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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
Integra, 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)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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<PAGE> 2
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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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[ ] 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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<PAGE> 3
INTEGRA, INC.
1060 FIRST AVENUE
KING OF PRUSSIA, PENNSYLVANIA 19406
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 27, 2000
To our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of Integra,
Inc. (the "Company") will be held on Tuesday, June 27, 2000 at 8:00 a.m., local
time, in the Grant Room at The Union League of Philadelphia, 140 South Broad
Street, Philadelphia, Pennsylvania to consider and act upon the following
matters:
1. To approve an amendment to the Company's Certificate of Incorporation to
adopt a classified board of directors;
2. To elect four directors, each to hold office until the end of his
respective term and until the election and qualification of his
successor;
3. To approve the adoption of the Company's 1999 Stock Option Plan;
4. To approve the issuance of warrants to Charles Henri-Weil;
5. To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent accountants for 2000; and
6. 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 May 22, 2000 are
entitled to notice of and to vote at the Annual Meeting, and any adjournments
thereof.
By Order of the Board of Directors,
Eric E. Anderson, Ph.D.
Chief Executive Officer
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL 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.
<PAGE> 4
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 27, 2000
This Proxy Statement is being furnished to the stockholders of Integra,
Inc. (the "Company") in connection with the 2000 Annual Meeting of Stockholders
of the Company to be held on June 27, 2000 and any adjournment or adjournments
thereof (the "Annual Meeting"). The Annual Meeting will be held at 8:00 a.m.,
local time, in the Grant Room at The Union League of Philadelphia, 140 South
Broad Street, Philadelphia, Pennsylvania, 19102. This Proxy Statement and the
enclosed Proxy Card are being mailed to stockholders on or about May 26, 2000.
Execution and return of the enclosed Proxy Card are being solicited by and
on behalf of the Board of Directors of the Company for the purposes set forth in
the foregoing notice of meeting. The costs incidental to the solicitation and
obtaining of proxies, including the cost of reimbursing banks and brokers for
forwarding proxy materials to their principals, will be borne by the Company.
Proxies may be solicited, without extra compensation, by officers and employees
of the Company by mail, telephone, telefax, personal interviews and other
methods of communication.
VOTING AT THE ANNUAL MEETING
RECORD DATE; PROXIES; VOTE REQUIRED
Only stockholders of record at the close of business on May 22, 2000 (the
"Record Date") are entitled to vote at the Annual 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"). The
Company has no class or series of stock outstanding other than the Common Stock.
For purposes of the votes on all proposals set forth below, a quorum is
necessary before business may be transacted at the Annual Meeting except that,
even if a quorum is not present, the stockholders present in person or by proxy
shall have the power to adjourn the meeting until a quorum is present. Each
stockholder is entitled to one vote for each share of Common Stock owned of
record by such Stockholder with respect to each matter to be voted on at the
Annual Meeting.
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 election of those directors named herein and as recommended by
the Board of Directors on each of the other proposals unless contrary
instructions are given.
Any Proxy may be revoked at any time before it is exercised by providing
written notice to the Secretary of the Company. The casting of a ballot at the
Annual 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.
Approval of the Classified Board Amendment (as hereinafter defined)
requires the affirmative vote of the holders of a majority of the outstanding
shares of our Common Stock. Election as a director requires a plurality of the
votes present in person or represented by proxy and entitled to vote at the
Annual Meeting. Approval of the adoption of the Company's 1999 Stock Option
Plan, the issuance of warrants and the selection of PricewaterhouseCoopers LLP
as the Company's independent accountants for 2000 requires the affirmative vote
of a majority of the votes present in person or represented by proxy at the
Annual Meeting and entitled to vote on the matter.
<PAGE> 5
For the purpose of determining the vote required for approval of matters to
be voted on at the Annual Meeting, abstentions and broker non-votes (i.e.,
shares held by brokers or nominees that the broker or nominee does not have
discretionary power to vote on a particular matter and as to which instructions
have not been received from the beneficial owners or persons entitled to vote)
will be counted as shares that are present for purposes of determining a quorum.
With regard to the election of directors, votes may be cast in favor of a
nominee or withheld; votes that are withheld will be excluded entirely from the
vote and will have no effect. Abstentions may be specified on proposals other
than the election of directors and will be counted as present for purposes of
the item on which the abstention is noted. Therefore, such abstentions will have
the effect of a negative vote. Broker non-votes will be treated as shares that
are unvoted and not present on such proposals. Because amending the Company's
Certificate of Incorporation requires the majority of all shares outstanding and
entitled to vote thereon, broker non-votes will have the effect of a negative
vote with respect to that proposal. With regard to proposals other than the
election of directors and the amendment of the Company's Certificate of
Incorporation, broker non-votes will have no effect on the outcome of such
proposals.
I. AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION
TO PROVIDE FOR A CLASSIFIED BOARD OF DIRECTORS
A classified board of directors divides directors into "classes" elected
for staggered "terms" of three years. Classification of the board of directors
might make it more difficult for a person acquiring shares of Common Stock to
take immediate control of the Board of Directors. The Company believes that a
classified board of directors may also contribute to the continuity and
stability of leadership and policy. The classification system of electing
directors may tend to maintain the incumbency of the Board of Directors as it
generally makes it more difficult for stockholders to change a majority of the
directors.
Delaware law permits the adoption of a classified board of directors with
staggered terms. A maximum of three classes of directors is permitted by
Delaware law, with members of one class to be elected each year for a maximum
term of three years. The Company's Certificate of Incorporation currently does
not provide for a classified board of directors. The Board of Directors of the
Company has unanimously approved and recommended for stockholder approval an
amendment to Article 5 of our Certificate of Incorporation providing for a
classified Board of Directors, the text of which is set forth in Exhibit A to
this Proxy Statement (the "Classified Board Amendment").
Under the Classified Board Amendment, the Company's Board of Directors will
be divided into three classes, designated Class I, Class II and Class III, upon
stockholder approval of the Classified Board Amendment. The directors in Class I
will hold office until the Company's 2001 annual meeting; the directors in Class
II will hold office until the Company's 2002 annual meeting; and the directors
in Class III will hold office until the Company's 2003 annual meeting, and, in
each case, until their successors are duly elected and qualified or until their
earlier resignation, removal from office or death. After each such election, the
directors shall then serve succeeding terms of three years and until their
successors are duly elected and qualified.
