<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
<TABLE>
<S> <C>
[ ] 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-12
</TABLE>
MEDICALCONTROL, 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
MEDICALCONTROL, INC.
8625 KING GEORGE, DR., SUITE 300
DALLAS, TEXAS 75235
TELEPHONE: (214) 630-6368
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held Wednesday, May 31, 2000
To our Shareholders:
PLEASE TAKE NOTICE that the Annual Meeting of Shareholders (the
"Annual Meeting") of MedicalControl, Inc. (the "Company") will be held at the
Company's offices at 8625 King George Dr., Suite 300, Dallas, Texas 75235, at
9:30 a.m., local time, on Wednesday May 31, 2000, for the following purposes:
1. To elect four (4) Directors to hold office until the next Annual
Meeting of the Company when their respective successors are elected
and qualified, or upon their earlier retirement, resignation or
removal;
2. To approve the MedicalControl, Inc. Stock Option and Incentive Plan
(the "Stock Option Plan");
3. To approve the MedicalControl, Inc. 2000 Non-Employee Director Stock
Compensation Plan (the "Directors Compensation Plan"); and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on April 24,
2000, are entitled to notice of and to vote at the Annual Meeting and at any
adjournment thereof.
A Proxy Statement that describes the foregoing proposals and a form of
Proxy accompany this notice.
By Order of the Board of Directors
Stephanie L. McVay
Secretary
Dallas, Texas
May 2, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE EXECUTE THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED REPLY ENVELOPE, WHICH
REQUIRES NO POSTAGE. ANY SHAREHOLDER GRANTING A PROXY MAY REVOKE IT AT ANY TIME
BY DELIVERING WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY PRIOR TO ITS
EXERCISE.
<PAGE> 3
MEDICALCONTROL, INC.
8625 KING GEORGE DR., SUITE 300
DALLAS, TEXAS 75235
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, MAY 31, 2000
This Proxy Statement is furnished to shareholders of MedicalControl,
Inc. (the "Company") in connection with the solicitation of proxies by the
Board of Directors of the Company for use at the Annual Meeting of Shareholders
to be held at 9:30 a.m., local time, on Wednesday, May 31, 2000, at the
Company's executive offices, and at all adjournments or postponements thereof.
Shareholders of the Company will be asked to consider the matters set forth in
the attached Notice of Annual Meeting of Shareholders at the Annual Meeting.
The Board of Directors is not currently aware of any other matters that will
come before the Annual Meeting.
Proxies in the form enclosed will be voted at the Annual Meeting, if
properly executed, returned to the Company prior to the Annual Meeting and not
revoked. The Proxy may be revoked at any time before it is voted by giving
written notice to the Secretary of the Company.
This Proxy Statement and form of Proxy were first mailed to
shareholders of the Company on or about May 2, 2000.
QUORUM AND VOTING
RECORD DATE. The record date for the Annual Meeting ("Record Date") is
April 24, 2000. Only holders of record of the Company's Common Stock, $.01 par
value per share ("Common Stock") at the close of business on such date are
entitled to notice of, and to vote at, the Annual Meeting.
VOTING STOCK. The only class of stock entitled to be voted at the
meeting is Common Stock. Holders of record of Common Stock are entitled to one
vote per share on the matters to be considered at the Annual Meeting. At the
close of business on the Record Date, 4,672,492 shares of Common Stock were
issued and outstanding and entitled to vote at the Annual Meeting.
QUORUM. In order for any business to be conducted at the Annual
Meeting, the holders of more than 50% of the shares of Common Stock entitled to
vote must be represented at the Annual Meeting, either in person or by properly
executed proxy. If a quorum is not present at the scheduled time of the Annual
Meeting, the shareholders who are present may adjourn the Annual Meeting until a
quorum is present. The time and place of the adjourned meeting will be announced
at the time the adjournment is taken, and no other notice will be given. An
adjournment will have no effect on the business that may be conducted at the
Annual Meeting.
VOTING BY STREET NAME HOLDERS. If a shareholder owns shares in "street
name" by a broker, the broker, as the record holder of the shares, is required
to vote those shares in accordance with your instructions. If you do not give
instructions to the broker, the broker will nevertheless be entitled to vote the
shares with respect to "discretionary" items but will not be permitted to vote
the shares with respect to "non-discretionary" items (in which case, the shares
will be treated as broker "non-votes").
<PAGE> 4
REQUIRED VOTE. To be elected as a director, each nominee needs the
affirmative vote of the holders of record of a plurality of the votes duly cast
at the Annual Meeting (i.e., the nominee receiving the greatest number of votes
will be elected). The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock represented at the Annual Meeting is
required to approve the proposals to adopt the Stock Option Plan and the
Directors Compensation Plan. Any shares voted as abstentions and broker
"non-votes" on any matter (or a withheld authority vote as to directors) are
counted as present and entitled to vote for the purposes of determining a
quorum, but are not deemed to have been voted in favor of such matter. The
effect of broker "non-votes" on a particular matter depends on whether the
matter is one as to which the broker or nominee has discretionary voting
authority. If a broker submits a proxy that indicates the broker does not have
discretionary authority to vote certain shares on a particular matter, those
shares will be counted as present for purposes of determining a quorum, but
will not be considered present and entitled to vote for the purpose of
calculating the vote with respect to such matter. Abstentions and broker
"non-votes" are not counted for purposes of the election of a Director. An
abstention is counted as a vote against these proposals. A broker "non-vote"
with respect to either the proposal for the option plan or the proposal for the
compensation plan is counted as a vote against the proposal.
DEFAULT VOTING. Where shareholders have appropriately specified how
their proxies are to be voted, they will be voted accordingly. If a shareholder
properly executes and returns the accompanying proxy, but does not indicate any
voting instructions, such shareholder's shares will be voted as follows:
(i) FOR the election of each nominee listed below as director of
the Company;
(ii) FOR the adoption of the Stock Option Plan;
(iii) FOR the adoption of the Outside Directors Plan; and
(iv) at the discretion of the proxy holders on any other matter
that may properly come before the meeting or any adjournment
thereof.
If any other matter or business is brought before the Annual Meeting,
the proxy holders may vote the proxies in their discretion. The Board of
Directors does not currently know of any such other matter or business.
