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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
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Q-MED, INC.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
(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:
___________________________________________________________________________
4. Proposed maximum aggregate value of transaction:
___________________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange 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:
___________________________________________________________________________
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<PAGE>
Q-MED, INC.
100 METRO PARK SOUTH
LAURENCE HARBOR, NEW JERSEY 08878
------------------------
NOTICE OF ANNUAL MEETING
------------------------
May 25, 2000
NOTICE IS HEREBY given that the Annual Meeting of the stockholders of qmed,
Inc. (the "Company"), will be held at the Sheraton at Woodbridge Place, Iselin,
New Jersey 08830, on June 26, 2000 at 10:00 A.M., for the following purposes:
1. To elect a Board of Directors.
2. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Common
Stock from 20,000,000 to 40,000,000.
3. To ratify the selection of the Company's independent certified public
accountants for the current fiscal year.
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on May 24, 2000 as
the record date for the determination of stockholders who are entitled to notice
of, and to vote at the 2000 Annual Meeting of stockholders. Only stockholders of
record as of the close of business on May 24, 2000 will be entitled to notice of
and to vote at the annual meeting.
Please sign, date and mail the enclosed proxy promptly in the enclosed
postage-paid envelope so that your shares will be represented at the meeting.
THE COMPANY URGES THAT AS MANY STOCKHOLDERS AS POSSIBLE BE REPRESENTED AT
THE MEETING. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE
URGED TO READ THE ATTACHED PROXY STATEMENT AND THEN FILL IN, DATE, SIGN AND
RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. IF YOU ARE PRESENT
IN PERSON AT THE MEETING, YOU MAY VOTE IN PERSON REGARDLESS OF HAVING SENT IN
YOUR PROXY. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING AND
YOUR PROMPTNESS WILL ASSIST US IN PREPARATIONS FOR THE MEETING.
By Order of the Board of Directors
Herbert H. Sommer, Secretary
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
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<PAGE>
Q-MED, INC.
100 METRO PARK SOUTH
LAURENCE HARBOR, NEW JERSEY 08878
------------------------
PROXY STATEMENT
-------------------------
May 25, 2000
This proxy statement sets forth certain information with respect to the
accompanying proxy proposed to be used at the 2000 Annual Meeting of
stockholders (the "Meeting") of qmed, Inc. (the "Company") or at any adjournment
thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting. The proxy statement and enclosed form of proxy are first being mailed
to stockholders on or about June 5, 2000. The Board of Directors of the Company
solicits this proxy and urges you to sign the proxy, fill in the date and return
same immediately.
Shares of the Company's common stock, $.001 par value (the "Common Stock"),
represented by valid proxies in the enclosed form, executed and received in time
for the meeting, will be voted as directed, or if no direction is indicated,
will be voted for the election as directors of the nominees described herein and
in favor of proposal Nos. 2 and 3. Proxies are being solicited by mail, and, in
addition, officers and regular employees of the Company may solicit proxies by
telephone or personal interview. As is customary, the expense of solicitation
will be borne by the Company. The Company will also reimburse brokers for the
expenses of forwarding proxy solicitation material to beneficial owners of
shares held of record by such brokers. Your prompt cooperation is necessary in
order to insure a quorum and to avoid expense and delay.
PROXIES ARE REVOCABLE AT ANY TIME PRIOR TO BEING VOTED EITHER BY WRITTEN
NOTICE DELIVERED TO THE SECRETARY OF THE COMPANY OR BY VOTING AT THE MEETING IN
PERSON.
The mailing address of the principal executive offices of the Company is
100 Metro Park South, 3rd Floor, Laurence Harbor, NJ 08878. The annual report of
the Company for the fiscal year ended November 30, 1999 ("Fiscal 2000")
including consolidated financial statements, supplementary financial information
and management's discussion and analysis of financial condition and results of
operations, accompanies this proxy statement.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's by-laws provide that the Board of Directors be comprised of
three to fifteen directors. The Board of Directors have, pursuant to the
by-laws, fixed the number of directors to serve until the next annual meeting of
stockholders at six. Therefore, six directors are to be elected until the next
annual meeting or until their successors have been elected and qualified.
