UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
ROCHESTER MEDICAL CORPORATION
- --------------------------------------------------------------------------------
(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):
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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[_] Fee paid previously with preliminary materials:
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was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
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4) Date Filed:
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ROCHESTER MEDICAL CORPORATION
ONE ROCHESTER MEDICAL DRIVE
STEWARTVILLE, MINNESOTA 55976
TELEPHONE (507) 533-9600
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 8, 2001
------------------
The Annual Meeting of Shareholders of Rochester Medical Corporation (the
"Company") will be held Thursday, February 8, 2001, at 3:30 o'clock p.m.
(Central Standard Time) in Salon E, Minneapolis Hilton and Towers Hotel, 1001
Marquette Avenue, Minneapolis, Minnesota 55403 to consider and take action upon
the following matters:
1. To elect six directors to serve until the next Annual Meeting of
Shareholders.
2. To approve the Rochester Medical Corporation 2001 Stock Incentive
Plan.
3. To act upon any other business that may properly come before the
meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on December 13,
2000, as the record date for the determination of the shareholders entitled to
vote at the meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Anthony J. Conway
Anthony J. Conway
PRESIDENT AND SECRETARY
Dated: December 22, 2000
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT YOU
PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE MARK, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU LATER
DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS EXERCISED.
ROCHESTER MEDICAL CORPORATION
ONE ROCHESTER MEDICAL DRIVE
STEWARTVILLE, MINNESOTA 55976
TELEPHONE (507) 533-9600
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PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 8, 2001
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SOLICITATION AND REVOCABILITY OF PROXY
This Proxy Statement is furnished to the shareholders of Rochester Medical
Corporation (the "Company"), in connection with the solicitation by the
Company's Board of Directors of the enclosed proxy for use at the 2001 Annual
Meeting of Shareholders of the Company to be held on Thursday, February 8, 2001,
at 3:30 o'clock p.m. (Central Standard Time) in Salon E, Minneapolis Hilton and
Towers Hotel, 1001 Marquette Avenue, Minneapolis, Minnesota 55403, or at any
adjournment(s) thereof (the "2000 Annual Meeting") for the purposes set forth in
the Notice of Annual Meeting of Shareholders. The persons named as proxies in
the enclosed form of proxy will vote the Common Stock according to the
instructions given therein or, if no instruction is given, then in favor of all
nominations and Proposal 2. A person giving a proxy may revoke it before it is
exercised by delivering to the Secretary of the Company a written notice
terminating the proxy's authority or by duly executing a proxy bearing a later
date. A shareholder who attends the meeting need not revoke his or her proxy and
vote in person unless he or she wishes to do so.
The Company will pay expenses for solicitation of proxies. Proxies are
being solicited primarily by mail, but, in addition, directors, officers and
regular employees of the Company, who will receive no extra compensation for
their services, may solicit proxies personally, by telephone or by special
letter.
So far as the management of the Company is aware, only matters described in
this Proxy Statement will be acted upon at the meeting. If another matter
requiring a vote of shareholders properly comes before the meeting, the persons
named as proxies in the enclosed proxy form will vote on such matter according
to their judgment.
A copy of the Company's Annual Report on Form 10-K, including financial
statements, for the fiscal year ended September 30, 2000, is being furnished to
each shareholder with this Proxy Statement.
The principal executive offices of the Company are located at One Rochester
Medical Drive, Stewartville, Minnesota 55976. The approximate mailing date of
this Proxy Statement and the accompanying form of proxy is December 22, 2000.
1
RECORD DATE AND VOTING OF SECURITIES
The Common Stock of the Company, without par value, is the only authorized
voting security of the Company. Only holders of the Company's Common Stock whose
names appear of record on the Company's books on December 13, 2000, are entitled
to receive notice of, and to vote at, the 2001 Annual Meeting. At the close of
business on December 13, 2000, a total of 5,338,900 shares of Common Stock were
outstanding, each entitled to one vote. Holders of Common Stock do not have
cumulative voting rights.
PROPOSAL 1: ELECTION OF DIRECTORS
NOMINEES
The Company's By-Laws provide that the shareholders or the Board of
Directors may set the number of directors to constitute the Company's Board of
Directors. The Board of Directors has determined to set the number of directors
at six. Each director is elected at the Annual Meeting of Shareholders to hold
office until the Annual Meeting of Shareholders next held after his or her
election.
It is intended that the persons named as proxies in the enclosed form of
proxy will vote the proxies received by them for the election as directors of
the nominees named in the table below except as specifically directed otherwise.
Each nominee has indicated a willingness to serve, but in case any nominee is
not a candidate at the meeting, for reasons not now known to the Company, the
proxies named in the enclosed form of proxy may vote for a substitute nominee in
their discretion. Information regarding these nominees is set forth in the table
below.
DIRECTOR
NAME AGE SINCE POSITION
- ------------------------ ----- --------- --------------------------------------------------
Anthony J. Conway 56 1988 Chairman of the Board, Chief Executive
Officer, President, and Secretary
Philip J. Conway 44 1988 Director, Vice President, Production Technologies
Richard D. Fryar 53 1988 Director, Vice President, Research
and Development
Darnell L. Boehm 52 1995 Director
Peter R. Conway 46 1988 Director
Roger W. Schnobrich 70 1995 Director
ANTHONY J. CONWAY, a founder of the Company, has served as Chairman of the
Board, Chief Executive Officer, President, and Secretary of the Company since
May 1988, and was its Treasurer until September 1997. In addition to his duties
as Chief Executive Officer, Mr. Anthony Conway actively contributes to the
Company's research and development and design activities. From 1979 to March
1988, he was President, Secretary and Treasurer of Arcon Corporation ("Arcon"),
a company that he co-founded in 1979 to develop, manufacture and sell
latex-based male external catheters and related medical devices. Prior to
founding Arcon, Mr. Anthony Conway worked for twelve years for International
Business Machines Corporation ("IBM") in various research and development
capacities. Mr. Anthony Conway is one of the named inventors on numerous patent
applications that have been assigned to the Company, of which to date 17 have
resulted in issued United States patents.
2
PHILIP J. CONWAY, a founder of the Company, has served as Vice President of
Production Technologies of the Company since August 1999 and as a Director of
the Company since May 1988. From 1988 to July 1999, Mr. Philip Conway served as
Vice President of Operations of the Company. Mr. Philip Conway is responsible
for plant design as well as new product and production processes, research,
design and development activities. From 1979 to March 1988, Mr. Philip Conway
served as Plant and Production Manager of Arcon, a company that he co-founded.
Prior to joining Arcon, Mr. Philip Conway was employed in a production
supervisory capacity by AFC Corp., a manufacturer and fabricator of fiberglass,
plastics and other composite materials. He is one of the named inventors on
numerous patent applications that have been assigned to the Company, of which to
date 17 have resulted in issued United States patents.
RICHARD D. FRYAR, a founder of the Company, has served as a Director and as
Vice President of Research and Development of the Company since May 1988. Mr.
Fryar is responsible for overseeing the Company's research and development and
regulatory affairs activities. From 1984 to March 1988, Mr. Fryar was employed
by Arcon, a company that he co-founded, in research and development capacities.
From 1969 to 1984, he was employed by IBM in various research and development
capacities. He is one of the named inventors on numerous patent applications
that have been assigned to the Company, of which to date 17 have resulted in
issued United States patents.
DARNELL L. BOEHM has served as a Director of the Company since October
1995. Since 1986, Mr. Boehm has served as a Director and the Chief Financial
Officer and Secretary of Aetrium, Inc., a manufacturer of electromechanical
equipment for handling and testing semiconductor devices. Since August 1999,
Mr. Boehm has served as a Director of ALPNET, Inc., a supplier of multilingual
information services including language translation, product localization and
other services. From October 1988 to March 1993, Mr. Boehm served as the Acting
President of Genesis Labs, Inc., a manufacturer of medical diagnostic products.
He is also the principal of Darnell L. Boehm & Associates, a management
consulting firm.
PETER R. CONWAY has served as a Director of the Company since May 1988. He
is a Director and the Chief Executive Officer of Halcon Corporation, a
manufacturer of quality custom office furniture of which he was a co-founder in
1978. From 1979 to 1985 Mr. Peter Conway served as a director of Arcon.
ROGER W. SCHNOBRICH has served as a director of the Company since October
1995. Mr. Schnobrich has been a partner with the law firm of Hinshaw &
Culbertson since 1997. Prior to joining Hinshaw & Culbertson, Mr. Schnobrich
was a partner in the law firm of Popham, Haik, Schnobrich and Kaufman Ltd. for
more than five years. Mr. Schnobrich serves as a director of Developed
Technology Resource Inc., a company that invests in business, technology and
infrastructure in the former Soviet Union.
