UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transition period from ______________________ to ______________________
Commission file number: 0-22052
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PROXYMED, INC.
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(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0202059
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2501 DAVIE ROAD, SUITE 230, FT. LAUDERDALE, FLORIDA 33317
- --------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(954) 473-1001
--------------------------
(Issuer's telephone number)
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. [X] Yes
[ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
COMMON STOCK, $.001 PAR VALUE
9,538,622 SHARES AS OF NOVEMBER 4, 1996
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS.
PROXYMED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 5,397,488
Investment in U.S. Treasury Notes, current portion 6,022,239
Trade receivables, net 111,877
Other receivables 1,380,530
Note receivable 107,536
Inventory 175,217
Other current assets 202,754
------------
Total current assets 13,397,641
Investment in U.S. Treasury Notes, non-current portion 1,500,277
Property and equipment, net 1,691,336
Goodwill, net 601,639
Other assets 32,054
------------
Total assets $17,222,947
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 502,198
Current portion of deferred revenue 84,500
------------
Total current liabilities 586,698
Deferred revenue, less current portion 40,000
------------
Total liabilities 626,698
------------
Stockholders' equity:
Common stock, $.001 par value. Authorized 20,000,000
shares; issued and outstanding 9,530,622 shares 9,531
Additional paid-in capital 25,850,925
Accumulated deficit (9,264,207)
------------
Total stockholders' equity 16,596,249
------------
Total liabilities and stockholders' equity $17,222,947
============
See accompanying notes.
2
<PAGE>
<TABLE>
<CAPTION>
PROXYMED, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- ---------------------------
1996 1995 1996 1995
----------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $ 2,089,489 7,135,041 280,159 1,130,522
----------- ---------- ----------- ---------
Costs and expenses:
Cost of sales 617,180 4,884,107 175,427 700,299
Selling, general and adminis-
trative expenses 3,803,586 4,210,138 1,466,061 1,116,405
----------- ---------- ----------- ---------
4,420,766 9,094,245 1,641,488 1,816,704
----------- ---------- ----------- ---------
Operating loss (2,331,277) (1,959,204) (1,361,329) (686,182)
Other income (expense):
Gain (loss) on sale of assets 993,895 (826,220) 5,669 247,228
Gain on sale of subsidiary - 669,664 - 669,664
Interest, net 257,734 (153,228) 179,691 (19,704)
----------- ---------- ----------- ---------
Net income (loss) (1,079,648) (2,268,988) (1,175,969) 211,006
Dividends on cumulative
preferred stock 95,803 61,257 7,475 51,938
----------- ---------- ----------- ---------
Net income (loss) appli-
cable to common
shareholders $(1,175,451) (2,230,245) (1,183,444) 159,068
=========== ========== ============ =========
Net income (loss) per share of
common stock $ (.17) (.49) (.13) .03
=========== ========== ============ =========
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
<CAPTION>
PROXYMED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,079,648) (2,268,988)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization expense 267,569 234,054
Common stock issued for services 56,000 -
Compensatory warrants issued (Note 7) 247,834 -
Amortization of covenant not-to-compete (60,000) -
(Gain) loss on sale of assets (993,895) 826,220
Gain on sale of subsidiary - (669,664)
Changes in assets and liabilities, net of
effect of acquisitions and dispositions:
Accounts receivable 57,436 816,208
Inventory 63,046 62,642
Other (122,336) 87,172
Accounts payable and accrued expenses (220,654) (2,872,407)
----------- -----------
Net cash used in operating activities (1,784,648) (3,784,763)
----------- -----------
Cash flows from investing activities:
Purchases of U.S. Treasury Notes (8,541,153) -
Maturities of U.S. Treasury Notes 1,018,637 -
Proceeds from sale of dispensary assets 350,000 3,557,973
Proceeds from sale of subsidiary - 800,000
Capital expenditures (1,011,626) (295,709)
----------- -----------
Net cash provided by (used in) investing activities (8,184,142) 4,062,264
------------ -----------
Cash flows from financing activities:
Net proceeds from sale of equity securities 13,041,309 2,002,250
Proceeds from exercise of stock options and warrants 1,820,097 -
Payment of preferred stock dividends (82,963) -
Payment of notes payable and long-term debt - (1,580,412)
Collection of notes receivable 541,739 -
Payment of capital lease obligations (417,884) (154,602)
----------- -----------
Net cash provided by financing activities 14,902,298 267,236
----------- -----------
Net increase in cash and cash equivalents 4,933,508 544,737
Cash and cash equivalents at beginning of period 463,980 1,137,913
----------- -----------
Cash and cash equivalents at end of period $ 5,397,488 1,682,650
=========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 31,123 273,250
=========== ==========
Common stock issued for businesses and services $ - 63,263
=========== ==========
</TABLE>
See accompanying notes.
4
<PAGE>
PROXYMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION - The accompanying unaudited financial statements of
ProxyMed, Inc. and subsidiaries (the "Company") have been prepared in accordance
with the instructions to Form 10-QSB and do not include all of the information
and disclosures required by generally accepted accounting principles. However,
such information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the three and nine months ended September
30, 1996 are not necessarily indicative of the results to be expected for the
full year. Reference is made to the Company's annual report on Form 10-KSB for
the year ended December 31, 1995.
(2) STOCK SPLIT - On June 12, 1996, the Board of Directors authorized a
three-for-two stock split on the Company's common stock payable July 8, 1996 to
shareholders of record on June 24, 1996. All applicable share and per share data
have been retroactively adjusted for the stock split.
(3) REVENUE RECOGNITION - Revenues from the Company's prescription drug
dispensing activities are reported at net realizable amounts from HMO providers
and patients at the time the individual prescriptions are filled or services are
provided. Revenues from sales of software or software licenses are recognized
upon delivery of the software, or ratably upon the completion of any significant
Company obligations. Revenues from software rentals are recognized over the
rental period. Revenues from sales of computer hardware are recognized upon
shipment of the hardware.
(4) INVENTORY - Inventory, which consists primarily of prescription drugs, is
stated at the lower of cost (first-in, first-out method) or market.
(5) NET INCOME (LOSS) PER SHARE - Net income (loss) per share is generally
computed by dividing net income (loss) applicable to common shareholders by the
weighted average shares of common stock outstanding during the applicable period
(7,032,435 shares and 4,805,358 shares for the nine months ended September 30,
1996 and 1995, respectively; and 9,351,790 shares and 5,454,012 shares for the
three months ended September 30, 1996 and 1995, respectively). Common stock
equivalents have been included in the computation using the modified treasury
stock method for those periods in which the Company reported net income;
however, they have been excluded from the computation in those periods in which
the Company reported losses as their effect would be anti-dilutive. The effect
on the computation of preferred stock, which was converted to common stock in
its entirety at various dates through August 2, 1996, is not material.
5
<PAGE>
(6) SALE OF COMMON STOCK - In May 1996, the Company completed the sale of
3,367,500 shares of common stock in an underwritten offering to the public at
$4.42 per share. An additional 82,500 shares of common stock were sold by the
underwriter on behalf of an unaffiliated selling shareholder. The sale of shares
by the Company resulted in net proceeds of $13,041,309, after expenses of
$1,831,816. Net proceeds from the offering are being used for sales and
marketing of the Company's healthcare information technology products and
services, product development, payment of capital lease obligations, and working
capital. As part of the transaction, the Company issued warrants to purchase
300,000 shares of common stock to the underwriter, which are exercisable for
five years at a price of $5.63 per share.
(7) COMPENSATORY STOCK OPTIONS AND WARRANTS - In May 1996, the Company signed an
Electronic Commerce and Healthcare Information Licensing Agreement with
Personalized Programming, Inc. ("PPI"). The agreement requires the Company to
provide PPI with a "software developer's toolbox" to enable PPI to integrate the
Company's products and services into PPI's existing prescription module in its
physician practice management software, The Medical Manager. The Medical Manager
software is presently used by over 110,000 physicians in 22,000 offices
throughout the United States. The Company will share in revenues paid to PPI,
and PPI will be entitled to a portion of all defined transaction fee revenue
derived from the Company's prescription network services. As part of the
agreement, the Company granted a five-year warrant to PPI for the purchase of
150,000 shares of common stock for $3.50 per share. The compensatory value of
this warrant, as well as a warrant for 37,500 shares exercisable at $4.17 per
share issued in connection with a license agreement with Blue Cross and Blue
Shield of Massachusetts, Inc. ("BCBSM") (see Note 8 below), has been computed
using the Black-Scholes model, and has been charged to expense in the second
quarter of 1996 in the amount of $247,834.
(8) LICENSE FEES - In February 1996, the Company, Bergen Brunswig Drug Company
and IntePlex, Inc. (collectively, "Bergen"), signed a strategic marketing
agreement whereby Bergen paid a one-time, non-refundable fee of $1,000,000 for a
non-exclusive license to market certain of the Company's products (as defined in
the agreement) throughout the U.S. The Company will pay Bergen from 10% to 30%
of net sales (as defined) earned from the sale of these products, depending on
the total annual volume of sales, including certain sales of the defined
products not resulting from Bergen referrals. The $1,000,000 fee and related
incidental costs were recognized in the first quarter of 1996. Bergen Brunswig
Drug Company and IntePlex, Inc. are wholly-owned subsidiaries of Bergen Brunswig
Corporation, a supplier of pharmaceutical products with reported 1995 revenues
of $8.4 billion.
In March 1996, the Company entered into a license agreement with BCBSM,
a large health insurance provider based in Boston. Under this agreement, BCBSM
agreed to pay a one-time license fee of $204,000 in exchange for the right to
license ProxyScript and ProxyCom to physicians exclusively in five New England
states, and on a non-exclusive basis in one state, for up to two years. Of this
license fee, the Company recognized $189,000 as revenue in the first quarter of
1996, and $10,500 in the third quarter of 1996, based on the portion of the
total fee earned each period.
6
<PAGE>
(9) SALE OF ASSETS AND SALE OF SUBSIDIARY
(a) SALE OF ASSETS - In March 1995, the Company sold to Eckerd
Corporation ("Eckerd") certain, but not all, of the assets related to the
Company's HMO prescription drug dispensing operations. A portion of the purchase
price (up to $2,200,000) was contingent on the amount of prescription business
retained by Eckerd through September 30, 1996. Accordingly, the Company
initially recorded a loss on the sale, and recognized additional income as
prescription data was provided by Eckerd. Ultimately, the final purchase price
paid by Eckerd was $4,830,387, and the Company recognized a cumulative gain on
the sale of approximately $254,000. Net sales related to these prescription drug
dispensing operations were $-0- for the three and nine months ended September
30, 1996; and approximately $-0- and $3,404,000 for the three and nine months
ended September 30, 1995.
