<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
INNOSERV TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(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/ $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:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
INNOSERV TECHNOLOGIES, INC.
320 WESTWAY, SUITE 520
ARLINGTON, TEXAS 76018
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 17, 1996
------------------------
Notice is hereby given that the Annual Meeting of Shareholders of InnoServ
Technologies, Inc. ("InnoServ") will be held in the Shamrock Meeting Room of the
Arlington Hilton Hotel, located at 2401 East Lamar Boulevard, Arlington, Texas
76006, on September 17, 1996 at 2:00 p.m., Central Daylight Time, for the
following purposes:
1. To elect directors to hold office until the annual meeting of
shareholders in 1997 and until their successors are elected and qualified;
2. To take action with respect to any other matters which may properly come
before the meeting or any adjournment(s) thereof.
The Board of Directors' nominees for election as directors are: Thomas E.
Carroll, Bernard J. Korman, Michael G. Puls, Dudley A. Rauch, Michael M. Sachs,
Samuel Salen, M.D., Michael F. Sandler and David A. Wegmann.
The enclosed proxy is solicited by the Board of Directors of InnoServ.
Holders of common stock of record at the close of business on August 21, 1996
are entitled to notice of and to vote at the meeting or any adjournment(s)
thereof. In order to constitute a quorum for the conduct of business at the
meeting, holders of a majority of all the outstanding shares of InnoServ's
common stock must be present in person or be represented by proxy.
You are encouraged to attend the meeting in person, but if you cannot do so,
you are requested to complete, date and sign the enclosed proxy card and to
return it without delay in the enclosed postage-paid envelope. If you attend the
meeting, you may vote in person, if you wish, whether or not you have returned
your proxy. In any event, a proxy may be revoked at any time before it is
exercised.
By Order of the Board of Directors
SAMUEL SALEN, M.D.
VICE CHAIRMAN AND SECRETARY
Arlington, Texas
August 30, 1996
<PAGE>
INNOSERV TECHNOLOGIES, INC.
320 WESTWAY, SUITE 520
ARLINGTON, TEXAS 76018
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 17, 1996
------------------------
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished to shareholders of InnoServ Technologies,
Inc., a California corporation ("InnoServ"), in connection with the solicitation
of proxies by and on behalf of the Board of Directors of InnoServ (the "Board of
Directors") for use at the Annual Meeting of Shareholders of InnoServ to be held
at 2:00 p.m., Central Daylight Time, on September 17, 1996 in the Shamrock
Meeting Room of the Arlington Hilton Hotel, located at 2401 East Lamar
Boulevard, Arlington, Texas 76006 or at any adjournment(s) thereof (the "Annual
Meeting") for the purposes set forth below and in the accompanying Notice of
Annual Meeting of Shareholders. This Proxy Statement, together with the form of
proxy, are being mailed on or about August 30, 1996 to InnoServ's shareholders
of record as of the close of business on August 21, 1996.
A shareholder signing and returning the enclosed proxy has the power to
revoke it at any time before it is exercised by (1) attending the Annual Meeting
and voting in person, (2) duly executing and delivering a proxy for the Annual
Meeting bearing a later date, or (3) delivering written notice of revocation to
the Secretary of InnoServ at 320 Westway, Suite 520, Arlington, Texas 76018
prior to exercise of the enclosed proxy at the Annual Meeting.
InnoServ will bear the entire cost of this solicitation of proxies,
including expenses in connection with preparing, assembling and mailing the
proxy solicitation materials and the charges and expenses of brokerage firms and
others for forwarding solicitation materials to beneficial owners. In addition
to solicitation by mail, proxies may be solicited personally or by telephone by
directors, officers or employees of InnoServ, who will receive no additional
compensation for such services.
ANNUAL REPORT
Concurrently herewith, InnoServ is providing to each shareholder of record
as of August 21, 1996, a copy of its Annual Report for the year ended April 30,
1996, including audited financial statements. The Annual Report does not form
any part of the material for the solicitation of proxies. Shareholders of
InnoServ may obtain, without charge, a copy of InnoServ's Annual Report on Form
10-K filed with the Securities and Exchange Commission for the year ended April
30, 1996, by writing to Investor Relations, InnoServ Technologies, Inc., 320
Westway, Suite 520, Arlington, Texas 76018.