Messrs. Anthony J. Conway, Philip J. Conway and Peter R. Conway are
brothers.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES NAMED ABOVE AS DIRECTORS OF THE COMPANY FOR THE ENSUING YEAR.
BOARD MEETINGS
During the fiscal year ended September 30, 2000, the Board of Directors met
on 2 occasions and adopted resolutions by unanimous written consent on 4
additional occasions.
COMMITTEES
The Board of Directors has established a Compensation Committee and an
Audit Committee. The Audit Committee has oversight of the Company's financial
statements, financial reporting process,
3
systems of internal accounting and financial controls, internal audit function,
the annual independent audit of the Company's financial statements and legal
compliance. The Compensation Committee has power and authority to recommend
compensation for the Company's executive officers. Messrs. Boehm and Schnobrich
are members of each committee. The Audit Committee met three times and the
Compensation Committee met on one occasion during the fiscal year ended
September 30, 2000.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
No director of the Company attended fewer than 75% of all board and
committee meetings.
COMPENSATION OF DIRECTORS
No director who is also an employee of the Company receives any separate
compensation for services as a director. Non-employee directors currently
receive reimbursement of out-of-pocket expenses incurred with respect to their
duties as board or committee members.
Non-employee directors also each receive an automatic grant of stock
options under the Company's 1991 Stock Option Plan (the "1991 Stock Option
Plan"). Under the 1991 Stock Option Plan, each director who is elected or
reelected and who is not an employee of the Company is entitled to an automatic
grant of a non-qualified option to purchase 1,000 shares of Common Stock (an
"Automatic Grant"). Each Automatic Grant has the following terms: (1) the
exercise price is equal to the fair market value (as defined in the 1991 Stock
Option Plan) of the Common Stock on the date of grant; (2) the exercise price is
payable upon exercise in cash or in Common Stock held at least six months, (3)
the term of the option is 10 years, (4) the option is immediately exercisable
and (5) the option expires if not exercised within twelve months (i) after the
optionee ceases to serve as a Director or (ii) following the optionee's death.
Messrs. Darnell Boehm, Roger W. Schnobrich and Peter R. Conway are the
only non-employee Directors of the Company and therefore the only Directors
eligible to receive the compensation described above. On February 3, 2000, each
of these directors received an Automatic Grant.
EXECUTIVE OFFICERS
In addition to its executive officers who are also directors of the
Company, the Company employs the following executive officers:
NAME AGE POSITION
- --------------------------- ----- -------------------------------------------------
David A. Jonas 36 Controller, Treasurer and Director of Operations
Dara Lynn Horner 42 Vice President, FEMSOFT Marketing
Martyn R. Sholtis 41 Vice President, Marketing and Sales
DAVID A. JONAS has served as the Company's Controller since June 1998, as
its Director of Operations since August 1999, and as its Treasurer since
November 2000. Mr. Jonas has had principal responsibility for the Company's
operational activities since August 1999, and since November 2000 has also had
principal responsibility for the Company's financial activities. Prior to
joining the Company, Mr. Jonas was employed in various financial, financial
management and operational management positions with Polaris Industries, Inc.
from January 1989 to June 1998. Mr. Jonas holds a BS degree in Accounting from
the University of Minnesota and is a certified public accountant.
DARA LYNN HORNER has served as Marketing Director for the Company's
FEMSOFT INSERT product line since November 1998. Ms. Horner has principal
responsibility for management of the Company's FEMSOFT marketing activities.
From 1990 until joining the Company in 1998, Ms. Horner was employed
4
by Lake Region Manufacturing, Inc., a medical device manufacturer, most
recently as Marketing Director. From 1980 to 1998, she was employed in various
marketing and sales capacities with, respectively, Medtronic, Inc., West
Central Tribune, and Blue Cross-Blue Shield of Minnesota.
MARTYN R. SHOLTIS joined the Company in April 1992 and serves as Vice
President of Marketing & Sales. Mr. Sholtis' responsibilities include
implementation of the Company's marketing & sales strategy as well as the
development of the Company's relationships with the Company's private label and
international customers. From 1985 to 1992 Mr. Sholtis was employed by Sherwood
Medical, a company that manufactured and sold a variety of disposable medical
products including urological catheters, most recently as Regional Sales Manager
for the Nursing Care Division.
The Company's executive officers are employed pursuant to annually renewing
employment agreements which continue until terminated by either the Company or
the employee. Under each respective agreement, employment continues unless
terminated by the employee or by the Company. Each such agreement contains
confidentiality and assignment of invention provisions benefiting the Company,
and the employment agreements with Messrs. Conways and Fryar also contain
non-competition provisions benefiting the Company.
CHANGE IN CONTROL AGREEMENTS
The Compensation Committee of the Board authorized change in control
agreements with Philip J. Conway, Vice President of Production Technologies, and
Richard D. Fryar, Vice President of Research and Development, on December 1,
1998, and with Anthony J. Conway, President and Chief Executive Officer, Dara
Lynn Horner, Vice President of FEMSOFT Marketing, David A. Jonas, Controller,
and Martyn R. Sholtis, Vice President of Sales and Marketing, on November 21,
2000. The Compensation Committee and the Board believe that the arrangements are
appropriate to reinforce and encourage the continued attention and dedication of
members of the Company's management to their assigned duties without distraction
if a change in control of the Company is proposed. The Compensation Committee
and the Board believe that it is important, should the Company or its
shareholders receive a proposal for transfer of control of the Company, that
management be able to assess and advise the Board whether such proposal would be
in the best interests of the Company and its shareholders and to take such other
actions regarding such proposal as the Board might determine to be appropriate,
without being influenced by the uncertainties of management's own personal
situation.
The change in control agreements, which are substantially the same for each
individual, provide that each employee agrees to continue employment with the
Company following a Change in Control (as defined), unless such employment is
terminated because of death, disability or by the employee for Good Reason (as
defined). If a Change in Control occurs and the individual remains employed by
the Company for twelve months following such Change in Control, then the
individual will be entitled to receive a payment equal to 2.5 times such
individual's earned compensation (salary plus cash bonuses) during the 12 month
period. If an individual's employment is terminated within twelve months
following a Change in Control by the Company without Cause (as defined) or by
the individual for Good Reason, then the individual will be entitled to receive
a payment equal to 2.5 times such individual's earned compensation during the
one year period prior to the date of the Change in Control. In either case,
payments to an individual are subject to excess payment limitations, such that
the amounts payable under such individual's agreement shall be reduced until no
portion of the total payments by the Company to such individual as a result of
the change in control (including the value of accelerated vesting of stock
options) will not be deductible solely as a result of Section 280G of the
Internal Revenue Code of 1986, as amended.
5
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 1, 2000, certain information
with respect to the beneficial ownership of the Common Stock of the Company by
(i) each person who, to the knowledge of the Company, owned beneficially more
than five percent of such stock, (ii) each director, (iii) each executive
officer named in the "Summary Compensation Table" below and (iv) all directors
and executive officers as a group. Unless otherwise noted, shares are subject to
the sole voting and investment power of the indicated person.
NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
- ---------------------------------------- ---------------------------- -----------------
Anthony J. Conway(2)(3)(4) 469,750 8.7%
Philip J. Conway(2)(3)(5) 264,200 4.9%
Peter R. Conway(3)(6) 234,200 4.4%
Richard D. Fryar(2)(7) 197,500 3.7%
Brian J. Wierzbinski(8) 109,035 2.0%
Darnell L. Boehm(9) 42,350 *
Roger W. Schnobrich(10) 37,500 *
Dara Lynn Horner(11) 15,000 *
Woodland Partners LLC(12) 346,200 6.5%
All Officers and Directors
as a group (8 persons)(13) 1,369,535 24.4%
- ------------------
*Less than 1%
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes general 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 December 1, 2000 are deemed to be outstanding for the purpose of
computing the percentage of the person holding such options or warrants,
but are not deemed outstanding for computing the percentage of any other
person.
(2) The address of each executive officer of the Company is One Rochester
Medical Drive, Stewartville, Minnesota 55976.
(3) Messrs. Anthony J. Conway, Peter R. Conway and Philip J. Conway are
brothers.
(4) Includes 36,000 shares issuable upon exercise of currently exercisable
options at prices ranging from of $7.3125 to $17.25 per share.
