<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
ADVANCED MEDICAL, 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>
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- --------------------------------------------------------------------------------
ADVANCED MEDICAL, INC.
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JUNE 22, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ADVANCED MEDICAL, INC.
9775 BUSINESSPARK AVENUE
SAN DIEGO, CALIFORNIA 92131
(619) 566-0426
June 8, 1995
To Our Stockholders:
We enclose herewith:
(i) A notice of Annual Meeting of Stockholders to be held at The Plaza,
Fifth Avenue at Fifty-Ninth Street, New York, New York at 9:00 a.m. on
June 22, 1995;
(ii) A proxy statement describing the matters to be considered at the
meeting; and
(iii) A proxy which, when executed by you and returned to the Company, will
make it possible for your shares to be voted at the meeting in the
event that you are unable to be present in person.
The matters to be acted upon at the Annual Meeting are set forth in the
notice and accompanying proxy statement. We welcome your attendance at the
meeting, but if you cannot attend, please promptly complete and execute the
enclosed proxy and return it to us in the envelope provided for that purpose
(which requires no postage if mailed in the United States).
Very truly yours,
Joseph W. Kuhn
PRESIDENT
<PAGE>
ADVANCED MEDICAL, INC.
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 22, 1995
------------------------
June 8, 1995
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Advanced Medical, Inc. (the "Company") will be held at The Plaza,
Fifth Avenue at Fifty-Ninth Street, New York, New York at 9:00 a.m. on June 22,
1995 for the following purposes:
1. To elect directors;
2. To ratify the appointment of Price Waterhouse as independent accountants
for the year ending December 31, 1995; and
3. To transact such other business as may properly come before the Annual
Meeting.
The Board of Directors of the Company has fixed the close of business on May
30, 1995 as the record date for purposes of determining the stockholders
entitled to notice of, and to vote at, the Annual Meeting.
A list of stockholders entitled to vote at the Annual Meeting will be open
to the examination of any stockholder, for any purpose germane to the meeting,
at the offices of Gordon Altman Butowsky Weitzen Shalov Wein, 114 West 47th
Street, 21st Floor, New York, New York 10036 during ordinary business hours for
ten days prior to the Annual Meeting. The Annual Meeting may be adjourned from
time to time without notice other than by announcement at the meeting.
By Order of the Board of Directors
Joseph W. Kuhn
SECRETARY
<PAGE>
PROXY STATEMENT
ADVANCED MEDICAL, INC.
9775 BUSINESSPARK AVENUE
SAN DIEGO, CALIFORNIA 92131
(619) 566-0426
ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Advanced Medical, Inc. (herein referred to as the
"Company" or "Advanced Medical"), of proxies to be voted at the Annual Meeting
of Stockholders to be held at 9:00 a.m. on June 22, 1995, and at any adjournment
thereof (the "Annual Meeting"). The purpose of the Annual Meeting is to elect
directors and to ratify the appointment of Price Waterhouse as independent
accountants for the year ending December 31, 1995. Proxy statements and forms of
proxies are first being sent to stockholders on or about June 8, 1995.
The close of business on May 30, 1995 has been set as the record date for
purposes of determining stockholders entitled to vote at the meeting. At the
close of business on May 30, 1995, there were 15,410,302 shares of the Company's
Common Stock, par value $.01 per share ("Common Stock"), which (except as
otherwise contemplated under "10% Cumulative Preferred Stock") is the only class
of outstanding voting securities of the Company. Each share of Common Stock
entitles its holder of record to one vote, except with respect to the election
of directors, as described below.
Proxies may be revoked by the person executing the proxy at any time before
the authority thereby granted is exercised, upon written notice to such effect
received by the Secretary of the Company. Attendance at the meeting will not in
and of itself constitute revocation of a proxy, although proxies may be revoked
at the meeting by written notice delivered to the Secretary, in which case the
shares represented thereby may be voted in person. Proxies may also be revoked
by the submission of subsequently dated proxies. Shares represented by a valid
unrevoked proxy will be voted at the meeting or any adjournment thereof as
specified therein by the person giving the proxy; if no specification is made
the shares represented by such proxy will be voted (1) SO as to elect the
largest possible number of the Board of Directors' nominees as directors and (2)
FOR the ratification of the appointment of Price Waterhouse as independent
accountants of the accounts of the Company for 1995.
ELECTION OF DIRECTORS
CUMULATIVE VOTING RIGHTS
The election of directors will be by a plurality vote. There are currently
six members on the Board of Directors and two vacancies.
The Company's certificate of incorporation and by-laws provide that, in the
election of directors, every holder of Common Stock has the right to vote his
shares cumulatively. Under cumulative voting, the number of shares a stockholder
is entitled to vote multiplied by the number of directors to be elected
represents the number of votes he may cast at such election. A stockholder may
cast all such votes for one nominee or distribute them among any two or more
nominees. As a result, each stockholder, in voting for directors at the meeting,
will be entitled to six votes for each share of Common Stock held.