PRINCIPAL SHAREHOLDERS
The close of business on August 21, 1996 is the record date for
determination of holders of InnoServ's common stock, $.01 par value (the "Common
Stock"), entitled to notice of and to vote at the Annual Meeting and at any
adjournment(s) thereof. On that date, there were outstanding and entitled to
vote 5,035,833 shares of Common Stock.
The following table sets forth information as of August 1, 1996 with respect
to beneficial ownership of InnoServ's Common Stock by (i) each director and
nominee for election as director, (ii) each
1
<PAGE>
Named Executive Officer described under "Executive Compensation," (iii) all
directors and executive officers as a group, and (iv) each person known to
InnoServ to be the beneficial owner of five percent or more of the outstanding
shares of Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
NAME AND ADDRESS (1) BENEFICIALLY OWNED OWNERSHIP (2)
- --------------------------------------------------------------- ------------------ -----------------
<S> <C> <C>
Dudley A. Rauch................................................ 1,067,232(3) 21%
Samuel Salen, M.D. ............................................ 340,157(4) 7%
Michael G. Puls................................................ 2,400 *
Thomas E. Hoefert.............................................. 0 *
Thomas E. Carroll.............................................. 2,351,438(5) 44%
Bernard J. Korman.............................................. 23,000(6) *
Michael M. Sachs............................................... 134,312(7) 3%
Michael F. Sandler............................................. 2,356,438(5)(6) 44%
David A. Wegmann............................................... 13,961(8) *
MEDIQ Incorporated............................................. 2,351,438(9) 44%
One MEDIQ Plaza
Pennsauken, NJ 08110
All directors and officers as a group (9 persons).............. 3,937,500(10) 73%
</TABLE>
- ------------------------
* Less than one percent
NOTES:
(1) Except as otherwise indicated, the address of each person is c/o InnoServ
Technologies, Inc., 320 Westway, Suite 520, Arlington, Texas 76018 and each
person has sole voting and investment control with respect to the shares
listed.
(2) Percent of shares of Common Stock outstanding at August 1, 1996. Shares
subject to purchase pursuant to warrants and stock options exercisable at
such date or within 60 days thereafter are deemed to be outstanding for
purposes of calculating the percentage, where applicable.
(3) Includes 52,868 shares held by Cecilia B. Rauch, Mr. Rauch's spouse; 13,743
shares held by the Rauch Family Foundation over which Mr. Rauch exercises
shared voting and investment powers; and 26,322 shares held by the Henry E.
Rauch Trust of 1994 over which Mr. Rauch exercises sole voting and
investment powers. Mr. Rauch disclaims beneficial ownership of all such
shares. Also includes 11,900 shares of Common Stock subject to outstanding
options issued pursuant to the 1992 Stock Incentive Plan which were, or
become, exercisable within 60 days of August 1, 1996.
(4) Of such shares (i) 121,962 shares of Common Stock are held by the Salen
Family Trust of 1995, (ii) 97,105 shares are owned by MSB Radiology Medical
Group, Inc. Profit Sharing Trust, (iii) 96,990 shares are owned by MSB
Radiology Medical Group, Inc. Pension Trust, (iv) 11,000 shares are owned by
MSB Radiology Medical Group, Inc. ("MSB"), and (v) 2,200 shares are held by
Dr. Salen's son. Also includes 10,900 shares subject to outstanding options
issued pursuant to the 1992 Stock Incentive Plan which were, or become,
exercisable within 60 days of August 1, 1996. Dr. Salen, as a trustee,
exercises shared voting and investment control over the shares held by the
Salen Family Trust of 1995, MSB Radiology Medical Group, Inc. Profit Sharing
Trust and MSB Radiology Medical Group, Inc. Pension Trust. Dr. Salen
exercises shared voting and investment control over the shares held by MSB.
Dr. Salen disclaims beneficial ownership of the 2,200 shares held by his
son.
(5) Includes 2,026,438 shares of Common Stock and 325,000 shares of Common Stock
issuable upon exercise of a warrant held by MEDIQ Incorporated ("MEDIQ").
Messrs. Carroll and Sandler are directors, executive officers and
shareholders of MEDIQ and, as such, share voting and investment control over
such shares. Messrs. Carroll and Sandler disclaim beneficial ownership of
such shares.
2
<PAGE>
(6) Includes 2,000 shares of Common Stock subject to outstanding options issued
pursuant to the 1992 Stock Incentive Plan which were, or become, exercisable
within 60 days of August 1, 1996.
