SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ____)
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[X] Definitive Proxy Statement Only (as Premitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HEALTHWATCH, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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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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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF
HEALTHWATCH, INC.
To the Shareholders of HealthWatch, Inc.:
PLEASE TAKE NOTICE that a Special Meeting of Shareholders of
HealthWatch, Inc., will be held at 2:00 p.m. (Pacific time) on Tuesday, April
15, 1997, at the Company's offices, 2445 Cades Way, Vista, California, to
consider and act upon the following matters:
I. To elect directors.
II. To approve the issuance of Incentive Options for up to 500,000
shares of the Company's Common Stock pursuant to the 1995
Stock Option Plan.
III. To transact such other business as may properly come before
the meeting.
Accompanying this Notice are a Proxy and Proxy Statement and a copy of
the Company's 1996 Annual Report on Form 10-KSB as filed with the Securities and
Exchange Commission. Whether or not you expect to be present at the meeting,
please sign and date the Proxy and return it to the Company. The Proxy may be
revoked at any time prior to the time that it is voted. Only shareholders of
record at the close of business on February 14, 1997, will be entitled to vote
at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Sanford L. Schwartz
Chairman of the Board
March 24, 1997
PROXY STATEMENT
HEALTHWATCH, INC.
2445 Cades Way
Vista, California 92083
Special Meeting of Shareholders
April 15, 1997
GENERAL
The enclosed Proxy is solicited by the Board of Directors of
HealthWatch, Inc. ("HealthWatch" or the "Company"). Such solicitation is being
made by mail and may also be made by directors, officers, and employees of the
Company personally or by telephone. Any Proxy given pursuant to such
solicitation may be revoked by the shareholder at any time prior to the voting
of the Proxy by filing with the Company either a written revocation or a later
dated Proxy or by attendance and voting in person at the meeting. Shares
represented by Proxies will be voted as specified in such Proxies, and if no
choice is specified, will be voted in favor of the Board of Directors' nominees
to the Board and for the issuance of Incentive Stock Options under the Company's
1995 Stock Option Plan.
Votes cast by proxy or in person at the Special Meeting will be
tabulated by the election inspectors appointed for the meeting who will
determine whether or not a quorum is present. The election inspectors will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as unvoted for purposes of determining
the approval of any matter submitted to the shareholders for a vote. If a broker
indicates on the Proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the material enclosed herewith will be paid by the Company.
Directors will not be separately compensated for soliciting proxies. The Company
may reimburse banks, brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy material
to beneficial owners of stock. This Proxy Statement and accompanying form of
Proxy are being mailed to shareholders on or about March 24, 1997.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders of the Company intended to be presented at
the Company's next annual meeting of shareholders must be received by the
President of the Company at the above address no later than August 17, 1997, in
order for any such proposals to be included in the Company's Proxy Statement and
form of Proxy relating to that meeting.
OUTSTANDING STOCK
Common Stock, $.07 par value ("Common Stock"), of which there were
2,576,745 shares outstanding on the record date, constitutes the only class of
outstanding voting securities issued by the Company. Each shareholder will be
entitled to cast one vote for each share of Common Stock held. Votes may be cast
in person or by proxy. Only shareholders of record at the close of business on
February 14, 1997, will be entitled to vote at the meeting.
The following table sets forth as of February 14, 1997, the shares of
Common Stock and percentage of total shares owned by the shareholders known to
beneficially own 5% of the Company's outstanding shares of Common Stock, each
director and nominee for election to the Board of Directors of the Company and
as to all officers and directors as a group. All persons indicated have (unless
indicated to the contrary) sole or shared with spouse voting and dispositive
power over such shares.
Name and Address of Beneficial
Owner, Name of Director or Amount
Nominee or Identity of Group Beneficially Owned Percentage
- ---------------------------- ------------------ ----------
Lindley S. Branson 177,142(1) 6.6%
2445 Cades Way
Vista, California 92083
Richard T. Case 1,928(1) *
Sanford L. Schwartz 90,440(1)(2) 3.4%
Kenneth A. Selzer, M.D. 61,408(1) 2.3%
All Officers, Directors and Nominees
as a Group (8 persons) 388,317(1) 13.5%
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* Less than one percent of shares outstanding.
