INTEGRAMED AMERICA, INC.
One Manhattanville Road
Purchase, New York 10577
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held June 10, 1997
To the Stockholders:
Notice is hereby given that the Annual Meeting of the Stockholders of
IntegraMed America, Inc. (the "Company") will be held on June 10, 1997, at 10:00
a.m. local time at the Company's headquarters, One Manhattanville Road,
Purchase, New York 10577. The meeting is called for the following purposes:
1. Election of six directors for a term of one year;
2. Approval and ratification of an amendment to the Company's 1992
Incentive and Non-Incentive Stock Option Plan;
3. Approval and ratification of the appointment of Price Waterhouse
LLP as the independent accountants of the Company; and
4. Consideration of and action upon such other matters as may
properly come before the meeting or any adjournment or
adjournments thereof.
The close of business on April 25, 1997 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the meeting.
All stockholders are cordially invited to attend the meeting. Whether
or not you expect to attend, you are respectfully requested by the Board of
Directors to sign, date and return the enclosed proxy promptly. Stockholders who
execute proxies retain the right to revoke them at any time prior to the voting
thereof. A return envelope which requires no postage if mailed in the United
States is enclosed for your convenience.
By Order of the Board of Directors,
/s/ Dwight P. Ryan
------------------
Dwight P. Ryan
Secretary
Dated: May 5, 1997
INTEGRAMED AMERICA, INC.
One Manhattanville Road
Purchase, New York 10577
(914) 253-8000
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of IntegraMed America, Inc., a Delaware
corporation (the "Company"), for the Annual Meeting of Stockholders to be held
at the Company's headquarters, One Manhattanville Road, Purchase, New York 10577
on June 10, 1997, at 10:00 a.m. and for any adjournment or adjournments thereof,
for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. Any stockholder giving such a proxy has the power to revoke it at
any time before it is voted. Written notice of such revocation should be
forwarded directly to the Corporate Secretary of the Company, at the above
stated address. Attendance at the meeting will not have the effect of revoking
the proxy unless such written notice is given or the stockholder votes by ballot
at the meeting.
If the enclosed proxy is properly executed and returned, the shares
represented thereby will be voted in accordance with the directions thereon and
otherwise in accordance with the judgment of the persons designated as proxies.
Any proxy on which no direction is specified will be voted in favor of the
actions described in this Proxy Statement, including the election of the
nominees set forth under the caption "Election of Directors," the approval and
ratification of an amendment to the Company's 1992 Incentive and Non-Incentive
Stock Option Plan (the "Plan"), and the approval and ratification of the
appointment of Price Waterhouse LLP as the independent accountants of the
Company.
The approximate date on which this Proxy Statement and the accompanying
form of proxy will first be mailed or given to the Company's stockholders is May
5, 1997.
Your vote is important. Accordingly, you are urged to sign and return
the accompanying proxy card whether or not you plan to attend the meeting. If
you do attend, you may vote by ballot at the meeting, thereby canceling any
proxy previously given.
VOTING SECURITIES
Holders of shares of Common Stock, par value $.01 per share (the
"Common Stock") and Series A Cumulative Convertible Preferred Stock (the
"Preferred Stock") of record as of the close of business on April 25, 1997, are
entitled to notice of and to vote at the meeting on all matters. On the record
date there were issued and outstanding 9,587,640 shares of Common Stock and
165,644 shares of Preferred Stock entitled to vote on all matters to be acted
upon at the meeting. Each outstanding share is entitled to one vote upon all
matters to be acted upon at the meeting. A majority of the outstanding shares of
Common Stock and Preferred Stock entitled to vote on any matter and represented
at the meeting in person or by proxy shall constitute a quorum. Assuming a
quorum is present, (1) the affirmative vote of a plurality of the shares of
Common Stock and Preferred Stock so represented and entitled to vote is
necessary to elect the directors and (2) the affirmative vote of a majority of
the shares of Common Stock and Preferred Stock outstanding and entitled to vote,
excluding broker non-votes, is necessary to approve and ratify the amendment to
the Plan and the appointment of Price Waterhouse LLP as the independent
accountants of the Company. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. If a stockholder, present in person or by proxy, abstains on any
matter, the stockholder's shares of Common Stock and/or Preferred Stock will not
be voted on such matter. Thus, an abstention from voting on any matter has the
same legal effect as a vote "against" the matter, even though the stockholder
may interpret such action differently. Except for determining the presence or
absence of a quorum for the transaction of business, broker non-votes are not
counted for any purpose in determining whether a matter has been approved.
-1-
PRINCIPAL STOCKHOLDERS
Set forth below is information concerning stock ownership of all
persons known by the Company to own beneficially 5% or more of the shares of
Common Stock and of each director, each executive officer named under "Executive
Compensation" and all directors and executive officers of the Company as a group
based upon the number of outstanding shares of Common Stock as of March 31,
1997. For the purposes of this Proxy Statement, beneficial ownership is defined
in accordance with the rules of the Securities and Exchange Commission and
generally means the power to vote and/or to dispose of the securities regardless
of any economic interest therein.
Shares of Percent of
Common Stock Common Stock
Name and Address Owned (1) Outstanding
- - ---------------- --------- -----------
Alphi Investment Management Company
155 Pfingsten Road, Suite 360
Deerfield, IL 60013....................... 820,600(2) 8.56%
Bay Area Fertility and Gynecology
Medical Group
5601 Norris Canyon Road, Suite 300
San Ramon, CA 94583....................... 333,333(3) 3.48%
FMR Corp.