(7) Includes 2,860 shares of Common Stock owned by Mr. Sachs' spouse and 1,210
shares held by Mr. Sachs as trustee of a trust, as to which shares Mr. Sachs
disclaims beneficial ownership. Also includes 11,900 shares of Common Stock
subject to outstanding options issued pursuant to the 1992 Stock Incentive
Plan which were, or become, exercisable within 60 days of August 1, 1996.
(8) Includes 11,900 shares of Common Stock subject to outstanding options issued
pursuant to the 1992 Stock Incentive Plan which were, or become, exercisable
within 60 days of August 1, 1996.
(9) Includes 325,000 shares of Common Stock issuable upon exercise of a warrant
held by MEDIQ. Bessie G. Rotko, Michael J. Rotko, Judith M. Shipon, and PNC
Bank, National Association, as Trustees under an Agreement of Trust dated
November 18, 1983, are the indirect beneficial owners of shares of common
and preferred stock representing approximately 19% and 56% of MEDIQ's shares
outstanding, respectively, and may therefore be deemed "controlling persons"
of MEDIQ. The address of the Trustees is c/o MEDIQ Incorporated, One MEDIQ
Plaza, Pennsauken, New Jersey, 08110.
(10) Includes 50,600 shares of Common Stock subject to outstanding options
issued pursuant to stock options which were, or become, exercisable within
60 days of August 1, 1996. Directors and officers, as a group, disclaim
beneficial ownership of 2,450,641 shares.
VOTING
Holders of Common Stock are entitled to one vote per share on each matter
submitted to or acted upon by the shareholders at the Annual Meeting except for
cumulative voting rights with respect to the election of directors (see
"Election of Directors"). The presence, either in person or by proxy, of the
holders of 2,517,917 shares of Common Stock, being a majority of the outstanding
shares of Common Stock entitled to vote, is necessary to constitute a quorum for
the transaction of business at the Annual Meeting. Shares represented by all
valid proxies will be voted in accordance with the instructions contained in the
proxies. In the absence of instructions, shares represented by valid proxies
will be voted for the election of the Board of Director's nominees and with
respect to any other matters, in the discretion of the proxy holders as
indicated on the proxy.
ELECTION OF DIRECTORS
The directors of InnoServ are elected annually and serve until the next
annual meeting of shareholders or until their successors are elected and
qualified. Shareholders are entitled to a cumulative voting right in the
election of directors. Under cumulative voting, each shareholder is entitled to
a number of votes equal to the number of directors to be elected multiplied by
the number of shares the shareholder is entitled to vote. Such votes may be cast
for one nominee or distributed among two or more nominees. The eight nominees
for director receiving the highest number of votes at the meeting will be
elected.
No shareholder shall be entitled to cumulate votes for a nominee unless such
nominee's name has been placed in nomination prior to the voting and the
shareholder has given notice at the Annual Meeting prior to the voting of the
intention to cumulate votes. If any shareholder gives such notice, all
shareholders may cumulate votes. By delivering an executed proxy, a shareholder
gives the persons named in the accompanying proxy discretionary authority to
cumulate votes in the election of directors.
3
<PAGE>
The nominees for election as directors, all of whom are presently directors
except for Mr. Carroll, are set forth below. InnoServ has no reason to believe
that any nominee for election will not be able to serve his prescribed term.
Should any nominee become unavailable to serve, the proxies solicited hereby may
be voted for election of such other person as shall be designated by the Board
of Directors.
<TABLE>
<CAPTION>
DIRECTOR OF
INNOSERV
NAME AGE POSITION SINCE
- ------------------------------------------ --- ----------------------------------------- -------------
<S> <C> <C> <C>
Dudley A. Rauch (1)(2).................... 55 Director, Chairman of the Board of
Directors 1981
Samuel Salen, M.D. (2).................... 55 Director, Vice Chairman of the Board of
Directors and Secretary 1981
Michael G. Puls........................... 46 President and Chief Executive Officer;
Director 1995
Thomas E. Carroll (3)..................... 52 Nominee for Director --
Bernard J. Korman (2)..................... 64 Director 1994
Michael M. Sachs (1)(2)................... 55 Director 1981
Michael F. Sandler (1)(2)(3).............. 50 Director 1994
David A. Wegmann (2)...................... 49 Director 1983
</TABLE>
- ------------------------
NOTES:
(1) Member of the Audit Committee of the Board of Directors.
(2) Member of the Compensation and Stock Option Committee of the Board of
Directors.
