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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 Section240.14a-11(c) or
Section240.14a-12
MEDICONSULT.COM, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
MEDICONSULT.COM, INC.
33 Reid Street, 4(th) Floor
Hamilton, Bermuda
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, JUNE 15, 1999
To our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of
Mediconsult.com, Inc. (the "Company") will be held at the Hotel
Inter-Continental, 111 East 48th Street, New York, New York, the Beekman Room
II, on June 15, 1999 at 10:00 a.m., local time, for the following purposes:
1. To elect a Board of five Directors to serve until the next annual
meeting of stockholders or until their successors are elected and
qualified;
2. To consider and vote upon a proposal to approve an amendment to the
Company's 1996 Stock Option Plan to authorize an additional 1,000,000
shares of Common Stock for issuance thereunder;
3. To ratify the appointment by the Board of Directors of
PricewaterhouseCoopers as the independent auditors of the Company to
examine and report on its financial statements for the fiscal year
beginning January 1, 1999; and
4. To consider and take action upon such other matters as may properly come
before the Meeting and any adjournment or adjournments thereof.
The close of business on April 30, 1999, has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting. The transfer books of the Company will not be closed.
All stockholders are cordially invited to attend the Meeting. Whether or not
you expect to attend, you are respectfully requested to sign, date and return
the enclosed proxy promptly in the accompanying envelope, which requires no
postage if mailed in the United States.
By Order of the Board of Directors,
Robert A. Jennings,
Chairman and Chief Executive Officer
May 11, 1999
<PAGE>
MEDICONSULT.COM, INC.
33 REID STREET, 4(TH) FLOOR
HAMILTON, BERMUDA
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Mediconsult.com, Inc. ("Mediconsult" or the "Company") of
proxies to be voted at the Annual Meeting of Stockholders to be held at the
Hotel Inter-Continental, 111 East 48th Street, New York, New York, the Beekman
Room II, on Tuesday June 15, 1999 at 10:00 a.m., local time, and at any
adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. Any stockholder giving
such a proxy may revoke it at any time before it is exercised by written notice
to the Secretary of the Company at the above-stated address or by giving a later
dated proxy. Attendance at the Meeting will not have the effect of revoking the
proxy unless such written notice is given, or unless the stockholder votes by
ballot at the Meeting.
The approximate date on which this Proxy Statement and the accompanying form
of proxy will first be sent or given to the Company's stockholders is May ,
1999.
VOTING SECURITIES
Only holders of shares of common stock, par value $0.001 per share ("Common
Stock"), of record at the close of business on April 30, 1999 are entitled to
vote at the Meeting. On the record date, the Company had issued and outstanding
27,270,031 shares of Common Stock. Each outstanding share of Common Stock is
entitled to one vote upon all matters to be acted upon at the Meeting. A
majority in interest of the outstanding Common Stock represented at the Meeting
in person or by proxy shall constitute a quorum. The affirmative vote of a
plurality of the shares present in person or represented by proxy at the Meeting
and entitled to vote is necessary to elect the nominees for election as
directors. The affirmative vote of a majority of shares present in person or
represented by proxy at the Meeting and entitled to vote is necessary to approve
the amendment to the Company's 1996 Stock Option Plan and to ratify the
selection of Pricewaterhouse Coopers as the Company's independent auditors.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. If a
stockholder, present in person or by proxy, abstains on any matter, the
stockholder's Common Stock will not be voted on such matter. Thus, an abstention
for voting on any matter has the same legal effect as a vote "against" the
matter even though the stockholder may interpret such action differently. Broker
non-votes are not counted for any purpose in determining whether a matter has
been approved.
If the enclosed proxy is properly executed and returned, the Common Stock
represented thereby will be voted in accordance with the instructions thereon.
If no instructions are indicated, the Common Stock represented thereby will be
voted (i) FOR the election of the nominees set forth under the caption "Election
of Directors", (ii) FOR the amendment of the Company's 1996 Stock Option Plan to
authorize an additional 1,000,000 shares of Common Stock for issuance
thereunder; and (iii) FOR ratification of PricewaterhouseCoopers as the
independent auditors of the Company for fiscal 1999. Members of the Board of
Directors and other officers, who own an aggregate of 14,537,752 shares of
Common Stock, or 53.3% of the outstanding shares entitled to vote, have
indicated that they intend to vote for all three such proposals. Such votes
would constitute the requisite adoption and approval of such proposals.
Your vote is important. Accordingly, you are urged to sign and return the
accompanying proxy card whether or not you plan to attend the Meeting. If you do
attend, you may vote by ballot at the Meeting, thereby canceling any proxy
previously given.
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PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, five Directors will be elected by the stockholders to serve
until the next annual meeting or until their successors are elected and
qualified. The accompanying proxy will be voted for the election as Directors of
the nominees listed below, all of whom are currently Directors, unless the proxy
contains contrary instructions. Management has no reason to believe that any of
the nominees will not be a candidate or will be unable to serve as a Director.
However, in the event that any of the nominees should become unable or unwilling
to serve as a Director, the proxy will be voted for the election of such person
or persons as shall be designated by the Directors.
Set forth below is certain information with respect to each nominee:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ------------------------------------------- --- -------------------------------------------
<S> <C> <C>
Robert A. Jennings......................... 41 Chief Executive Officer and Chairman of the
Board
Ian Sutcliffe.............................. 46 President, Director
Michael Treacy............................. 42 Director
John Buchanan.............................. 42 Director
Barry Guld................................. 42 Director
</TABLE>
ROBERT A. JENNINGS has served Chairman and Chief Executive Officer of the
Company since its inception in 1996. From 1993 to 1997, Mr. Jennings acted as an
advisor to a number of companies on general business matters. Beginning in 1997,
Mr. Jennings began to work on a full-time basis on Mediconsult matters. Mr.
Jennings is a chartered accountant and was employed by Coopers & Lybrand in
Canada and England for nine years.
IAN SUTCLIFFE has served as President and a Director of the Company since
1996. He has 17 years of experience as a management consultant, primarily in the
high-tech sector. Most recently, from 1993 to 1996, he was a consultant
specializing in re-engineering marketing and sales processes worldwide for IBM.
From 1989 to 1993, Mr. Sutcliffe was a partner at BDO Dunwoody, a consulting
organization which he joined in 1989 upon the merger of his consulting firm,
Sutcliffe & Associates, with BDO Dunwoody. Mr. Sutcliffe is a chartered
accountant and was employed by Coopers & Lybrand in Canada and Europe for six
years.
MICHAEL TREACY, PH.D. has been a Director of the Company since July 1998. He
is the Managing Director of Treacy & Co., LLC ("Treacy & Co.") which provides
strategic consulting services in a number of industries and leads that firm's
business and practice development. From 1981 to 1989, he was a professor of
management science at the MIT Sloan School of Management, after which he formed
his own consulting firm. Mr. Treacy earned his Ph.D. from the MIT Sloan School
of Management.
JOHN BUCHANAN has been a Director of the Company since 1998. Since 1993, he
has been President and Chief Executive Officer of Retek Information Systems
Inc., a wholly owned subsidiary of HNC Software Inc. Retek develops, markets and
supports predictive software solutions to the enterprise software industry.
BARRY GULD has been a Director of the Company since 1998. Mr. Guld
co-founded and served as President of Zadall Systems Group, a leading vendor of
pharmacy software systems, which was sold to National Data Corporation. He is
currently a consultant to National Data Corporation and a director of Client
Technology Inc., Mood Sciences Inc., and Velocity Computer Solutions.
All directors hold office until the next annual meeting of stockholders and
until their successors are duly elected and qualified. Officers are elected to
serve, subject to the discretion of the board of directors, until their
successors are appointed. There are no family relationships among any of the
directors or executive officers of the Company.
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The Audit Committee reviews, acts on and reports to the board of directors
with respect to various auditing and accounting matters, including the
recommendation of the Company's independent auditors, the scope of annual
audits, fees to be paid to the independent auditors, the performance of the
Company's independent auditors and the Company's accounting practices. The
current members of the Company's Audit Committee are Messrs. Guld, Sutcliffe and
Buchanan.
The Compensation Committee determines the salaries and benefits for the
Company's employees, consultants, directors and other individuals the Company
compensates. The Compensation Committee also administers, or helps the Board of
Directors administer, the Company's compensation plans. The current members of
the Compensation Committee are Messrs. Jennings, Guld and Treacy.