82 Devonshire Street
Boston, MA 02109.......................... 805,500(4) 8.40%
Morris Notelovitz
2801 N.W. 58th Blvd.
Gainesville, FL 32606..................... 666,666(5) 6.95%
Gerardo Canet ............................... 258,799(6)(7) 2.64%
Peter Callan................................. 17,500(6) 0.18%
Lois Dugan................................... 32,125(6) 0.33%
Jay Higham................................... 27,000(6) 0.28%
Donald S. Wood, Ph.D......................... 34,300(6) 0.36%
Vicki L. Baldwin............................. 53,132(6) 0.55%
Elliott Hillback, Jr......................... 21,750(6)(8) 0.23%
Sarason D. Liebler........................... 38,200(6) 0.40%
Patricia M. McShane, M.D..................... 29,110(6) 0.30%
Lawrence Stuesser ........................... 81,750(6)(9) 0.85%
All executive officers and directors
as a group (12 persons) ................... 622,255(10) 6.21%
(1) As of March 31, 1997, there were 165,644 shares of Preferred Stock
outstanding of which 150,000 shares, or 91.0%, were owned by Barry Blank
(Box 32056, Phoenix, AZ 85064) as reported on his Schedule 13D filed with
the Securities and Exchange Commission (the "Commission") on June 6, 1994.
Upon conversion of each share of Preferred Stock owned by Mr. Blank into
1.60 shares of Common Stock, he would own 2.5% of the Company's
outstanding Common Stock.
-2-
(2) As reported on its Schedule 13G filed with the Commission on February 11,
1997, Alphi Investment Management Company ("AIMCO") may be deemed to be
beneficial owners of these shares which include 666,800 shares, or 6.95%,
of the Company's Common Stock, owned by Alphi Fund L.P. of which AIMCO is
the general partner.
(3) Represents shares issued by the Company, as part consideration, to acquire
the exclusive right to manage the Bay Area Fertility and Gynecology
Medical Group, Inc.
(4) As reported on their Schedule 13G filed with the Commission on February
14, 1997, FMR Corp. and its wholly owned subsidiary, Fidelity Management &
Research Company, may be deemed to be beneficial owners of these shares,
which include 605,500 shares, or 6.32%, of the Company's outstanding
Common Stock, owned by Fidelity VIP Equity-Income Fund. In addition, as
reported on such Schedule 13G, Edward C. Johnson, III, Chairman of FMR
Corp., and certain Johnson family members through their ownership of
voting Common Stock and the execution of the shareholders' voting
agreement, form a controlling group with respect to FMR Corp., and, as
such, may be deemed to be beneficial owners of such shares of Common
Stock.
(5) Represents shares issued by the Company, as part consideration, pursuant
to its acquisition of the outstanding stock of three related Florida
corporations in June 1996. Gerardo Canet has the proxy right to vote these
shares through September 30, 1997.
(6) Includes (or consists of) currently exercisable options to purchase Common
Stock as follows: Gerardo Canet -- 208,799; Peter Callan -- 17,500; Lois
Dugan -- 28,125; Jay Higham -- 25,000; Patricia McShane -- 29,110; Donald
Wood -- 32,300; Elliott Hillback, Jr. -- 21,750; Lawrence Stuesser --
21,750; and Sarason Liebler -- 21,750.
(7) Excludes 666,666 shares of Common Stock owned by Morris Notelovitz, M.D.,
Ph.D. for which Gerardo Canet has the proxy right to vote through
September 30, 1997.
(8) Excludes 136,612 shares of Common Stock owned by Integrated Genetics, a
division of Genzyme Corporation, that Elliott D. Hillback, Jr., as a
Senior Vice President of Genzyme Corp., may be deemed to beneficially own.
(9) Excludes 31,600 shares of Common Stock held by family members of Lawrence
Stuesser for which Mr. Stuesser had disclaimed beneficial ownership.
(10) Includes currently exercisable options to purchase 434,673 shares of
Common Stock. If all of the shares described in notes (7), (8) and (9)
were included, the number of shares owned would be 1,457,133 shares and
the percentage ownership, would be 14.54%. Includes 4,000 shares of Common
Stock and currently exercisable options to purchase 28,125 shares of
Common Stock held by Lois Dugan, who resigned as an executive officer
effective April 16, 1997.
ELECTION OF DIRECTORS
At the meeting, six directors will be elected by the stockholders to
serve until the next Annual Meeting of Stockholders or until their successors
are elected and shall qualify. Each of the nominees is currently a director of
the Company. Management recommends that the persons named below be elected as
directors of the Company and it is intended that the accompanying proxy will be
voted for the election as directors of the six persons named below, unless the
proxy contains contrary instructions. The Company has no reason to believe that
any of the nominees will not be a candidate or will be unable to serve. However,
in the event that any nominee should become unable or unwilling to serve as a
director, the persons named in the proxy have advised that they will vote for
the election of such person or persons as shall be designated by management.
-3-
The following sets forth the names and ages of the six nominees for
election to the Board of Directors, their respective principal occupations or
employments during the past five years and the period during which each has
served as a director of the Company.
GERARDO CANET (51) became President, Chief Executive Officer and a
director of the Company effective February 14, 1994 and the Chairman of the
Board effective April 19, 1994. For approximately five years prior to joining
the Company, Mr. Canet held various executive management positions with Curative
Technologies, Inc., most recently as Executive Vice President and President of
its Wound Care Business Unit. From 1979 to 1989, Mr. Canet held various
management positions with Kimberly Quality Care, Inc. (and a predecessor
company), a provider of home health care services, most recently from 1987 to
1989 as Executive Vice President, Chief Operating Officer and a director of
Kimberly Quality Care, Inc. Mr. Canet earned an M.B.A. from Suffolk University
and a B.A. in Economics from Tufts University. Mr. Canet has been a director of
Curative Technologies, Inc. since July 1991.
VICKI L. BALDWIN (51) is the mother of two children conceived at the
Monash IVF Program in Melbourne, Australia, and a founder of the Company. Ms.
Baldwin is currently a director of the Company and has been since its inception
and was an executive officer from its inception through December 1995. Prior to
founding the Company, Ms. Baldwin worked as a management consultant for McKinsey
and Company, Inc. in Australia. Ms. Baldwin has recently joined Oxford Health
Plans, Inc. where she is focusing on an initiative aimed at implementing a new
model for developing and financing specialty women's health services. Ms.
