<PAGE> 1
INTEGRA, INC - PROXY Filing Date:
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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 |_| 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
INTEGRA, INC.
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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<PAGE> 2
INTEGRA, INC - PROXY Filing Date:
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|_| Fee paid previously with preliminary materials.
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|_| 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing party:
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(4) Date Filed:
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<PAGE> 3
INTEGRA, INC - PROXY Filing Date:
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INTEGRA
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 23, 1999
------------------------
King of Prussia, Pennsylvania
May 7, 1999
To the Holders of Common Stock of
INTEGRA, INC.:
The Annual Meeting of the Stockholders of INTEGRA, INC. (the "Company") will be
held at the Fourth Floor Board Room, 1060 First Avenue, King of Prussia,
Pennsylvania 19406 on Wednesday, June 23, 1999 at 9:00 A.M., local time, to
consider and act upon the following matters:
1. To elect eight directors for the ensuing year.
2. To ratify the Board of Directors' selection of
PricewaterhouseCoopers LLP as the Company's independent accountants
for 1999.
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on April 30, 1999 are
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
Mark D. Gibson
Secretary
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE MARK, SIGN AND DATE THE ENCLOSED FORM
OF PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE SO THAT YOUR VOTE
CAN BE RECORDED. THE ENVELOPE DOES NOT REQUIRE ANY POSTAGE IF MAILED IN THE
UNITED STATES.
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INTEGRA, INC - PROXY Filing Date:
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PROXY STATEMENT
This Proxy Statement, which will be mailed commencing on or about May 7,
1999 to the persons entitled to receive the accompanying Notice of Annual
Meeting of Stockholders, is furnished in connection with the solicitation of
Proxies by and on behalf of the Board of Directors of Integra, Inc. (the
"Company") for use at the 1999 Annual Meeting of Stockholders (the "Meeting") to
be held on June 23, 1999, and at any adjournment or adjournments thereof. If
properly signed and returned to the Company and not revoked, the accompanying
Proxy will be voted in accordance with the instructions it contains. The persons
named in the Proxy will vote the shares represented thereby for the Board of
Directors' slate of directors and as recommended by the Board of Directors
unless contrary instructions are given. The Company's principal executive
offices are located at 1060 First Avenue, King of Prussia, Pennsylvania 19406.
Any Proxy may be revoked at any time before it is exercised by written
notice to the Secretary of the Company. The casting of a ballot at the Meeting
by a stockholder who may theretofore have given a Proxy will not have the effect
of revoking that Proxy unless the stockholder so notifies the Secretary of the
Company in writing at any time prior to the voting of the shares represented by
the Proxy.
Only stockholders of record at the close of business on April 30, 1999
(the "Record Date") are entitled to vote at the Meeting or any adjournment or
adjournments thereof. As of the Record Date, the Company had outstanding
10,138,552 shares of common stock, $.01 par value (the "Common Stock"), each
holder of which is entitled to one vote per share with respect to each matter to
be voted on at the Meeting. The Company has no class or series of stock
outstanding other than the Common Stock.
Directors are elected by plurality vote. Adoption of proposal II will
require the affirmative vote of a majority of the Common Stock voting on that
proposal. Abstentions and broker non-votes (as hereinafter defined) will be
counted as present for the purpose of determining the presence of a quorum. For
the purpose of determining the vote required for approval of matters to be voted
on at the Meeting, shares held by stockholders who abstain from voting will be
treated as being "present" and "entitled to vote" on the matter and, thus, an
abstention has the same legal effect as a vote against the matter. However, in
the case of a broker non-vote where a stockholder withholds authority from his
Proxy to vote the Proxy as to a particular matter, such shares will not be
treated as "present" and "entitled to vote" on the matter and, thus, a broker
non-vote or the withholding of a Proxy's authority will have no effect on the
outcome of the vote on matters I and II. A "broker non-vote" refers to shares of
Common Stock represented at the Meeting in person or by proxy by a broker or a
nominee where such broker or nominee (i) has not received voting instructions on
a particular matter from the beneficial owners or persons entitled to vote and
(ii) the broker or nominee does not have discretionary voting power on such
matter.
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1
<PAGE> 5
INTEGRA, INC - PROXY Filing Date:
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I. ELECTION OF DIRECTORS
Eight directors will be elected at the Meeting. It is the intention of
each of the persons named in the accompanying form of Proxy to vote the shares
represented thereby in favor of the seven nominees listed in the following
table, unless otherwise instructed in such Proxy. Each such nominee is presently
serving as a director. In case any of the nominees is unable or declines to
serve, such persons reserve the right to vote the shares represented by such
Proxy for another person duly nominated by the Board of Directors in his stead
or, if no other person is so nominated, to vote such shares only for the
remaining nominees. The Board of Directors has no reason to believe that any
nominee listed below will be unable or will decline to serve. The directors
elected by the stockholders will serve until the 2000 Annual Meeting of
Stockholders and until their respective successors are duly elected and shall
have qualified.