The Nominating Committee recommends individuals for director positions. The
members of the Nominating Committee are Messrs. Jennings, Sutcliffe and Treacy.
The Company's directors do not receive any fees for their services as
directors. Each director, however, is reimbursed for all reasonable and
necessary costs and expenses incurred as a result of being a director, such as
expenses incurred for attendance at meetings of the board of directors.
In November 1998, the Company entered into a services agreement with Treacy
& Co., an entity of which Michael Treacy, one of the Company's directors, is a
principal, under which the Company received various services from Treacy & Co.
in consideration of the grant of options to acquire 2,000,000 shares of Common
Stock at an exercise price of $0.003 per share. All of the options have vested
and expire on November 16, 2003. In addition, the predecessor of JHC Limited,
the largest stockholder of the Company, granted Treacy & Co. an option to
acquire 358,333 shares of Common Stock owned by JHC, at an exercise price of
$1.20 per share. The services provided included marketing, sales and client
services advice, strategic planning and seconding Mr. Michael Swanson to act in
the capacity of Vice President, Sales. The Company has no obligation to grant
additional options to Treacy & Co.
In addition, on October 31, 1998, John Buchanan and Barry Guld each received
options to purchase 100,000 shares of Common Stock at an exercise price of $1.50
per share, which vest at a rate of 5,000 shares per month beginning on October
30, 1998 for their services on the board of directors.
The Board of Directors held four meetings during the last fiscal year. None
of the directors attended fewer than 75% of the number of meetings of the Board
of Directors or any committee of which he is a member, held during the period in
which he was a director or a committee member, as applicable.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. (i) The Mediconsult
Trust, an owner of in excess of 10% of the outstanding securities of the
Company, failed to timely file Form 4s to report a donation of 250,000 shares of
common stock to a charitable organization in December 1998, and an amendment to
the Company's Certificate of Incorporation in October 1998 which made the shares
of preferred stock held by it convertible into common stock, (ii) Ms. Debora
Falk, an executive officer, failed to timely file a Form 4 to report a sale of
shares of common stock on the open market in December 1998 and failed to timely
file a Form 5 to report a grant of an option to purchase shares of common stock
by the Company in October 1996, (iii) Barry Guld and John Buchanan, each a
director, each failed to timely file a Form 5 to report grants of options to
purchase shares of common stock by the Company in October 1998 and each failed
to timely file a Form 3 to report their appointment to the board of directors
and (iv) each of David Austin, Michael Swanson and Michael Treacy each failed to
timely file a Form 3 to report their respective appointments during 1998 as
executive officers and, in the case of Michael Treacy, as a director of the
Company.
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PROPOSAL 2
AMENDMENT TO THE 1996 STOCK OPTION PLAN
History of the Plan
In April 1996, the Board of Directors of the Company adopted and the
stockholders approved the 1996 Stock Option Plan (the "1996 Plan") for the
Company and its subsidiaries. The 1996 Plan authorized the issuance of options
to purchase up to 1,000,000 shares of the Company's Common Stock.
On December 31, 1997, the Company's Board of Directors approved an increase
in the number of shares of Common Stock issuable under the 1996 Plan from
1,000,000 to 2,000,000 shares, subject to approval by the Company's
stockholders. During October 1998, the Board of Directors approved an additional
increase in the number of shares issuable under the 1996 Plan to 2,500,000
shares, subject to approval by the Company's stockholders. In November 1998, the
Board of Directors of the Company, subject to stockholder approval, adopted an
amendment to the 1996 Plan to limit the maximum option grant which may be made
to an employee in any calendar year to 250,000 shares (subject to adjustment for
capital changes). Such amendment was to enable the 1996 Plan to satisfy a
requirement of Section 162(m) of the Internal Revenue Code of 1986 relating to
performance-based compensation which is not subject to a $1,000,000
deductibility limit. In November 1998, the Board of Directors also approved an
amendment to the 1996 Plan, subject to stockholder approval, to provide that
upon the exercise of an option, payment can be made by delivery of shares of
Common Stock or with a promissory note, in addition to payment in cash. All of
such amendments have been approved by the stockholders of the Company.
Amendment to the Plan
As of April 9, 1999, the Company had 62,950 shares of Common Stock available
for issuance under the 1996 Plan. At such date, options to purchase an aggregate
of 800,000 shares were outstanding pursuant to the 1996 Plan, of which options
for an aggregate of 404,100 shares were then exercisable. On April 10, 1999, the
day after the closing of the Public Offering (defined below), E. Michael Ingram
became Chief Financial Officer of the Company and was granted options for
200,000 shares of Common Stock, subject to the increase in the number of shares
covered by the 1996 Plan to have sufficient option shares available for
issuances.
The Company has used options to attract key employees and has also used
incentive stock options in conjunction with recent acquisitions to provide
incentives for the retention of seller/managers of acquired companies. The
Company believes it to be in the Company's best interests to have options
available to provide incentives to key employees of companies who may be
acquired in the future as well as continuing employees. Because of the lack of
remaining shares, the Board of Directors authorized additional shares to be
reserved for recent awards and for future awards, subject to stockholder
approval. The 1,000,000 additional shares for which approval is sought
represents approximately 3.7% of the Company's outstanding shares of Common
Stock at April 30, 1999 and approximately 3.2% of the Company's outstanding
shares on a fully diluted basis on that date. As of April 9, 1999, the market
value of the securities underlying the additional 1,000,000 shares of Common
Stock authorized for issuance under the 1996 Plan was $13,000,000.
Description of the Plan
The Board has the power to determine at the time the option is granted
whether the option will be an Incentive Stock Option (an option which qualifies
under Section 422 of the Internal Revenue Code of 1986) (an "ISO") or an option
which is not an Incentive Stock Option (a "Non-Qualified Option").
Upon the effective date of the approval of the amendment, a total of 862,950
shares of Common Stock will be reserved for issuance upon the exercise of
options ("Options") available for grant under the 1996 Plan (subject to
adjustment for capital changes). Shares subject to Options which for any reason
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expire or are terminated unexercised may again be available for grant under the
1996 Plan. Unless sooner terminated, the 1996 Plan will terminate in April 2006.
The complete text of the 1996 Plan is attached as Exhibit A hereto and the
description contained herein is qualified in its entirety by the full text of
the 1996 Plan.
The 1996 Plan is administered by the Board of Directors of the Company
which, subject to the terms of the 1996 Plan, has the authority to determine to
whom Options shall be granted (subject to certain eligibility requirements for
grants of ISOs), whether the Option is to be an ISO or Non-Qualified Option, the
number of shares covered by each such grant, the exercise or purchase price per
share, the time or times at which Options shall be granted, and other terms and
provisions governing Options, as well as the restrictions, if any, applicable to
shares of Common Stock issuable upon exercise of Options. The Board of Directors
may, from time to time, adopt amendments, certain of which are subject to
stockholder approval, and may terminate the 1996 Plan at any time (although such
action shall not affect Options previously granted). Holders of Options are
protected against dilution in the event of a stock dividend, recapitalization,
stock split, merger or similar transactions.
The 1996 Plan requires that the exercise price for each Option shall be no
less than the fair market value of the Common Stock on the date the Option is
granted, and that each Option shall expire on the date specified by the Board of
Directors, but not more than ten years from its date of grant. However, in the
case of any ISO granted to an employee or officer owning more than 10% of the
total combined voting power of all classes of stock of the Company or any
related corporation, the ISO expires no more than five years from its date of
grant.
Exercise of any Option, in whole or in part, is effected by a written notice
of exercise delivered to the Company at its principal office together with
payment for the Common Stock in full, or, at the discretion of the Board, (i) by
the delivery of shares of Common Stock of the Company, valued at fair market
value, a promissory note, or any combination thereof, or (ii) through an
exercise notice payment procedure. The 1996 Plan contains terms providing for
the exercise of Options by or on behalf of former and deceased employees. ISOs
granted pursuant to the 1996 Plan are not assignable or transferable other than
by will or by the laws of descent and distribution and are exercisable during
the optionee's lifetime only by the optionee.