Proxies are solicited in favor of the nominees named below, all of whom are now
serving as directors. In the event one or more of the nominees is unable to
serve as a director, it is intended that the proxies will be voted for the
election of such other person, if any, as shall be designated by the Board of
Directors. The Company is unaware of any information which would indicate that
any of the nominees will be unable to serve and is not presently considering any
additional persons to serve on the board.
<TABLE>
<CAPTION>
Director
Name Age Since Present Title
---- --- ----- -------------
<S> <C> <C> <C>
Michael W. Cox 58 1983 Chief Executive Officer,
President and Treasurer
David Feldman 60 1999 Chairman of the Board
Richard I. Levin, M.D. 51 1983 Vice President, Medical
Director, and Director
Robert A. Burns 74 1983 Director
A. Bruce Campbell, Ph.D.,
M.D., F.A.C.D. 51 1999 Director
Herbert H. Sommer 42 1996 Secretary and Director
</TABLE>
Directors are elected to serve until the next Annual Meeting of
shareholders and until their successors have been elected and qualified. The
Company's officers are appointed by the Board of Directors and hold office at
the will of the board.
Mr. Cox, a founder of the Company, has served as its President and
Treasurer since February, 1983 and served as Chairman of the Board from 1983 to
1996.
Mr. Feldman was appointed Chairman of the Board in March 1999. Mr. Feldman
is director of a number of mutual funds in the Dreyfus Group and of Heitman
Financial LTD., a real estate investment firm. He is former Chairman and CEO of
AT&T Investment Management Company, the management subsidiary of the
telecommunications giant's pension funds. At the time of his retirement in 1997,
Mr. Feldman had responsibility for the management of $70 billion in assets. He
was the first Chairman of the New York Stock Exchange Pension Managers
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<PAGE>
Advisory Committee as well as former Chairman of the Financial Executives
Institute's Committee on Investment of Employee Benefits Assets. He continues to
serve as an ex-officio member of the latter two organizations.
Dr. Levin, a founder of the Company, has been Vice President, Medical
Director and Secretary of the Company since February, 1983. Dr. Levin is a
Professor of Medicine at New York University School of Medicine and has served
as Associate Dean there since 1997. Dr. Levin also serves as director of the New
York University School of Medicine Laboratory for Cardiovascular Research and is
the President of the American Heart Association, New York City affiliate. He is
certified as a Diplomat from the National Board of Medical Examiners, American
Board of Internal Medicine and in the sub-specialty of Cardiovascular Diseases
(American Board of Internal Medicine and Cardiology). Dr. Levin also is a Fellow
of the American College of Physicians, Fellow of the American College of
Cardiology, and a member of the American Federation for Clinical Research, among
other professional affiliations. Dr. Levin devotes such time and attention to
the business affairs of the Company as he and the Company's Board of Directors
deem appropriate.
Mr. Burns, a founder of the Company, has served as a director and
consultant to the Company since February, 1983. Since 1981, Mr. Burns has been
the sole shareholder and President of Stuart Allen, Inc., a corporation, engaged
in marketing, consulting and contract administration. From 1980 to 1981, Mr.
Burns was the President of High Stoy Technological Corporation, a company that
manufactured and sold medical ultrasound equipment and whose assets were sold to
Squibb Corporation. From 1972 to 1979, Mr. Burns was President and Chief
Operating Officer of MetPath, Inc., which operates a national clinical reference
laboratory and which has since been acquired by Corning Glass Works, Inc.
Dr. Campbell was appointed a Director in February 1999. He served as
President of Monsanto Health Solutions from 1997 to 1998, Senior Vice President
of Aetna US Healthcare, Inc., the nation's largest health insurer from 1996 to
1997 and Chief Medical Officer of Aetna Health Plans from 1994 to 1996. He was
also Vice President, Medical Programs, for Scripps Health and is currently
President and CEO of Camber Companies, LLC, a privately funded
multi-disciplinary musculoskeletal ambulatory treatment center business.
Mr. Sommer was appointed a Director and Secretary of the Company in June
1996. Mr. Sommer, whose firm, Sommer & Schneider LLP, serves as the Company's
outside general counsel, has engaged in the private practice of law for the past
13 years and is licensed to do so in the State of New York. Mr. Sommer served as
a director of MediData International, Inc. during 1994. Mr. Sommer's
distinctions include serving as the founding Chairman of the Securities Law
Committee of the Nassau County Bar Association from 1989 to 1991.
