<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
SUNQUEST INFORMATION SYSTEMS, INC.
(Name of Registrant as Specified in its Charter)
SUNQUEST INFORMATION SYSTEMS, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] 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>
[Sunquest Logo]
Dear Fellow Shareholder:
I am pleased to invite you to attend the 2000 Annual Meeting of the
Shareholders of Sunquest Information Systems, Inc. which will be held at the
Viscount Suite Hotel, 4855 East Broadway Blvd., Tucson, Arizona, on Thursday,
May 4, 2000, at 9:00 A.M., local time. The formal Notice of Annual Meeting,
the Proxy Statement, a proxy card and a copy of the Company's Annual Report
for 1999 accompany this letter. The Annual Meeting is open to all shareholders
or their authorized representatives. We hope that you will be able to attend.
At the meeting, we will report on the operations, progress and plans of the
Company and give you an opportunity to ask questions. Your Board of Directors
and the executive officers of the Company look forward to personally greeting
those shareholders who are able to attend.
It is important that your shares are represented at this meeting, whether or
not you attend the meeting in person, and regardless of the number of shares
you own. To be sure your shares are represented, we urge you to complete and
mail the enclosed proxy card as soon as possible.
I hope to see you on May 4th.
/s/ Sidney A. Goldblatt
Sidney A. Goldblatt
Chairman and Chief Executive Officer
Tucson, Arizona
March 28, 2000
<PAGE>
SUNQUEST INFORMATION SYSTEMS, INC.
4801 East Broadway Boulevard
Tucson, Arizona 85711-3609
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 4, 2000
To: The Shareholders of Sunquest
Notice is hereby given that the Annual Meeting of the shareholders of
Sunquest Information Systems, Inc. will be held at the Viscount Suite Hotel,
4855 East Broadway Blvd., Tucson, Arizona, on Thursday, May 4, 2000, at 9:00
A.M., local time, for the following purposes:
(a) To elect a board of seven directors to serve for a term of one year
and until their respective successors are duly elected and qualified.
(b) To ratify the selection of Ernst & Young LLP to audit the books and
accounts of the Company for the year ending December 31, 2000.
(c) To transact such other business as may properly come before the
meeting and any and all adjournments and postponements thereof.
The Board of Directors has fixed the close of business on March 17, 2000 as
the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting and any adjournments or postponements
thereof.
Whether or not you plan to attend the Annual Meeting, please complete, sign,
date and return the enclosed proxy card promptly. You are cordially invited to
attend the Annual Meeting in person. The return of the enclosed proxy card
will not affect your right to revoke your proxy or to vote in person if you do
attend the Annual Meeting.
By Order of the Board of
Directors,
Nina M. Dmetruk
Secretary
Tucson, Arizona
March 28, 2000
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES
YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE IT,
SIGN IT AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK
YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY.
<PAGE>
PROXY STATEMENT
SUNQUEST INFORMATION SYSTEMS, INC.
4801 East Broadway Boulevard
Tucson, Arizona 85711-3609
March 28, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Sunquest Information
Systems, Inc. (the "Company"), for use at the Company's 2000 Annual Meeting of
Shareholders (together with any adjournments thereof, the "Annual Meeting") to
be held on Thursday, May 4, 2000, at 9:00 A.M., local time, at the Viscount
Suite Hotel, 4855 East Broadway Blvd., Tucson, Arizona, for the purposes set
forth in the accompanying Notice of Annual Meeting, and at any adjournment
thereof. This Proxy Statement and the enclosed form of proxy and Annual Report
for 1999 are first being sent to shareholders on or about March 28, 2000.
The Board has fixed the close of business on March 17, 2000 as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the Annual Meeting (the "Record Date"). As of the Record Date there were
15,547,873 shares of Common Stock outstanding. Each share of Common Stock of
the Company is entitled to one vote per share on each matter properly brought
before the Annual Meeting. There is no cumulative voting in the election of
directors.
Shares can be voted at the Annual Meeting only if the shareholder is present
in person or represented by proxy. If the enclosed proxy is properly executed
and returned prior to voting at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon. In
the absence of instructions, shares represented by executed proxies will be
voted as recommended by the Board. The accompanying proxy may be revoked by
the shareholder at any time prior to its use by giving notice of such
revocation in writing to the Secretary of the Company, c/o Sunquest
Information Systems, Inc., 1407 Eisenhower Boulevard, Suite 200, Johnstown,
Pennsylvania 15904, or by delivering a duly executed proxy bearing a later
date, provided such notice or proxy is actually received by the Company prior
to the taking of any vote at the Annual Meeting.
Brokers, banks and other nominee holders will be requested to obtain voting
instructions of beneficial owners of stock registered in their names, and
shares represented by a duly executed proxy submitted by such a nominee holder
on behalf of such a beneficial owner will be voted to the extent instructed by
the nominee holder on the proxy card. Rules applicable to nominee holders may
preclude them from voting shares held by them in nominee capacity on certain
kinds of proposals unless they receive voting instructions from the beneficial
owners of the shares (the failure to vote in such circumstances is referred to
as a "broker non-vote").
