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 [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[_] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
ProxyMed, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ProxyMed, Inc.
- --------------------------------------------------------------------------------
(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(1)(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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[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
PROXYMED, INC.
2555 DAVIE ROAD, SUITE 110
FORT LAUDERDALE, FLORIDA 33317
(954) 473-1001
--------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JULY 25, 2001
---------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
ProxyMed, Inc., a Florida corporation (the "Company"), will be held on
Wednesday, July 25, 2001, at 9 o'clock a.m., Eastern Daylight Time, at the
Sheraton Fort Lauderdale Airport, 1825 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 9 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 approve the Company's 2001 Stock Option Plan;
(3) To vote on a proposal to amend the Company's Restated Articles of
Incorporation to increase the number of authorized shares of Common Stock
from 100,000,000 to 200,000,000; and
(4) 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 May 25, 2001, 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, 2000, 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
Frank M. Puthoff, Secretary
Fort Lauderdale, Florida
June 18, 2001
PROXYMED, INC.
2555 DAVIE ROAD, SUITE 110
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 Wednesday, July 25, 2001. The approximate date on
which this statement and the enclosed proxy was sent to shareholders is June 18,
2001. 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 9 persons to the Board of Directors as
set forth below; (ii) for approval of the Company's 2001 Stock Option Plan;
(iii) to vote on a proposal to amend the Company's Restated Articles of
Incorporation to increase the number of authorized shares of Common Stock from
100,000,000 to 200,000,000; and (iv) 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 this 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, all without extra
compensation.
At the record date for the meeting, the close of business on May 25,
2001, the Company had issued 24,757,988 shares of Common Stock and had 243,265
voting shares of Common Stock represented by Series C 7% Convertible Preferred
Stock. Series B Convertible Preferred Stock has no voting rights. Only
shareholders of record at the close of business on May 25, 2001, 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 whom 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 not counted for the purpose of determining whether the proposal
has been approved.
1
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.
STOCK OWNERSHIP
The following table sets forth information to our knowledge or as
reported to us regarding the beneficial ownership of our common stock as of May
16, 2001, with respect to (i) each person known to us to be the beneficial owner
of more than 5% of our common stock, including convertible preferred stock and
exercisable options and warrants; (ii) each director; (iii) each executive
officer named in the Summary Compensation Table; and (iv) all of our directors
and officers as a group:
Name and Address (1) # of Shares (2) % of Class
----------------- --------------- ----------
Harold S. Blue (3)(28) 618,884 2.4%
Edwin M. Cooperman (4)(28) 9,200 *
Gerald B. Cramer (5)(28) 1,311,444 5.1%
Donald G. Drapkin (6)(28) 153,518 *
Michael S. Falk (7)(28) 2,422,004 8.9%
John Paul Guinan (8)(28) 333,766 1.3%
Nancy J. Ham (9) 48,940 *
Lonnie W. Hardin (10)(28) 81,001 *
A. Thomas Hardy (11)(28) 947,536 3.7%
Thomas E. Hodapp (28) 0 0
Michael K. Hoover (12)(28) 1,985,569 7.5%
John B. Okkerse, Jr., Ph.D. (13) 133,334 *
Bertram J. Polan (14)(28) 97,500 *
Frank M. Puthoff (15)(28) 181,850 *
Judson E. Schmid (16)(28) 91,558 *
Eugene R. Terry (17)(28) 85,000 *
Timothy J. Tolan (18)(28) 17,500 *
2
Name and Address (1) # of Shares (2) % of Class
----------------- --------------- ----------
Capital Ventures International (19) 2,173,430 8.1%
425 California Street, Suite 1100
San Francisco, CA 94104
Commonwealth Associates, LP (20) 5,784,420 19.0%
830 Third Avenue
New York, NY 10022
CRM Family of Mutual Funds (21) 3,386,402 12.1%
707 Westchester Avenue
White Plains, NY 10604
E&M RP Trust (dated 10/3/85) (22) 1,552,450 5.9%
655 Brea Canyon Road
Walnut, CA 91789
HFTP Investments LLP (23) 1,406,379 5.4%
750 Lexington Avenue, 22/nd/ Floor
New York, NY 10022
Leonardo, LP (24) 1,262,473 5.1%
245 Park Avenue, 26/th/ Floor
New York, NY 10167
Perg Proxy LLC (25) 1,436,015 5.5%
450 Park Avenue, Suite 1203
New York, NY 10022
RMC Capital LLC (26) 3,881,128 13.6%
3291 N. Buffalo Drive, Suite 8
Las Vegas, NV 89129
Siam Partners (22) 1,552,450 5.9%
655 Brea Canyon Road
Walnut, CA 91789
Tahoe Partnership (22) 1,552,450 5.9%
655 Brea Canyon Road
Walnut, CA 91789
ZWD Investments (22) 1,552,450 5.9%
One State Plaza
New York, NY 10004
3
Name and Address (1) # of Shares (2) % of Class
----------------- --------------- ----------
All directors and officers 8,416,104 26.8%
as a group (20 persons) (27)
___________________
*Less than 1%
(1) The address for each person, unless otherwise noted, is 2555 Davie
Road, Suite 110, Fort Lauderdale, Florida 33317-7424.
(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 May 16, 2001,
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 35,550 shares held of record and 583,334 shares issuable upon
the exercise of currently exercisable stock options.
(4) Includes 9,200 shares issuable upon the exercise of currently
exercisable warrants.
(5) Includes 383,110 shares held of record directly by Mr. Cramer and
various related parties (including family members and trusts
established by Mr. Cramer), 600,000 shares underlying Series C
Preferred stock held by such related parties, and 328,334 shares
issuable upon the exercise of currently exercisable warrants held by
such related parties.
(6) Includes 3,518 shares held of record, 100,000 shares underlying Series
C Preferred stock held, and 50,000 shares issuable upon the exercise of
currently exercisable warrants.
(7) Includes 66,018 shares held of record, 100,000 shares underlying Series
C Preferred stock, and 2,255,986 shares issuable upon the exercise of
currently exercisable warrants.
(8) Includes 1,000 shares held of record and 332,766 shares issuable upon
exercise of currently exercisable stock options.
(9) Includes 40,000 shares held of record and 8,940 shares issuable upon
exercise of currently exercisable stock options.
(10) Includes 81,001 shares issuable upon exercise of currently exercisable
stock options.
(11) Includes 251,506 shares held of record by Mr. Hardy, 300,000 shares
underlying Series C Preferred stock held by Hardy Family Partnership
LP, and 396,030 shares issuable upon exercise of currently exercisable
stock options and warrants held by Mr. Hardy and Hardy Family
Partnership, LP.
(12) Includes 394,010 shares held of record, 1,000,000 shares underlying
Series C Preferred stock, and 591,559 shares issuable upon exercise of
currently exercisable stock options and warrants.
(13) Includes 133,334 shares issuable upon exercise of currently exercisable
stock options.
(14) Includes 12,500 shares held of record and 85,000 shares issuable upon
exercise of currently exercisable stock options.
(15) Includes 5,000 shares held of record and 176,850 shares issuable upon
exercise of currently exercisable stock options.
(16) Includes 8,290 shares held of record and 83,268 shares issuable upon
exercise of currently exercisable stock options.
(17) Includes 85,000 shares issuable upon exercise of currently exercisable
stock options.
(18) Includes 17,500 shares held of record.
(19) Includes 73,430 shares held of record, 1,400,000 shares underlying
Series C Preferred stock, and 700,000 shares issuable upon exercise of
currently exercisable warrants.
(20) Includes 134,533 shares held of record, 150,000 shares underlying
Series C Preferred stock, and 5,499,887 shares issuable upon exercise
of currently exercisable warrants held by Commonwealth Associates, LP
and ComVest Capital Partner, LLC.
4
(21) Includes 112,236 shares held of record, 2,140,000 shares underlying
Series C Preferred stock, and 1,134,166 shares issuable upon exercise
of currently exercisable warrants held by various mutual funds managed
by Cramer, Rosenthal & McGlynn.
(22) Includes 52,450 shares held of record, 1,000,000 shares underlying
Series C Preferred stock, and 500,000 shares issuable upon exercise of
currently exercisable warrants.
(23) Includes 121,002 shares underlying Series B preferred stock and
1,285,377 shares issuable upon exercise of currently exercisable
warrants.
(24) Includes 1,262,473 shares held of record..
(25) Includes 48,515 shares held of record, 925,000 shares underlying Series
C Preferred stock and 462,500 shares issuable upon exercise of
currently exercisable warrants.
(26) Includes 131,128 shares held of record, 2,500,000 shares underlying
Series C Preferred stock, and 1,250,000 shares issuable upon exercise
of currently exercisable warrants.
(27) Includes 1,218,002 shares held of record by the named officers and
directors and their related parties, 2,100,000 shares underlying Series
C Preferred stock, and 5,287,188 shares issuable upon exercise of
currently exercisable stock options and warrants.
(28) All shares held of record and beneficially owned are subject to a
lock-up until September 15, 2001. This lock-up may be extended for a
period of 12 months at the discretion of Commonwealth Associates.
ITEM 1. ELECTION OF DIRECTORS
The Company currently has nine 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. The Company's officers are elected annually by
the directors. Management of the Company has nominated nine directors currently
serving as directors for election to the Board of 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
- ---- --- --------
Michael K. Hoover 45 Chairman of the Board and
Chief Executive Officer
Harold S. Blue 40 Director
Edwin M. Cooperman (2) 57 Director
Gerald B. Cramer (2) 71 Director
Donald G. Drapkin (1)(2) 53 Director
Michael S. Falk 39 Director
Thomas E. Hodapp 41 Director
5
Name Age Position
- ---- --- --------
Bertram J. Polan (1) 49 Director
Eugene R. Terry (1) 63 Director
__________________________
(1) Member of the Audit Committee, the Chairman of which is Mr. Drapkin.
