<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HealthDesk Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 1 Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
--------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------
5) Total fee paid:
--------------------------------------------------------------
[ ] 2 Fee paid previously with preliminary materials.
[ ] 3 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>
HEALTHDESK CORPORATION
2560 Ninth Street, Suite 220
Berkeley, CA 94710
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 17, 1998
To the Shareholders of HealthDesk Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
HealthDesk Corporation, a California corporation (the "Company"), will be held
on June 17, 1998, at 9:00 a.m. local time at the Radisson Hotel Berkeley Marina
at 200 Marina Boulevard, Berkeley, California, 94710 for the following
purposes:
1. To elect six (6) members of the Board of Directors to hold office until
the 1999 Annual Meeting of Shareholders and until their respective
successors are elected and qualified.
2. To vote upon a proposal to ratify the appointment of Coopers & Lybrand
L.L.P. as the Company's independent public accountants for the year ending
December 31, 1998.
3. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on April 27, 1998 are
entitled to notice of, and to vote at, this meeting and any adjournments
thereof. For ten days prior to the meeting, a complete list of the shareholders
entitled to vote at the meeting will be available for examination by any
shareholder for any purpose relating to the meeting during ordinary business
hours at the principal office of HealthDesk Corporation.
By Order of the Board of
Directors
/s/ Timothy S. Yamauchi
-------------------------
TIMOTHY S. YAMAUCHI
Secretary
Berkeley, California
April 30, 1998
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. PROXIES ARE REVOCABLE, AND
ANY SHAREHOLDER MAY WITHDRAW HIS OR HER PROXY AND VOTE IN PERSON AT THE
MEETING.
<PAGE>
HEALTHDESK CORPORATION
2560 Ninth Street, Suite 220
Berkeley, CA 94710
Proxy Statement for Annual Meeting of Shareholders
April 30, 1998
The accompanying proxy is solicited by the Board of Directors of
HealthDesk Corporation, a California corporation (the "Company"), for use at
the Annual Meeting of Shareholders to be held June 17, 1998, or any adjournment
thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting. The date of this Proxy Statement is April 30, 1998, the approximate
date on which this Proxy Statement and the accompanying form of proxy were
first sent or given to shareholders.
GENERAL INFORMATION
Voting Securities. Only shareholders of record as of the close of business
on April 27, 1998 will be entitled to vote at the meeting and any adjournment
thereof. As of that date, there were 5,792,845 shares of Common Stock of the
Company, no par value, issued and outstanding. Shareholders may vote in person
or by proxy. Each holder of shares of Common Stock is entitled to one vote for
each share of stock held on the proposals presented in this Proxy Statement.
The Company's bylaws provide that a majority of all of the shares of the stock
entitled to vote, whether present in person or represented by proxy, shall
constitute a quorum for the transaction of business at the meeting.
Solicitation of Proxies. The cost of soliciting proxies will be borne by
the Company. In addition to soliciting shareholders by mail through its regular
employees, the Company may request banks and brokers, and other custodians,
nominees and fiduciaries, to solicit their customers who have stock of the
Company registered in the names of such persons and will reimburse them for
their reasonable, out-of-pocket costs. The Company may use the services of its
officers, directors, and others to solicit proxies, personally or by telephone,
without additional compensation.
Voting of Proxies. All valid proxies received prior to the meeting will be
voted. All shares represented by a proxy will be voted, and where a shareholder
specifies by means of the proxy a choice with respect to any matter to be acted
upon, the shares will be voted in accordance with the specification so made. If
no choice is indicated on the proxy, the shares will be voted in favor of the
proposal. A shareholder giving a proxy has the power to revoke his or her
proxy, at any time prior to the time it is voted, by delivery to the Secretary
of the Company of a written instrument revoking the proxy or a duly executed
proxy with a later date, or by attending the meeting and voting in person.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Six (6) directors, constituting the Company's full Board, are to be
elected at the Annual Meeting. If elected, the nominees will serve as directors
until the Company's Annual Meeting of Shareholders in 1999, and until their
successors are elected and qualified.
