<PAGE>
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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
APPLIED VOICE RECOGNITION, INC
------------------------------
(Name of Registrant as Specified in its Charter)
Name of Person(s) Filing Proxy Statement, if other than the Registrant
Payment of Filing Fee (Check the appropriate box): [X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.: Schedule 14A
(3) Filing Party: Applied Voice Recognition, Inc.
(4) Date Filed: November 24, 2000
<PAGE>
APPLIED VOICE RECOGNITION, INC.
1770 St. James Place
Suite 116
Houston, Texas 77056
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held December 11, 2000
To Our Stockholders:
Our 2000 annual meeting of stockholders will be held at the Houstonian Hotel
and Conference Center, 111 North Post Oak, Houston, Texas, on December 11,
2000, at 2:00 p.m., local time, for the following purposes:
1. To elect:
. two directors for terms expiring in 2001;
. three directors for terms expiring in 2002; and
. two directors for terms expiring in 2003.
2. To amend our amended and restated certificate of incorporation to
increase our authorized common stock, from 50,000,000 shares to
85,000,000 shares.
3. To amend our amended and restated certificate of incorporation to change
our name to e-DOCS.MD, Inc.
4. To amend our 1997 incentive plan to increase the number of shares
issuable under that plan; and
5. To transact such other business as may properly come before the meeting
or any adjournment of the meeting.
Stockholders of record at the close of business on November 15, 2000 are
entitled to notice of and to vote at the meeting. A complete list of the
stockholders entitled to vote at the meeting will be available for examination
by any stockholder at our executive offices, during ordinary business hours,
for a period of at least ten days before the meeting.
The accompanying proxy statement contains information regarding the matters
to be considered at the meeting. For reasons outlined in the proxy statement,
the board of directors recommends a vote "for" the matters being voted upon.
Your proxy is important to assure a quorum at the meeting. Whether or not
you expect to attend the meeting, please be sure that the enclosed proxy is
properly completed, dated, signed and returned without delay in the enclosed
envelope. It requires no postage if mailed in the United States.
By Order of the Board of Directors,
/s/ JAMES G. SPRINGFIELD
-------------------------------------
James G. Springfield,
President
Houston, Texas
November 27, 2000
<PAGE>
APPLIED VOICE RECOGNITION, INC.
----------------
Proxy Statement
----------------
Annual Meeting of Stockholders
To be held on December 11, 2000
General Information
This proxy statement is being furnished to our stockholders in connection
with the solicitation of proxies by our board of directors for use at our
annual meeting of stockholders to be held on the date, at the time and place
and for the purposes set forth in the accompanying notice of annual meeting of
stockholders, and any adjournment of the meeting.
This proxy statement and accompanying form of proxy, along with our annual
report for our fiscal year ended December 31, 1999, are first being mailed to
holders of our common stock on or about November 27, 2000.
The board of directors has established November 15, 2000 as the record date
to determine stockholders entitled to notice of and to vote at the meeting. At
the close of business on the record date, 49,150,719 shares of common stock
were outstanding. Each share is entitled to one vote. The holders of a majority
of the outstanding common stock, present in person or by proxy, will constitute
a quorum for the transaction of business at the meeting.
Each proxy that is properly signed, dated and returned to us in time for the
meeting, and not revoked, will be voted in accordance with instructions
contained in the proxy. If no contrary instructions are given, proxies will be
voted "for" each item to be voted upon. Proxies may be revoked at any time
before their being exercised by delivering a written notice of revocation or a
later dated proxy to our corporate secretary. In addition, a stockholder
present at the meeting may revoke his or her proxy and vote in person.
Election of the director nominees will be by plurality vote. Approval of the
amendments to our amended and restated certificate of incorporation require the
affirmative vote of a majority of the outstanding shares of our common stock.
Approval of the amendments to our 1997 incentive plan and any other matters
that come before the meeting require the affirmative vote of at least a
majority of votes cast at the meeting on such matters. Our corporate secretary
will appoint an inspector of election to tabulate all votes and to certify the
results of all matters voted upon at the meeting. Our policy is:
. to count abstentions and broker non-votes for purposes of determining the
presence of a quorum at the meeting;
. to treat abstentions as shares represented at the meeting and voting
against a proposal and to disregard broker non-votes in determining
results on proposals requiring a majority vote; and
. to consider neither abstentions nor broker non-votes in determining
results of plurality votes.
We will pay all of the expenses of soliciting proxies from stockholders,
including the reimbursement of brokerage firms and others for their expenses in
forwarding proxies and proxy statements to the beneficial owners of our common
stock.
<PAGE>
Election of Directors
Pursuant to our certificate of incorporation and bylaws, the board of
directors shall consist of no less than three and no more than 12 directors and
shall be fixed from time to time by a majority of the directors in office.
Currently, the board of directors has fixed the number of directors at seven.
Our certificate of incorporation and bylaws provide for three classes of
directors serving staggered three-year terms, with each class to be as nearly
equal in number as possible. The board currently has six directors, all of whom
are standing for election at the meeting.
Information Regarding Nominees and Directors
The following information is furnished, as of October 31, 2000, for each
person who is nominated for election as a director:
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned(1)
---------------------
Director Percent of
Name Age Position Since Shares Class(2)(3)
---- --- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
J. William Boyar(4)..... 49 Chairman of the board of 1997 345,000 *
directors
James G. Springfield.... 36 President, chief executive 2000 2,000 *
officer and vice chairman of the
board of directors
Daniel Dornier(5)....... 38 Director 1998 8,319,005 16.75%
James S. Cochran, M.D... 56 Director 1999 144,445 *
I. Bobby Majumder(5).... 32 Director 2000 66,667 *
N. Rudy Garza(4)........ 41 Director 1999 2,829,747 5.64%
Peter Michalos, M.D..... 40 Director Nominee -- -- --
</TABLE>
(1) Includes all shares of common stock with respect to which each director
directly, through any contract, arrangement, understanding, relationship or
otherwise, has or shares the power to vote or direct voting of such shares
or to dispose or direct the disposition of such shares. Includes shares
that may be purchased under outstanding stock options and warrants within
60 days.
