<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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
4HEALTH, 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)(1)
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>
4HEALTH, INC.
5485 Conestoga Court
Boulder, CO 80301
(303)546-6306
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 6, 1997
Dear Shareholders of 4Health, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of 4Health, Inc.,
a Utah corporation (the "Company"), will be held at the Company headquarters
located at 5485 Conestoga Court, Boulder, Colorado on Friday, June 6, 1997 at
3:00 p.m.
The purpose of the meeting is to accomplish the following:
1. Elect one director of the Company for a three year term.
2. To ratify and approve the selection of independent public accountants
for the current fiscal year.
3. Transact such other business as may properly come before the meeting
or any adjournments thereof.
Only holders of record of the Company's common stock as of the close of business
on April 18, 1997 will be entitled to vote at the meeting, or at any adjournment
or postponement thereof.
ALL SHAREHOLDERS, WHETHER OR NOT THEY EXPECT TO ATTEND THE ANNUAL MEETING OF
SHAREHOLDERS IN PERSON, ARE URGED TO SIGN AND DATE THE ENCLOSED PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE. Any person giving a proxy has the power
to revoke it at any time by following the instructions provided in the Proxy
Statement. The giving of a proxy will not affect your right to vote in person
if you attend the Annual Meeting of Shareholders and give written notice of
revocation before the Proxy is voted.
By order of the Board of Directors,
R. Lindsey Duncan
Chairman of the Board
Boulder, Colorado
April 23, 1997
<PAGE>
4HEALTH, INC.
5485 Conestoga Court
Boulder, CO 80301
(303)546-6306
April 18, 1997
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of 4Health, Inc., a Utah corporation (the
"Company"), for use at the Annual Meeting of Shareholders to be held Friday,
June 6, 1997 at 3:00 p.m. local time, or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting of Shareholders. The Annual Meeting will be held at the
Company's headquarters at 5485 Conestoga Court, Boulder, Colorado.
These proxy solicitation materials are being mailed on or about April 25,
1997, together with the Company's 1996 Annual Report to the Shareholders, to all
shareholders of record as of the close of business on April 18, 1997, the record
date, who are entitled to vote at the meeting. Each share held on the record
date entitles the registered holder to one vote at the Annual Meeting. As of
March 21, 1997 there were 11,382,801 shares of the Company's common stock, par
value $.01 ("Common Stock"), outstanding.
If the form of Proxy accompanying this Proxy Statement is properly
executed, dated and returned to the Company, the shares represented by the Proxy
will be voted at the Annual Meeting of Shareholders in accordance with the
shareholder(s) directions. If the Proxy is signed and returned without any
directions given, the shares will be voted in accordance with the
recommendations of the Board of Directors as described in this Proxy Statement.
Any shareholder giving a Proxy may revoke the Proxy, at any time before it is
voted at the meeting, by delivering a written notice of revocation to the
Secretary of the Company, by submitting a subsequently executed and dated Proxy
or by attending the meeting and voting in person. Attendance at the Annual
Meeting by a shareholder who has given a Proxy will not have the effect of
revoking it unless the shareholder gives written notice of revocation thereof
before the Proxy is voted. The Chairman of the Annual Meeting will announce the
closing of the polls during the meeting, and all Proxies must be received prior
to the closing of the polls in order to be counted.
The costs of the solicitation of Proxies will be borne by the Company. In
addition to the use of the mails, Proxies may be solicited personally or by
telephone or facsimile by a few regular employees of the Company without
additional compensation. The Company may also request banks and brokers to
solicit their customer(s) who have a beneficial interest in the Common Stock
registered in the name of nominees and will reimburse such banks and brokers for
their reasonable out-of-pocket expenses.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting of
Shareholders constitutes a quorum for the transaction of business.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Pursuant to the Company's Articles of Incorporation, as amended, the Board
of Directors is divided into three classes, the terms of which expire
successively over a three-year period. At each Annual Meeting of Shareholders,
successors to directors whose terms expire at the meeting shall be elected for
three-year terms. In 1996, the Board of Directors was constituted with seven
members, three of whom have since resigned. The terms of two such resigning
Class I directors ends at the Annual Meeting of Shareholders in 1997; the term
of the other resigning Class II director and Ms. Cheryl Wheeler ends at the
Annual Meeting of Shareholders in 1998; the terms of Messrs. R. Lindsey Duncan,
Todd Crosland and Rockwell Schutjer, Class III directors, ends at the Annual
Meeting of Shareholders in 1999, and until successors shall have been elected
and qualified.
