HEALTHGATE DATA CORP - 10-K/A - 20050429 - PART_III
Item 10. Directors and Executive Officers of the
Registrant
.
The following
table sets forth certain information regarding HealthGate’s directors and
executive officers as of March 31, 2004.
Name
Age
Position
William S. Reece
39
Chairman of the Board
of Directors, President and Chief Executive Officer
Julie Furrier
37
Chief Financial
Officer, Treasurer and Secretary
Paul L. Harman
48
Vice President,
Business Development
Jonathan J.G. Conibear
(2)
53
Director
Edson D. de Castro (1)
66
Director
David Friend (1)(3)
56
Director
Harry R. Jacobson, M.D
(2)(3)
57
Director
William G. Nelson, Ph.D.
(1)(3)
70
Director
(1)
Member of the Audit
Committee
(2)
Member of the
Compensation Committee
(3)
Member of the 2004
Nominating Committee
William S.
Reece
is a founder of HealthGate and has served as a member of HealthGate’s
board of directors and as President and Chief Executive Officer since the
Company’s inception in 1994. Mr. Reece has served as the Chairman of the Board
of Directors since December 1994. From 1988 to 1994, Mr. Reece served in
several positions, including Vice President, Sales and Marketing, Manager of
U.S. Sales and Marketing Representative at PaperChase, a medical literature
retrieval software company owned by Beth Israel Hospital in Boston.
Julie Furrier
was appointed as HealthGate’s
Chief Financial Officer, Secretary and Treasurer on February 7, 2005. Ms. Furrier joined HealthGate in November
2000 and served as HealthGate’s Chief Accounting Officer since 2001.
Prior to joining HealthGate, from 1993 to 2000, Ms. Furrier was employed in
several positions for Town & Country Corporation and subsidiaries,
including as Chief Financial Officer, Treasurer and Secretary of Town
& Country Fine Jewelry Group, Inc. from 1999 to 2000. From 1991 to
1992, Ms. Furrier was employed by The Boston Company Advisors, Inc. as a
financial reporting accountant and from 1989 to 1991 she was employed by
Edelstein & Company LLP as an auditor.
Ms. Furrier has been a licensed Certified Public Accountant since 1993.
Paul L.
Harman
joined HealthGate in 1997 and has held several titles and positions,
including Managing Director, HealthGate Europe Ltd. (1997 to 1999), Vice
President, activePress (1999 to 2000), Vice President, Information Technology
and Software Development (2000 to 2003),
and Vice President, Business Development (beginning in January 2004). Prior to joining HealthGate, Mr. Harman had
six years experience in the medical publishing industry, including serving as
Managing Director for Compact Information Ltd (UK) (owned by Blackwell Science Ltd.) from 1994
to 1997 and as International Sales Director for Adonis BV (Netherlands) from
1991 to 1994. Prior to that Mr. Harman
worked for Sony Corporation as a Corporate Planning Manager in Sony’s European
Headquarters (from 1990 to 1991) and for The Harper Group (from 1979 to 1990)
developing on-line software for the international freight forwarding and
logistics industry.
2
Jonathan
J. G. Conibear
has
served as a member of our Board of Directors since December 1996. In October 2001, Mr. Conibear became a
managing director of Taylor and Francis, a United Kingdom academic research
publisher. From 1986 to September 2001,
Mr. Conibear served as Executive Director of Blackwell Science, Ltd., the
largest publisher of medical societies’ journals and one of the world’s largest
medical publishers, with headquarters in Oxford, U.K. From 1985 to 1997, Mr. Conibear had other
responsibilities with Blackwell Science, including President, Blackwell Science
Inc., Blackwell’s U.S. subsidiary, Chair, Blackwell’s Asian subsidiary, and
Sales Director. From 1974 to 1985, Mr. Conibear served in various positions
with Oxford University Press.
Since May 2004 Mr. Conibear has been a director of
T&FInforma, a quoted U.K. publisher of specialist academic and professional
information.
Edson D.
de
Castro
has served as a member of our Board of Directors
since December 1994. Since 1997, Mr. de Castro has been a self-employed
business consultant. From 1992 to 1997, Mr. de Castro was Chairman of
Xenometrix, Inc., a biotechnology company. From 1989 to 1990, Mr. de Castro was
Chairman of the Board of Directors of Data General Corporation. From 1968 to
1989, Mr. de Castro served as President and Chief Executive Officer of Data
General. Mr. de Castro is a director of AVAX Technologies, Inc., a
biopharmaceutical company, and a director of VCampus Corp., a publisher of
educational courseware for Internet training programs. Mr. de Castro is also a
trustee of Boston University and a Member of the Clark University Graduate
School of Management Advisory Council. Mr. de Castro is also a Member of the Corporation
of Partners Healthcare System, Inc.
