UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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
[_] 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 (S) 240.14a-11(c) or (S) 240.14a-12
DETWILER, MITCHELL & CO.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[LOGO OF DMC]
DETWILER, MITCHELL & CO.
225 FRANKLIN STREET, 20/TH/ FLOOR
BOSTON, MA 02110
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 2002
To the Stockholders of Detwiler, Mitchell & Co.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of Detwiler, Mitchell & Co., a Delaware corporation, will be
held at The Inn at Rancho Santa Fe, 5951 Linea Del Cielo, Rancho Santa Fe,
California 92067 on Monday, May 20, 2002, at 10:00 a.m., Pacific Daylight
Savings Time, for the following purposes:
1. To approve a special grant of stock options covering 1,463,333 shares of
our Common Stock.
2. To elect three Directors of our company, each to serve for three years or
until his successor shall be duly appointed or elected.
3. To ratify the selection of PricewaterhouseCoopers LLP as our company's
independent accountants for year 2002.
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment(s) or postponement(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on April 2, 2002 will
be entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, whether or not you plan to attend in person, to assure your
representation at the Annual Meeting, you are urged to mark, sign, date, and
return the enclosed Proxy as promptly as possible in the postage-prepaid
envelope provided for that purpose. Any stockholder attending the meeting may
vote in person even if such stockholder returned a completed Proxy.
Requests for additional copies of proxy materials and other information
should be addressed to Investor Relations at the executive offices of our
company, 225 Franklin Street, 20th Floor, Boston, Massachusetts 02110, (617)
451-0100.
By Order of the Board of Directors
Boston, Massachusetts
April 10, 2002
[LOGO OF DMC]
DETWILER, MITCHELL & CO.
225 FRANKLIN STREET, 20/TH/ FLOOR
BOSTON, MA 02110
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 2002
GENERAL
The enclosed Proxy Statement is solicited by the Board of Directors of
Detwiler, Mitchell & Co., a Delaware corporation, for use at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held on May 20, 2002 at 10:00 a.m.,
Pacific Daylight Savings Time, or at any adjournment(s) or postponement(s)
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting of Stockholders. The Annual Meeting will be held at The Inn at
Rancho Santa Fe, 5951 Linea Del Cielo, Rancho Santa Fe, California 92067.
Our company's telephone number is (617) 451-0100. These proxy solicitation
materials were first mailed on or about April 12, 2002 to all stockholders
entitled to vote at the Annual Meeting.
INFORMATION CONCERNING VOTING, SOLICITATION AND PROXIES
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on April 2, 2002 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting. On
the Record Date, our company had approximately 2,652,357 shares of Common Stock,
$0.01 par value (the "Common Stock"), and no shares of preferred stock, issued
and outstanding.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share of Common Stock
held by him or her.
Shares of Common Stock represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated thereon. In the absence of specific instructions to
the contrary, properly executed proxies will be voted FOR the proposal to
approve the grant of stock options, FOR the election of each person nominated by
the Board of Directors for election as a Director and FOR ratification of the
independent auditors. The effect of an abstention or a broker nonvote on a
proposal is the same as that of a vote against such proposal. No business other
than that set forth in the accompanying Notice of Annual Meeting of Stockholders
is expected to come before the Annual Meeting. Should any other matter requiring
a vote of stockholders properly arise, the persons named in the enclosed form of
proxy (the "Proxy Holders") will have discretionary authority to vote such proxy
in accordance with their best judgment on such matter.
Directors are elected by a plurality vote.
The cost of this proxy solicitation will be paid by our company. Our
company will reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding soliciting materials to such
beneficial owners. Proxies may be solicited by certain of our company's
Directors, officers, and employees, without additional compensation, personally
or by telephone or telegram.
1
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to our company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person. Attending the Annual Meeting
in and of itself will not constitute a revocation of a proxy.
DEADLINES FOR RECEIPT OF STOCKHOLDER NOMINATIONS, PROPOSALS AND PROPOSALS
FOR INCLUSION IN THE PROXY STATEMENT FOR THE 2003 ANNUAL MEETING
Section 2.5 of our company's Bylaws provides that nominations may be made
by the Board of Directors or by any stockholder entitled to vote in the election
of Directors generally, provided that all stockholders intending to nominate
Director candidates for election must deliver written notice thereof to the
Secretary of our company, which notice must be received not less than sixty nor
more than ninety days prior to the meeting or, if less than seventy days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, within ten days after the date on which notice of such meeting is
first given to stockholders. Such notice must set forth certain information
concerning such stockholder and his or her nominee(s), including their names and
addresses, such other information as would be required to be in the proxy
statement soliciting proxies for the election of the nominees of such
stockholder and the consent of each nominee to serve as a Director of our
company if so elected. The chairman of the Annual Meeting will refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
Our company's Bylaws also require that stockholders give advance notice and
follow certain other procedures with regard to business they wish to bring
before an annual meeting of stockholders. Section 2.6 of our company's Bylaws
provides that all stockholders intending to bring business before the meeting
deliver written notice thereof to the Secretary of our company in the same
manner and within the same periods as required for stockholder nominees for the
Board of Directors, as described in the preceding paragraph. Such notice shall
set forth certain information concerning such stockholder and the proposed
business, including any material interest of the stockholder in such business.
The chairman of the Annual Meeting will refuse to permit business to be brought
before the Annual Meeting if notice is not given in compliance with the
foregoing procedure.
We intend to hold our next Annual Meeting of Stockholders on or about May
1, 2003. Stockholders seeking to include a proposal in the Proxy Statement for
our company's 2003 Annual Meeting must ensure that such proposal is received at
the executive offices of our company on or before March 1, 2003. Inclusion of
any such proposal is subject to certain other requirements.
