def14a_100802
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No.__ ]
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a- 11(c) orss.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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[X] No fee required.
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4) Date Filed:
MEDIX RESOURCES, INC.
420 Lexington Ave., Suite 1830
New York, New York 10170
(212) 697-2509
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 8, 2002
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Medix
Resources, Inc., a Colorado corporation (the "Company"), will be held at The
Helmsley Hotel, 212 East 42nd Street, New York, NY 10017, on Tuesday, October 8,
2002 at 10:00 a.m., local time, for the following purposes:
1. To elect two (2) members to the Company's seven-person Board of
Directors, who will serve 3-year terms, and until their successors are
duly elected and qualified;
2. To approve an amendment to the Company's Articles of Incorporation to
increase the number of shares of the Company's common stock, par value
$.001 per share (the "Common Stock"), authorized for issuance from 100
million to 125 million;
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, 2002; 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 22, 2002,
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, 2001, a Proxy Statement and a proxy card accompany this
notice. These materials were sent to shareholders on or about August 30, 2002.
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
Mark W. Lerner
Secretary
New York, New York
August 30, 2002
MEDIX RESOURCES, INC.
420 Lexington Ave., Suite 1830
New York, New York 10170
(212) 697-2509
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 8, 2002
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 8, 2002, at 10:00 a.m.,
local time, or at any adjournment(s) thereof, for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Shareholders. The Annual
Meeting will be held at The Helmsley Hotel, 212 East 42nd Street, New York, NY
10017. These proxy solicitation materials were mailed on or about August 30,
2002 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 22, 2002 (the
"Record Date") are entitled to vote at the Annual Meeting. On the Record Date,
62,923,624 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 proposed amendment to the Company's Articles of
Incorporation to increase the number of shares of the Company's Common Stock
authorized for issuance from 100 million to 125 million, and ratification of the
appointment of our independent public accountants, will be approved by the
shareholders if the number of votes cast for such proposals 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 absences 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 or on the other votes to be taken at the Annual
Meeting.
The principal executive offices of the Company are located at 420 Lexington
Ave., Suite 1830, New York, New York 10170. 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 two (2) members of the Company's Board of Directors; (2) approval of
the proposed amendment to the Company's Articles of Incorporation to increase
the number of shares of the Company's Common Stock authorized for issuance from
100 million to 125 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,
2002; 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 2003 Annual Meeting of Shareholders must deliver such proposals to us
no later than March 31, 2003 in order to be included in the Proxy Statement and
form of Proxy relating to the 2003 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. The terms of two directors terminate at the
2002 Annual Meeting, Messrs. Havens and Scalzi. The Board of Directors has
nominated those two current directors to fill these positions for a three-year
term. 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 nominees, as listed
below. At the next Annual Meeting, unless a vacancy on the Board is filled
during the year, 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
Samuel H. Havens(1) Director 59 1999
Guy L. Scalzi (2) Director 56 2001
--------------------
(1)Member of the Finance and Nominating Committees of the Board of Directors
(2)Member of the Nominating Committee of the Board of Directors
Biographical Information on Nominees.
Samuel H. Havens. Prior to his retirement in 1996, Mr. Havens served as
President of Prudential Healthcare for five years. He had begun his career with
The Prudential Insurance Company as a group sales representative in 1965, and
served in various posts in Prudential healthcare operations over three decades.
Since retiring, Mr. Havens has served on the Board and as a consultant to
various healthcare organizations. He is a member of the Board of Advisors of
Temple Law School and the Editorial Board of Managed Care Quarterly. Mr. Havens
completed the Executive Program in Business Administration at Columbia
University. He holds a JD degree from Temple Law School, a CLU from the American
College of Life Underwriters, and a BA degree from Hamilton College.
Guy L. Scalzi. Mr. Scalzi is Vice President and Chief Operating Officer 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.
Current Board Members
Listed below is information about the current members of our Board of
Directors and the Committees on which they serve.