PROPOSAL I
ELECTION OF DIRECTORS
NUMBER OF DIRECTORS
The Bylaws of the Company provide that the number of Directors may be
determined from time to time by the Board of Directors. The number of members
of the Board of Directors was five (5) following the last Annual Meeting of
Shareholders in 1999. However, on March 28, 2000, the Board of Directors
approved resolutions that will decrease the number of Directors on the Board to
four (4) effective as of May 31, 2000, the day scheduled for the Annual
Meeting.
In the event any nominee should be unavailable to stand for election
at the time of the Annual Meeting, the proxies may be voted for a substitute
nominee selected by the Board of Directors. Management of the Company knows of
no reason why any nominee would be unable to serve.
2
<PAGE> 5
CURRENT NOMINEES
At the Annual Meeting, the holders of Common Stock as of the Record
Date will consider and vote for each of the members of the Company's Board of
Directors. The Board of Directors has nominated John Ward Hunt, William L. Amos,
Jr., M.D., Frank M. Burke, Jr., and David Samuel Coats for reelection as
Directors of the Company. The nominees are currently serving as Directors of the
Company, and if they are reelected, the nominees will continue to serve until
their terms expire upon the election and qualification of their successors, or
the earlier retirement, resignation or removal of any such nominee. Should any
nominee become unable or unwilling to accept nomination or election, the proxy
holders may vote the proxies for the election in his stead of any other person
the Board of Directors may recommend. Each of the nominees has indicated their
willingness to serve the full term.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
EACH OF THE FOREGOING NOMINEES.
The following is biographical information about each of the nominees:
See "Management" for biographical information concerning Mr. Hunt, who
is an employee of the Company.
WILLIAM L. AMOS, JR., M.D. has served as a Director of the Company
since May 1996. Dr. Amos has served as the Company's Medical Director since
1993. In 1988, Dr. Amos founded MedStrategies of Georgia, Inc., which
collaborated with MedStrategies of Virginia, Inc. to form MedStrategies, Inc.
MedStrategies offers a wide range of consulting services to managed care
organizations, providers and healthcare purchasers. Prior to founding
MedStrategies, Inc., Dr. Amos was engaged in the private practice of obstetrics
and gynecology for twelve (12) years and served as Director, Senior Vice
President and Medical Director of AFLAC. Dr. Amos was a founding Director and
first President of the American Association of Preferred Provider Organizations.
Dr. Amos has served as a Director of the Utilization Review Accreditation
Commission. Dr. Amos received his Bachelors of Science degree from the Georgia
Institute of Technology in 1966 and his Medical Doctorate from the Medical
College of Georgia in 1970. Dr. Amos completed his internship and residency in
obstetrics and gynecology at Baylor University Medical Center in 1974. Dr. Amos
is certified by the American Board of Obstetricians and Gynecologists and a
Fellow of the American College of Obstetricians and Gynecologists. See "Certain
Relationships and Related Transactions."
FRANK M. BURKE, JR. was appointed to the Board of Directors on March
22, 1999. Mr. Burke has served as Chairman, Chief Executive Officer and Managing
General Partner of Burke, Mayborn Company, Ltd., a private investment and
consulting company located in Dallas, Texas ("BMC"), since 1984. BMC provides
strategic and financial consulting to selected individuals and entities. From
1960 to 1984, Mr. Burke was associated with Peat, Marwick, Mitchell & Co., an
international firm of certified public accountants now known as KPMG, L.L.P.
Mr. Burke was elected partner in 1968, and served as a member of the Peat
Marwick Board of Directors from 1978 to 1984. During the same period Mr. Burke
served as Chairman of the Energy Group for Peat Marwick International and
National Director of Energy and Natural Resources for Peat Marwick in the United
States. Mr. Burke presently serves as a Director of Kaneb Services, Inc. (NYSE),
Kaneb Pipe Line Partners, L.P. (NYSE) and Miller Exploration Company (Nasdaq).
In addition, Mr. Burke serves on the Board of Directors of numerous private
corporations.
3
<PAGE> 6
DAVID SAMUEL COATS has served as a Director of the Company since April
1996. Mr. Coats is a self-employed business consultant and private investor.
From January 1993 until December 1998, he was President and Chief Executive
Officer of PROS Strategic Solutions, Inc. PROS is the world's leading provider
of airline revenue management systems. From January 1996 until November 1996,
Mr. Coats was a self-employed business consultant and private investor. From
1993 to 1995, Mr. Coats served as a Senior Vice President at Continental
Airlines, Inc. ("Continental"), where he was a member of the management team
that brought Continental out of bankruptcy and assisted in establishment of its
business after bankruptcy. At various periods during his tenure at Continental,
Mr. Coats was over in-flight services, reservations, customer relations and the
short haul system of Continental and Continental Express. He also served as a
member of Continental's senior management committee. Mr. Coats received his
Bachelor of Arts degree in 1964 and Juris Doctor degree in 1965 from the
University of Texas in Austin.
None of the nominees have any family relationship with each other or
any officer or director of the Company. None of the nominees are being proposed
for election pursuant to any arrangement of understanding between such nominees
and any other person, except only the Directors and executive officers of the
Company acting solely as such.
BOARD OF DIRECTORS; COMMITTEES
The Board of Directors has the responsibility for establishing
corporate policies and for the overall performance of the Company, although it
is not involved in day-to-day operations. The Board of Directors meets
regularly throughout the year to review significant developments affecting the
Company and to act upon matters requiring its approval. The Board of Directors
holds its annual meeting immediately after the Annual Meeting of Shareholders.
It also holds special meetings as required from time to time when important
matters arise requiring Board action between scheduled meetings. During the
last fiscal year, the Board of Directors met seven times.
The Board of Directors has established Audit, Compensation and Stock
Option Committees to devote attention to specific subjects and to assist it in
the discharge of its responsibilities. A description of the committees and
their functions, their current members and the number of meetings held by them
during the last fiscal year are described below.
In 1999, the Audit Committee consisted of Mr. Robert W. Philip (until
March 1999 upon his resignation from the Company's Board of Directors), Mr.