(3) Pursuant to the Agreement of Merger and Plan of Organization dated August 3,
1994 ("Agreement of Merger"), MEDIQ has the right, subject to qualification
by InnoServ, to designate two individuals to be nominated for election to
the Board of Directors of InnoServ. Messrs. Carroll and Sandler are the
individuals so designated by MEDIQ. MEDIQ's right to designate two nominees
exists until the shares of Common Stock received by MEDIQ pursuant to the
Agreement of Merger are distributed by MEDIQ to its stockholders. A
Registration Statement on Form S-3 has been filed, but not declared
effective, with the Securities and Exchange Commission in order to provide
MEDIQ the opportunity to distribute such shares. In the Agreement of Merger,
MEDIQ agreed to distribute the shares within 60 days after the Common Stock
is registered.
Further information with respect to the nominees and directors is set forth
below:
Mr. Rauch has been a private investor since 1992. Previously, Mr. Rauch
served as President and Chief Executive Officer of InnoServ from 1981 and was
elected Chairman and appointed Chief Executive Officer in 1986. He resigned as
Chief Executive Officer in 1992.
Dr. Salen is a radiologist and the President of MSB Radiology Medical Group,
Inc., a private physician's group practice. Dr. Salen served as interim
President and Chief Executive Officer of InnoServ from March 1995 to December
1995.
Mr. Puls became President and Chief Executive Officer of InnoServ in
December 1995. Before joining InnoServ, Mr. Puls was a Group Director of Venture
Projects for Senmed Medical Ventures, a manager of commercialization processes
for advanced medical technologies, from January 1995 to December 1995. Mr. Puls
was the President and Chief Executive Officer of EnviroSurgical, Inc., an
early-stage medical device company, from January 1993 to December 1994 and an
independent consultant to medical device and service companies from July 1991 to
December 1992. He also served as the Vice President of Business Development for
EZEM Corporation, a provider of radiology products, from January 1989 to June
1991.
4
<PAGE>
Mr. Carroll has been the President, Chief Executive Officer and a director
of MEDIQ Incorporated ("MEDIQ"), a healthcare services company, since 1995.
Formerly he was the President and Chief Operating Officer of MEDIQ/PRN Life
Support Services, Inc. ("MEDIQ/PRN") from 1994 to 1995 and Executive Vice
President and Chief Operating Officer of MEDIQ/PRN from 1990 to 1994.
Mr. Korman was President, Chief Executive Officer and a director of MEDIQ
from 1980 to 1996. He is Chairman of the Board of Directors of NutraMax
Products, Inc., a consumer health care products company and also serves as a
director of MHM Services, Inc., a provider of behavioral health management
services, The New America High Income Fund, a financial services company, The
Pep Boys, Inc., a supplier of automotive parts and supplies, Today's Man, Inc.,
a retail men's clothing company and Omega Healthcare Investors, Inc., a real
estate investment trust.
Mr. Sachs is the Chairman and Chief Executive Officer of Westrec Properties,
Inc., which owns and manages marinas. From 1982 to 1990, Mr. Sachs was Executive
Vice President, Director and General Counsel of Public Storage, Inc., a rental
storage facilities company.
Mr. Sandler, a certified public accountant, has been Senior Vice President,
Finance and Chief Financial Officer since November 1988, Treasurer since 1991,
and director since March 1994, of MEDIQ. He has served as Vice President and a
director of NutraMax Products, Inc. since July 1990, and as Vice President and
Chief Financial Officer of PCI Services, Inc. since September 1991. He has
served as Vice President, Treasurer and a director of MEDIQ/PRN since May 1992,
and also served as Chief Financial Officer of MEDIQ/PRN from January 1989 to
September 1992. Mr. Sandler is also a director of MHM Services, Inc.
Mr. Wegmann has been a private investor since 1988. Mr. Wegmann serves on
the Board of Directors of Compression Labs, Incorporated, a manufacturer of
digital video compression hardware and Plantronics, Inc., a manufacturer of
telephone headset equipment.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During the fiscal year ended April 30, 1996, the Board of Directors of
InnoServ had an Audit Committee and a Compensation and Stock Option Committee.
