<PAGE> 1
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:
<TABLE>
<CAPTION>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
COMPURAD, INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / $125 per Exchange Act Rules 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
COMPURAD, INC.
NOTICE OF
1997 ANNUAL MEETING OF STOCKHOLDERS
May 22, 1997
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders
(the "Meeting") of CompuRAD, Inc., a Delaware corporation (the "Company"), will
be held on Thursday, May 22, 1997 at 2:00 p.m., local time, at The Loews Ventana
Canyon Resort, 7000 N. Resort Drive, Tucson, Arizona, for the following
purposes:
1. To elect three directors for a three-year term expiring in
2000;
2. To ratify the appointment of Ernst & Young LLP as independent
auditors for the fiscal year ended December 31, 1997; and
3. To transact such other business as may properly come before
the Meeting or any adjournment thereof. Management is
presently aware of no other business to come before the
Meeting.
These items of business are more fully described in the Proxy Statement
accompanying this notice.
The Board of Directors has fixed the close of business (Mountain
Standard Time) on March 31, 1997 as the record date for the determination of
stockholders entitled to receive notice of and to vote at the Meeting and at any
adjournment thereof.
All stockholders are cordially invited to attend the Meeting in person.
To assure your representation at the Meeting, however, you are urged to execute
and return the enclosed proxy in the postage paid envelope. Any stockholder
attending the Meeting may vote in person even if the stockholder has returned a
proxy if the stockholder revokes in writing any previously executed proxy. A
copy of the Company's 1996 Annual Report, which includes audited financial
statements, is enclosed.
If your shares are held of record by a broker, bank or other nominee
and you wish to attend the Meeting, you must obtain a letter from the broker,
bank or other nominee and bring it to the Meeting. In order to vote your shares
at the Meeting, you must obtain from the record holder a proxy issued in your
name.
By Order of the Board of Directors
/s/ Henky Wibowo
Henky Wibowo
Secretary
Tucson, Arizona
April 24, 1997
- --------------------------------------------------------------------------------
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
- --------------------------------------------------------------------------------
<PAGE> 3
COMPURAD, INC.
1350 NORTH KOLB
TUCSON, ARIZONA 85715
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement is furnished to stockholders of CompuRAD, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies on behalf of the Company's Board of Directors (the "Board") for use at
the Annual Meeting of Stockholders (the "Meeting") to be held on Thursday, May
22, 1997, at 2:00 p.m., local time, at the Loews Ventana Canyon Resort, 7000 N.
Resort Drive, Tucson, Arizona or any adjournments thereof.
The proxy materials are being mailed on or about April 24, 1997 to
stockholders entitled to vote at the Meeting. The Company's Board of Directors
has unanimously approved the matters being submitted for stockholder approval at
the Meeting.
VOTING SECURITIES AND VOTING RIGHTS
The close of business (Mountain Standard Time) on March 31, 1997 has
been fixed as the "Record Date" for the determination of stockholders entitled
to notice of and to vote at the Meeting. On that date there were 3,857,950
shares of Common Stock issued and outstanding.
The presence, in person or by proxy, of the holders of a majority of
the total number of shares of Common Stock outstanding constitutes a quorum for
the transaction of business at the Meeting. Each stockholder voting at the
Meeting, either in person or by proxy, may cast one vote per share of Common
Stock on each matter of business to be considered at the Meeting. The
affirmative vote of a majority of the shares represented at the meeting, in
person or by proxy, and entitled to vote is required: (i) to elect three
directors; and (ii) to ratify the appointment of Ernst & Young LLP as the
independent auditors of the Company for the fiscal year ending December 31,
1997.
Votes cast by proxy or in person at the Meeting will be tabulated by
the election inspector appointed for the Meeting and will determine whether or
not a quorum is present. The election inspector will treat abstentions 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 for a vote. If a broker indicates on the
proxy that it does not have discretionary authority as
<PAGE> 4
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.
VOTING OF PROXIES
When a proxy is properly executed and returned, the shares it
represents will be voted at the Meeting as directed. If no specification is
indicated, the shares will be voted: (i) "for" the election of the three
director nominees named herein; and (ii) "for" the ratification of the
appointment of Ernst & Young LLP as the independent auditors of the Company for
the fiscal year ending December 31, 1997.
REVOCABILITY OF PROXIES
Proxies may be revoked by written notice to the Secretary of the
Company at any time prior to their being voted at the Meeting. Stockholders who
are present at the Meeting may revoke in writing their proxies previously
submitted and vote in person, if they so desire.