Director
Name Date of Birth Position Since
Samuel H. Havens (4)(5) 6/19/43 Director and Chair of the 1999
Nominating Committee
Joan E. Herman (2)(3) 6/2/53 Director and Chair of the 2000
Audit Committee
Patrick W. Jeffries(4) 1/25/53 Director and Chair of the 2001
Finance Committee
John T. Lane (1)(2)(3)(4) 4/13/42 Director and Chairman of 1999
The Board
John R. Prufeta (1)(4)(5) 7/1/60 President, Chief Executive 1999
Officer and a Director
Guy L. Scalzi(5) 7/18/46 Director 2001
Dr. David B. Skinner (1)(2)(3) 4/28/35 Director and Chair of the 1999
Compensation Committee
--------------------
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Finance Committee
(5) Member of Nominating Committee
The following is biographical information about those directors whose
information does not appear elsewhere in this proxy statement.
John T. Lane. Prior to his retirement from J.P. Morgan & Company in 1994,
Mr. Lane was head of that firm's U.S. Private Clients Group. He also served as
Chairman of J.P. Morgan, Florida; a Director of Morgan Shareholder Services,
J.P. Morgan of California, and Morgan Futures; and a member of the firm's Credit
Policy committee. Earlier, he held a number of positions in the J. P. Morgan
organization, which he joined in 1968. Since retiring from J.P. Morgan, Lane has
served as a consultant to various organizations. Mr. Lane currently serves or
the Boards of Acme Metals Incorporated and Biospecifics Technologies Corp.,
whose common shares are publicly traded. Mr. Lane holds an MBA degree from the
University of Michigan, and a BA degree from Dartmouth College.
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 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. In March 2002, Mr. Jeffries became the Executive Vice
President for IT and Central Services of WellPoint Health Networks Inc. 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.
Dr. David B. Skinner. Dr. Skinner is President Emeritus of the New
York-Presbyterian Hospital and the New York-Presbyterian Healthcare System. He
was Vice Chairman/President and CEO of the Society of the New York Hospital and
its Healthcare System and subsequently of the merged institution for 13 years.
He is also a professor of cardiothoracic surgery and surgery at the Weill
Medical College of Cornell University, professor of surgery at Columbia
University College of Physicians and Surgeons, and an attending surgeon at New
York Presbyterian Hospital. He was professor of surgery at Johns Hopkins
University School of Medicine from 1968 to 1972, and professor and chairman of
surgery at the University of Chicago, Pritzker School of Medicine from 1973 to
1987. Dr. Skinner has been awarded numerous honorary degrees, faculty
appointments, corporate directorships, and domestic and international honors,
awards, and prizes. Dr. Skinner holds a BA degree, with high distinction, from
the University of Rochester and an MD degree, cum laude, from Yale University.
Board and Committee Meetings in 2001
The Board of Directors of the Company held a total of sixteen meetings
during the year ended December 31, 2001 (three in person and thirteen by
telephone). During the same period, the Audit Committee of the Board of
Directors met six times (once in person and five meetings by telephone) and the
Compensation Committee met once by telephone and signed two unanimous consents.
During 2001, 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, except for Dr. Skinner, who
missed seven of 23 Board and Committee meetings. The Nominating Committee will
consider Board nominee suggestions from our shareholders. Any such suggestions
in connection with the 2003 Annual Meeting should be made to the Committee in
writing on or before March 31, 2003.
Directors Compensation
In 1999, we adopted the policy of compensating non-employee Directors,
$1,000 for attending each regular quarterly Board meeting in person, and $250
for attendance 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 2001, the Directors waived such fees but not reimbursements for
out-of-pocket expenses. Independently, Ms Joan Herman has waived her director
fees altogether, based on WellPoint company policy.
From time to time, the Board of Directors will grant non-employee Directors
options to acquire shares of Common Stock as compensation for their services to
the Company as Directors. During 2001, we granted options covering 200,000
shares of Common Stock each to Mr. Jeffries and Mr. Scalzi, at the time they
became Directors, which are exercisable at $.78 per share.