The Board of Directors recommends that the shareholders elect the nominee
named below as a Class I director of the Company for a term expiring at the
Annual Meeting of Shareholders in 2000 and until his successor shall have been
elected and qualified. It is intended that the persons named as proxies in the
enclosed form of Proxy will vote the Proxies received by them for the election
of the nominee named below. The nominee is presently serving as an interim
director of the Company, appointed by the Board of Directors to fill a Class I
vacancy. The nominee has indicated a willingness to serve, but in case the
nominee is not a candidate at the Annual Meeting, for reasons not presently know
to the Company, the proxies named in the enclosed form of Proxy may vote for a
substitute nominee in their discretion.
Steven B. Beckman President, Achieve Communications, Inc.
Nominee
Term Expires: 2000 Age: 29
Mr. Steven B. Beckman is President of Achieve Communications, Inc., which
he founded in 1996 in Boulder, Colorado. From 1993 through 1996, Mr. Beckman
served as Vice President Sales and Marketing at 4health, Inc. (a predecessor
company) as well as being responsible for accounting and operations functions
from 1993 to 1995. Prior to joining 4health, Inc., Mr. Beckman's experience was
in sales and marketing functions. He received a bachelor of arts degree from
the University of California at Santa Barbara.
VOTE REQUIRED
The affirmative vote of a majority of the shares represented at the Annual
Meeting of Shareholders is required for the election of Mr. Beckman as a Class I
director. Abstentions and broker non-votes will not be included in determining
the number of votes cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE NOMINEE
The Board of Directors met 5 times during 1996 for regular Board of
Directors meetings. All directors attended more than 95% of the aggregate of
(i) the total number of meetings of the Board of Directors held while they were
members and (ii) the total number of meetings held by all Committees of the
Board of Directors on which they served as members. In addition, several
special telephonic meetings were held as needed to conduct normal corporate
business. The Board of Directors has three
3
<PAGE>
standing committees, the Audit Committee, the Compensation Committee, and the
Long-Term Stock Incentive Plan Administration Committee ("LTSIP Administration
Committee"). Currently, the Audit Committee and the LTSIP Administration
Committee are composed of Messrs. Crosland and Beckman. The Audit Committee met
once during 1996. Among other duties, the Audit Committee reviews the financial
performance of the Company, evaluates internal controls, and recommends
independent auditors. The LTSIP Administration Committee met throughout 1996 as
needed to grant stock options. The LTSIP Administration Committee is
responsible for overseeing the Company's Long-Term Stock Incentive Plan (the
"LTSIP") including, subject to the express terms of the LTSIP, making awards,
interpreting the LTSIP, amending and rescinding rules and other duties related
to the proper implementation of the LTSIP. The newly created Compensation
Committee is composed of Messrs. Duncan, Crosland, and Beckman. The
Compensation Committee met once in 1996. The primary responsibility of the
Compensation Committee is to establish and review the compensation policies of
the Company, including those for executives. The Company does not have a
nominating committee, the functions of such a committee being performed by the
Board of Directors as a whole.
The LTSIP provides that upon assuming office, each non-employee director
shall be granted a non-qualified option to acquire 5,000 shares of Common Stock
at an exercise price equal to 100% of the fair market value on the date of
grant. One-half of the grant shall become exercisable upon completion of one
year of service as a director and the remaining balance upon completion of two
years of service as a director. All options have a five year expiration term.
On April 1, 1997, Mr. Beckman received 5,000 options under this policy
exercisable at a price of $5.00 per share.