SOLICITATION
The Company will bear the cost of solicitation of proxies, including
the charges and expenses of brokerage firms and others that forward solicitation
material to beneficial owners of the Company's stock. Proxies may be solicited
by mail, telephone, telefacsimile or personal communications. The Company has
retained Corporate Investor Communications, Inc. to assist in the solicitation
of proxies.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Any Stockholder proposal which is intended to be presented at the
Company's 1998 Annual Meeting of Stockholders for the year ended December 31,
1997 must be received at the Company's principal executive offices no later than
January 31, 1998 in order that it may be considered for inclusion in the proxy
statement and form of proxy relating to that meeting.
-2-
<PAGE> 5
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors is comprised of six members, three
Class I Directors, one Class II Director and two Class III Directors, all with a
three-year staggered term. At the Meeting, three Class I Directors will be
elected with a three-year term expiring at the 2000 Annual Meeting of
Stockholders. The Board recommends a vote for the re-election of Ronald
Michaels, Jose L. Canchola and Stewart F. Gross, whose terms expire at the 1997
Annual Meeting of Stockholders. Unless otherwise instructed, the proxy holders
will vote the proxies received by them for the election of Messrs.
Michaels, Canchola and Gross as directors of the Company.
If a nominee should become unavailable for election, the proxy may be
voted for a substitute nominee selected by the persons named in the proxy;
however, the Board of Directors is not aware of any circumstances likely to
render any nominee unavailable.
INFORMATION CONCERNING DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The names of the Company's directors, nominees for directors and
executive officers and certain information about them are set forth below.
<TABLE>
<CAPTION>
TERM
NAME AGE(1) POSITION EXPIRES
- ------------------------- ------ ----------------------------------------------------- -------
<S> <C> <C> <C>
Phillip Berman, M.D.(2) 43 Chairman, Chief Executive Officer and President 1999
Ronald Michaels 61 Executive Vice President and Director 1997
Cary Cole(3) 31 Vice President, Sales and Director 1998
Henky Wibowo 31 Vice President, Engineering and Director 1999
Jose L. Canchola(2) (3) 65 Director 1997
Stewart F. Gross(2) (3) 46 Director 1997
Kevin Donovan 40 Vice President, Finance and Chief Financial Officer --
</TABLE>
- --------------------
(1) As of March 31, 1997.
(2) Member of Compensation and Nomination Committee.
(3) Member of Audit Committee.
PHILLIP BERMAN, M.D., CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT.
Dr. Berman founded the Company and has served as Chairman, President and Chief
Executive Officer of the Company since 1992. After practicing medicine in New
York, Dr. Berman founded Arizona State Radiology, P.C., a radiology practice in
Tucson, Arizona ("ASR") in 1988. Dr. Berman served as President of ASR until
1995 and as Chairman of Radiology of St. Mary's Hospital in Tucson through 1992.
Dr. Berman received a B.A. in Anthropology from Harvard University in 1975 and
an M.D. from The Medical College of Pennsylvania in 1980. He served as an intern
at Cedars-Sinai Medical Center in Los Angeles and a resident in Diagnostic
Radiology at the University of California at San Diego and Scripps Clinic.
RONALD MICHAELS, EXECUTIVE VICE PRESIDENT AND DIRECTOR. Mr. Michaels
joined the Company in August 1995 as a consultant and became Executive Vice
President in January 1996 and a Director of the Company in July 1996. Mr.
Michaels has been the sole shareholder and Chief Executive Officer of The
Stratford Group, Inc., a private holding company that engages in a variety of
consulting and investing activities, since 1978. Mr. Michaels served as CEO of
Gordon-Michaels Associates, a
-3-
<PAGE> 6
management consulting firm in New York City from 1967 to 1973. Mr. Michaels
served as a founding member of the five-person Executive Committee, and Chief
Marketing Officer of New York City's OTB Corporation, a public-benefit
corporation, from 1970 to 1972. Mr. Michaels received a B.S. in Speech Science
from Purdue University in 1957.
CARY COLE, VICE PRESIDENT, SALES AND DIRECTOR. Mr. Cole joined the
Company in 1992 as a consultant and has served as Vice President, Sales and
Director of the Company since 1993. He was President of Student Financial
Resources Corporation and Educational Programs and Services Corporation from
1990 to 1992. Mr. Cole received his B.S. in Business Administration from the
University of Arizona in 1989.