(2) Based on 49,120,547 shares of common stock outstanding at October 31, 2000,
plus, for each director, those number of shares underlying exercisable
options and warrants beneficially owned by the director.
(3) Percent of class for any director is calculated without regard to shares of
common stock issuable to others upon exercise of outstanding stock options
or warrants. Any shares a director is deemed to own by having the right to
acquire by exercise of a stock option or warrant is considered to be
outstanding solely for the purpose of calculating that director's ownership
percentage.
(4) Member of the audit committee.
(5) Member of the compensation committee.
Nominees for Election as Directors for Terms Expiring in 2003
J. William Boyar has been a director since August 1997 and chairman of the
board since October 1, 2000. Mr. Boyar is chairman of the Houston-based law
firm Boyar & Millar P.C. and has 24 years of experience in representing multi-
million dollar domestic and international businesses which include public and
private company acquisitions, dispositions, capitalizations, and financing of
assets. He received his undergraduate degree in English from Tulane University
and his J.D. from Tulane University School of Law. Boyar & Millar, P.C.
represents us as outside counsel on various legal matters.
James G. Springfield joined us on October 2, 2000 as our president, chief
executive officer and vice chairman. Before joining us, Mr. Springfield was
with the Memorial Hermann Healthcare System for over 12 years, his most recent
role as vice president and chief operating officer of Memorial Hermann
Hospital. Before that, he served as the vice president and chief executive
officer of Memorial Hermann Children's Hospital from
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<PAGE>
December 1997 until December 1999. He also served as the vice president of
senior services for the Memorial Hermann Healthcare System. He previously
served as the assistant vice president of operations for Memorial Hospital
Southwest and worked at that hospital for six years. He began his career as a
financial analyst with Memorial in 1988 and completed his administrative
fellowship with the system in 1991. Mr. Springfield is a diplomat of the
American College of Healthcare Executives and is also a member of the
Healthcare Finance Management Association. Mr. Springfield received a BBA from
Baylor University in 1987 and a masters in healthcare administration from the
University of Houston--Clear Lake in 1991.
Nominees for Election as Directors for Terms Expiring in 2002
Daniel Dornier has served as a director since September 1998. From August
1991 to June 1993, Mr. Dornier was an investment banker with SBC-Warburg Dillon
Reed. From June 1993 to June 1995, he served as a private investment manager
for various companies owned by the Dornier family. From 1995 to 1998, Mr.
Dornier served as president of Dornier Capital Advisors, where he managed
investment portfolios for high net worth individuals in Europe. In 1999, he co-
founded Greenwich AG, which focuses on early stage investments in high growth
companies in Germany and the United States. Mr. Dornier studied business at the
University of Nuertingen, Germany and received an MBA from the Swiss Campus of
City University in Bellevue, Washington.
James S. Cochran, M.D. has been a director since February 1999. Since 1978,
Dr. Cochran has been practicing medicine with Urology Specialists & Associates,
a private practice of eight physicians in Dallas, Texas. Dr. Cochran also holds
a position as clinical instructor in urology at the University of Texas
Southwestern Medical School as well as the position of chief medical officer of
Physicians Data Corp and Ultrasight, Inc. In addition to being a member of
numerous professional societies, such as the American Urological Association,
the American Medical Association and the American Fertility Society, among
others, he is also a member of several national advisory boards including Prime
Medical Inc. and Indigo, Inc. Dr. Cochran is the former president of the
medical/dental staff of Presbyterian Hospital of Dallas and is chairman of the
urology process improvement committee. Dr. Cochran received his undergraduate
degree in biochemistry from Rice University and doctor of medicine from the
University of Texas Southwestern Medical School.
I. Bobby Majumder has been a director since May 2000. Mr. Majumder is a
partner in the law firm of Gardere & Wynne, L.L.P. and has been practicing
corporate and securities law since 1993. Mr. Majumder earned his undergraduate
degree in Philosophy from Trinity University and his J.D. from Washington & Lee
University.
Nominees for Election as Directors for Terms Expiring in 2001
N. Rudy Garza has been a director since September 1999. From 1983 to 1996,
Mr. Garza served as vice president and chief executive officer of S. D. Garza
Engineering, Inc., a civil and environmental engineering company, and was
involved in mergers, acquisitions and the raising of equity. In 1996, Mr. Garza
founded G-51 Capital, LLC and has served as its president since then. Mr. Garza
is a seed and early stage venture capitalist specializing in Texas-centric
Internet and software companies. Mr. Garza received his undergraduate degree in
finance from St. Edward's University and his MBA from the University of Texas.
Peter Michalos, M.D. is a board certified ophthalmologist, orbital and
oculoplastic surgeon in private practice since 1991 and an inventor. He is
assistant professor of clinical ophthalmology at the Columbia University
College of Physicians & Surgeons. He now serves as secretary/treasurer of the
Southampton Hospital Medical Staff and has been its chairman of Surgical Peer
Review. His training includes a BS in Biology from St. John's University and an
MD from the State University of New York Downstate College of Medicine. He did
post graduate residency training at New York Hospital-Cornell and Columbia
Presbyterian medical centers in New York.
3
<PAGE>
Committees
To facilitate the various functions of the board of directors, the board has
created standing compensation and audit committees. The audit committee meets
with our independent auditors to review financial results, internal financial
controls and procedures, and audit plans and recommendations. It also
recommends the selection, retention or termination of our independent public
accountants, approves services provided by the independent public accountants
before providing those services and evaluates the possible effect the
performance of the services will have on their independence. The compensation
committee recommends to the board the compensation of executive officers and
directors and the adoption of stock grants and stock option plans.
Directors and Committee Meetings
During the year ended December 31, 1999, the board of directors held 8
formal meetings and acted through unanimous written consent on 7 occasions. The
compensation committee did not hold a meeting, but met and advised the board of
directors throughout the year. The board of directors as a whole acted as the
compensation committee during 1999. The audit committee held two meetings. Each
director attended at least 75% of the meetings held during 1999 by the board of
directors and all committees of the board of directors on which the director
served.
Directors' Compensation
None of the directors receive any compensation to attend board meetings.