Baldwin earned a B.A. in Biology and Chemistry with High Honors from the
University of Delaware, received an M.Ed. from the University of Houston, and an
M.B.A. in International Business and Finance from New York University. Ms.
Baldwin is a past president of Women in Management and serves on the Board of
Directors of RESOLVE, Inc., the national, nonprofit organization serving the
needs of infertile couples.
ELLIOTT D. HILLBACK, JR. (52) became a director of the Company in June
1992. Mr. Hillback is a Senior Vice President of Genzyme Corp., a position he
has held since July 1990, and from July 1991 to September 1996 he has also
served as the President and Chief Executive Officer of Genzyme Genetics, a
division of Genzyme Corp. See "Certain Relationships and Related Transactions."
Most recently, Mr. Hillback was elected a director for Aquila
Biopharmaceuticals, Inc. Mr. Hillback has a B.A. from Cornell University and an
M.B.A. from Harvard Business School.
SARASON D. LIEBLER (60) became a director of the Company in August
1994. Mr. Liebler is President of SDL Consultants, a privately-owned consulting
firm engaged in rendering general business advice. From February 1985 to
December 1, 1991, Mr. Liebler served as Chief Executive Officer of American
Equine Products, Inc. and served as a director of that company from February
1985 to November 1992. American Equine Products, Inc., manufactured and
distributed horse health care products and was a franchisor of retail pet stores
and a distributor of pet products. American Equine Products, Inc. filed for
bankruptcy in September 1991. During the past 20 years, Mr. Liebler has been a
director and/or officer of a number of companies in the fields of home health
care, clinical diagnostics, high density optical storage and sporting goods.
PATRICIA M. MCSHANE, M.D. (48) became a director of the Company in
March 1997 and was a Vice President of the Company in charge of medical affairs
from September 1992 through February 28, 1997. Since May 1988, Dr. McShane has
been, and currently is, the Medical Director of the Boston Network Site where
she is engaged in the practice of medicine, specializing in infertility. For
four years prior thereto, Dr. McShane was the Director of the IVF program at
Brigham and Women's Hospital in Boston. Dr. McShane has held various positions
at Harvard University School of Medicine, including Assistant Professor of
Obstetrics and Gynecology. Dr. McShane graduated from Tufts University School of
Medicine and is board certified in reproductive endocrinology and infertility.
LAWRENCE J. STUESSER (54) became a director of the Company in April
1994. Since June 1996, Mr. Stuesser has held the position of President and CEO
of Computer People Inc., the U.S. subsidiary of London-based Delphi Group. From
July 1993 to May 1996, he was a private investor and business consultant. Mr.
Stuesser was elected Chairman of the Board in July 1995 and has been a director
of Curative Health Services, Inc. since 1993. Mr. Stuesser was Chief Executive
Officer of Kimberly Quality Care, Inc. from 1986 to July 1993, at which time
that Company was acquired by the Olsten Company. Mr. Stuesser holds a B.B.A. in
accounting from St. Mary's University.
-4-
Directors are elected by the Company's stockholders at each annual
meeting or, in the case of a vacancy, are appointed by the directors then in
office, to serve until the next annual meeting or until their successors are
elected and qualified. Officers are appointed by and serve at the discretion of
the Board of Directors.
The Board of Directors of the Company held six meetings and took action
by consent four times during the fiscal year ended December 31, 1996. Each of
the directors attended at least 75% of the aggregate of all meetings of (i) the
Board of Directors and (ii) the committees thereof on which such director
served, held during the term of his directorship.
The Audit Committee consists of Messrs. Hillback, Jr., Liebler and
Stuesser. The Audit Committee met one time during the fiscal year ended December
31, 1996. The Audit Committee is authorized by the Board of Directors to review,
with the Company's independent accountants, the annual financial statements of
the Company; to review the work of, and approve non-audit services performed by,
such independent accountants; and to make annual recommendations to the Board
for the appointment of independent public accountants for the ensuing year. The
Audit Committee also reviews the effectiveness of the financial and accounting
functions, organization, operations and management of the Company.
The Compensation Committee consists of Messrs. Hillback, Jr., Liebler
and Stuesser. The Compensation Committee met two times during the fiscal year
ended December 31, 1996. The Compensation Committee reviews and recommends to
the Board of Directors the compensation and benefits of all officers of the
Company, reviews general policy matters relating to compensation and benefits of
employees of the Company, administers the issuance of stock options to the
Company's officers, employees and consultants and also has authority to grant
options to directors who are not employees of the Company.
The Company does not have a Nominating Committee.
DIRECTOR COMPENSATION
In 1996, in addition to stock option compensation discussed below,
non-employee directors of the Company received an annual retainer of $10,000, a
fee of $750 for each meeting of the Board attended and $2,500 per year for
membership on a committee of the Board and were reimbursed for expenses actually
incurred in attending meetings. Directors who are also executive officers are
not compensated for their services as directors.
Under the 1994 Outside Director Stock Purchase Plan , there are
reserved for issuance thereunder 125,000 shares of Common Stock, pursuant to
which directors who are not full-time employees of the Company may elect to
receive all or a part of their annual retainer fees, the fees payable for
attending meetings of the Board of Directors and the fees payable for serving on
Committees of the Board, in the form of shares of Common Stock rather than cash,
provided that any such election be made at least six months prior to the date
that the fees are to be paid; no such elections were made as of April 25, 1997.