HENKY WIBOWO, VICE PRESIDENT, ENGINEERING, SECRETARY AND DIRECTOR. Mr.
Wibowo co-founded the Company and has served as Vice President, Engineering of
the Company since 1992. He was an engineer at IIS, Inc., now known as Avalon
Software, from 1990 to 1991. He is currently Secretary of the Company. Mr.
Wibowo received a B.S. in Electrical Engineering from Oregon State University in
1988 and an M.S. in Electrical Engineering from the University of Arizona in
1990.
JOSE L. CANCHOLA, DIRECTOR. Mr. Canchola was appointed to the Company's
Board of Directors in April 1997. Since 1976, Mr. Canchola has been the
President and Chief Executive Officer of the Canchola Group, Inc., a company
which owns and operates seven McDonald's restaurants in Southern Arizona. Mr.
Canchola has received numerous humanitarian and business awards, including being
one of five finalists for the National Minority Retailer of the Year and
Hispanic Magazine's 1996 recipient of the Hispanic Lifetime Achievement Award.
Mr. Canchola is currently on the Board of Directors of Tucson Electric Power
(NYSE:TEP), the advisory board of the Northern Trust Bank of Arizona and a
former member of the McDonald's Corporation National Operators Advisory Board.
Mr. Canchola graduated from the New York Institute of Finance in 1966 and the
Mortgage Banking School at the University of Chicago in 1973.
STEWART F. GROSS, DIRECTOR. Mr. Gross was appointed to the Company's
Board of Directors in April 1997. Since 1992, Mr. Gross has been an executive
with the Florida Shopping Center Group. He was Senior Vice President and
Managing Partner of the Tucson Office and a member of the Board of Directors of
Leo Eisenberg Company from 1980 to 1992. Mr. Gross has served as Arizona State
Government Affairs Chairman and National Chairman for State Issues of the
International Council of Shopping Centers, a worldwide association with over
30,000 members. Mr. Gross is a Certified Leasing Specialist and received a B.A.
in History from the University of Arizona in 1973.
KEVIN DONOVAN, VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER. Mr.
Donovan has served as Vice President, Finance and Chief Financial Officer of the
Company since August 1993. Mr. Donovan served on the Company's Board of
Directors from 1994 until July 1996. Prior to joining the Company, Mr. Donovan
was a partner in the New York accounting firm Dannible & McKee from 1988 to
1993. He received a B.S. in Accounting from Syracuse University in 1980 and
obtained his C.P.A. license in the State of New York in 1982 and in the State of
Arizona in 1994.
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<PAGE> 7
BOARD MEETINGS AND COMMITTEES
During the year ended December 31, 1996, the Board of Directors met on
six occasions, including taking action by consent in lieu of a meeting three
times. With the exception of Messrs.. Canchola and Gross who were appointed to
the Board in April 1997, no director attended fewer than 75% of the meetings.
The Board of Directors has two standing committees: the Compensation
and Nomination Committee and the Audit Committee.
Directors Berman, Canchola, and Gross serve on the Compensation and
Nomination Committee, which establishes salaries and incentive compensation for
employees of the Company other than executive officers, and makes
recommendations to the Board of Directors with regard to salaries and incentive
compensation for executive officers of the Company. The Compensation and
Nomination Committee did not hold any meetings during fiscal year 1996.
Directors Cole, Canchola and Gross serve on the Audit Committee, which
reviews the results and scope of the audit and other services provided by the
Company's independent auditors. The Audit Committee was formed in April 1997.
DIRECTOR COMPENSATION
During 1996, all Directors were employees of the Company and did not
receive compensation for their services as directors. The Company plans to
compensate its outside directors at the rate of $1,000.00 per meeting plus their
travel and out-of-pocket expenses in connection with their attendance at the
meetings of the Board of Directors.
REQUIRED VOTE
The three nominees receiving the highest number of affirmative votes of
the shares present or represented by proxy and entitled to vote will be elected
as directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" THE ELECTION OF THE NOMINEES.
-5-
<PAGE> 8
PROPOSAL NO. 2
CONFIRMATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has chosen to appoint Ernst & Young LLP,
independent auditors, to audit the financial statements of the Company for the
fiscal year ended December 31, 1997 and recommends that stockholders vote in
favor of the ratification of such appointment. In the event of a negative vote,
the Board will reconsider its selection.