The Board knows of no matters which are to be brought before the Annual
Meeting other than those set forth in the accompanying notice. If any other
matters properly come before the Annual Meeting, the
1
<PAGE>
persons named in the enclosed proxy card, or their duly appointed substitutes,
will be authorized to vote or otherwise act thereon in accordance with their
judgment on such matters.
A quorum for the transaction of business at the Annual Meeting will require
the presence, in person or by proxy, of shareholders entitled to cast at least
a majority of the total number of votes entitled to be cast on a particular
matter to be acted upon at the meeting. Abstentions and broker non-votes are
counted as shares present for determination of a quorum but are not counted as
affirmative or negative votes and are not counted in determining the number of
votes cast on any matter.
Proxies in the form enclosed are solicited on behalf of the Board. The cost
of preparing, assembling and mailing the Notice of Annual Meeting, Proxy
Statement and form of proxy is to be borne by the Company. In addition to the
solicitation of proxies by use of the mails, directors, officers or other
employees of the Company may solicit proxies personally or by telephone or
telegraph. Arrangements will also be made with custodians, nominees and
fiduciaries for forwarding of proxy solicitation materials to beneficial
owners of shares of record held by such custodians, nominees and fiduciaries,
and the Company will, upon request, reimburse such custodians, nominees and
fiduciaries for reasonable expenses incurred in connection therewith.
2
<PAGE>
ELECTION OF DIRECTORS
A purpose of the meeting is to elect a board of seven directors to serve for
a term of one year and until their respective successors are elected and
qualified. In the election, the seven persons who receive the highest number
of votes actually cast will be elected. The proxies named in the proxy card
intend to vote for the election of the nominees listed below unless otherwise
so instructed. If a holder does not wish his or her shares to be voted for a
particular nominee, the holder must strike through the name of the nominee on
his proxy card, in which event his shares will be voted for the other listed
nominees. If any nominee becomes unable to serve, the proxies may vote for
another person designated by the Board or the Board may reduce the number of
directors. The Company has no reason to believe that any nominee will be
unable to serve.
Information concerning the persons nominated by the Board, all of whom, are
currently directors of the Company, is set forth below.
Nominees for Election as Directors
<TABLE>
<CAPTION>
Name and Age Principal Occupation and Directorships
------------ --------------------------------------
<C> <S>
Sidney A. Goldblatt Sidney A. Goldblatt, M.D., a co-founder of the Company, has been
Age 65 Chief Executive Officer since December 1994 and a director of the
Company since its formation in 1979. Dr. Goldblatt also served as
President of the Company from September 1986 to February 2000 and
Chief Operating Officer of the Company from December 1992 to
August 1994. Dr. Goldblatt has served as President and sole
shareholder of S. Goldblatt Pathology Associates, P.C. since
1971.
Nina M. Dmetruk Nina M. Dmetruk has served as Executive Vice President--Chief
Age 47 Financial Officer of the Company since September 1991 and a
director of the Company since December 1991. She has served as
Secretary of the Company since August 1996 and Treasurer of the
Company since April 1998. Effective May 26, 1996, Ms. Dmetruk
entered into an employment agreement with the Company under which
she agreed to serve as the Executive Vice President--Chief
Financial Officer of the Company on a full-time basis. See
"Executive Compensation and Related Information--Employment
Contracts and Termination of Employment." During her earlier
service as Executive Vice President--Chief Financial Officer, Ms.
Dmetruk was not an employee of the Company and devoted
approximately 60% to 80% of her time to the Company's business.
Ms. Dmetruk is a CPA and a CFP and until May 1996 was the sole
proprietor of an accounting firm for more than five years.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Name and Age Principal Occupation and Directorships
------------ --------------------------------------
<C> <S>
Stanley J. Lehman Stanley J. Lehman has been a director of the Company since
Age 46 October 1989 and served as Secretary of the Company from October
1989 to August 1996. He has been a shareholder in the law firm of
Klett Rooney Lieber & Schorling, a professional corporation that
has served as general counsel to the Company, for more than five
years.
Richard W. Barker Richard W. Barker, Ph.D., was elected to the Board of Directors
Age 51 of the Company by the members of the Board in August 1996. Dr.
Barker has been President and Chief Executive Officer of
iKnowMed, an Internet-based healthcare infomediary since January
2000. He was Senior Vice President of Chiron Corporation, a
biotechnology company from June 1996 to December 1999, and was
President and Chief Executive of Chiron Diagnostics, the
diagnostic products division of Chiron Corporation, from June
1996 to September 1998. He was employed by IBM Corporation as
General Manager, Worldwide Healthcare Solutions from June 1995 to
June 1996 and as General Manager, North American Healthcare
Solutions from April 1994 to June 1995. Prior to that date, Dr.