David
Friend
has served as a member of our Board of Directors since April
1995. He has been a Partner with the
venture capital firm Orchid Partners since 2002. From 1999 to 2002, Mr. Friend was president
and CEO of Sonexis, Inc., a telecommunications hardware company where he is
currently the Chairman of the Board.
From 1995 through December 1999, Mr. Friend served as Chairman of the
Board of Directors of FaxNet Corp., a provider of messaging services to the
telecommunications industry. During 1994 and 1995, Mr. Friend served as a
lecturer at Massachusetts Institute of Technology. From 1983 to 1994, Mr.
Friend served as Chairman of the Board of Directors of Pilot Software, an
international software firm. Mr. Friend has also been a director of GEAC
Computer Corporation, Limited since 2001.
Harry Jacobson, M. D.
became a director in October 2003.
Dr. Jacobson is Vice Chancellor for Health Affairs and Professor of
Medicine at Vanderbilt University Medical Center. In 1985, Dr. Jacobson joined the Vanderbilt
faculty as Professor of Medicine and Director of the Division of
Nephrology. From 1978 to 1985, Dr.
Jacobson was on the faculty of the University of Texas Southwestern Medical
Center at Dallas. From 1976 to 1978, he served as Chief of the Renal Section of
the U.S. Army Surgical Research Center at Brooke Army Medical Center. Dr. Jacobson is a member of numerous
professional organizations, including the Institute of Medicine of the
National Academy of Sciences, the American Society of Nephrology, the
International Society of Nephrology, the American Society of Clinical
Investigation, and the Association of American Physicians. He is a founder of
Renal Care Group and is a member of its Board of Directors. Dr. Jacobson is a
member of the Board of Directors of Kinetic Concepts, Inc., a global medical
technology company, and Ingram Industries, Inc., a wholesale book distributor,
and has also served as Chairman of EBM Solutions, Inc. since 1999.
William
G. Nelson, Ph.D.
has
served as a member of our Board of Directors since October 2000. Since 1990, Dr. Nelson has been the Chairman
of the Board of Directors of HarrisData Corp., a computer software
company. Since 1999, Dr. Nelson has also
been the Chairman of the Board of Directors of Repository Technologies Inc., a
computer software company. Dr. Nelson
has been a director of GEAC Computer Corporation, Limited since 1988,
additionally from June 1996 through October 2000, Dr. Nelson served as the
Chairman of the Board of Directors of GEAC, and from September 1996 until April
1999, he also served as its Chief Executive Officer and President. Since 1986, Dr. Nelson has also served as a
director of Manugistics Group, Inc., a provider of intelligent supply chain
optimization solutions for enterprises and evolving eBusiness trading networks.
Since 2002, Dr. Nelson has served as a director of Catalyst International Inc.,
a supplier of supply chain management software. Dr. Nelson is a Partner with Orchid
Partners, a venture capital firm. From
December 1991 to December 1994, Dr. Nelson was President and Chief Executive
Officer of Pilot Software, Inc.
3
Executive officers of
HealthGate are elected by the board of directors on an annual basis and serve
at the pleasure of the board of directors.
There are no family relationships among any of the Company’s executive
officers or directors.
The Company’s board of
directors is divided into three classes, each of whose members serve for
staggered three-year terms. One class of
directors will be elected each year at the annual meeting of stockholders for a
term of three years. Mr. de Castro, Mr.
Reece and Dr. Jacobson presently serve as Class III Directors whose term
expires at the annual meeting of stockholders in 2005; Mr. Friend and Dr.
Nelson presently serve as Class I Directors whose term expires at the annual
meeting of stockholders in 2006; and Mr. Conibear and Dr. Jacobson presently
serve as Class II Directors whose term expires at the annual meeting of
stockholders in 2007. All directors will
hold office until their successors have been duly elected and qualified.
Audit
Committee Financial Expert
The Board of Directors of
HealthGate has determined that Mr. de Castro, Chairman of the Audit Committee,
is an “audit committee financial expert,” as defined in the rules of the SEC,
and is “independent” as defined in Rule 4200 (a)(15) of NASD’s listing
standards.
Based solely on a review of
Forms 3, 4, and 5 furnished to HealthGate pursuant to Rule 16a-3(e) under the
Securities Exchange Act of 1934 (the “Exchange Act”) during and with respect to
its most recent fiscal year, as well as written representations furnished to HealthGate
by reporting persons, all persons subject to Section 16 of the Exchange Act
with respect to HealthGate have filed on a timely basis all reports required by
Section 16(a) of the Exchange Act during the most recent fiscal year.
