<PAGE>
PROXY STATEMENT PURSUANT TO SECTION (14)C
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
1240.14a-12
EQUIMED, 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>
EQUIMED, INC.
2171 SANDY DRIVE
STATE COLLEGE, PENNSYLVANIA 16803
___________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 30, 1997
___________________
The 1997 Annual Meeting of Stockholders (the "Meeting") of EquiMed, Inc., a
Delaware corporation (the "Company"), will be held on August 30, 1997, at 3:00
p.m., Eastern Daylight Time, at 2171 Sandy Drive, State College, Pennsylvania
16803, for the following purposes:
1. To elect two Class II Directors to hold office until the Annual
Meeting of Stockholders in 1999 and until their respective
successors are duly elected and qualified; and
2. To transact such other business as may properly come before the
Meeting and any and all adjournments or postponements thereof.
The Board of Directors has fixed the close of business on July 29, 1997 as
the record date for determining the stockholders entitled to notice of, and to
vote at, the Meeting. A complete list of stockholders entitled to vote at the
Meeting will be available for examination during normal business hours by any
stockholder of the Company, for any purpose germane to the Meeting, for a
period of ten (10) days prior to the Meeting at the Company's offices located
at the address set forth above. Only stockholders of record on the record date
are entitled to notice of and to vote at the Meeting and any and all
adjournments, continuations or postponements thereof.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1996, a Proxy Statement and a proxy accompany this notice.
These materials are first being sent to stockholders on or about August 5, 1997.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the accompanying Proxy Statement for further information
with respect to the business to be transacted at the Meeting.
THE BOARD OF DIRECTORS URGES YOU TO DATE, SIGN AND RETURN THE ENCLOSED
PROXY AS SOON AS POSSIBLE. YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN
PERSON. STOCKHOLDERS WILL BE ADMITTED TO THE MEETING ONLY UPON PRESENTATION OF
PROOF OF STOCK OWNERSHIP, WHICH MAY INCLUDE A CURRENT BROKERAGE STATEMENT OR A
LETTER FROM THEIR BANK OR BROKER. THE RETURN OF THE ENCLOSED PROXY WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU DO ATTEND THE MEETING.
By Order of the Board of Directors,
Marcy L. Colkitt
Secretary
State College, Pennsylvania
August 1, 1997
<PAGE> 1
EQUIMED, INC.
2171 SANDY DRIVE
STATE COLLEGE, PENNSYLVANIA 16803
___________________
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 30, 1997
___________________
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of EquiMed, Inc., a Delaware corporation
(the "Company"), for use at the Company's 1997 Annual Meeting of Stockholders
(together with any and all adjournments, continuations or postponements
thereof, the "Meeting") which is scheduled to be held on August 30, 1997, at
3:00 p.m., Eastern Daylight Time, at 2171 Sandy Drive, State College,
Pennsylvania 16803 for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. This Proxy Statement, the foregoing notice,
the Annual Report to Stockholders for the fiscal year ended December 31, 1996
and the enclosed proxy are being mailed to stockholders on or about August 5,
1997. The Annual Report to Stockholders is not to be considered part of the
Company's proxy solicitation materials.
At the Meeting, stockholders will be asked to: (i) elect two Class II
Directors of the Company to serve until the Annual Meeting of Stockholders in
1999 and until their successors are duly elected and qualified; and (ii)
transact such other business as may properly come before the Meeting. The
Company's Board of Directors recommends a vote "FOR" the election of the
nominees for directors of the Company listed in this Proxy Statement.
The Board of Directors knows of no other matters which are likely to be
brought before the Meeting. If any other matters properly come before the
Meeting, however, the persons named in the enclosed proxy, or their duly
constituted substitutes acting at the Meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment on such matters.
Any proxy may be revoked at any time prior to its exercise by notifying
the Secretary of the Company in writing, by delivering a duly executed proxy
bearing a later date, or by attending the Meeting and voting in person.
<PAGE> 2
VOTING SECURITIES, VOTING RIGHTS AND SECURITY OWNERSHIP
VOTING SECURITIES AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of the common stock of the Company (the "Common Stock") is
necessary to constitute a quorum at the Meeting. Only stockholders of record
at the close of business on July 29, 1997 (the "Record Date") will be entitled
to notice of, and to vote at, the Meeting. As of July 29, 1997 and taking into
account the Company's 1-for-6 reverse stock split effective August 11, 1997,
there are 4,454,443 shares of Common Stock outstanding and entitled to vote at
the Meeting. Holders of Common Stock as of the Record Date are entitled to one
vote for each share held. Holders of Common Stock do not have cumulative
voting rights.
All shares of Common Stock represented by properly executed proxies, unless
such proxies have previously been revoked, will be voted in accordance with the
instructions indicated in such proxies. If no such instructions are indicated,
such shares will be voted in favor of election of the nominees for directors of
the Company listed in this Proxy Statement, and with respect to any other
matter that may properly come before the Meeting as indicated in the enclosed
proxy. Abstentions will be counted as shares present for quorum purposes.
