def14a_101601
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No. ______]
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Check the appropriate box:
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____ Definitive Additional Materials
____ Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
Medix Resources, Inc.
(Name of Registrant as Specified in Its Charter)
Medix Resources, Inc.
(Name of Person(s) Filing Proxy Statement)
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4) Date Filed:
MEDIX RESOURCES, INC.
305 Madison Avenue, Suite 2033
New York, New York 10165
(212) 697-2509
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 16, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Medix
Resources, Inc., a Colorado corporation (the "Company"), will be held at 180
Tices Lane, East Brunswick, New Jersey, on Tuesday, October 16, 2001 at 10:00
a.m., local time, for the following purposes:
1. To elect four (4) members to the Company's seven-person Board of Directors,
who will serve staggered terms, as provided in the attached Proxy
Statement, and until their successors are duly elected and qualified;
2. To ratify and approve an increase from 10 million to 13 million in the
number of shares of the Company's common stock, par value $.001 per share
(the "Common Stock"), authorized and reserved for issuance upon the
exercise of options pursuant to the Company's 1999 Stock Option Plan;
3. To ratify the appointment of Ehrhardt Keefe Steiner & Hottman PC,
independent public accountants, to audit the financial statements of the
Company for the fiscal year ending December 31, 2001; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournments(s) thereof.
The Board of Directors has fixed the close of business on August 29, 2001,
as the record date (the "Record Date") for determining the Shareholders entitled
to receive notice of, and to vote at, the Annual Meeting. A complete list of
shareholders entitled to vote at the Annual Meeting will be available, upon
written demand, for inspection during normal business hours by any shareholder
of the Company prior to the Annual Meeting, for a proper purpose, at the
Company's offices located at the address set forth above. Only shareholders of
record on the record date are entitled to notice of, and to vote at, the Annual
Meeting and any and all adjournments or postponements thereof.
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 2000, a Proxy Statement and a proxy card accompany this
notice. These materials were sent to shareholders on or about September 7, 2001.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE URGED TO
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN
THE POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE. ANY SHAREHOLDER
ATTENDING THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF SUCH SHAREHOLDER HAS
PREVIOUSLY RETURNED A PROXY CARD.
By Order of the Board of Directors
Gary L. Smith
Secretary
New York, New York
September 7, 2001
MEDIX RESOURCES, INC.
305 Madison Avenue, Suite 2033
New York, New York 10165
(212) 697-2509
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 16, 2001
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Medix Resources, Inc., a Colorado corporation (the "Company"), for use at the
Annual Meeting of Shareholders to be held on October 16, 2001, at 10:00 a.m.,
local time, or at any adjournment(s) thereof, for the purposes set forth herein
and in an accompanying Notice of Annual Meeting of Shareholders. The Annual
Meeting will be held at the Company's office at 180 Tices Lane, East Brunswick,
New Jersey. The telephone number of that office is (732) 937-5050. These proxy
solicitation materials were mailed on or about September 7, 2001 to all
shareholders listed in the shareholder records of the Company as of the Record
Date (as that term is defined below). The Company will bear the cost of this
solicitation.
Record Date and Quorum
Shareholders of record at the close of business on August 29, 2001 (the
"Record Date") are entitled to vote at the Annual Meeting. On the Record Date,
52,010,304 shares of the Company's common stock, $0.001 par value per share (the
"Common Stock"), were outstanding. Shareholders holding at least one-third of
all shares of Common Stock represented in person or by proxy, shall constitute a
quorum for the transaction of business at the Annual Meeting.
Revocability of Proxies
Any Proxy given pursuant to this solicitation may be revoked by the person
or entity giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed Proxy Card bearing a later date
or by attending the Annual Meeting and voting in person. An appointment of proxy
is revoked upon the death or incapacity of the shareholder appointing the proxy
if the Secretary or other officer or agent of the Company who is authorized to
tabulate votes receives notice of such death or incapacity before the proxy
exercises his authority under the appointment.
Voting and Solicitation
Each outstanding share of Common Stock shall be entitled to one (1) vote on
each matter submitted to a vote at the Annual Meeting. Assuming a quorum is
present, those candidates receiving the most votes shall be elected as directors
of the Company. Approval of the increase from 10 million shares to 13 million
shares authorized and reserved for issuance under the Company's 1999 Stock
Option Plan will occur if the proposal receives a majority of the total votes
cast in person or by proxy, assuming a quorum is present. The ratification of
the appointment of our independent public accountants will be approved by the
shareholders if the number of votes cast for such ratification exceeds the
number of votes cast against it, assuming a quorum is present. Where brokers
have not received any instructions from their clients on how to vote on a
particular proposal, brokers are permitted to vote on routine proposals but not
on non-routine matters. The absence of votes on non-routine matters are "broker
non-votes." Abstentions and broker non-votes shall be counted towards the
presence of a quorum. However, they will not be counted and will have no effect
in the election of directors and the vote on the ratification of the appointment
of independent public accountants. In voting on the increase in the number of
shares authorized under the Company's 1999 Stock Option Plan, abstentions will
have the effect of "no" votes, and broker non-votes will not be counted as votes
cast.
The principal executive offices of the Company are located at 305 Madison
Avenue, Suite 2033, New York, NewYork 10165. In addition to the use of the
mails, proxies may be solicited personally, by telephone or by facsimile, and
the Company may reimburse brokerage firms and other persons holding shares of
the Company's Common Stock in their names or in the names of their nominees, for
their reasonable expenses in forwarding proxy solicitation materials to the
beneficial owners. The Company may retain the services of a professional proxy
solicitation firm, in which case the Company will pay such firm its standard
fees for such services and reimburse such firm for its out-of-pocket expenses.
Matters to Be Brought Before the Annual Meeting
The matters to be brought before the Annual Meeting include: (1) the
election of four (4) members of the Company's Board of Directors; (2) the
approval of the increase in the number of shares authorized and reserved under
the Company's 1999 Stock Option Plan from 10 million to 13 million; (3) the
ratification of the appointment of Ehrhardt Keefe Steiner & Hottman PC,
independent public accountants, to audit the financial statements of the Company
for the fiscal year ending December 31, 2001; and (4) the transaction of such
other business as may properly come before the Annual Meeting or any
adjournment(s) thereof.
Deadline for Receipt of Shareholder Proposals for Next Annual Meeting
Shareholders of the Company who intend to present proposals at the
Company's 2002 Annual Meeting of Shareholders must deliver such proposals to us
no later than March 31, 2002 in order to be included in the Proxy Statement and
form of Proxy relating to the 2002 Annual Meeting of Shareholders. In addition,
if we receive notice of a shareholder proposal after that date, then the persons
named in that Proxy Statement and form of Proxy will have discretionary
authority to vote on such shareholder proposal, without discussion of such
proposal in the Proxy Statement and without such proposal appearing as a
separate item on the form of Proxy.