However, all board members are eligible to receive stock options under our 1997
incentive plan. In February 1999, Mr. Cochran was granted options to purchase
52,778 shares of our common stock at an exercise price of $1.25 per share.
These options vested and became exercisable in equal monthly installments over
a 19-month period beginning February 8, 1999. In February 2000, Messrs.
Connolly, Boyar, Cochran, Dornier and Garza each were granted options to
purchase 100,000 shares of our common stock at an exercise price of $0.453 per
share. These options vest and become exercisable in equal monthly installments
over a 12-month period beginning January 7, 2000. In May 2000, Mr. Majumder was
granted options to purchase 100,000 shares of our common stock at an exercise
price of $0.625 per share. Mr. Majumder's options vest and become exercisable
in equal monthly installments over a 12-month period beginning May 3, 2000. In
October, 2000, Mr. Boyar was granted additional options to purchase 500,000
shares of our common stock at an exercise price of $0.31 per share. These
options vest and become exercisable in equal monthly installments over a 15-
month period beginning October 1, 2000.
Employment Agreements
Each officer serves at the discretion of the board of directors, subject to
the terms of his employment agreement, if any, and is eligible to receive stock
options pursuant to our 1997 incentive plan.
James G. Springfield. On August 29, 2000, we entered into an employment
agreement with James G. Springfield, our new president, chief executive officer
and vice chairman of our board of directors. The term of the agreement
commenced October 2, 2000 and will continue for an initial term expiring on
December 31, 2003. The expiration date automatically will be extended for
successive one year periods following the expiration of the initial term unless
the agreement is otherwise terminated in accordance with its terms. The
agreement may be terminated either by Mr. Springfield or us by written notice
at least 90 days before the expiration of the initial term or any succeeding
one year term. We have agreed to pay Mr. Springfield as follows:
. for the period from the commencement date until August 31, 2001, a
monthly base salary of $14,166;
. for the period from September 1, 2001 until August 31, 2002, a monthly
base salary of $15,000;
. for the period from September 1, 2002 until the expiration date, a
monthly base salary of $16,666.
In addition to his base salary, Mr. Springfield is entitled to receive a
bonus of up to 100% of his base salary provided he meets certain performance
criteria set by our compensation committee. Mr. Springfield also
4
<PAGE>
is entitled to participate in all health, dental, disability, life insurance
and other benefit programs we now have or may establish in the future.
We have granted Mr. Springfield incentive stock options to purchase
3,600,000 shares of our common stock, subject to our stockholders' approval of
the proposals to amend our 1997 incentive plan and to increase our authorized
common stock. The exercise price of the options is $0.31 per share, the fair
market value of our common stock on the date of grant. One-twelfth of the
options vest on the last day of each of the first 12 calendar quarters during
the initial term. The options also are subject to forfeiture if Mr. Springfield
is terminated for cause or if he terminates the agreement before the expiration
of the initial term, and are subject to accelerated vesting upon a change in
control and certain other circumstances.
We currently do not have a sufficient number of shares of common stock
available for issuance as incentive stock options under our 1997 incentive plan
to provide Mr. Springfield with all of the options granted. In addition, we do
not have a sufficient number of shares of common stock authorized for issuance
under our certificate of incorporation to issue common stock upon full exercise
of Mr. Springfield's options. Therefore, Mr. Springfield's options are subject
to our stockholders' approval of the proposal to increase the number of shares
issuable under our 1997 incentive plan, and the proposal to increase the number
of authorized shares of common stock under our certificate of incorporation.
Timothy J. Connolly. On July 1, 1997, we entered into an employment
agreement with Timothy J. Connolly, our former chief executive officer,
president and chairman of the board. On September 28, 2000, his employment
agreement was amended to reflect his resignation as president and chief
executive officer and as a director. Under the amended agreement, Mr. Connolly
will provide us consulting services in the areas of capital raising, investor
and public relations and business development as we may request from time to
time. Mr. Connolly's employment is not exclusive or full-time, and he may
perform services for companies other than us in his sole discretion. The term
of the contract, as amended, expires December 31, 2001. According to the
agreement, Mr. Connolly receives an annual base salary of $250,000 for 2000.
Mr. Connolly's employment agreement allows him, at his option, to be paid in
shares of common stock in lieu of his future cash salary on terms agreeable to
Mr. Connolly and us. Mr. Connolly has received all of his salary from February
15, 2000 through October 15, 2000 in common stock and has agreed that all
salary that otherwise would accrue under his employment agreement during the
period October 16, 2000 through December 31, 2000, will be deferred until
January 2, 2001, whereupon it will be paid to him in cash. In addition, options
to purchase 100,000 shares of common stock granted to Mr. Connolly as a member
of our board were deemed fully vested and are exercisable. In addition to the
base salary, Mr. Connolly is entitled to receive a bonus, if any, as may be
determined by our board of directors. Mr. Connolly is entitled to terminate
employment with us and receive 100% of the base salary under his contract if a
change of control occurs as defined in his contract.
Jackson L. Nash. On February 14, 2000, we entered into a letter agreement
with Jackson L. Nash as our chief financial officer. The term of the agreement
is effective until terminated by either us or Mr. Nash. The contract provides
for payment at a rate of $80 per hour. We have granted to Mr. Nash options to
purchase 50,000 shares of our common stock at an exercise price of $0.5672 per
share. One-eleventh of these options vested on February 22, 2000, the date of
grant. The rest of Mr. Nash's options vest in equal monthly installments over a
ten month period beginning March 1, 2000.
5
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information, derived from our
transfer records, filings with the Securities and Exchange Commission and other
public information, regarding the beneficial ownership of our common stock as
of October 31, 2000, by each person who is known by us to beneficially own more
than five percent of the outstanding shares of common stock, each of the named
executive officers, directors and the director nominee, and all directors, the
director nominee and executive officers as a group.