Broker non-votes will not be counted for determining a quorum or in
determining whether a matter has been approved. Any stockholder executing a
proxy has the power to revoke such proxy at any time prior to its exercise.
A proxy may be revoked by (i) filing with the Company a written revocation of
the proxy, (ii) appearing at the Meeting and casting a vote contrary to that
indicated on the proxy, or (iii) submitting a duly executed proxy bearing a
later date.
The cost of preparing, printing, assembling and mailing this Proxy
Statement and other material furnished to stockholders in connection with
the solicitation of proxies will be borne by the Company. In addition to
the solicitation of proxies by use of the mails, officers, directors and
regular employees of the Company may solicit proxies by written
communication, by telephone, telegraph or personal call. Such persons are
to receive no special compensation for any solicitation activities. The
Company will reimburse banks, brokers and other persons holding Common Stock
in their names, or those of their nominees, for their expenses in forwarding
proxy solicitation materials to beneficial owners of Common Stock.
<PAGE> 3
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of shares of Common Stock as of July 29, 1997 and taking into account
the Company's 1-for-6 reverse stock split effective August 11, 1997, by (i)
each person known by the Company to be the beneficial owner of more than 5%
of the outstanding shares of Common Stock, (ii) each director and nominee
for director, (iii) each executive officer named in the Summary Compensation
Table below and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner (1)(2) Beneficial Ownership of class
- ----------------------- -------------------- --------
</CAPTION>
<S> <C> <C>
Douglas R. Colkitt, M.D(3) 3,479,154 75.3%
Larry W. Pearson(4) 186,654 4.0%
Jerome Derdel, M.D.(5) 1,000 *
Daniel L. Beckett 0 *
P. Craig Hethcox 0 *
William E. Pritts II 0 *
Raymond J. Caravan 0 *
All directors and executive officers as a
group (7 persons)(6) 3,666,808 79.3%
</TABLE>
__________________________
* Less than 1%.
(1) The addresses of all such beneficial owners is in care of the Company at
2171 Sandy Drive, State College, PA 16803.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days upon the exercise of options or
warrants. Each beneficial owner's number of shares is determined by
assuming that options or warrants that are held by such person (but not
those held by any other person) and that are exercisable within 60 days
have been exercised. The total outstanding shares used to calculate each
beneficial owner's percentage includes such options and warrants. Unless
otherwise noted, the Company believes that all persons named in the table
have sole voting and investment power with respect to all shares of Common
Stock beneficially owned by them.
(3) Includes exercisable options to purchase 83,333 shares of Common Stock at
an exercise price of $300 per share. Does not include 207,919 shares
owned by Dr. Colkitt's spouse, of which Dr. Colkitt disclaims beneficial
ownership.
(4) Includes exercisable options to purchase 83,333 shares of Common Stock at
an exercise price of $63.00 per share.
(5) Includes exercisable options to purchase 1,000 shares of Common Stock at
exercise prices ranging from $21.00 to $51.75 per share.
(6) Includes exercisable options to purchase 167,667 shares of Common Stock.
<PAGE> 4
EXECUTIVE OFFICER AND DIRECTORS
The executive officers, directors and director nominees of the Company are
as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
</CAPTION>
<S> <C> <C>
Douglas R. Colkitt, M.D.(1) 43 Chairman of the Board of Directors and
Chief Executive Officer and President
Jerome Derdel, M.D.(1)(2) 46 Director
Raymond J. Caravan 43 Director Nominee
Daniel L. Beckett 38 Chief Financial Officer
</TABLE>
____________________
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
The following sets forth certain information with respect to the members of
the Board of Directors, the executive officers and other significant employees
of the Company.
DOUGLAS R. COLKITT, M.D. has been the Chairman of the Board of Directors of
the Company since the February 1996 merger between EquiVision, Inc.
("EquiVision") and Colkitt Oncology Group, Inc., a Delaware corporation (the
"Oncology Group"), and the subsequent reincorporation merger of EquiVision with
and into its wholly owned Delaware subsidiary, EquiMed, Inc. (the "Merger");
Chief Executive Officer of the Company since January 1997; and President of the
Company since June 15, 1997. Prior to the Merger, Dr. Colkitt was the Chairman
of the Board of Directors of EquiVision since its inception in October 1991.
In addition to practicing medicine as a board certified oncologist since
1979, Dr. Colkitt owns several medical businesses, including the businesses
comprising Colkitt Oncology Group, Inc. where he served as Chairman,
President and Chief Executive Officer from 1986 until the Merger in February
1996. Dr. Colkitt is the Chairman of National Medical Financial Services
Corporation ("NMFS"), a publicly traded company engaged in medical billing
services. Dr. Colkitt received a B.A. from Washington and Jefferson
College, an M.D. from the University of Pennsylvania and an M.B.A. from the
Wharton School of the University of Pennsylvania.
JEROME DERDEL, M.D. has been a director of the Company since June 1996.
Dr. Derdel is a board certified radiation oncologist since 1983 and
currently serves as the Medical Director of the Radiation Oncology
Department at Centre Community Hospital in State College, Pennsylvania. Dr.
