<PAGE> 1
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:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
[ ] Confidential for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
AHT Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
AHT CORPORATION
555 WHITE PLAINS ROAD
TARRYTOWN, NEW YORK 10591
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Advanced Health Corporation, a Delaware corporation (the
"Company"), will be held at the Tarrytown Hilton, 455 South Broadway, Tarrytown,
New York 10591, on July 14, 2000, at 10:00 a.m. (local time) for the following
purposes:
a. to elect a director of the Company to serve for a three-year term and
until his successor is duly elected and qualified;
b. to approve an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 15,000,000
to 30,000,000;
c. to approve an amendment to the Company's 1995 Stock Option Plan
authorizing the issuance of options thereunder to purchase up to an
additional 350,000 shares of Common Stock of the Company;
d. to ratify the selection of Arthur Andersen, LLP as the Company's
independent auditors;
e. to transact such other business as may properly come before the Meeting
or any adjournments thereof.
Only stockholders of record at the close of business on June 5, 2000, are
entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors,
/s/ JONATHAN EDELSON
--------------------------------------
Jonathan Edelson, M.D. Chairman of the
Board, Chief Executive Officer and
President
Tarrytown, New York
June 14, 2000
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE READ THE
ENCLOSED PROXY STATEMENT AND SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED FROM WITHIN THE UNITED
STATES.
<PAGE> 3
AHT CORPORATION
555 WHITE PLAINS ROAD
TARRYTOWN, NEW YORK 10591
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 14, 2000
This Proxy Statement is being mailed to you in connection with the
solicitation of proxies by the Board of Directors of AHT Corporation, a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders (the
"Meeting"), to be held on July 14, 2000 at 10:00 a.m. (local time), at the
Tarrytown Hilton, 455 South Broadway, Tarrytown, New York 10591, and any
adjournments thereof.
SOLICITATION OF PROXIES
All shares represented by duly executed proxies in the form enclosed
herewith received by the Company prior to the Meeting will be voted as
instructed therein at the Meeting. There are boxes on the proxy card to vote for
or to withhold authority to vote for the director nominee; to approve an
amendment to the Company's Certificate of Incorporation increasing the number of
authorized shares of Common Stock, $.01 par value per share ("Common Stock")
from 15,000,000 to 30,000,000; to approve an amendment to the Company's 1995
Stock Option Plan authorizing the issuance of options thereunder to purchase up
to an additional 350,000 shares of Common Stock of the Company; to ratify the
selection of Arthur Andersen, LLP as the Company's independent auditors; and to
transact such other business as may properly come before the Meeting or any
adjournments thereof. If no instructions are given, the persons named in the
accompanying proxy intend to vote FOR the director nominee, FOR approval of the
amendment to the Company's Certificate of Incorporation increasing the number of
authorized shares of Common Stock from 15,000,000 to 30,000,000; FOR the
approval of the amendment to the Company's 1995 Stock Option Plan authorizing
the issuance of options thereunder to purchase up to an additional 350,000
shares of Common Stock of the Company; FOR ratification of the selection of
Arthur Andersen, LLP as the Company's independent auditors, and in accordance
with their judgment upon such other matters as may properly come before the
Meeting or any adjournment thereof.
Any stockholder may revoke a previously executed proxy at any time prior to
its exercise by (i) delivering a later-dated proxy, (ii) giving written notice
of revocation to the Secretary of the Company at the address set forth above at
any time before such proxy is voted, or (iii) voting in person at the Meeting.
No proxy will be voted if the stockholder who executed such proxy attends the
Meeting and elects to vote in person. If a stockholder does not intend to attend
the Meeting, any proxy or notice should be returned to the Company for receipt
by the Company not later than the close of business on July 7, 2000.
A copy of the Annual Report of the Company containing audited financial
statements for the fiscal year ended December 31, 1999 is enclosed herewith.
This Proxy Statement and the form of proxy enclosed herewith were first mailed
to stockholders on or about June 18, 2000. The mailing address of the Company's
principal executive offices is 555 White Plains Road, Tarrytown, New York 10591.
The Board of Directors does not know of any matter other than as set forth
herein that is expected to be presented for consideration at the Meeting.
However, if other matters properly come before the Meeting, the persons named in
the accompanying proxy (each of whom is an officer and employee of the Company)
intend to vote thereon in accordance with their judgment.
RECORD DATE, OUTSTANDING VOTING SECURITIES AND VOTES REQUIRED
The Company's Common Stock is the only outstanding class of voting
securities of the Company. The record date for determining the holders of Common
Stock entitled to vote on the actions to be taken at the
<PAGE> 4
Meeting is the close of business on June 5, 2000 (the "Record Date"). As of the
Record Date, 11,130,449 shares of Common Stock were outstanding. Each holder of
Common Stock on the Record Date is entitled to cast one vote per share at the
Meeting. The Common Stock does not have cumulative voting rights.
Holders of a majority of the shares entitled to vote must be present at the
Meeting, in person or by proxy, so that a quorum may be present for the
transaction of business. In accordance with Delaware law, abstentions and
"broker non-votes" (i.e., proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owners or other
persons entitled to vote shares as to a matter with respect to which brokers or
nominees do not have discretionary power to vote) will be treated as present for
purposes of determining the presence of a quorum. Only shareholders of record at
the close of business on June 5, 2000 will be entitled to vote at the Annual
Meeting. For purposes of Proposal 1, relating to the election of a director, a
plurality of the votes cast of the shares represented in person or represented
by proxy at the meeting and entitled to vote on the election of a director will
elect the director. Abstentions and broker non-votes will therefore have no
legal effect with respect to Proposal 1. Approval of Proposal 2, to amend the
Certificate of Incorporation, will require the affirmative vote of the holders
of a majority of the outstanding shares on the Record Date. For purposes of
Proposal 2, therefore, abstentions and broker non-votes will have the same
effect as a vote against the proposed amendment. For purposes of Proposals 3 and
4 and any other matter that may come before the Annual Meeting, the affirmative
vote of the holders of a majority of shares present in person or represented by
proxy at the meeting and entitled to vote on the proposal will be required to
adopt the proposal. Abstentions are votes by persons entitled to vote, and
therefore are effectively treated as a vote against the proposals. Broker
non-votes will be treated as not entitled to vote, and will therefore have no
effect on the passage of any proposal to come before the meeting other than
Proposal 2.