On June 11, 1996, the Board of Directors granted stock options to
purchase 6,000 shares of Common Stock to each of Messrs. Hillback, Jr., Liebler,
and Stuesser, and to Ms. Vicki Baldwin, the non-employee directors, each such
option being exercisable at $3.75 per share, 50% of which shares become
exercisable in June 1997 and the balance of such shares become exercisable in
June 1998. On October 24, 1995, the Board of Directors granted stock options to
purchase 6,000 shares of Common Stock to each of Messrs. Hillback, Jr., Liebler,
and Stuesser, the non-employee directors, each such option being exercisable at
$2.56 per share, 50% of which shares became exercisable in June 1996 and the
balance of such shares become exercisable in June 1997. On November 15, 1994,
the Board of Directors granted stock options to purchase 30,000 shares of Common
Stock to each of Messrs. Hillback, Jr., Liebler and Stuesser, the non-employee
directors, each such option being exercisable at $1.25 per share, 25% of which
shares became exercisable one year from the date of the grant; thereafter the
shares become exercisable at the rate of 6.25% of the total number of shares
subject to the option every three months. New non-employee directors will be
granted options to purchase 30,000 shares of Common Stock under the 1992 Plan
and, annually upon re-election, non-employee directors will be granted options
to purchase 6,000 shares of Common Stock under the 1992 Plan.
-5-
SDL Consultants, a company owned by Sarason D. Liebler, who became a
director of the Company in August, 1994, rendered consulting services to the
Company for aggregate fees of approximately $17,000, $22,000 and $40,000 during
1996, 1995 and 1994, respectively.
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid or
accrued by the Company during the years ended December 31, 1996, 1995 and 1994
for the Company's Chief Executive Officer and for the five most highly
compensated executive officers (the "Named Executive Officers"), including three
who are no longer serving as officers of the Company, effective January 1, 1997,
February 28, 1997 and April 16, 1997, respectively.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Securities
Compensation Underlying
------------ Options
Name Year Salary ($) Bonus ($) Granted (#)
---- ---- ---------- --------- -----------
Gerardo Canet 1996 220,000 -- 120,000
President and 1995 215,000 53,750 --
Chief Executive Officer (1) 1994 189,000(1) 27,000 315,500
Peter Callan 1996 108,000 10,000 --
Vice President, 1995 41,545(1) 9,375 40,000
Central Region (1)
Lois A. Dugan 1996 120,000 -- --
Vice President, Northeast 1995 113,000 28,250 --
Region (1), (2) 1994 78,750(1) 12,495 40,000
Jay Higham 1996 125,000 -- 40,000
Vice President, Marketing 1995 110,000 19,250 --
and Development (1) 1994 27,500(1) 4,609 40,000
Patricia M. McShane, M.D. 1996 238,000(3) 29,000(3) --
Vice President, Medical 1995 173,600(3) 15,190( --
Affairs (3) 1994 203,000(3) 8,000(3) 37,293
Morris Notelovitz, M.D., Ph.D. 1996 179,000(1)(4) -- 40,000(4)
Vice President for Medical
Affairs, and Medical Director
of WMDC (4)
(1) Gerardo Canet, Peter Callan, Lois Dugan, Jay Higham and Morris
Notelovitz, M.D., Ph.D. commenced employment with the Company on
February 14, 1994, August 14, 1995, April 5, 1994, October 3, 1994 and
June 7, 1996, respectively.
(2) Lois Dugan resigned as Vice President of the Company's Northeastern
Region effective April 16, 1997.
-6-
(3) Amounts represent aggregate compensation earned for serving as an
executive officer of the Company and as the Medical Director of the
Boston Network Site. Dr. McShane resigned as a Vice President of the
Company in charge of Medical Affairs effective February 28, 1997. Dr.
McShane was elected a director of the Company in March 1997 and remains
the Medical Director at the Boston Network Site.
(4) Annual compensation amount represents aggregate compensation earned for
serving as an executive officer of the Company and as the Medical
Director of the Women's Medical & Diagnostic Center, Inc. Effective
January 1, 1997 and March 31, 1997, Dr. Notelovitz resigned as an
executive officer of the Company and as the Medical Director at the
Women's Medical & Diagnostic Center, Inc., respectively. As a result of
his resignation, the options granted to Dr. Notelovitz in 1996 were
canceled.
OPTIONS GRANTED IN 1996
Percent of
Shares Potential Realizable
Underlying Value at Assumed
Number of Total Annual Rates of Stock
Shares Options Market Price Appreciation for
Underlying Granted to Price on Option Term ($) (3)
Options Employees Exercise Date of Expiration
Name Granted in 1996 Price Grant Date 5% 10%
---- ------- ------- ----- ----- ---- ----- -----
Gerardo Canet 120,000(1) 35% $2.37 $2.34 August 1, 2006 173,715 445,073
President and Chief Executive
Officer
Jay Higham 40,000(1) 12% $2.37 $2.34 August 1, 2006 57,905 148,357
Vice President, Marketing and
Development
Morris Notelovitz, M.D., Ph.D. 40,000(2) 12% $3.75 $3.75 June 11, 2006(2) 94,333 239,061
Vice President for Medical
Affairs, and Medical Director
of WMDC
(1) Subject to stockholder approval of an amendment to increase the number
of shares of Common Stock authorized under the 1992 Plan to 1,300,000
shares, each such option being exercisable at $2.37 per share, 25% of
which shares become exercisable one year from the date of grant;
thereafter the shares become exercisable at the rate of 6.25% of the
total number of shares subject to the option every three months.
(2) Exercisable, with respect to 25% of the underlying shares, one year
from the date of grant; thereafter the options become exercisable every
three months at the rate of 6.25% of the total number of shares subject
to each such options. These options were cancelled pursuant to Dr.
Notelovitz's resignation as an executive officer of the Company in
January 1997.
(3) Potential realizable value is based on the assumption that the price
per share of Common Stock appreciates at the assumed annual rate of
stock appreciation for the option term. The assumed 5% and 10% annual
rates of appreciation (compounded annually) over the term of the option
are set forth in accordance with the rules and regulations adopted by
the Commission and do not represent the Company's estimate of stock
price appreciation.
