<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
Raytel Medical Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[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:
<PAGE> 2
RAYTEL MEDICAL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 5, 1998
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of RAYTEL MEDICAL CORPORATION, a
Delaware corporation (the "Company"), will be held at the Hotel Sofitel, 223
Twin Dolphin Drive, Redwood City, California on Thursday, March 5, 1998 at 11:00
a.m. for the following purposes:
1. To elect three (3) directors to Class III of the Board of
Directors.
2. To ratify the appointment of Arthur Andersen LLP as the independent
accountants of the Company for the fiscal year ending September 30,
1998.
3. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
Stockholders of record at the close of business on January 14, 1998
shall be entitled to vote at the meeting.
By order of the Board of Directors
/s/ RICHARD F. BADER
RICHARD F. BADER
Chairman of the Board and
Chief Executive Officer
San Mateo, California
January 27, 1998
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN
THE POSTAGE-PAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO
SO EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
<PAGE> 3
RAYTEL MEDICAL CORPORATION
2755 CAMPUS DRIVE, SUITE 200
SAN MATEO, CALIFORNIA 94403
------------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of Raytel Medical Corporation,
a Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders to be held Thursday, March 5, 1998 at 11:00 a.m., local time, or at
any adjournment thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will
be held at the Hotel Sofitel, 223 Twin Dolphin Drive, Redwood City, California.
The Company's principal executive offices are located at 2755 Campus Drive,
Suite 200, San Mateo, California. Its telephone number at that address is (650)
349-0800.
These proxy solicitation materials were mailed on or about January 27,
1998 to all stockholders entitled to vote at the Annual Meeting.
RECORD DATE
Stockholders of record at the close of business on January 14, 1998 are
entitled to notice of, and to vote at, the Annual Meeting. At the record date,
8,944,419 shares of the Company's Common Stock, $0.001 par value, were issued
and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person.
VOTING
The shares represented by the proxies received will be voted as you
direct. If you give no direction, the shares will be voted as recommended by the
Board of Directors. Each stockholder is entitled to one vote for each share of
stock held by him or her on all matters.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting materials sent to stockholders. The Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation materials to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone or telegram. Except as described above, the Company
does not currently intend to solicit proxies other than by mail.
1
<PAGE> 4
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholder proposals intended to be considered at the 1999 Annual
Meeting of Stockholders must be received by the Company no later than November
1, 1998. Such proposals may be included in next year's proxy statement if they
comply with certain rules and regulations promulgated by the Securities and
Exchange Commission (the "SEC").
PROPOSAL NO. 1
ELECTION OF DIRECTORS
CLASSIFIED BOARD
The Company has a classified Board of Directors consisting of three
classes of directors serving staggered three-year terms. The Class III directors
are Albert J. Henry, Gene I. Miller, and David E. Wertheimer, M.D., whose
current terms will end in 1998; the Class I directors are F. David Rollo, M.D.,
and Thomas J. Fogarty, M.D., whose current terms will end in 1999; and the Class
II directors are Richard F. Bader and Allan Zinberg, whose current terms will
end in 2000. At each annual meeting of stockholders, the successors to the class
of directors whose term expires at such meeting will be elected to hold office
for a term expiring at the annual meeting of stockholders held in the third year
following the year of their election.
NOMINEES
The terms of the three Class III directors will expire on the date of
the upcoming annual meeting. Accordingly, three persons are to be elected to the
Board as Class III directors at the meeting. Management's nominees for election
to these three positions are the current Class III directors, Albert J. Henry,
Gene I. Miller, and David E. Wertheimer, M.D. If elected, the nominees will
serve as directors until the Company's annual meeting of stockholders in 2001,
or until their successors are elected and qualified. If any of the nominees
declines to serve or becomes unavailable for any reason, or if a vacancy occurs
before the election, the Proxies may be voted for such substitute nominees as
management may designate.
If a quorum is present and voting, the three nominees for Class III
directors receiving the highest number of votes will be elected. Abstentions and
shares held by brokers that are present but not voted because the brokers were
prohibited from exercising discretionary authority, i.e., "broker non-votes,"
will not be counted as present for purposes of determining if a quorum is
present.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE THREE NOMINEES NAMED IN THIS PROPOSAL.
2
<PAGE> 5
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Richard F. Bader.................. 60 Chairman of the Board of Directors and
Chief Executive Officer
Allan Zinberg .................... 56 President, Chief Operating Officer and
Director
E. Payson Smith, Jr. ............. 49 Senior Vice President and Chief Financial
Officer
F. David Rollo, M.D. ............ 58 Senior Vice President, Executive Medical
Director and Director
David E. Wertheimer, M.D.......... 42 Senior Vice President - Heart Center
Development and Director
Swapan Sen........................ 45 Senior Vice President - General Manager,
Medical Facility Operations
Michael O. Kokesh ................ 47 Vice President, General Counsel and Secretary
John F. Lawler, Jr................ 51 Vice President - Corporate Controller
Thomas J. Fogarty, M.D. .......... 63 Director
Albert J. Henry .................. 60 Director
Gene I. Miller.................... 56 Director
</TABLE>
RICHARD F. BADER was a founder of the Company in 1981 and has served as
its Chief Executive Officer and as a director since its inception and as
Chairman of the Company's Board of Directors since April 1986. Mr. Bader also
served as President of the Company from its inception to May 1988 and again from
May 1989 to December 1991, and as Chief Financial Officer from February 1990 to
December 1991. Prior to founding the Company, Mr. Bader was employed as
President and Chief Executive Officer of Compression Labs, Inc., a developer of
video digital signal compression technology, from 1977 to 1981, and of
Integrated Microsystems, a manufacturer of semiconductor microsystems, from 1969
to 1975.
ALLAN ZINBERG has been President and Chief Operating Officer of the
Company since December 1991. Mr. Zinberg joined the Company as President of the
Company's Cardiac Datacorp, Inc. subsidiary ("CDI") in February 1990, when CDI
was acquired by the Company, and has also served as a director of the Company
since that time. From June 1974 to February 1990, Mr. Zinberg was employed by
CDI, where he served as a senior executive from June 1979 to February 1990.