Directors do not receive compensation for attending meetings of the Board
of Directors. Directors are reimbursed for their reasonable travel and lodging
expenses incurred attending meetings.
CONTINUING DIRECTORS
The terms of the following directors of the Company do not expire at the
1997 Annual Meeting of the Shareholders. The following is provided for
informational purposes. All terms expire at the Annual Meeting in the year
indicated.
R. Lindsey Duncan Chairman of the Board, President, Chief Executive
Director since: 1993 Officer of the Company since 1993
Term Expires: 1999 Age: 34
Mr. Duncan is a nutritionist certified by the National Institute of
Nutritional Education. Since the mid-1980s, he has owned, operated, and been
the principal nutritionist of Home Nutrition Clinic, Santa Monica, California.
To date, Mr. Duncan has consulted with more than 10,000 clients, accumulating
over 30,000 hours of clinical time. His clients have included victims of
Chernobyl, as well as many of the world's leading music, film, and television
celebrities. In 1988, Mr. Duncan began formulating his own nutritional
supplements and in 1993, organized 4health, Inc. Mr. Duncan is a member of the
National Nutritional Foods Association, the American Herbal Products
Association, and the Herb Research Foundation and a finalist in Ernst & Young's
national "1996 Entrepreneur of the Year." Mr. Duncan makes numerous appearances
on prime time national and regional television and radio programs such as ABC,
CBS, NBC, CNN, CNBC, and more. He is regularly featured in national and
international magazines.
Cheryl Wheeler Secretary and Marketing Manager for the
Director since :1993 Company since 1993
Term Expires: 1998 Age: 36
4
<PAGE>
Ms. Wheeler, a marketing manager at the Company, coordinates Mr. Duncan's
industry seminars, speeches, and other public appearances and related marketing
activities. Ms. Wheeler is a nutritionist certified by the National Institute
of Nutritional Education. Before joining the Company, Ms. Wheeler was a
nutritionist, a professional stuntwoman, and martial arts expert.
Todd B. Crosland President of Rex Industries
Director since: 1996
Term Expires: 1999 Age: 37
Mr. Crosland, served a as an officer and a director of Surgical
Technologies, Inc. from December 1992, until its merger with 4Health, Inc.
Mr. Crosland is chairman of the board and president of Rex Industries, Inc.,
which operates a specialty metals fabrication business. Mr. Crosland
received a bachelor of science degree in business finance from the University
of Utah. Pursuant to the terms of the merger, Mr. Crosland was elected to
4Health's board of directors to serve a three year term.
Rockwell D. Schutjer Director of Surgical Technologies, a division
Director since: 1996 of the Company
Term Expires: 1999 Age: 51
Mr. Schutjer, co-founded Surgical Technologies, Inc. and served as a
director from 1989 until its merger with 4Health, Inc. Mr. Schutjer currently
serves as Director of Surgical Technologies, a division of 4Health, Inc. Mr.
Schutjer received his bachelor of science degree in business finance from the
University of Utah. Pursuant to the terms of the merger, Mr. Schutjer was
elected to 4Health's board of directors to serve a three year term. Mr.
Schutjer is Mr. Crosland's brother-in-law.
RELATED PARTY TRANSACTIONS
R. Lindsey Duncan, the majority shareholder, loaned the Company $200,000
during 1994 for the down payment required on the purchase of the corporate
headquarters building. The loan was unsecured, bore interest at 7.0% and was
due by March 31, 1997. The balance was paid in 1996. The Company also holds a
note from Todd B. Crosland, director of the Company, with an unpaid principal
balance of $250,000 bearing interest at 8%. The note and interest was
originally due January 31, 1997, however, the maturity date has been extended to
September 1, 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, executive
officers, directors and 10% shareholders of the Company are required to file
reports on Forms 3, 4 and 5 of their beneficial holdings and transactions in the
Company's Common Stock. During 1996, all such reports were filed in a timely
manner with the exception of the transactions listed below which were filed on a
delinquent Form 5 on April 8, 1997 by Rockwell D. Schutjer, Director and Officer
of the Company.