Under Delaware law, a director on a classified board of directors can be
removed from office during his term by stockholders only for cause, unless the
corporation's Certificate of Incorporation provides otherwise. The Company's
Certificate of Incorporation does not provide otherwise. The Company's By-laws
provide that the holders of a majority of the shares of the Company's capital
stock may, at any meeting of stockholders, remove any or all of the Company's
directors with or without cause. Because this option is not contained in the
Company's Certificate of Incorporation, however, the Delaware statute controls
on this issue. Therefore, if this Proposal is approved, the holders of a
majority of the outstanding voting shares would be able to remove a director
during his elected term only for cause. In this context, "cause" is not defined
by statute. Vacancies that occur on the Company's Board of Directors during the
year may be filled by the Board to serve until the next annual meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
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II. ELECTION OF DIRECTORS
The Board of Directors is presently composed of five members. Each of the
nominees for election, except Charles Henri-Weil and Elliot Sainer, was
previously elected to the Board of Directors by the Company's stockholders.
Charles Henri-Weil was appointed to the Board on December 2, 1999 and Elliot
Sainer was appointed to the Board on May 4, 2000, each to fill a vacancy created
by the resignation of a director. Irwin Lehrhoff, Ph.D. has decided not to stand
for reelection to the Board of Directors and the Board has not nominated an
individual to fill his seat. Notwithstanding that vacancy, proxies cannot be
voted for a greater number of persons than the number of nominees named.
If the Classified Board Amendment is approved by the stockholders, the
Company's Certificate of Incorporation will provide that the Board of Directors
shall be divided into three classes, each class consisting, as nearly as
possible, of one-third of the total number of directors, with each class having
a three-year term. If elected at the Annual Meeting, each of the nominees will
serve as indicated below and until his successor is elected and qualified, or
until such director's earlier death, resignation or removal.
If the Classified Board Amendment is not approved by stockholders, the four
directors set forth below are each nominated for election, the term of office of
each person elected as director to continue until the next annual meeting or
until his successor has been elected and qualified.
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 four nominees
listed below, 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.
INFORMATION WITH RESPECT TO NOMINEES
Certain information concerning the nominees for election as directors is
set forth below. Such information was furnished by them to the Company.
Class I -- Nominee for a Term Continuing until 2001
SHAWKAT RASLAN, age 48, has been a director of the Company since February
1994 and has served as Chairman of the Board of Directors since November 1999.
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 and Access Worldwide Communication Services, Inc.
Class II -- Nominee for a Term Continuing until 2002
ELLIOT SAINER, age 54, has been a director of the Company since May 1999.
Mr. Sainer has been the President and Chief Executive Officer of Aspen Youth
Services, which provides education, treatment and rehabilitation services to
at-risk youth and their families, since he founded the organization in May 1998.
From July 1989 to May 1998, Mr. Sainer served as President and Chief Executive
Officer of College Health Enterprises, a regional healthcare system that owns
and operates hospitals and long term facilities in Southern California. He is
the current Chairman of the Youth Services Committee of the National Association
of Psychiatric Health Systems.
Class III -- Nominees for Terms Continuing until 2003
ERIC E. ANDERSON, PH.D., age 49, has been the Chief Executive Officer of
the Company since November 1999 and a director of the Company since October
1998. From October 1998 to November 1999, Dr. Anderson was the President and
Chief Operating Officer of the Company. Dr. Anderson joined the Company in June
1997 and served as President and Chief Executive Officer of the Company's
behavioral
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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.
CHARLES HENRI-WEIL, age 63, has been a director of the Company since
December 1999. Since 1990, Mr. Weil has been a self-employed financial
consultant based in Paris, France. Mr. Weil has also served as Chairman and
Chief Executive Officer of Intergestion, an investment banking company based in
France, since June 1989. He serves as a director of certain European companies,
including Dawnay Day Bank, Europeenne de Distribution Luxembourg and Europeenne
des metaux Luxembourg, an industrial conglomerate.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH NOMINEE.
III. APPROVAL OF THE 1999 STOCK OPTION PLAN
GENERAL
The Board of Directors of the Company unanimously adopted the 1999 Stock
Option Plan (the "Plan"), which is attached as Exhibit B, on December 17, 1999,
subject to the approval of the Company's stockholders. The Board believes that
the Company's interests are advanced by providing certain key employees of the
Company and its subsidiaries, members of the Board of Directors, consultants and
other individuals with an additional incentive to continue their efforts on
behalf of the Company and its subsidiary or parent corporations (each, an
"Affiliate" and collectively, "Affiliates"), as well as to attract people of
training, experience and ability to the Company and its subsidiaries.
ELIGIBILITY
Under the Plan, the Company may grant stock options to key employees of the
Company or its Affiliates, including officers or directors thereof, and to
consultants and other individuals providing service to the Company or its
Affiliate (collectively "Eligible Persons"). This group of Eligible Persons
includes approximately 34 people as of the date of this Proxy Statement. Stock
options that are intended to qualify as "incentive" stock options within the
meaning of Section 422 of the Internal Revenue Code (the "Code") may only be
granted to employees.
ADMINISTRATION
The Plan will be administered by the Compensation Committee of the Board of
Directors or a subcommittee of the Compensation Committee that is appointed by
the Compensation Committee (the "Committee") and, unless otherwise determined by
the Board of Directors, the members of the Board of Directors who serve on the
Committee will be "Non-employee Directors," as that term is defined in Rule
16b-3 under the Securities Exchange Act of 1934, as amended. The Committee is
authorized to select Eligible Persons to receive options under the Plan, the
time when such options will be granted, the terms of such options and the number
of shares for which options are granted. The Committee is authorized to
establish such rules and regulations, to make determinations and
interpretations, and to take other administrative actions with regard to the
Plan that it deems necessary or advisable.
STOCK ISSUABLE UNDER THE PLAN
The maximum aggregate number of shares of Common Stock that may be issued
under the Plan may not exceed 1,000,000 shares, subject to adjustments for
changes in the stock subject to the Plan. Upon the expiration or termination of
any unexercised stock option, the underlying shares of Common Stock will again
be available for issuance. The maximum number of shares that may be granted to
any person under the Plan during any fiscal year cannot exceed 500,000.
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STOCK OPTIONS
Stock options entitle the holder to purchase shares of Common Stock at a
per share price determined by the Committee, which price shall not be less than
100% of the "Market Value" of the Common Stock on the date on which it is
granted. Market Value is defined in the Plan as the last sale price regular way
on the date of reference or if no such sale has occurred, the average closing
high bid and low asked prices regular way. As of May 1, 2000, the market value
of the Common Stock underlying the Plan was $625,000.
Options may be made exercisable in installments as determined by the
Committee at the time the stock option is granted. In no event, however, may
options be exercisable after 10 years from the date of grant. In the case of any
option intended to be an incentive stock option granted to an individual owning,
on the date of grant, stock representing 10% of the voting power of all classes
of stock of the Company or an Affiliate, such options may be exercisable no more
than 5 years from the date of grant and the exercise price per share of such
options may be no less than 110% of the Market Value of Common Stock on the date
of grant. Payment of the exercise price of an option may be made in cash or
shares of Common Stock. The Company also has the discretion to make loans to an
optionee (or to guarantee loans made by third parties) on such terms and
conditions as the Board of Directors of the Company determines in order to
facilitate the payment of the exercise price.