BOARD MEETINGS AND COMMITTEES
The business affairs of our company are managed by or under the direction
of the Board of Directors, although it is not involved in day-to-day operations.
During the year ended December 31, 2001, the Board of Directors met four times.
The Board of Directors of our company has standing Audit and Compensation
Committees.
Audit Committee. The Audit Committee recommends to the Board of Directors
the appointment of the firm selected to be independent public accountants for
our company and monitors and evaluates the performance of such firm; reviews and
approves the scope of the annual audit and evaluates with the independent public
accountants our company's annual audit and annual consolidated financial
statements; reviews our company's financial reporting policies and practices;
reviews with management the status of internal control procedures, adequacy of
financial staff and other matters and makes such recommendations to the Board of
Directors as may be appropriate; evaluates matters having a potential financial
impact on our company which may be brought to its attention by management, the
independent public accountants or the Board of Directors; and reviews all public
financial reporting documents of our company. The current members of the Audit
Committee are Frank Jenkins (chairman), Edward Baran and Barton Beek, each of
whom is "independent" as defined in the NASDAQ listing standards. The Board of
Directors has adopted a written charter for the Audit Committee, a copy of which
is attached as Appendix A. The Audit
2
Committee held four meetings during fiscal 2001 and held two meetings in 2002
prior to release of the earnings report and the filing of the Annual Report on
Form 10-K for fiscal 2001. See "Audit Committee Report" below.
Compensation Committee. The Compensation Committee reviews and makes
recommendations to the Board of Directors with respect to the specific
compensation to be paid or provided to executive officers and also recommends
grants of stock options including incentive stock options under our company's
2000 Omnibus Equity Incentive Plan. The Committee reviews the structure of
salary, commissions, bonus and deferred bonus compensation for key employees.
The current members of the Compensation Committee are Robert Sharp (chairman)
and Messrs. Beek and Jenkins. The Compensation Committee held two meetings
during fiscal 2001. See "Compensation Committee Report" below.
During the fiscal year ended December 31, 2001, each of the Directors of
our company attended all of the meetings of the Board of Directors and all of
the meetings of the committee(s) of the Board on which he served during the
period he served in such capacities.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth names and certain other information
concerning our company's Directors and executive officers, as of April 2, 2002:
TERM OF
OFFICE AS
DIRECTOR
NAME AGE POSITION WILL EXPIRE
- ------------------------------------------------------------------------------------------------------------------------
James Mitchell 63 Chairman, Chief Executive Officer 2004
and Director
James Graves 53 Vice-Chairman and Director 2002
Robert Detwiler 72 President and Director 2002
Edward Hughes 61 Chief Operating Officer 2003
and Director
Edward Baran 66 Director 2003
Barton Beek 78 Director 2002
Frank Jenkins 65 Director 2004
Robert Sharp 66 Director 2004
Stephen Martino 45 Chief Financial Officer
Stephen Frank 49 Chief Legal Officer and Secretary
Information with respect to the principal occupation during the past five
years of each nominee, each current Director and each executive officer is set
forth below. There currently are no family relationships among Directors or
executive officers of our company.
James Mitchell became a Director in October 1988 and became Chairman of our
company on January 1, 1993 and served as Chief Executive Officer between January
1, 1993 and August 30, 1999 and again, since May 22, 2000. He served as
President of our company between January 1, 1997 and May 22, 2000. Mr. Mitchell
is the founder of one of our operating subsidiaries, James Mitchell & Co. In
1973, Mr. Mitchell was a founding officer of Security First Group, a financial
services firm that pioneered the concept of marketing insurance and annuity
3
products through stock brokerage firms. Before joining that firm, Mr. Mitchell
served as Vice President of Marketing for the Variable Annuity Life Insurance
Company of Houston, Texas. He attended Portland State University and is a
registered General Securities Principal with the NASD.
James Graves was appointed by the Board of Directors to fill a vacancy on
February 27, 2002, and was also named Vice-Chairman. Mr. Graves is a Managing
Director and partner of Erwin, Graves & Associates, LP, a management consulting
firm located in Dallas, Texas. Prior to starting that company, he was the Chief
Operating Officer and head of Equity Capital Markets at J.C. Bradford & Co., an
investment banking and brokerage firm located in Nashville, Tennessee, which was
acquired by Paine Webber in 2000. Mr. Graves received a B.A. degree from Trinity
College in Hartford, Connecticut. He is a member of the Board of Directors and
Compensation Committee for Cash America International and Hallmark Financial
Services, Inc. He is currently a registered NASD General Securities Principal.
Robert Detwiler is Director and President of our company and one of our
principal subsidiaries, Fechtor, Detwiler & Co., Inc. ("Fechtor, Detwiler"). Mr.
Detwiler joined Fechtor, Detwiler in 1975. He owned one third of Fechtor,
Detwiler until the merger between that company and JMC Group, Inc. in August
1999. He was named a Director of our company May 22, 2000. Mr. Detwiler has been
in the securities industry since 1957 and has been with Smith Barney, Laird &
Company and Wood, Struthers & Winthrop. He is a member of the Board of Directors
of CardioTech International, a public company that is also an investment banking
client of Fechtor Detwiler, and Friendship Home, a non-profit corporation. He is
a registered General Securities Principal with the NASD.
Edward Hughes has been employed by Fechtor, Detwiler for 15 years. He is
currently Chief Operations Officer and a Director of our company. He holds a
Bachelor of Science degree in Business Administration and an Associates Degree
in Finance from Northeastern University. Mr. Hughes has served as a member and
as Chairman of the 13th District Committee of the NASD. He is a registered
General Securities and Financial Principal with the NASD.
Edward Baran became a Director in August 1992. Mr. Baran, who has spent
more than forty years in the insurance industry, is currently Chairman and Chief
Executive Officer of BCS Financial Corporation, a financial services holding
company. Prior to joining BCS in November 1987, Mr. Baran was Vice Chairman,
President and Chief Executive Officer of Capitol Life Insurance Company of
Denver, Colorado. He is a graduate of Georgetown University. He is a member of
the Audit Committee of the Board of Directors.