Derdel is a graduate of John Carroll University in Cleveland, Ohio, where he
received his B.S. in Physics. Dr. Derdel received his M.D. from the
University of Bologna, Italy.
DANIEL L. BECKETT has served as the Chief Financial Officer of the Company
since November 1996 having previously served from May through November 1996 as
Controller. From February through May 1996, Mr. Beckett was in charge of
financial analysis for the Company. Mr. Beckett previously served as the
Controller for Oncology Services Corporation, a corporation affiliated with the
Oncology Group prior to the Merger, from October 1991 to February 1996. Mr.
Beckett is a graduate of Grace College in Winona Lake, Indiana where he
received his B.S. degree in Business Administration and Accounting.
<PAGE> 5
RAYMOND J. CARAVAN is the President of K-B Offset Printing, Inc. and
Express-Tech Volume Printing Centers, Inc., commercial offset and digital
printing companies located in State College, Pennsylvania. From 1980 to 1987,
Mr. Caravan was the East-Regional Director of a Wall Street investment firm and
the manager of valuation services for a Boston-based investment management
company with actively managed assets of five billion dollars. He is a 1975
graduate of The Pennsylvania State University with a BS degree in Business
Administration and Marketing.
CLASSES OF DIRECTORS
The Board of Directors currently has two members and is divided into two
classes. Class I Directors will serve until the Annual Meeting of Stockholders
in 1998 and thereafter for terms of two years until their successors have been
elected and qualified. Class II Directors will be elected at the Meeting and
will serve until the Annual Meeting of Stockholders in 1999 and thereafter for
terms of two years until their successors have been elected and qualified.
Currently, Jerome Derdel, M.D. is the sole Class I Director and Douglas R.
Colkitt is the sole Class II Director.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee and a Compensation Committee, but does
not have a Nominating Committee.
In 1996, the Audit Committee consisted of Mr. Brian Smith, a director of
the Company until June 15, 1997, and Dr. Colkitt. The functions of the Audit
Committee generally include reviewing with the Company's independent auditors
the scope and results of their engagement and reviewing the adequacy of the
Company's systems of internal accounting controls. The Audit Committee held
one meeting in 1996. Beginning as of January 1, 1997, the Audit Committee
consisted of Mr. Smith until his resignation from the Board of Directors
when Dr. Derdel became the member of the Audit Committee.
In 1996, the Compensation Committee consisted of Larry W. Pearson,
President of the Company until his resignation on June 15, 1997, Dr. Derdel
and Dr. Colkitt. Mr. Pearson resigned from the Compensation Committee on
March 2, 1996. The functions of the Compensation Committee are to review
and evaluate the compensation of the Company's executive officers,
administer the Company's Stock Option Plan and establish guidelines for
compensation of other personnel. The Compensation Committee held two
meetings in 1996.
The Board of Directors held one regular meeting and six special meetings in
1996 and acted by written consent 25 times. Each director attended at least
75% of the aggregate number of meetings of the Board of Directors and
committees on which he served while a member of the board or such committee.
COMPENSATION OF DIRECTORS
No compensation is currently paid by the Company to its outside directors
but such directors are reimbursed for expenses incurred for attendance at
meetings. From time to time, however, outside directors have been and may be
granted options to purchase shares of Common Stock. In 1996, the Company
issued to Dr. Derdel options to purchase 3,000 (pre-split) shares of Common
Stock, at an exercise price of $8.63 per (pre-split) share as compensation
for services rendered as a director of the Company.
<PAGE> 6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to
compensation paid or accrued by the Company subsequent to the date of the
Merger and by EquiVision prior to the date of the Merger for the years ended
December 31, 1996, 1995 and 1994 to the Company's Chief Executive Officer
and to each of the Company's other executive officers:
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
---------------------------------- ----------------------------
Securities All Other
Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) Options(#)* ($)(1)
- --------------------------- ---- --------- ---------- ------------ ---------
</CAPTION>
<S> <C> <C> <C> <C> <C>
Larry W. Pearson.................................. 1996 269,340 -- 9,375 8,973
President and Chief Executive Officer (2)(3) 1995 193,803 25,000 509,375 (4) 9,240
1994 195,058 -- -- 7,985
P. Craig Hethcox.................................. 1996 117,500 -- 3,516 7,500
Chief Operating Officer (2)(5) 1995 141,250 9,375 203,516 (4) 8,750
1994 73,365 -- 25,000 --
William E. Pritts II............................... 1996 119,103 -- 50,000 9,500
Chief Financial Officer (2)(6) 1995 12,500 -- 50,000 (4) --
</TABLE>
_______________________
* - number of shares as of December 31, 1996, prior to the 1-for-6 reverse
split.
(1) Amounts shown reflect contributions to the 401(k) plan of the Company or of
EquiVision as a pre-tax salary deferral.
(2) The compensation disclosed for the years ended December 31, 1995 and 1994
reflect compensation paid to the named executive officers by EquiVision,
the legal predecessor to the Company.
(3) Mr. Pearson resigned as Chief Executive Officer of the Company as of
January 1, 1997 and as President of the Company as of June 15, 1997.