Ernst & Young LLP has audited the Company's financial statements since
fiscal year ended December 31, 1993. Representatives of Ernst & Young LLP are
expected to be present at the Meeting, will have the opportunity to make a
statement if they so desire and are expected to be available to respond to
appropriate questions.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the Common Stock
present or represented at the Meeting is required to approve the selection of
Ernst & Young LLP as the independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE CONFIRMATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS
INDEPENDENT AUDITORS FOR FISCAL YEAR ENDED DECEMBER 31, 1997.
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<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation paid by the Company to the Company's Chief Executive Officer and
the Company's most highly compensated other executive officers and non-executive
officer employees whose salary and bonus for such year exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------------------------------------
Other Annual
Name and Principal Position Year Salary Compensation
- ------------------------------------ ---- ------------- ------------
<S> <C> <C> <C>
Phillip Berman, M.D. 1996 $ 134,000 --
Chairman, Chief Executive Officer 1995 83,333(1) __
and President 1994 __ __
Ronald Michaels 1996 78,000 $150,000(2)
Executive Vice President 1995 __ __
1994 __ __
Cary Cole 1996 139,200 __
Vice President, Sales 1995 60,000 87,571(3)
1994 60,000 66,478(3)
Henky Wibowo 1996 105,000 --
Vice President, Engineering 1995 68,692 __
1994 55,038 __
Kevin Donovan 1996 68,538 --
Vice President Finance and Chief 1995 30,527 __
Financial Officer 1994 4,385 __
Scott Evers 1996 36,000 82,177(3)
Regional Sales Manager 1995 24,000 38,362(3)
1994 __ 2,000(3)
</TABLE>
- -------------------------
(1) Dr. Berman became Chief Executive Officer in March 1996.
(2) Represents the fair market value in March 1996 of 150,000 shares of the
Company's Common Stock issued to Mr. Michaels.
(3) Represents sales commissions earned.
No stock options were granted to the Company's Chief Executive Officer
or the other Executive Officers during 1996.
STOCK OPTION PLAN
In July 1996, the Company's 1996 Stock Plan (the "1996 Plan") was
adopted by the Board of Directors. A total of 400,000 shares of Common Stock
have been authorized for issuance thereunder. Under the 1996 Plan, options and
stock purchase rights may be granted to the Company's employees, directors and
consultants. Only employees may receive "incentive stock options," which are
intended to qualify for certain tax treatment; nonemployees, including
nonemployee directors, may receive "nonstatutory stock options," which do not
qualify for such treatment. The exercise price of incentive stock options under
the 1996 Plan must at least equal the fair market value of the Common Stock on
the date of grant, while the exercise price of nonstatutory options must at
least equal 85% of such market
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<PAGE> 10
value and must be no less than 100% of such market value if such options are to
qualify for certain tax treatment as "performance based compensation." Options
and stock purchase rights granted under the 1996 Plan generally vest on a
cumulative annual basis over a five year period, 20% of the total number of
shares subject to each option or stock purchase right vesting at the end of each
full year following the date of grant. All incentive stock options granted under
the 1996 Plan will expire ten years from the date of grant unless terminated
sooner pursuant to the provisions of the 1996 Plan. In the event of a change of
control of the Company, including a merger or sale of substantially all of the
Company's assets, outstanding options and stock purchase rights must be assumed
by any successor corporation, or equivalent options or rights must be
substituted, or they will become fully vested and exercisable.