Management's nominees for election to the Board of Directors and certain
information with respect to their age and background are set forth below.
Management knows of no reason why any nominee would be unable or unwilling to
serve. However, if any nominee(s) should for any reason be unable or unwilling
to serve, the proxies will be voted for such substitute nominees as management
may designate.
If a quorum is present and voting, the nominees for directors receiving
the highest number of votes will be elected as directors. Abstentions and
shares held by brokers that are present, but not voted because the brokers were
prohibited from exercising discretionary authority, i.e., "broker non-votes,"
will be counted as present for purposes of determining if a quorum is present.
<TABLE>
<CAPTION>
Director
Name Position With the Company Age Since
- ------------------------ ------------------------------------ ----- ---------
<S> <C> <C> <C>
Peter S. O'Donnell President, Chief Executive Officer 49 1995
and Chairman of the Board
John Pappajohn Director 69 1993
James A. Gordon Director 48 1996
Dr. Joseph Rudick, Jr. Director 41 1992
Molly J. Coye, MD Director 50 1997
Joseph R. Dunham II Nominee 34 --
</TABLE>
Peter S. O'Donnell has been President, Chief Executive Officer and
Chairman of the Board of the Company since September 1995. From May 1995 to
August 1995, Mr. O'Donnell was a consultant to the Company. From February 1993
to April 1995, Mr. O'Donnell was Executive Vice President of Sales and
Marketing at the Partnership Group, a company which provides consulting
services to employees regarding child and elder care matters. From October 1991
to February 1993, Mr. O'Donnell was Executive Vice President of Sales and
Marketing for Wellmark Inc., a healthcare company offering electronic data
interchange services that allow hospitals and other healthcare providers to
transmit files electronically to payers. Mr. O'Donnell received an M.A. degree
in government in 1972 from Rutgers University and a B.A. degree in psychology
in 1971 from Pennsylvania State University.
John Pappajohn has been a director of the Company since 1993. Mr.
Pappajohn also serves as a director of the following companies: CareGroup,
Inc.; Core, Inc.; OncorMed Inc.; PACE Health Management Systems, Inc.; Patient
Infosystems, Inc; and American Physician Partners, Inc. Mr. Pappajohn has been
the sole owner of Pappajohn Capital Resources, a venture capital firm, and has
served as President of Equity Dynamics, Inc., a financial consulting firm,
since 1969. Mr. Pappajohn received a B.S.C. degree from the University of Iowa
in 1952.
James A. Gordon has been director of the Company since September 1996. Mr.
Gordon is the President of the General Partner of Edgewater II Management,
L.P., a venture capital management firm. Mr. Gordon is also the General Partner
of Edgewater Private Equity Fund II, L.P., a venture capital firm. Mr. Gordon
serves as a director of the following companies: IMNET Systems, Inc.; Advanced
Photonix, Inc.; and Microwave Systems. Mr. Gordon has been President of Gordon
Management, an investment management company, since February 1992. Mr. Gordon
received a B.A. degree summa cum laude from Northwestern University.
Dr. Joseph Rudick, Jr., a founder of the Company, has been a director of
the Company since August 1992. Dr. Rudick has been self-employed as a physician
since 1988 with Associate Ophthalmologist, P.C. Dr. Rudick has also served as
Vice President of Castle Group/Paramount Capital, a venture capital firm, since
1993. Dr. Rudick currently serves as a director of Optex Ophthalmics and
Channel Pharmaceuticals. Dr. Rudick received a B.A. from Williams College in
1978 and an M.D. from the University of Pennsylvania in 1983.
