<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ENDOCARDIAL SOLUTIONS, INC.
(Name of Registrant as Specified in its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________
(2) Aggregate number of securities to which transaction applies:
________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined): ______________________________
(4) Proposed maximum aggregate value of transaction: _____________
(5) Total fee paid: ________________________
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ________________________
(2) Form, Schedule or Registration Statement No.: _______________
(3) Filing Party: ________________________
(4) Date Filed: ________________________
<PAGE>
ENDOCARDIAL SOLUTIONS, INC.
1350 ENERGY LANE, SUITE 110
ST. PAUL, MINNESOTA 55108
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 27, 1999
TO THE STOCKHOLDERS OF ENDOCARDIAL SOLUTIONS, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of
Endocardial Solutions, Inc. (the "Company") will be held on Thursday, May 27,
1999 at 9:00 a.m., local time, at the IDS Center (50th Floor), located at 701
Marquette Avenue, Minneapolis, Minnesota, for the following purposes:
(1) To elect two directors to serve for three-year terms or until
their respective successors are elected and qualify;
(2) To approve an amendment to the Company's 1993 Long-Term
Incentive and Stock Option Plan to increase the number of
shares authorized for issuance under the plan; and
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of record of the Company's Common Stock as of the close of
business on April 19, 1999 are entitled to notice of and to vote at the meeting
and any adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES. IF YOU LATER DESIRE TO REVOKE YOUR PROXY, YOU MAY
DO SO AT ANY TIME BEFORE IT IS EXERCISED.
By Order of the Board of Directors,
James W. Bullock
Secretary
April 26, 1999
<PAGE>
ENDOCARDIAL SOLUTIONS, INC.
1350 ENERGY LANE, SUITE 110
ST. PAUL, MINNESOTA 55108
--------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
-------------------
MAY 27, 1999
This Proxy Statement is furnished in connection with the solicitation
of the enclosed proxy by the Board of Directors of Endocardial Solutions, Inc.
(the "Company") for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Thursday, May 27, 1999 at 9:00 a.m., local time, at the
IDS Center (50th Floor), located at 701 Marquette Avenue, Minneapolis,
Minnesota, and at any adjournment thereof, for the purposes set forth in the
Notice of Annual Meeting of Stockholders. This Proxy Statement and the form of
proxy enclosed are being mailed to stockholders with the Company's Annual Report
to Stockholders commencing on or about April 26, 1999.
Only stockholders of record of the Common Stock, par value $0.01 per
share, of the Company (the "Common Stock") at the close of business on April 19,
1999 will be entitled to vote at the Annual Meeting. As of that date, a total of
9,046,000 shares of Common Stock were outstanding, each share being entitled to
one vote. There is no cumulative voting. The presence at the Annual Meeting, in
person or by proxy, of the holders of a majority of the shares of Common Stock
will constitute a quorum for the transaction of business at the Annual Meeting.
If, however, a quorum is not present or represented at the Annual Meeting, the
stockholders entitled to vote thereat, present in person or represented by
proxy, will have the power to adjourn the Annual Meeting, without notice other
than announcement at the Annual Meeting, until a quorum shall be present or
represented.
Shares of the Company's Common Stock represented by proxies in the
accompanying form, which are properly completed, signed and returned to the
Company prior to the Annual Meeting, and which have not been revoked, will be
voted in the manner directed by the stockholder. If no direction is given, the
proxy will be voted FOR the election of the nominees for director named in this
Proxy Statement, and FOR the amendment of the Company's 1993 Long-Term
Incentive and Stock Option Plan. A stockholder may revoke a proxy at any time
prior to its exercise by giving to an officer of the Company a written notice of
revocation of the proxy's authority, by submitting a duly elected proxy bearing
a later date or by delivering a written revocation at the Annual Meeting.
If a stockholder returns a proxy withholding authority to vote the
proxy with respect to a nominee for director, then the shares of the Common
Stock covered by such proxy shall be deemed present at the Annual Meeting for
purposes of determining a quorum and for purposes of calculating the vote with
respect to such nominee, but shall not be deemed to have been voted for such
nominee. If a stockholder abstains from voting as to any matter, then the shares
held by such stockholder shall be deemed present at the Annual Meeting for
purposes of determining a quorum and for purposes of calculating the vote with
respect to such matter, but shall not be deemed to have been voted in favor of
such matter. If a broker returns a "non-vote" proxy, indicating a lack of
authority to vote on such matter, then the shares covered by such non-vote shall
be deemed present at the Annual Meeting for purposes of determining a quorum but
shall not be deemed to be present and entitled to vote at the Annual Meeting for
purposes of calculating the vote with respect to such matter.
The Board of Directors of the Company do not presently know of any
matters to be presented for consideration at the Annual Meeting of Stockholders
other than the matters described in the Notice of Annual Meeting of Stockholders
mailed together with this Proxy Statement, but if other matters are presented,
it is the intention of the persons named in the accompanying proxy to vote on
such matters in accordance with their best judgment to the extent provided under
federal securities laws. The proxy confers discretionary authority to vote with
respect to matters not properly presented by a stockholder in accordance with
the Company's Bylaws.
<PAGE>
PROPOSAL ONE: ELECTION OF DIRECTORS
The Board of Directors of the Company is composed of six members
divided into three classes. The members of each class are elected to serve
three-year terms with the term of office of each class ending in successive
years. Robert G. Hauser, M.D. and Steven R. LaPorte are the directors in the
class whose term expires at the Annual Meeting. The Board of Directors has
nominated Messrs. Hauser and LaPorte for election to the Board of Directors
at the Annual Meeting for terms of three years, and each has indicated a
willingness to serve. The other directors of the Company will continue in
office for their existing terms. James E. Daverman and Ronald H. Kase serve
in the class whose term expires in 2000, and Graydon E. Beatty and James W.