For information concerning meetings, committees and compensation paid to
the above nominees during Fiscal 1998, see "Information Concerning the Board of
Directors and Committees."
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<PAGE>
PROPOSAL NO. 2
APPROVAL OF AN AMENDMENT TO THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
Introduction
The Company's Restated Certificate of Incorporation currently authorizes
the issuance of twenty million (20,000,000) shares Common Stock, with a par
value of $.001 per share. The Board of Directors on May 24, 2000, adopted a
resolution proposing that the Restated Certificate of Incorporation be amended
to increase the authorized number of shares of Common Stock to forty million
(40,000,000) shares, subject to stockholder approval of the amendment.
Current Use of Shares
As of May 2, 2000, the Company had 12,821,293 shares of Common Stock
outstanding and approximately 3,300,000 shares reserved for future issuance
under the Company's employee stock plans, of which, currently, approximately
1,468,000 are covered by outstanding options and approximately 890,000 are
available for grant or purchase. In addition, an additional 1,554,282 shares are
reserved for issuance upon the exercise of outstanding warrants. Based upon the
foregoing number of outstanding and reserved shares of Common Stock, the Company
currently has approximately 3,266,000 shares remaining available for other
purposes.
Proposed Amendment to Restated Certificate of Incorporation
The Board of Directors has adopted resolutions setting forth (i) the
proposed amendment to the first paragraph of Article IV of the Company's
Restated Certificate of Incorporation (the "Amendment"); (ii) the advisability
of the Amendment; and (iii) a call for submission of the Amendment for approval
by the Company's stockholders at the Annual Meeting.
The following is the text of the first paragraph of Article IV of the
Restated Certificate of Incorporation of the Company, as proposed to be amended:
"The aggregate number of shares which the Corporation shall have authority
to issue shall be forty million (40,000,000) of the par value of $.001
each, all of which shall be Common Stock."
Purpose and Effect of the Proposed Amendment
The Board of Directors believes that it is in the Company's best interest
to increase the number of shares of Common Stock that may be issued in order to
give the Company additional flexibility to issue shares of Common Stock in
future public and private financing transactions. Although the Board of
Directors has no immediate plans, understandings, agreements or
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<PAGE>
commitments to issue any of the additional shares of Common Stock that would be
authorized upon the approval of the Amendment, other than upon the exercise of
outstanding options and warrants, the Board of Directors may in the future give
consideration to various plans and financing that may involve the issuance of
Common Stock.
The Company reserves the right to seek a further increase in authorized
shares from time to time in the future as considered appropriate by the Board of
Directors.
Under the Company's Restated Certificate of Incorporation, the Company's
stockholders do not have preemptive rights with respect to Common Stock. Thus,
should the Board of Directors elect to issue additional shares of Common Stock,
existing stockholders would not have any preferential rights to purchase such
shares. If the Board of Directors elects to issue additional shares of Common
Stock, such issuance could have a dilutive effect on the earnings per share,
voting power, and shareholdings of current stockholders. In addition, if the
Board of Directors elects to issue additional shares of Common Stock, such
issuance would likely not require that current stockholders receive notice of
such issuance or require approval of current stockholders unless, for example,
the Board of Directors elected to increase the number of shares of Common Stock
available for issuance under the Company's employee stock plans or elected to
issue more than 20% of the number of shares of Common Stock outstanding in any
one transaction.
Potential Anti-Takeover Effect
The proposed Amendment could, under certain circumstances, have an
anti-takeover effect, although this is not the intent of the proposal. The
increased number of authorized shares of Common Stock could discourage, or be
used to impede, an attempt to acquire or otherwise change control of the
Company. The private placement of shares of Common Stock into "friendly" hands,
for example, could dilute the voting strength of a party seeking control of the
Company. Furthermore, many companies have issued warrants or other rights to
acquire additional shares of Common Stock to the holders of its Common Stock to
discourage or defeat unsolicited share accumulation programs and acquisition
proposals, which programs or proposals may be viewed by the Board of Directors
as not in the best interest of the Company and its stockholders. Although the
Company has no present intent to use the additional authorized shares of Common
Stock for such purposes, if this Proposal is adopted, more capital stock of the
Company would be available for such purposes than is currently available.
