UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|X| Soliciting Material Pursuant to ss.240.14a-12
CHAD THERAPEUTICS
--------------------------------------------------------------------------------
(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:
----------------------------------------------------------------------
[LOGO]
CHAD
THERAPEUTICS
August 4, 2003
Vote to Support Chad's Continued Growth
Please Sign and Return the Board's WHITE Proxy Card Today!
Dear Fellow Chad Shareholder:
We are pleased to enclose our earnings release for the first quarter of fiscal
2004. Chad reported its best revenue performance in six years, as sales
increased by 13% compared to the first quarter of fiscal 2003 to $5,669,000. Net
income increased by 26% from the same quarter a year ago. The turnaround plan
that we put into place several years ago is working.
As stated in our press release, we expect continued revenue growth in the
current fiscal year, assuming no changes in the Medicare reimbursement
structure. We believe that our strong sales, combined with our expense reduction
program, will enable Chad to generate earnings in the range of $0.13 to $0.15
for the year.
At the same time, Chad's balance sheet remains strong, with $1,431,000 in cash
and no debt at quarter's end.
Despite an overwhelming defeat last year,
dissident Monte McDowell has returned
to disrupt Chad's affairs once again
Our financial position would have been even stronger had we not been forced to
incur approximately $165,000 in additional expenses as a result of last year's
proxy contest waged by a dissident group. Unfortunately, one member of that
group, Monte McDowell, has returned to force your Company to incur additional
costs and disruption in another proxy contest at this year's annual meeting.
McDowell is attempting to gain a board seat for himself and he has indicated
that he may seek reimbursement from the Company for his own proxy fight expenses
if he wins.
We urge you to reject this second attempt by McDowell to influence and disrupt
Chad's affairs by signing and returning the Board's White proxy card today.
McDowell has indicated he will be using a gold proxy card. Do not return any
gold card or any other card you may receive from McDowell. Even a gold card
marked "Withhold" in protest will revoke an earlier-dated "For" vote for your
board. Only your latest dated proxy counts, so please make certain that your
latest card is the Board's White proxy card.
Support Chad's New Highly Qualified Director Nominee
Kathleen M. Fisher
In light of the retirement of director David Cutter, who chaired the Board's
Audit Committee, the Nominating Committee conducted an extensive search and
interview process in order to select the most highly qualified director
available. We are delighted that Kathleen M. Fisher has agreed to be nominated
to our Board and to serve as Chairperson of the Audit Committee.
Kathy's excellent credentials and strong relationships in the financial
community will be beneficial to Chad, its Board and its shareholders. She is the
Executive Vice President and Chief Financial Officer of SonicWALL, Inc., a
publicly held internet security system manufacturer. Kathy has also served as
the Chief Financial Officer of several other publicly held technology companies,
including QAD, Inc., Adept Technology, and Borland Software Corporation.
Significantly, Kathy's experience and credentials make her exceptionally
well-qualified to chair the Audit Committee. Under the Sarbanes Oxley Act of
2002 and related rules of the SEC and the American Stock Exchange, the Company
is required to have on its Audit committee a person meeting the definition of
"financial expert." Kathy clearly fills this bill.
You can vote for Kathy Fisher as well as two of our independent directors who
are up for election this year only on Chad's White proxy card. To ensure that
all three of our nominees are elected to the Board, please sign and return only
the Board's WHITE proxy card.
A QUESTION OF CREDIBILITY
Last year, McDowell was a member of the so-called Committee to Restore Chad
Shareholder Value. In its proxy contest the Committee received favorable votes
from a miniscule three tenths of one percent of the outstanding shares (only
approximately 30,000 out of over 10 million outstanding) apart from its own
shareholdings. Despite this resounding defeat, McDowell is back, claiming that
his Committee was overwhelmingly rejected by our shareholders because it decided
to solicit proxies too close to the annual meeting date. We believe that this
incredible excuse is an insult to the intelligence of our shareholders.