-7-
The following table sets forth certain information concerning Named
Executive Officers who held unexercised options at December 31, 1996:
OPTION VALUES AT DECEMBER 31, 1996
Number of Value of Unexercised
Unexercised In-the-Money
Options at Options at
Shares December 31, December 31,
Acqd. 1996 1996($) (1)
Upon Value ------------------------------- ---------------------------
Name Exercise Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- -------- ------------ ----------- ------------- ----------- -------------
Gerardo Canet -- -- -- 19,001 -- 19,001
-- -- 71,249 4,750 71,249 4,750
-- -- 34,125 11,375 -- --
20,000 43,750(3) 67,500 87,500 25,312 32,812
-- -- -- 120,000(2) -- --
Peter Callan -- -- 12,500 27,500 -- --
Lois A. Dugan -- -- 15,625 9,375 -- --
-- -- 7,500 7,500 2,812 2,812
Jay Higham -- -- 12,500 12,500 6,687 6,687
-- -- 7,500 7,500 2,812 2,812
-- -- -- 40,000(2) -- --
Patricia M. -- -- 15,475 9,285 -- --
McShane, M.D. -- -- 2,707 -- 1,936 --
-- -- 6,266 6,267 2,350 2,350
Morris -- -- -- 40,000(4) -- --
Notelovitz, M.D.,
Ph.D.
(1) Based upon the closing sales price of the Common Stock on the Nasdaq
National Market on December 31, 1996 of $1.625 per share.
(2) These options were granted by the Company in August 1996 and are
subject to stockholder approval of an amendment to increase the number
of shares of Common Stock authorized under the 1992 Plan to 1,300,000
shares, each such option being exercisable at $2.37 per share, 25% of
which shares become exercisable one year from the date of grant;
thereafter the shares become exercisable at the rate of 6.25% of the
total number of shares subject to the option every three months.
(3) Based upon the closing sale price of the Common Stock on June 28, 1996
of $3.4375 per share.
(4) These options were canceled as a result of Dr. Notelovitz's resignation
as an executive officer of the Company in January 1997.
-8-
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
On February 14, 1994, Gerardo Canet entered into an employment
agreement with the Company to serve as its President and Chief Executive Officer
and was appointed as a director. Pursuant to the employment agreement, Mr. Canet
receives an annual salary of $215,000 subject to increases and in February 1994
was granted options to purchase an aggregate of 140,500 shares of Common Stock.
Under Mr. Canet's employment agreement, the Company may terminate his employment
without cause on thirty days' notice, in which event Mr. Canet will receive, as
severance pay, twelve months' salary payable monthly. In the event Mr. Canet's
employment is terminated by reason of his permanent disability or death, Mr.
Canet (or his legal representative) will receive six months' base salary
(reduced by any payments following termination received under any long-term
disability policy maintained by the Company for Mr. Canet's benefit).
The employment agreement further provides that in the event that (i)
within one year after a "Change of Control" (as defined therein) of the Company,
Mr. Canet's employment terminates or there occurs a material reduction in his
duties (other than by reason of his disability) or a material interference by
the Company's Board of Directors with the exercise of his authority, or (ii) the
Company is acquired for cash in excess of $10.00 per share of Common Stock, the
stock options granted to Mr. Canet under the agreement would accelerate and
become exercisable as of the date of such termination material reduction,
material interference, or cash acquisition, or, with respect to the incentive
options, the earliest date thereafter consistent with certain restrictions set
forth in the agreement.
Under the employment agreement, Mr. Canet has agreed not to compete
with the Company while employed by the Company and for a period of one year
thereafter.
--------------
The Company is a party to a Change in Control Severance Agreement with
each of Mr. Canet and Dwight P. Ryan, Vice President and Chief Financial Officer
of the Company. Both Change in Control Severance Agreements were entered into in
August 1994.
The Company is also party to Executive Retention Agreements with each
of Jay Higham and Donald Wood, Vice Presidents of the Company, entered into in
March 1995 and with Peter Callan, Vice President of the Company, entered into in
September 1995 and Glenn Watkins, Vice President of the Company, entered into in
February 1997.
The Change in Control Severance Agreements and the Key Executive
Retention Agreements (together referred to herein as the "Agreements") provide
for certain severance payments and benefits to the named executives in the event
of a termination of their employment, either by the Company without cause, or by
the executive for "Good Reason" (as defined below), at any time within eighteen
(18) months following a "Change in Control" (as defined below) of the Company
(any such termination, a "Qualifying Termination"). More specifically, the
Agreements provide the named executives with one additional year of salary,
bonus (if applicable), and benefits (or equivalent), more than he or she would
previously have been entitled to receive upon a termination without cause (or,
additionally, in the case of Mr. Canet, certain terminations by Mr. Canet for
Good Reason which would be deemed equivalent to a termination without cause
under his current employment agreement). Accordingly, pursuant to the
Agreements, in the event of a Qualifying Termination of the respective
executive, Mr. Canet's severance has been increased to two years (from the one
year severance provision which was contained in his employment agreement with
the Company) and Mr. Ryan and the four Vice Presidents will be paid one year's
severance (Mr. Ryan and the Vice Presidents not previously having been a party
to a severance agreement with the Company). Pursuant to the terms of the
Agreements, all incentive options granted to the respective executive would
become fully vested upon a Qualifying Termination, subject to certain terms and
conditions. Also, pursuant to the Agreements, the Company would be required to
pay each respective executive for all reasonable fees and expenses incurred by
the respective executive in litigating his or her rights, thereunder, to the
extent the executive is successful in any such litigation.
-9-
"Change in Control" under the Agreements means either: (i) any one or
more changes in the aggregate composition of the Company's Board of Directors as
a result of which Mr. Canet and the other individuals constituting the Board of
Directors as of July 26, 1994 (the "Incumbent Board"), cease to constitute a
majority of the Board of Directors, provided, however, that any individual
elected to the Board by, or nominated for election by, a majority of the
then-current Incumbent Board (except if such person assumes office by reason of
an actual or threatened election contest) is deemed to be a member of the
then-current Incumbent Board; or (ii) the closing of the cash acquisition in the
event the Company is acquired for cash in excess of $10.00 per share of Common
Stock, except in either case (i) or (ii) if the executive is or was a member of
the Board and approved such event in writing or by vote at a meeting of the
Board.
