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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
I. SCHEDULE 14A INFORMATION
A. 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
MERIDIAN MEDICAL TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERIDIAN MEDICAL TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
5) Total fee paid:
_____________________________________________________________________________
/_/ Fee paid previously with preliminary materials.
/_/ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: _________________________________________________
2) Form, Schedule or Registration Statement No.:____________________________
3) Filing Party: ___________________________________________________________
4) Date Filed: _____________________________________________________________
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<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
10240 Old Columbia Road
Columbia, Maryland 21046
December 4, 1998
Dear Stockholder:
We are pleased to enclose your Notice of Annual Meeting and Proxy
Statement for the Annual Meeting of Stockholders of Meridian Medical
Technologies, Inc. (the "Company") to be held on Thursday, January 7, 1999, at
9:30 a.m., local time, at Amherst House, 7251 Eden Brook Drive, Columbia,
Maryland 21046.
At the Annual Meeting, you will be asked to elect two directors of the
Company each to serve a three-year term and to ratify the selection of Ernst &
Young LLP as the independent auditors of the Company.
The Board of Directors hopes that you will be able to attend this
stockholders' meeting. We look forward to meeting each of you and discussing
with you significant events that have occurred during the Company's last year
and its current prospects. If you are unable to be present in person or to be
otherwise represented, please execute the enclosed proxy and return it at your
earliest convenience in the enclosed envelope. You are urged to read the
enclosed Proxy Statement, which contains information relevant to the actions to
be taken at the meeting.
Very truly yours,
/s/ JAMES H. MILLER
-----------------------
James H. Miller
Chairman, President and
Chief Executive Officer
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
10240 Old Columbia Road
Columbia, Maryland 21046
(410) 309-6830
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
MERIDIAN MEDICAL TECHNOLOGIES, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of
Meridian Medical Technologies, Inc. (the "Company") will be held on Thursday,
January 7, 1999, at 9:30 a.m., local time, at Amherst House, 7251 Eden Brook
Drive, Columbia, Maryland 21046, for the following purposes:
(1) To elect two directors each to a term of three years or
until a successor has been elected and qualified;
(2) To consider and vote upon the ratification of the selection by
the Board of Directors of Ernst & Young LLP as independent
auditors of the Company for the current fiscal year; and
(3) To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on November 20,
1998 are entitled to notice of and to vote at the meeting or any adjournment or
adjournments thereof.
By Order of the Board of Directors
/s/ PAMELA J. GIGOGNE
----------------------------------
ASSISTANT CORPORATE SECRETARY
Columbia, Maryland
December 4, 1998
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
10240 Old Columbia Road
Columbia, Maryland 21046
(410) 309-6830
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
------------
INTRODUCTION
The Board of Directors of Meridian Medical Technologies, Inc. (the
"Company"), the executive offices of which are located at 10240 Old Columbia
Road, Columbia, Maryland 21046, hereby solicits your proxy in the form enclosed
for use at the Annual Meeting of Stockholders to be held on Thursday, January 7,
1999, at 9:30 a.m., or any adjournment or adjournments thereof ("Annual
Meeting"). The expenses of soliciting your proxy will be borne by the Company.
This Proxy Statement and the accompanying form of proxy are first being released
for mailing to the stockholders on or about December 4, 1998.
At the Annual Meeting, stockholders will be asked to elect two
directors of the Company, each to serve a three-year term, and to ratify the
selection of Ernst & Young LLP as independent auditors of the Company for the
current fiscal year.
We urge you to date, sign and return your proxy in the enclosed
envelope promptly to make certain that your shares will be voted at the Annual
Meeting.
The principal executive offices of the Company are located at 10240 Old
Columbia Road, Columbia, Maryland 21046, telephone (410) 309-6830.
<PAGE>
MEETING INFORMATION
Date, Time and Place
The Annual Meeting will be held on Thursday, January 7, 1999, at 9:30
a.m., local time, at Amherst House, 7251 Eden Brook Drive, Columbia, Maryland
21046.
Record Date; Voting Rights
Only stockholders of record at the close of business on November 20,
1998 will be entitled to vote at the Annual Meeting. On November 20, 1998, there
were 2,991,080 outstanding shares of Common Stock, each of which is entitled to
one vote. The presence in person or by proxy at the Annual Meeting of the
holders of a majority of the outstanding shares of Common Stock will constitute
a quorum for the transaction of business.
With respect to Proposal 1, the nominees for election as directors who
receive the greatest number of votes cast at the Annual Meeting, assuming that a
quorum is present, will be elected as directors. A withheld vote will not have
any effect on the outcome of the vote for election of the directors.
With respect to Proposal 2, approval will require the affirmative vote
of a majority of the shares of Common Stock present in person or represented by
proxy at the Annual Meeting and entitled to vote. An abstention will have the
effect of a vote against the proposal.
Brokers who hold shares of Common Stock in street name may not have the
authority to vote on certain matters for which they have not received
instructions from beneficial owners. Such broker non-votes (arising from the
lack of instructions from beneficial owners), although present for quorum
purposes, will not change the number of votes cast for or against Proposal 2.