(4) Of the stock options granted in 1995 to Messrs. Pearson, Hethcox and
Pritts, 9,375, 3,516 and 50,000, respectively, were forfeited in return
for stock option regrants issued as of June 26, 1996.
(5) Mr. Hethcox joined EquiVision in July 1994 and resigned from the Company in
November 1996.
(6) Mr. Pritts joined EquiVision on December 1, 1995 at an annual salary of
$150,000 and resigned from the Company in November 1996. In November 1996,
Daniel L. Beckett was named as Chief Financial Officer of the Company.
<PAGE> 7
STOCK OPTION GRANTS IN 1996*(1)
<TABLE>
<CAPTION>
Individual Grants Potential
---------------------------------------- Realizable Value at
% of Total Assumed Rates of
Number of Options Stock Appreciation
Shares Granted to for
Underlying Employees Exer- Expira- Option Term (3)
Options During cise tion ------------------
Name Granted (2) Fiscal Year Price Date 5% 10%
- ----------- ---------- ----------- ------- ------ ------- --------
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Larry W.
Pearson (4) 9,375 3.7% $ 8.00 6/06 $ 47,156 $119,531
P. Craig
Hethcox (4) 3,516 1.4 8.00 6/06 17,685 44,829
William E.
Pritts II(4) 50,000 19.5 11.26 6/06 354,000 897,500
</TABLE>
_______________________
* - number of shares as of December 31, 1996, prior to the 1-for-6 reverse
split.
(1) The option grants disclosed in this table reflect options granted to the
named executive officers prior to 1996 by EquiVision, the legal
predecessor to the Company prior to the Merger and assumed by the Company
pursuant to the Merger. For financial reporting purposes, such options are
treated as being granted in 1996.
(2) The options granted in 1996 to the named executive officers were regrants
based on the forfeiture of identical grants of stock options issued between
June 2, 1995 and November 29, 1995.
(3) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the price of the Common Stock and overall market conditions.
The amounts reflected in this table may not necessarily be achieved.
(4) The stock options previously granted to Messrs. Pearson, Hethcox and Pritts
were not exercised prior to their resignations and have been forfeited.
AGGREGATED STOCK OPTION EXERCISES IN 1996
AND STOCK OPTION VALUES AT DECEMBER 31, 1996*
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Number of Options at FY-End Options at FY-End
Shares on Value ------------------------- -----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ---------- -------- ----------- ------------- ------------- -------------
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Larry W. Pearson (1) 0 0 501,875 7,500 $ 0 $ 0
P. Craig Hethcox (2) 0 0 0 0 0 0
William E. Pritts II (2) 0 0 0 0 0 0
</TABLE>
___________________
* - number of shares as of December 31, 1996, prior to the 1-for-6 reverse
split.
<PAGE> 8
(1) Stock options for 9,375 shares, of which 1,875 shares were exercisable and
7,500 shares were unexcercisable at December 31, 1996, were not exercised
prior to Mr. Pearson's resignation and have been forfeited, effective June
15, 1997.
(2) The stock options previously granted to Messrs. Hethcox and Pritts were not
exercised prior to their resignations and have been forfeited.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently comprised of Drs. Colkitt and
Derdel. None of the executive officers of the Company currently serves on the
compensation committee of another entity or on any other committee of the board
of directors of another entity performing similar functions.
EquiMed is the result of the merger between EquiVision and Colkitt Oncology
Group, Inc., a Delaware corporation (the "Oncology Group"), and the subsequent
reincorporation merger of EquiVision with and into its wholly owned Delaware
subsidiary, EquiMed. These two mergers are referred to collectively herein as
the "Merger." The Merger was consummated on February 2, 1996. By the Merger,
the Company acquired the stock and assets of various corporations, partnerships
and joint ventures owning or controlling 30 radiation oncology centers
comprising the Oncology Group. EquiMed succeeded to all of the assets,
liabilities and contractual obligations of EquiVision and of the Oncology
Group. In connection with the Merger, Dr. Colkitt, the Company's Chairman, CEO
and principal stockholder and the former Chairman and principal stockholder of
the Oncology Group, received 19,321,571 (pre-split) shares of Common Stock,
representing 81.5% of the shares of Common Stock outstanding immediately
following the Merger and 75.2% upon completion of a subsequent public offering
by the Company in February 1996 in which Dr. Colkitt sold 95,000 (pre-split)
shares.
In connection with the Merger, Dr. Colkitt entered into an agreement with
the Company to fully indemnify the Company, among other things, against any
damage, loss, expense or liability, including attorneys' fees and expenses,
incurred by the Company resulting from litigation with former minority
stockholders of certain entities comprising the Oncology Group, which indemnity
was to be secured, pursuant to a stock pledge agreement, by a pledge of the
number of shares of Common Stock having a value of $25,000,000. Dr. Colkitt
has further agreed to indemnify the Company against certain losses that may
arise in connection with the representations and warranties of the Oncology
Group and, as security for such obligation, has agreed to pledge additional
shares of Common Stock having a value of $7,500,000.