Bullock serve in the class whose term expires in 2001. Upon the expiration of
the term of a class of directors, directors in such class will be elected for
three-year terms at the annual meeting of stockholders in the year in which
such term expires. The affirmative vote of a majority of the shares of Common
Stock present and entitled to vote at the Annual Meeting is necessary to
elect the nominees for director.
The persons named as proxies in the enclosed form of proxy will vote
the proxies received by them FOR the election of Messrs. Hauser and LaPorte
unless otherwise directed. In the event that any nominee becomes unavailable for
election at the Annual Meeting, the persons named as proxies in the enclosed
form of proxy may vote for a substitute nominee in their discretion as
recommended by the Board of Directors.
Information concerning the incumbent directors is set forth below.
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Robert G. Hauser, M.D. Robert G. Hauser, M.D., 59 years old, has been a
(Nominee with new term Director of the Company since October 1995. Dr.
expiring in 2002) Hauser has been a cardiologist at the Minneapolis
Heart Institute since September 1992, and has served
as Executive Director since July 1994 and President
since February 1997. Dr. Hauser served as President
of the Cardiovascular Services Division of Abbott
Northwestern Hospital from May 1995 until November
1996. From 1988 to July 1992, Dr. Hauser served as
President and Chief Executive Officer of Cardiac
Pacemakers, Inc., a cardiovascular device company.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Steven R. LaPorte Steven R. LaPorte, 48 years old, has been a Director
(Nominee with new term of the Company since September 1996. Mr. LaPorte has
expiring in 2002) served as Vice President and General Manager of
Medtronic CardioRhythm, an affiliate of Medtronic,
Inc., since January 1994. From 1989 to January 1994,
Mr. LaPorte served as Vice President of Operations
for the Neurological Division of Medtronic, and from
1979 to 1989, as a project manager and then Director
of the Corporate Information Services division of
Medtronic. Mr. LaPorte serves on the Board of
Directors as a representative of Medtronic pursuant
to the terms of an Investment Agreement dated April
26, 1996.
- --------------------------------------------------------------------------------
James E. Daverman James E. Daverman, 49 years old, has been a Director
(Term expires in 2000) of the Company since July 1994. Mr. Daverman has
served as a Managing General Partner and is a founder
of Marquette Venture Partners, a venture capital
investment firm, since January 1987. Mr. Daverman is
a director of CollaGenex Pharmaceuticals, Inc., a
pharmaceutical company.
- --------------------------------------------------------------------------------
Ronald H. Kase Ronald H. Kase, 40 years old, has been a Director of
(Term expires in 2000) the Company since March 1993. Mr. Kase joined New
Enterprise Associates, a venture capital investment
firm, in January 1991 and became a general partner in
May 1995. Mr. Kase is a limited partner of NEA
Partners V, Limited Partnership. Mr. Kase also serves
as a director of several privately held health care
companies.
- --------------------------------------------------------------------------------
Graydon E. Beatty Graydon E. Beatty, 42 years old, is a founder of the
(Term expires in 2001) Company and has been Chief Technical Officer of the
Company since May 1995 and a Director since August
1992. Since the Company's inception in May 1992, Mr.
Beatty has served in several technical
- --------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
and management positions. In addition, from May 1992
until December 1993, Mr. Beatty served as a
consultant with GMN Consulting, an engineering
consulting firm, and as a consulting engineer of
AngeMed, a division of Angeion Corp., a cardiovascular
device company, from February 1992 to September 1992.
Mr. Beatty was Senior Development Engineer of
Bio-Medical Design Group, Inc., an electrophysiology
system developer, from December 1991 to May 1992.
From 1989 to December 1991, Mr. Beatty served as
Principal Research Engineer at Cardiac Pacemakers,
Inc., a cardiovascular device company.
- --------------------------------------------------------------------------------
James W. Bullock James W. Bullock, 42 years old, has been President,
(Term expires in 2001) Chief Executive Officer and a Director of the Company
since May 1994. In addition, Mr. Bullock served as
the Chief Financial Officer of the Company from May
1994 until May 1996. From April 1992 until joining
the Company, Mr. Bullock served as President and
Chief Operating Officer of Stuart Medical, Inc., a
cardiac monitoring start-up company. From April 1990
to April 1992, Mr. Bullock served as Vice President
of Sales and Marketing of the Stackhouse Division of
Bird Medical Technologies, a medical device company.
From 1978 to 1990, Mr. Bullock served in a variety of
marketing and sales management positions, most
recently as Vice President of Sales, for the
Pharmaseal Division of Baxter International Inc., a
medical products company. Mr. Bullock serves as a
director of XRT Corp., a manufacturer of x-ray
catheters.
- --------------------------------------------------------------------------------
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS.
HAUSER AND LAPORTE AS DIRECTORS OF THE COMPANY.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the 1998 fiscal year, the Board of Directors held five meetings.
Each director holding office during the fiscal year attended at least 75% of the
total number of meetings of the Board of Directors (held during the period for
which he has been a director) and committees of the Board on which he served.
The Board of Directors has an Audit Committee and a Compensation Committee,
which are described below. The Company does not have a Nominating Committee.
The Board of Directors has an Audit Committee comprised in 1998 of
Messrs. Daverman and Kase. The Audit Committee reviews the scope, results and
costs of the audit with the Company's independent accountants, reviews the
Company's significant accounting policies and internal controls and reports the
results of its review to the full Board of Directors and to management. The
Audit Committee held one meeting during the 1998 fiscal year.