If an optionee is terminated by action of the Company or an Affiliate or by
reason of disability or retirement under a retirement plan maintained by the
Company or an Affiliate, the optionee's vested options remain exercisable for
three months after such termination. If the terminated optionee dies within that
three month period, his heirs or legatees have an additional one year to
exercise such vested options. In the event of the death of an optionee while he
is employed, all of such deceased optionee's options will become fully vested
and will be exercisable for a period of one year after his death by his heirs or
legatees.
Stock options granted under the Plan are non-transferrable, except by will
or the laws of descent or distribution, or by the optionee, with the consent of
the Committee, to or for the benefit of a member of such optionee's immediate
family.
ADJUSTMENTS
The number of shares of Common Stock issuable under the Plan, and the terms
of any outstanding option, may be adjusted by the Committee to reflect any
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, or any other change in the corporate structure
or shares of the Company.
In connection with certain mergers, consolidations or sales of all or
substantially all of the Company's assets, the Committee may accelerate the
exercisability of the options.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The current federal income tax consequences of grants under the Plan are
generally described below. This description of tax consequences is not a
complete description, and is based on the Internal Revenue Code as presently in
effect, which is subject to change, and does not purport to be a complete
description of the federal income tax aspects of options and stock awards under
the Plan.
Nonqualified Stock Options
An optionee will not be subject to federal income tax upon the grant of a
nonqualified stock option. Upon the exercise of a nonqualified stock option, the
optionee will recognize ordinary compensation income in an amount equal to the
excess, if any, of the then fair market value of the shares acquired over the
exercise price. The Company will generally be able to take a deduction with
respect to this compensation income for federal income tax purposes. The
optionee's tax basis in the shares acquired will equal the exercise price plus
the amount taxable as compensation to the optionee. Upon a sale of the shares
acquired upon exercise, any gain or loss is generally long-term or short-term
capital gain or loss, depending on how long the shares are held. The
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required holding period for long-term capital gain is presently more than one
year. The optionee's holding period for shares acquired upon exercise will begin
on the date of exercise.
Incentive Stock Options
An optionee who receives incentive stock options generally incurs no
federal income tax liability at the time of grant or upon exercise of the
options. However, the spread will be an item of tax preference which may give
rise to alternative minimum tax liability at the time of exercise. If the
optionee does not dispose of the shares before the date that is two years from
the date of grant and one year from the date of exercise, the difference between
the exercise price and the amount realized upon disposition of the shares will
constitute long-term capital gain or loss, as the case may be. Assuming both
holding periods are satisfied, no deduction will be allowable to the Company for
federal income tax purposes in connection with the option. If, within two years
of the date of grant or within one year from the date of exercise, the holder of
shares acquired upon exercise of an incentive stock option disposes of the
shares, the optionee will generally realize ordinary compensation income at the
time of the disposition equal to the difference between the exercise price and
the lesser of the fair market value of the stock on the date of exercise or the
amount realized on the disposition. The amount realized upon such a disposition
will generally be deductible by the Company for federal income tax purposes.
Tax Deductibility Under Section 162(m)
Section 162(m) of the Internal Revenue Code disallows a public company's
deductions for employee compensation exceeding $1,000,000 per year for the chief
executive officer and the four other most highly compensated executive officers.
Section 162(m) contains an exception for performance-based compensation that
meets specific requirements. The Plan is intended to permit all options to
qualify as performance-based compensation.
Withholding
The Company has the right to deduct from all grants paid in cash or other
compensation, any taxes required to be withheld with respect to grants under the
Plan. The Company may require that the participant pay to the Company the amount
of any required withholding. The Committee may permit the participant to elect
to have withheld from the shares issuable to him or her with respect to an
option a number of shares with a value equal to the required tax withholding
amount.
AMENDMENTS
The Company's Board of Directors may, at any time, amend the Plan or any
options outstanding under the Plan. No amendment of the Plan may, without the
optionee's consent, adversely affect the rights of such optionee under any
option held by such optionee.
BENEFITS
The following table lists the number of options and the dollar value of
those options that have been designated for certain persons under the 1999 Stock
Option Plan, if the Plan is approved by Integra Stockholders. The dollar value
of the options listed in the table is based upon the closing price of Common
Stock on May 1, 2000. Because options are granted from time to time by the
Committee to those persons whom the Committee determines in its discretion
should receive options, however, the benefits and amounts that may be received
in the future by persons eligible to participate in the Plan are not presently
determinable.
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NEW PLAN BENEFITS
1999 STOCK OPTION PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE NUMBER OF UNITS
- ----------------- ------------ ---------------
<S> <C> <C>
Eric E. Anderson, Chief Executive Officer................ $312,500 500,000
Lawrence M. Davies, Former Chief Executive Officer....... -- --
Mark D. Gibson, Former Chief Financial Officer........... -- --
Paul Patti, Ph.D., Former Vice President -- Clinical
Services............................................... -- --
Richard Jackson, Former Chief Information Officer........ -- --
Edwin Edghill, Vice President -- Sales................... -- --
All current executive officers as a group................ $312,500 500,000
All current directors who are not executive officers as a
group.................................................. $ 93,750 150,000
Each nominee for election as a director.................. -- --
Each associate of any such directors, executive officers
or nominees............................................ -- --
Each other person who is to receive five percent of the
options................................................ -- --
All employees, including all current officers who are not
executive officers, as a group......................... $184,000 115,000
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
IV. AUTHORIZATION OF ISSUANCE OF WARRANTS
The Board of Directors approved the issuance of warrants to purchase 50,000
shares of Common Stock to Charles Henri-Weil, as well as the conditional
issuance of additional warrants to purchase 50,000 shares of Common Stock,
subject to the approval of the Company's Stockholders. The warrants are to be
issued in connection with a temporary line of credit in an amount up to $2
million extended by Mr. Weil to the Company and the conditional warrants will be
issued if the Company fails to obtain a line of credit from a financial
institution to replace the line of credit that was extended by Mr. Weil by June
30, 2000, and Mr. Weil's line of credit assumes more permanence. Both sets of
warrants would have a ten-year term and would be exercisable at a price per
share equal to the fair market value of a share of Common Stock on the closing
date of the Company's Annual Meeting. The exercise price would be subject to
adjustment in the event of stock splits, stock dividends, recapitalizations and
other similar circumstances. The warrants would not be registered under the
Securities Act of 1933 and may not be sold without such registration or an
opinion of counsel satisfactory to the Company that an exemption to such
registration requirements is available.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
V. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected PricewaterhouseCoopers
LLP ("PWC") to serve as independent accountants for the Company for 2000. PWC
has examined the financial statements of the Company since its inception. The
Board of Directors considers PWC 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 Annual
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.