No stock options were granted to the Company's Chief Executive Officer
or the Named Executive Officers during 1996. On January 6, 1997, the Company
granted options to purchase shares of the Company's Common Stock to the
following Executive Officers:
<TABLE>
<CAPTION>
<S> <C> <C>
Phillip Berman, M.D., Chairman, Chief Executive Officer and 2,500
President
Ronald Michaels, Executive Vice President 2,000
Cary Cole, Vice President, Sales 2,000
Henky Wibowo, Vice President, Engineering 2,000
Kevin Donovan, Vice President, Finance and Chief 1,000
Financial Officer
</TABLE>
1996 EMPLOYEE STOCK PURCHASE PLAN
In July 1996, the Company's 1996 Employee Stock Purchase Plan (the
"Purchase Plan") was adopted by the Board of Directors. A total of 100,000
shares of Common Stock have been authorized for issuance thereunder. The
Purchase Plan, which is intended to qualify under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"), will be administered by the Board
of Directors. Under the Purchase Plan, the Company will withhold a specified
percentage (not to exceed 10%) of each salary payment to participating employees
over certain offering periods. Any employee who is currently employed for at
least 20 hours per week at for at least five months in a calendar year, either
by the Company or by a designated subsidiary of the Company, will be eligible to
participate in the Purchase Plan. Unless the Board of Directors or its committee
determines otherwise, each offering period will run six months. The first
offering period will commence on a date to be determined by the Board. New six
month offering periods will commence every six months thereafter. In the event
of a merger or sale of substantially all of the Company's assets, each option
under the Purchase Plan may be assumed by any successor corporation, or the
offering period then in progress may be shortened and all options automatically
exercised. The price at which Common Stock will be purchased under the Purchase
Plan is equal to 85% of the fair market value of the Common Stock on the first
day of the applicable offering period or the last day of the applicable offering
period, whichever is lower. Employees may end their participation in the
offering at any time during the offering period and participation ends
automatically on termination of employment with the Company. The maximum number
of shares that a participant may purchase on the last day of any offering period
is determined by dividing the payroll deductions accumulated during the offering
period by the purchase price. However, no person may purchase shares under the
Purchase Plan to the extent such person would own
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<PAGE> 11
5% or more of the total combined value or voting power of all classes of the
capital stock of the Company or of any of its subsidiaries, or to the extent
that such person's rights to purchase stock under all employee stock purchase
plans would accrue at a rate that exceeds $25,000 worth of stock for any
calendar year.
BENEFICIAL SECURITY OWNERSHIP OF CERTAIN
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of March 31, 1997 by: (i)
each person or entity who is known by the Company to beneficially own five
percent or more of the outstanding Common Stock, (ii) each director; (iii) the
Company's Chief Executive Officer and each of the other executive officers of
the Company other than the Chief Executive Officer whose total salary and bonus
for fiscal year 1996 exceeded $100,000; and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF BENEFICIAL
FIVE PERCENT SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS OWNER PERCENT
- ----------------------------------------------------------- ------------- -------
<S> <C> <C>
Phillip Berman, M.D. (1)(2) ............................... 517,500 13.5%
c/o CompuRAD, Inc. ......................................
1350 North Kolb Road
Tucson, Arizona 85715
Henky Wibowo (3)(4) ....................................... 517,500 13.5%
c/o CompuRAD, Inc. ......................................
1350 North Kolb Road
Tucson, Arizona 85715
Cary Cole (4)(5) .......................................... 490,500 12.8%
c/o CompuRAD, Inc. ......................................
1350 North Kolb Road
Tucson, Arizona 85715
Phillip A. Lamoreaux (6) .................................. 265,200 6.9%
1505 Bridgeway, Suite 125
Sausalito, CA 94965
Thomas Stejskal, M.D. (3) ................................. 247,650 6.4%
9670 N. Pusch Ridge Place
Tucson, Arizona 85797
Travelers (7) ............................................. 200,000 5.2%
388 Greenwich Street
Legal Department 20th Floor
New York, NY 10013
Ronald Michaels (3)(4) .................................... 150,000 3.9%
Kevin Donovan (8)(9) ...................................... 89,600 2.3%
Jose L. Canchola .......................................... -- --
Stewart F. Gross .......................................... 1,250 *
All directors and executive officers as a group (7 persons) 1,766,350 46.0%
</TABLE>
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<PAGE> 12
- -----------------
* Represents less than 1% of the total number of shares of Common Stock
outstanding.
(1) Dr. Berman is the majority shareholder of the P. Berman Family, L.L.C.,
which is the general partner of Sequoia Investments Limited
Partnership, which is the record owner of 517,500 shares of Common
Stock.
(2) Includes 2,500 shares subject to options exercisable within 60 days
from March 31, 1997.
(3) To the Company's knowledge, this person has sole voting and investment
power with respect to all shares of Common Stock shown as beneficially
owned by him, subject to community property laws where applicable.
(4) Includes 2,000 shares subject to options exercisable within 60 days
from March 31, 1997.
(5) Mr. Cole if the manager of MC(2) Management Group, LLC, which is the
general partner of MC(2) Investments Limited Partnership, LLP, which is
the record owner of 440,000 shares of Common Stock. Mr. Cole is a
member of MC(2) Foundation, which is the record owner of 50,500 shares
of Common Stock.
