SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
PHARMANETICS, INC.
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(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PHARMANETICS, INC.
9401 Globe Center Drive, Suite 140
Morrisville, North Carolina 27560
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 16, 2001
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TO THE SHAREHOLDERS OF
PHARMANETICS, INC.
The Annual Meeting of Shareholders of PharmaNetics, Inc. (the "Company")
will be held at the Company's facility located at 9401 Globe Center Drive,
Suite 140, Morrisville, North Carolina on Wednesday May 16, 2001, at 9:30 a.m.
for the following purposes:
1. To elect a board of directors;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent auditors of the Company for the year ending December 31, 2001;
and
3. To act upon such other matters as may properly come before the meeting
or any adjournment thereof.
The foregoing items are more fully described in the attached Proxy Statement.
The Board of Directors has fixed the close of business on March 30, 2001
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting or any adjournment or adjournments thereof. You are
cordially invited to attend the meeting in person. However, to assure your
representation at the meeting, you are urged to mark, sign, date and return the
enclosed proxy card as promptly as possible in the postage-prepaid envelope
enclosed for that purpose. You may vote in person at the meeting, even if you
returned a proxy.
The Company's Proxy Statement and proxy is submitted herewith along with
the Company's Annual Report for the year ended December 31, 2000.
IMPORTANT -- YOUR PROXY IS ENCLOSED
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, SHAREHOLDERS ARE URGED TO
EXECUTE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES.
By Order of the Board of Directors
/s/ John P. Funkhouser
JOHN P. FUNKHOUSER,
President and Chief Executive Officer
Raleigh, North Carolina
April 16, 2001
PHARMANETICS, INC.
9401 Globe Center Drive, Suite 140
Morrisville, North Carolina 27560
-----------------------------------
PROXY STATEMENT
Annual Meeting of Shareholders
May 16, 2001
------------------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
The enclosed proxy is solicited by the Board of Directors of PharmaNetics,
Inc., a North Carolina corporation (the "Company"), for use at our Annual
Meeting of Shareholders to be held at 9401 Globe Center Drive, Morrisville,
North Carolina, at 9:30 a.m. on Wednesday, May 16, 2001, and any adjournments
thereof (the "Meeting"). We will bear the cost of soliciting proxies. In
addition to solicitation of proxies by mail, our employees, without extra
remuneration, may solicit proxies personally or by telephone. We will reimburse
brokerage firms and other custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses for forwarding proxy materials to beneficial
owners and seeking instruction with respect thereto. The current mailing
address of our principal executive offices is 9401 Globe Center Drive, Suite
140, Morrisville, North Carolina 27560. Copies of this Proxy Statement and
accompanying proxy card were mailed to shareholders on or about April 16, 2001.
Revocability of Proxies
You may revoke your proxy at any time before it is voted by giving a later
proxy or written notice to us (Attention: Paul Storey, Secretary), or by
attending the Meeting and voting in person.
Voting
When the enclosed proxy is properly executed and returned (and not
subsequently properly revoked), the shares it represents will be voted in
accordance with the directions indicated thereon, or, if no direction is
indicated thereon, it will be voted: (i) FOR the election of the nominees for
director identified below; (ii) FOR ratification of the appointment of
PricewaterhouseCoopers LLP, Raleigh, North Carolina, as our independent
auditors for the year ending December 31, 2001; and (iii) in the discretion of
the proxies with respect to any other matters properly brought before the
shareholders at the Meeting.
Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the Meeting but will not be counted in tabulation of votes cast on proposals
presented at the Meeting. While there is no definitive statutory or case law
authority in North Carolina with regard to these matters, we believe that our
intended treatment of abstentions and broker non-votes at the Meeting is
appropriate.
Record Date
Only the holders of record of our Common Stock and Series A Preferred
Stock at the close of business on the record date, March 30, 2001 (the "Record
Date"), are entitled to notice of and to vote at the Meeting. On the Record
Date, 7,851,948 shares of Common Stock and 97,500 shares of Series A Preferred
Stock were outstanding. Shareholders will be entitled to one vote for each
share of Common Stock and ten votes for each share of Series A Preferred Stock
held on the Record Date.
1
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
Nominees
Our Bylaws provide that the number of directors constituting the Board of
Directors shall be no less than one and no more than nine. There are currently
seven directors serving on the board and the number authorized for election at
the meeting is seven. Therefore, seven directors are to be elected to serve for
one year, until the election and qualification of their successors, and it is
intended that proxies, not limited to the contrary, will be voted FOR all of
the management nominees named below. If any nominee is unable or declines to
serve as a director at the time of the Meeting, the individuals named in the
enclosed proxy may exercise their discretion to vote for any substitute
proposed by the Board of Directors. It is not anticipated that any nominee
listed below will be unable or will decline to serve as a director. Under our
Bylaws, shareholders desiring to nominate a person for election at the Meeting
were required to give notice to us by March 20, 2001. Because no timely notice
has been received, shareholder nominations will not be permitted. None of the
nominees is related by blood, marriage or adoption to any other nominee or any
executive officer of the Company.
Name of Nominee Age Director Since
----------------------------------------- ----- ---------------
John P. Funkhouser ............... 47 1993
William A. Hawkins ............... 47 1995
John K. Pirotte .................. 51 1996
Stephen R. Puckett ............... 48 1996
Philip R. Tracy .................. 59 1996
Frances L. Tuttle ................ 53 1999
James B. Farinholt, Jr. .......... 66 2000
John P. Funkhouser was elected our President, Chief Executive Officer and
a director in October 1993 upon the Company's acquisition of Coeur
Laboratories, Inc., which manufactures and sells disposable power injection
syringes for cardiology and radiology procedures, as well as custom
angiographic procedure kit manifolds ("Coeur"). Mr. Funkhouser also served as
President and Chief Executive Officer of Coeur from 1992 until its sale in June
1999. Before his employment with Coeur, Mr. Funkhouser was a General Partner
with Hillcrest Group, a venture capital firm, and worked for over nine years in
managing venture capital portfolio companies. Mr. Funkhouser holds a B.A. from
Princeton University and an M.B.A. from the University of Virginia.
