annual Report of the Company (which does not form a part of
the proxy solicitation materials), including the Annual Report on Form 10-K with
the financial statements of the Company for the fiscal year ended September 30,
1996, is being distributed concurrently herewith to stockholders.
The mailing address of the principal executive offices of the
Company is 10 Constitution Avenue, P.O. Box 6860, Piscataway, New Jersey 08855.
This Proxy Statement and the accompanying form of proxy are being mailed to the
stockholders of the Company on or about January 8, 1997.
VOTING SECURITIES
The Company has only one class of voting securities, its common
stock, par value $0.0001 per share (the "Common Stock"). At the Annual Meeting,
each stockholder of record at the close of business on December 19, 1996 will be
entitled to one vote for each share of Common Stock owned on that date as to
each matter presented at the Annual Meeting. On December 19, 1996, 9,911,067
shares of Common Stock were outstanding. A list of stockholders eligible to vote
at the Annual Meeting will be available for inspection at the Annual Meeting and
for a period of ten days prior to the Annual Meeting during regular business
hours at the principal executive offices of the Company at the address specified
above.
<PAGE>
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the
accompanying form of proxy intend to vote at the Annual Meeting for the election
of the six nominees named below as Directors of the Company to serve until the
next Annual Meeting or until their successors are duly elected and qualified. If
any nominee is unable to be a candidate when the election takes place, the
shares represented by valid proxies will be voted in favor of the remaining
nominees. The Board of Directors does not currently anticipate that any nominee
will be unable to be a candidate for election.
The Board of Directors currently has seven members, all of whom,
other than Dr. Terry J. Sullivan, are nominees for re-election.
The affirmative vote of a plurality of the Company's outstanding
Common Stock represented and voting at the Annual Meeting is required to elect
the Directors.
Information Regarding Nominees for Election as Directors
The Board of Directors currently has seven members. The following
information with respect to the principal occupation or employment, other
affiliations and business experience of each of the six nominees during the last
five years has been furnished to the Company by such nominee. Except as
indicated, each of the six nominees for re-election has had the same principal
occupation for the last five years.
John P. Ryaby, 62, a founder of the Company, has been a Director
of the Company since March 1992 and Chairman of the Board of Directors since
February 1994. Mr. Ryaby served as Chief Executive Officer and President of the
Company from March 1992 until his resignation from such offices in February 1994
and currently serves as the Vice President of Research and Development and
Regulatory Affairs. Mr. Ryaby served from late 1989 until 1992 as the President
and Chief Operating Officer of Interpore Orthopaedics, Inc. ("Interpore"), a
division of Interpore International, Inc., a physical and biological research
company. Mr. Ryaby was a founder, and from 1975 to 1982, was President and Chief
Operating Officer, of Electro-Biology, Inc. ("EBI"), a company involved in bone
growth electrical stimulation technology, and was responsible for obtaining
regulatory approval of EBI's pre-market approval ("PMA") in 1979 and for
establishing EBI's direct sales force.
Patrick A. McBrayer, 45, was named Chief Executive Officer,
President and a Director of the Company in February 1994. Prior to joining the
Company, Mr. McBrayer served in various executive positions from 1987 to
February 1994 at Osteotech, Inc., including President and Chief Executive
Officer. While at Osteotech, Inc., a company that develops and markets biologic,
biomaterial and implant systems for musculoskeletal surgery, Mr. McBrayer guided
the company's transition from its inception to a public entity. From 1979
through 1986, he served in a variety of positions of increasing responsibility
with Johnson & Johnson, Inc., including Marketing Manager of the Patient Care
Division, where he built a significant business in surgical products.
<PAGE>
Buzz Benson, 42, has been a Director of the Company since January
1995. Mr. Benson has been the Managing Director of and a Partner in the Piper
Jaffray Healthcare Fund, a venture capital fund, since November 1992. The Piper
Jaffray Healthcare Fund is the investment manager and sole private limited
partner of Piper Jaffray Healthcare Capital Limited Partnership (SBIC). From
November 1986 to November 1992, Mr. Benson was a Managing Director in the
corporate finance department of Piper Jaffray Inc. Mr. Benson serves on the
Board of Directors of Unologix, Inc.
Donald J. Lothrop, 37, has been a Director of the Company since
March 1993. Mr. Lothrop has been a General Partner of Delphi Ventures II, L.P.
since July 1994. From January 1991 to June 1994, he was a Partner of Marquette
Venture Partners, a venture capital firm, where he focused on the health care
area. From July 1989 to December 1990, he worked at Bain & Company, Inc., a
management consulting firm.
Terence D. Wall, 55, has been a Director of the Company since
March 1993. Mr. Wall founded Vital Signs, Inc., a medical products company, in
1972 and has been President, Chief Executive Officer and a Director of Vital
Signs, Inc. since that time. Mr. Wall serves on the Board of Directors of Vital
Signs, Inc., EchoCath, Inc. and Bionix, Inc.