"Good Reason" under the Agreements consists of any of the following
grounds based on which the named executive terminates his or her own employment
within eighteen (18) months following a Change in Control of the Company: (i) a
material reduction in the Executive's duties, title(s) or offices, or a material
interference with his or her authority or status by the Board of Directors; (ii)
a relocation of the Company's principal executive offices to a location at least
fifty (50) miles from the Company's current offices in Purchase, New York; (iii)
in the case of Mr. Canet, a material breach of or default by the Company under
his employment agreement; (iv) in the case of Mr. Ryan, or any of the Vice
Presidents, in the event Mr. Canet's employment as President and Chief Executive
Officer of the Company is terminated (other than due to the death or permanent
disability of Mr. Canet) within the eighteen (18) month period following a
Change in Control by either the Company (other than for cause) or Mr. Canet for
good Reason; (v) if the executive's total salary and cash bonus opportunities
for a fiscal year (which includes any portion of the eighteen-month period
following a Change in Control) are less than 90% of the total salary and cash
bonus compensation opportunities made available to the executive in the then
most recently completed fiscal year; (vi) the failure of the Company to continue
in effect any material benefits or perquisites or insurance plans in which the
executive was participating unless substituted for with substantially similar
benefits, or in the event the Company takes actions which would adversely affect
the executive's participation in, or materially reduce the executive's benefits
under, such plans, or deprive the executive of a material fringe benefit; (vii)
the Company (either in one transaction or a series of related transactions)
sells or otherwise disposes of, not in the ordinary course of business, assets
or earning power aggregating more than 30% of the assets or earning power of the
Company (or the Company and its subsidiaries), unless the executive is or was a
member of the Board and approved any of the foregoing either in writing or by
vote at a meeting of the Board; (viii) a material breach of or default by the
Company under the Agreements which is not cured by the Company within thirty
days after its receipt or prior written notice thereof from the executive; or
(ix) a purported termination for cause by the Company of the executive's
employment within the eighteen (18) month period following a Change in Control
which is not effected in compliance with certain procedural requirements (such
as notice and an opportunity for the executive to be heard, together with his
counsel, before the Board).
-10-
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), requires the Company's executive officers, directors and
persons who beneficially own more than 10% of a registered class of the
Company's equity securities to file with the Commission initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Such executive officers, directors, and greater than
10% beneficial owners are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms filed by such reporting persons.
Based solely on the Company's review of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that the required filings applicable to the Company's executive
officers, and greater than 10% beneficial owners were made for the year ended
December 31, 1996 and were timely filed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Company's acquisition of the Women's Medical &
Diagnostic Center ("WMDC") in June 1996, Morris Notelovitz, M.D., Ph.D. became a
member of the Company's Board of Directors, and under two long term employment
agreements (the "Employment Agreements"), one being with the Company and the
other with WMDC, Dr. Notelovitz agreed to serve as Vice President for Medical
Affairs and Medical Director of WMDC and agreed to provide medical services for
WMDC, as defined, respectively. Effective January 1, 1997, Dr. Notelovitz
resigned from his position as a director of the Company and terminated the
Employment Agreements (medical services under the Employment Agreement with WMDC
will be terminated effective March 31, 1997). At March 31, 1996, Dr. Notelovitz
was a greater than 5% shareholder of the Company's outstanding Common Stock.
Dr. Patricia M. McShane, became a director of the Company in March 1997
and was a Vice President of the Company in charge of medical affairs from
September 1992 through February 28, 1997. Since May 1988, Dr. McShane has been,
and currently is, the Medical Director of the Boston Network Site where she is
engaged in the practice of medicine, specializing in infertility. Dr. McShane's
aggregate compensation earned in 1996 for serving as an executive officer of the
Company and as the Medical Director of the Boston Network Site was $267,000.
SDL Consultants, a company owned by Sarason D. Liebler, a Company
director, rendered consulting services to the Company during 1996, 1995 and 1994
for aggregate fees of approximately $17,000, $22,000 and $40,000, respectively.
Under its joint development program for genetic testing with Genzyme
Genetics ("GG"), the Company funded approximately $56,000 and $134,000 in 1996
and 1995, respectively. GG and the Company mutually agreed to terminate the
project effective December 31, 1996. Elliott D. Hillback, Jr., a director of the
Company, is Senior Vice President of Genzyme Corporation.
-11-
APPROVAL AND RATIFICATION OF AN AMENDMENT TO THE
1992 INCENTIVE AND NON-INCENTIVE STOCK OPTION PLAN
The 1992 Incentive and Non-Incentive Stock Option Plan (the "Plan") was
adopted by the Board of Directors and stockholders of the Company in June 1992.
The Board of Directors of the Company has adopted and recommends to the
stockholders approval of an amendment to the Plan to increase the number of
shares of Common Stock reserved for issuance upon exercise of options granted or
to be granted under the Plan from 850,000 to 1.3 million shares. The proposed
amendment to the Plan is described below.
Purpose
The purpose of the Plan is to enable the Company to grant options to
selected employees, directors, consultants, agents, independent contractors and
other persons so as to further the growth and development of the Company, its
direct and indirect subsidiaries and the entities with which the Company
collaborates to deliver services ("Collaborating Entities"). The grant of
options by the Company is intended to encourage such selected employees,
directors, consultants, agents, independent contractors and other persons who
contribute and are expected to contribute materially to the Company's success to
obtain a proprietary interest in the Company through ownership of its stock,
thereby providing such persons with an added incentive to promote the best
interests of the Company and affording the Company a means of attracting persons
of outstanding ability.