William A. Hawkins has been the President and Chief Executive Officer of
Novoste Corporation, a medical device company focused on the treatment of
coronary artery disease since June 1998. From April 1997 until he joined
Novoste Corporation, Mr. Hawkins was Vice President of American Home Products
Corporation, a pharmaceutical company. From October 1995 until he joined
American Home Products, Mr. Hawkins was President of Ethicon Endo-Surgery,
Inc., a medical device company that is a subsidiary of Johnson & Johnson. From
January 1995 to October 1995, Mr. Hawkins served as Vice President in charge of
U.S. operations of Guidant Corporation and President of Devices for Vascular
Intervention, a medical device company and a subsidiary of Guidant. Prior to
joining Guidant, Mr. Hawkins held several positions with IVAC Corporation, most
recently serving as President and Chief Executive Officer from 1991 until 1995.
Mr. Hawkins holds a B.S. in Engineering and Biomedical Engineering from Duke
University and an M.B.A. from the University of Virginia.
John K. Pirotte is President and Chief Operating Officer of Teleion
Wireless, Inc., a privately held company that develops and markets wireless
data communication modules, since 2000. Mr. Pirotte has also been Chairman and
Chief Executive Officer of CORPEX Technologies Incorporated, a privately held
company that develops and markets surface active chemical technology, since
1990. In addition, Mr. Pirotte has operated a private investment company and
was Chief Financial Officer from 1979 to 1981 and Chairman and Chief Executive
Officer from 1981 until 1988 of The Aviation Group, Inc. He is a member of the
Board of Directors of Digital Recorders, Inc. a NASDAQ listed company (symbol
TBUS) that manufactures and sells
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advanced technology products to the transportation industry. He is a founding
director of North Carolina Enterprise Corp., a venture capital fund. Mr.
Pirotte holds a B.A. from Princeton University and an M.S. from New York
University Graduate School of Business Administration.
Stephen R. Puckett is Chairman of the Board of Directors of MedCath
Incorporated, a provider of cardiology and cardiovascular services that he
founded in 1988. He also formally served as President and Chief Executive
Officer of Medcath. He has also served as Executive Vice President and Chief
Operating Officer of the Charlotte Mecklenburg Hospital Authority. Mr. Puckett
holds a B.S. and an M.S. in Health Management from the University of Alabama.
Philip R. Tracy was President and CEO of Burroughs-Wellcome Co., the
United States subsidiary of Wellcome plc, a global pharmaceutical company, from
1989 until the acquisition of Wellcome by Glaxo plc in 1995. Prior to 1989, he
served in various legal capacities with Burroughs-Wellcome, including Vice
President and General Counsel. He has served on the boards of Wellcome Plc, the
Pharmaceutical Research and Manufacturers of America, and the Non-Prescription
Drug Manufacturers Association. He is currently Of Counsel to the law firm of
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P. and serves as a
venture partner with Intersouth Partners, a venture capital firm based in North
Carolina. Mr. Tracy holds a B.A. from the University of Nebraska and an L.L.B.
from George Washington University School of Law, and has attended the Senior
Executive Program at Stanford University.
Frances L. Tuttle has served as Senior Vice President -- Near Patient
Testing of Bayer Diagnostics, a Business Group of the worldwide Bayer Group
since June 2000. From February 1999 to June 2000, Ms. Tuttle served as Senior
Vice President -- Critical Care Systems. From 1979 to 1999, Ms. Tuttle served
in various positions within Chiron Diagnostics, which was purchased by Bayer
Diagnostics in September 1998, most recently as Senior Vice President of the
Immunodiagnostics division. Ms. Tuttle holds a B.S. in accounting from the
University of North Carolina at Chapel Hill and an M.B.A. from Harvard Business
School.
James B. Farinholt, Jr. is Special Assistant to the President of Virginia
Commonwealth University for Economic Development, advising on campus expansion
and commercialization of scientific discoveries. He is a member of the Board of
Directors of Owens & Minor, Inc. and the VCU Intellectual Properties
Foundation. Mr. Farinholt holds a B.S. from Hampden-Sydney College.
Information Concerning the Board of Directors and Committees
The business of the Company is under the general management of the Board
of Directors as provided by the laws of North Carolina and our Bylaws. During
the year ended December 31, 2000, the Board of Directors held seven formal
meetings, excluding actions that were taken by unanimous written consent during
the year. Of the members serving on the board for the entire year, each
attended at least 75% of the 2000 meetings of the Board of Directors and Board
committees of which they were a member.
The Board of Directors has established an Audit Committee and a
Compensation Committee. The Board has no Nominating Committee. The Audit
Committee currently consists of Messrs. Pirotte, Tracy and Farinholt. The Audit
Committee held two formal meetings during 2000, as well as telephonic meetings
to discuss quarterly results with our auditors. The Audit Committee makes
recommendations to the Board of Directors concerning its review of our internal
controls, accounting system and the annual audit, and regarding the selection
of independent auditors. The Compensation Committee currently consists of
Messrs. Pirotte, Puckett and Farinholt. The Compensation Committee recommends
employee salaries and incentive compensation to the Board of Directors and
administers our stock option plans. During 2000, the Compensation Committee
held one meeting, excluding actions that were taken by unanimous written
consent during the year.
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Vote Required
The seven nominees receiving the highest number of affirmative votes of
the shares present or represented and entitled to be voted at the Meeting shall
be elected as directors of the Company.
The Board of Directors has unanimously approved and recommends that
shareholders vote "FOR" the election of the management nominees listed above.