Burke (from March 1999) and Mr. Coats. The functions of the Audit Committee are
to recommend annually to the Board of Directors the appointment of the
independent public accountants of the Company, discuss and review the scope and
the fees of the prospective annual audit and review the results thereof with
the independent public accountants, review and approve non-audit services of
the independent public accountants, review compliance with existing accounting
and financial policies of the Company, review the adequacy of the financial
organization of the Company and review management's procedures and policies
relative to the adequacy of the Company's internal accounting controls and
compliance with federal and state laws relating to financial reporting. The
Audit Committee met twice during the last fiscal year.
In 1999, the Compensation Committee consisted of Mr. Robert W. Philip
(until March 1999 upon his resignation from the Company's Board of Directors),
Mr. Burke (from March 1999) and Mr. Coats. The functions of the Compensation
Committee are to review and approve annual salaries and bonuses for all
executive officers and review, approve and recommend to the Board of Directors
the terms and conditions
4
<PAGE> 7
of all employee benefits or changes thereto. The Compensation Committee also
administered the Company's 1993 Stock Compensation Plan for the benefit of
certain officers, Directors, employees and advisors of the Company (the "Prior
Option Plan"), which was terminated in March 2000. The Compensation Committee
was authorized, among other powers, to determine from time to time the
individuals to whom options shall be granted, the number of shares to be covered
by each option and the time or times at which the option was granted pursuant to
the Prior Option Plan. The Compensation Committee met three times during the
last fiscal year.
The Stock Option Committee consists of the entire Board of Directors.
The function of the Stock Option Committee is to manage and administer the
Company's Outside Directors Stock Option Plan. The Stock Option Committee did
not meet during the last fiscal year.
The Company does not have a nominating committee. The Board of
Directors as a whole performs the functions customarily attributable to a
nominating committee.
No director attended fewer than 75% of the total number of meetings of
the Board of Directors and its committees that he was required to attend.
Each non-employee director of the Company receives $1,750 for each
meeting of the Board of Directors attended, as well as reimbursement of
reasonable expenses, and $500 for each telephonic meeting of the Board of
Directors in which he participates. In addition, non-employee Directors receive
options under the Outside Directors Plan to purchase 10,000 shares of Common
Stock at fair market value upon initial election to the Board and options to
purchase 1,000 additional shares of Common Stock upon their re-election for
subsequent terms. Each year, Directors who serve as members of the Audit
Committee or the Compensation Committee are also granted options to purchase
5,000 shares of Common Stock for each committee that they serve on during a
particular year.
MANAGEMENT
The executive officers and Directors of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
William L. Amos, Jr., M.D. 55 Director
Bob E. Buddendorf 62 Senior Vice President and Chief Financial Officer
Frank M. Burke, Jr. 60 Director
David Samuel Coats 59 Director
John Ward Hunt 53 President, Chief Executive Officer and Chairman of the Board of
Directors
Donald Richard Huntington 44 President and Chief Executive Officer of MedicalControl
Network Solutions, Inc.("MNS")
Patrick W. Kennedy 35 President and Chief Executive Officer of ppoONE.com, inc.
Stephanie L. McVay 36 Senior Vice President, General Counsel and Secretary
Ralph T. Smith, Jr. 52 Senior Vice President, Network Services of MNS
</TABLE>
5
<PAGE> 8
The following is biographical information regarding the executive
officers of the Company:
BOB E. BUDDENDORF was elected Senior Vice President and Chief
Financial Officer of the Company in April 1999. Mr. Buddendorf serves as an
officer for each of the Company's subsidiaries other than the TPA subsidiary
and is on the Board of Directors of the TPA subsidiary. From July 1988 until
March 1999, Mr. Buddendorf served in various capacities (most recently as
assistant treasurer) in the treasury organization of Electronic Data Systems
Corporation, a Plano, Texas computer services firm. He has over eight years of
experience with Deloitte & Touche, an international accounting and consulting
firm, and 20 years experience as chief financial officer of three publicly held
corporations. Mr. Buddendorf received his Bachelor of Business Administration
and Master of Business Administration degrees from Southern Methodist
University in 1959 and 1961, respectively, and is a Certified Public
Accountant.
JOHN WARD HUNT has served as President of the Company since January
1989 and as Chief Executive Officer and Chairman of the Board since December
1989. Mr. Hunt is Chairman of the Board of the Company's operating subsidiaries.
From 1970 until joining the Company in 1989, Mr. Hunt was self-employed as an
investor in various operating businesses. Mr. Hunt is the managing general
partner of the principal shareholder of the Company. He received his Bachelor of
Arts in History from Washington and Lee University in 1969. See "Certain
Relationships and Related Transactions."
DONALD RICHARD HUNTINGTON has served as President and Chief Executive
Officer of MedicalControl Network Solutions, Inc. since December 1999. He has
served as President and Chief Executive Officer of Business Health Companies,
Inc. ("BHC") since June 1994. The Company acquired BHC in September 1998. Mr.
Huntington is an employee benefits professional with 20 years of experience in
the design, funding and administration of employee health care benefit plans.
His experience includes senior management in the group benefits department of
The Prudential Insurance Company of America and senior level benefits consulting
for Coopers & Lybrand and Towers Perrin. Mr. Huntington graduated from St.
John's University with a Bachelor of Science in Economics in 1978. See
"Executive Compensation-Employment Agreements."
PATRICK W. KENNEDY has served as President and Chief Executive Officer
of ppoONE.com, inc. since December 1999, Senior Vice President of ppoONE.com,
inc. from January 1998 to December 1999 and Vice President, Information
Management of the Company from August 1995 to December 1998. Mr. Kennedy was
Director of Information Technology for United Chambers Healthcare from 1994 to
1995 and Manager of Information Systems for Bristol-Meyers Squibb from 1991 to
1994. Mr. Kennedy received his Bachelor of Science degree in Computer Science
from Purdue University and his Master of Science degree in Biomechanics from
Penn State University. See "Executive Compensation-Employment Agreements."
STEPHANIE L. MCVAY has served as General Counsel and Secretary of the
Company since July 1996 and Senior Vice President and General Counsel since May
1999. She is also Senior Vice President and General Counsel for MNS and
ppoONE.com, inc., and secretary for each of the Company's subsidiaries other
than the TPA subsidiary. Prior to joining the Company, Ms. McVay practiced
corporate and securities law for eight years with the law firm of Gardere &
Wynne, L.L.P. She received her Bachelor of Business Administration degree in
Accounting from Texas A&M University in 1984 and a Juris Doctor degree from
Southern Methodist University School of Law in 1988.