The Board of Directors has a Compensation Committee comprised in 1998
of Messrs. Daverman and Kase. The Compensation Committee makes recommendations
concerning executive salaries and incentive compensation for employees of the
Company, subject to ratification by the full Board of Directors, and administers
the Company's stock option plans. The Compensation Committee held three meetings
during the 1998 fiscal year.
COMPENSATION OF DIRECTORS
Each Director is reimbursed for expenses actually incurred in
attending meetings of the Board of Directors and its committees. Non-employee
Directors are eligible to participate in the Company's Directors' Stock
Option Plan (the "Directors' Plan"). The Directors' Plan provides for an
automatic grant of nonqualified stock options to purchase 10,000 shares of
Common Stock to non-employee Directors of the Company on the date such
individuals become directors of the Company (the "Initial Grant"), and an
option to purchase 5,000 shares of Common Stock on each subsequent annual
stockholder meeting date, subject to certain limitations. Options granted in
connection with the Initial Grant vest and become exercisable as to one-third
of such shares on the date of such Initial Grant and one-third at each of the
next two anniversary dates thereafter if the holder remains a director on
such dates. Options granted on the date
3
<PAGE>
of each subsequent annual meeting of stockholders become exercisable six
months subsequent to the date of grant. Directors who are also employees of
the Company are not separately compensated for any services provided as a
director.
EXECUTIVE OFFICERS
The executive officers of the Company serve at the discretion of the
Board of Directors and are chosen annually by the Board of Directors. Set forth
below are the names, ages and positions of the executive officers and certain
key personnel of the Company.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
James W. Bullock 42 President, Chief Executive Officer and Director
Leota L. Pearson 40 Vice President, Finance and Chief Financial Officer
Frank J. Callaghan 45 Vice President, Research and Development
Richard J. Omilanowicz 46 Vice President, Manufacturing
Michael D. Dale 39 Vice President, Worldwide Sales
Andrew K. Balo 51 Vice President of Regulatory, Clinical Affairs
and Quality Assurance
Graydon E. Beatty 42 Chief Technical Officer and Director
Patrick J. Wethington 30 Director of Marketing
</TABLE>
Information concerning the business experience of Messrs. Bullock and
Beatty is provided in "Proposal One: Election of Directors." Set forth below is
a description of the background of the other executive officers.
LEOTA L. PEARSON has been Vice President Finance and Chief Financial
Officer since January 1999. In addition, Ms. Pearson served as Controller of the
Company from July 1994 to January 1999. From November 1993 until joining the
Company, Ms. Pearson served as Controller of General Litho Services, Inc., a
printing company. Ms. Pearson completed her MBA in June 1993. From 1983 to May
1990, Ms. Pearson served as Controller of Orthomet, Inc., a manufacturer and
distributor of orthopedic devices. Ms. Pearson is a Certified Public Accountant.
FRANK J. CALLAGHAN has been Vice President of Research and Development
of the Company since November 1995. From 1987 until joining the Company, Mr.
Callaghan served as a Director of Research and Development at Telectronics
Pacing Systems, Inc., a manufacturer of cardiac rhythm management devices. From
1983 to 1987 Mr. Callaghan served in several capacities, including Manager,
Systems Technology, at Cordis Corporation, a manufacturer of angiographic and
implantable devices.
RICHARD J. OMILANOWICZ has been Vice President of Manufacturing of the
Company since November 1994. From May 1993 until joining the Company, Mr.
Omilanowicz served as General Manager of McKechnie Plastic Components, a custom
injection molding company. From 1980 to May 1993, Mr. Omilanowicz served in
several capacities at the Pharmaseal Division of Baxter International Inc., most
recently as Director of Research, Development and Engineering.
MICHAEL D. DALE has been Vice President of Worldwide Sales since
December 1998. From October 1996 until just prior to joining the Company, Mr.
Dale served as Vice President of Global Sales for Cyberonics, Inc., and
additionally as Managing Director of their international subsidiary, Cyberonics
Europe, S.A. Cyberonics is a medical device company which produces an
implantable pulse generator for stimulation of the vagus nerve for the treatment
of epilepsy. From July 1988 until October 1996, Mr. Dale served with St. Jude
Medical, Inc., the worlds leading supplier of prosthetic heart valves, in a
variety of sales and marketing positions. Most recently, Mr. Dale served as the
Business Unit Director for St. Jude Medical Europe. Prior to St. Jude Medical,
Mr. Dale worked for the Edwards Laboratories Division of American Hospital
Supply, subsequently Baxter, Inc., as a sales representative for their critical
care and heart valve related products from June 1983 until July 1988.
4
<PAGE>
ANDREW K. BALO has been Vice President of Regulatory, Clinical Affairs
and Quality Assurance of the Company since October 1997. From September 1995
until joining the Company, Mr. Balo served as Vice President,
Regulatory/Clinical/Technical Services at Pacesetter, Cardiac Rhythm Management
Division of St. Jude Medical, Inc. From July 1992 to September 1995, Mr. Balo
served as Vice President Regulatory/Clinical/Quality of St. Jude Medical, a
manufacturer of mechanical and tissue heart valves. From 1978 to 1992, Mr. Balo
served in a variety of regulatory, clinical and quality management positions,
most recently as Vice President of Regulatory and Quality for the Operating Room
Division of Baxter International, Inc., a medical products company.