The fact is that the Committee filed its definitive proxy statement twelve days
before last year's meeting and had retained a professional proxy solicitation
firm to assist it in soliciting shareholder votes. Furthermore, McDowell's group
had sent out its original letter nearly a month before the meeting, so it had
communicated with our holders even before its proxy mailing. We believe that the
overwhelming vote in favor of management clearly demonstrated that our
shareholders understood that McDowell and his fellow dissidents would be a
negative influence and have an adverse impact on the performance of the Company.
We believe that McDowell's entire solicitation
- including his complaints about Chad -
lacks credibility
For example, McDowell complains about "almost $150,000" of bonuses being paid in
fiscal 2003. In fact, as any shareholder could have determined by reading Chad's
proxy statement, the total amount of bonuses actually paid was $116,000, which
included $49,000 for our VP of Sales and Marketing as an incentive package based
on sales generated-- a standard form of compensation in our industry and many
others. We believe the remaining $67,000 in bonuses paid to five company senior
officers is hardly outrageous in a year of improved operating results, and in
fact is significantly less than the aggregate pay cuts of $146,880 voluntarily
taken by two of our senior officers in 2001 and 2002 when Chad was beginning its
turnaround.
Many of McDowell's other complaints that appear in his preliminary proxy
materials distort the real situation at Chad and show an alarming lack of
familiarity with our business.
He claims that we outsource "most" of our product development and that our
products have higher capital costs than our competitors. That is simply wrong.
In fact most of our conserver product development is performed internally, not
outsourced. Furthermore our costs are not higher than our competitors. Indeed,
we believe that we are able to price our TOTAL 02 Delivery System(R) at a lower
cost than our only competitor, which is one of the largest concentrator
manufacturers in the world.
Additionally, our strategy is not to have the lowest priced product on the
market - our conservers are known for their quality, reliability and
cost-effectiveness. We are price-competitive and have regained sufficient market
share in the past two years to restore Chad's historical position as a market
leader. What is McDowell's problem with that?
Don't Be Misled by McDowell -
Chad's Operating Performance Has Continued To Improve
In order to bolster his own nomination, McDowell is trying to create the
impression that Chad does not have an effective operating plan. Don't be misled.
Our operating results have continued to improve. On an apples-to-apples basis,
factoring out a non-cash charge of $934,000 in fiscal 2003 related to the
write-off of an intangible license fee and a tax benefit in fiscal 2002 of
$995,000, our pro forma net earnings increased to $0.05 per diluted share for
fiscal 2003 from $0.02 per diluted share for fiscal 2002. These results were
achieved despite the enormous distraction and $165,000 expense (or more than
$0.01 per diluted share) of McDowell's proxy contest last year.
Twelve Months Ended
March 31,
2003 2002
------------- -------------
Reconciliation to GAAP Earnings
GAAP net earnings (loss) $ (433,000) $ 1,157,000
Non-cash charge for intangible license fee write-off 934,000 --
Income tax (benefit) -- (995,000)
------------- -------------
Pro forma net earnings
before non-cash charges and income tax benefits 501,000 162,000
Reconciliation to Diluted Earnings Per Share:
GAAP net earnings (loss) per share (0.04) 0.11
Non-cash charge for intangible license fee write-off 0.09 --
Income tax (benefit) -- (0.09)
------------- -------------
Pro forma diluted earnings per share
before non-cash charges and income tax benefits $ 0.05 $ 0.02
This earnings increase was meaningful in itself. More important, it set the
stage for more dramatic improvements thus far in fiscal 2004, with significant
gains in market share both domestically and internationally as we continue to
expand our product line and offer one of the widest arrays of conserver choices
available on the market today.
Is McDowell really aligned with your interests?
McDowell's preliminary proxy statement would have you believe that his
"significant" equity interest in Chad aligns him with the interests of our
shareholders. That is this year's version of his story. In last year's proxy
contest, one of the nominees he was urging you to support owned no shares in the
Company and one of his fellow Committee members owned no shares as well. At the
same time McDowell himself owned only 10,000 shares that he had purchased for a
total of $8,400.