(1) Includes for the following persons the number of shares set forth
opposite their name which are issuable within 60 days of the date of
this Proxy Statement upon exercise of outstanding stock purchase
options or warrants or conversion of outstanding debentures:
Branson--118,571 shares; Case--1,214 shares; Schwartz--58,841 shares;
Selzer--57,837 shares; and all officers and directors as a
group--286,242 shares.
(2) Includes shares owned by Creative Business Strategies, Inc. ("CBS").
Mr. Schwartz is an officer, director and principal shareholder of CBS.
ELECTION OF DIRECTORS
Proxies returned by shareholders will be voted at the meeting, in the
absence of contrary indication, in favor of the election of the following four
persons as directors (each of whom, except Lindley S. Branson and Richard T.
Case, were elected as directors at the Annual Meeting of Shareholders held on
December 16, 1994) to hold office until the next Annual Meeting of Shareholders
and thereafter until their successors have been duly elected and qualified,
unless a prior vacancy shall occur by reason of their death, resignation or
removal from office.
Although management has no reason to believe that any of the nominees
will be unable to serve as a director, if that contingency should occur, it is
intended that the shares represented by the Proxies will be voted, in the
absence of contrary indication, for any substitute nominee designated by the
Board of Directors, unless the Board determines to reduce its size
appropriately. Proxies will not be voted for more than four nominees to the
Board of Directors.
The nominees to the Board of Directors of the Company are as follows:
<TABLE>
<CAPTION>
Director
Name Since Age Positions With The Company
- ---- -------- --- --------------------------
<S> <C> <C> <C>
Lindley S. Branson -- 54 President and Chief Executive Officer
and Chief Financial Officer
Richard T. Case -- 46 Nominee
Sanford L. Schwartz 1983 46 Chairman of the Board of
Directors
Kenneth A. Selzer, M.D. 1988 41 Director
</TABLE>
Lindley S. Branson has been President and Chief Executive and Chief
Financial Officer of the Company since September 1995. Mr. Branson has been a
partner with the Minneapolis, Minnesota law firm of Gray, Plant, Mooty, Mooty &
Bennett, P.A. for more than the last five years.
Richard T. Case. Mr. Case has been President of Benchmark Associates, a
business consulting firm since 1985. Mr. Case was President of PolyMedica
Industries, Inc., a medical products company from May 1990 to July 1992. Mr.
Case served as a director of the Company from 1990 to 1994.
Sanford L. Schwartz. Mr. Schwartz, Chairman of the Board of Directors
of the Company, has been a consultant with Creative Business Strategies, Inc., a
business/development consulting firm, since July 1992. He served as Chief
Executive Officer of the Company from June 1983 to September 1993. Mr. Schwartz
is a director of Renaissance Entertainment Corporation.
Kenneth A. Selzer, M.D. Dr. Selzer is President and Chief Executive
Officer of Integrated Neuroscience Consortium, Inc., a trial management
organization formed in September 1996; is a physician with North County
Neurology Associates, a medical group, which position he has held since 1993;
and a physician with the U.C.S.D. Medical Center, La Jolla, California, which
position he has held since June 1993. He was a resident in neurology at
Vanderbilt University from January 1991 to May 1993 and has been a general
partner of La Jolla Consulting Group, a consulting firm which specializes in
biomedical products, biotechnology and health care services, since January 1989.
During fiscal 1996, the Board of Directors met eight times. All
directors attended at least 75% of the aggregate of the total number of meetings
of the Board of Directors held during fiscal 1996 during the period for which
they were directors. There are no committees of the Board of Directors.