Barton Beek became a Director in January 1984. Mr. Beek is a securities
attorney specializing in mergers and acquisitions and a senior partner of
O'Melveny & Myers, a law firm that he joined in 1955, with offices worldwide.
Mr. Beek is a graduate of the California Institute of Technology, the Stanford
University Graduate School of Business and Loyola College of Law. He is a member
of the Audit and Compensation Committees of the Board of Directors.
Frank Jenkins is an Associate Professor of Finance at RPI Lally School of
Management in Hartford, Connecticut, and also provides ongoing financial,
marketing and business strategy consulting to clients internationally. He was
formerly the Chief Financial Officer, Vice President and Managing Partner of
Harbridge House (which was purchased by Coopers & Lybrand in 1993) for 25 years
until retiring as a Managing Director of Coopers & Lybrand in 1998. He graduated
from North Carolina State University with a BSME and has a MBA from Wharton
School, University of Pennsylvania. He is currently on the Board of Directors of
Metro West Health, Inc., Metro West Community Healthcare Foundation, Inc.,
Clark, Cutler & McDermott, Inc. and the Boston Classical Orchestra. He is
Chairman of the Audit Committee and a member of the Compensation Committee of
the Board of Directors.
Robert Sharp became a Director of our Company in May 1995. Mr. Sharp
retired from his position as President and Chief Executive Officer of Keyport
Life Insurance Company in February 1992 after having served in that position
since 1979. Mr. Sharp is the past chairman of the National Association for
Variable Annuities and a former director of the National Association of Life
Companies. Mr. Sharp is a graduate of the California State University at
Sacramento and is a registered Principal with the NASD. He is also a director of
Navallier Variable Funds, a mutual fund complex. He is Chairman of the
Compensation Committee of the Board of Directors.
4
Stephen Martino became the Chief Financial Officer of our company in
October 1999. Prior to joining us, Mr. Martino was Senior Vice President of
Finance for Nvest, a New York Stock Exchange listed firm with approximately $125
billion in assets under management. Previously, he served in senior management
positions with First Data Corporation and KPMG Peat Marwick. He received a BS in
Business Administration, graduating magna cum laude, from Northeastern
University. He is a member of the American Institute of CPAs and has a Series 27
Financial and Operations Principal license with the NASD.
Stephen Frank has been the Chief Legal Officer, Chief Compliance Officer
and Secretary of Fechtor, Detwiler & Co., Inc. since 1993 and the Chief Legal
Officer and Secretary of our company since the merger. He has a BA in Psychology
from C.W. Post College and a JD from New York Law School. Mr. Frank has served
both as an arbitrator and as chairperson in NASD sponsored arbitrations and has
been a member of the NYSE and NASD Content Committee for national continuing
education. He is a registered General Securities, Financial Operations and
Options Principal with the NASD.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during our company's last three fiscal years to our Chief Executive
Officer, President, Chief Operating Officer and Chief Financial Officer (the
"named executive officers") (1):
LONG-TERM
COMPENSATION
AWARDS
SECURITIES
ANNUAL COMPENSATION UNDERLYING ALL OTHER
-------------------- OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) SARS (#)(2) ($)(3)
- -------------------------------------------------------------------------------------------------------------------
James Mitchell, Chairman and 2001 $ 275,769 $ 0 0 $ 9,929
Chief Executive Officer 2000 $ 225,000 $ 105,000 0 $ 9,929
1999 $ 225,000 $ 61,868 31,250 $ 9,529
Edward Hughes, Chief Operating Officer 2001 $ 112,000 $ 0 50,000 $ 3,069
2000 $ 102,308 $ 39,000 0 $ 3,069
Stephen Martino, Chief Financial Officer 2001 $ 182,692 $ 0 50,000 $ 4,099
2000 $ 161,637 $ 39,000 0 $ 4,099
Andrew Detwiler, President (1)(4) 2001 $ 18,587 $ 0 0 $ 1,641,481
2000 $ 0 $ 0 50,000 $ 1,132,250
- ------------------
(1) Mr. Detwiler resigned as President of our company on October 12, 2001.
Although he is no longer an officer or director, he did serve in that
capacity for a significant period of time in 2001 and is thus included here
as a "Named Executive Officer".
(2) The 31,250 common shares listed under Long-Term Compensation for Mr.
Mitchell are Incentive Stock Options granted under the 1993 Executive Stock
Option Plan. The 50,000 shares for Mr. Detwiler represent shares granted
under our company's 2000 Omnibus Equity Incentive Plan and were canceled on
his resignation date. The options for 50,000 shares each to Messrs. Hughes
and Martino are subject to stockholder approval and are included in the
stock options of Proposal 1 herein. Our company does not have any
outstanding Stock Appreciation Rights ("SARs").
5
(3) Amounts reported for Messrs. Mitchell, Detwiler, Hughes and Martino in the
"All Other Compensation" column include $5,100, $5,100, $3,365, $4,512,
respectively for 2001 and $5,100, $5,100, $3,069 and $4,099, respectively
for 2000 and $4,700 for 1999 for Mr. Mitchell, representing our company's
contributions to its 401(k) Savings Plan on their behalf. Additionally,
Mr. Mitchell received benefits of $4,829 for each of 2001, 2000 and 1999,
representing life insurance premiums paid by our company pursuant to a
split dollar insurance agreement.
(4) Mr. Detwiler's compensation under "All Other Compensation" was solely
commission-based. Mr. Detwiler also earned a salary during part of 2001,
for his role as president of our company.