2
<PAGE>
Dr. Molly J. Coye is currently the Director of the West of Coast Office
for The Lewin Group. Until September 1997, Dr. Coye served as Senior Vice
President of Strategic Development for the Company. Dr. Coye served as Senior
Vice President of the Good Samaritan Health System, a non-profit, integrated
health care system, from September 1993 to January 1996. From June 1991 to
September 1993, Dr. Coye served as Director of the California Department of
Health Services. From 1986 to 1990, Dr. Coye was the Commissioner of Health for
the State of New Jersey. Dr. Coye received a B.S. degree in political science
from the University of California at Berkeley in 1968, an M.A. degree in Asian
history from Stanford University in 1972, and an M.D. and an M.P.H. from Johns
Hopkins University in 1977. Dr. Coye completed an internship in Family Medicine
at San Francisco General Hospital and a residency in Preventative Medicine at
the Robert Wood Johnson Foundation Clinical Scholars Program at the University
of California at San Francisco.
Joseph R. Dunham II is currently the Senior Vice President of Equity
Dynamic, Inc., a financial consulting firm. From January 1993 to August 1997,
Mr. Dunham served as Manager of Investment Services with Wellmark Blue Cross
Blue Shield of Iowa. From May 1990 to January 1993, Mr. Dunham served as Vice
President of Corporate Finance with Allied Group Merchant Banking. Mr. Dunham
received a B.A. degree in Business Education from Wartburg College in 1986 and
an M.B.A. from Drake University in 1992.
During 1997, the Board held two (2) meetings. Each director serving on the
Board in 1997 attended at least 75% of such meetings of the Board and the
committees on which he served.
The Company has an Audit Committee and a Compensation Committee.
The Audit Committee's function is to review with the Company's independent
accountants and management the annual financial statements and independent
accountants' opinion, review the scope and results of the examination of the
Company's financial statements by the independent accountants, approve all
professional services and related fees performed by the independent
accountants, recommend the retention of the independent accountants to the
Board, subject to ratification by the shareholders, and periodically review the
Company's accounting policies and internal accounting and financial controls.
The members of the Audit Committee are Messrs. Pappajohn and Gordon. The Audit
Committee was created in late 1996 and held one meeting in 1997.
The Compensation Committee's function is to review and establish salary
levels for executive officers and certain other management employees and to
grant stock options. The members of the Compensation Committee in 1997 were
Messrs. Pappajohn and Sengpiel. During 1997, the Compensation Committee held
one meeting. The members of the Compensation Committee in 1998 are Messrs.
Pappajohn and Gordon.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES
NAMED ABOVE.
3
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected Coopers & Lybrand
L.L.P. as independent accountants to audit the financial statements of the
Company for the year ending December 31, 1998. Coopers & Lybrand L.L.P. has
acted as the Company's independent auditors since the Company's inception. A
representative of Coopers & Lybrand L.L.P. is expected to be present at the
Annual Meeting with the opportunity to make a statement if the representative
desires to do so, and is expected to be available to respond to appropriate
questions.
The affirmative vote of a majority of the votes cast at the Annual Meeting
of Shareholders, at which a quorum representing a majority of all outstanding
shares of Common Stock of the Company is present and voting, either in person
or by proxy, is required for approval of this proposal. Abstentions and broker
non-votes will each be counted as present for purposes of determining the
presence of a quorum. Abstentions have the same effect as a negative vote on
this proposal. Broker non-votes will have no effect on the outcome of this
vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPOINTMENT
OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE
YEAR ENDING DECEMBER 31, 1998.
4
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 31, 1998,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person known by the Company to own more than 5% of the Company's Common
Stock, (ii) each director and director-nominee of the Company, (iii) the
individual who served as the Chief Executive Officer of the Company in 1997,
and the other three highest compensated executive officers of the Company whose
salary and bonus for the year ended December 31, 1997 exceeded $100,000 (the
"Named Executive Officers"), and (iv) all directors and executive officers of
the Company as a group.