E. PAYSON SMITH, JR. has been Senior Vice President and Chief Financial
Officer of the Company since December 1991 and was a director from February 1990
to February 1993. From June 1986 through December 1991, Mr. Smith served as
Senior Vice President of Corporate Finance of Van Kasper & Company, an
investment banking firm.
F. DAVID ROLLO, M.D. has been Senior Vice President and Executive
Medical Director of the Company since June 1996 and a director of the Company
since March 1993. Dr. Rollo served as Senior Vice President-Medical Affairs of
HCIA, a healthcare information company, from April 1995 to June 1996. Dr. Rollo
served as President and Chief Executive Officer of Metricor, a healthcare
consulting company, from October 1992 to April 1995, when it was acquired by
HCIA. From September 1980 to October 1992, Dr. Rollo served as Senior Vice
President-Medical Affairs of Humana, Inc., a hospital management company. Dr.
Rollo is also a director of ADAC Laboratories, Inc.
3
<PAGE> 6
SWAPAN SEN has been a Senior Vice President of the Company since
December 1997 and a Vice President of the Company since February 1990, when he
joined the Company following the CDI acquisition. Since the Company's
acquisition of Cardiovascular Ventures, Inc. ("CVI") in August 1997, Mr. Sen has
had primary responsibilities for the day- to-day operations of the Company's
cardiovascular diagnostic facilities, and continues to have primary
responsibility for the day to day operations of the Company's imaging centers.
From February 1990 to December 1991, he managed the three imaging centers
associated with the CDI acquisition. From December 1985 to February 1990, Mr.
Sen served in the same capacity with CDI.
DAVID E. WERTHEIMER, M.D. has been a Senior Vice President of the
Company since August 1997, when he joined the Company following the CVI
acquisition and has also served as a director of the Company since August 1997.
Dr. Wertheimer was the founder of CVI in 1991, where he served as the Chairman
of the Board and a director until its acquisition by the Company in August 1997.
Dr. Wertheimer has been a practicing cardiologist with the Heart Institute of
Port St. Lucie, Inc., a multi-specialty physician practice, and its predecessor
practice, which he founded in 1984. Dr. Wertheimer is a Fellow of the American
College of Cardiology, the American College of Physicians, and the Society for
Cardiac Angiography and Intervention. Dr. Wertheimer currently serves as the
chairman of the Medical Advisory Committee of the Department of Health for the
State of Florida, a post that he has held since 1996.
MICHAEL O. KOKESH has been General Counsel and Secretary of the Company
since March 1996 and a Vice President since December 1996. Mr. Kokesh was a
co-founder of National Reproductive Medical Centers, Inc., where he served as a
director from November 1991 to June 1993 and served as Vice President, General
Counsel, and Secretary from November 1991 until March 1996. From May 1989 to
November 1991, Mr. Kokesh was a partner with Bronson, Bronson & McKinnon, a
general practice law firm where he specialized in healthcare law, emphasizing
transactional, corporate and securities matters.
JOHN F. LAWLER, JR. has served as Vice President-Corporate Controller of
the Company since March 1993. Mr. Lawler served as Corporate Controller of Zygo
Corp., a manufacturer of measuring equipment and optical components, from
September 1983 to March 1993. Prior to September 1983, he served with Raymond
Industries, Inc., a diversified manufacturing company, and KPMG Peat Marwick.
THOMAS J. FOGARTY, M.D. has been a director of the Company since
November 1982. Dr. Fogarty is a cardiovascular surgeon and has served as
Professor of Surgery at Stanford University Medical School since July 1993. Dr.
Fogarty practiced with Pacific Coast Cardiac and Vascular Systems from 1971 to
July 1993. Dr. Fogarty is also the founder and President of Fogarty Engineering,
Inc., Thomas Fogarty Winery and Portola Valley Vineyards. Dr. Fogarty has
authored 85 patents in the field of catheter and cardiovascular instrumentation.
Dr. Fogarty is also a director of Cardiac Pathways, Inc., CardioThoracic
Systems, Inc., Emergency Medical Systems, Inc., General Surgical Innovations,
Inc., and several privately-held companies. In addition, he is general partner
of a venture capital fund focused on the development of advanced cardiac care
products.
ALBERT J. HENRY has been a director of the Company since March 1990. Mr.
Henry has been Chairman of the Board of Directors and Chief Executive Officer of
Henry & Co., a venture capital firm, and manager of its related venture funds,
since 1983. Mr. Henry also serves as chairman of the board of directors of
several privately-held biotechnology, healthcare and other companies.
GENE I. MILLER has been a director of the Company since February 1989.
Mr. Miller has been a general partner of Peregrine Ventures funds, a venture
capital firm, since its inception in 1981. Mr. Miller is also a director of
Somatogen, Inc., a developer and manufacturer of human blood substitutes, and
Digital Transmission Systems, Inc., a manufacturer of telecommunications
equipment, and serves on the boards of several privately-held companies.
There are no family relationships among directors or executive officers
of the Company.
4
<PAGE> 7
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held three regular meetings and
one special meeting during the fiscal year ended September 30, 1997. The Board
of Directors has a Compensation Committee, an Audit Committee, an Employee Stock
Option Committee, and a Nominating Committee. During the fiscal year ended
September 30, 1997, no incumbent director attended fewer than 75% of the
aggregate of (i) all meetings of the Board of Directors (held during the period
in which such director served) and (ii) all meetings of committees of the Board
on which such director served.
The Compensation Committee, which consists of Dr. Fogarty, Mr. Miller
and Mr. Henry, is responsible for reviewing the performance of the officers of
the Company and making recommendations to the Board concerning salaries and
incentive compensation for such officers. The Compensation Committee held one
meeting during the fiscal year ended September 30, 1997.
The Audit Committee, which consists of Mr. Miller and Mr. Henry, is
responsible for reviewing the Company's financial statements and significant
audit and accounting practices with the Company's independent auditors and
making recommendations to the Board of Directors with respect thereto. The Audit
Committee held one meeting during the fiscal year ended September 30, 1997.