Federal Income Tax Consequences
INCENTIVE STOCK OPTIONS. The following general rules are applicable for
Federal income tax purposes under existing law to employees who receive and
exercise ISOs granted under the 1996 Plan:
Generally, no taxable income results to the optionee upon the grant of an
ISO or upon the issuance of shares to the optionee upon exercise of the ISO.
(But see the discussion of possible taxation under "Minimum Tax" below.) If
shares acquired upon exercise of an ISO are disposed of after the later of (i)
two years following the date the Option was granted, and (ii) one year following
the date the shares are transferred to the optionee pursuant to the exercise of
the Option, the difference between the amount realized on such disposition of
the shares and the exercise price will be treated as long-term capital gain or
loss to the optionee.
If shares acquired upon exercise of an ISO are disposed of before the
expiration of one or both of the requisite holding periods (a "disqualifying
disposition"), then in most cases any excess of the fair market value of the
shares at the time of exercise of the Option over the exercise price, or, if
less, the actual gain on disposition, will be treated as compensation to the
optionee and will be taxed as ordinary income in the year of such disqualifying
disposition. Any excess of the amount realized by the optionee as the result of
a disqualifying disposition over the sum of (i) the exercise price and (ii) the
amount of ordinary income recognized under the above rules will be treated as
either long-term or short-term capital gain, depending upon the time elapsed
between receipt and disposition of such shares. In addition, ISOs granted under
the 1996 Plan will be terminated if the optionee is not employed by the Company
at all times during the period
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from the date the Option is granted through the date 90 days before the date the
Option is exercised (twelve months in the case of death or permanent disability
(subject to certain limitations outlined in the 1996 Plan)).
In general, no tax deduction is allowed to the Company upon either grant or
exercise of an ISO under the 1996 Plan. However, in any year that an optionee
recognizes compensation income on a disqualifying disposition of shares acquired
by exercising an ISO, the Company will generally be entitled to a corresponding
deduction for income tax purposes.
An optionee may be entitled to exercise an ISO by delivering shares of the
Company's Common Stock ("old stock") to the Company in exchange for the Common
Stock received upon exercise of the ISO ("option stock"), if the optionee's ISO
grant so provides. In general, if an optionee exchanges old stock for option
stock instead of, or in addition to, paying part or all of the exercise price in
cash, no gain or loss will be recognized with respect to the exchange of the old
stock, and shares acquired upon exercise of the ISO will not be subject to tax
as explained above until the shares are sold. However, an exception exists to
this rule when the old stock is "statutory option stock" (as defined below) that
has been held for a period less than the applicable holding periods under the
Code. In that event, the optionee will realize ordinary compensation income with
respect to the old stock in an amount equal to the lesser of (i) the excess of
the fair market value of the option stock on the date of exercise of the ISO
over the basis of the old stock, or (ii) the fair market value of the old stock
on the date it was originally exercised over the original option exercise price.
"Statutory option stock" consists of stock acquired through the exercise of a
"qualified stock option," an "incentive stock option," an option acquired under
an "employee stock purchase plan" or a "restricted stock option," as these terms
are defined in the Code. Further, if the old stock used to exercise an ISO is
Restricted Stock (as defined below), exercise of the ISO with such Restricted
Stock may be treated as the lapse of the restrictions imposed on such Restricted
Stock under the rules discussed below, and the optionee may recognize income as
a result.
NON-QUALIFIED OPTIONS. The following general rules are applicable for
Federal income tax purposes under existing law to holders of Non-Qualified
Options and to the Company.
The optionee generally does not realize any taxable income upon the grant of
a Non-Qualified Option, and the Company is not allowed a deduction by reason of
such grant. The optionee will recognize ordinary compensation income at the time
of exercise of a Non-Qualified Option in an amount equal to the excess, if any,
of the fair market value of the shares on the date of exercise over the exercise
price. In accordance with the regulations under the Code and applicable state
law, the Company will require the optionee to pay to the Company an amount
sufficient to satisfy withholding taxes in respect of such compensation income
at the time of the exercise of the Option. If the Company withholds shares
instead of cash to satisfy this withholding tax obligation, the optionee
nonetheless will be required to include in income the compensation income
attributable to the shares withheld. When the optionee sells the shares, such
optionee will recognize a capital gain or loss in an amount equal to the
difference between the amount realized upon the sale of the shares and such
optionee's basis in the shares (i.e., the exercise price plus the amount taxed
to the optionee as compensation income). If the optionee holds the shares for
longer than the statutory holding period, this gain or loss will be a long-term
capital gain or loss. The present statutory holding period is one year. In
general, the Company will be entitled to a tax deduction in the year in which
compensation income attributed to the Non-Qualified Options is recognized by the
optionee. The foregoing rules are based upon the assumptions that (i) the
Options do not have a readily ascertainable fair market value at the date of
grant and (ii) the Common Stock acquired by exercising the Non-Qualified Option
is either transferable or not subject to a "substantial risk of forfeiture" (as
such terms are defined in regulations under Section 83 of the Code).
An optionee may be entitled to exercise a Non-Qualified Option by delivering
shares of old stock to the Company in exchange for the Common Stock received
upon exercise of the option ("Non-Qualified Option stock"), if the optionee's
Non-Qualified Option grant so provides. In general, if an optionee
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exchanges old stock for Non-Qualified Option stock instead of, or in addition
to, paying part or all of the exercise price in cash, no gain or loss will be
recognized with respect to the exchange of the old stock. However, if the fair
market value of the Non-Qualified Option stock received exceeds the fair market
value of the old stock (at the time of exercise) delivered to acquire the
Non-Qualified Option stock, the transaction will be separated into two parts for
tax purposes. In the first part, the number of shares of old stock delivered
will be deemed exchanged, tax-free, for a like number of shares of the
Non-Qualified Option stock received, and the basis of the shares so received
will be the same as the basis of the shares of old stock delivered. In the
second part of the transaction, the balance of the shares of Non-Qualified
Option stock received will be treated as ordinary compensation income, and the
fair market value of these shares will constitute both the amount of
compensation income with respect to, and the basis for, such shares. Further, if
the old stock used to exercise a Non-Qualified Option is Restricted Stock (as
defined below), and the Common Stock acquired on exercise of the Non-Qualified
Option is not subject to restrictions substantially similar to those imposed on
such Restricted Stock, exercise of the Non-Qualified Option with such Restricted
Stock will be treated as the lapse of the restrictions imposed on such
Restricted Stock under the rules discussed below, and the optionee may recognize
income as a result.
SPECIAL RULES FOR RESTRICTED STOCK. Common Stock that is subject to
restrictions on transfer and also to a substantial risk of forfeiture (as
defined in regulations under Section 83 of the Code), referred to herein as
"Restricted Stock," is subject to special tax rules. If the Common Stock
acquired on the exercise of an Option is Restricted Stock, the amount of income
recognized by the optionee generally will be determined as of the time the
restrictions lapse, and will be equal to the difference between the amount paid
for the Restricted Stock and the fair market value of the Restricted Stock at
that time. In that case, the payment to the Company of withholding taxes will be
required as the income arises, i.e., at the time the transfer restrictions on
the stock lapse or the substantial risk of forfeiture no longer exists.
Due to certain securities law restrictions, the Common Stock acquired by
officers and directors of the Company who exercise Non-Qualified Options may be
treated for tax purposes as Restricted Stock. Similarly, the Common Stock
acquired by officers and directors of the Company who exercise ISOs will be
treated for alternative minimum tax purposes (but not regular tax purposes) as
Restricted Stock.
If an optionee transfers Restricted Stock to the Company to exercise an ISO,
the restrictions on such Restricted Stock will be deemed to have lapsed on the
date of transfer, and the optionee may recognize income at that time. Similarly,
if the optionee transfers Restricted Stock to the Company to exercise a
Non-Qualified Option, and the stock received by the optionee on exercise is not
subject to restrictions substantially similar to those imposed on such
Restricted Stock, the restrictions on that Restricted Stock will be deemed to
have lapsed on the date of transfer, and the optionee may recognize income at
that time.