(2) Member of the Compensation Committee, the Chairman of which is Mr.
Drapkin.
Harold S. Blue has continuously served as a director of the Company
since its founding in 1993. From August, 1993, until September, 2000, he served
as Chairman and from 1993 to November, 1999, as its Chief Executive Officer.
From September, 2000 to May, 2001, Mr. Blue served as Vice-Chairman and from
May, 2000 to July, 2000 also as Interim Chief Executive Officer and from July,
2000 as a consultant until December, 2000. Currently, Mr. Blue is Executive Vice
President of Portfolio Companies for Commonwealth Associates, LP. Between
September, 1990, and September, 1993, Mr. Blue served as Chief Executive Officer
of Health Services Inc., a physician practice management company. In 1984, he
founded Best Generics, Inc., the country's third largest generic distribution
company, which was sold to Ivax Corporation in 1988, where Mr. Blue became a
director until 1990. From 1979 until 1984, Mr. Blue owned and operated a retail
pharmacy chain of 10 stores in South Florida. Mr. Blue served as director of
iMALL from 1997 to 1999, when it was acquired by Excite@home. Mr. Blue now
serves as a director of MonsterDaata Inc., Healthwatch Inc., eB2B Inc. and
FutureLink Corp.
Edwin M. Cooperman has served as a director of ProxyMed since July
2000. He is Chairman of the Board of Tutor Time Learning Systems, Inc., a
privately-held company engaged in pre-school education and child care. He is
also a principal of T.C. Solutions, a privately-held investment and financial
services consulting firm. Previously, Mr. Cooperman was Chairman of the
Travelers Bank Group and Executive Vice President, Travelers Group, where he was
responsible for strategic marketing, the integration of Travelers brands and
products, joint and cross marketing efforts and corporate identity strategies,
as well as expanding the Travelers Bank Group's credit card run in portfolios.
After joining Travelers in 1991, Mr. Cooperman became Chairman and CEO of
Primerica Financial Services Group, which comprises Primerica Financial
Services, Benefit Life Insurance Company and Primerica Financial Services
Canada. Previous to this, Mr. Cooperman served at American Express where he
became Chairman and Co-Chief Executive of Travel Related Services, North
America. Mr. Cooperman is also a director of drKoop.com, Inc., US Wireless Data,
Inc. and Grannum Value Mutual Fund.
Gerald B. Cramer has served as a director of ProxyMed since July 2000.
He co-founded of the investment firm of Cramer, Rosenthal & McGlynn, LLC in
1973, and currently serves as Chairman. Prior to that, Mr. Cramer was a senior
partner at Oppenheimer & Company. He earned a BS from Syracuse University and
attended the University of Pennsylvania Wharton School of Finance. He serves on
the Board of Trustees at Syracuse University and on its Investment Committee.
Donald G. Drapkin has served as a director of ProxyMed since July 2000.
Mr. Drapkin has been a Director and Vice-Chairman of MacAndrews & Forbes
Holdings Inc. and various of its affiliates since March 1987. Prior to joining
MacAndrews & Forbes, he was a Partner in the law firm of Skadden, Arps, Slate,
Meagher & Flom in New York for more than five years. Mr. Drapkin is also a
director in the following corporations filing reports pursuant to the Securities
Exchange Act of 1934: Anthracite Capital, Inc., Black Rock Asset Investors, The
Molson Companies Limited, Panavision, Inc., Playboy.com, Inc., Playboy
Enterprises, Inc., Revlon Consumer Products Corporation, Revlon, Inc., The
Warnaco Group, Inc. and Weider Nutrition International, Inc.
Michael S. Falk has served as a director of ProxyMed since July 2000.
Mr. Falk co-founded Commonwealth Associates L.P. in 1988, and in 1995 he became
Chairman, Chief Executive Officer, and President. He is also a director of
eB2B.com, Inc., FutureLink, Inc., Intelispan, Inc., and US Tec, Inc. and
6
US Wireless Data, Inc. Mr. Falk is a graduate of the Stanford University
Executive Program for Smaller Companies, and holds a Bachelor's degree with
honors in Economics from Queens College.
Thomas E. Hodapp has served as a director of ProxyMed since July 2000.
In 1999, Mr. Hodapp founded Access Capital Management, a private banking and
management firm dedicated to providing financial and strategic advisory services
to select, early stage private healthcare and information technology companies.
From 1992 to 1998, Mr. Hodapp was a Managing Director for Robertson Stephens &
Company, LLC, a leading international investment banking firm, overseeing the
firm's Healthcare Managed Care Research Group, with a focus on the managed care,
practice management and healthcare information services industries. From 1988 to
1992, he was with Montgomery Medical Ventures, a venture firm focused on the
biotechnology, medical device and healthcare service fields. MMV I and II
actively managed long-term investments in over 40 early stage companies, many of
which the firm was involved in co-founding. Prior to that, Mr. Hodapp researched
the healthcare industry as an industry analyst with Goldman, Sachs & Company,
S.G. Warburg Securities and Volpe & Covington. Additionally, Mr. Hodapp has been
published in a number of major financial and healthcare industry journals and
publications, was a two-time selection to the Wall Street Journal Research
Analyst All-Star Team, and is a frequent speaker at national healthcare
investment and strategy forums.
Michael K. Hoover was appointed Chairman of the Board and Chief
Executive Officer of ProxyMed in July 2000. He served as President and Director
of Healtheon/WebMD Corporation after Healtheon acquired ActaMed Corporation, an
eHealth information systems and transaction company similar to ProxyMed in May
1998. Mr. Hoover co-founded ActaMed in May 1992 and served as its President from
its inception to May 1998, and as its President and Chief Executive Officer from
December 1995 to May 1998. From 1989 to 1992, Mr. Hoover served as the Executive
Director of Financial Services of the MicroBilt Division of First Financial
Management Corporation. Prior to that, he founded FormMaker Software
Corporation, a producer of electronic forms automation systems, and served as
its Chief Executive Officer from 1982 to 1988.
Bertram J. Polan has been a director of ProxyMed 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
Northern American Biologicals, Inc., one of the world's largest independent
providers of human plasma products.
Eugene R. Terry has been a director of ProxyMed since August 1995. He
is 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.
Meetings - All directors attended more that 75% of the meetings of the
Board of Directors for the fiscal year ended December 31, 2000. There were a
total of 29 Board meetings held during such year.
Audit Committee - Our Audit Committee consists of three non-employee,
independent directors: Donald G. Drapkin (Chair), Bertram J. Polan and Eugene R.
Terry. The Audit Committee is responsible for meeting with representatives of
our independent accountants and with representatives of senior
7
management to review the general scope of our annual audit, matters relating to
internal audit control systems and the fee charged by the independent
accountants. In addition, pursuant to its Charter which is set forth in Exhibit
A of this Proxy Statement, the Audit Committee is responsible for reviewing and
monitoring the performance of non-audit services by our independent accountants
and for recommending the engagement or discharge of our independent accountants.
Compensation Committee - Our Compensation Committee consists of three
non-employee, independent directors: Donald G. Drapkin (Chair), Edwin M.
Cooperman and Gerald B. Cramer. 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 options to be made under our
existing plans.
Directors are elected annually at our annual meeting of shareholders.
Each director serves until his successor is elected and qualified or until the
earlier death, resignation, removal or disqualification of the director. The
officers are appointed annually by the directors.
We have a "key person" life insurance policies for our benefit on the
lives of Mr. Hoover and Mr. Guinan, each in the amount of $1,000,000.
Compensation of Directors
Our employee directors are not compensated for their services as
directors. In September 2000, all outside directors, except for Mr. Falk and Mr.
Blue, received a stock option for 200,000 shares of our stock vesting over three
years at a price of $1.22 per share. Mr. Drapkin, as Chairman of the Audit and
Compensation Committees, also received in September 2000 an option for an
additional 200,000 shares on the same terms. All directors are reimbursed for
reasonable expenses incurred in attending board meetings. In addition,
non-employee directors receive stock options under the 1995 Outside Plan upon
the directors' initial election or appointment to the Board of Directors.
Messrs. Polan and Terry, upon joining the Board, were each granted options to
purchase 75,000 shares of common stock at an exercise price of $3.17. These
options are now fully vested.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934 (the "Exchange
Act") requires our officers and directors, and persons who own more than 10% of
the registered class of our 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 us with copies of all Section 16(a) forms they file.
Based on our review of the copies of such forms received by us, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, we believe that during our fiscal year ended
December 31, 2000, all filing requirements applicable to our officers and
directors and greater than 10% beneficial owners were complied with, except that
Messrs. Cooperman, Cramer, Drapkin, Hodapp, Polan and Terry failed to timely
file Form 5's relating to the grant of stock options to each of them in
September 2000, but they have since filed.
Executive Compensation
The following table sets forth the compensation paid during the past
three fiscal years to our Chief Executive Officers and our other four most
highly compensated executive officers during year 2000 with annual compensation
over $100,000 for such years (the "named executive officers"), plus two
additional individuals for whom disclosure would have been provided but for the
fact that the individuals were not serving as executive officers at the end of
the last completed fiscal year:
Summary Compensation Table
-----------------------------------
Long-Term Compensation
--------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
--------------------------------------------------------------------------------------
Other Restricted Securities All
Name and Annual Stock Underlying LTIP Other
Principal Salary Bonus Comp. Award(s) Options/ Payouts Compen-
Position Year ($) ($) ($) ($) SARs (#) ($) sation ($)
- -----------------------------------------------------------------------------------------------------------------------
Michael K. Hoover
Chairman and CEO 2000 56,553(1) -- 285,000(1) -- 5,000,000 -- --
John B. Okkerse, Jr.