(b) SALE OF SUBSIDIARY - On September 29, 1995, the Company sold to
National Health Care Affiliates, Inc. and an affiliate thereof (collectively
"NHCA") all of the outstanding common stock of its wholly-owned subsidiary
ProxyFusion, Inc. for $1,542,029. ProxyFusion, Inc. provides home infusion
therapy services, including pharmacy and nursing services, primarily to HMO
patients. A gain on this sale of $669,664 was recorded in September 1995. Net
sales related to this operation were $-0- in the three and nine months ended
September 30, 1996; and approximately $596,000 and $1,936,000 for the three and
nine months ended September 30, 1995.
Pro forma data reflecting the results of operations as if both the sale
of assets to Eckerd and the sale of the subsidiary to NHCA had occurred as of
January 1, 1995 is as follows. Due to revenues and costs subsequent to these
dispositions from the marketing and development of the Company's healthcare
information technology products and services, amongst other factors, such pro
forma data may not be indicative of future results of operations.
<TABLE>
<CAPTION>
PRO FORMA - PRO FORMA -
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1995
------------------ ------------------
<S> <C> <C>
Net sales $ 1,795,000 534,000
------------ ---------
Costs and expenses:
Cost of sales 1,225,000 354,000
Selling, general and adminis-
trative expenses 2,242,000 918,000
------------ ---------
3,467,000 1,272,000
------------ ---------
Operating loss (1,672,000) (738,000)
Other income (expense):
Gain (loss) on sale of assets 7,000 (10,000)
Interest, net (82,000) (20,000)
------------ ---------
Net loss $ (1,747,000) (768,000)
============ =========
Net loss per share of common stock $ (.37) (.17)
============ =========
</TABLE>
7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
From inception until 1995, the Company's business was principally
related to the dispensing of prescription drugs through a variety of methods of
delivery, including retail and institutional pharmacies and its home infusion
therapy subsidiary. In the first quarter of 1995, management determined that the
Company's retail pharmacy business was undesirable, primarily due to the need
for substantial additional capital required to achieve the economies of scale
required for profitable operations, and decided to shift the emphasis of the
Company's business. As part of the retail pharmacy operations, the Company
provided at no charge to its customers certain of its healthcare information
technology products and services, which were favorably received. Management also
recognized a need for these products and services in the marketplace.
Consequently, the Company elected to pursue the commercialization of its
healthcare information technology products and services. In March 1995, the
Company sold its retail pharmacy operations to Eckerd, and in September 1995 the
Company sold its home infusion subsidiary to NHCA. These sales enabled the
Company to pay off substantial debt to a major drug supplier and to raise cash
needed for the further development and commercialization of its new products and
services. Through December 31, 1995, revenues from the Company's healthcare
information technology products and services were not material.
The Company also owns and operates ProxyCare, Inc. ("ProxyCare"), its
institutional pharmacy subsidiary which dispenses prescription drugs to patients
in long-term care facilities; however, the Company is considering whether
ProxyCare fits within its long-term business plan. There are no understandings,
commitments or agreements at the date of this Form 10-QSB for the sale of
ProxyCare.
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996, COMPARED TO THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1995
NET SALES. Net sales for the three months ended September 30, 1996
decreased by $850,363, or 75%, to $280,159 from net sales of $1,130,522 for the
three months ended September 30, 1995. Net sales for the nine months ended
September 30, 1996 decreased by $5,045,552, or 71%, to $2,089,489 from net sales
of $7,135,041 for the nine months ended September 30, 1995. These decreases were
primarily attributable to the Eckerd and NHCA dispositions which occurred in
1995. The combined net sales of these operations comprised 53% and 75% of the
Company's net sales in the three and nine months ended September 30, 1996,
respectively. After eliminating the sales represented by these operations which
were sold, net sales "as adjusted" for the three months ended September 30, 1996
decreased $253,856, or 48%, to $280,159 compared to net sales of $534,015 in the
1995 quarter. This decrease was primarily due to a decline in the net sales of
ProxyCare for the 1996 quarter of $267,915 versus the same quarter in 1995. Net
sales for the nine months ended September 30, 1996 which were not attributable
to the
8
<PAGE>
operations sold increased $294,332, or 16%, to $2,089,489 compared to net
sales of $1,795,157 in the 1995 period. This increase was primarily due to the
net effect of two factors. First, the Company recognized income totaling
$1,204,000 from two one-time license fees in the 1996 period (Bergen and BCBSM),
whereas no license fee income was received in the 1995 period. Second, sales by
the Company's remaining drug dispensing operations, ProxyCare, decreased
$938,019, or 53%, to $821,052 for the nine months ended September 30, 1996, as
compared to net sales of $1,759,071 for the nine months ended September 30,
1995. This decrease was due primarily to the loss of business from several
customers in the first quarter of 1996. The Company believes that price
fluctuations are not a significant factor affecting ProxyCare's sales because of
contractual fixed pricing arrangements with many customers.
GROSS PROFIT MARGIN. Gross profit margin for the three months ended
September 30, 1996 of 37% was comparable to a gross profit margin of 38% for the
three months ended September 30, 1995. Gross profit margin for the nine months
ended September 30, 1996 was 70% compared to a gross profit margin of 32% for
the nine months ended September 30, 1995. This increase is due to the favorable
impact of the one-time license fee revenues received in the first quarter of
1996 from Bergen and BCBSM.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months ended September 30, 1996 increased
by $349,656, or 31%, to $1,466,061 from selling, general and administrative
expenses of $1,116,405 for the three months ended September 30, 1995. Selling,
general and administrative expenses for the nine months ended September 30, 1996
decreased by $406,552, or 10%, to $3,803,586 from selling, general and
administrative expenses of $4,210,138 for the nine months ended September 30,
1995. However, after deducting selling, general and administrative expenses
related to the operations sold to Eckerd and NHCA, selling, general and
administrative expenses "as adjusted" in the three and nine month periods ended
September 30, 1996 increased by 60% and 70%, respectively. These increases are
the net effect of two factors. First, selling, general and administrative
expenses for ProxyCare decreased in the nine months ended September 30, 1996 by
approximately 47% from the 1995 levels primarily due to cost control measures
instituted after the loss of certain customers in 1996. As a result of these
measures, ProxyCare's selling, general and administrative expenses as a
percentage of sales was maintained at approximately 33% of net sales in the nine
months ended September 30, 1996, compared to 29% in the 1995 period. Secondly,
other selling, general and administrative expenses for the Company's other
recurring operations, as adjusted, increased by $1,801,028, or 104%, to
$3,529,011 in the nine months ended September 30, 1996, compared to $1,727,983
for the nine months ended September 30, 1995, primarily due to the Company's
efforts to develop and market its new products and services. This increase
primarily resulted from the following: (i) additional payroll and related costs
for sales, product development, customer service, clinical pharmacy service and
management personnel related to the Company's new products and services
($848,000); (ii) additional marketing expenses related to these products and
services, marketing materials, attendance at national and local trade shows,
expenses for pilot programs for potential customers and travel costs ($250,000);
(iii) additional depreciation, amortization and computer costs related to new
network equipment and capitalized software costs ($139,000); (iv) additional
consulting fees to
9
<PAGE>
various software and business consultants ($174,000); (v) charges related to
certain compensatory stock options and warrants issued in the second quarter of
1996, primarily related to the PPI licensing agreement, as described in Note 7
of Notes to Consolidated Financial Statements ($248,000), (vi) commissions
principally under the Bergen agreement ($58,000), (vii) additional stockholders'
expenses related to the Company's annual meeting, and relations with
institutional and other investors ($69,000), (viii) net increases in various
other selling, general and administrative expenses ($75,000), and (vi) a credit
of $60,000 for the amortization of a non-compete agreement.
INTEREST, NET. The Company earned net interest income for the three and
nine month periods ended September 30, 1996 of $179,691 and $257,734,
respectively, whereas the Company incurred net interest expense for the three
and nine month periods ended September 30, 1995 of $19,704 and $153,228,
respectively. This reflects the use of proceeds from the Eckerd and NHCA sales
in 1995, and proceeds from the sale of equity securities in 1995 and 1996, to
retire all indebtedness, resulting in the elimination of interest expense. In
the second quarter of 1996, the Company retired all interest-bearing
indebtedness, and all available cash has been invested in interest-bearing money
market accounts and U.S. Treasury Notes.
OTHER. The gain (loss) on sale of assets in the three and nine month
periods ended September 30, 1996 and 1995 relate to the sale of certain, but not
all, of the assets related to the Company's HMO prescription drug dispensing
operations. Initially, a loss on the sale was recorded in the first quarter of
1995, and contingent income was recorded in subsequent periods based on the
amount of prescription business retained by Eckerd through September 30, 1996.
Ultimately, the Company recognized a cumulative gain on the sale of
approximately $250,000. The gain on sale of subsidiary of $669,664 in the three
and nine month periods ended September 30, 1996 and 1995 relate to the sale of
ProxyFusion, Inc. See Note 9 of Notes to Consolidated Financial Statements for a
description of these transactions.
NET INCOME (LOSS). As a result of the foregoing, the Company recorded a
net loss of $1,175,969 for the three months ended September 30, 1996, as
compared to net income of $211,006 for the three months ended September 30,
1995, and a net loss of $1,079,648 for the nine months ended September 30, 1996
as compared to a net loss of $2,268,988 for the nine months ended September 30,
1995. The Company believes it is making progress in its strategic relationships
and other plans to increase the usage of its healthcare information technology
products and services. However, the Company anticipates that it will continue to
incur significant operating losses until it generates a substantial flow of
recurring revenues from these products and services. There can be no assurance
that the Company will realize a significant level of recurring revenues from the
sale of these products and services, or that revenues from these operations or
those of ProxyCare will ultimately result in significant reductions in losses or
achievement of profitability.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
In the nine month period ended September 30, 1996, cash used in
operating activities totaled $1,784,648. However, primarily as a result of the
sale of 3,367,500 shares of common stock in May 1996 which resulted in net
proceeds of $13,041,309, and the exercise of certain stock options and warrants
in the second and third quarters of 1996 which resulted in net proceeds of
$1,820,097, the Company had cash, cash equivalents and investments in U.S.
Treasury Notes totaling $12,920,004 as of September 30, 1996. These available
funds continue to be used for operations, for the further development and
marketing of the Company's new products and services, and for the acquisition of
equipment and other general corporate purposes. In addition to these cash
resources, the Company has received or expects to receive additional
non-operating cash as follows: (i) $928,906 was received in October 1996 as a
final payment from the Eckerd sale, and (ii) a final payment of $107,536 is
expected by the end of 1996 on the note receivable from the NHCA sale. In
addition, in August 1996 the Company completed the conversion of all of the
Series A Preferred Stock into common stock, which eliminates the payment of
future cash dividends on the Series A Preferred Stock.
In October 1996, the Company obtained a revolving bank line of credit
of up to $5,000,000. Borrowings, if any, are due on demand, collateralized by
U.S. Treasury Notes, and bear interest at the prime rate less 3/4%.