Under Section 83(b) of the Code, an election is available to the optionee to
include in gross income, in the taxable year that Restricted Stock is first
transferred to the optionee, the amount of any excess of the fair market value
(as determined under Section 83) of the Restricted Stock over the amount (if
any) paid for such stock. If this election is made and the optionee pays the tax
in the year such election is made, no further tax liability will arise at the
time the transfer restrictions on the Restricted Stock lapse or the substantial
risk of forfeiture no longer exists. However, if shares of Restricted Stock for
which a Section 83(b) election is in effect are forfeited while such shares are
both nontransferable and subject to a substantial risk of forfeiture, the loss
realized by the optionee on the forfeiture, for federal income tax purposes, is
limited to the amount paid for such shares (not including any compensation
income recognized by the optionee at the time of transfer) less any amount
realized by the optionee on such forfeiture. Restricted Stock acquired by
exercising an ISO generally is not subject to the rules of Section 83, but
rather the rules discussed above under Incentive Stock Options.
MINIMUM TAX. The exercise of ISOs granted under the 1996 Plan may result in
a further "minimum tax" under the Code. The Code provides that an "alternative
minimum tax" will be applied against a taxable base which is equal to regular
taxable income, adjusted for certain limited deductions and losses,
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increased by items of tax preference, and reduced by a statutory exemption. The
statutory exemption is phased out for certain higher income taxpayers. The
bargain element at the time of exercise of an ISO, i.e., the amount by which the
value of the Common Stock received upon exercise of the ISO exceeds the exercise
price, is included in the optionee's alternative minimum taxable income for
purposes of the minimum tax, subject to the rules applicable to Restricted
Stock.
Thus, if upon exercise of an ISO an optionee receives stock which is not
Restricted Stock, the bargain element is included in the optionee's alternative
minimum taxable income in the year of exercise. If the optionee receives
Restricted Stock on exercise of an ISO, the bargain element is measured and
included in alternative minimum taxable income in the year(s) that the
restrictions on the stock lapse(s), unless the optionee files a Section 83(b)
election under the Code with the Internal Revenue Service within 30 days of the
date of exercise of the ISO and thereby elects to include the bargain element in
alternative minimum taxable income in the year of exercise. For purposes of
determining alternative minimum taxable income (but not regular taxable income)
for any subsequent year in which the taxpayer sells the stock acquired by
exercise of the ISO, the basis of such stock will be its fair market value at
the time the ISO was exercised. A taxpayer is required to pay the higher of his
regular tax liability or the alternative minimum tax. A taxpayer who pays
alternative minimum tax attributable to the exercise of an ISO may be entitled
to a tax credit against regular tax liability in later years.
ERISA. The 1996 Plan is not an employee benefit plan which is subject to
the provisions of the Employee Retirement Income Security Act of 1974, and the
provisions of Section 401(a) of the Code are not applicable to the 1996 Plan.
OPTIONS GRANTED UNDER THE PLAN
The chart below indicates the number of options that have been granted as of
April 9, 1999, pursuant to the 1996 Plan to (i) the Named Executive Officers,
(ii) all current executive officers (other than the Named Executive Officers),
as a group, (iii) all current directors who are not executive officers, as a
group and (iv) all employees, including all current officers who are not
executive officers, as a group.
<TABLE>
<CAPTION>
NUMBER OF
OPTIONS
GRANTEE GRANTED
- ---------------------------------------------------------------------------------- -----------
<S> <C>
Robert A. Jennings................................................................ 790,000
Ian Sutcliffe..................................................................... 250,000
Debora A. Falk.................................................................... 144,000
All other executive officers as a group........................................... 399,000
All non-employee directors as a group............................................. 200,000
All other employees as a group.................................................... 638,050
</TABLE>
On April 10, 1999, the day after the closing of the Public Offering, E.
Michael Ingram became Chief Financial Officer of the Company and was granted
options for 200,000 shares of Common Stock, subject to the increase in the
number of shares covered by the 1996 Plan to have sufficient option shares
available for issuance.
8
<PAGE>
PROPOSAL 3
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has designated PricewaterhouseCoopers
as the Company's independent auditors for the current fiscal year and recommends
ratification of their appointment. Representatives of PricewaterhouseCoopers are
expected to be present at the annual meeting of stockholders and will be
available to respond to appropriate questions and will be given the opportunity
to make a statement if they so desire.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to the Company with
respect to the beneficial ownership of the Company's Common Stock as of April 9,
1999, based on information provided to the Company, by (1) each of the Company's
directors, (2) the executive officers named in the table under "Executive
Compensation--Summary Compensation Table,", (3) all executive officers and
directors as a group, and (4) each person (or group of affiliated persons) who
is known by the Company to beneficially own 5% or more of the Company's Common
Stock. Unless otherwise indicated below, to the Company's knowledge, all persons
listed below have sole voting and investment power with respect to their shares.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)
-------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- -------------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Robert A. Jennings (2).............................................. 13,269,999 48.9%
Michael Treacy (3).................................................. 2,358,333 8.1
Ian Sutcliffe....................................................... 290,000 1.1
Debora A. Falk (4).................................................. 96,000 *
John Buchanan (5)................................................... 40,000 *
Barry Guld (6)...................................................... 40,000 *
JHC Limited (7)..................................................... 12,479,999 46.0
All Directors and Officers as a group (11 persons) (8).............. 16,693,299 56.9
</TABLE>
- ------------------------
* Indicates beneficial ownership of less than 1% of the total outstanding
Common Stock.
(1) To the Company's knowledge, except as set forth in the footnotes to this
table and subject to applicable community property laws, each person named
in the table has "beneficial ownership" with respect to the shares set forth
opposite such person's name. The information as to beneficial ownership is
based on statements furnished to the Company by the beneficial owners. For
purposes of computing the percentage of outstanding shares held by each
person named above, pursuant to the rules of the Securities and Exchange
Commission, any security that such person has the right to acquire within 60
days of the date of calculation is deemed to be outstanding, but is not
deemed to be outstanding for purposes of computing the percentage ownership
of any other person. Accordingly, more than one person may be deemed to be a
beneficial owner of the same securities. The total issued and outstanding
Common Stock represented in the above chart does not include 77,753 shares
of Common Stock payable in kind as a dividend on the preferred stock owned
by JHC Limited that had accrued from January 1, 1999 through April 9, 1999,
the date on which such preferred stock converted into Common Stock.
(2) Includes 12,479,999 shares owned by JHC Limited. Mr. Jennings controls JHC
Limited.
(3) Includes 2,000,000 shares of Common Stock issuable upon the exercise of a
currently exercisable option granted to Treacy &Co. of which Mr. Treacy is a
principal, on November 16, 1998, with an exercise price of $0.003 per share,
and 358,333 shares of Common Stock issuable upon the exercise of a currently
exercisable option granted to Treacy & Co. on the same date by The
Mediconsult Trust, which is now the obligation of JHC Limited, with an
exercise price of $1.20 per share.
9
<PAGE>
(4) Represents currently exercisable options at an exercise price of $0.05 per
share.
(5) Represents currently exercisable options and options which vest within 60
days at an exercise price of $1.50 per share.
(6) Represents currently exercisable options and options which vest within 60
days at an exercise price of $1.50 per share.
(7) Mr. Jennings controls JHC Limited, a Bermuda company.
(8) See footnotes 1 through 7 above.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to the Company's Chief Executive Officer and the Company's most highly
compensated executive officers, other than the Chief Executive Officer (the
"Named Executive Officers") whose total annual salary and bonus exceeded
$100,000 for the years ended December 31, 1998, 1997 and 1996 for services
rendered in all capacities in these years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL -------------
COMPENSATION SECURITIES
---------------------- UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($)
- ------------------------------------------------ --------- ---------- ---------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Robert A. Jennings.............................. 1998 -- -- -- --
Chief Executive Officer 1997 -- -- -- --
1996 55,000 790,000 -- --
Ian Sutcliffe................................... 1998 240,000 -- -- --
President 1997 240,000 -- -- --
1996 120,000 -- 250,000 --
Debora A. Falk.................................. 1998 100,200 -- -- --
Vice President, Client Services 1997 100,200 -- 48,000 --
1996 25,050 5,400 96,000 --
</TABLE>
1996 STOCK OPTION PLAN
In April 1996, the Company's board of directors adopted the 1996 Stock
Option Plan (the "1996 Plan"). The 1996 Plan was approved by the stockholders
during May 1996. As originally adopted, the total number of shares of common
stock subject to options under the 1996 Plan was not to exceed 1,000,000,
subject to adjustment in the event of certain recapitalizations, reorganizations
and similar transactions.