(6) To the Company's knowledge based on Schedule 13D on file with the
Securities and Exchange Commission, Mr. Lamoreaux has sole voting and
investment power with respect to 33,500 shares of Common Stock and
shared voting and investment power with respect to 231,700 shares of
Common Stock with Lamoreaux Partners, a California limited partnership,
of which Mr. Lamoreaux is the General Partner.
(7) To the Company's knowledge based on Schedule 13G on file with the
Securities and Exchange Commission, Travelers Group Inc., Associated
Madison Companies, Inc., PFS Services, Inc., The Travelers Indemnity
Company, Travelers/Aetna Property Casualty Corp., and The Travelers
Insurance Group Inc. have shared voting and investment power with
respect to 200,000 shares of Common Stock.
(8) Mr. Donovan owns 52,100 shares of Common Stock as community property
with his wife. Mr. Donovan is the indirect beneficial owner of 37,500
shares of Common Stock through his wife, who is the custodian for their
children's shares.
(9) Includes 1,000 shares subject to options exercisable within 60 days
from March 31, 1997.
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
The Company, Dr. Phillip Berman, Ronald Michaels, Cary Cole, Henky
Wibowo and Kevin Donovan, among others, entered into a Settlement Agreement (the
"Settlement Agreement") with ASR and certain other individuals affiliated with
ASR, including Dr. Thomas Stejskal, formerly a director of the Company and a
principal stockholder (the "ASR Affiliates"), dated July 14, 1996, pursuant to
which the Company and Dr. Berman have resolved all previously outstanding
difference between them and ASR and the ASR Affiliates regarding the use of
intellectual property included in the Company's software. In consideration for
entering the Settlement Agreement, the Company has: (i) issued 126,000 shares to
certain of the ASR Affiliates; (ii) issued to ASR a non-interest bearing
promissory note in the amount of $250,000 payable December 31, 2002; and (iii)
agreed to pay ASR $541,676, at the Company's option, in cash, in shares of
Common Stock or any combination of cash and shares of Common Stock. The Company
issued 93,480 shares of stock to ASR in November 1996 in full settlement of the
$541,676.
On April 16, 1996 the Company entered into an Agreement to Co-Sign Loan
(the "Co-Sign Agreement") with Harold Cole, the father of Cary Cole, Vice
President, Sales and a director of the
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<PAGE> 13
Company, to assist the Company in obtaining a short-term loan (the "BankOne
Loan") in the amount of $250,000 from BankOne, Arizona, N.A., secured by the
Company's assets. Pursuant to the terms of the Co-Sign Agreement, Harold Cole
agreed to pay such sums on the BankOne Loan as necessary for the Company to meet
its obligations under that loan. In consideration for Harold Cole's entering the
Co-Sign Agreement, in April 1996, the Company granted to him an option to
purchase up to 75,000 shares of the Company's Common Stock at a per share price
of $0.007 per share. Such option was exercised in full in May 1996. The BankOne
Loan was paid in full upon the completion of the Company's initial public
offering.
In July 1996, the Company acquired the ClinicalWare product line from
Pinga, Inc., a company owned by Dr. Berman, Cary Cole and Henky Wibowo, each of
whom are directors and executive officers and principal stockholders of
CompuRAD. The purchase price of $90,000 was determined on the basis of the
expenses incurred by Pinga, Inc. relating to the development of the ClinicalWare
software.
In March 1995, the Company and U.S. Radiology ("USR"), a company owned
by Dr. Berman, entered into a license agreement pursuant to which USR granted
the Company an exclusive right to use the MammoWorks product. The Company was
obligated to pay USR a license fee of $150 per copy licensed by the Company, up
to 500 licenses. The Company would not have been obligated to pay any additional
license fees to USR after the first 500 licenses. Through July 1996, 70
MammoWorks copies were licensed by the Company, and $10,500 was paid to Dr.
Berman. In July 1996, the Company and USR entered into a Technology Transfer
Agreement pursuant to which USR and Dr. Berman transferred all their rights and
interests in the MammoWorks product to the Company for $1.00. The Company is
obligated to pay a royalty fee to USR on the remaining 430 copies licensed by
the Company. The Company has no further obligations under the March 1995 license
agreement. From July 1996 to December 31, 1996, 41 copies were licensed by the
Company and $6,150 was paid to USR.