Vote Necessary to Approve the Amendment
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock entitled to vote at the Annual Meeting, assuming a quorum is
present, is necessary for approval of the Amendment. Therefore, abstentions and
broker non-votes (which may occur if a beneficial owner of stock where shares
are held in a brokerage or bank account fails to provide the broker or the bank
voting instructions as to such shares) effectively count as votes against the
Amendment.
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<PAGE>
Recommendation of the Board
The Board of Directors recommends a vote "FOR" the proposal to amend the
Company's Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock from Twenty Million (20,000,000) shares to
Forty Million (40,000,000) shares. Unless a contrary choice is specified,
proxies solicited by the Board of Directors will be voted FOR approval of the
Amendment.
PROPOSAL NO. 3
TO RATIFY THE SELECTION OF AMPER, POLITZINER & MATTIA
AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has recommended that Amper, Politziner & Mattia be
retained as the Company's independent certified public accountants for the
fiscal year ending November 30, 2000. Although this recommendation is not
required to be submitted to a vote of stockholders, the Board of Directors
believes it appropriate as a matter of policy that this recommendation be
submitted for ratification at the Company's annual meeting. In the event the
stockholders do not ratify the retention of Amper, Politziner & Mattia, the
selection of other independent auditors will be considered by the Board of
Directors. See "Relationship with Independent Certified Public Accountants."
STOCKHOLDER VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares present in
person and by proxy and voting at the Meeting is required for ratification of
the selection of independent certified public accountants.
The Board of Directors recommends a vote FOR ratification of the selection
of Amper, Politziner & Mattia.
VOTING SECURITIES AND RECORD DATE
Holders of Common Stock of the Company of record at the close of business
on May 24, 2000, are entitled to notice and to vote at the Meeting. At the close
of business on May 24, 2000, the Company had 12,843,293 shares of Common Stock
outstanding, each of which entitled the holder thereof to one vote.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 2, 2000, the number and
percentage of shares of Common Stock of the Company, owned of record and
beneficially, by each person known by the Company to own 5% or more of such
stock, each director of the Company and by all executive officers and directors
of the Company, as a group:
Approximate Approximate
Number of Percent of
Name Shares (1) Class (2)
---- ------------ ---------
Michael W. Cox 1,676,466(3) 12.6%
Robert A. Burns 68,958(4) <1%
Richard I. Levin, M.D. 282,698(5) 2.2%
David Feldman 10,000(6) <1%
Herbert H. Sommer 47,500(7) <1%
A. Bruce Campbell, M.D. 10,000(8) <1%
Galen Partners III, L.P. 3,033,638(9) 21.9%
Officers and
Directors as a
Group ( 6 Persons) 2,314,092(10) 16.7%
------------
(1) Information with respect to beneficial ownership is based upon information
furnished by each stockholder or contained in filings made with the
Securities and Exchange Commission. Unless otherwise indicated, beneficial
ownership includes both sole investment and voting power.
(2) Based upon 12,821,293 shares of Common Stock outstanding as of May 2, 2000
and, with respect to each stockholder, the number of shares which would be
outstanding upon the exercise by such stockholder of outstanding rights to
acquire stock, either upon exercise of outstanding options, warrants or
conversion of other securities.
(3) Includes 486,912 shares which may be obtained upon the exercise of
outstanding options.
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(4) Includes 30,000 shares which may be obtained upon the exercise of
outstanding warrants.
(5) Includes 271,412 shares which may be obtained upon the exercise of
outstanding options.
(6) Consists of 10,000 shares which may be obtained upon the exercise of
outstanding warrants.
(7) Consists of 47,500 shares which may be obtained upon the exercise of
outstanding warrants and options.
(8) Consists of 10,000 shares which may be obtained upon the exercise of
outstanding options.
(9) Includes 2,015,838 shares owned by Galen Partners III, L.P. and two other
private funds which are managed jointly with Galen Partners III L.P.
(collectively the "Galen Funds"), and 1,019,259 shares which may be
acquired by the Galen Funds and persons managing the Galen Funds upon the
exercise of outstanding warrants.
(10) Includes a total of 1,037,824 shares which may be obtained by officers and
directors upon the exercise of outstanding options or warrants.
