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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
AMENDMENT NO. 1 TO FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO _____________
COMMISSION FILE NUMBER 001-12799
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INFOCURE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 58-2271614
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
239 ETHAN ALLEN HIGHWAY, 06877
RIDGEFIELD, CT (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (203) 894-1300
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, PAR
VALUE $.001 (Title of each class)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. [ ]
The aggregate market value of the common equity held by non-affiliates
of the registrant (assuming for these purposes, but without conceding, that all
executive officers and directors are "affiliates" of the Registrant) as of April
24, 2001 (based on the closing sale price of the registrant's common stock, par
value $.001 per share, as reported on the Nasdaq National Market on such date
($2.37)) was $83,545,088. There were 37,167,352 shares of common stock
outstanding as of April 24, 2001.
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This Amendment No. 1 on Form 10-K/A to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 2000 is being filed to add the
information required to be set forth in Part III.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Information regarding executive officers of InfoCure is furnished in
Part I of this Annual Report on Form 10-K under the heading "Directors and
Executive Officers of the Registrant."
Set forth below is the name and age of each director of InfoCure as of
March 31, 2001, after giving effect to the spin-off of InfoCure's dental
business through a pro rata distribution to its stockholders of all the
outstanding common stock of PracticeWorks, Inc. (the "PracticeWorks Spin-Off"):
NAME AGE POSITION AT INFOCURE
---- --- ---------------------------------------------
Frederick L. Fine........................... 42 Chairman of the Board
Joseph M. Walsh............................. 41 President, Chief Executive Officer and
Director
Stephen N. Kahane, M.D., M.S................ 43 Vice Chairman, Chief Strategy Officer and
Director
Michael A. Manto............................ 42 Executive Vice President and Director
Kenneth R. Adams............................ 65 Director
Stephen J. DeNelsky......................... 33 Director
Frederick L. Fine, age 42, is a founder of InfoCure and currently
serves as our Chairman of the Board and senior advisor. He has served as a
director of InfoCure since its inception. Mr. Fine served as President and Chief
Executive Officer of InfoCure from July 1997 until March 2001. Mr. Fine served
as president of American Medcare from 1995 to 1997 and as president of
International Computer Solutions, a subsidiary of American Medcare, from 1994 to
1997. From 1993 to 1995, Mr. Fine served as executive vice president of American
Medcare, and from 1985 to 1994 served as executive vice president of
International Computer Solutions, which he co-founded in 1985. From 1991 to
1993, Mr. Fine served as vice president of Newport Capital, Inc., predecessor to
American Medcare. From 1983 to 1985, Mr. Fine was associated with Informatics
General Corporation, a supplier of accounting software, and from 1981 to 1983
was associated with Moore Business Systems, a division of Moore Corporation
Ltd., a provider of practice management systems.
Joseph M. Walsh, age 41, has served as President and Chief Executive
Officer and as a director of InfoCure since March 2001. From April 2000 until
March 2001, Mr. Walsh served as president of InfoCure's VitalWorks division.
From 1987 until April 2000, Mr. Walsh served as president and chief executive
officer of Micro-Designs Software Corporation, a healthcare practice management
company specializing in oral and maxillofacial and plastic surgery practices.
InfoCure acquired Micro-Designs in 1998.
Stephen N. Kahane, M.D., M.S., age 43, has served as Vice Chairman and
Chief Strategy Officer and as a director of InfoCure since March 2001. From
November 1999 until March 2001, Dr. Kahane served as President of E-Health for
InfoCure and then as Chief Strategy Officer of InfoCure's VitalWorks division.
From October 1996 until November 1999, he served as president and chief
executive officer of Datamedic Holding Corp., a practice management and clinical
software company specializing in ophthalmology and general medical practices.
Datamedic was acquired by InfoCure in 1999. From October 1988 to October 1996,
Dr. Kahane was a co-founder and senior executive at a clinical software
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company, Clinical Information Advantages, Inc. Dr. Kahane also trained and
served on the faculty at The Johns Hopkins Medical Center.
Michael A. Manto, age 42, has served as Executive Vice President and as
a director of InfoCure since March 2001. From July 2000 until March 2001, he
served as Executive Vice President of InfoCure's VitalWorks division. From 1991
until 2000, Mr. Manto was with Hyperion Solutions Corporation, a multinational
business software company, where he served as vice president and corporate
controller. Mr. Manto also served as interim chief financial officer of Hyperion
Software Corporation. Prior to joining Hyperion, Mr. Manto, a certified public
accountant, worked at Ernst & Young LLP.