Barker was with McKinsey & Company as Partner and Leader,
European Healthcare Practice. Dr. Barker also serves on the Board
of EXACT Laboratories, Inc., an applied genomics company.
Larry R. Ferguson Larry R. Ferguson was elected to the Board of Directors of the
Age 50 Company by the members of the Board in December 1997. Mr Ferguson
has been President of the Ferguson Group, a management consulting
company, since January 2000. He was President and Chief Executive
Officer of Avio Corporation, a health care information systems
company, from December 1998 to December 1999. He was President of
The Ferguson Group from January 1996 to December 1998. He was
employed by First Data Health Systems Corporation, a provider of
information systems and related services to health care
providers, from May 1980 to June 1995, serving as its President
from August 1986 to June 1995.
Curtis S. Goldblatt Curtis S. Goldblatt, M.D., was elected to the Board of Directors
Age 34 of the Company by the shareholders in April 1998. Curtis S.
Goldblatt has been an Associate Pathologist of S. Goldblatt
Pathology Associates, P.C. and Medical Advisor/ Medical Director
of the Histologic Technician-Certificate Program at Conemaugh
Health System since July 1997. He was employed as Chief Resident
of S. Goldblatt Pathology Associates, P.C. from July 1996 to June
1997. Prior to July 1996, Curtis S. Goldblatt was a Pathology
Resident at the University of Pittsburgh Medical Center from July
1993 to June 1996. Curtis S. Goldblatt is the son of Dr. Sidney
A. Goldblatt.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Name and Age Principal Occupation and Directorships
------------ --------------------------------------
<C> <S>
Charles A. Schliebs Charles A. Schliebs was elected to the Board of Directors of the
Age 49 Company by the members of the Board in March 2000. Charles A.
Schliebs has been Managing Director of iNetworks, LLC, a venture
catalyst organization, since May 1999. He was a shareholder in
the law firm of Klett Rooney Lieber & Schorling, a professional
corporation that has served as general counsel to the Company,
from September 1999 to February 2000. He was a partner in the law
firm of Jones, Day, Reavis & Pogue from December 1988 to May
1999. Mr. Schliebs also serves on the Board of ITXS, Inc., an e-
commerce exchange for high-end computer equipment company, and
schwoo.com, inc., an Internet security company.
</TABLE>
Required Vote
There is no cumulative voting in the election of directors. The seven
nominees for election as directors who receive the highest number of votes
actually cast will be elected. Broker non-votes will be treated as shares that
neither are capable of being voted nor have been voted and, accordingly, will
have no effect on the outcome of the election of directors.
The Board unanimously recommends a vote FOR each of the nominees listed
above.
Board of Directors and Committees
The Board held twelve meetings during the year 1999. The Board also took
action by unanimous written consent on three (3) occasions during the year.
The Board has a Compensation Committee and an Audit Committee. The Company
has no nominating committee. The Compensation Committee, which is currently
comprised of Dr. Richard W. Barker, Larry R. Ferguson and Charles A. Schliebs
as voting members, and Stanley J. Lehman, as a non-voting advisory member, is
responsible for determining the compensation of the executive officers of the
Company and for administering the Company's Stock Incentive Plan of 1996, as
amended, ("Incentive Plan") and Employee Stock Purchase Plan. The Compensation
Committee is also responsible for such related matters as may be delegated to
it by the Board. The Compensation Committee held ten meetings during the year
1999 and took action by unanimous written consent on two (2) additional
occasions during the year.
Nina M. Dmetruk, Stanley J. Lehman, Dr. Richard W. Barker and Larry R.
Ferguson currently serve as the Audit Committee of the Board. The Audit
Committee discusses with the Company's independent auditors and approves in
advance the scope of the annual audit, reviews with the independent auditors
the annual financial statements and the audit report, consults with the
Company's internal compliance staff, reviews management's administration of
the internal accounting controls and reviews the Company's procedures relating
to business ethics and compliance with the securities laws and the rules of
the Nasdaq
5
<PAGE>
Stock Market. The Audit Committee also recommends to the Board the appointment
of the independent auditors. During the year 1999, the Audit Committee held
two meetings.
No director attended fewer than 75% of the total number of meetings of the
Board and the meetings of any committee of the Board on which he or she served
during the year ended December 31, 1999, with the exception of Larry R.
Ferguson who attended 70% of the Compensation Committee meetings.
Director Compensation
Non-employee directors of the Company are reimbursed, upon request, for
expenses incurred in attending meetings of the Board, but there are no
standard arrangements for compensating them for their service as directors.
Dr. Barker has been granted options to purchase 26,000 shares of Common Stock
under the Company's Incentive Plan. Of these options, 15,000 shares were
granted upon his nomination as director, 3,000 shares upon his election by the
shareholders and 8,000 shares upon his reelection by the shareholders. Mr.