OPTION GRANTS
No options to purchase Common Stock to the named executive officers were
granted during the 2001 fiscal year except options for 50,000 shares each to
Edward Hughes and Stephen Martino, which are included in the stock options of
Proposal 1 herein. Such options are not considered granted unless Proposal 1 is
passed. The following table provides pro forma information related to such
grants of options to the named executive officers during the 2001 fiscal year if
such options are approved by the stockholders:
Pro Forma Stock Option Information
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ----------------------------------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF TOTAL ANNUAL RATE OF
NUMBER OF OPTIONS/SARS STOCK PRICE
SECURITIES GRANTED TO ALL APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE PRICE OPTION TERM (2)
OPTIONS/SARS DURING FISCAL OR BASE PRICE EXPIRATION ---------------
NAME GRANTED (1) YEAR (1) ($/SH) DATE 5% ($) 10%($)
---- ----------- -------- ------ ---- ------------- -------------
Edward Hughes 50,000 3.4% $1.01 11/14/06 $13,814 $30,525
Stephen Martino 50,000 3.4% $1.01 11/14/06 $13,814 $30,525
(1) The options listed above vest in annual installments of 16,667, 16,667 and
16,666 shares beginning November 14, 2002. Our company does not have any
outstanding SARs.
(2) The 5% and 10% assumed rates of appreciation are mandated by rules of the
Securities and Exchange Commission and do not represent our company's
estimate or projection of the future Common Stock price. The potential
realizable value for the above options were calculated using the closing
price of the Common Stock on November 14, 2001 of $1.01 per share.
6
OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides information related to options exercised
by the named executive officers during the 2001 fiscal year and the number and
value of options held at fiscal year-end, assuming the Stockholder Approved
Options in Proposal 1 are approved by stockholders.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FY- IN-THE-MONEY OPTIONS/
SHARES ACQUIRED VALUE END (#)(1)(2) SARS AT FY-END ($)(1)(2)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-----------------------------------------------------------------------------------------------------------------------
James Mitchell 0 0 45,834 10,416 $ 0 $ 0
Edward Hughes (3) 0 0 29,167 58,333 $ 8,000 $ 1,500
Stephen Martino (3) 0 0 16,667 58,333 $ 0 $ 1,500
Andrew Detwiler (4) 0 0 8,334 0 $ 0 $ 0
- --------------------
(1) Our company does not have any outstanding SARs.
(2) The closing price for the Common Stock on December 31, 2001, as reported by
the NASDAQ SmallCap Market, was $1.04. Mr. Hughes' exercisable options
include options to purchase 12,500 shares of Common Stock at a price of
$0.40 per share granted under the 1999 Special Stock Option Plan and no
other in-the-money options. Messrs. Mitchell, Martino and Detwiler had no
in-the-money options at the end of 2001.
(3) Unexercisable options listed for Messrs. Hughes and Martino include a grant
of options to purchase 50,000 shares of Common Stock at a price of $1.01,
the closing price on November 14, 2001. These options are subject to
stockholder approval and are included in the options covered by Proposal I
herein. The table assumes that the options have been approved.
(4) The stock options existing at the end of the year for Mr. Detwiler include
options to purchase up to 8,334 shares of Common Stock, which expired
unexercised on January 12, 2002.
COMPENSATION OF DIRECTORS
The members of the Board of Directors who are not full-time employees of
our company are entitled to receive reimbursement for out-of-pocket expenses
they incur in attending Board of Directors' meetings and otherwise performing
their duties and receive fees of $1,000 for each meeting of the Board of
Directors which they attend. Members of committees additionally receive $500 per
committee meeting held on the same day as a Board of Directors' meeting, or
$1,000 per committee meeting if held on a different day. Non-employee Directors
receive formula grants of non-qualified stock options under our company's 2000
Omnibus Equity Incentive Plan. Options to acquire 6,000 shares of Common Stock
are to be granted within six months after an individual takes office as a
Director and options to acquire an additional 6,000 shares are to be granted
within six months after every third anniversary of such Director's taking
office.
TRANSACTIONS INVOLVING DIRECTORS
Effective as of October 1, 2001, Detwiler, Mitchell & Co. entered into a
Letter of Engagement with Erwin, Graves & Associates, LP ("Erwin Graves"), a
management consultancy firm located in Dallas, Texas. James Graves is a partner
of the firm with a 25% interest in the partnership with his spouse having an
additional 25% interest. The arrangement with Erwin Graves allows for two
payments of $50,000 (or 50,000 shares of Common Stock in lieu of $50,000). One
payment of 50,000 shares of common stock was made December 17, 2001 in lieu of
$50,000. On November 12, 2001, the Compensation Committee and the Board
authorized the grant of stock options to purchase 250,000 shares of Common Stock
to Erwin Graves at a price equal to the closing price on the Nasdaq SmallCap
Market on November 14, 2001, subject to approval by our stockholders. Such
options are
7
included in the total number of options covered by Proposal I herein. The Letter
of Engagement was filed as an exhibit to our Form 10-K for the year ended
December 31, 2001 dated March 15, 2002.
On February 27, 2002, Mr. Graves was elected a Director and Vice-Chairman,
and is standing for re-election at the Annual Meeting.
Effective March 22, 2002, the Company borrowed $300,000 from James H.
Graves and delivered to Mr. Graves a 14 month promissory note (the "Note")
bearing interest at 10% per annum, secured by non-marketable securities having a
book value of $303,500 at February 28, 2002. The Note contains a provision,
which allows Mr. Graves on 3 business days notice to the Company to purchase the
non-marketable securities, which are collateral for the Note in exchange for
cancellation of the Note and any interest due thereon. The cash borrowed by the
Company from Mr. Graves will be transferred to its subsidiary, Fechtor, Detwiler
& Co., and will therefore increase capital of Fechtor, Detwiler & Co. for
regulatory purposes.