Code
of Ethics
In December 2003, the Board
of Directors of HealthGate adopted a Code of Conduct and Ethics which is
applicable to all employees, including the chief executive officer, chief
financial officer, principal accounting officer and controller. HealthGate’s Code of Conduct and Ethics is
posted on the Company’s website at www.healthgate.com. HealthGate intends to describe any amendments
to its Code of Conduct and Ethics any waivers granted to HealthGate’s chief
executive officer, chief financial officer, principal accounting officer and
controller under the Code of Conduct and Ethics on the Company’s website at
www.healthgate.com.
4
ITEM
11. EXECUTIVE COMPENSATION
Summary Compensation
Table
The following table summarizes
the compensation paid to or earned by HealthGate’s Chief Executive Officer,
Chief Financial Officer and Vice President — Business Development, the most
highly compensated executive officers of HealthGate at December 31, 2004 (the “Named
Executive Officers”) whose total salary and bonus exceeded $100,000 for
services rendered to HealthGate in all capacities during the year ended
December 31, 2004.
ANNUAL COMPENSATION
LONG-TERM COMPENSATION
NAME AND PRINCIPAL POSITION
YEAR
SALARY ($)
BONUS ($)
SECURITIES UNDERLYING OPTIONS (#)
ALL OTHER COMPENSATION ($)(1)
William S. Reece
2004
210,000
—
173
President
and Chief Executive Officer
2003
213,750
150,000
178
2002
240,000
99,150
(2)
205
Veronica Zsolcsak (3)
2004
202,500
—
422
Chief
Financial Officer, Treasurer and Secretary
2003
205,313
120,000
430
2002
225,000
54,999
(2)
483
Paul Harman (4)
2004
165,000
17,090
(5)
207
Vice President - Business Development
(1)
Represents payments made by the Company in the respective years for
term life insurance premiums on behalf of the Named Executive Officers.
(2)
Options granted pursuant to
Option Exchange Offer. On November 27, 2001, HealthGate commenced an offer to
exchange certain options to purchase shares of its common stock upon the
terms and subject to the conditions described in the Offer to Exchange dated November
27, 2001, as amended (the “Option Exchange Offer”). Under the Option Exchange
Offer, employees, including executive officers, were given the opportunity to
elect to cancel outstanding stock options held by them in exchange for an
equal number of new options to be granted at a future date. Pursuant to the
Option Exchange Offer, on December 28, 2001, Mr. Reece elected to cancel options
for the purchase of 99,150 shares and Ms. Zsolcsak elected to cancel options
for the purchase of 54,999 shares. In accordance with the terms of the Option
Exchange Offer, HealthGate granted new options to purchase common stock in
exchange for such tendered options on July 8, 2002. The exercise price of the
new options was $0.25 per share (equal to the fair value of HealthGate’s
common stock as quoted on the Over-the-Counter Bulletin Board on the date of
grant).
(3)
Ms. Zsolcsak resigned as
Chief Financial Officer, Treasurer and Secretary on February 7, 2005.
(4)
Mr. Harman was appointed as
Vice Preseident of Business Development in January, 2004.
(5)
Represents commissions and
bonuses earned in 2004.
5
Option Grants in Year Ended
December 31, 2004
No individual grants of
stock options were made to any of the Named Executive Officers during the
fiscal year ending December 31, 2004.
Aggregated Option Exercises In
2004 And 2004 Year-End Option Values
The following table sets
forth certain information with respect to the number and value of option
exercises in 2004 and unexercised options held by the Named Executive Officers
on December 31, 2004.
Number of Securities Underlying Unexercised Options at Fiscal
Year-End (#)
Value of Unexercsed In-the-Money Options at Fiscal Year-End ($)(1)
Name
Shares
Acquired
on
Exercise (#)
Value
Realized ($)
Exercisable
Unexercisable
Exercisable
Unexercisable
William S. Reece
75,000
36,625
194,983
62,500
52,680
40,313
Veronica Zsolcsak
—
—
124,999
50,000
69,900
32,250
Paul Harman
—
—
113,333
41,667
62,375
26,875
(1)
The value of unexercised
in-the-money options represents the difference between $0.70 (the closing
price of HealthGate’s common stock as quoted on the Over-the-Counter Bulletin
Board on December 31, 2004, the last day of HealthGate’s fiscal year), and
the exercise price of the stock options, multiplied by the number of shares
subject to the stock options.
Compensation of Directors
Directors of HealthGate who
are also our employees did not receive additional compensation for serving as
Directors.