Six directors are to be elected to serve until the next annual meeting and
until their successors are elected and have qualified. UNLESS OTHERWISE
DIRECTED, IT IS THE INTENTION OF THE PERSONS DESIGNATED AS PROXIES TO CUMULATE
VOTES FOR ONE OR MORE OF THE NOMINEES LISTED BELOW IN A MANNER SO AS TO ELECT
THE LARGEST POSSIBLE NUMBER OF SUCH NOMINEES TO THE BOARD OF DIRECTORS. IF ANY
OF SUCH NOMINEES SHOULD BECOME UNAVAILABLE FOR ANY REASON, IT IS INTENDED THAT
PROXIES WILL BE VOTED FOR THE ELECTION OF SUCH OTHER PERSONS AS SHALL BE
DESIGNATED BY THE BOARD OF DIRECTORS.
<PAGE>
NOMINEES
Information regarding the nominees for election to the Board of Directors is
set forth below. The information presented with respect to each nominee has been
furnished by that nominee. All current directors have been elected or appointed,
as the case may be, to serve until the next annual meeting and until their
successors are elected and qualified.
<TABLE>
<CAPTION>
NAME POSITION WITH COMPANY AGE DIRECTOR SINCE
- ------------------------------------------------ -------------------------------------- --- -----------------
<S> <C> <C> <C>
Jeffry M. Picower............................... Director, Chairman of the Board and 53 March 1993
Chief Executive Officer
Anthony Cerami.................................. Director 54 March 1989
Norman M. Dean.................................. Director 75 March 1989
Henry Green..................................... Director 52 February 1991
Frederic Greenberg.............................. Director 54 June 1995
Richard B. Kelsky............................... Director 40 June 1989
</TABLE>
JEFFRY M. PICOWER--Mr. Picower was a director, Vice President and Assistant
Treasurer of the Company from September 1988 to March 1989 and Vice Chairman
from December 1988 to June 1989. Mr. Picower was re-elected as a director and
Co-Chairman of the Board on March 8, 1993 and became Chairman of the Board on
May 4, 1993. Mr. Picower has been Chief Executive Officer since September 7,
1993. He has, since 1984, been Chairman of the Board and Chief Executive Officer
of Monroe Systems for Business, Inc. ("Monroe"), a world-wide office equipment,
distribution and service organization. Mr. Picower has been a director of
Physician Computer Network, Inc. ("PCN") since January 1994 and Chairman of the
Board since June 1994. PCN, a corporation whose principal shareholder is Mr.
Picower, operates a computer network linking its office-based physician members
to health care organizations.
ANTHONY CERAMI, PH.D.--Dr. Cerami was first elected to the Board of
Directors of the Company in March 1989. He has been President of The Picower
Institute for Medical Research since October 1991. Dr. Cerami was Dean, Graduate
and Postgraduate Studies at The Rockefeller University from 1986 through January
1991 and was a Professor at The Rockefeller University from 1978 until October
1991. He is an editor of the JOURNAL--MOLECULAR MEDICINE and is on the editorial
boards of several biomedical journals. He has been an author of numerous
publications covering many aspects of medical biochemistry. He holds a B.S. from
Rutgers University and a Ph.D. from The Rockefeller University. Dr. Cerami is
Chairman of the Scientific Advisory Board and a director of Alteon, Inc.
NORMAN M. DEAN--Mr. Dean was first elected to the Board of Directors of the
Company in March 1989. Mr. Dean has been a director and President of Foothills
Financial Corporation, a venture capital company, since January 1985 and
Chairman of the Board of Miller Diversified Corp. since May 1990.
HENRY GREEN--Mr. Green was President and Chief Operating Officer of the
Company from September 1990 to March 1993 and has been a director of the Company
since 1991. Mr. Green was also President and Chief Executive Officer of
Controlled Therapeutics Corporation ("CTC") (a development stage pharmaceutical
company and a former subsidiary of the Company) from February 1991 to December
1992. Mr. Green became an employee of PCN in March 1993. Mr. Green was elected
President of PCN in May 1993 and Chief Executive Officer in June 1994. He was
elected as a director of PCN in July 1993. From 1988 to September 1990, Mr.
Green was Vice President of Johnson & Johnson International. From 1981 to 1988,
Mr. Green was President of Vistakon, Inc., a subsidiary of Johnson & Johnson.
Mr. Green holds a B.S. and an M.B.A. from Drexel University.
FREDERIC GREENBERG--Mr. Greenberg was appointed to the Board of Directors of
the Company on June 7, 1995. Mr Greenberg is a partner with EGS Partners LLC, an
asset management and merchant banking firm which Mr. Greenberg founded in 1989.
From 1974 to 1989, Mr. Greenberg served as a
2
<PAGE>
pharmaceutical analyst with Goldman Sachs & Company, an investment banking firm,
where he was instrumental in organizing healthcare industry symposiums and
conferences for leading pharmaceutical companies and the investment community.
He has participated in numerous merger, acquisition and valuation analyses of
some of the leading healthcare organizations. Mr. Greenberg serves as an advisor
to various healthcare companies and has been a director of PCN since July 1993.
RICHARD B. KELSKY--Mr. Kelsky has been a director of the Company since June
1989. Since 1984, Mr. Kelsky has been Vice President and General Counsel of
Monroe. Mr. Kelsky has been a director of PCN since January 1992.
COMMITTEES OF THE BOARD
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee consists of Messrs. Dean (Chairman) and Greenberg. The
function of the Audit Committee is to recommend the selection of independent
accountants, review the scope of their examination, consider individual audit
matters, monitor adequacy of internal controls, review annual financial
statements, conduct other activities relating thereto as the Audit Committee
deems appropriate and report to the Board of Directors. The Audit Committee,
which then consisted of Mr. Dean and Dr. Cerami, met once during 1994.