COMPENSATION COMMITTEE REPORT
During 2001, executive compensation policy and practice were recommended to
the Board by the Compensation Committee (the "Committee"). The Committee is
composed of Robert Sharp, Chairman, Frank Jenkins and Barton Beek. The Committee
held two meetings during 2001.
No member of the Compensation Committee served as an officer or employee of
our company or its subsidiaries. No executive officers of our company served
during fiscal 2001 on the board of directors of any company which had a
representative on our company's Board of Directors. No member of our company's
Board of Directors served during 2001 as an executive officer of a company whose
board of directors had a representative from our company on its Board of
Directors.
The Committee's compensation policy is to provide our company's senior
officers, including the executive officers named in this proxy statement, with
base salaries commensurate with the base salaries of executives in our industry,
augmented by (i) performance-based bonuses and (ii) stock incentives, primarily
stock options. The objectives of the Committee's policies are to attract and
retain outstanding executives by providing compensation opportunities comparable
to those offered by other companies in our industry, and to motivate and reward
these executives with bonuses and stock awards which link their total
compensation to the enhancement of stockholder values.
For several months prior to November 12, 2001, the Compensation Committee
of the Board of Directors together with senior management and an industry
consultant (James Graves, now a director and candidate for re-election) were
addressing the compensation plan of each revenue production department to ensure
the interests of employees and stockholders were aligned. On November 12, 2001,
the Compensation Committee adopted and the Board approved a new compensation
plan for institutional sales, research and trading professionals, which the
Committee believes aligns total compensation with the interests of stockholders
and is more consistent with changing industry standards. As an integral part of
the new compensation plan, the Committee recommended and the Board approved
grants of options covering a total of 1,970,000 shares of Common Stock at the
market price on the date of grant. Of the 1,970,000 options so approved,
1,463,333 are subject to approval by stockholders. See "Proposal to Approve
Special Grant of Stock Options" herein. It was the sense of the Committee that
meaningful stock ownership on the part of the key employees was an essential
element of recovery on the part of the Firm and was a necessary part of
acceptance by key employees of the new compensation plan. Such approval included
the grant of options to future employees to fill certain key positions with an
exercise price equal to the closing price of the Common Stock on their first day
of employment, and also included the option for 250,000 shares to Erwin, Graves
& Associates, LP, as described above under "Transactions Involving Directors".
The new compensation plan was implemented at Fechtor Detwiler on December
1, 2001 with the following major provisions: payouts to institutional salesmen,
research analysts and traders decreased from a combined 62% to 48% (a 23%
reduction); execution costs and certain direct sales expenses will be shared by
employees and the Firm; employees will be paid a guaranteed salary; bonuses
earned in excess of the guaranteed salary will be deferred with 75% being paid
annually on a staggered basis (by department) and 25% paid over a three-year
vesting period
8
beginning the following year. Deferred bonuses will be forfeited by any employee
upon termination. Additionally, all institutional salesmen, research analysts,
and trading employees executed an employment and non-compete agreement with the
Firm in consideration for significant stock option grants and the aforementioned
restructured compensation plan.
Mr. Mitchell is the only executive under an Employment Agreement. His
compensation was $276,000 for the year 2001 and $225,000 for each of 2000 and
1999. His base salary of $225,000 was established pursuant to a three-year
employment contract entered into in 1998. The contract was renewed as of January
1, 2001 for an additional three-year term, amending it as well to increase his
base salary to $285,000 and providing for Mr. Mitchell to participate in the
same annual bonus award plan as other senior executives of our company.
Effective October 29, 2001, in light of reduced revenues at our company, Mr.
Mitchell voluntarily reduced his salary to $225,000.
The Committee at its November 12, 2001 meeting considered the operating
results for 2001 and determined that although all executives were diligent in
their duties, no cash bonuses be awarded to the officers and employees of our
company.
Among the options authorized at the November 12, 2001 meeting were options
to Stephen Frank, Chief Legal Officer, Stephen Martino, Chief Financial Officer
and Edward Hughes, a Director and Chief Operating Officer, who each received
options to purchase 50,000 shares. These options are included in the total
subject to stockholder approval at the annual meeting under Proposal 1. No other
options were granted to officers. The following directors, Messrs. Beek, Baran
and Sharp, received a grant of options to purchase 6,000 shares each as part of
the automatic grant of options under the 2000 Omnibus Equity Incentive Plan
during 2001.
This report shall not be deemed incorporated by reference by any general
statement incorporating this proxy statement by reference into any filing under
the Securities Acts, except to the extent that our company specifically
incorporates this information by reference, and shall not otherwise be deemed
"filed" under such Acts.
Respectfully submitted:
The Compensation Committee
Robert Sharp, Chairman
Barton Beek
Frank Jenkins
AUDIT COMMITTEE REPORT
The Audit Committee assists the Board of Directors in fulfilling its
oversight responsibilities relating to our company's financial reporting
process, its systems of internal accounting and financial controls, and the
independent audit of its financial statements. See "Audit Committee" under
"Board Meetings and Committees" above, and the Audit Committee charter attached
as Appendix A.
The Audit Committee has reviewed and discussed with management the audited
financial statements of our company for the fiscal year ended December 31, 2001.
The Audit Committee has reviewed and discussed with PricewaterhouseCoopers LLP,
our company's independent accountants who are responsible for expressing an
opinion on the conformity of those audited financial statements with generally
accepted accounting principles, their judgment as to the quality, not just the
acceptability, of our company's accounting practices and such other matters as
are required to be discussed by the independent accountants with the Audit
Committee under generally accepted auditing standards including the matters
required to be discussed by Statement on Auditing Standards No. 61.
The Audit Committee has also received the written disclosures from
PricewaterhouseCoopers LLP required by Independence Standards Board Standard No.
1 and the Audit Committee has discussed the independence of
PricewaterhouseCoopers LLP with that firm.