Kenneth R. Adams, age 65, has served as a director of InfoCure since
March 2001. From 1984 until his retirement in 1998, Mr. Adams served in various
capacities with SunGard Data Systems Inc., a provider of integrated information
technology solutions to the financial services industry. From October 1988 until
December 1995, Mr. Adams was chairman and chief executive officer of the SunGard
Disaster Recovery business unit, and from January 1996 until December 1998, Mr.
Adams served as chief executive officer of SunGard Healthcare Systems Inc.
Stephen J. DeNelsky, age 33, has served as a director of InfoCure since
March 2001. In December 2000, he founded Sapphire Capital Management LLC, a New
York-based investment fund, and he currently serves as its managing partner.
From June 1999 until December 2000, Mr. DeNelsky was a senior research analyst
at Credit Suisse First Boston's Health Care Equity Research Group, covering
primarily the healthcare information technology and e-health sectors. From
January 1996 to June 1999, Mr. DeNelsky occupied senior research analyst
positions at Deutsche Banc Alex. Brown, ING Barings Furman Selz and McDonald &
Company Securities.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the directors, executive officers and the holders of more than
10% of InfoCure's common stock to file with the SEC initial reports of ownership
of InfoCure's common stock and other equity securities on a Form 3 and reports
of changes in such ownership on a Form 4 or Form 5. Officers, directors and 10%
stockholders are required by Securities and Exchange Commission regulations to
furnish us with copies of all Section 16(a) forms that they file. Based solely
on our review of copies of reports filed by reporting persons or written
representations from certain reporting persons that no Form 5 filing was
required for such person, we believe that during fiscal year 2000, all filings
required to be made by our reporting persons were timely made in accordance with
the requirements of the Exchange Act.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth information
regarding total compensation paid by InfoCure for services rendered by our Chief
Executive Officer and our other most highly compensated executive officers whose
annual salary and bonus exceeded $100,000 during 2000 (collectively, the "Named
Executive Officers"). The individuals listed in the table held their positions
at December 31, 2000. In connection with the PracticeWorks Spin-Off, Messrs.
Perlman, Price and Cochran resigned as executive officers of InfoCure to take
executive positions at PracticeWorks, and Mr. Fine resigned as our Chief
Executive Officer and President. Mr. Fine continues to serve as our Chairman of
the Board.
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SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION OTHER RESTRICTED SECURITIES
NAME AND FISCAL ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS($)(2) OPTIONS (#) COMPENSATION($)(3)
Frederick L. Fine 2000 $ 145,833 $ 4,000 $ ----- $ ----- 1,200,200 $ 9,350
Chief Executive Officer 1999 125,000 19,500 15,683 ----- 440,200 9,621
and President 1998 124,000 33,333 16,911 428,750 350,200 9,600
Richard E. Perlman(4) 2000 215,833 ----- ----- ----- 1,200,100 -----
Chairman of the Board 1999 120,000 23,500 17,380 ----- 440,100 4,000
and Treasurer 1998 120,000 33,333 ----- 367,500 320,000 -----
James K. Price(4) 2000 209,375 4,000 ----- ----- 1,200,200 9,600
Executive Vice President 1999 125,000 19,500 19,452 ----- 440,200 9,600
and Secretary 1998 125,000 33,333 19,270 367,500 320,200 -----
James A. Cochran(4)(5) 2000 145,334 25,000 18,000 ----- 250,100 -----
Senior Vice President - 1999 52,083 ----- 7,500 ----- 300,000 -----
Finance and Chief
Financial Officer
(1) The amounts presented for 2000 include an automobile allowance for
the use of a vehicle in the amount of $12,000 and compensation for
business expenses in the amount of $6,000 for Mr. Cochran. The
amounts presented for 1999 include an automobile allowance for the
use of a vehicle in the amount of $9,683 for Mr. Fine, $11,380 for
Mr. Perlman, $13,452 for Mr. Price and $5,000 for Mr. Cochran and
compensation for business expenses in the amount of $6,000 for each
of Messrs. Fine, Perlman and Price and $2,500 for Mr. Cochran. The
amounts presented for 1998 include an automobile allowance for the
use of a vehicle in the amount of $10,911 for Mr. Fine and $13,270
for Mr. Price and compensation for business expenses in the amount of
$6,000 for Messrs. Fine and Price. The compensation set forth in this
column does not include compensation in the form of perquisites or
other personal benefits for Mr. Perlman in fiscal years 1998 and 2000
and Messrs. Price and Fine in 2000 because such perquisites and other
personal benefits did not exceed the lesser of $50,000 or 10% of the
total annual salary and bonus for Messrs. Perlman, Price and Fine for
such years.
