SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to S. 240.14a-11(c) or S. 240.14a-12
PhyMatrix Corp.
..............................................................................
(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):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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>
[PhyMatrix logo]
PhyMatrix Corp.
777 South Flagler Drive
West Palm Beach, Florida 33401
____________
NOTICE OF ANNUAL MEETING
TO BE HELD ON
NOVEMBER 14, 1996
____________
The Annual Meeting of Stockholders of PhyMatrix Corp. (the "Company") will
be held on Thursday, November 14, 1996 at 4:00 p.m. at the Governors Club
located at 777 South Flagler Drive, West Palm Beach, Florida, for the
following purposes:
1. To elect the directors of the class of the Board of Directors whose
terms expire at this Annual Meeting, which directors shall be elected
to serve until the 1999 annual meeting of stockholders and until their
successors are duly elected and qualified.
2. To consider and act upon a proposal to amend the Company's 1995 Equity
Incentive Plan (the "Equity Plan") by increasing the number of shares
of Common Stock available for issuance under the Equity Plan by
1,000,000 shares.
3. To consider and act upon such other business and matters or proposals
as may properly come before said Annual Meeting or any adjournment or
adjournments thereof.
The Board of Directors has fixed the close of business on September 27,
1996 as the record date for determining the stockholders having the right to
receive notice of and to vote at said Annual Meeting.
By Order of the Board of
Directors
Alberto M. Hernandez, Secretary
West Palm Beach, Florida
October 11, 1996
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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN,
DATE AND MAIL PROMPTLY THE ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE.
-----------------------------------------------------------------------------
<PAGE>
[PhyMatrix logo]
____________
PROXY STATEMENT
____________
ANNUAL MEETING OF STOCKHOLDERS
November 14, 1996
This Proxy Statement is furnished in connection with the solicitation by
and on behalf of the Board of Directors of PhyMatrix Corp. (the "Company") of
proxies for use at the Annual Meeting of Stockholders of the Company to be
held, pursuant to the accompanying Notice of Annual Meeting, on Thursday,
November 14, 1996 at 4:00 p.m., and at any adjournment or adjournments
thereof (the "Annual Meeting"). Action will be taken at the Annual Meeting to
elect the directors of the class of the Board of Directors whose terms expire
at the Annual Meeting, which directors shall be elected to serve until the
annual meeting of stockholders in 1999 and until their successors are duly
elected and qualified; to consider and act upon a proposal to amend the
Company's 1995 Equity Incentive Plan (the "Equity Plan") by increasing the
number of shares of Common Stock available for issuance under the Equity Plan
by 1,000,000 shares; and to consider and act upon such other business and
matters or proposals as may properly come before the Annual Meeting.
If a stockholder specifies in the proxy accompanying this Proxy Statement
(the "Proxy") how it is to be voted, it will be voted in accordance with such
specification, but any Proxy which is signed and returned and which does not
specify how it is to be voted will be voted "for" the election of the
nominees for directors named herein and "for" the approval of Item 2 in the
Notice of Annual Meeting. Any stockholder giving a Proxy in the accompanying
form retains the power to revoke it at any time before it is exercised by
delivering a written revocation to the Secretary of the Company, by executing
and returning to the Company a proxy bearing a later date or by attending the
Annual Meeting and voting his or her shares in person. Any stockholder who
attends the Annual Meeting in person will not be deemed thereby to revoke the
stockholder's Proxy unless such stockholder affirmatively indicates at the
Annual Meeting his or her intention to vote the shares in person.
The Company's principal executive offices are located at 777 South Flagler
Drive, West Palm Beach, Florida 33401. Unless otherwise indicated or required
by the context, references to the "Company" include its consolidated
subsidiaries.
The Company mailed this Proxy Statement and the Proxy on or about
October 11, 1996 to its stockholders of record at the close of business on
September 27, 1996.
ANNUAL REPORT AND INDEPENDENT PUBLIC ACCOUNTANTS
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1995 (plus the six months ended June 30, 1996), including
financial statements and the report of Coopers & Lybrand LLP thereon, is
being mailed herewith to each of the Company's stockholders of record at the
close of business on September 27, 1996. Representatives of Coopers & Lybrand
LLP are expected to be present at the Annual Meeting and will have the
opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions.
VOTING SECURITIES
The holders of record of shares of Common Stock, $.01 par value, of the
Company at the close of business on September 27, 1996 may vote at the Annual
Meeting. On that date, there were outstanding and entitled to vote 22,238,144
shares of Common Stock. Each stockholder has one vote at the Annual Meeting
for each share of Common Stock held of record on said date. As long as a
quorum (a majority of issued and outstanding shares of Common Stock) is
present at the Annual Meeting, the nominees for director shall be elected,
and the amendment to the Equity Plan proposed in Item 2 of the Notice of
Annual Meeting shall be approved, by a majority of the votes cast at the
Annual Meeting by the holders of shares entitled to vote thereat. Votes may
be cast in favor of the election of any nominees for director or withheld;
votes that are withheld will be treated as a vote against the nominee. Where,
as to any matter submitted to the stockholders for a vote, proxies are marked
as abstentions (or stockholders appear in person but abstain from voting),
such abstentions will be treated as shares that are present and entitled to
vote for purposes of determining the presence of a quorum but as unvoted for
purposes of determining the approval of any matter submitted to the
stockholders
<PAGE>
for a vote. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with
respect to that matter for purposes of determining the presence of a quorum.
ITEM 1
ELECTION OF DIRECTORS
The Company's By-laws provide that the Board of Directors shall consist of
not less than three nor more than 15 directors, the exact number to be fixed
by the Board of Directors. The Board of Directors has currently fixed the
number of directors at eight. In the event that any of the nominees becomes
unavailable (which is not now anticipated by the Company), the persons named
as Proxies have discretionary authority to vote for a substitute. The Board
of Directors has no reason to believe that any of the nominees will be
unwilling or unable to serve if elected. The By-laws provide that, within the
limits above specified, the number of directors may at any time be increased
or decreased by the vote of the Board. No decrease in the number of
directors, however, will affect the term of any director in office.
The Board of Directors is divided into three classes, with staggered
three-year terms. The initial terms of Bruce A. Rendina and Stephen E. Ronai
will expire at the Annual Meeting; the initial terms of Joseph N. Cassese,
David M. Livingston, M.D. and Eric Moskow, M.D. will expire at the Company's
1997 annual meeting; and the initial terms of Abraham D. Gosman, Hugh L.
Carey and John T. Chay will expire at the Company's 1998 annual meeting.
Successors to the directors whose terms expire at each annual meeting are
eligible for election for three-year terms. A director holds office until the
annual meeting for the year in which his term expires and until his successor
is elected and qualified.
Nominees for Director
Each of the following directors has been nominated for re-election at the
Annual Meeting.
Bruce A. Rendina, age 42, has served as a director of the Company since
January 29, 1996. Mr. Rendina was the co-founder of DASCO Development
Corporation, a medical facility development company ("DASCO"), and served as
its Executive Vice President from 1987 to 1994 and its President since 1994.
Prior to founding DASCO, Mr. Rendina was associated with Coopers & Lybrand
LLP from 1975 to 1985.
Stephen E. Ronai, age 60, has served as a director of the Company since
January 29, 1996. Mr. Ronai has been a partner in the Connecticut law firm of
Murtha, Cullina, Richter and Pinney since 1984 where he serves as Chairman of
the firm's Health Care Department. He is a member of the American Academy of
Healthcare Attorneys of the American Hospital Association and the National
Health Lawyers Association. From 1989 to 1995 he served as a member of the
Board of Directors of the National Health Lawyers Association. He also
formerly served as Chairman of the Board of Trustees of the Connecticut
Hospital Association.
Continuing Directors
The following individuals are directors of the Company whose terms will
expire at the Company's 1997 or 1998 annual meeting of stockholders:
Abraham D. Gosman, age 67, has served since June 1994 as an executive
officer of the Company and is presently the Chairman of the Board of
Directors, President and Chief Executive Officer of the Company. Previously,
he founded and was the principal owner of The Mediplex Group, Inc.
("Mediplex"), a diversified health care company, and its predecessor
companies for more than 15 years, with the exception of the period from April
1986 to August 1990 when Mediplex was owned by Avon Products, Inc. ("Avon").
He was the Chief Executive Officer of Mediplex from its inception to
September 1988 and assumed that position again after Mediplex was purchased
from Avon in August 1990. In addition, Mr. Gosman has served as Chairman of
the Board of Trustees and Chief Executive Officer of Meditrust, the nation's
largest health care real estate investment trust, since its inception in
1985. In October 1996, Mr. Gosman became Chairman of the Board of The
Standish Care Company, an assisted living development and management company.
Hugh L. Carey, age 77, has served as a director of the Company since
February 21, 1996. Currently, he is Chairman of the Board of Advisors of
Cambridge Partners, L.L.C. He served as an Executive Vice President of W.R.
Grace & Company from January 1989 to December 1995. He was Governor of the
State of New York from January 1974 to January 1982. He is currently a
director of Triarc Companies, Inc.
Joseph N. Cassese, age 67, has served as a director of the Company since
January 29, 1996. Mr. Cassese was the Vice President of Mediplex from January
1976 to March 1986 and the President of Mediplex from March 1986
2
<PAGE>
to March 1988 and again from August 1990 to December 1991. Mr. Cassese was
also a Vice President of A.M.A. Advisory Corp., the advisor to Meditrust,
from April 1988 to August 1990. Mr. Cassese has been retired since December
1991.