PATRICK J. WETHINGTON has been Director of Marketing of the Company
since November 1996. From March 1994 to October 1996, Mr. Wethington was the
marketing manager for tachycardia products for Guidant/CPI's implantable
cardioverter defibrillator pulse generator and endocardial lead business. From
June 1992 to March 1994, Mr. Wethington served as a field clinical
representative for Guidant/CPI's cardiac rhythm management products. From
September 1990 to June 1992, Mr. Wethington served as a sales and marketing
consultant for several businesses, including 3M, Dayton Hudson Corp. and Synet
Service Corporation.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by
or paid for services rendered to the Company in all capacities during each of
the last three fiscal years by the Company's Chief Executive Officer and the
other most highly compensated executive officers whose salary and bonus earned
in 1998 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
OMPENSATION
ANNUAL COMPENSATION AWARDS
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#)(1) COMPENSATION
- -------------------------------------- -------- ------------ ----------- ------------- --------------
<S> <C> <C> <C> <C> <C>
James W. Bullock, 1998 $ 190,000 $ 43,130 75,000 --
President and Chief Executive 1997 185,577 30,000 50,000 --
Officer and Director 1996 180,000 20,000 70,000 --
Frank J. Callaghan, 1998 $ 140,830 $ 18,844 15,000 --
Vice President, Research 1997 126,000 -- 10,000 --
and Development 1996 120,000 7,698 10,000 $ 50,735(2)
Richard J. Omilanowicz, 1998 $ 140,000 $ 8,844 -- --
Vice President, Manufacturing 1997 128,446 -- 10,000 --
1996 119,954 -- 12,500 --
Andrew K. Balo, 1998 $ 140,000 $ 54,000 50,000 $ 23,321(2)
Vice President, Regulatory, Clinical 1997 21,538 -- 60,000 89,781(2)
Affairs and Quality Assurance (3)
Graydon E. Beatty, 1998 $ 122,115 $ 12,370 15,000 --
Chief Technical Officer 1997 110,000 -- -- --
and Director 1996 110,000 -- -- --
</TABLE>
- ----------------
(1) Represents options granted pursuant to the Company's 1993 Long-Term
Incentive and Stock Option Plan (the "Stock Option Plan").
(2) Represents reimbursement of relocation expenses.
5
<PAGE>
(3) Mr. Balo joined the Company in October 1997.
STOCK OPTIONS
The following table summarizes stock options granted to the executive
officers named in the Summary Compensation Table above during the Company's
fiscal year ended December 31, 1998.
OPTION GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
% OF TOTAL EXERCISE EXPIRA- POTENTIAL REALIZABLE
NUMBER OF OPTIONS PRICE PER TION VALUE AT ASSUMED
SECURITIES GRANTED TO ANNUAL RATES OF STOCK
UNDERLYING EMPLOYEES PRICE APPRECIATION FOR
OPTIONS IN FISCAL OPTION TERM(4)
------------------------
NAME GRANTED YEAR(2) SHARE(3) DATE 5% 10%
- ---------------------------- ------------ ------------- ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
James W. Bullock............ 75,000 33.4% $ 10.50 07/13/08 $ 495,255 $ 1,255,072
Frank J. Callaghan.......... 15,000 6.7 10.50 07/13/08 99,051 251,014
Richard J. Omilanowicz...... -- -- -- -- -- --
Andrew K. Balo.............. 50,000 22.3 8.25 12/08/08 259,419 657,419
Graydon E. Beatty........... 15,000 6.7 10.50 07/13/08 99,051 251,014
</TABLE>
- ---------------
(1) Each option represents the right to purchase one share of Common Stock.
The options shown in this column are all incentive stock options
granted pursuant to the Stock Option Plan. The options vest in monthly
installments over a period of four years and are exercisable beginning
after six months of employment or six months after the date of grant.
Each option grant allows the individual to acquire shares of the
Company's Common Stock at a fixed price per share over a ten year
period of time. To the extent not already exercisable, the options
generally become exercisable in the event of a change of control of the
Company.
(2) In 1998, the Company granted employees options to purchase an aggregate
of 224,500 shares of Common Stock.
(3) The exercise price may be paid in cash, or in the case of Mr. Bullock,
in cash, by promissory note or in shares of Common Stock with a market
value as of the date of grant equal to the exercise price or a
combination of any of the above.
(4) The compounding assumes a ten year exercise period for all options
grants. The 5% and 10% assumed annual rates of compounded stock price
appreciation are mandated by rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
the Company's future Common Stock prices. These amounts represent
certain assumed rates of appreciation only. Actual gains, if any, on
stock option exercises are dependent on the future performance of the
Common Stock and overall stock market conditions. The amounts reflected
in the table may not necessarily be achieved.
6
<PAGE>
The following table sets forth certain information concerning options
to purchase Common Stock exercised by the executive officers named in the
Summary Compensation Table above during fiscal year 1998 and the number and
value of unexercised stock options held by such officers as of December 31,
1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
VALUE OF OPTIONS HELD AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED VALUE OPTIONS HELD AT IN-THE-MONEY OPTIONS HELD
ON REALIZED DECEMBER 31, 1998 AT DECEMBER 31, 1998 (1)
NAME EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ----------- -------- ----------- -------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
James W. Bullock........ -- -- 245,208 139,792 $ 2,118,504 $ 279,896
Frank J. Callaghan...... 10,000 $132,850 43,542 41,458 374,135 158,865
Richard J. Omilanowicz.. -- -- 55,992 21,008 485,899 99,171
Andrew K. Balo.......... -- -- 16,250 93,750 0 87,500
Graydon E. Beatty....... -- -- 25,000 15,000 245,000 0
</TABLE>
- ---------------
(1) "Value" has been determined based on the difference between the last
sale price of the Company's Common Stock as reported by the Nasdaq
National Market System on December 31, 1998 ($10.00) and the per share
option exercise price, multiplied by the number of shares subject to
the in-the-money options.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
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 recommends salaries, incentives and other forms of
compensation for directors, officers and other employees of the Company. The
Compensation Committee also is responsible for the administration of the
Company's Stock Option Plan. The Compensation Committee has reviewed and is in
accord with the compensation paid to executive officers in fiscal year 1998.