In 2004 each of HealthGate’s
non-employee Directors received $2,700 per quarterly Board of Directors’
meeting attended, $450 per Committee meeting attended, and $450 per monthly
Board of Directors’ conference call attended.
Directors are also reimbursed, upon request, for expenses incurred in
attending each Board of Directors’ meeting.
Additionally, as compensation for their services each
of HealthGate’s non-employee Directors is granted stock options under the
Company’s Stock Option Plan. The number of options issued to non-employee
Directors for their services is 11,666 per year (or 35,000 for the three-year
period). These options have an exercise
price equal to the Company’s share price on the date of grant, vest quarterly
in twelve equal installments based on continuing service as a director through
each applicable quarter and have a five year term for options granted prior to
2004 and a ten year term for options granted in or after January 2004.
Employment Contracts, Termination
of Employment, and Change-In-Control Arrangements
Under an employment
agreement dated October 1, 1995, HealthGate agreed to employ Mr. Reece as
Chairman of the Board, President and Chief Executive Officer of HealthGate for
a period of three years beginning on October 1, 1995, to be automatically
renewed on an annual basis, unless either party does not wish to extend the
employment agreement, in which case the agreement will terminate three years
from the applicable renewal date. Under the agreement, Mr. Reece’s minimum base
salary is subject to annual review by the Board of Directors. Mr. Reece is also
eligible to participate in any bonus programs HealthGate adopts. Mr. Reece’s
2004 annual base salary was $210,000.
Mr. Reece did not receive any bonuses under HealthGate’s 2004 Executive
Bonus Plan.
6
HealthGate may terminate Mr.
Reece’s employment for malfeasance, nonfeasance or breach of the employment
agreement, as determined by 75% of the Board of Directors. If HealthGate
terminates Mr. Reece’s employment for malfeasance, nonfeasance or breach of the
employment agreement, Mr. Reece will be entitled to receive a lump sum
severance payment equal to 12 months’ compensation at his then current base
salary, the amount of any bonus paid to him in the previous contract year, and
any accrued bonus through the date of termination, plus any benefits to which
he is entitled for 12 months following the date of termination. HealthGate may
also terminate Mr. Reece’s employment if Mr. Reece is convicted of a felony
involving HealthGate. If HealthGate terminates Mr. Reece’s employment for
conviction of a felony involving HealthGate, Mr. Reece will not be entitled to
any further compensation under the employment agreement, except as may be
required by applicable law.
In addition, Mr. Reece may
elect to terminate the employment agreement for good reason or following a
change in control of HealthGate. In the event Mr. Reece makes such an election
for good reason or as a result of a change in control, he will be entitled to a
lump sum severance payment equal to 12 months’ compensation at his then current
base salary, any accrued bonus through the date of election, plus any benefits
to which he is entitled for 12 months following the date of election.
HealthGate has agreed that
if it terminates the employment of certain employees, including Julie Furrier,
Chief Financial Officer, and Paul Harman, Vice President, Business Development,
without cause, the employee shall be entitled to severance payments comprising
the employee’s then current base salary and then current health care coverage
for six months from the date of termination.
On February 7, 2005 Veronica
Zsolcsak resigned as Chief Financial Officer, Treasurer and Secretary of HealthGate. Ms. Zsolcsak has agreed to be a part time
employee of HealthGate through August 5, 2005, with a significantly reduced
time commitment to HealthGate.
HealthGate has agreed to continue to pay Ms. Zsolcsak at her salary of
$208,575 during this six month transition period.
Compensation Committee Interlocks
and Insider Participation
None
of HealthGate’s executive officers serves as a member of the Board of Directors
or compensation committee of any entity that has one or more of its executive
officers serving as a member of the Company’s Board of Directors or
Compensation Committee. HealthGate’s Compensation Committee currently consists
of Mr. Conibear and Dr. Jacobson, neither of whom has ever been an officer or
employee of HealthGate.
ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets
forth information with respect to the beneficial ownership of HealthGate’s
Common Stock as of March 1, 2005 by: (a) each person who the Company knows owns
beneficially more than 5% of the Company’s Common Stock; (b) each of the
Company’s Directors; (c) each of the Named Executive Officers; and (d) all of
the Company’s Directors, nominees and executive officers as a group. Unless
otherwise indicated, the mailing address for each person and business entity
listed below is c/o HealthGate Data Corp., 25 Corporate Drive, Suite 310,
Burlington, MA 01803.