CEO (2) 2000 85,392 50,000 -- -- -- -- --
1999 16,154 -- -- -- 133,334(2) -- 128,179(3)
Harold S. Blue
Chairman and CEO (4) 2000 136,340 -- -- -- 400,000 -- 176,677(4)
1999 202,198 -- -- -- 50,000 -- --
1998 145,033 -- -- -- -- -- --
John Paul Guinan
EVP, Prescription
Services 2000 188,059 -- -- -- 400,000 -- --
1999 180,609 5,000 -- -- 35,000 -- --
1998 163,943 15,063 -- -- -- -- --
Lonnie W. Hardin
SVP, Payer Services 2000 137,800 8,750(5) -- -- 200,000 -- --
1999 116,817 -- 39,693(6) -- -- -- --
1998 97,167 50 -- -- -- -- --
A. Thomas Hardy
SVP, Lab Services 2000 230,602 20,000(5) -- -- 300,000 -- --
1999 238,457 100,000 -- -- 142,000 -- --
Frank M. Puthoff
EVP & CLO 2000 157,988 10,000(5) -- -- 150,000 -- --
1999 144,835 15,000 -- -- -- -- --
1998 130,530 20,050 -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
_________________
(1) Mr. Hoover joined us on July 28, 2000. As part of his employment
agreement dated July 28, 2000, Mr. Hoover was awarded 200,000 shares of
common stock valued at $285,000.
(2) Dr. Okkerse resigned as Chairman and Chief Executive Officer effective
May 19, 2000.
(3) Consists of separation payments made pursuant to an agreement dated May
19, 2000. In addition, the separation agreement allowed for the
accelerated vesting of one third of the stock options granted to Dr.
Okkerse at the time of hire in November 1999.
(4) Mr. Blue was appointed Interim Chief Executive Officer on May 19, 2000
and held that position until the appointment of Michael K. Hoover on
July 28, 2000. Other compensation consists of
fees earned pursuant to a consulting agreement dated July 7, 2000,
which terminated on December 31, 2000.
(5) Earned in 2000 but not paid until January 2001.
(6) Consists of reimbursement of relocation expenses.
The following table provides information on stock option grants during
fiscal year 2000 to each of the named executive officers:
Option/SAR Grants in Last Fiscal Year
- ---------------------------------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term*
- ----------------------------------------------------------------------------------------------------------------------
# of Securities % of Total
Underlying Options/SARs
Options/ SARs Granted To Exercise or
Granted Employee In Base Price Expiration
Name Fiscal Year Date 5% 10%
- ----------------------------------------------------------------------------------------------------------------------
Michael K. Hoover 5,000,000 50% $1.50 7/28/10 $4,716,710 $5,298,458
- ----------------------------------------------------------------------------------------------------------------------
Harold S. Blue 400,000 4% $1.53 7/11/10 $ 384,884 $ 432,354
- ----------------------------------------------------------------------------------------------------------------------
John Paul Guinan 400,000 4% $1.53 7/11/10 $ 384,884 $ 432,354
- ----------------------------------------------------------------------------------------------------------------------
Lonnie W. Hardin 200,000 2% $1.53 7/11/10 $ 192,442 $ 216,177
- ----------------------------------------------------------------------------------------------------------------------
A. Thomas Hardy 300,000 3% $1.53 7/11/10 $ 288,663 $ 324,266
- ----------------------------------------------------------------------------------------------------------------------
Frank M. Puthoff 150,000 1% $1.53 7/11/10 $ 144,311 $ 162,133
- ----------------------------------------------------------------------------------------------------------------------
*The assumed annual rates of stock price appreciation are required disclosures,
and are not intended to forecast future stock appreciation.
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 Options/SAR Values
-----------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at FY-End (#) Options/SARs at FY-End ($)**
- ----------------------------------------------------------------------------------------------------------------------
# of Shares
Acquired on $ Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------
Michael K. Hoover -- -- -- 5,000,000 -- --
- ----------------------------------------------------------------------------------------------------------------------
John B. Okkerse, Jr. -- -- 133,334 -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Harold S. Blue -- -- 516,667 83,333 -- --
- ----------------------------------------------------------------------------------------------------------------------
John Paul Guinan 40,000 $244,383 176,667 423,333 -- --
- ----------------------------------------------------------------------------------------------------------------------
Lonnie W. Hardin -- -- 7,168 214,332 -- --
- ----------------------------------------------------------------------------------------------------------------------
A. Thomas Hardy -- -- 76,667 365,333 -- --
- ----------------------------------------------------------------------------------------------------------------------
Frank M. Puthoff -- -- 37,169 159,999 -- --
- ----------------------------------------------------------------------------------------------------------------------
**Year-end values for unexercised in-the-money options represent the positive
spread between the exercise price of such options and the fiscal year-end market
value of the common stock, which was $1.25 on December 31, 2000.
There were no awards made to named executive officers in the last
completed fiscal year under any long-term incentive plan for performance to
occur over a period longer than one fiscal year. We do not have any defined
benefit or actuarial plans for our employees. Certain stock options for
executive
management and directors were amended in 2000 to allow for extensions of
exercise periods (typically one to three years) after termination of employment.
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 stock option plans and grant of options to
newly-hired employees, and any future equity incentive plans.
Mr. Hoover has been Chairman of the Board and Chief Executive Officer
of the Company since July, 2000. His annual base salary is $150,000 and upon
commencing employment, he was granted 200,000 restricted shares of common stock
and an option to purchase 5,000,000 shares of common stock at an exercise price
of $1.50 per share. The Committee believes that while his annual base salary is
in the low range paid to similarly situated executives at similar companies, his
interests are directly aligned with our shareholders due to the fact that as of
the date of this report, Mr. Hoover beneficially owns approximately 9% of the
Company due to his own direct purchases of the Company's stock and his stock
options.
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 Committee intends to review the
performance and compensation of the executive officers annually, in conjunction
with performance of the Company. 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).
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Donald G. Drapkin, Chair
Edwin M. Cooperman
Gerald B. Cramer
Report of the Audit Committee
The Audit Committee is composed of "independent" directors as defined
in standards promulgated by the Securities and Exchange Commission and the
National Association of Securities Dealers. All members of the Audit Committee
share equally the responsibility for the performance of the functions set forth
below and in its Charter, which is set forth in Exhibit A to this Proxy
Statement.
The Audit Committee oversees the Company's financial reporting process
on behalf of the Board of Directors. Management has the primary responsibility
for the financial statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management
and discussed the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, all matters
required to be discussed by Statement of Auditing Standards 61 "Communications
with Audit Committees". In addition, the Committee has discussed with the
independent auditors the auditors' independence from management and the Company,
including the matters in the written disclosures required by the Independence
Standards Board Standard No. 1 and considered the compatibility of non-audit
services with the auditors' independence.
The Committee discusses with the Company's independent auditors the
overall scope and plans for their respective audits. The Committee meets with
the independent auditors, with or without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
Committee held four meetings during fiscal year 2000.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2000 for filing with the Securities and
Exchange Commission. The Board approved the selection of the Company's
independent auditors for the year ending December 31, 2001.
Fees Paid to Independent Accountants
The Securities and Exchange Commission's Final Rule on Auditor
Independence requires that the Company make the following disclosures regarding
the amount of fees billed by its independent auditors and the nature of the work
for which these fees were billed:
Audit Fees
Aggregate fees and expenses incurred for PricewaterhouseCoopers' audit
of the Company's annual financial statements for the year ended December 31,
2000 and for it reviews of the financial statements included in the Company's
Forms 10-Q for year ended December 31, 2000 totaled $98,000. Of this amount,
$46,100 had been billed as of December 31, 2000. The balance of the fees was
billed prior to the date of this Proxy Statement.
Financial Information Systems Design and Implementation Fees
There were no fees billed for any financial information systems design
and implementation services rendered by PricewaterhouseCoopers for the year
ended December 31, 2000.
12
All Other Fees
Aggregate fees for all other services provided by
PricewaterhouseCoopers for the year ended December 31, 2000 totaled $118,100. Of
this amount, $78,100 had been billed as of December 31,2000.
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Donald G. Drapkin, Chair
Bertram J. Polan
Eugene R. Terry
Performance Graph
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG PROXYMED, INC.
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ HEALTH SERVICES INDEX
[GRAPH]
Employment Agreements with the Named Executive Officers
In July 2000, we entered into an employment agreement with Mr. Hoover.
The agreement is for a three-year term and automatically extends from year to
year thereafter unless terminated by us 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. Mr. Hoover receives an annual base salary of $150,000 and is
entitled to such bonuses as may be awarded from time to time and to participate
in any stock option plans which we may now have or in the future develop. He may
be terminated for "cause" as defined in his agreement. If terminated for cause,
he will be entitled to base salary earned, and he will retain all vested stock
options. If, upon 90 days' prior written notice, he is terminated "without
cause", he will be entitled to receive an amount equal to his base salary plus
bonus, if any, and continuation of health insurance for nine months
13
following termination, plus any unvested options shall vest. In addition, the
agreement contains confidentiality and non-competition covenants.