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes,
currently having terms expiring at the meeting of the Company's stockholders in
2000, 2001 and 2002, respectively. At the Meeting, one person will be elected to
serve as director in the class whose three-year term expires at the annual
meeting of the Company's stockholders in the year 2003 and until his successor
has been duly elected and qualified as provided in the Company's Restated
Certificate of Incorporation and Restated By-laws.
One person has consented to be nominated and, if elected, to serve as a
director of the Company. The nominee is presently a member of the Company's
Board of Directors. Information about the nominee for director is set forth
below.
NOMINEE FOR ELECTION TO THE BOARD OF DIRECTORS
ARTHUR M. SOUTHAM, M.D., 42, was elected to the Board of the Company in
March 1999. Since August 1999, Dr. Southam has been President and CEO of Health
Systems Design Corporation, which develops billing and claims software for PPOs
and HMOs. He is a founding principal of 2C Solutions, a recently created
partnership focusing on collaborative technology initiatives in the healthcare
industry, and is a member of the Board of Directors of Health Systems Design
Corporation, a company that develops hospital-based information systems. From
1996 to 1998, Dr. Southam served as President and CEO of California-based Health
Net, one of the nation's largest HMOs. Prior to that, at CareAmerica Health
Plans, a health benefits and workers compensation insurance company in
California, he held several top-level positions during an eleven-year period,
including that of President and CEO. He is the immediate past Chairman of the
California Association of Health Plans and has also served as Chairman of the
Integrated Health Care Association. Dr. Southam received his M.D. degree and a
Master's degree in Public Health from UCLA. He received his M.B.A. degree from
Pepperdine University and his B.A. from Amherst College.
2
<PAGE> 5
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE -- TERM EXPIRING IN 2001
JAMES T. CARNEY, age 55, has been a director of the Company since September
1996. Mr. Carney has served as General Manager of Benefits Administration for
USX Corporation and Vice President of Administration for United States Steel and
Carnegie Pension Fund since 1989. Mr. Carney was named General
Attorney -- Employee Benefits of USX Corporation in 1988, Senior General
Attorney -- Employee Benefits and Workers' Compensation in 1985 and Senior
General Attorney -- Commercial and Employee Relations for the U.S. Diversified
Group in 1986.
BARRY KUROKAWA, age 44, has been a director of the Company since March
1996. Since February 1996, Mr. Kurokawa has served as a Managing Member of
ProMed Management, L.L.C. ("ProMed"), a private healthcare investment management
company. From May 1992 to January 1996, he was employed by INVESCO Trust Company
as Senior Vice President and portfolio manager of their four healthcare funds.
From July 1992 to January 1996, Mr. Kurokawa was also the Vice President of
Global Health Sciences, a closed-end fund. Before he joined INVESCO, Mr.
Kurokawa served as Vice President Equity Research and healthcare analyst at
Trust Company of the West, an investment management company, from July 1987 to
April 1992.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE -- TERM EXPIRING IN 2002
JONATHAN EDELSON, M.D., 40, has been the Chairman of the Board and Chief
Executive Officer of the Company since its inception in 1993, and has been
President since April 1, 1999. Dr. Edelson is a board-certified internist. Prior
to co-founding the Company, Dr. Edelson served as the Chief Executive Officer of
Physicians' Online, from August 1993 to December 1994. Dr. Edelson was a Senior
Vice President with ValueRx, Inc., the prescription drug benefits management
unit of Value Health, Inc., from October 1990 to June 1993. As a practicing
physician prior to joining ValueRx, Inc., Dr. Edelson founded Medical Decision
Resources, Inc., a physician profiling and education business, in March 1989,
and served as its President through September 1990. Dr. Edelson attended Yale
University, University of Chicago School of Medicine and the Harvard School of
Public Health.
ROBERT J. ALGER, 44, has been Executive Vice President and Chief
Information Officer of the Company since March 1998, and has been Vice President
and Chief Information Officer of the Company since February 1995. Prior to
joining the Company, Mr. Alger was Chief Information Officer and Vice President
of Information Systems at Blue Shield of California, from December 1991 to
February 1995, and a partner at Scribner, Jackson & Associates, a technology
consulting group, from January 1986 to December 1991. Mr. Alger received his
B.S. from California State University -- Northridge.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS;
COMPENSATION OF DIRECTORS
During the fiscal year ended December 31, 1999, the Board of Directors met
five times. The Company's Compensation Committee, which met three times in 1999
and is comprised of Messrs. Carney and Kurokawa, makes recommendations to the
Board of Directors with respect to general compensation and benefit levels,
determines the compensation and benefits for the Company's executive officers
and administers the Company's 1995 Stock Option Plan and Employee Stock Purchase
Plan. The Audit Committee met once in 1999 and is comprised of Messrs. Kurokawa
and Carney, and oversees the activities of the Company's independent auditors
and internal accounting controls. The Board of Directors does not have a
standing nominating committee or any committee performing a similar function.
Each director attended at least 75% of the aggregate of all Board meetings and
all meetings of committees of which he was a member held during 1999 while he
was in office.
Dr. Southam currently receives cash compensation of $2,500 per meeting from
the Company for his service as a member of the Board of Directors. All directors
are entitled to receive reimbursement for certain out-of-pocket expenses in
connection with attendance at Board and committee meetings. Directors of the
Company, including non-employee directors, are eligible to receive options under
the Company's 1995 Stock Option Plan.
3
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of Common Stock as of May 1, 2000 with respect to (i) each person known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each of the Company's directors, (iii) certain executive officers of
the Company and (iv) all directors and officers as a group. Unless otherwise
indicated, the address for each stockholder is c/o the Company, 555 White Plains
Road, Tarrytown, New York 10591.
<TABLE>
<CAPTION>
SHARES OF
COMMON
NAME AND ADDRESS STOCK(1) PERCENT(1)
---------------- --------- ----------
<S> <C> <C>
Cybear, Inc.(2)............................................. 2,008,670 15.3%
407 E. Grand River, Brighton, MI 48116
Dimensional Fund Advisors................................... 763,800 6.9%
1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401
Tudor Investment Group et al................................ 640,964 5.8%
One Liberty Plaza, 51st Floor, New York, NY 10006
Jonathan Edelson, MD(3)..................................... 621,959 5.6%
Robert J. Alger(4).......................................... 86,761 *
Jeffrey M. Sauerhoff(5)..................................... 50,257 *
Eddy W. Friedfeld(6)........................................ 37,958 *
James Carney(7)............................................. 27,083 *
Barry Kurokawa(8)........................................... 29,090 *
Arthur M. Southam, MD(9).................................... 3,333 *
All directors and executive officers as a group (7 856,441 7.7%
persons)(10)..............................................