ELECTION OF DIRECTORS
Nominees
Our Board of Directors currently consists of seven directors. Our Directors
are Mr. Samuel H. Havens, Ms. Joan E. Herman, Mr. Patrick W. Jeffries, Mr. John
T. Lane, Mr. John R. Prufeta, Mr. Guy L. Scalzi, and Dr. David B. Skinner.
Pursuant to the Company's Articles of Incorporation, whenever our Board consists
of six or more members, the Board shall be classified into three classes as
nearly equal in number as possible. Because two of our directors have been
elected by the Board of Directors to fill vacancies on the Board since the last
Annual Meeting, four directors will be elected at the upcoming Annual Meeting.
The Board of Directors has nominated current directors to fill these four Board
positions. The Board of Directors recommends that the Shareholders vote "FOR"
the director nominees listed below. Unless otherwise instructed, the proxy
holder will vote the proxies received by him for management's four nominees, as
listed below. Because of the staggered terms of the Company's Board of
Directors, three directors will be elected for a new term of three years, and
one director will be elected to complete a term with one year remaining. Messrs.
John R. Prufeta, Patrick W. Jeffries and Ms. Joan E. Herman will be elected for
three years, and Mr. Guy L. Scalzi will be elected for one year. At the next
Annual Meeting, unless a vacancy on the Board is filled during the year, only
two directors will be elected for a three-year term each.
In the event any management nominee is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the current Board of Directors to fill the
vacancy. It is not expected that any nominee will be unable or will decline to
serve as a director. The term of office of each person elected as a director
will continue until the end of his or her respective term as stated above, and
until such person's successor has been elected and qualified.
The nominees are as follows:
Name Position With the Company Age First Elected
------------------- ------------------------- --- -------------
John R. Prufeta (1)(3) President, Chief 41 1999
Executive Officer
and Director
Joan E. Herman(2)(4) Director 48 2000
Patrick W. Jeffries Director 48 2001
Guy L. Scalzi Director 55 2001
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Nomination Committee
(4) Member of the Compensation Committee
Biographical Information.
Joan E. Herman. Ms Herman is the Group President of WellPoint's Senior,
Specialty, and State Sponsored Programs division and is responsible for the
Company's Dental, Life & AD&D, Pharmacy, Behavioral Health, Workers'
Compensation Managed Care Services, Senior Services, and Disability businesses.
She is also responsible for WellPoint's State Sponsored Programs, which include
MediCal and Healthy Families. In 1999, a Wellpoint affiliate entered into an
agreement with the Company to implement a pilot program for the introduction of
Cymedix(R)software to healthcare providers identified by such affiliate. Ms.
Herman serves on the Company's Board of Directors pursuant to the terms of that
agreement. Prior to joining WellPoint in 1998, Ms. Herman was the senior vice
president, Strategic Development and senior vice president, Group Insurance for
Phoenix Home Life Mutual Insurance Company. Ms. Herman has served as chairman of
the board of Leadership Greater Hartford and been a member of the board of
directors of the American Academy of Actuaries, the American Leadership Forum,
the Hartford Ballet, the Greater Hartford Arts Council, and the Children's Fund
of Connecticut. She is a member of the American Academy of Actuaries and a
Fellow of the Society of Actuaries. Ms. Herman holds an MA in Mathematics from
Yale University, an MBA from Western New England College, and an A.B. in
mathematics from Barnard College.
Patrick W. Jeffries. Mr. Jeffries is the founding partner of Health Technology
Partners, LLC and a predecessor company, which was founded in 1997 and provides
consulting services for healthcare and technology companies. From August 1997 to
March 1999, Mr. Jeffries was the CEO and Chairman of the Board of OpTx
Corporation, during which time he lead this disease management company in its
transition from a late development stage company to commercial profitability.
From December 1995 to July 1997, he was Executive Vice President of Salick
Health Care, Inc., a national system of cancer treatment facilities. From 1985
to 1995, Mr. Jeffries was first an associate and then a partner of McKinsey &
Company, Inc., an international management consulting firm. He holds an MBA from
Cornell University and a BSEE from Washington University.
John R. Prufeta. Mr. Prufeta joined the Company as a full time employee and as
its President and Chief Executive Officer on March 1, 2000. Mr. Prufeta also is
the Chairman of the Board of the Company's Cymedix Lynx subsidiary. He had been
appointed to the position of Chief Executive Officer while a consultant to the
Company in October 1999. Prior to that he was the Managing General Partner of
The Creative Group, Creative Health Concepts, and TCG Development, and the
President and Chief Executive Officer of Creative Management Strategies, Inc.
for over 11 years. Those affiliated companies cover a wide spectrum of services
within the healthcare industry. He graduated from St. John's University with a
B.S. in management, and from the Executive Program, OPM at Harvard University,
Graduate School of Business.
Guy L. Scalzi Mr. Scalzi is Vice President of First Consulting Group Management
Services, LLC, a healthcare information technology consultant. Prior to joining
that company in January 2000, he was Senior Vice President and Chief Information
Officer for New York Presbyterian Healthcare System from April 1996 to December
1999. From January 1995 to March 1996, Mr. Scalzi was Director of Planning for
Information Services at New York Hospital-Cornell Medical Center. From June 1993
to December 1994, he was Chief Information Officer, The Hospital for Joint
Diseases, New York University Medical Center. From 1984 to 1993, he was a
founder and senior executive with DataEase International, Inc., an international
PC software development and marketing company. Mr. Scalzi has an MBA from
Manhattan College and a B.S. degree from The State University of New York at
Oswego.
Board and Committee Meetings in 2000
The Board of Directors of the Company held a total of twelve meetings
during the year ended December 31, 2000 (three in person and nine by telephone),
and signed one Unanimous Written Consent in lieu of a meeting. During the same
period, the Audit Committee of the Board of Directors met five times (once in
person and four by telephone) and signed one Unanimous Written Consent, the
Nominating Committee met three times by telephone, the Executive Committee met
once in person and the Compensation Committee did not meet. During 2000, all
members of the Company's Board of Directors attended over 75% of the meetings of
the Board of Directors and its Committees on which they served that occurred
while they were directors. The Nominating Committee will consider Board nominee
suggestions from our shareholders. Any such suggestions in connection with the
2002 Annual Meeting should be made to the Committee in writing on or before
March 31, 2002.
Directors Compensation
The Company has adopted the policy of compensating non-employee Directors,
$1,000 for attending each regular quarterly Board meeting in person, and $250
for attendance at Board meetings by telephone. The Board of Directors has also
authorized payment of reasonable travel or other out-of-pocket expenses incurred
by non-employee Directors for attending Board or committee meetings.
Notwithstanding this policy, during 2000, payments to directors were
significantly below this level. Ms. Joan Herman waived her Director fees
altogether, and other Directors elected to eliminate their fees for some portion
of the year. As a result, during 2000, Ms. Joan Herman, Mr. Samuel Havens, Dr.
David Skinner and Mr. John T. Lane were each paid $0, $3,750, $3,750, and
$3,750, respectively, for their services to the Company as Directors. From time
to time, the Board of Directors grant non-employee Directors options to acquire
shares of Common Stock as compensation for their services to the Company as
Directors. During 2000, we did not grant any options to non-employee Directors.