CERTAIN INFORMATION CONCERNING NOMINEES
Certain information concerning the nominees for election as directors is
set forth below. Such information was furnished by them to the Company.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OWNED PERCENT
BENEFICIALLY AS OF OF
NAME OF NOMINEE AND CERTAIN BIOGRAPHICAL INFORMATION APRIL 30, 1999(1) CLASS
- ---------------------------------------------------- ----------------- -----
<S> <C> <C>
JOHN H. FOSTER, age 57, has been Chairman of the Board of
the Company since March 1991. Mr. Foster was Chief
Executive Officer of the Company from March 1991 to
October 1998. Mr. Foster has been Chairman of the Board
of NovaCare, Inc., a national clinical and technological
leader in providing comprehensive rehabilitation services
("NovaCare"), since December 1984. Between December 1984
and May 1997 he was also Chief Executive Officer of
NovaCare. Mr. Foster is a director of Corning
Incorporated, an international corporation with business
interests in specialty materials and communications. Mr.
Foster is a director of Access Worldwide Communications,
Inc., an outsourced and marketing services company. He is
also a director of NovaCare Employee Services, Inc., a
professional employer organization. Mr. Foster is the
founder and Chairman of the Board of Foster Management
Company, an investment advisor. ................................ 4,127,666(2) 39.2%
ERIC E. ANDERSON, PH.D., age 48, has been the President and
Chief Operating Officer and a director of the Company since
October, 1998. Dr. Anderson joined the Company in June 1997
and served as President and Chief Executive Officer of the
Company's behavioral managed care operation until
September 1998. From January 1996 to June 1997, Dr.
Anderson served as a consultant in the managed behavioral
health and information technology industries. From
February 1994 to December 1996, Dr. Anderson was an
Executive Vice President and General Manager for Medco
Behavioral Care Corp. From May 1991 to January 1994, Dr.
Anderson served as Senior Vice President for College
Health Enterprises. Prior to that time he managed the
behavioral healthcare operation of PacifiCare. Dr.
Anderson is a licensed psychologist and has over twenty
years of behavioral health experience. ......................... 2,800(3) *
</TABLE>
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2
<PAGE> 6
INTEGRA, INC - PROXY Filing Date:
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<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OWNED PERCENT
BENEFICIALLY AS OF OF
NAME OF NOMINEE AND CERTAIN BIOGRAPHICAL INFORMATION APRIL 30, 1999(1) CLASS
- ---------------------------------------------------- ----------------- -----
<S> <C> <C>
LAWRENCE M. DAVIES, age 40, has been Chief Executive Officer
of the Company since October 1998. Mr. Davies has been a
director of the Company since January 1992 and was its
President from June 1993 until October 1998. Since
October 1998 Mr. Davies has also been a Principal of
Foster Management Company. Mr. Davies was Vice President
of the Central Division of the Contract Services Group of
NovaCare from June 1992 to May 1993 and Division Vice
President of the Midwest Region of the Contract Services
Group of NovaCare from September 1988 to May 1992. From
January 1987 to August 1988 Mr. Davies was Director of
Corporate Development for NovaCare. Mr. Davies was
manager of Mergers and Acquisitions for Foster Medical
Corporation from August 1984 to December 1986 .................. 122,568(4) 1.2
HARVEY V. FINEBERG, M.D., age 53, has been a director of the
Company since November 1993. Dr. Fineberg has been a
director of NovaCare Employee Services, Inc. since March
1997. Dr. Fineberg has been Provost of Harvard University
since July 1997. Dr. Fineberg was Dean of the Harvard
School of Public Health from July 1984 to June 1997. He was
Professor of Health Policy and Management at the Harvard
School of Public Health from 1982 until June 1997. He is
also a member of the Institute of Medicine ..................... 7,000 *
TIMOTHY E. FOSTER, age 47, has been a director of the
Company since February 1993. Mr. Foster has been Chief
Executive Officer of NovaCare since May 1997. Between
October 1994 and May 1997 he was President and Chief
Operating Officer of NovaCare. He has been a director of
NovaCare since December 1984. Mr. Foster has been a
director of NovaCare Employee Services, Inc. since March 1997.
Mr. Foster has been a Managing Partner of Foster Management
Company since June 1997 ........................................ 4,120,421(5) 39.1
IRWIN LEHRHOFF, PH.D., age 70, has been a director of the
Company since March 1991, at which time his company,
Irwin Lehrhoff & Associates, Inc., was acquired by the
Company. For more than the prior five years, Dr. Lehrhoff
has engaged in the private practice of clinical
psychology in Southern California. Dr. Lehrhoff holds a
Ph.D. in Communication Disorders and a Ph.D. in Clinical
Psychology. He is a member of the American Psychological
Association and the International Society of Mental
Health. Dr. Lehrhoff presently serves as a director of
the Thalians Community Mental Health Center. He was
previously a director and President of the National
Association of Rehabilitation Agencies. Dr. Lehrhoff was
Director and President of the California Speech
Pathologists and Audiologists in Private Practice from
1973 to 1977 ................................................... 191,000(6) 1.9
</TABLE>
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3
<PAGE> 7
INTEGRA, INC - PROXY Filing Date:
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<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OWNED PERCENT
BENEFICIALLY AS OF OF
NAME OF NOMINEE AND CERTAIN BIOGRAPHICAL INFORMATION APRIL 30, 1999(1) CLASS
- ---------------------------------------------------- ----------------- -----
<S> <C> <C>
R. BRUCE MOSBACHER, age 46, has been a director of the
Company since July 1992. Mr. Mosbacher has been a general
partner of Saw Island Partners, a securities, real estate
and oil and gas investment firm, since 1985. From 1983 to
1985, Mr. Mosbacher was of counsel to Gaston Snow & Ely
Bartlett of Palo Alto, California; prior to that, he was
associated with Wilson, Sonsini, Goodrich & Rosati of
Palo Alto, California. Mr. Mosbacher serves on the Boards
of Advisors of investment funds managed by Foster
Management Company and is a director of a number of
privately held companies. He previously was a director of
ISI Corporation, ISI Trust Fund, ISI Growth Fund, Inc.