</TABLE>
---------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission") and generally
includes voting or investment power with respect to securities and includes
options exercisable within 60 days of May 1, 2000. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
Percentage of beneficial ownership is based on 11,130,449 shares of Common
Stock outstanding as of May 1, 2000 plus securities and options exercisable
individually within 60 days of May 1, 2000.
(2) Assuming exercise of warrants and conversion of a note issued in connection
with the CyBear agreement.
(3) Includes currently exercisable options to purchase 226,735 shares of Common
Stock.
(4) Includes currently exercisable options to purchase 86,761 shares of Common
Stock.
(5) Includes currently exercisable options to purchase 50,257 shares of Common
Stock.
(6) Includes currently exercisable options to purchase 37,958 shares of Common
Stock.
(7) Includes currently exercisable options to purchase 27,083 shares of Common
Stock.
(8) Includes currently exercisable options to purchase 27,090 shares of Common
Stock.
(9) Includes currently exercisable options to purchase 3,333 shares of Common
Stock.
(10) See notes (3), (4), (5), (6), (7), (8) and (9).
4
<PAGE> 7
EXECUTIVE OFFICERS
The following table sets forth the executive officers of the Company. See
"Election of Directors" for a description of the business experience of Dr.
Edelson and Mr. Alger.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jonathan Edelson, M.D..................... 40 Chairman, Chief Executive Officer,
President, and Director
Robert J. Alger........................... 44 Executive Vice President, Chief
Information Officer, and Director
Jeffrey M. Sauerhoff...................... 51 Chief Financial Officer
Eddy W. Friedfeld......................... 38 Senior Vice President -- Business & Legal
Affairs, General Counsel and Secretary
</TABLE>
JEFFREY M. SAUERHOFF has been Chief Financial Officer of the Company since
January 1999; Senior Vice President of Finance and Administration since July
1998; Vice President of Finance and Administration since October 1996; and
Controller of the Company since March 1995. Prior to joining the Company, he
served as Chief Financial Officer at three companies: Preferred Solutions, a
pharmacy benefit management company, from 1993 to 1994; East Nassau-Suffolk
Region, an affiliate of HIP, a health insurance company, from 1991 to 1993; and
Erisco, Inc., then a wholly-owned subsidiary of the Dun & Bradstreet
Corporation, that provides software-based business solutions for health benefits
administration and information needs, from 1979 to 1991. Mr. Sauerhoff holds a
B.S. degree from C.W. Post College.
EDDY W. FRIEDFELD has been Senior Vice President -- Business & Legal
Affairs, General Counsel and Secretary of the Company since August 1997. From
1993 to August 1997, he was Vice President, Business Affairs, of Skysat
Communications Network Corporation. Since 1986, Mr. Friedfeld has been an
attorney specializing in the areas of corporate, securities, technology, and
healthcare law. Mr. Friedfeld holds a J.D. degree from New York University and a
B.A. degree from Columbia College.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following table sets forth a summary of the compensation of the
Company's Chief Executive Officer and each other executive officer of the
Company who earned in excess of $100,000 in annual salary and bonus during the
Company's fiscal year ended December 31, 1999 (collectively, the "Named
Executive Officers"), for services rendered in all capacities to the Company
during the Company's fiscal years ended December 31, 1999, 1998, and 1997.
5
<PAGE> 8
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
<TABLE>
<CAPTION>
SECURITIES UNDERLYING
OPTIONS/SARS
----------------------
NAME AND PRINCIPAL POSITION YEAR ($)SALARY (#)
--------------------------- ---- ---------- --------
<S> <C> <C> <C>
Jonathan Edelson, M.D. ..................................... 1999 298,240 200,000
Chairman, Chief Executive Officer, and President 1998 298,589 --
1997 269,224 150,000
Robert J. Alger ............................................ 1999 181,219 60,000
Executive Vice President and Chief Information Officer 1998 178,431 25,000
1997 169,261 60,000
Jeffrey M. Sauerhoff........................................ 1999 185,519 10,000
Chief Financial Officer 1998 172,902 50,731
1997 130,319 22,255
Eddy W. Friedfeld........................................... 1999 164,883 22,000
Senior Vice President -- Business & Legal Affairs, 1998 152,566 55,000
General Counsel and Secretary............................. 1997 52,333 22,500
</TABLE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%(4)
(a) (b) (c) (d) (e) (f) (g)
---- ------------ ---------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Jonathan Edelson.......... 150,000 28.67% $1.810 01/08/09 $170,745 $432,701
Jonathan Edelson.......... 50,000 9.56% 4.130 07/23/09 $129,867 $329,108
Robert J. Alger........... 30,000 5.73% 1.810 01/08/09 $ 34,149 $ 86,540
Robert J. Alger........... 30,000 5.73% 4.130 07/23/09 $ 77,920 $197,465
Jeffrey M. Sauerhoff...... 10,000 1.91% 4.130 07/23/09 $ 25,973 $ 65,822
Eddy W. Friedfeld......... 12,000 2.29% 2.880 04/09/09 $ 21,735 $ 55,080
Eddy W. Friedfeld......... 10,000 1.91% 4.130 07/23/09 $ 38,473 $ 78,322
</TABLE>
The following table sets forth certain information regarding options held
at December 31, 1999, by each of the Named Executive Officers.
6
<PAGE> 9
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END AT FISCAL YEAR-END(1)
-------------------------------- ------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ -------------- ----------- -------------
<S> <C> <C> <C> <C>
Jonathan Edelson, M.D.................. 151,735 247,917 $299,529 $565,187
Robert J. Alger........................ 61,522 93,854 136,402 193,156
Jeffrey M. Sauerhoff................... 45,336 50,969 113,261 126,706
Eddy W. Friedfeld...................... 33,958 65,542 91,602 157,253
</TABLE>
---------------
(1) Value of unexercised in-the-money options is based on a value of $4.69 per
share of the Company's Common Stock, the fair value of the Company's Common
Stock on December 31, 1999. Amounts reflected are based on the assumed value
minus the exercise price multiplied by the number of shares subject to the
option.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation program requires that a substantial portion of
any executive's compensation (including that of the Chief Executive Officer) be
tied to the profitability and performance of the Company. In addition, the
Company believes that tying an employee's compensation to stock performance
enables the Company to align employees' interests more closely with those of its
stockholders.