John T. Chay, age 38, has served as a director of the Company since
April 15, 1996. Mr. Chay has served as an executive officer of Nutrichem,
Inc. which he co-founded in November 1993 and has served since June 1991 as
Chief Executive Officer of The HealthLink Group, Inc., a practice management
consulting firm which he also founded.
David M. Livingston, M.D., age 55, has served as a director of the Company
since January 29, 1996. Dr. Livingston has been a Director of Dana-Farber
Cancer Institute in Boston, Massachusetts since 1991 and has been employed as
a physician at the Institute since 1973. He currently serves as Chairman of
the Institute's Department of Medicine and Executive Committee for Research
and as a Trustee of the Institute. He is also the Emil Frei Professor of
Medicine at Harvard Medical School where he has taught since 1973.
Eric Moskow, M.D., age 38, has served as a director of the Company since
September 30, 1996 and has been Executive Vice President of Strategic
Planning of the Company since September 1996. He founded Physician's Choice
Management, LLC in October 1995 and served as its Executive Vice President
from October 1995 to October 1996. Prior to establishing Physician's Choice,
he served as Medical Director for Mediplex of Ridgefield from November 1994
to August 1996 and as Associate Medical Director for US Healthcare in
Connecticut from 1988 to 1990. Dr. Moskow is board-certified in internal
medicine and has served as President of the Family Medical Associates of
Ridgefield for the past nine years.
Certain Information Regarding Directors
The Board of Directors of the Company has the following committees:
Executive Committee. The members of the Executive Committee of the
Company's Board of Directors are Messrs. Gosman, Rendina and Cassese. The
Executive Committee exercises all the powers of the Board of Directors
between meetings of the Board of Directors, except such powers as are
reserved to the Board of Directors by law.
Audit and Compliance Committee. The members of the Audit and Compliance
Committee of the Company's Board of Directors are Messrs. Carey and Ronai and
Dr. Livingston. The Audit and Compliance Committee makes recommendations
concerning the engagement of independent public accountants, reviews with the
independent public accountants the plans for and results of the audit,
approves professional services provided by the independent public
accountants, reviews the independence of the independent public accountants,
considers the range of audit and non-audit fees and reviews the adequacy of
the Company's internal accounting controls. The Audit and Compliance
Committee also oversees the Company's Compliance Program and the
implementation of and adherence to the Company's Standards of Conduct, both
of which are designed to ensure maintenance of high ethical standards and
compliance with all legal (healthcare-related and other) requirements
applicable to the Company.
Compensation Committee. The members of the Compensation Committee of the
Company's Board of Directors are Messrs. Cassese and Carey. The Compensation
Committee establishes general compensation policies for the Company and
approves increases both in directors' fees and in salaries paid to officers
and senior employees of the Company. The Compensation Committee administers
all of the Company's employee benefit plans, including the Equity Plan. The
Compensation Committee determines, subject to the provisions of the Company's
plans, the directors, officers, employees and consultants of the Company
eligible to participate in any of the plans, the extent of such participation
and terms and conditions under which benefits may be vested, received or
exercised.
Prior to the completion of the Company's initial public offering on
January 29, 1999, Mr. Gosman was the Company's sole director. All action
taken by the Board prior to that date, including compensation-related
decisions, was taken by Mr. Gosman by written consent without a meeting.
There are no family relationships among any of the directors or executive
officers of the Company.
Compensation of Directors
Officers who are members of the Board of Directors do not receive
compensation for serving on the Board. Each other member of the Board
receives annual compensation of $15,000 for serving on the Board, plus a fee
of $1,000 for each Board of Directors' meeting attended. In addition, such
directors receive an additional fee of $500 for each committee meeting
attended, except that only one fee will be paid in the event that more than
one such meeting is held on a single day. All directors receive reimbursement
of reasonable expenses incurred in attending Board and committee meetings and
otherwise carrying out their duties. Each non-employee director who was a
member of the Compensation Committee at the time of the closing of the
initial public offering received options
3
<PAGE>
to purchase 10,000 shares of Common Stock upon the closing of the offering at
the initial public offering price pursuant to the Equity Plan. Each director
who is a member of the Compensation Committee on the first business day
following each annual meeting of the stockholders will receive the option to
purchase 2,500 shares of Common Stock. Any of such options granted to a
member of the Compensation Committee under the Equity Plan will be
exercisable one year following the date of grant.
MANAGEMENT AND EXECUTIVE COMPENSATION
Executive Officers
The following is a biographical summary of the experience of the executive
officers of the Company who do not serve as directors of the Company.
Officers are appointed by and serve at the discretion of the Board of
Directors.
Frederick R. Leathers, age 38, has served since June 1994 as the Chief
Financial Officer and Treasurer of the Company. Previously, he served as
Treasurer, Chief Financial Officer and Principal Accounting Officer of
Mediplex from October 1991 to June 1994, Corporate Controller from May 1991
to October 1991 and held the position of Assistant Controller from May 1986
to May 1987. He was Treasurer of A.M.A. Advisory Corp. (the advisor to
Meditrust) and Controller of Meditrust from July 1988 to January 1991. Mr.
Leathers was associated with State Street Bank and Trust Company, Inc. in the
mutual funds division from May 1987 to July 1988.
William A. Sanger, age 46, has served since September 1994 as the
Executive Vice President and Chief Operating Officer of the Company.
Previously, he served as the President and Chief Executive Officer of JFK
Medical Center in Atlantis, Florida from February 1992 to September 1994
where he developed integrated delivery networks and implemented a
comprehensive physician acquisition strategy. He served as Executive Vice
President and Chief Operating Officer of Saint Vincent Medical Center,
Toledo, Ohio from January 1990 to February 1992.
Robert A. Miller, age 41, has served since June 1994 as an executive
officer of the Company and is presently Executive Vice President of
Acquisitions. Previously, he served as Senior Vice President/Development
Operations of Mediplex from September 1992 and Vice President from June 1991.
Mr. Miller served as Regional Operations Director for New Medico Associates
from January 1991 to October 1991. Previously, Mr. Miller was Vice President
of Hospital Operations of Glenbeigh, Inc., where he was employed from 1979
through 1991.
Edward E. Goldman, M.D., age 51, has served since October 1994 as
President of a subsidiary of the Company, since October 1995 as an executive
officer of the Company and is presently Executive Vice President of Physician
Development. Dr. Goldman is a board certified family practice physician and
previously served as Chairman of PAL-MED Health Services from February 1983
to September 1994, a multi-specialty IPA which provides physicians services
and manages health care related services.
Francis S. Tidikis, age 49, served from January 1996 to March 1996 as
Executive Vice President of Marketing of the Company. Since March 1996, he
has assumed the role of Executive Vice President of Operations. Mr. Tidikis
had served as Senior Vice President of Physician Management Services for
Tenet Healthcare Corporation since March 1995. Mr. Tidikis had been with
Tenet Healthcare Corporation and its predecessor, National Medical
Enterprises, since April 1981, serving as Executive Vice President of the
Eastern District from June 1991 to February 1995 and as Vice President of
Operations for the Eastern Region Hospital Group from February 1984 to
September 1990. Mr. Tidikis currently serves as a director of Professional
Liability Insurance Company.
Don S. Harvey, age 39, has served as an operations officer of the Company
since April 1995 and as an executive officer since October 1995 and is
presently Senior Vice President of Operations. He was a consultant to the
Company from January 1995 to April 1995. Mr. Harvey served as Executive Vice
President and Chief Operating Officer of JFK Medical Center in Atlantis,
Florida from April 1990 to December 1994, where he developed and managed
medical related services.
Donald A. Sands, age 45, has served as the Vice President--Medical
Facility Development since January 1996. He has served since 1995 as Chairman
of the Board and Chief Executive Officer of DASCO, which he co-founded.
Previously, Mr. Sands served as President of DASCO from 1985. From 1984 to
1985, he was Director of Development for Loews Hotels and was Counsel for
Westin Hotel Company from 1979 to 1984.
Executive Compensation
The following table sets forth certain information regarding compensation
paid or accrued by the Company during the period June 24, 1994 (inception) to
December 31, 1994 and the year ended December 31, 1995, to the Company's
Chief Executive Officer and to each of the Company's four other most highly
compensated executive officers (the "Named Executive Officers") during 1995.
None of the Named Executive Officers received or exercised stock options
during or hold stock options at the end of 1995.
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<TABLE>
<CAPTION>
Annual
Compensation All Other
(Salary) Compensation(1)
Name and Principal Position Year ($) ($)
--------------------------------------------------------- ------ -------------- ---------------
<S> <C> <C> <C>
Abraham D. Gosman ......................................... 1995 225,000 --
Chairman, President and Chief Executive Officer 1994 116,682 --
Frederick R. Leathers .................................... 1995 229,487 290
Chief Financial Officer and Treasurer 1994 102,057 --
Robert A. Miller .......................................... 1995 206,382 102
Executive Vice President of Acquisitions 1994 101,916 --
Edward E. Goldman, M.D .................................... 1995 400,000 --
Executive Vice President of Physician Development 1994 133,333 --
William A. Sanger ......................................... 1995 304,571 174
Executive Vice President and Chief Operating Officer 1994 98,038 --
</TABLE>
(1) Amounts indicated are for life insurance premiums paid by the Company.