Certain Filings
On May 1, 1991, comprehensive new rules promulgated by the Securities
and Exchange Commission relating to the reporting of securities transactions by
directors and officers became effective. To the Company's knowledge, based
solely on a review of the copies of such reports furnished to the Company and
written representations that no other reports were required, during the two
fiscal years ended June 30, 1996, all required reports were timely filed, except
that Annette Agner, Controller of the Company, was ten month's late in reporting
a stock grant declared in December 1993 and Ms. Agner and William Bevan,
formerly Vice President Sales and Marketing, were three months late in filing
reports regarding stock options granted in fiscal 1994.
INFORMATION CONCERNING DIRECTORS AND OFFICERS
Compensation
The following table sets forth, on an accrual basis, the aggregate cash
compensation paid by the Company and its subsidiaries during the three fiscal
years ended June 30, 1996, to the Company's President and Chief Executive
Officer, former President and Chief Executive Officer and Chairman of the Board
of Directors. No officer or director of the Company received compensation of
$100,000 or more in fiscal 1996.
<TABLE>
<CAPTION>
Name and Principal Fiscal Options Restricted All Other
Position Year Salary Bonus (No. of Shares) Stock Awards Compensation
- -------- ------ -------- ----- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Lindley S. Branson 1996 $54,000 -- 18,571shs. -- --
President and CEO 1995 -- -- -- -- --
1994 -- -- -- -- --
John D. Greenbaum, 1996 $49,405 -- 1,429shs. 4,286shs. --
President and CEO 1995 $101,207 -- 3,571shs.(1) -- $6,818
1994 $150,000 -- -- -- $7,200
Sanford L. Schwartz, 1996 $ 36,247(2) -- -- -- --
Chairman of the 1995 $ 33,250(2) -- 11,035shs.(1) 35,714shs.(2) --
Board of Directors 1994 $ 25,000(2) -- -- 2,142shs. --
</TABLE>
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(1) Includes for Messrs. Greenbaum and Schwartz, 3,928 and 3,892 shares,
respectively, subject to previously granted options which were repriced
during the fiscal year.
(2) Includes amounts paid to Creative Business Strategies, Inc. Mr.
Schwartz is an officer, director and principal shareholder of CBS. The
fair market value as of the date of grants of the shares of Common
Stock subject to the stock awards were $81,000 in 1995 and $26,250 in
1994.
During fiscal 1995, Kenneth A. Selzer, M.D., a director of the Company,
received a stock award of 3,571 shares of Common Stock (fair market value at
date of grant of $9,500) and was granted options for 10,714 shares of Common
Stock in consideration for services rendered both as a director and as a
consultant to the Company. Dr. Selzer's outstanding stock options were also
repriced during the year. The foregoing table does not include the following
options granted in December 1996: Mr. Branson--250,000 shares; Mr.
Schwartz--100,000 shares; and Dr. Selzer--100,000 shares. All such options were
at an exercise price of $2.0625 per share, the fair market value for the
Company's Common Stock on the date the options were granted.
STOCK BASED COMPENSATION
The Company has a 1989 Incentive Stock Option Plan and 1993 and 1995
Stock Option Plans ("the Plans") for its key employees directors and consultants
to purchase shares of the Company's Common Stock. The Plans provide that the
purchase price of the shares covered by incentive stock options may not be less
than the fair market value of the shares on the date the option was granted.
Nonstatutory stock options granted can be granted at exercise prices of 85% or
more of the fair market value of the Company's Common Stock on the date of
grant. To date, all options granted under the Plans have been at exercise prices
equal to the fair market value of the Common Stock on the date the Company
agreed to grant the options.
The Company has, from time to time, also provided nonstatutory stock
options outside of the Plans to directors, officers and consultants and has
awarded stock grants to officers, directors, employees and consultants in
consideration for services. These nonstatutory options generally have had a term
of three to five years and have had exercise prices equal to the fair market
value of the Company's Common Stock on the date the options were granted. At
February 14, 1997, the Company had an aggregate of 2,104,275 shares reserved
under the Plans and its 1995 Stock Bonus and Salary Deferral Plan, including an
aggregate of 1,649,562 shares reserved for issuance pursuant to outstanding
stock options under the Plans.