To implement these policies, the Company's executive compensation program
consists of two main elements: (i) annual compensation, consisting of base
salary and incentive bonuses; and (ii) long-term incentives that provide a
financial opportunity through stock options. Each component of compensation has
an integral role in the total executive compensation program.
The base salary component of annual compensation is based on competitive
salaries earned by executives with similar experience in companies similar in
size to the Company. Increases in base salary are the direct result of
individual achievements within a fiscal year.
The incentive bonus component of annual compensation is a function of an
individual's contributions relative to performance objectives and overall
Company profitability. The incentive bonus portion of executive compensation
reflects the Compensation Committee's view that, for senior executives, a
meaningful portion of compensation should be "at risk," providing a direct link
between pay, achievements and Company results for any year.
Long-term incentive compensation, rather than reflecting a single year's
results, is intended to focus management's attention on the Company's future.
The Compensation Committee believes strongly that executive pay should relate
directly to Company performance. Long-term incentives are intended to provide
financial opportunities for executives based on the Company's performance over a
number of years.
Long-term incentive compensation is achieved through grants of stock
options, which may be either incentive stock options ("ISOs") or stock options
that are non-qualified for Federal income tax purposes ("NSOs") under the
Company's 1995 Stock Option Plan (the "Option Plan"). Options provide executives
with the opportunity to buy and maintain an equity interest in the Company and
to share in the appreciation of the value of the Company's stock. Under the
Option Plan, the exercise price of ISOs may not be less than 100% of the fair
market value of the Common Stock at the time of grant and the exercise price of
NSOs is determined by the Compensation Committee at the time such options are
granted. Options granted under the Option Plan typically vest in equal annual
installments over a three-year period. These features result in (i) enhancing
the Company's ability to retain, for an extended period of time, those
individuals who are key to the creation of stockholder value and (ii) ensuring
that executives gain only when stockholders gain through appreciation in the
market price of the Company's Common Stock.
7
<PAGE> 10
In December 1997, the Compensation Committee approved a repricing of the
Incentive Stock Option plan that reduced the strike price for options with an
exercise price of more than $14 to an exercise price of $12 and extended the
employee vesting period. Executive officers were excluded from this action. In
August 1998, the Compensation Committee approved a further repricing and reverse
split of the Incentive Stock Option plan that reduced the strike price for
options with an exercise price of more than $5.05 to an exercise price of $2.50
while simultaneously reducing those options granted by 25%. The vesting period
was not extended and executive officers were included in this action. Such
repricings were deemed necessary by the Company's Compensation Committee in
light of market conditions and the desire to give employees adequate incentive.
In the event of a Change of Control (as defined herein), bonuses will be
distributed to the executive officers of the Company approximating the following
amounts: Dr. Edelson: $601,000; Mr. Alger: $377,000; Mr. Sauerhoff: $52,000 and
Mr. Friedfeld: $50,000. A "Change of Control" of the Company shall be deemed to
have occurred if (a) there shall be consummated (x) any consolidation or merger
of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the common stock of the Company (the
"Common Stock") would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of the Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company; or (b) the stockholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company; or (c) any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company's
outstanding Common Stock; or (d) during any period of two consecutive years,
individuals who at the beginning of such period constitute the entire Board
shall cease for any reason to constitute a majority thereof unless the election,
or the nomination for election by the Company's stockholders, of each new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period.
James T. Carney
Barry Kurokawa
8
<PAGE> 11
PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock
for the period from January 1, 1999 through December 31, 1999 to that of the
NASDAQ Index and an index based on the common stock of a peer group of the
following eight companies: Allscripts, Inc. (MDRX), CareInsite, Inc. (CARI),
Cybear, Inc. (CYBA), Dynamic Healthcare Technology (DHTI); Health Systems Design
Corporation (HSDC), Healtheon/WebMD Corp. (HLTH), MedPlus, Inc. Ohio (MEDP), and
ProxyMed, Inc. (PILL). The graph assumes that the value of the investment in
Common Stock and each index was $100 at October 3, 1996, and that all dividends
were re-invested. Stock price performances shown in the graph are not
necessarily indicative of future price performances. American Oncology
Resources, Inc. (AORI); American Physicians (APPM); Medpartners, Inc. (MDM);
Phycor, Inc. (PHYC); Phymatrix Corporation (PHMX); Physicians Resource Group
(PYRG); Complete Management (CPMI); which were previously part of the Company's
peer group, were replaced because the Company discontinued its operation in the
physician practice management business and therefore the comparison were no
longer relevant.
Comparison of Cumulative Total Return Among Advanced Health Corporation,
Peer Group Companies Within the Company's Industry and NASDAQ National Market
Index.
COMPARISON OF 39 MONTH CUMULATIVE TOTAL RETURN*
AMONG AHT CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
[GRAPH]
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET
AHT CORPORATION PEER GROUP (U.S.)
--------------- ---------- -------------------
<S> <C> <C> <C>
10/3/96 100.00 100.00 100.00
12/96 79.37 72.94 104.44
12/97 100.79 69.90 127.97
12/98 11.11 56.12 180.44
12/99 29.77 58.60 334.88
</TABLE>
* $100 invested on 10/3/86 in stock or index -- including reinvestment of
dividends. Fiscal year ending December 31.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements (the "Employment
Agreements") with Jonathan Edelson, M.D., its Chairman, Chief Executive Officer,
and President; Robert J. Alger, its Executive Vice President and Chief
Information Officer; Jeffrey M. Sauerhoff, its Chief Financial Officer; and Eddy
W. Friedfeld, its Senior Vice President -- Business & Legal Affairs, General
Counsel, and Secretary (each an
9
<PAGE> 12
"Executive"). The Employment Agreements provide that the annual base salary of
each of the Executives is at least: Dr. Edelson, $300,000; Mr. Alger, $190,000;
Mr. Sauerhoff $190,000; and Mr. Friedfeld, $175,000. The Executives are also
entitled to receive discretionary bonuses.