Employment Agreements
The Company has entered into an employment agreement with Dr. Goldman that
provides for an initial three-year term expiring in October 1997 that is
automatically renewable for an initial period of two years and for successive
periods of one year thereafter, unless either party elects not to renew. The
base salary for Dr. Goldman under the agreement is $400,000 per year. In
addition, he is entitled to receive bonuses and benefits, including health
insurance, dental insurance, short and long term disability, life insurance
and a car allowance. The agreement may be terminated by the Company without
cause upon 30 days notice (180 days notice after the first anniversary of the
agreement) and with cause (as defined in the agreement) effective immediately
upon notice. Dr. Goldman may terminate the agreement immediately if the
Company fails to fulfill its obligations thereunder or without cause upon 30
days notice. In the event that Dr. Goldman is terminated without cause, he is
entitled to receive his base salary for the lesser of (i) the remaining term
of the then current employment period or (ii) 12 months following the
effective date of his termination of employment. The agreement contains
restrictive covenants prohibiting Dr. Goldman from competing with the
Company, or soliciting employees of the Company to leave, during his
employment and for a period of two years after termination of the agreement,
other than after a termination by the Company without cause or by Dr. Goldman
for good reason.
The Company has entered into an employment agreement with Mr. Miller that
provides for an initial two-year term expiring in January 1998 that is
automatically renewable for successive one-year periods, unless either party
elects not to renew. The base salary for Mr. Miller under the agreement is
$300,000 per year. In addition, he is entitled to receive such bonuses and
benefits as the Company, in its sole discretion, may provide to its executive
officers. The agreement may be terminated by the Company without cause upon
15 days notice and with cause (as defined in the agreement) immediately upon
notice. Mr. Miller may terminate the agreement immediately upon written
notice to the Company in the event of any material breach by the Company of
its obligations thereunder. In the event Mr. Miller is terminated without
cause, he is entitled to receive his base salary for 12 months following the
effective date of his termination of employment. The agreement contains
restrictive covenants prohibiting Mr. Miller from competing with the Company,
or soliciting employees of the Company to leave, during his employment and
for a period of 12 months after termination of the agreement (if Mr. Miller
is terminated with cause or if he chooses not to renew).
The Company has entered into an employment agreement with Mr. Sanger that
provides for an initial three-year term expiring in July 1997 that is
automatically renewable for successive one-year periods until either party
elects not to renew. The base salary for Mr. Sanger under the agreement is
$300,000 per year. In addition, he is entitled to receive bonuses and
benefits, including health insurance, dental insurance, short and long term
disability, life insurance and a car allowance. The agreement may be
terminated by the Company without cause and with cause (as defined in the
agreement) effective immediately upon written notice. Mr. Sanger may
terminate the agreement upon written notice to the Company, if the Company
fails to pay any sums due or perform substantially all of its duties and
obligations under the agreement. In the event that Mr. Sanger is terminated
without cause, he is entitled to receive his base salary for 12 months
following the effective date of his termination of employment. The agreement
contains restrictive covenants prohibiting Mr. Sanger from competing with the
Company, or soliciting employees of the Company to leave during his term of
the agreement and for a period of 12 months thereafter (if Mr. Sanger is
terminated with cause or if he chooses not to renew the agreement).
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Compensation Committee Report
The Company was incorporated in October 1995 to combine the business
operations of certain companies (the "Related Companies") controlled by Mr.
Gosman, the Company's Chairman, Chief Executive Officer and President. The
business operations of the Related Companies were acquired from third parties
in transactions completed since September 1994. Simultaneously with the
closing of the Company's initial public offering on January 23, 1996, the
Related Companies were transferred to the Company in exchange for 13,307,450
shares of Company Common Stock (the "Formation").
Prior to the completion of its initial public offering, the Company did
not have a Compensation Committee or any other committee of the Board of
Directors. Decisions concerning compensation of executive officers were made
during this period by Mr. Gosman, the Company's sole director. From June 1994
through 1995, the Company hired the majority of its current executive
officers. During this period, as a newly formed but rapidly growing company,
the Company established the salaries of its executive officers, including the
Chief Executive Officer, at levels which the Company believed were sufficient
to attract and retain the key personnel upon whom the Company has relied for
its growth and success to date. The Company believes that such salary levels
were competitive with the salary levels of similar positions at comparable
companies in the health care industry.
The Company did not pay bonuses to the Chief Executive Officer or any of
the other Named Executive Officers in 1995, in large part because the Company
was still in its start-up and initial growth phase. The Company also did not
grant stock options or other equity incentive awards to the Chief Executive
Officer or other Named Executive Officers for similar reasons and because all
of such officers were initial stockholders in the Company. The Company has
granted equity incentives in the form of stock options under the Equity Plan
to other executive officers and employees who were not initial stockholders
in the Company. The Company believes that granting such long-term incentive
compensation will allow the Company to retain and motivate such officers and
employees.
Over the next year, the Compensation Committee intends to formulate and
formalize compensation policies with respect to the Company's executive
officers. In addition to the continued use of long-term equity incentive
compensation, such policies may include the payment of annual cash bonuses in
order to reward certain individual or Company-wide achievements or the
attainment of certain individual and Company-wide goals.
Respectfully submitted by,
Abraham D. Gosman
Hugh L. Carey
Joseph N. Cassese
CERTAIN TRANSACTIONS
During 1994 and 1995, Mr. Gosman and certain companies controlled by him
completed the acquisition of various companies and businesses which were
transferred to the Company.
As of July 31, 1996, the Company had outstanding borrowings from Mr.
Gosman of approximately $77,000, which borrowings were made for working
capital purposes and to fund certain of the Company's acquisitions. At
December 31, 1995 the Company also had a $19.5 million loan from NationsBank,
which was guaranteed by Mr. Gosman. Mr. Gosman did not receive any
consideration for this or any other guarantee he has provided on behalf of
the Company. The $19.5 million loan was repaid from the net proceeds of the
initial public offering. After repayments to Mr. Gosman made from the net
proceeds of the initial public offering totalling $28.7 million, the Company
owed Mr. Gosman approximately $10.8 million, which was repaid from the net
proceeds of the Company's offering of 6-3/4% Convertible Subordinated
Debentures due 2003 completed on June 26, 1996 (the "Debt Offering"). All
amounts loaned to the Company by Mr. Gosman accrue interest at a floating
rate equal to NationsBank's prime rate. The Company agreed to repay in full
the amount owed to Mr. Gosman from the proceeds of any public offering by the
Company of its debt or equity securities; and to repay Mr. Gosman from the
proceeds of any institutional debt financing by the Company for working
capital purposes, except that the amount to be repaid from such institutional
debt financing proceeds would not exceed 25% of the maximum amount available
to be borrowed under the terms of the financing. Pursuant to such agreement,
the $11.7 million the Company owed Mr. Gosman (including additional amounts
borrowed since the closing of the initial public offering) was repaid from
the net proceeds of the Debt Offering.
In connection with the acquisition of OTI in March 1995, Mr. Gosman
guaranteed until the later of the satisfaction of certain financial covenants
or July 31, 1998 the repayment by a subsidiary of the Company of a portion
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of the $17.5 million in acquisition financing from FINOVA Capital Corporation
("FINOVA"). Mr. Gosman's liability under the guarantee was limited to no more
than $6.1 million. The Company used the net proceeds of the initial public
offering to repay in full its obligations to FINOVA.
During 1995, in addition to the guarantee discussed above, Mr. Gosman
guaranteed the payment by the Company of indebtedness in the amount of $4.6
million incurred in connection with the acquisition of DASCO, all of which
was repaid during 1996. In addition, Mr. Gosman executed a reimbursement
agreement and provided collateral for a letter of credit to secure other
indebtedness of the Company in the amount of $5.4 million incurred in
connection with the acquisition of Oncology & Radiation Associates, P.A. Upon
the closing of the Company's initial public offering, the Company obtained
the release of Mr. Gosman from these guarantees and from his other
obligations with respect to acquisition indebtedness through the assumption
by the Company of Mr. Gosman's obligation to pay such Acquisition
indebtedness and of the obligation to provide cash collateral for the letter
of credit.
The Company occupies office space for its principal offices in West Palm
Beach, Florida under the terms of a lease which the Company assumed from a
company the stockholders and executive officers of which include Messrs.
Gosman, Leathers, Miller and Sanger and Dr. Goldman. The Company estimates
that the total amount of lease payments to be made under the assumed lease
through the end of the current lease term will equal approximately $1.8
million.
In connection with the closing of the Company's initial public offering
and the simultaneous transfer to the Company of certain companies controlled
by the executive officers and directors of the Company, the following
executive officers and directors of the Company received the indicated number
of shares of Common Stock: Mr. Gosman (including shares held for the benefit
of his two adult sons), 8,282,305; Mr. Rendina, 916,667; Mr. Chay, 133,333;
Mr. Sands, 916,667; Mr. Leathers, 459,505; Mr. Miller, 459,505; Mr. Sanger,
336,224; and Dr. Goldman, 168,112.
Various persons who upon the closing of the initial public offering and
the Formation became employees and/or officers of the Company were employees
and/or officers of companies the stockholders and executive officers of which
included Mr. Gosman and Mr. Leathers. The services of such employees and/or
officers were provided to the Company at cost prior to the Formation under
the terms of a management agreement.
From time to time, the Company may charter an airplane and flight services
at competitive rates from two companies owned by Mr. Gosman.
DASCO provides development and other services in connection with the
establishment of health parks, medical malls and medical office buildings.
DASCO provides these services to or for the benefit of the owners of the new
facilities, which owners are either corporations or limited partnerships. Mr.