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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
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VI. OTHER MATTERS
The Board of Directors of the Company does not know of any other matter
which may be brought before the Annual 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.
MATTERS CONCERNING DIRECTORS
COMMITTEES AND MEETINGS
During 1999, the Board of Directors of the Company met six times. Each of
the current nominees for director 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 that were held during the time that such person served.
The Board of Directors has a Compensation 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, Irwin Lehrhoff and Charles Henri-Weil. The Compensation Committee
makes recommendations to the full Board of Directors as to the compensation of
senior management. The Compensation Committee also administers the Integra, Inc.
1994 Stock Option Plan and determines the persons who are eligible to receive
options under that plan and the number of shares of Common Stock subject to each
option. The Compensation Committee did not meet during 1999.
The members of the Audit Committee are Irwin Lehrhoff, who serves as
Chairman, Shawkat Raslan, and Charles Henri-Weil. 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 held one meeting in 1999.
REQUIREMENTS FOR ADVANCE NOTIFICATION OF NOMINATIONS
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.
DIRECTOR COMPENSATION ARRANGEMENTS
Directors of the Company do not receive an annual retainer. Directors do,
however, receive $2,000 for each Board meeting or Committee meeting attended in
person and $1,000 for each Board meeting or Committee meeting attended via
telephone. The Chairman of the Board of Directors receives compensation equal to
twice the per meeting compensation listed in the prior sentence.
Upon stockholder approval of the 1999 Stock Option Plan, each outside
director will receive a stock option grant to purchase 50,000 shares of the
Company's Common Stock with an exercise price per share equal to the fair market
value of a share of Common Stock on the date of grant. These stock options will
be fully vested on the date of grant and will have a ten year term. In addition,
if the Chief Executive Officer meets his bonus plan, each director who has
attended more than seventy-five percent of the Board meetings will receive a
bonus stock option grant to purchase 20,000 shares of the Company's Common Stock
with an exercise price per share equal to the fair market value of a share of
Common Stock on the date of grant under the Company's Board of Directors'
Compensation Plan.
From time to time the Chief Executive Officer may request, with the
approval of the Board of Directors, specific assistance from a particular
director. The compensation of such director for additional services
8
<PAGE> 12
provided will be considered on a case by case basis and will be granted only
with Board approval. No directors currently are being compensated under such an
arrangement.
EXECUTIVE COMPENSATION
COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for the fiscal years ended
December 31, 1999, 1998 and 1997 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, 1999 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ------------
--------------------------- OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS COMPENSATION(1)
- --------------------------- ---- -------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Eric E. Anderson, Ph.D............ 1999 $239,385 $75,000 -- --
Chief Executive Officer 1998 200,000 60,000 200,000 --
1997 104,327 30,625 25,000 --
Lawrence M. Davies(2)............. 1999 $154,808 $39,375 $206,523
Former Chief Executive Officer 1998 156,250 152,500(3) -- --
1997 150,000 20,000 -- 2,885
Mark D. Gibson(4)................. 1999 $119,308 -- -- $ 68,044
Former Chief Financial Officer 1998 100,054 $36,000(5) -- --
1997 86,800 17,400 5,000 --
Paul Patti, Ph.D.(6).............. 1999 $134,154 -- -- --
Former Vice President -- 1998 125,957 $25,000 10,000 --
Clinical Services 1997 50,769 10,000 -- --
Richard Jackson(7)................ 1999 $100,000 $5,000 -- --
Former Chief Information 1998 82,692 14,000 7,500 --
Officer 1997 11,538 -- -- --
Edwin Edghill..................... 1999 $90,000 $54,085(8) -- --
Vice President -- Sales 1998 90,000 11,386(8) -- --
1997 36,077 10,000 -- --
</TABLE>
- ---------------
(1) Amounts disclosed in this column include:
(a) Severance amounts paid by the Company to the following Named Executive
Officers in 1999 upon their separation from the Company: Mr. Davies
$175,000 and Mr. Gibson $60,000.
(b) Amounts paid to the following Named Executive Officers for unused time
off: For fiscal year 1999 -- Mr. Davies $31,523 and Mr. Gibson $8,044.
For fiscal year 1997 -- Mr. Davies $2,885.
(2) Mr. Davies resigned on November 12, 1999.
(3) Includes one-time bonus of $100,000 related to the sale of the Outpatient
Group Practice Business of the Company.
(4) Mr. Gibson resigned on December 23, 1999.
(5) Includes one-time bonus of $15,000 related to sale of the Outpatient Group
Practice Business of the Company.
(6) Dr. Patti resigned on January 6, 2000.
(7) Mr. Jackson resigned on February 11, 2000.
(8) Includes payments of sales commission.
9
<PAGE> 13
OPTION GRANTS
The Company granted no stock options to the Named Executive Officers during
the fiscal year ended December 31, 1999.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth the number and value of options held by the
Named Executive Officers at December 31, 1999. During the fiscal year ended
December 31, 1999, none of the Named Executive Officers exercised any options to
purchase Common Stock.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED UNEXERCISED IN-THE-
SHARES OPTIONS AT MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1999 DECEMBER 31, 1999(1)
ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eric E. Anderson,
Ph.D................. -- -- 45,000 180,000 -- --
Lawrence M. Davies..... -- -- 10,000 -- -- --
Mark D. Gibson......... -- -- 6,000 1,500 -- --
Paul Patti, Ph.D....... -- -- 2,000 8,000 -- --
Richard Jackson........ -- -- 1,500 6,000 -- --
Edwin Edghill.......... -- -- -- -- -- --
</TABLE>
- ---------------
(1) None of the options held by the Named Executive Officers were in-the-money
at December 31, 1999. 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
Securities and Exchange Commission regulations by subtracting the aggregate
exercise price of the option from the aggregate year-end value of the
underlying common stock.
CERTAIN EMPLOYMENT AND SEPARATION ARRANGEMENTS
Dr. Anderson was employed by the Company during fiscal year 1999 under two
separate employment agreements. The Company had an agreement with Dr. Anderson
until November 17, 1999 (the "First Agreement") that provided for Dr. Anderson
to serve as President and Chief Operating Officer of the Company at an annual
base salary of $240,000. Under the First Agreement, Dr. Anderson was 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.
The First Agreement also provided that if Dr. Anderson was terminated by the
Company without "cause" during the term of his employment, he was 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 would
be required to pay Dr. Anderson the difference between $120,000 and any
compensation Dr. Anderson received from any subsequent employment or from any
contract source that may pay Dr. Anderson.