(2) The amounts presented represent the value on the date of grant of
restricted stock awards of 70,000 shares to Mr. Fine, 60,000 shares
to Mr. Perlman and 60,000 shares to Mr. Price, calculated based on
the closing price of InfoCure's common stock as reported on The
Nasdaq National Market on the date of grant. One-half of the shares
awarded to Messrs. Fine, Perlman and Price vested in the first
quarter of 1999, and the remaining shares vested in the third quarter
of 1999. In January 1999, InfoCure entered into agreements with each
of Messrs. Fine, Perlman and Price pursuant to which the benefit of
the restricted stock awards was credited to a deferred compensation
arrangement upon vesting of the restricted stock. The value of the
restricted stock awards as of December 29, 2000, calculated as of the
closing price for our common stock on such date, was $262,500 for Mr.
Fine and $225,000 for each of Messrs. Perlman and Price.
(3) The amounts presented represent InfoCure's contribution to the 401(k)
savings plan.
(4) In connection with the PracticeWorks Spin-Off, these individuals'
options converted into options to acquire shares of PracticeWorks
common stock.
(5) Mr. Cochran joined InfoCure in August 1999.
Option Grants in Last Fiscal Year. The following table contains
information concerning the stock option grants made to the Named Executive
Officers during 2000. The amounts shown for potential realizable values are
based upon assumed annualized rates of InfoCure stock price appreciation of 5%
and 10% over the full ten-year term (or shorter term) of the options, as
required by the Securities and
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Exchange Commission, and are not intended to represent or forecast possible
future appreciation, if any, of the price of InfoCure common stock. In
connection with the PracticeWorks Spin-Off, the terms of the options granted to
Mr. Fine were adjusted in the manner described in the footnotes to the table.
The options granted to the other individuals were converted into options to
purchase shares of PracticeWorks common stock.
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE VALUE AT
ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE
UNDERLYING OPTIONS EXERCISE APPRECIATION
OPTIONS GRANTED TO PRICE EXPIRATION FOR OPTION TERM
NAME GRANTED (#) EMPLOYEES PER SHARE($/SH) DATE 5%($) 10%($)
Frederick L. Fine 200(1) * % $ 31.19 01/01/10 $ 3,923.04 $ 9,941.77
1,200,000(2) 10.0 4.44 08/21/10 3,350,750.57 8,491,459.83
Richard E. Perlman 100 * 31.19 01/01/10 1,961.52 4,970.88
1,200,000 10.0 4.44 08/21/10 3,350,750.57 8,491,459.83
James K. Price 200 * 31.19 01/01/10 3,923.04 9,941.77
1,200,000 10.0 4.44 08/21/10 3,350,750.57 8,491,459.83
James A. Cochran 100 * 5.50 08/02/10 345.89 876.56
250,000 2.1 4.44 08/21/10 698,073.04 1,769,054.13
* Less than one percent.
(1) In connection with the PracticeWorks Spin-Off, these options were
converted into options to purchase 423 shares of InfoCure common stock
at an exercise price of $14.74. The expiration date remained the same,
and the potential realizable value of such options remained
substantially the same.
(2) In connection with the PracticeWorks Spin-Off, these options were
converted into options to purchase 2,540,004 shares of InfoCure
common stock at an exercise price of $2.10. These options represent
21.3% of total options granted to employees after the PracticeWorks
Spin-Off. The expiration date remained the same, and the potential
realizable value of such options remained substantially the same.