Sands and Mr. Rendina have acquired equity interest in the entities which own
23 of the 26 facilities developed by DASCO. The collective interests of
Messrs. Sands and Rendina range from 17% to 100%. In addition, as of December
31, 1995, Mr. Gosman individually and as trustee for his two adult sons and
Messrs. Leathers, Miller and Sanger and Dr. Goldman have acquired limited
partnership interests ranging from 14% to 36% in the entities which own seven
facilities being developed by the Company through DASCO. The Company (through
DASCO) also is providing construction management, development, marketing and
consulting services to an entity principally owned by Mr. Gosman in
connection with the development by such entity of a medical mall, and may
provide other services to related entities in the future. During the six
months ended June 30, 1996, the Company recorded revenues in the amount of
$1,079,568 related to such services. DASCO has and continues to provide all
of its medical facility development services to affiliated parties on terms
no less favorable to the Company than those provided to unaffiliated parties.
Meditrust, a publicly traded real estate investment trust with assets in
excess of $1.7 billion dollars of which Mr. Gosman is the Chairman of the
Board and Chief Executive Officer, has provided financing in the aggregate
amount of $150.0 million for the development of 15 facilities developed by
DASCO.
Mr. Ronai is a partner in the Connecticut law firm of Murtha, Cullina,
Richter and Pinney which has been retained to perform certain legal services
for the Company.
During December 1995, the Company obtained a 43.75% interest in Physicians
Choice Management, LLC, a newly formed management services organization that
provides management services to an independent physician association composed
of over 330 physicians based in Connecticut ("Physician's Choice"). The
Company acquired this interest in exchange for a payment of $1.5 million to
the stockholders of Physician's Choice, including Dr. Moskow. During
September 1996, the Company acquired the remaining 56.25% interest from such
stockholders for a payment of $1 million in cash plus 363,442 shares of the
Company's Common Stock.
7
<PAGE>
CERTAIN STOCKHOLDERS
The following table sets forth, as of September 30, 1996, certain
information regarding the beneficial ownership of shares of Common Stock by
each person known by the Company to be the beneficial owner of more than 5%
of outstanding Common Stock, by each director and each of the Named Executive
Officers of the Company and by all directors and executive officers as a
group. Except as indicated in the footnotes, all of such shares of Common
Stock set forth in the following table are owned directly, and the indicated
person has sole voting and investment power with respect to all Common Stock
shown as beneficially owned by such person:
<TABLE>
<CAPTION>
Amount of Beneficial
Ownership
---------------------------
Shares
Beneficially Percentage
Name Owned Owned
- -------------------------------------------------- -------------- ------------
<S> <C> <C>
Abraham D. Gosman (1) 8,356,126 37.6%
Putnam Investments, Inc. (2) 2,322,300 10.4
Frederick R. Leathers 460,505 2.1
William A. Sanger 336,224 1.5
Robert A. Miller (3) 459,655 2.1
Edward E. Goldman, M.D. 168,112 *
Joseph N. Cassese -- *
David M. Livingston, M.D. -- *
Bruce A. Rendina 916,667 4.1
Stephen E. Ronai 4,000 *
Hugh L. Carey -- *
John T. Chay 142,833 *
Eric Moskow, M.D. 165,252 *
All directors and executive officers as a group
(15 persons) 11,952,792 53.7
</TABLE>
* Less than one percent.
(1) Includes 4,000,000 shares held by Mr. Gosman as trustee for the benefit
of his two adult sons. Mr. Gosman's business address is PhyMatrix Corp.,
777 South Flagler Drive, West Palm Beach, FL 33401.
(2) Putnam Investments, Inc. ("PII") and its wholly-owned subsidiary Putnam
Investment Management, Inc. ("PIM") have shared dispositive power with
respect to such shares, including 1,096,700 shares with respect to which
Putnam New Opportunities Fund (the "Fund") has shared voting and
dispositive power. The address of PII, PIM and the Fund is One Post
Office Square, Boston, Massachusetts 02109. The foregoing is based upon
the Schedule 13G dated July 10, 1996 filed by PII, PIM and the Fund.
(3) Includes 150 shares owned by Mr. Miller's minor sons with respect to
which Mr. Miller disclaims beneficial ownership.
ITEM 2.
PROPOSAL TO AMEND THE 1995 EQUITY INCENTIVE PLAN
The 1995 Equity Incentive Plan (the "Equity Plan") was adopted by the
stockholders of the Company in November 1995 and provides for the award of up
to two million shares of Common Stock in the form of incentive stock options
("ISOs"), non-qualified stock options ("Non-statutory Stock Options"),
restricted stock, performance stock units and stock appreciation rights. To
date, the Company has only awarded stock options.
On September 30, 1996 options to purchase 2,215,000 shares of Common Stock
were outstanding under the Equity Plan, 225,000 of which were granted subject
to stockholder approval of the amendment to the Equity Plan. Currently, no
shares are available for future grants under the Equity Plan. Accordingly,
the Board of Directors has adopted, subject to shareholder approval,
amendments to the Equity Plan increasing the number of shares of Common Stock
available for issuance under the Equity Plan by 1,000,000 shares to a total
of 3,000,000 shares of Common Stock. The Company believes that the amendment
increasing the shares available under the Equity Plan is a necessary factor
in allowing the Company to attract, retain and motivate its directors and key
employees and consultants upon whom the long term success of the Company is
dependent.
The following is a summary of the material provisions of the Equity Plan
and is qualified in its entirety by reference to the complete text of the
Equity Plan which is attached to this Proxy Statement as Exhibit A.
8
<PAGE>
All employees, directors and consultants of the Company and any of its
subsidiaries are eligible to participate in the Equity Plan. The Company
currently has approximately 1,350 employees, consultants or directors who are
eligible to participate in the Equity Plan.
The Equity Plan will be administered by the Compensation Committee (the
"Committee") which consists of Messrs. Carey and Cassese. The Committee
determines who shall receive Awards from those employees and directors who
are eligible to participate in the Equity Plan, the type of Award to be made,
the number of shares of Common Stock which may be acquired pursuant to the
Award and the specific terms and conditions of each Award, including the
purchase price, term, vesting schedule, restrictions on transfer and any
other conditions and limitations applicable to the Awards or their exercise.
The Board of Directors, at its discretion, may assume administration of the
Equity Plan.
Each Award may be made alone, in addition to or in relation to any other
Award. The terms of each Award need not be identical, and the Committee need
not treat participants uniformly. Except as otherwise provided by the Equity
Plan or a particular Award, any determination with respect to an Award may be
made by the Committee at the time of award or at any time thereafter. The
Committee determines whether Awards are settled in whole or in part in cash,
Common Stock, other securities of the Company, Awards or other property. The
Committee may permit a participant to defer all or any portion of a payment
under the Equity Plan, including the crediting of interest on deferred
amounts denominated in Common Stock. Such a deferral may have no effect for
purposes of determining the timing of taxation of payments. In the event of
certain corporate events, including a merger, consolidation, dissolution,
liquidation or the sale of substantially all of the Company's assets, all
Awards become fully exercisable and realizable.
The Committee may amend, modify or terminate any outstanding Award,
including substituting therefor another Award of the same or a different
type, changing the date of exercise or realization, and converting an ISO to
a Nonstatutory Stock Option, if the participant consents to such action, or
if the Committee determines that the action would not materially and
adversely affect the participant. Awards may not be made under the Equity
Plan after November 14, 2005, but outstanding Awards may extend beyond such
date.
The number of shares of Common Stock issuable pursuant to the Equity Plan
may not be changed except by approval of the stockholders. However, in the
event that the Committee determines that any stock dividend, extraordinary
cash dividend, creation of a class of equity securities, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination,
exchange of shares, warrants or rights offering to purchase Common Stock at a
price substantially below fair market value, or other similar transaction
affects the Common Stock such that an adjustment is required to preserve the
benefits intended to be made available under the Equity Plan, the Committee
may adjust equitably the number and kind of shares of stock or securities in
respect of which Awards may be made under the Equity Plan, the number and
kind of shares subject to outstanding Awards, and the award, exercise or
conversion price with respect to any of the foregoing, and if considered
appropriate, the Committee may make provision for a cash payment with respect
to an outstanding Award. In addition, upon the adoption of a plan or
agreement concerning a change in control, sale of substantially all the
assets, or liquidation or dissolution of the Company, all Awards which are
not then fully exercisable or realizable become so. Common Stock subject to
Awards which expire or are terminated prior to exercise or Common Stock which
has been forfeited under the Equity Plan will be available for future Awards
under the Equity Plan. Both treasury shares and authorized but unissued
shares may be used to satisfy Awards under the Equity Plan.
The Equity Plan may be amended from time to time by the Board of Directors
or terminated in its entirety; however, no amendment may be made without
stockholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement.
Options
The Committee may award two types of options: ISOs, which qualify for
special tax treatment under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), and Nonstatutory Stock Options that do not qualify
for special federal income tax treatment under the Code. The Committee may
also determine the number of shares to be covered by each option, the option
price therefor, the term of the option, and the other conditions and
limitations applicable to the exercise of the option. As required by the
Code, the option price per share of Common Stock purchasable under an ISO may
not be less than the fair market value of the Common Stock on the date of
award. The option price per share of Common Stock purchasable under a
Nonstatutory Stock Option will be determined by the Committee and may be less
than, equal to or greater than the fair market value of the Common Stock on
the date of award. In no event, however, shall the option price per share of
Common Stock purchasable under an option be less than the lesser of 50% of
the fair market value of the Common Stock on the date of award
9
<PAGE>
or the par value of the Common Stock. Options may be exercisable for not more
than ten years after the date the option is awarded in the case of ISOs and
ten years and one day after the date the option is awarded in the case of
Nonstatutory Stock Options. The Committee may at any time accelerate the
exercisability of all or any portion of any option.