and ISI Income Fund, Inc. and is a member of the State
Bar of California .............................................. 5,000(7) *
SHAWKAT RASLAN, age 47, has been a director of the Company
since February 1994. Mr. Raslan serves as President and
Chief Executive Officer of International Resources
Holdings, Inc., an asset management and investment
advisory service. He has held these positions since 1982.
Mr. Raslan serves as a director of U.S. Home Care
Corporation .................................................... 5,000 *
</TABLE>
- -------
* Less than one percent.
(1) Except as indicated in the following footnotes, each of the persons listed
above has sole voting and investment power with respect to all shares of
Common Stock shown in the table as beneficially owned by him.
(2) Includes 3,690,200 shares of Common Stock owned by Abbingdon Venture
Partners Limited Partnership ("Abbingdon") and Abbingdon Venture Partners
Limited Partnership-II ("Abbingdon-II"), limited partnerships, of each of
which Mr. John H. Foster is a general partner through intermediate general
partnerships. Also includes 400,000 shares of Common Stock presently
issuable upon the exercise of warrants owned by Abbingdon and
Abbingdon-II. Also includes 11,966 shares of Common Stock owned by the
Trust u/w Virginia C. Foster, of which Mr. John H. Foster is a trustee.
(3) Includes 2,000 shares of Common Stock held by a trust
for the benefit of Dr. Anderson's son.
(4) Includes 10,000 shares of Common Stock presently issuable upon the
exercise of stock options.
(5) Includes 3,690,200 shares of Common Stock owned by Abbingdon and
Abbingdon-II, of each of which Mr. Timothy E. Foster is a general partner
through intermediate general partnerships. Also includes 400,000 shares of
Common Stock presently issuable upon the exercise of warrants owned by
Abbingdon and Abbingdon-II.
(6) Includes 176,000 shares of Common Stock owned by Irwin Lehrhoff Trust No.
1, of which Dr. Lehrhoff is a trustee and a beneficiary. Does not include
5,500 shares of Common Stock held by Dr. Lehrhoff's spouse which
shares of Common Stock Dr. Lehrhoff disclaims beneficial ownership.
(7) Represents shares of Common Stock owned by the Mosbacher/Ditz Living
Trust, of which Mr. Mosbacher is the trustee and a beneficiary.
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4
<PAGE> 8
INTEGRA, INC - PROXY Filing Date:
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During 1998, the Board of Directors of the Company met five times. The
Board of Directors also acted by unanimous written consent on four occasions
during 1998. Each of the persons named in the table above, other than Harvey V.
Fineberg, M.D., Timothy E. Foster and Shawkat Raslan, attended at least 75% of
the meetings of the Board of Directors and meetings of any committees of the
Board on which such person served which were held during the time that such
person served.
The Board of Directors has a Compensation Committee, an Acquisition
Committee and an Audit Committee. The Board of Directors does not have a
Nominating Committee.
The members of the Compensation Committee are Shawkat Raslan, who serves
as Chairman, and John H. Foster. The Compensation Committee makes
recommendations to the full Board of Directors as to the compensation of senior
management and administers the Integra, Inc. 1994 Stock Option Plan and
determines the persons who are eligible to receive options and the number of
shares of Common Stock subject to each option. The Compensation Committee met
two times during 1998.
The members of the Acquisition Committee are Lawrence M. Davies and R.
Bruce Mosbacher who serves as Chairman. The Acquisition Committee develops
acquisition strategies and programs and identifies and evaluates potential
acquisition opportunities. The Acquisition Committee did not meet during 1998.
The members of the Audit Committee are Timothy E. Foster, who serves as
Chairman, Harvey V. Fineberg, and R. Bruce Mosbacher. The Audit Committee acts
as a liaison between the Board of Directors and the independent auditors and is
authorized to recommend to the Board the appointment of the independent
auditors. The Audit Committee reviews with the independent auditors the planning
and scope of the audits of the financial statements, the results of those audits
and the adequacy of internal accounting controls and monitors other corporate
and financial policies. The Audit Committee met one time in 1998 and met in
early 1999 to review the results of the Company's 1998 audit.
No family relationships exist between any of the directors and officers of
the Company.
The Board of Directors will consider nominees for directors recommended by
stockholders or others. There are no specified formal procedures for submitting
such recommendations. Recommendations may be addressed to the Chief Executive
Officer, Integra, Inc., 1060 First Avenue, King of Prussia, Pennsylvania 19406.
