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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.___)
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 Rule 14a-11(c) or Rule 14a-12
SIMIONE CENTRAL HOLDINGS, 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> 2
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 9, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of
Simione Central Holdings, Inc., a Delaware corporation (the "Company"), will be
held at the executive offices of the Company located at 6600 Powers Ferry Road,
Atlanta, Georgia 30339 on June 9, 1998 at 10:00 a.m., Atlanta time, for the
following purposes:
1. To elect seven directors for a term of one year, and until
their successors shall have been duly elected and shall have been duly
qualified;
2. To approve the increase in the number of shares of common
stock, $.001 par value per share, reserved for issuance under the
Simione Central Holdings, Inc. Omnibus Equity-based Incentive Plan; and
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Stockholders of record at the close of business on April 10, 1998
will be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
/S/ M. Henry Day, Jr.
M. Henry Day, Jr.
General Counsel and Secretary
Atlanta, Georgia
April 29, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE
AND MAIL THE ACCOMPANYING FORM OF PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
<PAGE> 3
SIMIONE CENTRAL HOLDINGS, INC.
6600 POWERS FERRY ROAD
ATLANTA, GEORGIA 30339
PROXY STATEMENT
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Simione Central Holdings, Inc., a Delaware corporation (the
"Company"), for use at the 1998 Annual Meeting of Stockholders to be held at the
executive offices of the Company located at 6600 Powers Ferry Road, Atlanta,
Georgia 30339 on June 9, 1998 at 10:00 a.m., Atlanta time (the "Annual
Meeting"). The approximate date on which this Proxy Statement and form of proxy
were first sent or given to stockholders is April 30, 1998.
VOTING SECURITIES
The Company has set the close of business on April 10, 1998 as the
record date for the purpose of determining stockholders entitled to vote at the
Annual Meeting. At the close of business on April 10, 1998, the Company had
outstanding 8,524,465 shares of common stock, par value $.001 per share (the
Common Stock), the only class of voting securities of the Company outstanding.
Each holder of Common Stock is entitled to one vote for each share so held.
The presence, in person or by proxy, of the holders of a majority of
the shares of Common Stock entitled to vote is required for a quorum to transact
business at the Annual Meeting. Abstentions and broker non-votes will be counted
as present in determining whether the quorum requirement is satisfied. A
plurality of the votes of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote is required to
elect directors. Abstentions and broker non-votes will have no effect on the
outcome of the voting to elect the directors. An affirmative vote of a majority
of the shares of Common Stock present in person or represented by proxy and
entitled to vote at the Annual Meeting is required for approval of an increase
in the number of shares of Common Stock reserved for issuance under the Simione
Central Holdings, Inc. Omnibus Equity-based Incentive Plan (the "Incentive
Plan"). Abstentions will have the effect of a vote against the proposal to
approve an increase in the number of shares of Common Stock reserved for
issuance under the Incentive Plan. Broker non-votes will have no effect on the
outcome of such voting. A broker non-vote may occur when a nominee holding
shares of Common Stock for a beneficial owner does not vote on a proposal
because such nominee does not have discretionary voting power and has not
received instructions from the beneficial owner.
The shares represented by the accompanying proxy will be voted as
directed, or, if no direction is indicated, will be voted FOR: (i) the election
of the seven nominees for director identified below; and (ii) the approval of an
increase in the number of shares of Common Stock reserved for issuance under the
Incentive Plan. Each proxy executed and returned by a stockholder may be revoked
at any time thereafter by giving written notice of such revocation to the
Secretary of the Company or by attending the Annual Meeting and electing to vote
in person, except as to any matter or matters upon which, prior to such
revocation, a vote shall have been cast pursuant to the authority conferred by
such proxy.
<PAGE> 4
PROPOSAL 1 - ELECTION OF DIRECTORS
The Board of Directors of the Company consists of seven members. The
current terms of all existing directors expire upon the election and
qualification of the directors to be selected at this Annual Meeting. The Board
of Directors has nominated the individuals indicated below for election to the
Board of Directors at the Annual Meeting, each to serve for a one-year term to
expire at the 1999 Annual Meeting.
The nominees have consented to being named herein and to serve if
elected. If any of them should become unavailable for election prior to the
Annual Meeting, the proxies will be voted for a substitute nominee or nominees
designated by the Board of Directors.
The following sets forth information concerning each of the nominees
for election to the Board of Directors, including his name, age, principal
occupation or employment during at least the past five years and the period
during which such person has served as a director of the Company.
NOMINEES:
GARY M. BREMER, age 58, has served as Chairman of the Board of the
Company since October 8, 1996, and from October 8, 1996 to April 10, 1997 also
served as the Company's Chief Executive Officer. From 1978 until October 1996,
Mr. Bremer served as President and Chief Executive Officer of Central Health
Holding Company, Inc. ("CHHC") and Central Health Services, Inc., a subsidiary
of CHHC ("CHS"). Mr. Bremer has 23 years of experience in the home health care
industry.
JAMES R. HENDERSON, age 52, has served as President and as a director
of the Company since October 8, 1996, and since April 10, 1997 has also served
as the Company's Chief Executive Officer. From November 1995 to October 1996,
Mr. Henderson acted as a private consultant to various companies in the
information services industry, and from July 1992 to November 1995, Mr.
Henderson served as Executive Vice President for National Data Corporation, an
information services company. From February 1991 to June 1992, he served as
Executive Vice President, Worldwide Sales, Marketing and Operations, of QMS,
Inc., a computer printer company. From 1988 to January 1991, he served as
Executive Vice President of Dun and Bradstreet Software Services, Inc., a client
server software solutions company. Mr. Henderson has 31 years of experience in
the information services industry.
WILLIAM J. SIMIONE, JR., age 56, is a certified public accountant who
has served as Vice Chairman of the Board and Executive Vice President of the
Company since October 8, 1996. From January 1996 until October 1996, Mr. Simione
served as the President of Simione Central, Inc., a wholly-owned subsidiary of
the Company. From January 1975 until December 1995, Mr. Simione was Managing
Partner of the Home Health Care Consulting Division of Simione & Simione, CPA's
("Simione & Simione"). Since September 1995, Mr. Simione has also served as a
director and an audit committee member of Personnel Group of America, Inc., a
leading provider of information technology services and commercial staffing
solutions. Mr. Simione has 32 years of experience in the home health care
industry.
MURALI ANANTHARAMAN, age 41, has served as a director of the Company
since October 8, 1996. From January 1996 to October 8, 1996, Mr. Anantharaman
was a director of InfoMed Holdings, Inc., a Delaware corporation ("IMHI") that
merged with Simione Central Holding, Inc., a Georgia corporation, to form the
Company effective October 8, 1996. Mr. Anantharaman has been a Partner at EGL
Holdings, Inc., a Georgia corporation ("EGL") and a venture capital firm, since
1987.
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JAMES A. GILBERT, age 49, has served as a director of the Company since
May 21, 1997. From November 1997 to the present, Mr. Gilbert has served as
Assistant to the President of IMNET Systems, Inc., a provider of electronic
information and document management systems to the health care industry
("IMNET"). From September 1996 to November 1997, Mr. Gilbert served as
President, Chief Operating Officer and a director of IMNET. From January 1995 to
September 1996, Mr. Gilbert served as Senior Vice President and General Counsel
at HBO & Company, a health care information company. From 1988 to December 1994,
Mr. Gilbert held several other positions at HBO & Company. Prior to 1988, Mr.
Gilbert was a Partner with the Atlanta law firm of Hansell & Post.
RICHARD D. JACKSON, age 61, has served as a director of the Company
since December 1996. Mr. Jackson served as Vice Chairman of First Financial
Management Corp., a financial services company, from January 1995 to August 1996
and as Chief Operating Officer and Senior Executive Vice President from June
1993 to December 1995. From 1990 through May 1993, he served as Vice Chairman
and Chief Executive Officer of Georgia Federal Bank, Atlanta, Georgia. Mr.
Jackson is currently a director of ANACOMP, Inc., a service provider to and
manufacturer of micrographic machines and equipment, and of Schweitzer Mauduit
International, Inc., a manufacturer of tobacco papers and wrappers.
BARRETT C. O'DONNELL, age 45, has served as a director of the Company
since October 8, 1996. Mr. O'Donnell served as Chairman of the Board of IMHI
from October 1992 to October 8, 1996 and as Chief Executive Officer from
November 1994 to October 8, 1996. From 1978 to present, Mr. O'Donnell has been
Chairman of the Board, President and Chief Executive Officer of O'Donnell Davis,
Inc., a New Jersey corporation ("ODD"), which is in the consulting and
investment advisory services business.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
ELECTION OF THE SEVEN NOMINEES LISTED ABOVE AS DIRECTORS.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors of the Company held seven meetings during 1997.
The Board of Directors has established an Audit Committee and a Compensation
Committee. The Company does not have a Nominating Committee. The Audit Committee
reviews the Company's accounting practices and financial results, consults with
and reviews the services provided by the Company's independent accountants, and
reviews and approves (with the concurrence of a majority of the disinterested
directors of the Company) transactions, if any, with affiliated parties. The
current members of the Audit Committee are Messrs. Anantharaman (Chairman) and
O'Donnell. The Audit Committee held two meetings during 1997. The Compensation
Committee reviews and recommends to the Board of Directors the compensation and
benefits of all the executive officers of the Company, administers the Company's
compensation and benefit plans, and reviews general policies relating to
compensation and benefits of employees of the Company. The current members of
the Compensation Committee are Messrs. Jackson (Chairman), Anantharaman and
Gilbert. The Compensation Committee held three meetings during 1997. Each of the
Company's directors in 1997 attended at least seventy-five percent (75%) of the
meetings of the Board of Directors and the Committees, if any, on which they
served.
DIRECTOR COMPENSATION
Directors who are officers of the Company receive no additional
compensation for serving on the Board of Directors. Directors who are not
officers of the Company, except Messrs. Anantharaman and O'Donnell, receive fees
of $1,000, $500 and $250 for each Board, Committee and telephone meeting,
respectively, attended. All directors receive reimbursement for certain expenses
in connection with attendance at Board and Committee meetings. Further, upon
election to the Board of Directors, each outside
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director receives an option for 5,000 shares of Common Stock with the exercise
price equal to the fair market value of the Common Stock on the date of the
grant and vesting in three equal annual installments.
The Company has a verbal consulting arrangement with ODD, a consulting
and investment advisory services company, whereby ODD provides consulting
services on general business operations and corporate investments and assistance
with respect to merger or acquisition opportunities. Mr. O'Donnell, a director
of the Company, is the Chairman of the Board, President and Chief Executive
Officer and a 75% stockholder of ODD. Currently, ODD is paid $12,000 per month,
plus reimbursement of out-of-pocket expenses, for such services. The fees were
determined by negotiation between the parties. The amount paid to ODD by the
Company in consulting fees totaled $144,000 in the year ended December 31, 1997.
See "Certain Relationships and Related Transactions."
The Company has a consulting agreement with EGL, a venture capital
firm, whereby EGL provides consulting services on general business operations
and corporate investments including financial analysis, review of industry
trends and assistance with respect to merger or acquisition opportunities. Mr.