The 1996 Plan allows the board to grant stock options from time to time to
the Company's employees, officers, directors and consultants. The board has the
power to determine at the time the option is granted whether the option will be
an Incentive Stock Option (an option which qualifies under Section 422 of the
Internal Revenue Code of 1986) or an option which is not an Incentive Stock
Option. However, Incentive Stock Options will only be granted to persons who are
employees. Vesting provisions are determined by the board at the time options
are granted. On December 31, 1997, the shares eligible under the 1996 Plan were
increased to 2,500,000 shares and it is expected that at the meeting, the shares
eligible under the 1996 Plan will be increased to 3,500,000 shares. The 1996
Plan provides that all outstanding options will vest upon a change of control.
The exercise price is payable in cash, stock or any other means as determined by
the board.
10
<PAGE>
The board of directors may amend the 1996 Plan at any time, provided that
the board may not amend the 1996 Plan to materially increase the number of
shares available under the 1996 Plan, materially increase the benefits accruing
to participants under the 1996 Plan, or materially change the eligible class of
employees, without stockholder approval.
There have been a total of 2,353,050 options granted under the 1996 Plan, of
which 1,626,550 have been exercised as of December 31, 1998. There were 716,000
options outstanding as of December 31, 1998, out of 862,950 shares that were
then reserved for issuance. Since December 31, 1998, options for 284,000 shares
have been granted.
OPTION GRANTS IN THE LAST FISCAL YEAR. THE NAMED EXECUTIVE OFFICERS DID NOT
RECEIVE ANY OPTION GRANTS DURING THE YEAR ENDED DECEMBER 31, 1998.
OPTION EXERCISES AND YEAR-END HOLDINGS. The following table sets forth
certain information concerning the number and value of unexercised options held
by each of the Named Executive Officers at December 31, 1998.
AGGREGATED OPTION EXERCISES IN THE YEAR ENDED DECEMBER 31, 1998
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
OPTIONS AT FISCAL YEAR END FISCAL YEAR END (1)
------------------------------ ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
Robert Jennings........................................... -- -- $ -- --
Ian Sutcliffe............................................. -- -- -- --
Debora Falk............................................... 96,000 -- 781,440 --
</TABLE>
- ------------------------
(1) Options are In-the-Money if the market value of the shares covered thereby
is greater than the option exercise price. This calculation is based on the
fair market value of the Common Stock at December 31, 1998, of $8.19 per
share, less the exercise price.
EMPLOYMENT AGREEMENTS
Robert Jennings, Ian Sutcliffe, David Austin, Debora Falk and Bruce Tilden
each has an employment agreement with Mediconsult or one of the Company's
subsidiaries. Each agreement is effective as of January 1, 1999, and expires on
December 31, 2001, and will be automatically renewed for 12 month periods after
that date unless either party gives the other written notice of termination at
least three months prior to the expiration of the initial or any subsequent
term. The annual salary for each of these executives is as follows: Robert
Jennings, $275,000; Ian Sutcliffe, $240,000; David Austin, $198,000 CDN; Debora
Falk, $198,000 CDN; and Bruce Tilden, $154,200 CDN. In addition, David Austin
has received options to purchase 100,000 shares of Common Stock, 10,000 of which
have vested upon the signing of his agreement and 8,000 vest each month
beginning February 1, 1999 and ending November 1, 1999. Mr. Austin is entitled
to receive a cash equivalent of 12% of his base salary until he joins the
applicable employee benefit plans and programs. Also, each of these executives
is entitled to participate in a team-based performance bonus plan, with awards
based upon predetermined deliverables being developed by Mediconsult and may
receive options to purchase shares of Common Stock in the future. The employment
agreements can be terminated upon delivery of written notice from the Company,
with or without cause. Upon termination without cause, Robert Jennings, Ian
Sutcliffe, David Austin and Debora Falk are each entitled to 12 months salary
and any bonus earned in the preceding 12 months, and Bruce Tilden is entitled to
six months salary and bonus earned in the preceding six months.
11
<PAGE>
E. Michael Ingram has an employment agreement with Mediconsult, effective as
of April 1, 1999 and expiring on March 31, 2003. This agreement will be
automatically renewed for 12 month periods after that date unless either party
gives the other written notice of termination at least three months prior to the
expiration of the initial or any subsequent term. The annual salary for Mr.
Ingram is $200,000. In addition, Mr. Ingram is entitled to a non-accountable
expense allowance of $50,000 per year for the first two years, and has received
options to purchase 200,000 shares of Common Stock, which options vest at the
rate of 50,000 option shares per year beginning on the first anniversary of the
date of grant. Upon termination without cause, Mr. Ingram is entitled to 12
months salary and any bonus earned in the preceding 12 months, except that upon
termination by Mediconsult without cause or by Mr. Ingram for good reason within
12 months after a change of control of Mediconsult, Mr. Ingram is entitled to 24
months salary and any bonus earned in the preceding 24 months.
Each of the Named Executives Officers has agreed not to compete or solicit
clients or other employees during their severance period and is also bound by a
nondisclosure and invention assignment agreement, which prohibits such executive
from, among other things, disseminating or using confidential information about
the Company's business or clients in any way that would be adverse to the
Company.
CERTAIN TRANSACTIONS
Recently, The Mediconsult Trust, which has been the majority stockholder and
is controlled by Robert Jennings, the Company's Chairman and Chief Executive
Officer, transferred its interest in Mediconsult to JHC Limited, a Bermuda
corporation also controlled by Mr. Jennings. As a result, JHC Limited now is the
Company's largest stockholder. The Mediconsult Trust has from time to time
advanced funds to Mediconsult on an interest-free basis. On September 30, 1998,
the board of directors approved the conversion of these advances to the Company
up to that date into shares of junior preferred stock. In connection with this
conversion, the Company amended its certificate of incorporation to provide,
among other things, that each outstanding share of junior preferred stock will
be automatically converted into 8.33 shares of Common Stock, subject to
adjustment, upon the occurrence of a "Conversion Event." In April 1999, the
Company sold 4,800,000 shares in a registered public offering of its Common
Stock, at a price to the public of $13.00 per share (the "Public Offering").
Such offering was a Conversion Event and the shares of junior preferred stock
converted into 3,583,333 shares of Common Stock, plus 149,419 shares of Common
Stock issuable in respect of payable in kind dividends accruing since September
30, 1998. Since September 30, 1998, The Mediconsult Trust has advanced an
additional $713,000 to Mediconsult as an interest free loan. Of this amount,
approximately $200,000 has been repaid from the proceeds of the private
placement of senior preferred stock referred to below and the balance was repaid
from the proceeds of the Public Offering.
In connection with the Public Offering, JHC Limited and Michel Bazinet sold
625,000 shares and 225,000 shares of Common Stock of the Company, respectively,
on the same terms and at the same time as the as the shares sold by the Company.
The Company is a party to a strategic consulting interim agreement dated
November 16, 1998, with Treacy & Co. and The Mediconsult Trust. The agreement
provides that in consideration for consulting services rendered by Treacy & Co.
to Mediconsult in connection with marketing, sales and client services advice,
strategic planning and the seconding of Mr. Swanson to act in the capacity of
Vice President, Sales, the Company granted Treacy & Co. immediately exercisable
options to purchase 2,000,000 shares of common stock, at an exercise price of
$0.003 per share, which expire on November 16, 2003. In addition, The
Mediconsult Trust granted Treacy & Co. an option to purchase 358,333 shares of
common stock, exercisable from and after a Conversion Event, at an exercise
price of $1.20 per share which expires on December 31, 1999. This option is now
the obligation of JHC Limited. The agreement gives Treacy & Co. registration
rights in the event of a public offering. Treacy & Co. waived its registration
rights in connection with the Public Offering.
12
<PAGE>
The Company granted options to purchase 100,000 shares of common stock to
Messrs. Guld and Buchanan on October 31, 1998 for their services on the
Company's board of directors.