Ferguson has been granted options to purchase 23,000 shares of Common Stock
under the Company's Incentive Plan. Of these options, 15,000 shares were
granted upon his nomination as director, 3,000 shares upon his election by the
shareholders and 5,000 shares upon his reelection by the shareholders. Mr.
Schliebs has been granted an option to purchase 15,000 shares of Common Stock
under the Company's Incentive Plan. Mr. Lehman's law firm receives fees at his
regular professional hourly rate for time devoted to Board meetings. Dr.
Barker and Mr. Ferguson are also to be granted options for shares of Common
Stock, as determined by the Board, on each occasion that they are reelected as
directors. Mr. Schliebs is to be granted options for shares of Common Stock,
as determined by the Board, on each occasion that he is reelected as director
commencing with the election of directors in 2001. Directors who are employees
of the Company are not paid any separate fees for serving as directors.
Certain Transactions and Business Relationships
Ms. Dmetruk, a director and executive officer of the Company, Curtis S.
Goldblatt, a director of the Company and Jodi Beth Gottlieb are directors and
executive officers of Any Travel, Inc., a travel agency located in Tucson,
Arizona ("Any Travel"). The outstanding shares of Any Travel are held one-
third by Bradley L. Goldblatt, Dr. Goldblatt and Ms. Dmetruk as trustees for
the benefit of Bradley L. Goldblatt (the "BLG Trust"); one-third by Bradley L.
Goldblatt, Dr. Goldblatt and Ms. Dmetruk as trustees for the benefit of Curtis
S. Goldblatt (the "CSG Trust"); and one-third by Jodi Beth Gottlieb, Dr.
Goldblatt and Ms. Dmetruk as trustees for the benefit of Jodi Beth Gottlieb
(the "JBG Trust"). The BLG Trust, the CSG Trust and the JBG Trust are
collectively referred to herein as the "Trusts." Dr. Goldblatt is the father
of Bradley L. Goldblatt, Curtis S. Goldblatt and Jodi Beth Gottlieb.
The Company's principal administrative, sales and marketing, customer
service and product development facilities are located in two buildings in
Tucson, Arizona which are owned by Any Travel (the "Broadway Property" and the
"El Dorado Property"). The Company leases the Broadway Property from Any
Travel under a lease which provides for a triple-net annual rent of
$1,020,760, subject to adjustment based on the consumer price index. Such
annual rental was determined in accordance with an
6
<PAGE>
independent appraisal of the fair rental value of the property. The lease
expires in September 2001. During 1999, the Company paid Any Travel rent of
$1,191,089.
The Company leases the El Dorado Property from Any Travel under a ten-year,
triple net lease. The existing tenant leases were assigned to the Company.
During 1999, the Company paid Any Travel rent of $895,893 under the lease. The
monthly rentals were determined in accordance with an independent appraisal of
the fair rental value of the property and are subject to future adjustment in
accordance with a formula based on the consumer price index.
During 1999, the Company used Any Travel as its travel agent. Any Travel has
advised the Company that in 1999 it received gross commissions of $301,432
from hotels, airlines and car rental agencies with respect to its travel
services for the Company.
In April 1996, Dr. Goldblatt and the Trusts entered into a Tax
Indemnification Agreement with the Company whereby they agreed, among other
things, to indemnify the Company for any federal or state income taxes
(including interest) incurred by the Company if for any reason the Company is
deemed to have been a C corporation during any period for which it reported
its taxable income as an S corporation. The Tax Indemnification Agreement also
provides for cross-indemnification for any losses or liabilities with respect
to certain additional taxes (including interest and, in the case of Dr.
Goldblatt and the Trusts, penalties) resulting from the Company's operations
during the period in which it reported its taxable income as an S corporation.
The Company changed from an S corporation to a C corporation in May 1996 in
connection with its initial public offering of Common Stock (the "IPO").
Stanley J. Lehman, a director of the Company, is a shareholder in the law
firm of Klett Rooney Lieber & Schorling, a professional corporation, that
serves as the Company's general counsel.
RATIFICATION OF SELECTION OF AUDITORS
The Board has selected Ernst & Young LLP to serve as the Company's auditors
for the year ending December 31, 2000. A representative of Ernst & Young LLP
will be present at the Annual Meeting and will have the opportunity to make a
statement, if such person desires to do so, and to respond to appropriate
questions.
Required Vote
The proposal to ratify the selection of Ernst & Young LLP will be approved
by the shareholders if it receives the affirmative vote of a majority of the
votes cast by all shareholders entitled to vote thereon. Abstentions and
broker non-votes are not counted as affirmative or negative votes and are not
counted in determining the number of votes cast on the proposal. Accordingly,
abstentions and broker non-votes will have no effect on the outcome of voting
on the proposal.
The Board unanimously recommends a vote FOR ratification of the selection of
Ernst & Young LLP as independent accountants.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the Record Date by (i) each
director of the Company, (ii) the Chief Executive Officer of the Company and
the Company's other four most highly compensated executive officers for 1999
who were serving as executive officers at the end of the year (the "Named
Executive Officers"), (iii) each person or affiliated group of persons known
by the Company to be the beneficial owner of more than five percent of the
outstanding Common Stock, and (iv) all of the Company's directors and
executive officers as a group.