Transaction Amount of Acquisition or
Title of Security Date Shares Disposal Price
- ----------------- ----------- --------- --------------- ---------
Common Stock 10/31/96 1,000 Disposal $ 6.000
Common Stock 11/12/96 2,000 Disposal 5.625
Common Stock 11/13/96 3,000 Disposal 5.625
Common Stock 12/03/96 2,000 Disposal 5.625
Common Stock 12/03/96 5,000 Disposal 5.625
Amount of Securities
Beneficially Held
at December 31, 1996 61,862
5
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table includes information as of March 21, 1997 concerning
the beneficial ownership of the holdings of Common Stock of the Company by (i)
all persons who are known by the Company to hold five percent or more of the
outstanding shares of Common Stock of the Company, (ii) each of the directors of
the Company, (iii) each executive, and (iv) all directors and officers of the
Company as a group. Except as otherwise indicated, all shares are owned
directly, and the persons named in the table have sole voting and investing
power with respect to shares shown as beneficially owned by them.
Shares
Beneficially
Name and Address of Beneficial Owner Owned Percent
- ------------------------------------ ------------ -------
PRINCIPAL SHAREHOLDERS
R. Lindsey Duncan
5485 Conestoga Court
Boulder, CO 80301 6,169,153 (5) 51.6%
Rex Crosland
630 North 400 West
Salt Lake City, UT 84103 750,000 6.3%
DIRECTORS AND EXECUTIVE OFFICERS
R. Lindsey Duncan (1)(3) - - - - - - - -See Above- - - - - - -
Cheryl Wheeler (1)(4) 57,964 (5) *
Todd B. Crosland (1) 132,000 (5) 1.1%
Rockwell D. Schutjer (1)(4) 199,862 (5) 1.7%
Steven B. Beckman (1)(2) 0 *
Scott W. Lusk (4) 1,018 *
All officers and directors as a group
(6 people) 6,559,997 54.9%
- -------------------------
* Less than 1%
(1) Serves as a director of the Company.
(2) Was appointed by the Board as a director on April 1, 1997 to fill a vacancy
and has been nominated for reelection.
(3) Serves as an executive officer of the Company and appears in the Summary
Compensation table.
(4) Serves as an executive officer of the Company, but does not appear in the
Summary Compensation table pursuant to Regulation S-K, Item 402(a)(3).
(5) Includes the following number of shares which could be purchased under
stock options exercisable within 60 days from the date hereof: Mr. Duncan,
401,252 shares; Ms. Wheeler 27,964 shares; Mr. T. Crosland, 3,000 shares;
Mr. Schutjer, 141,500 shares; and all officers and directors as a group,
573,716 shares.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the year ending December 31, 1996, the cash
compensation paid by the Company, as well as certain other compensation paid or
accrued for the year, to R. Lindsey Duncan, the Company's President and Chief
Executive Officer. The only other executive to receive total cash compensation
exceeding $100,000 during 1996, was Richard B. Carlock. Mr. Carlock commenced
employment in July 1995 and resigned his position as Chief Financial Officer of
the Company on December 15, 1996.
SUMMARY COMPENSATION
<TABLE>
Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
-------------------------------------------------------------
Restricted Securities All
Stock Underlying LTIP Other
Award Options Payouts Comp-
Name and Position Year Salary Bonus Other ($) (#)(1) ($) ensation
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. Lindsey Duncan, 1996 $150,000 $0 $0 $0 331,034 0 $0
President and Chief 1995 84,023 0 0 0 105,329 0 0
Executive Officer 1994 27,023 0 0 0 0 0 0
Richard B. Carlock, 1996 109,439 0 0 0 11,285 0 0
Chief Financial
Officer
</TABLE>
(1) The number of shares has been adjusted to reflect post merger amounts.