The Employee Stock Option committee, which consists of Messrs. Bader and
Zinberg, is authorized to grant stock options under the Company's 1990 Stock
Option Plan to employees of the Company who are not executive officers. The
Employee Stock Option Committee held one meeting during the fiscal year ended
September 30, 1997.
The Nominating Committee, which consists of Messrs. Bader, Henry and
Miller, was appointed in August 1997. The Nominating Committee was formed for
purposes of identifying and evaluating the qualifications of all candidates for
election to the Board of Directors. The Nominating Committee will consider
nominations recommended by stockholders. Stockholders wishing to submit
nominations must notify the Company of their intent to do so (and provide the
Company with certain information set forth in the Company's bylaws, a copy of
which may be obtained from the Company) on or before the date on which
stockholder proposals to be included in the proxy statement for the stockholder
meeting must be received by the Company.
DIRECTOR COMPENSATION
Non-employee directors are entitled to a fee of $1,000 for each Board
meeting they attend. In June 1994, the Company's non-employee directors,
including Dr. Rollo, who was not an employee at the time, were granted stock
options pursuant to the Company's 1990 Stock Option Plan in connection with
their service on the Board of Directors. The options are fully exercisable,
subject to the Company's right to repurchase any unvested shares at the original
exercise price at the time the optionee ceases to serve on the Board of
Directors. Such shares vest, and the Company's repurchase right terminates, in
annual installments of 25%, subject to the optionee's continuous service and
subject to adjustment at each scheduled vesting date by multiplying the number
of shares scheduled for vesting by a fraction, the numerator of which is the
number of meetings of the Board of Directors attended by the optionee during the
preceding 12-month period and the denominator of which is all such meetings held
during such period.
In addition, the Company's 1995 Outside Directors Stock Option Plan (the
"Directors Plan") provides for formula-based grants of options to non-employee
directors. The Directors Plan provides that each non-employee director of the
Company shall be granted a nonstatutory stock option to purchase 6,000 shares of
Common Stock on the date on which the optionee first becomes a non-employee
director of the Company. Thereafter, on the date immediately following each
annual stockholders' meeting, each non-employee director who is reelected at the
meeting to an additional term shall be granted an additional option to purchase
6,000 shares of Common Stock if, on such date, he or she shall have served on
the Company's Board of Directors for at least six months. The Directors Plan
provides that each option shall become exercisable in installments as to
one-third of the total number of shares subject to the option on each of the
first, second and third anniversaries of the date of grant, subject to the
director's continuous service and subject to adjustment at each scheduled
vesting date by multiplying the number of shares eligible for vesting by a
fraction, the numerator of which is the number of meetings of the Board of
Directors attended by the director during the preceding 12-month period and the
5
<PAGE> 8
denominator of which is all such meetings held during such period. Shares which
do not vest on a scheduled vesting date as a result of such an adjustment will
vest instead, without further adjustment, on the fifth anniversary of the date
of grant. The exercise price per share of all options granted under the
Directors Plan shall be equal to the fair market value of a share of the
Company's Common Stock on the date of grant. Options granted under the Directors
Plan have a term of ten years.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
relating to the beneficial ownership of the Company's Common Stock by (i) each
person who is known by the Company to be the beneficial owner of more than 5% of
the outstanding shares of Common Stock, (ii) each executive officer named in the
tables set forth under "Executive Compensation," (iii) each director and (iv)
all executive officers and directors as a group, as of December 31, 1997:
<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY
NAME AND ADDRESS OWNED (1) PERCENT(1)
---------------- ------------ ----------
<S> <C> <C>
Rosenberg Capital Management (2) ................... 836,500 9.4%
1 Embarcadero Center
San Francisco, CA 94111
T. Rowe Price Associates, Inc. (3) ................. 804,484 9.0%
100 E. Pratt Street
Baltimore, MD 21202
Wellington Management Company LLP ................. 774,800 8.7%
75 State Street, 19th Floor
Boston, MA 02109
Richard F. Bader (4)................................ 616,767 6.8%
c/o Raytel Medical Corporation
2755 Campus Drive, Suite 200
San Mateo, CA 94403
State of Wisconsin Investment Board................. 565,000 6.3%
P.O. Box 7842
Madison, WI 53707
Thomas J. Fogarty, M.D. (5)......................... 228,462 2.6%
Albert J. Henry (6)................................. 210,953 2.4%
David E. Wertheimer, M.D. (7) ...................... 182,874 2.1%
Allan Zinberg (8)................................... 159,744 1.8%
E. Payson Smith, Jr. (9)............................ 70,267 *
Gene I. Miller (10)................................. 50,994 *
F. David Rollo, M.D. (11)........................... 41,769 *
Swapan Sen (12)..................................... 34,086 *
All executive officers and
directors as a group (11 persons) (13).............. 1,617,860 17.3%
</TABLE>
- -----------------
* Less than 1%
6
<PAGE> 9
(1) Beneficial ownership is determined in accordance with the rules of the SEC.
In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of Common Stock subject to
options held by that person that are currently exercisable, or will become
exercisable within 60 days after December 31, 1997, are deemed outstanding.
Such shares, however, are not deemed outstanding for purposes of computing
the percentage ownership of any other person. In general, options granted
under the Company's 1983 Stock Option Plan and its 1990 Stock Option Plan
are fully exercisable from the date of grant, subject to the Company's
right to repurchase any unvested shares at the original exercise price in
the event of termination of the optionee's employment. Options (or shares
issued upon exercise thereof) vest over a period of two to four years from
the date of grant. Unless otherwise indicated in the footnotes to this
table, the persons and entities named in the table have sole voting and
sole investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.
(2) Includes 836,500 shares beneficially owned by Dresdner RCM Global
Investors, L.L.C.
(3) Includes 470,000 shares beneficially owned by T. Rowe Price New Horizons
Fund.
(4) Includes 196,522 shares issuable upon exercise of stock options that are
currently exercisable and will be fully vested within 60 days after
December 31, 1997.
(5) Includes 161,935 shares held by the Lincoln Trust Company, Custodian FBO
Thomas J. Fogarty IRA Rollover Account, and 65,194 shares held by the
Fogarty Family Revocable Trust dated September 14, 1971, as amended and
restated February 14, 1991. Also includes 1,333 shares issuable upon
exercise of stock options that are currently exercisable and will be fully
vested within 60 days after December 31, 1997.