The Audit Committee's functions include (i) reviewing and approving the
scope and general extent of the annual audit, the audit procedures utilized and
the basis for determining the compensation to be paid to the independent
auditors, (ii) recommending to the Board of Directors the engagement of the
independent auditors for the ensuing year, (iii) reviewing and reporting to the
Board of Directors concerning the results of the annual audit conducted by the
independent auditors, (iv) reviewing and reporting to the Board of Directors
concerning InnoServ's policies and procedures relating to accounting and
financial controls, (v) inquiring of appropriate personnel of InnoServ and of
the independent auditors as to deviations from or failures to fulfill the
corporation's responsibilities relating to accounting policies, internal
controls and financial reporting practices. The Committee held two meetings
during the 1996 fiscal year.
The Compensation and Stock Option Committee reviews salaries, bonuses and
other aspects of executive compensation and administers InnoServ's Incentive
Stock Option Plan. The Committee held three meetings during the 1996 fiscal
year.
InnoServ does not have a Nominating Committee.
The Board of Directors of InnoServ held ten meetings during the 1996 fiscal
year. Each incumbent director attended all such meetings and all meetings held
by all committees of the Board of Directors on which the director served.
COMPENSATION OF DIRECTORS
Directors who are not officers receive $3,500 per quarter and $1,000 for
each Board of Directors or Committee meeting attended. Also, under the 1992
Stock Incentive Plan, on the first business day
5
<PAGE>
following InnoServ's annual meeting of shareholders, each nonemployee director
is automatically granted options to purchase shares of Common Stock equal to the
lesser of (a) 3,000 shares of Common Stock and (b) the number of shares of
Common Stock that have an aggregate fair market value of $20,000 on the date of
grant. Directors who are officers receive no additional compensation.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of InnoServ as of August 1, 1996.
<TABLE>
<CAPTION>
SERVED AS AN
NAME AGE POSITION OFFICER SINCE
- ------------------------------ --- ------------------------------------------ ------------------
<S> <C> <C> <C>
Michael G. Puls............... 46 President and Chief Executive Officer, December 1995
Director
Thomas E. Hoefert............. 43 Vice President and Chief Financial Officer January 1996
</TABLE>
Each officer serves until a successor has been chosen or until the officer's
earlier resignation or removal. There is no family relationship among any of the
above executive officers or the directors of InnoServ. A summary of the
employment history of Mr. Puls appears above under the heading "Election of
Directors".
Mr. Hoefert became Vice President and Chief Financial Officer of InnoServ in
January 1996. Prior thereto, Mr. Hoefert was employed by Recognition
International Inc., a manufacturer of document processing equipment and
solutions, as Vice President and Chief Financial Officer from 1994 to 1996 and
as Vice President and Controller from 1989 to 1994.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation paid or
accrued by InnoServ for InnoServ's chief executive officer and other executive
officers (the "Named Executive Officers") for services in all capacities for
each of the three years in the period ended April 30, 1996.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- AWARDS/
NAME AND OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (SHARES) COMPENSATION
- ------------------------------------ --------- ----------- --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael G. Puls (1)................. 1996 $ 68,974 $ 0 * 150,000 $ 90,481(2)
President, Chief Executive Officer
and Director
Samuel Salen, M.D. (3).............. 1996 $ 160,146 $ 0 $ 6,846(4) 0 $ 17,279(5)
President, Chief Executive 1995 $ 37,480 $ 0 $ 22,000(4) 3,000(4) $ 0
Officer and Vice Chairman of the
Board of Directors
Thomas E. Hoefert (6)............... 1996 $ 43,846 $ 0 * 25,000 $ 0
Vice President and Chief Financial
Officer
James P. Butler (7)................. 1996 $ 68,590 $ 0 * 0 $ 62,356(8)
Vice President, Finance and 1995 $ 100,000 $ 5,000 * 10,000 $ 0
Chief Financial Officer
</TABLE>
- ------------------------
NOTES:
* Perquisites and other personal benefit amounts are not required to be
reported in Other Annual Compensation if not exceeding $50,000 or ten
percent of the executive's annual salary and bonus.
6
<PAGE>
(1) Mr. Puls has served as President and Chief Executive Officer of InnoServ
since December 27, 1995.
(2) Represents payments for relocation assistance in conjunction with the
commencement of Mr. Puls' employment with InnoServ.
(3) Dr. Salen served as interim President and Chief Executive Officer of
InnoServ from March 13, 1995 to December 26, 1995, during which period
InnoServ searched for a new Chief Executive Officer to replace Mr. Alan
Margulis who resigned from that position on March 13, 1995.
(4) Directors fees earned by and options to purchase Common Stock granted to Dr.