Voting and Revocation of Proxies
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares of Common Stock
represented thereby will be voted in accordance with the instructions marked
thereon. Executed but unmarked proxies will be voted "FOR" the nominees proposed
by the Board of Directors and "FOR" the ratification of the selection of
auditors. The duly appointed proxies may, in their discretion, vote upon such
other matters as may properly come before the Annual Meeting.
Any proxy may be revoked at any time before it is exercised by giving
written notice of such revocation or delivering a later dated proxy to the
Assistant Corporate Secretary of the Company prior to the meeting, or by the
vote of the stockholder in person at the meeting.
-2-
<PAGE>
Solicitation of Proxies
The cost of soliciting proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
Company, through its directors, officers and regular employees, may also solicit
proxies personally or by telephone. The Company also will request persons, firms
and corporations holding shares of Common Stock in their names or in the name of
their nominees, which are beneficially owned by others, to send proxy material
to and obtain proxies from the beneficial owners and will reimburse the holders
for their reasonable expenses in so doing. The Company has engaged the services
of Chase Mellon Shareholder Services for the purpose of assisting in the
solicitation of proxies at a cost of $4,500 plus reimbursement of certain
expenses.
PROPOSAL 1 -- ELECTION OF DIRECTORS
General
The Company's Amended and Restated By-Laws provide that the number of
members of the Board of Directors shall be fixed and determined from time to
time by resolution of the Board of Directors. The Board of Directors has acted
to fix the number of directors at five. Pursuant to the terms of the Company's
First Amended and Restated Certificate of Incorporation, the Board of Directors
is divided into three classes, as nearly equal in number as reasonably possible,
with terms currently expiring at the upcoming annual meeting of stockholders
("Class II"), the annual meeting of stockholders following fiscal 1999 ("Class
III") and the annual meeting of stockholders following fiscal 2000 ("Class I"),
respectively.
The Board of Directors has nominated Bruce M. Dresner and David L.
Lougee, the incumbent Class II directors, each to serve as a Class II director
for a three-year term expiring at the end of the Company's 2001 fiscal year or
until the election and qualification of a successor.
The proxies solicited hereby, unless directed to the contrary therein,
will be voted for the nominees. The nominees have consented to being named in
this Proxy Statement and to serve if elected. The Board has no reason to believe
that either of the nominees for election as a director will not be a candidate
or will be unable to serve, but if either occurs, it is intended that the shares
of Common Stock represented by proxies will be voted for such substitute
nominee(s) as the Chairman of the Board of Directors, in his sole discretion,
may designate.
-3-
<PAGE>
The following table sets forth certain information regarding the
nominees for election to the Board of Directors, whose terms will expire after
fiscal year 2001, and the directors who will continue in office for the
remainder of their terms:
<TABLE>
<CAPTION>
Principal Occupation Director
Name and Age During the Last 5 Years and other Directorships Since
------------ ----------------------------------------------- -----
<S> <C> <C>
Class II Directors and
Nominees whose Terms will
expire in 2001
Bruce M. Dresner Vice President for Investments, Columbia University 1985
Age 50
David L. Lougee Managing Partner, Mirick, O'Connell, DeMallie & Lougee 1996
Age 58 (law firm); Director, Vialog Corporation
(teleconferencing service provider)
Class III Directors whose
Terms will Expire in 1999
James H. Miller Chairman (since November 1996), President and Chief 1989
Age 60 Executive Officer of the Company
Robert G. Foster Chairman, President and Chief Executive Officer, 1996
Age 60 Commonwealth BioVentures, Inc. (venture capital firm);
Director, Wyman-Gordon Company
Class I Director whose Term
will Expire in 2000
E. Andrews Grinstead, III Chairman, President and Chief Executive Officer, 1996
Age 51 Hybridon, Inc. (biotechnology); Director, BioCapital
Investments Limited Partnership; Director, Pharmos
Corporation (pharmaceutical company)
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES NAMED HEREIN.
Meetings and Committees of the Board
During the fiscal year ended July 31, 1998 ("fiscal 1998"), the Board
of Directors held six meetings, two of which were by telephone conference.
During their term, all of the then incumbent directors were present for at least
75 percent of the meetings of the Board and the committees of the Board on which
they serve.
The Compensation and Stock Option Committee ("Committee") of the Board
of Directors presently consists of Messrs. Foster, Grinstead and Lougee. The
Committee is empowered to administer the Company's 1986 Stock Option Plan ("1986
Plan") and 1997 Long-Term Incentive
-4-
<PAGE>
Plan ("1997 Plan"), which includes the power to grant stock options and stock
appreciation rights and to award restricted stock and incentive shares. The
Committee also is responsible for the determination of the compensation for the
president and chief executive officer. The Committee met four times during
fiscal 1998.
The Audit Committee of the Board of Directors has certain duties
relating to the year-end audit, the Company's internal accounting controls and
the Company's relationship with its independent auditors. Messrs. Dresner and
Grinstead are the current members of the Audit Committee. The Audit Committee
met once during fiscal 1998.