David J. Ottensmeyer, M.D., 66, has been a Director of the
Company since October 1996. From August 1991 to December 1995, Dr. Ottensmeyer
served as President and Chief Executive Officer of The Lovelace Institutes, a
health services and biomedical research organization. From June 1990 to August
1991, Dr. Ottensmeyer served as President of the Travelers Health Companies and
Chief Medical Officer of the Travelers Companies - Managed Care and Employee
Benefits Operations.
Committees of the Board
The Audit Committee consists of Messrs. Patrick A. McBrayer, Buzz
Benson and Donald J. Lothrop and its functions include recommending to the Board
of Directors the selection of the Company's auditors and reviewing with such
auditors the plan and results of their audit and the adequacy of the Company's
systems of internal accounting controls and management information systems. In
addition, the Audit Committee reviews the independence of the auditors and their
fees for services rendered to the Company.
The Compensation Committee consists of Messrs. Terence D. Wall
and Donald J. Lothrop and its functions include recommending, reviewing and
overseeing salaries, benefits and stock option plans relating to the Company's
employees, consultants, directors and other individuals compensated by the
Company. The Committee administers all stock option plans relating to the
compensation of officers, including having complete discretion (subject to the
provisions of the 1995 Plan) to authorize options and direct stock issuances
under the Company's 1995 Stock Option/Stock Issuance Plan (the "1995 Plan").
Attendance at Board and Committee Meetings
During fiscal year 1996, the Board of Directors held four
meetings. During fiscal year 1996, each Director attended all meetings of the
Board of Directors, except for Mr. Lothrop who missed one meeting. The
Compensation Committee acted by unanimous written consent in lieu of a meeting
four times during fiscal year 1996. The Audit Committee held two meetings during
fiscal year 1996.
<PAGE>
Compliance with Reporting Requirements
Under the securities laws of the United States, the Company's
Directors, executive officers, and any persons holding more than ten percent of
the Company's Common Stock are required to report their ownership of the
Company's Common Stock and any changes in that ownership to the Securities and
Exchange Commission and the Nasdaq National Market Surveillance Department.
Specific due dates for these reports have been established and the Company is
required to report in this Proxy Statement any failure to file by these dates
during fiscal year 1996. Based solely on its review of such forms received by it
from such persons for their fiscal year 1996 transactions, the Company believes
that all filing requirements applicable to such officers, directors and greater
than ten percent beneficial owners were complied with, except that each of Mr.
Bochnowski, a former Director of the Company, and Mr. Lothrop, a Director of the
Company, failed to timely file their Form 4s for the month ended March 31, 1996.
Compensation of Directors
Cash Compensation. Directors do not receive a fee for attending
Board of Directors or committee meetings, but are reimbursed for expenses
incurred in connection with performing their respective duties as Directors of
the Company.
Stock Option Grant. Under the Company's 1995 Plan, each
non-employee Director first elected or appointed to the Board of Directors after
the initial public offering of the Company's Common Stock will automatically be
granted an option for 7,500 shares of Common Stock on the date of his or her
election or appointment to the Board of Directors, provided such individual has
not previously been in the employ of the Company. In addition, at each annual
meeting of stockholders, each individual with at least six months of service on
the Board of Directors who will continue to serve as a non-employee Director
following the meeting will automatically be granted an option for 1,250 shares
of Common Stock, whether or not such individual has been in the prior employ of
the Company or joined the Board of Directors prior to the effective date of the
1995 Plan. Each option granted under the automatic grant program will have an
exercise price equal to 100% of the fair market value of the Common Stock on the
automatic grant date and a maximum term of ten years, subject to earlier
termination upon the optionee's cessation of Board of Director service. Each
automatic option will be immediately exercisable; however, any shares purchased
upon exercise of the option will be subject to repurchase by the Company should
the optionee's service as a non-employee Director cease prior to the optionee's
completion of one year of service on the Board of Directors, as measured from
the grant date. The initial 7,500 share grant will vest in successive equal
annual installments over the optionee's initial four-year period of service on
the Board of Directors. However, each outstanding option will immediately vest
upon (i) certain changes in the ownership or control of the Company or (ii) the
death or disability of the optionee while serving on the Board of Directors. In
accordance with the 1995 Plan, each of Messrs. Benson, Lothrop and Wall, if
re-elected to the Board of Directors for the ensuing year, will receive options
to purchase 1,250 shares of Common Stock at an exercise price equal to the fair
market value of the Company's Common Stock on February 7, 1997.