The Compensation Committee consists of Messrs. Dean (Chairman) and Kelsky.
The function of the Compensation Committee is to review and approve the
compensation of the principal officers and employees of the Company and its
subsidiaries. The Compensation Committee did not formally meet during 1994.
The Board of Directors does not have a standing nominating committee or one
performing similar functions.
The Board of Directors met five times and acted by unanimous written consent
two times in 1994. Each of the members of the Board of Directors attended 75% or
more of the aggregate of the total number of meetings of the Board of Directors
and the total number of meetings held by all committees of the Board on which
such director served.
10% CUMULATIVE PREFERRED STOCK
In addition to the six directors to be elected by the holders of the
Company's Common Stock as described above, as a result of the existence of an
event of default with respect to the Company's 10% Cumulative Preferred Stock
(the "10% Preferred Stock"), the holders of shares of the 10% Preferred Stock
(the "Holders") may elect two (2) additional directors which would fill the two
(2) existing vacancies on the Board of Directors, provided that such voting
rights shall not be exercised unless the Holders of ten percent (10%) in number
of shares of the 10% Preferred Stock outstanding as of the record date described
below are present in person or by proxy at the Annual Meeting.
Pursuant to Section 213 of the Delaware General Corporation Law, the record
date for purposes of determining the Holders entitled to vote at the Annual
Meeting shall be the close of business on the day next preceding the day on
which notice of this meeting is given to the Holders. In the event that the
requisite number of Holders are present at the meeting and elect to exercise
their voting rights, the Holders shall vote as a single class to elect the two
(2) directors to be elected by the Holders and each Holder shall have the right
to vote his shares cumulatively as described in "Election of
Directors--Cumulative Voting Rights." As a result, each Holder, in voting for
such two directors at the meeting, will be entitled to two votes for each share
of 10% Preferred Stock held.
3
<PAGE>
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its major operating subsidiary,
IMED Corporation ("IMED"), to or on behalf of the Company's Chief Executive
Officer and each of the other most highly compensated executive officers of the
Company whose salary and bonus exceeded $100,000 (determined for and as of the
end of 1994) (the "Named Executive Officers") for the years ended December 31,
1992, 1993 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- ----------------------------------
OTHER ANNUAL SECURITIES ALL OTHER
SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
YEAR ($) ($) ($)(2) OPTIONS ($)(3)
--------- --------- --------- ------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jeffry M. Picower (1) 1994 0 0 12,500 0 0
Chairman of the Board and Chief 1993 0 0 7,895 0 0
Executive Officer
Joseph W. Kuhn 1994 135,500 40,650 9,250 0 2,063
President, Chief Financia1 Officer, 1993 138,627 0 104,376 0 2,222
Treasurer and Secretary; President, 1992 131,183 30,000 185,208 0 1,964
Treasurer and Secretary--IMED
<FN>
(1) Mr. Picower does not receive an annual salary or bonus from the Company.
"Other Annual Compensation" for Mr. Picower represents compensation earned
as a director. See "Compensation of Directors."
(2) "Other Annual Compensation" includes annual compensation, other than salary
or bonus, including perquisites and other personal benefits where such
exceed the lesser of $50,000 or 10% of the Named Executive Officer's annual
salary and bonus. In the amount reported for 1994, Mr. Kuhn received
supplemental income for the use of a vehicle valued at $9,250. In the
amount reported for 1993, Mr. Kuhn received supplemental income of $67,750
and cancellation of a $35,543 loan in connection with his acceptance of
employment as the Company's Chief Financial Officer and the use of a
vehicle valued at $1,083. In the amount reported for 1992, Mr. Kuhn
received payments to or on his behalf totaling $124,226 and $60,982 for
relocation expenses and tax liabilities on the relocation expenses,
respectively.
(3) The respective amounts reported as "All Other Compensation" for Mr. Kuhn
represents contributions made by the Company to the Company's 401(K) Plan
on behalf of Mr. Kuhn to match pre-tax elective deferral contributions
(included under salary) made by Mr. Kuhn to such plan.
</TABLE>
JOSEPH W. KUHN--Mr. Kuhn (age 35) was appointed President of the Company and
IMED in January 1995. Since August 1993, Mr. Kuhn has been Chief Financial
Officer, Treasurer and Secretary of the Company and Treasurer and Secretary of
IMED. From August 1993 to January 1995, Mr. Kuhn was Vice President of the
Company and Executive Vice President of IMED. Mr. Kuhn was Corporate Controller
of the Company from January 1990 to August 1993. Mr. Kuhn joined CTC in
September 1989 and was its Corporate Controller through December 1991. From 1983
to 1989, Mr. Kuhn held positions of increasing responsibility, including senior
manager, with Price Waterhouse, a public accounting firm. From 1982 to September
1983, Mr. Kuhn was employed by Main Hurdman, a public accounting firm. Mr. Kuhn
holds a B.A. degree from Rutgers University and is a Certified Public
Accountant.