(6) Includes 170,484 shares held by Henry Venture II Limited. Mr. Henry, a
director of the Company, is Chairman and Chief Executive Officer of Henry
Venture II Limited, and thereby has voting and dispositive power over such
shares. Mr. Henry disclaims beneficial ownership of such shares, except for
his proportional interest therein. Also includes 40,469 shares issuable to
Mr. Henry upon exercise of stock options that are currently exercisable and
will be fully vested within 60 days after December 31, 1997.
(7) In addition, Dr. Wertheimer indirectly owns 4,100 shares held by his minor
children, as to which he disclaims beneficial ownership.
(8) Includes 29,050 shares issuable upon exercise of stock options that are
currently exercisable and will be fully vested within 60 days after
December 31, 1997.
(9) Includes 27,999 shares issuable upon exercise of stock options that are
currently exercisable and will be fully vested within 60 days after
December 31, 1997. In addition, Mr. Smith holds 2,800 shares as custodian
for his minor children, as to which he disclaims beneficial ownership.
(10) Includes 40,469 shares issuable upon exercise of stock options that are
currently exercisable and will be fully vested within 60 days after
December 31, 1997.
(11) Includes 28,781 shares issuable upon exercise of stock options that are
currently exercisable and will be fully vested within 60 days after
December 31, 1997.
(12) Includes 29,086 shares issuable upon exercise of stock options that are
currently exercisable and will be fully vested within 60 days after
December 31, 1997.
(13) Includes 413,021 shares issuable upon exercise of stock options that are
currently exercisable, of which 413,021 shares will be fully vested within
60 days after December 31, 1997.
7
<PAGE> 10
EXECUTIVE COMPENSATION AND OTHER MATTERS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth information concerning the compensation
received for services rendered to the Company during each of the fiscal years
ended September 30, 1997, 1996 and 1995 by the Chief Executive Officer of the
Company and the four other most highly compensated executive officers of the
Company whose total salary and bonus for such fiscal year exceeded $100,000
(collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG TERM
---------------------- COMPENSATION
AWARDS OPTIONS
FISCAL GRANTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (SHARES) COMPENSATION(2)
- --------------------------- ------ -------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Richard F. Bader........... 1997 $281,973 $179,000 300,000 $9,944(2)
Chairman of the Board of 1996 $282,754 $130,000 -- $9,989(3)
Directors and Chief 1995 $259,560 $82,000 -- $9,808(4)
Executive Officer
Allan Zinberg.............. 1997 $281,973 $135,000 100,000 $9,944(2)
President and 1996 $281,480 $100,000 -- $9,254(3)
Chief Operating Officer 1995 $259,560 $82,000 -- $10,801(4)
E. Payson Smith, Jr. ...... 1997 $174,897 $45,000 35,000 $9,854(2)
Senior Vice President and 1996 $174,591 $35,000 -- $10,063(3)
Chief Financial Officer 1995 $160,974 $49,000 -- $10,010(4)
F. David Rollo, M.D. ...... 1997 $250,120 $37,000 87,000 $2,284(2)
Senior Vice President 1996 $225,000 -- -- $9,989(3)
and Executive Medical 1995 -- -- -- --
Director
Swapan Sen................. 1997 $163,324 $85,000 -- $10,172(2)
Senior Vice 1996 $143,133 $50,000 21,000 $9,975(3)
President-General 1995 $131,630 $40,000 -- $9,975(4)
Manager, Medical Facility
Operations
</TABLE>
- ------------------------
(1) Includes amounts (if any) deferred under the Company's 401(k) Plan and its
Executive Deferred Compensation Plan.
(2) Consists of matching contributions by the Company under the 401(k) Plan,
contributions by the Company to the Pension Plan and life insurance
premiums paid by the Company for the benefit of the Named Executive
Officer. The amounts representing 401(k) Plan contributions for the
calendar year 1997 are $2,375 for Mr. Bader, $2,375 for Mr. Zinberg, $2,375
for Mr. Smith, $2,603 for Mr. Sen, and $1,924 for Dr. Rollo. The amounts
representing Pension Plan contributions for the calendar year 1996 are
$7,119 for Mr. Bader, $7,119 for Mr. Zinberg, $7,119 for Mr. Smith and
$7,119 for Mr. Sen , and $-0- for Dr. Rollo. The amounts representing life
insurance premiums are $450 for Mr. Bader, $450 for Mr. Zinberg, $450 for
Mr. Sen, $360 for Mr. Smith, and $360 Dr. Rollo.
(3) Consists of matching contributions by the Company under the 401(k) Plan,
contributions by the Company to the Pension Plan and life
8
<PAGE> 11
insurance premiums paid by the Company for the benefit of the Named
Executive Officer. The amounts representing 401(k) Plan contributions for
the calendar year 1996 are $2,375 for Mr. Bader, $1,640 for Mr. Zinberg,
$2,449 for Mr. Smith, $2,489 for Mr. Sen, and $0 for Dr. Rollo. The amounts
representing Pension Plan contributions for the calendar year 1995 are
$2,375 for Mr. Bader, $1,640 for Mr. Zinberg, $2,449 for Mr. Smith, $2,489
for Mr. Sen, and $0 for Dr. Rollo. The amounts representing life insurance
premiums are $450 for calendar year 1996 for Messrs. Bader, Zinberg, Smith,
and Sen, and $0 for Dr. Rollo.
(4) Consists of matching contributions by the Company under the 401(k) Plan,
contributions by the Company to the Pension Plan and life insurance
premiums paid by the Company for the benefit of the Named Executive
Officer. The amounts representing 401(k) Plan contributions for the
calendar year 1995 are $2,194 for Mr. Bader, $3,187 for Mr. Zinberg, $2,309
for Mr. Smith, $2,250 for Mr. Sen, and $0 for Dr. Rollo. The amounts
representing Pension Plan contributions for the calendar year 1994 are
$7,164 for Mr. Bader, $7,164 for Mr. Zinberg, $7,164 for Mr. Smith, $7,164
for Mr. Sen, and $0 for Dr. Rollo. The amounts representing life insurance
premiums are $450 for calendar year 1995 for Messrs. Bader, Zinberg, Smith,
and Sen, and $0 for Dr. Rollo.