RALPH T. SMITH, JR. has served as Senior Vice President, Network
Services since December 1999 and Chairman of the Board of BHC since June 1994.
The Company acquired BHC in September 1998. Prior
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<PAGE> 9
to joining BHC, Mr. Smith held senior management positions with Mitchell Energy
& Development Corp. and BJ Hughes. Mr. Smith is a graduate of University of
Massachusetts and his background includes 25 years of experience in human
resources, compensation and benefits administration. See "Executive
Compensation-Employment Agreements."
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table, and the accompanying explanatory footnotes,
includes annual and long-term compensation information on (i) the Company's
Chief Executive Officer and (ii) each executive officer who received total
annual salary and bonus in excess of $100,000, for services rendered in all
capacities during the fiscal years ended December 31, 1999, 1998 and 1997.
<TABLE>
LONG TERM
NAME AND PRINCIPAL POSITION ANNUAL COMPENSATION COMPENSATION
- --------------------------- ------------------------------------------ ---------------
FISCAL OTHER ANNUAL ALL OTHER
YEAR SALARY BONUS COMPENSATION(1) OPTIONS GRANTED COMPENSATION
---- ------ ----- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
John Ward Hunt 1999 $214,100 $75,000(3) $4,885 -0- $32,610(2)
President and Chief 1998 $262,500 $22,000 $4,379 -0- $32,610(2)
Executive Officer 1997 $250,000 -0- $3,317 -0- $32,610(2)
Donald Richard Huntington 1999 $201,800 -0- $5,000 -0- -0-
President and Chief 1998 $ 53,030 -0- -0- -0- -0-
Executive Officer 1997 -0- -0- -0- -0- -0-
MNS(4)
Patrick W. Kennedy 1999 $140,833 -0- $2,479 110,000(5) -0-
President and Chief 1998 $145,875 -0- $2,627 20,000(6) -0-
Executive Officer of 1997 $117,500 -0- $1,243 20,000(7) -0-
ppoONE.com, inc.
Ralph T. Smith 1999 $201,800 -0- $5,000 -0- -0-
Senior Vice President 1998 $ 53,030 -0- -0- -0- -0-
Network Services of 1997 -0- -0- -0- -0- -0-
MNS(4)
Robert O. Brooks(8) 1999 $137,750 25,000(3) $3,394 225,000(9) -0-
Executive Vice President 1998 $162,750 -0- $3,423 -0- -0-
Chief Operating Officer 1997 $154,200 -0- $3,759 25,000(10) -0-
</TABLE>
(1) The amounts reflect the Company's contributions on behalf of the persons
indicated to the 401(k) Plan.
(2) Reflects the amount paid by the Company for certain split dollar insurance
and/or deferred compensation/salary continuation for the benefit of J. Ward
Hunt.
(3) Represents a bonus that was granted in 1998, but paid in 1999.
(4) Messrs. Huntington and Smith joined the Company in September 1998 when the
Company purchased BHC.
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<PAGE> 10
(5) On June 24, 1999, the Company granted Mr. Kennedy an option to purchase
110,000 shares at $7.375 per share expiring June 24, 2009. Subject to
certain terms and conditions, this option vests and may be exercised 20%
per year on a cumulative basis commencing June 24, 2000.
(6) On December 15, 1998, the Company granted Mr. Kennedy an option to purchase
20,000 shares at $7.63 per share expiring December 15, 2008. This option is
fully vested.
(7) On August 18, 1997, the Company granted Mr. Kennedy an option to purchase
20,000 shares at $3.375 per share expiring August 18, 2007. Mr. Kennedy has
exercised this option.
(8) Mr. Brooks ceased to be employed by the Company in December 1999.
(9) On February 10, 1999, the Company granted Mr. Brooks an option to purchase
225,000 shares at $7.625 per share expiring February 10, 2009. This option
has been forfeited.
(10) On August 15, 1997, the Company granted Mr. Brooks an option to purchase
25,000 shares at $3.38 per share expiring August 15, 2007. Mr. Brooks
exercised this option to purchase 10,000 shares. The remaining shares under
this option were forfeited.
401(k) PLAN
Effective January 1, 1991, as amended April 1, 1992, the Company
adopted a 401(k) Profit Sharing Plan (the "401(k) Plan") that is qualified
under Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code"). The 401(k) Plan is available to each Company employee who meets
certain eligibility requirements. Employees may begin participation in the
401(k) Plan in January, April, July and October of each year any time after one
year of employment. Participating employees may contribute a portion of their
compensation not exceeding a limit set annually by the Internal Revenue
Service. The Company typically makes matching contributions for eligible
employees in an amount of 50% of the first 5% of the employee's contribution.
STOCK OPTION PLANS
The following table sets forth certain information with respect to the
options granted during the fiscal year ended December 31, 1999, to each
executive officer of the Company listed in the Summary Compensation Table set
forth above.
OPTION GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
Percent of
Total Options Exercise or
Number of Granted to Base Price in
Options Employees in Dollars per Expiration Grant Date
Name Granted(1) Fiscal Year Share(2) Date Present Value
---- ----------- ------------ ----------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
John Ward Hunt -0- -0- -- -- --
Donald Richard Huntington -0- -0- -- -- --
Patrick W. Kennedy 110,000 20.3% $7.375 6-24-09 $359,700
Ralph T. Smith, Jr. -0- -0- -- -- --
Robert O. Brooks 225,000(3) 41.4% $7.625 2-09-09 $645,750
</TABLE>
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<PAGE> 11
(1) Options vest over a five (5) year period from date of grant at the rate of
20% per year.
(2) Closing price of Common Stock at date of grant.
(3) All of which have been forfeited.