Anantharaman, a director of the Company, is a Partner of EGL. The consulting
agreement expires on June 30, 1999 and provides for a monthly consulting fee of
$5,000, plus reimbursement of out-of-pocket expenses. The fees were determined
by negotiation between the parties. The amount paid to EGL by the Company in
consulting fees totaled $60,000 in the year ended December 31, 1997. See
"Certain Relationships and Related Transactions."
For a description of certain options granted to certain directors of
the Company, see "Executive Compensation--Grants of Stock Options."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is currently
comprised of Messrs. Jackson (Chairman), Anantharaman and Gilbert. None of these
directors served as an officer or employee of the Company or any of its
subsidiaries during the year ended December 31, 1997. Except as set forth under
"--Director Compensation" and "Certain Relationships and Related Transactions,"
there were no material transactions between the Company and any of the members
of the Compensation Committee during the year ended December 31, 1997.
PROPOSAL 2 - APPROVAL OF THE INCREASE IN THE NUMBER
OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE
UNDER THE SIMIONE CENTRAL HOLDINGS, INC.
OMNIBUS EQUITY-BASED INCENTIVE PLAN
The Company maintains the Simione Central Holdings, Inc. Omnibus
Equity-based Incentive Plan (the "Incentive Plan"), which allows the Company to
grant equity-based compensation to key employees, officers, directors and
consultants of the Company or an affiliate. On March 26, 1997, the Board of
Directors reserved 500,000 shares of Common Stock for issuance pursuant to
awards under the Incentive Plan (250,000 shares after the Company's 1-for-2
reverse stock split effected on June 30, 1997), subject to adjustment as
provided therein. The number of shares of Common Stock associated with any
forfeited Stock Incentive (as defined below) is added back to the number of
shares that can be issued under the Incentive Plan. The Incentive Plan was
adopted by the Board of Directors on March 26, 1997 and approved by the
stockholders on June 21, 1997. The last reported closing sale price per share of
Common Stock was $14.125 as of April 27, 1998.
The Board has proposed to increase the number of shares available for
grant under the Incentive Plan as of June 9, 1998 by 1,000,000 shares to
1,250,000 shares
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of Common Stock, subject to stockholder approval. Awards under the Incentive
Plan are determined by the Compensation Committee of the Board of Directors. The
Incentive Plan permits the Compensation Committee to make awards of a variety of
equity-based incentives, including stock awards, incentive stock options and
non-qualified stock options to purchase shares of Common Stock, stock
appreciation rights phantom shares, performance unit appreciation rights and
dividend equivalent rights (collectively, "Stock Incentives"). Through April 27,
1998, the Compensation Committee had awarded stock options under the Incentive
Plan to purchase 242,800 shares of Common Stock.
The number of shares of Common Stock as to which a Stock Incentive is
granted and to whom any Stock Incentive is granted is determined by the
Compensation Committee, subject to the provisions of the Incentive Plan. Stock
Incentives issuable may be made exercisable or settled at such prices and may be
made forfeitable or terminable under such terms as are established by the
Compensation Committee, to the extent not otherwise inconsistent with the terms
of the Incentive Plan. Each Stock Incentive is evidenced by a Stock Incentive
Agreement or made subject to the terms of a Stock Incentive Program, each
containing terms and restrictions as the Compensation Committee deems
appropriate. No participant, however, may be granted during any one year period
rights to shares of Common Stock under options and stock appreciation rights
which, in the aggregate, exceed 100,000 shares of Common Stock.
The Incentive Plan allows for the grant of incentive stock options and
non-qualified stock options. The Compensation Committee determines whether an
option is an incentive stock option or a non-qualified stock option at the time
the option is granted. The exercise price of an option is established by the
Compensation Committee. The exercise price of an incentive stock option may not
be less than the fair market value of the Common Stock on the date of the grant
(or less than 110% of the fair market value if the participant controls more
than 10% of the voting power of the Company or a subsidiary). Non-qualified
stock options may be made exercisable at a price equal to, less than or more
than the fair market value of the Common Stock on the date that the option is
awarded. The Compensation Committee may permit an option exercise price to be
paid in cash or by the delivery of previously-owned shares of Common Stock, or
to be satisfied through a cashless exercise executed through a broker or by
having a number of shares of Common Stock otherwise issuable at the time of
exercise withheld.
The term of an option is specified in the applicable Stock Incentive
Agreement. The term of an incentive stock option may not exceed ten years from
the date of grant; however, any incentive stock option granted to a participant
who controls more than 10% of the voting power of the Company or a subsidiary
will not be exercisable after the expiration of five years after the date the
option is granted. Subject to any further limitations in a Stock Incentive
Agreement, in the event of a participant's termination of employment, an
incentive stock option will become unexercisable no later than three months
after the date of such termination of employment; provided, however, that if
such termination of employment is due to death or disability, one year will be
substituted for the three-month period.
Stock appreciation rights may be granted separately or in connection
with another Stock Incentive, and the Compensation Committee may provide that
they are exercisable at the discretion of the holder or that they will be paid
at a time or times certain or upon the occurrence or non-occurrence of certain
events. Stock appreciation rights may be settled in shares of Common Stock or in
cash, according to terms established by the Compensation Committee with respect
to any particular award.
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The Compensation Committee may grant shares of Common Stock to a
participant as stock awards, subject to such restrictions and conditions, if
any, as the Compensation Committee may determine. Dividend equivalent rights,
performance units and phantom shares may be granted in such numbers or units and
may be subject to such conditions or restrictions as the Compensation Committee
may determine and will be payable in cash or shares of Common Stock, as the
Compensation Committee may determine. The Compensation Committee may make cash
awards designed to cover tax obligations of employees that result from the
receipt or exercise of a Stock Incentive.
Stock Incentives generally are not transferable or assignable during a
holder's lifetime. However, Stock Incentives may include exercise, conversion or
settlement rights to a holder's estate or personal representative in the event
of the holder's death or disability. At the Compensation Committee's discretion,
Stock Incentives that are subject to termination upon termination of employment
may be cancelled, accelerated, paid or continued, subject to the terms of the
applicable Stock Incentive Agreement and to the provisions of the Incentive
Plan.
The number of shares of Common Stock reserved for issuance in
connection with the grant or settlement of Stock Incentives or to which a Stock
Incentive is subject, as the case may be, and the exercise price of each option
are subject to adjustment in the event of any recapitalization of the Company.
In the event of certain corporate reorganizations, Stock Incentives may be
substituted, cancelled, accelerated, cashed-out or otherwise adjusted by the
Compensation Committee, provided such adjustment is not inconsistent with the
terms of the Incentive Plan or any agreement reflecting the terms of a Stock
Incentive.
Although the Incentive Plan may be amended by the Board of Directors
without stockholder approval, the Board of Directors also may condition any such
amendment upon stockholder approval if stockholder approval is deemed necessary
or appropriate in consideration of tax, securities or other laws. No such action
by the Board of Directors may adversely affect the rights of a holder of a Stock
Incentive without the holder's consent.
A participant will not recognize income upon the grant of an option or
at any time prior to the exercise of the option or a portion thereof. At the
time a participant exercises a non-qualified option or portion thereof, he or
she will recognize compensation taxable as ordinary income in an amount equal to
the excess of the fair market value of the Common Stock on the date the option
is exercised over the price paid for the Common Stock, and the Company will then
be entitled to a corresponding deduction.
A participant who exercises an incentive stock option will not be taxed
at the time he or she exercises his or her option or a portion thereof. Instead,
he or she will be taxed at the time he or she sells the Common Stock purchased
pursuant to the option. A participant will be taxed on the difference between
the price he or she paid for the stock and the amount for which he or she sells
the stock. If a participant does not sell the stock prior to two years from the
date of grant of the option and one year from the date the stock is issued to
him or her, the gain will be capital gain and the Company will not get a
corresponding deduction. If a participant sells the stock at a gain prior to
that time, the difference between the amount the participant paid for the stock
and the lesser of the fair market value on the date of exercise or the amount
for which the stock is sold will be taxed as ordinary income and the Company
will be entitled to a corresponding deduction. If the stock is sold for an
amount in excess of the fair market value on the date of exercise, the excess
amount is taxed as capital gain. If a participant sells the stock for less than
the amount he or she paid for the stock prior to the one or two
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year periods indicated, no amount will be taxed as ordinary income and the loss
will be taxed as a capital loss. Exercise of an incentive stock option may
subject a participant to, or increase a participant's liability for, the
alternative minimum tax.
A participant generally will not recognize income upon the grant of a
stock appreciation right, dividend equivalent right, performance unit
appreciation right or phantom share (an "Equity Incentive"). At the time a
participant receives payment under any Equity Incentive, he or she generally
will recognize compensation taxable as ordinary income in an amount equal to the
cash or the fair market value of the Common Stock received, and the Company will
then be entitled to a corresponding deduction.
A participant will not be taxed upon the grant of a stock award if such
award is not transferable by the participant or is subject to a "substantial
risk of forfeiture," as defined in the Internal Revenue Code of 1986, as amended
(the "Code"). However, when the shares of Common Stock that are subject to the
stock award become transferable by the participant and are no longer subject to
a substantial risk of forfeiture, a participant will recognize compensation
taxable as ordinary income in an amount equal to the fair market value of the
stock subject to the stock award, less any amount paid for such stock, and the
Company will then be entitled to a corresponding deduction. However, if a
participant so elects at the time of receipt of a stock award that is subject to
a substantial risk of forfeiture, he or she may include the fair market value of
the stock subject to the stock award, less any amount paid for such stock, in
income at the time of grant and the Company also will be entitled to a
corresponding deduction at that time.
The affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting is required for approval of an increase in the number of shares of
Common Stock reserved for issuance under the Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL
OF THE INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK
RESERVED FOR ISSUANCE UNDER THE INCENTIVE PLAN.
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EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee consists entirely of nonemployee directors
and determines the compensation paid to the Chief Executive Officer. The
Compensation Committee also determines, along with the Chief Executive Officer,
all compensation paid to the other executive officers of the Company. The
Compensation Committee believes that for the Company to be successful long-term
and for it to increase stockholder value it must be able to hire, retain,
adequately compensate and financially motivate talented and ambitious
executives. The Compensation Committee attempts to reward executives for both
individual achievement and overall Company success.
Executive compensation is made up of three components:
i. Base Salary: An executive's base salary is initially
determined by considering the executive's level of responsibility,
prior experience and compensation history. Published salaries of
executives in similar positions at other companies of comparable size
(sales and/or number of employees) is also considered in establishing
base salary.
ii. Cash Bonus: The Company maintains an incentive bonus plan
to provide annual cash bonuses to certain executives. Such bonuses are
based, in part, on the Company's financial performance during the
previous fiscal year including data in connection with earnings per
share and profitability and performance as compared to the Company's
approved profit plan. In addition, objective individual measures of
performance compared to the individual's business unit profit
performance are considered. A subjective rating of the executive's
personal performance is also considered.
iii. Stock Options: The Compensation Committee believes that the
granting of stock options is directly linked to increased executive
commitment and motivation and to the long-term success of the Company.
The Compensation Committee thus awards stock options to certain
executives. The Compensation Committee uses both subjective appraisals
of the executive's performance and the Company's performance and
financial success during the previous year to determine option grants.