Accounts receivable turnover for ProxyCare was 4.8 times in 1996
compared to 5.8 times in 1995. Inventory turnover for ProxyCare was 4.1 times in
1996 compared to 6.9 times in 1995. Both of these indicators were adversely
affected by the decline in ProxyCare's 1996 sales as discussed above.
As mentioned above, the Company expects to continue to incur
significant negative net cash flow from operations until it begins receiving
substantial recurring revenues from the sale of its healthcare information
technology products and services. Furthermore, while the Company presently has
no material commitments for capital expenditures, management is committed to the
strategy of investing funds in further marketing and development of its products
and services, and may pursue acquisitions which are deemed to be in accordance
with its business strategy. With the cash resources received in the second and
third quarters of 1996, management believes that its cash resources are
sufficient to support its planned operations for at least the next 12 months,
although there can be no assurances that the Company's cash balances will be
sufficient.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
In September 1995, an administrative charge of sex discrimination was
filed against the Company before the Clearwater, Florida, Human Relations
Department by a former employee who had been terminated in connection with the
sale of the Company's retail pharmacy operations to Eckerd. The claimant alleged
sexual harassment by another former employee in violation of applicable federal,
state and local laws. On September 14, 1996, the claim was dismissed by the
Clearwater, Florida, Human Relations Department on the basis of insufficient
evidence. Claimant has 90 days after September 14, 1996 to file an action in
federal court. The Company has vigorously defended itself in this action, and if
necessary will continue to do so. The Company does not believe this action to be
material.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Company's annual meeting held on August 7, 1996, the shareholders
approved a resolution for the election of the following persons to serve on the
Board of Directors until the next annual meeting of the shareholders or until
the election and qualification of their respective successors. A total of
6,505,574 votes were cast for directors. Harold S. Blue, John P. Guinan, Travis
J. Leonardi, Bennett Marks and Bertram J. Polan each received 6,505,124 votes in
favor. Harry A. Gampel, Samuel X. Kaplan, Gary N. Mansfield and Eugene R. Terry
each received 6,505,574 votes in favor.
ITEM 5 - OTHER INFORMATION.
On August 7, 1996, the Board of Directors elected the following persons
to serve as officers of the Company: Harold S. Blue, Chairman of the Board and
Chief Executive Officer; John P. Guinan, President and Chief Operating Officer;
Bennett Marks, Executive Vice President - Finance and Chief Financial Officer;
Gary N. Mansfield, Executive Vice President Business Development; and Frank M.
Puthoff, Executive Vice President - Chief Legal Officer and Secretary.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
10.1 - Employment Agreement dated October 17, 1996 between Bruce
Roberson and ProxyMed, Inc.
10.2 - Employment Agreement dated October 29, 1996 between Jeffrey
Backerman and ProxyMed, Inc.
10.3 - Form of Indemnification Agreement for All Officers and
Directors
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the third quarter ended
September 30, 1996.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PROXYMED, INC.
(Registrant)
Date NOVEMBER 13, 1996 /s/ BENNETT MARKS
--------------------- -----------------------
Bennett Marks
Executive Vice President - Finance,
Chief Financial Officer and Principal
Accounting Officer
13
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 17th
day of October, 1996, by and between PROXYMED, INC. ("Company") and Bruce
Roberson, residing at 762 Edgewater Lane, Kennesaw, Georgia 30144 ("Employee").
Reference herein to the Company shall include any successors, if applicable.
WHEREAS, upon the terms and subject to the conditions of this Agreement,
the Company desires to employ the Employee and the Employee is willing to accept
employment by the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth hereinafter and other good and valuable considerations, the receipt
and sufficiency of which is hereby acknowledged, the Company and the Employee
agree as follows:
1. RECITALS. All of the above recitals are true and correct.
2. TERM. The term of this Agreement shall commence on the first business day
following the end of Employee's employment with his present employer (the
"Effective Date") and shall continue until the date prior to the third
anniversary of such first business day (hereafter the "Term); provided however,
if Employee has not commenced employment with the Company on or before November
11, 1996, this Agreement automatically will be void and unenforceable by the
parties. This Agreement and the employment of Employee hereunder shall be
automatically extended from year to year thereafter unless (x) terminated by the
Company by delivery of not less than 90 days' written notice to Employee prior
to the end of the Term or any extension thereof in which case the employment of
Employee shall terminate on the date specified for termination in such notice,
or (y) terminated by Employee by delivery of not less than 30 days' written
notice to the Company in which case the employment of Employee shall terminate
on the date which is 30 days following the date notice is received by the
Company or such later date as the Company and Employee may agree to.
3. PURPOSE; DUTIES; LOYALTY; AUTHORITY OF EMPLOYEE.
a) PURPOSE. During the Term, the Employee will be employed as Executive
Vice President-Sales and Marketing by the Company and shall render exclusive
service to the Company as an employee upon all the terms, provisions and
conditions hereinafter set forth.
b) DUTIES. Employee is and shall be employed by the Company on a full-time
exclusive basis. Employee shall perform the duties and have the authority and
responsibilities customarily accompanying that position, namely, responsibility
for sales and marketing of the entire current and future line of the Company's
products (including sales and marketing related press releases, trade shows and
all other sales and marketing initiatives), and building a sales and marketing
organization.
c) LOYALTY. During the Term, Employee shall devote the necessary time
required for his employment position and shall give his best efforts to the
business of the Company and to the performance of the duties and obligations of
Employee described in this Agreement. Employee shall not, directly or
indirectly, alone, or as a partner, officer, director or shareholder of any
other institution, be engaged in any other commercial activities whatsoever, or
continue or assume any other corporate affiliations without the prior written
consent of the Company, except for (a) passive investments, and (b) minimal time
utilized for business activities that do not compete with the business of the
Company or its subsidiaries. No provision of this Agreement shall apply to NIH
Research, a Company owned and operated by the wife of Employee.
<PAGE>
d) AUTHORITY OF EMPLOYEE. Subject to the Articles and Bylaws of the
Company, Employee shall have the authority to accept orders binding upon the
Company and otherwise enter into binding agreements on behalf of the Company
appropriate to the Executive Vice President - Sales and Marketing position.
4. COMPENSATION AND EXPENSES.
a) SALARY. During the Term, in consideration for the services rendered by
the Employee under this Agreement, the Company shall pay the Employee $180,000
on an annual basis (the "Base Salary") in accordance with the Company's
customary payroll practices, and a $500 per month car allowance, subject to
federal and state taxes, if any.
b) BONUS. The employee may qualify to earn a Performance Bonus up to
$100,000 each year of the Term of the Agreement. Employee shall receive $25,000
guaranteed on January 31, 1997, and $25,000 guaranteed on April 30, 1997.
Employee may earn an additional $50,000 bonus for 1997 based upon Employee
achieving reasonable performance goals to be negotiated and agreed upon in
writing no later than January 15, 1997. Achievement of the performance goals and
payment of the additional $50,000 or any prorata amount shall be certified by
the Company's Chief Financial Officer and payable on February 15, 1998. Should
Employee be involuntarily terminated, whether with or without cause, Employee
shall be entitled to receive as of the Termination Date that prorated portion of
his performance bonus, if any, that Employee had acheived on a partial year
annualized basis for the year in which he was terminated. For subsequent fiscal
years, the performance criteria shall be established upon mutual agreement of
the parties to be negotiated in good faith, subject to review and approval of
the Company's Compensation Committee or the Board of Directors.
c) ADDITIONAL COMPENSATION. During the Term, as a further incentive and
inducement to the Executive to accept employment by the Company and to devote
his best efforts to the business and affairs of the Company, the Employee shall
be entitled to such bonuses that may be awarded from time to time by the Board
of Directors of the Company and to participate in any stock option or bonus
plans which the Company may now have or in the future develop, at the
appropriate level of participation as the three most senior executives of the
Company.
d) RELOCATION. The Company shall pay Employee all reasonable, necessary
and actual costs for Employee's relocation, including actual moving expenses,
travel expenses for Employee and Employee's spouse to look for housing, rental
expenses in Florida until Employee's relocation, broker's commissions on the
sale of Employee's house, closing costs, including attorneys fees and points and
associated costs, as well as grossing up any such expenses taxable to Employee.
However, Employee agrees that in no event shall Company be obligated to pay
Employee for all relocation costs, including any gross up, more than $57,500. In
addition, the Company shall reimburse Employee for commuting expenses from
Atlanta to Florida until Employee's home sells. All such expenses shall be
submitted to the Company for its approval.
e) OPTIONS. Employee will receive a stock-option agreement for a five (5)
year term to purchase up to 100,000 shares of the Company's common stock at its
fair market value defined as mean of the high and low prices at which common
stock is reported to have traded on the NASDAQ System at the close of business
on the Effective Date of this Agreement. The options will vest over a three year
period as follows: 25% upon Employee's execution of this Agreement; 37% upon the
first anniversary of Employee's employment; and 38% on the second anniversary of
Employee's employment. The options will be issued as non-qualified options under
and in accordance with a new stock option plan. The Company agrees that such new
stock option plan shall be effective and, if Company so elects, ratified by the
Company's shareholders, no later than September 30, 1997. Company agrees to
exercise its best efforts to effect a new stock option plan by December 31,
1996. If Company fails to meet these time
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<PAGE>
tables or if shareholders refuse to ratify any proposed plan, then Employee may
elect to terminate his employment and such termination shall be deemed to be a
termination without cause in accordance with Section 6a) and 6c) of this
Agreement, except that the balance of compensation payable pursuant to this
Agreement shall be the amount payable under Section 6c)i) and the no-compete
provisions of Section 7 shall apply. Regarding the new stock option plan, the
Company agrees to recommend to the Compensation Committee that the Employee's
stock options be for a ten (10) year term instead of five (5), and to recommend
to the Compensation Committee and the Board of Directors to not require a six
month holding period for equity securities granted or awarded to an insider, but
would remain an optional form of exemption for acquisitions of securities from
an insider in accordance with recent changes to the Securities and Exchange
Commission Rule 16(b)(3), effective August 15, 1996.
f) EXPENSES. During the Term of this Agreement, the Company shall promptly
pay or reimburse the Employee for all reasonable business expenses actually
incurred or paid by the Employee in the performance of his services hereunder in
accordance with the policies and procedures of the Company for the reimbursement
of business expenses, including without limitation reasonable expenses relating
to travel, hotel and related costs associated with transportation to and from
Employee's principal residence to Company's principal corporate office, provided
that the Employee properly accounts therefor in accordance with the Company's
policies for 6 months after the Effective Date of the Agreement.
g) TAX WITHHOLDING. The Company shall have the right to deduct or withhold
from the compensation due Employee hereunder any and all sums required for
Federal income and social security taxes and all state or local taxes now
applicable or that may be enacted and become applicable in the future.