In addition, the Board of Directors has an Executive Committee, whose
present membership consists of Messrs. Foster and Miller. The Executive
Committee met twice during fiscal 1998.
The Board of Directors does not have a nominating or committee
performing similar functions. The Board of Directors will consider stockholder
nominations for directors submitted in accordance with the procedure set forth
in Section 2.10(b) of the Company's Amended and Restated By-Laws. The procedure
provides that a notice relating to the nomination must be timely given in
writing to the secretary of the Company prior to the meeting. To be timely, the
notice must be delivered not later than the time permitted for submission of a
stockholder proposal as described under "1999 Annual Meeting of Stockholders."
Such notice must be accompanied by the nominee's written consent and contain
information relating to the business experience and background of the nominee,
and information with respect to the nominating stockholder and persons acting in
concert with the nominating stockholder.
Compensation of Directors
Each of the Company's directors other than Mr. Miller received, during
fiscal 1998, $1,500 for each meeting of the Board personally attended (other
than meetings held by telephone conference as to which no fee is paid).
Directors of the Company who are not also officers or employees of the Company
or a subsidiary, who have served for at least one year and who will continue to
serve as directors immediately following the annual meeting, receive automatic
grants of non-statutory stock options covering 1,300 shares of Common Stock
under the 1986 Plan (which continues in effect until the earlier of the
termination of the 1986 Plan or the unavailability of shares of Common Stock for
grants thereunder) on the date of each annual meeting and may receive
discretionary grants of options and other awards under the 1997 Plan. Each
person who becomes a non-employee director receives a stock option covering
6,000 shares of Common Stock effective as of the date of such director's
election. Options so granted have an exercise price equal to the fair market
value of the Common Stock on the date of grant, become exercisable in 25 percent
cumulative annual installments and generally expire 10 years from the date of
grant. If a director is removed from office, all options granted to such
director pursuant to the automatic grants will expire immediately upon such
removal. During fiscal 1998, Messrs. Dresner, Foster, Grinstead and Lougee were
granted options covering 1,300 shares of Common Stock at an exercise price of
$9.00 per share, pursuant to these provisions.
-5-
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information as to compensation paid for
services rendered to the Company by the President and Chief Executive Officer
and the four other executive officers of the Company (the "Named Executives") as
of July 31, 1998 for the three fiscal years ended July 31, 1998.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
- ------------------------------------------------------------------------------------------------------------------------
SECURITIES
UNDERLYING ALL OTHER COMPENSATION
NAME AND FISCAL SALARY BONUS OPTIONS/SARS ($)(2)
PRINCIPAL POSITION YEAR ($)(1) ($) (#)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James H. Miller 1998 325,000 - 50,000 23,143
Chairman, President and CEO 1997 325,000 - 40,000 19,067
1996 225,000 100,000 - 9,784
- ------------------------------------------------------------------------------------------------------------------------
G. Troy Braswell, Jr. 1998 124,167 - 765 3,607
Vice President and Chief 1997 60,000 - 4,000 402
Financial Officer
- ------------------------------------------------------------------------------------------------------------------------
Peter A. Garbis(3) 1998 113,983 - 1,285 5,824
Vice President
- ------------------------------------------------------------------------------------------------------------------------
Mark D. Ruby 1998 127,120 - 740 4,490
Vice President 1997 123,000 - - 4,030
1996 70,875 - 6,000 434
- ------------------------------------------------------------------------------------------------------------------------
Gerald L. Wannarka(4) 1998 81,250 - 7,000 785
Sr. Vice President
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes amounts deferred at the election of the Named Executive
under the Company's 401(k) Plan.
(2) Includes Company matching contributions under the Company's
401(k) Plan in the following amounts for fiscal 1998: Mr. Miller,
$4,013; Mr. Braswell $2,150; Mr. Garbis $4,490; and Mr. Ruby,
$2,998. The Company provides group accidental death and disability
and term life insurance to all its employees who work more than 30
hours per week. The death and disability benefit and life insurance
-6-
<PAGE>
benefit under the Company's plan is up to 200% of the insured
person's annual compensation (as defined in the plan), except in
the case of certain employees, including the Named Executives, with
respect to whom benefits are up to 300% of the insured person's
annual income. Premiums paid attributable to such benefits in
fiscal 1998 were as follows: Mr. Miller, $19,130; Mr. Braswell,
$1,457; Mr. Garbis $1,334; Mr. Ruby, $1,492; and Dr. Wannarka,
$785.
(3) Mr.Garbis was elected Vice President of the Company as of
March 20, 1998.
(4) Dr. Wannarka was hired as a Vice President as of December 15, 1997
and subsequently promoted to Senior Vice President as of
September 30, 1998.
Stock Options
The following table sets forth further information regarding grants of
options to purchase Common Stock made by the Company during fiscal 1998 to the
Named Executives.