Article Sixth of the Certificate of Incorporation of the Company provides
that the Company shall indemnify and hold harmless any director, officer,
employee or agent of the Company from and against any and all expenses and
liabilities that may be imposed upon or incurred by him or her in connection
with, or as a result of, any proceeding in which he or she may become involved,
as a party or otherwise, by reason of the fact that he or she is or was such a
director, officer, employee or agent of the Company, whether or not he or she
continues to be such at the time such expenses and liabilities shall have been
imposed or incurred, to the extent permitted by the laws of the State of
Delaware, as they may be amended from time to time.
Article Eleventh of the Certificate of Incorporation of the Company
contains a provision, authorized by Delaware law, which eliminates the personal
liability of a director of the Company to the Company or to any of its
stockholders for monetary damages for a breach of his fiduciary duty as a
director, except in a case in which the director breached his or her duty of
loyalty, failed to act in good faith, engaged in intentional misconduct or
knowingly violated a law, authorized the payment of a dividend or approved a
stock repurchase in violation of Delaware corporate law, or obtained an improper
personal benefit.
DIRECTOR COMPENSATION
Directors of the Company do not receive fees for service as directors but
are reimbursed for out-of-pocket expenses.
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INTEGRA, INC - PROXY Filing Date:
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EXECUTIVE COMPENSATION
The following table sets forth information for the years ended December
31, 1998, 1997 and 1996 concerning the compensation of the Company's Chief
Executive Officer and each of the other most highly compensated executive
officers of the Company whose total annual salary and bonus exceeded $100,000
during the year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
----------------------------
ANNUAL OTHER
COMPENSATION ANNUAL
--------------------------- COMPENSATION AWARDS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) OPTIONS(#) COMPENSATION($)
--------------------------- ---- --------- -------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John H. Foster................... 1998 -- -- -- -- --
Chairman of the Board(1) 1997 -- -- -- -- --
1996 -- -- -- -- --
Lawrence M. Davies............... 1998 156,250 152,500(2) 6,000(3) -- --
Chief Executive 1997 150,000 20,000 6,000(3) -- 2,885(4)
Officer(1) 1996 150,000 20,000 6,000(3) -- --
Eric E. Anderson, Ph.D........... 1998 200,000 60,000 4,800(3) 200,000 --
President and Chief 1997 104,327 30,625 2,800(3) 25,000 --
Operating Officer 1996 -- -- -- -- --
Mark D. Gibson................... 1998 100,054 36,000(5) 2,800(3) -- --
Chief Financial 1997 86,800 17,400 -- 5,000 --
Officer 1996 76,271 5,930 -- 2,500 --
</TABLE>
- ---------------
(1) Mr. Foster was Chief Executive Officer until October 1998 when Mr. Davies
became Chief Executive Officer.
(2) Includes one-time bonus of $100,000 related to sale of the Outpatient
Group Practice Business of the Company.
(3) Represents car allowance.
(4) Represents payment for unused paid time off.
(5) Includes one-time bonus of $15,000 related to sale of the Outpatient Group
Practice Business of the Company.
The Company granted 200,000 stock options to the executive officers named
in the Summary Compensation Table during the year ended December 31, 1998.
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<PAGE> 10
INTEGRA, INC - PROXY Filing Date:
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The following table sets forth the grants of stock options to the
executive officers named in the Summary Compensation Table during the year ended
December 31, 1998. The amounts shown for each of the named executive officers as
potential realizable values are based on arbitrarily assumed annualized rates of
stock price appreciation of five percent and ten percent over the exercise price
of the options during the full terms of the options. No gain to the optionees is
possible without an increase in stock price which will benefit all stockholders
proportionately. These potential realizable values are based solely on
arbitrarily assumed rates of appreciation required by applicable Securities and
Exchange Commission regulations. Actual gains, if any, on option exercises and
holdings of Common Stock are dependent on the future performance of the Common
Stock and overall market conditions. There can be no assurance that the
potential realizable values shown in this table will be achieved.
OPTION GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
OPTIONS ASSUMED ANNUAL RATES OF STOCK
GRANTED TO EXERCISE PRICE APPRECIATION FOR OPTION TERM
OPTIONS EMPLOYEES PRICE EXPIRATION ----------------------------------
NAME GRANTED IN FISCAL YEAR ($/SH) DATE 5% 10%
- ---- ------- -------------- -------- ---------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
John H. Foster ........ 0 0 N/A N/A N/A N/A
Lawrence M. Davies .... 0 0 N/A N/A N/A N/A
Eric E. Anderson, Ph.D 200,000 92 $ 2.25 4/01/07 $283,500 $715,500
Mark D. Gibson ........ 0 0 N/A N/A N/A N/A
</TABLE>
The following table sets forth the number and value of options held by the
executive officers of the Company named in the Summary Compensation Table.