At the time the pledge agreements were executed, Dr. Colkitt pledged to the
Company a total 2,888,889 (pre-split) shares of Common Stock with an aggregate
value of approximately $32,500,000. The pledge agreements provide that in the
event the closing trading price of the Common Stock increases or decreases, an
adjustment will be made in the number of shares subject to the pledges. Based
on the closing trading price of the Common Stock as of July 29, 1997 (which was
$2.0625 per pre-split share), the value of such pledged stock is approximately
$10.1 million. The Company believes the value of such pledged shares is
sufficient based on the Company's estimate of any potential damages, costs,
expenses or liability, including attorneys' fees and expenses, which may be
incurred by the Company resulting from the indemnified events. However, there
can be no assurance that such potential damages, costs, expenses or liability
will not exceed the Company's good faith estimate or that the value of the
pledged shares will not decrease based on a decrease in the market price of the
Common Stock. Because of the Company's estimate of any potential liability for
which Dr. Colkitt has indemnified the Company,
<PAGE> 9
Dr. Colkitt intends to ask the Company's Board of Directors to re-evaluate the
terms of the pledge agreements.
Pursuant to the terms of the Merger, Dr. Colkitt is required to vote all of
his shares of Common Stock to elect not less than three independent members to
the Board of Directors so long as Dr. Colkitt owns in excess of 20% of the
Company's outstanding Common Stock.
On July 1, 1993, in consideration of the substantial investment Dr. Colkitt
made in EquiVision, Dr. Colkitt holds an option to purchase 83,333 shares of
Common Stock at an exercise price of $300 per share. The option became
exercisable on June 30, 1995 and expires on June 30, 2003.
Dr. Colkitt owns the common stock of 30 of the medical practices affiliated
with the Company (the "Affiliated Medical Practices") which have entered into
management agreements with the Company and has granted the Company, or its
designee, an irrevocable option to acquire the common stock of the Affiliated
Medical Practices for an exercise price of $1.00. The term of the option
agreements coincide with the term of the related management agreements, which
are for a initial 40-year term and provide for successive automatic renewals.
In 1996, the Company's President and Chief Executive Officer had the authority
to exercise this option agreement on behalf of the Company without prior
approval of the Board of Directors. The Company's policy requires a majority
of the Company's independent directors to approve transactions between the
Company and Dr. Colkitt. Accordingly, there are limitations on
Dr. Colkitt's ability to amend or terminate any management agreements or
option agreements granted to the Company related to the common stock of the
Affiliated Medical Practices.
On June 1, 1996, EquiMed India Private Limited ("EquiMed India"), a wholly
owned subsidiary of the Company formed to obtain contracts for accounting and
billing services, began operations in Madras, India. EquiMed India had
revenues and net income of approximately $2,100,000 and $1,900,000,
respectively, principally related to a contract for accounting and billing
services with Anesthesia Solutions, Inc. ("ASI"), a company wholly owned by Dr.
Colkitt. Prior to April 1, 1997, EquiMed India subcontracted with Nittany
Decisions Services Private Limited ("Nittany"), a company 80% owned by Dr.
Colkitt, to provide the accounting and billing services for ASI. According to
the contract terms, EquiMed India retains approximately 10% of the revenues
billed for ASI and pays Nittany its costs and an agreed upon rate of return.
Effective April 1, 1997, the Company acquired Dr. Colkitt's interest in Nittany
as part of its acquisition of a group of management services and outsourcing
companies. EquiMed India is exempt from income taxes payable to agencies of
the Indian government and the local provincial government based upon
agreements with these agencies when EquiMed India was incorporated. At
December 31, 1996, EquiMed India had trade receivables of approximately
$2,000,000 which primarily represented receivables for the services from
ASI. The Company acquired all of the stock of ASI, effective July 31, 1997.
In 1996, Dr. Colkitt was the Chairman and sole stockholder of George
Washington Real Estate Corporation ("George Washington") and Thomas Jefferson
Real Estate Corporation ("Thomas Jefferson"), which corporations lease premises
occupied by certain of the radiation oncology centers owned, operated or
managed by the Company. The Company made lease payments to George
Washington and Thomas Jefferson in the aggregate amount of $568,846 in 1996.
In January 1997, the Company acquired George Washington and Thomas Jefferson
from Dr. Colkitt.
<PAGE> 10
In 1996, the Company leased certain equipment from D&T Leasing Limited
Partnership ("D&T") and Nixon Equipment Corporation ("Nixon"), both controlled
by Dr. Colkitt. The Company made payments to D&T, in the aggregate, of
$113,812 in 1996. The Company made payments to Nixon, in the aggregate, of
$160,040 during 1996. During 1996, the Company repaid approximately
$3,218,000 of the principal amount under these capital leases, thereby
reducing its monthly payment obligations. In January 1997, the Company
acquired Nixon from Dr. Colkitt for approximately $400,000.
The Affiliated Medical Practices have contracts with National Medical
Financial Services ("NMFS") for the provision of billing, collection and
accounts receivable management services, as well as certain accounting
services. The centers paid to NMFS an aggregate of $2,619,470 during 1996
for such services. NMFS is a publicly traded company of which Dr. Colkitt
is the Chairman and principal stockholder.