In November 1999, Dr. Okkerse became Chief Executive Officer of the
Company. His employment was for a three-year term. He received an annual base
salary of $200,000 and was entitled to bonuses as may be awarded from time to
time. He resigned in May 2000 and received twelve months' separation pay, a cash
bonus of $50,000, and the vesting of 133,334 options at $10.25. Dr. Okkerse is
also bound by a confidentiality and post-term non-competition agreement.
In April 1996, we entered into an employment agreement with Mr. Blue
for a period of three years, which was automatically extended from year to year
unless terminated by either party upon 60 days' written notice. Mr. Blue
received an annual base salary of $180,000. On July 10, 2000, Mr. Blue resigned
as Chief Executive Officer, terminated his employment agreement and entered into
a twelve-month consulting agreement wherein he would be paid $15,330 per month.
On December 29, 2000, in consideration of Mr. Blue accepting $105,000 in lieu of
the balance of $112,283 owed at that time, his consulting agreement was
terminated. Mr. Blue is also bound by a confidentiality and post-term
non-competition agreement.
In December 1995, we entered into an employment agreement with Mr.
Guinan, which is automatically extended from year to year unless terminated by
either party upon 60 days' written notice. Mr. Guinan receives an annual base
salary of $180,000 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 plans
which we may now have or in the future develop. Mr. Guinan 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. If
he is terminated "without cause", then he will be entitled to receive an amount
equal to his base salary and bonus, if any, and continuation of health insurance
for six months following termination, plus any unvested options shall vest. In
addition, the agreement contains confidentiality and non-competition covenants.
In December 1998, upon acquiring Key Communications, we entered into a
three-year employment agreement with Mr. Hardy. Mr. Hardy receives an annual
base salary of $225,000 and may receive an annual bonus up to $40,000 as may be
awarded by the Board of Directors. He may be terminated for "cause" as defined
in his agreement. If so terminated, he will be entitled to base salary earned,
and he will retain all vested stock options. 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 nine months
following termination, plus any unvested options shall vest. The agreement
contains confidentiality and non-competition covenants.
In November 1996, we entered into an employment agreement with Mr.
Puthoff. The agreement is for a three-year term and automatically extends from
year to year thereafter unless terminated by us 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. He receives an annual base salary of $155,750, and is
entitled to such bonuses as may be awarded from time to time and to participate
in any stock option or bonus plans which we may now have or in the future
develop. He may be terminated for "cause" as defined in his Agreement. If
terminated for cause, he will be entitled to base salary earned, and he will
retain all vested stock options. If, upon 90 days' prior written notice, he is
terminated "without cause", he will be entitled to receive an amount equal to
his base salary plus bonus, if any, and continuation of health insurance for
nine months following termination, plus any unvested options shall vest. In
addition, the agreement contains confidentiality and non-competition covenants.
14
Liability and Indemnification of Our Directors and Officers
The Florida Business Corporation Act provides that directors of a
corporation will not be personally liable for monetary damages for breach of
their fiduciary duty as directors, except for liability (i) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (ii) for any unlawful payment of a dividend or unlawful stock
repurchase or redemption, as provided in Section 607.0834 of the Florida
Business Corporation Act, (iii) for any transaction from which the director
derived an improper personal benefit, or (iv) for a violation of criminal law.
Our Restated Articles of Incorporation and Bylaws also provide that we shall
indemnify our directors and officers to the fullest extent permitted by Section
607.0831 of the Florida Business Corporation Act, including circumstances in
which indemnification is otherwise discretionary. We have procured and maintain
insurance under which our directors and officers are insured, subject to the
limits of the policy, against certain losses arising from claims made against
such directors and officers. We have entered into indemnification agreements
with most of our directors and executive officers limiting their personal
liability for monetary damages and reasonable attorney fees, except for
liability that cannot be eliminated under the Florida Business Corporation Act.
Certain Relationships and Related Transactions
On April 30, 1997, we loaned a total of $350,000 to Mr. Blue. The funds
were advanced pursuant to two demand promissory notes with recourse in the
principal amounts of $290,000 and $60,000, respectively, each bearing interest
at a rate of 7-3/4% per year. Mr. Blue had collateralized the notes with shares
of our common stock. On June 30, 2000, both notes were amended to cease accruing
interest after July 1, 2000, and to provide for a balloon payment on January 1,
2002 of the full principal and interest due. The notes are collateralized by his
stock option for 400,000 shares of the Company's stock at a price of $1.53 per
share. As of December 31, 1999 these loans were included in other assets on the
balance sheet; as of December 31, 2000, all amounts owed under these loans have
been reclassified to stockholders' equity.
ITEM 2. ADOPTION OF THE PROPOSED 2001 STOCK OPTION PLAN
The Board of Directors has adopted the 2001 Stock Option Plan (the
"2001 Plan"), for its employees, officers and directors. The 2001 Plan is
effective July 25, 2001, upon shareholder approval. Of the 5,000,000 shares of
Common Stock available for issuance under the 2001 Plan, 933,332 shares have
been issued, subject to shareholder approval. The purpose of the 2001 Plan is to
attract and retain directors, officers, other key employees and consultants, to
encourage stock ownership by such persons and to give them a greater personal
interest in the success of the Company.
The following description of the 2001 Plan is qualified by reference to
the complete text of such Plan which is set forth on Exhibit B to this Proxy
Statement.
The 2001 Plan provides for the issuance of up to 5,000,000 shares upon
exercise of options designated as either "incentive stock options" ("ISO") or
"non-qualified options" ("NQSO") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). The 2001 Plan is
administered by the Compensation Committee of the Board of Directors which
determines, among other things, the persons to be granted options under the 2001
Plan, the number of shares subject to each option and the option price. The
exercise price of any incentive stock option granted under the 2001 Plan 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
15
owning more than 10% of the outstanding Common Stock 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.
The term of each option and the manner in which it may be exercised is
determined by the Board of Directors or a committee appointed by the Board of
Directors provided that no option may be exercisable more than ten years after
the date of grant and, in the case of an incentive stock option granted to an
eligible employee owning more than 10% of the Common Stock, no more than five
years after the date of grant. Incentive stock options may be granted only to
employees and no option granted to an employee may be exercised unless, at the
time of exercise, the grantee is an employee of the Company or a subsidiary, and
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 numbers
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 or for estate planning purposes under certain
circumstances and if approved by the Board of Directors. The 2001 Plan has
change of control provisions.
A summary of the federal income tax treatment under the Code, as
presently in effect, of options granted under the 2001 Plan is as follows. The
Company recommends that optionees seek independent tax advice with respect to
their options.
With respect to incentive stock options, an optionee will not recognize
any taxable income at the time an ISO is granted and the Company will not be
entitled to a federal income tax deduction at that time. No ordinary income will
be recognized by the holder of an ISO at the time of exercise. The excess of the
market value of the shares of the Company's Common Stock at the time of exercise
over the aggregate option price will be an adjustment to alternative minimum
taxable income for purposes of the federal "alternative minimum tax" at the date
of exercise. If the optionee holds the shares of the Company's Common Stock
acquired upon exercise of the ISO for the greater of two years after the date
the option was granted or one year after the acquisition of such shares, the
difference between the aggregate option price and the amount realized upon
disposition of the shares will constitute a long-term capital gain or loss, as
the case may be, and the Company will not be entitled to a federal income tax
deduction. If the shares of the Company's Common Stock are disposed of in a
sale, exchange of other "disqualifying disposition" within two years after the
date of grant or within one year after the date of exercise, the optionee will
realize ordinary income in an amount equal to the excess of the market value of
the shares of the Company's Common Stock at the time of exercise, over the
aggregate option price. The Company may be entitled to a federal income tax
deduction equal to such amount.
With respect to non-qualified stock options, the granting of a NQSO
does not produce taxable income to the recipient or a tax deduction to the
Company. Taxable ordinary income will be recognized by the holder at the time of
such exercise in an amount equal to the excess of the market value of shares of
the Company's Common Stock purchased at the time of such exercise over the
aggregate option price. The Company may be entitled to a corresponding federal
income tax deduction. Upon a subsequent disposition of the shares of the
Company's Common Stock, optionee will generally recognize taxable capital gain
or loss based upon the difference between the per share market value at the time
of exercise and the per share selling price. Taxable income at the time or
exercise will constitute wages subject to withholding of income tax and the
Company will be required to make whatever arrangements are necessary to insure
that funds equaling the amount of tax required to be withheld are available for
payment. The tax basis for the shares of the Company's Common Stock acquired is
the option price plus the taxable income recognized.
16
The Board of Directors recommends that all shareholders vote "FOR" approval
of the proposed 2001 Stock Option Plan.
ITEM 3. AMEND THE COMPANY'S RESTATED ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 100,000,000 TO
200,000,000
There will be submitted to the shareholders a proposal to amend Article
THIRD of the Company's Restated Articles of Incorporation, as amended (the
"Restated Articles") to increase the authorized number of shares of Common
Stock, $.001 par value, from 100,000,000 to 200,000,000. The full text of the
proposed amendment to the Restated Articles is set forth as Exhibit C to this
Proxy Statement.
The Company is presently authorized to issue 100,000,000 shares of Common
Stock. As of the close of business on May 25,2001 (the "Record Date"), the
Company had 24,757,988 shares of Common Stock issued and outstanding. A balance
of 13,969,404 authorized shares of Common Stock remains available for issuance
without shareholder action. The Company believes that this small amount of
authorized and unissued shares are inadequate in the event that the Company
wishes to consider future acquisitions, mergers and other business combinations.
The 100,000,000 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 Common Stock have no preemptive 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
Restated Articles that would increase the number of shares of Common Stock which
the Company is authorized to issue from 100,000,000 to 200,000,000 shares. The
proposed amendment does not change any other provision of the Restated Articles.