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Officers
The executive officers of the Company on January 1, 1997 were the
following:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Patrick A. McBrayer 45 Chief Executive Officer and President
John P. Ryaby 62 Vice President of Research and Development and
Regulatory Affairs
John Bohan 48 Vice President of Sales and Marketing
Richard H. Reisner 53 Vice President, Chief Financial Officer and Secretary
Roger J. Talish 54 Vice President of Operations
</TABLE>
Information Concerning Executive Officers Who Are Not Directors
John Bohan joined the Company in February 1994 as Vice President
of Sales and Marketing. Prior to joining the Company, Mr. Bohan held various
positions from 1972 to 1994 at Johnson & Johnson, Inc., including Vice President
of Marketing and Sales for Johnson & Johnson Medical, Inc. and for Ethicon, Inc.
Most recently, he served as Vice President of Sales and Marketing and as a
member of the Board of Directors of Johnson & Johnson Advanced Materials
Company.
Richard H. Reisner, a founder of the Company, has served as its
Vice President and Chief Financial Officer since September 1992. From 1991 to
1992, Mr. Reisner was Vice President and Chief Financial Officer of Cirrus
Diagnostics Inc. ("Cirrus"), a company which developed a system for the
automation of diagnostic immunoassay and chemistry testing, and was directly
involved with the acquisition of Cirrus by Diagnostic Products Corporation in
May 1992. From 1990 to 1991, Mr. Reisner was the Corporate Controller for
Datascope Corp., a manufacturer of medical instruments. From 1988 to 1990, Mr.
Reisner was President and Chief Executive Officer of Pain Suppression Labs,
Inc., a manufacturer of electrical stimulation devices to suppress chronic
headache pain. From 1979 to 1988, Mr. Reisner was Vice President of Finance and
Administration of EBI and was responsible for obtaining third-party
reimbursement for EBI's bone growth electrical stimulation devices.
Roger J. Talish, a founder of the Company, has served as Vice
President of Operations for the Company since March 1992. From 1989 to 1992, Mr.
Talish was Vice President of Operations at Interpore and from 1985 to 1989 he
held the same position at Meditron, Inc. From 1978 to 1985, Mr. Talish held
various engineering management positions at EBI, including Director of Research
and Product Engineering.
<PAGE>
Summary Compensation Table
The following table sets forth the annual and long-term
compensation paid by the Company during fiscal years 1996, 1995 and 1994 to the
Chief Executive Officer and President and the other executive officers of the
Company whose total compensation during fiscal year 1996 exceeded $100,000
(collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
Annual Long-Term
Compensation (1) Compensation
--------------------------- ---------------------------
Securities
Restricted Underlying
Stock Options
Fiscal Salary Bonus Awards(s)(2) Granted
Name and Principal Position Year ($) ($) ($) (#)
- --------------------------- ---- --- --- --- ---
<S> <C> <C> <C> <C> <C>
Patrick A. McBrayer (3)......................... 1996 $200,000 - - -
Chief Executive Officer and President 1995 200,000 - - -
1994 126,538(4) 40,000(5) - -
John P. Ryaby (6)............................... 1996 144,000 10,000(7) - -
Vice President of Research and Development and 1995 135,000 10,000(7) - -
Regulatory Affairs 1994 120,000 10,000(7) - -
John Bohan (8).................................. 1996 129,167 23,359 - -
Vice President of Sales and Marketing 1995 120,000 9,659 - 25,000(9)
1994 72,769(10) 10,000(11) - -
Roger J. Talish................................. 1996 128,750 6,666(7) - -
Vice President of Operations 1995 115,000 6,667(7) - -
1994 115,000 6,667(7) - -
Richard H. Reisner.............................. 1996 128,333 - - -
Vice President, Chief Financial Officer 1995 110,000 - - -
and Secretary 1994 110,000 - - -
- ------------------
</TABLE>
(1) Other compensation in the form of perquisites and other personal benefits
has been omitted as the aggregate amount of such perquisites and other
personal benefits constituted the lesser of $50,000 or 10% of the total
annual salary and bonus for the executive officer for such year.
(2) No restricted stock grants were made to Messrs. Ryaby, Reisner or Talish
during the fiscal years ended September 30, 1994, September 30, 1995 and
September 30, 1996. Messrs. Ryaby, Reisner and Talish each entered Stock
Restriction Agreements with the Company relating to 159,500, 129,412 and
151,612 shares of Common Stock, respectively, previously purchased by such
individuals. Pursuant to the terms of the Stock Restriction Agreements,
10% of the shares of each of Messrs. Ryaby, Reisner and Talish vested
immediately on March 1, 1993, and an additional 16% vested upon receipt of
the PMA from the U.S. Food and Drug Administration on October 5, 1994. The
remaining shares vest in 37 equal monthly installments, measured from
October 5, 1994. The Company has the right to repurchase, at a purchase
price of $0.0034 per share, any unvested shares held by each of Messrs.