For federal income tax purposes, no taxable income results to the optionee
upon the grant of an ISO or upon the issuance of shares to him or her upon
the exercise of the option. Correspondingly, no deduction is allowed to the
Company for federal income tax purposes upon either the grant or the exercise
of an ISO.
If shares acquired upon the exercise of an ISO are not disposed of either
within the two-year period following the date the option is granted or within
the one-year period following the date the shares are transferred to the
optionee pursuant to exercise of the option, the difference between the
amount realized on any disposition thereafter and the option price will be
treated as long-term capital gain or loss to the optionee. If a disposition
occurs before the expiration of the requisite holding periods, then the lower
of (i) any excess of the fair market value of the shares at the time of the
exercise of the option over the option price or (ii) the actual gain realized
on disposition, will be deemed to be compensation to the optionee and will be
taxed at ordinary income rates. In such event, the Company will be entitled
to a corresponding deduction for federal income tax purposes. Any such
increase in the income of the optionee or deduction from the income of the
Company attributable to such disposition is treated as an increase in income
or deduction from income in the taxable year in which the disposition occurs.
Any excess of the amount realized by the optionee on disposition over the
fair market value of the shares at the time of exercise will be treated as
capital gain.
"Alternative minimum taxable income" in excess of the taxpayer's exemption
amount is subject to the alternative minimum tax, which is imposed at
graduated rates of up to 28% on individuals and is payable to the extent it
exceeds regular income tax. The excess of the fair market value on the date
of exercise over the option price of shares acquired upon exercise of an ISO
generally constitutes an item of alternative minimum taxable income for the
purpose of the alternative minimum tax, and the payment of any alternative
minimum tax resulting therefrom will not increase the optionee's basis for
the shares acquired for regular income tax purposes. In addition, if the
aggregate fair market value (determined at the time the option is granted) of
the Common Stock covered by ISOs which are exercisable for the first time by
an individual during a calendar year exceeds $100,000, the amount of the
excess will not be treated as shares acquired through the exercise of an ISO.
Under the Code, a person who is granted a Nonstatutory Stock Option will
not have taxable income at the date of grant; however, an optionee who
thereafter exercises such an option will be deemed to have received
compensation income in an amount equal to the difference between the option
price and the fair market value of the shares on the date of exercise. The
optionee's tax basis for such shares will be increased by the amount which is
deemed compensation income. For the year in which a Nonstatutory Stock Option
is exercised, the Company will be entitled to a deduction in the same amount
as the optionee is required to include in his or her income, provided the
Company withholds and deducts to the extent required by then applicable law.
When the optionee disposes of such shares he or she will recognize capital
gain or loss.
Stock Appreciation Rights
A stock appreciation right ("SAR") entitles the participant to receive an
amount in cash or shares of Common Stock or a combination thereof having a
value equal to (or, if the Committee shall so determine at the time of grant,
less than) the excess of the fair market value of a share of Common Stock on
the date of exercise over the fair market value of a share of Common Stock on
the date of grant (or over the option price, if the SAR was granted in tandem
with an option) multiplied by the number of shares with respect to which the
SAR is exercised. Subject to the provisions of the Equity Plan, the Committee
may award SARs in tandem with a Nonstatutory Stock Option (at or after the
award of the option), or alone and unrelated to an option and determine the
terms and conditions applicable thereto, including the form of payment. SARs
granted in tandem with an option terminate to the extent that the related
option is exercised, and the related option terminates to the extent that the
tandem SARs are exercised. Generally, SARs granted in tandem with an option
will be exercisable at such time or times, and only to the extent that, a
related option is exercisable, and shall not be transferable except to the
extent that a related option is transferable.
No income will be recognized by a participant in connection with the grant
of an SAR. When the SAR is exercised or when a participant receives payment
in cancellation of an option, the participant will generally be required to
include as taxable ordinary income in the year of such exercise or payment an
amount equal to the amount of cash received and the fair market value of any
stock received. The Company will generally be entitled to a deduction
10
<PAGE>
for federal income tax purposes at the same time equal to the amount
includable as ordinary income by such participant, provided the Company
withholds and deducts to the extent required by then applicable law.
Performance Shares
A performance share ("Performance Share") entitles a participant to
acquire shares of Common Stock upon the attainment of specified performance
goals. Subject to the provisions of the Equity Plan, the Committee may award
Performance Shares and determine the performance goals applicable to each
such Award, the number of such shares for each Performance Cycle, the
duration of each Performance Cycle, and all other limitations and conditions
applicable to the awarded Performance Shares. There may be more than one
Performance Cycle in existence at any one time, and the duration of
Performance Cycles may differ from each other. The payment value of each
Performance Share shall be equal to the fair market value of one share of
Common Stock on the date the Performance Share is earned or, in the
discretion of the Committee, on the date the Committee determines that the
Performance Share has been earned. The Committee will determine, at or after
the time of award, whether payment values will be settled in whole or in part
in cash or other property, including Common Stock or Awards.
No income will be recognized by a recipient in connection with the grant
of Performance Shares. When a recipient receives a Performance Stock Unit,
the recipient will generally be required to include as taxable ordinary
income in the year of receipt an amount equal to the amount of cash received
and the fair market value of any Common Stock or other property received. The
Company will generally be entitled to a deduction for federal income tax
purposes at the same time equal to the amount includable as ordinary income
by such recipient, provided the Company withholds and deducts to the extent
required by then applicable law.
Restricted Stock
An Award of restricted stock ("Restricted Stock") entitles the participant
to acquire shares of Common Stock for a purchase price per share equal to or
less than par value, subject to such conditions and restrictions as the
Committee shall determine, including a right of the Company, during a
specified period or periods, to repurchase such shares at their original
purchase price (or to require forfeiture of such shares) upon the
participant's termination of employment. Subject to the provisions of the
Equity Plan, the Committee may award shares of Restricted Stock and determine
the purchase price therefor, the duration of the restricted period during
which, and the conditions under which, the shares may be forfeited to or
repurchased by the Company, and the other terms and conditions of such
Awards. The Committee may modify or waive the restrictions with respect to
any Restricted Stock. Shares of Restricted Stock may be issued for no cash
consideration or such minimum consideration as may be required by applicable
law. A participant shall have all the rights of a stockholder with respect to
the Restricted Stock, including voting and dividend rights, subject to
restrictions on transferability and Company repurchase rights or forfeiture
conditions and subject to any other conditions contained in the Award.
A recipient of Restricted Stock generally will be subject to tax at
ordinary income rates on the fair market value of the Common Stock at the
time the Common Stock is no longer subject to forfeiture, less any amount
paid for such stock. A recipient who makes an election under Section 83(b) of
the Code within 30 days of the date of issuance of the Restricted Stock,
however, will recognize ordinary income on the date of issuance equal to the
fair market value of the shares of Restricted Stock at that time (measured as
if the shares were unrestricted and could be sold immediately), less any
amount paid for such stock. If the election is made, no taxable income will
be recognized when the shares subject to such election are no longer subject
to forfeiture. If the shares subject to such election are forfeited, the
recipient will not be entitled to any deduction, refund or loss for tax
purposes with respect to the forfeited shares, except that the amount, if
any, actually paid for the shares will be a capital loss. The holding period
to determine whether the recipient has long-term or short-term capital gain
or loss begins when the forfeiture period expires (or upon earlier issuance
of the shares, if the recipient elected immediate recognition of income under
Section 83(b) of the Code).
Stock Units
Subject to the provisions of the Plan, the Committee may award stock units
("Stock Units") subject to such terms, restrictions, conditions, performance
criteria, vesting requirements and payment rules as the Committee shall
determine. Shares of Common Stock issued in connection with a Stock Unit
shall be issued for no cash consideration or such minimum consideration as
may be required by law.
Section 162(m) of the Code
Approval of the Equity Plan will also constitute approval of options and
SARs for purposes of Section 162(m) of the Code to the extent the exercise
price of the options is not less than the fair market value of the Common
Stock on the date of grant ("Non-Discount Options").
11
<PAGE>
Section 162(m) of the Code denies a deduction for federal income tax
purposes of compensation paid to any "covered employee" to the extent such
compensation exceeds $1 million in any year. Covered employees for purposes
of Section 162(m) are the chief executive officer and the four next most
highly compensated officers. The deduction limit does not apply, however, to
"qualified performance-based compensation." Compensation attributable to an
option or SAR is deemed to constitute qualified performance-based
compensation if, among other things, (i) the award is made by a committee
comprised solely of outside directors, (ii) the plan states the maximum
number of shares with respect to which options and SARs may be granted during
a specified period to any employee, (iii) the amount of compensation the
employee could receive pursuant to any SAR or option is not greater than the
difference between the fair market value of the Common Stock on the date of
grant and at a future measurement date, respectively, and (iv) the plan is
approved by stockholders after adequate disclosure, including a general
description of the class of eligible employees and a description of the
formula used to calculate the compensation to be paid if the performance goal
is attained or the maximum amount of compensation that could be paid to any
employee during a specified period. Awards, other than Non-Discount Options
and SARs, do not qualify as "qualified performance based compensation" under
Section 162(m).
As noted above, the formula to calculate the maximum amount of
compensation that could be attributed to Non-Discount Options or SARs granted
to any employee in any one year is equal to one percent of the total
outstanding shares of Common Stock (which is the maximum number of shares of
Common Stock or equivalent units that may be awarded to any participant
during a calendar year) multiplied by the difference between the fair market
value of the Common Stock at the date of grant and the fair market value of
the Common Stock on the date of exercise.