<TABLE>
<CAPTION>
Shares Owned (2)
-----------------------------------------
Name and Address of
Beneficial Owner (1) Number of Shares Percentage of Class
- -------------------------------------- ------------------ --------------------
<S> <C> <C>
Peter S. O'Donnell (3) ............... 180,000 2.8%
Terry M. Brandt (4) .................. 50,000 *
Timothy S. Yamauchi (5) .............. 60,000 *
Gerald W. Zieg (6) ................... 60,000 *
John Pappajohn (7) ................... 1,422,500 21.9
Edgewater Private Equity Fund II, L.P.
666 Grand Avenue, Suite 200
Des Moines, Iowa 50309 ............... 1,228,500 18.9
James A. Gordon (8) .................. 1,228,500 18.9
Dr. Joseph Rudick, Jr.
150 Broadway
New York, New York 10038 (9) ......... 219,000 3.4
David Sengpiel (10) .................. 15,000 *
Molly C. Coye, MD (11) ............... 77,400 1.2
Joseph R. Dunham II (12) ............. 10,000 *
All officers and directors as a group
(ten persons) (13) ................... 3,322,400 51.2%
</TABLE>
- ------------
* Represents less than 1%.
(1) Except as otherwise indicated, the address for each beneficial owner
identified is c/o HealthDesk Corporation, 2560 Ninth Street, Suite 220,
Berkeley, California 94710.
(2) Unless otherwise indicated, the Company believes that all persons and
entities named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by them. A person
is deemed to be the beneficial owner of shares of Common Stock that can be
acquired by such person within 60 days from March 31, 1998, upon the
exercise of options or convertible securities. Each beneficial owner's
percentage ownership is based on 5,792,845 shares of Common Stock
outstanding as of March 31, 1998 and is determined by assuming that
convertible securities and options that are held by such person (but not
those held by any other person) and which are exercisable within such
period have been exercised.
(3) Represents immediately exercisable options to purchase 180,000 shares.
(4) Represents immediately exercisable options to purchase 50,000 shares.
(5) Represents immediately exercisable options to purchase 60,000 shares.
(6) Represents immediately exercisable options to purchase 60,000 shares, of
which, 50,000 shares were granted on May 21, 1997, replacing an option to
purchase 50,000 shares that was granted on December 2, 1996. Option to
purchase 50,000 shares was canceled in connection with the repricing. See
"REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON
REPRICING OF OPTIONS."
5
<PAGE>
(7) Includes immediately exercisable options to purchase 10,000 shares.
(8) Includes 1,228,500 shares of Common Stock held by Edgewater Private Equity
Fund II, L.P. Mr. Gordon may be deemed to be the beneficial owner of such
shares. Excludes 30,000 shares of Common Stock held by Laura Gordon 1985
Trust over which Mr. Gordon has voting power but no pecuniary interest.
Mr. Gordon disclaims beneficial ownership of such 30,000 shares.
(9) Includes immediately exercisable options to purchase 24,000 shares.
(10) Includes immediately exercisable options to purchase 15,000 shares. Mr.
Sengpiel resigned as director on April 21, 1998.
(11) Includes immediately exercisable options to purchase 77,400 shares.
(12) Mr. Dunham was nominated by the Board as director on April 21, 1998.
(13) Includes immediately exercisable options to purchase 476,400 shares.