During 2000, we paid Mr. Havens $52,000 in fees for consulting services.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' EACH OF THE ABOVE NOMINEES TO THE
COMPANY'S BOARD OF DIRECTORS. ASSUMING A QUORUM IS PRESENT, THOSE CANDIDATES
RECEIVING THE MOST VOTES WILL BE ELECTED AS DIRECTORS OF THE COMPANY.
EXECUTIVE OFFICERS
The following table sets forth the (i) the names of the current executive
officers of the Company, (ii) their ages, and (iii) the capacities in which they
serve the Company. All of the Company's executive officers devote full-time to
the Company's business and affairs.
Name Age Position(s) With the Company
---- --- ----------------------------
John R. Prufeta 41 President and Chief
Executive Officer
Patricia A. Minicucci 52 Executive Vice
President, Operations
Gary L Smith 47 Executive Vice
President, Chief
Financial Officer and
Secretary
Louis E. Hyman 33 Executive Vice President
and Chief Technology
Officer
Brian R. Ellacott 44 Senior Vice President,
Business Development
Executive Officers Biographical Information
John R. Prufeta. Mr. Prufeta joined the Company as a full time employee and as
its President and Chief Executive Officer on March 1, 2000. Mr. Prufeta also is
the Chairman of the Board of the Company's Cymedix Lynx subsidiary. He had been
appointed to the position of Chief Executive Officer while a consultant to the
Company in October 1999. Prior to that he was the Managing General Partner of
The Creative Group, Creative Health Concepts, and TCG Development, and the
President and Chief Executive Officer of Creative Management Strategies, Inc.
for over 11 years. Those affiliated companies cover a wide spectrum of services
within the healthcare industry. He was elected to the Company's Board of
Directors in April 1999. A 1983 graduate of St. John's University with a B.S. in
management, Mr. Prufeta graduated from the Executive Program, OPM at Harvard
University, Graduate School of Business.
Patricia A. Minicucci In March 2000, Ms. Minicucci joined the Company as
Executive Vice President, Operations. Prior to joining Medix's staff, Ms.
Minicucci served as executive vice president and a principal of Creative Health
Concepts. In 1995, she founded and was chief executive officer of Practice
Paradigms, an organization serving primary care physicians. Prior to founding
Practice Paradigms, Minicucci was senior vice president-managed care with Empire
Blue Cross Blue Shield and, before that, president-employee benefits division
with Washington National Corporation. Ms. Minicucci began her career in
healthcare at CIGNA Corporation where she held numerous positions, including
president-South Central Division, CIGNA Healthplan Inc.; vice president-human
resources division, Employee Benefits Group; vice president-human resources
department, Group Insurance Division; and regional vice president-field claim
operations, Group Insurance Division. She holds a B.A. in History from Russell
Sage College.
Gary L. Smith. Mr. Smith joined the Company as Executive Vice President and
Chief Financial Officer in December of 2000. From 1995 to 2000, Mr. Smith was
with Provident Group, a financial advisory firm serving companies operating in
emerging market countries, where he was a principal. Previously, Mr. Smith was
an executive of American Express Bank, the international banking arm of the
financial services conglomerate American Express Corporation (NYSE: AXP), where
he held various senior financial positions, most recently as Senior Director and
Commercial Banking Head, London Branch. He holds a BSc degree in Economics from
the Wharton School and an MSc in Accounting and Finance from the London School
of Economics.
Louis E. Hyman On May 14, 2001, Mr. Hyman became an officer of the Company with
the titles of Executive Vice President and Chief Technology Officer. Prior to
that, since March 9, 2001, he was a consultant to the Company, serving as
interim Chief Technology Officer. From September 1999 until joining Medix, Mr.
Hyman was President and CEO of Ideal Technologies, Inc., a healthcare
integration consulting firm. Mr. Hyman held senior technology management and
executive positions with CareInsite, Inc. (from August 1999 to September 2000 as
Vice President of Information Technology) and LaPook Lear Systems Inc. (from
August 1992 to August 1999 as Vice President and Director of Technology), both
of which were merged into WebMD, Inc. in September 2000. As a result of these
transactions, Mr. Hyman maintained his position as Vice President of Information
Technology with WebMD through November 2000, where he played a key role in
WebMD's integration efforts as well as initiatives to improve the Company's
profitability. He graduated Summa Cum Laude from St. John's University where he
earned a B.S. degree in Computer Science.
Brian R. Ellacott In March 2000, Mr. Ellacott joined the Company as a Senior
Vice President. Mr. Ellacott served as president of Cosmetic Surgery Consultants
from November 1998 until March 2000, when he joined Medix Resources, Inc. From
1996 to 1998 he was executive vice president of Alignis Inc., an alternative
healthcare PPO. Before that, he was president-Bibb Hospitality (Atlanta) for The
Bibb Company. Mr. Ellacott began his career in healthcare at Baxter
International/American Hospital Supply where he held numerous positions,
including director of national accounts (Chicago); director of marketing
(Australia); director of marketing (Canada); systems manager (Canada); regional
manager (British Columbia); and product manager (hospital products). He holds a
B.A. in Business Administration, with Honors, from Wilfrid Laurier University
(Waterloo, Canada).
Executive Officer Compensation
Summary Compensation Table. The following table sets forth the annual and
long-term compensation for services in all capacities to the Company for the
three years ended December 31, 2000, awarded or paid to, or earned by our
President and our four other most highly compensated officers (the "Named
Officers").
Annual Compensation Long-Term
------------------- Compensation
-----------------
Securities
Underlying
Name and Principal Fiscal Options/Warrants
Position Year Salary Bonus Other(1) (Shares)
------------------- ------------ ----------- --------- ----------- -----------------
John R. Prufeta, 2000 $120,000 0 600,000
President and CEO 1999 $171,000(2) 0 925,000
David R. Pfeil, 2000 $165,385 $100,000 0
former Executive 1999 $287,000(4) 0 800,000
Vice President and
CTO and President
and COO of
Subsidiary(3)
Patricia A. Minicucci, 2000 $163,846 0 400,000
Executive Vice
President for
Operations
Michael W. Knepper, 2000 $146,731 0 400,000
former Senior Vice
President for
Mergers and
Acquisitions(5)
Brian R. Ellacott 2000 $125,769 0 150,000
Senior Vice
President for
Business
Development
John P. Yeros 2000 $ 77,500(6) 0 $291,495(6) 0
Former President 1999 $199,650 0 1,250,000
and CEO(6) 1998 $180,442 0 500,000
------------
(1) Other annual compensation, except as noted, is made up of automobile
allowances, and disability and health insurance premiums, in amounts less
than 10% of the officer's annual salary plus bonus.
(2) During 1999, Mr. Prufeta served as a consultant to the Company pursuant to
a consulting agreement between the Company and his employer, Creative
Management Strategies, Inc., which company was paid or accrued the amount
shown above and received options to purchase 25,000 shares of Common Stock,
included in the amount shown. He became an employee of the Company in early
2000.