STOCK OPTION GRANTS
The following table sets forth information concerning grants of options
to purchase the Company's Common Stock made during the fiscal year ended
September 30, 1997 to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------
POTENTIAL REALIZABLE
VALUE
AT ASSUMED RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SHARES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED EXERCISE OPTION TERM(1)
OPTIONS TO EMPLOYEES PRICE PER EXPIRATION ----------------------
NAME GRANTED IN 1997 SHARE(2) DATE 5% 10%
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Bader....... 300,000(3)(4) 47.45% $8.50 05/05/07 $1,603,681 $4,064,043
Allan Zinberg.......... 100,000(3)(4) 15.82% $8.50 05/05/07 $534,560 $1,354,681
E. Payson Smith, Jr. .. 35,000(3)(4) 5.54% $8.50 05/05/07 $187,096 $474,138
F. David Rollo, M.D.... 87,000(3)(4) 13.76% $8.50 05/05/07 $465,068 $1,178,573
Swapan Sen ............ -- -- -- -- -- --
</TABLE>
- -----------------------
(1) Potential realizable values are net of the exercise price but before taxes
associated with the exercise. Amounts represent hypothetical gains that
could be achieved for the respective options if exercised at the end of the
option term. The assumed 5% and 10% rates of stock price appreciation are
provided in accordance with the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of the
future Common Stock price. Actual gains, if any, on stock option exercise
are dependent on the future financial performance of the Company, overall
market conditions and the option holders' continued employment through the
vesting period.
(2) All options were granted at the fair market value of the Common Stock on
the date of grant, based on the closing price of the Company's Common Stock
on the Nasdaq National Market.
(3) The options were granted on May 5, 1997 in replacement of previously
outstanding options. On such date, as a result of a decline in the market
price of the Company's Common Stock, the Employee Stock Option Committee
and the Compensation Committee determined that it was in the best interest
of the Company to offer current option holders the opportunity to exchange
outstanding options with an exercise price above the then-current market
price ($8.50) for options with an exercise price equal to such market
price. Each new option vests at the same rate as the option it replaced,
and with the vesting of each new option to commence on June 30, 1997. Of
the Named Officers, Messrs. Bader, Zinberg, Smith and Rollo participated
in the exchange.
(4) The options vest and become exercisable at the rate of 8-1/3% on June 30,
1997 and at the end of each calendar quarter thereafter through June 30,
1999.
9
<PAGE> 12
OPTION EXERCISES AND YEAR-END HOLDINGS
The following table sets forth information concerning the exercise of
stock options during the fiscal year ended September 30, 1997 and the stock
options held as of September 30, 1997 by the Named Executive Officers.
AGGREGATE OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED SEPTEMBER 30, 1997 SEPTEMBER 30, 1997(2)
UPON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE(3) UNEXERCISABLE EXERCISABLE(3) UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Bader....... 100,722 $1,045,229 171,521 250,001 $1,627,562 $1,500,006
Allan Zinberg.......... -- -- 20,716 83,334 $136,851 $ 500,004
E. Payson Smith, Jr. .. 37,244 $361,453 25,083 29,167 $248,923 $ 175,002
F. David Rollo, M.D. .. 4,375 $38,609 21,530 76,501 $153,872 $ 446,006
Swapan Sen............. -- -- 27,567 12,432 $267,006 $ 64,698
</TABLE>
- ----------------
(1) "Value Realized" represents the fair market value of the Common Stock on
the exercise date minus the aggregate exercise price of such options. For
purposes of this calculation, the fair market value of the Common Stock is
based on the closing price for the Common Stock, as quoted on the Nasdaq
National Market.
(2) Based on the closing price of $14.50 for the Common Stock as quoted on the
Nasdaq National Market on September 30, 1997, less the exercise price.
(3) Options granted prior to October 1, 1995, are fully exercisable, subject to
the Company's right to repurchase any unvested shares at the original
exercise price in the event of the optionee's termination. Options (or
shares issued upon exercise thereof) vest over periods of two to four years
from the date of grant.
10
<PAGE> 13
TEN YEAR OPTION REPRICINGS
The following table provides the specified information concerning all
repricings of options to purchase the Company's Common Stock held by any
executive officer of the Company since December 1, 1995, the date of the
Company's initial public offering.
TEN YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET EXERCISE TERM
UNDERLYING PRICE OF PRICE AT REMAINING
OPTIONS STOCK AT TIME OF NEW AT DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME AND POSITION DATE AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Bader..................... 05/05/97 300,000 $8.50 $11.50 $8.50 9 years
Chairman of the Board of Directors 71 days
and Chief Executive Officer
Allan Zinberg........................ 05/05/97 100,000 $8.50 $11.50 $8.50 9 years
President and 71 days
Chief Operating Officer
E. Payson Smith, Jr.................. 05/05/97 35,000 $8.50 $11.50 $8.50 9 years
Senior Vice President and 71 days
Chief Financial Officer
F. David Rollo, M.D.................. 05/05/97 87,000 $8.50 $11.875 $8.50 9 years
Senior Vice President and 26 days
Executive Medical Director
</TABLE>
PENSION PLAN
The Raytel Medical Corporation Pension Plan (the "Pension Plan") was
adopted in March 1990. Pursuant to the Pension Plan, the Company makes annual
contributions on behalf of each full-time employee. The Company's contribution
is equal to 3% of the amount of such employee's salary and bonus for each
calendar year, not exceeding $160,000, plus an additional 3% of the amount by
which such salary and bonus (up to $160,000) exceeds the maximum amount of
remuneration that is treated as "wages" for purpose of social security tax
withholding (the "Social Security Wage Base"). The Social Security Wage Base was
$65,400; $62,700; and $61,200 in calendar years 1997, 1996 and 1995,
respectively. The aggregate amount contributed by the Company on an employee's
behalf becomes 20% vested after three years of employment and thereafter vests
in annual 20% increments such that the employee's benefits are fully vested
after seven years. Alternatively, an employee's pension benefits become fully
vested immediately in the event of (i) the employee's retirement at or after age
65, (ii) the employee's death or permanent disability, or (iii) termination of
the Pension Plan or of the Company's contributions thereunder. Upon becoming
eligible to receive distributions, an employee may elect to receive his or her
benefits in various forms, including different types of annuities or a lump sum
payment. Absent an election, benefits to an employee who is married are paid in
the form of a "50% joint and survivor annuity," pursuant to which the employee
is entitled to a monthly benefit until death, after which the employee's spouse,
if he or she survives the employee, is entitled to continued 50% monthly
benefits until his or her death.