(5) Includes 23,000 shares issuable upon exercise of currently exercisable
options at prices ranging from $7.3125 to $17.25 per share. Also includes
1,000 shares held in an IRA for the benefit of Mr. Philip J Conway, and
1,000 shares held in an IRA for the benefit of his wife, as to which he
disclaims beneficial ownership.
(6) Includes 28,000 shares issuable upon exercise of currently exercisable
options at prices ranging from $8.25 to $20.00 per share. Mr. Peter R.
Conway's address is 501 Old Territorial Road, Chatfield, Minnesota 55923.
(7) Includes 23,000 shares issuable upon exercise of currently exercisable
options at prices ranging from $7.3125 to $17.25 per share.
(8) Includes 108,000 shares issuable upon exercise of currently exercisable
options at prices ranging from $7.3125 to $17.25 per share. As part of the
Company's cost reduction efforts, Mr. Wierzbinski's position was
eliminated in December 2000 and Mr. Wierzbinski's employment with the
Company was terminated in December 2000. Mr. Wierzbinski's duties have
been assigned to Anthony J. Conway, the Company's Chief Executive Officer,
and David A. Jonas, Controller and Treasurer. Mr. Wierzbinski's address is
2009 Bailey Estates Lane SW, Rochester, Minnesota 55902.
6
(9) Includes 25,000 shares issuable upon exercise of currently exercisable
options at prices ranging from $10.50 to $20.00 per share. Also includes
2,350 shares held for the benefit of a minor child. Mr. Boehm's address is
19330 Bardsley Place, Monument, Colorado 80132.
(10) Includes 25,000 issuable upon exercise of currently exercisable options at
prices ranging from $10.50 to $20.00 per share. Also includes 12,000
shares held in an IRA for the benefit of Mr. Schnobrich. Mr. Schnobrich's
address is 3100 Piper Jaffray Tower, Minneapolis, Minnesota 55402.
(11) Includes 15,000 shares issuable upon exercise of currently exercisable
options at prices ranging from $7.3125 to $13.875 per share.
(12) This information is based on a Schedule 13G/A filed by Woodland Partners
LLC ("Woodland") with the SEC on February 4, 2000, reporting beneficial
ownership data as of January 20, 2000. Woodland holds sole voting power
with respect to 384,100 shares of Common Stock, shared voting power with
respect to 55,300 shares and sole investment power with respect to 439,400
shares. Woodland's address is 60 South Sixth Street, Suite 3750,
Minneapolis, MN 55402.
(13) Includes the total of 283,000 options exercisable at the times and for the
prices described in footnotes (4) through (11) inclusive.
7
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Executive compensation is determined by the Board of Directors based on the
recommendations of the Compensation Committee, which is composed entirely of
independent, outside directors. The following information sets forth the
compensation paid by the Company for services rendered during the three (3)
fiscal years ended September 30, 2000 for the Company's Chief Executive Officer
and for each of the other four (4) most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-----------------------------------
OTHER ANNUAL SECURITIES
FISCAL COMPENSATION UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS/SAR'S(#) COMPENSATION
- ----------------------------- -------- ----------- -------------- ------------------ ----------------
Anthony J. Conway 2000 $157,327 $ 40,000 30,000 --
Chief Executive Officer 1999 134,750 40,132 12,000 --
and President 1998 128,600 33,500 15,000 --
Brian Wierzbinski(2) 2000 143,539 32,000 30,000 --
Former Executive Vice 1999 124,385 37,012 8,000 --
President, Chief Financial 1998 117,200 27,250 10,000 --
Officer and Treasurer
Philip J. Conway 2000 113,721 23,000 10,000 --
Vice President, 1999 108,837 24,488 8,000 --
Production Technologies 1998 103,600 24,000 10,000 --
Richard D. Fryar 2000 113,721 23,000 10,000 --
Vice President, 1999 108,837 24,488 8,000 --
Research and Development 1998 103,600 24,000 10,000 --
Dara Lynn Horner 2000 110,116 19,000 15,000 $ 11,056(4)
Vice President, 1999 82,385 49,625(3) 25,000 9,892
FEMSOFT Marketing 1998 -- -- -- --
- ------------------
(1) Annual bonus amounts are earned and accrued during the fiscal years
indicated, and paid subsequent to the end of the fiscal year.
(2) As part of the Company's cost reduction efforts, Mr. Wierzbinski's position
was eliminated in December 2000 and Mr. Wierzbinski's employment with the
Company was terminated in December 2000. Mr. Wierzbinski's duties have
been assigned to Anthony J. Conway, the Company's Chief Executive Officer,
and David A. Jonas, Controller and Treasurer.
(3) Includes annual and signing bonus.
(4) Includes amounts reimbursed by the Company for expenses, as provided in Ms.
Horner's employment agreement.
8
LONG TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
Stock options granted to the Company's executive officers during the fiscal
year ended September 30, 2000, are shown in the following table of Option
Grants.
OPTION GRANTS
POTENTIAL
REALIZABLE
VALUE AT
INDIVIDUAL GRANTEE ASSUMED ANNUAL
- --------------------------------------------------------------------------------------------- RATES OF STOCK
PERCENT OF TOTAL PRICE APPRECIATION
OPTIONS OPTIONS GRANTED TO EXERCISE FOR OPTION TERM(1)
GRANTED EMPLOYEES PRICE EXPIRATION --------------------------
NAME (#) IN FISCAL YEAR ($/SH)(2) DATE(3) 5% 10%
- ---------------------------- --------------- ------------------- ----------- ---------------- ------------ ------------
Anthony J. Conway 30,000(3) 19.35% $ 7.313 9/30/09 $ 147,126 $ 364,217
Chief Executive Officer
and President
Brian J. Wierzbinski 30,000(3) 19.35% 7.313 9/30/09(4) 147,126 364,217
Former Executive Vice
President, Chief Financial
Officer and Treasurer
Philip J. Conway 10,000(3) 6.45% 7.313 9/30/09 49,042 121,406
Vice President,
Production Technologies
Richard D. Fryar 10,000(3) 6.45% 7.313 9/30/09 49,042 121,406
Vice President,
Research and Development
Dara Lynn Horner 15,000(3) 9.68% 8.770 9/30/09 76,122 199,140
Vice President,
FEMSOFT Marketing
- ------------------
(1) Potential realizable value is based on an assumption that the market price
of the stock appreciates at the stated rate, compounded annually, from the
date of grant until the end of the ten year option term. These values are
calculated based on regulations promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
appreciation. There is no assurance that the actual stock price
appreciation over the ten year option term will be at the assumed 5% or 10%
levels, or at any other defined level.
(2) The exercise price of each option is equal to the market value of the
Common Stock on the date of grant. The exercise price is payable in cash,
or, at the discretion of the Stock Option Committee, in Common Stock of the
Company already owned by the optionee or by promissory note acceptable to
the Company.
(3) The option vests and becomes exercisable for the option shares in four
equal, successive annual installments, the first vesting on December 1,
2000. The option is subject to earlier termination in the event of
optionee's cessation of service with the Company.
(4) Mr. Wierzbinski is no longer an executive officer of the Company. Mr.
Wierzbinski departed the Company in December 2000.
9
OPTIONS EXERCISED DURING FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
(Fiscal year ended September 30, 2000)
The value of unexercised stock options held by the Company's executive
officers at fiscal year end is set forth in the following table. No stock
options were exercised by any of the Company's executive officers during the
past fiscal year.
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES VALUE SEPTEMBER 30, 2000 SEPTEMBER 30, 2000(1)
ACQUIRED REALIZED ------------------------------- ---------------------------------
NAME AND PRINCIPAL POSITION ON EXERCISE $(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ------------- --------- ------------- --------------- ------------- --------------
Anthony J. Conway 0 0 21,750 50,250(3) $0 $0
Chief Executive Officer
and President
Brian J. Wierzbinski(7) 0 0 96,000 44,000(5) 0 0
Former Executive Vice
President, Chief Financial
Officer and Treasurer
Philip J. Conway 0 0 16,000 24,000(4) 0 0
Vice President,
Production Technologies
Richard D. Fryar 0 0 16,000 24,000(4) 0 0
Vice President,
Research and Development
Dara Lynn Horner 0 0 8,750 31,250(6) 0 0
Vice President,
FEMSOFT Marketing
- ------------------
(1) An in-the-money option is an option which has an exercise price for the
Common Stock which is lower than the fair market value of the Common Stock
on a specified date. The fair market value of the Company's Common Stock at
September 30, 2000 was $6.125 per share.