The Company entered into a receivable purchase agreement in April 1995.
Under the terms of the agreement, receivables are transferred to Oncology
Funding Corporation (a company that is wholly owned by Dr. Colkitt) which then
factors the receivables with an unrelated financing company, John Alden Asset
Management Company ("Alden"). The factored receivables may be denied by Alden
for various reasons including nonpayment by the payor. The transfer of
receivables to Alden is recognized as a sale, and the difference between the
sales price (adjusted for the accrual of probable adjustments) and the net
receivables is recognized as a gain or loss on the sale of receivables.
Proceeds to the Company from receivables sold under this agreement were
approximately $45,726,000 for the year ended December 31, 1996. During 1995
and 1996, the Company failed to comply with certain covenants of the receivable
purchase agreement. Remedies available to Alden due to these events of
noncompliance include termination of the receivable purchase agreement. The
balance of the receivables transferred that remain uncollected was
approximately $4,896,000 at December 31, 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
The Compensation Committee of the Board of Directors (the "Committee") is
charged with reviewing and evaluating the compensation of executive officers,
administering the Company's Stock Option Plan and establishing guidelines for
compensation of other personnel.
The Company's executive compensation policy is designed to motivate
management to create stockholder value by linking executive pay with the
returns realized by stockholders and assuring the continued growth and
performance of the Company by attracting, motivating and retaining talented
executive officers through competitive compensation.
EXECUTIVE COMPENSATION STRUCTURE
As shown in the Summary Compensation Table above (the "Summary Table"), the
compensation of executive officers consists of three primary components: base
salary, an annual incentive program (i.e., bonus) and a long-term incentive
compensation program (i.e., stock options). As more fully described below, two
of the three components, bonuses and stock options, are dependent upon factors
which include company financial performance, individual performance and stock
price. The third component, base salary, once established, is not subject to
contingency. The Committee regularly
<PAGE>
reviews each component of executive compensation and determines increases based
upon several factors including Company performance, individual performance and
competitive salary rates. Executive officers are also entitled to customary
benefits generally available to all employees of the Company, including group
medical and life insurance and 401(k) plans.
EXECUTIVE COMPENSATION COMPONENTS
SALARY. Salaries shown in the Summary Table represent the non-contingent
portion of compensation for executive officers for fiscal 1996. Such
compensation was initially determined by evaluating the responsibilities of
position, the experience of the individual, by reference to the competitive
marketplace for executive talent and other factors considered by the Committee,
which included individual and Company performance. The Committee also
considered the success of the executive officers in developing and executing
the Company's acquisition, financing and strategic plans.
BONUS. Bonuses shown in the Summary Table were awarded in cash. The award
of bonuses to executive officers is based upon their achievement of Company and
individual performance goals. The particular bonus award is subject to a
maximum of up to 50% of the executive officer's base salary.
STOCK OPTIONS. Equity participation is the last principal component of the
Company's executive compensation program. The Company believes that, in order
to achieve its long-term growth objectives and to align management and
stockholder interests, it is in the Company's best interests to grant stock
options to its executive officers. The Committee believes that stock options
provide an effective incentive for management to create stockholder value over
the long term since the option value depends on appreciation in the price of
the Common Stock over a number of years.
CHIEF EXECUTIVE OFFICER COMPENSATION
On January 1, 1996, the Company entered into a new employment agreement
with Larry W. Pearson, the Company's President and Chief Executive Officer,
effective through September 30, 1998. The agreement provided for annual
base salary of not less than $300,000 per year plus a bonus of up to 50% of
base salary, subject to the approval of the Board of Directors, plus
benefits and reimbursement of expenses. Mr. Pearson resigned from the
position of Chief Executive Officer, effective December 31, 1996, and from
the position of President, effective June 15, 1997. The Company and Mr.
Pearson agreed to terminate his employment agreement effective June 15,
1997, except that Mr. Pearson is entitled to continue, for one year
following the termination, as a participant in the Company's employee
benefit plans and is bound by the noncompetition and nonsolicitation
provisions thereof.
TAX CONSIDERATIONS
Section 162(m) of the Internal Revenue Code limits the Company's income tax
deduction for compensation paid in any taxable year to any of the five most
highly compensated executive officers to $1,000,000, subject to several
exceptions. The Compensation Committee undertook a review
<PAGE> 12
of the Company's current compensation practices and concluded that no action
would be taken at this time and that further review would be made during 1997.
COMPENSATION COMMITTEE
Douglas R. Colkitt, M.D.
Jerome D. Derdel, M.D.
