<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [X] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
EUROMED, 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies: N/A
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies: N/A
- --------------------------------------------------------------------------------
(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):
N/A
- --------------------------------------------------------------------------------
(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:
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(4) Date Filed:
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<PAGE> 2
EUROMED, INC.
WILHELMINAKANAAL NOORD 6
NL 4902 VR OOSTERHOUT
THE NETHERLANDS
April 30, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Meeting") of EuroMed, Inc., a Nevada corporation ("EuroMed"), to be held at
10:00 a.m., local time, on May 26, 1997, at Grosvenor House London, 86 Park
Lane, London WIA 3AA, England. The attached Notice of Annual Meeting and Proxy
Statement describe the formal business to be transacted at the Meeting. We have
enclosed a copy of EuroMed's Annual Report for the fiscal year ended December
31, 1996.
Directors and officers of EuroMed are expected to be present to help host
the Meeting and to respond to any questions that our stockholders may have. I
hope that you will be able to attend.
EuroMed's Board of Directors believes that a favorable vote on each of the
matters to be considered at the Meeting is in the best interest of EuroMed and
its stockholders and recommends a vote "FOR" each such matter. Accordingly, we
urge you to review the attached material carefully and to return the enclosed
Proxy promptly. Whether or not you plan to attend the Meeting, you may vote in
person if you wish, even though you have previously returned your proxy. It is
important that your shares be represented and voted at the Meeting.
On behalf of your Board of Directors, thank you for your support.
Sincerely,
Robert W. L. Veldman,
Chief Executive Officer and President
<PAGE> 3
CONFIDENTIAL -- FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14(a)-6(e)(2))
EUROMED, INC.
Wilhelminakanaal Noord 6
NL 4902 VR Oosterhout
The Netherlands
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 26, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of EuroMed, Inc. (the "Company") will be held at 10:00 a.m., local
time, on May 26, 1997, at the Grosvenor House London, 86 Park Lane, London WIA
3AA, England, for the following purposes:
(1) To elect five members of the Board of Directors (constituting the
entire Board of Directors) to serve until the next Annual Meeting of
Stockholders and until their respective successors shall be elected and
qualified.
(2) To approve the sale of Pluripharm International B.V., a subsidiary
of the Company.
(3) To ratify the selection of Killman, Murrell & Company, P.C. as
independent public accountants for the Company for the fiscal year ending
December 31, 1997.
(4) Such other business as may properly come before the Meeting or any
adjournments thereof.
The close of business on April 18, 1997 has been fixed as the record date
for determining stockholders entitled to notice of and to vote at the Meeting or
any adjournments thereof. For a period of at least 10 days prior to the Meeting,
a complete list of stockholders entitled to vote at the Meeting will be open for
examination by any stockholder during ordinary business hours at the offices of
EuroMed, Inc. at Wilhelminakanaal Noord 6, NL 4902 VR Oosterhout, The
Netherlands.
Information concerning the matters to be acted upon at the Meeting is set
forth in the accompanying Proxy Statement.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY TO ASSURE THAT
YOUR SHARES ARE REPRESENTED AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE
PREPAID IF MAILED IN THE UNITED STATES) IS PROVIDED. EVEN IF YOU HAVE GIVEN YOUR
PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE,
HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
By Order of the Board of Directors,
Richard F. Dahlson
Secretary
Dallas, Texas
April 30, 1997
<PAGE> 4
EUROMED, INC.
WILHELMINAKANAAL NOORD 6
NL 4902 VR OOSTERHOUT
THE NETHERLANDS
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 26, 1997
This Proxy Statement is being first mailed on or about May 1, 1997 to
stockholders of EuroMed, Inc., a Nevada corporation (the "Company"), by the
Board of Directors to solicit proxies (the "Proxies") for use at the Annual
Meeting of Stockholders (the "Meeting") to be held at 10:00 a.m., local time, on
May 26, 1997, at the Grosvenor House London, 86 Park Lane, London WIA 3AA,
England, or at such other time and place to which the Meeting may be adjourned
(the "Meeting Date").
The purpose of the Meeting is to consider and act upon (i) the election of
five directors (constituting the entire Board of Directors) to serve until the
next Annual Meeting of Stockholders and until their respective successors shall
be elected and qualified, (ii) the approval of the sale of Pluripharm
International B.V., a subsidiary of the Company ("Pluripharm"), (iii) the
ratification of the selection of Killman, Murrell & Company, P.C. as independent
public accountants for the Company for the fiscal year ending December 31, 1997,
and (iv) such other matters as may properly come before the Meeting or any
adjournments thereof.
All shares represented by valid Proxies, unless the stockholder otherwise
specifies, will be voted (i) FOR the election of the persons named herein under
"PROPOSAL I -- ELECTION OF DIRECTORS" as nominees for election as directors of
the Company for the term described therein, (ii) FOR the sale of Pluripharm,
(iii) FOR the ratification of the selection of Killman, Murrell & Company, P.C.
as independent public accountants for the Company for the fiscal year ending
December 31, 1997 and (iv) at the discretion of the Proxy holders with regard to
any other matter that may properly come before the Meeting or any adjournments
thereof.
Where a stockholder has appropriately specified how a Proxy is to be voted,
it will be voted accordingly. The Proxy may be revoked at any time by providing
written notice of such revocation to American Stock Transfer & Trust Company, 40
Wall Street, 46th Floor, New York, New York 10005, Attention: Donna Ansbro. If
notice of revocation is not received by the Meeting Date, a stockholder may
nevertheless revoke a Proxy if the stockholder attends the Meeting and desires
to vote in person.
RECORD DATE AND VOTING SECURITIES
The record date for determining the stockholders entitled to vote at the
Meeting is the close of business on April 18, 1997 (the "Record Date"), at which
time the Company had issued and outstanding 3,118,000 shares of common stock,
par value $.01 per share (the "Common Stock"). The Common Stock is the only
outstanding voting securities of the Company.
QUORUM
The presence at the Meeting, in person or by proxy, of the holders of a
majority of the issued and outstanding shares of Common Stock is necessary to
constitute a quorum to transact all business to come before the Meeting.
<PAGE> 5
PROPOSAL I -- ELECTION OF DIRECTORS
Five directors are to be elected, each director to hold office for a term
of one year or until his successor shall have been elected and qualified. The
Board of Directors has nominated the five persons named below to serve as
directors. Three of the nominees, Messrs. Hinnen, Shelmire and Shuey, are
currently members of the Board of Directors. In order to be elected a director,
a nominee must receive a plurality of the votes of the shares of Common Stock
present in person or represented by Proxy at the Meeting. Votes that are
withheld and broker non-votes will be counted toward a quorum, but will not be
counted in the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
NAMED HEREIN (ITEM NO. 1 ON THE ENCLOSED PROXY CARD).
Each of the nominees has indicated his willingness to serve as a member of
the Board of Directors if elected; however, in case any nominee shall become
unavailable for election to the Board of Directors for any reason not presently
known or contemplated, the Proxy holders have discretionary authority to vote
the Proxy for a substitute nominee or nominees. The following sets forth
information as of April 16, 1997 as to the nominees for election at the Meeting,
including their ages, present principal occupations, other business experience
during the last five years, membership on committees of the Board of Directors
and directorships in other publicly-held companies.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
A. Francois Hinnen....................... 54 Chairman of the Board
Robert W. L. Veldman..................... 48 Chief Executive Officer and President
David Anderson........................... 41 Chief Financial Officer
Jesse Shelmire, IV....................... 39 Director
Robert A. Shuey, III(1).................. 42 Director
</TABLE>
- ---------------
(1) Member of the Audit Committee and the Compensation Committee.