PROPOSAL NO. 2 -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm PricewaterhouseCoopers LLP
("PwC"), Raleigh, North Carolina, to serve as our independent auditors for the
year ending December 31, 2001, and recommends that the shareholders ratify such
action. If the appointment of PwC is not ratified by the shareholders, the
Board of Directors will reconsider its selection. PwC has audited our accounts
since 1994 and has advised us that it does not have, and has not had, any
direct or indirect financial interest in the Company or its subsidiaries in any
capacity other than that of serving as independent auditors. Representatives of
PwC are expected to attend the Meeting. They will have an opportunity to make a
statement, if they desire to do so, and will also be available to respond to
appropriate questions.
Audit Fees
PwC billed the Company aggregate fees of $55,500 for professional services
rendered for the audit of our annual financial statements for fiscal year 2000
and for reviews of the financial statements included in our quarterly reports
on Form 10-Q for the first three quarters of fiscal 2000.
All Other Fees
PwC billed the Company aggregate fees of $36,660 for professional services
rendered in fiscal 2000 other than audit services and review of quarterly
reports. These fees resulted primarily from services rendered for the review of
our fiscal 1999 tax returns and review of our registration statements and
reports filed with the SEC during fiscal 2000 as part of our reporting
requirements. The Audit Committee of the Board of Directors considered these
activities to be compatible with the maintenance of PwC independence. We did
not engage PwC in fiscal 2000 to perform any services for financial information
systems design or implementation.
The affirmative vote of the holders of a majority of the shares of our
Common Stock present or represented and voting on this proposal at the Meeting
shall constitute ratification of the appointment of PwC.
The Board of Directors has unanimously approved and recommends a vote
"FOR" the ratification of the appointment of PwC as our independent auditors
for the year ending December 31, 2001.
OTHER INFORMATION
Principal Shareholders
The following table sets forth certain information regarding the ownership
of shares of our Common Stock and Series A Preferred Stock as of the Record
Date by (1) each person known by the Company to own beneficially more than 5%
of the outstanding shares of Common Stock or Series A Preferred Stock, (2) each
of our current directors, (3) each of our Chief Executive Officer and four most
highly compensated executive officers other than the Chief Executive Officer
whose cash compensation for the year ended December 31, 2000 exceeded $100,000
(collectively, the "Named Executive Officers"), and (4) all of our current
directors and executive officers as a group. As of the Record Date, we had
7,851,948 shares of Common Stock and
4
97,500 shares of Series A Preferred Stock outstanding. Each share of Series A
Preferred Stock is convertible into ten shares of Common Stock. Except as
indicated in footnotes to this table, the persons named in this table have sole
voting and investment power with respect to all shares of Common Stock
indicated. Share ownership in the case of Common Stock includes shares issuable
upon conversion of Series A Preferred Stock and upon exercise of outstanding
options that may be exercised within 60 days after the Record Date for purposes
of computing the percentage of Common Stock owned by such person but not for
purposes of computing the percentage owned by any other person. Percentage
voting power is calculated assuming the Common Stock and the Series A Preferred
Stock vote together as one class with each share of Common Stock entitled to
one vote and each share of Series A Preferred Stock entitled to ten votes.
Shares Beneficially Owned
----------------------------------------------------------
Common Stock Series A Preferred Stock
------------------------------- ------------------------
Percentage
Number Percent Number Percent Total Voting
of Shares of Class of Shares of Class Power
------------------ ---------- ----------- ---------- -------------
Bayer Diagnostics Corporation 600,000 7.6% -- -- 6.8%
63 North Street
Medfield, MA 02052
Davenport & Co 840,322(1) 10.7% -- -- 9.5%
901 E. Cary Street, Suite 1100
Richmond, VA 23219
Joseph H. Sherrill, Jr 583,065(2) 8.3% 6,000 6.2% 7.3%
1510 Stickney Point Road
Sarasota, FL 34231
Salem Investment Counselors, Inc. 421,120(3) 5.4% -- -- 4.8%
P.O. Box 25427
Winston-Salem, NC 27114
Special Situations Funds(4) 300,000(5) 3.7% 25,000 25.6% 2.8%
153 East 53rd Street
New York, NY 10022
Elliot Bossen 120,000(6) 1.5% 10,000 10.3% 1.1%
3100 Tower Boulevard, #1104
Durham, NC 27707
Leonardo, L.P. 240,000(7) 3.0% 20,000 20.5% 2.3%
245 Park Avenue
New York, NY 10167
Hull Capital Corp. 84,000(8) 1.1% 7,000 7.2% 0.8%
152 West 57th Street, 11th Floor
New York, NY 10019
AIG Sound Shore Funds(4) 78,000(9) 1.0% 6,500 6.7% 0.7%
1281 East Main Street, 3rd Floor
Stamford, CT 06902
John P. Funkhouser 402,910(10) 4.9% -- -- *
Michael D. Riddle 95,501(11) 1.2% -- -- *
Dick D. Timmons II 62,500(12) * -- -- *
Peter J. Scott 41,000(13) * -- -- *
James A. McGowan 25,000(14) * -- -- *
William A. Hawkins 15,532(15) * -- -- *
Stephen R. Puckett 14,000(16) * -- -- *
John K. Pirotte 13,000(16) * -- -- *
Philip R. Tracy 13,000(16) * -- -- *
James B. Farinholt, Jr. 6,500(14) * -- -- *
Frances L. Tuttle --
All current executive officers and directors as a 697,443(17) 8.2% -- -- *
Group (6 directors and 6 executive officers)
--------
* Less than one percent.
5
(1) As reported in the Schedule 13G dated March 23, 2001 filed with the
Securities and Exchange Commission ("SEC") by Davenport & Company LLC.
Consists of shares held by individuals who are customers or
representatives (or members of a representatives' immediate family) of
Davenport & Company LLC, which disclaims beneficial ownership.