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information concerning the total
compensation of the Named Executive Officers for the years ended December 31,
1997, 1996 and 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------- ----------------------
Other Annual Securities Underlying
Name and Principal Position Year Salary Bonus Compensation Options (#)
- ----------------------------------- ------ ----------- ----------------- ----------------- ----------------------
<S> <C> <C> <C> <C> <C>
Peter S. O'Donnell (1)
President, Chief Executive 1997 $163,200 $20,000 (2) -- --
Officer and Chairman of 1996 $161,067 $ 26,667 -- --
the Board ........................ 1995 $ 53,033 $ 13,333 $79,699 (3) 180,000
Terry M. Brandt (4)
Chief Technology Officer ......... 1997 $ 98,958 -- -- 50,000
Timothy S. Yamauchi (5) 1997 $110,000 -- -- --
Chief Financial Officer, ......... 1996 $101,141 $ 20,000 -- --
Secretary and Treasurer .......... 1995 $ 26,258 -- -- 60,000
Gerald W. Zieg (6)
Senior Vice President of ......... 1997 $ 90,000 -- $25,000 (7) 10,000
Sales and Marketing .............. 1996 $ 7,500 -- $ 2,083 (8) 50,000
</TABLE>
- ------------
(1) Mr. O'Donnell joined the Company in September 1995.
(2) Represents payment of deferred 1996 year end bonus.
(3) Represents consulting fees of $63,699 from May to September 1995 and
relocation costs.
(4) Mr. Brandt joined the Company in March 1997.
(5) Mr. Yamauchi joined the Company in September 1995.
(6) Mr. Zieg joined the Company in December 1996.
(7) Represents annual commission of $25,000.
(8) Represents commission of $2,083 for the month of December 1996.
Peter S. O'Donnell has been President, Chief Executive Officer and
Chairman of the Board of the Company since September 1995. From May 1995 to
August 1995, Mr. O'Donnell was a consultant to the Company. From February 1993
to April 1995, Mr. O'Donnell was Executive Vice President of Sales and
Marketing at the Partnership Group, a company which provides consulting
services to employees regarding child and elder care matters. From October 1991
to February 1993, Mr. O'Donnell was Executive Vice President of Sales and
Marketing for Wellmark, Inc., a healthcare company offering electronic data
interchange services that allow hospitals and other healthcare providers to
transmit files electronically to payers. Mr. O'Donnell received an M.A. degree
in government in 1972 from Rutgers University and a B.A. degree in psychology
in 1971 from Pennsylvania State University.
6
<PAGE>
Terry M. Brandt has been Chief Technology Officer since March 1997. Mr.
Brandt has over ten years of healthcare technology experience. Most recently,
Mr. Brandt was technical director for Isys Idea Systems, Inc., a company
specializing in the development of educational and promotional properties for
the World Wide Web. From 1993 to 1995, he was the Vice President and Chief
Technology Officer for Hospital Cost Consultants, Inc. Previously he was
Director of Information Services for Shands Teaching Hospital in Gainesville,
Florida. He received his undergraduate degree from the University of Central
Florida and his M.S. in Marketing and Consumer Behavior from the University of
Florida.
Timothy S. Yamauchi has been Chief Financial Officer, Secretary and
Treasurer of the Company since September 1995. From May 1994 to June 1995, Mr.
Yamauchi served as Chief Financial Officer of Innofusion Corporation, a private
home healthcare company. From May 1991 to May 1994, Mr. Yamauchi was employed
by Total Pharmaceutical Care Inc., a public healthcare service company, as
Treasurer and Director of Planning and Analysis. Mr. Yamauchi received a B.S.
degree in Accounting from California State University, Los Angeles in 1983, an
M.B.A. from Harvard Graduate School of Business Administration in 1991 and is a
Certified Public Accountant.
Gerald W. Zieg has been Senior Vice President of Sales of the Company
since December 1996. Mr. Zieg was Senior Vice President of Business Development
of Ambulatory Pharmaceutical Services of America, Inc., a home health care
company, from April 1996 to November 1996. From 1991 until April 1996, Mr. Zieg
was Director of Marketing, Infusion/Chronic Homecare Program for Apria
Healthcare Incorporated, a medical services company. Mr. Zieg received a B.S.
in Pharmacy from the University of Michigan in 1973 and an M.S. in Pharmacy
from Wayne State University in 1979.