<TABLE>
<CAPTION>
=============================================================================================================================
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- -----------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
for Option Term(1)
- -----------------------------------------------------------------------------------------------------------------------------
Number of Percent of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise Price Expiration
Name Granted Fiscal 1998 per Share Date 5%($) 10%($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James H. Miller 50,000 30.6% $12.938 2/25/08 $406,832 $1,030,992
- -----------------------------------------------------------------------------------------------------------------------------
G. Troy Braswell, Jr. 765 .46% $6.75 10/30/07 $3,247 $8,230
- -----------------------------------------------------------------------------------------------------------------------------
Peter A. Garbis 1,285 .78% $6.75 10/30/07 $5,455 $13,824
- -----------------------------------------------------------------------------------------------------------------------------
Mark D. Ruby 740 .45% $6.75 10/30/07 $3,141 $7,961
- -----------------------------------------------------------------------------------------------------------------------------
Gerald L. Wannarka 7,000 4.28% $9.125 12/15/07 $40,171 $101,800
=============================================================================================================================
</TABLE>
(1) Disclosures of the 5% and 10% assumed annual compound rates of
stock appreciation are mandated by the rules of the SEC and do not
represent the Company's estimate or projection of future Common
Stock prices. The actual value realized may be greater or less than
the potential realizable value set forth in the table.
-7-
<PAGE>
The following table summarizes certain information regarding
outstanding options held by the Named Executives as of July 31, 1998. No stock
options were exercised by the Named Executives during fiscal 1998.
<TABLE>
<CAPTION>
====================================================================================================================
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
====================================================================================================================
Number of Securities Value of Unexercised
Underlying Unexercised Options/SARS at In-the-Money
Fiscal Year End (#) Options/SARS at Fiscal Year End ($)(1)
- ----------------------------------------------------------------------------------------------------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
James H. Miller 90,000/70,000(2) $128,750/$32,500
- ----------------------------------------------------------------------------------------------------------------------
G. Troy Braswell, Jr. 1,000/3,765 $2,875/$11,972
- ----------------------------------------------------------------------------------------------------------------------
Peter A. Garbis 2,000/3,285 $3,750/$9,372
- ----------------------------------------------------------------------------------------------------------------------
Mark D. Ruby 3,000/3,740 $7,875/$11,113
- ----------------------------------------------------------------------------------------------------------------------
Gerald L. Wannarka 0/7,000 $0/$14,000
=======================================================================================================================
</TABLE>
(1) Value is calculated as the difference between the fair market
value of a share of Common Stock on July 31, 1998 ($11.125 per
share) and the exercise price of the options.
(2) Excludes 135,912 and 12,600 securities underlying exercisable
and unexercisable options, respectively, assumed by the Company in
connection with the 1996 merger. Such options are exercisable for
$.005 per share.
Employment and Change of Control Agreements
The Company is party to an employment agreement (the "Employment
Agreement"), effective in fiscal 1997, with James H. Miller. Under the
Employment Agreement, the Company will employ Mr. Miller as President and Chief
Executive Officer. The Employment Agreement has an initial term of three years,
and provides for a minimum base salary of $325,000 and customary benefits,
subject to annual extensions. The Company may terminate the Employment Agreement
upon disability or retirement or for "Cause" (as defined in the Employment
Agreement). If the Company terminates the Employment Agreement for any reason
other than disability, retirement or Cause, or Mr. Miller terminates the
Employment Agreement for "Good Reason," as defined in the Employment Agreement,
Mr. Miller will be entitled to receive a lump sum payment equal to 200% of his
base salary for the preceding 12 months and continued life, disability, accident
and health insurance coverage for up to 24 months. In addition, all stock
options previously awarded under the Company's stock option plans would become
immediately exercisable and any transfer restrictions on restricted securities
would lapse. The Employment Agreement further provides that any benefits or
payments pursuant to these provisions will be reduced to the extent that such
amounts received (together with any other amounts received that must be included
in such determination) would constitute an "excess parachute payment" as defined
in Section 280G of the Internal Revenue Code of 1986, as amended ("Code").
-8-
<PAGE>
The Company is party to change of control agreements (the "Change of
Control Agreements") with Peter Garbis and Gerald Wannarka (the "Executives").
These Change of Control Agreements each have a term of three years, beginning in
fiscal 1999. Under these Change of Control Agreements, the Company will continue
to pay the Executives their Base Salary (as defined in the Change of Control
Agreements) as well as continue life and health insurance coverage for a period
of 12 months following the occurrence of both a Change of Control and a
Termination Event (as such terms are defined in the Change of Control
Agreements). In addition, pursuant to certain of the Executive's stock option
agreements, certain stock options awarded under the Company's stock option plans
would become immediately exercisable following both a Change of Control and
termination of the Executive's employment by the Company for any reason other
than Cause or by the Executive for Good Reason (as such terms are defined in the
stock option agreements).
Report on Compensation of Executive Officers
The Board of Directors believes that the Company must provide a total
Chief Executive Officer ("CEO") compensation package that will motivate and
retain a CEO of outstanding ability who is capable of directing the strategic
focus of the Company. The Company's CEO compensation program has three primary
components: a base salary, a discretionary cash bonus and a long-term incentive
award.