GENERAL COMPENSATION POLICY. The Company is committed to attracting,
hiring and retaining an experienced management team that can successfully
develop and manufacture the Company's products, penetrate target markets and
develop new products. 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 long-term stockholder interest, as well as the
officers' personal performance. It is the Compensation Committee's objective to
have a portion of each executive officer's compensation contingent upon Company
performance as well as upon such executive officer's own level of performance.
Accordingly, the compensation package for each executive officer is comprised of
three elements: (i) base salary which reflects individual performance and is
designed primarily to be competitive with salary levels in the industry; (ii)
bonus payments contingent upon specific corporate and individual milestones; and
(iii) long-term stock-based incentive awards which strengthen the mutuality of
interests between the executive officers and the Company's stockholders.
BASE SALARY. The base salary is established as a result of the
Compensation Committee's analysis of each executive officer's individual
performance during the prior year, the overall performance of the Company during
the prior year and historical compensation levels within the executive officer
group. The Compensation Committee believes executive salaries must be sufficient
to attract and retain key individuals. Salaries are also based on experience
level and are intended to be competitive with median salaries paid to comparable
executives in similar positions at other medical device companies of comparable
size.
7
<PAGE>
BONUS AWARDS FOR FISCAL 1998. In conjunction with the 1998 bonus pool,
the Compensation Committee established certain performance objectives, including
corporate goals, which, when met, would result in bonus payments to employees,
including executive officers. In early 1999, the Committee approved bonuses for
executive officers and employees for recognition of established objectives.
LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are provided
through grants of stock options. The grants are designed to align the interest
of each executive officer with those of the stockholders and provide each
individual with an incentive to manage the Company from the perspective of an
owner with an equity stake in the Company. Stock options are generally granted
to executive officers at the time they are elected. In determining the number of
shares subject to stock option grants, the Committee takes into consideration
the job responsibilities, experience and contributions of the individual as well
as the recommendations of the Chief Executive Officer. The options vest in
monthly installments over a period of four years and are exercisable beginning
after six months of employment or six months after the date of grant. Each
option grant allows the individual to acquire shares of the Company's Common
Stock at a fixed price per share over a ten year period of time.
CEO COMPENSATION. The Compensation Committee's determination of the
Chief Executive Officer's salary, bonus and stock option grants follow the
policies set forth above for all executive compensation. The Committee seeks to
establish a level of base salary competitive with that paid by companies within
the industry which are of comparable size, and a bonus contingent upon specific
corporate objectives. In addition, a significant percentage of the total
compensation package is contingent upon the Company's performance and stock
price appreciation.
During 1998, Mr. Bullock received an incentive stock option grant of
75,000 shares. In addition, a bonus of $43,130 was paid during 1998 based upon
the accomplishment of specific milestones. These stock and bonus awards
reflected the Compensation Committee's judgment as to Mr. Bullock's individual
performance and the overall performance of the Company in completing its EnSite
3000-TM- System for European commercialization and two U.S. clinical trial
submissions. The Committee also believes that stock options granted to Mr.
Bullock to date provide a significant and appropriate tie between overall
compensation and the performance of the Company over the long term.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m). As a result of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
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 Committee believes that options granted under
the Stock Option Plan will meet the requirements for qualifying as
performance-based.
Section 162(m) of the Code did not affect the deductibility of
compensation paid to the Company's executive officers in 1998 and is not
anticipated to affect the deductibility of such compensation expected to be paid
in 1999. The Committee will continue to monitor this matter and may propose
additional changes to the executive compensation program if warranted.
RONALD H. KASE and
JAMES E. DAVERMAN
The Members of the Compensation Committee
of the Board of Directors
8
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Ronald H. Kase and James
E. Daverman. No executive officer of the Company served as a member of the
Compensation Committee or as a director of any other entity, one of whose
executive officers served on the Compensation Committee or as a director of the
Company.
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for
the Company's Common Stock, the Nasdaq Stock Market Index and the Standard &
Poor's Health Care Index, assuming the investment of $100 in the Common Stock
and each index on March 19, 1997 (the date the Common Stock began trading) and
the reinvestment of dividends, if any.
<TABLE>
<CAPTION>
3/19/97 12/31/97 12/31/98
------- -------- --------
<S> <S> <S> <C>
Endocardial Solutions, Inc. . . . . . . . . . . . $ 100 $ 113 $ 111
Nasdaq Stock Market Index . . . . . . . . . . . . 100 121 170
Standard & Poor's Health Care Index . . . . . . . 100 128 184
</TABLE>
9
<PAGE>
CERTAIN TRANSACTIONS
In January 1998, the Company signed a license agreement (the "License
Agreement") with Medtronic, Inc. that gives the Company exclusive use of 3D
intracardiac location technology for its EnSite 3000-TM- System. In connection
with the License Agreement, the Company issued to Medtronic an immediately
exercisable warrant to purchase 447,554 shares of the Common Stock, and agreed
to issue in the future an additional warrant, subject to certain conditions and
contingencies, to purchase 223,777 shares of Common Stock. In connection with
execution of the License Agreement, the Company also granted Medtronic certain
demand and piggy-back registration rights with respect to the shares obtained on
exercise of the warrants.
In February 1999, the Company entered into a $7,000,000 note agreement
with Medtronic. Under the agreement, the Company received $3,500,000 in February
1999 and has the option to receive an additional $3,500,000 upon the Company
providing a written request to Medtronic on or before December 31, 1999. The
note bears interest at 8%. Accrued interest on the note is payable on a
quarterly basis. Any borrowings under the note are due on the earlier of the
following: (i) the closing of any financing from which the Company receives net
proceeds of at least $20,000,000; (ii) a change of control; or (iii) February 2,
2001. Medtronic also received a warrant to purchase shares of the Company's
common stock. The number of shares Medtronic can purchase is based upon the
amount outstanding under the note agreement, plus any accrued interest, divided
by the exercise price, which as of the note agreement date was $10.08. The
warrant may be exercised only immediately before a change of control in the
Company if there remains an amount outstanding under the note agreement, or upon
an event of default by the Company. Medtronic may exercise the warrant by either
converting any outstanding amounts due under the note agreement or paying cash
for the shares of common stock acquired.