OPTION GRANTS
The following table presents information with respect to the Chief
Executive Officer concerning the granting of options during 1996:
OPTION GRANTS IN 1996
<TABLE>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term
---------------------------------------------------------------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees Price ($) Expiration 5% 10%
Name Granted (1) (1) Per Share Date ($) ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. Lindsey Duncan 35,109 2.94% 3.32 4/20/00 32,204 (2) 71,271 (2)
R. Lindsey Duncan 35,109 2.94% 4.98 4/20/00 0 (2) 12,990 (2)
R. Lindsey Duncan 35,111 2.94% 5.82 4/20/00 0 (2) 0 (2)
R. Lindsey Duncan 331,034 27.75% 3.99 3/31/01 364,137 (3) 807,723 (3)
Richard B. Carlock(5) 25,079 2.10% 3.32 4/20/00 23,073 (2) 50,910 (2)
Richard B. Carlock(5) 25,079 2.10% 4.98 4/20/00 0 (2) 9,279 (2)
Richard B. Carlock(5) 25,077 2.10% 5.82 4/20/00 0 (2) 0 (2)
Richard B. Carlock(5) 11,285 .95% 3.99 4/25/01 12,414 (3) 27,535 (3)
</TABLE>
7
<PAGE>
(1) Reflects exchange of previously (unexercised) granted options which were
reissued as options under the new Long-Term Stock Incentive Plan.
(2) Stock was not publicly traded when these grants were made. Stock
appreciation calculated assuming the first vested exercise price of $3.32
per share reflected the current market price for the stock when these
options were granted.
(3) Stock was not publicly traded when this grant was made. Stock appreciation
calculated assuming the exercise price of $3.99 per share reflected the
current market price for the stock when the option was granted.
(4) Reflects all options currently held by the Chief Executive Officer.
(5) Mr. Carlock resigned his position as Chief Financial Officer of the Company
on December 15, 1996. All exercisable options have been exercised or
terminated as of April 18, 1997.
OPTION EXERCISES AND HOLDINGS
The following table presents information with respect to the Chief
Executive Officer concerning the exercise of options during 1996 and unexercised
options held as of December 31, 1996:
AGGREGATED OPTION EXERCISES AND YEAR END OPTION VALUES
<TABLE>
Number of Unexercised Value of Unexercised In-the-
Options at Money Options at
December 31, 1996 December 31, 1996
----------------------------------------------------------
Shares Value
Name Exercised(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. Lindsey Duncan 0 $ 0 366,143 70,220 $576,399 (1) $18,257 (1)
Richard B. Carlock(2) 25,079 73,481 (3) 11,285 50,156 17,040 (1) 0 (1)
</TABLE>
(1) Based on the closing market price of $5.50 per share for the Company's
Common Stock as of December 31, 1996.
(2) Mr. Carlock resigned his position as Chief Financial Officer of the Company
on December 15, 1996. All exercisable options have been exercised or
terminated as of April 18, 1997.
(3) Based on the closing market price of $6.25 per share for the Company's
Common Stock on October 24, 1996, the date of exercises.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
R. Lindsey Duncan, the President and Chief Executive Officer of the
Company, served on the Compensation Committee of the Board of Directors during
1996. Todd B. Crosland, a directors of the Company, is currently indebted to
the Company in the amount of $250,000. (See "Related Party Transactions"
herein.)
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has responsibility for
making recommendations regarding compensation policy for the Company, including
executives. The Compensation Committee's overall goal is to provide a strong
link among shareholder value, Company performance, and executive compensation.
An additional goal is to promote long-term growth and development for the
Company by attracting and retaining qualified and talented executives. The
following report shall not be deemed incorporated by reference into any filing
under the Securities Exchange Act of 1933 or the Securities Exchange Act of
1934.
8
<PAGE>
The Company uses various compensation surveys, including industry and
regional specific surveys, to develop its compensation strategy and plans. The
Compensation Committee also refers to such surveys for executive compensation,
including that of the Chief Executive Officer. Once comparable compensation is
identified, executive compensation is divided into base salary and bonus.
