SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Dynamic Healthcare Technologies, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),14a-6(i)(2)
or Item 22 (a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No:
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4) Date Filed:
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of DYNAMIC HEALTHCARE TECHNOLOGIES, INC.:
The Annual Meeting of the Shareholders of DYNAMIC HEALTHCARE
TECHNOLOGIES, INC., a Florida corporation, (the "Company" ) will
be held at the Sheraton North Orlando Hotel, 600 North Lake
Destiny Drive, Maitland, Florida 32751 on June 3, 1997, at 1:30 p.m.
local time, for the following purposes:
1. To elect seven (7) persons as directors for a term of one
year. The slate proposed by the Board of Directors is set forth
in the accompanying Proxy Statement.
2. To vote on the proposal of the Board of Directors that KPMG
Peat Marwick, LLP, independent public accountants, be engaged as
auditors for the Company for the fiscal year ending December 31,
1997.
3. To vote on the proposal of the Board of Directors to amend
the Articles of Incorporation to increase authorized shares of
common stock ("Common Stock") to a total of 40,000,000 shares.
4. To vote on the proposal of the Board of Directors to amend
the 1993 Incentive Stock Option Plan ("1993 ISO Plan") to
increase to a total of 1,500,000 shares of Common Stock issuable
pursuant to the terms set forth therein.
5. To vote on the proposal of the Board of Directors to amend
the Stock Warrant and Option Plan for Directors and Management
employees ("D & M Plan") to increase to a total of 650,000
shares of Common Stock issuable pursuant to the terms set forth
therein.
6. To vote on the proposal of the Board of Directors to amend
the Employee Stock Purchase Plan ("ESP Plan") to increase to a
total of 600,000 shares of Common Stock issuable pursuant to the
terms set forth therein.
7. To consider and transact any other business which may
properly come before the meeting or any adjournment thereof.
The Board of Directors has designated April 15, 1997, as the
record date for the determination of shareholders entitled to
notice of and to vote at such meeting or any adjournment
thereof. Only shareholders of record at the close of business
on April 15, 1997, will be entitled to notice of and to vote at
the meeting.
You are cordially invited to attend the meeting. Whether or
not you plan to attend, please mark, sign, date and mail the
enclosed proxy, which requires no postage if mailed in the
United States.
Your attention is called to the accompanying Proxy Statement.
By Order of the Board of Directors
/S/ PAUL S. GLOVER
Paul S. Glover
Vice President Finance and
Chief Financial Officer
Dynamic Healthcare Technologies, Inc.
101 Southhall Lane, Suite 210
Maitland, Florida 32751
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS JUNE 3, 1997
This Proxy Statement is furnished to shareholders of DYNAMIC
HEALTHCARE TECHNOLOGIES, INC., a Florida corporation, (the
"Company") in connection with the solicitation on behalf of the
Board of Directors of proxies for use at the Annual Meeting of
Shareholders to be held on June 3,1997, and at any adjournment
thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting of Shareholders.
The address of the principal executive office of the Company is
101 Southhall Lane, Suite 210, Maitland, Florida 32751. This
Proxy Statement and form of Proxy were mailed to shareholders of
the Company on approximately April 28, 1997.
SOLICITATION AND REVOCATION OF PROXIES
The costs and expenses of solicitation of proxies will be paid
by the Company. In addition to the use of mails, proxies may be
solicited by directors, officers and regular employees of the
Company personally or by facsimile machine, telegraph or
telephone.
Proxies in the form enclosed are solicited on behalf of the
Board of Directors. Any shareholder given a proxy in such form
may revoke it any time before it is voted at the meeting, by
executing a subsequent proxy or by notice to the Secretary of
the Company at the Company's principal address as set forth
above. Such proxies, if received in time for voting and not
revoked, will be voted at the annual meeting in accordance with
the specifications indicated thereon. If no instructions are
indicated, proxies will be voted (i) "FOR" the election of the
seven (7) persons named herein as nominees for election to the
Board of Directors; (ii) "FOR" proposals 2, 3, 4, 5 and 6; and
(iii) at the discretion of the proxy holders of record for any
other matter that may properly come before the meeting or any
adjournment thereof. The Board of Directors is not aware that
any matter other than those described in the Notice of Annual
Meeting of Shareholders to which this Proxy Statement is
appended will be presented for action at the meeting.