7
<PAGE>
OPTIONS GRANTED IN 1997
During the year ended December 31, 1997, the Company granted options to
purchase the Company's Common Stock to the Named Executive Officers as set
forth below:
<TABLE>
<CAPTION>
Individual Grants in Fiscal 1997
- -----------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at
Assumed Annual Rates of
Stock Price Appreciation
Percent of Total for
Options Granted Option Term
Options to Employees in Exercise Expiration Date ------------------------
Name Granted Fiscal Year Price Date (Year) 5% 10%
- -------------------------- --------- ------------------ --------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Peter S. O'Donnell ....... -- -- -- -- -- --
Terry M. Brandt .......... 50,000 13.8% $3.28 - $3.38 2007 $103,768 $262,968
Timothy S. Yamauchi ...... -- -- -- -- -- --
Gerald W. Zieg (1) ....... 60,000 16.6% $3.13 - $3.28 2006 & 2007 $119,050 $301,695
</TABLE>
- ------------
(1) Includes 50,000 options that were repriced in May 1997, replacing options
granted in December 1996.
The following table provides the specified information concerning
exercises of options to purchase the Company's Common Stock in 1997, and
unexercised options held as of December 31, 1997, by the Named Executive
Officers:
AGGREGATE OPTION EXERCISES IN 1997
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised In-the-Money Options at
Acquired Options at 12/31/97 (1) 12/31/97 (2)
on Value ------------------------------- ------------------------------
Name Realized Exercisable Unexercisable Exercisable Unexercisable
---------- ---------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Peter S. O'Donnell .......... -- -- 180,000 -- $351,337 --
Terry M. Brandt ............. -- -- 50,000 -- -- --
Timothy S. Yamauchi ......... -- -- 60,000 -- $117,218 --
Gerald W. Zieg .............. -- -- 60,000 -- $ 5,700 --
</TABLE>
- ------------
(1) Options granted under the Company's 1994 Founder's Stock Option Plan are
generally immediately exercisable subject to a repurchase right in favor
of the Company which lapses as the option vests over a four-year period.
(2) Valuation based on the difference between the option exercise price and the
fair market value of the Company's Common Stock on December 31, 1997
(which was $3.25 per share, as reported by NASDAQ SmallCap Market at the
close of business on December 31, 1997).
The following table provides specified information concerning all
repricings of options to purchase the Company's Common Stock held by any
executive officer of the Company since January 17, 1997, the date of the
Company's initial public offering:
<PAGE>
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
Length of
Number of Market Price Original Option
Securities of Stock per Exercise Price Term
Underlying Share per share at New Remaining at
Options at time of Time of Exercise Date of
Repriced or Repricing or Repricing or Price per Repricing or
Name and Position Date Amendment Amendment Amendment Share Amendment
- ----------------------------- --------- ------------- -------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Gerald W. Zieg, SVP ......... 5/28/97 50,000 $ 3.13 $ 5.00 $ 3.13 115 Months
</TABLE>
8
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON REPRICING OF OPTIONS
On May 21, 1997, the Compensation Committee, comprised of John Pappajohn
and David Sengpiel, considered the options held by the Company's employees,
including executive officers, and the fact that a broad decline in the price of
the Common Stock of the Company had resulted in a substantial number of stock
options granted pursuant to the 1994 Stock Option Plan having exercise prices
above the recent trading prices of the Company's Common Stock (the "Underwater
Options").
The Compensation Committee reviewed a study prepared by the finance
department of the Company demonstrating that a substantial number of the
options held by employees at that point in time were Underwater Options. The
Compensation Committee reviewed the impact of the decline in the market price
of the Company's Common Stock on the incentive afforded by the Underwater
Options and determined that such options were significantly less likely to
serve their purposes of retaining and motivating employees whose contributions
are important to the Company's future success. The Compensation Committee also
determined that unless adjustment was made, longer term employees holding
Underwater Options would perceive a substantial inequity in comparison to more
recently hired employees granted options with exercise prices set at the then
lower market price of the Company's Common Stock, and the morale of such longer
term employees would suffer as a consequence. The Compensation Committee
believed that the future success of the Company would depend in large part on
its ability to retain and motivate its highly skilled employees for whom
competition in the marketplace is intense, and the loss of such employees could
have a significant adverse impact on the Company's business. The Compensation
Committee believed that providing equity incentives to employees of the Company
to further increase the Company's performance and the value of the Company for
its shareholders was both important and cost effective. The Compensation
Committee considered other alternatives, such as granting new options
selectively to then employed key employees, but determined that the size of the
additional options that would be required to offset the decline in the market
price of the Company's Common Stock would result in significant dilution to the
shareholders.
