<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.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $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
MAY 29, 1996
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<PAGE>
ADVANCED MEDICAL, INC.
9775 BUSINESSPARK AVENUE
SAN DIEGO, CALIFORNIA 92131
(619) 566-0426
April 30, 1996
To Our Stockholders:
We enclose herewith:
(i) a notice of Annual Meeting of Stockholders to be held at The
Grand Hyatt Hotel, Park Avenue at Grand Central, New York, New York at 9:00
a.m. on May 29, 1996;
(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,
/s/ Joseph W. Kuhn
Joseph W. Kuhn
PRESIDENT
<PAGE>
ADVANCED MEDICAL, INC.
9775 BUSINESSPARK AVENUE
SAN DIEGO, CALIFORNIA 92131
(619) 566-0426
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 1996
April 30, 1996
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Advanced Medical, Inc. (the "Company") will be held at The Grand
Hyatt Hotel, Park Avenue at Grand Central, New York, New York at 9:00 a.m. on
May 29, 1996 for the following purposes:
1. to elect directors;
2. to consider and act upon a proposal to ratify the appointment of Price
Waterhouse as independent accountants for the year ending December 31, 1996; and
3. to transact such other business as may properly come before the Annual
Meeting and all adjournments thereof.
The Board of Directors of the Company has fixed the close of business on
April 24, 1996 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 law 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
/s/ Joseph W. Kuhn
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 to stockholders in connection with the
solicitation by the Board of Directors of Advanced Medical, Inc. (herein
referred to as the "Company"), of proxies to be voted at the Annual Meeting of
Stockholders to be held at 9:00 a.m. on May 29, 1996, and all adjournments
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, 1996. Proxy statements and forms
of proxies are first being sent to stockholders on or about April 30, 1996.
The close of business on April 24, 1996 has been set as the record date for
purposes of determining stockholders entitled to vote at the meeting. At the
close of business on April 24, 1996, there were 16,135,125 shares of the
Company's common stock, par value $.01 per share ("Common Stock"), which (except
as otherwise contemplated under "Election of Directors -- 10% Cumulative
Preferred Stock") is the only class of outstanding voting securities of the
Company. 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. Each share of Common Stock entitles its holder of record to
one vote, except with respect to the election of directors, as described below.
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 below. 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.
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
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1
<PAGE>
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 1996.
1. 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.
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.
NAME POSITION WITH COMPANY AGE DIRECTOR SINCE
---- --------------------- --- --------------
Jeffry M. Picower. . . Director, Chairman of the Board 53 March 1993
and Chief Executive Officer
Anthony Cerami . . . . Director 55 March 1989
Norman M. Dean . . . . Director 76 March 1989
Henry Green. . . . . . Director 53 February 1991
Frederic Greenberg . . Director 55 June 1995
Richard B. Kelsky. . . Director 41 June 1989
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 in March 1993 and became Chairman of the
Board in May 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
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2
<PAGE>
Computer Network, Inc. ("PCN") since January 1994 and Chairman of the
Board since June 1994. PCN, a corporation whose principal shareholder is Mr.
Picower, develops, markets and supports practice management software products
for physician practices.
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. 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 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. 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 pharmaceutical analyst
with Goldman Sachs & Co., an investment banking firm, where he was instrumental
in organizing health care 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 health care
organizations. Mr. Greenberg serves as an advisor to various health care
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. Mr. Kelsky is a director of Monroe and from 1984 to 1996 was its
Vice President and General Counsel and its Vice Chairman since 1996. 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 met
twice during 1995.
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3
<PAGE>
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 met three times during 1995.
The Board of Directors does not have a standing nominating committee or one
performing similar functions.
The Board of Directors met nine times in 1995. 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.
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 Common Stock pursuant to the
Directors Stock-Based Benefit Plan ("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.
Effective March 16, 1996, Mr. Green will receive the $10,000 annual director's
compensation and the option to purchase Common Stock pursuant to the Directors
Plan.
10% CUMULATIVE PREFERRED STOCK
In addition to the six directors to be elected by the holders of 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.
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4
<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 $100,000 (determined for and as of the
end of 1995) (the "Named Executive Officers") for the years ended December 31,
1993, 1994 and 1995:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------ --------------------------
OTHER ALL
ANNUAL SECURITIES OTHER
SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
YEAR ($) ($) ($)(2) OPTIONS ($)(3)
---- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
JEFFRY M. PICOWER (1) 1995 0 0 10,000 0 0
Chairman of the Board and 1994 0 0 12,500 0 0
Chief Executive Officer 1993 0 0 7,895 0 0
JOSEPH W. KUHN 1995 175,000 60,000 9,250 0 2,053
President, Chief Financial 1994 135,500 40,650 9,250 0 2,063
Officer, Treasurer and Secretary; 1993 138,627 0 104,376 0 2,222
President, Treasurer and
Secretary - IMED
</TABLE>
- -----------------------------------
(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 amounts reported for 1994 and 1995, Mr.