The business address of Messrs. Cox, Burns and Levin is 100 Metro Park
South, Laurence Harbor, New Jersey 08878. Mr. Campbell's business address is 302
W. Main Street, Suite 208, Avon, Connecticut 06001. Mr. Feldman's business
address is 466 Lexington Avenue, New York, New York 10017. Galen Partners III,
L.P. address is 610 Fifth Avenue - 5th Floor, Rockefeller Center, New York, New
York 10020. Mr. Sommer's business address is Sommer & Schneider LLP, 595 Stewart
Avenue, Suite 710, Garden City, New York 11530.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten-percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended November 30, 1999 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with.
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<PAGE>
INFORMATION CONCERNING BOARD OF DIRECTORS AND COMMITTEES
GENERAL
During Fiscal 1999, the Company paid no director's fees. All directors are
reimbursed for travel and other expenses relating to attendance at board
meetings. Directors who are officers of the Company receive no additional
compensation for service on the board. During Fiscal 1999, the Board of
Directors met formally three times. All directors attended all of the meetings.
The Board of Directors established an Audit Committee by resolution dated
February 20, 1998. The Audit Committee presently consists of three members,
Messrs. Cox, Feldman and Campbell. The primary purposes of the Audit Committee
will be (i) to review the scope of the audit to be performed; (ii) to meet with
the Company's independent certified public accountants to review the results of
the audit; (iii) to review with the Company's independent certified public
accountants the Company's internal auditing proceedings and controls; (iv) to
make recommendations regarding the selection of the Company's independent
certified public accountants; and (v) to review the Company's quarterly
financial statements prior to public issuance.
In the absence of a compensation, stock option or special committee
comprised of a majority of independent directors, the Audit Committee will
review any transaction of the Company in which a director or officer has a
material interest.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information regarding the
compensation of the Company's Chief Executive Officer and each of its other
executive officers whose total salary and bonus for the fiscal year ended
November 30, 1999 exceeded $100,000:
<TABLE>
<CAPTION>
Name and Year Other Restricted All Other
Principal Ended Annual Stock Options/ LTIP Compen-
Position Nov. 30, Salary Bonus Compensation Awards SARs Payouts sation
-------- -------- ------ ----- ------------ ------ ---- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael W. Cox 1999 $140,400 $ -0- $ -0- -0- 200,000/0 $-0- $-0-
President, 1998 133,477 -0- -0- -0- 0/0 -0- -0-
Chief Executive 1997 110,400 -0- -0- -0- 5,500/0 -0- -0-
Officer
Richard I. Levin 1999 $ 94,260 $ -0- $ -0- -0- 0/0 $-0- $-0-
Vice President, 1998 103,629 -0- -0- -0- 0/0 -0- -0-
Medical Director 1997 118,260 -0- -0- -0- 5,500/0 -0- -0-
</TABLE>
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STOCK OPTION PLANS
On February 3, 1986, the Company's Board of Directors adopted an incentive
stock option plan entitled, "qmed, Inc. 1986 Incentive Stock Option Plan" (the
"1986 Plan"). The 1986 Plan was approved by the Company's shareholders in April,
1986. In December, 1986, the 1986 Plan was amended to authorize the issuance of
non-qualifying stock options ("Non-Qualifying Options") with a maximum exercise
period of ten years and to bring the administration of outstanding
Non-Qualifying Options within the 1986 Plan.
Pursuant to the 1986 Plan, 700,000 shares of the Company's Common Stock
were reserved for issuance upon exercise of options. Options are granted by an
independent committee appointed by the Board of Directors of the Company and no
member of such committee is eligible to receive any options under the 1986 Plan.
Options permit the grantees to purchase shares of the Company's Common Stock at
a price equal to at least 100% of the market value of the stock at the date of
grant. The Options are exercisable for a period of up to five years from the
date of the grant, in the case of Incentive Stock Options and ten years in the
case of Non-Qualifying Stock Options, are non-transferable and are not
exercisable after 3 months if the employee leaves the Company's employ.
As of November 30, 1998, all options to purchase shares of Common Stock
available had been granted under the 1986 Plan.
In September, 1990, the Board of Directors adopted the qmed, Inc. 1990
Employee Stock Incentive Plan (the "1990 Plan"). The 1990 Plan was approved by
the Company's stockholders at the Company's Annual meeting in November, 1990.
Pursuant to the 1990 Plan eligible participants of the Company, its subsidiaries
and affiliates may receive, until September 25, 2000, stock options, stock
appreciation rights, restricted stock or deferred stock awards for up to
1,000,000 shares of the Company's Common Stock.