Salen during the periods he was a nonemployee director of InnoServ.
(5) Payment for accrued vacation in conjunction with Dr. Salen's termination of
employment.
(6) Mr. Hoefert became a Vice President and Chief Financial Officer of InnoServ
effective January 17, 1996.
(7) Mr. Butler acted as Vice President, Finance and Chief Financial Officer from
July 1, 1994 to January 5, 1996.
(8) Includes $50,000 paid to Mr. Butler as severance compensation and a $11,756
payment for accrued vacation in conjunction with his separation from the
employment of InnoServ. Also includes $600 for contributions to the InnoServ
Technologies, Inc. Savings and Retirement Plan.
STOCK OPTION GRANTS
The following table sets forth certain information concerning stock option
grants in fiscal 1996 to the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED ANNUAL
PERCENTAGE OF RATES OF STOCK PRICE
TOTAL OPTIONS APPRECIATION FOR OPTION
OPTIONS GRANTED TO EXERCISE TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME (SHARES) (1) FISCAL YEAR ($ PER SHARE) DATE 5% 10%
- --------------------- ----------- ----------------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael G. Puls...... 150,000 40% $ 3.625 12/26/05 $ 342,000 $ 866,597
Thomas E. Hoefert.... 25,000 7% $ 3.500 01/24/06 $ 55,029 $ 139,452
</TABLE>
- ------------------------
NOTES:
(1) Options become exercisable in equal installments over a three year period.
Options may be exercised for cash and/or other shares of InnoServ's Common
Stock in the sole discretion of InnoServ's Compensation and Stock Option
Committee.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information concerning the fiscal year-end
value of unexercised options held by each Named Executive Officer. No options
were exercised by the Named Executive Officers in fiscal 1996.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT YEAR-END OPTIONS AT YEAR-END (1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael G. Puls................................. -- 150,000 $ 0 $ 0
Samuel Salen, M.D............................... 9,800 3,100 $ 2,228 $ 0
Thomas E. Hoefert............................... -- 25,000 $ 0 $ 3,125
</TABLE>
- ------------------------
NOTES:
(1) Calculated using the closing price of the Common Stock on April 30, 1996 of
$3.625 per share.
7
<PAGE>
EMPLOYMENT AGREEMENTS
InnoServ has letter agreements with Messrs. Puls and Hoefert which provide
that if the employment of the executive is terminated by InnoServ for any reason
other than cause (as defined in the agreements), then InnoServ must pay a
severance payment by the continuation of the executive's then current monthly
salary and continued participation in InnoServ's medical and insurance plans for
twelve months in the case of Mr. Puls and six months in the case of Mr. Hoefert.
The agreements also contain a two year covenant not to compete following
termination of employment.
The agreements with Messrs. Puls and Hoefert also provide that, in the event
of termination of the executive's employment with InnoServ without cause within
six months following a "change of control" of InnoServ (as defined in the
agreements), the executive will receive a severance payment as provided for
above and, in the case of Mr. Puls, a one-time payment equivalent to Mr. Puls's
prior year's bonus. The agreements also provide for immediate vesting of all the
executive's stock options upon such change of control.
Effective March 13, 1995, Mr. Alan Margulis resigned from his position as
President and Chief Executive Officer of InnoServ and entered into a separation
agreement with InnoServ which provides that InnoServ will pay to Mr. Margulis a
severance compensation of approximately $72,000 on each of January 5, 1996,
January 5, 1997 and January 5, 1998. The Separation Agreement also terminated
other certain agreements between Mr. Margulis and InnoServ.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
InnoServ applies a consistent philosophy to compensation for all employees,
including executive officers. This philosophy is based on the premise that the
achievements of InnoServ result from the coordinated efforts of all individuals
working toward common objectives. InnoServ strives to achieve those objectives
through teamwork that is focused on meeting the expectations of customers and
shareholders.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance, and to enable InnoServ to attract, retain
and reward executive officers who contribute to the long-term success of
InnoServ. InnoServ's compensation program for executive officers is based on the
same principles applicable to compensation decisions for all employees of
InnoServ:
- InnoServ compensates competitively.
- InnoServ is committed to providing a pay program that helps attract and
retain the best people in the industry.
- InnoServ pays for relative sustained performance.
- Executive officers are rewarded based upon corporate performance, business
unit performance and individual performance. Individual performance is
evaluated by reviewing organizational and management development progress
against set objectives and the degree to which teamwork and company values
are fostered.