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 without limitation, possible future equity financing, stock
dividends, stock 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 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 Restated Articles.
INDEPENDENT ACCOUNTANTS
The Board has appointed PricewaterhouseCoopers LLP, Miami, Florida, as
independent accountants to audit the consolidated financial statements of the
Company for the fiscal year ending December 31, 2001. Representatives of
PricewaterhouseCoopers LLP 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.
17
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 Year 2002 Annual
Meeting of Shareholders of the Company must be received by the Company not later
than December 31, 2001, at its principal executive offices, 2555 Davie Road,
Suite 110, Fort Lauderdale, Florida 33317, Attention:. Corporate Secretary, for
inclusion in the proxy statement and proxy relating to the Year 2002 Annual
Meeting of Shareholders.
ADDITIONAL INFORMATION
Accompanying this proxy statement is a copy of the Company's annual
report, which includes a copy of the Annual Report on Form 10-K. Additional
copies of the Company's Annual Report on Form 10-K may be obtained from the
Company on written request. Items 6-9 of the Company's Annual Report on Form 10-
K are incorporated by reference herein.
BY ORDER OF THE
BOARD OF DIRECTORS
Frank M. Puthoff, Secretary
June 18, 2001
Fort Lauderdale, Florida
18
EXHIBIT A
AUDIT COMMITTEE CHARTER
-----------------------
Pursuant to Section 607.0825 of the Florida Statutes and Article III,
Section I, of the Bylaws of the Company, there shall be a committee of the Board
of Directors to be known as the Audit Committee. Pursuant to Section 6(d) of the
NASD Bylaws, the Audit Committee shall be composed of at least three directors
who are "independent", as defined in Section 6(c) of the NASD ByLaws. The Audit
Committee shall otherwise be in compliance with the rules and regulations of the
Securities and Exchange Commission and the National Association of Securities
Dealers, as each may be amended.
The Audit Committee will consult with the Company's outside auditor at
the end of each fiscal quarter to review the Company's financial statements and
any other matters as appropriate prior to filing its annual 10-K and 10-Q's, and
issuing any earnings release, to ascertain compliance with appropriate audit
procedures and provide assistance to the Board of Directors in fulfilling its
oversight responsibilities.
In discharge of its functions, the Audit Committee will:
1. Review and recommend to the Board of Directors the outside auditor
to be selected to audit the books of the Company. The Board of
Directors and the Audit Committee shall have the ultimate right to
select, evaluate and remove the outside auditor, who is ultimately
accountable to the Board of Directors and the Audit Committee.
2. Meet with the outside auditor to discuss the scope of the proposed
audit for the current year, the audit procedures to be utilized,
the fees involved and any non-accounting related services, and at
the conclusion thereof, discuss such audit (among themselves and
with the outside auditor), including any problems identified
regarding internal controls, any comments or recommendations of
the outside auditor and management's responses thereto, and the
auditor's judgment about the quality and acceptability of the
Company's accounting principles as applied to its financial
reporting.
3. Review and discuss the adequacy and effectiveness of the internal
auditing, accounting and financial controls of the Company, and
elicit from the outside auditor any recommendations that they may
have for the improvement of internal control procedures or
particular areas where new or more detailed controls or procedures
are desirable.
4. Receive annually a written statement from the outside auditor
delineating relationships between the outside auditor and the
Company; engage in active dialogue with the outside auditor on
issues that might reasonably affect their objectivity and
independence, and take or recommend to the Board of Directors
appropriate action, if necessary, to ensure the independence of
the outside auditor.
5. Review, discuss and monitor the internal audit function, if any,
and the coordination of such function with the outside auditor,
and assure that unrestricted access is provided between the Audit
Committee and the controller/internal auditor of the Company, who
shall report major exceptions and areas of concern to the Audit
Committee.
6. Review and discuss any changes in accounting principles and any
matters involving litigation which would have a material impact on
the financial statements.
19
7. Review and discuss the outside auditor's evaluation of the Company's
financial, accounting and auditing personnel, and the cooperation which
the outside auditor received from management during the course of the
audit.
8. Maintain free and open means of communication between the Board of
Directors, the outside auditor and the Company's financial, accounting
and audit personnel.
9. Review and recommend to the Board of Directors a Code of Business
Ethics Policy, and oversee its implementation and monitor the Company's
compliance.
10. Investigate any matter brought to its attention within the scope of its
functions, with the power to engage such professional assistance as it
deems necessary for this purpose.
11. Annually prepare a report to shareholders as required by the Securities
and Exchange Commission. The report should be included in the Company's
proxy statement in accordance with SEC regulations.
12. Review and reassess the adequacy of this Charter at least annually.
Submit the Charter to the Board of Directors for approval and have the
document published at least every three years in accordance with SEC
regulations.
The Audit Committee may elect a Chairman from among its members absent the
designation of such Chairman by the Board of Directors.
Minutes shall be kept of the proceedings of the Audit Committee which shall
be submitted to the Board of Directors of the Corporation.
20
EXHIBIT B
PROXYMED, INC.
2001 STOCK OPTION PLAN
1. Purpose of the Plan
-------------------
The purpose of this Plan is to further the growth of ProxyMed, Inc., a Florida
corporation, and its subsidiaries (the "Company") by offering an incentive to
officers, directors, other key employees and consultants of the Company to
continue in the employ of the Company, and to increase the interest of these
individuals in the Company, through additional ownership of its common stock.
2. Definitions
-----------
Whenever used in this Plan, the following terms shall have the meanings set
forth in this Section:
a) "Board of Directors" means the Board of Directors of the Company.
b) "Change of Control" means any of the following events:
i) an acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any Person (as
defined in the Exchange Act of 1934, as amended (the "1934 Act") immediately
after which such Person has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the 1934 Act) of two-thirds (2/3) or more of the
combined voting power of the Company's then outstanding Voting Securities;
provided, however, that in determining whether a Change in Control has occurred,
Voting Securities which are acquired in a Non-Control Acquisition (as
hereinafter defined) shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (x)
an employee benefit plan (or a trust forming a part thereof) maintained by (A)
the Company or (B) any corporation or other Person of which a majority of its
voting power or its equity securities or equity interest is owned directly or
indirectly by the Company (a "Subsidiary"), (y) the Company or any Subsidiary,
or (z) any Person in connection with a Non-Control Transaction (as hereinafter
defined).
ii) the individuals who, as of the date this Plan is approved by the
Company's Board of Directors (the "Board"), are members of the Board (the
"Incumbent Board") cease for any reason to constitute at least two-thirds (2/3)
of the Board; provided, however, that the voluntary resignation of a member of
the Incumbent Board unrelated to a Change of Control shall not affect such
calculation; provided, further, however, that if the election or nomination for
election by the Company's stockholders or Board of any new director was approved
by a vote of at least two-thirds (2/3) of the Incumbent Board, such new director
shall, for purposes of this Agreement, be considered a member of the Incumbent
Board; provided further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially assumed office as a
result of either an actual or threatened solicitation of proxies or consents by
or on behalf of a person other than the Board (a "proxy contest"), including by
reason of any agreement intended to avoid or settle any election contest or
proxy contest; or
iii) approval by stockholders of the Company of:
a) a merger, consolidation or reorganization involving the
Company, unless
(1) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least
seventy-five percent (75%) of the combined voting power of the outstanding
Voting Securities of the corporation resulting from such merger or consolidation
or reorganization or the ultimate entity controlling such corporation (the
"Surviving Corporation") in
21
substantially the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization;
(2) the individuals who are members of the Incumbent
Board immediately prior to the execution of the agreement providing for such
merger, consolidation or reorganization constitute at least two-thirds (2/3) of
the members of the board of directors of the Surviving Corporation and no
agreement, plan or arrangement is in place to change the composition of the
board following the merger, consolidation or reorganization such that the
Incumbent Board would constitute less than two-thirds (2/3) of the reconstituted
board;
(3) no person (other than the Company, any Subsidiary, or
any employee benefit plan (or any trust forming a part thereof) maintained by
the Company, the Surviving Corporation or any Subsidiary, or any Person who
immediately prior to such merger, consolidation or reorganization had Beneficial
Ownership of twenty percent (20%) or more of the then-outstanding Voting
Securities) has Beneficial Ownership of twenty percent (20%) or more of the
combined voting power of the Surviving Corporation's then-outstanding Voting
Securities; and
(4) a transaction described in clauses (1) through (3)
shall herein be referred to as a "Non-Control Transaction".
b) a complete liquidation or dissolution of the Company; or
c) an agreement for the sale or other disposition of all of
the operating assets of the Company to any Person (other than a transfer to a
Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person; provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company the Subject Person becomes the Beneficial Owner
of any additional Voting Securities which increases the percentage of the then-
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
c) "Code" means the Internal Revenue Code of 1986, as amended.
d) "Committee" means the Compensation Committee or similar committee
of the Board of Directors.
e) "Common Stock" means the common stock, par value $.001 per share,
of the Company.
f) "Corporate Transaction" means any (i) reorganization or liquidation
of the Company, (ii) reclassification of the Company's capital stock, (iii)
merger of the Company with or into another corporation, or (iv) the sale of all
or substantially all the assets of the Company, which results in a significant
number of employees being transferred to a new employer or discharged or in the
creation or severance of a parent-subsidiary relationship.
g) "Date of Grant" means, as the case may be: (i) the date the
Committee approves the grant of an Option pursuant to this Plan; or (ii) such
later date as may be specified by the Committee as the date a particular Option
granted pursuant to this Plan will become effective.
h) "Employee" means any person employed by the Company within the
meaning of Section 3401(c) of the Code and the regulations promulgated
thereunder. For purposes of any Non-Qualified Option only, any officer or
director of the Company shall be considered an Employee even if he is not an
employee within the meaning of the first sentence of this subsection.