Ryaby, Reisner and Talish at the time of termination of service. However,
in the event service with the Company is terminated by reason of death or
disability, such repurchase right shall immediately terminate. All
restricted shares immediately vest in the event the Company is acquired by
merger or asset sale, unless the Company's repurchase rights are assigned
to the acquiring entity. As of September 30, 1996, Messrs. Ryaby, Reisner
<PAGE>
and Talish held 44,660, 36,241 and 42,331 shares of restricted Common
Stock, respectively, which shares had a fair market value equal to
$178,488, $144,841 and $169,180, respectively. In addition, Messrs. Ryaby,
Reisner and Talish each entered into Stock Purchase Agreements with the
Company on August 2, 1993, relating to 100,000, 50,000 and 50,000 shares
of Common Stock, respectively, which shares are no longer restricted.
(3) In January 1994, Mr. McBrayer was issued 350,000 shares of restricted
Common Stock, at $0.02 per share, the then existing fair market value.
50,000 and 37,500 of the shares issued to Mr. McBrayer vested on January
15, 1994 and July 15, 1994, respectively. The remaining 262,500 shares
vest in 38 monthly installments of 7,000 shares (with the exception of the
last installment in which all remaining shares vest) upon Mr. McBrayer's
completion of each additional month of service, measured from July 15,
1994. The Company will have the right to repurchase, at the original issue
price, any unvested shares held by Mr. McBrayer at the time of his
termination of service; provided, however, that in the event Mr.
McBrayer's service with the Company is terminated by reason of death or
disability such repurchase right shall be applicable only to the number of
shares that remain unvested on the date six months after the date of such
termination. All restricted shares immediately vest in the event the
Company is acquired by merger or asset sale, unless the Company's
repurchase rights are assigned to the acquiring entity. As of September
30, 1996, Mr. McBrayer held 80,500 shares of restricted Common Stock,
which shares had a fair market value equal to $320,390.
(4) Mr. McBrayer joined the Company on February 14, 1994. The figure of
$126,538 refers to Mr. McBrayer's actual earnings for the period from
February 14, 1994 to September 30, 1994, based on an annual salary of
$200,000.
(5) Pursuant to the terms of his employment agreement, Mr. McBrayer received a
one-time bonus payment of $40,000 upon the commencement of his employment
with the Company.
(6) Mr. Ryaby resigned as Chief Executive Officer and President in February
1994 and currently serves as the Vice President of Research and
Development and Regulatory Affairs.
(7) Represents a portion of the loan to each of Messrs. Ryaby and Talish
forgiven by the Company on January 1, 1994, January 1, 1995, and January
1, 1996.
(8) In February 1994, Mr. Bohan was issued 100,000 shares of restricted Common
Stock, at $0.02 per share, the then existing fair market value. 12,500 of
the shares issued to Mr. Bohan vested on each of August 5, 1994 and
February 5, 1995. The remaining 75,000 shares vest in 25,000 share
installments on each of February 5, 1996, February 5, 1997 and February 5,
1998, upon Mr. Bohan's completion of each additional year of service. The
Company will have the right to repurchase, at the original issue price,
any unvested shares held by Mr. Bohan at the time of his termination of
service. All restricted shares immediately vest in the event the Company
is acquired by merger or asset sale, unless the Company's repurchase
rights are assigned to the acquiring entity. As of September 30, 1996, Mr.
Bohan held 50,000 shares of restricted Common Stock, which shares had a
fair market value equal to $199,000.
(9) On January 8, 1995, the Company granted Mr. Bohan an option to purchase
25,000 shares of Common Stock at an exercise price of $.60 per share,
vesting 20% per annum, pursuant to the Company's 1993 Stock Option Plan.
(10) Mr. Bohan joined the Company on February 14, 1994. The figure of $72,769
refers to Mr. Bohan's actual earnings for the period from February 14,
1994 to September 30, 1994, based on an annual salary of $120,000.
(11) Pursuant to the terms of his employment agreement, Mr. Bohan received a
one-time bonus payment of $10,000 upon the commencement of his employment
with the Company.
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table sets forth certain information with respect to the
Named Executive Officers regarding stock option holdings as of September 30,
1996. No stock options were exercised by such persons in fiscal year 1996. No
stock appreciation rights were exercised by any Named Executive Officer during
fiscal year 1996 and no stock appreciation rights were outstanding as of
September 30, 1996.
<TABLE>
<CAPTION>
Value of
Number of Securities Unexercised
Underlying Unexercised In-The-Money
Options at Options at
Fiscal Year End Fiscal Year End(1)
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Patrick A. McBrayer................................. - - - -
John P. Ryaby....................................... - - - -
John Bohan.......................................... 5,000 20,000 $17,000 $68,000
Richard H. Reisner.................................. - - - -
Roger J. Talish..................................... - - - -
- ---------------
(1) Amounts calculated by subtracting the exercise price of the options from
the market value of the underlying Common Stock using the closing selling
price on the Nasdaq National Market of $4.00 per share of Common Stock on
September 30, 1996.
