PROXYMED, INC.
2501 DAVIE ROAD, SUITE 230
FORT LAUDERDALE, FLORIDA 33317
(954) 473-1001
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 1998
-------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
ProxyMed, Inc., a Florida corporation (the "Company"), will be held on
Thursday, May 21, 1998, at 9 o'clock a.m., Eastern Daylight Time, at the Fort
Lauderdale Airport Hilton, 1870 Griffin Road, Dania, Florida 33004 for the
following purposes, all of which are set forth more completely in the
accompanying proxy statement:
(1) The election of 7 persons to the Board of Directors to serve until the
next annual meeting of the shareholders or until election and
qualification of their respective successors;
(2) To vote on a proposal to amend the Company's Restated Articles of
Incorporation to increase the number of authorized shares of Common
Stock, par value $.001, from 20,000,000 to 50,000,000; and
(3) To transact such other business as may properly come before the meeting.
Pursuant to the Company's Bylaws, the Board of Directors has fixed the
close of business on April 3, 1998, as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting.
The Annual Meeting may be postponed or adjourned from time to time without
any notice other than by announcement at the meeting of any postponements or
adjournments thereof, and any and all business for which notice is hereby given
may be transacted at any such postponed or adjourned meeting.
A FORM OF PROXY AND THE ANNUAL REPORT OF THE COMPANY FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1997, ARE ENCLOSED. IT IS IMPORTANT THAT PROXIES BE RETURNED
PROMPTLY. THEREFORE, WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE
ANNUAL MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE WHICH DOES NOT REQUIRE POSTAGE IF MAILED IN THE UNITED
STATES.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ HAROLD S. BLUE
------------------
Harold S. Blue
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Fort Lauderdale, Florida
May 1, 1998
PROXYMED, INC.
2501 DAVIE ROAD, SUITE 230
FORT LAUDERDALE, FLORIDA 33317
(954) 473-1001
---------------------
PROXY STATEMENT
---------------------
The enclosed proxy is solicited by the Board of Directors of ProxyMed,
Inc., a Florida corporation (the "Company"), for use at the Annual Meeting of
Shareholders to be held on Thursday, May 21, 1998, and the approximate date on
which this statement and the enclosed proxy will be sent to shareholders will
be May 1, 1998. The form of proxy provides a space for you to withhold your
vote for any proposal. You are urged to indicate your vote on each matter in
the space provided; if no space is marked, it will be voted by the persons
therein named at the meeting (i) for the election of 7 persons to the Board of
Directors as set forth below; (ii) for approval to amend the Company's Restated
Articles of Incorporation to increase the number of authorized shares of Common
Stock, par value $.001, from 20,000,000 to 50,000,000; and (iii) in their
discretion, upon such other business as may properly come before the meeting.
Whether or not you plan to attend the meeting, please fill in, sign and return
your proxy card to the transfer agent in the enclosed envelope, which requires
no postage if mailed in the United States.
The cost of Board of Directors' proxy solicitation will be borne by the
Company. In addition to solicitation by mail, directors, officers and employees
of the Company may solicit proxies personally and by telephone and telegraph,
all without extra compensation.
At the record date for the meeting, the close of business on April 3,
1998, the Company had issued 12,449,368 shares of $.001 par value common stock
("Common Stock"). Only shareholders of record at the close of business on April
3, 1998 are entitled to notice of and to vote at the Annual Meeting. In the
event that there are not sufficient votes for approval of any of the matters to
be voted upon at the Annual Meeting, the Annual Meeting may be adjourned in
order to permit further solicitation of proxies. The quorum necessary to
conduct business at the Annual Meeting consists of a majority of the
outstanding shares of Common Stock. The approval of the proposals covered by
this Proxy Statement will require an affirmative vote of the holders of a
majority of the shares of Common Stock voting in person or by proxy at the
Annual Meeting, with the exception of the election of directors, each of which
is elected by a plurality.
All shares of Common Stock that are represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual Meeting and not
revoked will be voted at the Annual Meeting in accordance with the instructions
indicated in such proxies. If no instructions are indicated, such proxies will
be voted for approval of each matter voted upon. Abstentions or broker
non-votes are counted as shares present in the determination of whether shares
of Common Stock represented at the meeting constitute a quorum. Abstentions and
broker non-votes are tabulated separately. Since only a plurality is required
for the election of directors, abstentions or broker non-votes will have no
effect on the election of directors (except for purposes of determining whether
a quorum is present at the Annual Meeting). As to other matters to be acted
upon at the Annual Meeting, abstentions are treated as AGAINST votes, whereas
broker non-votes are counted for the purpose of determining whether the
proposal has been approved.