(2) Value realized is based on the fair market value of the Company's Common
Stock on the date of exercise minus the exercise price and does not
necessarily indicate that the optionee sold such stock.
(3) 15,000 granted February 14, 1997, 15,000 granted February 4, 1998, 12,000
granted December 17, 1998, and 30,000 granted December 1, 1999 under the
Company's 1991 Stock Option Plan; exercisable at $17.25 per share, $15.375
per share, $13.625 per share and $7.3125 per share, respectively.
(4) 12,000 granted February 14, 1997, 10,000 granted February 4, 1998, 8,000
granted December 17, 1998, and 10,000 granted December 1, 1999 under the
Company's 1991 Stock Option Plan; exercisable at $17.25 per share, $15.375
per share, $13.625 per share and $7.3125 per share, respectively.
(5) 80,000 granted February 1, 1996, 12,000 granted February 14, 1997, 10,000
granted February 4, 1998, 8,000 granted December 17, 1998, and 30,000
granted December 1, 1999 under the Company's 1991 Stock Option Plan;
exercisable at $14.375 per share, $17.25 per share, 15.375 per share,
$13.625 per share and $7.3125 per share, respectively.
(6) 20,000 granted November 16, 1998, 5,000 granted June 17, 1999, 10,000
granted October 1, 1999, and 5,000 granted December 1, 1999 under the
Company's 1991 Stock Option Plan; exercisable at $13.875 per share, $10.00
per share, $9.50 per share and $7.3125 per share, respectively.
(7) Mr. Wierzbinski is no longer an executive officer of the Company. Mr.
Wierzbinski departed the Company in December 2000.
10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation Committee (the "Committee") was established in
1995 and is composed entirely of independent, outside members of the Company's
Board of Directors. The Committee reviews and approves each of the elements of
the executive compensation program and assesses the effectiveness and
competitiveness of the overall program.
Rochester Medical's executive compensation program is designed to
accomplish several goals, including:
o To attract, retain, and motivate employees of outstanding ability.
o To link changes in employee compensation to individual and corporate
performance.
o To align the interests of management with the interests of the
Company's shareholders.
KEY PROVISIONS OF THE EXECUTIVE COMPENSATION PROGRAM
The Company's executive compensation program consists of three components:
base salary, annual incentive bonus, and long-term incentives in the form of
stock options. The program includes a strong link between pay and performance by
emphasizing variable components of the program through annual incentive bonus
and stock options. The annual incentive bonus is an integral part of the
program, providing a means for total executive compensation to adjust from the
low to middle range of compensation for comparable-sized manufacturing companies
as appropriate based on the individual's and the Company's performance. In the
past, the Company has typically paid a portion of the available annual incentive
bonus to each executive, which has generally resulted in total executive
compensation falling within the midrange of compensation at comparable
companies.
BASE SALARY
The Committee determines base salaries for executive officers on the basis
of a number of factors, including an assessment of competitive compensation
levels for similar-size publicly held manufacturing companies performed by an
independent consulting firm, the Company's financial condition, any changes in
job responsibilities, and the performance of each executive. Executive officer
base salaries generally are set to correspond to the midrange of base salaries
at comparable companies.
ANNUAL INCENTIVE BONUS
Executive officers are eligible to receive annual incentive compensation
equivalent to a specified percentage of their salaries under the Company's bonus
plan. At the beginning of each fiscal year, the Company establishes bonus payout
targets that are designed to bring the level of total annual cash compensation
(base salary plus annual incentive bonus) within the competitive ranges for
comparable positions at similar-size publicly held manufacturing companies. The
total potential bonus for each executive is based upon performance objectives as
appropriate for that executive's area of responsibility. These objectives
include financial performance of the Company and individual performance
objectives. The results from the respective areas of responsibility for each
executive are evaluated against financial and individual performance objectives,
to determine a payout level as a percentage of the annual incentive target. In
recent years, incentive payouts have generally averaged 15-25% of the
executives' base salary.
LONG-TERM INCENTIVE (STOCK OPTIONS)
Generally, the Company awards stock options to executive officers on an
annual basis. Each grant is designed to align the interests of executive officer
with those of the shareholders and provide each
11
individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the business. Awards to specific
employees, including the Chief Executive Officer, are made on the basis of each
employee's job responsibilities and recommendations of the executive officers of
the Company concerning the individual's contributions (both historical and
potential) to the success of the Company, without regard to prior awards of
stock option grants.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Conway is a founder of the Company and has served as its Chief
Executive Officer and Chairman of the Board since its incorporation in 1988. Mr.
Conway's base salary and annual incentive bonus are set by the Committee using
the same policies and criteria used for other executive officers. In setting Mr.
Conway's salary for fiscal 2000, the Committee considered competitive
information for similar sized manufacturing companies provided by an independent
compensation consultant and the Company's financial performance. Mr. Conway is
currently paid a base salary and bonus, which has been set by the Committee in
the low to midrange of comparable competitive compensation data. As a result of
the comparison of the Company's performance with its targeted performance in
fiscal 2000, Mr. Conway received a bonus equal to 73% of target bonus level.
TAX LIMITATION
As a result of federal tax legislation enacted in 1993, a publicly-held
company such as 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 year. It is not expected that
the compensation to be paid to the Company's executive officers for the 2001
fiscal year will exceed the $1 million limit per officer. Compensation which
qualifies as performance-based compensation will not have to be taken into
account for purposes of this limitation. The Company believes the total
compensation granted to its executives, including options, is less than the $1
million limit per officer and that, in any case, stock options granted to its
executives qualify for the performance-based exception to the deduction limit.
However, there can be no assurance that the options will so qualify. In
addition, future amendments to the Company's Option Plan may be necessary to
preserve such qualification in the future.
The cash compensation paid to the Company's executive officers for the
fiscal 2000 year did not exceed the $1 million dollar limit per officer, nor is
the cash compensation to be paid to the Company's executive officers for the
2001 fiscal year expected to reach that level. Because it is very unlikely that
the cash compensation payable to any of the Company's executive officers in the
foreseeable future will approach the $1 million dollar limitation, the
Compensation Committee has decided not to take action at this time to limit or
restructure the elements of cash compensation payable to the Company's executive
officers. The Compensation Committee will reconsider this decision should the
individual compensation of any executive officer ever approach the $1 million
dollar level.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
-- Roger W. Schnobrich
-- Darnell L. Boehm
12
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage changes in the
cumulative total shareholder return on the Company's Common Stock with the
cumulative total return on the Nasdaq Market Value Index and the Media General
Financial Services Medical Instruments and Supplies Index ("MG Index") during
the five fiscal years ended September 30, 2000. The comparison assumes $100 was
invested on September 30, 1995 in the Company's Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends.
COMPARISON OF 5-YEAR CUMULATIVE RETURN
[GRAPH]
ROCHESTER MEDICAL CORP. MG INDEX NASDAQ MARKET INDEX
1995 100 100 100
1996 107.26 124.86 116.75
1997 108.06 140.77 158.69
1998 66.13 147.00 164.91
1999 62.10 167.88 266.79
2000 39.52 200.69 364.95
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings, including this Proxy Statement,
in whole or in part, the preceding Compensation Committee Report on Executive
Compensation and the preceding Company Stock Performance Graph are not to be
incorporated by reference into any such filings; nor are such Report or Graph to
be incorporated by reference into any future filings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION No member of the
Compensation Committee is a former officer or employee of
the Company or any of its subsidiaries.
13
AUDIT COMMITTEE REPORT
Effective January 31, 2000, the Securities and Exchange Commission adopted
new rules and amendments to current rules relating to the disclosure of
information about companies' audit committees. In large part, the new rules are
based on recommendations made by the Blue Ribbon Committee on Improving the
Effectiveness of Corporate Audit Committees. The new rules require that, for all
votes of shareholders occurring after December 15, 2000, the proxy statement
must contain a report of the audit committee addressing several issues
identified in the rules. In addition, the SEC recommends that audit committees
adopt written charters. Any such charter must be included as an attachment to
the proxy statement at least once every three years. Our Audit Committee adopted
a charter on May 19, 2000, and it is included in this proxy statement as
Appendix A.