A. Francois Hinnen, MSc has served as Chairman of the Board of the Company
since November 18, 1995. Mr. Hinnen served as Chief Executive Officer of the
Company from November 18, 1995 until October 31, 1996, and as President of the
Company from November 18, 1995 until February 28, 1997, and has served, through
a controlled company, as the Managing Director of Galenica B.V. ("Galenica") and
Confedera B.V. ("Confedera") since January 1991. Mr. Hinnen has also served the
Company as the chief pharmacist for Galenica and Confedera, which are
wholly-owned subsidiaries of the Company organized under the laws of The
Netherlands. Mr. Hinnen has 28 years experience as a certified pharmacist and 24
years business experience as an entrepreneur in the pharmaceutical industry. Mr.
Hinnen graduated first of year in 1967 with a Masters in Mathematics and Natural
Sciences, and in 1968 with a degree in Microbiology and Pharmacy from the
University of Utrecht, The Netherlands. Mr. Hinnen was a member of the staff of
the University of Nijmegen, The Netherlands, from 1969-1970.
Robert W. L. Veldman, MSc has served as Chief Executive Officer of the
Company since February 1997. Mr. Veldman has twenty-three years of related
health care management experience. Before joining EuroMed, Mr. Veldman worked as
director of business development at Merck, Sharp & Dohme B.V. in Haarlem from
1995 to 1997. Prior to that he worked as Pharmaceutical Director and Managing
Director Hospital Division, Brocacef BV -- Maarssen from 1988 to 1995, as
Director of European Operations, Centocor Europe BV -- Leiden from 1987 to 1988
and served as managing director and chief operating officer of Centrafarm Group
NV -- Etten Leur from 1978 to 1987 and as an industrial pharmacist, Organon
International BV -- Oss from 1975 to 1978.
David Anderson has served as the Company's Chief Financial Officer since
February 1997. Mr. Anderson brings fifteen years of healthcare experience in the
United States, including experience in the home infusion drug market as well as
the free standing and hospital based home nursing and equipment service
businesses. Mr. Anderson served as western division vice president of Nurse
Finders, Inc., a home health and medical staffing company, from 1995 to 1997 and
served as director and senior vice president of operations for OptionCare, Inc.,
a home infusion therapy company, from 1993 to 1995. Prior to that, he founded
and was
2
<PAGE> 6
an equity director and chief development officer for Earthstone, a division of
EPIC Health Care Group, from 1990 to 1993, served as executive vice president of
ABC Home Health, a privately held home health care company, from 1987 to 1990
and served as associate and district director for T-2 Medical Management, a home
infusion therapy provider company, from 1985 to 1987.
Jesse Shelmire, IV has served as a director of the Company since November
27, 1996. Mr. Shelmire has 15 years of experience in the investment banking and
stock underwriting business. Upon graduating from the Warton School of Business
he worked from 1981 to 1989, for Smith Barney, Inc. in their Dallas, Texas
office. From 1989 to 1993, he served as the Portfolio Manager for Stonegates
Securities, Inc. of Dallas, Texas where he managed $250 million of assets in
equity and fixed income accounts, he served at Dillon-Gage Securities Corp. as
Director of Corporate Finance from 1993 to 1995 and he served as Director of
Corporate Finance for LaJolla Securities Corporation from 1994 to 1995. Mr.
Shelmire currently serves as Managing Director of Investment Banking for First
London Securities Corporation in Dallas, Texas.
Robert A. Shuey, III has served as a director of the Company since June
1996. Mr. Shuey is employed by National Securities Corporation of Dallas, Texas
as the Director of Corporate Finance. Prior to that, Mr. Shuey was with LaJolla
Securities Corporation from 1994 to 1995 in the position of Director of
Corporate Finance. Mr. Shuey was employed as Director of Corporate Finance by
Dillon-Gage Securities Corp., an investment banking firm, from 1994 to 1995, and
prior to that held the position of Senior Vice President, Corporate Finance, of
Dickinson & Company, a brokerage firm. Mr. Shuey was Vice President of Rauscher
Pierce Refnes, Inc. from June 1984 to September 1987. From May 1980 until June
1984, he was director of the corporate finance department and a Vice President
of Institutional Equity Corporation. Prior to that time, Mr. Shuey was an
associate in the corporate finance department of Salomon Brothers, Inc.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Company is managed under the direction of the Board of
Directors. The Board of Directors meets on a regularly scheduled basis to review
significant developments affecting the Company and to act on matters requiring
approval of the Board of Directors. It also holds special meetings when an
important matter requires action by the Board of Directors between scheduled
meetings. The Board of Directors met seven times and acted by unanimous written
consent two times during 1996. During 1996, each member of the Board of
Directors participated in at least 75% of all Board of Directors meetings during
the period for which he was a director.
The Board of Directors has two standing committees: the Audit Committee and
the Compensation Committee. The functions of these committees, their current
members, and the number of meetings held during fiscal 1996 are described below.
Audit Committee. The Audit Committee makes recommendations to the Board of
Directors regarding the appointment of independent auditors, reviews the plan
and scope of any audit to the Company's financial statements and reviews the
Company's significant accounting policies and related matters. Mr. Shuey
currently is the sole member of the Audit Committee. The Audit Committee did not
meet in 1996.
Compensation Committee. The Compensation Committee makes recommendations to
the Board of Directors regarding the compensation of executive officers and the
administration of the Company's 1995 Long-Term Incentive Plan. Mr. Shuey
currently is the sole member of the Compensation Committee. The Compensation
Committee did not meet in 1996.
Nominating Committee. The Company does not have a nominating committee. The
functions customarily performed by a nominating committee are performed by the
Board of Directors as a whole.
3
<PAGE> 7
PROPOSAL II -- SALE OF PLURIPHARM
On March 26, 1997, the Board of Directors approved a five-point
restructuring plan. This restructuring plan consisted of the following: (i) a
settlement of all claims between the Company and A. Doets and N.T.P. Roozekrans,
the former owners of Pluripharm International B.V. ("Pluripharm"), in
consideration for which Messrs. Doets and Roozekrans would assign and deliver to
the Company 850,000 shares of Common Stock (the "Settlement"); (ii) the sale of
all of the capital stock of Pluripharm (the "Sale"); (iii) the give-back by Mr.
Hinnen and his affiliates of 850,000 shares of Common Stock (the "Hinnen
Give-Back"); (iv) the plan to repurchase in the open-market from time to time up
to 300,000 shares of Common Stock (the "Repurchase Plan"); and (v) the
undertaking of a new strategy of acquiring healthcare related companies or
assets outside of The Netherlands, including possible purchases of health care
companies or assets in the United States (the "New Strategy").
Pursuant to a Settlement Agreement, dated as of April 3, 1997 (the
"Settlement Agreement"), by and among the Company, Mr. Doets, Mr. Roozekrans and
certain other parties, the Settlement was agreed to, and was subsequently
closed. Accordingly, on April 18, 1997, 850,000 shares of Common Stock were
returned to the Company and are no longer issued and outstanding.