<TABLE>
<CAPTION>
Percent of
Name and Address of Beneficial Owner Number of Shares Shares Outstanding
- ------------------------------------ ---------------- -------------------
<S> <C> <C>
Sidney A. Goldblatt 11,904,000(1) 76.6%
4801 East Broadway Blvd.
Tucson, AZ 85711
Nina M. Dmetruk 5,028,589(2) 32.3
4801 East Broadway Blvd.
Tucson, AZ 85711
Stanley J. Lehman 2,000 *
Richard W. Barker 26,000(3) *
Larry R. Ferguson 23,000(3) *
Curtis S. Goldblatt -- --
Charles A. Schliebs 1,000 *
Mark J. Emkjer 55,555(3) *
Ivan G. Boyd 70,729(3) *
James F. Garliepp 35,723(4) *
Bradley L. Goldblatt 3,272,760(5) 21.0
4801 East Broadway Blvd.
Tucson, AZ 85711
Jodi Beth Gottlieb 1,636,380(6) 10.5
c/o Any Travel
1181 North El Dorado Place
Tucson, AZ 85715
All directors and executive officers as
a group (10 persons) 12,237,456(7) 78.7%
</TABLE>
- --------
* Less than 1.0%.
(1) Includes an aggregate of 4,909,140 shares held by the BLG Trust, the CSG
Trust and the JBG Trust. Dr. Goldblatt is a trustee of the Trusts with
shared investment power but no voting power with respect to the shares
held by the Trusts.
8
<PAGE>
(2) Consists of the shares held by the BLG Trust, the CSG Trust and the JBG
Trust and 119,449 shares that may be acquired through the exercise of
presently exerciseable stock options or shares that may be acquired
through the exercise of stock options that become exercisable within 60
days of March 17, 2000. Ms. Dmetruk is a trustee of the Trusts with
shared investment and voting power with respect to all of such shares.
(3) Consists of shares that may be acquired through the exercise of presently
exerciseable stock options or shares that may be acquired through the
exercise of stock options that become exerciseable within 60 days of
March 17, 2000.
(4) Includes 35,014 shares that may be acquired through the exercise of
presently exercisable stock options.
(5) Consists of the shares held by the BLG Trust and the CSG Trust. Bradley
L. Goldblatt is a trustee of the Trusts with shared investment and voting
power with respect to all of such shares.
(6) Consists of the shares held by the JBG Trust. Ms. Gottlieb is a trustee
of the Trust with shared investment and voting power with respect to all
of such shares.
(7) See Notes 1 and 2 above.
9
<PAGE>
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following table shows all compensation paid to each of the Named
Executive Officers for all services rendered to the Company and its
subsidiaries for each of the last three completed fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------------- ------------
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Options(Shs) Compensation
- --------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Sidney A. Goldblatt 1999 $224,911 $110,363 -- $ --
Chief Executive Officer 1998 208,000 -- -- --
1997 208,000 -- -- --
Mark J. Emkjer 1999 240,385 122,600 162,500 108,168(2)
President and Chief Operating 1998 -- -- -- --
Officer (1) 1997 -- -- -- --
Nina M. Dmetruk 1999 252,991 103,797 21,431 4,331(4)
Executive Vice President-- 1998 239,458 -- 75,000 1,599(4)
Chief Financial Officer, 1997 227,996 -- 126,050(3) 3,998(4)
Secretary and Treasurer
James F. Garliepp 1999 143,571 49,355 15,000 4,317(4)
Executive Vice President-- 1998 141,075 1,920 -- 3,581(4)
Chief Design Officer (5) 1997 141,075 -- 52,521(3) 4,800(4)
Ivan G. Boyd 1999 317,598 68,412 15,000 2,295(4)
Senior Vice President-- 1998 243,700 -- -- 78,586(7)
Sales and Marketing (6) 1997 7,692 25,000 100,000 --
</TABLE>
- --------
(1) Mr. Emkjer was elected to his position as President in February 2000 and
Chief Operating Officer in January 1999.
(2) Includes Company contributions to the Profit Sharing Plan and relocation
expenses and tax reimbursements paid by the Company.
(3) Consists of shares subject to options repriced from grants made in
calendar year 1996. See "--Report on Fiscal Year 1997 Repricing of
Options."
(4) Company contributions to the Profit Sharing Plan for the account of the
Named Executive Officer.
(5) Mr. Garliepp was elected to his position as Executive Vice President--
Chief Design Officer in March 2000. From September 1991 until March 2000,
Mr. Garliepp served as the Company's Executive Vice President--Chief
Technology Officer.
10
<PAGE>
(6) Mr. Boyd was elected to his position as Senior Vice President--Sales and
Marketing in November 1997.