Medtronic currently owns 1,736,510 shares of Common Stock of the
Company, which represents approximately 19.3% of the Company's outstanding
Common Stock, as well as warrants which are currently exercisable for an
additional 447,554 shares. Mr. LaPorte, a Director of the Company, is Vice
President and General Manager of Medtronic CardioRhythm, an affiliate of
Medtronic. Mr. LaPorte serves on the Board of Directors as a representative of
Medtronic, pursuant to the terms of an Investment Agreement dated April 26,
1996.
10
<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 January 31, 1999 by (i) each
person who is known by the Company to own beneficially more than 5% of the
Common Stock, (ii) each director, nominee and executive officer of the Company
named in the Summary Compensation Table under the heading "Executive
Compensation" above and (iii) all directors and executive officers of the
Company as a group. Unless otherwise noted, the stockholders listed in the table
have sole voting and investment powers with respect to the shares of Common
Stock owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
OWNED (1) SHARES
---------------- -------------
<S> <C> <C>
Medtronic Asset Management, Inc. (2)........................ 2,184,064 23.1%
7000 Central Avenue NE
Minneapolis, MN 55432
Marquette Venture Partners II, L.P. (3)..................... 735,293 8.2
520 Lake Cook Road, Suite 450
Deerfield, IL 60015
Interactive Research Advisors, Inc. (4)..................... 527,500 5.9
101 Park Center Plaza
Suite 1300
San Jose, CA 95113
Sprout Capital VI, L.P. (5)................................. 482,347 5.4
3000 Sand Hill Road
Building 4, Suite 270
Menlo Park, CA 94025-7114
James E. Daverman (6)....................................... 746,960 8.3
James W. Bullock (7)........................................ 266,770 2.9
Graydon E. Beatty (8)...................................... 237,500 2.6
Richard J. Omilanowicz (9).................................. 63,771 *
Frank J. Callaghan (10)..................................... 55,729 *
Robert G. Hauser, M.D. (11)................................. 38,667 *
Andrew K. Balo (12)......................................... 20,000 *
Ronald H. Kase (13)......................................... 13,773 *
Steven R. LaPorte (14)...................................... 11,667 *
All executive officers and directors........................ 1,491,149 15.6
as a group (11 persons) (15)
</TABLE>
- -----------------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes generally voting power
and/or investment power with respect to securities. Shares of Common
Stock subject to options or warrants currently exercisable or
exercisable within 60 days of the date hereof ("Currently Exercisable
Options") are deemed outstanding for computing the percentage
beneficially owned by the person holding such options but are not
deemed outstanding for computing the percentage beneficially owned by
11
<PAGE>
any other person. Except as indicated by footnote, the Company believes
that the persons named in this table, based on information provided by
such persons, have sole voting and investment power with respect to the
shares of Common Stock indicated.
(2) Includes 447,554 shares issuable pursuant to a currently exercisable
warrant.
(3) Includes 20,425 shares held by MVP II Affiliates Fund, L.P.
(4) Disclosure is made in reliance upon a statement on Schedule 13G, dated
as of February 12, 1999, filed with the Securities and Exchange
Commission.
(5) Includes 65,986 shares held by DLJ Capital Corporation.
(6) Includes 735,293 shares beneficially owned by Marquette Venture
Partners II, L.P. and MVP II Affiliates Fund, L.P. with respect to
which Mr. Daverman has voting and investment power. See Note 3 above.
Mr. Daverman is a Managing General Partner of Marquette Venture
Partners. Mr. Daverman disclaims beneficial ownership of these shares,
except to the extent of his proportionate interest in Marquette Venture
Partners II, L.P. and MVP II Affiliates Fund, L.P. Includes 11,667
shares issuable pursuant to Currently Exercisable Options.
(7) Represents shares issuable pursuant to Currently Exercisable Options.
(8) Includes 27,500 shares issuable pursuant to Currently Exercisable
Options.
(9) Includes 60,771 shares issuable pursuant to Currently Exercisable
Options.
(10) Includes 50,729 shares issuable pursuant to Currently Exercisable
Options.
(11) Includes 36,667 shares issuable pursuant to Currently Exercisable
Options.
(12) Represents shares issuable pursuant to Currently Exercisable Options.
(13) Includes 11,667 issuable pursuant to Currently Exercisable Options.
(14) Includes 11,667 shares issuable pursuant to Currently Exercisable
Options. Excludes shares beneficially owned by Medtronic Asset
Management, Inc. Mr. LaPorte is Vice President and General Manager of
Medtronic CardioRhythm, an affiliate of Medtronic. Mr. LaPorte has no
voting or investment power over these shares and disclaims beneficial
ownership of these shares.
(15) See Notes 6 to 14 above.
12
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors and persons who beneficially own more
than 10% of the Company's Common Stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission.
Such executive officers, directors and greater than 10% beneficial owners are
required by the regulations of the Commission to furnish the Company with copies
of all Section 16(a) reports they file.
Based solely on a review of the copies of such reports furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers and directors and greater than 10% beneficial owners were
complied with, except that statements of changes in beneficial ownership on Form
4 were not timely filed by Graydon E. Beatty to reflect a sale of 5,000 shares
of Common Stock in March 1998, and by Robert G. Hauser to reflect a purchase of
2,000 shares of Common Stock in August 1998, and an annual statement of changes
in beneficial ownership on Form 5 was not timely filed by James W. Bullock to
reflect his June 1977 stock option grant, but such information was subsequently
reported.