<TABLE>
<CAPTION>
Number of
Shares of Percent
Common of
Name and Address of Beneficial Owner(1) Stock(2) Class(2)
--------------------------------------- ---------- --------
<S> <C> <C>
Greenwich, AG....................................... 7,156,483(3) 14.45%
Neuer Wall 32
20354 Hamburg, Germany
Voice Technologies Partners, Ltd.................... 5,590,000 11.38%
Entrepreneurial Investors Limited................... 5,402,222 11.00%
Citibank Building, Second Floor
East Mall Drive
P.O. Box F-42544
Freeport, Bahamas
Timothy J. Connolly................................. 4,458,353(4)(5) 9.06%
Jan Carson Connolly................................. 4,458,353(4)(6) 9.06%
Daniel Dornier...................................... 8,319,005(7) 16.75%
25 Field Point Drive
Greenwich, Connecticut 06830
James G. Springfield................................ 2,000 *
N. Rudy Garza....................................... 2,829,747(8)(9) 5.64%
J. William Boyar.................................... 345,000(10) *
James S. Cochran, M.D............................... 144,445(11) *
I. Bobby Majumder................................... 66,667(12) *
Peter Michalos, M.D. ............................... -- --
Jackson L. Nash..................................... 45,454(13) *
All directors and executive officers as a group (8
persons)........................................... 11,752,318 22.92%
</TABLE>
* Indicates less than one percent.
(1) Except as otherwise indicated, the addresses for the above-referenced
persons are 1770 St. James Place, Suite 116, Houston, Texas 77056.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of common stock subject to options and warrants held by
that person that are currently exercisable or exercisable within 60 days
of October 31, 2000 are deemed outstanding. Such shares, however, are not
deemed outstanding for the purposes of computing the percentage ownership
of each other person. Except as indicated in the footnotes to this table
and pursuant to applicable community property laws, each stockholder named
in the table has sole voting and investment power with respect to the
shares set forth opposite such stockholder's name.
(3) Includes 400,000 shares of common stock issuable upon exercise of
currently exercisable warrants.
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<PAGE>
(4) Mr. Connolly has voting and disposition control over the shares of common
stock owned by Voice Technologies Partners, L.P., by virtue of owning all
of the outstanding stock of Voice Technologies Management Corp., the
managing general partner of Voice Technologies Partners, L.P. Ms. Carson
Connolly also owns a partnership interest in Voice Technologies Partners,
L.P.
(5) Includes 100,000 shares of common stock issuable upon exercise of
currently exercisable director stock options. Also includes 1,917,296
shares of common stock and warrants beneficially owned by his wife, Jan
Carson Connolly.
(6) Includes 2,541,057 shares of common stock and options beneficially owned
by her husband, Timothy J. Connolly.
(7) Includes 141,111 shares of common stock issuable upon exercise of director
stock options. In addition, Mr. Dornier beneficially owns 6,756,483 shares
and 400,000 shares of the common stock and warrant holdings of Greenwich,
AG, by virtue of being a director and its chief executive officer.
(8) Includes 1,025,000 shares of common stock issuable upon exercise of
currently exercisable warrants and director stock options.
(9) Includes 1,804,747 shares of common stock issued upon conversion of a
convertible promissory note, including settlement of all related accrued
interest.
(10) Includes 335,000 shares of common stock issuable upon exercise of director
stock options.
(11) Includes 144,445 shares of common stock issuable upon exercise of director
stock options.
(12) Includes 66,667 shares of common stock issuable upon exercise of director
stock options.
(13) Includes 45,454 shares of common stock issuable upon exercise of options.
Required Vote and Recommendation
The board of directors recommends a vote "for" the nominees for election to
the board of directors. Directors are elected by plurality vote. All duly
submitted and unrevoked proxies in the form accompanying this proxy statement
will be voted for the nominees selected by the board of directors, except where
authorization to vote is withheld.
The persons named in the enclosed form of proxy intend to vote their proxies
for the election of the nominees. The board of directors expects that the
nominees will be available for election but, if any nominee is not so
available, proxies received will be voted for a substitute nominee to be
designated by the board of directors or, if no such designation is made by the
board, proxies will be voted for a lesser number of nominees.
Proposed Amendments to Amended and Restated Certificate of Incorporation
Increase in Authorized Common Stock
The board of directors has proposed to amend our certificate of
incorporation to increase our authorized shares of common stock, par value
$.001 per share, from 50,000,000 to 85,000,000 shares. As of October 31, 2000,
we had 49,120,547 shares of our common stock outstanding. In addition, we had:
. 2,978 shares of series 2 preferred stock outstanding, which are
convertible at the holder's option into 312,743 shares of our common
stock;
. outstanding options that are exercisable for 6,378,221 shares of our
common stock (of which 1,866,795 are currently vested);
. outstanding warrants that are currently convertible into 4,777,232 shares
of our common stock; and
. outstanding promissory notes that are convertible into 3,392,000 shares
of our common stock.
We do not currently have a sufficient number of shares of authorized common
stock to meet these obligations. This amendment is necessary for us to have a
sufficient number of shares of common stock available.
7
<PAGE>
In addition, the board believes that increasing the number of authorized
shares of common stock will provide us greater flexibility to pursue actions
that enhance stockholder value. Issuing additional shares can benefit us by:
. furthering our goal of improving our balance sheet;
. enabling us to respond quickly to opportunities in the capital markets;
. providing us with additional forms of consideration for strategic
acquisitions; and
. allowing us to pursue our business strategy.
The authorization of additional shares of common stock will not, by itself,
have any effect on the rights of our stockholders. However, any future
issuances of common stock may have a dilutive effect. Furthermore, under
certain circumstances, an increase in the number of authorized shares of common
stock can provide management with a means to discourage a change of control,
such as through the issuance to stockholders of rights to purchase additional
shares of common stock at bargain prices. As in the case of other types of
issuances, those intended to prevent or adversely affect changes of control
could be accomplished without further stockholder approval. However, the board
of directors has no present intention of using the additional authorized shares
for any of these purposes and is not aware that any takeover or similar action
is contemplated.
If the stockholders adopt this proposal, we will file an amendment to our
certificate of incorporation to increase our authorized common stock to
85,000,000 shares with the Delaware Secretary of State. The proposed amendment
would be filed promptly following the meeting and would be effective on the
filing date.
Name Change
The board of directors has proposed an amendment to our certificate of
incorporation, which if adopted, would change our name to e-DOCS.MD, Inc. The
board of directors believes that the name e-DOCS.MD, Inc. more accurately
reflects our business and is more consistent with our ongoing operations,
thereby benefitting both us and our stockholders.