Common Stock Subject to the Plan
Under the Plan, 850,000 shares of Common Stock of the Company are
currently reserved for issuance upon exercise of options granted thereunder. The
amendment presently before the stockholders, if approved, will increase the
number of shares of Common Stock issuable under the Plan to an aggregate of 1.3
million shares.
At April 1, 1997, options to purchase an aggregate of 1,000,837 shares
of Common Stock were outstanding under the Plan at exercise prices ranging from
$0.0625 per share to $3.75 per share.
Grant of Options
Under the Plan, incentive stock options ("Incentive Stock Options"),
qualifying under Section 422 of the Internal Revenue Code of 1986, as amended
("the "Code"), may be granted to employees (including officers) of the Company
and/or any of its subsidiaries, and non-incentive (or "non-qualified") stock
options ("Non-Incentive Stock Options," together with Incentive Stock Options,
hereinafter "Stock Options") may be granted to employees, directors,
consultants, agents, independent contractors and such other persons as the
Incentive and Non-Incentive Stock Option Plan Committee (the "Committee") of the
Board of Directors determines will contribute to the Company's success. The
Committee, which consists of two or more directors appointed by the Board of
Directors who themselves are not eligible for discretionary grants of Stock
Options, selects the optionees under the Plan and determines (i) whether the
respective Stock Option is to be a Non-Incentive Stock Option or an Incentive
Stock Option, (ii) the number of shares of Common Stock purchasable under the
option, (iii) the exercise price, which cannot be less than 100% of the fair
market value of the Common Stock on the date of grant with respect to Incentive
Stock Options (110% of fair market value in the case of an Incentive Stock
Option granted to an owner of stock possessing more than 10% of the total voting
power of all classes of stock of the Company (a "10% Owner")), (iv) the time or
times when the Stock Option becomes exercisable, and (v) the term of the option
(not to exceed ten years). Incentive Stock Options are not exercisable prior to
one year from the date of grant. The fair market value, determined as of the
date the option is granted, of shares exercisable for the first time by the
holder of an Incentive Stock Option may not exceed $100,000 in any calendar
year.
-12-
Exercise of Options
All options are exercisable during the optionee's lifetime only by the
optionee and only while the optionee is an employee, director, consultant,
agent, independent contractor or otherwise employed by or engaged in performing
services for the Company or a subsidiary, either directly or through a
Collaborating Entity, and for a period of three months thereafter, except where
termination of employment or engagement is due to death or disability. In the
event of death or disability, the option is exercisable by the optionee or the
optionee's executor or administrator within one year from the date of death or
termination of employment by reason of such disability, only to the extent the
option would be exercisable by the optionee as at such date. No option is
transferable other than by will or the laws of descent and distribution.
Options are exercisable by payment in cash to the Company, or a check
to its order, of the full purchase price for the shares of Common Stock to be
purchased, plus the amount, if any, required for withholding taxes in connection
with such exercise (the "Exercise Payment"); provided, however, that with the
consent of the Committee or such officer of the Company as may be authorized by
the Committee from time to time to give such consent, the Exercise Payment may
be paid by the surrender of Common Stock owned by the person exercising the
option and having a fair market value on the date of exercise equal to the
Exercise Payment, or in any combination of cash and Common Stock so long as the
total cash so paid and the fair market value of the Common Stock surrendered
equals the Exercise Payment, and the Common Stock so surrendered, if originally
issued to the optionee upon exercise of an option granted by the Company, shall
have been held by the optionee for more than six months.
Option Adjustments
The Plan contains a customary anti-dilution provision which provides
that in the event of any change in the Company's outstanding capital stock by
reason of stock dividends, recapitalizations, mergers, consolidations,
split-ups, combinations or exchanges of shares and the like, the aggregate
number of shares of Common Stock subject to outstanding options and the exercise
price are to be appropriately adjusted by the Board of Directors (or the
Committee), whose determination thereon shall be conclusive.
Amendments
The Board has the authority to make changes in or additions to the Plan
as it deems desirable and the Board and the Committee may adopt rules and
regulations to carry out the Plan. The Board may not, without stockholder
approval, (i) increase the number of shares which may be issued under the Plan,
(ii) adversely affect the rights of a holder of an option previously granted
under the Plan, (iii) modify materially the eligibility requirements for
participation in the Plan, or (iv) increase materially the benefits accruing to
participants under the Plan.
Termination
The Plan terminates on April 30, 2002 (unless sooner terminated at the
discretion of the Board of Directors).
Federal Income Tax Consequences
Under current tax law, there are generally no Federal income tax
consequences to either the employee or the Company on the grant of Non-Incentive
Stock Options if granted under the terms set forth in the 1992 Plan and if the
option is not immediately exercisable. Upon exercise of such a Non-Incentive
Stock Option, the excess of the fair market value of the shares subject to the
option over the option price (the "Spread") at the date of exercise is taxable
as ordinary compensation income to the optionee in the year it is exercised and
is deductible by the Company as compensation for Federal income tax purposes, if
Federal income tax is withheld on the Spread. However, if the shares are subject
to vesting restrictions conditioned on future employment or the holder is
subject to the short-swing profits liability restrictions of Section 16(b) of
the Securities Exchange Act of 1934, as amended ("Exchange Act") (i.e., is an
executive officer, director or 10% stockholder of the Company) then taxation and
measurement of the Spread is deferred until such restrictions lapse, unless a
special election is made under Section 83(b) of the Code to report such income
currently without regard to such restrictions. The optionee's basis in the
shares will be equal to the fair market value on the date taxation is imposed
(determined without regard to marketability restrictions imposed by the
securities laws) and the holding period commences on such date.
-13-
Holders of Incentive Stock Options incur no regular Federal income tax
liability at the time of grant or upon exercise of such option, assuming that
the optionee was an employee of the Company from the date the option was granted
until 90 days before such exercise. However, upon exercise, the Spread must be
added to regular Federal taxable income in computing the optionee's "alternative
minimum tax" liability. An optionee's basis in the shares received on exercise
of an Incentive Stock Option will be the option price of such shares for regular
income tax purposes. No deduction is allowable to the Company for Federal income
tax purposes in connection with the grant or exercise of such option.