9
Based on the Audit Committee's review and discussions noted above, the
Audit Committee recommended to the Board of Directors that our company's audited
financial statements be included in our company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2001 for filing with the Securities and
Exchange Commission.
Respectfully Submitted: The Audit Committee
Frank Jenkins, Chairman
Edward Baran
Barton Beek
PERFORMANCE GRAPH
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Common Stock during the five fiscal years ended
December 31, 2001 with the cumulative total return on the S&P 500 Index and the
NASDAQ Financial Stocks Industry Index.
Assumes $100 invested on December 31, 1996 in NASDAQ Financial Stock
Industry Index, S&P 500 Index and Detwiler, Mitchell & Co.
[GRAPHIC REMOVED HERE]
PERFORMANCE 1996 1997 1998 1999 2000 2001
NASDAQ $ 100.00 $ 152.93 $ 148.57 $ 147.58 $ 159.40 $ 175.37
S&P 500 $ 100.00 $ 133.45 $ 172.19 $ 208.54 $ 189.97 $ 167.58
DMCO $ 100.00 $ 67.70 $ 96.80 $ 141.90 $ 64.50 $ 26.83
The foregoing information shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent our company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Unless otherwise noted below, the following table presents certain
information with respect to the ownership of the Common Stock as of April 2,
2002 by each person known by our company to own beneficially more than 5% of the
Common Stock, by each person who is a Director or nominee for Director of our
company, by each named executive officer and by all executive officers and
Directors of our company as a group:
SHARES OF COMMON
STOCK
BENEFICIALLY OWNED
AS OF APRIL 2, 2002 (1)
NAME NUMBER (2)(3) %
- --------------------------------------------------------------------------------------------------
Robert Detwiler (4)(5) 605,625 21.90%
James Mitchell 237,976 8.61%
James Graves (6) 50,000 1.81%
Edward Hughes (4) 56,460 2.04%
Stephen Martino 30,895 1.12%
Robert Sharp 54,750 1.98%
Frank Jenkins 44,500 1.61%
Barton Beek 41,000 1.48%
Edward Baran 12,250 *
All Executive Officers and Directors as a group (9 persons)(7) 1,120,957 40.54%
Total outstanding shares (7) 2,765,275
* Less than 1%
- ----------------
(1) All ownership figures include options to purchase shares of Common Stock
exercisable within 60 days of April 2, 2002, as set forth below. Except as
otherwise noted below, each individual, directly or indirectly, has sole or
shared voting and investment power with respect to the shares listed.
(2) Includes approximately 9,635, 2,793, 4,228, and 16,657 vested shares of
Common Stock contributed by our company to its 401(k) Savings Plan for
Messrs. Mitchell, Hughes, Martino and for all executive officers and
Directors as a group. Outside Directors do not have 401(k) Plan holdings
with our company.
(3) Includes options to purchase 45,834, 29,167, 16,667, 11,250, 2,000, 11,250,
9,250 and 125,418 shares of Common Stock for Messrs. Mitchell, Hughes,
Martino, Sharp, Jenkins, Beek, Baran and for all executive officers and
Directors as a group, respectively.
(4) Includes 50,000 shares of Common Stock for Mr. Detwiler which represent a
part of 150,000 shares held in trust ("Trust Shares") to reimburse our
company for any shares issued by our company upon exercise of stock options
under the 1999 Special Stock Option Plan (the "Special Plan") assumed by
our company after the merger. Reimbursed shares will be summarily canceled
upon receipt by our company. Mr. Hughes's ownership also include options to
purchase 12,500 shares which were granted under the Special Plan. There
will be no dilution in issued and outstanding common stock of our company
should Mr. Hughes exercise his options due to the fact that all shares
underlying these options will be reimbursed to the company as described
above.
11
(5) Includes 2,500 shares owned by Mr. Robert Detwiler's wife, as to which he
disclaims beneficial ownership.
(6) Includes 50,000 shares owned by Erwin, Graves & Associates, LP as to which
Mr. Graves has shared voting power. Not included are options, subject to
stockholder approval, held by Erwin Graves & Associates, LP, to purchase an
additional 250,000 shares, 83,334 shares of which will become immediately
exercisable if approved. None of such options are exercisable within 60
days, unless approved by the stockholders. Mr. Graves and his wife each
have a 25% partnership interest in Erwin, Graves & Associates, LP.
(7) Includes stock options to purchase up to 112,918 shares of Common Stock.
The stock option to purchase 12,500 shares of Common Stock for Mr. Hughes
under the 1999 Special Stock Option Plan is not included in this total as
no dilution of outstanding shares will occur due to exercise of these
options.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our company's
Directors and executive officers, and persons who own more than 10% of a
registered class of its equity securities, to file with the Securities and
Exchange Commission, NASDAQ and the Pacific Stock Exchange initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of our company. Executive officers, Directors and greater than 10%
stockholders are required by Securities and Exchange Commission regulations to
furnish our company with copies of all Section 16(a) reports they file.
Specific due dates for these reports have been established and we are
required to identify those persons who failed to timely file these reports. To
our knowledge, based solely on review of the copies of such reports furnished to
us and written representations that no other reports were required, during the
fiscal year ended December 31, 2001, all Section 16(a) filing requirements
applicable to its executive officers, Directors and greater than 10% beneficial
owners were complied with.
I. PROPOSAL TO APPROVE SPECIAL GRANT OF STOCK OPTIONS
On November 12, 2001, the Board of Directors, acting upon the
recommendations of company management and the Compensation Committee, granted
stock options to purchase a total of 1,970,000 shares of Common Stock, of which
1,463,333 were granted subject to stockholder approval. These options were
granted as part of an overall, newly designed compensation plan enabling our
company to retain key employees and hire others. See "Compensation Committee
Report." Erwin Graves & Associates, an independent consultancy firm, has been
aiding our company with sensitive management decisions since the Merger. Of the
total options granted, 250,000 were granted to that firm. One of the principals
of that firm, James Graves, was appointed on February 27, 2002 to fill a vacancy
on the Board of Directors and stands for re-election at this Annual Meeting.