PROPOSAL TWO: AMENDMENT OF THE
1993 LONG-TERM INCENTIVE AND STOCK OPTION PLAN
The Board of Directors has approved, subject to stockholder approval,
an amendment to the Stock Option Plan to increase the number of shares of Common
Stock available for issuance thereunder from 1,500,000 shares to 1,800,000
shares. As of January 31, 1999, the Company had remaining 91,616 shares
available for option grants pursuant to the Stock Option Plan. The Board of
Directors believes that the Stock Option Plan has been and continues to be an
important incentive in attracting, retaining and motivating key employees, and
that it is appropriate to increase the number of shares available for option
grants and other awards under the Stock Option Plan at this time. Approval of
the proposed amendment to increase the number of authorized shares under the
Stock Option Plan will assure that sufficient shares are available to enable the
Compensation Committee to achieve the objectives of the Stock Option Plan to aid
in maintaining and developing personnel capable of assuring the future success
of the Company, to offer such personnel additional incentives to put forth
maximum effort for the success of the business and to afford them an opportunity
to acquire an interest in the Company through stock options.
The Board of Directors may amend or discontinue the Stock Option Plan
at any time. Subject to certain provisions of the Stock Option Plan, no
amendment of the Stock Option Plan, however, shall without stockholder approval:
(i) increase the maximum number of shares under the Stock Option Plan, (ii)
decrease the minimum price, (iii) extend the maximum term, or (iv) modify the
eligibility requirements for participation in the Stock Option Plan. The Board
of Directors may not alter or impair any option or award previously granted
under the Stock Option Plan without the consent of the holder of the option.
13
<PAGE>
Pursuant to the Stock Option Plan, executive officers, other full or
part-time employees, consultants, directors (including directors who are not
employees of the Company) or independent contractors of the Company may receive
options to purchase Common Stock. The Stock Option Plan provides for the grant
of both incentive stock options ("ISOs") intended to qualify for preferential
tax treatment under Section 422 of the Internal Revenue Code of 1986, as
amended, and nonqualified stock options that do not qualify for such treatment.
The exercise price of all ISOs granted under the Stock Option Plan must equal or
exceed the fair market value of the Common Stock at the time of grant. Only full
or part-time employees are eligible for the grant of ISOs. The Stock Option Plan
also provides for grants of stock appreciation rights ("SARs"), restricted stock
awards and performance awards. The Stock Option Plan is administered by the
Compensation Committee.
The following is a summary of the principal federal income tax
consequences generally applicable to options and awards under the Stock Option
Plan. The grant of an option is not expected to result in any tax consequences
for the recipient or the Company or any subsidiary employing such individual
(the "employer"). The holder of an ISO generally will have no taxable income
upon exercising the ISO (except that the alternative minimum tax may apply), and
the employer generally will receive no tax deduction when an ISO is exercised.
Upon exercise of a stock option other than an ISO, the optionee must recognize
ordinary income equal to the excess of the fair market value of the shares
acquired on the date of exercise over the option price, and the employer will
then be entitled to a tax deduction for the same amount. The tax consequences to
an optionee of a disposition of shares acquired through the exercise of an
option will depend on how long the shares have been held and upon whether such
shares were acquired by exercising an ISO or stock option other than an ISO.
Generally, there will be no tax consequence to the employer in connection with a
disposition of shares acquired under an option except that the employer may be
entitled to a tax deduction in the case of a disposition of shares acquired
under an ISO before the applicable ISO holding period has been satisfied.
The tax consequences of the grant of an SAR are generally governed by
Section 83 of the Code. At the time an SAR is granted, an optionholder will not
recognize any taxable income. At the time of exercise of an SAR the optionholder
will recognize ordinary income equal to the cash or the fair market value of the
shares received at such time. Any additional gain recognized on a subsequent
sale or exchange of such shares will not be compensation income but generally
will qualify as a capital gain. The Company generally will be allowed an income
tax deduction in the amount that, and for its taxable year in which, the
optionholder recognizes ordinary income upon the exercise of an SAR, but only if
the Company properly reports such income to the Internal Revenue Service or
withholds income tax upon such amount as required under the Code.
The tax consequences of restricted stock and performance awards
(collectively hereinafter referred to as "deferred awards") also are governed by
Section 83 of the Code. At the time a deferred award is granted, a recipient
will not recognize any taxable income. At the time a deferred award matures, the
recipient will recognize ordinary income equal to the cash or fair market value
of the shares received at such time. Any additional gain recognized on a
subsequent sale or exchange of such shares will not be compensation income but
will be treated as capital gain. Section
14
<PAGE>
83(b) of the Code provides that a recipient of a restricted stock award may
elect, not later than 30 days after the date the restricted stock award is
originally made, to include as ordinary income the fair market value of the
stock at that time. Any future appreciation in the fair market value of the
stock will be capital gain. If the stock is subsequently forfeited under the
terms of the restricted stock award, the recipient will not be allowed a tax
deduction with respect to such forfeiture. The Company generally will be allowed
an income tax deduction in the amount that, and for its taxable year in which, a
recipient recognizes ordinary income pursuant to a restricted stock award or
performance award, but only if the Corporation properly reports such income to
the Internal Revenue Service or withholds income tax upon such amount as
required under the Code.
Special rules apply in the case of individuals subject to Section 16(b)
of the Securities Exchange Act of 1934. In particular, under current law, shares
received pursuant to the exercise of a stock option, other purchase right, or
SAR may be treated as restricted as to transferability and subject to a
substantial risk of forfeiture for a period of up to six months after the date
of exercise. Accordingly, unless a special tax election is made, the amount of
ordinary income recognized and the amount of the employer's deduction may be
determined as of such date.