A SHAREHOLDER WHO SUBMITS A PROXY ON THE ACCOMPANYING FORM HAS THE POWER
TO REVOKE IT AT ANY TIME PRIOR TO ITS USE BY DELIVERING A WRITTEN NOTICE TO THE
SECRETARY OF THE COMPANY, BY EXECUTING A LATER-DATED PROXY OR BY ATTENDING THE
MEETING AND VOTING IN PERSON. UNLESS AUTHORITY IS WITHHELD, PROXIES WHICH ARE
PROPERLY EXECUTED WILL BE VOTED FOR THE PURPOSES SET FORTH THEREON.
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of April 3, 1998, with respect to
(i) each person known to the Company to be the beneficial owner of more than 5%
of the Company's Common Stock, (ii) each director, and (iii) each executive
officer named in the Executive Compensation chart, and (iv) all directors and
officers of the Company as a group:
NAME AND ADDRESS(1) NUMBER OF SHARES(2) PERCENT OF CLASS
- ------------------- ------------------- ----------------
Harold S. Blue(3) ...................... 814,132 6.4
John Paul Guinan(4) .................... 217,500 1.7%
Bennett Marks(5) ....................... 159,750 1.3%
Frank M. Puthoff(4) .................... 26,667 *
Bruce S. Roberson(4) ................... 62,000 *
Harry A. Gampel(6) ..................... 283,558 2.3%
Samuel X. Kaplan(4) .................... 75,000 *
Bertram J. Polan(7) .................... 82,500 *
Eugene R. Terry(4) ..................... 75,000 *
Bellingham Industries Inc.(8) .......... 4,851,210 38.2%
Urraca Building
Frederico Boyd Avenu
Panama City, Panama
All directors and officers
as a group (23 persons)(9) ............ 2,278,622 16.8%
<FN>
- ----------------
* Less than 1%
(1) The address for each person, unless otherwise noted, is 2501 Davie Road,
Suite 230, Fort Lauderdale, Florida 33317-7424.
</FN>
(2) In accordance with Rule 13d-3 of the Exchange Act, shares that are not
outstanding, but that are subject to options, warrants, rights or
conversion privileges exercisable within 60 days from April 3, 1998, have
been deemed to be outstanding for the purpose of computing the percentage
of outstanding shares owned by the individual having such right, but have
not been deemed outstanding for the purpose of computing the percentage
for any other person.
(3) Includes 634,132 shares held of record, and 180,000 shares issuable upon
the exercise of currently exercisable stock options.
(4) Represents shares issuable upon the exercise of currently exercisable stock
options.
(5) Includes 8,500 shares held of record, and 151,250 shares issuable upon the
exercise of currently exercisable stock options.
(6) Includes 208,558 shares held of record, and 75,000 shares issuable upon the
exercise of currently exercisable stock options.
(7) Includes 7,500 shares held of record, and 75,000 shares issuable upon
exercise of currently exercisable stock options.
(8) Includes 4,701,210 shares held of record, and 150,000 shares issuable upon
the exercise of currently exercisable stock options which were purchased
from an unaffiliated third party.
(9) Includes 1,246,905 shares held of record, and 1,031,717 shares issuable
upon the exercise of currently exercisable stock options.
2
ITEM 1. ELECTION OF DIRECTORS
The Company currently has seven directors, with each director holding
office until the next annual meeting of shareholders and until his successor is
duly elected and qualified or until the earlier death, resignation, removal or
disqualification of the director. Management of the Company has nominated six
out of the seven directors currently serving as directors for election to the
Board of Directors and one new individual to serve as director on the Board of
Directors. The Company's officers are elected annually by the directors.
The following nominees may be elected by plurality vote. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NOMINEE FOR ELECTION TO THE BOARD.
It is intended that proxies will be voted for the following nominees, unless
otherwise directed:
NAME AGE POSITION
- ---- --- --------
Harold S. Blue(1) ............... 37 Chairman of the Board, Chief Executive Officer
John Paul Guinan(1) ............. 37 President, Director
Bennett Marks(1) ................ 49 Executive Vice President--Finance, Chief Financial Officer
and Director
Samuel X. Kaplan(2)(3) .......... 75 Director
Bertram J. Polan(2)(3) .......... 46 Director
Peter A. A. Saunders ............ 56 Director
Eugene R. Terry(2)(3) ........... 59 Director
<FN>
- ----------------
(1) Member of the Executive Committee, the Chairman of which is Mr. Blue.