The Company entered into an agreement with Dr. Anderson on November 17,
1999 (the "Second Agreement") that provided for Dr. Anderson to serve as Chief
Executive Officer of the Company. Pursuant to the Second Agreement, Dr. Anderson
received a base salary at a rate of $240,000 per annum, with performance-based
merit increases to be determined by the Board of Directors upon its annual
review of Dr. Anderson's salary. In addition, beginning in 2000, Dr. Anderson
has the opportunity to earn an annual bonus of up to 75% of his base salary,
which bonus will be determined within the first 90 days of each calendar year
for such year. The Second Agreement also provides for Dr. Anderson to receive a
grant of options to purchase an aggregate of 500,000 shares of Common Stock
under the Company's 1999 Stock Option Plan as promptly as practicable after the
execution of the Second Agreement. The options will vest as follows: 25% on
10
<PAGE> 14
the date of grant and an additional 25% per year for each of the three years
following the date of grant. The options will become fully vested upon a change
of control (as defined in the Second Agreement).
Under the Second Agreement, Dr. Anderson may be terminated by the Company
at any time for due cause (as defined in the Second Agreement). In the event of
such termination, or termination due to incapacity, the Company is required to
pay Dr. Anderson the amount of his salary that had accrued, but was not paid, at
the time of his termination. The Company may also terminate Dr. Anderson at any
time for any reason it deems appropriate. After such a termination, however, the
Company would be required to pay Dr. Anderson severance in the form of salary
continuation for twelve months following such termination. If the termination
occurs within six months of a change in control (as defined in the Second
Agreement), Dr. Anderson would be entitled to an amount equal to twelve months'
salary paid to him in a lump sum on the date of his termination, as well as the
continuation of health, disability and life insurance benefits for twelve months
following his termination.
The Company entered into a separation agreement with Lawrence M. Davies on
November 12, 1999 which set forth the terms governing Mr. Davies' separation
from the Company. Under this agreement, Mr. Davies received a severance payment
of $175,000, plus $39,375, which amount equaled 75% of Mr. Davies' bonus
opportunity for 1999. In addition, the Company agreed to continue to provide Mr.
Davies with coverage under the Company's medical and dental plans, long term
disability plan, accidental death and dismemberment insurance and supplemental
life insurance plans for one year. Mr. Davies also will receive basic life
insurance coverage at two times his base salary with the Company for a period of
one year following his separation. If Mr. Davies obtains full-time employment
prior to the end of that one-year period, his inclusion in the Company's benefit
plans will be discontinued. Mr. Davies continued as a consultant to the Company
for between eight and twelve hours each week at an hourly rate of $100 per hour
until April 30, 2000. The Company may extend Mr. Davies' consulting arrangement
with Mr. Davies' consent.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On March 30, 2000, in return for his commitment to provide the Company with
a line of credit of up to $2 million, Charles Henri-Weil, a director of the
Company who serves on the Compensation Committee, received a commitment from the
Company to issue to him warrants to purchase 50,000 shares of Common Stock. The
issuance of warrants is conditioned upon stockholder approval at the Annual
Meeting. The warrants, if approved by the Company's stockholders, will have a
ten-year term and an exercise price per share equal to the fair market value of
a share of Common Stock on the date the warrants are issued.
In addition, if the Company is unable to secure a replacement line of
credit for Mr. Weil's line of credit by June 30, 2000, Mr. Weil will be granted
additional warrants to purchase 50,000 shares of the Common Stock on the same
terms and conditions as described above.
11
<PAGE> 15
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 December 31, 1994 to December
31, 1999. 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 December 31, 1994 and that
all dividends were reinvested.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG INTEGRA, INC., THE AMEX MARKET VALUE INDEX
AND THE NASDAQ HEALTH SERVICES INDEX
[INTEGRA LINE GRAPH]
<TABLE>
<CAPTION>
INTEGRA, INC. AMEX MARKET VALUE NASDAQ HEALTH SERVICES
------------- ----------------- ----------------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 52.86 126.42 126.77
1996 21.43 134.50 126.57
1997 14.29 163.13 128.99
1998 7.14 165.96 109.29
1999 9.65 214.80 90.32
</TABLE>
- ---------------
* $100 invested on 12/31/94 in stock or index -- including reinvestment of
dividends. Fiscal year ending December 31.
REPORT OF THE COMPENSATION COMMITTEE
The report of the Compensation Committee documents the Committee's policies
regarding executive officer compensation. The Committee's philosophy and
objectives in setting compensation are: (i) to offer levels of compensation that
are competitive with those offered by other companies in similar businesses;
(ii) to compensate executives based on each executive's level of responsibility
and contribution to the Company's business goals; (iii) to link compensation
with the Company's financial performance; and (iv) 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.
12
<PAGE> 16
BASE SALARY
Base salary is determined based upon level of responsibility, individual
performance and Company performance, as well as 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 those 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 that 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 Chief Executive Officer of
the Company in consultation with the Compensation Committee. Bonuses, which are
paid annually, range from 10% to 75% 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 that are set
by the Chief Executive Officer of the Company in consultation with the
Compensation Committee in the following areas: patient care efficiency, employee
retention, management objectives and personal objectives.
STOCK OPTIONS
During 1999, the Company granted 20,000 stock options under the Integra,
Inc. 1994 Stock Option Plan (the "Stock Option Plan") to executive officers of
the Company. The primary purpose of the 1994 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 such key
employees an opportunity to benefit from increases in the market price of the
Common Stock. The 1994 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 1994 Stock Option Plan is administered by the
Compensation Committee of the Board of Directors, which determines the persons
who are to receive options and the number of shares subject to each option. In
selecting individuals for 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.
COMPENSATION COMMITTEE
Shawkat Raslan, Chairman
Irwin Lehrhoff, Ph.D.
Charles Henri-Weil
May 1, 2000
13
<PAGE> 17
CERTAIN TRANSACTIONS
See "Compensation Committee Interlocks and Insider Participation."