Do you really believe he is a changed man just because he bought more shares?
In last year's proxy fight, McDowell had aligned himself with another dissident
shareholder who a few months earlier had been found liable by a civil jury in
federal court for committing fraud and breach of fiduciary duty in connection
with his dealings with certain limited partnerships (unrelated to Chad). That
dissident had also launched a mini-tender offer in an attempt to buy 120,000
Chad shares from other Chad holders at below-market prices. If McDowell could
align himself with this individual, do you really believe he is now aligned with
your best interests?
You should be aware that McDowell has been engaged in litigation with one of our
leading customers who provides us with orders totaling millions of dollars per
year. We are deeply concerned that if McDowell gains a seat on your Board, his
adversarial position could potentially endanger our relationship with this
customer.
McDowell's Disruptive Tactics
After his failed proxy contest last September, McDowell had all year to engage
in dialogue with us about any ideas he may have had for enhancing shareholder
value. Did he?-Absolutely not! The first time he spoke to us was in June when he
requested to meet with the Nominating Committee. This late request came after
Chad had already spent nine months considering and interviewing candidates for
the open seat on the Board.
Despite the fact that we agreed to accommodate his late request and invited him
to meet with the Nominating Committee, McDowell did not even meet with the
Committee in person - he spoke to the Committee by phone while he was on
vacation in the Bahamas. During the interview, Mr. McDowell threatened us with
another proxy contest if we declined to nominate him that, according to him,
would cost your Company $250,000.
Furthermore, when the board raised questions about certain inaccuracies in his
nominee's questionnaire that had been returned to us, he told us that he wasn't
sure that he had even reviewed the completed questionnaire. We later found out
that his questionnaire had been completed not by McDowell himself, but by
another member of his dissident group, Kevan Acord.
This type of attitude has absolutely no place in good corporate governance. If
Mr. McDowell doesn't have the time or interest to meet with the Nominating
Committee or to ensure that the Committee is provided with accurate information,
how much attention will he provide to Chad's affairs as a director? It was clear
to your Nominating Committee that McDowell was attempting to bully his way on to
the board, and didn't feel that he had to comply with the normal procedural
safeguards and requirements of the nominating process.
McDowell was rejected as a director nominee, but we followed up with a letter to
him offering to continue to meet to discuss any ideas he may have for Chad. He
never responded. The next communication we received from him was a demand for a
shareholder list and his hostile proxy statement filed with the SEC.
We don't believe that McDowell's campaign is about maximizing value. We believe
his true goal is to bully his way on to the board, cause significant disruption
and attempt to gain greater and greater influence over your Company. Consider
the following language that appears in McDowell's own preliminary proxy
statement:
"In the event that the Nominee is elected, the Nominee's minority
representation could potentially have an adverse effect on the
effectiveness of the Chad Board.......it is possible that the minority
representation could cause dissension among the Chad Board and a loss of
collegiality among board members, leading to a less effective Board....."
Chad's Board and Management Team
Are Dedicated to Enhancing Shareholder Value
Our officers and directors share a single overriding goal: to enhance value for
all Chad shareholders. This is the primary consideration in all of our policies,
strategic plans, and day to day decisions in running the Company. In pursuing
that goal, we have laid the groundwork for a bright future for our Company and
its shareholders.
We continue to believe that Chad's improving performance will ultimately result
in a substantially higher market price for our shareholders. To further that
end, in the past year we retained Neil Berkman Associates, an investor relations
firm, to enhance Chad's visibility in the investment community. We believe that
as Chad's growth story continues to gain momentum in the marketplace, our
shareholders will be rewarded for their patience.
We would like to thank all of our shareholders for their continued patience,
consideration, and support.
On Behalf of the Board of Directors
/s/ Earl L Yager /s/ Thomas E. Jones
Earl L Yager Thomas E. Jones
President Chief Executive Officer
--------------------------------------------------------------------------------
Please sign and return the Board of Directors WHITE Proxy Card today. If you
hold your shares in street-name, please return your WHITE proxy in the envelope
provided by your brokerage firm or bank. Do not return any proxy card to
McDowell, since it may revoke an earlier dated card sent to Chad. Remember: Only
your latest dated proxy counts.