(2) Member of the Audit Committee, the Chairman of which is Mr. Polan
(3) Member of the Compensation Committee, the Chairman of which is Mr. Terry.
</FN>
HAROLD S. BLUE joined ProxyMed, Inc. in 1993 and currently serves as Chief
Executive Officer and Chairman of the Board. From 1992 to 1996, Mr. Blue was
also President and Chief Executive Officer of Health Services Inc., a physician
practice management company which was sold to InPhyNet Medical Management, Inc.
From 1979 to 1984, Mr. Blue was President and Chief Executive Officer of Budget
Drugs, Inc., a retail discount pharmacy chain located in South Florida. In
September 1984, Mr. Blue founded Best Generics, Incorporated. Best Generics was
later sold to pharmaceutical manufacturer, Ivax Corporation (Amex: IVX), where
Mr. Blue served as a member of Ivax's Board of Directors from 1988 to 1990. He
currently serves as a director of iMall, Inc. (OTC: IIML), the largest
independent mall on the Internet, Windsor Capital Corp. (OTC: WDSC), a
specialty regional mall based retailer, and AccuMed International, Inc.
(Nasdaq: ACMIC), a healthcare medical device company.
JOHN PAUL GUINAN has been the President and a director of the Company
since June 1995 and also its Chief Operating Officer until January 1998. He was
an Executive Vice President of the Company from July 1993 until June 1995. From
March 1993 to June 1993, Mr. Guinan was the Chief Executive Officer and
co-founder of ProxyScript, Inc. (f/k/a Medical Containment Systems, Inc.),
which the Company acquired in June 1993. From 1989 until April 1993, Mr. Guinan
founded and developed two companies: The Desktop Professionals, Inc., a company
which supplied automation systems to South Florida professional offices; and
POSitive Thinking, Inc., a software development company which specialized in
point of sale systems.
BENNETT MARKS has been Executive Vice President--Finance, Chief Financial
Officer and a director of the Company since October 1993. From May 1991 to
October 1993, Mr. Marks was Vice President--Finance and a director of FiberCorp
International, Inc., a public company engaged in the manufacturing and
marketing of network management systems for use by telecommunication companies.
From 1981 to April 1991, Mr. Marks was an audit partner with KPMG Peat Marwick,
an international accounting and
3
consulting firm. While with KPMG Peat Marwick, Mr. Marks was the partner on
audits of numerous public companies and served as an Associate SEC Reviewing
Partner. He also served as the Administrative Partner in Charge of KPMG Peat
Marwick's West Palm Beach office. Mr. Marks is a certified public accountant.
SAMUEL X. KAPLAN has been a director of the Company since August 1995.
Since 1987, Mr. Kaplan has been a healthcare management consultant. He has also
been the President of U.S. Care, Inc., a California-based company which designs
and administers long-term care insurance programs, since 1987, when he founded
that company. In 1962, he founded U.S. Administrators, Inc., a healthcare
management company, which he served as President and Chairman until 1987.
BERTRAM J. POLAN has been a director of the Company since August 1995. Mr.
Polan is the founder and President of Gemini Bio-Products, Inc., a
California-based supplier of biological products used in medical schools,
private medicine research institutes and the bio-technology industry, which he
founded in 1985. From 1973 to 1985, Mr. Polan was employed in various executive
capacities, most recently as vice president of sales and marketing, with North
American Biologicals, Inc., one of the world's largest independent providers of
human plasma products.
PETER A. A. SAUNDERS, F.R.S.A. (Fellow of Royal Society of Arts) is the
owner and Chairman of Pass Consultants, a marketing and business consulting
firm he founded in Surrey, England in 1988. From 1992 through 1994, he also
served as Managing Director of United Artist Communications (London-U.K.), Ltd.
From 1959 to 1984, Mr. Saunders held various executive and directorship
positions with Allders Department Stores, a subsidiary of United Drapery
Department Stores Group, and, after its acquisition by Hanson Trust, P.L.C. in
1984, continued as a Director until 1988. Since 1989, Mr. Saunders has been
serving as a Director of Theragenics Corporation, a public company specializing
in the treatment of prostate cancer located in Norcross, Georgia; as a
non-executive Director of Mayday Healthcare NHS Trust, a 700-bed hospital in
Surrey, England since 1992; and as a non-executive Director of Eurobell
(Sussex) Limited, a United Kingdom cable television and telecommunications
company since 1993.
EUGENE R. TERRY has been a director of the Company since August 1995. Mr.