On February 26, 1999, the Company sold in a private placement an aggregate
of 506,329 shares of the Company's newly designated senior preferred stock and
warrants exercisable for five years to purchase 224,000 shares of senior
preferred stock to Nazem & Company IV, L.P., Transatlantic Venture Fund C.V. (a
joint venture of Nazem & Company and Banque Nationale de Paris) and other
individual investors, for an aggregate of $3.2 million. The purchase price and
the conversion price of the senior preferred stock was, and exercise price of
the warrants is, $6.32 per share, an amount equal to 85% of the average bid and
ask price of the Company's shares on the OTC Bulletin Board for the relevant
30-day period preceding the closing. The shares of senior preferred stock
automatically converted into an equal number of shares of common stock upon the
closing of the Public Offering. The holders of the senior preferred stock have
the right to nominate a member of the Company's board of directors so long as
they maintain at least 50% of their original share position. In connection with
the private placement, the Company agreed to provide the holders of Common Stock
issuable upon the conversion of senior preferred stock demand and piggyback
registration rights and the right to tag-along with the Company's founders in
certain sales of their shares. So long as the investors hold at least 50% of
their original share position, the Company agreed not to effect any material
change in the direction of the Company's business unless approved by at least
two-thirds of the board of directors and then only after consultation with the
investors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee currently consists of Messrs. Jennings,
Treacy and Guld. Other than Mr. Jennings, the Company's Chairman and Chief
Executive Officer, none of the members of the Compensation Committee has been an
officer or employee of Mediconsult at any time since its inception. None of the
Company's executive officers or employees serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Company's board of directors or Compensation
Committee. Prior to the formation of the Compensation Committee, the board of
directors as a whole made decisions relating to compensation of the Company's
executive officers. Mr. Jennings did not receive a salary from the Company in
1998, but he is now entitled to receive a salary pursuant to his employment
agreement, which became effective as of January 1, 1999. Mr. Jennings has not
participated in board discussions regarding his own compensation.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
In evaluating the reasonableness of compensation paid to the Company's
executive officers, the Compensation Committee takes into account, among other
factors, how compensation compares to compensation paid by competing companies,
individual contributions and the Company's performance. Base salary is
determined based upon individual performance, competitive compensation trends
and a review of salaries for like jobs at similar companies.
It is the Company's policy that the compensation of executive officers also
be based, in part, on the grant of stock options as an incentive to enhance the
Company's performance. Stock options are granted based upon a review of such
executive's responsibilities and relative position in the Company, such
executive's overall job performance and such executive's existing stock option
position. In 1998, in accordance with the above criteria, none of the executive
officers received stock options.
In 1998, the Chief Executive Officer did not receive a salary. He is now
entitled to receive a salary pursuant to his employment agreement which became
effective as of January 1, 1999. Base salary level was established considering
base salaries of peer Chief Executive Officers with similar executive
responsibilities.
13
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total stockholders' return on the
Company's Common Stock since March 31, 1997, the first day of significant
trading of the Company's Common Stock, with the Nasdaq Stock Market (U.S.) Index
and the Hambrecht & Quist Internet Index over the same period (assuming the
investment of $100 in the Company's Common Stock and in the two other indices,
and reinvestment of all dividends). Past financial performance should not be
considered to be a reliable indicator of future performance, and investors
should not use historical trends to anticipate results or trends in future
periods.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
3/97 6/97 9/97 12/97 3/98 6/98 9/98 12/98
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MEDICONSULT.COM, INC. 100 130 88 60 97 77 38 437
NASDAQ STOCK MARKET (U.S.) 100 117 137 129 150 154 140 181
HAMBRECHT & QUIST INTERNET 100 91 120 124 165 207 167 288
</TABLE>
14
<PAGE>
GENERAL
The Management of the Company does not know of any matters other than those
stated in this Proxy Statement which are to be presented for action at the
Meeting. If any other matters should properly come before the Meeting, proxies
will be voted on these other matters in accordance with the judgment of the
persons voting the proxies. Discretionary authority to vote on such matters is
conferred by such proxies upon the persons voting them.
The Company will bear the cost of preparing, printing, assembling and
mailing all proxy material which may be sent to stockholders in connection with
this solicitation. Arrangements will also be made with brokerage houses, other
custodians, nominees and fiduciaries, to forward soliciting material to the
beneficial owners of the Company's Common Stock held by such persons. The
Company will reimburse such persons for reasonable out-of-pocket expenses
incurred by them. In addition to the solicitation of proxies by use of the
mails, officers and regular employees of the Company may solicit proxies without
additional compensation, by telephone, telecopier or telegraph. The Company does
not expect to pay any compensation for the solicitation of proxies.
The Annual Report of the Company on Form 10-KSB for the fiscal year ended
December 31, 1998 (the "Annual Report") has been forwarded to all stockholders.
The Annual Report, which includes audited financial statements, does not form
any part of the material for the solicitation of proxies.
The Company will furnish without charge to each person whose proxy is being
solicited, upon written request of any such person, a copy of the Annual Report
as filed with the Securities and Exchange Commission, including the financial
statements and schedules. Requests for copies of such report should be directed
to Robert Jennings, Chief Executive Officer, Mediconsult.com, Inc., 33 Reid
Street, 4(th) Floor, Hamilton, Bermuda.
STOCKHOLDER PROPOSALS
The Annual Meeting of Stockholders for the fiscal year ending December 31,
1999 is expected to be held on or about June 15, 2000, with the mailing of proxy
materials for such meeting to be made on or about April 30, 2000. All proposals
of stockholders intended to be presented at the Company's next Annual Meeting of
Stockholders must be received at the Company's executive office no later than
November 30, 1999 in order to be consulted for inclusion in the proxy statement
and form of proxy related to that meeting.
By Order of the Board of Directors,
Robert Jennings, Chairman
and Chief Executive Officer
May 11, 1999
15
<PAGE>
EXHIBIT A
MEDICONSULT.COM, INC.
1996 STOCK OPTION PLAN*
1. Definitions. Except as otherwise expressly provided in this Plan, the
following capitalized terms shall have the respective meanings hereafter
ascribed to them:
(a) "Board" shall mean the Board of Directors of the Corporation;
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended;
(c) "Consultant" shall mean a person who provides services to the
Corporation as an independent contractor;
(d) "Corporation" means Mediconsult.com, Inc. and each and all of any
present and future subsidiaries;
(e) "Date of Grant" shall mean, for each participant in the Plan, the
date on which the Board approves the specific grant of stock options to that
participant;
(f) "Employee" shall be an employee of the Corporation or any subsidiary
of the Corporation;
(g) "Grantee" shall mean the recipient of an Incentive Stock Option
under the Plan;
(h) "Incentive Stock Option" shall refer to a stock option which
qualifies under Section 422 of the Code.
(i) "Non-statutory Option" shall mean an option which is not an
Incentive Stock Option.
(j) "Shares" shall mean the Corporation's common stock, $.001 par value;
(k) "Shareholders" shall mean owners of record of any Shares; and
2. Purpose. The purpose of this Stock Option Plan (the "Plan") is two-fold.
First, the Plan will further the interests of the Corporation and its
shareholders by providing incentives in the form of stock options to employees
who contribute materially to the success and profitability of the Corporation.
Such stock options will be granted to recognize and reward outstanding
individual performances and contributions and will give selected employees an
interest in the Corporation parallel to that of the shareholders, thus enhancing
their proprietary interest in the Corporation's continued success and progress.
This program also will enable the Corporation to attract and retain experienced
employees. Second, the Plan will provide the Corporation flexibility and the
means to reward directors and consultants who render valuable contributions to
the Corporation.
3. Administration. This Plan will be administered by the Board. The Board
has the exclusive power to select the participants in this Plan, fix the awards
to each participant, and make all other determinations necessary or advisable
under the Plan, to determine whether the performance of an eligible employee
warrants an award under this Plan, and to determine the amount and duration of
the award. The Board has full and exclusive power to construe and interpret this
Plan, to prescribe, amend and rescind rules and regulations relating to this
Plan, and to take all actions necessary or advisable for this Plan's
administration. The Board shall have full power and authority to determine, and
at the time such option is granted shall clearly set forth, whether the option
shall be an Incentive Stock Option or a Non-statutory Option. Any such
determination made by the Board will be final and binding on all persons. A
member of the Board will not be liable for performing any act or making any
determination required by or pursuant to the Plan, if such act or determination
is made in good faith.