(2) As reported in the Schedule 13G dated February 6, 2001 filed with the SEC
by Joseph H. Sherrill Jr. Includes 60,000 shares of common stock issuable
to Mr. Sherrill upon conversion of shares of Series A Preferred Stock and
a warrant to purchase 12,000 shares of Common Stock, both of which he
acquired in February 2000.
(3) As reported in the Schedule 13G dated February 14, 2001 filed with the SEC
by Salem Investment Counselors, Inc. Consists of shares held by
individuals who are customers or representatives (or members of a
representatives' immediate family) of Salem Investment Counselors, Inc.,
which disclaims beneficial ownership.
(4) Consists of three separate but affiliated limited partnerships or
companies.
(5) Consists of 250,000 shares of Common Stock issuable upon conversion of
Series A Preferred Stock and 50,000 shares of Common Stock issuable upon
exercise of a warrant, both acquired in February 2000
(6) Consists of 100,000 shares of Common Stock issuable upon conversion of
Series A Preferred Stock and 20,000 shares of Common Stock issuable upon
exercise of a warrant, both acquired in February 2000.
(7) Consists of 200,000 shares of Common Stock issuable upon conversion of
Series A Preferred Stock and 40,000 shares of Common Stock issuable upon
exercise of a warrant, both acquired in February 2000.
(8) Consists of 70,000 shares of Common Stock issuable upon conversion of
Series A Preferred Stock and 14,000 shares of Common Stock issuable upon
exercise of a warrant, both acquired in February 2000.
(9) Consists of 65,000 shares of Common Stock issuable upon conversion of
Series A Preferred Stock and 13,000 shares of Common Stock issuable upon
exercise of a warrant, both acquired in February 2000.
(10) Includes 377,910 shares underlying options.
(11) Includes 80,501 shares underlying options.
(12) Includes 57,500 shares underlying options.
(13) Includes 40,000 shares underlying options.
(14) Includes 5,000 shares underlying options.
(15) Includes 10,532 shares underlying options.
(16) Includes 7,000 shares underlying options.
(17) Includes shares referenced in footnotes (10) through (16).
6
Compensation of Executive Officers
Summary Compensation.
The following table reflects all cash and noncash compensation paid by us
to the Named Executive Officers for their services in all capacities during the
years ended December 31, 2000, 1999 and 1998:
Long-Term
Compensation
Awards
-------------
Annual Compensation
---------------------------------
Options/ All Other
Name and Principal Position Year Salary Bonus SARs Compensation
------------------------------------------ ------ ----------- ---------- ------------- ---------------
John P. Funkhouser, 2000 $234,000 $15,000 -- --
President, Chief Executive Officer 1999 225,000 11,000 120,000 --
1998 185,000 25,000 -- --
Michael D. Riddle, 2000 159,600 15,000 -- $ 1,800(1)
Vice President, Sales, Marketing & 1999 150,000 15,000 78,000 --
Business Development 1998 125,000 -- -- --
James A. McGowan, 2000 129,615 -- 100,000 10,413(2)
Vice President, Chief Financial Officer, 1999 -- -- -- --
Chief Administrative Officer 1998 -- -- -- --
Dick D. Timmons, II, 2000 150,080 5,000 -- --
Vice President, Chief Operating Officer 1999 140,000 7,000 40,000 --
1998 125,000 -- -- --
Peter J. Scott, 2000 128,160 5,000 -- --
Vice President, Quality Assurance 1999 120,000 6,000 20,000 --
and Regulatory Affairs 1998 95,000 --
--------
(1) Consists of car allowance
(2) Consists of apartment lease
Option Grants, Exercises and Holdings and Fiscal Year-End Option Values.
The following table summarizes all option grants during the year ended
December 31, 2000 to the Named Executive Officers.
OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 2000
Potential Realizable
% of Total Value at Assumed
Number of Options Annual Rates of Stock
Shares Granted to Exercise Price Appreciation for
Underlying Employees in or Base Option Term(2)
Options Fiscal Year Price Per Expiration ----------------------------
Name Granted 2000 Share(1) Date 5% 10%
------------------ ---------------- -------------- ----------- ----------- ------------ -------------
James A. McGowan 100,000(3) 46% $ 14.56 5/8/10 $ 915,671 $2,320,489
--------
(1) The exercise price may be paid in cash, in shares of Common Stock with a
market value as of the date of exercise equal to the option price or a
combination of cash and shares of Common Stock.
(2) The compounding assumes a 10-year exercise period for all option grants.
These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock, and overall stock market conditions. The
amounts reflected in this table may not necessarily be achieved.
(3) This grant was made in May 2000 and becomes exercisable over four years
from the date of grant, based on continued employment with us. To the
extent not already exercisable, the options become fully vested
7
by their terms upon the consummation of a merger in which we are not the
surviving corporation, a transfer of all our stock, a sale of substantially
all of our assets or a dissolution or liquidation of the Company, unless the
successor corporation assumes the outstanding options or substitutes
substantially equivalent options.
The following table sets forth information concerning option exercises
during 2000 and option holdings as of December 31, 2000 by the Named Executive
Officers.
FISCAL YEAR-END OPTION VALUES
Shares Value Number of Unexercised Value of Unexercised
Acquired on Realized Options at In-the-Money Options
Exercise $ December 31, 2000 at December 31, 2000(1)
------------- ---------- ----------------------------------- ----------------------------------
Name Exercisable(2) Unexercisable(2) Exercisable(2) Unexercisable(2)
------------------------ ---------------- ------------------ ---------------- -----------------
John P. Funkhouser ..... -- -- 372,910 72,500 $3,499,405 $435,625
Michael D. Riddle ...... 15,000 $273,150 75,501 44,000 $ 585,362 $264,250
James A. McGowan ....... -- -- -- 100,000 -- --
Dick D. Timmons ........ -- -- 56,250 33,750 $ 361,875 $209,375
Peter J. Scott ......... -- -- 38,750 21,250 $ 253,750 $135,000
--------
(1) Calculated by subtracting the exercise price from $11.75, the closing price
of our Common Stock as reported by the Nasdaq National Market on December
29, 2000, the last business day of the fiscal year ended December 31,
2000, and multiplying the difference by the number of shares underlying
each option.