During the fiscal year ended December 31, 1998, none of the executive officers
named in the Summary Compensation Table exercised any options to purchase Common
Stock.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-THE-
NUMBER OF UNEXERCISED OPTIONS MONEY OPTIONS AT
AT DECEMBER 31, 1998(#) DECEMBER 31, 1997($)(1)
----------------------------- ----------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------------------------- ----------------------------
<S> <C> <C>
John H. Foster............................. N/A N/A
Lawrence M. Davies......................... 10,000/0 N/A
Eric E. Anderson, Ph.D..................... 0/200,000 N/A
Mark D. Gibson............................. 5,000/2,500 N/A
</TABLE>
- ---------------
(1) None of the options held by the executive officers named in the Summary
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INTEGRA, INC - PROXY Filing Date:
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Compensation Table were in-the-money at December 31, 1998. In-the-money
options are those for which the fair market value of the underlying Common
Stock exceed the exercise price of the option. The value of in-the-money
options is determined in accordance with regulations of the Securities and
Exchange Commission by subtracting the aggregate exercise price of the
option from the aggregate year-end value of the underlying Common Stock.
EMPLOYMENT ARRANGEMENTS
The Company has entered into employment agreements, which are terminable
at will, with each of Lawrence M. Davies and Mark D. Gibson. These agreements
set forth, among other things, the base salary, bonus, equity participation, and
other employee benefit arrangements for each of Messrs. Davies and Gibson.
The Company has entered an arrangement with Eric E. Anderson, Ph.D. which
provides for Dr. Anderson to serve as President and Chief Operating Officer of
the Company at an annual base salary at the rate of $240,000. Dr. Anderson is
eligible to receive a bonus of up to 30% of his base salary based on the
achievement of certain objectives agreed upon with the Chief Executive Officer
of the Company. If Dr. Anderson is terminated by the Company without "cause"
during the term of his employment, he is entitled to severance pay equal to 12
months' base salary; provided, however, that during months seven through twelve
of the severance payments period, the Company will only have to pay Dr. Anderson
the difference between $120,000 and any compensation Dr. Anderson receives from
any subsequent employment or from any contract source that may pay Dr. Anderson.
In October 1998 Lawrence M. Davies was appointed Chief Executive Officer
of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors of the
Company during 1998 were Shawkat Raslan and John H. Foster. During 1998, John H.
Foster, Chairman of the Board and Chief Executive Officer of the Company and
Shawkat Raslan, a director and Company, were directors and members of the
Compensation Committee of Access Worldwide Communications, Inc. See "Certain
Transactions".
PERFORMANCE GRAPH
The following performance graph compares the cumulative total stockholder
return of the Company's Common Stock to the AMEX Market Value Index and to the
NASDAQ Health Services Index for the period from June 7, 1994, the date of the
Company's initial public offering, to December 31, 1998. Effective July 14,
1997, the Company's Common Stock was listed on the American Stock Exchange and,
accordingly, the Company has selected the AMEX Market Value Index as an
appropriate index for this graph. The graph assumes that $100 was invested in
each of the Company's Common Stock, the AMEX Market Value Index, and the NASDAQ
Health Services Index on June 7, 1994 and that all dividends were reinvested.
COMPARISON OF 55 MONTH CUMULATIVE TOTAL RETURN* SINCE JUNE 7, 1994 AMONG
INTEGRA, INC., THE AMEX MARKET VALUE INDEX AND THE NASDAQ HEALTH SERVICES
INDEX
<TABLE>
<CAPTION>
AMEX NASDAQ
MEASUREMENT PERIOD INTEGRA, MARKET HEALTH
(FISCAL YEAR COVERED) INC. INDEX SERVICES
<S> <C> <C> <C>
6/7/94 100 100 100
DEC-94 103 98 105
DEC-95 54 124 133
DEC-96 22 132 133
DEC-97 15 160 135
DEC-98 7 163 116
</TABLE>
- ---------------
* $100 INVESTED ON JUNE 7, 1994 IN STOCK OR INDEX -- INCLUDING REINVESTMENT
OF DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
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INTEGRA, INC - PROXY Filing Date:
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REPORT OF THE COMPENSATION COMMITTEE
The report of the Compensation Committee documents the Committee's
policies regarding executive officer compensation. The Company's philosophy and
objectives in setting compensation are:
- to offer levels of compensation which are competitive with those
offered by other companies in similar businesses;
- to compensate executives based on each executive's level of
responsibility and contribution to the Company's business goals;
- to link compensation with the Company's financial performance; and
- to align the interests of the Company's executives with the
interests of the Company's stockholders.
There are three major components to executive compensation at the Company:
base salary, bonus and stock options.
BASE SALARY
Base salary is determined by level of responsibility, individual
performance and Company performance, as well as by the need to provide a
competitive package that allows the Company to recruit and retain key
executives. After reviewing individual and Company performance and salaries at
other companies of similar size, the Chief Executive Officer makes
recommendations to the Compensation Committee concerning officers' salaries. The
Compensation Committee reviews and, with any changes it deems appropriate,
approves these recommendations.
EXECUTIVE OFFICER BONUSES
Bonuses are paid to the Company's executive officers based upon both their
individual performance and the Company's financial performance. Amounts which
may be earned by an executive officer as bonus, expressed as a percentage of
base salary, are generally agreed upon with the executive officer at the
commencement of his employment, subject to annual review by the President of the
Company in consultation with the Compensation Committee. Bonuses, which are paid
annually, range from 10% to 30% of an employee's annual base salary. Depending
on the provisions of the executive officer's employment agreement, between 30%
and 75% of the employee's bonus will be based upon the financial performance of
the Company. The remaining portion of an executive officer's bonus is based upon
the achievement of personal performance goals which are set by the President of
the Company in consultation with the Compensation Committee in the following
areas: patient care efficiency, employee retention, management objectives and
personal objectives. The President's personal performance goals are set by the
Chief Executive Officer of the Company in consultation with the rest of the
Compensation Committee.