If you have any questions about the issues in this proxy contest, please call
Earl Yager at Chad, 818-882-0883, ext. 223. For assistance in voting your
shares, please contact our proxy solicitor, Morrow & Co., Inc., at 800-607-0088.
--------------------------------------------------------------------------------
Safe Harbor Statements under the Private Securities Litigation Reform Act of
1995
The foregoing statements regarding prospects for future earnings and revenues,
future sales trends for the OXYMATIC 400 series and CYPRESS conservers and the
introduction of products under development are forward-looking statements that
involve certain risks and uncertainties. A number of important factors could
cause actual results to differ materially from those contemplated by such
forward-looking statements. These include the loss of one or more major
customers, increased competition, the introduction of new products with
perceived competitive advantages over the OXYMATIC 400 series and CYPRESS
conservers, changes or proposed changes in health care reimbursement which
affect home care providers and CHAD's ability to anticipate and respond to
technological and economic changes in the home oxygen market. Moreover, the
success of the OXYMATIC 400 series and CYPRESS conservers and products under
development will depend on their efficacy, reliability and the health care
community's perception of the products' capabilities and benefits, the degree of
acceptance the products achieve among home care providers and, with respect to
products under development, obtaining timely regulatory approval. Additional
factors that could cause actual results to differ materially from those
contemplated in this letter can be found in the Company's annual and quarterly
reports filed with the Securities and Exchange Commission under the caption
"Outlook: Issues and Risks."
--------------------------------------------------------------------------------
Please sign, date and return the enclosed Board of Directors WHITE proxy card
today. If you have already returned a card to McDowell, you have every right to
revoke your vote by signing and returning a later dated WHITE proxy card in the
envelope provided. Only your latest dated proxy counts.
If you hold your shares in street-name, please return your WHITE proxy card in
the envelope provided by your brokerage firm or bank.
To discuss the issues in this proxy contest, please call Earl Yager at Chad
Therapeutics (818) 882-0883, ext. 223. For assistance in voting your WHITE proxy
card, please call our proxy solicitor, Morrow & Co., Inc., at (800) 607-0088.
--------------------------------------------------------------------------------
[LOGO] 21622 PLUMMER STREET
THERAPEUTICS CHATSWORTH, CA 91311
THE AMBULATORY O2 SPECIALISTS! TOLL FREE: 800.432.8870
PHONE: 818.882.0883
MAIN FAX: 818.882.1809
FOR IMMEDIATE RELEASE
COMPANY CONTACT: INVESTOR CONTACT:
EARL L. YAGER NEIL BERKMAN ASSOCIATES
PRESIDENT (310) 277 - 5162
WWW.CHADTHERAPEUTICS.COM INFO@BERKMANASSOCIATES.COM
CHAD Therapeutics Reports Improved
First Quarter Revenue and Earnings
CHATSWORTH, California, July 28, 2003 . . . CHAD Therapeutics, Inc.
(ASE:CTU), a producer and distributor of oxygen conserving devices and oxygen
systems for pulmonary patients who need supplementary oxygen, today announced
operating results for the first quarter of fiscal 2004.
For the three months ended June 30, 2003, revenue increased 13% to
$5,669,000 from $5,022,000 for the first quarter of fiscal 2003. Net earnings
for the first quarter of fiscal 2004 increased 26% to $224,000, or $0.02 per
diluted share, from $178,000, or $0.02 per diluted share, for the first quarter
of fiscal 2003.