Our Audit Committee presently consists of two directors, both of whom are
independent directors. Consistent with Nasdaq's independent director and audit
committee listing standards, as amended on December 14, 1999, a director will
not be considered "independent" if, among other things, he or she has:
o been employed by the corporation or its affiliates in the current or
past three years;
o accepted any compensation from the corporation or its affiliates in
excess of $60,000 during the previous fiscal year (except for board
service, retirement plan benefits, or non-discretionary compensation);
o an immediate family member who is, or has been in the past three
years, employed by the corporation or its affiliates as an executive
officer;
o been a partner, controlling shareholder or an executive officer of any
for-profit business to which the corporation made, or from which it
received, payments (other than those which arise solely from
investments in the corporation's securities) that exceed five percent
of the organization's consolidated gross revenues for that year, or
$200,000, whichever is more, in any of the past three years; or
o been employed as an executive of another entity when any of the
company's executives serve on that entity's compensation committee.
The Board of Directors acknowledges the requirement in the new SEC rules
that audit committees consist of at least three independent directors, and is
taking steps to comply with these rules prior to the deadline of June 14, 2001.
The Audit Committee has reviewed and discussed the audited financial
statements for fiscal year 2000 with management and with the independent
auditors. Specifically, the Audit Committee has discussed with the independent
auditors the matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards, AU Section 380), which includes, among other
things:
o methods used to account for significant unusual transactions;
o the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or
consensus;
o the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditor's conclusions
regarding the reasonableness of those estimates; and
o disagreements with management over the application of accounting
principles, the basis for management's accounting estimates, and the
disclosures in the financial statements.
14
The Audit Committee has received the written disclosures and the letter
from our independent accountants, Ernst & Young LLP, required by Independence
Standards Board Standard No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES.
Based on its review of the audited financial statements and the various
discussions noted above, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in our Annual Report
on Form 10-K for the fiscal year ended September 30, 2000.
SUBMITTED BY THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
--Darnell L. Boehm
--Roger W. Schnobrich
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 30, 2000, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were properly met.
PROPOSAL 2: TO APPROVE THE 2001 STOCK INCENTIVE PLAN
GENERAL
On November 21, 2000, the Board of Directors adopted the Rochester Medical
Corporation 2001 Stock Incentive Plan (the "Incentive Plan"), subject to
shareholder approval. The Incentive Plan provides for the grant of stock options
to employees, officers, consultants, independent contractors and non-employee
directors providing services to the Company, as determined by the Board of
Directors or by a committee of Directors designated by the Board of Directors to
administer the Incentive Plan.
The following summary of the Incentive Plan is qualified in its entirety by
reference to the full text of the Incentive Plan, which is attached to this
Proxy Statement as Appendix B.
SUMMARY OF THE INCENTIVE PLAN
PURPOSE. The purpose of the Incentive Plan is to promote the interests of
the Company and its shareholders by aiding the Company in attracting and
retaining employees, officers, consultants, independent contractors and
non-employee directors capable of assuring the future success of the Company, to
offer such persons incentives to put forth maximum efforts for the success of
the Company's business and to afford such persons an opportunity to acquire a
proprietary interest in the Company.
15
ADMINISTRATION. The Compensation Committee has been designated by the Board
of Directors to administer the Incentive Plan. The Compensation Committee will
have full power and authority to determine when and to whom awards will be
granted and the type, amount, form of payment and other terms and conditions of
each award, consistent with the provisions of the Incentive Plan. Subject to the
provisions of the Incentive Plan, the Compensation Committee may amend or waive
the terms and conditions of an outstanding award. The Compensation Committee
will have full authority to interpret the Incentive Plan and establish rules and
regulations for the administration of the Incentive Plan. The Board of Directors
may exercise the Compensation Committee's powers and duties under the Incentive
Plan.
ELIGIBILITY. Any employee, officer, consultant, independent contractor or
director providing services to the Company and its subsidiaries will be eligible
to be selected by the Compensation Committee to receive awards under the
Incentive Plan.
NUMBER OF SHARES. The Incentive Plan provides for the issuance of up to
500,000 shares of Common Stock, subject to adjustment in the event of a stock
dividend or other distribution, recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of shares of Common Stock or other securities of the
Company, issuance of warrants or other rights to purchase shares of Common Stock
or other securities of the Company or other similar changes in the corporate
structure or stock of the Company. Shares of Common Stock subject to awards
under the Incentive Plan that are not used or are forfeited because the terms
and conditions of the awards are not met, or because the award terminates
without delivery of any shares, may again be used for awards under the Incentive
Plan. The shares of Common Stock issued under the Incentive Plan will be
authorized but unissued shares.
TYPES OF AWARDS AND CERTAIN TERMS AND CONDITIONS. The types of awards that
may be granted under the Incentive Plan are stock options. The Incentive Plan
provides that all awards are to be evidenced by written agreements containing
the terms and conditions of the awards. The Compensation Committee may not amend
or discontinue any outstanding award without the consent of the holder of the
award if such action would adversely affect the rights of the holder. Except as
provided by the Incentive Plan, awards will not be transferable other than by
will or by the laws of descent and distribution. During the lifetime of a
participant, an award may be exercised only by the participant to whom such
award is granted. Awards may be granted for no cash consideration or for such
minimal cash consideration as may be required by law. Generally, the
consideration to be received by the Company for the grant of awards under the
Incentive Plan will be the participant's past, present or expected future
contributions to the Company.
STOCK OPTIONS. Incentive stock options meeting the requirements of Section
422 of the Internal Revenue Code ("Incentive Stock Options") and non-qualified
options may be granted under the Incentive Plan. The Compensation Committee will
determine the exercise price of any option granted under the Incentive Plan, but
in no event will the exercise price for any Incentive Stock Option be less than
100% of the fair market value of the shares of Common Stock on the date of
grant. Stock options will be exercisable at such times as the Compensation
Committee determines. Stock options may be exercised in whole or in part by
payment in full of the exercise price in cash or such other form of
consideration as the Compensation Committee may specify, including delivery of
shares of Common Stock having a fair market value on the date of exercise equal
to the exercise price.
DURATION, TERMINATION AND AMENDMENT. Unless earlier discontinued or
terminated by the Board of Directors, no awards may be granted under the
Incentive Plan after February 8, 2011. The Incentive Plan permits the Board of
Directors to amend, alter, suspend, discontinue or terminate the Incentive Plan
at
16
any time, except that prior shareholder approval will be required for any
amendment to the Incentive Plan that requires shareholder approval under the
rules or regulations of The Nasdaq National Market or any securities exchange
that are applicable to the Company or that would cause the Company to be unable,
under the Internal Revenue Code, to grant Incentive Stock Options under the
Incentive Plan.
FEDERAL TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences
generally applicable to awards under the Incentive Plan.
STOCK OPTIONS. The grant of an option is not expected to result in any
taxable income for the recipient. The holder of an Incentive Stock Option
generally will have no taxable income upon exercising the Incentive Stock Option
(except that a liability may arise pursuant to the alternative minimum tax), and
the Company will not be entitled to a tax deduction when an Incentive Stock
Option is exercised. Upon exercising a non-qualified stock option, the optionee
must recognize ordinary income equal to the excess of the fair market value of
the shares of Common Stock acquired on the date of exercise over the exercise
price, and the Company will be entitled at that time to a tax deduction for the
same amount. Upon exercising a stock appreciation right, the amount of any cash
received and the fair market value on the exercise date of any shares of Common
Stock received are taxable to the recipient as ordinary income and deductible by
the Company. The tax consequence to an optionee upon 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
Incentive Stock Option or by exercising a non-qualified stock option. Generally,
there will be no tax consequence to the Company in connection with disposition
of shares acquired under an option, except that the Company may be entitled to a
tax deduction in the case of a disposition of shares acquired under an Incentive
Stock Option before the applicable Incentive Stock Option holding periods set
forth in the Internal Revenue Code have been satisfied.
SATISFACTION OF TAX OBLIGATIONS. Under the Incentive Plan, the Compensation
Committee may permit participants receiving or exercising awards, subject to the
discretion of the Compensation Committee and upon such terms and conditions as
it may impose, to surrender shares of Common Stock (either shares received upon
the receipt or exercise of the award or shares previously owned by the
participant) to the Company to satisfy federal and state tax obligations. In
addition, the Compensation Committee may grant, subject to its discretion, a
cash bonus to a participant in order to provide funds to pay all or a portion of
federal and state taxes due as a result of the exercise or receipt of (or lapse
of restrictions relating to) an award. The amount of any such bonus will be
taxable to the participant as ordinary income, and the Company will have a
corresponding deduction equal to such amount (subject to the usual rules
concerning reasonable compensation).
SECTION 162(M) REQUIREMENTS. The Incentive Plan has been designed to meet
the requirements of Section 162(m) of the Internal Revenue Code regarding the
deductibility of executive compensation.