- InnoServ strives for fairness in the administration of compensation.
In light of InnoServ's compensation levels, the provisions of the Revenue
Reconciliation Act of 1993 which, under some circumstances, do not allow
publicly held corporations to take a tax deduction for remuneration of its
executive officers over $1 million per year have no effect on InnoServ's
compensation philosophy.
COMPENSATION METHODS
InnoServ utilizes a compensation program that consists of cash and equity
based compensation.
8
<PAGE>
InnoServ sets base salary for employees by reviewing the aggregate of base
salary for competitive positions in the market. InnoServ does not have a defined
annual bonus plan, but makes an annual review of each senior management
employee's performance based on InnoServ's compensation philosophy as well as
InnoServ's performance to determine any amount to be awarded to such employee as
a bonus.
InnoServ also has an incentive stock option program, the purpose of which is
to provide additional incentives to employees to work to maximize shareholder
value. The incentive stock option program also utilizes vesting periods to
encourage key employees to continue in the employ of InnoServ. Senior management
employees of InnoServ are evaluated annually based upon individual performance
and the performance of InnoServ to determine if the awarding of incentive stock
options is appropriate.
CHIEF EXECUTIVE OFFICER COMPENSATION
Based upon the Committee's evaluation of Mr. Puls's past experience, input
received from the executive recruiting firm retained to conduct the search for a
new Chief Executive Officer as to comparable compensation in the market, and the
Committee's expectations with respect to Mr. Puls's future contributions to the
furtherance of InnoServ's goals and objectives in a turnaround situation, and on
other factors, including the pay levels of former Chief Executive Officers and
Mr. Puls's overall compensation package, the Committee set Mr. Puls's annual
base salary at $200,000 and granted to him options to purchase 150,000 shares of
Common Stock.
CONCLUSION
The Committee believes this executive compensation program serves the
interests of shareholders and InnoServ effectively. The compensation vehicles
are appropriately balanced to provide increased motivation for executives to
contribute to InnoServ's overall future success, thereby enhancing the value of
InnoServ for the shareholders.
COMPENSATION AND STOCK OPTION COMMITTEE
Dudley A. Rauch, Chairman
Samuel Salen, M.D.
Bernard J. Korman
Michael F. Sandler
Michael M. Sachs
David A. Wegmann
9
<PAGE>
PERFORMANCE GRAPH
The Securities and Exchange Commission requires InnoServ to include in this
Proxy Statement a linegraph presentation comparing cumulative, five-year
shareholder returns with an overall stock market index (Standard & Poors 500
Index) and either a nationally recognized industry standard or an index of peer
companies selected by InnoServ. InnoServ believes the various published indices
available for the healthcare industry are not representative of the market in
which InnoServ operates and it is not practical to construct a peer issuer index
as InnoServ's competitors are the service organizations of medical equipment
manufacturers and third party maintenance service companies, only one of which
is known to have publicly traded stock. Therefore, the Board of Directors has
approved the use of the Standard & Poors Industrial Index which contains both
medical equipment manufacturers and healthcare providers as its peer group
index. The table below compares the total return during the five years ended
April 30, 1996 of the Common Stock of InnoServ to the Standard & Poors 500 Index
and the Standard & Poors Industrial Index, assuming an initial investment of
$100 in each of the above at their closing prices on April 30, 1991 and assuming
the reinvestment of all dividends, if any. The performance shown is not
necessarily indicative of future performance.
TOTAL SHAREHOLDER RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INNOSERV TECHNOLOGIES,
INC. S&P 500 S&P INDUSTRIALS
<S> <C> <C> <C>
Starting Basis 1991 $100.00 $100.00 $100.00
1992 49.33 114.03 113.65
1993 102.58 124.56 119.50
1994 96.24 131.19 127.30
1995 65.44 154.10 152.16
1996 $ 70.29 $200.66 $196.74
</TABLE>
10
<PAGE>
OTHER MATTERS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no interlocks between InnoServ and other entities involving
InnoServ's executive officers and directors and those of other entities. No
member of the Compensation and Stock Option Committee is an officer or former
officer of InnoServ, except for Mr. Rauch who was the President and Chief
Executive Officer of InnoServ from 1981 to 1992 and Dr. Salen who was the
interim President and Chief Executive Officer of InnoServ from March 13, 1995 to
December 26, 1995.