Mr. Gary M. Bremer, who serves as the Company's Chairman of the Board
and who served as the Company's Chief Executive Officer from October 8, 1996 to
April 10, 1997, is paid a base salary of $329,000 pursuant to an employment
agreement. See "--Employment Agreements." Pursuant to Mr. Bremer's employment
agreement, Mr. Bremer also receives an annual bonus of $70,000 if the Company
achieves certain financial results, a car allowance of $2,000 per month and
reimbursement of up to $22,000 per year for certain club memberships and
insurance expenses. The Compensation Committee also considers stock option
grants that can be awarded to Mr. Bremer. Additional compensation is based on a
subjective analysis of the Company's performance and Mr. Bremer's role in
generating such performance.
Mr. James R. Henderson, who has served as the Company's Chief Executive
Officer since April 10, 1997, began service with the Company as President and a
director in October 1996, at which time he was paid a base salary of $225,000.
Upon his election as Chief Executive Officer of the Company, the Compensation
Committee determined to continue his base salary of $225,000. In addition, the
Compensation Committee can consider awarding Mr. Henderson cash bonuses and
stock option grants. Mr. Henderson does not have an employment agreement with
the Company.
It should be noted that: (i) exceptions to the general principles
stated above are made when the Compensation Committee deems them appropriate to
stockholder interest; (ii) the Compensation Committee regularly considers other
forms of
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compensation and modifications of its present policies, and will make changes as
it deems appropriate; and (iii) the competitive opportunities to which the
Company's executives are exposed frequently come from private companies or
divisions of large companies, for which published compensation data is often
unavailable, with the result that the Compensation Committee's information about
such opportunities is often anecdotal.
Section 162(m) of the Code establishes a limit on the deductibility of
annual compensation for certain executive officers that exceeds $1,000,000 per
year unless certain requirements are met. The Company does not anticipate that
any employee will exceed such $1,000,000 cap in the near future but will make
necessary adjustments if and when this occurs.
Compensation Committee
Richard D. Jackson, Chairman
Murali Anantharaman
James A. Gilbert
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COMPENSATION SUMMARY
The following table sets forth all compensation paid by the Company for
the years ended December 31, 1997, 1996 and 1995 to each of the individuals who
served as Chief Executive Officer during 1997 and the four most highly
compensated other executive officers (together, the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation ------------
------------------------------------------------------ Number of
Other Securities
Annual Underlying All Other
Salary Bonus Compensation Option Compensation
Name and Principal Position Year ($) ($) ($) Grants(#) ($)(1)
- --------------------------- ---- -------------- ---------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gary M. Bremer 1997 $ 329,000 $ -- $ 45,934(3) -- $ 29,909(4)
Chairman of the Board 1996 346,335(5) 42,623 -- 183,324 46,492(4)(5)
and former Chief 1995 -- -- -- -- --
Executive Officer (2)
James R. Henderson 1997 225,000 -- -- 100,000 6,872
President and Chief 1996 225,000(5) -- -- 202,526 --
Executive Officer 1995 -- -- -- -- --
William J. Simione, Jr. 1997 300,000 -- -- -- 6,134
Vice Chairman of the 1996 300,000(5) -- -- 60,557 --
Board and Executive Vice 1995 -- -- -- -- --
President
Gary W. Rasmussen 1997 200,000 -- -- -- 4,891
Chief Operating Officer 1996 200,000(5) -- -- 24,773 4,440(5)
1995 -- -- -- -- --
Lori N. Siegel 1997 135,000 -- -- -- 3,715
Chief Financial Officer 1996 135,000(5) -- -- 22,661 2,610(5)
1995 -- -- -- -- --
James A. Tramonte 1997 118,750 -- -- -- 34,669
Former General Counsel 1996 150,000(5) -- -- 24,773 3,794(5)
and Secretary (6) 1995 -- -- -- -- --
- --------------------
</TABLE>
(1) Represents group life insurance and disability insurance premium
payments, except for Mr. Tramonte who received in 1997 an additional
$31,250 in connection with his resignation from the Company as of
October 13, 1997.
(2) Mr. Bremer served as Chief Executive Officer of the Company from
October 8, 1996 until April 10, 1997.
(3) See "--Employment Agreements" with respect to a description of certain
car allowance, club membership and insurance expense reimbursements to
which Mr. Bremer is entitled pursuant to his employment agreement.
(4) Includes $20,698 and $37,294 of interest imputed to Mr. Bremer in 1997
and 1996, respectively, in connection with a promissory note to the
Company for $900,000 entered into on March 5, 1996 by Mr. Bremer. The
Company forgave all interest (5.05% per annum) that accrued on the
outstanding principal balance of this promissory note. In July 1997,
Mr. Bremer repaid in full the then outstanding principal balance of
$850,000. See "Certain Relationships and Related Transactions."
(5) Represents the annualized salary and group life insurance and
disability insurance premium payments the executive officer would have
received had he or she joined the Company on January 1, 1996. Messrs.
Bremer, Henderson, Simione, Rasmussen, Tramonte and Ms. Siegel joined
the Company on October 8, 1996. The annualized salary and insurance and
disability payments set forth herein for 1996 are based on payments
made by the Company from October 8, 1996 until December 31, 1996.
(6) Mr. Tramonte resigned as General Counsel and Secretary of the Company
as of October 13, 1997.
10
<PAGE> 13
GRANTS OF STOCK OPTIONS
The following table sets forth certain information with respect to
individual grants of stock options by the Company to the Named Executive
Officers during the year ended December 31, 1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
--------------------------------------------------------------
Potential
Realizable Value
Number of % of Total at Assumed Annual
Securities Options Rates of Stock
Underlying Granted to Exercise Price Appreciation
Options Employee in Price Expiration for Option Term(1)
Name Granted(#) Fiscal Year ($/Sh) Date 5%($) 10%($)
- ---- ---------- ----------- -------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Gary M. Bremer................... -- -- -- -- -- --
James R. Henderson............... 100,000 30% $ 9.875 5/21/07 $ 621,033 $1,573,821
William J. Simione, Jr........... -- -- -- -- -- --
Gary W. Rasmussen................ -- -- -- -- -- --
Lori N. Siegel................... -- -- -- -- -- --
James A. Tramonte................ -- -- -- -- -- --
- --------------------
</TABLE>
(1) The dollar amounts under these columns represent the potential
realizable value of each grant of option assuming that the market price
of the Common Stock appreciates in value from the date of grant at the
5% and 10% annual rates prescribed by the Securities and Exchange
Commission (the "Commission") and, therefore, are not intended to
forecast possible future appreciation, if any, of the price of the
Common Stock. The actual value, if any, that an executive officer may
ultimately realize will depend on the excess of the stock price over
the exercise price on the date the stock option is exercised.
Therefore, there can be no assurance that the value realized by an
executive officer upon actual exercise of the stock options granted in
1997 will be at or near the Potential Realizable Value indicated in the
table.
11
<PAGE> 14
OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning the value of
unexercised stock options held at the end of the fiscal year ended December 31,
1997 by each Named Executive Officer. During 1997, none of the Named Executive
Officers exercised any stock options.
OPTION VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 1997(#) DECEMBER 31,1997($)(1)
---------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Gary M. Bremer....................... 171,213 12,111 $988,741 $ 48,444
James R. Henderson................... 67,510 235,016 36,704 73,400
William J. Simione, Jr............... 45,877 14,680 254,414 58,720
Gary W. Rasmussen.................... 10,093 14,680 45,436 58,720
Lori N. Siegel....................... 7,921 14,740 19,360 32,296
James A. Tramonte.................... 10,093 7,340 45,436 29,360
</TABLE>
--------------------
(1) Dollar values were calculated by determining the difference between the
fair market value of the underlying securities at year-end ($9.00 per
share) and the exercise price of the options.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Mr. Gary M. Bremer, the
Chairman of the Board, which provides for an initial base salary of $329,000, an
annual bonus of $70,000 if the Company achieves certain financial results, and a
car allowance of $2,000 per month. In addition, Mr. Bremer's employment
agreement provides for reimbursement of up to $22,000 per year for certain club
membership and insurance expenses. The agreement was signed on December 10, 1996
and has an initial three year term which will renew for additional one year
terms unless terminated by either party. The agreement further provides that if
Mr. Bremer is terminated for any reason other than for cause (as defined in the
agreement), or if Mr. Bremer terminates the agreement for good reason (as
defined in the agreement), he will be entitled to the compensation remaining
under the current term of the agreement. The agreement contains non-compete
provisions prohibiting Mr. Bremer from competing with the Company during the
term of the agreement and for one year thereafter, except in the case of certain
terminating events of Mr. Bremer's employment following a change in control (as
defined in the agreement) of the Company.
A Company subsidiary has an employment agreement with Mr. William J.
Simione, Jr., Vice Chairman of the Board and an Executive Vice President of the
Company, which provides for a base salary of $300,000, plus certain benefits,
and a potential bonus payable at the discretion of the Board of Directors. The
agreement was signed on January 1, 1996 and has an initial five year term that
can be renewed for additional one year terms unless terminated by either party.
The agreement provides for different severance payments if there is a change in
control of the Company based upon the circumstances and timing of Mr. Simione's
termination of employment with respect to
12
<PAGE> 15
the change in control. The agreement also contains a non-compete provision
prohibiting Mr. Simione from competing with the Company during the term of the
agreement and, depending upon the terminating events of Mr. Simione's
employment, for a period of time thereafter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information at February 1, 1998 with
respect to (i) any person known to the Company to be the beneficial owner of
more than 5% of the Common Stock, (ii) all directors of the Company, (iii) all
Named Executive Officers (as defined on page 10), and (iv) all directors and
executive officers as a group. The Company believes that the beneficial owners
of the Common Stock listed below, based on information furnished by such owners,
have sole voting and investment power with respect to the shares of Common
Stock, except as noted below.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
-------------------
OWNED
NAME AND ADDRESS -----
OF BENEFICIAL OWNER NUMBER(1) PERCENT(2)
- ------------------- --------- ----------
<S> <C> <C>
O'Donnell Davis, Inc.(3).............................................................. 1,121,973 12.6%
P.O. Box 7395
Princeton, NJ 08543
Barrett C. O'Donnell(4)............................................................... 1,121,973 12.6
P.O. Box 7395
Princeton, NJ 08543
Murali Anantharaman(5)................................................................ 920,138 10.7
120 Breakwater Circle
Atlanta, GA 30328
Simione Central Holdings, Inc......................................................... 904,008 10.6
Profit Sharing Plan Trust
c/o Trust Company of Knoxville, Inc.