In January 2002, the Directors discontinued the policy of cash fees to
Directors for attending Board or committee meetings. Instead, each non-employee
Director (other than Ms. Herman) was compensated for their services in 2002
through the grant of options to purchase 40,000 shares of our Common Stock.
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 42 President and Chief Executive Officer
Patricia A. Minicucci 53 Executive Vice President, Operations
Mark W. Lerner 48 Executive Vice President, Chief Financial
Officer and Secretary
Louis E. Hyman 34 Executive Vice President and
Chief Technology Officer
Brian R. Ellacott 45 Senior Vice President and Regional CEO
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.
Mark W. Lerner. Mr. Lerner became the Executive Vice President and Chief
Financial Officer of the Company on July 1, 2002. Prior to joining the Company
he served as Vice President, Finance, Operations and Development for Boardroom,
Inc., a publisher of business information, from June, 2000, and as Senior Vice
President, e-commerce at Weinstein & Holtzman, Inc., a wholesaler and
distributor to the construction and real estate industry, from 1998 to June,
2000. Mr. Lerner served as Chief Financial Officer and Vice President of Finance
and Operations, of the Science & Professional Division of The Thomson
Corporation, from 1993 to 1998. Prior to 1993 he served in various financial
positions at Pfizer, Inc. over eleven years. He received his BS in Finance
degree from Miami University of Ohio, and his MBA degree from Emory University.
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. From
March 9 to May 14, 2001, he was a consultant to the Company, serving as interim
Chief Technology Officer. From September 2000 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 Senior
Vice President of Business Development. In Mid-2001, Mr. Ellacott was appointed
as the Division CEO for Southeast Region Markets. 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, 2001, awarded or paid to, or earned by our Chief
Executive Officer ("CEO") and our four other most highly compensated officers
(the "Named Officers").
Long-Term
Compensation
Securities
Underlying
Annual Compensation Options
Name and Fiscal
Principal Position Year Salary Bonus Other(1) (Shares)
John R. Prufeta 2001 $114,000 0 425,000
President and CEO 2000 $120,000 0 600,000
1999 $171,000 (2) 0 925,000
Louis E. Hyman, 2001 $156,625 (3) 0 250,000
Executive Vice President and
Chief Technology Officer
Patricia A. Minicucci 2001 $197,000 0 175,000
Executive Vice President 2000 $163,846 0 400,000
Gary L. Smith(4), 2001 $197,000 0 175,000
former Executive Vice 2000 $2,430 0 $250,000
President and Chief
Financial Officer
Brian R. Ellacott 2001 $165,000 0 175,000
Senior Vice President 2000 $125,769 0 150,000
------------------
(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) During 2001, Mr. Hyman, through an affiliated entity, served as a
consultant to Medix before he became a full time employee and executive
officer. This amount includes the consulting compensation to his firm. He
also received a grant of options to purchase 20,000 shares for his
consulting services.
(4) Mr. Smith's employment with the Company terminated in July, 2002.
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, our shareholders approved the 1999 Plan. 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.
Options granted under our 1999 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 our company are eligible
for ISOs. Our company 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 option grants differ from optionee to
optionee and are set forth in the optionees' individual stock option agreement.
Such options generally vest over a period of one or more years and expire after
up to ten years. 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 Common Stock, by
delivery of options or a combination of any of these methods. At our 2001 Annual
Meeting, our shareholders approved an increase of 3,000,000 shares to 13,000,000
as the amount of total shares of our Common Stock reserved for issuance under
the 1999 Plan.
As of August 1, 2002, we had issued 5,246,085 shares of our Common Stock
upon exercise of options to current or former employees and directors, and have
7,308,000 shares currently covered by outstanding options held by current or
former employees and directors, with exercise prices ranging form $.19 to $4.97.
Such options have been granted under the 1999 Plan and earlier stock option
plans.