BOARD RECOMMENDATION AND SHAREHOLDER VOTE REQUIRED
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE
PROPOSAL TO APPROVE THE INCENTIVE PLAN. The persons named in the accompanying
Proxy intend to vote the Proxies held by them in favor of such proposal, unless
otherwise directed. Adoption of the Incentive Plan requires a favorable vote of
the holders of at least a majority of the shares of Common Stock present and
entitled to vote.
17
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company that are intended to be presented
by such stockholders at the Company's 2002 Annual Meeting must be received no
later than October 11, 2000, in order that they may be included in the proxy
statement and form of proxy relating to that meeting.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 2000 as filed with the Securities and Exchange Commission is
furnished with this Proxy Statement. Copies of that Report are also available
without charge upon written request to Rochester Medical Corporation, One
Rochester Medical Drive, Stewartville, MN 55976, to the attention of David A.
Jonas, Controller.
Please mark, sign, date and return promptly the enclosed proxy provided.
The signing of a proxy will not prevent you from attending the meeting in
person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Anthony. J Conway
Anthony. J Conway
PRESIDENT
Dated: December 22, 2000
18
APPENDIX A
AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter governs the operations of the audit committee. The committee
shall review and reassess the charter at least annually and obtain the approval
of the board of directors. The committee shall be appointed by the board of
directors and shall comprise at least three directors, each of whom are
independent of management and the Company. Members of the committee shall be
considered independent if they have no relationship that may interfere with the
exercise of their independence from management and the Company. All committee
members shall be financially literate, or shall become financially literate
within a reasonable period of time after appointment to the committee, and at
least one member shall have accounting or related financial management
expertise.
STATEMENT OF POLICY
The audit committee shall provide assistance to the board of directors in
fulfilling its oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors, the internal auditors
and management of the Company. In discharging its oversight role, the committee
is empowered to investigate any matter brought to its attention with full access
to all books, records, facilities, and personnel of the Company and the power to
retain outside counsel, or other experts for this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the audit committee is to oversee the
Company's financial reporting process on behalf of the board and report the
results of their activities to the board. Management is responsible for
preparing the Company's financial statements, and the independent auditors are
responsible for auditing those financial statements. The committee in carrying
out its responsibilities believes its policies and procedures should remain
flexible, in order to best react to changing conditions and circumstances. The
committee should take the appropriate actions to set the overall corporate
"tone" for quality financial reporting, sound business risk practices, and
ethical behavior.
The following shall be the principle recurring processes of the audit
committee in carrying out its oversight responsibilities. The processes are set
forth as a guide with the understanding that the committee may supplement them
as appropriate.
o The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board and the audit committee, as representatives of
the Company's shareholders. The committee shall have the ultimate
authority and responsibility to evaluate and, where appropriate, replace
the independent auditors. The committee shall discuss with the auditors
their independence from management and the Company and the matters
included in the written disclosures required by the Independence Standards
Board. Annually, the committee shall review and recommend to the board the
selection of the Company's independent auditors.
o The committee shall discuss with the internal auditors and the independent
auditors the overall scope and plans for their respective audits including
the adequacy of staffing and compensation.
A-1
Also, the committee shall discuss with management, the internal auditors,
and the independent auditors the adequacy and effectiveness of the
accounting and financial controls, including the Company's system to
monitor and manage business risk, and legal and ethical compliance
programs. Further, the committee shall meet separately with the internal
auditors and the independent auditors, with and without management
present, to discuss the results of their examinations.
o The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also the committee shall discuss
the results of the quarterly review and any other matters required to be
communicated to the committee by the independent auditors under generally
accepted auditing standards. The chair of the committee may represent the
entire committee for the purposes of this review.
o The committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report on
Form 10-K (of the annual report to shareholders if distributed prior to
the filing of Form 10-K), including their judgment about the quality, not
just acceptability, of accounting principles, the reasonableness of
significant judgments, and the clarity of the disclosures in the financial
statements. Also, the committee shall discuss the results of the annual
audit and any other matters required to be communicated to the committee
by the independent auditors under generally accepted auditing standards.
A-2
APPENDIX B
ROCHESTER MEDICAL CORPORATION
2001 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE OF THE PLAN.
This Plan shall be known as the "Rochester Medical Corporation 2001 Stock
Incentive Plan" and is hereinafter referred to as the "Plan." The purpose of
this Plan is to promote the interests of the Company and its shareholders by
aiding in maintaining and developing employees, officers, consultants,
independent contractors and non-employee directors capable of assuring the
future success of Rochester Medical Corporation, a Minnesota corporation (the
"Company"), to offer such persons additional incentives to put forth maximum
efforts for the success of the business, and to afford them an opportunity to
acquire a proprietary interest in the Company through stock options as provided
herein. Options granted under this Plan may be either incentive stock options
("Incentive Stock Options") within the meaning of Section 422 of the United
States Internal Revenue Code of 1986, as amended (the "Code"), or options which
do not qualify as Incentive Stock Options.
SECTION 2. STOCK SUBJECT TO THE PLAN.
(a) Subject to adjustment as provided in Section 11, the maximum number of
shares granted as shares on which options may be exercised under this Plan shall
be 500,000 shares (the "Shares") of the Company's common stock, par value $.01
per share (the "Common Stock"), and the maximum number of Shares available for
granting Incentive Stock Options under this Plan shall not exceed 500,000,
subject to adjustment as provided in Section 11 and subject to the provisions of
Section 422 or 424 of the Code or any successor provision. The Shares shall be
authorized but unissued shares of Common Stock. If an option or restricted stock
grant under this Plan expires or for any reason is terminated or expires
unexercised with respect to any Shares, such Shares shall again be available for
options or restricted stock awards thereafter granted during the term of this
Plan.
(b) No person may be granted any award or awards under this Plan, the value
of which is based solely on an increase in the value of the Shares after the
date of grant, for more than 50,000 Shares (subject to adjustment as provided
for in Section 11) in the aggregate in any calendar year. The foregoing annual
limitation specifically includes the grant of any award or awards representing
"qualified performance-based compensation" within the meaning of Section 162(m)
of the Code.
SECTION 3. ADMINISTRATION OF PLAN.
(a) This Plan shall be administered by the Board of Directors of the
Company or a committee of two or more directors of the Company. The members of
such committee shall be appointed by and serve at the pleasure of the Board of
Directors. Such committee shall consist of not less than that number of
directors that shall be required to permit options or restricted stock granted
under this Plan to qualify under Rule 16b-3 (or any successor rule or
regulation) promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, each of whom shall be a
"Non-Employee Director" within the meaning of such Rule. If the Company is
subject to Section 162(m) of the Code, the Company expects to have this Plan
administered in accordance with the requirements for the award of "qualified
performance-based compensation" within the meaning of such Section and each
member of such Committee shall be an "outside director" within the meaning of
such Section. If any such committee is established, the Board of Directors may,
at any time and from time to time, without any further action of such committee,
exercise the powers and duties of such committee under this Plan. The group
administering this Plan at any time shall be referred to herein as the
"Committee."
B-1
(b) The Committee shall have plenary authority in its discretion, but
subject to the express provisions of this Plan, (i) to determine the persons to
whom and the time or times at which options shall be granted and the number of
Shares to be subject to each option, (ii) to determine the purchase price of the
Shares covered by each option, (iii) to determine the terms and conditions of
each option, (iv) to accelerate the time at which all or any part of an option
may be exercised, (v) to amend or modify the terms of any option with the
consent of the holder of the option, (vi) to interpret this Plan, (vii) to
prescribe, amend and rescind rules and regulations relating to this Plan, (viii)
to determine the terms and provisions of each option agreement with respect to
options granted under this Plan (which agreements need not be identical),
including the designation of those options intended to be Incentive Stock
Options, and (ix) to make all other determinations necessary or advisable for
the administration of this Plan, subject to the exclusive authority of the Board
of Directors under Section 13 to amend or terminate this Plan. The Committee's
determinations on the foregoing matters, unless otherwise disapproved by the
Board of Directors of the Company, shall be final and conclusive.
(c) The Committee shall select one of its members as its Chair and shall
hold its meetings at such times and places as it may determine. A majority of
its members shall constitute a quorum. All determinations of the Committee shall
be made by not less than a majority of its members. Any decision or
determination that is set forth in a written document and signed by all of the
members of the Committee shall be fully effective as if it had been made by a
majority vote at a meeting duly called and held. The Committee may appoint a
Secretary and may make such rules and regulations for the conduct of its
business as it shall deem advisable.
SECTION 4. ELIGIBILITY.