(3) Mr. Pfeil resigned as an employee, officer and director of both the Company
and its subsidiary, Cymedix Lynx Corporation, effective as of March 2,
2001.
(4) During 2000 and 1999, we paid two companies affiliated with Mr. Pfeil
approximately $184,000 and $284,000 respectively for Mr. Pfeil's services,
for travel related expenses and software development and web-site hosting
and development services and purchase of computer equipment. He became an
employee of the Company in early 2000 and resigned effective March 2, 2001.
(5) Mr. Knepper's employment terminated on April 21, 2001.
(6) John P. Yeros, resigned as President, Chairman of the Board of Directors
and as a Director on March 1, 2000. On that date he entered into a 21-month
Consulting Agreement with us, which was terminated in November 2000. The
compensation shown above under "Salary" was paid while still an employee of
the Company and the amount shown under "Other" was paid as consulting and
termination fees.
Stock Option Awards In August 1999, our Board of Directors approved and
authorized our 1999 Stock Option Plan (the "1999 Plan"), which is intended to
grant either non-qualified stock options or incentive stock options, as
described below. In 2000, the 1999 Plan was approved by our shareholders. The
purpose of the 1999 Plan is to enable our company to provide opportunities for
certain officers and key employees to acquire a proprietary interest in our
company, to increase incentives for such persons to contribute to our
performance and further success, and to attract and retain individuals with
exceptional business, managerial and administrative talents, who will contribute
to our progress, growth and profitability. All grants of options to employees in
2000 where made under the 1999 Plan. See "INCREASE OF AUTHORIZED AND RESERVED
SHARES FOR ISSUANCE UNDER STOCK OPTION PLAN."
Option information for fiscal 2000 relating to the Named Officers is set
forth below:
Number of Shares Percentage
of Common Stock of Total
Underlying Options
Options Granted to
Granted in Employees in Exercise Expiration
Name 2000 2000 Price Date
------------------- --------------- ------------- ----------- --------------
John R. Prufeta 600,000 27.0% $4.97 10/13/09
David R. Pfeil 0 0%
Patricia A. Minicucci 400,000 18.0% $4.97 3/1/05
Michael W. Knepper 400,000 18.0% $3.97 2/10/05
Brian R. Ellacott 150,000 6.8% $3.97 2/10/05
Option Exercises and Year-End Values in
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Year-End at Year-End(1)
Shares Value ------------------------------ ----------------------------
Name Exercised Realized Exercisable Unexercisable Exercisable Unexercisable
--------------------- ------------- ---------- -------------- --------------- ----------- --------------
John R. Prufeta 0 0 775,000(2) 750,000 $446,875 $250,000
David R. Pfeil 250,000 $325,625 550,000 0 $398,750 0
Patricia A. Minicuccu 0 0 250,000 150,000 0 0
Michael W. Knepper 0 0 400,000 0 0 0
Brian R. Ellacott 0 0 100,000 50,000 0 0
Ellacott
--------------
(1) The dollar values are calculated by determining the difference between
$1.125 per share, the fair market value of the Common Stock at December 31,
2000, and the exercise price of the respective options.
(2) Includes options covering 25,000 of these shares were granted to a company
that is an affiliate of Mr. Prufeta for executive search services.
The Company has no retirement, pension or profit-sharing program for the
benefit of its directors, executive officers or other employees, although the
Company does maintain a 401(k) Plan for participation by all employees,
including executive officers, for contributions by employees, but with no
matching by the Company. In the future, the Board of Directors may recommend one
or more such programs for adoption by the Company.
Employment Agreements
Mr. Prufeta's Employment Agreement, which has an initial term of two years,
ending on January 31, 2002, provides that he will be compensated at the base
salary of $120,000 annually, plus a commission of 2.5% of certain gross revenue
of the Company, subject to certain exclusions. He will hold the positions of
President and Chief Executive Officer and report to the Board of Directors.
Pursuant to his Employment Agreement, Mr. Prufeta has been granted options to
purchase 400,000 shares of Common Stock at $.50 per share, and 600,000 shares of
Common Stock at $4.97 per share, which vest upon the occurrence of certain
performance goals. His Employment Agreement provides for termination at any time
by the employee with or without cause or by the Company with cause. The
Employment Agreement is also subject to termination by the Company without cause
after the initial one-year term, subject to the right of the employee to
continue to receive compensation for 6 months. The Employment Agreement also
contains a non-compete provision that extends for a period of one year after
termination or resignation of the employee, as well as certain confidentiality
provisions. The Employment Agreement contains provisions providing that, upon
the occurrence of a "Triggering Event" (defined to include a change in ownership
of 50% of the outstanding shares of the Company's Common Stock through a merger
or otherwise) during the term of his employment, he will receive a lump sum
payment equal to his then current year's base and bonus pay.
Ms. Minicucci's Employment Agreement, which has an initial term of two
years, ending on March 1, 2002, provides that she will be compensated at the
salary of $200,000 annually. She will hold the position of Executive Vice
President, Operations, and report to the President and CEO. Pursuant to her
Employment Agreement, she has been granted options to purchase 400,000 shares of
Common Stock at $4.97 per share, which vest over the 2-year term of his
Employment Agreement. Her Employment Agreement provides for termination at any
time by the employee with or without cause or by the Company with cause. The
Employment Agreement is also subject to termination by the Company without cause
after the initial one-year term, subject to the right of the employee to
continue to receive compensation for 6 months. The Employment Agreement also
contains a non-compete provision that extends for a period of one year after
termination or resignation of the employee, as well as certain confidentiality
provisions. The Employment Agreement contains provisions providing that, upon
the occurrence of a "Triggering Event" (defined to include a change in ownership
of 50% of the outstanding shares of the Company's Common Stock through a merger
or otherwise) during the term of her employment, she will receive a lump sum
payment equal to his then current year's base and bonus pay.
Mr. Smith's Employment Agreement, which has an initial term of two years,
ending on December 11, 2002, provides that he will be compensated at the salary
of $200,000 annually. He will hold the position of Executive Vice President and
Chief Financial Officer, and report to the President and CEO. Pursuant to his
Employment Agreement, he has been granted options to purchase 250,000 shares of
Common Stock at $1.125 per share, which vest over the 2-year term of his
Employment Agreement. His Employment Agreement provides for termination at any
time by the employee with or without cause or by the Company with cause. The
Employment Agreement is also subject to termination by the Company without cause
after the initial one-year of the term, subject to the right of the employee to
continue to receive compensation for 6 months. The Employment Agreement also
contains a non-compete provision that extends for a period of one year after
termination or resignation of the employee, as well as certain confidentiality
provisions. The Employment Agreement contains provisions providing that, upon
the occurrence of a "Triggering Event" (defined to include a change in ownership
of 50% of the outstanding shares of the Company's Common Stock through a merger
or otherwise) during the term of his employment, he will receive a lump sum
payment equal to his then current year's base and bonus pay.