The Employment Agreements generally provide for a four-year term that is
automatically renewable for successive one-year terms unless either party gives
prior written notice of its intent not to renew. The Employment Agreements set
forth the compensation arrangements and the employee fringe benefits provided by
the Company to each Executive. In addition, the Employment Agreements set forth
the compensation payable to an Executive in the event of a termination of the
Executive's employment by the Company. Generally, upon the termination of an
Executive's employment by the Company for cause, the Executive is entitled to
receive earned but unpaid salary and reimbursement for business expenses
incurred during the performance of the Employee's duties. If an Executive's
employment with the Company is terminated without cause, or within a specified
period after a change of control (as defined in the Employment Agreements), the
Executive is entitled to receive the amounts payable in the event of a
termination for cause plus a cash severance payment not to exceed the cash
compensation received by the Executive in the prior 12-month period (in the case
of Mr. Alger, 24 months, and in the case of Dr. Edelson, 36 months and in the
case of Messrs. Sauerhoff and Friedfeld in the event of an acquisition, 18
months) and the vesting of certain shares of Common Stock and options to
purchase Common Stock of the Company then held by such Executive. Each
Employment Agreement contains a non-compete provision that restricts an
Executive from competing against the Company for a period of one year following
such Executive's termination of employment with the Company.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
In 1997, 1998 and 1999, in accordance with the Company's Senior Executive
Loan Policy, which is administered by the Compensation Committee of the Board of
Directors, the Company made loans in the aggregate amounts of $800,000 and
$145,000 to each of Dr. Edelson, and Mr. Alger, respectively. These loans are
due three years from the loan date with interest payable monthly at a rate of 6%
per annum. As of May 31, 2000, the loans outstanding including interest and net
of payments were $576,000 and $168,000 for Dr. Edelson and Mr. Alger,
respectively. Dr. Edelson and Mr. Alger have agreed to repay such loans no later
than March 31, 2001. The Compensation Committee has agreed to extend the term of
payment for payment of certain loans to each of Dr. Edelson and Mr. Alger to
December 31, 2000.
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
As of June 2, 2000, the Board of Directors unanimously adopted a resolution
approving an amendment to the Company's Certificate of Incorporation to increase
the number of shares of the Company's Common Stock, $.01 par value, authorized
for issuance from 15,000,000 to 30,000,000, and directing that the amendment be
presented to the Stockholders of the Company for approval at the Company's
Annual Meeting. In addition to the Common Stock, the Company has authorized
5,000,000 shares of Preferred Stock, par value $.01, none of which are currently
issued or outstanding. The amendment to the Certificate of Incorporation will
not alter the number of authorized shares of Preferred Stock.
On March 27, 2000, the Company entered into a Securities Purchase Agreement
with CyBear, Inc. (the "CyBear Agreement"), pursuant to which CyBear purchased a
$4 million Senior Secured Convertible Note and received a Warrant to purchase up
to 300,000 shares of the Company's Common Stock at an exercise price of $4.34.
The Note is convertible at a per share price equal to the lower of (i) 80
percent of the average closing market price of the Company's Common Stock over
the 30 trading days prior to the date of conversion, or (ii) $4.34, provided
that the aggregate number of shares of Common Stock issued upon conversion may
not exceed 1,913,550.
As of June 1, 2000, approximately 11,130,449 of the Company's 15 million
authorized shares of Common Stock were outstanding. In addition, approximately
2,869,551 shares net of options exercises of Common Stock were reserved for
issuance in connection with the Company's stock option plan and upon exercise of
other outstanding warrants, and for use in connection with the previously
announced settlement of the class
10
<PAGE> 13
action lawsuit filed against the Company. Accordingly, only approximately
shares of the Company's Common Stock remained available for future issuance to
CyBear or to any other entity or for any other purpose. As a result, the Company
does not currently have available a sufficient number of authorized and unissued
or unreserved shares of Common Stock to satisfy the maximum number of shares of
Common Stock that may be issued upon conversion of the CyBear Note and exercise
of the CyBear Warrant. CyBear acknowledged in the CyBear Agreement "that the
Company does not presently have sufficient authorized but unissued shares of
Common Stock to deliver to [CyBear] upon exercise of the Warrants and conversion
of the Convertible Notes." The Company covenants in the CyBear Agreement that
"[n]o later than July 14, 2000, the Company shall have taken all action
necessary, including, without limitation, calling a meeting of shareholders to
amend its certificate of incorporation to authorize a sufficient number of
shares to enable the Company to issue" the maximum number of shares upon
conversion of the Note (1,913,550) plus the shares issuable upon exercise of the
Warrant 300,000. The failure of the Company to comply with this covenant could
give rise to an event of default under the CyBear Agreement. Among CyBear's
remedies for a default is the exercise of its rights under the Security
Agreement, which grants CyBear a security interest in all of the Company's
accounts, accounts receivables, goods, personal property, and intellectual
property, including copyrights, patents and trademarks. Moreover, the CyBear
Agreement contains a liquidated damages provision, which subjects the Company to
a $1,000 per day penalty for the first two days and a $2,500 per day penalty for
each day thereafter that the Company fails to timely deliver Common Stock in
response to a Notice of Conversion or exercise of the Warrant. Stockholders
should refer to the terms of the CyBear Agreement, which was filed as an exhibit
with the Company's annual report on Form 10-K.
In addition to allowing the Company to issue shares of Common Stock upon
exercise of the CyBear Note and Warrant, additional shares of Common Stock
beyond those currently authorized are required for the following reasons:
- Additional authorized shares of Common Stock will be required for the
Company to issue additional stock options pursuant to the Amendment to
the Amended and Restated 1995 Stock Option Plan proposed in this Proxy
Statement, which the Company believes is necessary to attract, retain and
motivate qualified personnel.
- Additional authorized shares of Common Stock may be required to fulfill
certain remaining requirements under the class action settlement
agreement (the "Settlement Agreement"). The Settlement Agreement provides
that, "in the event that the aggregate value of the [886,437] Settlement
Shares, based on the weighted average price of AHT common stock for the
30 contiguous trading days ending on [the date on which the court's
approval of the allocation of the Settlement Shares becomes final], is
less than $2,954,790, in addition to the Settlement Shares AHT shall pay
or cause to be paid cash, or issue or cause to be issued additional AHT
common stock (valued at the weighted average price per share as stated
above), equal in value to the difference between $2,954,790 and the
Aggregate Value" of the Settlement Shares. In addition, the Settlement
Agreement provides that the Settlement Shares shall "be adjusted to
account for any stock splits, dividends, or the issuance of shares of AHT
that have not been authorized as of the date" of the settlement.
- The failure to increase the authorized shares of Common Stock may impede
the Company's ability to pursue financing, grant stock options, or enter
into transactions with third parties that the Board of Directors believes
are in the best interests of the Company and the Stockholders.
For these reasons, the Board of Directors believes it is both necessary and in
the best interests of the Company and the Stockholders to increase the number of
authorized shares of Common Stock from 15 million to 30 million. Although the
Company has no current plans to utilize all of the increased authorized shares
that would be available if the Amendment to the Certificate of Incorporation is
approved, the Board of Directors believes it is important that the Company have
the flexibility to issue additional shares without further authorization from
Stockholders.