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 Common Stock as of May 1, 2000, each director and each Named Executive
Officer of the Company and all directors and Named Executive Officers of the
Company as a group, and their respective stockholdings as of such date
(according to information furnished by them to the Company), are set forth in
the following table. To the Company's knowledge, no single stockholder, with the
exception of Charles Henri-Weil, beneficially owned more than 5% of the Common
Stock on May 1, 2000. Except as indicated in the footnotes to the table, all of
such shares are owned with sole voting and investment power.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OWNED
NAME AND ADDRESS BENEFICIALLY PERCENT OF CLASS(1)
- ---------------- ---------------- -------------------
<S> <C> <C>
Charles Henri-Weil......................................... 629,900 6.2
8/Rue Cortambert
Paris, France 75116
Irwin Lehrhoff, Ph.D(2).................................... 250,000 2.5
Lawrence M. Davies......................................... 107,568 1.1
Eric E. Anderson, Ph.D(3)(4)............................... 49,000 *
Shawkat Raslan............................................. 40,000 *
Elliot Sainer(5)........................................... 7,000 *
Mark D. Gibson............................................. -- *
Paul Patti, Ph.D........................................... -- *
Richard Jackson(4)......................................... 1,500 *
Edwin Edghill.............................................. -- *
Directors and officers as a group (10 persons)(4).......... 1,077,968 10.2
</TABLE>
- ---------------
* Less than one percent (1%).
(1) Applicable percentage ownership is based on 10,138,552 shares of Common
Stock outstanding on May 1, 2000. Shares of Common Stock issuable upon the
exercise of stock options exercisable currently or within 60 days of May 1,
2000 are deemed outstanding and to be beneficially owned by the person
holding such option for purposes of computing such person's beneficial
ownership, but are not deemed outstanding for the purpose of computing the
percentage ownership of any other person.
(2) 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 5,000
shares of Common Stock owned by Dr. Lehrhoff's spouse, of which shares of
Common Stock Dr. Lehrhoff disclaims beneficial ownership.
(3) Includes 4,000 shares owned by a trust for the benefit of Dr. Anderson's
son.
(4) Includes with respect to Dr. Anderson 45,000 shares and Mr. Jackson 1,500
shares, all of which shares are subject to presently exercisable options.
(5) Includes 5,000 shares owned by Mr. Sainer's daughter.
14
<PAGE> 18
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, 1999 all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with.
INDEPENDENT PUBLIC ACCOUNTANTS
A representative of PWC will be present at the Annual Meeting, will have
the opportunity to make a statement if such representative desires to do so and
will be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2001 Annual Meeting
of Stockholders of the Company must be received by the Company by January 19,
2001 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 January 19, 2001 of an intent to be present at the Company's 2001
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.
By Order of the Board of Directors,
Eric E. Anderson, Ph.D.
Chief Executive Officer
May 26, 2000
15
<PAGE> 19
EXHIBIT A
TEXT OF THE PROPOSED AMENDMENT TO ARTICLE 5
OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF INTEGRA, INC.
Amend existing Article 5 of the Amended and Restated Certificate of
Incorporation so as to read in its entirety as follows:
FIFTH:
(a) Subject to the provisions of the General Corporation Law of the State
of Delaware, the number of directors of the Corporation shall be as
determined as provided in the By-laws.
(b) The Board of Directors shall be divided into three classes, as nearly
equal in number as possible, designated Class I, Class II, and Class
III. Class I directors shall initially serve until the first annual
meeting of stockholders next succeeding the date of this Certificate of
Amendment; Class II directors shall initially serve until the second
annual meeting of stockholders next succeeding the date of this
Certificate of Amendment; and Class III directors shall initially serve
until the third annual meeting of stockholders next succeeding the date
of this Certificate of Amendment. Commencing with the first annual
meeting of stockholders next succeeding the date of this Certificate of
Amendment, directors of each class the term of which shall then expire
shall be elected to hold office for a three-year term and until the
election and qualification of their respective successors in office. In
case of any increase or decrease, from time to time, in the number of
directors, the number of directors in each class shall be apportioned
as nearly equal as possible.
<PAGE> 20
EXHIBIT B
INTEGRA, INC.
1999 STOCK OPTION PLAN
1. Purposes of Plan. The purposes of this Plan, which shall be known as
the Integra, Inc. 1999 Stock Option Plan and is hereinafter referred to as the
"Plan", are (i) to provide incentives for key employees, directors, consultants
and other individuals providing services to Integra, Inc. (the "Company") and
its subsidiary or parent corporations (within the respective meanings of
Sections 424(f) and 424(e) of the Internal Revenue Code of 1986, as amended (the
"Code"), and referred to herein as "Subsidiary" and "Parent", respectively, and
such Parent and each Subsidiary are referred to herein individually as an
"Affiliate" and collectively as "Affiliates") by encouraging their ownership of
the common stock, $.01 par value, of the Company (the "Stock") and (ii) to aid
the Company in retaining such key employees, directors, consultants and other
individuals upon whose efforts the Company's success and future growth depends
and in attracting other such employees, directors, consultants and individuals.
2. Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors or a subcommittee of the Compensation
Committee appointed by the Compensation Committee, as hereinafter provided (the
committee or subcommittee administering the Plan is hereinafter referred to as
the "Committee"). For purposes of administration, the Committee, subject to the
terms of the Plan, shall have plenary authority to establish such rules and
regulations, to make such determinations and interpretations, and to take such
other administrative actions as it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be final,
conclusive and binding on all persons, including Optionees (as hereinafter
defined) and their legal representatives and beneficiaries.
The Committee shall consist of not fewer than two members of the Board of
Directors. Unless otherwise determined by the Board of Directors, all members of
the Board of Directors who serve on the Committee shall be "Non-Employee
Directors" (as defined in Rule 16b-3 under the Securities Exchange Act of 1934,
as amended) and "outside directors" as defined in Treasury Regulation Section
1.162-27(e)(3). The Compensation Committee shall designate one of the members of
the Committee as its Chairman. The Committee shall hold its meetings at such
times and places as it may determine. A majority of its members shall constitute
a quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by all
members shall be as effective as if it had been made by a majority vote at a
meeting duly called and held. The Committee may appoint a secretary (who need
not be a member of the Committee). No member of the Committee shall be liable
for any act or omission with respect to his service on the Committee if he acts
in good faith and in a manner he reasonably believes to be in or not opposed to
the best interests of the Company.
3. Stock Available for Options. There shall be available for options under
the Plan a total of 1,000,000 shares of Stock, subject to any adjustments which
may be made pursuant to Section 5(f) hereof. Shares of Stock used for purposes
of the Plan may be either authorized and unissued shares, or previously issued
shares held in the treasury of the Company, or both. Shares of Stock covered by
options which have terminated or expired prior to exercise shall be available
for further options hereunder. The maximum number of options which may be
granted to any person under the Plan during any fiscal year of the Company shall
not exceed 500,000 shares.