If the stockholders adopt this proposal, we will file an amendment to our
certificate of incorporation to change our name to e-Docs.MD, Inc. with the
Delaware Secretary of State. The proposed amendment would be filed promptly
following the meeting and would be effective on the filing date.
Required Vote and Recommendations
The affirmative vote of a majority of the issued and outstanding shares of
common stock is required to approve the amendments. Since the affirmative vote
of a majority of the issued and outstanding shares of common stock is required
to approve the amendments, as opposed to a specified percentage of the shares
present at the annual meeting, the failure to vote in person or by proxy, or an
abstention from voting, will have the same effect as a vote against the
amendments.
The board of directors recommends that the stockholders vote for the
amendments.
8
<PAGE>
Proposal to Amend Our 1997 Incentive Plan
Under the 1997 incentive plan, key employees, non-employee directors and
consultants are eligible for incentive awards, including non-qualified stock
options, incentive stock options, and other stock based awards. Currently, the
plan provides that shares of our common stock are available for awards at an
aggregate of the greater of:
. 3,000,000 shares of our common stock; and
. 20% of the number of shares of our common stock issued and outstanding on
the last day of each calendar quarter.
Furthermore, the plan provides that:
. not more than 3,000,000 shares of our common stock shall be available for
incentive stock options; and
. awards intended to comply with the performance-based exception of section
162(m) of the Internal Revenue Code shall not exceed 2,000,000 shares per
covered employee, per calendar year.
Section 162(m) of the Internal Revenue Code generally limits the
deductibility of compensation paid to the chief executive officer and the four
other highest paid officers to $1,000,000 per year. Compensation meeting the
performance-based exception is not subject to this limitation on deductibility.
Compensation qualifies as performance-based only if it is payable on account of
performance and satisfies certain other requirements, one of which is that the
plan under which options are granted specifies the maximum number of shares
that may be granted to any employee during a specified period.
Currently the maximum amount of shares subject to the plan is approximately
9,825,000. As of October 31, 2000, approximately 1,775,000 shares remain
available under the plan. In connection with his agreement to join us, we
granted Mr. Springfield incentive stock options covering 3,600,000 shares,
subject to our stockholders' approval of this proposal and the proposal to
increase our authorized common stock. These options were granted to Mr.
Springfield at an exercise price of $0.31 per share, the fair market value of
our common stock on the date of grant, and are intended to comply with the
performance-based exception.
We currently do not have a sufficient number of shares reserved for
incentive stock options under the plan to permit the exercise of Mr.
Springfield's options. Also, our specified limit of 2,000,000 shares per
covered employee, per calendar year, is not high enough to allow for future tax
deduction under the performance-based exception related to Mr. Springfield's
options. Therefore, amendments to the plan are required. In addition, the board
of directors believes an increase in the shares reserved for issuance under the
plan is necessary for us to fully implement our compensation policy.
Accordingly, as part of our overall effort to increase stockholder value, in
November 2000, the board of directors adopted amendments to our 1997 incentive
plan, subject to stockholder approval, to:
. increase the aggregate number of shares of common stock available for
awards to 20% of the number of shares of our common stock authorized;
. increase the limit on the number of shares available for incentive stock
options to 17,000,000; and
. increase the plan's limit on the number of shares that may be granted as
incentive awards under the performance-based exception on a per covered
employee, per calendar year basis, to 5,000,000.
These amendments are intended to:
. make sufficient shares available for future exercise of Mr. Springfield's
incentive stock options under the plan;
. entitle us to possible future tax deductions, without regard to the
$1,000,000 limit on deductibility under section 162(m), in connection
with awards under the plan;
9
<PAGE>
. further our efforts in attracting, retaining and motivating key
employees, non-employee directors and consultants; and
. continue to closely align the interests of participants in the plan with
those of stockholders by encouraging stock ownership and by tying
compensation to our performance and performance of the common stock.
If approved, approximately 8,950,000 shares of common stock will be
available for future awards under the plan.
These amendments will not change any other material term of the plan.
Required Vote and Recommendation
The affirmative vote of a majority of the shares present or represented at
the meeting is required for approval of the amendments to the plan.
The board of directors recommends that the stockholders vote for approval of
the amendments to the plan.
Other Information
Executive Compensation
The following table provides certain summary information concerning
compensation paid or accrued during the fiscal years ended December 31, 1999,
1998 and 1997 to our chief executive officer and to each of the other most
highly compensated executive officers during the fiscal year ended December 31,
1999 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
Annual Compensation Number of
------------------------ Securities
Name and Principal Other Annual Underlying
Position Year Salary Bonus Compensation(1) Options
------------------ ---- -------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Eric A. Black(3)........ 1999 $104,167 25,000 -- 1,500,000(4)
chief executive officer
Timothy J. Connolly..... 1999 $250,000 $109,250 -- --
chairman of the board 1998 $224,417(5) -- $11,605(2) --
1997 $157,833 24,399 9,433(2) 500
Robin P. Ritchie(3)..... 1999 $161,665 -- -- --
chief operating officer 1998 $ 50,000 -- -- 300,000(6)
H. Russell Douglas...... 1999 $178,675 $ 15,020 -- --
chief technology
officer 1998 $188,401(5) -- 9,000(2) 110,000
1997 $113,500 -- 7,500(2) 100,500
Richard A. Cabrera(3)... 1999 $103,979 $ 25,000 -- 210,000(4)
chief financial officer --
Milton A.
Speigelhauer(3)........ 1999 $159,842 -- -- 150,000(6)
vice president of
marketing and sales
</TABLE>
--------
(1) Amounts exclude perquisites and other personal benefits because such
compensation did not exceed the lesser of $50,000 or 10% of the total
annual salary and bonus reported for each executive officer.
(2) Includes commissions and car allowance, if pertinent.
(3) On December 20, 1999, Mr. Black, Mr. Ritchie, Mr. Cabrera, and Mr.
Speigelhauer agreed to terminate their employment contracts.
10
<PAGE>
(4) These options were forfeited upon the termination of employment contracts.
(5) Includes 32,143 and 21,429 shares of common stock issued to Timothy J.