DIRECTORS' REPORT. On May 1, 1995, the Board of Directors unanimously approved
repricing all outstanding stock options held by current employees and directors
of the Company (a total of 22,456 shares), including 3,928, 3,892 and 5,250
shares subject to options held by John D. Greenbaum, Sanford L. Schwartz and
Kenneth A. Selzer, M.D., respectively, all of whom were directors of the
Company. Mr. Greenbaum was also President and Chief Executive Officer of the
Company at the time of such action. It was the Board of Directors' opinion that
the repricing of these options was appropriate in view of the Company's
inability to provide adequate cash compensation, particularly to its officers
and directors, due to the Company's lack of working capital. On May 1, 1995,
John D. Greenbaum was being paid a salary of $4,167 per month, which represented
a substantial reduction in the $12,500 per month salary he was to have been paid
pursuant to his employment agreement with the Company, and the Company had an
accrued obligation of $43,161 to Sanford L. Schwartz and an affiliated company
which was then past due.
The following table shows option grants during fiscal 1996 to the named
executive officers of the Company. Reference is also made to the information
included above under "Compensation."
<TABLE>
<CAPTION>
Options Granted Percent of Total Exercise Expiration
Name in Fiscal 1996 Options Granted Price Date
------------------------ ------------------ -------------------- ---------- --------------
<S> <C> <C> <C> <C>
Lindley S. Branson 18,571 shs. 14.8% $3.29 12/11/00
John D. Greenbaum 1,429 shs. 1.1% $3.29 2/6/97
Sanford L. Schwartz None - - -
</TABLE>
The following table shows the number of options exercised during fiscal
1996 and the 1996 fiscal year-end value of the options held at the end of the
fiscal year by the named executive officer and by the groups indicated.
<TABLE>
<CAPTION>
Value of Unexercised
Shares Acquired on Number of Unexercised Options at in-the-money Options
Exercise June 30, 1996 at June 30, 1996
Name of Options Exercisable/Unexercisable Exercisable/Unexercisable
---- ---------- ------------------------- -------------------------
<S> <C> <C> <C>
Lindley S. Branson None 18,571/-0- shs. $-0-/$-0-
John D. Greenbaum None 5,000/-0- shs. $ -0-/$-0-
Sanford L. Schwartz None 6,472/4,564 shs. $ 21,422/$15,107
</TABLE>
APPROVAL OF INCENTIVE STOCK OPTIONS UNDER THE 1995 STOCK OPTION PLAN
Background and Purpose
Because of the limited number of shares remaining under the Company's
current option plans for grants of stock options for Company employees and
consultants, the Board of Directors adopted on December 8, 1995, the 1995 Stock
Option Plan ("1995 Plan"). The purpose of the 1995 Plan is to provide a means to
attract and retain competent personnel and to provide to participating officers,
directors, employees and consultants long-term incentive for high levels of
performance and for unusual efforts to improve the financial performance of the
Company and its subsidiaries. The Board believes that it is in the Company's and
its shareholders' best interest to provide to such persons, through the granting
of stock options, an opportunity to participate in the appreciation and value of
the Common Stock of the Company. The 1995 Plan provides for the grant of either
incentive or nonstatutory options. The following description of the primary
features of the 1995 Plan is qualified in all respects by reference to the full
test of the 1995 Plan.
Eligibility and Administration
Employees and consultants of the Company and its subsidiaries,
including officers and directors, are eligible to receive options granted under
the 1995 Plan. The 1995 Plan authorizes the granting of options to purchase up
to 2,000,000 shares of Common Stock, including Incentive Options for up to
500,000 shares. The shares subject to the options will generally be made
available from authorized but unissued shares.
The 1995 Plan will be administered by the full Board of Directors or a
committee ("Committee") of the Board of Directors. The Company, if appointed,
will have full authority to award options under the 1995 Plan, to establish the
terms of the option agreements, and to take all other action deemed appropriate
for administration of the Plan.