4. Eligibility. Options under the Plan may be granted to key employees of
the Company or any Affiliate, including officers or directors of the Company or
any Affiliate, and to consultants and other individuals providing services to
the Company or any Affiliate (each such grantee, an "Optionee"). Options may be
granted to eligible individuals whether or not they hold or have held options
previously granted under the Plan or otherwise granted or assumed by the
Company. In selecting individuals for options, the Committee may take into
consideration any factors it may deem relevant, including its estimate of the
individual's present and potential contributions to the success of the Company
and its Affiliates. Service as an employee, director, officer or consultant of
or to the Company or any Affiliate shall be considered employment for purposes
of the
<PAGE> 21
Plan (and the period of such service shall be considered the period of
employment for purposes of Section 5(d) of this Plan); provided, however, that
incentive stock options may be granted under the Plan only to an individual who
is an "employee" (as such term is used in Section 422 of the Code) of the
Company or any Affiliate.
5. Terms and Conditions of Options. The Committee shall, in its
discretion, prescribe the terms and conditions of the options to be granted
hereunder, which terms and conditions need not be the same in each case, subject
to the following:
(a) Option Price. The price at which each share of Stock covered by
an option granted under the Plan may be purchased shall not be less than
the Market Value (as defined in Section 5(c) hereof) per share of Stock on
the date of grant of the option. The date of the grant of an option shall
be the date specified by the Committee in its grant of the option.
(b) Option Period. The period for exercise of an option shall in no
event be more than ten years from the date of grant, or in the case of any
option intended to be an incentive stock option granted to an individual
owning, on the date of grant, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Parent
or Subsidiary, more than five years from the date of grant. Options may, in
the discretion of the Committee, be made exercisable in installments during
the option period. Any shares not purchased on any applicable installment
date may be purchased thereafter at any time before the expiration of the
option period.
(c) Exercise of Options. In order to exercise an option, the Optionee
shall deliver to the Company written notice specifying the number of shares
of Stock to be purchased, together with cash or a certified or bank
cashier's check payable to the order of the Company in the full amount of
the purchase price therefor; provided that, for the purpose of assisting an
Optionee to exercise an option, the Company may make loans to the Optionee
or guarantee loans made by third parties to the Optionee, on such terms and
conditions as the Board of Directors may authorize; and provided further
that such purchase price may be paid in shares of Stock owned by the
Optionee for a period of at least six months prior to the date of exercise
and having an aggregate Market Value on the date of exercise equal to the
aggregate purchase price, or in a combination of cash and Stock. For
purposes of the Plan, the Market Value per share of Stock shall be the last
sale price regular way on the date of reference, or, in case no sale takes
place on such date, the average of the closing high bid and low asked
prices regular way, in either case on the principal national securities
exchange on which the Stock is listed or admitted to trading, or if the
Stock is not listed or admitted to trading on any national securities
exchange, the last sale price reported on the National Market System of the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") on such date, or the last sale price reported on the NASDAQ
SmallCap Market on such date, or the average of the closing high bid and
low asked prices in the over-the-counter market on such date, whichever is
applicable, or if there are no such prices reported on NASDAQ or in the
over-the-counter market on such date, as furnished to the Committee by any
New York Stock Exchange member selected from time to time by the Committee
for such purpose. If there is no bid or asked price reported on any such
date, the Market Value shall be determined by the Committee in accordance
with the regulations promulgated under Section 2031 of the Code, or by any
other appropriate method selected by the Committee. If the Optionee so
requests, shares of Stock purchased upon exercise of an option may be
issued in the name of the Optionee or another person. An Optionee shall
have none of the rights of a stockholder until the shares of Stock are
issued to him.
(d) Effect of Termination of Employment. An option may not be
exercised after the Optionee has ceased to be in the employ of the Company
or any Affiliate, except in the following circumstances:
(i) If the Optionee's employment is terminated by action of the
Company or an Affiliate, or by reason of disability or retirement under
any retirement plan maintained by the Company or any Affiliate, the
option may be exercised by the Optionee within three months after such
termination, but only as to any shares exercisable on the date the
Optionee's employment so terminates;
2
<PAGE> 22
(ii) In the event of the death of the Optionee during the three
month period after termination of employment covered by (i) above, the
person or persons to whom his rights are transferred by will or the laws
of descent and distribution shall have a period of one year from the
date of his death to exercise any options which were exercisable by the
Optionee at the time of his death; and
(iii) In the event of the death of the Optionee while employed, the
option shall thereupon become exercisable in full, and the person or
persons to whom the Optionee's rights are transferred by will or the
laws of descent and distribution shall have a period of one year from
the date of the Optionee's death to exercise such option. The provisions
of the foregoing sentence shall apply to any outstanding options which
are incentive stock options to the extent permitted by Section 422(d) of
the Code and such outstanding options in excess thereof shall,
immediately upon the occurrence of the event described in the preceding
sentence, be treated for all purposes of the Plan as nonstatutory stock
options and shall be immediately exercisable as such as provided in the
foregoing sentence.
In no event shall any option be exercisable more than ten years from the
date of grant thereof. Nothing in the Plan or in any option granted
pursuant to the Plan (in the absence of an express provision to the
contrary) shall confer on any individual any right to continue in the
employ of the Company or any Affiliate or interfere in any way with the
right of the Company or any Affiliate to terminate his employment at any
time.
(e) Limitation on Transferability of Options. Except as provided in
this Section 5(e), during the lifetime of an Optionee, options held by such
Optionee shall be exercisable only by him and no option shall be
transferable other than by will or the laws of descent and distribution.
The Committee may, in its discretion, provide that during the lifetime of
an Optionee, options held by such Optionee may be transferred to or for the
benefit of a member of his immediate family. For purposes hereof, the term
"immediate family" of an Optionee shall mean such Optionee's spouse and
children (both natural and adoptive), and the direct lineal descendants of
his children.
(f) Adjustments for Change in Stock Subject to Plan. In the event of
a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure or shares of the Company, the Committee
shall make such adjustments, if any, as it deems appropriate in the number
and kind of shares subject to the Plan, in the number and kind of shares
covered by outstanding options, or in the option price per share, or both,
and, in the case of a merger, consolidation or other transaction pursuant
to which the Company is not the surviving corporation or pursuant to which
the holders of outstanding Stock shall receive in exchange therefor shares
of capital stock of the surviving corporation or another corporation, the
Committee may require an Optionee to exchange options granted under the
Plan for options issued by the surviving corporation or such other
corporation.