Pursuant to the 1990 Plan, an independent committee, in its discretion,
determines those directors of the Company to be granted Director Stock Options
and those officers and other key employees of the Company, its subsidiaries and
affiliates to be granted Employee Stock Options, Stock Appreciation Rights,
Restricted Stock Awards or Deferred Stock Awards or a combination, thereof; the
type of grants to be made; the number of shares subject to such grants; the
terms and conditions of the awards, including restrictions on Director Stock
Options, Employee Stock Options or other awards and/or the stock relating
thereto based on performance and/or such other factors as the Committee in its
sole discretion determines and vesting acceleration features based on
performance and/or such other factors as the Committee in its sole discretion
determines; and whether, to what extent and under what circumstances stock and
other amounts payable with respect to an award may be deferred either
automatically or at the participant's election. Grants of options to purchase
141,128 shares were made under the 1990 Plan during Fiscal 1999.
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As of November 30, 1999, there were options to purchase 4,999 shares of
Common Stock available to be granted under the 1990 Plan.
In March 1997 the Company's Board of Directors adopted the Q-Med 1997
Equity Incentive Plan (the "1997 Plan"). The 1997 Plan was approved by the
Company's stockholders at the Company's Annual meeting in May, 1997. Pursuant to
the 1997 Plan eligible participants of the Company, its subsidiaries and
affiliates may receive, until July 31, 2007, stock options, stock appreciation
rights, restricted stock or deferred stock awards for up to 600,000 shares of
the Company's Common Stock. Grants of options to purchase 429,000 shares were
made under the 1997 Plan during Fiscal 1999.
As of November 30, 1999, there were options to purchase 6,965 shares of
Common Stock available to be granted under the 1997 Plan.
In September 1999 the Company's Board of Directors adopted the Q-Med 1999
Equity Incentive Plan (the "1999 Plan"). The 1999 Plan was approved by the
Company's stockholders at the Company's Annual meeting in October 1999. Pursuant
to the 1999 Plan eligible participants of the Company, its subsidiaries and
affiliates may receive, until August 31, 2009, stock options, stock appreciation
rights, restricted stock or deferred stock awards for up to 1,000,000 shares of
the Company's Common Stock. Grants of options to purchase 55,128 shares were
made under the 1999 Plan during Fiscal 1999.
As of November 30, 1999, there were options to purchase 944,872 shares of
Common Stock available to be granted under the 1999 Plan.
The following table sets forth as to each executive officer of the Company
listed in the Summary Compensation table above concerning certain options
granted during the year ended November 30, 1999:
<TABLE>
<CAPTION>
% of Total
Options/SARs
Options/ Granted to
SARs Employees in Exercise or Base Expiration
Name Granted Fiscal Year Price Per Share Date
---- ----------- ------------ ---------------- -----------
<S> <C> <C> <C> <C>
Michael W. Cox 200,000 / 0 41.3% / N/A $ 2.75 2/17/2009
Richard I. Levin 0 / 0 0 / N/A $ N/A N/A
</TABLE>
The following table sets forth as to each executive officer listed in the
Summary Compensation table above certain information concerning the exercise of
options during the year ended November 30, 1999 and options outstanding as of
such date:
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<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised in-the-Money
Shares Options Options
Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized Unexercisable Unexercisable
---- ----------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Michael W. Cox 0 $ 0 286,912/0 $620,552/0
Richard I. Levin 0 $ 0 281,412/0 $577,589/0
</TABLE>
BOARD REPORT ON EXECUTIVE COMPENSATION
The Board of Directors did not, during Fiscal 1999, have a compensation or
similar committee. Accordingly, the full Board of Directors is responsible for
determining and implementing the compensation policies of the Company.
The Board's executive compensation policies are designed to offer
competitive compensation opportunities for all executives which are based on
personal performances, individual initiative and achievement, as well as
assisting the Company in attracting and retaining qualified executives. The
Board also endorses the position that stock ownership by management and
stock-based compensation arrangements are beneficial in aligning management's
and stockholders' interests in the enhancement of stockholder value.