Pursuant to a Share Purchase Agreement, dated as of April 3, 1997 (the
"Share Purchase Agreement"), by and among the Company, EuroMed Europe B.V.
("EuroMed Europe") and Mutarestes B.V. ("Mutarestes") (collectively, the
"EuroMed Group") and Houdstermaatschappij Singultus B.V. I.O. ("Purchaser"), the
EuroMed Group has agreed to sell to Purchaser all of the capital stock of
Pluripharm, at a purchase price of approximately $2,800,000, consisting of a
pre-closing dividend from Pluripharm to Mutarestes of approximately $400,000,
and the payment at the closing of the Sale by Purchaser to the EuroMed Group of
approximately $2,400,000 cash (the "Purchase Price"). The closing of the Sale is
scheduled to occur on June 2, 1997, and is subject to the following conditions:
(i) receipt by the Company of a statement (the "Fairness Opinion") of the firm
Paardekooper & Hoffman or a financial advisory firm of the same reputation, in
which the value of Pluripharm is determined and in which it is declared that the
Purchase Price is considered to be a fair consideration and a reasonably
equivalent value to the EuroMed Group and its stockholders; and (ii) approval of
the Sale by the stockholders of EuroMed (the "Stockholder Approval"). The
Company has received the Fairness Opinion, a copy of which is attached hereto as
Appendix A, and described below, and by this Proxy Statement is seeking to
obtain Stockholder Approval.
B.V. Wisteria ("Wisteria"), the holder of 1,923,130 shares of Common Stock
(61.67% of the issued and outstanding shares of Common Stock) has entered into a
Compensation Agreement with Purchaser (the "Compensation Agreement"), which
provides, among other things, that Wisteria will take all actions within its
powers as the majority stockholder of the Company to cause the Stockholder
Approval to be received, and in the event Stockholder Approval is not received
(due to an event within the power of Wisteria) or the Fairness Opinion is not
furnished, in each case by or before May 27, 1997, and, as a result thereof, the
Share Purchase Agreement is rescinded by the Company, Wisteria shall pay
Purchaser 500,000 Dutch guilders. Mr. Hinnen, the controlling shareholder of
Wisteria, has indicated that he will vote all shares of Common Stock owned by
Wisteria in favor of the Sale, thereby assuring the approval thereof.
EuroMed acquired Mutarestes (a holding company) and Pluripharm in July 1996
from personal holding companies owned by Messrs. Doets and Roozekrans, for a
purchase price consisting of (i) 10 million Dutch guilders and (ii) 850,000
shares of Common Stock. The Company is taking this step primarily as a result of
the changing pharmaceutical wholesale market in The Netherlands, which has
resulted in significantly lowered prices and decreased margins, and the
Company's inability to consolidate the Pluripharm operations into the Company's
operations in The Netherlands. In the Company's 1996 financial statements,
Pluripharm was considered as a discontinued operation. Further, there are no
U.S. tax consequences or benefits from the loss on the Pluripharm transaction
until the Company divests of its European subsidiaries. The Sale and the related
Settlement will result in the Company recognizing a loss of approximately
$3,200,000. Messrs. Doets and Roozekrans negotiated the Share Purchase Agreement
on behalf of the Purchaser and may have a direct or indirect interest in, or may
have provided other financial or non-financial assistance to, Purchaser.
4
<PAGE> 8
Simultaneously with the closing of the Share Purchase Agreement, the Hinnen
Give-Back shall occur, after which time, and from time to time, the Company may
purchase up to 300,000 shares of Common Stock in the open market pursuant to the
Repurchase Plan. In addition, management is currently pursuing the New Strategy
and is actively seeking and reviewing possible acquisition candidates, although
no agreements have been entered into at this time. Management believes that the
cash to be received in the Sale will allow the Company to pursue the New
Strategy, with the intention of bringing greater value to the stockholders of
the Company.
The following is a table of certain selected financial data of EuroMed for
the last five years of operations:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------------------------------------
1992 1993 1994 1995 1996
--------- ---------- ---------- ---------- ----------
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Income Statement Data
Sales............................... $6,780 $12,470 $20,271 $32,978 $35,471
Gross Profit........................ 659 1,362 2,027 3,356 3,045
Operating Profit (Loss)............. 179 590 915 1,256 (297)
Net Income (Loss) from Continuing
Operations....................... 118 444 687 836 (481)
Earnings (Loss) Per Share
Continued Operations............. .06 .22 .34 .42 $ (0.15)
Discontinued Operations.......... (1.00)
-------
Total Earnings (Loss) Per Share
Based on the weighted
average number of shares
outstanding of
3,190,000................. $ (1.15)
Balance Sheet Data at Year End
Inventory........................... $ 668 $ 1,460 $ 2,497 $ 4,719 $ 4,526
Total Current Assets................ 972 2,093 3,837 8,031 10,486
Total Assets........................ 1,131 2,342 4,375 8,845 11,674
Current Liabilities................. 1,182 2,149 3,433 6,653 8,057
Long-Term Debt...................... 672 611 685 1,075 90
Stockholders' Equity (Deficit)...... (723) (418) 257 1,117 3,527
-------
</TABLE>
The following is a table of certain selected financial data for Pluripharm
for the last four years of operations.
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------------
1993 1994 1995 1996
------- ------- ------- -------
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C>
Income Statement Data
Sales................................................. $21,065 $22,858 $31,539 $35,125
Gross Profit.......................................... 1,362 1,432 2,577 2,831
Operating Profit...................................... 1,595 1,547 2,160 1,939
Net Income............................................ 1,022 995 1,405 1,260
Balance Sheet Data at Year End
Inventory............................................. -- $ 1,059 $ 1,338 $ 1,458
Total Current Assets.................................. -- 5,652 8,801 6,812
Current Liabilities................................... -- 5,591 8,728 5,508
Long-Term Debt........................................ -- -- -- --
Stockholders' Equity.................................. -- 74 184 1,388
</TABLE>
5
<PAGE> 9
The operating performance of Pluripharm has, however, declined since its
acquisition by EuroMed. The operating results of Pluripharm on a semi-annual
basis (Pluripharm was acquired by EuroMed on July 5, 1996) was as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
JUNE 30, DECEMBER 31,
1996 1996
--------- -------------
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C>
Sales..................................................... $17,704 $17,421
Gross Profit.............................................. 1,527 1,304
Operating Profit.......................................... 1,182 757
Net Income from Continuing Operations..................... 755 505
</TABLE>
This decline has continued into the first quarter of 1997, for which
quarter management estimates sales at Pluripharm to be approximately $6.8
million and net income to be approximately $90,000.
The Fairness Opinion sought by EuroMed with regard to the sale has been
provided by Paardekooper & Hoffman of Amsterdam, The Netherlands, which is one
of the top 10 largest accounting firms in The Netherlands. This firm was chosen
by the parties in an arms-length transaction. EuroMed's management along with
the Purchaser believes that this firm is qualified to research and render an
opinion as to the fairness of the transaction. Paardekooper & Hoffman are the
Dutch affiliate of Killman, Murrel & Company, P.C., the Company's independent
public accountants for the fiscal year ending 1996. Further, Paardekooper &
Hoffman was reimbursed for their work on EuroMed's 1996 year end audit and
continue to serve the Company as an affiliate of the Company's independent
auditor.