The following table sets forth certain information with respect to the
options exercised by the executive officers named above during the year ended
December 31, 1999:
<TABLE>
<CAPTION>
Shares Number of Unexercised Value of Unexercised In-the-
Acquired Options Money Options
on Value at December 31, 1999 at December 31, 1999(1)
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- --------- ---------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John Ward Hunt 300,000(2) $1,153,875 500,000 -0- -0- -0-
Donald Richard Huntington -0- -0- -0- -0- -0- -0-
Patrick W. Kennedy -0- -0- 39,000 110,000 $114,775 $137,500
Ralph T. Smith, Jr. -0- -0- -0- -0- -0- -0-
Robert O. Brooks 46,000 $ 115,900 -0- -0- -0- -0-
</TABLE>
(1) Based upon the closing price of the Common Stock of the Company on December
31, 1999, which was $8.625 per share.
(2) The Partnership exercised options to purchase 267,000 shares on June 14,
1999 by tendering 141,843 shares of the Company's Common Stock having a
fair market value of $8.00 per share on that date.
EMPLOYMENT AGREEMENTS
In connection with the acquisition of BHC in 1998, Messrs. Huntington
and Smith entered into employment agreements with a subsidiary of the Company.
Under the provisions of these agreements, a subsidiary of the Company agreed to
employ Messrs. Huntington and Smith until September 1, 2003, subject to certain
exceptions, and to pay them each a base salary of at least $200,000 and to
provide to them certain perquisites. These employment agreements also contain
non-competition covenants which would restrict Messrs. Huntington and Smith
from competing with the Company in the States of Texas, Louisiana, New Mexico,
Arkansas, Oklahoma, Mississippi, Alabama and Tennessee for three years after
their employment terminates.
Effective January 1, 1998, Mr. Kennedy entered into an employment
agreement with a subsidiary of the Company. Under the provisions of the
agreement, a subsidiary of the Company agreed to employ Mr. Kennedy until June
30, 2002, subject to certain exceptions, and to pay him a base salary of at
least $140,000 and to provide to him certain perquisites. This employment
agreement also contains non-competition covenants which would restrict Mr.
Kennedy from competing with the subsidiary in the United States for two years
after his employment terminates. This agreement was amended in 1999 to provide
that upon a change of control of the Company or the subsidiary, Mr. Kennedy may
elect to exercise and sell the shares underlying the 110,000 incentive stock
options granted to him in June 1999 and have the subsidiary pay him an amount
in cash equal to $400,000, less the net proceeds of the sale of such shares, or
he may retain such options.
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<PAGE> 12
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than ten percent of the Common Stock, to file initial reports of ownership
(Form 3) and reports of changes in ownership (Form 4) with the Securities and
Exchange Commission. Executive officers, directors and greater than ten percent
beneficial owners are required by the Commission to furnish the Company with
copies of all Section 16(a) forms they file. Based upon a review of the copies
of such forms furnished to the Company, the Company believes that all Section
16(a) filing requirements applicable to its executive officers, directors and
greater than ten percent beneficial owners were met during the year ended
December 31, 1999, except Mr. Burke had one late Form 4 filing relating to the
purchase of shares of Common Stock by BMC, and the Company has no record of any
Form 3, Form 4 or Form 5 filings by Mr. Daniel Keane.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company served as a member of the
Compensation Committee (or other board committee performing similar functions
or, in the absence of any such committee, the entire board of directors) of
another corporation, one of whose executive officers served on the Compensation
Committee. No executive officer of the Company served as a director of another
corporation, one of whose executive officers served on the Compensation
Committee. No executive officer of the Company served as a member of the
Compensation Committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire board of
directors) of another corporation, one of whose executive officers served as a
director of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Answer Partnership, Ltd. (the "Partnership") is a Texas limited
partnership that is owned 62.5% by J. Ward Hunt and 37.5% by The Essential
Endowment Trust (the "Trust"). Each of them owns a 1% general partnership
interest in the Partnership, with the balance of their respective interests
being held as limited partnership interests. The Partnership was organized
effective as of July 3, 1992, for purposes of acquiring all of the then-issued
and outstanding Common Stock. Mr. Hunt, President and Chief Executive Officer
of the Company, is the Managing Partner of the Partnership and controls the
day-to-day management of the Partnership. The Trust is a Texas irrevocable
trust that was formed effective as of July 2, 1992, for purposes of acquiring
an interest in the Partnership for the primary benefit of three children of Mr.
Hunt. In the event that Mr. Hunt should withdraw, or cease to serve, as
Managing Partner, the successor Managing Partner under the terms of the
partnership agreement for the Partnership would be Hilre Lucille Hunt and
Thomas R. Corbett, as Co-Trustees of the Trust. The Partnership is authorized
to invest generally in any type of property and to hold or develop and to sell,
exchange or otherwise dispose of all or any part of the Partnership property
and carry on any other business or businesses and exercise any and all powers
as may be permitted by law.
On October 2, 1994, the Company approved a five-year loan to Mr. Hunt
of up to $300,000. On March 24, 1998, the Company extended the maturity date of
the loan to November 1, 2000. The loan is secured by the pledge of 70,000
shares of the Company's Common Stock by the Partnership and is guaranteed by
the Partnership. The loan accrues interest at the variable rate of prime plus
one percent per annum. The outstanding principal and accrued interest on the
loan as of April 1, 2000 was approximately $455,580.
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<PAGE> 13
On March 18, 1998, the Partnership obtained a revolving line of credit
facility having a borrowing limit equal to $1,400,000 from Inwood National Bank
(the "Bank"). Under the terms of the Partnership's credit facility with the
Bank, the Partnership executed a promissory note dated November 1, 1997 (the
"Note") in the principal amount of $1,400,000. The Note was renewed as of March
13, 2000, and the amount available under the credit facility was reduced to
$1,130,000. The Note bears interest at a variable rate equal to one percent
over prime. The Partnership is required to pay accrued interest on the
principal of the Note on a monthly basis with a final payment of unpaid
principal and accrued interest due and payable on July 13, 2000. All interest
payments are current, and the outstanding principal balance of the Note as of
April 15, 2000, was approximately $1,080,000. The Note is secured by a Pledge
Agreement dated March 18, 1998, wherein the Partnership pledged 700,000
registered shares of Common Stock as security for the Bank. The Note is also
secured by a Commercial Continuing Guaranty entered into between Mr. Hunt, as
guarantor, and the Bank. The Partnership retains the right to vote the Common
Stock for so long as no default has occurred under the Note or the Pledge
Agreement. The Partnership is currently in compliance with the terms of the
Note and the Pledge Agreement. Although the Partnership intends to comply with
the terms of the Note, any inability or failure by the Partnership to comply
with the terms of the Note and Pledge Agreement may result in the Bank
foreclosing on the pledged shares of Common Stock, which it may be required to
sell under current federal banking regulations.