The Company believes that Non-Discount Options and SARs granted under the
Equity Plan will constitute qualified performance-based compensation
following approval of the Equity Plan.
Future Awards under the Equity Plan are subject to the discretion of the
Committee. Therefore, it is impossible to indicate the specific awards that
will be granted to or benefits that will be received by any individual
participant or any group of participants under the Equity Plan. The following
table, however, provides certain information about Awards outstanding as of
September 30, 1996 to the named executive officers, all current executive
officers as a group, all current directors who are not executive officers as
a group and all employees, including current employees who are not executive
officers, as a group.
<TABLE>
<CAPTION>
1995 Equity Incentive Plan
----------------------------------------
Dollar
Name and Position Value($)(1) Shares of Common Stock
- ----------------------------------------------------- --------------- ------------------------
<S> <C> <C>
Abraham D. Gosman -- --
Frederick R. Leathers -- --
Robert A. Miller -- --
Edward E. Goldman -- --
William A. Sanger -- --
Executive Officer Group (9 persons) $1,290,000 360,000
Non-Executive Officer Director Group (6 persons) $ 80,000 20,000
Non-Executive Officer Employee Group (40 persons) $2,855,125 1,835,500
</TABLE>
(1) Calculated using the difference between the exercise price per share
under the options and $19.00, the closing price of the Company's Common
Stock as reported on The Nasdaq National Market on September 30, 1996.
The Board urges the stockholders to vote "for" the proposed amendment,
increasing by 1,000,000 the total number of shares which may be awarded under
the Equity Plan.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the next annual
meeting of stockholders must be received by the Company at its principal
executive offices by June 13, 1997 for inclusion in the proxy statement and
form of proxy relating to that meeting and must comply with the applicable
requirements of the federal securities laws.
12
<PAGE>
OTHER MATTERS
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as shown above. However, if
any such other business should come before the Annual Meeting, it is the
intention of the persons named in the enclosed Proxy to vote the Proxies in
respect of any such business in accordance with their best judgment.
The cost of preparing, assembling and mailing this proxy material will be
borne by the Company. The Company may solicit Proxies otherwise than by use
of the mail, in that certain officers and regular employees of the Company,
without additional compensation, may use their personal efforts, by telephone
or otherwise, to obtain Proxies. Such assistance may take the form of
personal, telephonic or written solicitation or any combination thereof. The
Company will also request persons, firms and corporations holding shares in
their names, or in the names of their nominees, which shares are beneficially
owned by others, to send this proxy material to and obtain Proxies from such
beneficial owners and will reimburse such holders for their reasonable
expenses in doing so.
By Order of the Board of Directors
Alberto M. Hernandez
Secretary
October 11, 1996
13
<PAGE>
EXHIBIT A
PHYMATRIX CORP.
1995 EQUITY INCENTIVE PLAN
as amended through September 30, 1996
Section 1. Purpose
The purpose of the 1995 Equity Incentive Plan (the "Plan") of PhyMatrix
Corp. (the "Company") is to enable the Company and its subsidiaries to
attract, retain and motivate their employees and consultants and to enable
these employees and consultants to participate in the long-term growth of the
Company by providing for or increasing the proprietary interests of such
persons in the Company, thereby assisting the Company to achieve its
long-range performance goals.
Section 2. Definitions
As used in the Plan:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" means any Option, Stock Appreciation Right, Performance Share,
Restricted Stock or Stock Unit awarded under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means a committee of not fewer than two members of the Board
appointed by the Board to administer the Plan, each of whom is a
"Non-Employee Director" within the meaning of Rule 16b-3 of the Act, or
any successor provision, and an "outside director" within the meaning of
Section 162(m) of the Code; provided, however, that if there is only one
member of the Board then the committee shall be composed of only one
director who need not be an "outside director" nor a "disinterested
person" as described above.
"Committee Member" means a director appointed by the Board to be a
member of the Committee.
"Common Stock" or "Stock" means the Common Stock, $0.01 par value, of
the Company.
"Fair Market Value" means, with respect to Common Stock, to the extent
it is traded on an exchange or The Nasdaq Stock Market's National Market
or any successor thereto, the closing price of the Common Stock on the
applicable date of determination (or if such date shall not be a trading
day, on the last trading day previous thereto); and with respect to the
Common Stock if it is not so traded or any other property, the fair market
value of such property as determined by the Committee in good faith.
"Incentive Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under the Plan which is intended to meet
the requirements of Section 422 of the Code or any successor provision.
"Nonstatutory Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under the Plan which is not intended to be
an Incentive Stock Option.
"Option" means an Incentive Stock Option or a Nonstatutory Stock Option.
"Participant" means a person selected by the Committee to receive an
Award under the Plan.
"Performance Cycle" or "Cycle" means the period of time selected by the
Committee during which performance is measured for the purpose of
determining the extent to which an award of Performance Shares has been
earned.
"Performance Shares" means shares of Common Stock awarded to a
Participant under Section 8.
"Restricted Period" means the period of time selected by the Committee
during which an award of Restricted Stock may be forfeited to the Company.
"Restricted Stock" means shares of Common Stock awarded to a Participant
under Section 9 which are subject to forfeiture.
"Stock Appreciation Right" or "SAR" means a right awarded to a
Participant under Section 7.
A-1
<PAGE>
"Stock Unit" means a share of Common Stock or a unit valued in whole or
in part by reference to, or otherwise based on, the value of a share of
Common Stock, awarded to a Participant under Section 10.
Section 3. Administration
The Plan shall be administered by the Committee. The Committee shall have
the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it shall from
time to time consider advisable, to interpret the provisions of the Plan and
any Award, and to decide all disputes arising in connection with the Plan.
The Committee's decisions and interpretations shall be final and binding.
Section 4. Eligibility
All employees, consultants and directors of the Company or any of its
subsidiaries shall be eligible to be Participants in the Plan.
Section 5. Stock Available for Awards
(a) Awards may be made under the Plan for up to 2,000,000 shares of Common
Stock. If any Award in respect of shares of Common Stock expires or is
terminated before exercise or is forfeited for any reason or settled in a
manner that results in fewer shares of Common Stock outstanding than were
initially awarded, including without limitation the surrender of shares of
Common Stock in payment for the Award or any tax obligation thereon, the
shares of Common Stock subject to such Award or so surrendered, as the case
may be, to the extent of such expiration, termination, forfeiture or
decrease, shall again be available for award under the Plan. Shares of Common
Stock issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares. In no event shall any Participant receive
in any 12-month period Awards for more than 1% of the total outstanding
shares of Common Stock.
(b) In the event that the Committee determines in its sole discretion that
any stock dividend, extraordinary cash dividend, creation of a class of
equity securities, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination, exchange of shares, warrants or rights
offering to purchase Common Stock at a price substantially below fair market
value, or other similar transaction affects the Common Stock such that an
adjustment is required in order to preserve the benefits or potential
benefits intended to be made available under the Plan, the Committee shall
have the right to adjust equitably any or all of (i) the number and kind of
shares of stock or securities in respect of which Awards may be made under
the Plan, (ii) the number and kind of shares subject to outstanding Awards,
and (iii) the award, exercise or conversion price with respect to any of the
foregoing, and if considered appropriate, the Committee may make provision
for a cash payment with respect to an outstanding Award, provided that the
number of shares subject to any Award shall always be a whole number and that
any such cash payment shall be made only to the extent necessary to effect an
equitable adjustment in such benefits or potential benefits.
(c) The Company may make Awards under the Plan in substitution for stock
and stock-based awards held by employees of another corporation who
concurrently become employees of the Company or a subsidiary of the Company
as the result of a merger or consolidation of the employing corporation with
the Company or a subsidiary of the Company or the acquisition by the Company
or a subsidiary of the Company of property or stock of the employing
corporation. The Committee may direct that the substitute awards be granted
on such terms and conditions as the Committee considers appropriate in the
circumstances. The shares which may be delivered under such substitute Awards
may be in addition to the maximum number of shares provided for in section
(a) above only to the extent that the substitute Awards (i) are granted to
persons whose relationship to the Company does not make (and is not expected
to make) them subject to Section 16(b) of the Act, (ii) are granted in
substitution for awards issued under a plan approved, to the extent then
required under Rule 16b-3 (or any successor rule) under the Act, by the
stockholders of the entity which issued such predecessor awards and (iii) are
granted without the effect of disqualifying the Plan or, without the consent
of any optionee, any Incentive Stock Option granted under the Plan, under
Section 422 of the Code.
Section 6. Options
(a) Subject to the provisions of the Plan, the Committee may award
Incentive Stock Options and Nonstatutory Stock Options and determine the
number of shares to be covered by each Option, the option price therefor, the
term of the Option, and the other conditions and limitations applicable to
the exercise of the Option. The terms and conditions of Incentive Stock
Options shall be subject to and comply with Section 422 of the Code, or any
successor provision, and any regulations thereunder. Anything in the Plan to
the contrary notwithstanding, no term of the Plan relating to Incentive Stock
Options shall be interpreted, amended or altered, nor shall any discretion or
authority granted to the Committee under the Plan be so exercised, so as to
disqualify the Plan or, without the consent of the optionee, any Incentive
Stock Option granted under the Plan, under Section 422 of the Code.
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(b) The option price per share of Common Stock purchasable under an Option
shall not be less than 100% of the Fair Market Value of the Common Stock on
the date of award with respect to Incentive Stock Options and not less than
50% of the Fair Market Value of the Common Stock on the date of award with
respect to Nonstatutory Stock Options. If the Participant owns or is deemed
to own (by reason of the attribution rules applicable under Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or any subsidiary or parent corporation of the Company
and an Incentive Stock Option is granted to such Participant, the option
price shall be not less than 110% of Fair Market Value of the Common Stock on
the date of award.