4
<PAGE>
EMPLOYMENT AGREEMENTS
Mr. Kuhn is employed by the Company and IMED as President pursuant to an
employment agreement providing for a base salary of $175,000. The agreement
provides that, upon termination of his employment by the Company other than for
cause, Mr. Kuhn will receive an amount, to be paid over a six-month period
commencing with the date his employment terminates, equal to six months' salary,
which amount will be reduced by any salary or compensation that Mr. Kuhn
receives from any other sources during such six-month period. In addition,
subject to certain conditions, the option to purchase shares of Common Stock
previously granted to Mr. Kuhn will become fully vested when his employment
terminates. From September 1993 through December 1994, Mr. Kuhn was employed by
the Company as Chief Financial Officer and by IMED as Executive Vice President
pursuant to his employment agreement providing for a base salary of $135,500.
During 1994, Mr. Kuhn received a performance bonus of $40,650 pursuant to
his employment contract.
In connection with Mr. Kuhn's acceptance of employment as the Company's
Chief Financial Officer on September 1, 1993, he received supplemental income of
$67,750 and the cancellation of a $35,543 loan made by the Company to Mr. Kuhn
in connection with his relocation to California in 1990.
STOCK-BASED BENEFIT PLANS
STOCK OPTION PLAN
The Company's Stock Option Plan (the "Option Plan"), was originally adopted
by the Board of Directors on December 27, 1988. The Option Plan in its first
amended and restated form was adopted by the Board of Directors on July 12, 1990
and became effective on September 7, 1990. The Option Plan in its second amended
and restated form was adopted by the Board of Directors on June 30, 1992. The
Option Plan in its third amended and restated form was approved by the Board of
Directors and became effective on June 28, 1994. Under the Option Plan,
incentive stock options ("ISOs"), as provided in Section 422 of the Internal
Revenue Code, may be granted to key employees of the Company and its
subsidiaries, and nonqualified stock options ("NQSOs") may be granted to key
employees, directors (except directors eligible to participate in the Directors
Plan), and officers of the Company, its subsidiaries or affiliates, as well as
independent contractors and consultants performing services for such entities.
The maximum aggregate number of shares of the Company's Common Stock that may be
issued under the Option Plan is 1,700,200. The number of shares of Common Stock
which remain available for issuance under the Option Plan is 1,638,680 of which
1,132,263 are subject to currently outstanding options. The number of shares of
Common Stock available under the Option Plan will be reduced on a share for
share basis in respect of each share issued other than under the Option Plan to
persons eligible to participate in the Option Plan. In the event of a change in
the capitalization of the Company which affects the Common Stock, the Committee
may make proportionate adjustments to the number of shares of Common Stock for
which options may be granted and the number and exercise price of shares of
Common Stock subject to outstanding options. Options may not be granted under
the Stock Option Plan after December 27, 1998.
The Option Plan provides for administration by a committee appointed by the
Board of Directors (the "Committee"). No member of the Committee is eligible to
receive options under the Option Plan. The Committee has authority, subject to
the terms of the Option Plan, to determine the individuals to whom options may
be granted, the exercise price and number of shares of Common Stock subject to
each option, whether the options granted to employees are to be ISOs, the time
or times during which all or a portion of each option may be exercised and
certain other provisions of each option.
Pursuant to the Option Plan, the purchase price of shares of Common Stock
subject to ISOs must be not less than the fair market value of the Common Stock
at the date of the grant; provided, that the purchase price of shares subject to
ISOs granted to any optionee who owns shares possessing more than 10% of the
combined voting power of the Company or any parent or subsidiary of the Company
5
<PAGE>
("Ten Percent Shareholder") must be not less than 110% of the fair market value
of the Common Stock at the date of the grant. With respect to NQSOs, the
purchase price of shares will be determined by the Committee at the time of the
grant, but will not be less than the par value of a share of Common Stock. The
maximum term of an option may not exceed 10 years from the date of grant, except
with respect to ISOs granted to Ten Percent Shareholders which must expire
within five years of the date of grant. Options granted vest and become
exercisable as determined by the Committee. The Committee will limit the grant
so that no more than 250,000 shares of Common Stock (subject to certain
adjustments) may be awarded to any one employee in any calendar year. During the
lifetime of an optionee, his or her options may be exercised only by such
optionee. Options are not transferable other than by will or by the laws of
descent and distribution.
Payment of the purchase price for the shares of Common Stock to be received
upon exercise of an option may be made in cash, in shares of Common Stock or in
any combination thereof. In addition, the Committee may, pursuant to the terms
of the stock option agreement between the optionee and the Company, provide for
payment of the purchase price by promissory note or by any other form of
consideration permitted by law.
Options granted to participants under the Option Plan are subject to
forfeiture under certain circumstances in the event an optionee is no longer
employed by or performing services for the Company. In the event an optionee is
terminated for cause, all unexercised options held by such optionee (whether or
not vested) expire upon such termination. If an optionee is no longer an
Officer, Director or Employee (as defined in the Option Plan) other than as the
result of having been terminated for cause, all unvested options expire at such
time and all vested options expire twelve months thereafter, unless by their
terms such options expire sooner.
In the event of a change of control, as defined in the Option Plan, unless
otherwise determined by the Committee at the time of grant or by amendment (with
the holder's consent) of such grant, all options not vested on or prior to the
effective time of any such change of control shall immediately vest as of such
effective time.