SUMMARY OF BASIC FEATURES
A general description of the basic features of the stock options are
outlined below. A copy of the form of stock option agreement was filed in our
Annual Report on Form 10-K as Exhibit 10.12 for the year ended December 31,
2001.
Manner of Exercise and Purchase. Options may be exercised by delivery of a
Notice of Exercise and Common Stock Purchase Agreement in a form as provided
with the optionee's Stock Option Agreement, along with payment in full of the
total Option exercise price for the shares to be purchased.
Termination of Options. Upon the termination of an optionee's employment or
other service with our company, the optionee will have 30 days to exercise
options vested as of the date of termination; provided that if the termination
is due to the optionee's death, the estate of the optionee will have six months
to exercise. If the termination is due to disability of the optionee, which is
expected to last for longer than twelve months, then the optionee shall have the
right to exercise any vested options for six months after date of termination.
The Committee, in its discretion, may extend such termination of option.
12
Effect of Stock Issuance. The issuance of shares of Common Stock under the
Stock Options will dilute the voting power of current stockholders of our
company. A maximum of 1,463,333 shares will be reserved for issuance under the
options which are the subject of this Proposal. In the event of any
reorganization, merger, recapitalization, stock dividend, stock split or similar
change in the corporate structure or shares of our company, appropriate
adjustments will be made to the number and kind of shares reserved and under
outstanding stock options and to the exercise price of outstanding stock
options. As of March 22, 2002, our company had 2,652,357 shares issued and
outstanding. Our company plans to register under the Securities Act of 1933 the
shares issuable upon exercise of Options, within one year of issuance, thereby
making such shares eligible for resale in the public market without restriction
by non-affiliates of our company one year after the grant of options, to the
extent Options are then exercisable. However, affiliates of our company may
generally only publicly resell shares of common stock, including shares issued
in a registered transaction, under Rule 144, which limits the volume of such
sales, requires that they be made in certain types of market transactions,
requires that our company be current in its reports under the securities laws
and requires that a specified notice of sale be filed.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based on
current statutes, regulations and interpretations. There may however be, pending
legislative proposals, which would affect the taxation of capital gains. The
description does not include state or local income tax consequences. In
addition, the description is not intended to address specific tax consequences
applicable to an individual optionee who receives an Option.
Initial Grant of Option. The grant of an option ordinarily would not be a
taxable event for the optionee. Accordingly, our company obtains no deduction
from the grant.
Nonqualified Stock Options. These Options shall be Nonqualified Stock
Options and as such, upon exercise, the amount by which the fair market value of
the shares on the date of exercise exceeds the exercise price will be treated as
ordinary income (i.e., compensation) to the optionee. Our company will be
entitled to a deduction in the same amount, provided it makes all required
withholdings. In general, the optionee's tax basis in the shares acquired by
exercising a Nonqualified Stock Option is equal to the fair market value of such
shares on the date of exercise. Upon a subsequent sale of any such shares in a
taxable transaction, the optionee will realize capital gain or loss (long-term
or short-term, depending on whether the shares were held for the required
holding period before the sale) in an amount equal to the difference between his
or her basis in the shares and the sale price. If the price of the common stock
of our company is higher than the exercise price of the individual options on
the date of approval by the stockholders, our company will be required to record
as compensation expense the difference between the market price and the exercise
price. Any compensation expense deduction on the optionee's sale of shares under
these circumstances will be taken by the company at the time of approval by the
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE SPECIAL
GRANT OF STOCK OPTIONS
II. ELECTION OF DIRECTORS
NOMINEES
Three of our company's total of eight Directors are to be elected at
the Annual Meeting. The Board of Directors of our company has authorized the
nomination at the Annual Meeting of the persons named below as candidates.
Unless otherwise directed, the Proxy Holders will vote the proxies received by
them for the nominee named below. In the event that any nominee is unable or
declines to serve as a Director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the existing Board of
Directors to fill the vacancy. It is not expected the nominees will be unable or
will decline to serve as Directors.
13
Information with respect to the nominees to the Board of Directors is set
forth above in "Directors and Executive Officers." The nominees are:
Barton Beek
Robert Detwiler
James Graves
The Directors elected at this Annual Meeting will serve three-year terms,
until the annual meeting of stockholders in 2005, and until their successors are
duly elected.
REQUIRED VOTE
The affirmative vote of a plurality of the shares of Common Stock present
in person or represented by proxy and entitled to vote is required for the
election of each Director nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE PERSONS
NOMINATED FOR ELECTION AS DIRECTOR.
III. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors is recommending the ratification of its selection of
PricewaterhouseCoopers LLP as independent accountants to audit our financial
statements for the current fiscal year ending December 31, 2002.
PricewaterhouseCoopers LLP has audited our financial statements for calendar
year 2001.
PricewaterhouseCoopers LLP has advised our Audit Committee that it is
"independent" of us within the rules and guidelines of the SEC, the American
Institute of Certified Public Accountants and the Independence Standards Board.
Audit Fees:
- ----------
Audit fees billed to our company by PricewaterhouseCoopers for review of
our annual financial statements and quarterly financial statements included in
quarterly reports on Form 10-Q, for the year 2001, totaled $150,000.
We did not engage PricewaterhouseCoopers LLP to provide advice regarding
financial information systems design and implementation during 2001.
Fees billed to our company by PricewaterhouseCoopers LLP with respect to
the year 2001 for all other non-audit services rendered to our company including
tax related services and regulatory advisory services totaled $119,000.