7
Beneficial Owner
Shares Beneficially Owned
Percent Beneficially Owned(1)
EBM Solutions(2)
1,085,381
18.4
%
William S. Reece(3)
831,535
14.4
%
Blackwell Science Ltd.(4)
673,990
12.1
%
Oxney Mead, Oxford
OX2 OEL, United Kingdom
Barry M. Manuel, M.D.(5)
395,993
7.1
%
65 Wellesley Road
Belmont, MA 02478
Harry Jacobson(6)
246,955
4.4
%
David Friend(7)
231,286
4.1
%
William G. Nelson, Ph.D.(8)
168,773
3.0
%
Veronica Zsolcsak(9)
144,999
2.5
%
Paul Harman(10)
134,883
2.4
%
Edson D. de Castro(11)
79,315
1.4
%
Jonathan J.G. Conibear(12)
30,833
*
Executive Officers and directors as a group (8 persons)(13)
1,868,529
30.1
%
*
Less than one percent of outstanding shares.
(1)
Percentage ownership is
based on 5,563,373 shares outstanding as of March 1, 2005. Shares of Common
Stock subject to options and warrants currently exercisable or exercisable
within 60 days of March 1, 2005 are deemed outstanding for the purpose of
computing the percentage ownership of the person holding such options but are
not deemed outstanding for computing the percentage ownership of any other
person. Unless otherwise indicated below, the persons and entities named in
the table have sole voting and sole investment power with respect to all
shares beneficially owned, subject to community property laws where
applicable.
(2)
Includes
333,333 shares of common stock issuable pursuant to a warrant granted to EBM
Solutions, Inc. in connection with HealthGate’s acquisition of certain assets
and liabilities of EBM Solutions, Inc. in October 2003.
(3)
Includes
219,983 shares of Common Stock issuable to Mr. Reece upon the exercise of
stock options.
(4)
Includes
88,759 shares owned by Blackwell Wissenschafts-Verlag GmbH, a wholly owned
subsidiary of Blackwell Science.
(5)
Includes
395,933 shares owned by Dr. Manuel, 105,760 shares held in trusts for which
Dr. Manuel serves as trustee for the benefit of his children and
grandchildren. Dr. Manuel disclaims beneficial ownership of the 105,760
shares held in trust for the benefit of his children and grandchildren.
(6)
Includes
4,000 shares held indirectly as the custodian for his children and
grandchildren. Dr. Jacobson disclaims beneficial ownership of such shares.
Also includes 115,700 shares owned by EBM Solutions, Inc. which are expected
to be distributed to Dr. Jacobson upon EBM Solutions, Inc.’s anticipated
liquidation and 51,282 shares of common stock issuable pursuant to a warrant
granted to EBM Solutions, Inc. Such warrant shares are expected to be
distributed to Dr. Jacobson upon EBM Solutions, Inc.’s anticipated
liquidation. Dr. Jacobson disclaims beneficial ownership of these shares.
Also includes 20,417 shares of Common Stock issuable to Dr. Jacobson upon
exercise of stock options
8
(7)
Includes 35,844 shares of
Common Stock issuable to Mr. Friend upon exercise of stock options.
(8)
Includes
19,998 shares of Common Stock issuable to Dr. Nelson upon exercise of stock
options.
(9)
Includes
144,999 shares of Common Stock issuable to Ms. Zsolcsak upon exercise of
stock options.
(10)
Includes
61,393 shares of Common Stock issuable to Mr. Harman upon exercise of stock
options.
(11)
Includes
35,844 shares of Common Stock issuable to Mr. de Castro upon exercise of
stock options.
(12)
Includes
30,833 shares of Common Stock issuable to Mr. Conibear upon exercise of stock
options.
(13)
Includes
437,687 shares of Common Stock issuable upon exercise of stock options, and
51,282 shares of common stock issuable upon exercise of stock warrants.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
None
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND
SERVICES.
The following table sets
forth invoiced and estimated fees incurred by HealthGate from its principal
accountant for the years ended December 31 2004 and 2003.
This
category consists of fees related to the acquisition of substantially all of
the assets and certain liabilities of EBM Solutions, Inc. including an
attempted audit in 2003.
In
April 2003, HealthGate’s Audit Committee adopted Pre-Approval Policies and
Procedures for Audit and Non-Audit Services.
Pursuant to these policies and procedures, the Audit Committee is to
annually review and pre-approve the independent audit firm’s year-end audit and
new fiscal year quarterly reviews as well as other known or anticipated audit
or non-audit services. During the course
of the year, the Audit Committee (or the Chairman of the Audit Committee,
provided he or she reports such approval at the next Audit Committee meeting)
may pre-approve additional non-audit services that have not been pre-approved
at the initial review.
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