22
i) "Exercise Price" means the price per share which must be paid upon
exercise of an Option in cash or property or a combination of both.
j) "Fair Market Value" means: (i) if the Common Stock is traded in a
market in which actual transactions are reported, the mean of the high and low
prices at which the Common Stock is reported to have traded on the relevant date
in all markets on which trading in the Common Stock is reported or, if there is
no reported sale of the Common Stock on the relevant date, the mean of the
highest reported bid price and lowest reported asked price for the Common Stock
on the relevant date; (ii) if the Common Stock is Publicly Traded but only in
markets in which there is no reporting of actual transactions, the mean of the
highest reported bid price and the lowest reported asked price for the Common
Stock on the relevant date; or (iii) if the Common Stock is not Publicly Traded,
the value of a share of Common Stock as determined by the most recent valuation
prepared by an independent expert at the request of the Committee.
k) "Incentive Stock Option" means any Option which, at the time of the
grant, is an incentive stock option within the meaning of Section 422 of the
Code.
l) "Non-Qualified Option" means any Option that is not an Incentive
Stock Option pursuant to the terms of this Plan.
m) "Option" means any option granted pursuant to this Plan.
n) "Publicly Traded" means that a class of stock is required to be
registered pursuant to Section 12 of the Exchange Act, or that stock of that
class has been sold within the preceding 12 months in an underwritten public
offering, or stock that is regularly traded in a public market.
o) "Retirement" means a Termination of Employment by reason of an
Employee's retirement at a time when the Employee is at least 65 years old,
other than by reason of a termination by resignation, discharge, death or Total
Disability or the resignation, failure to stand for re-election or dismissal
from the Board of Directors.
p) "Termination of Employment" means the time when the employee-
employer relationship between an Employee and the Company ceases to exist for
any reason including, but not limited to, a termination by resignation,
discharge, death, Total Disability or Retirement, or the resignation, failure to
stand for re-election or dismissal from the Board of Directors.
q) "Total Disability" means the inability of an Employee to perform
the material duties of his or her job by reason of a medically determinable
physical or mental impairment that can be expected to result in death or that
has lasted or can be expected to last for a continuous period of not less than
twelve (12) months. All determinations as to the date and extent of disability
of an Employee will be made in accordance with the written policy pertaining to
Employee disability, if any, of the Company by which the Employee is employed.
In the absence of a written policy pertaining to Employee disability, all
determinations as to the date and extent of disability of an Employee will be
made by the Committee in its sole and absolute discretion. In making its
determination, the Committee may consider the opinion of the personal physician
of the Employee or the opinion of an independent licensed physician of the
Company's choosing.
3. Effective Date of the Plan
--------------------------
The "effective date" of this Plan is July 25, 2001.
4. Administration of the Plan
--------------------------
Either the Board of Directors or the Committee shall be responsible for the
administration of this Plan, and shall grant Options pursuant to this Plan.
Subject to the express provisions of this Plan, the Committee shall have full
authority to interpret this Plan, to prescribe, amend and rescind rules and
regulations relating to it, and to make all other determinations which it
believes to be necessary or advisable in administering this
23
Plan. The determinations of the Committee on the matters referred to in this
section shall be conclusive. The Committee may not amend this Plan. No member of
the Committee shall be liable for any act or omission in connection with the
administration of this Plan unless it resulted from the member's willful
misconduct.
5. The Committee
-------------
The Committee shall hold its meeting at such times and places as it may
determine and shall maintain written minutes of its meetings. A majority of the
members of the Committee shall constitute a quorum at any meeting of the
Committee. All determinations of the Committee shall be made by the vote of a
majority of the members who participate in a meeting. The members of the
Committee may participate in a meeting of the Committee in person or by
conference telephone or similar communications equipment by means of which all
members can hear each other. Any decision or determination by written consent of
all of the members of the Committee shall be as effective as if it had been made
by a vote of a majority of the members who participate in a meeting.
6. Stock Subject to the Plan
-------------------------
The maximum number of shares of Common Stock as to which Options may be granted
pursuant to this Plan is 5,000,000 shares. The maximum number of shares of such
Common Stock shall be reduced each year by the grant of Options as provided
herein. If any Option expires or is canceled without being exercised in full,
the number of shares as to which the Option is not exercised will once again
become shares as to which new Options may be granted. The Common Stock that is
issued on exercise of Options may be authorized but unissued shares or shares
that have been issued and reacquired by the Company.
7. Persons Eligible to Receive Options
-----------------------------------
Options may be granted only to Employees, as defined in Section 2(h) above.
8. Grants of Options
-----------------
a) In General. Except as otherwise provided herein, the Committee
----------
shall have complete discretion to determine when and to which Employees Options
are to be granted, the number of shares of Common Stock as to which Options
granted to each Employee will relate, whether Options granted to an Employee
will be Incentive Stock Options or Non-Qualified Options or partly Incentive
Stock Options and partly Non-Qualified Options and, subject to the limitations
in Sections 9 and 10 below, the Exercise Price and the term of Options granted
to an Employee. Any Options that are not designated as Incentive Stock Options
when they are granted shall be Non-Qualified Options. No grant of an Incentive
Stock Option may be conditioned upon a Non-Qualified Option's having yet been
exercised in whole or in part, and no grant of a Non-Qualified Option may be
conditioned upon an Incentive Stock Option's having not been exercised in whole
or in part.
9. Option Provisions
-----------------
a) Exercise Price. The Exercise Price of each Option shall be as
--------------
determined by the Committee; provided, however, that in the case of Incentive
Stock Options, the Exercise Price shall not be less than 100% of the Fair Market
Value of the Common Stock on the Date of Grant of the Option.
b) Term. The term of each Option shall be as determined by the
----
Committee, but in no event shall the term of an Option (whether or not an
Incentive Stock Option) be longer than ten (10) years from the Date of Grant.
c) Manner of Exercise. An Option that has vested pursuant to the terms
------------------
of this Plan may be exercised in whole or in part, in increments of a minimum of
one hundred (100) shares, at any time, or from time to time, during its term. To
exercise an Option, the Employee exercising the Option must deliver to the
Company, at its principal office:
24
i) a written notice of exercise of the Option, which states the
extent to which the Option is being exercised and which is executed by the
Employee;
ii) a check in an amount, or Common Stock with a Fair Market Value,
equal to the Exercise Price of the Option times the number of shares being
exercised, or a combination of the foregoing; and
iii) a check equal to any withholding taxes the Company is required
to pay as a result of the exercise of the Option by the Employee. If permitted
by the Board of Directors or the Committee, either at the time of the grant of
the Option or the time of exercise, the Employee may elect, at such time and in
such manner as the Board of Directors or the Committee may prescribe, to satisfy
such withholding obligation by (A) delivering to the Company Common Stock (which
in the case of Common Stock acquired from the Company shall have been owned by
the Employee for at least six months prior to the delivery date) having a fair
market value equal to such withholding obligation, or (B) requesting that the
Company withhold from the shares of Common Stock to be delivered upon the
exercise a number of shares of Common Stock having a fair market value equal to
such withholding obligation. The day on which the Company receives all of the
items specified in this subsection shall be the date on which the Option is
exercised to the extent described in the notice of exercise.
d) Delivery of Stock Certificates. As promptly as practicable after an
------------------------------
Option is exercised, the Company shall cause the transfer agent to deliver to
the Employee who exercises the Option certificates, registered in that person's
name, representing the number of shares of Common Stock that were purchased by
the exercise of the Option. Unless the Common Stock was issued in a transaction
that was registered pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), each certificate may bear a legend to indicate that if the
Common Stock represented by the certificate was issued in a transaction that was
not registered pursuant to the Securities Act, and may only be sold or
transferred in a transaction that is registered pursuant to the Securities Act
or is exempt from the registration requirements of the Securities Act.
e) Vesting of Options. Except as otherwise provided in this Plan, the
------------------
Options granted hereunder to Employees shall be subject to such conditions as to
vesting as shall be determined by the Committee, in its sole and absolute
discretion, at the Date of Grant of the Option, and the terms of such vesting
shall be clearly set forth in the instrument granting the Option; provided,
however, that upon a Change of Control, any Options that have not yet vested in
accordance with the terms of this Plan and the Stock Option Agreement shall vest
upon such Change of Control. An Option shall "vest" at such time as it becomes
exercisable in accordance with this Plan and the Stock Option Agreement. Upon
exercise of an Option and the delivery the stock certificates as provided
herein, the Common Stock acquired upon exercise of the Option shall not be
subject to forfeiture by the Employee for any reason whatsoever.
f) Nontransferability of Options. During the lifetime of a person to
-----------------------------
whom an Option is granted pursuant to this Plan, the Option may be exercised
only by that person or by his or her guardian or legal representative, except to
the extent the Board of Directors or the Compensation Committee shall otherwise
determine, whether at the time the option is granted or thereafter, and then
only for estate planning purposes to a trust wherein the option holder is the
trustee, and except to the extent the Board of Directors or the Committee shall
otherwise determine, whether at the time Option is granted or thereafter. An
Option may not be assigned, transferred, sold, pledged or hypothecated in any
way; shall not be subject to levy or execution or disposition under the
Bankruptcy Code of 1978, as amended, or any other state or federal law granting
relief to creditors, whether now or hereafter in effect; and shall not be
transferable otherwise than by will or the laws of descent and distribution. The
Company will not recognize any attempt to assign, transfer, sell, pledge,
hypothecate or otherwise dispose of an Option contrary to the provisions of this
Plan, or to levy any attachment, execution or similar process upon any Option
and, except as expressly stated in this Plan, the Company shall not be required
to, and shall not, issue Common Stock on the exercise
25
of an Option to anyone who claims to have acquired that Option from the person
to whom it was granted in violation of this subsection.