Terry is a principal in T/C Solutions, a management and venture capital firm
based in Boca Raton, Florida. He is also a pharmacist and the founder and
Chairman of Bloodline, Inc., a New Jersey-based company engaged in the blood
services business, which he founded in 1980. In 1971, Mr. Terry founded Home
Nutritional Support, Inc. ("HNSI"), one of the first companies established in
the home infusion industry. In 1984, HNSI was sold to Healthdyne, Inc. HNSI was
later sold to the W.R. Grace Group. From 1975 to 1984, Mr. Terry was also
founder and Chief Executive Officer of Paramedical Specialties, Inc., a
respiratory and durable medical equipment company, which was also sold to
Healthdyne, Inc. He is a director of Windsor Capital Corp. (OTC:WDSC), a
specialty regional mall based retailer.
The Company has agreed, through August 5, 1998, if so requested by the
underwriter of the Company's initial public offering, to nominate and use its
best efforts to elect a designee of the underwriter as a director of the
Company or, at the underwriter's option, as a non-voting adviser to the Board
of Directors of the Company. No such nominee has been designated to date.
The Company has "key person" life insurance policies on the lives of Mssr.
Blue and Guinan in the amount of $1,000,000 each.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
MEETINGS--All directors attended more than 96% of the meetings of the
Board for the fiscal year ended December 31, 1997. There were a total of ten
Board meetings held during such year.
AUDIT COMMITTEE--The Company's Audit Committee consists of three
non-employee directors: Bertram J. Polan (Chair), Samuel X. Kaplan and Eugene
R. Terry. The Audit Committee is responsible
4
for meeting with representatives of the Company's independent accountants and
with representatives of senior management to review the general scope of the
Company's annual audit, matters relating to internal audit control systems and
the fee charged by the independent accountants. In addition, the Audit
Committee is responsible for reviewing and monitoring the performance of
non-audit services by the Company's independent accountants and for
recommending the engagement or discharge of the Company's independent
accountants. The Audit Committee met two times in 1997.
COMPENSATION COMMITTEE--The Company's Compensation Committee consists of
three non-employee directors: Eugene R. Terry (Chair), Bertram J. Polan and
Samuel X. Kaplan. The Compensation Committee is responsible for approving and
reporting to the Board on the annual compensation for all officers, including
salary, stock options and other consideration, if any. The Committee is also
responsible for granting stock awards, stock options and other awards to be
made under the Company's existing plans. The Compensation Committee met four
times in 1997.
COMPENSATION OF DIRECTORS
Employee directors of the Company are not compensated for their services
as directors. The Company reimburses all directors for reasonable expenses
incurred in attending board meetings. In addition, non-employee directors
received stock options under the 1995 Outside Plan (described below) upon the
directors' initial election or appointment to the Board of Directors. In 1995
and 1996, Messrs. Gampel, Kaplan, Polan and Terry, upon joining the Board, were
each granted options to purchase 75,000 shares of Common Stock at an exercise
price equal to the market price on the date of grant. These options were
immediately vested with respect to 22,500 shares, with installments of 22,500
and 30,000 shares vesting one and two years from the date of grant,
respectively. These options expire five years after the dates of grant. As of
the date of this Proxy Statement, all options under the 1995 Outside Plan are
vested.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than 10% of the registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors and greater than 10% shareholders
are required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based on its review of the copies of such forms received by it, or written
representations from certain reporting persons that no Forms 5 were required
for those persons, the Company believes that, during the Company's fiscal year
ended December 31, 1997, all filing requirements applicable to its officers and
directors and greater than 10% beneficial owners were complied with, except
that (i) Mr. Gampel failed to timely file a monthly report of transactions in
February, March and April 1997, but has since filed such transactions on Form
5, and (ii) the Company has not received from Bellingham Industries, Inc. a
Form 5 or a written representation that no Form 5 is required.
5
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid during the past three
fiscal years to the Company's Chief Executive Officer and the other four most
highly compensated executive officers of the Company with annual compensation
for such years over $100,000 (the "named executive officers"):
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ------------------- --------
OTHER RESTRICTED NUMBER OF ALL
NAME AND ANNUAL STOCK OPTIONS/ LTIP OTHER
PRINCIPAL POSITION YEAR SALARY(S) BONUS COMPENSATION AWARD(S) SARs PAYOUTS COMPENSATION
- ------------------ ---- --------- ------- -------------- ---------- ----------- --------- -------------
Harold S. Blue 1997 125,000 -- -- -- -- -- --
Chairman and CEO 1996 100,983 -- -- -- 150,000 -- --
1995 60,000 -- -- -- -- -- --
John Paul Guinan 1997 125,000 -- -- -- -- -- --
President 1996 127,792 -- -- -- 15,000 -- --
1995 99,693 -- -- -- 202,500 -- --
Bennett Marks 1997 128,646 15,000 -- -- -- -- --
Executive V.P. 1996 107,542 -- 10,625(1) -- 86,250 -- --
and CFO 1995 100,000 -- 15,000(1) -- 15,000 -- --
Bruce S. Roberson 1997 180,000 50,000 22,506(3) -- -- -- --
Executive V.P. 1996 30,000(2) -- 24,759(3) -- 100,000 -- --
1995 -- -- -- -- -- -- --
Frank M. Puthoff 1997 125,000 15,000 -- -- 22,168 -- --
Executive V.P., CLO 1996 46,664(4) -- -- -- 40,000 -- --
and Secretary 1995 -- -- -- -- -- -- --
<FN>
- ----------------
(1) Mr. Marks received a non-accountable expense allowance of $15,000 (net of
taxes) per year through September 15, 1996.