Connolly and H. Russell Douglas, respectively, in lieu of cash salaries.
The value of this amounted to $76,001 and $51,001, respectively.
(6) The unvested options were forfeited upon the termination of employment.
With respect to the vested options, we agreed to extend the exercisable
period for an additional three years from December 20, 1999.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------
% of
Total
Options
Number of granted
Securities to Exercise
Underlying employees or Base
Option/SAR's in fiscal Price Expiration
Name granted year ($/share) Date
---- ------------ --------- --------- ----------
<S> <C> <C> <C> <C>
Eric A. Black(1).................... 1,500,000 71.14% $1.03 8/2/09
Richard A. Cabrera(1)............... 210,000 9.96% $1.25 4/15/09
</TABLE>
--------
(1) On December 20, 1999 Eric A. Black's and Richard A. Cabrera's employment
contracts terminated in connection with our reorganization. Upon
termination, Mr. Black and Mr. Cabrera agreed to forfeit the vested and
unvested shares of the option grants.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year Ended Option
Values
The following table provides certain information with respect to options
exercised during the fiscal year ended December 31, 1999 by the Chief Executive
Officer and each of the Named Executive Officers listed in the preceding
tables:
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Number of Options at Fiscal In-The-Money Options at Fiscal
Shares Year-End (#) Year-End ($)
Acquired Value ------------------------- -------------------------------
on Exercise Realized Exercisable Unexercisable Exercisable(1) Unexercisable(1)
----------- -------- ----------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Eric A. Black(2)........ -- -- -- -- -- --
Timothy J. Connolly..... -- -- 333 167 -- --
Robin P. Ritchie(3)..... -- -- 140,625 -- -- --
H. Russel Douglas....... -- -- 100,000 110,000 -- --
Richard A. Cabrera(2)... -- -- 333 167 -- --
Milton A.
Speigelhauer(3)........ -- -- 66,667 -- -- --
</TABLE>
--------
(1) The value for these options is not presented because the fair market value
price of our common stock is less than the option price.
(2) During 1999, Eric A. Black and Richard A. Cabrera were granted options to
purchase 1,500,000 and 210,000 shares of our common stock, respectively, in
connection with their employment agreements. On December 20, 1999, Mr.
Black's and Mr. Cabrera's contracts terminated as the result of our
reorganization. Upon termination, Mr. Black and Mr. Cabrera agreed to
forfeit the vested and unvested options.
(3) On December 20, 1999, Robin P. Ritchie's and Milton A. Spiegelhauer's
employment contracts terminated in connection with our reorganization. Upon
termination, Mr. Ritchie and Mr. Speigelhauer agreed to forfeit the
unvested options. We extended the life of the vested options for an
additional three years from December 20, 1999.
11
<PAGE>
Certain Transactions
Dornier Promissory Note
On September 1, 2000, in connection with completion of private placements
with several accredited investors, we issued a promissory note to Daniel
Dornier, who is a member of our board of directors. The note has a stated
principal amount of $100,000 and bears interest at 12%. The note will be
automatically converted into shares of common stock when our certificate of
incorporation is amended to increase our authorized common stock as proposed to
the stockholders at the meeting. The note is convertible into the number of
shares of common stock equal to $100,000 plus any accrued and unpaid interest
divided by the lesser of $0.15 or the lowest per share price that we have sold
shares of common stock between September 1, 2000 and the conversion date of the
note. Unless converted, the note matures on the earlier of February 28, 2001,
or a change in control in connection with our merger, acquisition or sale of
all or substantially all of our assets.
Garza Agreement
On February 22, 2000, we entered into a one-time oral consulting agreement
with N. Rudy Garza, one of our directors, that paid Mr. Garza a fee of $10,000
to provide consulting services relating to the preparation and review of our
business plan.
G-51 Capital
In July 1999, we entered into a convertible promissory note and warrant
purchase agreement, which was amended in November 1999, with G-51 Capital, an
affiliate of N. Rudy Garza who is a member of our board of directors. The note
had a stated principal amount of $250,000 and bore interest at 9%. The note was
secured by a security interest in certain of our assets. Effective October 26,
2000, the note was converted into 1,804,747 shares of our common stock at an
adjusted price of $0.15 per share, based on the pricing used in our September
2000 private placements. The warrant is exercisable into 833,333 shares of our
common stock at an exercise price of $1.25 per share.
Greenwich, AG
In July 1999, we issued a convertible promissory note to Greenwich, AG, an
affiliate of Daniel Dornier who is a member of our board of directors. The
note, which we repaid in 1999, had a stated principal amount of $500,000 and
bore interest at 9%. In August 1999, we completed a $2,000,000 private
placement of 2,000 shares of our series E convertible preferred stock with
Greenwich, AG and issued them a warrant. The warrant entitles Greenwich, AG to
purchase 400,000 shares of our common stock at $1.25 per share and is currently
exercisable.
Lernout & Hauspie Affiliates
Jo Lernout and Thomas Denys, were appointed to our board of directors on
February 8, 1999 and resigned as of December 20, 1999, in connection with our
reorganization. Mr. Lernout is an executive with Lernout & Hauspie Speech
Products and Mr. Denys is an executive with L&H Investment Co., N.V. The
following summarizes agreements between us and Lernout & Hauspie and its
affiliates, L&H Investment Co., N.V. and Lonestar Medical Transcription USA,
Inc.
Value Added Reseller Agreement. On September 30, 1998, we entered into a
$300,000 value added reseller agreement with Lernout & Hauspie. Lernout &
Hauspie develops and licenses dictation software for use in the health care
industry. The agreement gives us rights to a world-wide non-exclusive license
of software products developed by Lernout & Hauspie. On December 27, 1998, this
agreement was amended to include additional requirements. In accordance with
the amended agreement, we prepaid Lernout & Hauspie $1,000,000 for additional
software licenses. On December 20, 1999, the agreement was further amended to
delete any further development and support requirements, and to extend the
software licenses through March 31, 2001.
12
<PAGE>
Series D Preferred Stock Agreement. On December 31, 1998, we entered into a
series D preferred stock and warrant purchase agreement to sell up to 5,000
shares of series D convertible preferred stock to L&H Investment. The preferred
shares have a par value of $.10 and were priced at $1,000 per share. The shares
were cancelled as of December 20, 1999.