5. BENEFITS.
a) VACATION. Each year, Employee shall be entitled to such time out of the
office and away from his duties for vacation and attendance at business meetings
as the Company may deem reasonable and necessary; provided, however, Employee
shall be entitled to a minimum of 3 weeks of vacation leave with pay during any
calendar year. Vacation leave not taken during a calendar year does not accrue
unless approved in writing by the Company. Employee shall not be entitled to
receive any additional compensation from the Company on account of his failure
to take a vacation.
b) PARTICIPATION IN BENEFIT PLANS. Employee shall be entitled to
participate in whatever benefit plans, including health insurance that are
extended to all employees of the Company, on the same terms that such benefits
are so extended. Employee shall be entitled to family health insurance coverage
beginning 90 days from the commencement of employment from the Company's
insurance carrier (currently Humana HMO). If Employee elects the Humana PPO
option, any additional premium will be payable by Employee. The Company agrees
to reimburse Employee for actual expenses of COBRA coverage from Employee's
prior employer for the first 90 days of employment, but not to exceed the cost
of the Company's HMO coverage. The Company shall not be obligated to maintain
any special or additional plans for Employee's benefit. Employee shall also be
entitled to participate in benefit plans extended to the top three officers of
the Company.
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<PAGE>
6. TERMINATION.
a) TERMINATION WITHOUT CAUSE; DEATH; DISABILITY. The Company may, at its
sole option, terminate this Agreement without any cause or reason. In addition,
this Agreement will automatically terminate upon Employee's death or Disability
(as defined herein). Upon termination for Disability, Employee shall be entitled
to receive the amounts payable under Section 6 (c)(i) and (ii) (base salary for
9 months and prorated bonus) less any amounts received under any disability
insurance policy or plan. For purposes of this Agreement, "Disability" is
defined to mean the inability of Employee due to illness or physical or mental
infirmity (as determined by a physician selected by Employee and acceptable to
the Company) to perform his duties hereunder on a full-time basis for six
consecutive months with reasonable accommodation by the Company.
b) TERMINATION FOR CAUSE. The Company may terminate Employee's employment
hereunder for "cause". For purposes of this Agreement, the term "cause" shall be
limited to (i) a felony conviction, (ii) a final arbitration decision pursuant
to Section 8 k) of this Agreement that Employee has committed an act of fraud or
embezzlement against the Company or any of its subsidiaries, or (iii) the
willful and continued failure by Employee to substantially perform his duties to
the Company after receipt of written notice from the Company of any action or
inaction by Employee which is deemed by the Company to constitute a failure to
perform his duties hereunder and Employee has failed to correct the
unsatisfactory performance within thirty (30) days of such notice; (iv)
Employee's willful misconduct which is demonstrably and materially injurious to
the Company, monetarily or otherwise; (v) proven dishonesty affecting the
Company; (vi) excessive use of alcohol or illegal drugs interfering with the
performance of Employee's duties and the continuance after written warning;
(vii) any material breach by Employee of the covenants contained in Section 7 of
this Agreement regarding confidentiality. For purposes of this Paragraph, no
act, or failure to act, on Employee's part shall be considered "willful" unless
done, or omitted to be done, by Employee not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company. If at any time the Company shall determine that Employee has engaged in
one or more activities constituting "cause" for termination hereunder, the
Company shall provide Employee with an opportunity to appear before the Board of
Directors of the Company. If after this opportunity to be heard, the Board with
the advice of counsel determines that there is cause for termination, the
Company may terminate Employee's employment forthwith. In the event Employee is
terminated with cause, Section 7a) and 7b) will be of no force or effect.
c) PAYMENT UPON TERMINATION WITHOUT CAUSE. In the event of termination
without cause, other than by reason of Employee's death or Disability, and then
only on condition that Employee then executes a full and complete release of any
and all claims against the Company in a form satisfactory to the Company,
Employee (or his estate) shall be entitled to severance pay of (i) an amount
equal to Employee's Base Salary on the date of termination for 9 months
commencing on the date of termination payable in accordance with the Company's
customary payroll practices, plus (ii) a pro rata portion of any bonus
compensation which would have been paid to Employee under any bonus plan which
is adopted by the Company's Compensation Committee or Board of Directors in such
year if the Company had met the targeted goals to the date of termination, plus
(iii) the continuation of all benefit plans (including, without limitation, all
insurance plans) for 9 months after termination, plus (iv) any remaining
unvested options shall vest.
If the Company defaults in the payment of any amounts owed hereunder
to Employee following written notice by Employee and fails to cure such default
within ten days from the date of such notice, Employee shall be entitled to
accelerate the entire amount due hereunder. The Company shall have the
opportunity to cure a monetary default one time after which time, if another
default occurs, Employee shall be entitled to accelerate the entire amount due
hereunder upon written notice by Employee without affording the Company an
opportunity to cure. Upon termination of employment,
4
<PAGE>
Employee shall use his best efforts in good faith to find new employment
appropriate (in his good faith judgment) to his experience and stature in the
industry.
d) RETURN OF COMPANY PROPERTY. Upon notice of termination by the Company
or resignation by Employee, Employee shall immediately return to the Company all
property of the Company in Employee's possession, including Confidential
Information (as defined below). Employee acknowledges that the Company may
withhold any compensation owed to Employee hereunder until all such property is
returned.
7. COVENANTS OF EMPLOYEE.
a) Employee agrees that during the Term and for a period of time equal to
two years following a termination of employment for any reason, he will not,
directly or indirectly, engage, assist or participate in, whether as a director,
officer, executive, agent, manager, consultant, partner, owner or independent
contractor or other participant, in any Line of Business (as defined below)
which is the same as the Company or any of its subsidiaries as of the Effective
Date of this Agreement. Employee and Company agree that this clause is to
protect the interests of the Company while at the same time allowing the
Employee to pursue gainful employment with any other company Employee so
chooses, so long as such Employee does not, within the time period herein, work
in a line of business that directly competes with any Line of Business engaged
in by the Company or any of its subsidiaries as of the Effective Date of this
Agreement. Nothing contained herein shall prevent Employee from acquiring less
than 1% of any class of securities of any company that has any of its securities
listed on a national securities exchange or traded in the over-the-counter
market provided Employee remains a passive investor.
For the purposes of Section 7.a), Lines of Business shall be defined as
those businesses which Company is engaged in as of the Effective Date of this
Agreement as follows: (1) network services through ProxyNet(TM), the Company's
healthcare information network which enables physicians, managed care
organizations (MCO's) and pharmacies to transmit clinical pharmacy information
and to access the Company's clinical information databases; (2) the following
software products, including applications the Company is developing for nursing
home facilities and prisons, through which the Company provides its customers
with proprietary, on-line pharmacy management and drug utilization review
capabilities and access to ProxyNet: (a) ProxyScript(TM) provides pharmacy
management at the physician's office and automates the generation, processing
and management of prescriptions; (b) ProxyView(TM) enables MCO's, including
health maintenance organizations (HMO's) and physician practice management
groups (PMM's), to review prescriptions on-line as they are transmitted by
affiliated physicians; and (c) RxReceive(TM) permits pharmacies to receive
prescriptions electronically and (3) clinical information services which offer
prescriptions to various pharmacy related database, including the proprietary
drug database utilized as a drug reference and for information on generic drug
equivalents, a directory of all physicians and pharmacies participating in
ProxyNet, clinical interaction databases and MCO "formularies" published by the
Company. Through these products and services, physicians electronically (i)
perform allergy, disease and drug interaction screening, (ii) search for
alternative generic or less expensive drug choices, (iii) review prescriptions
against applicable MCO formularies, and/or (iv) transmit prescriptions
electronically to pharmacies.
b) Employee agrees that during the Term and for a period of two years
after the termination of this Agreement for any reason, he will not induce or
solicit any person employed or hereafter employed by the Company or any of its
subsidiaries to leave the employ of the Company or any of its subsidiaries.
Further, Employee agrees that for a period of two years after the termination of
this Agreement for any reason, he will not solicit, divert away, take away, or
attempt to take away any customer of the Company who was a customer while
Employee was with the Company. Regarding the latter sentence, Company and
Employee agree that Employee may contact and do business with those
5
<PAGE>
customers, however during the relevant time period, he may not solicit or sell
them any product or service in the Lines of Business that were the same as then
being offered by the Company or any of its subsidiaries as of the Effective Date
of this Agreement.
c) Employee agrees and acknowledges that the Confidential Information of
the Company and its subsidiaries (as hereinafter defined) is valuable, special
and unique to their business, that such business depends on such Confidential
Information, and that the Company wishes to protect such Confidential
Information by keeping it confidential for the use and benefit of the Company.
Based on the foregoing, Employee agrees to undertake the following obligations
with respect to such Confidential Information.
i) Employee agrees to keep any and all Confidential Information in
trust for the use and benefit of the Company.
ii) Employee agrees that, except as required by Employee's duties or
authorized in writing by the Company and its subsidiaries or required by
applicable law, he will not at any time during and for a period of 10 years
after the termination of his employment with the Company and its subsidiaries,
disclose, directly or indirectly, any Confidential Information of the Company or
any of its subsidiaries.
iii) Employee agrees to take all reasonable steps necessary, or
reasonably requested by the Company or its subsidiaries, to ensure that all
Confidential Information of the Company is kept confidential for the use and
benefit of the Company and its subsidiaries; and
iv) Employee agrees that, upon termination of his employment by the
Company or any of its subsidiaries or at any other time the Company may in
writing so request, he will promptly deliver to the Company all materials
constituting Confidential Information (including all copies thereof) that are in
the possession of or under the control of Employee. Employee further agrees
that, if requested by the Company to return any Confidential Information
pursuant to this Subsection (iv), he will not make or retain any copy or extract
from such materials.
For the purposes of this Section 7 (c), Confidential Information means
any and all information developed by or for the Company or any of its
subsidiaries of which Employee gained knowledge by reason of his employment by
the Company or any of its subsidiaries prior to the date hereof or his
employment under this Agreement that is not generally known in any industry in
which the Company or its subsidiaries is or may become engaged. Confidential
Information includes, but is not limited to, any and all information developed
by or for the Company concerning plans, marketing and sales methods, materials,
processes, business forms, procedures, devices used by the Company, its
subsidiaries, suppliers and customers with which the Company had dealt with
prior to Employee's termination of employment with the Company and its
subsidiaries, plans for development of new products, services and expansion into
new areas or markets, internal operations, and any trade secrets, proprietary
information of any type owned by the Company and its subsidiaries, together with
all written, graphic and other materials relating to all or any part of the
same. The Company will receive all materials, including, software programs,
source code, object code, specifications, documents, abstracts, and summaries
developed in connection with Employee's employment. Employee acknowledges that
the programs and documentation developed under by or in connection with
Employee's employment with the Company shall be the exclusive property of the
Company, and that the Company shall retain all right, title and interest in such
materials, including without limitation patent and copyright interests. Nothing
herein shall be construed as a license from the Company to make, use, sell or
copy any inventions, ideas, trade secrets, trademarks, copyrightable works, or
other intellectual property of the Company during the term of this Agreement or
subsequent to its termination.