Equity Compensation Plan Information
(a) (b) (c)
Number of Securities
Remaining Available for
Number of Securities to be Weighted-average Future Issuance Under
Issued Upon Exercise of Exercise Price of Equity Compensation Plans
Outstanding Options, Outstanding Options, (Excluding Securities
Plan Category Warrants and Rights Warrants and Rights Reflected in Column (a))
Equity Compensation
Plans Approved by
Shareholders 6,669,500 $1.39 6,330,500
Equity Compensation
Plans Not Approved by
Shareholders 8,272,779 $0.54 0
Total 14,942,279 $0.92 6,330,500
Option information for fiscal 2001 relating to the Named Officers is set
forth below:
Options Granted in 2001
Number of Shares of Percentage of
Common Stock Total Options Valuation under
Underlying Options Granted to Exercise Expiration Black-Scholes
Name Granted in 2001 Employees in 2001 Price Date Pricing Method(1)
John R. Prufeta 400,000 21.2% $.62 4/17/06 $217,755
25,000 1.3% $.60 3/23/06 $13,171
Louis E. Hyman 230,000 12.2% $.61 5/14/06 $123,190
20,000 1.1% $.70 3/03/03 $15,580
Patricia A. Minicucci 150,000 7.9% $.61 5/14/06 $80,341
25,000 1.3% $.60 3/23/06 $13,171
Gary L. Smith 150,000 7.9% $.61 5/14/06 $80,341
25,000 1.3% $.60 3/23/06 $13,171
Brian R. Ellacott 150,000 7.9% $.61 5/14/06 $80,341
25,000 1.3% $.60 3/23/06 $13,171
-------------
(1) The Black-Scholes option-pricing model estimates the options fair value by
considering the following assumptions: the options exercise price and
expected life, the underlying current market price of the stock and
expected volatility, expected dividends and the risk free interest rate
corresponding to the term of the option. The fair values calculated above
use expected volatility of 132%, a risk-free rate of 5.5%, no dividend
yield and anticipated exercise at the end of the term.
Option Exercises and Year-End Values in Fiscal 2001
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Shares Value Options at Year-End Options at Year-End(1)
Name Exercised Realized Exercisable Unexercisable Exercisable Unexercisable
John R. Prufeta 0 0 1,450,000 (2)500,000 $258,250 $80,000
Louis E. Hyman 0 0 112,500 137,500 $ 8,325 $12,375
Patricia A. Minicucci 0 0 575,000 0 $ 16,000 $ 0
Gary L. Smith 0 0 325,000 100,000 $ 16,000 $ 0
Brian R. Ellacott 0 0 312,500 12,500 $ 16,000 $ 0
--------------
(1) The dollar values are calculated by determining the difference between
$0.70 per share, the fair market value of the Common Stock at December 31,
2001, 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.
Medix has no retirement, pension or profit-sharing program for the benefit
of its directors, executive officers or other employees, but the Board of
Directors may recommend one or more such programs for adoption in the future.
Medix does not make any contributions to its 401(k) Plan for its employees.
Employment Agreements
Mr. Prufeta's Employment Agreement, which has an initial term of one year
and renews in automatic one year increments thereafter, provides that he will be
compensated at the base salary of $275,000 annually, plus a bonus of $400,000,
subject to certain performance criteria. He holds the positions of President and
Chief Executive Officer and reports to the Board of Directors. Pursuant to his
Employment Agreement, Mr. Prufeta has been granted options to purchase 200,000
shares of Common Stock at $.70 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 of the term subject to the right of the
employee to continue to receive salary and pro-rata bonus 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 one year
and renews in automatic one year increments thereafter, provides that she will
be compensated at the base salary of $245,000 annually, plus eligibility for
bonus consideration, subject to certain performance criteria. She holds the
position of Executive Vice President, Operations, and reports to the President
and CEO. Pursuant to her Employment Agreement, Ms. Minicucci has been granted
options to purchase 125,000 shares of Common Stock at $.70 per share, which vest
on a time-based schedule. 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 of the term subject to the right of the
employee to continue to receive salary and pro-rata bonus 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
her then current year's base and bonus pay.