STOCK OPTIONS
During 1998, the Company granted 200,000 stock options under the Integra,
Inc. 1994 Stock Option Plan (the "Stock Option Plan") to executive officers of
the Company. In addition, in November 1998, the Company granted options for
17,500 shares of Common Stock to two employees of the Company. The primary
purpose of the Stock Option Plan is to align the interests of the Company's key
employees, including its executive officers, more closely with the interests of
the Company's stockholders by offering these key employees an opportunity to
benefit from increases in the market price of the Common Stock. The Stock Option
Plan will provide long-term incentives that will enable the Company to attract
and retain key employees by encouraging their ownership of Common Stock. The
Stock Option Plan is administered by the Compensation Committee of the Board of
Directors, which will determine the persons who are to receive options and the
number of shares to be subject to each option. In selecting individuals for
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INTEGRA, INC - PROXY Filing Date:
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options and determining the terms thereof, the Compensation Committee may take
into consideration any factors it deems relevant, including present and
potential contributions to the success of the Company.
THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
SHAWKAT RASLAN, CHAIRMAN
JOHN H. FOSTER
CERTAIN TRANSACTIONS
In March 1998, in return for their commitment to guarantee up to $7.0
million of financing for the Company prior to the Company's sale of its
Outpatient Group Practice Business to PsychPartners, Abbingdon and Abbingdon-II
received warrants to purchase an aggregate of 400,000 shares of Common Stock at
the exercise price of $0.05 per share. Ultimately, Abbingdon and Abbingdon-II
did not have to guarantee any additional financing for the Company because the
Company obtained an extension of its credit facility with PNC Bank, National
Association and the sale of the Outpatient Group Practice Business to
PsychPartners was consummated. Abbingdon and Abbingdon-II are limited
partnerships, of each of which John H. Foster, Chairman of the Board and a
director, and Timothy E. Foster, a director of the Company, are general partners
through intermediate general partnerships. Abbingdon and Abbingdon-II are
managed by Foster Management Company, an investment advisor, of which Mr. Foster
is Chairman of the Board and sole stockholder, Mr. Timothy Foster is Managing
Partner, and Lawrence Davies, the Chief Executive Officer of the Company, is a
Principal.
Mr. Davies and Mr. Gibson received special one-time bonuses of $100,000
and $15,000, respectively, in May 1998 in connection with the sale of the
Company's Outpatient Group Practice Business to PsychPartners.
Each of the directors (except Eric E. Anderson, Ph.D., John H. Foster and
Irwin Lehrhoff, Ph.D.) of the Company acquired the following shares of Common
Stock from the Company in the following months for $.10 per share, which shares
of Common Stock vest over a three- to five-year period contingent upon continued
service: in March 1992, 5,000 shares of Common Stock to Lawrence M. Davies,
Chief Executive Officer and a director of the Company; in August 1992, 5,000
shares of Common Stock to R. Bruce Mosbacher, a director of the Company; in
June 1993, 5,000 shares of Common Stock to Timothy E. Foster, a director of the
Company and 100,000 shares of Common Stock to Mr. Davies; in December 1993,
5,000 shares of Common Stock to Harvey V. Fineberg, M.D., a director of the
Company; in January 1994, 5,000 shares of Common Stock to Shawkat Raslan, a
director of the Company.
The Company has entered into stock purchase agreements with each of its
directors (except Eric E. Anderson, Ph.D., John H. Foster and Irwin Lehrhoff,
Ph.D.) (the "Stock Purchase Agreements") pursuant to which such individuals
purchased their respective shares of Common Stock. The Stock Purchase Agreements
provide for restrictions on the sale of such shares and further provide that the
Company has the option to repurchase such shares at $.10 per share upon the
occurrence of certain conditions contained therein.
The Company entered into a stockholders agreement with Dr. Lehrhoff (the
"Stockholders Agreement") in connection with the Company's acquisition from Dr.
Lehrhoff of Irwin Lehrhoff & Associates, Inc. in March 1991. The Stockholders
Agreement grants certain registration rights to Dr. Lehrhoff in the event that
the Company registers shares of Common Stock pursuant to a registration
statement (other than a registration statement on Form S-8 or Form S-4 or other
comparable registration form) in connection with a public offering of Common
Stock.
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INTEGRA, INC - PROXY Filing Date:
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The Company subleases office space from NovaCare, of which John H. Foster
is Chairman of the Board and a director and Timothy E. Foster is Chief Executive
Officer and a director. The Company paid base rent at a rate equal to NovaCare's
cost, including reimbursement for leasehold improvements made by NovaCare.
During 1998, the Company paid NovaCare a total of $128,000 pursuant to this
sublease.
During 1998, NovaCare paid the Company $635,389 for EAP and managed
mental health services provided by the Company pursuant to a contract between
the Company and NovaCare.