- ------------------------
* Amendment appears in bold
A-1
<PAGE>
4. Participants. Any employee, officer, director or consultant that the
Board, in its sole discretion, designates is eligible to participate in this
Plan. However, only key employees of the Corporation shall be eligible to
receive grants of Incentive Stock Options. The Board's designation of a person
as a participant in any year does not require the Board to designate that person
to receive an award under this Plan in any other year or, if so designated, to
receive the same award as any other participant in any year. The Board may
consider such factors as it deems pertinent in selecting participants and in
determining the amount of their respective awards, including, but without being
limited to: (a) the financial condition of the Corporation; (b) expected profits
for the current or future years; (c) the contributions of a prospective
participant to the profitability and success of the Corporation; and (d) the
adequacy of the prospective participant's other compensation. The Board, in its
discretion, may grant benefits to a participant under this Plan, even though
stock, stock options, stock appreciation rights or other benefits previously
were granted to him under this or another plan of the Corporation, whether or
not the previously granted benefits have been exercised, but the participant may
hold such options only on the terms and subject to the restrictions hereafter
set forth.
5. Kinds of Benefits. Awards under this Plan, if any, will be granted in
options to acquire Shares as described below.
6. Options; Expiration; Limitations. Any Incentive Stock Option granted
under this Plan shall automatically expire ten years after the Date of Grant or
at such earlier time as may be described in paragraph 11 or directed by the
Board in the grant of the option. Notwithstanding the preceding sentence, no
Incentive Stock Option granted to a Shareholder who owns, as of the Date of
Grant, stock possessing more than ten percent of the total combined voting power
of all classes of stock of the Corporation shall, in any event, be exercisable
after the expiration of five years from the Date of Grant. For the purpose of
determining under any provision of this Plan whether a shareholder owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Corporation, such Shareholder shall be considered as
owning the stock owned, directly or indirectly, by or for his brothers and
sisters (whether by the whole or half blood), spouse, ancestors and lineal
descendants, and stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be considered as being owned proportionately
by or for its shareholders, partners or beneficiaries.
Upon the exercise of an option, the Corporation shall deliver to the
participant certificates representing authorized but unissued Shares. The
cumulative total number of shares which may be subject to options issued and
outstanding pursuant to this Plan is limited to 3,500,000 shares. This amount
automatically will be adjusted in accordance with Paragraph 22 of this Plan. If
an option is terminated, in whole or in part, for any reason other than its
exercise, the Board may reallocate the shares subject to that option (or to the
part thereof so terminated) to one or more other options to be granted under
this Plan.
7. Option Exercise Price. Each option shall state the option price, which
shall be not less than 100% of the fair market value of the Shares on the Date
of Grant or the par value thereof whichever is greater. Notwithstanding the
preceding sentence, in the case of a grant of an Incentive Stock Option to an
employee who, as of the Date of Grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Corporation or its Parent or Subsidiaries, the option price shall not be less
than 110% of the fair market value of the Shares on the Date of Grant or the par
value thereof, whichever is greater.
During such time as the Shares are not traded in any securities market, the
fair market value per share shall be determined by a good faith effort of the
Board, using its best efforts and judgment. During such time as the Shares are
traded in a securities market but not listed upon an established stock exchange,
the fair market value per share shall be the mean between dealer "bid" and "ask"
prices in the securities market in which it is traded on the Date of Grant, as
reported by the National Association of Securities Dealers, Inc. If the Shares
are listed upon an established stock exchange or exchanges such fair market
value shall be deemed to be the highest closing price on such stock exchange or
exchanges on the Date of
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Grant, or if no sale of any Shares shall have been made on any stock exchange on
that day, on the next preceding day on which there was such a sale. Subject to
the foregoing, the Board shall have full authority and discretion in fixing the
option price and shall be fully protected in doing so.
8. Maximum Option Exercise. The aggregate fair market value (determined as
of the Date of Grant) of the stock with respect to which Incentive Stock Options
are exercisable for the first time by a grantee during any calendar year (under
all such plans of the Corporation and its parent or subsidiary, if any) shall
not exceed $100,000. For purposes of this Paragraph 8, the value of stock
acquired through the exercise of Non-statutory Options shall not be included in
the computation of the aggregate fair market value.
9. Maximum Option Grant. The maximum option grant which may be made to an
employee of the Company in any calendar year shall not cover more than 250,000
shares, subject to adjustment as provied in Paragraph 22.
10. Exercise of Options.
(a) No stock option granted under this Plan may be exercised before the
Grantee's completion of such period of services as may be specified by the Board
on the Date of Grant. Furthermore, the timing of the exercise of any option
granted under this Plan may be subject to a vesting schedule based upon years of
service or an expiration schedule as may be specified by the Board on the Date
of Grant. Thereafter, or if no such period is specified subject to the
provisions of subsections (c), (d), (e), (f) and (g) of this Paragraph 10, the
Grantee may exercise the option in full or in part at any time until expiration
of the option.
A Grantee cannot exercise an Incentive Stock Option granted under this Plan
unless, at the time of exercise, he has been continuously employed by the
Corporation since the date the option was granted. The Board may decide in each
case to what extent bona fide leaves of absence for illness, temporary
disability, government or military service, or other reasons will not be deemed
to interrupt continuous employment.
(b) Unless an Option specifically provides to the contrary, all options
granted under this Plan shall immediately become exercisable in full in the
event of the consummation of any of the following transactions:
(i) A merger or acquisition in which the Company is not the surviving
entity;
(ii) The sale, transfer or other disposition of all or substantially all
of the assets of the Company; or
(iii) Any merger in which the Company is the surviving entity but in
which fifty percent (50%) or more of the Company's outstanding voting stock
is issued to holders different from those who held the stock immediately
prior to such merger.
(c) Except as provided in subsections (d), (e) and (f) of this Paragraph 10,
a Grantee cannot exercise an Incentive Stock Option after he ceases to be an
employee of the Corporation, unless the Board, in its sole discretion, grants
the recipient an extension of time to exercise the Incentive Stock Option after
cessation of employment. The extension of time of exercise that may be granted
by the Board under this subsection (c) shall not exceed three months after the
date on which the Grantee ceases to be an employee and in no case shall extend
beyond the stated expiration date of the option.
(d) If the employment of a Grantee is terminated by the Corporation for a
cause as defined in subsection (i) of this Paragraph 10, all rights to any stock
option granted under this Plan shall terminate, including but not limited to the
ability to exercise such stock options.
(e) If a Grantee ceases to be an employee as a result of retirement, he may
exercise the Incentive Stock Option within three months after the date on which
he ceases to be an employee (but no later than the stated expiration date of the
option) to the extent that the Incentive Stock Option was exercisable
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when he ceased to be an employee. An employee shall be regarded as retired if he
terminates employment after his sixty-fifth birthday.
(f) If a Grantee ceases to be an employee because of disability (within the
meaning of Section 105(d)(4) of the Code), or if a Grantee dies, and if at the
time of the Grantee's disability or death he was entitled to exercise an
Incentive Stock Option granted under this Plan, the Incentive Stock Option can
be exercised within 12 months after his death or termination of employment on
account of disability (but no later than the stated expiration date of the
option), by the Grantee in the case of disability or, in case of death, by his
personal representative, estate or the person who acquired by gift, bequest or
inheritance his right to exercise the Incentive Stock Option. Such options can
be exercised only as to the number of shares for which they could have been
exercised at the time the Grantee died or became disabled.
(g) With respect to Non-statutory Options granted to Board members, the
Board may provide on the Date of the Grant that such options will expire a
specified number of days after such Board member ceases to be a member of the
Board. In the absence of any such provision, the option will expire on the
stated expiration date of the option.
(h) Any stock option granted under the Plan will terminate, as a whole or in
part, to the extent that, in accordance with this Paragraph 10, it no longer can
be exercised.
(i) For purposes of this Paragraph 10, "cause" shall mean the following:
(1) Fraud or criminal misconduct;
(2) Gross negligence;
(3) Willful or continuing disregard for the safety or soundness of the
Corporation;
(4) Willful or continuing violation of the published rules of the
Corporation.