Prior to the Committee's consideration of Mr. Miller's base salary for
fiscal 1998, Mr. Miller requested that the Committee maintain his base salary
for fiscal 1998 at the minimum level specified by his Employment Agreement. Mr.
Miller informed the Committee that he was taking this action to help conserve
the Company's cash resources.
Base Salary. Mr. Miller's minimum annual salary for fiscal 1998 was
established at $325,000 by his Employment Contract. The Committee did not
evaluate Mr. Miller's performance for purposes of setting his base salary for
fiscal 1998 because Mr. Miller requested the Committee not to increase his
minimum base salary.
Annual Cash Bonus. The Committee believes that an annual cash bonus,
determined and paid after the fiscal year to which the bonus relates, generally
provides an effective means for rewarding outstanding individual performance by
the CEO during the fiscal year. The amount of the annual cash bonus is within
the sole discretion of the Committee and takes into account the financial needs
of the Company and the Committee's subjective assessment of the CEO's
performance. Prior to the Committee's consideration of a cash bonus for fiscal
1998, Mr. Miller advised the Committee that he would waive any cash bonus that
the Committee might award for fiscal 1998 performance in order to help conserve
the Company's cash resources. As a result, the Committee did not determine a
bonus amount.
Long-Term Incentive Compensation. The Committee believes that stock
options provide a useful incentive for future performance and for retaining
executives of outstanding ability. Stock
-9-
<PAGE>
option grants also serve to link the interests of the employees and the
Company's stockholders because increases in the value of the stock options are
directly tied to increases in stockholder value.
On February 25, 1998, the Committee granted to Mr. Miller an option
covering 50,000 shares of Common Stock at an exercise price of $12.938 per
share. Under the terms of the grant, the option vests in cumulative annual
installments of 25%, commencing one year from the date of grant and expires ten
years from the date of grant. See "Executive Compensation--Stock Options."
The Committee did not calculate the size of Mr. Miller's stock option
award with reference to the compensation practices of a peer group or other
objective criteria. Instead, the number of shares of Common Stock subject to the
option was determined in the Committee's discretion based, in part, on its
subjective assessment of Mr. Miller's performance as President and CEO of the
Company. The Committee noted, among other things, that, during fiscal 1997, the
Company achieved a revenue increase from $35 million to $41 million, improved
gross margin performance from 30% to 37%, increased earnings, before interest,
taxes, deductions and adjustments, from $4.9 million to $7.1 million and
increased earnings per share from a loss to $.17. In making the option award,
the Committee also considered Mr. Miller's willingness to forego any salary
increase or cash bonus.
The Committee also awarded stock options to each of Messrs. Braswell,
Garbis and Ruby during fiscal 1998. In making these stock option awards, the
Committee, using its discretion, created a pool of stock options for eligible
officers. The Committee then allocated awards among eligible officers based on
such officers' performance ratings for fiscal 1997. On December 15, 1997, in
connection with Dr. Wannarka's employment with the Company, Dr. Wannarka was
granted an option covering 7,000 shares of Common Stock. See "Executive
Compensation--Stock Options."
Compensation of Executive Officers Other than CEO. The compensation of
each of the executive officers, other than the CEO, generally is determined by
the CEO within the context of the Company's compensation policy. The Company's
compensation policy includes position descriptions for all non-contract
employees including the other executive officers. Each position is assigned a
grade level based on competitive salaries for positions with a similar range of
responsibilities at companies having comparable annual revenues to those of the
Company. The CEO approves all direct report position descriptions and assigned
grade levels. The Company's job performance appraisal is by "Management by
Objectives," which concentrates on results achieved. Once a year each of the
other executive officers and the CEO agree on objectives of the job. Examples of
such objectives are financial growth, expense reduction, operating within
budget, development and commercialization of quality products, market growth and
product and project management.
The Committee's philosophy in administering the Company's stock option
plans is to afford a broad group of non-contract employees an opportunity to
share in the ownership of the Company and the Company's success. Accordingly,
the Company historically has granted stock options to a broad class of employees
and not limited grants solely to executive officers. The CEO has complete
-10-
<PAGE>
authority to administer the 1997 Plan with respect to all employees other than
those subject to Section 16 of the Securities Exchange Act of 1934, as amended
("Exchange Act").
Robert G. Foster
E. Andrews Grinstead, III
David L. Lougee
Compensation Committee Interlocks and Insider Participation
The Compensation and Stock Option Committee of the Board of Directors
(the "Committee") is comprised of only non-employee directors of the Company.
Messrs. Foster, Grinstead and Lougee currently serve as members of the
Committee. Mr. Lougee is the Managing Partner of the law firm of Mirick,
O'Connell, DeMallie & Lougee. From time to time, attorneys with the firm provide
legal services to the Company.