Mr. Lerner's Employment Agreement, which has an initial term of one year
and renews in automatic one year increments thereafter, provides that he will be
compensated at the base salary of $207,000 annually, plus eligibility for bonus
consideration, subject to certain performance criteria. He holds the positions
of Executive Vice President and Chief Financial Officer and reports to the
President and CEO. Pursuant to his Employment Agreement, Mr. Lerner has been
granted options to purchase 275,000 shares of Common Stock at $.38 per share,
which vest upon a time-based schedule. 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 salary and pro-rata bonus
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. Hyman's original Employment Agreement, which had an initial term of two
years, ending on May 14, 2003, provided that he be compensated at the salary of
$ 200,000 annually. In 2002, the Company executed a new Employment Agreement
which has an initial term of one year and renews in automatic one year
increments thereafter, provides that he will be compensated at the base salary
of $225,000 annually, plus eligibility for bonus consideration, subject to
certain performance criteria. He holds the position of Executive Vice President
and Chief Technology Officer, and reports to the President and CEO. Pursuant to
his original 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 original Employment Agreement. Pursuant to his new Employment
Agreement, Mr. Hyman has been granted options to purchase 125,000 shares of
Common Stock at $.70 per share, which vest upon a time-based schedule. 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 salary
and pro-rata bonus 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 one year
and renews in automatic one year increments thereafter, provides that he will be
compensated at the base salary of $180,000 annually, plus eligibility for bonus
consideration, subject to certain performance criteria. He initially held the
position of Senior Vice President, Business Development, and recently was
appointed as Senior Vice President and Southeast Division Market CEO, reporting
to the Executive Vice President, Operations. Pursuant to his Employment
Agreement, Mr. Ellacott has been granted options to purchase 50,000 shares of
Common Stock at $.59 per share, which vest upon a time-based schedule. 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 salary
and pro-rata bonus 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
Board Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee")
administers the Medix stock option plans and oversees our executive
compensation, subject to approval of its recommendations by the Board of
Directors. Executive compensation includes base salaries, annual incentives and
long term stock option plans, as well as any executive benefits and/or
prerequisites.
Our general compensation philosophy for our executive officers, including
our Chief Executive Officer ("CEO"), is to offer competitive compensation
packages that are designed to attract and retain key executives critical to the
success of the Company. At present, packages include annual cash compensation
(salaries) and long-term compensation consisting of options to purchase the
Company's stock, to align the interests of management with those of the
Company's shareholders. Beginning with calendar year 2002, executive packages
will include variable amounts of annual bonus potential, tied to specific
performance goals for the Company and the individual executives. The Committee
intends to review the performance and compensation of executives annually, in
conjunction with the performance of the Company. Incentive Stock Option awards
are based upon the Committee's judgment as to the relative rank and contribution
of each executive (or other employee) to the success and survival of the
Company.
In addition, the Company has entered into employment agreements with its
executive officers, as outlined earlier in this report.
Compensation Committee,
Dr. David B. Skinner, Chairman
Ms. Joan E. Herman
Mr. John T. Lane
Compensation Committee Interlocks and Insider Participation
In 1999, we entered into agreements with WellPoint Pharmacy Management
("WPM") to implement a pilot program for the introduction of Cymedix( software
to healthcare providers identified by WPM. After the required testing of the
software, the agreements provide for a production program to install the
software broadly among WPM managed providers. One of the agreements provides
that Medix will nominate a representative of WPM to be elected to the Company's
Board of Directors. Ms. Herman is that representative. Such agreement also
provided that WPM would be granted warrants evidencing the right to purchase 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, September 8, 2004. In February 2002,
the warrant agreement was amended to revise the performance criteria and to add
an additional right to purchase up to 1,000,000 additional shares at $1.75 per
share. At March 15, 2002, warrants covering 1,850,000 shares, exercisable at
$.30 per share, had vested.