Mr. Hymans's Employment Agreement, which has an initial term of two years,
ending on May 14, 2003, provides that he will be compensated at the salary of $
200,000 annually. He will hold the position of Executive Vice President and
Chief Financial Officer, and report to the President and CEO. Pursuant to his
Employment Agreement, he has been granted options to purchase 230,000 shares of
Common Stock at $0.61 per share, which vest over the 2-year term of his
Employment Agreement. His Employment Agreement provides for termination at any
time by the employee with or without cause or by the Company with cause. The
Employment Agreement is also subject to termination by the Company without cause
after the initial one-year of the term, subject to the right of the employee to
continue to receive compensation for 6 months. The Employment Agreement also
contains a non-compete provision that extends for a period of one year after
termination or resignation of the employee, as well as certain confidentiality
provisions. The Employment Agreement contains provisions providing that, upon
the occurrence of a "Triggering Event" (defined to include a change in ownership
of 50% of the outstanding shares of the Company's Common Stock through a merger
or otherwise) during the term of his employment, he will receive a lump sum
payment equal to his then current year's base and bonus pay.
Mr. Ellacott's Employment Agreement, which has an initial term of two
years, ending on March 1, 2002, provides that he will be compensated at the
salary of $150,000 annually. He will hold the position of Senior Vice President,
Business Development. Pursuant to his Employment Agreement, he has been granted
options to purchase 150,000 shares of Common Stock at $3.97 per share, which
vest over the 2-year term of his Employment Agreement. His Employment Agreement
provided for termination at any time by the employee with or without cause or by
the Company with cause. The Employment Agreement is also subject to termination
by the Company without cause, subject to the right of the employee to continue
to receive compensation for 6 months. The Employment Agreement also contains a
non-compete provision that extends for a period of one year after termination or
resignation of the employee, as well as certain confidentiality provisions.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of August 29, 2001, by (i) each person known by the
Company to own beneficially more than 5 % of the outstanding shares of Common
Stock, (ii) each director and executive officer and (iii) all executive officers
and directors as a group. On such date, we had 52,010,304 shares of Common Stock
outstanding. Shares not outstanding but deemed beneficial1y owned by virtue of
the right of any individual to acquire shares within 60 days are treated as
outstanding only when determining the amount and percentage of Common Stock
owned by such individual. Each person has sole voting and investment power with
respect to the shares shown, except as noted.
Percentage of Common
Name and Address Number of Shares Stock Outstanding
---------------- ---------------- --------------------
John R. Prufeta
305 Madison Avenue 1,948,000(1) 3.7%
New York, New York
John T. Lane
94 Sixth Street 550,000(2) 1.0%
Garden City, New Jersey
Dr. David B. Skinner 200,000(3) *
525 East 68th Street
New York, New York
Samuel H. Havens 200,000(3) *
58 Winged Foot Drive
Livingston, New Jersey
Joan E. Herman 0(4) 0%
One Wellpoint Way
Thousand Oaks, California
Patrick W. Jeffries 100,000(3) *
15332 Antioch Street
Pacific Palisades,
California
Guy L. Scalzi 100,000(3) *
The Chrysler Building,
37th Floor
42nd and Lexington Streets
New York, New York
Patricia A. Minicucci 450,000(3) *
305 Madison Avenue
New York, New York
Gary L. Smith 225,000(3) *
305 Madison Avenue
New York, New York
Louis E. Hyman 77,500(3) *
180 Tices Lane
East Brunswick, New Jersey
Brian R. Ellacott 225,000(3)
101 Village Parkway *
Building One
Marietta, Georgia
All directors and executive officers
as a group (11 persons) 4,075,500 7.4%
-------------------
* Less than one percent
(1) Mr. Prufeta owns 748,000 shares of Common Stock, with the remainder
available upon the exercise of warrants and options held by him, including
25,000 shares covered by options granted to a company that is an affiliate
of Mr. Prufeta.
(2) All of Mr. Lane's reported holdings are available upon the conversion or
exercise of convertible preferred stock, warrants and options held by him,
including 50 shares of the Company's 1999 Series B Convertible Preferred
Stock (100% of the outstanding shares of that class), and 25 shares of the
Company's 1999 Series C Convertible Preferred Stock (3% of the outstanding
shares of that class).
(3) Represents shares of Common Stock available upon the exercise of
outstanding options.
(4) Ms. Herman has declined the grant of any options.
CERTAIN BUSINESS RELATIONSHIPS
We have adopted a policy that any transactions with directors or officers
or any entities in which they are also officers or directors or in which they
have a financial interest, will only be on terms that would be reached in an
arms-length transaction, consistent with industry standards and approved by a
majority of our disinterested directors. This policy provides that no such
transaction shall be either void or voidable solely because of such relationship
or interest of such directors or officers or solely because such directors are
present at the meeting of the Board of Directors or a committee thereof that
approves such transaction or solely because their votes are counted for such
purpose. In addition, interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof that approves such a transaction. We have also adopted a policy that any
loans to officers, directors and 5% or more shareholders are subject to approval
by a majority of the disinterested directors.
Before Mr. Prufeta was elected to our Board of Directors in 1999, OnPoint
Partners (formerly known as Creative Management Strategies) ("OPP"), a company
partially owned by Mr. John Prufeta, entered into agreements with us to provide
executive search services and sales and marketing services to us. In connection
with those agreements, we issued a 3-year option to acquire up to 25,000 shares
of our Common Stock at an exercise price of $0.55 per share to OPP. We also paid
such company $71,000 during 1999. In addition, for Mr. Prufeta's service to us
as Chief Executive Officer until he became a full-time employee, and the above
services provided by the affiliated company, we have paid $110,000 to OPP in
2000. At the time Mr. Prufeta became a full-time employee of the Company in
January of 2000, such agreements with OPP were terminated. During 2000, we have
paid OPP approximately $ 93,000 as reimbursements for rents and services for our
New York office space, which is leased in the name of OPP. In addition, we have
paid OPP employee search fess of approximately $ 152,000 during 2000, for their
employee search services. OPP is a recognized provider of executive and employee
search services to all areas of the health care industry, and provides it
services to us at standard rates. The Board of Directors, through the Audit
Committee, reviews and approves of our contractual arrangements with OPP.
During 1999, we paid two companies affiliated with Mr. David Pfeil, a
former officer and director of the Company, approximately $135,000 for Mr.
Pfeil's services, approximately $36,000 in reimbursements for his travel and
related expenses, and approximately $113,000 for software development and
web-site hosting and development services and purchases of computer equipment.
During 2000, we have paid such companies approximately $54,000 for software
development services, $12,000 for travel and related expenses and $118,000 for
purchases of computer equipment.
On March 15, 2000, our subsidiary, Cymedix Lynx Corporation, merged with
Automated Design Concepts, Inc. ("ADC"), which had been wholly-owned by Mr.