</TABLE>
Employment Arrangements
Patrick A. McBrayer entered into a three-year employment
agreement with the Company on January 15, 1994 (the "McBrayer Agreement")
whereby he became Chief Executive Officer and President of the Company. Pursuant
to the McBrayer Agreement, Mr. McBrayer receives annual minimum compensation of
$200,000, which amount is subject to review by the Compensation Committee during
the second and third years of the term of the McBrayer Agreement. Upon
commencement of his employment with the Company, Mr. McBrayer received a
one-time bonus payment of $40,000. In addition, Mr. McBrayer will be entitled to
participate in an Executive Performance Bonus Program to be developed by Mr.
McBrayer and approved by the Board of Directors. Mr. McBrayer is entitled to all
employee benefits generally made available to executive officers as well as a
monthly car allowance of $600. Pursuant to the McBrayer Agreement, Mr. McBrayer
purchased 350,000 shares of restricted Common Stock of the Company, at a
purchase price of $0.02 per share. In addition, if Mr. McBrayer's employment is
terminated by the Company without good cause prior to the third anniversary of
the McBrayer Agreement, Mr. McBrayer shall be entitled to receive monthly
severance payments, in amounts equal to his monthly base salary in effect at the
time of any such termination, until the earlier of 12 months following
termination or February 14, 1997.
<PAGE>
John Bohan entered into an employment agreement with the Company
on February 3, 1994 (the "Bohan Agreement") whereby he became Vice President of
Sales and Marketing of the Company. Pursuant to the Bohan Agreement, Mr. Bohan
receives annual compensation of $120,000, subject to annual review by the
Compensation Committee. Upon commencement of his employment with the Company,
Mr. Bohan received a one-time bonus payment of $10,000. Pursuant to the Bohan
Agreement, Mr. Bohan purchased 100,000 shares of restricted Common Stock of the
Company, at a purchase price of $0.02 per share. Mr. Bohan is also entitled to
all employee benefits generally made available to executive officers.
John P. Ryaby entered into an agreement with the Company on May
5, 1995 whereby if he is terminated by the Company without good cause prior to
November 13, 1999, he will be entitled to receive certain benefits from the date
of such termination until November 13, 1999.
Options granted under the 1995 Plan to the Chief Executive
Officer and any other executive officer or the shares of Common Stock subject to
direct issuances held by such individual, will automatically vest in full upon
the individual's involuntary termination within 18 months following certain
changes in control of the Company.
Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee, formed on January 8, 1995,
consists of Messrs. Wall and Lothrop. The Committee recommends, reviews and
oversees salaries, benefits and stock option plans for the Company's employees,
consultants, directors and other individuals compensated by the Company.
Mr. Lothrop is a general partner of Delphi Management Partners
II, L.P., which is the general partner of each Delphi Ventures II, L.P.
("Ventures") and Delphi Investments II, L.P. ("Investments"). Ventures and
Investments purchased (i) an aggregate of 1,600,000 shares of Series A Preferred
Stock at $1.00 per share from the Company in March 1993 and October 1994, which
shares converted into 799,998 shares of Common Stock at an as-converted purchase
price of $2.00 per share, upon the consummation of the Company's initial public
offering, and (ii) an aggregate of 155,152 shares of Series B Preferred Stock at
$2.75 per share from the Company in November 1994, which shares converted into
77,576 shares of Common Stock at an as-converted purchase price of $5,50 per
share, upon the consummation of the Company's initial public offering.
Mr. Wall purchased (i) an aggregate of 1,000,000 shares of Series
A Preferred Stock at $1.00 per share from the Company in March 1993 and August
1994, which shares converted into 500,000 shares of Common Stock at an
as-converted purchase price of $2.00 per share, upon the consummation of the
Company's initial public offering, and (ii) an aggregate of 96,970 shares of
Series B Preferred Stock at $2.75 per share from the Company in November 1994,
which shares converted into 48,485 shares of Common Stock at an as-converted
basis of $5.50 per share, upon the consummation of the Company's initial public
offering.
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors advises the
Chief Executive Officer and the Board of Directors on matters of the Company's
compensation philosophy and the compensation of executive officers and other
individuals compensated by the Company. The Compensation Committee also is
responsible for the administration of the Company's 1995 Plan under which option
grants and direct stock issuances may be made to executive officers. The
Compensation Committee has reviewed and is in accord with the compensation paid
to executive officers in fiscal year 1996.
General Compensation Policy. The fundamental policy of the
Compensation Committee is to provide the Company's executive officers with
competitive compensation opportunities based upon their contribution to the
development and financial success of the Company and their personal performance.
It is the Compensation Committee's objective to have a portion of each executive
officer's compensation contingent upon the Company's performance as well as upon
such executive officer's own level of performance. Accordingly, the compensation
package for each executive officer is comprised of two elements: (i) base salary
which reflects individual performance and is designed primarily to be
competitive with salary levels in the industry and (ii) long-term stock-based
incentive awards which strengthen the mutuality of interests between the
executive officers and the Company's stockholders.