In March 1996, the Company issued 150,000 shares of Common Stock to
Ronald Michaels in consideration of amounts owed to Mr. Michaels under a
consulting agreement between Mr. Michaels and the Company, entered into in
September 1995, and in consideration of Mr. Michaels becoming a full-time
employee and Executive Vice President of the Company.
The Company's principal offices, until October 1996, were subject to a
five-year lease between Dr. Berman, in his individual capacity, and El Dorado
Tucson Limited Partnership, an Arizona Tucson Limited Partnership. From March 1,
1993 until July 31, 1995, the Company and ASR co-occupied the space. During that
period, the Company paid a portion of the rent based on its pro rata use. From
August 1, 1995 until the Company moved its principal offices in October 1996,
the Company occupied all of the space and paid the full rent of approximately
$75,000.
From time to time during the two years prior to the Company's initial
public offering, the Company has sold shares of its Common Stock to certain
directors and officers of the Company in connection with the exercise of options
by such individuals.
The Company believes that all of the transactions set forth above were
made on terms no less favorable to the Company than could have been obtained
from unaffiliated third parties. The Company has adopted a policy that all
future transactions between the Company and its directors, officers, principal
stockholders and their affiliates shall be on terms no less favorable to the
Company than could be obtained by the Company from unrelated third parties and
shall be approved by a majority of the members of the Board and by a majority of
the disinterested directors.
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<PAGE> 14
LEGAL PROCEEDINGS
The Company is not a party to any material legal proceeding.
COMPLIANCE WITH SECTION 16(a)
OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers, and persons who beneficially own
more than 10% of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC"). Directors, officers and greater than 10% stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms
received by it during the year ended December 31, 1996, and written
representations that no other reports were required, the Company believes that,
during the year ended December 31, 1996, all directors, officers or beneficial
owners of more than 10% of the Company's Common Stock complied with the
applicable Section 16(a) filing requirements.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Meeting.
If any other matters properly come before the Meeting, it is the intention of
the persons named in the enclosed proxy card to vote the shares represented by
the proxies as the Board may recommend.
It is important that your shares be represented at the Meeting,
regardless of the number of shares which you hold. You are, therefore, urged to
execute and return, at your earliest convenience, the accompanying proxy card in
the envelope which has been enclosed.
By Order of the Board of Directors
Henky Wibowo
Secretary
Tucson, Arizona
April 24, 1997
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<PAGE> 15
DETACH HERE CPU 2
COMPURAD, INC.
PROXY FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
P
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
The undersigned stockholder of CompuRAD, Inc. (the "Company") hereby
O acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement for the 1997 Annual Meeting of Stockholders of the Company
X to be held on Thursday, May 22, 1997 at 2:00 p.m., local time, at Loews
Ventana Canyon Resort, 7000 North Resort Drive, Tucson, Arizona, and hereby
Y appoints Phillip Berman, M.D. with full power of substitution, Proxy and
Attorney-in-Fact, on behalf and in the name of the undersigned, to vote and
otherwise represent all of the shares registered in the name of the
undersigned at said Annual Meeting, or any adjournment thereof, with the
same effect as if the undersigned were present and voting such shares, on
the matters and in the manner specified on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
<PAGE> 16
DETACH HERE CPU 1
[X] Please mark
votes as in
this example.
In their discretion, the Proxies are entitled to vote upon such other
matters as may properly come before the Annual Meeting or any adjournments
thereof. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATIONS MADE. IF NO SPECIFICATION IS MADE, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE NOMINEES AND PROPOSALS
BELOW, AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AS
THE PROXYHOLDERS DEEM ADVISABLE.
1. Election of Directors:
NOMINEES: Ronald Michaels, Jose L. Canchola, Stewart F. Gross
FOR WITHHELD
[ ] [ ]
[ ]
--------------------------------------
For all nominees except as noted above
2. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
Ernst & Young LLP as the [ ] [ ] [ ]
independent auditors of the Company
for the fiscal year ending December
31, 1997.
MARK HERE [ ] MARK HERE [ ]
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK, SIGN AND
DATE THIS PROXY AND RETURN IT AS PROMPTLY AS POSSIBLE.
(This proxy should be marked, dated and signed by each stockholder exactly
as such stockholder's name appears hereon, and returned promptly in the
enclosed envelope. Persons signing in a fiduciary capacity should so
indicate. A corporation is requested to sign its name by its President or
other authorized officer, with the office held designated. If shares are
held by joint tenants or as community property, both holders should sign.)
Signature: Date:
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Signature: Date:
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