Compensation paid to the Company's executive officers generally consists of
the following elements: base salary, annual bonus and long-term compensation in
the form of stock options and the 401(k) Savings Plan. Compensation levels for
executive officers of the Company is determined by a consideration of each
officer's initiative and contribution to overall corporate performance and the
officer's managerial abilities and performance in any special projects that the
officer may have undertaken. Competitive base salaries that reflect the
individual's level of responsibility are important elements of the Company's
executive compensation philosophy. Subjective considerations of individual
performance are considered in establishing annual bonuses and other incentive
compensation. In addition, the Board considers the Company's financial position
and cash flow in making compensation decisions.
The Company has certain broad-based employee benefit plans in which all
employees, including the named executives, are permitted to participate on the
same terms and conditions relating to eligibility and subject to the same
limitations on amounts that may be contributed. In 1999, the Company also made
matching contributions to the 401(k) Savings Plan for those participants.
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<PAGE>
MR. COX' COMPENSATION AND EMPLOYMENT AGREEMENT
In reviewing Mr. Cox' performance in 1998 and determining appropriate
compensation, the Board, acting through an ad hoc committee of independent
directors consisting of Mr. Burns and Howard Waltman, who served as the
Company's Chairman until March 1999, took the following into consideration:
Mr. Cox was the principal force behind the Company's continuing efforts to
market and sell its ohms|cad system. In addition, Mr. Cox was instrumental in
obtaining a $2,000,000 private placement in the beginning of Fiscal 1999, the
restructuring of a portion of the Notes issued as part of the placement into
equity and raising an additional $2,200,000 of equity financing at the end of
Fiscal 1999. Upon the recommendation of Messrs. Burns and Waltman, Mr. Cox'
amended employment agreement provides for significant cash and equity incentives
based upon the Company's growth and performance.
In recognition of these accomplishments, Mr. Cox base salary was increased
to $140,000 per year from $110,000 per year in March 1998. The ad hoc committee
believed this base level to be more in line with compensation paid to the chief
executive officers in companies similar to the Company and recommended that
other performance based compensation be given consideration. In December 1998,
the Company and Michael W. Cox amended and extended Mr. Cox's employment
agreement, which was entered into in June 1995, replacing discretionary bonuses
with performance based compensation. The agreement was extended to end November
30, 2000 and provides for an initial base salary of $140,000 and increases based
upon the Company managing a certain number of lives using the Company's disease
management system as follows:
Annual Rate of
Number of Lives Base Salary
--------------- --------------
400,000 $180,000
500,000 $200,000
640,000 $250,000
The amended agreement also provides for cash bonuses based upon net
earnings before taxes, other contingent compensation arrangements and
non-recurring losses. Mr. Cox was granted 200,000 options in Fiscal 1999 under
the amended agreement of which 100,000 are vested and 50,000 vest on each
anniversary of the grant.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On November 16, 1998 Michael Cox, the Company's President, CEO and a
director, together with his wife, was required by the Galen Funds to invest
$100,000 as part of a private placement of approximately $3,200,000. Of the
$3,200,000, the Galen Funds invested
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<PAGE>
$1,000,000 of cash and converted $1,050,000 of outstanding notes as part of the
placement. Mr. and Mrs. Cox and 12 unaffiliated investors purchased the balance
of the placement for cash. The per share purchase price for all participants was
$1.67, which was determined by negotiations between the Company and the Galen
Funds.
It is the Company's policy not to engage in transactions with officers,
directors, principal stockholders or affiliates or any of them unless such
transactions have been approved by a majority of the disinterested directors and
are upon terms no less favorable to the Company than could be obtained from an
unaffiliated party in an arm's length transaction. During Fiscal 1997 there were
no transactions between the Company and any officer, director or principal
stockholder except as disclosed above with respect to executive compensation and
stock options.
COMPANY PERFORMANCE
The following graph shows a comparison of cumulative total returns on the
common stock of the Company from November 30, 1994 through November 30, 1999
with the cumulative total return on the NASDAQ Stock Market - U.S. and the
cumulative total return on a group of NASDAQ Health Services Stocks (SIC Code
80) compiled by the Center for Research in Security Prices at the University of
Chicago (the "Peer Group"). The Company did not pay any dividends during this
period.
The graph assumes an investment of $100 in each of the Company, the NASDAQ
Stock Market - U.S. and the Peer Group on November 30, 1994. The comparison also
assumes that all dividends are reinvested.