Aggregated Option Exercises in Last Fiscal Year and Year-End Option
Value Table. Shown below is information with respect to the number of InfoCure
shares acquired upon exercise of stock options and the aggregate gains realized
on exercises during 2000 for the Named Executive Officers. The table also sets
forth the number of shares covered by exercisable and unexercisable options held
by these executive officers on December 31, 2000 and the aggregate gains that
would have been realized had these options been exercised on December 31, 2000,
even though these options were not exercised, and the unexercisable options
could not have been exercised at that time. In connection with the PracticeWorks
Spin-Off, the unexercised options held by Mr. Fine were adjusted in the manner
described in the footnotes to the table. The options held by the other
individuals were converted into options to purchase shares of PracticeWorks
common stock.
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NUMBER OF SECURITIES VALUE OF UNEXERCISED IN
SHARES UNDERLYING UNEXERCISED THE MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR END (#) FISCAL YEAR END ($) (1)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
Frederick L. Fine(2) 446,618 $ 3,806,291 270,650 1,633,732 $ 101,892 $ 173,262
Richard E. Perlman 416,618 2,996,316 133,381 1,650,200 18,670 77,151
James K. Price 416,618 2,996,316 110,000 1,533,000 ----- 1,915
James A. Cochran ----- ----- 75,000 475,100 ----- -----
(1) The closing price for our common stock as reported by The Nasdaq Stock
Market on December 29, 2000 was $3.75. The value is calculated on the
basis of the difference between the option exercise price and $3.75,
multiplied by the shares of common stock underlying the option.
(2) In connection with the PracticeWorks Spin-Off, Mr. Fine's exercisable
options and unexercisable options were converted into options to
acquire 572,876 and 3,458,071 shares, respectively, of InfoCure common
stock.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
The following are descriptions of the employment and change of control
arrangements with individuals who were our Named Executive Officers prior to the
PracticeWorks Spin-Off. In connection with the PracticeWorks Spin-Off, Messrs.
Price, Perlman and Cochran resigned as executive officers of InfoCure to take
executive positions at PracticeWorks, and Mr. Fine resigned as our Chief
Executive Officer and President. Mr. Fine continues to serve as our Chairman of
the Board.
InfoCure entered into a four-year employment agreement with Frederick
L. Fine in July 1998, and amended this agreement in June 1999. The agreement, as
amended, provided for an initial annual base salary of $125,000 and a severance
payment equal to three times the then-current annual base salary rate upon the
termination of employment by InfoCure without cause or a voluntary termination
in the event of a change of control of InfoCure. In addition, the agreement, as
amended, provided for incentive compensation pursuant to a program established
by the Board of Directors, a cash bonus payment in the event that InfoCure meets
certain earnings thresholds and a non-qualified option to purchase shares of
InfoCure's common stock at fair market value, vesting over four years. The
agreement, as amended, provided for 100% vesting of all outstanding stock
options upon a change of control of InfoCure. The agreement, as amended,
provided for an additional gross-up payment to be made to Mr. Fine in the event
that, upon a change in the ownership or effective control of InfoCure or in the
ownership of a substantial portion of the assets of InfoCure, any payments to
Mr. Fine would be subject to an excise tax under Section 4999 of the Internal
Revenue Code of 1986, as amended. Mr. Fine was able to participate in InfoCure's
employee benefit programs. In November 2000, InfoCure and Mr. Fine agreed to
mutually terminate the foregoing agreement, as amended, and entered into a new
four-year employment agreement. The terms of the new agreement are substantially
similar to the terms of the prior agreement, except that Mr. Fine is to receive
an annual base salary of $250,000 and is eligible to receive a cash bonus
identical to the cash bonus awarded to our President and/or Chief Executive
Officer. The nonqualified option to be granted under this agreement shall vest
generally over three years. The agreement also provides that during the term of
the agreement, Mr. Fine shall own or have the right to purchase an aggregate
number of shares of InfoCure's common stock which is not less than 3% of the
then-outstanding shares of common stock (on an as-converted basis).
InfoCure entered into a four-year employment agreement with James K.