The additional shares of Common Stock will be available for issuance from
time to time without further action by the Stockholders, except as may be
required by law or the rules of the Nasdaq Stock Market, Inc., if applicable. In
addition, Stockholders do not have preemptive rights with respect to the Common
Stock, which
11
<PAGE> 14
means that current Stockholders do not have a prior right to purchase any new
issue of the Company's Common Stock in order to maintain their proportionate
ownership thereof. As such, the issuance of Common Stock, or securities
convertible into Common Stock, on other than a pro-rata basis would result in
the dilution of a present Stockholder's interest in the Company.
The proposal to increase the authorized number of shares of Common Stock is
not being made with the intention of using the additional shares for
anti-takeover purposes and is not in response to any known effort to accumulate
the Company's stock or to obtain control of the Company; however, the Company
could theoretically use the additional shares to make it more difficult to, or
to discourage, a change in control of the Company. Any such issuance of stock
could have the effect of diluting the earnings per share and book value per
share of outstanding shares of the Company's Common Stock, and such additional
shares could be used to dilute the stock ownership or voting rights of persons
seeking to obtain control of the Company.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock on the record date is necessary to approve the Amendment to the
Certificate of Incorporation. As a result, a failure to vote has the same effect
as a no vote. If approved by the Stockholders, the increase in the number of
shares of Common Stock will become effective upon the filing of the Certificate
of Amendment to the Certificate of Incorporation with the Secretary of State of
the State of Delaware, which filing should take place promptly after the
Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF
AUTHORIZED SHARES.
APPROVAL OF AMENDMENT TO 1995 STOCK OPTION PLAN
The Company has adopted the Amended and Restated 1995 Stock Option Plan,
which provides for the grant to directors, officers and employees of, and
consultants to, the Company and its subsidiaries of stock options, including
"incentive stock options" ("ISOs") intended to qualify as such under the
provisions of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and stock options that are non-qualified for Federal income tax
purposes ("NSOs"). As of April 1, 2000, options to purchase an aggregate of
2,132,267 shares of Common Stock had been granted under the Option Plan. On June
16, 1997, the stockholders of the Company, at the Annual Meeting, approved an
amendment to the Option Plan increasing the number of shares of Common Stock
reserved for issuance under the Option Plan by 600,000 shares to 2,100,000
shares of Common Stock. On June 25, 1999, the Board of Directors of the Company,
subject to stockholder approval at the Meeting, approved an amendment to the
Option Plan increasing the number of shares of Common Stock reserved for
issuance under the Option Plan by 200,000 shares to 2,300,000 shares of Common
Stock.
The purpose of the Option Plan is to further the growth and success of the
Company by enabling directors, officers and employees of the Company and
independent consultants retained by the Company who have been selected by the
Compensation Committee to acquire Common Stock, thereby increasing their
personal interest in such growth and success and to provide a means of rewarding
outstanding service by them on the Company's behalf. As of April 1, 2000, there
were approximately 53 persons eligible to receive options under the Option Plan.
The Option Plan is administered by the Compensation Committee comprised of
Messrs. Carney and Kurokawa. The Compensation Committee has full power and
authority to determine, with respect to the option grants, (i) the persons to
whom options are granted, (ii) the number of shares to be covered by each such
grant, (iii) the per share exercise price thereof, (iv) the status of the
granted option as either an ISO or an NSO, (v) the time or times at which each
granted option is to become purchasable, and (vi) the maximum term for which the
option may remain outstanding, which term shall in no event exceed 10 years
after the date of the grant. Options granted under the Option Plan typically
vest in equal annual installments over a three-year period. The exercise price
of ISOs granted under the Option Plan may not be less than 100% of the fair
market value of the Common Stock on the date of the grant. With respect to any
employee who owns stock possessing more than 10% of the voting power of the
outstanding capital stock of the Company, the exercise price may not be less
than 110% of the fair market value of such shares on the date of
12
<PAGE> 15
grant, and the terms of such option may not exceed five years. The exercise
price of an NSO shall be an amount determined by the Compensation Committee in
its sole discretion. Upon exercise of an option, payment in full of the purchase
price either in cash, check, in equivalently valued shares of Common Stock of
the Company or by any other means permitted by the Compensation Committee, is
required before the option shares are delivered. By allowing payment of the
exercise price by delivering shares of the Company's Common Stock, the Option
Plan permits the "pyramiding" of shares. Pyramiding occurs when the option
holder in a series of successive transactions uses the shares received upon the
prior exercise of an option to purchase additional shares under other
outstanding options. An option holder can thereby substantially increase his or
her equity ownership in the Company without a significant capital contribution.
The Board of Directors of the Company may from time to time adopt such
amendments to the Option Plan as it may deem appropriate, provided that
stockholder approval of such amendments must be obtained if required to comply
with regulations promulgated by the Securities and Exchange Commission under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or with Section 422 of the Code or the regulations promulgated by the
Treasury Department thereunder. The Option Plan shall terminate on the tenth
anniversary of the date on which the Option Plan was adopted by the Board of
Directors. Under the Option Plan, any optionee whose employment with the Company
is terminated for any reason, other than death or disability or a termination
for cause, may exercise his or her option, to the extent exercisable on the
effective date of such termination, at any time within 45 days after the date of
termination, provided such option has not expired on the date of such exercise.
In the event of the death or disability of the optionee, the option may be
exercised, to the extent exercisable on the date of death or disability, at any
time within 12 months by the person to whom the option shall have passed by will
or the laws of descent and distribution or the optionee, as the case may be. In
the event of termination of an optionee's employme nt for cause, the option
terminates immediately. An NSO granted under the Option Plan is taxed in
accordance with Section 83 of the Code and the regulations issued thereunder.
The following general rules are applicable to holders of such "non-statutory"
options and to the Company for Federal income tax purposes under existing law.
1) The optionee will not recognize any income on the grant of the option
pursuant to the Option Plan. 2) The optionee will recognize ordinary
compensation income at the time of exercise of the option in an amount equal to
the excess of the fair market value of the shares acquired on the date of
exercise, over the exercise price thereof. 3) When the optionee sells the
shares, he or she will recognize capital gain or loss (assuming the shares are
held as a capital asset) in an amount equal to the difference between the fair
market value of the shares on the date of exercise and his or her selling price.