(2) Mr. Roberson joined the Company on October 28, 1996.
(3) Consists of reimbursement of relocation expenses.
(4) Mr. Puthoff joined the Company on August 8, 1996.
</FN>
The following table provides information on stock option grants during
fiscal year 1997 to each of the named executive officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
% OF TOTAL
NUMBER OF OPTIONS/SARS EXERCISE OR
OPTIONS/SARS GRANTED TO EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED IN FISCAL YEAR ($/SHARE) DATE
- -------------------------- -------------- ---------------------- ------------ -----------
Frank M. Puthoff ......... 22,168 8% $ 7.38 9/10/07
6
The following table sets forth certain information concerning unexercised
options held by each of the named executive officers:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
NUMBER OF SHARES OPTIONS/SARS AT FY-END (#) OPTIONS/SARS AT FY-END ($)
ACQUIRED ON VALUE ----------------------------- ----------------------------
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ----------------- ------------ ------------- --------------- ------------- --------------
Harold S. Blue ............ -- -- 180,000 -- 625,800 --
John Paul Guinan .......... -- -- 217,500 -- 647,400 --
Bennett Marks ............. -- -- 151,250 10,000 413,550 1,200
Bruce S. Roberson ......... -- -- 62,000 38,000 7,440 4,560
Frank M. Puthoff .......... -- -- 26,667 35,501 3,200 --
There were no awards made to a named executive officer in the last
completed fiscal year under any long-term incentive plan for performance to
occur over a period longer than one fiscal year.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
administering, reviewing and approving compensation arrangements with respect
to executive compensation which includes base salaries, annual incentives and
long term stock option plans, as well as any executive benefits and/or
perquisites. In addition, the Compensation Committee is responsible for any
awards and administration of the Company's 1993 Stock Option Plan, the
Company's 1995 Stock Option Plan, the Company's 1997 Stock Option Plan, options
to newly-hired employees and any future equity incentive plans.
Mr. Blue has been Chairman of the Board and Chief Executive Officer of the
Company since February, 1993. In April, 1996, he was granted a three year
Employment Agreement with a base salary of $125,000. He received no annual
bonus during 1997. The Committee believes that his compensation is within the
low range of compensation paid to similarly situated executives at other
companies and similar industries, however, the Committee believes that since
Mr. Blue is the largest individual shareholder of the Company and holds more
than 5% of the outstanding shares of the Company's common stock, that his
interests are firmly aligned with the shareholders of the Company. The
Committee intends to review the performance and compensation of the executive
officers annually, in conjunction with performance of the Company.
The Committee's general philosophy with respect to the compensation of the
Chief Executive Officer and other executive officers is to offer competitive
compensation packages designed to attract and retain key executives critical to
the success of the Company. In general, subjective factors rather than specific
criteria of the Company's performance have been used in determining and
approving executive compensation. The Company's compensation programs include a
base salary, annual bonus awards based on individual and Company performance,
as well as the granting of stock options designed to provide long term
incentives and aligning the interest of management with those of the Company's
shareholders.
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1,000,000 paid to the
Company's Chief Executive Officer and the four (4) other most highly
compensated executive officers, unless such compensation is "performance
based". For purposes of Section 162(m), the Company currently intends to
structure any performance based portion of the compensation of its executive
officers that it might develop in a manner that complies with Section 162(m).