Assuming that (i) each of the Named Executive Officers retires at the
end of the calendar year in which such person attains age 65, (ii) each
individual's salary and bonus and the Social Security Wage Base increase by 5%
annually, (iii) there is no change in the $160,000 limit on the amount of
compensation on which the Company's contributions are based and (iv) funds
invested through the Pension Plan appreciate at a 6% annual return, the
retirement benefits that would be payable in a lump sum to each of the Named
Executive Officers would be $166,000 in the case of Mr. Bader, $871,000 in the
case of Mr. Zinberg, $318,000 in the case of Mr. Smith, $76,000 in the case of
Dr. Rollo, and $594,000 in the case of
11
<PAGE> 14
Mr. Sen. Assuming further that each such individual receives his or her benefits
in the form of a 50% joint and survivor annuity, and based on the current age of
each individual and that of each spouse, the monthly benefits payable to the
foregoing individuals will be $1,250 in the case of Mr. Bader, $6,560 in the
case of Mr. Zinberg, $2,390 in the case of Mr. Smith, $570 in the case of Dr.
Rollo, and $4,470 in the case of Mr. Sen.
EMPLOYMENT AGREEMENTS
Messrs. Bader, Zinberg and Smith have each entered into an employment
agreement with the Company that entitles each to receive a base annual salary
and such bonus as may be authorized from time to time by the Board of Directors.
Each agreement originally had a term of two years, expiring in September 1997,
and provides that at the end of each year, beginning in September 1996, the term
is automatically extended for an additional year, unless either party elects not
to renew the agreement. The agreements require each officer to devote his full
time and attention to the affairs of the Company. If the Company terminates the
employment of one of these officers other than for cause (or if the officer
voluntarily terminates his employment following certain specified actions by the
Company), the officer will be entitled to receive severance payments equal to
his then current base salary for a period of 24 months following the date of
termination. The current annual base salaries of Messrs. Bader, Zinberg and
Smith are $281,973, $281,973 and $174,897, respectively.
As a result of the CVI acquisition in August 1997, the Company, through
a subsidiary of CVI, has become subject to an employment agreement with David E.
Wertheimer that entitles him to receive a base salary and such bonus as may be
authorized from time to time by the Board of Directors. The agreement has a term
of ten years, expiring on December 31, 2006. The agreement requires that Dr.
Wertheimer devote his full time and attention to the affairs of the Company,
both in his capacity as a physician and as a member of executive management. The
agreement may be terminated only for cause. In addition, the agreement provides
that upon termination other than upon expiration of the regular term, the
employee is prohibited from engaging in the practice of medicine within a
ten-mile radius of his then current principal place of practice.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The goals of the Company's compensation policy are to attract, retain
and reward executive officers who contribute to the overall success of the
Company by offering compensation that is competitive in the healthcare industry,
to motivate executives to achieve the Company's business objectives and to align
the interests of officers with the long-term interests of stockholders. The
Company currently uses salary, a management incentive plan, an executive
deferred compensation plan and stock options to meet these goals.
COMPENSATION COMMITTEE
The Compensation Committee is composed of three non-management members
of the Board of Directors, Thomas J. Fogarty, M.D., Albert J. Henry and Gene I.
Miller. The Committee is responsible for setting and administering the policies
governing annual compensation of executive officers, including cash compensation
and grants of stock options. The Committee reviews compensation levels of
executive officers, considers their performance and makes recommendations
regarding their cash compensation and stock option awards to the full Board of
Directors.
FORMS OF COMPENSATION
The Company provides its executive officers with a compensation package
consisting of base salary, variable incentive pay, and participation in benefit
plans generally available to other employees. In setting total compensation, the
Committee considers individual and Company performance, as well as market
information from published survey data provided to the Committee by the
Company's human resources staff. The market data consist primarily of base
salary
12
<PAGE> 15
and total cash compensation rates, as well as incentive bonus and stock programs
of the companies considered by the Committee to be peer companies in the
Company's industry.
Base Salary. Salaries for executive officers are initially set based on
negotiation with individual executive officers at the time of recruitment and
with reference to salaries for comparable positions among individuals of similar
education and background to the executive officers being recruited. The Company
also gives consideration to the individual's experience, reputation in his or
her industry and expected contributions to the Company.
Generally, salary adjustments are made for each executive officer at the
end of each fiscal year. The size of the annual salary adjustments for each
executive officer is primarily based on the Committee's determination that the
officer has met or exceeded his or her individual goals. These individual goals
are determined in consultation with management, subject to review and approval
by the Board of Directors, and generally relate to strategic goals within the
responsibility of the executive officer. The Chief Executive Officer's goals
also include the Company's financial performance, measured primarily by the
achievement of predetermined revenue and expense objectives and maintenance of
adequate cash reserves.
Executive Bonuses. The Company seeks to provide additional incentives
and rewards to executives who make valuable contributions to the Company.
Accordingly, the Compensation Committee awards annual bonuses, which can
comprise a substantial portion of the total compensation of each executive
officer. At the beginning of each fiscal year, the Board establishes a suggested
budget for bonuses that may be earned during such fiscal year by executive
officers and other employees. Following the end of the fiscal year, the
Compensation Committee determines the amount of the cash bonus to be awarded to
each executive officer. Awards are based upon such factors as the Compensation
Committee may consider relevant in any particular year, including the Company's
attainment of certain goals for revenue growth and profitability, as well as the
Compensation Committee's evaluation of each executive officer's individual
contribution to the attainment of such goals.