(7) Includes relocation expenses and tax reimbursements paid by the Company.
Option Grants in Last Fiscal Year
The following table provides information on options granted to the Named
Executive Officers in 1999 under the Company's Incentive Plan:
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------
Number of Potential Realizable Value
Securities Percent of At Assumed Annual Rates
Underlying Total Options of Stock Price Appreciation
Options Granted to Exercise for Option Term(2)
Granted Employees Price Expiration ----------------------------
Name (Shs)(1) in 1999 Per Share Date 5% 10%
- ---- ---------- ------------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sidney A. Goldblatt -- --% $ -- -- $ -- $ --
Mark J. Emkjer 125,000 19.54 13.125 1/4/09 1,031,780 2,614,734
37,500 5.86 15.71875 7/1/09 370,704 939,436
Nina M. Dmetruk 21,431 3.35 15.71875 7/1/09 211,855 536,882
James F. Garliepp 15,000 2.34 15.5625 9/10/09 146,808 372,039
Ivan G. Boyd 15,000 2.34 11.03125 4/8/09 104,062 263,715
</TABLE>
- --------
(1) Options granted under the Incentive Plan typically have a ten-year term
and vest as specified in the stock option agreements. Options under the
plan may be granted as incentive stock options ("ISOs") or nonstatutory
stock options ("NSOs"). Options are granted with an exercise price equal
to at least the fair market value of the Company's Common Stock on the
date of grant. All options heretofore granted are NSOs and have an
exercise price equal to the fair market value of the Common Stock on the
date of grant.
(2) Potential realizable value is based on the assumption that the market
price of the Common Stock appreciates at the annual rates shown
(compounded annually) from the date of grant until the end of the ten
year option term. Potential realizable value is shown net of exercise
price. These numbers are calculated based on the regulations promulgated
by the Securities and Exchange Commission and do not reflect the
Company's estimate of future stock price growth.
11
<PAGE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
The following table sets forth information concerning the value of
unexercised options held by each of the Named Executive Officers, as of
December 31, 1999. No options were exercised by such persons during 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year End At Fiscal Year End
------------------------------ -------------------------------
Name Exercisable Unexercisable Exercisable(1) Unexercisable(1)
- ---- ------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Sidney A. Goldblatt -- -- $ -- $ --
Mark J. Emkjer -- 162,500 -- 46,875
Nina M. Dmetruk 109,033 113,448 273,974 169,801
James F. Garliepp 35,014 32,507 105,042 52,521
Ivan G. Boyd 66,667 48,333 375,002 224,529
</TABLE>
- --------
(1) The last sale price of a share of the Company's Common Stock on December
31, 1999 as reported by the Nasdaq National Market System was $13.50.
12
<PAGE>
TEN-YEAR OPTION REPRICINGS
The following table sets forth information with respect to the repricing of
those options held by any executive officer of the Company since May 31, 1996
when the Company became a reporting company pursuant to the Exchange Act.
<TABLE>
<CAPTION>
Length of
Original Option
Number of Market Price of Exercise Price Term Remaining
Options/SARs Stock at Time at Time of New at Date of
Repriced or of Repricing or Repricing or Exercise Repricing or
Name Date Amended(#) Amendment($) Amendment($) Price($) Amendment
- ---- ------ ------------ --------------- -------------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Sidney A. Goldblatt -- -- $ -- $ -- $ -- --
Richard A. Wesson (1) 4/3/97 108,718 10.50 16.00 10.50 9 years, 58 days
Nina M. Dmetruk 4/3/97 126,050 10.50 16.00 10.50 9 years, 58 days
Samuel A. Miller (2) 4/3/97 5,000 10.50 16.00 10.50 9 years, 58 days
4/3/97 15,000 10.50 15.625 10.50 9 years, 286 days
Joanna S. Broder (3) 4/3/97 20,000 10.50 12.00 10.50 9 years, 348 days
James F. Garliepp 4/3/97 52,521 10.50 16.00 10.50 9 years, 58 days
T. Paul Thomas (4) 4/3/97 7,878 10.50 16.00 10.50 9 years, 58 days
4/3/97 12,122 10.50 14.875 10.50 9 years, 219 days
</TABLE>
- --------
(1) Served as the Company's Engineering Consultant from January 1999 through
September 1999. Served as the Company's Chief Operating Officer from
August 1994 until December 1998. These Options were exercised during
August and September 1999.
(2) Served as the Company's Senior Vice President--Technology through
September 1998. These Options were forfeited upon his termination from
the Company.
(3) Served as the Company's Senior Vice President--Client Services until June
1999. Of these Options, 6,666 shares were exercised in June 1999 and
13,334 were forfeited upon her termination from the Company.