COMPARISON OF CUMULATIVE TOTAL RETURNS
The following graph and data points table compare the performance of the
Company's common stock with the performance of the AMEX-U.S. Index, as adjusted,
and as provided by the American Stock Exchange and a Custom Composite Index (4
stocks) over the five year period extending through the end of 2001. The graph
and tabular information assume that $100 was invested on December 31, 1996 in
the Company's common stock, the AMEX-U.S. Index and the Custom Composite Index,
with any dividends being reinvested. The Company has provided this graph and the
tabular information using publicly available information that it has no reason
to believe is not accurate. However, the Company takes no responsibility for
such information.
The Custom Composite Index includes Cybear, AllScripts, WebMD and ProxyMed,
companies that the Company believes are its peers and that are involved in the
same or similar lines of business. The Company believes that this peer group is
a better comparison than broader indices, which are publicly available. Data for
Cybear, AllScripts and WebMD were not available for periods prior to 1999.
Based on the reinvestment of $100 beginning December 31, 1996
12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001
Medix
Resources, Inc. (1) $100 $23 $9 $288 $100 $65
AMEX U.S.
Index (as adjusted) $100 $125 $134 $177 $166 $151
Custom Composite
Index $100 $98 $165 $138 $16 $20
----------------
(1) Medix acquired its Cymedix Internet software and services business in
January of 1998. Before then it operated only a medical temporary staffing
business. It did not dispose of all of its medical staffing business until
February 2000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since 1996, we have had 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. All of the
transactions described below have been approved according to this policy.
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 2001 and 2000,
we have paid OPP approximately $111,000 and $93,000, respectively, as
reimbursements for rents and services for our former New York office space,
which was leased in the name of OPP. In addition, we have paid OPP employee
search fees of approximately $38,361 and $152,000 during 2001 and 2000,
respectively, 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 its services to us at standard rates. The Board of
Directors, through the Audit Committee, reviews and approves of any contractual
arrangements with OPP.
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 our marketing efforts. During 2001, we paid Mr. Havens $20,000
for his services. Mr. Havens deferred his monthly payment from May, 2001 through
March, 2002. Currently, the accrued amount payable to Mr. Havens is $55,000.
Monthly payments began again in April, 2002.
See "EXECUTIVE COMPENSATION - Compensation Committee Interlocks and Insider
Participation" for a description of other related party transactions.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of August 1, 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 62,923,624 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.
Name and Address Number of Shares Percentage of Class
John R. Prufeta 2,453,000(1) 3.8%
420 Lexington Ave., Suite 1830
New York, New York
John T. Lane 705,000(2) 1.1
94 Sixth Street
Garden City, New York
Samuel H. Havens 255,000(3) *
58 Winged Foot Drive
Livingston, New Jersey
Joan E. Herman None(4) 0%
One Wellpoint Way
Thousand Oaks, California
Patrick W. Jeffries 355,000(5) *
One Wellpoint Way
Thousand Oaks, California
Guy L Scalzi 230,000(6) *
The Chrysler Building, 37th Floor
42nd and Lexington Ave.
New York, New York
David B. Skinner, M.D. 230,000(7) *
525 East 68th Street
New York, New York
Louis E. Hyman 355,000(8) *
420 Lexington Ave., Suite 1830
New York, New York
Patricia A. Minicucci 737,500(9) 1.2%
420 Lexington Ave., Suite 1830
New York, New York
Mark W. Lerner 78,125(6) *
420 Lexington Ave., Suite 1830
New York, New York
Brian Ellacott 400,000(10) *
101 Village Parkway
Building One
Marietta, Georgia
All directors and executive 5,798,625 8.6%
officers as a group (11 persons)
*Less than 1% of the outstanding shares
-------------------
(1) Mr. Prufeta owns 862,000 shares of Common Stock, with the remainder
available upon the exercise of warrants and options held by him.
(2) Mr. Lane owns 62,500 of these shares, the remainder 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 (25% of
the outstanding shares of that class).