The Audit Committee has concluded that the provision of the other services
including tax related services by PricewaterhouseCoopers LLP is compatible with
maintaining their independence.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting, will have an opportunity to make a statement if desired, and
will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
INDEPENDENT ACCOUNTANTS.
14
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
at the Annual Meeting. If any other business is properly brought before the
Annual Meeting, it is intended that proxies in the enclosed form will be voted
in respect thereof in accordance with the judgments of the persons voting the
proxies. It is important that your shares be represented at the meeting,
regardless of the number of shares which you hold. WHETHER OR NOT YOU INTEND TO
BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED TO COMPLETE, SIGN, AND RETURN
YOUR PROXY PROMPTLY.
By Order of the Board of Directors
Dated: April 10, 2002
15
APPENDIX A
DETWILER, MITCHELL & CO.
AUDIT COMMITTEE CHARTER
PURPOSE
The primary purpose of the Audit Committee (the "Committee") is to assist the
Board of Directors (the "Board") in fulfilling its responsibility to oversee
management's conduct of the Company's financial reporting process, including by
overviewing the financial reports and other financial information provided by
the Company to any governmental or regulatory body, the public or other users
thereof, the Company's systems of internal accounting and financial controls,
and the annual independent audit of the Company's financial statements.
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,
auditors or other experts for this purpose. The Board and the Committee are in
place to represent the Company's shareholders; accordingly, the outside auditors
are ultimately accountable to the Board and the Committee.
The Committee shall review the adequacy of this Charter on an annual basis.
MEMBERSHIP
The Committee shall be comprised of not less than three members of the Board,
and the Committee's composition will meet the requirements of the Audit
Committee Policy of the NASD.
Accordingly, all of the members will be directors:
1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company; and
2. Who are financially literate or who become financially literate within a
reasonable period of time after appointment to the Committee. In addition,
at least one member of the Committee will have accounting or related
financial management expertise.
KEY RESPONSIBILITIES
The Committee's job is one of oversight and it recognizes that the Company's
management is responsible for preparing the Company's financial statements and
that the outside auditors are responsible for auditing those financial
statements. Additionally, the Committee recognizes that financial management, as
well as the outside auditors, have more time, knowledge and more detailed
information on the Company than do Committee members; consequently, in carrying
out its oversight responsibilities, the Committee is not providing any expert or
special assurance as to the Company's financial statements or any professional
certification as to the outside auditors' work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set forth
as a guide with the understanding that the Committee may diverge from this guide
as appropriate given the circumstances.
. The Committee shall review with management and the outside auditors the
audited financial statements to be included in the Company's Annual Report
on Form 10-K (or the Annual Report to Shareholders if distributed prior to
the filing of Form 10-K) and review and consider with the outside auditors
the matters required to be discussed by Statement of Auditing Standards
("SAS") No. 61.
. The Committee shall discuss with the outside auditors their judgments about
the quality, not just the acceptability, of the accounting principles used
by the Company in its financial reporting.
A-1
. As a whole, or through the Committee chair, the Committee shall review with
the outside auditors the Company's interim financial results to be included
in the Company's quarterly reports to be filed with the Securities and
Exchange Commission and the matters required to be discussed by SAS No. 61,
prior to the Company's filing of the Form 10-Q.
. The Committee shall discuss with management and the outside auditors the
quality and adequacy of the Company's internal controls.
. The Committee shall:
. Request from the outside auditors annually, a formal written statement
delineating all relationships between the auditor and the Company
consistent with Independence Standards Board Standard Number 1;
. Discuss with the outside auditors any such disclosed relationships and
their impact on the outside auditor's independence; and
. Recommend that the Board take appropriate action to oversee the
independence of the outside auditors.
. The Committee, subject to any action that may be taken by the full Board,
shall have the ultimate authority and responsibility to select (or nominate
for shareholder approval), evaluate and, where appropriate, replace the
outside auditors.
A-2
[Side One]
DETWILER, MITCHELL & CO.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints James Mitchell and Stephen Frank, and each of
them, proxies with full power of substitution, to vote all shares of Common
Stock of Detwiler, Mitchell & Co. (the "Company") held of record by the
undersigned as of April 2, 2002 at the Annual Meeting of Stockholders of the
Company, to be held at The Inn at Rancho Santa Fe, 5951 Linea Del Cielo, Rancho
Santa Fe, California 92067 on Monday, May 20, 2002, at 10:00 a.m., Pacific
Daylight Savings Time, and at any and all adjournments thereof, upon the
following matters:
ANNUAL MEETING OF STOCKHOLDERS
(continued and to be signed on the reverse side)
[Side Two]
Please mark your vote as this X
-
(1) Proposal To Approve Special Grant Of For Against Abstain (3) Proposal to ratify For Against Abstain
Stock Options [_] [_] [_] the selection of [_] [_] [_]
PricewaterhouseCoopers
LLP as our company's
independent accountants
for year 2001.
(2) Election of three directors each (4) In accordance For Against Abstain
for three years or until his For Withold For All with the discretion of [_] [_] [_]
successor shall be duly appointed or All All Except the proxy holders, upon
elected. [_] [_] [_] such other matters as
may properly come
Nominees: (1) Barton Beek, (2) Robert Detwiler before the Annual
and (3) James Graves Meeting and at any and
all Adjournments
(To withhold authority for an individual thereof.
nominee, strike a line through the
nominee's name in the list above.)
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF THE FOREGOING
PROPSALS. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED FOR EACH OF THE ABOVE PROPOSALS.
Signature or signatures of Stockholder(s) ______________________________________
_____________________ Dated: ________, 2002 (Your signature should conform
exactly to your name as printed hereon. Any co-owners may sign. Executors,
administrators, trustees, etc. should give full title as such. If the
stockholder is a corporation, a duly authorized officer should sign on behalf of
the corporation and should indicate his or her title.)