Incentive Stock Options may only be granted under this Plan to any full or
part-time employee (which term as used herein includes, but is not limited to,
officers and directors who are also employees) of the Company and of its present
and future subsidiary corporations (herein called "subsidiaries") that qualify
as "subsidiary corporations" of the Company within the meaning of Section 424(f)
of the Code or any successor provision. Full and part-time employees of the
Company and its subsidiaries, members of the Board of Directors of the Company
or one of its subsidiaries who are not also employees thereof, and consultants
or independent contractors providing valuable services to the Company or one of
its subsidiaries who are not also employees thereof shall be eligible to receive
options which do not qualify as Incentive Stock Options and to receive grants of
restricted stock. In determining the persons to whom options or restricted stock
grants shall be granted and the number of Shares subject to each option or
grant, the Committee may take into account the nature of services rendered by
the respective persons, their present and potential contributions to the success
of the Company and such other factors as the Committee in its discretion shall
deem relevant. A person who has been granted an option or restricted stock grant
under this Plan may be granted an additional options or restricted stock grants
under this Plan if the Committee shall so determine; provided, however, that to
the extent the aggregate fair market value (determined at the time the Incentive
Stock Option is granted) of the Shares with respect to which all Incentive Stock
Options are exercisable for the first time by an employee during any calendar
year (under all plans described in Section 422 of the Code of his or her
employer corporation and its parent and subsidiary corporations described in
Section 424(e) or 424(f) of the Code) exceeds $100,000, such options shall be
treated as options which do not qualify as Incentive Stock Options.
SECTION 5. OPTION GRANTS.
(a) Subject to the provisions of Section 8, the option price for all
Incentive Stock Options granted under this Plan shall be determined by the
Committee but shall not be less than 100% of the fair market
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value of the Shares at the date of granting of such option. The option price for
options granted under this Plan which do not qualify as Incentive Stock Options
shall also be determined by the Committee. For purposes of the preceding
sentence and for all other valuation purposes under this Plan, the fair market
value of the Shares shall be as reasonably determined by the Committee. If on
the date of grant of any option granted under this Plan, the Shares are not
publicly traded, the Committee shall make a good faith attempt to satisfy the
option price requirement of this Section 6 and in connection therewith shall
take such action as it deems necessary or advisable.
(b) Each option and all rights and obligations thereunder shall expire on
the date determined by the Committee and specified in the option agreement. The
Committee shall be under no duty to provide terms of like duration for options
granted under this Plan, but the term of an Incentive Stock Option may not
extend more than ten (10) years from the date of granting of such option and the
term of options granted under this Plan which do not qualify as Incentive Stock
Options may not extend more than ten (10) years from the date of granting of
such option.
(c) Options shall be granted for no cash consideration or for such minimal
cash consideration as may be required by applicable law.
(iv) INCENTIVE STOCK OPTIONS. Notwithstanding anything in the Plan to the
contrary, the following additional provisions shall apply to the grant of stock
options which are intended to qualify as Incentive Stock Options:
(A) The aggregate Fair Market Value (determined as of the time the option
is granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by any participant during any calendar year
(under this Plan and all other plans of the Company and its Affiliates)
shall not exceed $100,000.
(B) All Incentive Stock Options must be granted within ten years from the
earlier of the date on which this Plan was adopted by Board of Directors or
the date this Plan was approved by the shareholders of the Company.
(C) Unless sooner exercised, all Incentive Stock Options shall expire and
no longer be exercisable no later than 10 years after the date of grant;
provided, however, that in the case of a grant of an Incentive Stock Option
to a participant who, at the time such Option is granted, owns (within the
meaning of Section 422 of the Code) stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or of its
Affiliate, such Incentive Stock Option shall expire and no longer be
exercisable no later than 5 years from the date of grant.
(D) The purchase price per Share for an Incentive Stock Option shall be
not less than 100% of the Fair Market Value of a Share on the date of grant
of the Incentive Stock Option; provided, however, that, in the case of the
grant of an Incentive Stock Option to a participant who, at the time such
Option is granted, owns (within the meaning of Section 422 of the Code)
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of its Affiliate, the purchase price per
Share purchasable under an Incentive Stock Option shall be not less than
110% of the Fair Market Value of a Share on the date of grant of the
Inventive Stock Option.
(E) Any Incentive Stock Option authorized under the Plan shall contain
such other provisions as the Committee shall deem advisable, but shall in
all events be consistent with and contain all provisions required in order
to qualify the Option as an Incentive Stock Option.
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SECTION 6. OPTION EXERCISE.
(a) The Committee shall have full and complete authority to determine
whether the option will be exercisable in full at any time or from time to time
during the term of the option, or to provide for the exercise thereof in such
installments, upon the occurrence of such events and at such times during the
term of the option as the Committee may determine.
(b) The exercise of any option granted hereunder shall only be effective at
such time that the sale of Shares pursuant to such exercise will not violate any
applicable domestic or foreign securities or other laws.
(c) An optionee electing to exercise an option shall give written notice to
the Company of such election and of the number of Shares subject to such
exercise. The full purchase price of such Shares shall be tendered with such
notice of exercise. Payment shall be made to the Company either in cash
(including check, bank draft or money order), or, at the discretion of the
Committee, (i) by delivery of the optionee's promissory note, which shall
provide for interest at a rate not less than the minimum rate required to avoid
the imputation of income, original issue discount or a below-market-rate loan
pursuant to Sections 483, 1274 or 7872 of the Code or any successor provisions
thereto, (ii) by delivering certificates for shares of Common Stock already
owned by the optionee having a fair market value equal to the full purchase
price of the Shares, or (iii) any combination of cash, promissory notes and
shares of Common Stock; provided, however, that an optionee shall not be
entitled to tender shares of Common Stock pursuant to successive, substantially
simultaneous exercises of options granted under this or any other stock option
plan of the Company. The fair market value of such tendered shares of Common
Stock shall be determined as provided in Section 6. Until such person has been
issued a certificate or certificates for the Shares subject to such exercise, he
or she shall possess no rights as a shareholder with respect to such Shares.
SECTION 7. ADDITIONAL RESTRICTIONS.
All Shares or other securities delivered under this Plan pursuant to any
option or restricted stock grant or the exercise thereof shall be subject to
such restrictions as the Committee may deem advisable under this Plan,
applicable federal or state securities laws and regulatory requirements, which
restrictions shall be contained in the agreement relating to the option or
restricted stock grant. The Committee shall cause appropriate entries to be made
or legends to be affixed to certificates representing the Shares to reflect such
restrictions. If any securities of the Company are traded on a securities
exchange, the Company shall not be required to deliver any Shares or other
securities covered by an option or restricted stock grant unless and until such
Shares or other securities have been admitted for trading on such securities
exchange.
SECTION 8. TEN PERCENT SHAREHOLDER RULE.
Notwithstanding any other provision in this Plan, if at the time an option
is otherwise to be granted pursuant to this Plan the optionee owns directly or
indirectly (within the meaning of Section 424(d) of the Code) shares of common
stock of the Company possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or its parent or
subsidiary corporations (within the meaning of Section 424(e) or 424(f) of the
Code), if any, then any Incentive Stock Option to be granted to such optionee
pursuant to this Plan shall satisfy the requirements of Section 422(c)(7) of the
Code, the option price shall be not less than 110% of the fair market value of
the Shares determined as described herein, and such option by its terms shall
not be exercisable after the expiration of five (5) years from the date such
option is granted.
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SECTION 9. NON-TRANSFERABILITY.
No option granted under this Plan and no right under any such option shall
be transferable by the recipient otherwise than by will or by the laws of
descent and distribution. During the lifetime of an optionee, an option shall be
exercisable only by such optionee. No option granted under this Plan or right
under any such option may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or encumbrance
thereof shall be void and unenforceable against the Company or any affiliate.
SECTION 10. ADJUSTMENTS.
If the Committee shall determine that, as the result of any change in the
Common Stock through merger, consolidation, reorganization, recapitalization,
stock dividend (of whatever amount), stock split or other similar corporate
transaction or change in the corporate structure of the Company, adjustments in
this Plan and outstanding options would be appropriate to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under this Plan, then the Committee shall make such adjustments in this Plan and
outstanding options as it may deem equitable. In the event of any such changes,
adjustments shall include, where appropriate, changes in the number and type of
Shares subject to this Plan and the number and type of Shares and the price per
Share subject to outstanding options.
SECTION 11. INCOME TAX WITHHOLDING; TAX BONUSES.