Price in July 1998, and amended this agreement in June 1999. The agreement, as
amended, provided for an initial annual base salary of $125,000 and a severance
payment equal to three times the then-current annual base salary rate upon the
termination of employment by InfoCure without cause or a voluntary termination
in the event of a change of control of InfoCure. In addition, the agreement, as
amended, provided for incentive compensation pursuant to a program established
by the Board of Directors, a cash bonus payment in the event that InfoCure meets
certain earnings thresholds and a non-qualified option to purchase shares of
InfoCure's common stock at fair market value, vesting over four years. The
agreement, as amended,
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provided for 100% vesting of all outstanding stock options upon a change of
control of InfoCure. The agreement, as amended, provided for an additional
gross-up payment to be made to Mr. Price in the event that, upon a change in the
ownership or effective control of InfoCure or in the ownership of a substantial
portion of the assets of InfoCure, any payments to Mr. Price would be subject to
an excise tax under Section 4999 of the Internal Revenue Code of 1986, as
amended. Mr. Price was able to participate in InfoCure's employee benefit
programs. This agreement, as amended, was terminated in connection with the
PracticeWorks Spin-Off.
InfoCure entered into a four-year employment agreement with Richard E.
Perlman in January 1998, and amended the agreement in June 1999. The agreement,
as amended, provided for an annual base salary of $120,000 and a severance
payment equal to three times the then-current annual base salary rate upon
termination of employment by InfoCure without cause or a voluntary termination
in the event of a change of control of InfoCure. Under the agreement, as
amended, Mr. Perlman was eligible to receive incentive compensation pursuant to
a program established by the Board of Directors, a cash bonus payment in the
event InfoCure met certain earnings thresholds and a nonqualified option to
purchase shares of InfoCure's common stock at fair market value, vesting over
four years. The agreement, as amended, provided for 100% vesting of all
outstanding stock options upon a change of control of InfoCure. The agreement,
as amended, provided for an additional gross-up payment to be made to Mr.
Perlman in the event that, upon a change in the ownership or effective control
of InfoCure or in the ownership of a substantial portion of the assets of
InfoCure, any payments to Mr. Perlman would be subject to an excise tax under
Section 4999 of the Internal Revenue Code of 1986, as amended. In addition, Mr.
Perlman was able to participate in InfoCure's employee benefit programs. This
agreement, as amended, was terminated in connection with the PracticeWorks
Spin-Off.
In August 1999, InfoCure entered into a three-year employment agreement
with James A. Cochran that provided for an annual base salary of $125,000 and a
severance payment equal to three times the then current annual base salary rate
upon termination of employment by InfoCure without cause or a voluntary
termination in the event of a change of control of InfoCure. Under the
agreement, Mr. Cochran was eligible to receive incentive compensation pursuant
to a program established by the Board of Directors and a nonqualified option to
purchase shares of InfoCure's common stock at fair market value, vesting over
four years. In addition, Mr. Cochran was able to participate in InfoCure's
employee benefit programs. This agreement was terminated in connection with the
PracticeWorks Spin-Off.
The following are descriptions of the employment and change of control
arrangements made with persons serving as executive officers of InfoCure
following the PracticeWorks Spin-Off:
InfoCure entered into a four-year employment agreement with Joseph M.
Walsh on July 24, 2000. The agreement provides for an initial annual base salary
of $250,000 and a severance payment equal to three times the then-current annual
base salary rate and a pro-rated annual bonus upon the termination of employment
by InfoCure without cause or a voluntary termination in the event of a change of
control of InfoCure. In addition, the agreement provides for incentive
compensation pursuant to a program established by the Board of Directors, a cash
bonus payment in the event that certain performance goals are met and a
non-qualified option to purchase shares of InfoCure's common stock at fair
market value, generally vesting over three years. Further, the agreement
provides that during the term of the agreement, Mr. Walsh shall own or have the
right to purchase an aggregate number of shares of InfoCure's common stock which
is not less than 3% of the then-outstanding shares of common stock (on an
as-converted basis). The agreement provides for 100% vesting of all outstanding
stock options upon a change of control of InfoCure. The agreement provides for
an additional gross-up payment to be made to Mr. Walsh in the event that, upon a
change in the ownership or effective control of InfoCure or in the ownership of
a substantial portion of the assets of InfoCure, any payments to Mr. Walsh would
be subject to an excise tax under Section 4999 of the Internal Revenue Code of
1986, as amended. Mr. Walsh is able to participate in InfoCure's employee
benefit programs.
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InfoCure entered into a four-year employment agreement with Stephen N.