Long-term Incentives. Longer term incentives are provided through the
1990 Stock Option Plan, which rewards executives and other employees through the
growth in value of the Company's stock. The committee believes that employee
equity ownership is highly motivating, provides a major incentive for employees
to build stockholder value and serves to align the interests of employees with
those of stockholders.
Grants of stock options to executive officers are based upon each
officer's relative position, responsibilities, historical and expected
contributions to the Company, and the officer's existing stock ownership and
previous option grants, with primary weight given to the executive officers'
relative rank and responsibilities. Initial stock option grants designed to
recruit an executive officer to join the Company may be based on negotiations
with the officer and with reference to historical option grants to existing
officers. Stock options are granted at the market price on the date of grant and
will provide value to the executive officers only when the price of the
Company's Common Stock increases over the exercise price.
Other Benefit Plans. Executive officers may participate in several
benefit plans, including the Company's Pension Plan, 401(k) Plan and Executive
Deferred Compensation Plan, a nonqualified deferred compensation plan. The
Company makes matching contributions to the 401(k) Plan equal to 25% of the
amount contributed by each employee.
FISCAL 1997 COMPENSATION
Bonuses paid after the end of fiscal 1997 were based upon the Company's
successes in fiscal 1997 and each executive's contribution to these successes.
These bonus awards recognized that fiscal 1997 was a year in which management
strategically positioned the Company for future growth through the development
and operation of heart centers and the completion of several key acquisitions
while successfully operating its existing businesses. Concurrent with these
developments, the Company posted new records for profitability, with pre-tax
income before taxes and extraordinary item for fiscal 1997 of $13,132,000 (which
does not include the $2,510,000 in income from the favorable administrative
decision related to a dispute with a New York Medicare carrier) which was more
than 33.6% higher than the Company's previous record of $9,828,000 earned in
fiscal 1996.
13
<PAGE> 16
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The compensation payable to Richard F. Bader, the Company's Chairman and
Chief Executive Officer, is determined by the Compensation Committee based on
the financial objectives set by the Compensation Committee for that fiscal year.
The financial objectives include but are not limited to the increase from one
fiscal year to the next in net revenues, net earnings and shareholder value as
measured by the change in the quoted price of the Company's stock and based upon
a survey of compensation paid to the chief executive officers of comparably
sized companies in the same industry as the Company. During fiscal 1997, the
Compensation Committee set certain mutually agreed upon financial objectives for
Mr. Bader. The Company's overall performance was equal to 100% of the
performance levels represented by the Compensation Committee's financial
objectives in the aggregate. Based on these financial results, the Compensation
Committee awarded Mr. Bader a bonus equal to approximately 65% of his 1997 base
salary.
For specific information regarding compensation earned in fiscal 1997 by
certain executive officers, see "Executive Compensation - Summary Compensation
Table."
THE COMPENSATION COMMITTEE
Thomas J. Fogarty, M.D.
Albert J. Henry
Gene I. Miller
REPORT OF THE EMPLOYEE STOCK OPTION COMMITTEE AND THE
COMPENSATION COMMITTEE ON REPRICING OF OPTIONS
In May 1997, the Employee Stock Option Committee and the Executive
Compensation Committee reviewed the options held by the Company's executive
officers and employees and considered the fact that the decline in the price of
the Common Stock of the Company resulted in a substantial number of stock
options granted pursuant to the 1990 Stock Option Plan having exercise prices
well above the recent trading prices for the Common Stock. The Committees were
advised by management that management believed that the Company's total
compensation package for employees, which included options with exercise
prices well above the current trading price of the Company's shares, defeats
the purpose of the options as an incentive to improve revenues, earnings and
shareholder value. The Committees also considered that the recent decline in
the Company's share price would result in inequities between employees holding
higher-priced options and recent hires who had been granted options with
exercise prices set at the lower current trading price of the Company's shares.
Accordingly, in May 1997, the Committees approved an offer to those
employees of the Company with options with an exercise price above $11.00 per
share, including executive officers (whom the Compensation Committee considered
separately), to exchange outstanding options with exercise prices above the
then-current trading price for options with an exercise price equal to the
then-current trading price, subject to the condition that any participating
employee agree to cancel any stock option held by him or her, and with the
vesting of each new option to commence on June 30, 1997. All exchange options
will terminate no later than 10 years from the date when the exchange was
approved by the two Committees. The offer to exchange options was effective May
5, 1997. In response to the offer, options for 530,900 shares, with exercise
prices ranging from $11.50 to $13.50, were exchanged for options for an equal
number of shares at an exercise price of $8.50, the closing price of the
Company's stock on May 5, 1997, the date of the approval of the repricing by
both Committees.
THE EMPLOYEE STOCK OPTION COMMITTEE THE COMPENSATION COMMITTEE
Richard F. Bader Thomas J. Fogarty, M.D.
Allan Zinberg Albert J. Henry
Gene I. Miller
14
<PAGE> 17
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return at
September 30, 1997 (assuming reinvestment of dividends) on $100 invested,
alternatively in the Company's Common Stock, the Nasdaq Stock Market - US Index,
and the Nasdaq Health Services Index on December 1, 1995, the date of the
Company's initial public offering.
<TABLE>
<CAPTION>
Cumulative Total Return
--------------------------------------------------------------------------------
12/01/95 12/31/95 03/31/96 06/30/96 09/30/96 12/31/96 03/31/97 06/30/97 09/30/97
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Raytel Medical $100 $106 $125 $159 $169 $138 $131 $144 $181
Corporation
Nasdaq Stock $100 $100 $105 $113 $117 $123 $116 $137 $161
Market (US)
Nasdaq Health
Services Index $100 $104 $109 $118 $118 $104 $97 $109 $118
</TABLE>
15
<PAGE> 18
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and Nasdaq. Officers, directors
and greater than 10% stockholders 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 on its review of the copies of
such reports received by it, or written representations from reporting persons
that all required reports were filed, all Section 16(a) filing requirements
applicable to its officers, directors and greater-than-10% beneficial owners
during fiscal 1997 were complied with.