4) In general, the Company will be entitled to a tax deduction in the year in
which the ordinary compensation income based on exercise is recognized by the
optionee and in the same amount of such ordinary compensation income recognized
by the optionee, subject to applicable tax withholding requirements. 5) Upon the
exercise of an NSO, the Company is entitled to require as a condition of
delivery of the shares of Common Stock that the optionee remit an amount
sufficient to satisfy all Federal, state and local withholding tax and
employment tax requirements relating thereto. The following Federal income tax
consequences are applicable to ISOs granted and exercised pursuant to the Option
Plan. 1) If the optionee does not own stock possessing more than 10% of the
total voting power of all classes of stock of the Company (or if the optionee
owns stock possessing more than 10% of the total voting power of all classes of
stock of the Company, the option price is at least 110% of the fair market value
of the shares on the date of grant and the option by its terms is not
exercisable more than five years from the date of grant), no regular taxable
income results to the optionee upon the grant of an ISO or upon the issuance of
shares to him or her upon exercise of the option. 2) No tax deduction is allowed
to the Company upon either the grant or exercise of an ISO pursuant to the
Option Plan. 3) If shares acquired upon exercise of an ISO are not disposed of
(i) within the two years following the date the option was granted or (ii)
within one year following the date the shares are transferred to the optionee
pursuant to the option exercise (the "Holding Periods"), the difference between
the amount realized on any disposition of the shares thereafter and the exercise
price will be treated as long-term capital gain or loss to the optionee. 4) If
shares acquired upon exercise of an ISO are disposed of before the expiration of
either of the Holding Periods (a "disqualifying disposition"), then the lesser
of (i) any excess of the fair market value of the shares at the time of exercise
of the option over the exercise price or (ii) the actual gain on disposition
will be treated as compensation to the optionee and will be taxed as ordinary
income in the taxable year in which the disposition occurs. 5) In any taxable
year that an optionee recognizes compensation income on a disqualifying
disposition
13
<PAGE> 16
of an ISO, the Company will generally be entitled to a corresponding deduction,
subject to applicable tax withholding requirements. 6) Any excess of the amount
realized by the optionee on disposition over the sum of (i) the exercise price
and (ii) the amount of ordinary income recognized under the above rules may be
either long-term or short-term capital gain, depending upon the time elapsed
between receipt and disposition of such shares. 7) An option will not be treated
as an ISO to the extent the aggregate fair market value for which ISOs are
exercisable by an optionee for the first time in a calendar year exceeds
$100,000. Under present accounting principles, neither the grant nor the
exercise of options granted with an exercise price equal to the fair market
value of the Common Stock will result in any charge to the Company's earnings.
However, the number of outstanding options, even if not granted at a discount,
may be a factor in determining the Company's reported earnings per share. As of
April 1, 2000, options to purchase an aggregate of 2,132,267 shares of Common
Stock had been granted under the Option Plan to an aggregate of 155 persons at a
weighted average exercise price of $2.75 per share, including 451,288 to Dr.
Edelson, 36,250 to Mr. Carney, 36,257 to Mr. Kurokawa, 10,000 to Dr. Southam,
101,335 to Mr. Sauerhoff, 188,195 to Mr. Alger, and 99,500 to Mr. Friedfeld. The
Board of Directors adopted, subject to stockholder approval, the amendment to
the Option Plan increasing the number of shares of Common Stock reserved for
issuance under the Option Plan by 350,000 from 2,300,000 to 2,650,000, in order
to permit the Company to continue to grant options, as determined by the
Compensation Committee, to directors, officers and employees of, and consultants
to, the Company to incent such persons to further the growth and success of the
Company and to reward outstanding service. The market value of the unexercised
1,234,252 shares reserved for issuance under the Option Plan is $4,085,374,
based on the closing price of the Common Stock on April 1, 2000 ($3.31). If the
proposed amendment to the Option Plan is not approved by the stockholders, the
Company's ability to utilize stock options as a form of incentive compensation
would be substantially limited. Because the Compensation Committee has
discretion under the Option Plan to grant options thereunder and to determine
the terms of such grants, it is not possible to determine the dollar value or
the number of shares that will be received by any of the Company's directors,
officers, employees or consultants under the Option Plan as so amended. The vote
of a majority of the shares of Common Stock represented in person or by proxy at
the Meeting is required to approve the proposed amendment to the Option Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
AMENDMENT TO THE 1995 STOCK OPTION PLAN.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors of the Company has selected the firm of Arthur
Andersen LLP, independent certified public accountants, to serve as auditors for
the Company for the fiscal year ending December 31, 2000. Arthur Andersen LLP
has served as the Company's auditors since its inception. It is expected that a
representative of Arthur Andersen LLP will be present at the Meeting and will be
available to make a statement (if he or she desires to do so) and to respond to
appropriate questions at the Meeting. If the stockholders do not ratify the
selection of Arthur Andersen LLP, the Board of Directors may consider selection
of other independent certified public accountants to serve as independent
auditors, but no assurances can be made that the Board of Directors will do so
or that any other independent certified public accountants would be willing to
serve. The vote of a majority of the shares of Common Stock represented in
person or by proxy at the Meeting is required to ratify the selection of
auditors. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
RATIFICATION OF THIS SELECTION.
DISCLOSURE PURSUANT TO SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who are beneficial owners of ten percent or more of the
Company's Common Stock, to file reports of ownership and changes in ownership of
the Company's securities with the Securities and Exchange Commission. Officers,
directors and greater than ten percent beneficial owners are required by
applicable regulations to furnish the Company with copies of all forms they file
pursuant to Section 16(a).
Based solely upon a review of the copies of the forms furnished to the
Company, and written representations from certain reporting persons that no
Forms 5 were required, the Company believes that
14
<PAGE> 17
during the fiscal year ended December 31, 1999, all filing requirements
applicable to its officers, directors and ten percent beneficial owners were
complied with. However, for the year 1999, filings of Forms 3, 4, and 5 were
late for Messrs. Edelson, Alger, Sauerhoff, and Friedfeld.
It is presently contemplated that the 2001 Annual Meeting of Stockholders
will be held on or about June 30, 2001. Proposals by stockholders intended for
inclusion in the proxy statement to be furnished to all stockholders entitled to
vote at the next annual meeting of the Company must be received at the Company's
principal executive offices not later than December 31, 2000. In order to
curtail controversy as to the date on which a proposal was received by the
Company, it is suggested that proponents submit their proposals by certified
mail, return receipt requested. Any such proposal must also meet the other
requirements of the rules of the Commission relating to stockholder proposals.