(2) The first number represents the number or value (as called for by the
appropriate column) of exercisable options; the second number represents
the number or value (as appropriate) of unexercisable options
Change of Control Arrangements
In the interest of promoting organizational stability in the context of a
potential acquisition or change of control, we entered into a change of control
agreement with Mr. Funkhouser in October 1997. Under this agreement, if Mr.
Funkhouser resigns or his employment by the Company is terminated for any
reason within two years following a change of control of the Company, he is
entitled to receive a severance payment from the Company, payable in full and
in cash within 30 days, equal to two times the total compensation paid by the
Company to Mr. Funkhouser, including all wages, salary, bonuses and incentive
compensation, during the twelve months preceding the year in which the
severance obligation becomes payable.
Supplemental Executive Retirement Plan
Effective February 21, 2001, we implemented a non-qualified Supplemental
Executive Retirement Plan, or SERP. All of our executive officers are eligible
for the plan. We have entered into SERP Agreements with each of John P.
Funkhouser, Michael D. Riddle and James A. McGowan. The SERP is a
non-qualified, unfunded, deferred compensation plan in which each participant's
account is a promise to pay future benefits. Provided the participant continues
to be a full-time employee, we will provide credits annually to each
participant's account in an amount to be determined by the Board of Directors
in its sole discretion. Each annual allocation vests ratably on a quarterly
basis over a four-year period. The account balance is the aggregate of all
allocations adjusted for investment gain or loss (as determined by the return
of the investments suggested by the participant), less any distributions made
to a participant or his beneficiaries. Each participant may make investment
suggestions for his account, but the investment decision for each account is in
the sole discretion of the Company. Each participant, or his beneficiaries, is
entitled to receive an amount equal to his vested account balance if: (1) the
participant suffers a disability while a full-time employee of the Company or
(2) the participant terminates employment. Each participant, or his
beneficiaries, is entitled to receive an amount equal to his total balance if:
(1) the participant dies while a full-time employee of the Company, (2) the
participant is a full-time employee at his normal retirement date, defined as
8
the first day of the calendar month following the month in which the
participant retires from service on or after he reaches age 65 or (3) a change
in control of the Company occurs. Upon a change in control, the participant
would also receive a minimum of 150% of the participant's base salary for the
most recent calendar year. For the year ending December 31, 2001, the Board of
Directors allocated to each participant's account an amount equal to 15% of his
base salary.
Compensation of Directors
Each of the Company's non-employee directors receives a retainer of $5,000
per year, $2,000 per Board meeting, $1,000 per committee meeting and $500 per
telephonic meeting that he or she attends. In 2000, each non-employee and
non-affliated director received a non-qualified option grant of 5,000 shares of
Common Stock upon re-election to the Board. All directors are reimbursed by the
Company for expenses incurred to attend Board meetings.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee"),
consisting entirely of non-employee directors, approves all policies under
which compensation is paid or awarded to the Company's executive officers. The
Committee is currently composed of Messrs. Pirotte, Puckett and Farinholt. The
Committee also administers the Company's stock plans.
Neither the material in this report nor the performance graph included in
this proxy statement under the heading " -- Performance Graph" (the
"Performance Graph") is soliciting material, is or will be deemed filed with
the SEC or is or will be incorporated by reference in any filing of the Company
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, whether made before or after the date of this Proxy Statement and
irrespective of any general incorporation language in such filing.
Compensation Philosophy. The Company's executive compensation program has
three objectives: (1) to align the interests of the executive officers with the
interests of the Company's shareholders by basing a significant portion of an
executive's compensation on the Company's performance; (2) to attract and
retain highly talented and productive executives; and (3) to provide incentives
for superior performance by the Company's executives. To achieve these
objectives, the Committee has crafted a program that consists of base salary,
short-term incentive compensation in the form of cash bonuses and long-term
incentive compensation in the form of stock and stock options. These
compensation elements are in addition to the general benefits programs which
are offered to all of the Company's employees.
Each year, the Committee reviews the Company's executive compensation
program. In its review, the Committee uses compensation survey data prepared by
outside consultants to study the compensation packages for executives of
companies at a comparable stage of development and in the Company's geographic
area. The Committee assesses the competitiveness of the Company's executive
compensation program and reviews the Company's financial and operational
performance for the previous fiscal year. The Committee also gauges the success
of the compensation program in achieving its objectives in the previous year
and considers the Company's overall performance objectives. For compensation
paid to the Chief Executive Officer and other Named Executive Officers in 2000,
no reference was made to the data for comparable companies included in the
Performance Graph.
Each element of the Company's executive compensation program is discussed
below.
Base Salaries. The Committee annually reviews the base salaries of the
Company's executive officers. The base salaries for the Company's executive
officers for fiscal 2000 were established by the Committee at the beginning of
that fiscal year. In addition to considering the factors listed in the
foregoing section that support the Company's executive compensation program
generally, the Committee reviews the responsibilities of the specific executive
position and the experience and knowledge of the individual in that position.
The
9
Committee also measures individual performance based upon a number of factors,
including a measurement of the Company's historic and recent financial and
operational performance and the individual's contribution to that performance,
the individual's performance on non-financial goals and other contributions of
the individual to the Company's success, and gives each of these factors
relatively equal weight without confining its analysis to a rigorous formula.
As is typical of most corporations, the actual payment of base salary is not
conditioned upon the achievement of any predetermined performance targets.
Incentive Compensation. Cash bonuses established for executive officers
are intended to motivate the individual to work hard to achieve the Company's
financial and operational performance goals or to otherwise incent the
individual to aim for a high level of achievement on behalf of the Company in
the coming year. In 2000, the Company paid cash bonuses to its executive
officers based on the achievement of Company objectives established in the
beginning of 2000.