Factors. The principal factors which the Compensation Committee
considered with respect to each executive officer's compensation package for
fiscal year 1996 are summarized below. The Compensation Committee may, however,
in its discretion apply entirely different factors in advising the Chief
Executive Officer and the Board of Directors with respect to executive
compensation for future years.
o Base Salary. The suggested base salary for each executive
officer is determined on the basis of the following factors: experience,
personal performance, the salary levels in effect for comparable positions
within and without the industry and internal base salary comparability
considerations. The weight given to each of these factors differs from
individual to individual, as the Compensation Committee deems appropriate.
While it is the general policy of the Compensation Committee not
to award performance-based cash bonuses, from time to time, the Compensation
Committee may advocate cash bonuses when such bonuses are deemed to be in the
best interest of the Company.
o Long-Term Incentive Compensation. Long-term incentives are
provided through grants of restricted stock and stock options. The grants are
designed to align the interests of each executive officer with those of the
stockholders and provide each individual with a significant incentive to manage
the Company from the perspective of an owner with an equity stake in the
Company. The restricted stock generally vests in monthly or annual installments
over a period of four years and any unvested shares held by an executive officer
at the time of his or her termination of service are subject to the Company's
right of repurchase. Each option grant allows the individual to acquire shares
of the Company's Common Stock at a fixed price per share (generally, the market
price on the grant date) over a specified period of time (up to ten years). Each
option generally becomes exercisable in installments over a five-year period,
contingent upon the executive officer's continued employment with the Company.
<PAGE>
Accordingly, the restricted stock or option grant will provide a return to the
executive officer only if the executive officer remains employed by the Company
during the vesting period, and then only if the market price of the underlying
shares appreciates.
The number of shares subject to each option grant is set at a
level intended to create a meaningful opportunity for stock ownership based on
the executive officer's current position with the Company, the base salary
associated with that position, the size of comparable awards made to individuals
in similar positions within the industry, the individual's potential for
increased responsibility and promotion over the option term and the individual's
personal performance in recent periods. The Compensation Committee also
considers the number of unvested options held by the executive officer in order
to maintain an appropriate level of equity incentive for that individual.
However, the Compensation Committee does not adhere to any specific guidelines
as to the relative option holdings of the Company's executive officers. There
were no stock options granted to executive officers in fiscal year 1996.
Through the Company's Employee Stock Purchase Plan, the Company
offers additional opportunities for equity ownership to executive officers.
CEO Compensation. In advising the Board of Directors with respect
to the compensation payable to the Company's Chief Executive Officer, the
Compensation Committee seeks to achieve two objectives: (i) establish a level of
base salary competitive with that paid by companies within the industry which
are of comparable size to the Company and by companies outside of the industry
with which the Company competes for executive talent and (ii) make a significant
percentage of the total compensation package contingent upon the Company's
performance and stock price appreciation.
The suggested base salary established for Mr. McBrayer on the
basis of the foregoing criteria was intended to provide a level of stability and
certainty each year. Accordingly, this element of compensation was not affected
to any significant degree by Company performance factors.
In January 1994, Mr. McBrayer was issued 350,000 shares of
restricted Common Stock of the Company. This restricted stock makes a
significant portion of Mr. McBrayer's total compensation contingent on increased
value for the Company's stockholders, since the value of this restricted stock
depends upon the value of the Company's Common Stock.
Compliance with Internal Revenue Code Section 162(m). As a result
of Section 162(m) of the Internal Revenue Code of 1986, as amended, which was
enacted into law in 1993, the Company will not be allowed a federal income tax
deduction for compensation paid to certain executive officers, to the extent
that compensation exceeds $1 million per officer in any one year. This
limitation will apply to all compensation paid to the covered executive officers
which is not considered to be performance based. Compensation which does qualify
as performance-based compensation will not have to be taken into account for
purposes of this limitation. The 1995 Plan contains certain provisions which are
intended to assure that any compensation deemed paid in connection with the
exercise of stock options granted under that plan with an exercise price equal
to the market price of the option shares on the grant date will qualify as
performance-based compensation.
<PAGE>
The Compensation Committee does not expect that the compensation
to be paid to the Company's executive officers for the 1997 fiscal year will
exceed the $1 million limit per officer. Accordingly, until final Treasury
regulations are issued with respect to the new $1 million limitation, the
Committee will defer any decision on whether or not to restructure one or more
components of the compensation paid to the executive officers so as to qualify
those components as performance-based compensation that will not be subject to
the $1 million limitation.