(a) In order to comply with all applicable domestic or foreign income tax
laws or regulations, the Company may take such action as it deems appropriate to
ensure that all applicable federal, state or local payroll, withholding, income
or other taxes, which are the sole and absolute responsibility of the person
receiving the option under this Plan, are withheld or collected from such
person. In order to assist the recipient in paying all or a portion of the
federal, state or local taxes to be withheld or collected upon exercise or
receipt of (or the lapse of restrictions relating to) an option or restricted
stock, the Committee, in its discretion and subject to such additional terms and
conditions as it may adopt, may permit the recipient to satisfy such tax
obligation by (i) electing to have the Company withhold a portion of the Shares
otherwise to be delivered upon exercise of such option with a fair market value
equal to the amount of such taxes, or (ii) delivering to the Company shares of
Common Stock other than Shares issuable upon exercise of such option with a fair
market value equal to the amount of such taxes. The fair market value of shares
of Common Stock shall be determined in accordance with Section 5. The election,
if any, must be made on or before the date that the amount of tax to be withheld
is determined.
(b) The Committee, in its discretion, shall have the authority, at the time
of grant of any option under this Plan or at any time thereafter, to approve
cash bonuses to designated recipients to be paid upon their exercise of the
option in order to provide funds to pay all or a portion of federal, state or
local taxes due as a result of such exercise. The Committee shall have full
authority in its discretion to determine the amount of any such tax bonus.
SECTION 12. AMENDMENT AND TERMINATION.
(a) The Company's Board of Directors may amend, alter, suspend, discontinue
or terminate this Plan at any time; provided, however, that notwithstanding any
other provision of this Plan or any option agreement, without the approval of
the shareholders of the Company, no such amendment, alteration, suspension,
discontinuation or termination shall be made that, absent such approval (i)
would violate the
B-5
rules or regulations of any securities exchange that are applicable to the
Company; or (ii) would cause the Company to be unable, under the Code, to grant
Incentive Stock Options under this Plan.
(b) The Committee may waive any conditions of or rights of the Company
under any outstanding option, prospectively or retroactively. Except as
otherwise provided herein or in the option agreement, the Committee may not
amend, alter, suspend, discontinue or terminate any outstanding option,
prospectively or retroactively, if such action would adversely affect the rights
of the holder of such option or restricted stock, without the consent of the
holder or beneficiary thereof.
(c) The Committee may correct any defect, supply any omission or reconcile
any inconsistency in this Plan or any option agreement in the manner and to the
extent it shall deem desirable to carry this Plan into effect.
SECTION 13. TIME OF GRANTING.
The granting of an option pursuant to this Plan shall be effective only if
a written agreement shall have been duly executed and delivered by and on behalf
of the Company and the person to whom such option is granted. Nothing contained
in this Plan or in any resolution adopted or to be adopted by the Board of
Directors or by the shareholders of the Company, and no action taken by the
Committee or the Board of Directors (other than the execution and delivery of
such an agreement), shall constitute the granting of an option hereunder.
SECTION 14. NO RIGHT TO AWARDS; NO GUARANTY OF CONTINUED SERVICE OR FUTURE
BENEFITS.
(a) No person shall have any claim to be granted any option under this
Plan, and there is no obligation for uniformity of treatment of employees,
directors, consultants, independent contracts or holders or beneficiaries of
options under this Plan. The terms and conditions of options need not be the
same with respect to any recipient or with respect to different recipients.
(b) Nothing in this Plan or in any agreement hereunder shall confer on any
employee, director, consultant or independent contractor any right to continue
in the employ or service of the Company or any of its subsidiaries or affect in
any way the right of the Company or any of its subsidiaries to terminate any
such person's employment or other services at any time, with or without cause.
In addition, the Company or an affiliate may at any time terminate the
employment or service of an employee, director, consultant or independent
contractor free from any liability or any claim under this Plan or any award or
agreement with respect to an option or restricted stock grant hereunder, unless
otherwise expressly provided in this Plan or in any such agreement.
(c) Options shall be granted under this Plan in the sole discretion of the
Board of Directors or the Committee and will not form part of the recipient's
salary or entitle the recipient to similar option grants in the future.
SECTION 15. GENERAL PROVISIONS.
(a) Nothing in this Plan shall prevent the Company or any affiliate from
adopting or continuing in effect other or additional compensation arrangements,
and such arrangements may be either generally applicable or applicable only in
specific cases.
(b) The validity, construction and effect of this Plan or any option
agreement hereunder, and any rules and regulations relating to this Plan or any
option agreement hereunder, shall be determined in accordance with the laws of
the State of Minnesota.
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(c) If any provision of this Plan or any option agreement hereunder is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify this Plan or any option agreement hereunder under any law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or deemed
amended without, in the determination of the Committee, materially altering the
purpose or intent of this Plan or the option agreement hereunder, such provision
shall be stricken as to such jurisdiction or option agreement, and the remainder
of this Plan or any such agreement shall remain in full force and effect.
(d) Neither this Plan nor any option hereunder shall create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship
between the Company or any affiliate of the Company and a recipient or any other
person.
(e) No fractional Shares shall be issued or delivered pursuant to this Plan
or any option hereunder, and the Committee shall determine whether cash shall be
paid in lieu of any fractional Shares or whether such fractional Shares or any
rights thereto shall be canceled, terminated or otherwise eliminated.
(f) Headings are given to the Sections and subsections of this Plan solely
as a convenience to facilitate reference. Such headings shall not be deemed in
any way material or relevant to the construction or interpretation of this Plan
or any provision hereof.
SECTION 16. EFFECTIVE DATE AND TERMINATION OF PLAN.
(a) This Plan shall be effective as of February 8, 2001 (the date of its
adoption by the Board of Directors and the shareholders of the Company).
(b) Unless this Plan shall have been discontinued as provided in Section 12
above, this Plan shall terminate on February 8, 2011. No option may be granted
after such termination, but termination of this Plan shall not, without the
consent of the recipient, alter or impair any rights or obligations under any
option theretofore granted.
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ROCHESTER MEDICAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, FEBRUARY 8, 2001
3:30 P.M. CST
SALON E
MINNEAPOLIS HILTON AND TOWERS HOTEL
1001 MARQUETTE AVENUE
MINNEAPOLIS, MN 55403
ROCHESTER MEDICAL CORPORATION
ONE ROCHESTER MEDICAL DRIVE
STEWARTVILLE, MN 55976 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT OF THE COMPANY
The undersigned, having duly received the Notice of Annual Meeting and
Proxy Statement dated December 20, 2000, hereby appoints Anthony J. Conway and
Philip J. Conway as Proxies (each with the power to act alone and with the power
of substitution and revocation) to represent the undersigned and to vote, as
designated below, all Common Shares of Rochester Medical Corporation held of
record by the undersigned on December 13, 2000, at the meeting of shareholders
to be held Thursday, February 8, 2001, in Salon E, Minneapolis Hilton and Towers
Hotel, 1001 Marquette Avenue, Minneapolis, Minnesota 55403, at 3:30 o'clock p.m.
CST, and any adjournment(s) thereof, and, in their discretion, upon any other
matters which may be brought before the meeting.
If no choice is specified, the proxy will be voted "FOR" each item.
SEE REVERSE FOR VOTING INSTRUCTIONS.
PLEASE DETACH HERE
1. Election of Directors: 01 Darnell L. Boehm 04 Philip J. Conway
02 Anthony J. Conway 05 Richard D. Fryar
03 Peter R. Conway 06 Roger W. Schnobrich
[ ] Vote FOR all nominees [ ] Vote WITHHELD
(except as marked from all nominees
to the contrary)
(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. Approval of the Rochester Medical Corporation 2001 Stock Incentive Plan.
[ ] For [ ] Against [ ] Abstain
3. In their discretion, the Proxies are authorized to vote upon other business
of which the Board of Directors is presently unaware and which may properly
come before the meeting, and for the election of any person as a member of
the Board of Directors if a nominee named in the accompanying Proxy
Statement is unable to serve or for good cause will not serve. In their
discretion, the Proxies are authorized to vote upon such other business as
may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
SHALL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR AND "FOR" ITEM
2 LISTED HEREIN, AND UPON ALL OTHER MATTERS, THE PROXIES SHALL VOTE AS THEY
DEEM IN THE BEST INTERESTS OF THE COMPANY. PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Address Change? Mark Box [ ] Indicate changes below:
Date _______________________________________________________
[ ]
Signature(s) in Box
PLEASE SIGN exactly as name appears at left. When shares are held by joint
tenants, both should sign. If signing as attorney, executor, administrator or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by an authorized person.