CERTAIN TRANSACTIONS
In July 1996, the Company made a short-term loan of $400,000 to F. David
Rollo, M.D., Senior Vice President and Executive Medical Director and a director
of the Company, bearing interest at the rate of 9.25% per annum, for the purpose
of assisting Dr. Rollo in the purchase of his principal residence upon his
relocation to California. The loan is secured by a second deed of trust on the
new principal residence. The note evidencing Dr. Rollo's loan requires that
interest be paid monthly on the outstanding principal balance. The outstanding
principal and any accrued but unpaid interest was originally due on May 1, 1997,
and was extended to May 1, 1998, provided that a portion thereof was due earlier
upon the sale of three separate parcels of residential property held by Dr.
Rollo. One of these properties was sold in August 1996, and a payment of
$150,000 was made, reducing the outstanding principal balance to $250,000. The
remaining principal balance of the note and all accrued and unpaid interest was
paid on November 26, 1997.
In August 1997, with the acquisition of CVI, the Company, through a
subsidiary of CVI, became a party to a real estate lease agreement with 1700
S.E. Hillmoor Drive, Inc., a Florida corporation in which David E. Wertheimer,
Senior Vice President-Heart Center Development and a director of the Company, is
a minority shareholder. The lease is for an office condominium consisting of
approximately 22,500 square feet in a medical office building. The lease
commenced January 1, 1997 and is for a ten-year term, with a single option to
renew for an additional ten-year term on the same terms and conditions. Pursuant
to the terms of the lease, the Company through its subsidiary is obligated to
pay $349,411.68 per year in rent, payable in equal monthly installments on the
first day of each month. The rent is adjustable beginning in 2002 based on the
change, if any, in the interest rate on the loan secured by the real property.
The tenant is also responsible for all real estate taxes on the tenant
improvements and personal property located on the premises, as well as all
operating costs, such as utilities, heating, ventilation and air conditioning
and all condominium association fees.
For a description of the compensation of officers and directors of the
Company, employment agreements between certain officers and the Company and the
eligibility of the Company's officers and directors to participate in the
Company's employee benefit plans, see "Proposal No. 1 C Election of Directors C
Director Compensation" and "Executive Compensation C Employment Agreements".
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen LLP as the
independent auditors of the Company for the current fiscal year ending September
30, 1998. The selection of the independent auditors is being submitted to the
stockholders for ratification at the Annual Meeting. In the event that
ratification by the stockholders of the selection of Arthur Andersen LLP as the
Company's independent auditors is not obtained, the Board of Directors will
reconsider such selection. Arthur Andersen LLP has audited the Company's
financial statements since 1993.
The ratification of the selection of Arthur Andersen LLP will require
the affirmative vote of not less than a majority of the shares of the Company's
Common Stock represented and voting at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP.
16
<PAGE> 19
OTHER BUSINESS
The Company currently knows of no other matters to be submitted at the
Annual Meeting. If any other matters properly come before the Annual Meeting, it
is the intention of the persons named in the enclosed form of Proxy to vote the
shares they represent as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: January 27, 1998
17
<PAGE> 20
DETACH HERE
RAYTEL MEDICAL CORPORATION
Proxy for Annual Meeting of Stockholders
Solicited by the Board of Directors
The undersigned, revoking all prior proxies, hereby appoints Richard F.
Bader and E. Payson Smith, Jr., or either of them, with full power of
substitution, as proxies to represent and vote as designated in this proxy any
and all of the shares of stock of Raytel Medical Corporation, held or owned by
or standing in the name of the undersigned on the Company's books on January
14, 1998 at the Annual Meeting of Stockholders of the Company to be held at the
Hotel Sofitel, 223 Twin Dolphin Drive, Redwood City, California at 11:00 a.m.
on March 5, 1998, and any continuation or adjournment thereof, with all powers
the undersigned would possess if personally present at the meeting.
THE UNDERSIGNED HEREBY DIRECTS AND AUTHORIZES SAID PROXIES, AND EACH OF
THEM, OR THEIR SUBSTITUTE OR SUBSTITUTES, TO VOTE AS SPECIFIED BELOW WITH
RESPECT TO THE PROPOSALS LISTED IN PARAGRAPHS 1 AND 2 ON THE REVERSE SIDE, OR
IF NO SPECIFICATION IS MADE, TO VOTE IN FAVOR THEREOF.
The undersigned hereby further confers upon said proxies, and each of
them, or their substitute or substitutes, discretionary authority to vote with
respect to all other matters, which may properly come before the meeting or any
continuation or adjournment thereof.
The undersigned hereby acknowledges receipt of: (a) Notice of Annual
Meeting of Stockholders of the Company, (b) accompanying Proxy Statement, and
(c) Annual Report to Stockholders for the fiscal year ended September 30, 1997.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 21
DETACH HERE
[X] Please mark Votes as in this example.
The undersigned hereby votes all the shares of the stock of Raytel Medical
Corporation which the undersigned is entitled to vote as hereinafter specified
upon the proposals listed below:
1. Election of three (3) directors to Class III of the Board of Directors.
Nominees: Albert J. Henry, Gene I. Miller and
David E. Wertheimer, M.D.
FOR WITHHOLD
--- --------
[ ] [ ]
[ ] --------------------------------------
For all nominees except as noted above.
2. To ratify the appointment of Arthur Andersen LLP FOR AGAINST ABSTAIN
as independent auditors of the Company for the [ ] [ ] [ ]
fiscal year ending September 30, 1998.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Sign exactly as your name(s) appears on your stock
certificate. If shares of stock stand of record in
the names of two or more persons or, in the name
of husband and wife, whether as joint tenants or
otherwise, both or all of such persons should sign
this ballot. If shares of stock are held of record
by a corporation, this ballot, should be executed
by the President or Vice President, and the
Secretary or Assistant Secretary, and the
corporate seal should be affixed thereto.
Executors or administrators or other fiduciaries
who execute this ballot for a deceased stockholder
should give their full title.
Signature: Date:
-------------------------------------------- ------------------
Signature: Date:
-------------------------------------------- ------------------