(3) Mr. Havens owns 12,500 of these shares, with the remainder available upon
the exercise of warrants and options held by him.
(4) Ms. Herman has declined the grant of any options based on WellPoint company
policy.
(5) Mr. Jeffries owns 62,500 of these shares, with the remainder available upon
the exercise of warrants and options held by him.
(6) Represents shares of Common Stock available upon the exercise of
outstanding options.
(7) Dr. Skinner owns 200,000 of these shares, with the remainder available upon
the exercise of options held by him.
(8) Mr. Hyman owns 50,000 of these shares, with the remainder available upon
the exercise of warrants and options held by him.
(9) Ms. Minicucci owns 50,000 of these shares, with the remainder available
upon the exercise of warrants and options held by her.
(10) Mr. Ellacott owns 25,000 of these shares, with the remainder available upon
the exercise of warrants and options held by him.
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 2001.
AMENDMENT TO ARTICLES OF INCORPORATION TO
INCREASE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE
The Board of Directors has determined that it is in the best interest of
the Company to amend the Company's Articles of Incorporation to increase the
number of authorized shares of the Company's Common Stock from 100,000,000 to
125,000,000. The text of the proposed Articles of Amendment is attached hereto
as Exhibit A.
As of August 8, 2002, there were 62,923,624 shares of the Company's Common
Stock outstanding, leaving 37,076,376 shares of Common Stock authorized but
unissued. However, as of August 8, 2002, the Company had entered into
commitments to issue (i) 7,308,000 shares of its Common Stock upon the exercise
of outstanding options, (ii) 18,310,312 shares of its Common Stock upon the
exercise of warrants, (iii) 310,000 shares of its Common Stock upon the
conversion of outstanding Preferred Stock of the Company, and (iv) 3,000,000
shares of its Common Stock upon the conversion of outstanding Promissory Notes.
Further, an additional 6,330,500 shares, under the Company's 1999 Stock Option
Plan, may be issued upon the exercise of options yet to be granted. These
commitments, in the aggregate, obligate the Company, on a contingent basis, to
issue up to 35,258,812 of the Company's Common Stock, which almost equals the
37,076,376 shares of authorized but unissued Common Stock out of which it can
satisfy such obligations.
In addition to satisfying the Company's current commitments as described
above, the Company will be required to raise additional capital to finance its
operations and to finance the development of its subsidiary's Cymedix software
products. The purpose of the proposed Amendment includes providing the Company
with greater flexibility in financing these cash requirements, by providing it
with adequate authorized Common Stock to commit in future financings. The Board
of Directors has determined that the Company soon will be restricted in its
financing options due to the limited amount of authorized but unissued shares of
Common Stock provided for in its Articles of Incorporation. Therefore, the Board
has determined that the Company's Articles of Incorporation must be amended to
authorize additional shares of Common Stock that may then be issued as approved
by the Company's Board of Directors. The Company is currently funding its
operations principally by issuing common stock and warrants from time to time in
private transactions at a discount to market. Failure to authorize this
amendment could limit the Company's ability to raise capital to fund its
operations
The Company's shareholders will have no appraisal rights under Colorado law
with respect to the Amendment or any equity financing that the Company may
undertake after its adoption. In addition, shareholders do not have any
preemptive rights to participate in any future issuance of Common Stock, and
therefore will suffer dilution of ownership upon such issuance. The issuance of
additional shares could also have the effect of diluting the earnings per share
and book value of existing shares of Common Stock. Although the authorization of
the additional shares is not intended as an anti-takeover device, the additional
shares could be used to dilute the stock ownership of persons seeking to gain
control of the Company, which could preclude existing shareholders from taking
advantage of such a situation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE `FOR' APPROVAL OF THE ARTICLES OF
AMENDMENT TO THE ARTICLES OF INCORPORATION. SUCH AMENDMENT SHALL BE APPROVED IF
A PLURALITY OF THE SHARES REPRESENTED AT THE SPECIAL MEETING VOTE IN FAVOR OF
THE AMENDMENT.