(g) Acceleration of Exercisability of Options Upon Occurrence of
Certain Events. The Committee may, in its discretion, provide in the case
of any option granted under the Plan that, in connection with any merger or
consolidation which results in the holders of the outstanding voting
securities of the Company (determined immediately prior to such merger or
consolidation) owning, directly or indirectly, less than a majority of the
outstanding voting securities of the surviving corporation (determined
immediately following such merger or consolidation), or any sale or
transfer by the Company of all or substantially all its assets or any
tender offer or exchange offer for or the acquisition, directly or
indirectly, by any person or group of all or a majority of the then
outstanding voting securities of the Company, such option shall become
exercisable in full or part, notwithstanding any other provision of the
Plan or of any outstanding options granted thereunder, on and after (i) the
fifteenth day prior to the effective date of such merger, consolidation,
sale, transfer or acquisition or (ii) the date of commencement of such
tender offer or exchange offer, as the case may be. The provisions of the
foregoing sentence shall apply to any outstanding options which are
incentive stock options to the extent permitted by Section 422(d) of the
Code and such outstanding options in excess thereof shall, immediately upon
the occurrence of the event described in clause (i) or (ii) of the
foregoing sentence, be treated for all purposes of the plan as nonstatutory
stock options and shall be immediately exercisable as such as provided in
the foregoing sentence. Notwithstanding the foregoing, in no event shall
any option be exercisable after the date of termination of the exercise
period of such option specified in Sections 5(b) and 5(d).
3
<PAGE> 23
(h) Registration, Listing and Qualification of Shares of Stock. Each
option shall be subject to the requirement that if at any time the Board of
Directors shall determine that the registration, listing or qualification
of the shares of Stock covered thereby upon any securities exchange or
under any federal or state law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of,
or in connection with, the granting of such option or the purchase of
shares of Stock thereunder, no such option may be exercised unless and
until such registration, listing, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Board of Directors. The Company may require that any person exercising an
option shall make such representations and agreements and furnish such
information as it deems appropriate to assure compliance with the foregoing
or any other applicable legal requirement.
(i) Other Terms and Conditions. The Committee may impose such other
terms and conditions, not inconsistent with the terms hereof, on the grant
or exercise of options, as it deems advisable.
6. Additional Provisions Applicable to Incentive Stock Options. The
Committee may, in its discretion, grant options under the Plan to eligible
employees which constitute "incentive stock options" within the meaning of
Section 422 of the Code; provided, however, that (a) the aggregate Market Value
of the Stock with respect to which incentive stock options are exercisable for
the first time by the Optionee during any calendar year shall not exceed the
limitation set forth in Section 422(d) of the Code; and (b) if the Optionee owns
on the date of grant securities possessing more than 10% of the total combined
voting power of all classes of securities of the Company or of any Affiliate,
the price per share shall not be less than 110% of the Market Value per share on
the date of grant.
7. Amendment and Termination. Unless the Plan shall theretofore have been
terminated as hereinafter provided, the Plan shall terminate on, and no option
shall be granted hereunder after October 31, 2009; provided, however, that the
Board of Directors may at any time prior to that date terminate the Plan. The
Board of Directors may at any time amend the Plan or any outstanding options. No
termination or amendment of the Plan may, without the consent of an Optionee,
adversely affect the rights of such Optionee under any option held by such
Optionee.
8. Stockholder Approval of Plan. The establishment of the Plan shall be
subject to approval by a majority of the votes cast thereon by the stockholders
of the Company at a meeting of stockholders duly called and held for such
purpose or by a method and in a degree that would be treated as adequate under
the applicable law of the Company's state of incorporation, and no option
granted hereunder shall be exercisable prior to such approval.
9. Withholding. It shall be a condition to the obligation of the Company
to issue shares of Stock upon exercise of an option, that the Optionee (or any
beneficiary, transferee or person entitled to act under Sections 5(d) or 5(e)
hereof) pay to the Company, upon its demand, such amount as may be requested by
the Company for the purpose of satisfying any liability to withhold federal,
state or local income or other taxes. If the amount requested is not paid, the
Company may refuse to issue such shares of Stock.
10. Issuance of Certificates; Legends. The Company may endorse such legend
or legends upon the certificates for shares of Stock issued upon the exercise of
an option granted hereunder and may issue such "stop transfer" instructions to
its transfer agent in respect of such shares as, in its absolute discretion, it
determines to be necessary or appropriate.
11. Correction of Defects, Omissions, and Inconsistencies. The Committee
may correct any defect, supply any omission, or reconcile any inconsistency in
this Plan in the manner and to the extent it shall deem desirable to carry this
Plan into effect.
12. Other Actions. Nothing contained in this Plan shall be construed to
limit the authority of the Company to exercise its corporate rights and powers,
including but not by way of limitation, the right of the Company to grant or
assume options for proper corporate purposes other than under the Plan with
respect to any employee or other person, firm, corporation or association.
4
<PAGE> 24
INTEGRA, INC.
PROXY - ANNUAL MEETING OF STOCKHOLDERS - JUNE 27, 2000
COMMON STOCK
The undersigned, a stockholder of INTEGRA, INC., does hereby appoint ERIC
E. ANDERSON, PH.D and SHAWKAT RASLAN or either 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 Tuesday, June 27, 2000 at 9:00 A.M., local time, or
at any adjournments thereof, upon such matters as may properly come before the
Annual 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 on the reverse side on each of the following matters and in
accordance with their judgment on any other matters which may properly come
before the Annual Meeting.
(CONTINUED AND TO BE DATED AND SIGNED ON OTHER SIDE)
<PAGE> 25
A (X) Please mark your
votes as in this
example.
1. Proposal to amend the
Certificate of Incorporation FOR AGAINST ABSTAIN
to provide for a Classified ( ) ( ) ( )
Board of Directors
FOR all the nominees WITHHOLD
listed (Except as marked AUTHORITY
to the contrary below) to vote for
all the nominees
listed
2. Election of ( ) ( ) Nominees: Shawkat Raslan
Directors Elliot Sainer
Eric E. Anderson, Ph.D.
Charles Henri-Weil
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE STRIKE A LINE THROUGH
THAT NOMINEE'S NAME AT RIGHT.)
3. Proposal to approve
the Integra, Inc. FOR AGAINST ABSTAIN
1999 Stock Option Plan ( ) ( ) ( )
4. Proposal to approve issuance
of warrants to purchase FOR AGAINST ABSTAIN
Common Stock to ( ) ( ) ( )
Charles Henri-Weil
5. Ratification of appointment
of PricewaterhouseCoopers LLP FOR AGAINST ABSTAIN
as independent accountants ( ) ( ) ( )
for 2000.
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 ANY OF ITEMS 1 THROUGH 5, THEY WILL BE VOTED
IN FAVOR OF THE ITEM(S) FOR WHICH NO DIRECTION IS INDICATED.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD USING THE ENCLOSED
ENVELOPE.
________________________(L.S.)_____________________(L.S.) Dated __________, 2000
STOCKHOLDER(S) SIGN HERE
IMPORTANT: Before returning this Proxy, please sign your name or names on the
line(s) above exactly as shown hereon. Executors, administrators,
trustees, guardians or corporate officers should indicate their full
title when signing. Where shares are registered in the name of joint
tenants or trustees, each joint tenant or trustee should sign.