-11-
<PAGE>
BENEFICIAL OWNERSHIP
Set forth below is a table showing certain information with respect to
those persons known to the Company to be the beneficial owners of more than 5%
of the outstanding shares of Common Stock, the Named Executives, each director
of the Company and all executive officers and directors of the Company as a
group as of November 20, 1998.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Owned
Beneficial Owner Directly or Indirectly(1)(2) Percent of Class(3)
---------------- ---------------------------- -------------------
<S> <C> <C>
Commonwealth BioVentures Entities 480,971(4) 15.2%
4 Milk Street
Portland, ME 04101
Mylan Laboratories, Inc. 272,299(5)(6) 9.0%
P.O. Box 4310
781 Chestnut Ridge Road
Morgantown, West Virginia 26504
EM Industries, Incorporated 243,476(5)(7) 8.1%
7 Skyline Drive
Hawthorne, New York 10532
Nomura Holding America Inc 204,770(5)(8) 6.4%
2 World Financial Center, Building B
New York, New York 10281
First Wilshire Securities Management, Inc. 177,200(5)(9) 5.9%
600 S Lake Street
Suite 405
Pasadena, California 91106
Internationale Nederlanden 174,491(5)(10) 5.5%
(U.S.) Investment Corporation
135 East 57th Street
New York, New York 10022
Bank of Boston Corp 150,303(5) 5.0%
c/o Bancboston Ventures Inc.
100 Federal Street
Boston, Massachusetts 02110
G. Troy Braswell, Jr. 2,691 *
Bruce M. Dresner 34,100 1.1%
Robert G. Foster(11) 53,485(12) 1.8%
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Peter A. Garbis 2,321
E. Andrews Grinstead, III 8,075 *
David L. Lougee 5,943 *
James H. Miller 233,461(13) 7.3%
Mark D. Ruby 4,685 *
Gerald L. Wannarka 1,750 *
All directors and executive officers as a 346,511 10.5%
group (9 persons)
</TABLE>
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* Less than 1%
(1) Unless otherwise indicated, includes shares held directly by
the individual as well as by such individual's spouse, shares held
in trust and in other forms of indirect ownership over which shares
the individual effectively exercises sole voting and investment
power and shares which the named individual has a right to acquire
within sixty days of November 20, 1998, pursuant to the exercise of
stock options.
(2) Includes the following number of shares of Common Stock issuable
upon exercise of stock options exercisable within 60 days of the
record date: Mr. Braswell, 2,191; Mr. Dresner, 32,600; Mr. Foster,
13,975; Mr. Garbis, 2,321; Mr. Grinstead, 8,075; Mr. Lougee, 5,575;
Mr. Miller, 225,912; Mr. Ruby, 4,685; and Dr. Wannarka, 1,750; and
all directors and executive officers as a group, 297,084.
(3) Based upon 2,991,080 shares of Common Stock outstanding as of
the record date, plus shares of Common Stock issuable within 60
days of the record date under option or warrant.
(4) Consists of shares and warrants owned by Commonwealth BioVentures
IV Limited Partnership (107,540 shares and warrants to purchase
32,842 shares which may be exercised within 60 days), Commonwealth
BioVentures V Limited Partnership (209,651 shares and warrants to
purchase 129,914 shares which may be exercised within 60 days)
(collectively the "Funds") and BioVentures Limited Partnership
("BPLP") (808 shares and warrants to purchase 216 shares which may
be exercised within 60 days). Robert G. Foster is President of
Commonwealth BioVentures, Inc. ("CBI"), which is the general
partner of BPLP, which, in turn, is the general partner of each of
the Funds. These numbers exclude certain shares and warrants held
by Mr. Foster, held jointly by Mr. Foster and his spouse or
children, and held by Mr. Foster in a profit sharing plan with CBI.
See footnotes 11 and 12.
(5) The information set forth in the table above is derived solely
from a Schedule 13D or 13G or the most recent amendment thereof
filed with the Commission.
(6) Includes 43,556 shares of Common Stock subject to presently
exercisable warrants.
(7) Includes 29,038 shares of Common Stock subject to presently
exercisable warrants.
(8) Includes 204,770 shares of Common Stock subject to presently
exercisable warrants.
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(9) First Wilshire Securities Management, Inc., an Investment Advisor
registered under section 203 of the Investment Advisors Act of
1940, claims sole power to vote or direct the vote with respect to
1,600 shares and sole power to dispose or direct the disposition
with respect to 177,200 shares.
(10) Includes warrants to purchase Company Common Stock exercisable for
174,491 shares of non-voting Common Stock, convertible, on a
one-for-one basis, into shares of voting Common Stock.
(11) Mr. Foster, a director of the Company, is the President of CBI,
which is the general partner of BPLP, which, in turn, is the
general partner of each of the Funds. Mr. Foster disclaims
beneficial ownership of all shares held by such entities.
(12) Includes 20,719 shares of Common Stock held jointly by Mr. Foster
with his wife or children, 13,975 shares subject to options and
18,791 shares subject to warrants exercisable within 60 days.
(13) Includes 2,857 shares of Common Stock subject to presently
exercisable warrants.