Considering these factors, the Compensation Committee determined that it
was in the best interests of the Company and its shareholders to restore the
incentives for employees and executive officers holding Underwater Options to
remain with the Company by adopting a stock option exchange program whereby
employees holding Underwater Options may elect to receive new options pursuant
to the 1994 Stock Option Plan having an exercise price comparable to the
trading price at that time in exchange for the cancellation of the Underwater
Options. The offer to exchange options was completed on May 28, 1997; options
for a total of 142,400 shares with exercise price of $5.00 per share were
exchanged for options for an equal number of shares at an exercise price of
$3.13 per share, the closing sale price per share of the Company's Common Stock
on the May 28, 1997 as quoted on the Nasdaq National Market.
COMPENSATION COMMITTEE
John Pappajohn
David Sengpiel
Employment Contracts and Termination and Change of Control Arrangements
The Company has entered into employment agreements with each of Peter S.
O'Donnell and Timothy S. Yamauchi which expired in December 1997 and
automatically renewed, pursuant to the terms of the agreements, for additional
one-year terms. The agreements provide for base compensation payable to Mr.
O'Donnell and Mr. Yamauchi of $163,200 and $110,000, respectively, and bonuses
to be determined based on annual pre-tax earnings, if any, of the Company. The
agreements also provide for employment on a full-time basis and contain a
provision that the employee will not compete or engage in a business
competitive with the Company for a period of one year after termination. In the
event of termination of the employee's employment by the Company other than for
cause (including non-renewal of the agreement) or by reason of death or
disability, the Company is obligated to make payments equal to one-half of the
then applicable annual base salary plus a pro rata portion of the bonus payable
for such year.
9
<PAGE>
The Company has also entered into a letter agreement with Gerald W. Zieg
pursuant to which Mr. Zieg is entitled to receive an annual salary of $90,000
plus commissions equal to 1% of net revenues, subject to certain exclusions.
Certain options granted under the Company's 1994 Founder's Stock Option
Plan contain provisions pursuant to which the unvested portions of outstanding
options become immediately exercisable and fully vested upon a merger of the
Company in which the Company's shareholders do not retain, directly or
indirectly, at least a majority of the beneficial interest in the voting stock
of the Company or its successor, if the successor corporation fails to assume
the outstanding options or substitute options for the successor corporation's
stock to replace the outstanding options. The outstanding options will
terminate to the extent they are not exercised as of consummation of the
merger, or assumed or substituted for by the successor corporation.
Director Compensation
For each meeting of the Board of Directors which they attend, directors
are reimbursed for reasonable travel expenses incurred.
Compensation Committee Interlocks and Insider Participation
During the last fiscal year, executive compensation was administered by
the Compensation Committee comprised of two outside directors, Messrs.
Pappajohn and Sengpiel.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who beneficially own
more than 10% of the Company's Common Stock to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission ("SEC"). Such persons are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms filed by such person.
Based solely on the Company's reviews of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that all filing requirements applicable to the Company's executive
officers, directors and more than 10% shareholders were complied with, except
one statement of changes in beneficial ownership reflecting one transaction by
Edgewater Private Equity Fund II, LP and annual statements of changes in
beneficial ownership in connection with the repricing of certain option grants
for Mr. Zieg.