No options were granted under the Option Plan in 1994 to any director of the
Company or Named Executive Officer.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1994
AND OPTION VALUES AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT 12/31/94
OPTIONS AT 12/31/94 ($)(1)
SHARES ACQUIRED VALUE -------------------------- --------------------------
ON EXERCISE REALIZED $ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jeffry M. Picower.................... 0 0 0 0 0 0
Joseph W. Kuhn (2)................... 0 0 19,200 10,800 0 0
<FN>
(1) Calculated based on the excess of the closing price of the Company's Common
Stock on December 31, 1994 ($2.00) as reported in the American Stock
Exchange Composite Transactions published in The Wall Street Journal over
the option exercise price.
(2) On January 5, 1995, the Company cancelled the options to acquire 30,000
shares of Common Stock owned by Mr. Kuhn and granted Mr. Kuhn an option to
acquire 125,000 shares of Common Stock ($1.8125 per share).
</TABLE>
DIRECTORS PLAN
The Company's Non-Qualified Stock Option Plan for Non-Employee Directors
(the "Directors Plan"), a separate plan pursuant to which it grants NQSOs to its
non-employee directors, was originally adopted by the Board on July 12, 1990 and
became effective on September 7, 1990. The Directors Plan in its amended and
restated form was adopted by the Board of Directors and became
6
<PAGE>
effective on June 30, 1992. The Directors Plan in its second amended and
restated form was approved by the Board of Directors and became effective on
June 28, 1994. Directors who are eligible participants in the Directors Plan are
not eligible to receive awards under the Option Plan. An aggregate of 250,000
shares of the Company's Common Stock may be issued under the Directors Plan. The
number of shares of Common Stock which remained available for issuance under the
Directors Plan was 240,000, of which 74,000 are subject to currently outstanding
options. The number of shares of Common Stock available under the Directors Plan
will be reduced on a share for share basis in respect of each share issued other
than under the Directors Plan to persons eligible to participate in the
Directors Plan. In the event of a change in the capitalization of the Company
which affects the Common Stock, the committee which administers the Directors
Plan (the "Plan Committee") may make proportionate adjustments to the number of
shares of Common Stock for NQSOs which may be granted and to the number and
exercise price of shares of Common Stock subject to outstanding NQSOs. NQSOs may
not be granted under the Directors Plan after September 7, 2000.
The Plan Committee consists of at least two individuals who are not eligible
to participate in the Directors Plan. The Plan Committee has the authority to
administer all aspects of the Directors Plan other than (i) the grant of NQSOs;
(ii) the number of shares of Common Stock subject to NQSOs; (iii) the rate at
which options granted thereunder vest and become first exercisable; and (iv) the
price at which each share covered by a NQSO may be purchased, all of which are
determined automatically under the Directors Plan.
On September 10, 1990, initial grants of NQSOs covering 12,000 shares of
Common Stock were made automatically under the Directors Plan to each of the
Company's three non-employee directors. An initial grant of NQSOs covering
12,000 shares of Common Stock also will be made automatically to any person who
becomes an eligible participant after September 10, 1990, on the business day
following such person's election to the Board of Directors. During the term of
the Directors Plan, additional grants of NQSOs covering 12,000 shares of Common
Stock will be made to each participant in the Directors Plan every three years
on the anniversary of such person's initial NQSO grant. The NQSOs granted under
the Directors Plan will vest and become exercisable at the rate of 4,000 for
every twelve month period of continuous service on the Board, provided that the
optionee is still a member of the Board on that date. For purposes of vesting,
participants will receive credit for any period of continuous service prior to
September 7, 1990. The term of each NQSO is five years from the date of grant.
During the lifetime of an optionee, his or her NQSOs may be exercised only by
the optionee and the NQSOs are not transferable other than by will or by the
laws of descent and distribution. NQSOs granted under the Directors Plan which
have not yet vested are subject to termination if the optionee ceases to be a
director or becomes an employee of the Company and all NQSOs which have vested
expire twelve months after such change in status, unless by their terms such
NQSOs expire sooner. In the event that an optionee is removed from the Board for
cause, all unexercised NQSOs, whether or not vested, expire upon such removal.
The purchase price of shares of Common Stock subject to NQSOs is the fair
market value of the Common Stock on the date of the grant. Payment for the
shares of Common Stock to be received by a optionee upon exercise of a NQSO may
be in cash or in shares of Common Stock. In addition, the Plan Committee may
provide in such optionee's stock option agreement for payment of the purchase
price by promissory note or any other form of consideration permitted by law.
In the event of a change of control, as defined in the Directors Plan, all
NQSOs not vested on or prior to the effective time of any such change in control
shall immediately vest as of such effective time.
COMPENSATION OF DIRECTORS
The Company's current policy is to compensate members of its Board of
Directors who are not employees of the Company at the annual rate of $10,000
plus options to purchase 4,000 shares of the
7
<PAGE>
Company's Common Stock pursuant to the Directors Plan. See "Stock-Based Benefit
Plans--Directors Plan." Travel and accommodation expenses of directors incurred
in connection with meetings are reimbursed by the Company.
In March 1993, the Company and Mr. Green entered into a consulting agreement
with a three year term, expiring on March 15, 1996, and providing for the
payment to Mr. Green of consulting fees in the amount of $100,000 annually. Mr.
Green does not currently receive the $10,000 annual director's compensation or
the option to purchase the Company's Common Stock pursuant to the Directors
Plan.