The Fairness Opinion analyzes developments in the Dutch pharmaceutical
market, the financial position of Pluripharm and the outlook for Pluripharm in
1997. In particular, the Fairness Opinion discusses the decline in gross profit
margin for wholesalers in pharmaceutical products as a result of the
implementation of a maximum price law for medication in The Netherlands. The
Fairness Opinion states that Pluripharm's gross profit margin in the second half
of 1996 declined approximately 20% from the first half of 1996. The Fairness
Opinion further discusses Pluripharm's declining sales and net income in the
first quarter of 1997 and projects lower sales and net income in 1997 as
compared to 1996. Based on the analysis in the Fairness Opinion, Paardekooper &
Hoffman is of the opinion that the purchase price being paid in the sale
represents a fair value for the shares of capital stock of Pluripharm. The
Fairness Opinion, which is attached to this Proxy Statement as Appendix A, has
been translated from Dutch to English.
The Fairness Opinion issued is an opinion on the terms and price agreed
upon by EuroMed and the Purchaser. Neither the terms nor the price have been set
or negotiated by Paardekooper & Hoffman and in management's opinion the Fairness
Opinion they have rendered is independent and substantiated by the facts as
discovered.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required for approval of the Sale. Abstentions and Broker
Non-Votes will have the effect of votes against the Sale.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE SALE (ITEM NO. 2 ON THE
ENCLOSED PROXY CARD).
PROPOSAL III -- INDEPENDENT PUBLIC ACCOUNTANTS
On November 19, 1996, KPMG Accountants N.V. ("KPMG") resigned as EuroMed's
independent public accountant. No report of KPMG for EuroMed contained an
adverse opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles. There have been no
disagreements between KPMG and EuroMed as described in Item 304(a)(1)(iv) of
Regulation S-K or events of the kind set forth in Item 304(a)(1)(v) of
Regulation S-K.
EuroMed provided KPMG with the above disclosures prior to filing a Current
Report Form 8-K with the Securities and Exchange Commission. KPMG responded to
the above disclosures by stating that they resigned as principal accountants for
EuroMed because they believed that the control structure of EuroMed
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<PAGE> 10
was not adequate to develop reliable financial statements. KPMG did not disclose
to EuroMed specific concerns or problems.
On February 20, 1997, EuroMed engaged Killman, Murrell and Company, P.C.
("Killman") as its independent public accountant. Prior to engaging Killman,
EuroMed discussed with Killman the reason given by KPMG for its resignation.
Killman has told EuroMed that it believes EuroMed has resolved the problems that
led to KPMG's resignation. EuroMed provided Killman with the above disclosures
prior to filing a Current Report on Form 8-K with the Commission and Killman did
not file any response to such disclosures.
The Board of Directors has selected Killman as independent auditors to
examine the Company's accounts for the current fiscal year. It is expected that
representatives of Killman will be present at the Meeting, will be available to
respond to appropriate questions of stockholders and will have an opportunity to
make a statement if they desire.
Ratification of Killman as independent public accountants requires the vote
of a majority of the votes represented and entitled to vote at the Meeting.
Abstentions on this proposal may be specified and will have the same effect as a
vote against such proposal. Broker non-votes will also have the effect as a vote
against this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF KILLMAN, MURRELL & COMPANY, P.C. AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997 (ITEM NO. 3 ON
THE ENCLOSED PROXY CARD).
EXECUTIVE OFFICERS
The executive officers of the Company are Messrs. Hinnen, Veldman and
Anderson. Information regarding such persons is provided above under "Proposal
I -- Election of Directors" above.
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information with respect to beneficial
ownership of Common Stock as of April 16, 1997 by (i) all persons known to the
Company to be the beneficial owner of 5% or more of the Common Stock, (ii) each
director of the Company, (iii) the chief executive officer and each of the
Company's four other most highly compensated executive officers whose total
annual compensation for 1996 based on salary and bonus earned during 1996
exceeded $100,000 (the "Named Executive Officers"), and (iv) all the Company
directors and executive officers as a group. This table does not include shares
of Common Stock that may be purchased pursuant to options not exercisable within
60 days of April 16, 1997. All persons listed have sole voting and investment
power with respect to their shares unless otherwise indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS
------------------------ ----------------- --------
<S> <C> <C>
A. Francois Hinnen,(1)................................... 1,923,130 61.68%
Robert W. L. Veldman,.................................... -- --
David Anderson........................................... -- --
Jesse Shelmire, IV....................................... 14,000(2) *
Robert A. Shuey, III..................................... 20,000(3) *
Gregory A. Gaylor........................................ 125,000 4.00%
Louis van den Reek....................................... -- --
All directors and executive officers as a group (7
persons)............................................... 2,082,130 66.78%
</TABLE>
- ---------------
* Less than 1%
(1) The 1,923,130 shares beneficially owned by Mr. Hinnen are owned directly
through B.V. Wisteria, a Netherlands limited liability company, which
company is owned by Pantapharma B.V., which is owned by Mr. Hinnen.
Additionally, Mr. Hinnen holds the voting power over 22,000 shares through
an
7
<PAGE> 11
irrevocable proxy which expires on June 30, 1997. Mr. Hinnen's address is
Beekhuizenseweg 87, 6881 A G Velp, The Netherlands.
(2) Consists of warrants to purchase Common Stock, which warrants were issued in
connection with the Company's initial public offering (the "Representatives
Warrants"). In addition, First London Securities Corporation was issued
20,000 Representative Warrants, of which Mr. Shelmire disclaims beneficial
ownership.
(3) Consists of 20,000 Representative Warrants. In addition, National Securities
Corporation was issued 6,667 Representatives Warrants, of which Mr. Shuey
disclaims beneficial ownership.
LITIGATION
EuroMed, Inc. has filed two separate lawsuits against one of its directors,
Gregory Alan Gaylor. The first, Case No. A366523, was filed against Mr. Gaylor
and Mr. Robert Jansonius, a former director of EuroMed, in the State District
Court of Clark County, Nevada on November 15, 1996. In the suit, the Company
alleges that Mr. Gaylor acted improperly by diverting Company funds to improper
uses, representing himself as having managerial authority over Company affairs,
and making untrue statements regarding Company business. The Company seeks
temporary and permanent injunctive relief prohibiting Mr. Gaylor from taking
certain actions, and the Court has granted a temporary restraining order and has
signed an order granting a preliminary injunction in the Company's favor. The
Company is in the process of negotiating a settlement agreement with Mr.
Jansonius.
The second lawsuit against Mr. Gaylor was initiated on February 18, 1997 in
Dallas, Texas in the United States District Court for the Northern District of
Texas, and bears Civil Action No. 3-97CV0322-H. The lawsuit alleges that Mr.
Gaylor violated Section 13(d) of the Securities Exchange Act of 1934, as
amended, by failing to make necessary federal securities law filings upon his
acquisition of more than a 5% beneficial interest in the Common Stock. In
addition, the Company has requested injunctive relief and damages resulting from
Mr. Gaylor's alleged disparagement of the Company and Mr. Gaylor's alleged
interference with the Company's operations arising from his communications with
the Company's investors, customers, stockholders and accountants.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid during the Company's last completed fiscal year to the Company's Chief
Executive Officer and each of the Company's executive officers (other than the
Chief Executive Officer) whose total annual salary and bonuses earned during the
fiscal year ended December 31, 1996, exceeded $100,000:
MANAGEMENT COMPENSATION AND TRANSACTIONS
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------------------- ----------------------------
SECURITIES
UNDERLYING
OTHER OPTIONS/ ALL OTHER
NAME/TITLE YEAR SALARY($) BONUS($) COMPENSATION($) SARS(#) COMPENSATION($)
---------- ---- --------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
A. Francois Hinnen(1) 1996 $125,000 -- -- -- --
1995 $125,000 -- -- -- --
</TABLE>
- ---------------
(1) Mr. Hinnen contracts his services to Confedera and Galenica through
Pantapharma B.V. See "Employment Agreements."