INDEPENDENT AUDITORS
Ernst & Young LLP served as InnoServ's independent auditors for the year
ended April 30, 1996. A representative of that firm is expected to be at the
Annual Meeting of Shareholders and will have an opportunity to make a statement,
if desired. The representative will also be available to respond to appropriate
questions from shareholders.
SHAREHOLDERS PROPOSALS
Any proposal of a shareholder intended to be presented at InnoServ's 1997
Annual Meeting of Shareholders must be received by InnoServ for inclusion in the
Proxy Statement and form of Proxy for that meeting no later than April 25, 1997.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES AND EXCHANGE ACT OF 1934
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the
rules promulgated thereunder, officers and directors of InnoServ and persons who
beneficially own more than 10 percent of a registered class of InnoServ's equity
securities are required to file with the Securities and Exchange Commission and
furnish to InnoServ reports of ownership and changes in ownership of all classes
of InnoServ's equity securities. Based solely on its review of the copies of
such reports received by it during or with respect to the year ended April 30,
1996, InnoServ believes that all reports required to be filed during or with
respect to the 1996 fiscal year, or prior fiscal years, by any person who was an
officer, director or beneficial owner of more than 10 percent of a registered
class of its equity securities at any time during the 1996 fiscal year were
filed timely, except that Mr. Puls filed a Form 3 on January 27, 1996, which due
date was January 8, 1996, and Dr. Salen filed a Form 4 on February 7, 1996,
which due date was November 10, 1995.
MISCELLANEOUS
As of the date of this Proxy Statement, there are no other matters to be
brought before the Annual Meeting. Should any other matters come before the
Annual Meeting, action may be taken thereon pursuant to the proxies in the form
enclosed, which confer discretionary authority on the persons named therein or
their substitutes with respect to such matters.
By Order of the Board of Directors
SAMUEL SALEN, M.D.
VICE CHAIRMAN AND SECRETARY
Arlington, Texas
August 30, 1996
11
<PAGE>
PROXY
INNOSERV TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
INNOSERV TECHNOLOGIES, INC. FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 17, 1996.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement (the "Proxy Statement"), each
dated August 30, 1996 and the Annual Report to Shareholders, and revoking all
prior proxies, hereby constitutes and appoints Michael G. Puls and Thomas E.
Hoefert and each of them, with full power of substitution, attorneys-in-fact
and proxies of the undersigned to represent the undersigned and to vote all
the shares of Common Stock, $.01 par value, of InnoServ Technologies, Inc.
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Shareholders in the Shamrock Meeting Room of the Arlington
Hilton Hotel, located at 2401 East Lamar Boulevard, Arlington, Texas 76006,
on September 17, 1996 at 2:00 p.m., Central Daylight Time, or at any
adjournment(s) thereof, in the following manner:
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as
indicated in
this example X
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed above.
contrary below)
1. Election of Directors.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR PROPOSAL 1.
Nominees: Thomas E. Carroll, Bernard J. Korman, Michael G. Puls, Dudley A.
Rauch, Michael M. Sachs, Samuel Salen, M.D., Michael F. Sandler and David A.
Wegmann.
(INSTRUCTION: To withhold authority to vote for any individual, write that
nominee's name on the space provided below.) If you do not withhold
authority to vote for the election of any nominee, your proxies will vote FOR
all nominees listed above.
__________________________________________
2. IN ACCORDANCE WITH THEIR BEST JUDGMENT, the proxies are authorized to vote
with respect to any matter which may properly come up before the Annual
Meeting.
DATED: ______________________ , 1996
____________________________________
SIGNATURE
____________________________________
SIGNATURE
PLEASE DATE AND SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR HEREIN. IF THERE
IS MORE THAN ONE OWNER OF THE SHARES REPRESENTED, ALL OWNERS SHOULD SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS, ATTORNEYS AND CORPORATE
OFFICERS SHOULD INDICATE THEIR FIDUCIARY CAPACITY OR FULL TITLE IN SIGNING.
WHEN THIS PROXY IS PROPERLY EXECUTED AND RETURNED, THE SHARES IT REPRESENTS
WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR ITEM 1 AND IN
ACCORDANCE WITH THE BEST JUDGMENT OF THE PROXY HOLDERS WITH RESPECT TO ANY
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE SO THAT IT MAY BE COUNTED AT THE ANNUAL MEETING ON SEPTEMBER 17,
1996.
FOLD AND DETACH HERE