Kahane on July 24, 2000. The agreement provides for an initial annual base
salary of $190,000 and a severance payment equal to three times the then-current
annual base salary rate upon the termination of employment by InfoCure without
cause or a voluntary termination in the event of a change of control of
InfoCure. In addition, the agreement provides for incentive compensation
pursuant to a program established by the Board of Directors and a non-qualified
option to purchase shares of InfoCure's common stock at fair market value,
generally vesting over three years. Further, the agreement provides for a cash
bonus of $120,000 for the year ended December 31, 2000, and thereafter, a cash
bonus payment as determined by the Chief Executive Officer and/or the
Compensation Committee. The agreement provides for 100% vesting of all
outstanding stock options upon a change of control of InfoCure. The agreement
provides for an additional gross-up payment to be made to Dr. Kahane in the
event that, upon a change in the ownership or effective control of InfoCure or
in the ownership of a substantial portion of the assets of InfoCure, any
payments to Dr. Kahane would be subject to an excise tax under Section 4999 of
the Internal Revenue Code of 1986, as amended. Dr. Kahane is able to participate
in InfoCure's employee benefit programs.
InfoCure entered into a four-year employment agreement with Michael A.
Manto on July 24, 2000. The agreement provides for an initial annual base salary
of $190,000 and a severance payment equal to three times the then-current annual
base salary rate and a pro-rated annual bonus upon the termination of employment
by InfoCure without cause or a voluntary termination in the event of a change of
control of InfoCure. In addition, the agreement provides for incentive
compensation pursuant to a program established by the Board of Directors, a cash
bonus payment in the event that that certain performance goals are met and a
non-qualified option to purchase shares of InfoCure's common stock at fair
market value, generally vesting over three years. Further, the agreement
provides that during the term of the agreement, Mr. Manto shall own or have the
right to purchase an aggregate number of shares of InfoCure's common stock which
is not less than 2% of the then-outstanding shares of common stock (on an
as-converted basis). The agreement provides for 100% vesting of all outstanding
stock options upon a change of control of InfoCure. The agreement provides for
an additional gross-up payment to be made to Mr. Manto in the event that, upon a
change in the ownership or effective control of InfoCure or in the ownership of
a substantial portion of the assets of InfoCure, any payments to Mr. Manto would
be subject to an excise tax under Section 4999 of the Internal Revenue Code of
1986, as amended. Mr. Manto is able to participate in InfoCure's employee
benefit programs.
COMPENSATION OF DIRECTORS
We compensate our independent directors through the InfoCure
Corporation Directors Stock Option Plan, adopted by our directors and approved
by our stockholders in June 1998. The Directors Stock Option Plan provides to
each director who is not an employee of InfoCure or its subsidiaries, at the
time he or she is first appointed or elected to the Board of Directors, an
option to purchase 10,000 shares of common stock. On each anniversary of such
director's service on the board, each non-employee director receives annual
grants of options to purchase 2,500 shares of common stock. The Directors Stock
Option Plan also allows the Compensation Committee of the Board of Directors to
make additional grants of options to non-employee directors. All options granted
under the Directors Stock Option Plan vest at a rate of 50% upon completion of
one year of service as a director after the date of grant and 50% upon
completion of the second year of service as a director after the date of grant.
Generally, no option is transferable by the optionee other than by will or the
laws of descent and distribution, and each option is
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exercisable only by the optionee during his or her lifetime. The exercise price
of all options will be the fair market value of the shares of common stock on
the date of grant, and the term of each option may not exceed ten years. Unless
terminated sooner by the Board of Directors, the Directors Stock Option Plan
will continue in effect for a period of ten years or until all options
outstanding thereunder have expired or been exercised. As of December 31, 2000,
there were 200,000 shares of common stock reserved for issuance under the
Directors Stock Option Plan, and as of March 6, 2001, there were 423,334 shares
of common stock reserved for issuance under such plan. As of December 31, 2000,
options to acquire 70,000 shares of our common stock had been granted pursuant
to the Directors Stock Option Plan at a weighted average exercise price of $8.94
per share. In connection with the PracticeWorks Spin-Off, these options were
converted into options to purchase shares of PracticeWorks common stock. As of
March 7, 2001, options to acquire 40,000 shares of our common stock were granted
to our new non-employee directors pursuant to the Directors Stock Option Plan at
an exercise price of $1.88 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2000, the Compensation Committee consisted of James D. Elliott
and Raymond H. Welsh, our independent directors. Neither Mr. Elliott nor Mr.