Lonestar Medical Transcription USA, Inc. Pursuant to an asset purchase
agreement dated January 7, 2000 and effective as of December 20, 1999, we sold
the net assets and contracts of our medical transcription service operations
based in New York, New Jersey, Houston, Texas and Manila the Philippines for
approximately $9.4 million to Lonestar and its then parent company L&H
Investment. Additionally, Lonestar and L&H Investment obtained non-exclusive
rights to our VoiceCOMMANDER 99 code.
The $9.4 million purchase price consisted of:
. the forgiveness of a $2.0 million promissory note held by Lernout &
Hauspie;
. the forgiveness of a $1.5 million promissory note held by L&H Investment;
. the forgiveness of approximately $94,000 in interest;
. the retirement of $5.0 million in series D preferred stock held by L&H
Investment and forgiveness of approximately $318,000 in dividends; and
. approximately $457,000 in cash for our accounts receivable sold.
We also converted warrants held by L&H Investment to purchase approximately
3.5 million shares of our common stock at $1.25 per share into a warrant to
purchase 800,000 shares of our common stock at $0.37 per share. Lonestar became
the holder of this warrant and in May 2000 performed a cashless exercise of the
warrant for 572,132 shares of our common stock.
In connection with this reorganization, Eric A. Black, our former president
and chief executive officer, and Richard A. Cabrera, our former chief financial
officer and secretary resigned their positions with us, effective as of
December 20, 1999. Messrs. Black and Cabrera became employees of Lonestar and
we agreed to release them from the non-compete clauses of their employment
contracts.
Bridge Loan Agreements
During the month of December 1998, we entered into various bridge loan
agreements with: Timothy J. Connolly, William T. Kennedy, Robin P. Ritchie and
Milton A. Speigelhauer, who were officers; N. Rudy Garza, one of our directors;
a former employee; and a third party. The aggregate balance of the 1998 bridge
loans was $335,333, and bore interest at 12% per annum. In connection with the
1998 bridge loans, we granted warrants to purchase 355,495 shares of common
stock at exercise prices ranging from $0.94 per share to $1.06 per share. The
bridge loans plus accrued interest were payable upon the earlier of six months
following the date of the notes or three business days following our receipt of
$2,000,000 in equity funding. On December 31, 1998, we received $2,000,000 in
equity funding and paid the 1998 bridge loans in January 1999.
Series E Preferred Stock Agreement
On August 18, 1999, we entered into a series E preferred stock purchase
agreement to sell up to 2,000 shares of series E convertible preferred stock
for $2,000,000 to Greenwich, AG, of which Daniel Dornier is a director. The
preferred shares have a par value of $.10 and were priced at $1,000 per share.
These series E preferred shares were exchanged for series G preferred stock in
January 2000.
Series G Preferred Stock Agreements
On January 7, 2000, we entered into a letter agreement under which certain
of our preferred stockholders agreed to exchange their shares of preferred
stock for a new series G preferred stock. The series G preferred stock reduced
the conversion price of the existing series of preferred stock and contained a
mandatory conversion provision that required the series G preferred stock to be
converted into common stock within seven days of issuance. The result of these
transactions was the resetting of the conversion price for each existing
13
<PAGE>
series of preferred stock followed by an automatic conversion of the new series
G preferred stock into our common stock. Each of these series G preferred stock
exchange agreements are described below.
Entrepreneurial Investors, Ltd. On January 20, 2000, we entered into a stock
exchange agreement with the Entrepreneurial Investors, Ltd., to exchange their
shares of our series A preferred stock for shares of series G preferred stock.
On March 23, 2000, Entrepreneurial Investors converted its 186,000 shares of
series A preferred stock into 14,880 shares of series G preferred stock. Upon
conversion, Entrepreneurial Investors also received stock dividends amounting
to 347.166 shares of series G preferred stock. On March 30, 2000, the entire
15,227.166 shares of series G preferred stock automatically converted into
5,075,722 shares of our common stock.
Holders of Series C Preferred Stock. On February 11, 2000, we entered into a
stock exchange agreement with the holders of the our series C preferred stock,
which includes Daniel Dornier and certain of his relatives, to exchange their
shares of series C preferred stock. On March 1, 2000 and March 23, 2000, the
series C investors converted their 153,538.8 series C shares into 15,353.8
shares of series G preferred stock. Upon conversion, the holders of the series
C preferred stock received stock dividends amounting to 287.34 shares of series
G preferred stock. On March 8, 2000, 14,516.68 shares of series G preferred
stock were automatically converted into 4,838,894 shares of our common stock,
and on March 30, 2000, the remaining 1,124.458 shares were converted into
374,819 shares of our common stock.
Greenwich, AG. On February 11, 2000, we entered into a stock exchange
agreement with Greenwich, AG to exchange its shares of series E preferred stock
for shares of series G preferred stock based on the primary terms set forth in
a letter agreement dated January 7, 2000. In March of 2000, Greenwich, AG
converted their 2,000 shares of series E preferred stock into 20,000 shares of
series G preferred stock and received stock dividends amounting to 269.448
shares of series G preferred stock. Those 20,269.448 shares of series G
preferred stock were converted into 6,756,483 shares or our common stock in
March of 2000.
Option and Warrant Forfeiture Agreement
In September 2000, Timothy J. Connolly and his wife, Jan Carson Connolly,
agreed to surrender warrants to purchase an aggregate of 100,073 shares of our
common stock at an exercise price of $1.00 per share and options to purchase an
aggregate of 283,000 shares of our common stock with exercise prices ranging
from $0.91 to $3.50 per share.
Boyar & Miller, P.C.