620 Market Street, Suite 300
Knoxville, TN 37902
Gary M. Bremer(6)..................................................................... 895,957 10.3
6600 Powers Ferry Road
Atlanta, GA 30339
Rowan Nominees Limited(7)............................................................. 884,873 10.3
33 King William Street
London, EC4R 9AS
The TCW Group, Inc.(8)................................................................ 605,100 7.1
865 South Figueroa Street
Los Angeles, CA 90017
Howard B. Krone (9)................................................................... 440,622 5.2
3633 Tuxedo Road
Atlanta, GA 30305
Putnam Investments, Inc.(10).......................................................... 436,300 5.1
One Post Office Square
Boston, MA 02109
William J. Simione, Jr.(11)........................................................... 124,748 1.5
4130 Whitney Avenue
Hamden, CT 06518
</TABLE>
13
<PAGE> 16
<TABLE>
<S> <C> <C>
James R. Henderson(12)................................................................ 83,284 *
6600 Powers Ferry Road
Atlanta, GA 30339
James A. Gilbert(13).................................................................. 3,750 *
235 North Mill Road
Atlanta, GA 30338
Richard D. Jackson(14)................................................................ 1,667 *
3745 Randall Mill Road
Atlanta, GA 30327
Gary W. Rasmussen(15)................................................................. 25,867 *
6600 Powers Ferry Road
Atlanta, GA 30339
Lori Nadler Siegel(16)................................................................ 11,075 *
6600 Powers Ferry Road
Atlanta, GA 30339
James A. Tramonte(17)................................................................. 27,709 *
5509 Mount Vernon Way
Dunwoody, GA 30338
All directors and executive officers as
a group (10 persons) (18)........................................................... 3,188,459 34.4
</TABLE>
--------------------
*Less than 1%
(1) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), beneficial ownership of a security
consists of sole or shared voting power (including the power to vote or
direct the vote) and/or sole or shared investment power (including the
power to dispose or direct the disposition) with respect to a security
through any contract, arrangement, understanding or relationship. The
number of shares of Common Stock includes the number of shares of
Common Stock which are subject to the exercise of options or warrants
within 60 days of February 1, 1998.
(2) Percentages were calculated based on the ratio of the number of shares
of Common Stock beneficially owned by such beneficial owner as of
February 1, 1998 to the sum of (a) 8,522,928, the total number of
outstanding shares of Common Stock as of February 1, 1998, and (b) the
number of shares of Common Stock issuable upon exercise of options or
warrants held by the applicable beneficial owner exercisable within 60
days of February 1, 1998.
(3) Includes 135,000 shares issuable upon exercise of warrants and 252,581
shares issuable upon exercise of options. Also includes 150,000 shares
held by the Trust Under the Will of John C. O'Donnell, Sr., as to which
Mr. O'Donnell may be deemed to share voting and dispositive power.
(4) Mr. O'Donnell is a stockholder, director and officer of O'Donnell
Davis, Inc. ("ODD"). Accordingly, pursuant to Rule 13d-3 under the
Exchange Act, he is deemed to be an indirect beneficial owner of the
Company's securities beneficially owned by ODD.
(5) Includes 15,464 shares as to which Mr. Anantharaman has sole voting
power, 19,801 shares issuable upon exercise of options, 853,930 shares
related to Rowan Nominees Limited ("Rowan") and 30,943 shares issuable
upon exercise of options
14
<PAGE> 17
related to Rowan. Rowan is an affiliate of EGL, in which Mr.
Anantharaman serves as a partner. Mr. Anantharaman disclaims beneficial
ownership with respect to shares beneficially owned by Rowan.
(6) Includes 171,213 shares issuable upon exercise of options. Excludes any
interest Mr. Bremer has in the Simione Central Holdings, Inc. Profit
Sharing Plan Trust (the "Profit Sharing Plan").
(7) Includes 30,943 shares issuable upon exercise of options.
(8) The information set forth in the table is based on a Schedule 13G dated
February 12, 1998 filed jointly by The TCW Group, Inc. ("TCW")and Mr.
Robert Day, who may be deemed to control TCW. TCW and Mr. Day each
claim (i) to be beneficial owners of 605,100 shares, and (ii) to have
voting and dispositive power with respect to all such shares.
(9) Includes 125,135 shares owned by Dr. Krone's wife, as to which Dr.
Krone may be deemed to have sole dispositive and voting power.
(10) The information set forth in the table is based on a Schedule 13G dated
January 16, 1998 filed jointly by Putnam Investments, Inc. ("Putnam")
and its affiliates, Marsh & McLennan Companies, Inc. ("Marsh &
McLennan"), Putnam Investment Management, Inc. ("Putnam Investment")
and Putnam Advisory Company, Inc. ("Putnam Advisory"). Putnam, a
wholly-owned subsidiary of Marsh & McLennan, is the beneficial owner of
the 436,300 shares and claims shared dispositive power with respect to
all such shares and shared voting power with respect to 272,500 of such
shares. Putnam Investment, a wholly-owned subsidiary of Putnam and the
investment advisor to the Putnam family of mutual funds, is the
beneficial owner of 148,300 of the 436,300 shares set forth in the
table and claims shared dispositive power with respect to such 148,300
shares but no voting power. Putnam Advisory, a wholly-owned subsidiary
of Putnam and the investment advisor to Putnam's institutional clients,
is the beneficial owner of 288,000 of the 436,300 shares set forth in
the table and claims shared voting power with respect to 272,500 shares
and shared dispositive power with respect to all 288,000 shares.
(11) Includes 45,877 shares issuable upon exercise of options.
(12) Includes 67,510 shares issuable upon exercise of options.
(13) Includes 2,500 shares issuable upon exercise of options.
(14) Represents 1,667 shares issuable upon exercise of options.
(15) Includes 10,093 shares issuable upon exercise of options. Excludes any
interest Mr. Rasmussen has in the Profit Sharing Plan.
(16) Includes 7,921 shares issuable upon exercise of options. Excludes any
interest Ms. Siegel has in the Profit Sharing Plan.
(17) Includes 10,093 shares issuable upon exercise of options. Excludes any
interest Mr. Tramonte has in the Profit Sharing Plan.
(18) Includes 610,106 shares issuable upon exercise of options and 135,000
shares issuable upon exercise of warrants. Excludes all shares
beneficially owned by Mr. Tramonte who, as of October 13, 1997,
resigned as an executive officer of the Company.
For a description of a voting agreement among the Company, ODD, EGL,
Mr. Anantharaman and certain of their affiliates, see "Certain Relationships and
Related Transactions."
15
<PAGE> 18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 1, 1996, IMHI entered into a lease agreement with Gateway
LLC with respect to the Company's Pompano Beach, Florida office (the "Pompano
Lease"). ODD owns 65% of Gateway LLC and more than 5% of the Company's Common
Stock. In addition, Mr. Barrett C. O'Donnell, a director of the Company, is the
Chairman of the Board, President and Chief Executive Officer and a 75%
stockholder of ODD. Pursuant to the lease agreement, Gateway LLC leases
approximately 20,291 square feet to the Company for a term of five years that
commenced on January 1, 1996. In addition, on October 24, 1997 a subsidiary of
the Company entered into a written addendum extending the Pompano Lease through
December 31, 2001. The Company has an option to renew the lease for an
additional five year term. Rental payments from the Company for the year ended
December 31, 1997 totaled $223,201. The scheduled annual rental payments for the
remaining term are $233,347 for 1998, $243,492 for 1999, $253,638 for 2000 and
$264,189 for 2001. In addition to the aforesaid lease payments, the Company is
obligated to pay its share of the office building's operating expenses. The
lease payments were determined by negotiation between the parties. The Company
believes that the terms of the lease agreement are at least as favorable as
could have been obtained elsewhere for similar facilities from unaffiliated
third parties.
During 1996, the Company entered into various capital lease agreements
with National Leasing, Inc. ("NLI"). Mr. Gary M. Bremer, Chairman of the Board
of the Company, Mr. William J. Simione, Jr., Vice Chairman of the Board and an
Executive Vice President of the Company, and Mr. Gary W. Rasmussen, Chief
Operating Officer of the Company, each respectively owned a 33.33% interest in
NLI. Each lease was for a three year term and provided for an interest rate of
14%. Interest expense related to these capital leases totaled $57,746 during the
year ended December 31, 1997. The Company purchased the leased assets in
December 1997 by paying off these leases in full in the amount of $579,039. The
terms of the various lease agreements and the purchase of the leased assets were
determined by negotiation between the parties. The Company believes that the
terms of the lease agreements and the purchase of the leased assets were at
least as favorable as could have been obtained for similar assets from
unaffiliated third parties.
On January 1, 1998, the Company replaced an oral lease agreement with
S&S Realty for the Company's Hamden, Connecticut office with a written
agreement. Mr. Simione owns 45% of S&S Realty. Pursuant to the lease agreement,
S&S Realty leases approximately 6,500 square feet to the Company for a term
expiring on December 31, 2002. Rental payments for the year ended December 31,
1997 totaled $129,996. The scheduled annual rental payments for each year of the
remaining term may, upon thirty (30) days' written notice from S&S Realty, be
increased by $5,850. In addition to the aforesaid lease payments, the Company is
obligated to pay its share of the office building's operating expenses (other
than water, which is provided by S&S Realty). The lease payments were determined
by negotiation between the parties. The Company believes that the terms of the
lease agreement are at least as favorable as could have been obtained elsewhere
for similar facilities from unaffiliated third parties.
On March 5, 1996, Gary M. Bremer entered into a promissory note for
$900,000 in connection with money borrowed from the Company for the purchase of
Common Stock, with all principal and interest (5.05% per annum) due on December
5, 1996. Mr. Bremer repaid $50,000 of the outstanding principal balance in 1996
and the maturity date for repaying the remaining balance due under the
promissory note was extended until such time as Mr. Bremer no longer personally
guaranteed a $1.5 million credit facility issued in favor of the Company. This
credit facility was paid off and terminated on July 7, 1997, whereupon Mr.
Bremer immediately repaid in full the remaining outstanding principal balance of
$850,000. The Company forgave all interest that had accrued on the outstanding
principal balance of this promissory note.
16
<PAGE> 19
On October 7, 1996 and as a condition to the consummation of the
Company's acquisition of IMHI, EGL and ODD (each an "Investor"), Mr.
Anantharaman and certain other holders of shares of IMHI Preferred Stock entered
into an agreement with IMHI (the "Preferred Stock Agreement"). Pursuant to the
Preferred Stock Agreement, such holders agreed to exchange all of their
respective shares of Preferred Stock for Common Stock based on a conversion
price of $4.00 per share. In addition, such holders received shares of Company
Common Stock in lieu of cash dividends that were payable on their respective
shares of Preferred Stock. Mr. Anantharaman is a partner in EGL. EGL is an
affiliate of Rowan, which is a more than 5% beneficial owner of the Company's
Common Stock. Mr. O'Donnell is a director and officer of ODD. ODD is also a more
than 5% beneficial owner of the Company's Common Stock. In connection with the
Preferred Stock Agreement (i) Rowan received approximately 483,550 shares of
Common Stock, (ii) ODD received approximately 265,350 shares of Common Stock,
and (iii) Mr. Anantharaman received approximately 1,000 shares of Common Stock.
In addition, the Preferred Stock Agreement entitles each Investor, as
long as such Investor and its affiliates own 5% or more of the Common Stock, to
designate through October 8, 1998 one person reasonably acceptable to the
Company's Board of Directors to serve as a director of the Company, and the
Company shall use all reasonable efforts to cause the election of such
designees. Furthermore, EGL and ODD agreed to be present, in person or by proxy,
at every stockholder meeting and to vote in favor of all nominees to the
Company's Board of Directors as approved by such Board, provided EGL's and ODD's
designees are included with such nominees. Currently, Mr. Anantharaman is EGL's
designee and Mr. O'Donnell is ODD's designee to the Board of Directors.