Kuhn received supplemental income for the use of a vehicle valued at
$9,250. In the amounts 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 $1,083.
(3) The respective amounts reported as "All Other Compensation" for Mr. Kuhn
represents contributions made by the Company to the Company's 401(K) Plan
on behalf of Mr. Kuhn to match pre-tax elective deferral contributions
(included under salary) made by Mr. Kuhn to such plan.
JOSEPH W. KUHN - Mr. Kuhn (age 36) was appointed President of the Company
and IMED in January 1995. Since August 1993, Mr. Kuhn has been Chief Financial
Officer, Treasurer and Secretary of the Company and Treasurer and Secretary of
IMED. From August 1993 to January 1995, Mr. Kuhn was Vice President of the
Company and Executive Vice President of IMED. Mr. Kuhn was Corporate Controller
of the Company from January 1990 to August 1993. Mr. Kuhn joined Controlled
Therapeutics Corporation (a development stage pharmaceutical company and former
subsidiary of the Company) in September 1989 and was its Corporate Controller
through December 1991. From 1983 to 1989, Mr. Kuhn held positions of increasing
responsibility, including senior manager, with Price Waterhouse, a public
accounting firm.
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<PAGE>
From 1982 to September 1983, Mr. Kuhn was employed by Main Hurdman, a public
accounting firm. Mr. Kuhn holds a B.A. degree from Rutgers University and is a
Certified Public Accountant.
STOCK OPTIONS
The following table sets forth certain information concerning the grant of
stock options by the Company during the year ended December 31, 1995 to the
Named Executive Officers.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1995
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATE
SECURITIES TOTAL OPTIONS EXERCISE OF STOCK APPRECIATION FOR
UNDERLYING GRANTED TO OF BASE THE OPTION TERM
OPTIONS EMPLOYEES PRICE EXPIRATION -----------------------
GRANTED IN 1995 ($/SHARE) DATE 5%($) 10%($)
---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Kuhn 125,000 11.2% 1.8125 1-5-2005 $142,188 $360,938
</TABLE>
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the year ended
December 31, 1995 and unexercised options held as of the end of that year.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1995
AND OPTION VALUES AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF SECURITIES IN-THE-MONEY
ACQUIRED VALUE UNDERLYING UNEXERCISED OPTIONS AT 12/31/95
OPTIONS AT 12/31/95 ($) (1)
ON REALIZED -------------------------- ---------------------------
EXERCISE $ 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 0 125,000 0 148,438
</TABLE>
- ---------------------------
(1) Calculated based on the excess of the closing price of Common Stock on
December 31, 1995 ($3.00) 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 canceled 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 ($1.8125 per share).
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6
<PAGE>
TEN-YEAR OPTION REPRICINGS
The following table provides the specified information concerning all
repricings of options to purchase the Company's Common Stock held by any
executive officer of the Company since March 27, 1989, the date on which shares
of the Company's Common Stock began trading on the American Stock Exchange.
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
NUMBER OF OPTION TERM
SECURITIES MARKET PRICE EXERCISE REMAINING AT
UNDERLYING OF STOCK AT PRICE AT TIME DATE OF
OPTIONS TIME OF OF REPRICING NEW REPRICING OR
REPRICED OR REPRICING OR OR EXERCISE AMENDMENT
DATE OF AMENDED AMENDMENT AMENDMENT PRICE (# OF
NAME AND POSITION REPRICING (#) ($) ($) ($) MONTHS)
- ----------------- --------- ---------- ------------ ------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Joseph W. Kuhn, 1/05/95 6,000 $1.8125 $ 6.9325 $1.8125 70
President, Chief 1/05/95 24,000 $1.8125 $16.9375 $1.8125 83
Financial Officer,
Treasurer and Secretary;
President, Treasurer and
Secretary - IMED
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Kuhn is employed by the Company and IMED as President pursuant to an
employment agreement providing for a base salary of $225,000 ($175,000 during
1995). 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 and 1995, Mr. Kuhn received performance bonuses of $40,650 and
$60,000, respectively, 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.