Operations Review
"CHAD's best quarterly revenue performance in six years is clear evidence
that our growth strategy is working," said Thomas E. Jones, Chief Executive
Officer. "Revenue continued to be driven by domestic sales of oxygen conservers,
which increased 21% over the same quarter last year. International revenue
increased by 9% over the prior year's quarter, also primarily the result of
higher conserver sales. We continue to gain market share in the domestic
conserver market and have begun to expand our position internationally, which we
attribute to the success of our strategy to offer the widest array of choices in
conserver products. Our OXYMATIC(R) 400 Series electronic conservers and
CYPRESS(TM) OXYPneumatic(R) conservers provide a cost-effective choice of
solutions for homecare providers to satisfy individual patient requirements."
Jones continued, "We are encouraged by the strong performance of our
conserver line and continue to look for opportunities to expand these product
offerings. We are developing additional models to fill specific requirements in
both the domestic and international markets. In addition, we are making progress
with development programs related to the technologies we licensed earlier this
year from AirMatrix Technologies, Inc. and ACOBA, LLC. These technologies will
help us expand our home oxygen product lines and potentially allow us to enter
the high-growth sleep disorder market. It is especially encouraging to note that
first quarter earnings rose despite a $60,000 increase in research and
development expenses to support these important product development efforts.
"The foundation of our strategic growth plan has been the restoration of
CHAD's traditional leadership position in the conserver market. We expect to
make continued progress in this area throughout the current fiscal year. We also
are moving forward with the second element of our strategic plan, which involves
CHAD's entry into related markets with significant growth potential."
(more)
CHAD, OXYMATIC, OXYMIZER, OXYLITE, AND TOTAL O2 ARE REGISTERED TRADEMARKS OF
CHAD THERAPEUTICS, INC.
ISO 9001 CERTIFIED COMPANY
WWW.CHADTHERAPEUTICS.COM
CHAD Therapeutics Reports First Quarter Results
July 25, 2003
Page Two
Outlook for Growth
Jones added, "We believe the growth we are generating in the conserver
market will provide the basis for continued positive revenue comparisons in
fiscal 2004, assuming no changes in the Medicare reimbursement structure. In
addition, certain selling, general and administrative expenses are expected to
be reduced by approximately $500,000 during the balance of fiscal 2004. If
current sales and expense trends continue, we currently expect CHAD to generate
net earnings of between $1,300,000 and $1,500,000, or $0.13 to $0.15 per diluted
share, for the fiscal year ending March 31, 2004." For fiscal 2003, CHAD
reported a net loss of $433,000, or $0.04 per diluted share.
Operating Loss Carryforwards
At June 30, 2003, the company had fully utilized its net operating loss
carrybacks and had approximately $111,000 and $2,405,000 in Federal and
California net operating loss carryforwards, respectively, available to offset
future taxable income. In September of 2002, the State of California enacted
legislation that suspended the utilization of net operating loss carryforwards
during tax years starting in 2002 and 2003 effective retroactively to January 1,
2002. As a result, CHAD will be unable to use its California net operating loss
carry forwards until the tax year beginning April 1, 2004.
About CHAD Therapeutics
CHAD Therapeutics, Inc. is in the business of developing, producing and
marketing respiratory care devices designed to improve the efficiency of oxygen
delivery systems for home health care and hospital treatment of patients
suffering from pulmonary diseases. For more information, visit
www.CHADtherapeutics.com.
Safe Harbor Statements under the Private Securities Litigation Reform Act of
1995.
The foregoing statements regarding prospects for future earnings and
revenues, future sales trends for the OXYMATIC 400 series and CYPRESS conservers
and the introduction of products under development are forward-looking
statements that involve certain risks and uncertainties. A number of important
factors could cause actual results to differ materially from those contemplated
by such forward-looking statements. These include the loss of one or more major
customers, increased competition, the introduction of new products with
perceived competitive advantages over the OXYMATIC 400 series and CYPRESS
conservers, changes or proposed changes in health care reimbursement which
affect home care providers and CHAD's ability to anticipate and respond to
technological and economic changes in the home oxygen market. Moreover, the
success of the OXYMATIC 400 series and CYPRESS conservers and products under
development will depend on their efficacy, reliability and the health care
community's perception of the products' capabilities and benefits, the degree of
acceptance the products achieve among homecare providers and, with respect to
products under development, obtaining timely regulatory approval. Additional
factors that could cause actual results to differ materially from those
contemplated in this press release can be found in the Company's annual and
quarterly reports filed with the Securities and Exchange Commission under the
caption "Outlook: Issues and Risks."