g) Retirement of Holder of Option. If there is a Termination of
------------------------------
Employment of an Employee to whom an Option has been granted due to Retirement,
each Incentive Stock Option held by the retired Employee, whether or not then
vested, may be exercised until the earlier of: (x) the end of the three (3)
month period immediately following the date of such Termination of Employment;
or (y) the expiration of the term specified in the Option. In the case of a Non-
Qualified Option, there shall be substituted the words, "the end of the twelve
(12) month period" for the words "the end of the three (3) month period" in the
immediately preceding sentence.
h) Total Disability of Holder of Option. If there is a Termination of
------------------------------------
Employment of an Employee to whom an Option has been granted by reason of his or
her Total Disability, each Option held by the Employee, whether or not then
vested, may be exercised until the earlier of: (x) the end of the twelve (12)
month period immediately following the date of such Termination of Employment;
or (y) the expiration of the term specified in the Option.
i) Death of Holder of Option. If there is a Termination of Employment
-------------------------
of an Employee to whom an Option has been granted by reason of (i) his or her
death, or (ii) the death of a former Employee within three (3) months following
the date of his or her Retirement (or, in the case of a Non-Qualified Option,
within twelve (12) months following the date of his or her Retirement), or (iii)
the death of a former Employee within twelve (12) months following the date of
his or her Termination of Employment by reason of Total Disability, then each
Option held by the person at the time of his or her death, whether or not then
vested, may be exercised by the person or persons to whom the Option shall pass
by will or by the laws of descent and distribution (but by no other persons)
until the earlier of: (x) the end of the twelve (12) month period immediately
following the date of death (or such longer period as is permitted by the
Committee); and (y) the expiration of the term specified in the Option,
provided, however, that in no event is the term of the Option to be deemed to
expire prior to the end of three (3) months from the date of death of the
Employee.
j) Termination of Employment Other Than for Retirement, Death or
-------------------------------------------------------------
Disability. Unless the Committee or the Board of Directors states otherwise with
- ----------
respect to a specific Option, if there is a Termination of Employment of an
Employee to whom an Option has been granted pursuant to this Plan for any reason
other than the Retirement, death or Total Disability of the Employee, then all
Options held by such Employee which are then vested may be exercised until the
earlier of: (x) the three (3) month period immediately following the date of
such Termination of Employment; or (y) the expiration of the term specified in
the Option.
k) Stock Option Agreement. As promptly as practicable after an
----------------------
Employee is granted an Option pursuant to this Plan, the Committee shall send
the Employee a document setting forth the terms and conditions of the grant. The
form of grant document shall be substantially as set forth in Exhibit "B-1"
attached hereto. Each Option granted pursuant to this Plan must be clearly
identified as to whether it is or is not an Incentive Stock Option and shall set
forth all other terms and conditions relating to the exercise thereof. In the
case of an Incentive Stock Option, the document shall include all terms and
provisions that the Committee determines to be necessary or desirable in order
to qualify the Option as an Incentive Stock Option within the meaning of Section
422 of the Code. If an Employee is granted an Incentive Stock Option and a Non-
Qualified Option at the same time, the Committee shall send the Employee a
separate document relating to each of the Incentive Stock Option and the Non-
Qualified Option.
l) Registration of Plan. Upon a Change of Control, the Company agrees
--------------------
to use its best efforts to cause the Plan to be registered under the Securities
Act at the earliest possible time. The Company shall have no other obligations
to register the Plan unless directed to do so by the Board of the Company based
on the Company's best interests.
26
10. Special Provisions Relating to Incentive Stock Options
------------------------------------------------------
No Incentive Stock Option may be granted pursuant to this Plan after ten (10)
years from the first to occur of: (i) the date this Plan is adopted by the Board
of Directors; or (ii) the date this Plan is approved by the stockholders of the
Company. No Incentive Stock Option may be exercised after the expiration of ten
(10) years from the Date of Grant or such shorter period as is provided herein.
Notwithstanding Section 8(b) hereof, Incentive Stock Options may not be granted
to an Employee who, at the time the Option is granted, owns more than ten
percent (10%) of the total combined voting power of the stock of the Company,
unless: (i) the purchase price of the Common Stock pursuant to the Incentive
Stock Option is at least one hundred ten percent (110%) of the Fair Market Value
of the Common Stock on the Date of Grant; and (ii) the Incentive Stock Option by
its terms is not exercisable after the expiration of five (5) years from the
Date of Grant. The Committee is authorized, pursuant to the last sentence of
Section 422(b) of the Code, to provide at the time an Option is granted,
pursuant to the terms of such Option, that such Option shall not be treated as
an Incentive Stock Option even though it would otherwise qualify as an Incentive
Stock Option. The terms of any Incentive Stock Option granted hereunder shall,
in the hands of any individual grantee thereof, be subject to the dollar
limitations set forth in Section 422(d) of the Code (pertaining to the $100,000
per year limitation).
11. Recapitalization
----------------
a) In General. If the Company increases the number of outstanding
----------
shares of Common Stock through a stock dividend or a stock split, or reduces the
number of outstanding shares of Common Stock through a combination of shares or
similar recapitalization then, immediately after the record date for the change:
(i) the number of shares of Common Stock issuable on the exercise of each
outstanding Option granted pursuant to this Plan (whether or not then vested)
shall be increased in the case of a stock dividend or a stock split, or
decreased in the case of a combination or similar recapitalization that reduces
the number of outstanding shares, by a percentage equal to the percentage change
in the number of outstanding shares of Common Stock as a result of the stock
dividend, stock split, combination or similar recapitalization; (ii) the
Exercise Price of each outstanding Option granted pursuant to this Plan (whether
or not then vested) shall be adjusted so that the total amount to be paid upon
exercise of the Option in full will not change; and (iii) the number of shares
of Common Stock that may be issued on exercise of Options granted pursuant to
this Plan (whether or not then vested) and that are outstanding or remain
available for grant shall be increased or decreased by a percentage equal to the
percentage change in the number of outstanding shares of Common Stock. Any
fractional shares will be rounded up to whole shares.
b) Corporate Transactions. If, as a result of a Corporate Transaction
----------------------
while an Option granted pursuant to this Plan is outstanding (whether or not
then vested), and the holders of the Common Stock become entitled to receive,
with respect to their Common Stock, securities or assets other than, or in
addition to, their Common Stock, then upon exercise of that Option the holder
shall receive what the holder would have received if the holder had exercised
the Option immediately before the first Corporate Transaction that occurred
while the Option was outstanding and as if the Company had not disposed of
anything the holder would have received as a result of that and all subsequent
Corporate Transactions. the Company shall not agree to any Corporate Transaction
unless the other party to the Corporate Transaction agrees to make available on
exercise of the Options granted pursuant to this Plan that are outstanding at
the time of the Corporate Transaction, the securities or other assets the
holders of those Options are entitled pursuant to this subsection to receive.
12. Rights of Option Holder
-----------------------
a) Stockholder. The holder of an Option (whether or not then vested)
-----------
shall not have any rights as a stockholder by reason of holding that Option.
Upon exercise of an Option granted pursuant to this Plan, the holder shall be
deemed to acquire the rights of a stockholder when, but not before, the issuance
of Common Stock as a result of the exercise is recorded in the stock transfer
records of the Company.
27
b) Employment. Nothing in this Plan or in the grant of an Option shall
----------
confer upon any Employee the right to continue in the employ of the Company or
shall interfere with or restrict in any way the rights of the Company to
discharge any Employee at any time for any reason whatsoever, with or without
cause.
13. Laws and Regulations
--------------------
The obligation of the Company to sell and deliver shares of Common Stock on
vesting and exercise of Options granted pursuant to this Plan shall be subject
to the condition that counsel for the Company be satisfied that the sale and
delivery thereof will not violate the Securities Act or any other applicable
laws, rules or regulations. In addition, the Company may, as a condition to such
sale and delivery, require the Employee to represent and warrant at the time of
any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required pursuant
to such securities laws.
14. Withholding of Taxes
--------------------
a) In General. In addition to the requirement set forth in Section
----------
9(c) above that, in order to exercise an Option granted pursuant to this Plan a
person must make a payment to the Company or authorize withholding in order to
enable the Company to pay any withholding taxes due as a result of the exercise
of that Option, if an Employee who exercised an Incentive Stock Option disposes
of shares of Common Stock acquired through exercise of that Incentive Stock
Option either (x) within two years after the Date of Grant of the Incentive
Stock Option or (y) within one year after the issuance of the shares on exercise
of the Incentive Stock Option then, promptly thereafter, the Employee shall
notify the Company of the occurrence of the event and the amount realized upon
the disposition of such Common Stock by the Employee, and pay any federal, state
and other taxes due as a result thereof.
b) Withholding of Taxes. If, whether because of a disposition of
--------------------
Common Stock acquired on exercise of an Incentive Stock Option, the exercise of
a Non-Qualified Option or otherwise, the Company becomes required to pay
withholding taxes to any federal, state or other taxing authority and the
Employee fails to provide the Company with the funds with which to pay that
withholding tax, then the Company may withhold, subject to applicable state law,
up to 50% of each payment of salary or bonus to the Employee (which will be in
addition to any other required or permitted withholding), until the Company has
been reimbursed for the entire withholding tax it was required to pay.