Certain Relationships and Related Transactions
The Company received a total financing commitment of $1,000,000 from Mr.
Pappajohn and Edgewater on February 20, 1998. This financing will be available
to the Company on an as needed basis for at least twelve months from the date
of this commitment. These commitments were partially utilized on February 25,
1998 for a total of $200,000 in the private placement, noted below.
In February 1998, the Company completed a private placement of an
aggregate of 400,000 shares of Common Stock at $2.00 per share to Mr. Pappajohn
and Edgewater (describe registration rights, if any.)
Except as described above, since January 1, 1997, the Company has made no
loans to officers, directors, principal shareholders or other affiliates other
than as described above or other than advances of reimbursable expenses. All
such transactions, including loans, are subject to approval by a majority of
the Company's independent and disinterested directors.
SHAREHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Proposals of shareholders intended to be presented at the next Annual
Meeting of the Shareholders of the Company must be received by the Company at
its offices at 2560 Ninth Street, Suite 220, Berkeley, California, 94710, not
later than January 4, 1999, and satisfy the conditions established by the
Securities and Exchange Commission for shareholder proposals to be included in
the Company's proxy statement for that meeting.
10
<PAGE>
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which the Board of
Directors intends to present or knows that others will present at the meeting
is as set forth above. If any other matter or matters are properly brought
before the meeting, or any adjournment thereof, it is the intention of the
persons named in the accompanying form of proxy to vote the proxy on such
matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ Timothy S. Yamauchi
-------------------------
TIMOTHY S. YAMAUCHI
Secretary
April 30, 1998
11
<PAGE>
HealthDesk Corporation
Proxy for Annual Meeting of Shareholders
Solicited by the Board of Directors
The undersigned hereby appoints Peter S. O'Donnell and Timothy S.
Yamauchi and each of them, with full power of substitution to represent the
undersigned and to vote all the shares of the stock of HealthDesk Corporation
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
of the Company to be held at the Radisson Hotel Berkeley Marina, 200 Marina
Blvd., Berkeley, California on June 17, 1998 at 9:00 a.m. local time, and at any
adjournment thereof (1) as hereinafter specified upon the proposals listed below
and as more particularly described in the Company's Proxy Statement and (2) in
their discretion upon such other matters as may properly come before the
meeting.
The undersigned hereby acknowledges receipt of: (1) Notice of Annual
Meeting of Shareholders of the Company, (2) accompanying Proxy Statement and (3)
Form 10-KSB of the Company for the year ended December 31, 1997.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY.
1. Election of the following directors:
[ ] FOR the nominees [ ] WITHHOLD AUTHORITY
listed below (except to vote for the
as marked to the nominees listed
contrary below.) below.
(INSTRUCTION: To withhold authority to vote for a nominee, strike a line
through the nominee's name.)
Peter S. O'Donnell
John Pappajohn
James A. Gordon
Dr. Joseph Rudick, Jr.
Molly C. Coye, MD
Joseph R. Dunham II
2. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
accountants of the Company for the year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
Whether or not you plan to attend the meeting in person, you are urged to sign
and promptly mail this proxy in the return envelope so that your stock may be
represented at the meeting.
The shares represented hereby shall be voted as specified. If no specification
is made, such shares shall be voted FOR proposals 1 and 2.
[ ] CHECK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT.
[ ] CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING.
Sign exactly as your name(s) appears on your stock certificate. If shares of
stock stand of record in the names of two or more persons or in the name of
husband and wife, whether as joint tenants or otherwise, both or all of such
persons should sign the Proxy. If shares of stock are held of record by a
corporation, the Proxy should be executed by the President or Vice President and
the Secretary or Assistant Secretary, and the corporate seal should be affixed
thereto. Executors or administrators or other fiduciaries who execute the above
Proxy for a deceased shareholder should give their full title. Please date the
Proxy.
Dated: ______________, 1998
Signature(s): ________________________________
________________________________