7
PERFORMANCE GRAPH
COMPARISON OF 56 MONTH CUMULATIVE TOTAL RETURN*
AMONG PROXYMED, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX AND THE NASDAQ
HEALTH SERVICES INDEX
[GRAPHIC OMITTED]
CUMULATIVE TOTAL RETURN
----------------------------------------------------------------
8/05/93 12/93 12/94 12/95 12/98 12/97 3/98
PROXYMED, INC. 100 165 108 96 175 177 334
NASDAQ STOCK MARKET (U.S.) 100 110 108 153 188 230 270
NASDAQ HEALTH SERVICES 100 117 126 160 160 163 179
8
STOCK OPTION PLANS
The Board of Directors has adopted four stock option plans for its
employees, officers and outside directors: the 1993 Stock Option Plan (the
"1993 Plan"); the 1995 Stock Option Plan (the "1995 Plan"); the 1995 Outside
Director Stock Option Plan (the "1995 Outside Plan"); and the 1997 Stock Option
Plan (the "1997 Plan", and collectively with the 1993 Plan, the 1995 Plan and
the 1997 Outside Plan, the "Plans"). The purpose of the Plans is to provide
certain directors, officers and key employees of the Company with a greater
personal interest in the success of the Company and to enhance the ability of
the Company to attract and maintain the services of qualified personnel.
The 1993, 1995 and 1997 Plans provide for the issuance of up to 600,000
shares, 376,250 shares and 250,000 shares of Common Stock, respectively, upon
exercise of options designated as either "incentive stock options" or
"non-qualified options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). The 1995 Outside Plan provides
for the issuance of up to 300,000 shares upon exercise of "non-qualified
options". The Plans are administered by the Compensation Committee of the Board
of Directors, which determines, among other things, the persons to be granted
options under the Plans, the number of shares subject to each option and the
option price.
With respect to the 1993, 1995 and 1997 Plans, the exercise price of any
incentive stock option may not be less than the fair market value of the shares
subject to the option on the date of grant; provided, however, that the
exercise price of any incentive stock option granted to an eligible employee
who is or will be the beneficial owner of more than 10% of the outstanding
voting power of the Company may not be less than 110% of the fair market value
of the shares underlying such options on the date of grant. Non-qualified
options may not be granted with exercise prices less than the fair market value
of the shares subject to the option on the date of grant. Incentive stock
options may be granted only to employees and no option granted under the 1993
Plan to an employee may be exercised unless, at the time of exercise, the
grantee is an employee of the Company or a subsidiary or was an employee within
the preceding three months. In the event of death, options may be exercised
during a twelve month period following such event. The Company may grant an
employee options for any number of shares, except that the value of the shares
subject to one or more incentive stock options first exercisable in any
calendar year may not exceed $100,000 (determined at the date of grant).
Options are not transferable, except upon the death of the optionee. The Plans
may be amended by the Board of Directors from time to time; however, the number
of shares covered by the 1993, 1995 and 1997 Plans may not be changed, nor may
certain other material amendments to those Plans be made, without further
shareholder approval.
The term of each option granted under the Plans and the manner in which it
may be exercised is determined by the Compensation Committee, provided that no
option may be exercisable more than 10 years after the date of grant and, in
the case of an incentive stock option granted to an eligible employee who is or
will be the beneficial owner of more than 10% of the outstanding voting power
of the Company, no more than five years after the date of grant. Incentive
stock options under the 1993, 1995 and 1997 Plans may only be granted during
the 10-year period following the dates of the Plans.
Of the 600,000 shares, 376,250 shares, 300,000 shares and 250,000 shares
of Common Stock available for issuance under the 1993 Plan, the 1995 Plan, the
1995 Outside Plan and the 1997 Plan, respectively, at April 3, 1998, options
had been granted, which had not expired, with respect to 599,751, 376,250,
300,000 and 111,168 shares, respectively. The exercise prices of all of these
options, when granted, were equal to the market value of the shares on the date
of grant. Exercise prices for options granted under the Plans range from $3.17
to $11.13 per share.
CERTAIN EMPLOYMENT AGREEMENTS
On April 1, 1996, the Company entered into an Employment Agreement with
Mr. Blue for a period of three years, which is automatically extended from year
to year unless terminated by either
9
party upon 60 days written notice. Mr. Blue receives an annual base salary of
$125,000 and is entitled to such bonuses as may be awarded from time to time by
the Board of Directors and to participate in any stock option or bonus plans
which the Company may now have or in the future develop. Mr. Blue may be
terminated for "cause," as defined in the Agreement. If he is terminated for
cause, he will be entitled to base salary earned, and he will retain all vested
stock options which shall remain exercisable for 90 days after the date of
termination. If he is terminated "without cause," then he will be entitled to
receive an amount equal to his base salary plus bonus, if any, and continuation
of health insurance for six months following termination. In addition, the
Agreement contains confidentiality and noncompetition covenants. Mr. Guinan has
an employment agreement with the Company for a three-year term commencing on
December 5, 1995, which is substantially similar to Mr. Blue's, with an annual
base salary of $180,000.