During 1996, the Company failed to achieve any of the performance targets
established for executive officers to receive bonuses, thus no bonuses were
paid. The Compensation Committee, in conjunction with the Company's Controller,
Director of Operations, and Director of Human Resources, is in the process of
evaluating organization-wide bonus programs. By the end of 1997, the
Compensation Committee plans to have in place a standardized bonus system which
will identify eligible employees, set performance targets, and establish bonus
payouts.
There is no set policy for adjusting base salary or bonuses subsequent to
initial employment. Such adjustments in the past have occurred due to changes
in job skills, performance, and competitive salary information.
The Company's current stock option plan includes executives, managers and
key employees. Stock options are granted periodically by the LTSIP
Administration Committee of the Board of Directors. The Long-Term Stock
Incentive Plan allows the grant of options, both incentive and non-qualified.
Historically, the LTSIP Administration Committee has granted non-qualified
options. For executives, the options are usually granted with one third vesting
after each year of service with the Company. Pricing of the options generally
begins at the fair market price on the date of grant for the options vested
after one year and increases $1.00 per share for each additional year of
service.
The compensation of Mr. Duncan, Chief Executive Officer of the Company, for
1996 is shown in the Summary Compensation table. The Compensation Committee
believes that Mr. Duncan's compensation adequately reflects his performance as
the Company's President and Chief Executive Officer.
The Compensation Committee has reviewed the Company's compensation plans
with regard to the deduction limitations under the Omnibus Budget Reconciliation
Act of 1993 (the "Act") and the final regulations interpreting the Act which
have recently been adopted by the Internal Revenue Service and the Department of
the Treasury. Based on this review, the Committee has determined that the
Company's LTSIP, as previously approved by shareholders, meets the requirements
for deductibility under the Act. The Committee believes that no tax deduction
will be lost as a result of Section 162(m) on compensation paid to Company
executives in 1996.
Submitted by the Company's Compensation Committee
R. Lindsey Duncan
Todd B. Crosland
Steven B. Beckman
STOCK PERFORMANCE
The graph below presents a comparison of the cumulative shareholder return
of the Company's Common Stock over the period July 17, 1996 to December 31, 1996
with the cumulative total return over the same period for The Nasdaq Stock
Market - U.S. Companies Total Return Index and a peer group represented by the
Nasdaq Pharmaceutical Stocks Total Return Index (SIC code 283). Both indexes
were prepared for Nasdaq by the Center for Research in Security Prices. The
graph below compares the
9
<PAGE>
cumulative total return of the Company's Common Stock over the July 17, 1996 to
December 31, 1996 period assuming a $100 investment on July 17, 1996 and
assuming reinvestment of all dividends. This graph shall not be deemed
incorporated by reference into any filing under the Securities Act of 1933 or
the Securities Exchange Act of 1934. (4Health's Common Stock commenced trading
on the Nasdaq National Market tier of The Nasdaq Stock Market under the stock
symbol HHHH on July 17, 1996. Prior to that date, the Company was known as
Surgical Technologies, Inc. with stock trading under the symbol SGTI. The prior
market performance history of Surgical has not been included herein because it
does not reflect the results of the merger or the changed nature of the
Company's business since the merger. The graph is based on daily total return
figures.)
STOCK PERFORMANCE
[GRAPH]
<TABLE>
---------------------------------------------------------------
MONTH END VALUES
- --------------------------------------------------------------------------------------------
7/17/96 8/30/96 9/30/96 10/31/96 11/29/96 12/31/96
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Company $ 100.00 $ 68.42 $ 78.95 $ 64.74 $ 57.90 $ 57.90
- --------------------------------------------------------------------------------------------
Nasdaq US Index 100.00 105.07 113.12 111.88 118.81 118.67
- --------------------------------------------------------------------------------------------
Nasdaq Pharmaceutical Index 100.00 106.24 113.67 108.56 106.95 110.05
- --------------------------------------------------------------------------------------------
</TABLE>
PROPOSAL 2
APPROVAL OF AUDITORS
Arthur Andersen LLP, independent public accountants, have been auditors for
the Company since the July 1996 reverse merger with Surgical Technologies, Inc.