8
<PAGE> 12
COMPENSATION OF DIRECTORS
The Company pays $3,500 per quarter to its directors who are not employees
or affiliates of the Company ("Independent Directors"). In addition, Independent
Directors may receive options to purchase Common Stock under the Company's 1995
Long-Term Incentive Plan.
EMPLOYMENT AGREEMENTS
Mr. Hinnen provides his services to Confedera B.V., a wholly-owned
subsidiary of the Company ("Confedera"), through a management agreement ("Hinnen
I Agreement") between Confedera and Pantapharma B.V., a Netherlands private
limited liability company ("Pantapharma"). Pursuant to the Hinnen I Agreement,
Pantapharma has agreed to fulfill the duties assigned to a director of Confedera
for a period commencing on January 1, 1995 through December 31, 1999, for which
Confedera has agreed to pay Pantapharma a management fee of approximately
$62,000, excluding sales tax, subject to review annually (with the understanding
that the management fee shall be annually increased by a percentage equal to the
price index figure for family consumption as determined by the Central Bureau of
Statistics of The Netherlands). In addition, Confedera has agreed to reimburse
Pantapharma for all business expenses incurred by Pantapharma for acting, in
such capacity, including, an automobile allowance of approximately $.37 per
kilometer. The Hinnen I Agreement is terminable by either party on at least one
year prior written notice. In the event Confedera terminates the Hinnen I
Agreement prior to the expiration of the term without cause (with cause being
defined as: (i) failure by Pantapharma to fulfill its duties and obligations
under the Hinnen I Agreement; (ii) Pantapharma has been adjudicated bankrupt or
has been granted suspension of payment; or (iii) Pantapharma for a continuous
period of thirteen weeks or more has not placed any staff at the disposal of
Confedera for the execution of the Hinnen I Agreement), Pantapharma shall be
entitled to continue to receive the management fee for the remainder of the
term. In the event Pantapharma is unable to fulfill its duties and obligations
under the Hinnen I Agreement for any reason, Pantapharma shall be entitled to
receive the management fee for one-year thereafter.
Mr. Hinnen provides his services to Galenica B.V., a wholly-owned
subsidiary of the Company ("Galenica"), through a management agreement ("Hinnen
II Agreement") between Galenica and Pantapharma. Pursuant to the Hinnen II
Agreement, Pantapharma has agreed to fulfill the duties assigned to a director
of Galenica for a period commencing on January 1, 1995 through December 31,
1999, for which Galenica has agreed to pay Pantapharma a management fee of
approximately $62,000, excluding sales tax, subject to review annually (with the
understanding that the management fee shall be annually increased by a
percentage equal to the price index figure for family consumption as determined
by the Central Bureau of Statistics of The Netherlands). In addition, Galenica
has agreed to reimburse Pantapharma for all business expenses incurred by
Pantapharma for acting in such capacity, including an automobile allowance of
approximately $.37 per kilometer. The Hinnen II Agreement is terminable by
either party on at least one-year prior written notice. In the event Galenica
terminates the Hinnen II Agreement prior to the expiration of the term without
cause (with cause being defined as: (i) failure by Pantapharma to fulfill its
duties and obligations under the Hinnen II Agreement; (ii) Pantapharma has been
adjudicated bankrupt or has been granted suspension of payment; or (iii)
Pantapharma for a continuous period of thirteen weeks or more has not placed any
staff at the disposal of Galenica for the execution of the Hinnen II Agreement),
Pantapharma shall be entitled to continue to receive the management fee for the
remainder of the term. In the event Pantapharma is unable to fulfill its duties
and obligations under the Hinnen II Agreement for any reason, Pantapharma shall
be entitled to receive the management fee for one-year thereafter.
David Anderson provides his services to EuroMed through a management
agreement between EuroMed and the Anderson Group, a sole proprietorship. This
contractual relationship states that Mr. Anderson will be reimbursed for his
Company related expenses and a $10,000 per month management fee. The term of
this contract is for six months beginning February 15, 1996.
Robert W.L. Veldman is supplying his services to the Company through a
management contract with Beheer-en Beleggingsmaatschappij File B.V. ("Management
Company"). His contract specifies that he will be the managing director of
EuroMed Europe and its subsidiaries. Mr. Veldman is considered an employee of
9
<PAGE> 13
the Management Company and not of EuroMed. Mr. Veldman's compensation shall be
200,000 Dutch gilders per year (approximately $100,000) for all work done for
the Company. He is also reimbursed 3,000 Dutch gilders (approximately $1,580)
per month for expenses incurred on behalf of the Company. EuroMed Europe is to
pay these amounts in 12 monthly payments upon invoicing by the Management
Company over the term of this contract. The term of the management contract is
one year from January 1, 1997 to December 31, 1997, and may be extended upon
agreement of both parties. The management contract shall terminate if (i)
EuroMed Europe files bankruptcy; (ii) a suspension of payment to the Management
Company occurs; (iii) Mr. Veldman dies; or (iv) Mr. Veldman is ill or unable to
work for 90 consecutive days.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The Compensation Committee
presently consists of one member, Mr. Shuey, who is an independent, nonemployee
director. The Compensation Committee is committed to a strong, positive link
between business, performance and strategic goals, and compensation and benefit
programs.
OVERALL EXECUTIVE COMPENSATION POLICY
The Company's compensation policy is designed to support the overall
objective of enhancing value for the Company's stockholders by:
- Attracting, developing, rewarding and retaining highly qualified and
productive individuals.
- Relating compensation to both Company and individual performance.
- Ensuring compensation levels that are externally competitive and
internally equitable.
- Encouraging executive stock ownership to enhance a mutuality of interest
with other stockholders.
The following is a description of the elements of the Company's executive
compensation and how each relates to the objectives and policy outlined above.
Base Salary
The Committee reviews each executive officer's salary annually. In
determining appropriate salary levels, the Committee considers individual
performance, internal equity, as well as pay practices of other companies
relating to executives of similar responsibility.
By design, the Committee strives to set executives' salaries at competitive
market levels. The Committee believes maximum performance can be encouraged
through the use of appropriate incentive programs. The Company's longterm
compensation philosophy is that long-term incentives should be related to
improvement in long-term stockholder value, thereby creating a mutuality of
interest with stockholders. In furtherance of this objective, the Company
intends to award to its executive officers stock options. Stock options
encourage and reward effective management that results in long-term corporate
financial success, as measured by stock price appreciation.