(c) No Incentive Stock Option shall be exercisable more than ten years
after the date the option is awarded and no Nonstatutory Stock Option shall
be exercisable more than ten years and one day after the date the option is
awarded. If a Participant owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any
subsidiary or parent corporation of the Company and an Incentive Stock Option
is awarded to such Participant, the term of such option shall be no more than
five years from the date of award.
(d) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the
Company. Such payment may be made in whole or in part in cash or by certified
or bank check or, to the extent permitted by the Committee at or after the
award of the Option, by delivery of a note or shares of Common Stock owned by
the optionee, including Restricted Stock, valued at their Fair Market Value
on the date of delivery, or such other lawful consideration as the Committee
may determine.
(e) No Option shall be transferable by the Participant otherwise than by
will or the laws of descent and distribution, and all Options shall be
exercisable, during the Participant's lifetime, only by the Participant;
provided, however, that the Committee may provide that a Nonstatutory Stock
Option is transferable by the Participant and exercisable by persons other
than the Participant during the Participant's lifetime upon such terms and
conditions as the Committee may determine.
(f) The Committee may at any time accelerate the exercisability of all or
any portion of any Option.
Section 7. Stock Appreciation Rights
(a) A Stock Appreciation Right is an Award entitling the Participant to
receive an amount in cash or shares of Common Stock or a combination thereof
having a value equal to (or if the Committee shall so determine at time of
grant, less than) the excess of the Fair Market Value of a share of Common
Stock on the date of exercise over the Fair Market Value of a share of Common
Stock on the date of grant (or over the option exercise price, if the Stock
Appreciation Right was granted in tandem with a Nonstatutory Stock Option)
multiplied by the number of shares with respect to which the Stock
Appreciation Right is exercised.
(b) Subject to the provisions of the Plan, the Committee may award SARs in
tandem with a Nonstatutory Stock Option (at or after the award of the
Nonstatutory Stock Option), or alone and unrelated to an Option, and may
determine the terms and conditions applicable thereto, including the form of
payment. SARs granted in tandem with a Nonstatutory Stock Option shall
terminate to the extent that the related Nonstatutory Stock Option is
exercised, and the related Nonstatutory Stock Option shall terminate to the
extent that the tandem SARs are exercised.
(c) An SAR related to a Nonstatutory Stock Option which can be exercised
only during limited periods following a change in control of the Company may
entitle the Participant to receive an amount based upon the highest price
paid or offered for Common Stock in any transaction relating to the change in
control or paid during the thirty-day period immediately preceding the
occurrence of the change in control in any transaction reported in the stock
market in which the Common Stock is normally traded.
(d) Notwithstanding that a Nonstatutory Stock Option at the time of
exercise shall not be accompanied by a related Stock Appreciation Right, if
the Fair Market Value of the shares subject to such Option exceeds the
exercise price of such Option at the time of its exercise, the Committee may,
in its discretion, cancel such Option, in which event the Company shall pay
to the person exercising such Option an amount equal to the difference
between the Fair Market Value of the Common Stock to have been purchased
pursuant to such exercise of such Option (determined on the date the Option
is canceled) and the aggregate consideration to have been paid by such person
upon such exercise. Such payment shall be by check, bank draft or in Common
Stock having a Fair Market Value (determined on the date the payment is to be
made) equal to the amount of such payment or any combination thereof, as
determined by the Committee. The Committee may exercise its discretion under
the first sentence of this paragraph (d) only in the event of a written
request of the person exercising the Nonstatutory Stock Option, which request
shall not be binding on the Committee.
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Section 8. Performance Shares
(a) A Performance Share is an Award entitling the Participant to acquire
shares of Common Stock upon the attainment of specified performance goals.
Subject to the provisions of the Plan, the Committee may award Performance
Shares and determine the performance goals applicable to each such Award, the
number of such shares for each Performance Cycle, the duration of each
Performance Cycle and all other limitations and conditions applicable to the
awarded Performance Shares. There may be more than one Performance Cycle in
existence at any one time, and the duration of Performance Cycles may differ
from each other. The payment value of each Performance Share shall be equal
to the Fair Market Value of one share of Common Stock on the date the
Performance Share is earned or, in the discretion of the Committee, on the
date the Committee determines that the Performance Share has been earned.
(b) Except as provided in a specific Award, during any Performance Cycle,
the Committee may adjust the performance goals for such Performance Cycle as
it deems equitable in recognition of unusual or non-recurring events
affecting the Company, changes in applicable tax laws or accounting
principles, or such other factors as the Committee may determine.
(c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares which have been
earned on the basis of performance in relation to the established performance
goals. The payment values of earned Performance Shares shall be distributed
to the Participant as soon as practicable thereafter. The Committee shall
determine, at or after the time of award, whether payment values will be
settled in whole or in part in cash or other property, including Common Stock
or Awards.
Section 9. Restricted Stock
(a) A Restricted Stock Award is an Award entitling the Participant to
acquire shares of Common Stock for a purchase price (which may be zero) equal
to or less than their par value, subject to such conditions, including a
Company right during a specified period or periods to repurchase such shares
at their original purchase price (or to require forfeiture of such shares if
the purchase price was zero) upon the Participant's termination of
employment.
(b) Subject to the provisions of the Plan, the Committee may award shares
of Restricted Stock and determine the purchase price (if any) therefor, the
duration of the Restricted Period during which, and the conditions under
which, the shares may be forfeited to or repurchased by the Company and the
other terms and conditions of such Awards. The Committee may modify or waive
the restrictions with respect to any Restricted Stock. Shares of Restricted
Stock may be issued for no cash consideration or such minimum consideration
as may be required by applicable law.
(c) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee, during
the Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Committee may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Committee, deposited by the
Participant, together with a stock power endorsed in blank, with the Company.
At the expiration of the Restricted Period, the Company shall deliver such
certificates and stock power to the Participant.
(d) A Participant shall have all the rights of a shareholder with respect
to the Restricted Stock including voting and dividend rights, subject to
nontransferability restrictions and Company repurchase or forfeiture rights
described in this Section and subject to any other conditions contained in
the Award.
Section 10. Stock Units
(a) Subject to the provisions of the Plan, the Committee may award Stock
Units subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Committee shall determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit shall
be issued for no cash consideration or such minimum consideration as may be
required by applicable law.
Section 11. Grants of Non-Discretionary Options to Committee Members
Notwithstanding any other provisions of the Plan, Committee Members shall
participate in the Plan only to the extent set forth in this Section 11.
(a) Each director who is a Committee Member on the first business day
following each annual meeting of the shareholders of the Company, commencing
with the 1996 annual meeting of shareholders, shall receive the award of a
Nonstatutory Stock Option to purchase 2,500 shares of Common Stock (the
"Non-Discretionary Option"). In addition, any person who is a Committee
Member immediately after the Company's initial public
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offering shall receive the award of a Nonstatutory Stock Option to purchase
10,000 shares of Common Stock at the initial public offering price (also, a
"Non-Discretionary Option"). Each Non-Discretionary Option awarded to a
Committee Member shall become exercisable one year after the date of grant.
On or about January 31, 1997, and each third anniversary thereof, the Board
shall review the provisions of this Section 11 to determine whether to modify
the size of the annual Non-Discretionary Option Award or otherwise amend such
provisions. Notwithstanding the foregoing, any outstanding Non-Discretionary
Option and the number and nature of shares of Common Stock subject to any
such Option held by a Committee Member shall be subject to adjustment only to
the extent set forth in Section 11(f) and 12(g), and not pursuant to any
other provision of the Plan, including, without limitation, Sections 5(b),
12(h) and 12(k) hereof.
(b) The term of each Non-Discretionary Option granted to a Committee
Member shall be ten years from its date of grant, unless sooner terminated in
accordance with Section 11(e).
(c) The purchase price of the shares of Common Stock subject to each
Non-Discretionary Option granted to a Committee Member shall be the Fair
Market Value of the Common Stock on the date the Option is granted. The
Committee shall determine whether an Award to a Committee Member is settled
in whole or in part in cash, shares of Common Stock, other securities of the
Company, Awards or other property. The Committee shall not permit a Committee
Member to defer all or any portion of a payment under the Plan.
(d) No Non-Discretionary Option shall be transferable by a Committee
Member other than by will or by the laws of descent and distribution and all
Non-Discretionary Options shall be exercisable during a Committee Member's
lifetime only by the Committee Member or his or her duly appointed guardian
or personal representative; provided, however, that the Board may provide
that a Nonstatutory Stock Option is transferable by a Committee Member and
exercisable by persons other than the Committee Member during the Committee
Member's lifetime upon such terms and conditions as the Board may determine.
(e) If a Committee Member retires as a director, his Non-Discretionary
Options shall be exercisable by him only during the three months following
his retirement and only as to the number of shares, if any, as to which the
Non-Discretionary Options were exercisable immediately prior to his
retirement. If a Committee Member dies while serving as a director, his
Non-Discretionary Options shall be exercisable by either his executor or
administrator or, if not so exercised, by the legatees or the distributees of
his estate, only during the twelve months following his death and only as to
the number of shares, if any, as to which the Non-Discretionary Options were
exercisable immediately prior to his death. If a Committee Member ceases to
serve as a director by reason of permanent and total disability, his
Non-Discretionary Options shall be exercisable by him only during the three
months following his retirement and only as to the number of shares, if any,
as to which the Non-Discretionary Options were exercisable immediately prior
to his disability. If a Committee Member ceases to serve as a director and to
be eligible to participate in the Plan for any other reason (including the
termination of his employment with the Company if such Committee Member is
also an employee of the Company), his Non-Discretionary Options shall be
exercisable by him only during the thirty days following such cessation and
only as to the number of shares, if any, as to which the Non-Discretionary
Options were exercisable immediately prior to such cessation. In no event
shall the term of any Non-Discretionary Options be extended beyond its
expiration date as a result of this Section 11(e).