This report of the Compensation Committee 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 (the
"Securities Act") or under 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 the Securities Act and the Exchange Act and shall not be
deemed soliciting material.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the directors, certain officers
of the Company and beneficial owners of more than ten percent of the Common
Stock to file reports of securities ownership and changes in such ownership
with the Securities and Exchange Commission. Based solely upon a review of
the copies of such forms furnished to the Company and the representations
made by such persons to the Company, the Company believes that during the
last fiscal year its directors, officers and ten-percent beneficial owners
complied with all filing requirements under Section 16(a) of the Exchange
Act, except that Larry W. Pearson and P. Craig Hethcox, who was Chief
Operating Officer of the Company, had late filings related to stock option
regrants; Gene E. Burleson and David Crane, who were directors of the
Company, and Daniel L. Beckett had late filings related to appointments as
directors or executive officers of the Company; and Jerome Derdel, M.D. and
Brian C. Smith and Richard Holdren, who were directors of the Company, had
late filings related to stock option grants.
<PAGE> 13
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
stockholder return on the Common Stock since November 15, 1993, the date the
Company's shares began public trading, with the cumulative total return on the
S&P SmallCap 600 Index and the Hambrecht & Quist Health Care (Excluding
Biotech) Index over the same period. The comparison assumes $100 was invested
on November 15, 1993 in the Common Stock and in each of the indices and assumes
reinvestment of dividends, if any, since that date. The Company has not paid
cash dividends on the Common Stock. Historic stock price is not indicative of
future stock price performance.
COMPARISON OF 37 MONTH CUMULATIVE TOTAL RETURN*
AMONG EQUIMED, INC., THE S & P SMALLCAP 600 INDEX
AND THE HAMBRECHT & QUIST HEALTHCARE - EXCLUDING BIOTECH INDEX
[ Graph of the following tabular data: ]
<TABLE>
<CAPTION>
Cumulative Total Returns
--------------------------------------------
EquiMed/Index Symbol 11/15/93 12/93 12/94 12/95 12/96
- ------------------- ------- ------ ------ ------ ------ ------
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
EquiMed Inc. EQMD 100 100 154 185 54
S & P SMALLCAP 600 I600 100 100 95 124 150
H & Q HLTHCARE-EXCL BIOTECH IHH- 100 102 109 181 201
</TABLE>
- ------------------------
* - $100 invested on 11/15/93 in stock or on
10/31/93 in index - including reinvestment of
dividends, fiscal year ending December 31.
This Stock Performance Graph shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act or under the Exchange Act, except to the
extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under the Securities Act
or the Exchange Act and shall not to be deemed to be soliciting material.
<PAGE> 14
ELECTION OF CLASS II DIRECTORS
NOMINEES FOR ELECTION
At the Meeting, the stockholders will elect two Class II Directors to hold
office until the Annual Meeting of Stockholders in 1999 and until their
respective successors are duly elected and qualified. The nominees of the
Board of Directors for election as Class II Directors are Douglas R. Colkitt
and Raymond J. Caravan. Unless contrary instructions are given, the shares
represented by the enclosed proxy will be voted "FOR" the election of all
nominees. The Board of Directors believes that the nominees are willing to
serve as directors. If any nominee at the time of election is unable or
unwilling to serve or is otherwise unavailable for election and, as a result,
another nominee is designated, the persons named in the enclosed proxy or other
substitutes will have discretion and authority to vote for or to refrain from
voting for the other nominee in accordance with their judgment. The nominees
who receive the most votes at the Meeting will be elected directors. The
nominees for election as directors, together with certain information about
them, are as follows:
<TABLE>
<CAPTION>
Director Term
Name Since Expires
- --------------------- --------- -------
</CAPTION>
<S> <C> <C>
Douglas R. Colkitt 1991 1999
Raymond J. Caravan New 1999
</TABLE>
Information with respect to the business background of the two nominees is
included under "Executive Officers and Directors."
THE BOARD RECOMMENDS A VOTE "FOR" THE ABOVE NOMINEES.
<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is the legal successor to EquiVision, which merged with the
Oncology Group on February 2, 1996 pursuant to the Merger. EquiVision, the
Oncology Group and the Company have been parties to a number of transactions
with their respective officers and directors and individuals or entities which
are affiliated with such officers and directors. Pursuant to the Merger, the
Company succeeded to all continuing obligations and benefits of these
transactions. Effective November 1, 1996, the Company sold its Ophthalmology
Division to Physician's Resource Group, Inc. and its wholly-owned subsidiary,
PRG Georgia, Inc. (collectively, "PRG"). This portion of the Proxy Statement
describes certain relationships and related transactions of which the Company
had some obligation or benefit in the year ended December 31, 1996. In the
future, any transactions between the Company and related parties, other than
the defense of actions for which Dr. Colkitt has indemnified the Company,
will be approved by a majority of the Company's independent directors. See
"EXECUTIVE COMPENSATION - Compensation Committee Interlocks and Insider
Participation" for a description of certain relationships and related
transactions between the Company and Dr. Colkitt.
During 1996 and prior to the November 1, 1996 sale of the Ophthalmology
Division to PRG, the Company paid $95,184 as lease expenses for a corporate
office to a partnership in which Larry W. Pearson is a general partner.
Effective November 1, 1996, the Company's obligations under the lease were
assigned to and assumed by PRG.