11. Method of Exercise. A stock option (or any part or installment thereof)
shall be exercised by giving written notice to the Company at its principal
office address. Such notice shall identify the Stock option being exercised and
specify the number of shares as to which such Stock option is being exercised,
accompanied by full payment of the purchase price therefor either (a) in United
States dollars in cash or by check, or (b) at the discretion of the Board,
through delivery of shares of Common Stock having a fair market value equal as
of the date of the exercise to the cash exercise price of the Stock option, or
(c) at the discretion of the Board, by delivery of the grantee's personal
recourse note bearing interest payable not less than annually at no less than
100% of the lowest applicable Federal rate, as defined in Section 1274(d) of the
Code, or (d) in the discretion of the Board, by delivery (including by
telecopier) to the Company or its designated agent of an executed irrevocable
option exercise form together with irrevocable instructions to a broker-dealer
to sell (or margin) a sufficient portion of the shares and deliver the sale (or
margin loan) proceeds directly to the Company to pay for the exercise price, or
(e) at the discretion of the Board, by any combination of (a), (b), (c) or (d)
above. If the Board exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (b), (c), (d) or
(e) of the preceding sentence, such discretion shall be exercised in writing at
the time of the grant of the ISO in question. The holder of a Option shall not
have the rights of a shareholder with respect to the shares covered by his Stock
option until the date of issuance of a stock certificate to him for such shares.
Except as expressly provided above in paragraph 10 with respect to changes in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar rights for which the record date is before the date such stock
certificate is issued.
Any option granted under this Plan may be exercised as to any lesser number
of shares than the full amount for which such option has been granted. A partial
exercise of an option will not affect the Grantee's rights to exercise the
option from time to time in accordance with this Plan as to the remaining shares
subject to the option.
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12. Taxes; Compliance with Law; Approval of Regulatory Bodies. The
Corporation, if necessary or desirable, may pay or withhold the amount of any
tax attributable to any amount payable or shares deliverable under this Plan and
the Corporation may defer making payment on delivery until it is indemnified to
its satisfaction for that tax. Stock options are exercisable, and shares can be
delivered under this Plan, only in compliance with all applicable federal and
sate laws and regulations, including, without limitation, state and federal
securities laws, and the rules of all stock exchanges on which the Corporation's
shares are listed at any time. Any certificate issued pursuant to options
granted under this Plan shall bear such legends and statements as the Board
deems advisable to assure compliance with federal and state laws and
regulations. No option may be exercised, and shares may not be issued under this
Plan, until the Corporation has obtained the consent or approval of every
regulatory body, federal or state, having jurisdiction over such matters as the
Board deems advisable.
Specifically, in the event that the Corporation deems it necessary or
desirable to file a registration statement with the Securities and Exchange
Commission or any State Securities Commission, no option granted under the Plan
may be exercised, and shares may not be issued, until the Corporation has
obtained the consent or approval of such Commission.
In the case of the exercise of an option by a person or estate acquiring by
bequest or inheritance the right to exercise such option, the Board may require
reasonable evidence as to the ownership of the option and may require such
consents and releases of taxing authorities as the Board deems advisable.
13. Assignability. Each option granted under this Plan is not transferable
other than by will or the laws of descent and distribution. Each option is
exercisable during the life of the Grantee only by him.
14. Tenure. A participant's right, if any, to continue to serve the
Corporation as an officer, employee or otherwise, will not be enlarged or
otherwise affected by his designation as a participant under this Plan, and such
designation will not in any way restrict the right of the Corporation to
terminate at any time the employment or affiliation of any participant for cause
or otherwise.
15. Amendment and Termination of Plan. The Board may alter, amend or
terminate this Plan from time to time without approval of the shareholders.
However, without the approval of the shareholders, no amendment will be
effective that:
(a) materially increases the benefits accruing to participants under the
Plan;
(b) increases the cumulative number of shares that may be delivered upon
the exercise of options granted under the Plan or the aggregate fair market
value of options which a participant may exercise in any calendar year;
(c) materially modifies the eligibility requirements for participation
in the Plan; or
(d) amends the requirements of paragraphs (a)-(c) of this Paragraph 15.
Any amendment, whether with or without the approval of shareholders, that
alters the terms or provisions of an option granted before the amendment will be
effective only with the consent of the participant to whom the option was
granted or the holder currently entitled to exercise it, except for adjustments
expressly authorized by this Plan.
16. Expenses of Plan. The expenses of the Plan will be borne by the
Corporation.
17. Duration of Plan. Options may only be granted under this Plan during the
ten years immediately following the earlier of the adoption of the Plan or its
approval by the Shareholders. Options granted during that ten year period will
remain valid thereafter in accordance with their terms and the provisions of
this Plan.
18. Other Provisions. The option agreements authorized under the Plan shall
contain such other provisions including, without limitation, restrictions upon
the exercise of the option, as the Board shall
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<PAGE>
deem advisable. Any such option agreements, which are intended to be "Incentive
Stock Options" shall contain such limitations and restrictions upon the exercise
of the option as shall be necessary in order that such option will be an
"Incentive Stock Option" as defined in Section 422 of the Code.
19. Indemnification of the Board. In addition to such other rights of
indemnification as they may have as directors, the members of the Board shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees actually and necessarily incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any option granted
thereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel selected by the
Corporation) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such director is liable for
negligence or misconduct in the performance of his duties; provided that within
60 days after the institution of any such action, suit or proceeding a director
shall in writing offer the Corporation the opportunity, at its own expense, to
handle and defend the same.
20. Application of Funds. The proceeds received by the Corporation from the
sale of stock pursuant to options granted under this Plan will be used for
general corporate purposes.
21. No Obligation to Exercise Option. The granting of an option shall impose
no obligation upon the Grantee to exercise such option.
22. Adjustment Upon Change of Shares. If a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange of
shares, stock split, stock dividend, rights offering, or other event affecting
shares of the Corporation occurs, then the number and class of shares to which
options are authorized to be granted under this Plan, the number and class of
shares then subject to options previously granted under this Plan, and the price
per share payable upon exercise of each option outstanding under this Plan shall
be equitably adjusted by the Board to reflect such changes.
23. Number and Gender. Unless otherwise clearly indicated in this Plan,
words in the singular or plural shall include the plural and singular,
respectively, where they would so apply, and words in the masculine or neuter
gender shall include the feminine, masculine or neuter gender where applicable.
24. Applicable Law. The validity, interpretation and enforcement of this
Plan are governed in all respects by the laws of Delaware.
25. Effective Date of Plan. This Plan shall not take effect until adopted by
the Board. This Plan shall terminate if it is not approved by the holders of a
majority of the outstanding shares of the capital stock of the Corporation,
which approval must occur within the period beginning twelve months before and
ending twelve months after the Plan is adopted by the Board.
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<PAGE>
MEDICONSULT.COM
33 REID STREET, 4(TH) FLOOR
HAMILTON, BERMUDA
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT JENNINGS and IAN SUTCLIFFE with the
power to appoint their substitutes, and hereby authorizes them to represent and
to vote on behalf of the undersigned all the shares of common stock par value
$.001 per share (the "Common Stock"), of Mediconsult.com, Inc. held of record by
the undersigned on April 30, 1999, at the Annual Meeting of Stockholders to be
held on June 15, 1999 at 10:00 a.m. any adjournment or adjournments thereof,
hereby revoking all proxies heretofore given with respect to such shares, upon
the following proposals more fully described in the notice of and proxy
statement for the Meeting (receipt whereof is hereby acknowledged).
1. ELECTION OF DIRECTORS
FOR all nominees listed below / /
WITHHOLD AUTHORITY to vote for
nominees listed below / /
(except as marked to
the contrary below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE WRITE THAT
NOMINEE'S NAME ON THE SPACE PROVIDED
BELOW)
------------------------------------------
ROBERT JENNINGS, IAN SUTCLIFFE, MICHAEL
TREACY, JOHN BUCHANAN and BARRY GULD.
PROPOSAL TO APPROVE the amendment to the
Company's 1996 Stock Option Plan to
2. reserve an additional 1,000,000 shares of
Common Stock for issuance thereunder.
/ / For / / Against / / Abstain
PROPOSAL TO RATIFY AND APPROVE the
appointment of PricewaterhouseCoopers as
3. the Company's independent accountants for
the fiscal year ending December 31, 1999.
/ / For / / Against / / Abstain
4. In their discretion the Proxies are
authorized to vote upon such other
business as may properly be brought before
the Meeting.
(CONTINUED, AND TO BE EXECUTED, ON THE REVERSE SIDE)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3 AND 4.
Please sign exactly as the name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
Partnership, please sign in partnership name by authorized person.
I will / / will not / / attend this Meeting.
Dated: ________________________, 1999
_____________________________________
SIGNATURE
_____________________________________
SIGNATURE IF HELD JOINTLY.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