RATIONALE FOR CEO COMPENSATION
Mr. Hinnen served as Chief Executive Officer of the Company from November
18, 1995 to October 31, 1996. His compensation package was designed to encourage
short and long-term performance in line with the interests of the Company's
stockholders. Mr. Hinnen's large stock ownership percentage as described
elsewhere herein was a substantial incentive to perform in such a way to enhance
stockholders' interest and returns. His base pay was $125,000 for 1995 and
$125,000 for 1996. The Committee believes Mr. Hinnen's total compensation was
competitive in the external marketplace and reflective of Company and individual
performance. The factors which the Committee considered in determining Mr.
Hinnen's base salary for 1996 were those mentioned above for other executive
officers. Mr. Hinnen was not paid an incentive or granted any options under the
Company's 1995 Long-Term Incentive Plan.
10
<PAGE> 14
Mr. Robert Jansonius, a former director of the Company, and Mr. Shuey
served as temporary Co-Chief Executive Officers of the Company from October 31,
1996 to, in the case of Mr. Jansonius, December 5, 1996, and in the case of Mr.
Shuey, February 28, 1997. Messrs. Shuey and Jansonius were not compensated for
serving in such capacities, but were reimbursed for certain expenses incurred in
connection therewith.
The Compensation Committee Report on Executive Compensation shall not be
deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933,
as amended or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
This report is submitted by the sole member of the Compensation Committee
as of the end of the 1996 fiscal year.
Robert A. Shuey, III
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock from March 19, 1996 (the
date of the Company's initial public offering) through December 31, 1996, with
the cumulative total return on the indices. The comparison assumes $100 was
invested immediately prior to such period in Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends. The Company's
classification category is SIC number 512. Dates on the following chart
represent the last day of the indicated fiscal year. The Company paid no
dividends during such period.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
<TABLE>
<CAPTION>
MEASUREMENT PERIOD EUROMED, INC.
(FISCAL YEAR COVERED) . INDUSTRY INDEX BROAD MARKET
<S> <C> <C> <C>
3/31/96 100.00 100.00 100.00
6/31/96 086.79 104.42 104.49
9/30/96 067.92 113.27 107.72
12/31/96 009.43 118.73 116.70
</TABLE>
11
<PAGE> 15
CERTAIN BUSINESS RELATIONSHIPS
Confedera has had a business relationship with International Procurement
Agency B.V. ("IPA"), a Netherlands based development agency procurer for the
export of pharmaceutical, since July 1994 and entered into a Cooperation
Agreement with IPA on July 10, 1995. Under the Cooperation Agreement, IPA is
primarily responsible for the financial, administrative and logistical
activities concerning the sale of pharmaceutical products and medical consumer
goods and Confedera is responsible for purchasing the pharmaceutical products
and medical consumer goods, quality control and the legal documentation
pertaining thereto. The Cooperation Agreement further provides that (i) the
parties will equally split the profits and losses of their activities, except
that Confedera will receive 66% of the profits (and assume the same percentage
of the losses) for customers located by Confedera, and (ii) as long as
Confedera's prices for goods are competitive, IPA will purchase pharmaceutical
and medical consumer goods exclusively from Confedera, although Confedera shall
be entitled to sell the pharmaceutical and medical consumer goods on a
non-exclusive basis. Mr. Hinnen owns approximately 33% of the capital stock of
Gentrade B.V., which owns 100% of the capital stock of IPA. Mr. Hinnen had
contracted with Gentrade B.V. to acquire an additional 32% of the capital stock
of the Company on or before June 1, 1996, under certain conditions. These
conditions were not met at that time, therefore, Mr. Hinnen did not acquire this
percentage. Further, Mr. Hinnen has a continuing option to purchase another 35%
of Gentrade B.V. if offered by the owner of this stock. The Company believes
that all transactions between IPA and Confedera have been, and will be, on an
arms-length basis.
Mr. Hinnen is the sole owner of the Rhedense Apotheek, a pharmacy located
in Rheden, The Netherlands. In 1994, 1995 and 1996, Rhedense Apotheek purchased
an aggregate of $1,096,000, $1,492,000 and $1,365,941, respectively, of
pharmaceutical products from Galenica. The Company believes that all
transactions between Rhedense Apotheek and Galenica have been, and will be, on
an arms-length basis.
Mr. Hinnen's brother is the sole owner of the Apotheek Neede, a pharmacy
located in Neede, The Netherlands. In 1994, 1995 and 1996, Apotheek Neede
purchased an aggregate of approximately $700,000, $994,000 and $1,358,683,
respectively, of pharmaceutical products from Galenica. The Company believes
that all transactions between Apotheek Neede and Galenica have been, and will
be, on an arms-length basis.
Mr. Hinnen's wife is the sole owner of Ariano Voorthuizen Beheer B.V.
("AVP"). On September 1, 1993, Galenica borrowed approximately $219,000 from AVP
("AVP Loan"). Interest on the AVP Loan was equal to the promissory note interest
rate of Nederlandsche Bank N.V., plus 2%. The remaining principal balance of,
and accrued but unpaid interest on, the AVP Loan was paid in full by Galenica in
July 1995.
Pursuant to a loan agreement dated February 1, 1995 between Galenica and
Wisteria ("Wisteria Agreement"), of which Mr. Hinnen is the sole equity owner,
Galenica borrowed approximately $421,000 from Wisteria. As of December 31, 1996,
the principal balance of this loan had been paid in full.
Since 1991, Pantapharma and Confedera have loaned or advanced money to each
other on a "when needed", and "if available" basis. As of December 31, 1995,
Confedera owed Pantapharma approximately $10,000 which has been since paid in
full. Following the pay-off of the outstanding loan balance, Pantapharma and
Confedera agreed to immediately discontinue such loan arrangement. As a
condition to an amendment to the loan agreement between Confedera, Galenica and
Bank MeesPierson, N.V. on November 9, 1995, Pantapharma agreed to loan to
Confedera approximately $125,000.
In February 1997, EuroMed Europe entered into a purchase agreement with
Pantapharma, whereby EuroMed Europe purchased from Pantapharma all of the
outstanding capital stock of Galenica Belgium, S.A., effective January 1, 1996.
It is the policy of the Company that any future transactions with
affiliated individuals or entities will be on terms no less favorable to the
Company than are reasonably available from unrelated third parties, and any such
affiliated transactions will require the approval of a majority of the
independent directors.
12
<PAGE> 16
SECTION 16 REQUIREMENTS
Section 16(a) of the Exchange Act, requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the "SEC").
Such persons are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it with
respect to fiscal 1996, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
officers, directors and persons who own more than 10% of a registered class of
the Company's equity securities have been complied with, except that one Form 5
was filed to report two late Form 4 transactions for Mr. Hinnen, the late Form 3
filing for Wisteria, the direct owner of shares held indirectly by Pantapharma,
which is owned by Mr. Hinnen, and eight late Form 4 transactions for Wisteria
and Pantapharma. Additionally, Louis van den Reek failed to file a Form 3.
STOCKHOLDER PROPOSALS
Stockholders may submit proposals on matters appropriate for stockholder
action at subsequent annual meetings of the Company consistent with Rule 14a-8
promulgated under the Exchange Act. For such proposals to be considered in the
Proxy Statement and Proxy relating to the 1998 Annual Meeting of Stockholders,
such proposals must be received by the Company, Attention: Secretary, at the
address set forth on the first page of this Proxy Statement, no later than [NOT
LESS THAN 120 CALENDAR DAYS IN ADVANCE OF DATE OF THE COMPANY'S PROXY STATEMENT
RELEASED IN CONNECTION WITH THE PREVIOUS YEAR'S ANNUAL MEETING], in order to be
included in the Company's proxy materials and form of proxy relating to that
meeting. Stockholder proposals must also be otherwise eligible for inclusion.