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d) INJUNCTIVE RELIEF.
i) Employee acknowledges and agrees that the covenants and obligations
contained in this Section 7 relate to special, unique and extraordinary matters
and that a violation of any of the terms of this Section will cause the Company
irreparable injury for which adequate remedies at law are not available.
Therefore, Employee agrees that the Company shall be entitled to an injunction,
restraining order, or other equitable relief from any court of competent
jurisdiction, restraining the Employee from committing any violation of the
covenants and obligations set forth in this Section 7.
ii) The Company's rights and remedies under this Section are cumulative
and are in addition to any other rights and remedies the Company may have
pursuant to the specific provisions of this Agreement and at law or in equity.
In connection with the foregoing provisions of this Section, the Employee
represents that his other economic means and circumstances are such that such
provisions will not prevent him from providing for himself and his family on a
basis satisfactory to Employee.
8. MISCELLANEOUS.
a) ATTORNEY'S FEES. In the event a proceeding is brought to enforce or
interpret any part of this Agreement or the rights or obligations of any party
to this Agreement, each party shall pay its own fees and expenses.
b) SUCCESSORS AND ASSIGNS. This Agreement and the benefits hereunder are
personal to the Company and are not assignable or transferable by the Employee
without the written consent of the Company. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the Company and the
Employee and the Employee's heirs and legal representatives, and the Company's
successors and assigns.
c) GOVERNING LAW. This Agreement shall be construed in accordance with and
governed by the law of the State of Florida, without regard to the application
of principles of conflict of laws.
d) NOTICES. All notices and other communications required or permitted to
be given under this Agreement shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the parties to this Agreement addressed to the
Company at its then principal office, as notified to Employee, or to the
Employee at his address specified on page 1 of this Agreement, or to either
party hereto at such other address or addresses as he or it may from time to
time specify for such purposes in a notice similarly given. All notices and
communications shall be deemed to have been received on the date of delivery.
e) MODIFICATION; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is approved
by a duly authorized officer of the Company and is agreed to in a writing signed
by the Employee and such officer. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
f) COMPLETE UNDERSTANDING. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
this Agreement.
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h) VALIDITY. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
i) SEVERABILITY. The invalidity of any one or more of the words, phrases,
sentences, clauses or sections contained in this Agreement shall not affect the
enforceabilty of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and if any
one or more of the words, phrases, sentences, clauses or sections contained in
this Agreement shall be declared invalid, this Agreement shall be construed as
if such invalid word or words, phrase or phrases, sentence or sentences, clause
or clauses, or section or sections had not been inserted.
j) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
k) ARBITRATION. Except for disputes relating to Section 7 of this
Agreement, any and all disputes or controversies that shall arise under or in
connection with this Agreement or in any other way related to Employee's
employment by the Company, including termination of employment, shall be
submitted to a panel of three arbitrators under the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association then
in effect. The parties hereby acknowledge that the Federal Arbitration Act takes
precedence over any state arbitration statutes, rules and regulations. Each of
the arbitrators shall be qualified and experienced in employment related matters
with at least one arbitrator being a licensed attorney. The arbitrators must
base their determination solely on the terms and conditions of this Agreement
and the law in the State of Florida. The arbitrators shall have the authority to
award any remedies that a court may order or grant, except that they will have
no authority to award punitive damages or any other damages not measured by the
prevailing party's actual damages, and may not, in any event, make any ruling,
finding or award that does not conform to the terms and conditions of this
Agreement. Arbitration shall be held either in Broward County or Dade County,
Florida, and the parties hereby agree to accept service of process at the
address above written and in the personal jurisdiction and venue as set out
herein. Both parties expressly covenant and agree to be bound by the decision of
the arbitrators as the final determination of the matter in dispute. Judgment
upon the award rendered by the arbitrators may be entered into any court having
jurisdiction thereof. Any fees or costs of such arbitration shall be share
equally by the parties.
l) INDEMNIFICATION. In accordance with the Company's Articles and Bylaws,
the Company agrees to defend, indemnify and hold harmless the Employee
("Indemnified Party") for acts in his capacity as Employee to the fullest extent
permitted by Florida corporate law at the present time (or as such right of
indemnity may be increased in the future) including in particular and without
limitation with respect to the execution and delivery of this Agreement or
Employee's accepting employment with the Company. The Company agrees to
reimburse the Indemnified Party in advance for any costs of defending any action
or investigation (including reasonable attorneys' fees and expenses) regarding
Employee's performance of his duties under this Agreement, subject to an
undertaking from the Indemnified Party to repay the Company if the Indemnified
Party is determined not to be entitled to such indemnity by a court of competent
jurisdiction; provided that, the Company shall first have the opportunity to
defend Employee so long as counsel hired by the Company does not have a conflict
with representation of both the Company and the Employee and Employee approves
of such counsel. Notwithstanding the foregoing, the Company shall not be
required to advance expenses for the defense of Employee for any causes of
action that relate to activities of Employee that the Company in good faith
determines are outside of the scope of the duties required of Employee under
this Agreement and not related to the execution and delivery of this Agreement
or Employee's accepting employment with the Company, including without
limitation, for causes of action such as sexual harassment, torts, etc.
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m) Sections 2x) and y); 6a) and c); 7 and 8 shall survive the termination
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
COMPANY:
PROXYMED, INC., a
Florida corporation
By: ______________________________
Harold Blue, Chairman and
C.E.O.
EMPLOYEE:
______________________________
Bruce Roberson
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 29th
day of October, 1996, by and between PROXYMED, INC. ("Company") and JEFFREY
BACKERMAN, residing at 4021 South Wabash St. Denver, Colorado 80237,
("Employee").
WHEREAS, upon the terms and subject to the conditions of this Agreement,
the Company desires to employ the Employee and the Employee is willing to accept
employment by the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth hereinafter and other good and valuable considerations, the receipt
and sufficiency of which is hereby acknowledged, the Company and the Employee
agree as follows:
1. TERM.The term of this Agreement shall commence on November 11, l996 (the
"Effective Date") and shall continue until November 10, l999 (hereafter the
"Term), and shall be automatically extended from year to year thereafter unless
i) terminated by the Company by delivery of not less than ninety (90) days
written notice to Executive prior to the end of the initial Term or any
extension thereof, in which case the employment of Executive shall terminate on
the date specified for termination in such notice, or ii) terminated by
Executive by delivery of not less than ninety (90) days written notice to the
Company, in which case the employment of Executive shall terminate on the date
which is ninety (90) days following the date notice is received by the Company.
2. POSITION; DUTIES; LOYALTY.
a) POSITION. Employee will be employed as Executive Vice President-Network
Division by the Company and shall render exclusive service to the Company as an
employee pursuant to the terms, provisions and conditions hereinafter set forth.
b) DUTIES. Employee shall be employed by the Company on a full-time
exclusive basis. Employee shall perform the duties and have the authority and
responsibilities customarily accompanying responsibility for the Company's
Network Service Division, including operations, development, and profit and loss
accountability.
c) LOYALTY. Employee shall devote the full time required for his position
and shall give his best efforts to the business of the Company and to the
performance of the duties and obligations described in this Agreement. Employee
shall not, directly or indirectly, alone, or as a partner, officer, director or
shareholder of any other institution, be engaged in any other commercial
activities whatsoever, or continue or assume any other corporate affiliations
without the prior written consent of the Company, which consent shall not be
unreasonably withheld, except for (a) passive investments, and (b) minimal time
utilized for business activities that do not compete with the business of the
Company or its subsidiaries.
3. COMPENSATION AND EXPENSES.
a) SALARY. In consideration for the services rendered by the Employee
under this Agreement, the Company shall pay the Employee a monthly base salary
of $8,750 (the "Base Salary") in accordance with the Company's customary payroll
practices, plus a $500 per month car allowance, subject to federal and state
taxes, if any. It is anticipated that the Network Division shall be significant
source of revenues and income within the next year and by then Employee will
have been promoted to the office of Chief Operating Officer by his first
<PAGE>
anniversary. In such event, the Base Salary shall be increased to $10,416.67 per
month. Employee performance reviews (with or without a wage increase) will be
conducted annually.
b) BONUS. Employee shall receive a one time bonus of $25,000 guaranteed
and payable on the first anniversary of employment. In addition, Employee may
qualify to earn a Performance Bonus each calendar year of the Term of the
Agreement equal to 5% of the net pretax operating income of the Network Division
of the Company up to a maximum of $100,000 each calendar year. "Net pretax
operating income" of the Network Division shall be defined as follows: Net sales
less cost of sales and less direct and indirect operating costs pertaining to
the Network Division ( but excluding administrative payroll costs of the CEO,
President, CFO, CLO and their administrative staffs; accounting department
salaries; legal and accounting expenses; investor, public relations and
stockholder expenses; goodwill amortization, and director and officer liability
insurance premiums. It also does not include i) income or losses from
acquisitions resulting from an acquisition, but subsequent incremental income
and improvements to losses will be included, or ii) income from hardware sales.
Performance Bonuses for any calendar year, if any, shall be paid within 3
business days after the Company's independent auditors have certified the
Company's financial statements for the relevant calendar year and the Chief
Financial Officer has certified the pretax net income of the Network Division.
c) ADDITIONAL COMPENSATION. As a further incentive and inducement to the
Executive to accept employment by the Company and to devote his best efforts to
the business and affairs of the Company, the Employee shall be entitled to such
bonuses that may be awarded from time to time by the Compensation Committee or
the Board of Directors of the Company, and to participate in any stock option or
bonus plans which the Company may now have or in the future develop
d) RELOCATION. The Company shall pay Employee all reasonable, necessary
and actual costs for Employee's relocation, including actual moving expenses,
travel expenses for Employee and Employee's spouse to look for housing, rental
expenses in Florida until Employee's relocation, broker's commissions on the
sale of Employee's house, closing costs, including attorneys fees and points and
associated costs, as well as grossing up any such expenses taxable to Employee.