On November 1, 1996, Simione Central, Inc., a wholly-owned subsidiary
of the Company ("SCI"), entered into various information, support and management
service agreements (the "Columbia Agreements") with certain affiliates of
Columbia/HCA Healthcare Corporation ("Columbia/HCA"). As part of the negotiation
of the Columbia Agreements, Columbia/HCA required that SCI, formerly a
subsidiary of CHHC, guarantee certain indemnification obligations of the former
stockholders of CHHC, including Mr. Bremer, to those Columbia/HCA affiliates
(the "Guaranty") for potential liabilities relating to the Central Health
Holding Company Employee Stock Ownership Plan Trust (the "Plan") or its
participants, including potential liabilities resulting from a then ongoing
investigation of the Plan by the Department of Labor and the Internal Revenue
Service's then ongoing audit of certain issues related to the Plan (both of
which have been resolved). Columbia/HCA became indirectly responsible for these
Plan obligations as a result of its acquisition of CHHC by purchasing all of
CHHC's stock. Because all of the former CHHC stockholders were also stockholders
of the Company as a result of the January 1996 spin-off of the Company from
CHHC, SCI agreed to undertake the Guaranty. Also, on November 1, 1996, the Plan
was converted into the Profit Sharing Plan and sponsorship of the Plan was
transferred from CHHC to the Company. Under the terms of the Guaranty, SCI
guarantees Columbia/HCA against: (i) Plan losses arising from a fiduciary
breach, prohibited transaction or other violation of law relating to the Plan;
or (ii) liabilities related to the Plan which are not paid by the former
stockholders of CHHC other than the Plan, but only to the extent such
liabilities are not recovered by Columbia/HCA through other indemnity provisions
of the stock purchase agreement. Columbia/HCA's other sources of potential
recovery include amounts accrued on CHHC's closing balance sheet at the time of
sale and escrow accounts established for the benefit of Columbia/HCA by the
former stockholders of CHHC. SCI's maximum liability under the Guaranty is
limited to $20 million for obligations arising before November 1, 1997, $17.5
million for obligations arising before November 1, 1998, $15 million for
obligations arising before November 1, 1999, $15 million for obligations arising
before November 1, 2000 and $0 thereafter. At no time during the term of the
Guaranty will SCI's liability exceed $20 million in the aggregate. Pursuant to
the Guaranty, SCI agreed that on each date that a guaranteed obligation is
required to be paid to Columbia/HCA, SCI would grant Columbia/HCA a security
interest equal to the amount of such guaranteed obligation in SCI's accounts
receivable. SCI also granted to Columbia/HCA and the parties to the Columbia
Agreements the right to offset any liability arising under the Guaranty against
any payments due from such parties to SCI
17
<PAGE> 20
for information, management and support services. At December 31, 1997, no
claims had been made under the Guaranty, and currently the Company does not
anticipate incurring any losses associated with the Guaranty.
Mr. G. Blake Bremer, the son of Mr. Gary M. Bremer, is currently
serving as an Assistant Vice President of the Company. As compensation for his
services, Mr. G. Blake Bremer was paid $99,803 in 1997. Ms. Lori Yawn Ferrero,
the Company's Director of Human Resources, and Ms. Martha Elizabeth Cavaiani,
the Company's Director of Marketing, are the sisters-in-law of Mr. Gary M.
Bremer. Ms. Ferrero and Ms. Cavaiani were paid $80,529 and $82,940,
respectively, in 1997 for their services. Mr. Robert J. Simione, the brother of
Mr. William J. Simione, Jr., is currently serving as Senior Vice President of
Simione Central Consulting, Inc. As compensation for his services, Mr. Robert J.
Simione was paid $226,443 in 1997. In addition, Mr. William J. Simione, III, the
son of Mr. William J. Simione, Jr., is currently serving as a Consulting Manager
of the Company. As compensation for his services, Mr. William J. Simione, III
was paid $69,019 in 1997.
For a description of consulting agreements between the Company and
certain directors, see "Proposal 1 -- Election of Directors--Director
Compensation."
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph shows a comparison, since the Common Stock began
trading on September 3, 1993, of cumulative total returns for the Common Stock,
the Standard & Poor's SmallCap 600 Index and the Standard & Poor's Computer
(Software and Services)--Mid-Cap Index. The comparisons in this table are
required by the Commission and, therefore, are not intended to forecast or be
indicative of possible future performance of the Common Stock.
INDEXED RETURNS
YEARS ENDING
<TABLE>
<CAPTION>
SIMIONE COMPUTER S&P
MEASUREMENT PERIOD CENTRAL (SOFTWARE & SMALLCAP
(FISCAL YEAR COVERED) HOLDINGS INC. SVC)-MID 600 INDEX
<S> <C> <C> <C>
3 SEP. 93 100 100 100
DEC. 93 62.50 100.68 104.04
DEC. 94 68.75 110.59 99.08
DEC. 95 40.63 193.56 128.76
DEC. 96 107.80 196.28 156.21
DEC. 97 112.50 283.07 196.17
</TABLE>
18
<PAGE> 21
OTHER BUSINESS
As of the date of this Proxy Statement, management knows of no other
business that will be presented for consideration at the Annual Meeting.
However, if other proper matters are presented at the Annual Meeting, it is the
intention of the proxy holders named in the accompanying proxy to take such
action as shall be in accordance with their judgment on such matters. The quorum
requirement for convening the Annual Meeting is the holders, in person or by
proxy, of a majority of the shares of Common Stock entitled to vote at the
Annual Meeting.
SOLICITATION COSTS
The Company will pay the cost of preparing and mailing this Proxy
Statement and the other costs of the proxy solicitation made by the Company's
Board of Directors. Certain of the Company's officers and employees may solicit
the submission of proxies authorizing the voting of shares of Common Stock in
accordance with the Board of Directors' recommendations, but no additional
remuneration will be paid by the Company for the solicitation of those proxies.
Such solicitations may be made by personal interview, telephone or telegram.
Arrangements have also been made with brokerage firms and others for the
forwarding of proxy solicitation materials to the beneficial owners of Common
Stock, and the Company will reimburse them for reasonable out-of-pocket expenses
incurred in connection therewith.
STOCKHOLDER PROPOSALS AND NOMINATIONS
FOR THE 1999 ANNUAL MEETING
A stockholder desiring to submit an otherwise eligible proposal for
inclusion in the Company's Proxy Statement for the 1999 Annual Meeting of
Stockholders of the Company must deliver the proposal so that it is received by
the Company no later than December 30, 1998. The Company requests that all such
proposals be addressed to M. Henry Day, Jr., General Counsel and Secretary, 6600
Powers Ferry Road, Atlanta, Georgia 30339 and mailed by certified mail, return
receipt requested.
INDEPENDENT PUBLIC ACCOUNTANTS
Effective January 23, 1997, the Company appointed Ernst & Young LLP as
the Company's independent accountants for the fiscal year ended December 31,
1996 and replaced Arthur Andersen LLP, the independent accountants for IMHI,
which was acquired by the Company on October 8, 1996. The decision to change
accountants was approved by the Audit Committee of the Board of Directors of the
Company acting pursuant to authority granted by the Board of Directors.
Arthur Andersen LLP's reports on IMHI's Financial Statements for the
three years ended June 30, 1996 contained no adverse opinion or a disclaimer of
opinion, and were not qualified or modified as to uncertainty, audit scope or
accounting principles.
During the last three fiscal years ended June 30, 1996, there were no
disagreements between IMHI and Arthur Andersen LLP on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Arthur
Andersen LLP, would have caused it to make a reference to the subject matter of
the disagreements in connection with its reports.
None of the "reportable events" described in Item 304(a)(1)(v) of
Regulation S-K occurred with respect to IMHI during the last three fiscal years
or in the subsequent interim period to the date hereof.
19
<PAGE> 22
During the last three fiscal years and subsequent interim period to the
date hereof, the Company did not consult with Ernst & Young LLP regarding any of
the matters or events set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.
Ernst & Young LLP served as the Company's independent public
accountants for the fiscal year ended December 31, 1997 and is currently serving
in such capacity for the year ending December 31, 1998. Representatives of Ernst
& Young LLP are expected to be present at the Annual Meeting, at which time they
will have the opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, the Company's directors and
executive officers, and any persons holding more than 10% of the Common Stock
outstanding, are required to report their initial ownership of Common Stock and
any subsequent changes in that ownership to the Commission and The Nasdaq Stock
Market. Specific due dates have been established and the Company is required to
disclose in this Proxy Statement any failure to file by these dates during the
Company's most recent fiscal year. To the Company's knowledge, all of these
filing requirements were satisfied. In making these disclosures, the Company has
relied solely on its review of copies of the reports that have been submitted to
the Company with respect to its most recent fiscal year.
REPORTS TO STOCKHOLDERS
The Company has mailed this Proxy Statement and a copy of its Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 (the "Form
10-K") to each stockholder entitled to vote at the Annual Meeting. Included in
the Form 10-K are the Company's financial statements for the fiscal year ended
December 31, 1997. The Form 10-K is not a part of the proxy solicitation
material.
By order of the Board of Directors
/s/ M. Henry Day, Jr.
M. Henry Day, Jr.
General Counsel and Secretary
Atlanta, GA
April 29, 1998
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<PAGE> 23
ANNEX A
SIMIONE CENTRAL HOLDINGS, INC.
OMNIBUS EQUITY-BASED INCENTIVE PLAN
<PAGE> 24
SIMIONE CENTRAL HOLDINGS, INC.
OMNIBUS EQUITY-BASED INCENTIVE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1 DEFINITIONS................................................. 1
1.1 Definitions................................................. 1
SECTION 2 THE STOCK INCENTIVE PLAN.................................... 2
2.1 Purpose of the Plan......................................... 2
2.2 Stock Subject to the Plan................................... 2
2.3 Administration of the Plan.................................. 3
2.4 Eligibility and Limits...................................... 3
SECTION 3 TERMS OF STOCK INCENTIVES................................... 3
3.1 Terms and Conditions of All Stock Incentives................ 3
3.2 Terms and Conditions of Options............................. 4
(a) Option Price........................................... 4
(b) Option Term............................................ 4
(c) Payment................................................ 4
(d) Conditions to the Exercise of an Option................ 5
(e) Termination of Incentive Stock Option.................. 5
(f) Special Provisions for Certain Substitute Options...... 5
3.3 Terms and Conditions of Stock Appreciation Rights........... 5
(a) Settlement............................................. 5
(b) Conditions to Exercise................................. 5
3.4 Terms and Conditions of Stock Awards........................ 5
3.5 Terms and Conditions of Dividend Equivalent Rights.......... 6
(a) Payment................................................ 6
(b) Conditions to Payment.................................. 6
3.6 Terms and Conditions of Performance Unit Awards............. 6
(a) Payment................................................ 6
(b) Conditions to Payment.................................. 6
3.7 Terms and Conditions of Phantom Shares...................... 6
(a) Payment................................................ 6
(b) Conditions to Payment.................................. 6
3.8 Treatment of Awards Upon Termination of Employment.......... 7
SECTION 4 RESTRICTIONS ON STOCK....................................... 7
4.1 Escrow of Shares............................................ 7
4.2 Restrictions on Transfer.................................... 7
SECTION 5 GENERAL PROVISIONS.......................................... 7
5.1 Withholding................................................. 7
5.2 Changes in Capitalization; Merger; Liquidation.............. 8
5.3 Cash Awards................................................. 9
5.4 Compliance with Code........................................ 9
5.5 Right to Terminate Employment............................... 8
5.6 Non-alienation of Benefits.................................. 8
5.7 Restrictions on Delivery and Sales of Shares; Legends....... 9
5.8 Termination and Amendment of the Plan....................... 9
5.9 Stockholder Approval........................................ 9
5.10 Choice of Law............................................... 9
5.11 Effective Date of Plan...................................... 9
</TABLE>
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SIMIONE CENTRAL HOLDINGS, INC.