THE COMPENSATION COMMITTEE
MR. TERENCE D. WALL
MR. DONALD J. LOTHROP
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing the annual percentage
change in the Company's cumulative total stockholder return on its Common Stock
from July 20, 1995 (the date public trading of the Company's stock commenced) to
the last day of the Company's last completed fiscal year (as measured by
dividing (i) the sum of (A) the cumulative amount of dividends for the
measurement period, assuming dividend reinvestment, and (B) the excess of the
Company's share price at the end over the price at the beginning of the
measurement period, by (ii) the share price at the beginning of the measurement
period) with the cumulative total return so calculated of the Nasdaq Stock
Market-US Index and a group of peer issuers in a line of business similar to the
Company during the same period.
{GRAPHIC -- GRAPH PLOTTED TO POINTS LISTED IN CHART BELOW}
<TABLE>
<CAPTION>
Research Total Return - Data Summary
EXGN
Cumulative Total Return
-----------------------
<S> <C> <C> <C> <C>
Exogen Inc. EXGN 100 128 35
PEER GROUP PPEER2 100 113 131
NASDAQ STOCK MARKET-US INAS 100 109 129
</TABLE>
The Peer Group consists of Biomet, Inc., Orthofix International
N.V., Orthologic Corp., Sofamor/Danek Group, Inc., Spine-Tech, Inc., Stryker
Corp., and Osteotech Inc.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, which might incorporate future
filings made by the Company under those statutes, the preceding Compensation
Committee Report on Executive Compensation and the Company Stock Performance
Graph will not be incorporated by reference into any of those prior filings, nor
will such report or graph be incorporated by reference into any future filings
made by the Company under those statutes.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT*
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock as of December 19, 1996 by
(i) each Director and nominee for Director, (ii) each of the Named Executive
Officers, (iii) each person known by the Company to be the beneficial owner of
more than 5% of the Company's Common Stock and (iv) all executive officers and
Directors as a group.
<TABLE>
<CAPTION>
Number of Shares of Percentage of
Common Stock Beneficially Shares
Name and Address of Beneficial Owner Owned(1) Outstanding (1)
- ------------------------------------ -------- ---------------
<S> <C> <C>
DLJ Capital Corporation (2).......................... 815,384 8.3%
277 Park Avenue
New York, NY 10172
Marquette Venture Partners II, L.P. (3).............. 744,463 7.5%
Corporate 500 Centre
520 Lake Cook Road
Deerfield, IL 60015
Orchid & Co., as Nominee for......................... 545,454 5.5%
T. Rowe Price Threshold
Fund III, L.P
100 East Pratt Street
Baltimore, MD 21202
John P. Ryaby (4).................................... 179,450 1.8%
Patrick A. McBrayer (5).............................. 293,500 3.0%
John Bohan (6)....................................... 103,836 1.0%
Richard H. Reisner (7)............................... 152,412 1.5%
Roger J. Talish (8).................................. 167,662 1.7%
Buzz Benson (9)...................................... 193,093 1.9%
Donald J. Lothrop (10)............................... 453,514 4.6%
David J. Ottensmeyer, M.D. (11)...................... 7,500 *
Terry J. Sullivan, M.D.(12).......................... 3,125 *
Terence D. Wall (13)................................. 49,735 *
All executive officers and directors
as a group (10 persons) (14)....................... 1,603,827 16.2%
- ------------------------
* Represents beneficial ownership of less than one percent of the Common
Stock.
</TABLE>
<PAGE>
(1) Applicable percentage of ownership as of December 19, 1996 is based upon
9,911,067 shares of Common Stock outstanding. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission, and includes voting and investment power with respect to
shares. Gives effect to the shares of Common Stock issuable within 60 days
of December 19, 1996 upon the exercise of all options and other rights
beneficially owned by the indicated stockholders on that date.
(2) Includes 111,470 shares owned by DLJ Capital Corporation and 703,914 shares
owned by Sprout Capital VI, L.P.
(3) Includes 723,783 shares owned by Marquette Venture Partners II, L.P. and
20,680 shares owned by MVP II Affiliates Fund, L.P.
(4) Includes 35,090 shares subject to the Company's repurchase right.
(5) Includes 1,000 shares held by Mr. McBrayer's two minor children and 30,000
shares held by Mr. McBrayer's wife. Mr. McBrayer disclaims beneficial
ownership of such shares. Also includes 59,500 shares subject to the
Company's repurchase right.
(6) Includes 50,000 shares subject to the Company's repurchase right. Also
includes 10,000 shares issuable upon the exercise of a stock option.
(7) Includes 28,477 shares subject to the Company's repurchase right, 53,412
shares pledged to Merrill Lynch, and 46,592 shares pledged to Cowen & Co.
(8) Includes 10,000 shares held by Mr. Talish's children. Mr. Talish disclaims
beneficial ownership of such shares. Includes 33,262 shares subject to the
Company's repurchase right.