However, Employee agrees that in no event shall Company be obligated to pay
Employee for all such relocation costs, including any gross up, more than
$50,000.
e) OPTIONS. Employee will receive a stock-option agreement for a five
(5) year term to purchase up to 60,000 shares of the Company's common stock at
its fair market value defined as mean of the high and low prices at which common
stock is reported to have traded on the NASDAQ System at the close of business
on the Effective Date of this Agreement. The options will vest over a three year
period as follows: 12,000 on the first anniversary of Employee's employment,
24,000 on the second anniversary of Employee's employment, and 24,000 on the day
before the third anniversary of Employee's employment. The option will be as
granted as a non-qualified option in accordance with a new stock option plan
which the Company will exercise best efforts to extend the term to ten (10)
years and to have it effective by December 31, l996, and will contain a "change
of control " provision similar to the 1995 Stock Option Plan which provides that
upon a "change of control", as defined therein, any unvested options shall
immediately vest as provided for in such plan.
f) EXPENSES. Company shall promptly pay or reimburse the Employee for all
reasonable business expenses actually incurred or paid by the Employee in the
performance of his services hereunder in accordance with the policies and
procedures of the Company for the reimbursement of business expenses for its
senior level executives, provided that the Executive
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properly accounts therefor in accordance with the Company's policy. In addition,
the Company shall reimburse Employee for reasonable and actual expenses relating
to travel, hotel and related costs traveling to and from his residence to Ft.
Lauderdale for the first three months of employment, subject to approval of
Employee's expense reports. Further, if the Company's principal office is
relocated in the future more than 50 miles from Ft. Lauderdale, Company shall
reimburse Employee's relocation expenses in the same manner as Section 3.d)
above.
g) TAX WITHHOLDING. The Company shall have the right to deduct or withhold
from the compensation due Employee hereunder any and all sums required for
Federal income and social security taxes and all state or local taxes now
applicable or that may be enacted and become applicable in the future.
4. BENEFITS.
a) VACATION. Employee shall be entitled to three weeks of vacation with
pay in the first year of his employment, and thereafter. Vacation not taken
during a calendar year does not accrue unless approved in writing by the
Company. Employee shall not be entitled to receive any additional compensation
from the Company on account of his failure to take a vacation.
b) PARTICIPATION IN BENEFIT PLANS. Employee shall be entitled to
participate in whatever benefit plans, including health insurance, that are
extended to all executives of the Company, on the same terms that such benefits
are so extended. Employee shall be entitled to family health insurance coverage
beginning 90 days from the commencement of employment from the Company's
insurance carrier (currently Humana HMO). If Employee elects the Humana PPO
option, any additional premium will be payable by Employee. The Company agrees
to reimburse Employee for actual expenses of COBRA coverage from Employee's
prior employer for the first ninety (90) days of employment, but not to exceed
the cost of the Company's HMO coverage. The Company shall not be obligated to
maintain any special or additional plans for Employee's benefit. Employee shall
also be entitled to participate in benefit plans extended to other executives of
the Company.
5. TERMINATION.
a) TERMINATION WITHOUT CAUSE; DEATH; DISABILITY. In the event of
Employee's Disability (as defined herein), this Agreement may be terminated at
the election of the Company. Upon termination for death or Disability, Employee
or his/her beneficiary or estate or legal representative shall be entitled to
receive the amounts payable under Section 5 (c). For purposes of this Agreement,
"Disability" is defined to mean the inability of Employee due to illness or
physical or mental infirmity (as determined by a physician selected by Employee
and acceptable to the Company) to perform his duties hereunder on a full-time
basis for six consecutive months with reasonable accommodation by the Company.
Employee shall, upon request of the Company, furnish information and assistance
to the Company, and, in addition, upon reasonable request of the Company's Board
of Directors or its designees, shall make himself available to undertake
reasonable assignments consistent with the dignity, importance and scope of his
position and his physical and mental health.
b) TERMINATION FOR CAUSE. The Company may terminate Employee's employment
hereunder for "cause", effective immediately upon giving written notice thereof.
For purposes of this Agreement, the term "cause" shall be limited to (i)
conviction of a felony or of any crime involving fraud or misrepresentation;
(ii) the continued failure by Employee to substantially perform his duties to
the Company after receipt of written notice from the Company specifying any
action or inaction by Employee which is deemed by the Company to constitute a
failure to
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perform his duties hereunder with suggestions, where feasible, as to how
Employee may remedy such failure, and Employee has failed to correct the
unsatisfactory performance within thirty (30) days of such notice; (iii)
Employee's gross negligence or willful misconduct which is materially injurious
to the Company, monetarily or otherwise; (iv) proven dishonesty affecting the
Company; (v) excessive use of alcohol or illegal drugs interfering with the
performance of Employee's duties and the continuance thereof after written
warning; (vi) any material breach by Employee of the Company's policies or of
the covenants contained in Section 6 of this Agreement regarding
confidentiality. For purposes of the paragraph, no act or failure to act on
Employee's part shall be considered "wilful" unless done, or omitted to be done,
by Employee not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. If at any time the Company
shall determine that Employee has engaged in one or more activities constituting
"cause" for termination hereunder, Employee's employment shall be terminated for
cause. Company shall pay Employee his full Base Salary through the date of
termination at the then current rate (including any applicable bonus and accrued
vacation pay), and all stock options, if any, which have become vested and
exercisable on or before the date of termination, with such options remaining
exercisable for such period of time specified as in Employee's Option
Agreement(s). Company shall then have no further obligations to Employee.
Employee may give a written request to the Company within thirty (30) days after
such termination requesting an opportunity to be heard by the Board of Directors
of the Company. If Employee timely so requests such an opportunity to be heard,
such opportunity shall be made available to Employee within 30 days after such
written request. If the Board, with the advice of counsel, determines that there
was cause for termination, its determination shall be deemed to be conclusive
and final. In the event Employee is terminated for cause, Section 6.a) and 6.b)
will be of no force or effect. If it determines in its reasonable judgment that
there was not sufficient basis to terminate Employee for cause, Employee shall
be reinstated with all back pay and benefits restored.
c) PAYMENT UPON TERMINATION WITHOUT CAUSE. In the event of termination
without cause, Employee shall be given ninety (90) days prior written notice.
Employee shall execute a full and complete release of any and all claims against
the Company in a form satisfactory to the Company, in which event Employee (or
his estate) shall be entitled to severance pay of (i) an amount equal to
Employee's Base Salary on the date of termination for 6 months commencing on the
date of termination payable in accordance with the Company's customary payroll
practices (or if such termination occurs before April 30, l998, then twelve
months Base Salary), plus (ii) a pro rata portion of any bonus compensation
which would have been paid to Employee under any bonus plan which is adopted by
the Company's Compensation Committee or Board of Directors in such year if the
Company and Employee had met the targeted goals to the date of termination, plus
(iii) the continuation of all benefit (including, without limitation, all
insurance plans) for 6 months after termination (or if such termination occurs
before April 30,1998, then for twelve (12) months), plus (iv)any remaining
unvested options shall vest. A termination pursuant to Section 1 above shall not
be deemed to be a termination without cause under this Section or a termination
for Good Reason under section 5.f) or subject to this Section 5.c).
d) ACCELERATION. If the Company defaults in the payment of any amounts
owed hereunder to Employee following written notice by Employee and fails to
cure such default within ten days from the date of such notice, Employee shall
be entitled to accelerate the entire amount due hereunder. The Company shall
have the opportunity to cure a monetary default one time after which time, if
another default occurs, Employee shall be entitled to accelerate the
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entire amount due hereunder upon written notice by Employee without affording
the Company an opportunity to cure.
e) RETURN OF COMPANY PROPERTY. Upon notice of termination by the Company
or resignation by Employee, Employee shall immediately return to the Company all
property of the Company in Employee's possession, including Confidential
Information (as defined below). Employee acknowledges that the Company may
withhold any compensation and benefits owed to Employee hereunder until all such
property is returned.
f) EMPLOYEE TERMINATION FOR GOOD REASON. Employee may terminate this
Agreement for Good Reason by giving Company ninety (90) days prior written
notice. Good Reason means: a) the assignment of any duties inconsistent in any
respect with Employee's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities hereunder, or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose as isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of written notice from Employee;
b) any reduction of Employee's Base Salary or the failure by the Company to
provide Employee with an incentive compensation program and health and the
benefits hereunder no less favorable than the benefits Employee was entitled to
hereunder; and c) if Employee is not appointed Chief Operating Officer by
January 31, l998 or if not given the opportunity before then. In such event,
Employee's termination shall be treated as a termination without cause and he
shall be entitled to the payments enumerated in Section 5.c) above.
g) MITIGATION If Employee becomes entitled to compensation pursuant to
Section 5. c) or 5. f) above, Executive shall use reasonable efforts to seek
other employment; provided, however, that he shall not be required to accept a
position of less importance or dignity or of a substantially different character
than the position held as of the date of termination or a position that could
require Executive to engage in activity in violation of the non-competition
provisions of Section 6 hereof nor shall he be required to accept a position
outside South Florida. The amount of any cash compensation paid or payable from
any such employment shall be reported to the Company on a monthly basis and such
amount shall be credited against amounts otherwise payable by the Company to
Executive under Sections 5.c) or 5.f) above. Other than as provided in this
Section 5.g), Executive shall have no duty to mitigate the amount of any payment
provided for in this Agreement.
6. COVENANTS OF EMPLOYEE.
a) Employee agrees that during the Term and for one year following a
termination of employment for any reason, he will not, directly or indirectly,
engage, assist or participate in, whether as a director, officer, executive,
agent, manager, consultant to vendors/sellers (but may consult to end
users/purchasers), partner, owner or independent contractor or other
participant, in any line of business which is the same as the Company or any of
its subsidiaries are engaged in as of the termination of this Agreement without
the written consent of the Company. Employee and Company agree that this clause
is to protect the interests of the Company while at the same time allowing the
Employee to pursue gainful employment with any other company Employee so
chooses, so long as such Employee does not, within the relevant time period
herein, engage in any line of business that directly competes with any line of
business engaged in by the Company or any of its subsidiaries as of the date
Employee terminates his employment with Company. Nothing contained herein shall
prevent Employee from acquiring less than 1% of any class of securities of any
company that competes with the Company that has any of its securities listed on
a national securities exchange or traded in the over-the-counter market,
provided Employee remains a passive investor.
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b) Employee agrees that during the Term and for one year after the
termination of employment for any reason, he will not, directly or indirectly,
without the prior written consent of the Company, induce or solicit any person
employed or hereafter employed by the Company or any of its subsidiaries to
leave the employ of the Company or any of its subsidiaries or solicit,
recruit,hire or attempt to solicit, recruit or hire any person employed by the
Company. Further, Employee agrees that for a period of one year after the
termination of this Agreement, he will not, directly or indirectly, without the
prior written consent of the Company, solicit, divert away, take away, or
attempt to take away any customer of the Company who was a customer which
Employee had, alone or in conjunction with others, served, solicited or had
material contacts with during his employment with the Company. Regarding the
latter sentence, Company and Employee agree that Employee may contact and do
business with those customers, however during the relevant time period, he may
not solicit or sell them any product or service in the lines of business that
were the same as then being offered by the Company or any of its subsidiaries as
of the termination of employee's employment.
c) Employee agrees and acknowledges that the Confidential Information of
the Company and its subsidiaries (as hereinafter defined) is valuable, special
and unique to its business, that such business depends on such Confidential
Information, and that the Company wishes to protect such Confidential
Information by keeping it confidential for the use and benefit of the Company.