During 1999, we paid Boyar & Miller, P.C. a total of $450,905 in legal fees
and expenses for legal work performed as our outside counsel. J. William Boyar,
a director, is a stockholder, director and the chairman of Boyar & Miller. The
payments represented 8.56% of Boyar & Miller's gross revenues for 1999.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our directors, executive officers
and persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership on Form 3 and changes in ownership on
Form 4 or 5 with the Securities and Exchange Commission. Our officers,
directors and 10% stockholders also are required by SEC rules to furnish us
copies of all Section 16(a) reports they file. To our knowledge, during the
fiscal year ended December 31, 1999, our officers, directors and 10%
stockholders complied with all Section 16(a) filing requirements, except for
the following:
. Mr. Garza did not file a Form 3 after being elected to our board of
directors in September 1999;
. Jo Lernout and Thomas Denys each did not file a Form 3 after being
elected to our board of directors in February 1999, each of Messrs.
Lernout and Denys resigned their directorships in December 1999;
. Eric A. Black, our former chief executive officer, did not file a Form 3
after becoming an officer in 1999, Mr. Black resigned in December 1999;
14
<PAGE>
. Messrs. Black, Cabrera, Cochran, Boyar and Dornier each did not file a
Form 5 reporting 1999 grants of stock options under the 1997 incentive
plan;
. Mr. Garza did not file a Form 5 reporting our November 1999 issuances to
G-51 Capital of a promissory note convertible into shares of our common
stock and a warrant to purchase shares of our common stock; and
. Mr. Dornier did not file a Form 5 reporting our July 1999 issuance to
Greenwich, AG of a promissory note convertible into shares of our common
stock, and our August 1999 issuances to Greenwich, AG of our series E
convertible preferred stock and a warrant to purchase shares of our
common stock.
Independent Accountants
The board of directors selected Weinstein Spira & Company, P.C. as
independent auditors for the year ended December 31, 1999. Representatives of
Weinstein Spira & Company, P.C. are expected to attend the meeting. They will
have an opportunity to make a statement if they desire to do so, and will be
available to respond to stockholders' questions.
On November 17, 1999, Ernst & Young LLP notified us that it was declining to
stand for re-election as our independent certifying accountant. The opinion on
the financial statements for the year ended December 31, 1998 included an
explanatory paragraph describing our financial condition and issues related to
the uncertainty as to our ability to continue as a going concern. We and Ernst
& Young LLP had no disagreements on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.
Stockholder Proposals
In order for stockholder proposals to be included in our proxy statement and
proxy relating to our 2001annual meeting of stockholders, such proposals must
be received by us at the above address not later than July 30, 2001.
If you want to present a proposal from the floor at the 2001 annual meeting
of stockholders, you must give us written notice no sooner than June 14, 2001,
and no later than October 12, 2001, and follow the procedures outlined in our
bylaws. These dates assume the 2001 annual meeting of stockholders occurs
within 30 days of December 11, 2001. If the date of the 2001 annual meeting of
stockholders is more than 30 calendar days before or after December 11, 2001,
your written notice will be timely if we receive it on the tenth day following
the earlier of the date that we mail notice of the meeting date to stockholders
or the date that we publicly announce the meeting date. Your notice should be
sent to us at 1770 St. James Place, Suite 116, Houston, Texas 77056. You may
request a copy of the by-law provisions governing the requirements for notice
at this same address.
Other Matters
Management does not know of any matters to be presented at the meeting other
than those set forth in the notice of annual meeting of stockholders. However,
if any other matters properly come before the meeting, the persons named in the
enclosed proxy intend to vote the shares to which the proxy relates on such
matters in accordance with their best judgment unless otherwise specified in
the proxy.
By Order of the Board of Directors,
/s/ JACKSON L. NASH
-------------------------------------
Jackson L. Nash, Secretary
Houston, Texas
November 27, 2000
15
<PAGE>
APPLIED VOICE RECOGNITION, INC.
THIS PROXY IS SOLICITED BY THE BOARD
OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS OF
APPLIED VOICE RECOGNITION, INC.
To be held December 11, 2000
The undersigned hereby appoints James G. Springfield and Jackson L. Nash,
and each of them, as proxies of the undersigned, with full power of substitution
and revocation to each of them, for and in the name of the undersigned to vote
all shares of Common Stock of Applied Voice Recognition, Inc. (the "Company"),
which the undersigned would be entitled to vote if personally present at the
Company's Annual Meeting of Stockholders to be held on December 11, 2000, at the
Houstonian Hotel and Conference Center, 111 North Post Oak, Houston, Texas at
2 p.m., Houston time, and at any adjournment or adjournments thereof, with all
the powers the undersigned would possess if personally present, with authority
to vote as specified by the undersigned on the reverse and in the discretion of
any proxy upon such other business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3 AND 4 AND
OTHERWISE IN THE DISCRETION OF ANY OF THE PROXIES.
(Please sign on reverse side)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
APPLIED VOICE RECOGNITION, INC.
December 11, 2000
Please Detach and Mail in the Envelope Provided
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[X] Please mark your
votes as in this
example.
FOR all the WITHHOLD
nominees listed authority
at right (except to vote for all
as marked to the nominees listed
contrary below) at right
1. To elect: two directors [ ] [ ] Nominees: J. William Boyar
for terms expiring in James G. Springfield
2001; three directors for Daniel Domier
terms expiring in 2002; James S. Cochran, M.D.
and two directors for I. Bobby Majumder
terms expiring in 2003. N. Rudy Garza
Peter Michalos, M.D.
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list at right.)
FOR AGAINST ABSTAIN
2. To amend our amended and restated certificate of incorporation to [ ] [ ] [ ]
increase our authorized common stock, from 50,000,000 shares to
85,000,000 shares;
3. To amend our amended and restated certificate of incorporation to [ ] [ ] [ ]
change our name to e-DOCS.MD, Inc;
4. To amend our 1997 incentive plan to increase the number of shares [ ] [ ] [ ]
issuable under that plan; and
5. To transact such other business as may properly come before the
meeting or any adjournment of the meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THE PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3 AND 4 AND OTHERWISE IN THE DISCRETION OF ANY OF THE
PROXIES.
PLEASE VOTE, SIGN, DATE, AND RETURN THIS PROXY USING THE ENCLOSED ENVELOPE.
Signature _________________________ Dated:_____________, 2000 Signature _________________________ Dated:_____________, 2000
NOTE: Please sign exactly as your name appears on the label above. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign full corporate name by President or
other authorized officer. If a partnership, please sign in partnership
name by authorized person.
</TABLE>