Section 16(a) Beneficial Ownership Reporting Compliance
During fiscal 1998, to the knowledge of the Company, each of the
Company's directors, executive officers and 10% stockholders filed all reports
relating to the Common Stock required under Section 16(a) of the Exchange Act.
CERTAIN TRANSACTIONS
The Company is party to a loan agreement providing for a term loan and
a revolving credit facility with Internationale Nederlanden (U.S.) Capital
Corporation ("ING"), which is an affiliate of International Nederlanden (U.S.)
Investment Corporation, which in turn is the beneficial owner of in excess of 5%
of the outstanding Common Stock representing warrants received by ING in
financing transactions with the Company. See "Beneficial Ownership." In fiscal
1998, in connection with the Company's sale of senior subordinated notes to
Nomura Holding America Inc. ("Nomura"), the Company restructured its loan
agreement with ING. The Company reduced the term loan by $3.5 million and
extended its maturity to March 31, 2003. The term loan bears interest at a rate
of either the Eurodollar loan rate plus 3.5%; or the greater of the prime rate
plus 1.5% or the federal funds rate plus 2.0% (10.0% at July 31, 1998). The
Company's line of credit with ING was increased in fiscal 1999 in order to
permit the Company to borrow up to a maximum of $8.5 million and bears interest
at either the Eurodollar rate plus 3.25%; or the greater of the prime rate plus
1.25% or the federal funds rate plus 1.75% (9.75% at July 31, 1998). The Company
engaged an affiliate of ING to provide financial advisory services in connection
with the sale of the senior subordinated notes to Nomura and the restructuring
of the Company's outstanding indebtedness. The Company paid ING's affiliate
$525,000 for such services during fiscal 1998.
In April 1998, Nomura purchased from the Company, $15 million aggregate
principal amount of senior subordinated notes. The notes mature on April 30,
2005 and bear 12% interest, payable quarterly in arrears. In connection with the
transaction, Nomura received warrants to purchase in excess of 5% of the
Company's outstanding Common Stock at an exercise price of
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$11.988 per share. See "Beneficial Ownership." During fiscal 1999, the warrants
were adjusted to reduce the exercise price to $7.50 per share.
During fiscal 1998, the Company was indebted to EM Industries, Inc.
("EM"), beneficial owner of in excess of 5% of the outstanding Common Stock, in
the amount of $1,277,000. The Company retired this loan in fiscal 1998 with
proceeds of the sale of the notes to Nomura.
Dey Laboratories, an affiliate of EM, is the exclusive distributor of
the Company's EpiPen(R) line of auto-injectors. The Company's contract with EM
extends until the year 2010, so long as certain minimum quantity requirements
are met, and generated revenues of approximately $20.7 million to the Company in
1998. In January 1996, a predecessor to Dey Laboratories provided a
non-interest-bearing loan to the Company in the amount of $375,000. The loan is
being repaid through a credit per unit of certain product shipments to Dey
Laboratories. As of July 31, 1998, the loan balance was approximately $201,900.
PERFORMANCE GRAPH
The following graph shows the cumulative stockholder return on the
Company's Common Stock during the five year period ended July 31, 1998 as
compared to (i) an overall stock market index, the NASDAQ (U.S.) Index, and (ii)
a peer group index, the S&P Medical Products and Supplies Index. The graph
assumes that $100 was invested on August 1, 1993, and the yearly points marked
on the horizontal axis correspond to July 31 of the indicated year.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
========================================================================================================================
STOCKHOLDER VALUE AT FISCAL YEAR END
- ------------------------------------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NASDAQ (U.S.) Index $100 $102 $144 $160 $237 $234
- ------------------------------------------------------------------------------------------------------------------------
Meridian Medical Technologies, Inc. $100 $91 $79 $93 $64 $117
- ------------------------------------------------------------------------------------------------------------------------
S&P Medical Products & Supplies Index $100 $77 $120 $137 $210 $264
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
PROPOSAL 2 -- RATIFICATION OF INDEPENDENT AUDITORS
Effective April 22, 1997, Price Waterhouse LLP ("PW") resigned as the
independent accountants of the Company. The reports of PW on the Company's
financial statements for fiscal year 1996 contained no adverse opinions or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principle. In connection with its audits for fiscal
year 1996, there were no disagreements between the Company and PW on any matter
of accounting principle or practices, financial statement disclosure or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
PW would have caused them to make reference thereto in their report on financial
statements for such years.
On May 29, 1997, the Board of Directors, upon the recommendation of the
Audit Committee, selected the firm of Ernst & Young LLP as independent auditors
of the Company for fiscal year 1997 and subsequently selected Ernst & Young LLP
as independent auditors for fiscal years 1998 and 1999. This nationally known
firm has no direct or indirect financial interest in the Company.
Although not legally required to do so, the Board is submitting the
selection of Ernst & Young LLP as the Company's independent auditor for fiscal
1999 for ratification by the stockholders at the Annual Meeting. If a majority
of the shares of Common Stock represented in person or by proxy at the meeting
is not voted for ratification, the Board will reconsider its appointment Ernst &
Young LLP as independent auditors for the current fiscal year.