(9) Includes 181,818 shares owned by Piper Jaffray Healthcare Capital Limited
Partnership (SBIC) and 10,025 shares held by Mr. Benson's spouse and
children. Mr. Benson, a Director of the Company, is a partner in such
partnership and, as such, may be deemed to share voting and investment
power with respect to such shares. Mr. Benson disclaims beneficial
ownership of such shares except to the extent of his respective interest in
such shares arising from his interest in the partnership. Also includes
1,250 shares issuable upon the exercise of a stock option, which 1,250
shares would be, if issued, subject to the Company's repurchase right.
(10) Includes 443,439 shares owned by Ventures and 2,213 shares owned by
Investments. Mr. Lothrop, a Director of the Company, is a general partner
of the general partner of Ventures and Investments, and, as such, may be
deemed to share voting and investment power with respect to such shares.
Mr. Lothrop disclaims beneficial ownership of such shares except to the
extent of his pecuniary interests in such shares arising from his interest
in Ventures and Investments. Also includes 1,250 shares issuable upon the
exercise of a stock option, which 1,250 shares would be, if issued, subject
to the Company's repurchase right.
(11) Consists of 7,500 shares issuable upon the exercise of a stock option,
which 7,500 shares would be, if issued, subject to the Company's repurchase
right.
(12) Consists of 3,125 shares issuable upon the exercise of stock options, of
which 1,250 shares would be, if issued, subject to the Company's repurchase
right.
(13) Includes 1,250 shares issuable upon the exercise of a stock option, which
1,250 shares would be, if issued, subject to the Company's repurchase
right. Does not include 500,000 shares held in trust on behalf of Mr.
Wall's children, which trust is administered by an independent trustee.
(14) See Notes (2) through (13) above.
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of
Directors appointed Arthur Andersen LLP, independent public accountants and
auditors of the Company since the Company's inception, as auditors of the
Company to serve for the fiscal year ending September 30, 1997, subject to the
ratification of such appointment by the stockholders at the Annual Meeting. A
majority of the votes of the outstanding shares of Common Stock is required to
ratify the appointment of the auditors. A representative of Arthur Andersen LLP
will attend the Annual Meeting of Stockholders with the opportunity to make a
statement if he or she so desires and will also be available to answer
inquiries.
STOCKHOLDER PROPOSALS
In accordance with regulations issued by the Securities and
Exchange Commission, stockholder proposals intended for presentation at the 1998
Annual Meeting of Stockholders must be received by the Secretary of the Company
no later than September 9, 1997 if such proposals are to be considered for
inclusion in the Company's Proxy Statement.
OTHER MATTERS
Management knows of no matters that are to be presented for
action at the meeting other than those set forth above. If any other matters
properly come before the meeting, the persons named in the enclosed form of
proxy will vote the shares represented by proxies in accordance with their best
judgment on such matters.
Proxies will be solicited by mail and may also be solicited in
person or by telephone by some regular employees of the Company. The Company may
also consider the engagement of a proxy solicitation firm. Costs of the
solicitation will be borne by the Company.
By Order of the Board of Directors
/s/Patrick A. McBrayer
----------------------
Patrick A. McBrayer
Chief Executive Officer and President
Piscataway, New Jersey
January 8, 1997
<PAGE>
(Form of Proxy)
EXOGEN, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - FEBRUARY 7, 1997
(This Proxy is solicited by the Board of Directors of the Company)
The undersigned stockholder of Exogen, Inc. hereby appoints Patrick A. McBrayer,
Chief Executive Officer and President and Richard H. Reisner, Chief Financial
Officer and Vice President and each of them, with full power of substitution,
proxies to vote the shares of stock which the undersigned could vote if
personally present at the Annual Meeting of Stockholders of Exogen, Inc. to be
held at The Holiday Inn Somerset, 195 Davidson Avenue, Somerset, New Jersey
08873, telephone number (908) 356-1700 on February 7, 1997, at 9:00 A.M.
(eastern standard time), or any adjournment thereof.
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement)
[ ] FOR all nominees below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees below
John P. Ryaby, Patrick A. McBrayer, Buzz Benson, Donald J. Lothrop, David
J. Ottensmeyer, M.D. and Terence D. Wall.
INSTRUCTION: To withhold authority to vote for an individual nominee, write
the nominee's name in the space provided below.
______________________________________
2. RATIFICATION OF ACCOUNTANTS
FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO [ ]
proposal to ratify the selection of Arthur Andersen LLP, independent public
accounts, as auditors of the Company as described in the Proxy Statement.
<PAGE>
3. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
PERSONS NOMINATED BY MANAGEMENT AS DIRECTORS AND FOR PROPOSAL 2.
Please date and sign exactly as your name appears on the envelope in which
this material was mailed. If shares are held jointly, each stockholder
should sign. Executors, administrators, trustees, etc. should use full title
and, if more than one, all should sign. If the stockholder is a corporation,
please sign full corporate name by an authorized officer. If the stockholder
is a partnership, please sign full partnership name by an authorized person.
------------------------------------
------------------------------------
Signature(s) of Stockholder
Dated:_______________________