OTHER BUSINESS
The Company does not intend to bring any business before the Meeting other
than that described herein and at this date the Company has not been informed of
any matters that may be presented at the Meeting by others; however, if any
other matters properly come before the Meeting or any adjournment thereof, it is
intended that the persons named in the accompanying Proxy will vote pursuant to
such Proxy in accordance with their best judgment on such matters.
MISCELLANEOUS
All costs of solicitation of Proxies will be borne by the Company. In
addition to solicitation by mail, the officers and employees of the Company may
solicit Proxies by telephone or personally, without additional compensation. The
Company may also make arrangements with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation materials to the
beneficial owners of shares of Common Stock held of record by such persons, and
the Company may reimburse them for their out-of-pocket expenses incurred in
connection therewith. The Company has engaged American Stock Transfer & Trust
Company as proxy solicitor for approximately $1,500.
The Annual Report to Stockholders of the Company, including financial
statements for the fiscal year ended December 31, 1996 accompanies this Proxy
Statement. The Annual Report is not to be deemed part of this Proxy Statement.
13
<PAGE> 17
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES, BUT NOT INCLUDING EXHIBITS,
WILL BE FURNISHED AT NO CHARGE TO EACH PERSON TO WHOM A PROXY STATEMENT IS
DELIVERED UPON THE WRITTEN REQUEST OF SUCH PERSON ADDRESSED TO EUROMED, INC.,
ATTN: ROBERT W.L. VELDMAN, WILHELMINAKANAAL NOORD 6, NL 4902VR OOSTERHOUT, THE
NETHERLANDS.
By Order of the Board of Directors,
Richard F. Dahlson
Secretary
Dallas, Texas
April 30, 1997
14
<PAGE> 18
APPENDIX A
CONFIDENTIAL
The Management of
Euromed Europe B.V.
Wilhelminakanaal-Noord 6
4902 VR OOSTERHOUT
The Management of
Houdstermaatschappij(Holding Company) Singultus B.V.i.a.
Bevelandseweg 102-110
1703 AX HEERHUGOWAARD
Amsterdam, April 16, 1997
001LV/ED
RE: FAIR VALUE ESTIMATE PLURIPHARM INTERNATIONAL B.V.
Gentlemen:
We received your written request to submit a fair value estimate regarding
the acquisition price agreed upon during the negotiations in order to acquire
the Pluripharm International B.V. shares as indicated in the April 3, 1997
agreement. Enclosed we are sending you our letter regarding the aforementioned
fair value estimate with regard to the sale of the Pluripharm International B.V.
shares by Mutarestes B.V.
We have based our analysis on the information which was part of the
enclosure sent with this writing as well as verbal information obtained from
management regarding the state of affairs in Pluripharm International B.V. for
the current fiscal year.
1. INTRODUCTION
Effective July 5, 1996 Euromed Europe B.V. acquired the shares from
Mutarestes B.V. Mutarestes B.V. holds the shares of Pluripharm International
B.V. who in turn owns the shares of B.V. Financieringsmaatschappij de Nieuwe
Wereld. Both Pluripharm International B.V. and B.V. Financieringsmaatschappij de
Nieuwe Wereld are wholesalers in pharmaceutical products. Effective July 1,
1996, Euromed Europe B.V. is entitled to Mutarestes B.V.'s profits and those
of its participation.
The 1996 annual report of Mutarestes B.V. which includes the consolidated
annual report for 1996, has been compiled on March 17, 1997 and an unqualified
auditors' opinion of the same date has been issued by Deloitte & Touche
C.P.A.'s. The annual report for 1996 shows a shareholders' equity of $1,388,000
and Net Earnings of $1,260,000.
As of the end of 1996, negotiations have been taking place between Euromed
Europe B.V. and Mutarestes B.V. on the one hand, and Singultus B.V.i.o. Holding
Company on the other, regarding the sale of Mutarestes B.V.'s participation in
Pluripharm International B.V. and B.V. Financieringsmaatschappij de Nieuwe
Wereld. The negotiations resulted in an agreement on April 3, 1997 whereby the
Pluripharm International B.V. shares will be sold for a price of $2,600,000.
Effective January 1, 1997, Pluripharm International B.V.'s results from
pharmaceutical activities are for the account and the risk of Singultus B.V.i.o.
Holding Company.
2. MARKET DEVELOPMENTS
As of June 1, 1996 government measures regarding maximum pricing for
medication, referred to as the "Price Law", have gone into effect. The objective
of this legislation is to bring prices for pharmaceutical products to the same
level as those of the member states within the EC. As a result of this
legislation the gross profit margin for wholesalers in pharmaceutical products
has declined.
A-1
<PAGE> 19
As it appears from the Pluripharm 1996 profit analysis survey, the gross
profit margin of approximately 22% for the first half of 1996 declined to
approximately 17.5% in the second half. A drop of 4.5% in absolute percentage
basis points (in relative terms 20%). Only to a limited degree are wholesalers
again able to expand their gross profit margin. Expansion is only feasible
through price negotiations with pharmaceutical suppliers. From the Pluripharm
1997 sales analysis it appears that the gross profit margin for the first
quarter of 1997 is 18.24%.
According to management it is not excluded that the government will
introduce further pricing limits which may put additional pressure on margins
for the wholesale industry. Management feels that the chances to structurally
improve its gross profit margin are limited. They are rather aware that pressure
from suppliers will set a trend to further reduce gross profit margins.
3. FINANCIAL POSITION OF PLURIPHARM INTERNATIONAL
From the enclosed consolidated financial report ending December 31, 1996,
Stockholders' Equity is $929,887. Net Earnings for 1996 amounted to $1,254,643.
The consolidated report has been compiled in accordance with General Accepted
Accounting Principles. The same principles have been used relative to previous
years.
The survey of Pluripharm's 1996 results analysis has slightly different
amounts as compared to the consolidated survey for 1996. The reason for the
variance is due to the slightly different presentation for extraordinary income
(royalties/market information), client discounts on sales and suppliers'
discounts on purchases.
Interim figures for the period ending March 31, 1997 show a stockholders'
equity of $929,887 to be increased by 1997's first quarter Gross Earnings of
$97,363, which results in a net amount of $63,378. The drop in earnings in the
first quarter is especially due to lower sales, as shown in Pluripharm's 1997
earnings analysis survey.
In comparison to the 1996 fourth quarter, sales declined by $1,744,000 in
rounded off figures or 18%. Lower sales translate into a lower gross profit of
approximately $317,000, based on the realized gross profit margin of 18.24%.
According to management the number of pharmacies which are Pluripharm
International B.V.'s clients, dropped from 60 to 45.
Expenses for the first quarter of 1997 are relatively slightly higher as
compared to previous quarters. This is due to annual expenses on the one hand,
such as auditing expenses by Deloitte & Touche, lawyers' fees by Stibbe Simont
Monhan Duhot as well as lower financial income from a lower payout of sales
bonuses to clients. Because of the change in policy with regard to deliveries of
client orders, transportation expenses increased structurally.