Arthur Andersen LLP has been reappointed by the Board of Directors, upon
recommendation of the Audit Committee, as the Company's
10
<PAGE>
auditors for the current year and shareholder approval of the appointment is
requested. In the event that the appointment of Arthur Andersen LLP is not
approved by the shareholders, the Board of Directors will make another
appointment to be effective at the earliest feasible time.
A representative of Arthur Andersen LLP will be present at the Annual
Meeting of Shareholders. The representative will have an opportunity to make a
statement if he desires to do so and will be available to respond to appropriate
questions.
VOTE REQUIRED
The affirmative vote of a majority of the shares represented at the Annual
Meeting of Shareholders is required for the appointment of independent auditors.
Abstentions and broker non-votes will not be included in determining the number
of votes cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE APPOINTMENT OF ARTHUR ANDERSEN LLP
SHAREHOLDERS PROPOSALS
The rules of the Securities and Exchange Commission permit shareholders of
a company, after timely notice to the company, to present proposals for
shareholder action in the company's proxy statement where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action and are not properly omitted by company action in accordance with the
proxy rules. If any shareholder intends to present a proposal for consideration
at the 1998 Annual Meeting of Shareholders, such proposal must be received by
the Company on or before December 24, 1997 for inclusion in the Company's proxy
statement for such meeting.
OTHER MATTERS
The Board of Directors of the Company knows of no matters other than the
foregoing to be brought before the meeting. However, the enclosed Proxy gives
discretionary authority in the event that any additional matters should be
presented.
The Annual Report of the Company for the past year is enclosed herewith
and contains the Company's financial statements for the year ended December
31, 1996. A COPY OF FORM 10-K, THE ANNUAL REPORT FILED BY THE COMPANY WITH
THE SECURITIES AND EXCHANGE COMMISSION, WILL BE FURNISHED WITHOUT CHARGE TO
ANY SHAREHOLDER WHO REQUESTS IT IN WRITING FROM THE COMPANY AT THE ADDRESS
NOTED ON THE FIRST PAGE OF THIS PROXY STATEMENT.
By Order of the Board of Directors
R. Lindsey Duncan
Chairman of the Board
Dated:
April 23, 1997
11
<PAGE>
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF 4HEALTH, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 6, 1997
The undersigned hereby appoints R. Lindsey Duncan and Todd Crosland, and
either of them, attorneys and proxies, with full power of substitution, and
hereby authorizes them as proxyholders to represent and to vote, as designated
below, the common stock, $.01 par value, of 4Health, Inc. held of record by the
undersigned on April 18, 1997, at the Annual Meeting of Shareholders of the
Company to be held at the offices of the Company, located at 5485 Conestoga
Court, Boulder, Colorado on Friday, June 6, 1997, at 3:00 p.m., and any
adjournments thereof, on the matters set forth herein.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS
1. To elect one director:
Nominee: Steven B. Beckman
/ / "FOR" nominee listed above / / "WITHHOLD AUTHORITY" to vote for
nominee listed above
2. To ratify the appointment of Arthur Andersen LLP as independent auditors.
/ / "FOR" / / "AGAINST" / / "ABSTAIN"
The shares represented in this proxy card will be voted as directed above.
If no direction is given and the proxy card is validly executed, the shares will
be voted for all listed proposals. In their discretion, the proxyholders are
authorized to vote upon such other business as may properly come before the
meeting.
<PAGE>
Receipt is acknowledged of the Proxy Statement dated April 23, 1997.
I plan to attend the Annual Meeting of Shareholders / /
YES / / NO
PLEASE MARK, SIGN, DATE AND RETURN IMMEDIATELY.
Signature _______________________________________ Date ________________________
Print Name ______________________________________ Date ________________________
THIS PROXY MUST BE SIGNED AS NAME APPEARS HEREON. Executors, Administrators,
Trustees, etc. should give their full title as such. If the signer is a
corporation, please sign full corporate name by a duly authorized officer.