Incentive and Nonstatutory Options
The 1995 Plan provides both for incentive stock options ("Incentive
Options") for up to an aggregate of 500,000 shares of the Company's Common Stock
specifically tailored to the provisions of the Code and for options not
qualifying as Incentive Options ("Nonstatutory Options"). Options are designated
as Incentive Options for Nonstatutory Options by the Committee when granted. In
the event that shareholders do not approve the issuance of up to 500,000 shares
of the Company's Common Stock pursuant to the exercise of Incentive Options
granted under the 1995 Plan, all options granted under the 1995 Plan will be
Nonstatutory Options. The use of the term "option" herein shall mean both
Incentive Options and Nonstatutory Options.
To obtain certain tax benefits, the 1995 Plan establishes special rules
for Incentive Options, including the requirement that such Incentive Options may
be granted to an individual only for shares having a maximum aggregate fair
market value not exceeding $100,000 (valued at the time of grant) for any year
in which such shares first become available for purchase through the exercise of
such Incentive Options. The option price per share for Incentive Options must
not be less than the fair market value per share of the Common Stock on the date
of grant.
Some restrictions also apply to Nonstatutory Options granted under the
1995 Plan as a result of the application of tax rules limiting the deductibility
of certain compensation paid to "named executive officers." These rules are
discussed more fully below in the section entitled Federal Income Tax
Consequences.
Terms and Conditions of Options
Except as described above, the 1995 Plan generally does not specify the
terms and conditions of options to be granted under the Plan. Under the
Company's current options, options generally become exercisable in three
cumulative annual installments of 33-1/3 percent of the total number of shares
covered thereby and are awarded with an exercise price equal to the fair market
value of the Common Stock on the date of grant. Under the 1995 Plan, no option
may be exercised later than 10 years from the date of the grant. Payment for
shares purchased upon the exercise of an option must be made in cash, in shares
of the outstanding Common Stock, or in a combination of cash and shares.
Unless otherwise determined by the Board of Directors or the Committee,
if appointed, options granted under the 1995 Plan may not be assigned and,
during the lifetime of the optionee, may be exercised only by him or her. If an
optionee's employment is terminated for cause, as defined in the 1995 Plan, any
options shall terminate immediately. Unless otherwise determined by the Board of
Directors or the Committee, if appointed, if an optionee ceases to be employed
by the Company for any other reason other than death or disability, the option
may be exercised, subject to the expiration date of the option, for three months
after such termination, but only to the extent it was exercisable on the date of
termination. If employment is terminated because of death or disability, the
option may be exercised (subject to the expiration date of the option) for up to
one year after such termination, but only to the extent it was exercisable on
the date of death or disability.
Modification and Termination
The 1995 Plan provides for adjustment in the number and class of shares
subject to the 1995 Plan and to the option rights and the exercise prices of
such option rights granted thereunder, in the event of stock dividends, stock
splits, reverse stock splits, recapitalization, reorganization, certain mergers,
consolidation, acquisition or other changes in the capital structure of the
Company.
The 1995 Plan will terminate on December 7, 2005. In addition, the
Board of Directors may, at any time, terminate the 1995 Plan or amend it except
with respect to certain matters for which shareholder approval is required under
the Code. No amendment or termination of the 1995 Plan by the Board of Directors
may adversely affect any option previously granted under the 1995 Plan without
the consent of the optionee.
Merger, Consolidation and Change in Control
The 1995 Plan provides that in the event of a Company dissolution or
liquidation or a merger or consolidation in which the Company is not the
surviving Corporation, the options will terminate. In the event of such a merger
or consolidation, the optionee must be offered either a substitute option with
terms and conditions which will substantially retain the optionee's rights or
the right to fully exercise the option prior to the merger or consolidation.