COMPENSATION COMMITTEE REPORT
The compensation committee is composed of non-employee directors who review
recommendations as to senior executive officer compensation which, upon the
approval of the compensation committee, are submitted to the Board of Directors.
The members of the compensation committee also administer the stock option plan
of the Company under which options are granted on a discretionary basis to
senior executive officers.
Compensation committee approvals of recommendations with respect to the
compensation of senior executive officers of the Company are made on an
individual basis based on a variety of factors which may include, but are not
limited to, the existing employment contract with such officer, evaluations of
the executive officer's performance, the level of responsibility associated with
the office, recruitment requirements, as well as the performance of the Company.
Recommendations made to the compensation committee are not determined by
reference to formulae. The compensation of the Company's senior executive
officers is structured in a manner that the compensation committee believes will
motivate, reward and retain senior executive officers consistent with the needs
of the Company as they may exist from time to time. The compensation which may
be paid by the Company to its senior executive officers consists of salary,
annual bonus awards and stock option grants.
Compensation to the Company's chief executive officer in 1994 was limited to
compensation earned as a director. Compensation to the Company's other senior
executive officer in 1994 was based upon an employment agreement entered into
prior to January 1, 1994. Mr. Kuhn's bonus on account of 1994 was paid pursuant
to the terms and provisions of his employment agreement.
This report is provided in accordance with federal securities law
requirements and is not intended to create any contractually binding employment
rights for the benefit of any employee of the Company or its subsidiaries.
NORMAN M. DEAN
RICHARD B. KELSKY
8
<PAGE>
PERFORMANCE GRAPH
The graph set forth below represents the cumulative total return from
December 31, 1990 to December 31, 1994 on the Common Stock of the Company, the
American Stock Exchange ("AMEX") Market Value Index, and a Peer Group Index. The
Peer Group Index is a representative grouping of 54 companies from SIC Code
3841--Surgical & Medical Instruments & Apparatus--which had reportable stock
performance from January 1, 1990 to December 31, 1994. The graph has been
prepared by an outside consulting firm to the Company. The graph assumes that
the value of the investment in the Company's Common Stock and each index was
$100 on January 1, 1990 and that all dividends were reinvested.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
FROM JANUARY 1, 1990 TO DECEMBER 31, 1994
AMONG ADVANCED MEDICAL, INC.,
AMEX MARKET VALUE INDEX AND PEER GROUP INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Advanced Medical, Inc. Peer Group Index AMEX Market Value Index
<S> <C> <C> <C>
1/1/90 100.00 100.00 100.00
12/31/90 72.73 122.88 84.80
12/31/91 142.05 211.52 104.45
12/31/92 87.50 175.99 105.88
12/31/93 13.07 128.50 125.79
12/31/94 18.18 147.86 111.12
</TABLE>
9
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 4, 1994, the Company issued to Decisions Incorporated
("Decisions") a secured promissory note in the amount of $6,000,000 (the
"Decisions Note"), the proceeds of which were used to repay principal to Aeneas
Venture Corporation ("Aeneas"). The note bears interest at 7% and is payable on
the earlier of January 4, 2001 or on demand by Decisions provided the repayment
is generated by net income of the Company exclusive of IMED, any borrowing or
debt or equity offering by the Company, or funds available through distribution
from affiliates, including IMED. The principal portion of the note is
convertible at the option of the holder into 6,000,000 shares of the Company's
Common Stock at a conversion price of $1.00 per share (subject to antidilution
protection). The Decisions Note is secured by a first priority security interest
in all of the Company's assets subject to the rights of General Electric Capital
Corporation under IMED's amended loan agreement.
On August 12, 1994, the Company issued a $6,500,000 secured promissory note
("the Note") to Decisions. The proceeds of the loan were used to (i) pay all
indebtedness to Aeneas in the amount of $3,188,000, (ii) make the July 15, 1994
interest payment on the Company's 7 1/4% Convertible Subordinated Debentures due
2002 ("Debentures") in the amount of $2,187,000 and (iii) pay other obligations
of the Company. The payment of the interest due on the Debentures cured Advanced
Medical's default in its payment of interest. The payment of all indebtedness
owed by Advanced Medical to Aeneas released Advanced Medical from its
obligations under a letter agreement with Aeneas thereby removing the
restrictions imposed therein on Advanced Medical's use of its available cash.
The Note is payable on January 4, 2001 and has an annual interest rate of 9%.
Interest on the principal is due on June 30 and December 31 of each year. In
regards to security, the Note ranks pari passu with the Decisions Note. The Note
is convertible, at the option of the holder, into up to 10,483,870 shares of
Common Stock at a conversion price of $.62 per share (subject to antidilution
protection). Any shares of Common Stock converted cannot be sold into the public
market prior to August 12, 1996.
On May 19, 1995, Decisions tendered $441,000, in principal amount, of
Debentures held by it pursuant to an Exchange Offer as defined in "Security
Ownership of Certain Beneficial Owners and Management."
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of May 30, 1995, information regarding the
beneficial ownership of the Company's Common Stock by (i) all persons known by
the Company to own beneficially more than 5% of its outstanding Common Stock,
(ii) each director of the Company, (iii) each of the Named Executive Officers
who still hold an office with the Company and/or its subsidiaries, and (iv) all
directors and officers of the Company as a group. Unless otherwise stated, the
Company believes that the beneficial owners of the shares listed below have sole
investment and voting power with respect to such shares.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENTAGE
OWNED OF TOTAL(1)
--------------- -----------
<S> <C> <C>
Jeffry M. Picower .................................................................. 20,629,169(2) 64.0%
South Ocean Blvd.