If the holder of shares acquired through exercise of an Incentive Stock
Option sells such shares within two years of the date of grant of such option or
within one year from the date of exercise of such option (a "Disqualifying
Disposition"), the optionee will realize income taxable at ordinary rates.
Ordinary income is reportable during the year of such sale equal to the
difference between the option price and the fair market value of the shares at
the date the option is exercised, but the amount includable as ordinary income
shall not exceed the excess, if any, of the proceeds of such sale over the
option price. In addition to ordinary income, a Disqualifying Disposition may
result in taxable income subject to capital gains treatment if the sales
proceeds exceed the optionee's basis in the shares (i.e., the option price plus
the amount includable as ordinary income). The amount of the optionee's taxable
ordinary income will be deductible by the Company in the year of the
Disqualifying Disposition.
At the time of sale of shares received upon exercise of an option
(other than a Disqualifying Disposition of shares received upon the exercise of
an Incentive Stock Option), any gain or loss is long-term or short-term capital
gain or loss, depending upon the holding period. The holding period for
long-term capital gain or loss treatment is more than one year.
The foregoing is not intended to be an exhaustive analysis of the tax
consequences relating to stock options issued under the Plan. For instance, the
treatment of options under state and local tax laws, which are not described
above, may differ from their treatment for Federal income tax purposes.
The following table sets forth information with respect to unexercised
options granted under the Plan since its effective date (excluding any options
granted subject to approval of the foregoing amendment to the Plan) and options
granted subject to approval of the foregoing amendment to the Plan (the
"Contingent Options").
Number of Shares Weighted
Covered by Average
Unexercised Number of Exercise
Options Granted Shares Price Per
(Excluding Covered by Share Covered
Contingent Contingent by Contingent
Name of Grantee Options) Options Options ($)
--------------- -------- ------- ---------
Gerardo Canet, Chairman, President
and Chief Executive Officer 219,501 120,000(1) 2.37
Peter Callan, Vice President
Central Region 40,000 -- --
Jay Higham, Vice President, Marketing
and Development 40,000 40,000(1) 2.37
All current executive officers, as a group 397,461 250,000(2) 2.19
All current outside directors, as a group 169,293 -- --
All current directors who are not
executive officers, as a group 69,000 15,000(3) 2.00
All employees, including all current
officers who are not executive officer, 144,083 40,000(4) 2.09
as a group
- - ------------------------
-14-
(1) Represents options to purchase shares of Common Stock at an exercise
price of $2.37 per share.
(2) Represents options to purchase shares of Common Stock at exercise
prices ranging from $1.68 to $2.37 per share.
(3) Represents options to purchase shares of Common Stock at an exercise
price of $2.00 per share.
(4) Represents options to purchase shares of Common Stock at exercise
prices ranging from $1.68 to $2.25 per share.
Other than the options set forth in the table above, the options to be
granted pursuant to the 1992 Plan are not determinable. The table above does not
include options that may be automatically granted in the future to Outside
Directors of the Company pursuant to the terms of the Plan, because it is not
determinable whether additional Outside Directors will be elected to the Board.
The Board of Directors recommends a vote FOR the approval and
ratification of the amendments to the Plan, and the persons named in the
accompanying proxy will vote in accordance with the choice specified thereon or,
if no choice is properly indicated, in favor of the approval and ratification.
-15-
APPROVAL AND RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
The Board of Directors has approved the firm of Price Waterhouse LLP,
Certified Public Accountants, as the Company's independent accountants for the
fiscal year ending December 31, 1997 and recommends to stockholders that they
vote for ratification of that appointment. Price Waterhouse LLP has been the
Company's accountants for the past fiscal year and has no direct or indirect
financial interest in the Company. A representative of Price Waterhouse LLP is
expected to be present at the Annual Meeting of Stockholders with the
opportunity to make a statement if he or she desires to do so, and shall be
available to respond to appropriate questions.
The Board of Directors recommends a vote FOR this approval.
GENERAL
The Management of the Company does not know of any matters other than
those stated in this Proxy Statement which are to be presented for action at the
meeting. If any other matters should properly come before the meeting, it is
intended that proxies in the accompanying form will be voted on any such other
matters in accordance with the judgment of the persons voting such proxies.
Discretionary authority to vote on such matters is conferred by such proxies
upon the persons voting them.
The Company will bear the cost of preparing, printing, assembling and
mailing the proxy, Proxy Statement and other material which may be sent to
stockholders in connection with this solicitation. It is contemplated that
brokerage houses will forward the proxy materials to beneficial owners at the
request of the Company. In addition to the solicitation of proxies by use of the
mails, officers and regular employees of the Company may solicit by telephone
proxies without additional compensation. The Company does not expect to pay any
compensation for the solicitation of proxies.
The Company will provide without charge to each person being solicited
by this Proxy Statement, on the written request of any such person, a copy of
the Annual Report of the Company on Form 10-K for the fiscal year ended December
31, 1996 (as filed with the Securities and Exchange Commission) including the
financial statements thereto. All such requests should be directed to Mr. Dwight
P. Ryan, Vice President, Chief Financial Officer and Secretary of IntegraMed
America, Inc., One Manhattanville Road, Purchase, New York 10577.
-16-
STOCKHOLDER PROPOSALS
The Annual Meeting of Stockholders for the fiscal year ending December
31, 1997 is expected to be held in June 1998 All proposals intended to be
presented at the Company's next Annual Meeting of Stockholders must be received
at the Company's executive office no later than December 31, 1997 for inclusion
in the Proxy Statement and form of proxy related to that meeting.
By Order of the Board of Directors,
/s/Gerardo Canet
----------------
Gerardo Canet
Chairman of the Board, President
and Chief Executive Officer
Dated: May 5, 1997
-17-