Long-Term Incentive Compensation. The Company's long-term incentive
compensation plan for its executive officers is based upon the Company's stock
plans. The Company believes that placing a portion of its executives' total
compensation in the form of stock or stock options achieves three objectives.
It aligns the interest of the Company's executives directly with those of the
Company's shareholders, gives executives a significant long-term interest in
the Company's success and helps the Company retain key executives. Options
generally vest over four years based on continued employment. In determining
the number of options to grant an executive, the Board primarily considered the
executive's past performance and the degree to which an incentive for long-term
performance would benefit the Company, as well as the number of shares and
options already held by the executive officer. It is the Committee's policy to
grant options at fair market value unless particular circumstances warrant
otherwise.
Benefits. The Company believes that it must offer a competitive benefits
program to attract and retain key executives. During fiscal 2000, the Company
provided the same medical and other benefits to its executive officers that are
generally available to its other employees.
Compensation of the Chief Executive Officer. The Chief Executive Officer's
compensation is based on the same elements and measures of performance as is
the compensation for the Company's other executive officers. The Committee
approved a base salary for Mr. Funkhouser for fiscal 2000 of $234,000 based on
the same factors as were considered in determining the base salaries of the
other executive officers.
Section 162(m) of the Code. It is the responsibility of the Committee to
address the issues raised by Section 162(m) of the Code. This Section makes
certain non-performance based compensation in excess of $1,000,000 to
executives of public companies non-deductible to the companies. The Committee
has reviewed these issues and has determined that it is not necessary for the
Company to take any action at this time with regard to these issues.
Submitted by: The Compensation Committee:
Stephen R. Puckett -- Chairman
John K. Pirotte
James B. Farinholt, Jr.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are currently Messrs. Pirotte,
Puckett and Farinholt. Messrs. Pirotte, Puckett and Farinholt were not at any
time during the fiscal year ended December 31, 2000 or at any other time an
officer or employee of the Company. No executive officer of the Company serves
as a member of the board of directors or compensation committee of any entity
which has one or more executive officers serving as a member of the Company's
Board of Directors or Compensation Committee.
10
Report of the Audit Committee
The Audit Committee has reviewed and discussed the Company's financial
statements for fiscal 2000 with management. The Audit Committee has discussed
with PwC, the Company's independent auditors, the matters required to be
discussed by Statement on Auditing Standards No. 61, as modified or
supplemented. The Audit Committee has received the written disclosures and the
letter from PwC required by Independence Standards Board Standard No. 1, as
modified or supplemented and has discussed with PwC its independence. Based on
the review and discussions described above, among other things, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for fiscal
2000.
The Board of Directors has determined that the members of the Audit
Committee are independent as defined in Rule 4200(a)(14) of the National
Association of Securities Dealers' listing standards, as applicable and as may
be modified or supplemented. The Audit Committee recommended and the Board of
Directors approved an Audit Committee charter, a copy of which is attached as
Appendix A to this Proxy Statement.
Submitted by: The Audit Committee:
John K. Pirotte -- Chairman
James B. Farinholt, Jr.
Philip R. Tracy
The material in this report will not be deemed filed with the SEC nor will
it be incorporated by reference into any filing of the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
whether made before or after the date of this Proxy Statement and irrespective
of any general incorporation language in such filing.
11
Performance Graph
The following graph shows a comparison of cumulative total shareholder
returns for the Company, the CRSP Total Market Return Index of the NASDAQ Stock
Market and the CRSP NASDAQ Pharmaceutical Stocks Total Return Index. (The
"CRSP" is the Center for Research in Securities Prices at the University of
Chicago.)
Comparison of Cumulative Total Return (1)
[PERFORMANCE GRAPH APPEARS HERE, SEE CHART FOR PLOT POINTS]
--------
(1) Assumes $100 invested on January 1, 1996 in each of the Company's Common
Stock, the Nasdaq CRSP Total Market Return Index, and the Nasdaq
Pharmaceutical Stocks Total Return Index (the "Pharmaceutical Index").
Total return assumes reinvestment of dividends.
--------------------------------------------------------------------------------
12/95 12/96 12/97 12/98 12/99 12/00
--------------------------------------------------------------------------------
NASDAQ $100 $123.04 $150.69 $212.51 $394.92 $237.62
--------------------------------------------------------------------------------
PEER GROUP -
PHARMA $100 $100.31 $103.66 $131.91 $248.01 $308.49
--------------------------------------------------------------------------------
PHARMANETICS $100 $ 35.23 $ 72.73 $ 47.73 $ 84.09 $106.82
--------------------------------------------------------------------------------
Certain Transactions
In August 1998, the Company entered into a Common Stock Purchase Agreement
with Chiron Diagnostics Corporation ("Chiron Diagnostics"), pursuant to which
the Company issued and sold to Chiron Diagnostics an aggregate of 600,000
shares of its Common Stock in exchange for $6,000,000 cash, or $10.00 per
share. In November 1998, Bayer acquired Chiron Diagnostics and made it a part
of Bayer Diagnostics. Bayer Diagnostics currently owns approximately 8.0% of
the Company's outstanding Common Stock. The Common Stock Purchase Agreement
provides, among other things, that Bayer Diagnostics will not acquire more than
20% of the Company's voting securities, except where a third party accumulates
or attempts to buy specified percentages of the Company's voting stock. Except
under limited circumstances, Bayer Diagnostics cannot transfer its shares to an
unaffiliated person unless the Company is first offered the right to purchase
such shares. Except with respect to certain significant events (including a
sale or dissolution of the Company), Bayer Diagnostics also agreed to vote its
shares in accordance with the recommendation of the Company's Board or in not
less than the proportion as the votes cast by other shareholders. In addition,
the Company agreed to include in the slate of nominees recommended by the
Company for election as directors of the Company at the 1999 annual meeting one
person designated by Bayer Diagnostics and reasonably acceptable to the
Company. Last year's Board nominee designated by Bayer Diagnostics and approved
by the Company
12
was Frances L. Tuttle. Ms. Tuttle has been nominated by the Company again this
year. The Company also granted to Bayer Diagnostics registration rights with
respect to the purchased shares and the right to receive notification of and to
make a competing bid with respect to certain change of control transactions. In
the event of a change in control transaction at less than $10.00 per share, the
Company must pay Bayer Diagnostics the difference between $10.00 and the price
per share in the transaction, unless Bayer Diagnostics has failed to meet its
minimum purchase requirements under the Distribution Agreement between them.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the Company's Common
Stock (collectively, "Insiders"), to file with the SEC initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Insiders are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely upon review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 2000, all Section
16(a) reports were filed on a timely basis, except that the initial report on
Form 3 for Director James B. Farinholt, Jr. was due on June 15, 2000 and was
filed on June 26, 2000, and the initial report on Form 3 for James A. McGowan,
Chief Financial Officer, was due on May 18, 2000 and was filed on May 25, 2000.