Palm Beach, FL 33480
FMR Corporation .................................................................... 1,340,441(3) 4.2
Devonshire Street
Boston, MA 02109
Anthony Cerami...................................................................... 29,159(4) *
Norman M. Dean...................................................................... 24,000(4) *
Henry Green......................................................................... 5,000 *
Frederic Greenberg.................................................................. 0(5) *
Richard B. Kelsky................................................................... 100,100(4) *
Joseph W. Kuhn...................................................................... 0(5) *
All directors and officers as a group (7 individuals)............................... 20,787,428(6) 64.5
<FN>
* Less than 1%
(1) Based on 15,410,302 shares of Common Stock outstanding, which does not
include the shares of Common Stock issuable upon conversion of the
Debentures or the exercise of the warrants or options or the conversion of
the $.01 par value mandatorily redeemable convertible preferred stock
("Convertible Preferred Stock") or the conversion of the convertible notes
described below in footnotes (2) through (6). However, in computing the
respective percentages of the Common Stock beneficially owned by the
holders described in footnotes (2) through (6), the shares of Common Stock
subject to the warrant, option or conversion privileges described therein
were deemed outstanding. The Company, pursuant to an exchange offer (the
"Exchange Offer"), which expired on May 19, 1995, and related transactions
with FMR Corporation, has agreed to exchange $43,848,000 principal amount
of its Debentures for an aggregate of $21,924,000 principal amount of its
15% Subordinated Debentures due 1999 and 2,060,856 shares of Common Stock.
After completion of this Exchange Offer, the total number of shares of
Common Stock outstanding shall be 16,130,717.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
(2) The total for Mr. Picower includes (i) 1,379,600 shares of Common Stock
owned by Decisions (but does not include 20,727 shares of Common Stock
issuable upon exchange of $441,000, in principal amount, of Debentures
owned by Decisions, pursuant to the Exchange Offer), (ii) 357,100 shares of
Common Stock owned by JA Special Partnership Limited (the "Partnership"),
(iii) 272,236 shares of Common Stock issuable upon the conversion of an
aggregate of 333,000 shares of Convertible Preferred Stock owned by Mr.
Picower (166,674 shares), Decisions (30,317 shares) and the Partnership
(136,009 shares), (iv) 6,000,000 shares of Common Stock issuable upon
conversion of the $6,000,000 Convertible Note owned by Decisions and (v)
10,483,870 shares of Common Stock issuable upon conversion of the
$6,500,000 Convertible Note owned by Decisions. The shares of Convertible
Preferred Stock owned by Mr. Picower, Decisions and the Partnership,
collectively, represent 100% of the issued and outstanding shares of
Convertible Preferred Stock. Mr. Picower is the sole stockholder and sole
director of Decisions and the sole general partner of the Partnership and,
as such, shares or has the sole power to vote or direct the vote of and to
dispose or direct the disposition of such shares of Common Stock and may be
deemed to be the beneficial owner of such shares.
(3) The total for FMR Corp. includes 1,340,441 shares beneficially owned by
Fidelity Management & Research Company, as a result of its serving as
investment advisor to various investment companies registered under Section
8 of the Investment Company Act of 1940 and serving as investment advisor
to certain other funds which are generally offered to limited groups of
investors.
(4) The total for each of Dr. Cerami and Messrs. Dean and Kelsky includes
options on 24,000, 20,000 and 18,000 shares of Common Stock, respectively,
under the Directors Plan which were exercisable as of May 30, 1995 or
become exercisable within 60 days after May 30, 1995. In addition, Dr.
Cerami owns beneficially 741 shares of 10% Preferred Stock.
(5) Does not include options to purchase 12,000 shares of Common Stock issued
to Mr. Greenberg under the Director's Plan and 125,000 shares of Common
Stock issued to Mr. Kuhn under the Option Plan.
(6) The total includes currently exercisable options on 62,000 shares under the
Directors Plan. In addition, all directors and officers as a group own an
aggregate of 741 shares of 10% Preferred Stock, which represent less than
1% of the outstanding shares of 10% Preferred Stock.
</TABLE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse was engaged to audit the Company's accounts in 1994. The
Board of Directors, upon the recommendation of the Audit Committee, which is
composed of two directors who are not now officers or otherwise employees of the
Company, selected Price Waterhouse to audit the Company's accounts for the year
ending December 31, 1995.
The Board of Directors recommends that the stockholders approve the
selection of Price Waterhouse as independent accountants for the year ending
December 31, 1995. A representative of Price Waterhouse is expected to be
present at the meeting and to be available to respond to appropriate questions.
The representative also will have an opportunity to make a statement if he or
she so desires.
1996 STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented for possible action at
the 1996 annual meeting must be received by the Company at its principal
executive offices prior to February 28, 1996 in order for such proposals to be
eligible for inclusion in the Company's proxy materials for its 1996 annual
meeting. All proposals received will be subject to the applicable rules of the
Securities and Exchange Commission.