Federal Income Tax Consequences
The following is a brief summary of the principal federal income tax
consequences under current federal income tax laws relating to awards under the
1995 Plan. This summary is not intended to be exhaustive and, among other
things, does not describe state or local tax consequences.
In general, an optionee will be subject to tax at the time a
Nonstatutory Option is exercised (but not at the time of grant), and he or she
will include in ordinary income in the taxable year in which he or she exercises
a Nonstatutory Option an amount equal to the difference between the exercise
price and the fair market value of the shares acquired on the date of exercise,
and the Company will generally be entitled to deduct such amount for federal
income tax purposes except as such deductions may be limited by the Revenue
Reconciliation Act of 1993 ("1993 Tax Act"), described below. Upon disposition
of shares, the appreciation (or depreciation) after the date of exercise will be
treated by the optionee as either short-term or long-term capital gain or loss
depending on whether the shares have been held for the then-required holding
period.
In general, an optionee will not be subject to tax at the time an
Incentive Option is granted or exercised. Upon disposition of the shares
acquired upon exercise of an Incentive Option, long-term capital gain or loss
will be recognized in an amount equal to the difference between the disposition
price and the exercise price, provided that the optionee has not disposed of the
shares within two years of the date of grant or within one year from the date of
exercise. If the optionee disposes of the shares without satisfying both holding
period requirements (a "Disqualifying Disposition"), the optionee will recognize
ordinary income at the time of such Disqualifying Disposition to the extent of
the difference between the exercise price and the lesser of the fair market
value of the shares on the date the Incentive Option was exercised or the date
of sale. Any remaining gain or loss is treated as short-term or long-term
capital gain or loss depending upon how long the shares have been held. The
Company is not entitled to a tax deduction upon either the exercise of an
Incentive Option or upon disposition of the shares acquired pursuant to such
exercise, except to the extent that the optionee recognizes ordinary income in a
Disqualifying Disposition and then only to the extent that such deduction is not
limited by the 1993 Tax Act.
If the optionee pays the exercise price, in full or in part, with
previously acquired shares, the exchange will not affect the tax treatment of
the exercise. However, if such exercise is effected using shares previously
acquired through the exercise of an Incentive Option, the exchange of the
previously acquired shares will be considered a disposition of such shares for
the purpose of determining whether a Disqualifying Disposition has occurred.
Commencing with the Company's 1995 fiscal year, the federal income tax
deduction that the Company may take for otherwise deductible compensation
payable to executive officers who, on the last day of the fiscal year, are
treated as "named executive officers" in the Company's Proxy Statement for such
year will be limited by the 1993 Tax Act to $1,000,000. Under the provisions of
the 1993 Tax Act, the deduction limit on compensation will apply to all
compensation, except compensation deemed under the 1993 Tax Act to be
"performance-based" and certain compensation related to retirement and other
employee benefit plans. Compensation related to the 1995 Plan generally will not
be deemed to be performance-based for purposes of the 1993 Tax Act. The 1993 Tax
Act also prescribes certain limitations and procedural requirements in order for
compensation to qualify as performance-based, including rules which require that
in the case of compensation paid in the form of stock options, the option price
be not less than the fair market value of the stock at date of grant and that
the plan under which the options are granted states the maximum number of shares
with respect to which options may be granted during a specified period to any
employee. Since shareholders are not being asked to approve the shares which may
be issued pursuant to the exercise of Nonstatutory Options, awards of
Nonstatutory Options under the 1995 Plan will not satisfy such requirements, and
accordingly, the Company may be limited in the deductions it may take with
respect to such awards under the 1995 Plan.
Approval of the Shares Subject to Incentive Stock Options Under the 1995 Plan
Shareholders are not being asked to approve the reservation of the full
number of shares subject to the 1995 Plan, but only to approve the granting of
Incentive Options for up to an aggregate of 500,000 shares under the 1995 Plan.
If shareholders do not approve the granting of Incentive Options for up to
500,000 shares under the 1995 Plan, all options granted under the 1995 Plan will
be Nonstatutory Options. Approval of the granting of Incentive Options for up to
500,000 shares under the 1995 Plan requires the favorable vote of a majority of
the shares present or represented and entitled to vote at the Special Meeting.