INFORMATION CONCERNING CERTAIN STOCKHOLDERS
The stockholders (including any "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) who, to the knowledge of the
Board of Directors of the Company, owned beneficially more than five percent of
the Company's one class of outstanding voting securities as of April 30, 1999,
each director and each executive officer named in the Summary Compensation Table
of the Company and all directors and officers of the Company as a group, and
their respective shareholdings as of such date (according to information
furnished by them to the Company), are set forth in the following table. Except
as indicated in the footnotes to the table, all of such shares are owned with
sole voting and investment power.
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INTEGRA, INC - PROXY Filing Date:
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<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OWNED
NAME AND ADDRESS BENEFICIALLY PERCENT OF CLASS
- ---------------- ---------------- ----------------
<S> <C> <C>
Abbingdon Venture Partners................... 3,067,650(1) 29.4%
Limited Partnership
1018 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Abbingdon Venture Partners................... 1,022,550(2) 10.0
Limited Partnership-II
1018 West Ninth Avenue
King of Prussia, Pennsylvania 19406
John H. Foster............................... 4,127,666(3) 39.2
Foster Management Company
1018 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Lawrence M. Davies........................... 122,568(4) 1.2
Integra, Inc.
1060 First Avenue
King of Prussia, Pennsylvania 19406
Eric E. Anderson, Ph.D....................... 2,800(5) *
Integra, Inc.
1060 First Avenue
King of Prussia, Pennsylvania 19406
Timothy E. Foster............................ 4,120,421(6) 39.0
NovaCare, Inc.
1016 West Ninth Avenue
King of Prussia, Pennsylvania 19406
Harvey V. Fineberg, M.D. .................... 7,000 *
Harvard School of Public Health
677 Huntington Avenue
Boston, Massachusetts 02115
Irwin Lehrhoff, Ph.D. ....................... 191,000(7) 1.9
Irwin Lehrhoff & Associates
13946 Ventura Boulevard
Sherman Oaks, California 91423
R. Bruce Mosbacher........................... 5,000(8) *
Mosbacher & Associates
2200 Sand Hill Road
Suite 150
Menlo Park, California 94025
Shawkat Raslan............................... 5,000 *
International Resources Holdings, Inc.
16th Floor
770 Lexington Avenue
New York, New York 10021
Mark D. Gibson............................... 5,000(9) *
Integra, Inc.
1018 West Ninth Avenue
King of Prussia, Pennsylvania 19406
</TABLE>
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INTEGRA, INC - PROXY Filing Date:
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<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OWNED
NAME AND ADDRESS BENEFICIALLY PERCENT OF CLASS
- ---------------- ---------------- ----------------
<S> <C> <C>
Wellington Management Company, LLP........... 664,000 6.5
75 State Street
Boston, Massachusetts 02109
Wellington Trust Company, LLP................ 664,000 6.5
75 State Street
Boston, Massachusetts 02109
Directors and officers as a group (9 persons) 4,496,255(3)(10) 42.6
</TABLE>
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* Less than one percent (1%).
(1) Includes 300,000 shares of Common Stock presently issuable upon the
exercise of warrants.
(2) Includes 100,000 shares of Common Stock presently issuable upon the
exercise of warrants.
(3) Includes 3,690,200 shares of Common Stock owned by Abbingdon and
Abbingdon-II, limited partnerships, of each of which Mr. John H. Foster is
a general partner through intermediate general partnerships. Also includes
400,000 shares of Common Stock presently issuable upon the exercise of
warrants owned by Abbingdon and Abbingdon-II. Also includes 11,966 shares
of Common Stock owned by the Trust u/w Virginia C. Foster, of which Mr.
John H. Foster is a trustee.
(4) Includes 10,000 shares of Common Stock presently issuable upon the
exercise of options.
(5) Includes 2,000 shares owned by a trust for the benefit of Dr. Anderson's
son.
(6) Includes 3,960,200 shares of Common Stock owned by Abbingdon and
Abbingdon-II, of each of which Mr. Timothy E. Foster is a general partner
through intermediate general partnerships. Also includes 400,000 shares of
Common Stock presently issuable upon the exercise of warrants owned by
Abbingdon and Abbingdon-II.
(7) Includes 176,000 shares of Common Stock owned by Irwin Lehrhoff Trust No.
1, of which Dr. Lehrhoff is a trustee and a beneficiary. Does not include
5,500 shares of Common Stock owned by Dr. Lehrhoff's spouse, of which
shares of Common Stock Dr. Lehrhoff disclaims beneficial ownership.
(8) Represents shares of Common Stock owned by the Mosbacher/Ditz Living
Trust, of which Mr. Mosbacher is the trustee and a beneficiary.
(9) Represents 5,000 shares of Common Stock presently issuable upon the
exercise of options.
(10) Includes 15,000 shares of Common Stock presently issuable upon the
exercise of options.
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INTEGRA, INC - PROXY Filing Date:
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COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of the Company's Common Stock, to file with the Securities and
Exchange Commission (the "Commission") initial reports of ownership and reports
of changes in ownership of Common Stock. Officers, directors and greater than
ten percent stockholders are required by the Commission regulations to furnish
the Company with copies of all Section 16 (a) reports filed.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during the fiscal year ended December 31, 1998 all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with, except that each of John H.