OMNIBUS EQUITY-BASED INCENTIVE PLAN
SECTION 1
DEFINITIONS
1.1 Definitions. Whenever used herein, the masculine pronoun shall be
deemed to include the feminine, and the singular to include the plural, unless
the context clearly indicates otherwise, and the following capitalized words and
phrases are used herein with the meaning thereafter ascribed:
(a) "Board of Directors" means the board of directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the committee appointed by the Board of
Directors to administer the Plan.
(d) "Company" means Simione Central Holdings, Inc., a Delaware
corporation.
(e) "Disability" has the same meaning as provided in the long-term
disability plan or policy maintained or, if applicable, most recently
maintained, by the Company or, if applicable, any affiliate of the Company
for the Participant. If no long-term disability plan or policy was ever
maintained on behalf of the Participant or, if the determination of
Disability relates to an Incentive Stock Option, Disability shall mean that
condition described in Code Section 22(e)(3), as amended from time to time.
In the event of a dispute, the determination of Disability shall be made by
the Committee and shall be supported by advice of a physician competent in
the area to which such Disability relates.
(f) "Disposition" means any conveyance, sale, transfer, assignment,
pledge or hypothecation, whether outright or as security, inter vivos or
testamentary, with or without consideration, voluntary or involuntary.
(g) "Dividend Equivalent Rights" means certain rights to receive cash
payments as described in Plan Section 3.5
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(i) "Exercise Price" means the price per share of Stock purchasable
under any Option.
(j) "Fair Market Value" with regard to a date means (1) the closing
price at which Stock shall have been sold on the last trading date prior to
that date as reported by the Nasdaq Stock Market (or, if applicable, as
reported by a national securities exchange selected by the Committee on
which the shares of Stock are then actively traded) and published in The
Wall Street Journal, (2) if Stock is not traded on a securities exchange,
but is reported by the Nasdaq Stock Market and market information is
published on a regular basis in The Wall Street Journal, the average of the
published high and low sales prices for the last business day prior to that
date as published in The Wall Street Journal, (3) if such market
information is not published on a regular basis, the average of the high
bid and low asked prices of Stock in the over-the-counter market on the
last business day prior to that date, as reported by the Nasdaq Stock
Market, or, if not so reported, by a generally accepted reporting service,
or (4) if Stock is not publicly traded, as determined in good faith by the
Committee with due consideration being given to (i) the most recent
independent appraisal of the Company, if such appraisal is not more than
twelve months old and (ii) the valuation methodology used in any such
appraisal provided that, for purposes of granting awards other than
Incentive Stock Options, Fair Market Value of the shares of Stock may be
determined by the Committee by reference to the average market value
determined over a period certain or as of specified dates, to a tender
offer price for the shares of Stock (if settlement of an award is triggered
by such an event) or to any other reasonable measure of fair market value.
(k) "Option" means a non-qualified stock option or an incentive stock
option.
<PAGE> 26
(l) "Over 10% Owner" means an individual who at the time an Incentive
Stock Option is granted owns Stock possessing more than 10% of the total
combined voting power of the Company or one of its Subsidiaries, determined
by applying the attribution rules of Code Section 424(d).
(m) "Participant" means an individual who receives a Stock Incentive
hereunder.
(n) "Performance Unit Award" refers to a performance unit award
described in Plan Section 3.6.
(o) "Phantom Shares" refers to the rights described in Plan Section
3.7.
(p) "Plan" means the Simione Central Holdings, Inc. Omnibus
Equity-based Incentive Plan.
(q) "Stock" means the Company's common stock, no par value.
(r) "Stock Appreciation Right" means a stock appreciation right
described in Plan Section 3.3.
(s) "Stock Award" means a stock award described in Plan Section 3.4.
(t) "Stock Incentive Agreement" means an agreement between the Company
and a Participant or other documentation evidencing an award of a Stock
Incentive.
(u) "Stock Incentive Program" means a written program established by
the Committee, pursuant to which Stock Incentives are awarded under the
Plan under terms, conditions and restrictions set forth in such written
program.
(v) "Stock Incentives" means, collectively, Dividend Equivalent
Rights, Options, Performance Unit Awards, Phantom Shares, Stock
Appreciation Rights and Stock Awards.
(w) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, with respect
to incentive stock options, at the time of the granting of the Option, each
of the corporations other than the last corporation in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
(x) "Termination of Employment" means the termination of the
employee-employer relationship between a Participant and the Company and
its affiliates, regardless of whether severance or similar payments are
made to the Participant for any reason, including, but not by way of
limitation, a termination by resignation, discharge, death, Disability or
retirement. The Committee shall, in its absolute discretion, determine the
effect of all matters and questions relating to a Termination of
Employment, including, but not by way of limitation, the question of
whether a leave of absence constitutes a Termination of Employment.
SECTION 2
THE STOCK INCENTIVE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide incentive to
officers, key employees, consultants, and directors of the Company and its
affiliates to stimulate their efforts toward the continued success of the
Company and to operate and manage the business in a manner that will provide for
the long-term growth and profitability of the Company; (b) encourage stock
ownership by officers, key employees, consultants, and directors by providing
them with a means to acquire a proprietary interest in the Company, acquire
shares of Stock, or to receive compensation which is based upon appreciation in
the value of Stock; and (c) provide a means of obtaining, rewarding and
retaining key personnel.
2.2 Stock Subject to the Plan. Subject to adjustment in accordance with
Section 5.2, 500,000 shares of Stock (the "Maximum Plan Shares") are hereby
reserved exclusively for issuance pursuant to Stock Incentives, all or any
portion of which may be issued pursuant to Options. At no time shall the Company
have outstanding Stock Incentives subject to Section 16 of the Exchange Act and
shares of Stock issued in respect of Stock Incentives in excess of the Maximum
Plan Shares; for this purpose, the outstanding Stock Incentives and shares of
Stock issued in respect of Stock Incentives shall be computed in accordance with
2
<PAGE> 27
Rule 16b-3(a)(1) as promulgated under the Exchange Act. To the extent permitted
by Rule 16b-3(a)(1) as promulgated under the Exchange Act, the shares of Stock
attributable to the nonvested, unpaid, unexercised, unconverted or otherwise
unsettled portion of any Stock Incentive that is forfeited or cancelled or
expires or terminates for any reason without becoming vested, paid, exercised,
converted or otherwise settled in full shall again be available for purposes of
the Plan.
2.3 Administration of the Plan. The Plan shall be administered by the
Committee, which shall be comprised of at least two members of the Board of
Directors who may be "outside directors" within the meaning of Code Section
162(m) and the regulations thereunder. The Committee shall have full authority
in its discretion to determine the officers, key employees, consultants, and
directors of the Company or its affiliates to whom Stock Incentives shall be
granted and the terms and provisions of Stock Incentives, subject to the Plan.
Subject to the provisions of the Plan, the Committee shall have full and
conclusive authority to interpret the Plan; to prescribe, amend and rescind
rules and regulations relating to the Plan; to determine the terms and
provisions of the respective Stock Incentive Agreements or Stock Incentive
Programs and to make all other determinations necessary or advisable for the
proper administration of the Plan. The Committee's determinations under the Plan
need not be uniform and may be made by it selectively among persons who receive,
or are eligible to receive, awards under the Plan (whether or not such persons
are similarly situated). The Committee's decisions shall be final and binding on
all Participants. The Committee may delegate to any member of the Board of
Directors or officer of the Company the administrative authority to (a)
interpret the provisions of the Plan, any Stock Incentive Agreement or any Stock
Incentive Program; and (b) determine the treatment of Stock Incentives upon a
Termination of Employment, as contemplated in Plan Section 3.8.
2.4 Eligibility and Limits. Stock Incentives may be granted only to
officers, key employees, consultants, and directors of the Company, or any
affiliate of the Company; that an incentive stock option may only be granted to
an employee of the Company or any Subsidiary. In the case of incentive stock
options, the aggregate Fair Market Value (determined as at the date an incentive
stock option is granted) of stock with respect to which stock options intended
to meet the requirements of Code Section 422 become exercisable for the first
time by an individual during any calendar year under all plans of the Company
and its Subsidiaries shall not exceed $100,000; provided further, that if the
limitation is exceeded, the incentive stock option(s) which cause the limitation
to be exceeded shall be treated as non-qualified stock option(s).
SECTION 3
TERMS OF STOCK INCENTIVES
3.1 Terms and Conditions of All Stock Incentives. (a) The number of shares
of Stock as to which a Stock Incentive shall be granted shall be determined by
the Committee in its sole discretion, subject to the provisions of Section 2.2
as to the total number of shares available for grants under the Plan and subject
to the limits on Options and Stock Appreciation Rights described in the
following sentence. To the extent required under Section 162(m) of the Code and
the regulations thereunder for compensation to be treated as qualified
performance-based compensation, the maximum number of shares of Stock with
respect to which Options or Stock Appreciation Rights may be granted during any
one year period to any employee shall not exceed 200,000.
(b) Each Stock Incentive shall either be evidenced by a Stock Incentive
Agreement in such form and containing such terms, conditions and restrictions as
the Committee may determine to be appropriate, or, except for Options or Stock
Appreciation Rights, be made subject to the terms of a Stock Incentive Program,
containing such terms, conditions and restrictions as the Committee may
determine to be appropriate. Each Stock Incentive Agreement or Stock Incentive
Program shall be subject to the terms of the Plan and any provisions contained
in the Stock Incentive Agreement or Stock Incentive Program that are
inconsistent with the Plan shall be null and void.
(c) The date a Stock Incentive is granted shall be the date on which the
Committee has approved the terms and conditions of the Stock Incentive and has
determined the recipient of the Stock Incentive and the
3
<PAGE> 28
number of shares covered by the Stock Incentive and has taken all such other
action necessary to complete the grant of the Stock Incentive.
(d) Any Stock Incentive may be granted in connection with all or any
portion of a previously or contemporaneously granted Stock Incentive. Exercise
or vesting of a Stock Incentive granted in connection with another Stock
Incentive may result in a pro rata surrender or cancellation of any related
Stock Incentive, as specified in the applicable Stock Incentive Agreement or
Stock Incentive Program.
(e) Stock Incentives shall not be transferable or assignable except by will
or by the laws of descent and distribution. Stock Incentives shall be
exercisable, during the Participant's lifetime, only by the Participant; or in
the event of the Disability of the Participant, by the legal representative of
the Participant; or in the event of the death of the Participant, by the legal
representatives of the Participant's estate or if no legal representative has
been appointed, by the successor in interest determined under the Participant's
will.