The cash position of the corporation has declined by DFL 5 million for the
period ending March 1997 as compared to December 31, 1996. The reduction is a
result of the partial payment of current accounts to Mutarested B.V. ($500,000),
reduction in Accounts Payable of $239,000, as well as payment of sales bonuses
for 1996 of $2,551,000. Simultaneously, demand for Cash and Cash Equivalents
increased due to an increase in Accounts Receivable and Inventories. These items
have been financed from taxes payable, in particular corporate taxes. The
corporate tax payable for 1995 and 1996, approximately $.8 million must be
settled early June 1997. In order to pay this amount, available bank credits
will have to be used.
4. OUTLOOK 1997
From the trend in sales, according to the 1996 Pluripharm results, it may
be assumed that average sales per quarter will show a variance of $.25 million,
on average sales of $9.3 million. The margin in the second half was 17.65% on
average.
Sales for the first quarter of 1997 amounts to $7.6 million whereby monthly
sales show a downward trend of $2.8 million to $2.5 million. Assuming the
possibility to arrest the declining trend to establish a level of
A-2
<PAGE> 20
$2.5 million a month, sales for 1997 can be projected at $30 million. Versus
1996 this is a decline of 20.6%. A continuing declining trend will result in a
much lower level of sales.
Gross profit margin before discounts amounts to approximately 18%,
resulting in a gross profit of $5.5 million, assuming a sales level of $30
million. An amount of approximately $.6 million per quarter for discounts paid
to clients and discounts received from suppliers must be taken into account. For
expense and interest coverage an amount of approximately DFL 6 million has been
set aside.
Expenses for the first quarter amounted to $.7 million. On an annual basis
a level of expenses of $2.5-2.8 million must be taken into account. Interest
expenses, assuming demands on cash and cash equivalents of approximately
$1.1-2.2 million on an annual basis, without taking into account financing
expenses on the acquisition price of $2.6 million or stockholders' equity of
approximately $.9 million, amount to approximately $.1 million.
Based on the current information and assumptions known, profit for 1997
before taxes may be projected at $.7 million. On an after-tax basis, this
translates into a net profit of approximately $440,000. At a lower level of
sales of $29 million, net profit will amount to approximately $250,000.
We should like to note that actual results for 1997 could deviate from
current projections. However, it has not appeared to us that the current
projections do not offer a reasonable basis for the projections made.
5. VALUATION OF PLURIPHARM INTERNATIONAL B.V.
Assuming sales before sales bonuses of $30 million at a lasting lower gross
profit margin of approximately 18%, net profit amounts to approximately
$440,000. Assuming a ratio of 6 times net earnings, the value of Pluripharm
International B.V. is $2.6 million.
On the other hand one can discuss to what extent lasting excess profit can
be realized assuming an acquisition price of $26 million for the shares. If the
acquisition is being financed through borrowed money, net earnings should be
lowered by the financing expenses. In the case of a medium-term loan, an
interest expense of approximately 7% on the amount borrowed or approximately
$185,000 before taxes must be taken into consideration.
Assuming complete deduction of the interest expense, a drop in net profit
by $120,000 to $321,000 remains. Net profit of approximately $321,000 versus an
investment of $26 million translates into a return on investment of 12%. This is
not an unusual business requirement.
Considering the declining trend in sales these percentages could come out
somewhat lower. An additional problem for the corporation is the change in
management, which could put client relations with the company in a different
perspective. A change in management is a signal to the competition that there is
an opportunity to take over clients. For the new management this could mean
client relations can only be solidified by making concessions in the area of
discounts and/or financing facilities. Both trends have a tendency to put
pressure on corporate profits.
6. OPINION
In light of the analysis of available figures for 1996 and the first
quarter of 1997 respectively, as well as having been made aware of the
projections as described by the management of Pluripharm International B.V. and
its advisors, we are of the opinion that the price of $26 million (four million
eight hundred thousand Dutch Guilders) has been based on business and rational
considerations and has been agreed upon by both parties after ample negotiation.
We are therefore of the opinion that the price mentioned above represents a
fair value for the Pluripharm International B.V. shares.
A-3
<PAGE> 21
We are at your disposal for further clarification.
Very sincerely,
PAARDEKOOPER & HOFFMAN
Certified Public Accountants
Drs. E.C. Denekamp RA (CA)
ENCLOSURES
1. Share Purchase Agreement of April 3, 1997 (share purchase agreement
PS/140207/008)
2. 1996 Consolidated Report of Mutarestes B.V. with Auditors' Opinion
3. Pluripharm International B.V.'s interim figures for the period ending March
31, 1997
4. Survey of Financial Analysis for 1996
5. Survey of Financial Analysis for 1997
A-4
<PAGE> 22
EUROMED, INC.
ANNUAL MEETING OF STOCKHOLDERS
COMMON STOCK
The undersigned hereby appoints David Anderson and Richard F. Dahlson,
each with power to act without the other and with full power of substitution, as
Proxies to represent and to vote, as designated on the reverse, all Common Stock
of EuroMed, Inc. owned by the undersigned, at the Annual Meeting of Stockholders
to be held at Grosvenor House London, 86 Park Lane, London WIA 3AA, England on
Monday, May 26, 1997, at 10:00 a.m. local time, upon such business as may
properly come before the meeting or any adjournment thereof including the
following:
(CONTINUED, AND TO BE SIGNED AND DATED ON REVERSE SIDE)
<PAGE> 23
- --------------------------------------------------------------------------------
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
FOR ALL NOMINEES NOMINEES: A. Francois Hinnen
LISTED AT RIGHT WITHHELD AUTHORITY Robert W. L. Veldman
(EXCEPT AS MARKED TO THE TO VOTE FOR ALL David Anderson
CONTRARY BELOW) NOMINEES LISTED AT RIGHT Jesse Shelmire, IV
Robert A. Shuey, III
</TABLE>
1. Election [ ] [ ]
of Directors
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEES NAME IN THE SPACE BELOW:
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of the sale of Pluripharm [ ] [ ] [ ]
International B.V.
3. Ratification of the selection of [ ] [ ] [ ]
Killman, Murrell & Company, P.C.
as independent public accountants
to audit the Company's financial
statements for the 1997 fiscal
year.
4. In their discretion on any other
matter that may properly come
before the meeting or any
adjournment thereof.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no specific direction is given, this proxy
will be voted (i) for the election of the nominees for director, (ii) for
approval of the sale of Pluripharm International B.V., (iii) for the
ratification of the selection of Killman, Murrell & Company, P.C. as independent
public accountants to audit the Company's financial statements for the 1997
fiscal year and (iv) at the discretion of the proxy holders with regard to any
other matter that may properly come before the meeting or any adjournment
thereof.
This proxy may be revoked prior to the exercise of the powers conferred by the
proxy.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE DATE, SIGN EXACTLY AS SHOWN HEREON AND MAIL PROMPTLY THIS PROXY IN THE
ENCLOSED ENVELOPE.
Signature
----------------------------------------------------------------------
DATE , 1997
- ----------------------------------------------------- -----------------
(SIGNATURE IF HELD JOINTLY)
NOTE: Please date, sign exactly as shown hereon and mail promptly this proxy in
the enclosed envelope. When there is more than one owner, each should
sign. When signing as an attorney, administrator, executor, guardian or
trustee, please add your title as such. If executed by a corporation, the
proxy should be signed by a duly authorized officer. If executed by a
partnership, please sign in the partnership name by an authorized person.