In November 1996, the Company entered into Employment Agreements with Mr.
Marks, Mr. Puthoff and Mr. Roberson. The Agreements are for a three-year term
and automatically extend from year to year thereafter unless terminated by the
Company upon 90 days written notice or by the employee upon 30 days written
notice prior to the end of the initial term or any extension. They receive an
annual base salary of $137,500, $125,000 and $180,000, respectively, and are
entitled to such bonuses as may be awarded from time to time and to participate
in any stock option or bonus plans which the Company may now have or in the
future develop. They may be terminated for "cause" as defined in their
Agreements. If terminated for cause, they will be entitled to base salary
earned, and they will retain all vested stock options which shall remain
exercisable for 90 days after the date of termination. If, upon 90 days prior
written notice, they are terminated "without cause," they will be entitled to
receive an amount equal to their base salary plus bonus, if any, and
continuation of health insurance for six months following termination, plus any
unvested options shall vest. In addition, the Agreements contain
confidentiality and noncompetition covenants.
CERTAIN TRANSACTIONS
Mr. Blue was a principal shareholder in three medical centers which were
customers of the Company's former drug dispensing business in 1995. Dr. Steven
Fox, a former director of the Company, was a principal shareholder in two
medical centers which were also customers of the Company's former drug
dispensing business in 1995. The Company received a total of approximately 4%
of its revenues in 1995, respectively, from these five medical centers.
In July 1995, Mr. Blue purchased 8,000 shares of the Company's Series A
Preferred Stock at an aggregate price of $200,000 pursuant to the Company's
private placement of such stock, which has subsequently been converted into
75,232 shares of Common Stock in August 1996 pursuant to the terms of the
Preferred Stock.
On April 30, 1997, the Company loaned a total of $350,000 to Mr. Blue. The
funds were advanced pursuant to two demand promissory notes in the principal
amounts of $290,000 and $60,000, respectively, each bearing interest at a rate
of 73/4% per year. Mr. Blue has agreed to secure the notes pursuant to pledges
of securities, including shares of the Company's Common Stock, satisfactory to
the Company's Board of Directors.
ITEM 2. PROPOSED AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
There will be submitted to the shareholders a proposal to amend Article
THIRD of the Company's Restated Articles of Incorporation (the "Articles") to
increase the authorized number of shares of Common Stock, $.001 par value, from
20,000,000 to 50,000,000. The full text of Article THIRD of the Articles
reflecting this amendment is set forth as Exhibit A to this proxy statement.
The Company's Restated Articles of Incorporation presently authorizes the
issuance of 20,000,000 shares of Common Stock having a par value of $.001 per
share. As of the close of business on April 3,
10
1998 (the "Record Date"), the Company had 12,449,368 shares of Common Stock
issued. A balance of 7,550,632 authorized shares of Common Stock remains
available for issuance without shareholder action, from which balance 2,968,052
shares of the Company's Common Stock have been reserved by the Company in order
to fulfill its obligations under certain warrant and option agreements. The
30,000,000 additional shares of Common Stock for which authorization is sought
would have the same rights and privileges as the Common Stock presently
outstanding. The shares of the Company's Common Stock have no pre-emptive
rights or other rights to subscribe for additional shares.
In view of the foregoing, the Board of Directors of the Company believes
that it is desirable to have additional shares of Common Stock and thus has
adopted a resolution recommending the approval of a proposed amendment to the
Company's Restated Articles of Incorporation, which would increase the number
of shares of Common Stock which the Company is authorized to issue from
20,000,000 to 50,000,000 shares. The proposed amendment does not change any
other provision of the Company's Restated Articles of Incorporation. The
additional shares of Common Stock will be available for issuance from time to
time for general corporate purposes as determined by the Company's Board of
Directors, including possible future stock dividends, splits, employee benefit
programs, issuances under stock options heretofore or hereafter granted or in
connection with the acquisition of the stock or assets of other companies. The
Company does not expect to obtain shareholder votes with respect to such
issuances, except as may be required, in any given instance, by the policies of
the Nasdaq National Market System or any stock exchange or other quotation
system on which the Company's securities may listed or quoted in the future or
pursuant to the requirements of Florida law.
THE BOARD OF DIRECTORS RECOMMENDS THAT ALL SHAREHOLDERS VOTE "FOR" THE
PROPOSED AMENDMENT TO THE COMPANY'S RESTATED ARTICLES OF INCORPORATION.