15. Reservation of Shares
---------------------
The Company shall at all times keep reserved for issuance on exercise of Options
granted pursuant to this Plan a number of authorized but unissued or reacquired
shares of Common Stock equal to the maximum number of shares the Company may be
required to issue on exercise of outstanding Options (whether or not then
vested) granted pursuant to this Plan.
16. Amendment of the Plan
---------------------
The Board of Directors may, at any time and from time to time, modify or amend
this Plan in any respect effective at any date the Board of Directors
determines; provided, however, that, without the approval of the stockholders of
the Company the Board of Directors may not increase the maximum number of
Incentive Stock Options that may be granted under the Plan. No modification or
amendment of this Plan shall, without the consent of the holder of an
outstanding Option (whether nor not then vested), adversely affect the holder's
rights pursuant to that Option.
28
17. Termination of the Plan
-----------------------
The Board of Directors may suspend or terminate this Plan at any time or from
time to time, but no such action shall adversely affect the rights of a person
holding an outstanding Option, whether or not then vested, granted pursuant to
this Plan prior to that date.
29
EXHIBIT "B-1"
STOCK OPTION AGREEMENT
This Agreement is made as of ___________, 20__, by and between
PROXYMED, INC. (the "Company") and _____________, who is an employee, officer or
director of the Company or one of its subsidiaries (the "Employee").
WHEREAS, the Employee is a valuable and trusted employee, officer or
director of the Company, and the Company considers it desirable and in its best
interests that the Employee be given an inducement to acquire a further
proprietary interest in the Company, and an added incentive to advance the
interests of the Company by possessing a right (the "Option Right") to purchase
shares of the Company's common stock, $.001 par value (the "Option Stock"), in
accordance with the PROXYMED, INC. 2001 Stock Option Plan (the "Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. Definitions. All terms not defined herein and defined in the Plan shall
-----------
be given the meaning expressed in the Plan.
2. Grant of Option. The Company hereby grants to the Employee the right,
---------------
privilege and option to purchase the number of shares of Option Stock, at the
purchase price as shown on Schedule I attached hereto (the "Option Price"), in
the manner and subject to the conditions hereinafter provided in this Agreement
and as provided in the Plan. The Option Right granted hereunder is either an
Incentive Stock Option or Non-Qualified Option, as specified on Schedule
3. Time of Exercise of Option. The aforesaid Option Right may be exercised
--------------------------
at any time, subject to Section 4, below, and from time to time, until the
termination thereof as provided in Paragraph 6, below, or as otherwise provided
in the Plan; provided, however, that the Option Right granted herein may not be
exercised after the termination date as shown on Schedule I, unless provided
otherwise in the Plan.
4. Vesting of Option Right. The Option Right shall vest as provided in
-----------------------
Schedule I.
5. Method of Exercise. The Option Right shall be exercised in whole or in
------------------
part, in increments of a minimum of one hundred (100) shares, at any time, or
from time to time, during its term. To exercise an option, the Employee shall
deliver written notice in the form attached hereto as Schedule II to the Company
at its principal place of business, accompanied by payment of the Option Price
per share and compliance with such other conditions and requirements as set
forth in the Plan. Payment shall be made by a check, plus a check equal to any
withholding taxes that the Company is required to pay as a result of the
exercise of the Option by the Employee.
30
Subject to the terms and conditions set forth in the Plan, as promptly as
practicable after an Option is exercised, the Company shall deliver such shares
issuable upon exercise of the Option.
6. Termination of Employment. The rights and obligations of the Employee upon
-------------------------
Termination of Employment shall be as set forth in the Plan.
7. Restrictions on Certain Resales. The shares issuable upon exercise of this
-------------------------------
Option have not been registered under the Securities Act of 1933, as amended
(the "Securities Act") or under any state securities laws, and are being offered
and sold in reliance upon federal and state exemptions for transactions not
involving any public offering. The holder may not resell the shares purchased
hereunder except pursuant to registration under the Securities Act or an
exemption therefrom.
Resales of shares issuable hereunder may be subject to other state and
federal securities laws. The Employee is advised to consult with legal counsel
as to compliance with the Securities Act, the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and such other laws prior to resale of such
shares.
The Company, as a condition to the exercise of an Option to acquire shares
not registered under the Securities Act, may require the Employee to represent
and warrant at the time of any exercise that the shares are being purchased only
for investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such a representation is
required by the Securities Act.
8. Reclassification, Merger, etc. The rights and obligations of the Company
-----------------------------
and the Employee as a result of the transactions specified in Section 11 of the
Plan shall be as provided therein.
9. Rights Prior to Exercise of Option. This Option Right is nonassignable and
----------------------------------
nontransferable by the Employee except as provided in the Plan and, during his
lifetime, is exercisable only by him. The Employee shall have no rights as a
stockholder with respect to the Option Stock until payment of the Option Price
and delivery to him of such shares as herein provided. Nothing in this Agreement
shall confer any right in an employee to continue in the employment of the
Company or interfere in any way with the right of the Company to terminate such
employment at any time.
10. Binding Effect. This Agreement shall inure to the benefit of and be binding
--------------
upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
11. Discrepancies. If there appears to be any discrepancies between this
-------------
Agreement and the Plan, they shall be interpreted and determined by the terms
and conditions of the Plan.
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
PROXYMED, INC.
By: _____________________________ By: ____________________________________
Frank M. Puthoff, Secretary Michael K. Hoover, Chairman and
Chief Executive Officer
I hereby accept the stock option right offered to me by the Company, as set
forth in this Stock Option Agreement dated as of ________, 20__, and Schedule I
which is attached thereto.
Accepted by:
Employee:
________________________________________
Employee Signature
_______________________________________
Date
32
SCHEDULE I
The information set forth in this Schedule I is subject to all of the terms
of the PROXYMED, INC. 2001 Stock Option Agreement to which this Schedule is
attached.
1. Name of Employee, Officer or Director:
______________________________________
2. Address:
______________________________________
______________________________________
3. Social Security Number: ________________________
4. Number of Shares: _________________________
5. Exercise Price: $____ per share [closing price at close of business on
_____]
6. Type of Option (check one):
[_] Incentive Stock Option
[_] Non-Qualified Stock Option
7. Number of Shares Date Vested Termination Date
---------------- ----------- ----------------
REFERENCE IS MADE TO THE 2001 STOCK OPTION PLAN FOR CERTAIN EVENTS SUCH AS
DEATH, DISABILITY, CHANGE OF CONTROL AND TERMINATION OF EMPLOYMENT THAT CAUSE
THESE OPTIONS TO EXPIRE PRIOR TO THE TERMINATION DATE SET FORTH ABOVE.
33
SCHEDULE II
NOTICE OF EXERCISE
I, the undersigned Employee, hereby give notice of the exercise of the
Option described below, to the extent and in the manner specified herein,
subject to the all of the terms and conditions of the PROXYMED, INC. STOCK
OPTION AGREEMENT granting this Option and the PROXYMED, INC. 2001 STOCK OPTION
PLAN. If the shares to be acquired pursuant to this exercise of the Option are
not registered under the Securities Act of 1933, as amended, the undersigned
represents and warrants that the shares are being purchased only for investment
and without any present intention to sell or distribute such shares.
1. Name of Employee, Officer or Director: _______________________________
2. Address:
__________________________________________
__________________________________________
__________________________________________
3. Social Security Number: __________________
4. Number of Shares Being Exercised on This Date: ______________
5. Exercise Price: $____ per share
6. Manner of Payment:
_________ Check (amount enclosed: $_____________)
____________________________
Employee Signature
DATE: ______________________
Signature Guarantee:
__________________________
34
EXHIBIT C
PROXYMED, INC.
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: 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 200,000,000 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 July 25,
2001. The number of votes cast were sufficient for approval.
Dated as of the ____day of ______, 2001.
ProxyMed, Inc.
By: ________________________________
Michael K. Hoover
Chairman of the Board and
Chief Executive Officer
35
PROXY FOR ANNUAL MEETING OF PROXYMED, INC.
2555 DAVIE ROAD, SUITE 110
FT. LAUDERDALE, FLORIDA 33317
(954) 473-1001
SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS OF PROXYMED, INC.
The undersigned hereby appoints Michael K. Hoover and Judson E. Schmid with
the power to vote, either one of them, at the Annual Meeting of Shareholders of
ProxyMed, Inc. (the "Company") to be held on Friday, July 25, 2001, at 9:00
a.m., Eastern Daylight Time, at the Sheraton Fort Lauderdale Airport, 1825
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; in favor of the adoption of the 2001 Stock Option Plan; in favor of
amending the Company's Restated Articles of Incorporation to increase the
number of authorized shares of Common Stock to 200,000,000; 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 ALL ITEMS.
(1) ELECTION OF DIRECTORS: (Nominees are Michael K. Hoover, Harold S. Blue,
Edwin M. Cooperman, Gerald B. Cramer, Donald G. Drapkin, Michael S. Falk,
Thomas E. Hodapp, Bertram J. Polan 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:
(Continued and to be signed on reverse side)
(Continued from other side)
(2) 2001 STOCK OPTION PLAN.
[_] FOR [_] AGAINST [_] ABSTAIN
(3) AMEND THE COMPANY'S RESTATED ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK, PAR VALUE $0.01, FROM
100,000,000 TO 200,000,000.
[_] FOR [_] AGAINST [_] ABSTAIN
Dated: ____________________________________
___________________________________________
Signature
___________________________________________
Signature (if held jointly)
(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.