Dr. Amos serves as the Medical Director for MedicalControl Network
Solutions, Inc. and Value Check, Inc., indirect wholly owned subsidiaries of the
Company, on a consultant basis. For such services, the Company pays
MedStrategies of Georgia, Inc., a corporation in which Dr. Amos is the sole
shareholder, $5,250 per month plus expenses. For any hours worked in excess of
35 hours per month, the Company pays MedStrategies $225 per hour for PPO related
services and $150 per hour for utilization review related services. For services
provided by Dr. Amos during the year ended December 31, 1999, the Company paid
MedStrategies of Georgia, Inc., consulting fees and expenses equal to $68,682.
Messrs. Huntington and Smith are former shareholders of BHC which was
acquired in September 1998 by the Company. In consideration of their shares of
BHC common stock, the Company paid to each of Messrs. Huntington and Smith
approximately $921,000 in cash and issued 199,467 shares of Common Stock to
each of them. In addition, the Company issued convertible subordinated
promissory notes to each of them in the original principal amount of
$428,571.43. These notes were converted into 161,903 shares of Common Stock at
an effective conversion price of $5.25 per share. In addition, Messrs.
Huntington and Smith also entered into employment agreements with a subsidiary
of the Company as described under the caption "Executive Compensation."
The Company does not currently intend to engage in future transactions
with Mr. Hunt or any affiliated persons in the future other than the consulting
arrangement with Dr. Amos. All ongoing and any future transactions with
affiliates are and will be on terms no less favorable to the Company than could
have been or could be obtained by the Company from unaffiliated parties. The
Company may seek competitive bids and related market data prior to any such
transaction. Further, any loans to officers, affiliates or shareholders of the
Company will be subject to review and approval by a majority of the
disinterested Directors of the Company.
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<PAGE> 14
PROPOSAL 2
MEDICALCONTROL, INC. STOCK OPTION AND INCENTIVE PLAN
The Company is seeking approval of the Stock Option Plan. The Stock
Option Plan would provide for up to two million shares of Common Stock to be
issued under the plan, plus any shares that are represented by grants under the
Prior Option Plan or any other stock option plan of the Company that are
forfeited, expire or are canceled without delivery of such shares or result in
the forfeiture of shares back to the Company. The purposes of the Stock Option
Plan are to (i) attract and retain persons eligible to participate in the plan;
(ii) motivate participants in the plan, by means of appropriate incentives, to
achieve long-range goals; (iii) provide incentive compensation opportunities
that are competitive with those of other similar companies; and (iv) further
align eligible employees' interests with those of the Company's other
shareholders through compensation that is based on the Common Stock; and
thereby promote the long-term financial interest of the Company, including the
growth in value of the Company's equity and enhancement of long-term
shareholder return.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADOPTION
OF THE STOCK OPTION PLAN.
THE STOCK OPTION PLAN
The Stock Option Plan provides for the issuance to employees,
non-employee Directors and eligible independent contractors (collectively
"Optionees") of shares of Common Stock pursuant to the grant of incentive stock
options ("ISO's"), non-qualified stock options ("NQSO's"), stock appreciation
rights ("SAR's") and restricted stock and rights to receive restricted stock
("Stock Awards"). The Compensation Committee of the Board of Directors (the
"Committee") has the authority to determine to whom stock options and other
equity compensation awards will be granted and the terms of any such award,
including the number of shares subject to each award and the vesting provisions
of each award. Subject to the terms of the Stock Option Plan, the Committee may
also amend the terms of any outstanding award.
The option price per share of Common Stock under the Stock Option Plan
is determined by the Committee at the time of each grant; provided, however,
that the option price per share for any ISO or SAR shall not be less than 100%
of the fair market value of the Common Stock at the time of the grant. For
purposes of the Stock Option Plan, "fair market value" of the Common Stock
shall be the mean between the lowest and highest reported sales price of Common
Stock on the date in question or if no sales are reported on such date, then
the closing price on such date. If the Common Stock is not listed on a stock
exchange, then "fair market value" shall be the mean of the lowest reported bid
price and highest reported ask price on such date, or an amount determined in
good faith by the Committee if it is also not traded in the over-the-counter
market as of such date.
Stock options or other awards under the Stock Option Plan are
exercisable at such time or times as are determined by the Committee. Payment
for the exercise of an option or SAR is required to be paid at the time of
exercise, and shall be made in cash or by tendering shares of Common Stock, by
actual delivery of shares or attestation based on a valuation of the shares on
the date of exercise. The Committee may also allow a participant to have a
third party sell shares to be acquired upon exercise and remit the proceeds to
the Company in payment of the exercise price.
The following additional maximums are imposed under the Plan, subject to
any adjustments resulting from stock splits, recapitalizations, mergers or
other significant corporate transactions: (i) the maximum number of shares of
Common Stock that may be issued under ISO's shall be 2,000,000 shares, (ii) the
maximum number of shares of Common Stock that may be issued in conjunction with
Stock Awards shall be 1,000,000 shares, (iii) the
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<PAGE> 15
maximum number of shares that may be granted to any one individual pursuant to
ISO's, NQSO's and SAR's shall be 500,000 shares during any fiscal year, and (iv)
the maximum payment that can be made for awards granted to any one individual
pursuant to Stock Awards shall be $1,000,000 for any single or combined
performance goals established for any fiscal year, based upon the fair market
value of a share of Common Stock on the first day of the applicable performance
period.
The Stock Option Plan may be amended, suspended or terminated at any
time by the Board of Directors, without shareholder approval, in such respects
as the Board of Directors may deem advisable; provided, however, that no
amendment may be made without shareholder approval when such approval is
required by Rule 16b-3 promulgated under the Exchange Act, the requirements of
Nasdaq, or any other applicable law, rule or regulation. An amendment,
suspension or termination will not affect any option previously granted under
the Stock Option Plan without the consent of the optionee so affected.
An Optionee who received stock options will not normally realize any
income, nor will the Company normally receive any deduction for federal income
tax purposes, upon the grant of an ISO or NQSO.