Welsh has had any relationship with the Company requiring disclosure under Item
404 of Regulation S-K under the Securities Exchange Act of 1934.
None of the Company's executive officers has served as a director or
member of the compensation committee (or other committee serving an equivalent
function) of any other entity, one of whose executive officers served as a
director of or member of the Compensation Committee.
ITEM 12. STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning
beneficial ownership of our outstanding common stock as of March 31, 2001 by:
- each stockholder that we know is the beneficial owner of more than 5%
of our common stock;
- each of our directors;
- each individual named in the Summary Compensation Table; and
- all directors and current executive officers as a group.
Information with respect to "beneficial ownership" shown in the table
below is based on information supplied by the respective beneficial owners.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. For purposes of calculating the percentage
beneficially owned by a particular beneficial owner, the shares of common stock
deemed outstanding include 37,167,352 shares outstanding as of March 31, 2001,
plus all common stock issuable on exercise of options within 60 days of March
31, 2001 held by the particular beneficial owner ("Presently Exercisable
Options"). Presently Exercisable Options are deemed to be outstanding and to be
beneficially owned by the person holding such options for the purpose of
computing the percentage ownership of such person but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person. Unless otherwise noted, the mailing address of each beneficial owner is
c/o InfoCure Corporation, 239 Ethan Allen Parkway, Ridgefield, Connecticut
06877.
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SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED OWNED
------------------------ ----- -----
WebMD Corporation(1) 1,929,012 5.2%
Frederick L. Fine(2) 2,364,284 6.2
Richard E. Perlman(3) 1,058,452 2.8
James K. Price(3) 1,333,752 3.6
James A. Cochran(3) 1,060 *
Joseph M. Walsh(4) 1,054,501 2.8
Stephen N. Kahane, M.D.(5) 609,408 1.6
Michael A. Manto(6) 398,437 1.1
Kenneth R. Adams 44,000 *
Stephen J. DeNelsky 36,700 *
All directors and current executive officers as a group 4,596,330 11.5
(9 persons)(7)
* Less than one percent.
(1) Based solely upon the Schedule 13G filed by WebMD Corporation on
February 14, 2001. The mailing address for WebMD is River Drive Center
2, 669 River Drive, Elmwood Park, New Jersey 07407-1361.
(2) Includes options to purchase 996,208 shares of our common stock and
9,544 shares held in a trust for the benefit of Mr. Fine's children
and a charitable trust over which he has sole voting and investment
control.
(3) In connection with the PracticeWorks Spin-Off, Messrs. Perlman, Price
and Cochran resigned from their positions at InfoCure to take
executive positions at PracticeWorks. The mailing address for Messrs.
Perlman, Price and Cochran is c/o PracticeWorks, Inc., 1765 The
Exchange, Suite 200, Atlanta, Georgia 30339.
(4) Includes options to purchase 635,001 shares of our common stock.
(5) Includes options to purchase 563,086 shares of our common stock.
(6) Includes options to purchase 396,875 shares of our common stock.
(7) Includes options to purchase 2,680,070 shares of our common stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
InfoCure and WebMD Corporation, formerly Healtheon/WebMD Corporation
("WebMD"), entered into a Letter Agreement on February 11, 2000 (the "Letter
Agreement") providing for, among other things, WebMD's $10 million contribution
to InfoCure in exchange for 400,000 shares of convertible redeemable preferred
stock in InfoCure's VitalWorks subsidiary. In connection with this Letter
Agreement, InfoCure and WebMD entered into a Marketing Agreement. The Letter
Agreement also contemplated the investment of an additional $90 million upon
completion of an initial public offering of the VitalWorks subsidiary, subject
to regulatory approval and approval of both companies' board of directors.
Subsequently, InfoCure cancelled its previously announced plans to conduct an
initial public offering of the VitalWorks subsidiary. The terms of the agreement
with WebMD provided that because the initial public offering of the VitalWorks
subsidiary was not completed by November 11, 2000: (i) the initial $10 million
in Series A Preferred Stock of the VitalWorks subsidiary is exchangeable, at
WebMD's option, into InfoCure's common stock at a per share conversion price
equal to the average closing price of
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InfoCure's common stock for the twenty trading days immediately prior to the
ninth month anniversary of the agreement, equal to 1,929,012 shares of InfoCure
common stock, representing approximately 5.0% of InfoCure's issued and
outstanding shares, and (ii) WebMD is no longer obligated to make the additional
$90 million investment contemplated by the agreement. On March 8, 2001, InfoCure
filed a lawsuit against WebMD with respect to certain disputes arising in
connection with the Marketing Agreement. See Item 3 of this Annual Report on
Form 10-K for further discussions of this lawsuit.