(f) In the event of a stock dividend, stock split or combination of shares
of Common Stock, recapitalization or other increase or decrease in the number
of issued shares of Common Stock effected without receipt of consideration by
the Company, appropriate and proportionate adjustment shall be made in the
number, kind and exercise price of each share of Common Stock subject to
Non-Discretionary Options then outstanding and to be granted to Committee
Members under this Section 11.
(g) Each Non-Discretionary Option granted to a Committee Member shall be
evidenced by a writing specifying the terms and conditions thereof in
accordance with this Section 11.
Section 12. General Provisions Applicable to Awards
(a) [Reserved.]
(b) Each Award under the Plan shall be evidenced by a writing delivered to
the Participant specifying the terms and conditions thereof and containing
such other terms and conditions not inconsistent with the provisions of the
Plan as the Committee considers necessary or advisable to achieve the
purposes of the Plan or comply with applicable tax regulations and accounting
principles.
(c) Each Award may be made alone, in addition to or in relation to any
other Award. The terms of each Award need not be identical, and the Committee
need not treat Participants uniformly. Except as otherwise provided by
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the Plan or a particular Award, any determination with respect to an Award
may be made by the Committee at the time of award or at any time thereafter.
(d) The Committee shall determine whether Awards are settled in whole or
in part in cash, Common Stock, other securities of the Company, Awards or
other property. The Committee may permit a Participant to defer all or any
portion of a payment under the Plan, including the crediting of interest on
deferred amounts denominated in cash and dividend equivalents on amounts
denominated in Common Stock.
(e) The Committee shall determine the effect on an Award of the
disability, death, retirement or other termination of employment of a
Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or designated beneficiary may
receive payment of an Award or exercise rights thereunder.
(f) In order to preserve a Participant's rights under an Award in the
event of a change in control of the Company, the Committee in its discretion
may, at the time an Award is made or at any time thereafter, take one or more
of the following actions with respect to any such change of control: (i)
provide for the acceleration of any time period relating to the exercise or
realization of the Award, (ii) provide for the purchase of the Award upon the
Participant's request for an amount of cash or other property that could have
been received upon the exercise or realization of the Award had the Award
been currently exercisable or payable, (iii) adjust the terms of the Award in
a manner determined by the Committee, (iv) cause the Award to be assumed, or
new rights substituted therefor, by another entity, or (v) make such other
provision as the Committee may consider equitable and in the best interests
of the Company.
(g) Further, in the event of (i) a dissolution or liquidation of the
Company, (ii) the sale of all or substantially all the assets of the Company,
(iii) a merger or consolidation of the Company resulting in a change in
ownership of more than fifty percent (50%) of the outstanding shares of the
Company's voting capital stock control of the Company, (iv) any other capital
reorganization in which more than fifty percent (50%) of the outstanding
shares of the Company's voting capital stock are exchanged or (v) any Person
(as defined below) becomes an Interested Stockholder (as defined below), then
upon the adoption of the plan or agreement of liquidation, dissolution, sale,
merger, consolidation or reorganization or upon the date that any such Person
becomes an Interested Stockholder, all Awards which are not then fully
exercisable or realizable shall become fully exercisable and realizable. As
used in this Section 12(g), (A) "Person" shall mean any individual, Group
Acting in Concert (as defined below), corporation, partnership, association,
joint stock company, trust, business trust, unincorporated organization or
association or other entity; (B) "Interested Stockholder" shall mean any
Person (other than the Company) who or which is the beneficial owner,
directly or indirectly, of more than fifty percent (50%) of the outstanding
shares of the Company's voting capital stock, but not any Person who was the
beneficial owner, directly or indirectly, of more than fifty percent (50%) of
the outstanding shares of the Company's voting capital stock immediately
after the closing of the initial public offering of the Common Stock; and (C)
"Group Acting in Concert" shall mean Persons (1) seeking to combine or pool
their voting or other interests in the securities of the Company for a common
purpose, pursuant to any contract, understanding, relationship, agreement or
other arrangement, whether written, oral or otherwise, or (2) who would be
deemed to be acting as a group or syndicate within the meaning of Section
13(d) of the Act or any subsequent provision replacing such section. In
addition, any persons who are beneficial owners of the same securities are
deemed to be members of a Group Acting in Concert. When persons act together
for any such purpose, their group will be deemed to have acquired their
stock. Notwithstanding the foregoing provisions of this Section 12(g), the
term "Interested Stockholder" shall not include (x) an employee stock
ownership, stock option, stock purchase or other plan for natural Persons who
are directors, officers, employees or consultants of the Company or a
subsidiary thereof, nor shall any fiduciary of any such plan be deemed to own
stock held by or administered in connection with such plan for the purposes
of this Section 12(g); or (y) any Person who becomes the beneficial owner,
directly or indirectly, of more than fifty percent (50%) of the outstanding
shares of the Company's voting capital stock under the terms of a will or
trust or, under the laws of descent and distribution, from the estate of a
person or a donor who was the beneficial owner, directly or indirectly, of
more than fifty percent (50%) of the outstanding shares of the Company's
voting capital stock immediately after the closing of the initial public
offering of the Common Stock.
(h) The Participant shall pay to the Company, or make provision
satisfactory to the Committee for payment of, any taxes required by law to be
withheld in respect of Awards under the Plan no later than the date of the
event creating the tax liability. In the Committee's discretion, such tax
obligations may be paid in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued
at their Fair Market Value on the date of delivery. The Company may, to the
extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the Participant.
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(i) For purposes of the Plan, the following events shall not be deemed a
termination of employment of a Participant:
(i) a transfer to the employment of the Company from a subsidiary or
from the Company to a subsidiary, or from one subsidiary to another; or
(ii) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the Participant's right
to reemployment is guaranteed either by a statute or by contract or under
the policy pursuant to which the leave of absence was granted or if the
Committee otherwise so provides in writing.
For purposes of the Plan, employees of a subsidiary of the Company shall
be deemed to have terminated their employment on the date on which such
subsidiary ceases to be a subsidiary of the Company.
(j) The Committee may amend, modify or terminate any outstanding Award,
including substituting therefor another Award of the same or a different
type, changing the date of exercise or realization and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
Section 13. Miscellaneous
(a) No person shall have any claim or right to be granted an Award, and
the grant of an Award shall not be construed as giving a Participant the
right to continued employment. The Company expressly reserves the right at
any time to dismiss a Participant free from any liability or claim under the
Plan, except as expressly provided in the applicable Award.
(b) Subject to the provisions of the applicable Award, no Participant
shall have any rights as a shareholder with respect to any shares of Common
Stock to be distributed under the Plan until he or she becomes the holder
thereof.
(c) Subject to the approval of the sole shareholder of the Company, the
Plan shall be effective on November 15, 1995. Prior to such approval, Awards
may be made under the Plan expressly subject to such approval.
(d) The Board may amend, suspend or terminate the Plan or any portion
thereof at any time, provided that no amendment shall be made without
shareholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement, including any requirement for
exemptive relief under Section 16(b) of the Securities Exchange Act of 1934,
or any successor provisions.
(e) Awards may not be made under the Plan after November 14, 2005, but
then outstanding Awards may extend beyond such date.
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PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD NOVEMBER 14, 1996
PHYMATRIX CORP.
The undersigned, having received the Notice of Annual Meeting of
Stockholders and the Board of Directors' Proxy Statement (the "Proxy
Statement"), hereby appoint(s) Abraham D. Gosman and Frederick R. Leathers,
and each of them, Proxies of the undersigned (with full power of
substitution) to attend the Annual Meeting of Stockholders of PhyMatrix Corp.
to be held November 14, 1996, and all adjournments thereof (the "Meeting"),
and there to vote all shares of Common Stock of PhyMatrix Corp. that the
undersigned would be entitled to vote, if personally present, in regard to
all matters which may come before the Meeting.
The undersigned hereby confer(s) upon the Proxies, and each of them,
discretionary authority (i) to consider and act upon such business, matters
or proposals other than the business set forth below as may properly come
before the Meeting and (ii) with respect to the election of directors in the
event that any of the nominees is unable or unwilling to serve. The Proxy
when properly executed will be voted in the manner specified herein. If no
specification is made, the Proxies intend to vote FOR all nominees for
director and FOR the amendment of the Company's 1995 Equity Incentive Plan.
Please mark vote as in this example./X/
1. For the election of all nominees listed below (except as otherwise
indicated).
/ / FOR all nominees / / WITHHOLD from all nominees
Nominees: Bruce A. Rendina and Stephen E. Ronai
----------------------------------------------------------------
FOR all nominees, except those listed on the line above
2. For the amendment of the Company's 1995 Equity Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Mark here for address change and note below. / /
Date
--------------------------------------------
Signature
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Signature
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In signing, please write name(s) exactly as appearing in the imprint on
this card. For shares held jointly, each joint owner should sign. If signing
as executor, or in any other representative capacity, or as an officer of a
corporation, please indicate your full title as such.