When an NQSO is exercised, the Optionee will generally realize ordinary
income (compensation) measured by the difference between the aggregate exercise
price of the Common Stock as to which the NQSO is exercised and the aggregate
fair market value of the Common Stock on the exercise date, and the Company
generally will be entitled to a deduction equal to the amount the Optionee is
required to treat as ordinary income, but only if the Company withholds federal
income tax with respect to such amount. An Optionee's holding period for the
shares received on exercise of an NQSO will commence on the date the option is
exercised, and his basis in the shares will equal his option price plus the
amount included in income on exercise of the option.
An Optionee generally will not recognize any income upon the exercise of
an ISO, but the exercise may, depending on particular factors relating to the
Optionee, subject the Optionee to the alternative minimum tax. An Optionee will
recognize capital gain or loss in the amount of the difference between the
exercise price and the sale price on the sale or exchange of stock acquired
pursuant to the exercise of an ISO, provided that the Optionee does not dispose
of such stock within two years from the date of grant and one year from the
date of exercise of the ISO (the "Required Holding Period"). An Optionee
disposing of such shares before the expiration of the Required Holding Period
will recognize ordinary income equal to the lesser of (i) the difference
between the option price and the fair market value of the stock on the date of
exercise, or (ii) the total amount of gain realized. The maximum federal income
tax rate on the remaining gain or loss generally depends on how long the shares
are held. The Company will not be entitled to a federal income tax deduction in
connection with the exercise of an ISO, except where the Optionee disposes of
the shares of Common Stock received upon exercise before the expiration of the
applicable Required Holding Period.
The tax consequences of SAR's, restricted stock and performance units
are not discussed herein, as the Company has not granted any of the foregoing
at the present time and has no current expectations to do so.
In addition, the Stock Option Plan has established for officers and
Directors of the Company an exemption from the provisions of Section 16(b) of
the Exchange Act for the grants of options. Section 16(b) provides for recovery
by the Company of profits made by officers and Directors on short-term trading
in shares of Common Stock. Grants of options to purchase Common Stock under the
Stock Option Plan by officers and employee-Directors may be entitled to an
exemption from the operation of Section 16(b), provided certain conditions are
met under the rules and regulations of the Commission.
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<PAGE> 16
Approval of the Stock Option Plan requires the affirmative vote of the
holders of a majority of the shares of the Common Stock represented at the
Annual Meeting.
PROPOSAL 3
MEDICALCONTROL, INC.
2000 NON-EMPLOYEE DIRECTOR COMPENSATION PLAN
On March 28, 2000, the Board of Directors approved the adoption of the
Directors Compensation Plan in order to further enhance the ability of the
Company to retain qualified persons who are not employees to serve as
Directors, by allowing them to elect to be paid their director fees in Common
Stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE
DIRECTORS COMPENSATION PLAN.
The Directors Compensation Plan provides for the issuance of up to
100,000 shares of Common Stock to Directors of the Company who are not
employees of the Company or any corporate affiliate of the Company. The purpose
of the Directors Compensation Plan is to promote the interests of the Company
and its shareholders by attracting, retaining and providing an incentive to
non-employee Directors through the acquisition of an equity interest in the
Company and an increased personal interest in its performance. The Directors
Compensation Plan will fulfill its purpose by allowing non-employee Directors
to elect to receive shares of Common Stock instead of cash as payment of the
directors fees paid to non-employee members of the Board of Directors. See
"Board of Directors; Committees."
Under the Directors Compensation Plan, eligible Directors may file with
the Secretary of the Company or other designee of the Board of Directors a
notice electing to receive payment of his directors fees in shares of Common
Stock for a particular calendar year. The notice may be filed at any time prior
to December 1 of the calendar year preceding the applicable year for which the
fees will be earned. If a notice electing payment in Common Stock is not filed
prior to December 1 of the prior calendar year, the directors fees for the
succeeding calendar year will be paid in cash. Once a notice is filed, it is
effective and irrevocable for all subsequent years until another notice is
filed by the director terminating his election to be paid fees in shares of
Common Stock. If a non-employee director files the appropriate notice, his
director fees will be paid in shares of Common Stock on the first business day
in January following the year of service, based upon the market value of the
Common Stock on such day.
The Board of Directors shall administer the Directors Compensation Plan.
The Board of Directors shall have complete authority to amend the plan at any
time, except for any increase in the number of shares of Common Stock
authorized under the Directors Compensation Plan or any other amendment that
requires shareholder approval under applicable law or Nasdaq regulations. No
amendment or termination of the Directors Compensation Plan will affect the
rights of participating Directors with respect to options outstanding at the
time of such termination or amendment.
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<PAGE> 17
PRINCIPAL SHAREHOLDERS AND OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of April 1, 2000, by (i) all persons known by
the Company to be the owner of record or beneficially of more than five percent
of the outstanding Common Stock, (ii) each director of the Company, (iii) each
executive officer of the Company listed in the Summary Compensation Table set
forth under the caption "Executive Compensation" and (iv) all Directors and
executive officers as a group. Except pursuant to applicable community property
laws and except as otherwise indicated, each shareholder identified in the
table possesses sole voting and investment power with respect to its or his
shares.
<TABLE>
<CAPTION>
Name Shares Beneficially Owned(1) Percent of Shares
---- ---------------------------- -----------------
<S> <C> <C>
Daniel A. Keane 630,190(2) 13.49%
Lois H. Keane 291,700 6.24%
William L. Amos, Jr., M.D. 20,000(3) *
Frank M. Burke, Jr. and 72,000(4) 1.53%
Burke, Mayborn Company, Ltd.
David Samuel Coats 34,000(5) *
John Ward Hunt and 3,315,657(6) 64.10%
The Answer Partnership, Ltd.
Donald Richard Huntington 40,916 *
Patrick W. Kennedy 20,000(5) *
Ralph T. Smith 40,810 *
Robert O. Brooks(7) - *
All named Executive Officers and 4,226,673(8) 79.68%
Directors as a Group (8 persons)
</TABLE>
- ----------------------------
* Less than one percent.
(1) Includes shares issuable upon exercise of stock options which are or will
be exercisable prior to May 31, 2000.