Q-med
Index
Chart
Raw Index
------------------------------- -----------------------------
NASDAQ Health Qmed NASDAQ Health Qmed
------ ------ ---- ------ ------ ----
1994 243.749 427.454 1.375 100.000 100.000 100.000
1995 347.411 508.352 8.500 142.528 118.926 618.182
1996 425.549 522.775 10.125 174.585 122.300 736.364
1997 530.089 542.246 7.500 217.473 126.855 545.455
1998 650.131 427.276 3.813 266.722 99.958 277.309
1999 1116.805 340.093 2.875 458.178 79.562 209.091
14
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Q-med
Index
Chart
Raw Index
------------------------------- -----------------------------
NASDAQ Health Qmed NASDAQ Health Qmed
------ ------ ---- ------ ------ ----
1993 243.222 347.520 1.875 100.000 100.000 100.000
1994 243.917 427.408 1.375 100.286 122.988 73.333
1995 347.503 507.704 8.500 142.875 146.093 453.333
1996 425.647 522.105 10.125 175.003 150.237 540.000
1997 530.256 537.999 7.500 218.013 154.811 400.000
1998 650.081 423.663 3.813 267.279 121.910 203.360
The comparisons in this table are required by the Securities and Exchange
Commission and are not intended to forecast or be indicative of possible future
performance of the Company's Common Stock. The stock price performance graph
shall not be deemed to be incorporated into any filing under the Securities Act
or the Exchange Act, notwithstanding any general statement contained in any such
filing incorporating this proxy statement by reference, except to the extent
that the Company specifically incorporates this information by reference.
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company's Board of Directors has appointed Amper, Politziner & Mattia,
independent certified public accountants to serve as auditors for Fiscal 1999.
Amper, Politziner & Mattia audited the Company's financial statements as of and
for each of the years ended November 30, 1997, 1998 and 1999.
A representative of the firm of Amper, Politziner & Mattia is expected to
be present at the meeting and will be available to respond to appropriate
questions. They will be given an opportunity to make a statement if they desire
to do so.
ANNUAL REPORT
The Company's annual report for Fiscal 1999 is enclosed herewith.
A COPY OF THE COMPANY'S FORM 10-K ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO,
MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO:
Q-MED, INC.
100 Metro Park South
Laurence Harbor, NJ 08878
Attn: Investor Relations
15
<PAGE>
STOCKHOLDER PROPOSALS
Proposals by Stockholders intended to be presented at the next annual
meeting to be held in 2001 must be received by the Secretary of the Company by
February 5, 2001 in order to be included in the proxy statement for that
meeting.
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OTHER BUSINESS
There is no matter other than those described above, so far as is known to
the management of the Company, at the date of this proxy statement, to be acted
on at the meeting. It is intended, however, if other matters come up for action
at said meeting or any adjournments thereof, that the persons named in the
enclosed form of proxy shall, in accordance with the terms of the proxy, have
authority in their discretion to vote shares represented by proxies received by
them, in regard to such other matters, as seems to said persons in the best
interests of the Company and its stockholders.
Q-MED, INC.
_______________________
Herbert H. Sommer
Secretary
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[FRONT]
PROXY
Q-MED, INC.
100 METRO PARK SOUTH
LAURENCE HARBOR, NEW JERSEY 08878
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael W. Cox and Herbert H. Sommer as
proxies, each with the power to appoint his substitute, and hereby authorizes
them to vote, as designated on the reverse side, all of the shares of common
stock of Q-Med, Inc. held of record by the undersigned on May 24, 2000, at the
annual meeting of stockholders to be held on June 26, 2000 or any adjournment
thereof.
<PAGE>
[BACK]
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is given, this proxy will be voted
FOR Proposal 1 through 4, inclusive.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
1. ELECTION OF DIRECTORS
NOMINEES: Michael W. Cox, David Feldman, Richard I. Levin, M.D., Robert A.
Burns, Dr. A. Bruce Campbell and Herbert H. Sommer
FOR WITHHELD
all nominees from all nominees
FOR, except vote withheld from the following nominee(s):
2. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock,
$.001 par value, from 20,000,000 to 40,000,000. For [ ] Against [ ]
Abstain [ ]
3. To ratify the selection of Amper, Politziner & Mattia to serve as the
Company's independent certified public accountants. For [ ] Against [ ]
Abstain [ ]
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears hereon. When shares are by joint tenants,
both should sign. When signing as attorney, executor, trustee, administrator or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Signature Date
Signature Date