EXPENSES AND SOLICITATION
The Company will bear the cost of soliciting proxies, including expenses in
connection with the preparation and mailing of this Proxy Statement and all
papers which now accompany or may hereafter supplement it. Solicitation of
proxies will be primarily by mail. However, proxies may also be solicited by
directors, officers and regular employees of the Company (who will not be
specifically compensated for such services) by telephone or otherwise. Brokerage
houses and other custodians, nominees and fiduciaries will be requested to
forward proxies and proxy material to the beneficial owners of Common Stock, and
the Company will reimburse them for their expenses.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON BEING SOLICITED BY
THIS PROXY STATEMENT, UPON WRITTEN REQUEST, A COPY OF THE COMPANY'S FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999, FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. ALL SUCH REQUESTS SHOULD BE DIRECTED TO AHT CORPORATION,
555 WHITE PLAINS ROAD, TARRYTOWN, NEW YORK 10591, ATTENTION: SECRETARY.
By Order of the Board of Directors,
/s/ JONATHAN EDELSON
--------------------------------------
Jonathan Edelson, M.D. Chairman of the
Board, Chief Executive Officer and
President
Tarrytown, New York,
June 14, 2000
15
<PAGE> 18
AHT CORPORATION
555 WHITE PLAINS ROAD
TARRYTOWN, N.Y. 10591
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints Jonathan Edelson, M.D. and Jeffrey M.
Sauerhoff as proxies, each with full powers of substitution, and hereby
authorizes them to represent and to vote, as designated on the reverse, all
shares of Common Stock of AHT Corporation held of record by the undersigned on
June 5, 2000 at the Annual Meeting of Stockholders to be held on July 14, 2000
or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER WILL BE VOTED
AT THE ANNUAL MEETING AND ANY ADJOURNMENT THEREOF IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR THE NOMINEE AND FOR
PROPOSALS 2, 3 AND 4 AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS NAMED AS
PROXIES HEREIN ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL
MEETING.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.)
<PAGE> 19
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
AHT CORPORATION
JULY 14, 2000
Please Detach and Mail in the Envelope Provided
A [X] Please mark your votes as in this example.
1. ELECTION OF DIRECTOR Nominee: Dr. Arthur Southam
FOR WITHHOLD AUTHORITY
The nominee listed at right to vote for the
Nominee listed at right
[ ] [ ]
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C> <C>
2. Approval of Amendment to Certificate
of Incorporation increasing the number
of the Company's authorized shares [ ] [ ] [ ]
3. Approval of Amendment to 1995 Stock
Option Plan [ ] [ ] [ ]
4. Ratification of Independent Auditor [ ] [ ] [ ]
</TABLE>
5. In accordance with their judgment, the proxies are authorized to vote upon
such other matters as may properly come before the Annual Meeting, or any
adjournment thereof.
Change of address and/or [ ]
comments mark here
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
SIGNATURE _____________________ SIGNATURE_____________________DATED ______,2000.
NOTE: Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporation name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized persons.
<PAGE> 20
CHAIRMAN'S OUTLOOK
AHT is building a national business-to-business e-commerce enterprise based
on automating the two most frequent clinical transactions initiated by
physicians: prescriptions and laboratory tests. Approximately four billion of
these clinical transactions take place annually, and virtually all of them are
still conducted manually by paper, telephone, fax and mail. This is a costly,
slow, and cumbersome process for physicians and for the healthcare entities
handling these transactions. AHT currently holds contracts with a number of
leading laboratory and prescription management companies that we believe are
committed to automating this process and are willing to pay recurring
transaction fees to AHT as one means to achieve this objective.
Our Internet-based e-commerce products are designed to automate crucial
everyday clinical transactions and, in the process, create tangible benefits for
physicians, clinical laboratories, pharmacy benefit managers (PBMs), pharmacies
and patients. It is our belief that automating prescription and laboratory
transactions will result in administrative savings, have a positive impact upon
the utilization of medical resources, and improve patient care.
AHT has a 'first-mover' advantage in the clinical e-commerce transaction
space by being, we believe, the first to introduce Internet-based products for
both prescription and laboratory management. We continue to innovate our
products to stay at what we believe is the leading edge of products in this
industry. We believe we have also continued to deliver on our strategy of
securing nationally recognized distribution channels for our products that will
provide us access to physicians across the nation. We believe that the
distribution channels and customers we have secured to date, and the additional
ones with whom we are currently negotiating, will create a growing platform for
our transaction-based business. In addition to our products, national customer
base and distribution channels, AHT holds two issued patents for electronic
prescription writing and has developed and owns over 100 programming interfaces
that assist in enabling AHT to connect physician offices to the myriad
information systems of laboratories, hospitals, PBMs, pharmacies and Internet
physician portals. It is these factors that differentiate AHT from its
competitors.
We believe that our current products have an opportunity to improve the
daily workflow of the 400,000 U.S. physicians who account for the majority of
prescriptions and laboratory tests. Writing prescriptions, ordering laboratory
tests or reviewing laboratory test results are events that occur many times
everyday for busy physicians and comprise an important part of their daily
workflow. We believe that as physicians are presented with the opportunity to
manage these transactions electronically, a growing number of them will
recognize the benefits of automation to them and their patients.
Achieving increasing connectivity with the 400,000 high-activity
physicians, both directly and through our distribution channels, presents AHT
with the opportunity to generate higher revenues in the future. While we expect,
going forward, to continue to generate revenues relating to fees for software
licenses, maintenance and interfaces, we intend to build our core business
around revenues from the per-transaction fees that healthcare companies will pay
us when physicians use our products to order and renew prescriptions and to
order and review laboratory tests.
To date, AHT has forged important relationships with some of the nation's
leading laboratories, hospitals, PBMs, on-line pharmacies and physician portals,
and we are actively pursuing relationships with others having national reach. We
are also examining ways that we may work with other e-health companies that have
expressed interest in partnering with AHT.
The stock market has experienced a great deal of turbulence in the last
year and, with it, we have seen a recent decline in the prices of e-health
stocks. We believe in the simple maxim that creating continued and increasing
value for your customers is the best means to increase the value of your
company. We aim to follow that maxim and believe that the healthcare companies
with which we work are providing us the opportunity to demonstrate that value.
The potential value that we can create for our customers is both concrete and
quantifiable in the form of potential reductions in the costs associated with
handling paper and making telephone calls, improved service and care delivery,
and, potentially, more revenue. We look forward to a promising year in 2000 and
will communicate with you as developments occur.
Jonathan Edelson, MD
Chairman, CEO and President