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 2002 fiscal year and recommends that the Company's Shareholders ratify such
appointment. The same firm audited the Company's financial statements last year.
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 billed the Company the amount of Audit
Fees identified in the table below for professional services rendered for the
audit of our annual financial statements for the fiscal year 2001 and the review
of quarterly financial statements included in our Quarterly Reports on Forms
10-Q filed during that year. In addition, in 2001, that firm billed the amount
identified as All Other Fees in the table below for tax-related consulting and
other professional services.
Auditors' Fees in 2001
Audit Fees
Annual audit $66,472
Quarterly reviews $28,039
Financial Information Systems
Design and Implementation Fees $ 0
All Other Fees $20,085
The Audit Committee of the Board of Directors has considered whether the
provision of the services represented by All Other Fees in the table above is
compatible with maintaining our accountant's independence. The Audit Committee
concluded that our accountant's independence was not compromised by providing
these services.
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. The Audit Committee Charter, adopted by the Board of
Directors, specifies the scope of the Audit Committee's responsibilities and how
it should carry out those responsibilities. Copies of the Charter are available
to its shareholders of record upon written request to the Company.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2001 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 representatives of the
firm.
Based upon the above review and discussions, the Audit Committee
recommended to the Board of Directors the inclusion of Company's 2001 audited
financial statements in our 2001 Annual Report on Form 10-K 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, 2001, 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
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
MEDIX RESOURCES, INC.
Pursuant to the provisions of the Colorado Business Corporation Act, as
amended (the "Act"), Medix Resources, Inc., a corporation organized under the
laws of the State of Colorado, by its President, does hereby certify as follows:
1. The name of the Corporation is Medix Resources, Inc.
2. The Board of Directors of said Corporation has consented to,
authorized and passed a resolution at a meeting duly held on July 23,
2002, declaring that the amendment to the Articles of Incorporation
contained herein is in the best interest of the Corporation and
decided to present such amendment to the shareholders of the
Corporation at the Annual Meeting of shareholders.
3. Upon notice given to each shareholder of record entitled to vote on
such amendment to the Articles of Incorporation in accordance with the
requirements of the Act, the Annual Meeting of the shareholders of the
Corporation was held on October 8, 2002, at which meeting holders
representing a quorum were present in person or represented by proxy,
and the number of votes cast for the amendment by each voting group
entitled to vote separately on the amendment was sufficient for
approval by the voting group.
4. The amendment approved was as follows:
Section I of Article IV of the Corporation's Articles of Incorporation
is amended in its entirety to read as follows:
"Section 1. Classes and Shares Authorized. The
total number of shares of Common Stock that the
Corporation shall have authority to issue is One
Hundred Twenty-Five Million (125,000,000) shares
of Common Stock, $0.001 par value per share. The
total number of shares of Preferred Stock that
the Corporation shall have authority to issue is
Two Million Five Hundred Thousand (2,500,000)
shares of Preferred Stock, $1.00 par value per
share."
5. Medix Resources, Inc. has caused these Articles of Amendment to
Articles of Incorporation to be filed, effective as of the date of
filing of these Articles of Amendment to Articles of Incorporation
with the Secretary of State of the State of Colorado.
[Form of Proxy Card]
MEDIX RESOURCES, INC.
420 Lexington Ave., Suite 1830
New York, New York 10170
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
October 8, 2002
The undersigned hereby appoints each of John R. Prufeta and Mark W. Lerner, 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 2002 Annual Meeting of
Shareholders to be held on October 8, 2002 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: - Samuel H. Havens and Guy L. Scalzi, terms of 3 years
To withhold authority to vote for any individual nominee, write that
individual's name in this space:
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2. To approve the proposed amendment to the Company's Articles of Incorporation
to increase the number of shares of the Company's Common Stock authorized for
issuance from 100 million to 125 million.
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 2002 fiscal year:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Please sign exactly as name appears at left:
Signature:
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Second Signature (if held jointly):
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Date:
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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.