(4) Served as the Company's Senior Vice President--Marketing through June
1997. These Options were forfeited upon his termination from the Company.
Employment Contracts and Termination of Employment
Effective May 26, 1996, the Company entered into an employment agreement
with Nina M. Dmetruk under which she was to be paid to serve as the Company's
Executive Vice President--Chief Financial Officer at a base annual salary of
$220,000. Effective February 1, 1999, Ms. Dmetruk's base annual salary was
increased to $254,654. The agreement is terminable by either party upon 90
days written notice and by the Company immediately for cause, including any
breach by Ms. Dmetruk of her agreement not to
13
<PAGE>
compete with the Company. Ms. Dmetruk agreed to devote her full working time
to the Company's business, except that during the first six months of her
employment she was permitted to devote a reasonable amount of time to winding
down her accounting practice, with an appropriate reduction of her base
compensation for time devoted to that activity. Ms. Dmetruk is entitled to
participate in any discretionary bonuses paid to officers in general. Under
the terms of the employment agreement, Ms. Dmetruk received on May 30, 1996 an
option under the Incentive Plan to purchase 126,050 shares of Common Stock at
the IPO price. On April 3, 1997, this option to purchase 126,050 shares of
Common Stock was modified to reduce the exercise price to $10.50. Ms. Dmetruk
will be entitled to $1.2 million in severance pay in the event that the
employment agreement is terminated: (i) by the Company at any time for other
than cause; (ii) by Ms. Dmetruk within 90 days of such time as Sidney A.
Goldblatt, Bradley L. Goldblatt, Curtis S. Goldblatt and Jodi Beth Gottlieb,
and trusts created for their benefit, cease to own, directly or indirectly,
fifty percent or more of the outstanding stock of the Company; or (iii) by Ms.
Dmetruk because of a material breach of the agreement by the Company which has
not been corrected by the Company within ten days written notice of such
breach or because of certain gross negligence, willful misconduct or
malfeasance by the Company which is determined to be detrimental to Ms.
Dmetruk.
Effective December 14, 1998, the Company entered into an employment
agreement with Mark J. Emkjer under which he is to be paid to serve as Chief
Operating Officer of the Company at a base annual salary of $250,000. The
agreement is terminable by either party upon 90 days written notice and by the
Company immediately for cause, including Mr. Emkjer's breach of his agreement
not to compete with the Company. Mr. Emkjer is entitled to participate in any
discretionary bonuses paid to officers in general. Under the terms of the
employment agreement, Mr. Emkjer received on January 4, 1999 an option under
the Incentive Plan to purchase 125,000 shares of Common Stock at $13.125 per
share (the fair market value of the Common Stock on the date of grant). Also
pursuant to terms of his employment agreement, Mr. Emkjer received on July 1,
1999 an option under the Incentive Plan to purchase 37,500 shares of Common
Stock at $15.71875 per share (the fair market value of the Common Stock on the
date of grant) and on January 1, 2000, Mr. Emkjer received an option to
purchase 113,938 shares of Common Stock at $13.00 per share (the fair market
value of the Common Stock on the date of grant). These options were awarded as
a result of Mr. Emkjer obtaining certain of his written performance goals in
1999.
Compensation Committee Interlocks and Insider Participation
Except as contemplated by employment agreements, the compensation of the
officers of the Company for the year ended December 31, 1999 was determined by
the Compensation Committee, then composed of Dr. Richard W. Barker, Larry R.
Ferguson, Peter P. Gombrich and Stanley J. Lehman. Stanley J. Lehman is a
shareholder in the law firm of Klett Rooney Lieber & Schorling, the Company's
general counsel. See "Election of Directors--Certain Transactions and Business
Relationships."
14
<PAGE>
Report of the Compensation Committee on Executive Compensation
The executive officer compensation programs utilized by the Company include
cash compensation paid as salary and discretionary bonuses, stock options
granted under the Company's Incentive Plan, and Company contributions to the
Profit Sharing Plan for the accounts of executive officers. Executive
officers, except those who own more than 5% of the outstanding Common Stock,
are also eligible to participate in the Stock Purchase Plan. These programs
are designed to attract, retain and reward highly qualified executive officers
who are important to the Company's success and to provide incentives relating
directly to the financial performance and long-term growth of the Company.
Except as contemplated by employment agreements, salaries, as well as the
number of shares covered by stock options, for the year 1999 were established
primarily upon an evaluation of the executive officer's, including the chief
executive officer's, position with and contributions to the Company, including
individual performance, level of responsibility, technical expertise and
length of service; Company performance; and industry compensation levels. No
particular weight was given to any single factor.
Under the Company's discretionary bonus program, annual bonuses may be paid
to the eligible officers of the Company only if the Company attains or exceeds
a predetermined percentage of its budgeted pre-tax income for the year (after
giving effect to the potential bonuses) and takes into account the officer's
base salary, the officer's level within the Company and the Company's pre-tax
income for the year. The payment of bonuses in any given year is within the
discretion of the Compensation Committee, and bonuses determined under the
formula are subject to adjustment in individual cases.