Foster, Timothy E. Foster, Abbingdon, Abbingdon-II and Shawkat Raslan failed to
make a timely filing of a statement on Form 4 regarding certain transactions.
Mr. John H. Foster, Mr. Timothy E. Foster, Abbingdon and Abbingdon-II have
subsequently each filed a Form 5 reporting their transactions. Mr. Raslan
subsequently filed a Form 4 reporting his transaction.
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INTEGRA, INC - PROXY Filing Date:
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PROPOSAL.
II. RATIFICATION OF SELECTION
OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected PricewaterhouseCoopers
LLP to serve as independent accountants for the Company for 1999. Such firm has
examined the financial statements of the Company since its inception. The Board
of Directors considers PricewaterhouseCoopers LLP to be eminently qualified.
Although it is not required to do so, the Board of Directors is submitting
its selection of the Company's accountants for ratification at the Meeting in
order to ascertain the views of stockholders regarding such selection. If the
selection is not ratified, the Board of Directors will reconsider its selection.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP TO EXAMINE THE CONSOLIDATED
FINANCIAL STATEMENTS OF THE COMPANY AND ITS SUBSIDIARIES FOR 1999. It is the
intention of the persons named in the accompanying form of Proxy to vote the
shares represented thereby in favor of such ratification unless otherwise
instructed in such Proxy.
A representative of PricewaterhouseCoopers LLP will be present at the
Meeting with the opportunity to make a statement if such representative desires
to do so, and will be available to respond to appropriate questions.
III. OTHER MATTERS
The Board of Directors of the Company does not know of any other matters
which may be brought before the Meeting. However, if any such other matters are
properly presented for action, it is the intention of the persons named in the
enclosed Proxy to vote the shares represented thereby in accordance with their
judgment on such matters.
IV. MISCELLANEOUS
All costs relating to the solicitation of Proxies will be borne by the
Company. Proxies may be solicited by officers, directors and regular employees
of the Company and its subsidiaries personally, by mail or by telephone or
telegraph, and the Company may pay brokers and other persons holding shares of
stock in their names or those of their nominees for their reasonable expenses in
sending soliciting material to their principals.
It is important that Proxies be returned promptly. Stockholders who do not
expect to attend the Meeting in person are urged to mark, sign and date the
accompanying Proxy and mail it in the enclosed return envelope, which requires
no postage if mailed in the United States, so that their votes can be recorded.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2000 Annual Meeting
of Stockholders of the Company must be received by the Company by January 7,
2000 in order to be considered for inclusion in the Company's Proxy Statement
relating to such meeting. In the event that a stockholder fails to notify the
Company by March 22, 2000 of an intent to be present at the Company's 2000
Annual Meeting of Stockholders in order to present a proposal for a vote, the
Company will have the right to exercise its discretion and vote against the
proposal, if presented, without including any information about the proposal in
its proxy materials.
April 30, 1999
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<PAGE> 19
INTEGRA, INC - PROXY Filing Date:
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INTEGRA, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- JUNE 23, 1999
COMMON STOCK
The undersigned, a stockholder of INTEGRA, INC., does hereby appoint JOHN
H. FOSTER, LAWRENCE M. DAVIES and ERIC E. ANDERSON, PH.D. or any of them, with
full power of substitution, his proxies, to appear and vote all shares of Common
Stock of the Company which the undersigned is entitled to vote at the Annual
Meeting of Stockholders to be held on Wednesday, June 23, 1999 at 9:00 A.M.,
local time, or at any adjournments thereof, upon such matters as may properly
come before the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby instructs said proxies or their substitutes to vote
as specified below on each of the following matters and in accordance with their
judgment on any other matters which may properly come before the Meeting.
(Continued and to be Signed on Reverse Side.)
SEE REVERSE SIDE
|X| PLEASE MARK YOUR VOTES AS THIS EXAMPLE.
<TABLE>
<S> <C>
1. Election of Directors.
|_| FOR all the nominees listed |_| WITHHOLD AUTHORITY to vote for all the nominees listed
(except as marked to the contrary below)
</TABLE>
NOMINEES: John H. Foster, Lawrence M. Davies, Eric E. Anderson, Ph.D., Timothy
E. Foster, Harvey V. Fineberg, M.D., Irwin Lehrhoff, Ph.D., R. Bruce Mosbacher
and Shawkat Raslan
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
2. Ratification of appointment of PricewaterhouseCoopers LLP as independent
accountants for 1999.
|_| FOR |_| AGAINST |_| ABSTAIN
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" EACH ITEM.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS INDICATED AS TO EITHER OF ITEMS 1 OR 2, THEY WILL BE VOTED IN FAVOR OF THE
ITEM(S) FOR WHICH NO DIRECTION IS INDICATED.
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INTEGRA, INC - PROXY Filing Date:
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IMPORTANT: Before returning this
Proxy, please sign your name or
names on the line(s) below
exactly as shown hereon.
Executors, administrators,
trustees, guardians or corporate
officers should indicate their
full titles when signing. Where
shares are registered in the
name of joint tenants or
trustees, each joint tenant or
trustee should sign.
--------------------------------(L.S.)
Dated
- --------------- , 1999
--------------------------------(L.S.)
Stockholder(s) Sign Here
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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17