On June 30, 2000, Mr. Fine borrowed $3,115,716.37 from the Company in
the form of a promissory note. As of December 31, 2000, none of the principal
had been repaid, and accrued interest approximating $156,000 was due. The note
was subsequently amended on March 5, 2001. The note, as amended, bears interest
at a rate of prime plus 0.5% (10.00% as of December 31, 2000) per annum and is
due December 31, 2001.
On June 30, 2000, Mr. Perlman borrowed $1,449,049 from the Company in
the form of a promissory note. As of December 31, 2000, none of the principal
had been repaid, and accrued interest approximating $72,000 was due. The note
was subsequently amended on March 5, 2001. The note, as amended, bears interest
at a rate of prime plus 0.5% (10.00% as of December 31, 2000) per annum and is
due December 31, 2001.
On June 30, 2000, Mr. Price borrowed $673,144 from the Company in the
form of a promissory note. As of December 31, 2000, none of the principal had
been repaid, and accrued interest approximating $34,000 was due. The note was
subsequently amended on March 5, 2001. The note, as amended, bears interest at a
rate of prime plus 0.5% (10.00% as of December 31, 2000) per annum and is due
December 31, 2001.
On June 30, 2000, the Company received a note receivable from Mr.
Fine in an amount of $2,691,882.25 in connection with Mr. Fine's exercise of
vested stock options. The note bears interest at a rate of prime plus 0.5%
(10.00% as of December 31, 2000) per annum and is due June 30, 2002. As of
December 31, 2000, the accrued interest on the note was approximately $136,000.
As of April 25, 2001, the Company renegotiated the note with Mr. Fine to provide
for extending the maturity date and waiving interest after April 1, 2001 in
exchange for Mr. Fine's placing certain shares of InfoCure common stock as
security for both loans with the Company.
On June 30, 2000, the Company received a note receivable from Mr. Price
in an amount of $2,122,800 in connection with Mr. Price's exercise of vested
stock options. The note bears interest at a rate of prime plus 0.5% (10.00% as
of December 31, 2000) per annum and is due June 30, 2002. As of December 31,
2000, the accrued interest on the note was approximately $106,000. As of this
date the Company is close to renegotiating the note with Mr. Price to provide
for extending the maturity date and waiving interest after April 1, 2001 in
exchange for Mr. Price's placing certain shares of InfoCure common stock as
security for both loans with the Company.
On June 30, 2000, the Company received a note receivable from Mr.
Perlman in an amount of $2,122,800 in connection with Mr. Perlman's exercise of
vested stock options. The note bears interest at a rate of prime plus 0.5%
(10.00% as of December 31, 2000) per annum and is due June 30, 2002. As of
December 31, 2000, the accrued interest on the note was approximately $106,000.
As of this date, the Company is close to renegotiating the note with Mr. Perlman
to provide for extending the maturity date and waiving interest after April 1,
2001 in exchange for Mr. Perlman's placing certain shares of InfoCure common
stock as security for both loans with the Company.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 on
Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly
authorized.
INFOCURE CORPORATION
By: /s/ Joseph M. Walsh
___________________________________
Date: April 30, 2001 Joseph M. Walsh
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities indicated on April 30, 2001.
SIGNATURE TITLE
_________________*__________________ Chairman of
Frederick L. Fine the Board
_________________*__________________ Chief Executive Officer,
Joseph M. Walsh President and Director
_________________*__________________ Vice Chairman, Chief Strategy
Stephen N. Kahane, M.D., M.S. Officer and Director
_________________*__________________ Executive Vice President and
Michael A. Manto Director
_________________*__________________ Principal Accounting and
James A. Cochran Financial Officer
_________________*__________________ Director
Stephen J. DeNelsky
_________________*__________________ Director
Kenneth R. Adams
* By: /s/ Joseph M. Walsh
________________________________
Joseph M. Walsh
Attorney-in-Fact
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