Unless otherwise instructed by the shareholder, the shares represented by the
enclosed proxy will be voted for approval of the granting of Incentive Options
for up to 500,000 shares under the 1995 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL
OF THE GRANTING OF INCENTIVE OPTIONS FOR UP TO 500,000 SHARES UNDER THE 1995
STOCK OPTION PLAN.
INDEPENDENT AUDITORS
Silverman Olson Thorvilson & Kaufmann Ltd. has served as the Company's
independent auditors since the Company's formation in 1983. The Company does not
expect that a representative of Silverman Olson Thorvilson & Kaufmann Ltd. will
be present at the meeting.
OTHER MATTERS
Management does not intend to bring before the meeting any business
other than as set forth in this Proxy Statement and has not been informed that
any other business is to be presented to the meeting. If any matters other than
those referred to above should properly come before the meeting, however, it is
the intention of the persons named in the enclosed Proxy to vote such Proxy in
accordance with their best judgment.
Please sign and return promptly the enclosed Proxy in the envelope
provided. The signing of a Proxy will not prevent your attending the meeting and
voting in person.
By Order of the Board of Directors
Sanford L. Schwartz
Chairman of the Board
March 24, 1997
HEALTHWATCH, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
SPECIAL MEETING OF SHAREHOLDERS
APRIL 15, 1997
The undersigned shareholder of HealthWatch, Inc. (the "Company") hereby
appoints Sanford L. Schwartz and Lindley S. Branson or either of them, as
attorneys, agents and proxies of the undersigned with full power of substitution
in each of them, to vote in the name and on behalf of the undersigned at the
Special Meeting of Shareholders of the Company to be held on April 15, 1997, and
at all adjournments thereof, all of the shares of Common Stock of the Company
that the undersigned would be entitled to vote if personally present, with the
powers the undersigned would possess if personally present.
I. GRANT [ ] Authority to vote for election of Lindley S. Branson,
Richard T. Case, Sanford L. Schwartz and Kenneth A.
Selzer, M.D. to serve as directors. You may withhold
WITHHOLD [ ] authority to vote for a nominee by lining through his
name.
(The Board of Directors recommends that you GRANT authority to vote for
the election of directors.)
II. FOR [ ] Approval of the issuance of Incentive Stock Options
AGAINST [ ] for up to 500,000 shares of the Company's Common
ABSTAIN [ ] Stock pursuant to the 1995 Stock Option Plan.
(The Board of Directors recommends that you vote FOR this proposal.)
III. In their discretion, upon such other business as may properly come
before the meeting;
all as set out in the Notice of Special Meeting of Shareholders and Proxy
Statement dated March 24, 1997, receipt of which is hereby acknowledged.
(Continued, and to be SIGNED, on other side)
(Continued from other side)
ALL SHARES WILL BE VOTED AS SPECIFIED. IF NO CHOICE IS SPECIFIED, THE
SHARES WILL BE VOTED FOR THE DIRECTORS AND FOR THE INCENTIVE STOCK OPTIONS UNDER
THE 1995 STOCK OPTION PLAN, ALL AS SET FORTH IN THE PROXY STATEMENT.
Both of said attorneys or their substitutes who shall be present and
act, or if only one shall attend, then that one, shall have and may exercise all
the powers of said attorneys hereunder.
Dated: __________________________________
(Please insert date)
________________________________________
(Signature)
________________________________________
(Joint Owner's Signature)
[Signature(s) should agree with
stenciled name(s).] When signing as
attorney, guardian, executor,
administrator or trustee, please give
title. If the signer is a corporation,
please give the full corporate name and
sign by a duly authorized officer,
showing his title. EACH joint owner is
requested to sign.
PLEASE EXECUTE AND RETURN THIS PROXY PROMPTLY.
YOUR COOPERATION WILL BE APPRECIATED.