12
<PAGE>
QUORUM AND VOTING
The holders of record of a majority of the shares of Common Stock entitled
to be voted present or represented by proxy at the Meeting shall constitute a
quorum for the transaction of business at the meeting, but, in the absence of a
quorum, the holders of record present in person or represented by proxy at such
meeting may vote to adjourn the meeting from time to time until a quorum is
obtained.
The election of directors shall be by plurality vote, with each stockholder
having the right to vote his shares cumulatively. See "Election of
Directors--Cumulative Voting Rights" described above. Other than with respect to
the election of directors, the affirmative vote of the holders of a majority of
the shares present in person or represented by proxy and entitled to vote at the
meeting is necessary for approval of all matters to be presented at the Annual
Meeting.
The aggregate number of votes cast by all stockholders present in person or
by proxy at the meeting will be used to determine whether a motion will carry.
Thus, an abstention from voting on a matter by a stockholder present in person
or by proxy at the meeting has no effect on the item on which the stockholder
abstained from voting. In addition, although broker "non-votes" will be counted
for purposes of attaining a quorum, they will have no effect on the vote.
FORM 10-K FOR FISCAL YEAR 1994
A copy of the Company's report to the Securities and Exchange Commission for
the year ended December 31, 1994 on Form 10-K, exclusive of exhibits, is
available without charge to stockholders on request and may be obtained by
writing to:
Corporate Secretary
Advanced Medical, Inc.
9775 Businesspark Avenue
San Diego, California 92131
OTHER MATTERS
The enclosed proxy is being solicited by the Board of Directors of the
Company. The cost of the solicitation will be borne by the Company. In addition
to use of the mails, proxies may be solicited by telephone, telegraph or
personal interview by employees of the Company and its subsidiaries without
additional compensation.
The Company will reimburse brokerage firms, banks, trustees, nominees and
other persons authorized by the Company for their out-of-pocket expenses in
forwarding proxy material to the beneficial owners of the Company's stock.
Management does not know of any other matters that will be presented at the
meeting other than matters incident to the conduct thereof. However, if any
matters properly come before the meeting or any adjournments, the holders of the
proxies named in the accompanying form of proxy have discretionary authority to
vote on such matters.
By Order of the Board of Directors
Joseph W. Kuhn
SECRETARY
San Diego, California
June 8, 1995
13
<PAGE>
- --------------------------------------------------------------------------------
ADVANCED MEDICAL, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 22, 1995
The undersigned stockholder of ADVANCED MEDICAL, INC. (the "Company")
hereby appoints JOSEPH W. KUHN, RICHARD B. KELSKY and HENRY GREEN, or any of
them, with full power of substitution and revocation, proxies of the undersigned
to vote all shares of Common Stock of the Company which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
the Company (the "Annual Meeting") to be held on Thursday, June 22,1995 at 9:00
a.m. at The Plaza, 5th at 59th Street, New York, New York and at any adjournment
thereof, with respect to:
1. The election of Directors;
2. The ratification of the appointment of Price Waterhouse as
independent accountants for the fiscal year ending December 31,
1995; and
3. The transaction of such other business as may properly come
before the Annual Meeting.
The proxy will be voted in accordance with the instructions given on the
other side, and in the discretion of the proxies upon such other matters as may
properly come before the Meeting. If no instructions are given this proxy will
be voted (1) so as to elect the largest possible number of the Board of
Directors' nominees and (2) for the ratification of the appointment of Price
Waterhouse as independent accountants.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
(Continued and to be signed on the other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
- --------------------------------------------------------------------------------
(continued from the reverse side)
------------------
I plan to attend
the meeting.
/ /
------------------
The Board of Directors Recommends Stockholders Vote FOR Item 1.
Item 1 - Election of Directors, Nominees: Anthony Cerami, Norman M. Dean, Henry
Green, Frederic Greenberg, Richard B. Kelsky, and Jeffry M. Picower.
The Board of Directors WITHHOLD
Recommends Authority to Vote for
Stockholders Vote all nominees listed
FOR Item 1. above
/ / / /
FOR the nominee listed above (except as written to the contrary below) and,
unless otherwise indicated, with discretion of the proxies to cumulate votes, in
their sole and absolute discretion, for one or more of such nominees in such
manner so as to elect the largest number of such nominees.
(To withhold authority to vote for any nominee write that nominees's name
in the space provided below)
- --------------------------------------------------------------------------------
To vote cumulatively, write "Cumulate For" and the number of shares
and the name(s) of the nominee(s) in the space provided below.
- --------------------------------------------------------------------------------
The Board of Directors Recommends Stockholders Vote FOR Item 2.
Item 2 - Proposal to Ratify the Appointment of Price Waterhouse as Independent
Accountants for the fiscal year ending December 31, 1995.
FOR AGAINST ABSTAIN
/ / / / / /
Please mark, date and sign exactly as your
name(s) appear(s) above and return in the
enclosed envelope. If acting as attorney,
executor, administrator, trustee, guardian,
etc., please give full title. If the
signer is a corporation, please sign the
full corporate name by fully authorized
officer. If shares are held jointly, each
stockholder named should sign.
Dated: , 1995
-----------------------------
------------------------------------------
Signature
- --------------------------------- ------------------------------------------
"PLEASE MARK INSIDE BLUE BOXES SO Signature if held jointly
THAT DATA PROCESSING EQUIPMENT
WILL RECORD YOUR VOTES"
- ---------------------------------
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