Based on the foregoing, Employee agrees to undertake the following obligations
with respect to such Confidential Information.
i) Employee agrees to keep any and all Confidential Information
in trust for the use and benefit of the Company.
ii) Employee agrees that, except as required by Employee's duties or
authorized in writing by the Company and its subsidiaries, he will not at any
time during and for a period of 10 years after the termination of his employment
with the Company and its subsidiaries, disclose, directly or indirectly, any
Confidential Information of the Company or any of its subsidiaries. except as
maybe required by applicable law or court order, in which case Employee shall
promptly notify Company so as to allow it to seek a protective order if it so
elects.
iii) Employee agrees to take all reasonable steps necessary, or
reasonably requested by the Company or its subsidiaries, to ensure that all
Confidential Information of the Company is kept confidential for the use and
benefit of the Company and its subsidiaries; and
iv) Employee agrees that, upon termination of his employment by the
Company or any of its subsidiaries or at any other time the Company may in
writing so request, he will promptly deliver to the Company all materials
constituting Confidential Information (including all copies thereof) that are in
the possession of or under the control of Employee. Employee further agrees
that, if requested by the Company to return any Confidential Information
pursuant to this Subsection (iv), he will not make or retain any copy or extract
from such materials.
For the purposes of this Section 6 (c), Confidential Information
means any and all information developed by or for the Company or any of its
subsidiaries of which Employee gained knowledge by reason of his employment by
the Company or any of its subsidiaries prior to the date hereof or during his
employment that is not generally known in any industry in which the Company or
its subsidiaries is or may become engaged, but does not apply to information
which is generally known to the public or the trade, unless such knowledge
results from an unauthorized disclosure by Employee. Confidential Information
includes, but is not limited to, any and all information developed by or for the
Company concerning plans, marketing and
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sales methods, materials, processes, business forms, procedures, devices used by
the Company, its subsidiaries, suppliers and customers with which the Company
had dealt with prior to Employee's termination of employment with the Company
and its subsidiaries, plans for development of new products, services and
expansion into new areas or markets, internal operations, and any trade secrets,
proprietary information of any type owned by the Company and its subsidiaries,
together with all written, graphic and other materials relating to all or any
part of the same. The Company will receive all materials, including, software
programs, source code, object code, specifications, documents, abstracts, and
summaries developed in connection with Employee's employment. Employee
acknowledges that the programs and documentation developed in connection with
Employee's employment with the Company shall be the exclusive property of the
Company, and that the Company shall retain all right, title and interest in such
materials, including without limitation patent and copyright interests. Nothing
herein shall be construed as a license from the Company to make, use, sell or
copy any inventions, ideas, trade secrets, trademarks, copyrightable works, or
other intellectual property of the Company during the term of this Agreement or
subsequent to its termination.
d) INJUNCTIVE RELIEF.
i) Employee acknowledges and agrees that the covenants and
obligations contained in this Section 6 relate to special, unique and
extraordinary matters and that a violation of any of the terms of this Section
will cause the Company irreparable injury for which adequate remedies at law are
not available. Therefore, Employee agrees that the Company shall be entitled
(without having to post a bond or other surety) to an injunction, restraining
order, or other equitable relief from any court of competent jurisdiction,
restraining the Employee from committing any violation of the covenants and
obligations set forth in this Section 6.
ii) The Company's rights and remedies under this Section are
cumulative and are in addition to any other rights and remedies the Company may
have pursuant to the specific provisions of this Agreement and at law or in
equity.
7. MISCELLANEOUS.
a) ATTORNEY'S FEES. In the event a proceeding is brought to enforce or
interpret any part of this Agreement or the rights or obligations of any party
to this Agreement, the non-prevailing party shall pay the prevailing party's
fees and expenses, including reasonable attorney fees..
b) SUCCESSORS AND ASSIGNS. This Agreement and the benefits hereunder are
personal to the Company and are not assignable or transferable by the Employee
without the written consent of the Company. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the Company and the
Employee and the Employee's heirs and legal representatives, and the Company's
successors and assigns.
c) GOVERNING LAW. This Agreement shall be construed in accordance with and
governed by the law of the State of Florida, without regard to the application
of principles of conflict of laws.
d) NOTICES. All notices and other communications required or permitted to
be given under this Agreement shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the parties to this Agreement addressed to the
Company at its then principal office, as notified to Employee, or to the
Employee at his address specified on page 1 of this Agreement, or to either
party
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hereto at such other address or addresses as he or it may from time to
time specify for such purposes in a notice similarly given. All notices and
communications shall be deemed to have been received on the date of delivery.
e) MODIFICATION; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is approved
by a duly authorized officer of the Company and is agreed to in a writing signed
by the Employee and such officer. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
f) COMPLETE UNDERSTANDING. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
this Agreement.
h) VALIDITY. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
i) SEVERABILITY. The invalidity of any one or more of the words, phrases,
sentences, clauses or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and if any
one or more of the words, phrases, sentences, clauses or sections contained in
this Agreement shall be declared invalid, this Agreement shall be construed as
if such invalid word or words, phrase or phrases, sentence or sentences, clause
or clauses, or section or sections had not been inserted.
j) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
k) ARBITRATION. Except for disputes relating to Section 7 of this
Agreement, any and all disputes or controversies that shall arise under or in
connection with this Agreement or in any other way related to Employee's
employment by the Company, including termination of employment, shall be
submitted to a panel of three arbitrators under the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association then
in effect. The parties hereby acknowledge that the Federal Arbitration Act takes
precedence over any state arbitration statutes, rules and regulations. Each of
the arbitrators shall be qualified and experienced in employment related matters
with at least one arbitrator being a licensed attorney. The arbitrators must
base their determination solely on the terms and conditions of this Agreement
and the law in the State of Florida. The arbitrators shall have the authority to
award any remedies that a court may order or grant, except that they will have
no authority to award punitive damages or any other damages not measured by the
prevailing party's actual damages, and may not, in any event, make any ruling,
finding or award that does not conform to the terms and conditions of this
Agreement. Arbitration shall be held either in Broward County or Dade County,
Florida, and the parties hereby agree to accept service of process at the
address above written and in the personal jurisdiction and venue as set out
herein. Both parties expressly covenant and agree to be bound by the decision of
the arbitrators as the final determination of the matter in dispute. Judgment
upon the award rendered by the arbitrators
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may be entered into any court having jurisdiction thereof. The non-prevailing
party shall pay the prevailing party's fees and costs, including reasonable
attorney fees.
l) INDEMNIFICATION. In accordance with the Company's Articles and Bylaws,
the Company agrees to defend, indemnify and hold harmless the Employee
("Indemnified Party") for acts in his capacity as Employee to the fullest extent
permitted by Florida corporate law at the present time (or as such right of
indemnity may be increased in the future) including in particular and without
limitation with respect to the execution and delivery of this Agreement or
Employee's accepting employment with the Company. The Company agrees to
reimburse the Indemnified Party in advance for any costs of defending any action
or investigation (including reasonable attorneys' fees and expenses) regarding
Employee's performance of his duties under this Agreement, subject to an
undertaking from the Indemnified Party to repay the Company if the Indemnified
Party is determined not to be entitled to such indemnity by a court of competent
jurisdiction; provided that, the Company shall first have the opportunity to
defend Employee so long as counsel hired by the Company does not have a conflict
with representation of both the Company and the Employee and Employee approves
of such counsel. Notwithstanding the foregoing, the Company shall not be
required to advance expenses for the defense of Employee for any causes of
action that relate to activities of Employee that the Company in good faith
determines are outside of the scope of the duties required of Employee under
this Agreement and not related to the execution and delivery of this Agreement
or Employee's accepting employment with the Company, including without
limitation, for causes of action such as sexual harassment, torts, etc.
m) Sections 5a) and c); 6 and 7 shall survive the termination of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
COMPANY:
PROXYMED, INC., EMPLOYEE
a Florida corporation
By:
- --------------------------------- ------------------------
Harold Blue, Chairman and C.E.O. Jeffrey Backerman
EXHIBIT 10.3
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made and entered into
as of ________________, 199___, by and between ProxyMed, Inc. a Florida
corporation (the ____ "Company") and ________________________________ (the
"Indemnitee").
RECITALS:
WHEREAS, the Board of Directors of the Company (the "Board of Directors")
has reviewed and analyzed the protection from liability available to Directors
and Officers of the Company and its subsidiaries under the Company's existing
corporate documents, applicable law and liability insurance; and
WHEREAS, the Board of Directors has determined that the risks of
litigation and possible liability for Directors and Officers arising out of the
performance of their duties have substantially increased, and that the
protection offered by the Company's existing corporate documents, applicable
law, and liability insurance is not sufficient to fully protect Directors and
Officers from liability; and
WHEREAS, the Board of Directors has determined that highly competent
persons will be difficult to attract and retain as Directors and/or Officers
unless the are adequately protected against liabilities incurred in performance
of their duties in such capacity; and
WHEREAS, the Board of Directors has determined that the use of
indemnification agreements will allow the Company to offer some protection from
liability to its Directors and Officers; and
WHEREAS, the Indemnitee is a Director and/or Officer of the Company; and
WHEREAS, Article VII of the Company Articles of Incorporation and
Article VII of the Company's Bylaws provide for indemnification of Directors
and Officers acting on behalf of the Company; and
<PAGE>
WHEREAS, SSC607.0850(7) of the Florida Business Corporation Act (the
"Statute") specifically provides that the indemnification provided by the
Statute is not exclusive;
NOW THEREFORE, in consideration of the Indemnitee's past and continued
services to the Company, the mutual agreements and covenants contained herein,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. INDEMNIFICATION. The Company agree to indemnify the Indemnitee to the
fullest extent now or hereafter permitted by applicable law (including, without
limitation, the indemnification permitted by the Statute) in the event that the
Indemnitee was or is made or is threatened to be made a party to or a witness in
any threatened, pending or completed action, suit, proceeding or appeal, whether
civil, criminal, administrative or investigative, by reason of the fact that the
Indemnitee was or is a Director and/or Officer of the Company or any of its
subsidiaries, both as to action in his official capacity and as to action in
another capacity while holding such directorship or office, where he acts or
acted in that capacity at the Company's request, against all reasonable expenses
(including attorneys' fees and disbursements) judgments, fines (including excise
taxes and penalties) and amounts paid in settlement actually and reasonably
incurred by the Indemnitee in connection with such action, suit, proceeding or
appeal. This Agreement is intended to cover all actions, suits, proceedings and
appeals arising out of or connected with the Indemnitee's service as a Director
and/or Officer which are currently pending or threatened or which arise in the
future, even if the Indemnitee is no longer a Director and/or Officer when such
action, suite, proceeding or appeal arises or is threatened.