11
INDEPENDENT ACCOUNTANTS
The Board has appointed Coopers & Lybrand L.L.P., Miami, Florida, as
independent accountants to audit the consolidated financial statements of the
Company for the fiscal year ending December 31, 1998. Representatives of
Coopers & Lybrand L.L.P. will be present at the Annual Meeting of Shareholders
and will be afforded the opportunity to make a statement if they desire to do
so and to respond to appropriate questions.
OTHER MATTERS
The Board of Directors is not aware of any other business that may come
before the meeting. However, if additional matters properly come before the
meeting, proxies will be voted at the discretion of the proxy holders.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1999 Annual Meeting
of Shareholders of the Company must be received by the Company not later than
December 31, 1998 at its principal executive offices, 2501 Davie Road, Suite
230, Fort Lauderdale, Florida 33317, Attention: Harold S. Blue, Chief Executive
Officer, for inclusion in the proxy statement and proxy relating to the 1999
Annual Meeting of Shareholders.
ADDITIONAL INFORMATION
Accompanying this proxy statement is a copy of the Company's annual
report. A copy of the Company's annual report on Form 10-K may be obtained from
the Company on written request.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ HAROLD S. BLUE
-------------------------
Harold S. Blue
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Fort Lauderdale, Florida
May 1, 1998
12
EXHIBIT A
ARTICLES OF AMENDMENT
TO
RESTATED ARTICLES OF INCORPORATION
OF
PROXYMED, INC., A FLORIDA CORPORATION
Pursuant to the provisions of Section 607.1006, Florida Statutes,
ProxyMed, Inc. (the "Corporation") adopts the following Articles of Amendment
to its Restated Articles of Incorporation:
FIRST: The Article III of the Corporation's Restated Articles of Incorporation
is amended by striking out the first paragraph thereof and by substituting in
lieu of said paragraph the following new first paragraph to Article III:
"The Corporation is authorized to issue 50,000,000 shares of Common Stock,
par value $.001 per share, and 2,000,000 shares of preferred stock, par
value $.01 per share."
SECOND: This Amendment was adopted by the shareholders at the Corporation's
Annual Meeting of Shareholders held on May 21, 1998. The number of votes cast
were sufficient for approval.
Dated as of the th day of , 1998.
ProxyMed, Inc.
Harold S. Blue
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
A-1
APPENDIX A
PROXY FOR ANNUAL MEETING OF PROXYMED, INC.
2501 DAVIE ROAD, SUITE 230
FT. LAUDERDALE, FLORIDA 33317
(954) 473-1001
SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS OF PROXYMED, INC.
The undersigned hereby appoints Harold S. Blue and Bennett Marks with the
power to vote, at the Annual Meeting of Shareholders of ProxyMed, Inc. (the
"Company") to be held on May 21, 1998 at 9:00 o'clock a.m., Eastern Daylight
Time, at the Ft. Lauderdale Airport Hilton, 1870 Griffin Road, Dania, Florida
33004, or any adjournment thereof, all shares of the Common Stock which the
undersigned possesses and with the same effect as if the undersigned was
personally present, upon all subjects that may properly come before the
meeting, including the matters described in the proxy statement furnished
herewith, subject to any directions indicated on this card. IF NO DIRECTIONS
ARE GIVEN, THE PROXIES WILL VOTE FOR THE ELECTION OF ALL LISTED NOMINEES, FOR
THE AMENDING OF THE RESTATED ARTICLES OF INCORPORATION, AND AT THEIR DISCRETION
ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE IN FAVOR OF BOTH ITEMS.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
(1) ELECTION OF DIRECTORS: (Nominees are Harold S. Blue, John Paul Guinan,
Bennett Marks, Samuel X. Kaplan, Bertram J. Polan, Peter A. A. Saunders and
Eugene R. Terry)*
[ ] FOR [ ] WITHHOLD AUTHORITY
* To vote your shares for all director nominees, mark the "For" box. To
withhold voting for all nominees, mark the "Withhold Authority" box. If you do
not wish your shares voted "For" a particular nominee(s), enter the name(s) of
that nominee(s) in the following space:
(2) AMENDMENT OF RESTATED ARTICLES OF INCORPORATION: To amend the Restated
Articles of Incorporation of the Company to increase the number of authorized
shares of Common Stock, par value $.001, from 20,000,000 to 50,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated:________________________
______________________________
Signature
(Please sign exactly as name
appears hereon. If the stock is
registered in the names of two or
more persons, each should sign.
Executors, administrators,
trustees, guardians, attorneys
and corporate officers should
include their titles.)
Please sign, date and promptly return this Proxy in the enclosed envelope.