(2) Includes 14,275 shares held by Mr. Keane's wife, Susan S. Keane, over which
he has joint investment authority, 291,700 shares held by his mother, Lois
H. Keane, over which he has sole investment authority, 32,600 shares held
jointly with his son, Benjamin P. Keane, and 134,600 shares held jointly
with Susan S. Keane.
(3) Includes 13,000 shares with respect to which Dr. Amos has the right to
acquire by virtue of outstanding vested options.
(4) Includes 31,000 shares with respect to which Mr. Burke has the right to
acquire by virtue of outstanding vested options. Includes 41,000 shares
owned by BMC, which may be deemed beneficially owned by Mr. Burke (within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) since, as the Chairman, Chief Executive Officer and managing
General Partner of BMC, Mr. Burke has the power to direct the voting and
disposition of such shares. The business address of BMC is 5500 Preston
Road, Suite 315, Dallas, Texas 75205.
(5) All of which represent shares with respect to which the officer or director
has the right to acquire by virtue of outstanding vested options.
(6) Includes 500,000 shares with respect to which J. Ward Hunt has the right to
acquire by virtue of outstanding vested options. Includes 2,696,157 shares
held of record and beneficially by The Answer Partnership, Ltd. but may
also be deemed to be beneficially owned by Mr. Hunt (within the meaning of
Rule 13d-3 under the
15
<PAGE> 18
Securities Exchange Act of 1934, as amended) since, as managing partner of
such partnership, Mr. Hunt has the power to direct the voting and
disposition of such shares. See "Certain Relationships and Related
Transactions" for further information concerning The Answer Partnership,
Ltd. The business address of Mr. Hunt and The Answer Partnership, Ltd. is
8625 King George Dr., Suite 300, Dallas, Texas 75235.
(7) Mr. Brooks ceased to be an employee of the Company on December 13, 1999.
All of the options granted to Mr. Brooks were terminated as of December 23,
1999, as a result of ceasing to be an employee.
(8) Includes options to purchase 632,000 shares of Common Stock.
AUDITORS
Grant Thornton LLP, independent certified public accountants, serves as
the Company's independent auditors. A representative of Grant Thornton LLP will
attend the Annual Meeting and will have the opportunity to make a statement if
he or she so desires. This representative will be available to respond to
appropriate shareholder questions at that time.
PROPOSALS OF SHAREHOLDERS FOR PRESENTATION AT NEXT ANNUAL MEETING OF
SHAREHOLDERS
Any shareholder of record of the Company, who desires to submit a proper
proposal for inclusion in the Proxy materials relating to the next Annual
Meeting of Shareholders, must do so in writing and it must be received at the
Company's principal executive offices by January 1, 2001. The proponent must be
a record or beneficial owner entitled to vote at the next annual meeting on his
or her proposal and must continue to own such security entitling him or her to
vote through the date on which the meeting is held.
ANNUAL REPORT ON FORM 10-KSB
The Company's Annual Report on Form 10-KSB has been distributed to all
record holders as of the record date. The Annual Report on Form 10-KSB is not
incorporated in the Proxy Statement and is not to be considered a part of the
soliciting material.
OTHER BUSINESS
Management of the Company is not aware of any other matters that are to
be presented at the Annual Meeting and has not been advised that other persons
will present any such matters. However, if other matters properly come before
the Annual Meeting, the individual named in the accompanying proxy card shall
vote on such matters in accordance with his best judgment.
ADDITIONAL INFORMATION
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone or telegraph by officers, Directors and other employees of
the Company, who will not receive additional compensation for such services.
The Company may also request brokerage houses, nominees, custodians and
fiduciaries to forward the soliciting material to the beneficial owners of
stock held of record and will reimburse such persons for forwarding such
material at the rates suggested by the New York Stock Exchange. The Company
will bear the cost of this solicitation of proxies. Such costs are expected to
be nominal. Proxy solicitation will commence with the mailing of this Proxy
Statement and enclosed Proxy on or about May 2, 2000.
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<PAGE> 19
FORM OF PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF THE SHAREHOLDERS OF MEDICALCONTROL, INC.
TO BE HELD MAY 31, 2000
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Shareholders of MedicalControl, Inc. (the "Company") to be held on
May 31, 2000, at 9:30 a.m., local time, at the Company's executive offices,
8625 King George Drive, Suite 300, Dallas, Texas 75235 and the Proxy Statement
in connection therewith, and appoints John Ward Hunt and Bob Buddendorf, and
each of them, as the lawful agents and proxies of the undersigned (with all
powers the undersigned would possess if personally present, including full
power of substitution), and hereby authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of MedicalControl, Inc. held
of record by the undersigned as of the close of business on April 24, 2000, at
the Annual Meeting of Shareholders or any adjournment or postponement thereof.
1. ELECTION OF DIRECTORS.
_____ FOR all nominees listed below (except as marked to the contrary
below)
_____ WITHHOLD authority to vote for all nominees listed below
J. Ward Hunt, William L. Amos, Jr. M.D., Frank M. Burke, Jr., and
David Samuel Coats
(INSTRUCTION: To withhold authority to vote for any nominee, write the nominees'
names on the space provided below.)
- ------------------------------------------------------
2. PROPOSAL TO APPROVE THE MEDICALCONTROL, INC. STOCK OPTION AND INCENTIVE
PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. PROPOSAL TO APPROVE THE MEDICALCONTROL, INC. NON-EMPLOYEE DIRECTOR STOCK
COMPENSATION PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. IN HIS DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON ANY MATTERS WHICH
MAY PROPERLY COME BEFORE THE ANNUAL MEETING, OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
It is understood that when properly executed, this Proxy will be voted in
the manner directed herein by the undersigned shareholder. WHERE NO CHOICE IS
SPECIFIED BY THE SHAREHOLDER, THE PROXY WILL BE VOTED "FOR" THE NAMED
PROPOSALS.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
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<PAGE> 20
The undersigned hereby revokes all previous proxies related to the shares
covered hereby and confirms all that said Proxy and his substitutes may do by
virtue hereof.
Please sign exactly as name(s)
appear below. When shares are
held by joint tenants, both
should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
Dated: ______________, 2000
------------------------------------
Signature
------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
[ ] PLEASE CHECK THIS BOX IF YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING.
- -----------------------------------------------------
18