As of January 31, 1999, options to purchase an aggregate of 1,408,384
shares of Common Stock had been granted under the Stock Option Plan, including
outstanding options granted to the executive officers named in the Summary
Compensation Table above and as a group as follows: James W. Bullock (385,000);
Frank J. Callaghan (85,000); Richard J. Omilanowicz (77,000); Andrew K. Balo
(110,000); Graydon E. Beatty (40,000); executive officers as a group (852,000).
Future grants of options and awards to executive officers and other employees
under the Stock Option Plan are not determinable.
The affirmative vote of a majority of the shares of Common Stock
represented at the meeting is required for the approval of the amendment to the
Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE 1993 LONG-
TERM INCENTIVE AND STOCK OPTION PLAN.
INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Ernst & Young LLP as independent
accountants for the Company for the fiscal year ending December 31, 1999. Ernst
& Young LLP has served as the Company's independent accountants since 1993 and
has no relationship with the Company other than that arising from its employment
as independent accountants. Representatives of Ernst & Young LLP are expected to
be present at the Annual Meeting, will have the opportunity to make a statement
if they desire to do so, and will be available to answer appropriate questions
from stockholders.
15
<PAGE>
SOLICITATION OF PROXIES
The Company is paying the costs of solicitation, including the cost of
preparing and mailing this Proxy Statement. Proxies are being solicited
primarily by mail, but in addition, the solicitation by mail may be followed by
solicitation in person, or by telephone or facsimile, by regular employees of
the Company without additional compensation. The Company will reimburse brokers,
banks and other custodians and nominees for their reasonable out-of-pocket
expenses incurred in sending proxy materials to the Company's stockholders.
PROPOSALS FOR THE 2000 ANNUAL MEETING
In order to be eligible for inclusion in the Company's proxy
solicitation materials for the 2000 Annual Meeting of Stockholders, any
stockholder proposal to be considered at such meeting must be received at the
Company's principal executive offices, 1350 Energy Lane, Suite 110, St. Paul,
Minnesota 55108, no later than December 28, 1999. Pursuant to the Company's
Bylaws, in order for business to be properly brought before the next annual
meeting by a stockholder, the stockholder must give written notice of such
stockholder's intent to bring a matter before the annual meeting no later than
fifteen days following the day on which the notice of the 2000 Annual Meeting of
Stockholders is mailed to stockholders. Each such notice should be sent to the
Secretary, and must set forth certain information with respect to the
stockholder who intends to bring such matter before the meeting and the business
desired to be conducted, as set forth in greater detail in the Company's Bylaws.
Any such proposal will be subject to the requirements of the proxy rules adopted
under the Securities Exchange Act of 1934.
GENERAL
The Company's Annual Report for the fiscal year ended December 31, 1998
is being mailed to stockholders together with this Proxy Statement. The Annual
Report is not to be considered part of the soliciting materials.
The information set forth in this Proxy Statement under the caption
"Compensation Committee Report on Executive Compensation" and "Performance
Graph" shall not be deemed to be (i) incorporated by reference into any filing
by the Company under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent that in any such filing the Company expressly so
incorporates such information by reference, and (ii) "soliciting material" or to
be "filed" with the SEC.
By Order of the Board of Directors,
James W. Bullock
Secretary
April 26, 1999
16
<PAGE>
ENDOCARDIAL SOLUTIONS, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 27, 1999
9:00 A.M.
IDS CENTER
50TH FLOOR
701 MARQUETTE AVENUE
MINNEAPOLIS, MN
ENDOCARDIAL SOLUTIONS, INC. PROXY
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints James W. Bullock and Leota L. Pearson
proxies (each with the power to act alone and with the power of
substitution), to vote, as designated below, all shares of Common Stock of
Endocardial Solutions, Inc. which the undersigned is entitled to vote at the
1999 Annual Meeting of Stockholders of Endocardial Solutions, Inc. to be held
on Thursday, May 27, 1999, at 9:00 a.m. local time, at the IDS Center (50th
Floor), located at 701 Marquette Avenue, Minneapolis, Minnesota, and any
adjournment thereof, and hereby revoke all former proxies.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
SEE REVERSE FOR VOTING INSTRUCTIONS
<PAGE>
--------------
COMPANY #
CONTROL #
--------------
-- PLEASE DETACH HERE --
<TABLE>
<S><C>
1. Election of directors: 01 Robert G. Hauser, M.D. 02 Steven R. LaPorte / / Vote FOR all / / Vote WITHHELD
nominees listed from all nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, -------------------------------------------
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
-------------------------------------------
2. Amendment of 1993 Long-Term Incentive and Stock Option Plan. / / For / / Against / / Abstain
3. In their discretion, the proxies are authorized to vote upon such
other matters that may properly come before the Annual Meeting or
any adjournment or adjournments thereof.
</TABLE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF DIRECTORS, AND FOR PROPOSAL TWO.
- --- ---
Address Change? Mark Box / /
Indicate changes below: Dated: _________________________, 1999
----------------------------------------
----------------------------------------
Signature(s) in Box
(If there are co-owners both must sign)
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
HEREON. JOINTLY OWNED SHARES WILL BE
VOTED AS DIRECTED IF ONE OWNER SIGNS
UNLESS ANOTHER OWNER INSTRUCTS TO THE
CONTRARY, IN WHICH CASE THE SHARES WILL
NOT BE VOTED. IF SIGNING IN A
REPRESENTATIVE CAPACITY, PLEASE INDICATE
TITLE AND AUTHORITY.