The Company retained the services of Parkwood Motors, a corporation owned
by Sharon Pearson, Larry Pearson's wife, to assist in the sale of the
ophthalmic practices to PRG. Parkwood engaged financial staffing to gather
due diligence and other information regarding entities to be acquired.
Parkwood was entitled to a commission equal to 5% of the earn-out received
by EquiMed from PRG. In 1996, such commission totalled $150,000.
Certain legal services are provided on behalf of the Company by Marcy L.
Colkitt & Associates, P.C., a firm of which Marcy Colkitt, Secretary and
General Counsel of the Company and the sister of Dr. Colkitt, is a partner.
In addition to compensation of approximately $134,000 received by Ms.
Colkitt in 1996 for her services as General Counsel of the Company, Marcy L.
Colkitt & Associates, P.C. received $132,263 during 1996 for the legal
services provided by the firm. Fees for legal services were at a rate
commensurate with those available from independent third parties.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Company has selected the firm of Ernst & Young LLP to serve as its
independent auditors for the current fiscal year. Representatives of Ernst &
Young LLP is not expected to be present at the Meeting and accordingly will not
be available to respond to questions.
<PAGE> 16
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders in 1998 must be received by the Secretary of the Company at the
Company's principal office in State College, Pennsylvania, prior to December
31, 1997 in order to be considered for inclusion in the Company's proxy
statement and form of proxy relating to that meeting. Proposals must be in
writing and sent via registered, certified or express mail. Facsimile or
other forms of electronic submissions will not be accepted.
SOLICITATION OF PROXIES
The accompanying form of proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of solicitation of proxies for the
Meeting will be paid by the Company. In addition to the mailing of the proxy
material, such solicitation may be made in person or by telephone or telegraph
by directors, officers or regular employees of the Company or its subsidiaries.
ANNUAL REPORT ON FORM 10-K
The Company will provide, without charge to each person solicited by this
Proxy Statement, on the written request of any such person, a copy of the
Company's annual report on Form 10-K (including the financial statements, but
excluding exhibits) as filed with the Securities and Exchange Commission for
its most recent fiscal year. Such written request should be directed to the
Corporate Secretary at the address of the Company appearing on the first
page of this Proxy Statement.
By Order of the Board of Directors,
Marcy L. Colkitt
Secretary
THE BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE
MEETING IN PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
YOU ARE URGED TO COMPLETE, DATE, AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ACCOMPANYING ENVELOPE. STOCKHOLDERS WHO ATTEND
THE MEETING MAY VOTE THEIR SHARES PERSONALLY EVEN THOUGH THEY HAVE
SENT THEIR PROXIES.
<PAGE>
APPENDIX
EQUIMED, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 30, 1997
The undersigned stockholder(s) of EquiMed, Inc., a Delaware corporation
(the "Company") revoking all previous proxies, hereby appoints Daniel L.
Beckett and Marcy L. Colkitt, and each of them acting individually, as the
attorneys and proxies of the undersigned, with full power of substitution,
to cast all votes for all shares of Common Stock which the undersigned would
be entitled to cast if personally present at the Annual Meeting of
Stockholders of the Company, to be held at the 2171 Sandy Drive, State
College, Pennsylvania 16803 on Saturday, August 30, 1997 at 3:00 p.m.,
Eastern Daylight Time, and any and all adjournments, continuations or
postponements thereof. Said proxies are authorized and directed to vote as
indicated with respect to the following matters:
1. ELECTION OF CLASS II DIRECTORS
<TABLE>
<CAPTION>
FOR WITHHOLD AUTHORITY
-------- -------------------
</CAPTION>
<S> <C> <C>
Douglas R. Colkitt [Figure: Box] [Figure: Box]
Raymond J. Caravan [Figure: Box] [Figure: Box]
</TABLE>
2. TO VOTE ON SUCH OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE
1997 ANNUAL MEETING OF STOCKHOLDERS AND ANY AND ALL ADJOURNMENTS,
CONTINUATIONS OR POSTPONEMENTS THEREOF
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS
OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEES FOR DIRECTORS. This Proxy also delegates discretionary authority to
vote with respect to any other business which may properly come before the
1997 Annual Meeting of Stockholders and any and all adjournments, continuations
or postponements thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING, PROXY STATEMENT AND ANNUAL REPORT OF EQUIMED, INC.
NOTE: PLEASE SIGN THIS PROXY EXACTLY AS THE
NAMES(S) APPEAR HEREON. WHEN SIGNING AS
ATTORNEY-IN-FACT, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE ADD YOUR TITLE AS SUCH.
PROXIES EXECUTED IN THE NAME OF A CORPORATION
SHOULD BE SIGNED ON BEHALF OF THE CORPORATION BY
A DULY AUTHORIZED OFFICER. WHERE SHARES ARE
OWNED IN THE NAME OF TWO OR MORE PERSONS, ALL
SUCH PERSONS SHOULD SIGN.
Dated:________________________________, 1997
________________________________________
Signature of Stockholder
________________________________________
Signature of Stockholder
PLEASE SIGN, DATE AND RETURN IN THE
ENCLOSED POSTAGE PAID ENVELOPE.