(tables attached)
#3362
CHAD THERAPEUTICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
June 30,
----------------------------
2003 2002
----------- -----------
Net sales $ 5,669,000 $ 5,022,000
Cost of sales 3,151,000 2,882,000
----------- -----------
Gross profit 2,518,000 2,140,000
Costs and expenses:
Selling, general and administrative 1,965,000 1,700,000
Research and development 323,000 263,000
----------- -----------
Total costs and expenses 2,288,000 1,963,000
Operating income 230,000 177,000
Interest income 5,000 4,000
----------- -----------
Earnings before income taxes 235,000 181,000
Income tax expense 11,000 3,000
----------- -----------
Net earnings $ 224,000 $ 178,000
=========== ===========
Basic earnings per share $ 0.02 $ 0.02
=========== ===========
Diluted earnings per share $ 0.02 $ 0.02
=========== ===========
Weighted shares outstanding:
Basic 10,076,000 10,068,000
=========== ===========
Diluted 10,254,000 10,429,000
=========== ===========
CHAD THEREAPEUTICS, INC.
CONDENSED BALANCE SHEETS
(unaudited)
June 30, June 30,
2003 2002
------------ ------------
Assets
Current assets:
Cash $ 1,431,000 $ 549,000
Accounts receivable, net 2,946,000 2,619,000
Income taxes refundable 4,000 995,000
Inventories, net 5,802,000 5,509,000
Prepaid expenses 455,000 323,000
------------ ------------
Total current assets 10,638,000 9,995,000
Property, plant and equipment, net 1,158,000 1,548,000
Other assets 735,000 1,184,000
------------ ------------
Total Assets $ 12,531,000 $ 12,727,000
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 801,000 $ 815,000
Accrued expenses 1,397,000 1,345,000
Income taxes payable 9,000 7,000
------------ ------------
Total current liabilities 2,207,000 2,167,000
Shareholders' equity:
Common shares, no par value, authorized
40,000,000 shares, 10,076,000 and
10,059,000 issued and outstanding 13,257,000 13,106,000
Retained earnings (accumulated deficit) (2,933,000) (2,546,000)
------------ ------------
Net shareholders' equity 10,324,000 10,560,000
------------ ------------
Total Liabilities and Shareholders' Equity $ 12,531,000 $ 12,727,000
============ ============
CHAD THERAPEUTICS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas E. Jones and Earl L. Yager, and
either of them, as Proxyholders, with the full power of substitution, and hereby
authorizes them to represent and vote, as designated on the reverse, all the
shares of voting capital stock of Chad Therapeutics, Inc. held of record by the
undersigned at the close of business on July 14, 2003 (and in the case of item 1
to cumulate and allocate said votes for directors in his discretion), at the
Annual Meeting of Shareholders to be held on September 9, 2003, and at any and
all adjournment(s) thereof.
The shares represented by 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 ALL THE NOMINEES FOR DIRECTOR
AND FOR APPROVAL OF PROPOSAL 2.
In their discretion the proxyholders are authorized to vote upon such
other business as may properly come before the meeting.
(Continued and to be signed on the reverse side)
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
--------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS:
Nominees:
Philip Wolfstein
James M. Brophy
Kathleen M. Fisher
FOR ALL
NOMINEES WITHHELD
|_| |_|
For, except vote withheld from the following nominee(s):
________________________________________________________
2. Proposal to ratify the appointment of KPMG LLP as independent Certified
Accountants and Auditors.
FOR AGAINST ABSTAIN
|_| |_| |_|
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
________________________________________________________________________________
Dated
________________________________________________________________________________
(Signature)
________________________________________________________________________________
(Signature)
________________________________________________________________________________
(Title)
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.