2. ADVANCE PAYMENT OF EXPENSES. Expenses incurred by the Indemnitee in
connection with any action, suit, proceeding or appeal, as described herein,
shall be paid by the Company in advance of the final disposition of such action,
suit, proceeding or appeal within thirty (30) days of Company's receipt of any
invoice for reasonable and actual expenses incurred by Indemnitee;
<PAGE>
provided however, Indemnitee has within ten (10) days after the Company's
request, executed a written agreement satisfactory to the Company's counsel to
repay all such amounts it if is ultimately determined that he is not entitled to
be indemnified by the Company under applicable law. Notwithstanding the
foregoing, the Company shall not be required to advance expenses for the defense
of Indemnitee for any cause of action that relate to activities that the Company
in its good faith determines are outside the scope of the duties required of
Indemnitee under this Agreement, including without limitation, causes of action
such as sexual harassment, personal torts and the like.
3. CHANGES IN THE LAW; PARTIAL INDEMNIFICATION.
a. In the event of any changes after the date of this Agreement in any
applicable law, statute or rule (including judicial interpretation thereof)
which expand the right of the Company to indemnify its Directors and Officers,
the Indemnitee's rights and the Company's obligations under this Agreement shall
be expanded to include such changes in applicable law, statute or rule. In the
event of any changes in any applicable law, statute or rule (including judicial
interpretation thereof) which narrow the right of the Company to indemnify its
Directors and Officers, such changes, to the extent not otherwise required by
such law, statute or rule to be applied to this Agreement, shall have no effect
on this Agreement or the parties' rights and obligations hereunder.
b. The indemnification provided by this Agreement shall not be deemed
exclusive of any rights to which the Indemnitee may be entitled under the
Company's Articles of Incorporation, its Bylaws, any agreement, any vote of
shareholders or Directors, applicable law or otherwise, both as to action in the
Indemnitee's official capacity and as to action in another capacity while
holding such directorship or office, where he acts or acted in that capacity at
the Company's request.
<PAGE>
c. If the Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the expenses, judgments,
fines or penalties actually or reasonable incurred by the Indemnitee in the
preparation, investigation defense, appeal or settlement of any civil or
criminal action, suit, proceeding or appeal, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee for the
portion of such expenses, judgments, fines or penalties to which the Indemnitee
is entitled.
4. CONTRIBUTION. If the indemnification provided in Paragraph 1 hereof may
not be paid to the Indemnitee under applicable law, then in any threatened,
pending or completed action, suit, proceeding or appeal in which the Company is
jointly liable with the Indemnitee, the Company shall contribute to the amount
of reasonable expenses (including attorneys' fees and disbursements), judgments,
fines (including expense taxes and penalties) and amounts paid in settlement
actually and reasonably incurred and paid or payable by the Indemnitee in such
proportion as is appropriate to reflect (a) the relative benefits received by
the Company on the one hand and the Indemnitee on the other hand from the
transaction from which such action, suit, proceeding or appeal arise, and (b)
the relative fault of the Company on the one hand and of the Indemnitee on the
other in connection with the events which resulted in such expenses, judgments,
fines or settlement amounts, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
Indemnitee on the other shall be determined by reference to, among other things,
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent the circumstances resulting in such expenses, judgments,
fines or settlement amounts. The Company agrees that it would not be just and
equitable if contribution pursuant to this Paragraph 4 were determined by pro
rata allocation or any other method of allocation which does not take account of
the foregoing equitable considerations.
5. EXCLUSIONS.
<PAGE>
a. The Company shall not be liable to make any payment hereunder (whether
in the nature of indemnification or contribution) to the extent payment is
actually made to the Indemnitee under an insurance policy (an "Insurance
Policy") or any other method outside of this Agreement. Before payment is
reasonable expended to be made under an Insurance Policy or such other method,
if the Indemnitee is required to pay any amount that the Company would otherwise
be obligated to pay except for the exclusion in this Subparagraph (a), the
Company shall promptly advance the amount the Indemnitee is required to pay for
which the Company is liable hereunder. In the event that the Company makes any
advance to the Indemnitee under this Subparagraph (1), the Indemnitee shall
promptly execute an assignment, if a form satisfactory to the Company's counsel,
under which the funds the Indemnitee later receives under such Insurance Policy
or such other method are assigned to the Company in an amount not to exceed the
amount which the Company advanced pursuant to this Subparagraph (a).
b. The Company shall not be liable hereunder for any amounts paid in
settlement of a proceedings effected without its prior written consent, which
shall not be unreasonably withheld.
6. TERM. All obligations of the Company contained herein shall continue
during the period the Indemnitee is a Director and/or Officer of the Company and
shall continue thereafter (a) until both parties agree in writing to terminate
this Agreement, or (b) as long as the Indemnitee remains subject to any possible
claim or threatened, pending or completed action, suit, proceeding or appeal,
whether civil, criminal, administrative or investigative, arising out of the
Indemnitee's service as a Director or Officer or in any other capacity in which
he served at the Company's request while a Director of Officer.
7. ENFORCEMENT. In the event the Indemnitee is required to bring any action
to enforce rights or to collect funds due under this Agreement and is successful
in such action, the Company shall reimburse the Indemnitee for all of the
Indemnitee's reasonable expenses (including
<PAGE>
attorneys' fees and disbursements) in bringing and pursuing such action. The
burden of proving that indemnification or advances are not reasonable shall be
on the Company.
8. OBLIGATIONS OF THE INDEMNITEE.
a. Promptly after receipt by the Indemnitee of notice of the commencement
of any action, suit, proceeding or appeal in which the Indemnitee is made or is
threatened to be made a part or a witness, the Indemnitee shall notify the
Company in writing of the commencement of such action, suit, proceeding or
appeal, but the Indemnitee's failure to notify the Company shall not relieve the
Company from any obligation to indemnify or advance expenses to the Indemnitee
under this Agreement, except to the extent such delay in providing notice has
caused actual damages to the Company through prejudice to the Company's rights
or its ability to defend the action, suit, proceeding or appeal.
b. The Indemnitee shall reimburse the Company for all or an appropriate
portion of the expenses advanced to the Indemnitee pursuant to Paragraph 2
hereof if it is finally judicially adjudicated that the Indemnitee is not
entitled to be indemnified, or not entitled to be fully indemnified because of
indemnification in the particular circumstances is not permitted under
applicable law.
would impose on the Company any penalty, constraint, or obligation to hold
harmless or indemnify the Indemnitee pursuant to this Agreement without the
Company's prior written consent, which shall not be unreasonably withheld.
9. DEFENSE OF CLAIM.
a. Except as otherwise provided below, in the case of any action, suit,
proceeding or appeal commenced against the Indemnitee, the Company shall be
entitled to participate therein at its own expense and, to the extent that it
may wish, to assume the defense thereof. If the Company wishes to assume the
defense of any action, suit, proceeding or appeal hereunder, the Company
<PAGE>
must give written notice to the Indemnitee of such assumption of defense and of
its choice of counsel. Such choice of counsel must be approved in writing by the
Indemnitee in his sole discretion, which will not be unreasonably withheld,
before the Company's assumption of defense hereunder may proceed. After notice
from the Company to Indemnitee of its election to assume the defense of any
action, suit, proceeding or appeal and the Indemnitee's approval of the
Company's choice of counsel, the Company shall not be obligated to the
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by the Indemnitee in connection with the defense thereof other than
reasonable costs of investigation, travel and lodging expenses arising out of
the Indemnitee's participation in such action, suit, proceeding or appeal,
except as otherwise provided herein. The Indemnitee shall have the right to
employ the Indemnitee's own counsel in such action, suit, proceeding or appeal,
but the fees and expenses of such counsel incurred after notice from the Company
to the Indemnitee of its assumption of the defense thereof shall be a the
Indemnitee's expense (i) unless the employment of such counsel has been
requested by the Indemnitee and authorized in writing by the Company, or (ii)
unless the Company shall not have employed counsel to assume the defense of such
action, suit, proceeding or appeal, in which case the reasonable fees and
expenses of the Indemnitee's counsel shall be at the expense of the Company, or
(iii) unless counsel for the Indemnitee shall have concluded that there may be a
conflict or interest between the Company and the Indemnitee in the defense of
such action, suit, proceeding or appeal; and (iv) except for reasonable costs
and expenses for counsel for Indemnitee to monitor proceedings (provided,
however, that such counsel for will not appear as counsel of record in any such
proceeding).
b. In the event that counsel for the Indemnitee concludes that there may
be a conflict of interest between the Company and the Indemnitee in the defense
of an action, suit, proceeding or appeal, (i) the Company shall not have the
right to assume and direct the defense of such action, suit, proceeding or
appeal on behalf of the Indemnitee, and (ii) the Company shall indemnify the
<PAGE>
Indemnitee for all reasonable legal fees and other reasonable expenses, but the
Company shall not be liable for any settlement or negotiated disposition of such
action, suit, proceeding or appeal or any part thereof effected without the
written consent of the Company, which shall not be unreasonably withheld.
10. SEVERABILITY. In any provision of this Company shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11. NOTICES. Any notices or other communications required or desired
hereunder shall be written and shall be given by (a) certified mail, return
receipt requested, (b) overnight courier service, or (c) personal delivery. Such
notice or communication shall be deemed to be given upon receipt or on the date
of courier or personal delivery, as applicable, and shall be given at the
following addresses:
the Company: ProxyMed, Inc.
2501 Davie Road, Suite 230
Ft Lauderdale, Florida 33317
Attn: Frank M. Puthoff
Chief Legal Officer
Indemnitee: ______________________________
______________________________
______________________________
______________________________
or to such other address as either party may specify by written notice to the
other party.
12. MISCELLANEOUS.
a. This Agreement shall be construed and enforced in accordance with the
laws of the State of Florida.
b. This Agreement shall be binding upon the Indemnitee, his heirs,
personal representatives and permitted assigns, and upon the Company, its
successors and assigns. This Agreement shall inure to the benefit of the
Indemnitee, his heirs, personal representatives and permitted assigns,
<PAGE>
and to the benefit of the Company, its successors and assigns. No assignment of
this Agreement or of any duty or obligation hereunder shall be made by the
Indemnitee without the prior written consent of the Company, which shall not be
unreasonably withheld.
c. This Agreement supersedes any other oral or written agreements between
the Company and the Indemnitee which would restrict or lessen any of the rights
granted to the Indemnitee hereunder.
d. No amendment, modification, termination or claimed waiver of any of
the provisions hereof shall be valid unless in writing and signed by the party
or an authorized representative of the party against whom such modification is
sought to be enforced.
IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the date first above written.
PROXYMED, INC.
By:_______________________________________
Frank M. Puthoff, Executive Vice President
Chief Legal Officer and Secretary
[INDEMNITEE]
__________________________________________
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<PERIOD-START> JAN-01-1996
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