Pfeil. Mr. Pfeil received $100,000 in cash and 60,400 shares of our common stock
valued at $374,000, as consideration for such acquisition. In connection with
that acquisition, we leased certain office spaced used by the acquired business
from Mr. Pfeil and his wife. The lease has a term two-year term ending February
28, 2002 and provides for rental payments at the rate of $1,000 per month. Prior
to the merger, the leased offices were used by ADC and another company owned by
Mr. Pfeil, who moved from a consulting role to positions as President and Chief
Operating Officer of Cymedix in connection with the merger. Mr. Pfeil has since
also become Executive Vice President and Chief Technology Officer of Medix.
During 1999, we entered into an agreement with Wellpoint Pharmacy
Management ("WPM") to implement a pilot program for the introduction of
Cymedix(R)software to healthcare providers identified by WPM. After the required
testing of the software, the agreement provides for a production program to
install the software broadly among WPM managed providers. The agreement provides
that the Company will nominate a representative of WPM to be elected to the
Company's Board of Directors. Ms. Herman is that representative. The agreement
also provided the WPM would be granted warrants covering up to 6,000,000 shares
of Common Stock, which vest upon the occurrence of certain performance criteria.
The agreement provides for the grant of warrants covering 3,000,000 shares with
an exercise price of $0.30 per share, and warrants covering 3,000,000 shares
with an exercise price of $0.50 per share, all expiring five years from the date
of grant. The warrants vest in 1,000,000 share increments. At August 29, 2001,
warrants covering 1,000,000 shares had vested.
During 1998, in connection with its acquisition of the predecessor Cymedix
Corporation, the Company assumed an obligation to pay the law firm of Douglas
Stahl, Esq., a former director of the Company, $82,127 in fees and
reimbursements owed to it by Cymedix Corporation. During 1998, the Company paid
$32,978 of those fees and fees for additional legal services to Mr. Stahl's
firm. During 1999, the Company paid Mr. Stahl's firm $66,355.
We have entered into a consulting agreement with Mr. Samuel Havens, which
provides that we pay Mr. Havens $5,000 per month for his consulting services in
connection with the marketing of our software products. During 2000, we paid Mr.
Havens $ 52,000 for his services. As of March 9, 2001, Mr. Havens has elected to
forego payment for his consulting services indefinitely.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors and executive officers, and persons who own more than 10% of a
registered class of a company's equity securities, to file with the U. S.
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of the Company's common stock and other equity securities.
Officers, directors and greater than 10% shareholders are required by Securities
and Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) reports they file. Based solely upon such reports, we believe that
none of such persons failed to comply with the requirements of Section 16(a)
during 1999, except for Gary Smith, who inadvertently filed his Form 3 late, and
David Pfeil, a former officer and director, who inadvertently filed a Form 4
late.
INCREASE OF SHARES AUTHORIZED AND RESERVED FOR
ISSUANCE UNDER STOCK OPTION PLAN
The Company adopted its 1999 Stock Option Plan (the "Plan") in 1999. The
purposes of the Plan are to enable the Company to provide opportunities for
employees, directors and consultants to acquire a proprietary interest in the
Company, to increase incentives for such persons to contribute to the Company's
performance and further success, and to attract and retain individuals with
exceptional business, managerial and administrative talents, who will contribute
to the progress, growth and profitability of the Company.
Currently, the Company's shareholders have approved the reservation of 10
million shares of the Company's Common Stock for issuance under the Plan. At a
Board of Directors meeting held on August 21, 2001, the Board authorized the
amendment of the Plan to increase the number of shares of Common Stock reserved
under the Plan by 3 million shares, the ratification and approval of which is
being sought at the Annual Meeting. As of August 29, 2001, the additional 3
million shares that will be issuable under the Plan, if the amendment is
ratified and approved, had an aggregate market value of $2,490,00. As of that
date, the Company had issued 3,000,000 shares upon exercise of options under the
Plan, had options covering 5,598,375 shares outstanding under the Plan, and had
1,401,625 shares currently reserved for issuance under the Plan. Outstanding
options were held by 30 employees of the Company, and outstanding options
covering 3,757,125 shares had vested. The exercise price of granted options
range from $0.19 to $4.97.
The Board is recommending to the shareholders that the increase by the
Board of Directors in the number of shares authorized and reserved for issuance
under the Plan be ratified and approved. As the Company expands its work force
to meet the demand for its products and services, it will be important that it
has available sufficient option resources to fashion attractive compensation
packages. The Board determined that the current number of available options may
not be adequate to meet those need over the next year. None of the options to be
ratified and approved by this vote of the shareholders has been granted as of
the date hereof, nor is any such grant expected to be made before the vote of
shareholders.
Options granted under the Plan include both incentive stock options
("ISOs"), within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and non-qualified stock options ("NQOs"). Under
the terms of the Plan, all officers and employees of the Company are eligible
for ISOs. As of August 29, 2001, there were 31 eligible officers and employees.
The Board of Directors or Compensation Committee determines in its discretion,
which persons will receive ISOs, the applicable exercise price, vesting
provisions and the exercise term thereof. The terms and conditions of each
option grant may differ and are set forth in the optionee's individual stock
option agreement. Such options generally vest over a period of several years and
expire after up to ten years. The Plan provides that in no event shall the
exercise price of either ISOs or NQOs be less than the fair market value per
share of the Common Stock on the date of such grant. In order to qualify for
certain preferential treatment under the Code, ISOs must satisfy the statutory
requirements thereof. Options that fail to satisfy those requirements will be
deemed NQOs and will not receive preferential treatment under the Code. Upon
exercise, shares will be issued upon payment of the exercise price in cash, by
delivery of shares of the Company's Common Stock, by delivery of options granted
under the Plan or a combination of any of these methods.
The Plan may be administered by the Compensation Committee (the
"Committee") or the Board of Directors. The Committee is made up of two or more
directors who are "Non-Employee Directors" as defined in Rule 16b-3 issued under
the Securities Exchange Act of 1934 (the "Act"). The Committee may correct any
defect, supply any omission, accelerate the vesting schedule of options already
granted, or reconcile any inconsistency in the Plan or any stock option
agreement, subject to the requirements of the Code. The Board, without further
action of the shareholders of the Company, except as may be required by the Code
or the American Stock Exchange listed company regulations, may at any time
suspend or terminate the Plan in whole or in part or amend the Plan in such
respects as the Board may deem appropriate and in the best interests of the
Company, subject, however, to the rights of optionees with outstanding options.
Any increase in the number of shares authorized to be issued under the Plan will
be presented to shareholders for approval under the current requirements of the
Code for ISOs.
Optionees are not taxed on the grant (or generally on the exercise) of
ISOs. The difference between the exercise price of an ISO and the fair market
value of a share of Common Stock received upon the exercise of the ISO may be
subject to the federal alternative minimum tax. If an optionee exercises an ISO
and disposes of any shares of Common Stock received by such optionee as a result
of such exercise within two years of the date of grant or within one year after
the issuance of such shares to such optionee, the Company is entitled to a tax
deduction and the optionee will be taxed, as ordinary income, on the lesser of
the gain on sale or the difference between the exercise price and the fair
market value of a share at the time of exercise. The optionee will also have a
capital gain to the extent that the sale price exceeds the fair market value on
the date of exercise. If the shares are not sold by the optionee before the end
of those periods, the optionee will have a capital gain or capital loss upon
sale of the shares to the extent that the sale price differs from the exercise
price. No tax effect will result to the Company by reason of grant or exercise
of ISOs, or upon the disposition of shares after expiration of two years from
the date of grant or one year from the date of exercise.