Deadline for Receipt of Shareholder Proposals
Shareholders having proposals that they desire to present at next year's
annual meeting of shareholders of the Company should, if they desire that such
proposals be included in the Company's Proxy Statement relating to such
meeting, submit such proposals in time to be received by the Company at its
principal executive office in Morrisville, North Carolina, not later than
December 16, 2001. To be so included, all such submissions must comply with the
requirements of Rule 14a-8 promulgated under the Exchange Act and the Board of
Directors directs the close attention of interested shareholders to that Rule.
In addition, management's proxy holders will have discretion to vote proxies
given to them on any shareholder proposal of which the Company does not have
notice prior to March 15, 2002. Proposals may be mailed to Secretary,
PharmaNetics, Inc., 9401 Globe Center Drive, Suite 140, Morrisville, North
Carolina 27560.
OTHER MATTERS
The Board of Directors knows of no other business to be brought before the
Meeting, but it is intended that, as to any such other business, the shares
will be voted pursuant to the proxy in accordance with the best judgment of the
person or persons acting thereunder.
By Order of the Board of Directors
/s/ John P. Funkhouser
JOHN P. FUNKHOUSER,
President and Chief Executive Officer
13
APPENDIX A
PHARMANETICS, INC.
AUDIT COMMITTEE CHARTER
ADOPTED MAY 2000
A-1
INTRODUCTION
As part of the corporate governance of PharmaNetics, Inc. (the "Company"),
an audit committee (the "Committee") has been previously established. In
response to recent changes in SEC and NASDAQ rules regarding the composition
and role of audit committees, the Committee desires to establish a written
charter that will assist the Board of Directors in discharging it corporate
governance responsibilities. The guiding principles of the Committee will be:
o To play a key role in monitoring the audit process;
o To have independent communication and information flow between the
Committee and external auditors;
o To have candid discussions with management and the external auditors
regarding issues involving judgment and impacting quality; and
o To maintain diligent and knowledgeable Committee members
The Committee believes that by playing a proactive role, it can enhance
the credibility of financial reports and strengthen communication among
directors, auditors, and management which will in turn enhance the quality of
financial reporting.
This charter is established to provide a clear understanding of the
Committee's role and to provide a framework for the Committee's organization
and responsibilities.
A-2
PHARMANETICS, INC.
AUDIT COMMITTEE CHARTER
MISSION STATEMENT
The Audit Committee (the "Audit Committee") will assist the Board of Directors
of PharmaNetics, Inc. (the "Company") in fulfilling its oversight
responsibilities. The Audit Committee will review the financial reporting
process, the audit process, and the Company's process for monitoring compliance
with laws and regulations and with the Company's code of conduct. In performing
its duties, the Audit Committee will maintain effective working relationships
with the Board of Directors, management, and the internal and external
auditors. To properly perform his or her role, each committee member will have
an understanding of the responsibilities of committee membership as well as
familiarity with the Company's business, operations, and risks.
Although the Audit Committee has the responsibilities and powers set forth in
this charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the external auditors. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the external auditors or to
assure compliance with laws and regulations and the Company's code of conduct.
ORGANIZATION
o The Audit Committee will be composed of not less than three nor more than
five members of the Board of Directors.
o The Board of Directors will appoint Committee members annually for a term of
one year.
o The Board of Directors will appoint a chairperson.
o Each Committee member shall be financially literate or become financially
literate within a reasonable period of time after his or her appointment to
the Audit Committee.
o At least one member of the Audit Committee shall have accounting or related
financial management expertise.
o The Audit Committee shall be comprised solely of directors independent of
management and free from any relationship that, in the opinion of the Board
of Directors, would interfere with the exercise of independent judgement as
a Committee member.
o A majority of the Committee members will constitute a quorum for meetings.
o The Committee will meet at least twice a year, or more frequently as
required, and at such times and places as it deems advisable.
o The Committee will maintain minutes and will report to the Board of Directors
after each meeting of the committee.
o The external and internal auditors will have the right to appear before and
be heard by the Audit Committee.
o The committee will have the right, for the purpose of the proper performance
of its functions, to meet at any reasonable time with the external and
internal auditors or any of the officers or employees of the Company.
A-3
ROLES AND RESPONSIBILITIES
Internal Controls
The Audit Committee will:
o Evaluate whether management is appropriately communicating the importance of
internal controls.
o Focus on the extent to which internal and external auditors examine computer
systems and applications, the security of such systems and contingency plans
for processing financial information in the event of a systems breakdown.
o Determine whether internal control recommendations made by internal and
external auditors are responded to by management in a timely fashion.
o Ensure that the external auditors have access to the Audit Committee with
regard to issues of fraud, deficiencies in internal controls and related
matters.