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<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
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 1995 was limited to
compensation earned as a director. Compensation to the Company's other senior
executive officer in 1995 was based upon an employment agreement entered into
prior to January 1, 1995. Mr. Kuhn's bonus on account of 1995 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
COMPENSATION COMMITTEE REGARDING REPRICING OF OPTIONS
In January 1995, the Compensation Committee considered the options held by
Mr. Kuhn and the impact of the decline in the price of the Company's Common
Stock on the long term incentive value of such options. The Compensation
Committee also reviewed the role of these options in Mr. Kuhn's overall
compensation and the factors believed to be the cause of the decline in the
price of the Company's Common Stock. As a result of this consideration and
review, the Compensation Committee decided to replace the options held by Mr.
Kuhn with new options. In reaching this decision, the Compensation Committee
was of the view that the options were intended to provide incentive to maximize
the long term value of the Company and that replacing the existing options with
new options to provide for an exercise price at then fair market value would
provide additional incentive to Mr. Kuhn because of the increased potential for
appreciation. On balance, considering all of these factors, the Compensation
Committee determined it to be in the best interest of the Company and the
stockholders to restore the incentive for Mr. Kuhn to exert his maximum efforts
on behalf of the Company by replacing these options with new options.
NORMAN M. DEAN
RICHARD B. KELSKY
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8
<PAGE>
PERFORMANCE GRAPH
The graph set forth below represents the cumulative total return from
December 31, 1991 to December 31, 1995 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 63 companies from SIC Code
3841 -- Surgical & Medical Instruments & Apparatus -- which had reportable stock
performance from January 1, 1991 to December 31, 1995. The graph has been
prepared by an outside consulting firm to the Company. The graph assumes that
the value of the investment in Common Stock and each index was $100 on January
1, 1991 and that all dividends were reinvested.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
FROM JANUARY 1, 1991 TO DECEMBER 31, 1995
AMONG ADVANCED MEDICAL, INC.,
AMEX MARKET VALUE INDEX AND PEER GROUP INDEX
1/1/91 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
Advanced Medical, Inc. $100.00 $195.31 $120.31 $17.97 $25.00 $37.50
Peer Group Index 100.00 172.14 143.22 104.58 120.34 205.30
AMEX Market Value 100.00 123.17 124.86 148.34 131.04 168.90
Index
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9
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 19, 1995, Decisions, Inc., a corporation affiliated with Jeffry M.
Picower ("Decisions"), tendered $441,000, in principal amount, of 7 1/4%
convertible subordinated debentures due 2002 ("7 1/4% Debentures") held by it in
connection with the Company's exchange of an aggregate of $43,848,000 in
principal amount of 7 1/4% Debentures for $21,924,000 in principal amount of 15%
Subordinated Debentures due 1999 and 2,075,000 shares of Common Stock.
On December 4, 1995, the Company borrowed $25,000,000 from Decisions (the
"$25,000,000 Note"), the proceeds of which can be used among other things (i)
for the payment of principal and interest on this note or the $6,000,000 and
$6,500,000 notes also payable to Decisions ("$6,000,000 and $6,500,000 Notes"),
(ii) to acquire or assist the Company to acquire any business or line of
business, (iii) to invest in or acquire any securities (or right to acquire any
securities) of IMED, any other affiliate of the Company or any other entity
(other than the Company), or (iv) to pay any and all costs and expenses incurred
in connection with the foregoing activities. The $25,000,000 Note bears
interest at 7%, and all accrued and unpaid interest shall be due and payable in
arrears on October 11, 1996, and thereafter on June 30 and December 31 of each
calendar year. The $25,000,000 Note is payable on January 4, 2001 and ranks
pari passu with the $6,000,000 and $6,500,000 Notes. The $25,000,000 Note is
convertible, at the option of the holder, into up to 9,523,809 shares of Common
Stock at a conversion price of $2.625 per share (subject to antidilution
protection).
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of April 24, 1996, information regarding the
beneficial ownership of 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. . . . . . . . . . . . . . . . . . . 30,283,082 (2) 71.2%
South Ocean Blvd.
Palm Beach, FL 33480
FMR Corporation. . . . . . . . . . . . . . . . . . . . 1,592,115 (3) 9.9
Devonshire Street
Boston, MA 02109
Anthony Cerami . . . . . . . . . . . . . . . . . . . . 25,159 (4) *
Norman M. Dean . . . . . . . . . . . . . . . . . . . . 16,000 (4) *
Henry Green. . . . . . . . . . . . . . . . . . . . . . 5,000 *
Frederic Greenberg . . . . . . . . . . . . . . . . . . 14,000 (4)
Richard B. Kelsky. . . . . . . . . . . . . . . . . . . 94,100 (4) *
Joseph W. Kuhn . . . . . . . . . . . . . . . . . . . . 25,000 (4) *
All directors and officers as a group (7 individuals). 30,462,341 (5) 71.5
</TABLE>
- -------------------------
* Less than 1%
- --------------------------------------------------------------------------------
10
<PAGE>
(1) Based on 16,135,125 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
Convertible Preferred Stock or the conversion of the Convertible Notes
described below in footnotes (2) through (5). However, in computing the
respective percentages of the Common Stock beneficially owned by the
holders described in footnotes (2) and (4), the shares of Common Stock
subject to the warrant, option or conversion privileges described therein
were deemed outstanding.