NQOs are not taxed upon grant. The optionee is taxed, as ordinary income,
on the exercise of such option to the extent that the fair market value on the
date of exercise exceeds the exercise price. The optionee's basis for
determining capital gain or capital loss upon the sale of the shares is the
higher of the fair market value on the date of exercise and the exercise price.
The Company is entitled to a deduction equal to the ordinary income realized by
the optionee upon the exercise of NQOS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' THE RATIFICATION AND APPROVAL OF
THE INCREASE IN THE NUMBER OF SHARES AUTHORIZED AND RESERVED FOR ISSUANCE UNDER
THE COMPANY'S 1999 STOCK OPTION PLAN. THE INCREASE SHALL BE RATIFIED AND
APPROVED IF A MAJORITY OF THE VOTES CAST ON THE PROPOSAL AT THE ANNUAL MEETING
ARE CAST IN FAVOR OF RATIFICATION AND APPROVAL OF THE PLAN.
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
The Board of Directors has appointed Ehrhardt Keefe Steiner & Hottman PC,
independent public accountants, to audit the Company's financial statements for
the 2001 fiscal year and recommends that the Company's Shareholders ratify such
appointment. Representatives of Ehrhardt Keefe Steiner & Hottman PC are expected
to be present at the Annual Meeting, and will have the opportunity to make a
statement if they desire, and are expected to be available to respond to
appropriate questions.
Ehrhardt Keefe Steiner & Hottman PC was paid by the Company $92,306 for
professional services rendered for the audit of our annual financial statements
for the fiscal year 2000 and the review of quarterly financial statements
included in our Quarterly Reports on forms 10-QSB filed during that year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' THE RATIFICATION OF EHRHARDT
KEEFE STEINER & HOTTMAN PC TO AUDIT THE COMPANY'S FINANCIAL STATEMENTS FOR THE
2001 FISCAL YEAR. SUCH APPOINTMENT SHALL BE RATIFIED IF A PLURALITY OF THE
SHARES VOTED ON THE PROPOSAL AT THE ANNUAL MEETING ARE VOTED IN FAVOR OF THE
APPOINTMENT.
AUDIT COMMITTEE REPORT
The Audit Committee of our Board of Directors has three members, who are
independent directors as required by The American Stock Exchange. They are Ms.
Joan E. Herman, Chair of the Committee, Mr. John T. Lane and Dr. David B.
Skinner. They have provided this report to the shareholders.
The Committee's principal function is to oversee the Company's financial
reporting process on behalf of the Board of Directors. The Company's management
has the primary responsibility for preparing our financial statements and our
reporting process, including the Company's system of internal controls. In
carrying out its duties, the Committee provides an open avenue of communications
between the Board of Directors, management and the Company's independent public
accountants. Our independent public accountants are ultimately accountable to
the Board and the Committee and are responsible for expressing an opinion on the
conformity of the Company's audited financial statements with generally accepted
accounting principals. As required by recently adopted regulations regarding
audit committees, the Board has adopted a Charter for our Audit Committee, which
is attached hereto as Exhibit A. The Charter specifies the scope of the Audit
Committee's responsibilities and how it should carry out those responsibilities.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2000 with the
Company's management and independent accountants. The Audit Committee discussed
with Ehrhardt, Keefe, Steiner & Hottman PC, our independent public accounting
firm, the matters required to be discussed by Statement on Auditing Standards
No. 61 (Communications with Audit Committees). The Audit Committee has also
received and reviewed the written disclosures and letter from that firm required
by Independence Standards Board Standard No.1 (Independence Discussion with
Audit Committees) and has discussed its independence with representative of the
firm.
Based upon the above review and discussions, the Audit Committee
recommended to the Board of Directors the inclusion of Company's 2000 audited
financial statements in our 2000 Annual Report on Form 10-KSB for filing with
the Securities and Exchange Commission.
OTHER MATTERS
Management knows of no other matters to be submitted to the Annual Meeting.
If any other matters properly come before the Annual Meeting, it is intended
that the person named in the enclosed form of Proxy will vote such Proxy in
accordance with his judgment.
ANNUAL REPORT TO SECURITIES AND EXCHANGE COMMISSION
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2000, as filed with the Securities and Exchange Commission,
is enclosed herewith as the Company's Annual Report to Shareholders. Additional
copies thereof may be obtained by Shareholders, without charge, by written
request to Investor Relations Department, Medix Resources, Inc., 7100 East
Belleview Ave., Suite 301, Englewood, CO 80111, (303) 741-2045.
EXHIBIT A
MEDIX RESOURCES, INC.
Audit Committee Charter
June 1, 2000 (Amended July 26, 2000)
The Audit Committee ("the Committee"), of the Board of Directors ("the Board")
of Medix Resources, Inc., a Colorado corporation ("the Company"), will have the
oversight responsibility, authority and specific duties as described below.
Section 1. Composition of the Committee
The Committee will be comprised of three or more directors as determined by the
Board. The members of the Committee will meet the independence and experience
requirements of the American Stock Exchange ("AMEX"). The members of the
Committee will be elected annually and will be listed in the annual report to
shareholders. The requirements of the AMEX will be reviewed by the Board
annually in connection with the election of the Committee. One of the members of
the Committee will be elected Committee Chair by the Board.
Section 2. Responsibility of the Committee
The Committee is a part of the Board. It's primary function is to assist the
Board in fulfilling its oversight responsibilities with respect to (i) the
annual financial information to be provided to shareholders and the Securities
and Exchange Commission (SEC); (ii) the system of internal controls that
management has established; and (iii) the external audit process. In addition,
the Committee provides an avenue for communication between the independent
accountants, financial management and the Board. The Committee should have a
clear understanding with the independent accountants that they must maintain an
open and transparent relationship with the Committee, and that the ultimate
accountability of the independent accountants is to the Board and the Committee.
The Committee will make regular reports to the Board concerning its activities.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Audit Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with laws
and regulations and the Company's business conduct guidelines.
Section 3. Authority of the Committee
Subject to the prior approval of the Board, the Committee is granted the
authority to investigate any matter or activity involving financial accounting
and financial reporting, as well as the internal controls of the Company. In
that regard, the Committee will have the authority to approve the retention of
external professionals to render advice and counsel in such matters to the
Committee, and through the Committee, to the Board. All employees will be
directed to cooperate with respect thereto as requested by members of the
Committee.