3.2 Terms and Conditions of Options. Each Option granted under the Plan
shall be evidenced by a Stock Incentive Agreement. At the time any Option is
granted, the Committee shall determine whether the Option is to be an incentive
stock option described in Code Section 422 or a non-qualified stock option, and
the Option shall be clearly identified as to its status as an incentive stock
option or a non-qualified stock option. Incentive stock options may only be
granted to employees of the Company or any Subsidiary. At the time any incentive
stock option granted under the Plan is exercised, the Company shall be entitled
to legend the certificates representing the shares of Stock purchased pursuant
to the Option to clearly identify them as representing the shares purchased upon
the exercise of an incentive stock option. An incentive stock option may only be
granted within ten (10) years from the earlier of the date the Plan is adopted
or approved by the Company's stockholders.
(a) Option Price. Subject to adjustment in accordance with Section 5.2 and
the other provisions of this Section 3.2, the Exercise Price under (i) any
non-qualified stock option shall be as set forth in the applicable Stock
Incentive Agreement which may be Fair Market Value on the date of grant or less
than or greater than such Fair Market Value; and (ii) any incentive stock option
shall be as set forth in the applicable Stock Incentive Agreement, but in no
event shall it be less than the Fair Market Value on the date the incentive
stock option is granted. With respect to each grant of an incentive stock option
to a Participant who is an Over 10% Owner, the Exercise Price shall not be less
than 110% of the Fair Market Value on the date the Option is granted.
(b) Option Term. Any incentive stock option granted to a Participant who
is not an Over 10% Owner shall not be exercisable after the expiration of ten
(10) years after the date the Option is granted. Any incentive stock option
granted to a Participant who is an Over 10% Owner shall not be exercisable after
the expiration of five (5) years after the date the Option is granted. The term
of any non-qualified stock option shall be as specified in the applicable Stock
Incentive Agreement.
(c) Payment. Payment for all shares of Stock purchased pursuant to
exercise of an Option shall be made in any form or manner authorized by the
Committee in the Stock Incentive Agreement, including, but not limited to, (i)
cash, (ii) by delivery to the Company of a number of shares of Stock which have
been owned by the holder for at least six (6) months prior to the date of
exercise having an aggregate Fair Market Value of not less than the product of
the Exercise Price multiplied by the number of shares the Participant intends to
purchase upon exercise of the Option on the date of delivery; (iii) in a
cashless exercise through a broker; or (iv) by having a number of shares of
Stock withheld, the Fair Market Value of which as of the date of exercise is
sufficient to satisfy the Exercise Price. In its discretion, the Committee also
may authorize (at the time an Option is granted or thereafter) Company financing
to assist the Participant as to payment of the Exercise Price on such terms as
may be offered by the Committee in its discretion. If a Stock Incentive
Agreement so provides, the Participant may be granted a new Option to purchase a
number of shares of Stock equal to the number of previously owned shares of
Stock tendered in payment for each share of Stock purchased pursuant to the
terms of the Stock Incentive Agreement. Any such new Option shall be subject to
the terms and conditions of the Stock Incentive Agreement pursuant to which such
new Option is granted. Payment of the Exercise Price shall be made at the time
that the Option or any part thereof is exercised, and
4
<PAGE> 29
no shares shall be issued or delivered upon exercise of an Option until full
payment has been made by the Participant. The holder of an Option, as such,
shall have none of the rights of a stockholder.
(d) Conditions to the Exercise of an Option. Each Option granted under the
Plan shall be exercisable by whom, at such time or times, or upon the occurrence
of such event or events, and in such amounts, as the Committee shall specify in
the Stock Incentive Agreement; provided, however, that subsequent to the grant
of an Option, the Committee, at any time before complete termination of such
Option, may accelerate the time or times at which such Option may be exercised
in whole or in part and may permit the Participant or any other designated
person to exercise the Option, or any portion thereof, for all or part of the
remaining Option term, notwithstanding any provision of the Stock Incentive
Agreement to the contrary.
(e) Termination of Incentive Stock Option. With respect to an incentive
stock option, in the event of Termination of Employment of a Participant, the
Option or portion thereof held by the Participant which is unexercised shall
expire, terminate, and become unexercisable no later than the expiration of
three (3) months after the date of Termination of Employment; provided, however,
that in the case of a holder whose Termination of Employment is due to death or
Disability, one (1) year shall be substituted for such three (3) month period.
For purposes of this Subsection (e), Termination of Employment of the
Participant shall not be deemed to have occurred if the Participant is employed
by another corporation (or a parent or subsidiary corporation of such other
corporation) which has assumed the incentive stock option of the Participant in
a transaction to which Code Section 424(a) is applicable.
(f) Special Provisions for Certain Substitute Options. Notwithstanding
anything to the contrary in this Section 3.2, any Option issued in substitution
for an option previously issued by another entity, which substitution occurs in
connection with a transaction to which Code Section 424(a) is applicable, may
provide for an exercise price computed in accordance with such Code Section and
the regulations thereunder and may contain such other terms and conditions as
the Committee may prescribe to cause such substitute Option to contain as nearly
as possible the same terms and conditions (including the applicable vesting and
termination provisions) as those contained in the previously issued option being
replaced thereby.
3.3 Terms and Conditions of Stock Appreciation Rights. Each Stock
Appreciation Right granted under the Plan shall be evidenced by a Stock
Incentive Agreement. A Stock Appreciation Right shall entitle the Participant to
receive the excess of (1) the Fair Market Value of a specified or determinable
number of shares of the Stock at the time of payment or exercise over (2) a
specified or determinable price which, in the case of a Stock Appreciation Right
granted in connection with an Option, shall be not less than the Exercise Price
for that number of shares subject to that Option. A Stock Appreciation Right
granted in connection with a Stock Incentive may only be exercised to the extent
that the related Stock Incentive has not been exercised, paid or otherwise
settled.
(a) Settlement. Upon settlement of a Stock Appreciation Right, the Company
shall pay to the Participant the appreciation in cash or shares of Stock (valued
at the aggregate Fair Market Value on the date of payment or exercise) as
provided in the Stock Incentive Agreement or, in the absence of such provision,
as the Committee may determine.
(b) Conditions to Exercise. Each Stock Appreciation Right granted under
the Plan shall be exercisable or payable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee shall
specify in the Stock Incentive Agreement; provided, however, that subsequent to
the grant of a Stock Appreciation Right, the Committee, at any time before
complete termination of such Stock Appreciation Right, may accelerate the time
or times at which such Stock Appreciation Right may be exercised or paid in
whole or in part.
3.4 Terms and Conditions of Stock Awards. The number of shares of Stock
subject to a Stock Award and restrictions or conditions on such shares, if any,
shall be as the Committee determines, and the certificate for such shares shall
bear evidence of any restrictions or conditions. Subsequent to the date of the
grant of the Stock Award, the Committee shall have the power to permit, in its
discretion, an acceleration of the expiration of an applicable restriction
period with respect to any part or all of the shares awarded to a Participant.
5
<PAGE> 30
3.5 Terms and Conditions of Dividend Equivalent Rights. A Dividend
Equivalent Right shall entitle the Participant to receive payments from the
Company in an amount determined by reference to any cash dividends paid on a
specified number of shares of Stock to Company stockholders of record during the
period such rights are effective. The Committee may impose such restrictions and
conditions on any Dividend Equivalent Right as the Committee in its discretion
shall determine, including the date any such right shall terminate and may
reserve the right to terminate, amend or suspend any such right at any time.
(a) Payment. Payment in respect of a Dividend Equivalent Right may be made
by the Company in cash or shares of Stock (valued at Fair Market Value on the
date of payment) as provided in the Stock Incentive Agreement or Stock Incentive
Program, or, in the absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Dividend Equivalent Right granted under
the Plan shall be payable at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Committee shall specify in the
applicable Stock Incentive Agreement or Stock Incentive Program; provided,
however, that subsequent to the grant of a Dividend Equivalent Right, the
Committee, at any time before complete termination of such Dividend Equivalent
Right, may accelerate the time or times at which such Dividend Equivalent Right
may be paid in whole or in part.
3.6 Terms and Conditions of Performance Unit Awards. A Performance Unit
Award shall entitle the Participant to receive, at a specified future date,
payment of an amount equal to all or a portion of the value of a specified or
determinable number of units (stated in terms of a designated or determinable
dollar amount per unit) granted by the Committee. At the time of the grant, the
Committee must determine the base value of each unit, the number of units
subject to a Performance Unit Award, the performance factors applicable to the
determination of the ultimate payment value of the Performance Unit Award and
the period over which Company performance shall be measured. The Committee may
provide for an alternate base value for each unit under certain specified
conditions.
(a) Payment. Payment in respect of Performance Unit Awards may be made by
the Company in cash or shares of Stock (valued at Fair Market Value on the date
of payment) as provided in the applicable Stock Incentive Agreement or Stock
Incentive Program or, in the absence of such provision, as the Committee may
determine.
(b) Conditions to Payment. Each Performance Unit Award granted under the
Plan shall be payable at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Committee shall specify in the
applicable Stock Incentive Agreement or Stock Incentive Program; provided,
however, that subsequent to the grant of a Performance Unit Award, the
Committee, at any time before complete termination of such Performance Unit
Award, may accelerate the time or times at which such Performance Unit Award may
be paid in whole or in part.
3.7 Terms and Conditions of Phantom Shares. Phantom Shares shall entitle
the Participant to receive, at a specified future date, payment of an amount
equal to all or a portion of the Fair Market Value of a specified number of
shares of Stock at the end of a specified period. At the time of the grant, the
Committee shall determine the factors which will govern the portion of the
rights so payable, including, at the discretion of the Committee, any
performance criteria that must be satisfied as a condition to payment. Phantom
Share awards containing performance criteria may be designated as Performance
Share Awards.
(a) Payment. Payment in respect of Phantom Shares may be made by the
Company in cash or shares of Stock (valued at Fair Market Value on the date of
payment) as provided in the applicable Stock Incentive Agreement or Stock
Incentive Program, or, in the absence of such provision, as the Committee may
determine.
(b) Conditions to Payment. Each Phantom Share granted under the Plan shall
be payable at such time or times, or upon the occurrence of such event or
events, and in such amounts, as the Committee shall specify in the applicable
Stock Incentive Agreement or Stock Incentive Program; provided, however, that
subsequent to the grant of a Phantom Share, the Committee, at any time before
complete termination of such Phantom Share, may accelerate the time or times at
which such Phantom Share may be paid in whole or in part.
6
<PAGE> 31
3.8 Treatment of Awards Upon Termination of Employment. Except as
otherwise provided by Plan Section 3.2(e), any award under this Plan to a
Participant who has experienced a Termination of Employment may be cancelled,
accelerated, paid or continued, as provided in the applicable Stock Incentive
Agreement or Stock Incentive Program, or, in the absence of such provision, as
the Committee may determine. The portion of any award exercisable in the event
of continuation or the amount of any payment due under a continued award may be
adjusted by the Committee to reflect the Participant's period of service from
the date of grant through the date of the Participant's Termination of
Employment or such other factors as the Committee determines are relevant to its
decision to continue the award.