(2) The total for Mr. Picower includes (i) 1,400,327 shares of Common Stock
owned by Decisions, (ii) 357,100 shares of Common Stock owned by JA Special
Partnership Limited (the "Partnership"), (iii) 300,486 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), (iv) 6,030,151
shares of Common Stock issuable upon conversion of the $6,000,000
Convertible Note owned by Decisions, (v) 10,534,846 shares of Common Stock
issuable upon conversion of the $6,500,000 Convertible Note owned by
Decisions and (vi) 9,523,809 shares of Common Stock issuable upon the
conversion of the $25,000,000 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 1,592,115 shares beneficially owned by
Fidelity Management & Research Company, as a result of its acting as
investment advisor to various investment companies registered under Section
8 of the Investment Company Act of 1940. FMR Corp. has sole voting power
with respect to zero shares and sole dispositive power with respect to
1,592,115 shares.
(4) The total includes options currently exercisable or exercisable within 60
days after April 24, 1996, of 12,000 shares of Common Stock for each of Dr.
Cerami and Messrs. Dean and Kelsky and 4,000 shares of Common Stock for Mr.
Greenberg under the Directors Plan. In addition, Mr. Kuhn's total includes
currently exercisable options on 25,000 shares of Common Stock, under the
Option Plan.
(5) The total includes currently exercisable options of 40,000 shares under the
Directors Plan and 25,000 under the Option Plan.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse was engaged to audit the Company's accounts in 1995. 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, 1996.
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.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF PRICE WATERHOUSE.
- --------------------------------------------------------------------------------
11
<PAGE>
ANNUAL REPORT TO STOCKHOLDERS AND
STOCKHOLDER PROPOSALS FOR 1997
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1995 has been mailed concurrently with this Proxy Statement
to all stockholders entitled to notice of and to vote at the Annual Meeting.
The Annual Report to Stockholders is not incorporated into this Proxy Statement
and is not considered proxy soliciting material.
Proposals of stockholders intended to be presented for possible action at
the 1997 annual meeting must be received by the Company at its principal
executive offices prior to February 10, 1997 in order for such proposals to be
eligible for inclusion in the Company's proxy materials for its 1997 annual
meeting. All proposals received will be subject to the applicable rules of the
Securities and Exchange Commission.
FORM 10-K FOR FISCAL YEAR 1995
A COPY OF THE COMPANY'S REPORT TO THE SECURITIES AND EXCHANGE COMMISSION FOR
THE YEAR ENDED DECEMBER 31, 1995 ON FORM 10-K, EXCLUSIVE OF EXHIBITS, IS
AVAILABLE WITHOUT CHARGE TO STOCKHOLDERS ON REQUEST AND MAY BE OBTAINED BY
WRITING TO:
CORPORATE COMMUNICATIONS
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
/s/ Joseph W. Kuhn
Joseph W. Kuhn
SECRETARY
San Diego, California
April 30, 1996
- --------------------------------------------------------------------------------
12
<PAGE>
ADVANCED MEDICAL, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 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 Wednesday, May 29, 1996 at 9:00
a.m. at The Grand Hyatt Hotel, Park Avenue at Grand Central, 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, 1996; 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)
Please mark your votes as indicated in this example /X/
THE BOARD OF DIRECTORS RECOMMENDS STOCKHOLDERS VOTE FOR ITEM 1.
ITEM 1 - ELECTION OF DIRECTORS, NOMINEES: ANTHONY CARAMI, NORMAN M. DEAN, HENRY
GREEN, FREDERIC GREENBERG, RICHARD B. KELSKY, AND JEFFRY M PICOWER.
The Board of Directors Recommends Stockholders Vote FOR Item 1. / /
WITHHOLD Authority to vote for all nominees listed above / /
FOR the nominees 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 nominee'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, 1996.
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: , 1996
----------------------------------
----------------------------------------------
Signature
----------------------------------------------
Signature if held jointly
FOLD AND DETACH HERE