The Compensation Committee of the Board has considered the potential impact
of Section 162(m) of the Internal Revenue Code of 1986, as amended, which
imposes a limit on tax deductions for annual compensation in excess of
$1,000,000 paid to its chief executive officer and its four most highly
compensated executive officers in any fiscal year. The Committee does not
believe that this limitation will apply in the foreseeable future. The
Incentive Plan is structured to qualify options and stock appreciation rights
granted thereunder as "performance based" compensation that is excluded from
the calculation of the $1,000,000 limitation.
The Compensation Committee of the Board of
Directors,
Richard W. Barker Larry R. Ferguson
Stanley J. Lehman
15
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below provides an indicator of cumulative total shareholder returns
("Total Return") for the Company as compared with the Center for Research in
Security Prices ("CRSP") Total Return Index for The Nasdaq Stock Market (U.S.
Companies) and the CRSP Total Return Index for the Nasdaq Computer and Data
Processing Services Stocks.
This graph covers the period May 31, 1996, when Sunquest's Common Stock began
trading on the Nasdaq National Market System, through December 31, 1999.
5/31/96 6/28/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
------- ------- ------- -------- ------- ------- ------- --------
Sunquest $100.00 $83.92 $103.50 $ 79.72 $54.55 $ 83.92 $ 84.62 $ 54.55
Nasdaq U.S. $100.00 $95.49 $ 98.89 $103.78 $98.15 $116.13 $135.79 $127.16
Nasdaq
Computer $100.00 $96.34 $ 98.26 $102.18 $94.84 $121.61 $133.00 $125.52
3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
------- ------- ------- -------- ------- ------- ------- --------
Sunquest $ 54.20 $ 51.05 $ 50.35 $ 79.02 $ 65.73 $ 90.21 $ 90.21 $ 75.52
Nasdaq U.S. $148.82 $152.91 $138.08 $179.19 $200.44 $219.31 $224.31 $323.73
Nasdaq
Computer $165.79 $183.71 $172.60 $224.10 $269.56 $280.49 $289.73 $473.65
16
<PAGE>
PROPOSALS FOR NEXT YEAR'S MEETING
Shareholder proposals intended to be presented at the 2001 Annual Meeting
must be received by the Company by November 30, 2000 to be considered for
inclusion in the Company's Proxy Statement and form of proxy for that meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the
Company's directors, officers, and persons who are directly or indirectly the
beneficial owners of more than 10% of the Common Stock of the Company are
required to file with the Commission, within specified monthly and annual due
dates, a statement of their initial beneficial ownership and all subsequent
changes in ownership of common stock. Rules of the Commission require such
persons to furnish the Company with copies of all Section 16(a) forms they
file. Based solely upon a review of such forms, the Company believes that,
during the year ended December 31, 1999, all such persons complied with all
applicable filing requirements.
17
<PAGE>
PROXY
SUNQUEST INFORMATION SYSTEMS, INC.
4801 East Broadway Boulevard
Tucson, Arizona 85711
The undersigned shareholder of Sunquest Information Systems, Inc. (the
"Company") hereby appoints Dr. Sidney A. Goldblatt and Nina M. Dmetruk, and each
of them, as the attorneys and proxies of the undersigned, with full power of
substitution, to represent and to vote, as designated on the reverse side, all
the shares of Common Stock, no par value, of the Company which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders of the Company, to be held at the Viscount Suite Hotel, 4855 East
Broadway Blvd., Tucson, Arizona, on Thursday, May 4, 2000, commencing at 9:00
a.m., local time, and at any adjournment or postponement thereof.
(Please sign on reverse side and return immediately)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
. FOLD AND DETACH HERE .
<PAGE>
1. Election of Directors.
FOR WITHHOLD
all nominees AUTHORITY
listed to the to vote for all
right (except nominees listed
as marked to to the right
the contrary)
[ ] [ ]
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.)
Dr. Sidney A. Goldblatt Stanley J. Lehman
Nina M. Dmetruk Dr. Richard W. Barker
Dr. Curtis S. Goldblatt Charles A. Schliebs
Larry R. Ferguson
2. Proposal to ratify the selection of Ernst & Young LLP to audit the books
and accounts of the Company for the year ending December 31, 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. HOWEVER, IN THE ABSENCE OF DIRECTION TO
THE CONTRARY, THE ATTORNEYS NAMED HEREIN INTEND TO VOTE THIS PROXY "FOR" THE
ELECTION AS DIRECTORS OF ALL THE NOMINEES LISTED, "FOR" PROPOSAL 2 AND FOR
MATTERS WHICH MAY BE PRESENTED AT THE MEETING IN ACCORDANCE WITH
RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF NOTICE OF THE AFORESAID ANNUAL MEETING
OF SHAREHOLDERS.
Signature(s) Signature(s) Date
--------------------- ------------------ --------
NOTE: Please sign exactly as name appears hereon. Joint holders should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please indicate the capacity in which you are signing. If a corporation or other
entity, please sign in full corporate or entity name by authorized person.
. FOLD AND DETACH HERE .