Section 4. Meetings
The Committee is to meet at least once annually to review the Company's audited
financial statements with the independent accountants and as many additional
times as the Committee deems necessary. Meetings of the Committee shall be
called by the Committee Chair after clearing the date and time with the other
members of the Committee. Content of the agenda for each meeting should be
cleared by the Committee Chair. The Committee is to meet in separate executive
sessions with the chief financial officer and independent accountants at least
once each year and at other times when considered appropriate. The operating
procedures of the Committee are subject to the provisions of the Company's
Bylaws, as the may be amended from time to time.
Section 5. Attendance
Committee members will strive to be present at all meetings. As necessary or
desirable, the Committee Chair may request that members of management and
representatives of the independent accountants be present at Committee meetings.
Section 6. Duties
In carrying out its oversight responsibilities, the Committee will:
1. Review and reassess the adequacy of this charter annually and recommend any
proposed changes to the Board for approval. This should be done in
compliance with applicable AMEX Audit Committee Requirements.
2. Review with the Company's management and independent accountants the
Company's accounting and financial reporting controls. Obtain annually in
writing from the independent accountants their letter as to the adequacy of
such controls.
3. Review with the Company's management and independent accountants
significant accounting and reporting principles, practices and procedures
applied by the Company in preparing its financial statements. Discuss with
the independent accountants their judgements about the quality, not just
the acceptability, of the Company's accounting principles used in financial
reporting.
4. Review the scope and general extent of the independent accountants' annual
audit. The Committee's review should include an explanation from the
independent accountants of the factors considered by the accountants in
determining the audit scope, including the major risk factors. The
independent accountants should confirm to the Committee that no limitations
have been placed on the scope or nature of their audit procedures. The
Committee will review annually with management the fee arrangement with the
independent accountants.
5. Inquire as to the independence of the independent accountants and obtain
from the independent accountants, at least annually, a formal written
statement delineating all relationships between the independent accountants
and the Company as contemplated by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees.
6. Have a predetermined arrangement with the independent accountants that they
will advise the Committee of any matters identified through procedures
followed for interim quarterly financial statements, and that such
notification is to be made prior to the related press release or, if not
practicable, prior to filing Forms 10-QSB.
7. At the completion of the annual audit, review with management and the
independent accountants the following:
- The annual financial statements and related footnotes and financial
information to be included in the Company's annual report to
shareholders and on Form 10-KSB.
- Results of the audit of the financial statements and the related
report thereon and, if applicable, a report on changes during the year
in accounting principles and their application.
- Significant changes to the audit plan, if any, and any serious
disputes or difficulties with management encountered during the audit.
Inquire about the cooperation received by the independent accountants
during their audit, including access to all requested records, data
and information. Inquire of the independent accountants whether there
have been any disagreements with management which, if not
satisfactorily resolved, would have caused them to issue a nonstandard
report on the Company's financial statements.
- Other communications as required to be communicated by the independent
accountants by Statement of Auditing Standards (SAS) 61 as amended by
SAS 90 relating to the conduct of the audit. Further, receive a
written communication provided by the independent accountants
concerning their judgment about the quality of the Company's
accounting principles, as outlined in SAS 61 as amended by SAS 90, and
that they concur with management's representation concerning audit
adjustments.
If deemed appropriate after such review and discussion, recommend to the
Board that the financial statements be included in the Company's annual
report on Form 10-KSB.
8. After preparation by management and review by independent accountants,
approve the report required under SEC rules to be included in the Company's
annual proxy statement. This charter is to be published as an appendix to
the proxy statement every three years.
9. Discuss with the independent accountants the quality of the Company's
financial and accounting personnel. Also, elicit the comments of management
regarding the responsiveness of the independent accountants to the
Company's needs.
10. Meet with management and the independent accountants to discuss any
relevant significant recommendations that the independent accountants may
have, particularly those characterized as `material' or `serious'.
Typically, such recommendations will be presented by the independent
accountants in the form of a Letter of Comments and Recommendations to the
Committee. The Committee should review responses of management to the
Letter of Comments and Recommendations from the independent accountants and
receive follow-up reports on action taken concerning the aforementioned
recommendations.
11. Recommend to the Board the selection, retention or termination of the
Company's independent accountants.
12. Review with management the Company's taxation position and the policies
applicable to that position.
13. Review with management and the independent accountants the methods used to
establish and monitor the Company's policies and procedures with respect to
minimizing the Company's exposure to fraud, and with respect to unethical
or illegal activities by Company employees that may have a material impact
on the financial statements.
14. Generally as part of the review of the annual financial statements, receive
an oral report(s), at least annually, from the Company's general counsel
concerning legal and regulatory matters that may have a material impact on
the financial statements.
15. As the Committee may deem appropriate, obtain, weigh and consider expert
advice as to Audit Committee related rules of the AMEX, Statements on
Auditing Standards and other accounting, legal and regulatory provisions.
16. Review with management the adequacy of the Company's insurance programs and
the level of risk exposure which is appropriate for the Company.
17. Generally, administer the Company's "conflict of interest" policy,
including the evaluation of the policy, recommendations to the Board to
amend the policy, and recommendations to management regarding the
implementation of the policy.
18. Direct any special projects or investigation deemed necessary by the Board,
and otherwise to undertake any function delegated to it by the Board.
[Form of Proxy Card]
MEDIX RESOURCES, INC. 305 Madison Avenue, Suite 2033
New York, New York 10165
PROXY FOR ANNUAL MEETING OF
SHAREHOLDERS
October 16, 2001
The undersigned hereby appoints each of John R. Prufeta and Gary L. Smith,
individually, as proxy and attorney-in-fact for the undersigned, with full power
of substitution, to vote on behalf of the undersigned at the Company's 2001
Annual Meeting of Shareholders to be held on October 16, 2001 and at any
adjournment(s) or postponement(s) thereof, all shares of the Common Stock, $.001
par value, of the Company standing in the name of the undersigned or which the
undersigned may be entitled to vote as follows:
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" ITEMS 1, 2 AND 3. In their discretion, the proxies are hereby
authorized to vote upon such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof, hereby revoking any
proxy or proxies heretofore given by the undersigned. In the event any nominee
listed below is unable or declines to serve as a director at the time of the
Annual Meeting, this proxy will be voted for any nominee who shall be designated
by the then Board of Directors to fill the vacancy.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
1. Election of Directors................FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY [ ]
(except as indicated below) to vote for all nominees
Nominees: Class 2 (3 years) - Patrick W. Jeffries, Joan E. Herman and John R. Prufeta
Class 1 (1 year) - Guy L. Scalzi
To withhold authority to vote for any individual nominee, write that
individual's name in this space:
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2. To ratify and approve the Board of Directors' increase in the number of
shares authorized and reserved for issuance under the Company's 1999 Stock
Option Plan, from 10 million shares of the Company's common stock to 13
million shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Ratify the selection by the Board of Directors of Ehrhardt Keefe Steiner &
Hottman as the Company's independent public accountants, to audit the
financial statements of the Company for the 2001 fiscal year:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Please sign exactly as name appears at left:
Signature:
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Second Signature (if held jointly):
-------------------------------------------
Date: _________________
When shares are held by joint tenants, both must sign. When signing
as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in the corporate
name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.