SECTION 4
RESTRICTIONS ON STOCK
4.1 Escrow of Shares. Any certificates representing the shares of Stock
issued under the Plan shall be issued in the Participant's name, but, if the
applicable Stock Incentive Agreement or Stock Incentive Program so provides, the
shares of Stock shall be held by a custodian designated by the Committee (the
"Custodian"). Each applicable Stock Incentive Agreement or Stock Incentive
Program providing for transfer of shares of Stock to the Custodian shall appoint
the Custodian as the attorney-in-fact for the Participant for the term specified
in the applicable Stock Incentive Agreement or Stock Incentive Program, with
full power and authority in the Participant's name, place and stead to transfer,
assign and convey to the Company any shares of Stock held by the Custodian for
such Participant, if the Participant forfeits the shares under the terms of the
applicable Stock Incentive Agreement or Stock Incentive Program. During the
period that the Custodian holds the shares subject to this Section, the
Participant shall be entitled to all rights, except as provided in the
applicable Stock Incentive Agreement or Stock Incentive Program, applicable to
shares of Stock not so held. Any dividends declared on shares of Stock held by
the Custodian shall, as the Committee may provide in the applicable Stock
Incentive Agreement or Stock Incentive Program, be paid directly to the
Participant or, in the alternative, be retained by the Custodian or by the
Company until the expiration of the term specified in the applicable Stock
Incentive Agreement or Stock Incentive Program and shall then be delivered,
together with any proceeds, with the shares of Stock to the Participant or to
the Company, as applicable.
4.2 Restrictions on Transfer. The Participant shall not have the right to
make or permit to exist any Disposition of the shares of Stock issued pursuant
to the Plan except as provided in the Plan or the applicable Stock Incentive
Agreement or Stock Incentive Program. Any Disposition of the shares of Stock
issued under the Plan by the Participant not made in accordance with the Plan or
the applicable Stock Incentive Agreement or Stock Incentive Program shall be
void. The Company shall not recognize, or have the duty to recognize, any
Disposition not made in accordance with the Plan and the applicable Stock
Incentive Agreement or Stock Incentive Program, and the shares so transferred
shall continue to be bound by the Plan and the applicable Stock Incentive
Agreement or Stock Incentive Program.
SECTION 5
GENERAL PROVISIONS
5.1 Withholding. The Company shall deduct from all cash distributions
under the Plan any taxes required to be withheld by federal, state or local
government. Whenever the Company proposes or is required to issue or transfer
shares of Stock under the Plan or upon the vesting of any Stock Award, the
Company shall have the right to require the recipient to remit to the Company an
amount sufficient to satisfy any federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares or the vesting of such Stock Award. A Participant may pay the withholding
tax in cash, or, if the applicable Stock Incentive Agreement or Stock Incentive
Program provides, a Participant may elect to have the number of shares of Stock
he is to receive reduced by, or with respect to a Stock Award, tender back to
the Company, the smallest number of whole shares of Stock which, when multiplied
by the Fair Market Value of the shares of Stock determined as of the Tax Date
(defined below), is sufficient to satisfy federal, state and
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local, if any, withholding taxes arising from exercise or payment of a Stock
Incentive (a "Withholding Election"). A Participant may make a Withholding
Election only if both of the following conditions are met:
(a) The Withholding Election must be made on or prior to the date on
which the amount of tax required to be withheld is determined (the "Tax
Date") by executing and delivering to the Company a properly completed
notice of Withholding Election as prescribed by the Committee; and
(b) Any Withholding Election made will be irrevocable except on six
months advance written notice delivered to the Company; however, the
Committee may in its sole discretion disapprove and give no effect to the
Withholding Election.
5.2 Changes in Capitalization; Merger; Liquidation. (a) The number of
shares of Stock reserved for the grant of Options, Dividend Equivalent Rights,
Performance Unit Awards, Phantom Shares, Stock Appreciation Rights and Stock
Awards; the number of shares of Stock reserved for issuance upon the exercise or
payment, as applicable, of each outstanding Option, Dividend Equivalent Right,
Performance Unit Award, Phantom Share and Stock Appreciation Right and upon
vesting or grant, as applicable, of each Stock Award; the Exercise Price of each
outstanding Option and the specified number of shares of Stock to which each
outstanding Dividend Equivalent Right, Phantom Share and Stock Appreciation
Right pertains shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Stock resulting from a subdivision or combination
of shares or the payment of a stock dividend in shares of Stock to holders of
outstanding shares of Stock or any other increase or decrease in the number of
shares of Stock outstanding effected without receipt of consideration by the
Company.
(b) In the event of or anticipation of a merger, consolidation or other
reorganization of the Company or tender offer for shares of Stock, the Committee
may make such adjustments with respect to awards and take such other action as
it deems necessary or appropriate to reflect such merger, consolidation,
reorganization or tender offer, including, without limitation, the substitution
of new awards, the termination or adjustment of outstanding awards, the
acceleration of awards or the removal of restrictions on outstanding awards. Any
adjustment pursuant to this Section 5.2 may provide, in the Committee's
discretion, for the elimination without payment therefor of any fractional
shares that might otherwise become subject to any Stock Incentive, but shall not
otherwise diminish the then value of the Stock Incentive.
(c) The existence of the Plan and the Stock Incentives granted pursuant to
the Plan shall not affect in any way the right or power of the Company to make
or authorize any adjustment, reclassification, reorganization or other change in
its capital or business structure, any merger or consolidation of the Company,
any issue of debt or equity securities having preferences or priorities as to
the Stock or the rights thereof, the dissolution or liquidation of the Company,
any sale or transfer of all or any part of its business or assets, or any other
corporate act or proceeding.
5.3 Cash Awards. The Committee may, at any time and in its discretion,
grant to any holder of a Stock Incentive the right to receive, at such times and
in such amounts as determined by the Committee in its discretion, a cash amount
which is intended to reimburse such person for all or a portion of the federal,
state and local income taxes imposed upon such person as a consequence of the
receipt of the Stock Incentive or the exercise of rights thereunder.
5.4 Compliance with Code. All incentive stock options to be granted
hereunder are intended to comply with Code Section 422, and all provisions of
the Plan and all incentive stock options granted hereunder shall be construed in
such manner as to effectuate that intent.
5.5 Right to Terminate Employment. Nothing in the Plan or in any Stock
Incentive shall confer upon any Participant the right to continue as an employee
or officer of the Company or any of its affiliates or affect the right of the
Company or any of its affiliates to terminate the Participant's employment at
any time.
5.6 Non-alienation of Benefits. Other than as specifically provided with
regard to the death of a Participant, no benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge; and any attempt to do so shall be void. No such benefit
shall,
8
<PAGE> 33
prior to receipt by the Participant, be in any manner liable for or subject to
the debts, contracts, liabilities, engagements or torts of the Participant.
5.7 Restrictions on Delivery and Sale of Shares; Legends. Each Stock
Incentive is subject to the condition that if at any time the Committee, in its
discretion, shall determine that the listing, registration or qualification of
the shares covered by such Stock Incentive upon any securities exchange or under
any state or federal law is necessary or desirable as a condition of or in
connection with the granting of such Stock Incentive or the purchase or delivery
of shares thereunder, the delivery of any or all shares pursuant to such Stock
Incentive may be withheld unless and until such listing, registration or
qualification shall have been effected. If a registration statement is not in
effect under the Securities Act of 1933 or any applicable state securities laws
with respect to the shares of Stock purchasable or otherwise deliverable under
Stock Incentives then outstanding, the Committee may require, as a condition of
exercise of any Option or as a condition to any other delivery of Stock pursuant
to a Stock Incentive, that the Participant or other recipient of a Stock
Incentive represent, in writing, that the shares received pursuant to the Stock
Incentive are being acquired for investment and not with a view to distribution
and agree that the shares will not be disposed of except pursuant to an
effective registration statement, unless the Company shall have received an
opinion of counsel that such disposition is exempt from such requirement under
the Securities Act of 1933 and any applicable state securities laws. The Company
may include on certificates representing shares delivered pursuant to a Stock
Incentive such legends referring to the foregoing representations or
restrictions or any other applicable restrictions on resale as the Company, in
its discretion, shall deem appropriate.
5.8 Termination and Amendment of the Plan. The Board of Directors at any
time may amend or terminate the Plan without stockholder approval; provided,
however, that the Board of Directors may condition any amendment on the approval
of stockholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws. No such termination or
amendment without the consent of the holder of a Stock Incentive shall adversely
affect the rights of the Participant under such Stock Incentive.
5.9 Stockholder Approval. The Plan shall be submitted to the stockholders
of the Company for their approval within twelve (12) months before or after the
adoption of the Plan by the Board of Directors of the Company. If such approval
is not obtained, any Stock Incentive granted hereunder shall be void.
5.10 Choice of Law. The laws of the State of Georgia shall govern the
Plan, to the extent not preempted by federal law.
5.11 Effective Date of Plan. The Plan shall become effective March 26,
1997, the effective date of its adoption by the Board of Directors, subject,
however, to the approval of the Plan by the Company's shareholders.
SIMIONE CENTRAL HOLDINGS, INC.
By: /s/ GARY M. BREMER
------------------------------------
Title: Chairman/CEO
-----------------------------------
ATTEST:
/s/ JAMES A. TRAMONTE
- --------------------------------------
Secretary
[Corporate Seal]
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<PAGE> 34
APPENDIX
SIMIONE CENTRAL HOLDINGS, INC.
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
The undersigned hereby appoints Gary
M. Bremer and M. Henry Day, Jr. as proxies
to represent the undersigned at the Annual
Meeting of Stockholders to be held at the
offices of the Company, 6600 Powers Ferry
Road, Atlanta, Georgia 30339, on June 9,
1998 at 10:00 a.m. and at any adjournment
thereof, and to vote the shares of stock
the undersigned would be entitled to vote
if personally present, as indicated below.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees below (except WITHHOLD AUTHORITY to vote for
as marked to the contrary below) [ ] all nominees below [ ]
</TABLE>
Gary M. Bremer, James R. Henderson, William J. Simione, Jr.,
Murali Anantharaman, James A. Gilbert, Richard D. Jackson, and Barrett C.
O'Donnell
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE, PRINT THAT
NOMINEE'S NAME ON THE LINE PROVIDED BELOW.
- --------------------------------------------------------------------------------
2. Approval of the increase in the number of shares reserved for issuance under
the Simione Central Holdings, Inc. Omnibus Equity-based Incentive Plan from
250,000 shares to 1,250,000 shares of Common Stock, $.001 par value per
share.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THIS PROXY MUST BE DATED AND SIGNED ON THE REVERSE SIDE
(continued and to be signed on reverse side)
(Continued from other side)
3. In their discretion, the proxies are authorized to vote on such other
business as may properly come before the meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO
CONTRARY INSTRUCTION IS GIVEN, THE SHARES WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES AND FOR THE APPROVAL OF THE INCREASE IN THE NUMBER OF SHARES RESERVED
FOR ISSUANCE UNDER THE SIMIONE CENTRAL HOLDINGS, INC. OMNIBUS EQUITY-BASED
INCENTIVE PLAN.
Dated: , 1998
-----------------------
-----------------------------------
Signature
-----------------------------------
Signature if held jointly
Please date, sign as name appears
at the left, and return promptly.
If the shares are registered in the
names of two or more persons, each
should sign. When signing as
Corporate Officer, Partner,
Executor, Administrator, Trustee or
Guardian, please give full title.
Please note any changes in your
address alongside the address as it
appears on the proxy.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE-PAID ENVELOPE.