Financial Reporting
The Audit Committee will:
General
o Review significant accounting and reporting issues, including recent
professional and regulatory pronouncements, and understand their impact on
the financial statements.
o Discuss with management and the internal and external auditors significant
risks and exposures and the plans to minimize such risks.
Annual Financial Statements
o Consider the annual financial statements and determine whether they are
consistent with the information known to committee members;
o Discuss judgmental areas such as those involving valuation of assets and
liabilities, including, for example, the accounting for and disclosure of
revenue recognition and reserves.
o Meet with management and the external auditors together and separately to
discuss the financial statements and the results of the audit.
o Review the annual report before its release and consider whether the
information contained therein is consistent with members' knowledge about
the Company and its operations.
o Obligate the external auditors to communicate certain required matters to the
committee.
Interim Financial Statements
o Be briefed on how management develops and summarizes quarterly financial
information, and the extent to which the external auditors review quarterly
financial information.
o Meet with management and, if a pre-issuance review was completed, with the
external auditors, either telephonically or in person, to discuss the
interim financial statements and the results of the review (this may be done
by the committee chairperson or the entire committee).
A-4
Compliance with Laws and Regulations
The Audit Committee will:
o Review the effectiveness of the system for monitoring compliance with laws
and regulations and the results of management's investigation and follow-up
(including disciplinary action) on any fraudulent acts or accounting
irregularities.
o Periodically obtain updates from management regarding compliance.
o Review the findings of any examinations by regulatory agencies such as the
Securities and Exchange Commission.
Compliance with Code of Conduct
The Audit Committee will:
o Ensure that a code of conduct is formalized in writing and obligate
management to communicate it to all employees.
o Evaluate whether management is appropriately communicating the importance of
the code of conduct and the guidelines for acceptable business practices.
o Review the program for monitoring compliance with the code of conduct.
o Periodically obtain updates from management regarding compliance.
Internal Audit
The Audit Committee will:
o Periodically assess, in conjunction with management, whether an internal
audit department would benefit the Company.
External Audit
The Audit Committee will:
o Instruct the external auditors that the Board of Directors and the Audit
Committee, as the shareholders' representative, is the external auditors'
client.
o Review the external auditors' proposed audit scope and approach.
o Review the performance of the external auditors and recommend to the Board of
Directors the appointment, retention or discharge of the external auditors.
o Obtain from the external auditors a formal written statement delineating all
relationships between the external auditors and the Company, consistent with
Independence Standard No. 1, and actively engage in a dialogue with the
external auditors with respect to any disclosed relationships or services
that may impact the objectivity and independence of the external auditors.
o Discuss with the external auditors items required to be communicated to audit
committees in accordance with SAS 61.
A-5
Other Responsibilities
The Audit Committee will:
o Meet with the external auditors and management in separate executive sessions
to discuss any matters that the Committee or these groups believe should be
discussed privately.
o Ensure that significant findings and recommendations made by the internal and
external auditors are dealt with in a timely fashion.
o Review with Company counsel any legal matters that could have a significant
impact on the Company's financial statements.
o If necessary, institute special investigations and, if appropriate, hire
special counsel or experts to assist.
o Perform other oversight functions as requested by the Board of Directors.
o Review and update the charter of the Committee and receive approval of
changes from the Board of Directors.
o Annually prepare a report to shareholders, as required by the SEC, to be
included in the Company's annual proxy statement.
o Periodically perform self-assessment of Audit Committee performance.
Reporting Responsibilities
The Audit Committee will:
o Regularly update the Board of Directors about Committee activities and
recommendations.
A-6
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
PHARMANETICS, INC.
P R O X Y
9401 Globe Center Drive
Morrisville, North Carolina 27560
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
May 16, 2001
The undersigned hereby appoints John P. Funkhouser and Paul T. Storey, and each
of them, as proxies, each with full power of substitution, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock and/or Series A Preferred Stock of PharmaNetics, Inc., a North Carolina
corporation (the "Company"), held of record by the undersigned on March 30,
2001, at the Annual Meeting of Shareholders to be held at 9401 Globe Center
Drive, Morrisville, North Carolina, on Wednesday, May 16, 2001, at 9:30 a.m., or
at any adjournment(s) thereof. The following proposals to be brought before the
meeting are more specifically described in the accompanying Proxy Statement.
(1) Election of Directors:
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY TO VOTE
(except as marked to the contrary) FOR ALL NOMINEES LISTED BELOW
INSTRUCTION: To withhold authority to vote for any individual nominee strike
a line through the nominee's name in the list below.
John P. Funkhouser William A. Hawkins John K. Pirotte
Stephen R. Puckett Philip R. Tracy Frances L. Tuttle
James B. Farinholt, Jr.
(2) To ratify the selection of PricewaterhouseCoopers LLP as auditors of
the Company for the fiscal year ending December 31, 2001.
[ ] VOTE FOR [ ] VOTE AGAINST [ ] ABSTAIN
(3) In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
[ ] GRANT AUTHORITY [ ] WITHHOLD AUTHORITY
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR MANAGEMENT'S NOMINEES FOR DIRECTOR LISTED ABOVE, FOR PROPOSAL 2 AND IN
THE DISCRETION OF THE PROXIES WITH RESPECT TO ANY OTHER MATTERS PROPERLY BROUGHT
BEFORE THE SHAREHOLDERS AT THE MEETING.
-------------------------------------
Signature
Please date and sign exactly as name
appears on your stock certificate.
Joint owners should each sign
personally. Trustees, custodians,
executors and others signing in a
representative capacity should
indicate the capacity in which they
sign.
Date: , 2001
--------------------------
--------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU
PLAN TO BE PRESENT AT THE MEETING. IF
YOU ATTEND THE MEET-ING, YOU CAN VOTE
EITHER IN PERSON OR BY YOUR PROXY.
--------------------------------------