A representative of Ernst & Young LLP will be present at the Annual
Meeting and will have the opportunity to make a statement if he desires to do
so. It is anticipated that such representative will be available to respond to
appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG AS AUDITORS FOR FISCAL 1999.
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OTHER BUSINESS
The Company does not presently know of any matters that will be
presented for action at the meeting other than those set forth herein. If other
matters properly come before the meeting, proxies submitted on the enclosed form
will be voted by the persons named in the enclosed form of proxy in accordance
with their best judgment.
ANNUAL REPORTS
The Company's Annual Report to Stockholders is enclosed with this Proxy
Statement. The Company also has filed with the SEC an Annual Report on Form 10-K
for the fiscal year ended July 31, 1998. Copies of the Form 10-K are available
upon written request to the Company at its principal executive office, 10240 Old
Columbia Road, Columbia, Maryland 21046, Attention: Assistant Corporate
Secretary. The Form 10-K report and Annual Report to Stockholders are not part
of these proxy solicitation materials.
1999 ANNUAL MEETING OF STOCKHOLDERS
It presently is contemplated that the annual meeting of stockholders
following fiscal 1999 will be held on or about January 7, 2000. Under the
current rules of the Securities and Exchange Commission, in order for any
appropriate stockholder proposal to be considered for inclusion in the proxy
materials of the Company for the fiscal 1999 annual meeting of stockholders, it
must be received by the Assistant Secretary of the Company no later than August
10, 1999, by certified mail, return receipt requested. In addition, pursuant to
Section 2.10(a) of the Company's Amended and Restated By-Laws, notice of a
stockholder proposal or of a nomination by stockholders of individuals for
election to the Company's Board of Directors, whether or not such nomination or
proposal is proposed to be included in the Company's proxy materials, must be
accompanied by a written notice setting forth with particularity the names and
addresses of the proponents and all persons acting in concert with the
proponent, the names and addresses of the proponent and all persons acting in
concert with the proponent as they appear on the Company's books (if they so
appear), the class and number of shares of Common Stock of the Corporation
beneficially owned by the proponent, a description of the proposal setting forth
all material information and other such information as the Board of Directors
reasonably determines is necessary or appropriate.
In addition, the proxies appointed by the Company may exercise
discretionary authority when voting on a stockholder proposal properly presented
at the Company's 1999 annual meeting of stockholders that is not included in the
Company's proxy statement for such meeting if such proposal is received by the
Company after August 10, 1999. If notice of such a stockholder proposal is
received by the Company on or prior to such date, such proposal is properly
presented at the 1999 annual meeting and is not included in the Company's proxy
statement for such meeting, the proxies appointed by the Company may exercise
discretionary authority if, in such proxy statement, the Company advises
stockholders on the nature of such proposal and how the proxies appointed by the
Company intend to vote on such proposal, unless the stockholder submitting such
proposal satisfies
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<PAGE>
certain requirements of the Securities and Exchange Commission, including the
mailing of a separate proxy statement to the Company's stockholders.
By Order of the Board of Directors
/s/ PAMELA J. GIGOGNE
-----------------------------
ASSISTANT CORPORATE SECRETARY
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<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
MERIDIAN MEDICAL TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
January 7, 1999
The undersigned hereby appoints James H. Miller and Pamela J. Gigogne,
and either of them, proxies of the undersigned, with full power of substitution,
to vote all shares of Common Stock of Meridian Medical Technologies, Inc. (the
"Company") that the undersigned is entitled to vote, at the Annual Meeting of
Stockholders of the Company to be held on January 7, 1999, and at any
adjournments thereof with all powers the undersigned would possess if personally
present, as follows on the reverse side of this proxy card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED IN
ITEM 1 AND FOR APPROVAL OF PROPOSAL LISTED IN ITEM 2. THIS PROXY WHEN PROPERLY
EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
(Continued on Other side, Please Sign and
Date on Other Side, and Return in Enclosed Envelope)
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Fold and Detach Here
<PAGE>
Please mark
your votes as
indicated in
example
Item 1 - Election of Bruce M. Dresner and David L. Lougee, each to a three year
term on the Board of Directors
FOR Withhold For All
All Nominees Authority Except
Item 2 - Proposal to ratify the appointment of Ernst & Young, LLP, as auditors
for fiscal 1999
FOR AGAINST ABSTAIN
INSTRUCTION: To withhold authority for either Nominee, mark the "For All
Except" box and write the Nominees name on the above line.
Item 3 - In their discretion, on such other matters as may properly come
before the meeting or adjournment thereof.
Date:--------------------------------------, 199
-------------------------------------------
Signature(s)
-------------------------------------------
Signature(s)
Please sign here personally. Signature of stockholder(s) should
correspond directly with name(s) in which shares are registered.
If the stock is registered in more than one name, each joint owner
or fiduciary should sign personally. Only authorized officers
should sign for a corporation.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
Fold and Detach Here