VOTING RIGHTS AND PROCEDURE
Only Common Stock of record at the close of business on April
15, 1997 ("Entitled Shareholders"), are entitled to execute
proxies or to vote at the annual meeting. As of March 31, 1997,
there were 17,064,853 shares of Common Stock outstanding. Each
holder of Common Stock is entitled to one vote for each share
held with respect to the matters mentioned in the foregoing
Notice of Annual Meeting of Shareholders and any other matters
that may properly come before the meeting, other than the
election of directors, in which shareholders may cumulate their
votes, (see "Election of Board of Directors"). A majority of
the outstanding shares are required to constitute a quorum at
the meeting.
PROPOSAL NUMBER ONE (1) - ELECTION OF BOARD OF DIRECTORS
Seven (7) Directors are to be elected at the annual meeting to
serve until the 1998 annual meeting of shareholders and until
their successors are elected and qualified. The Board of
Directors has no reason to believe that any of the nominees will
be unable to serve as a director. If, prior to the meeting, any
nominee ceases to be a candidate for election because the
nominee is unable to serve, or for good cause will not serve, it
is the intention of the individuals named as proxies to vote for
the election of such person or persons as the Board of Directors
may, in its discretion, recommend.
Shareholders have cumulative voting rights in connection with
the election of directors. Each Entitled Shareholder may cast a
number of votes equal to the number of shares of Common Stock
owned multiplied by the number of directors to be elected seven
(7). Those votes may be distributed among all the nominees
equally, or divided among any number of the nominees in such
proportion as the shareholder may desire. The seven (7)
nominees who receive the greatest number of votes will be
elected.
Unless authority is withheld in the proxy, the persons named in
the enclosed form of proxy will cast the votes of the proxied
shares to elect the seven nominees hereinafter named. These
shares may be voted cumulatively so that one or more of the
nominees may receive fewer votes than the other nominees (or no
votes at all), if such action is considered necessary or
desirable by the proxy holders. The Board of Directors
recommends a vote "FOR" election of the nominees listed below.
1
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
Nominee and Director Other
Principal Occupation Age Since Directorships Held
Jerry L. Carson 56 1993 None
Executive Vice President and
Chief Financial Officer
Evans Enterprises
Mitchel J. Laskey, C.P.A. 47 1994 Alliance Bank,
President and Chief Executive Officer a commercial bank
Dynamic Healthcare Technologies, Inc.
Thomas J. Martinson 47 1986 Interventional Innovations
President Corporation
Martinson & Company, Ltd.
Bret Maxwell 38 1996 None
Vice Chairman
First Analysis Corporation
David M. Pomerance 52 1991 First Mercantile National
President Bank, Inc.,
MMRI, Inc. a commercial bank
Daniel Raynor 37 1996 None
Managing Partner
The Argentum Group
Richard W. Truelick 56 1996 None
President
Truelick Associates
Jerry L. Carson has been a Director of the Company since
January 1993. Mr. Carson has been executive vice president and
chief financial officer of Evans Enterprises, a property
management and real estate development firm in Bedford, New
Hampshire, since 1990. Mr. Carson was executive vice president
and chief financial officer of Playboy Enterprises, Inc. from
1988 to 1990 and held the positions of vice president of
corporate development and treasurer of Baxter International from
1980 to 1986.
Mitchel J. Laskey has been Chief Executive Officer since May
1996, President, Chief Operating Officer and Treasurer since
August 1994 and a director since December 1994. From 1992 to
1994, Mr. Laskey was chairman and chief executive officer of
Dynamic Technical Resources, Inc., which was acquired by the
Company in August 1994. From 1985 to 1991, Mr. Laskey was a
principal or managing partner in various entrepreneurial
investments and also acted as a volunteer officer for a
not-for-profit social agency. From 1983 through 1985, Mr.
Laskey was executive vice president of Dynamic Control Division
of Baxter International and, from 1980 until its sale to Baxter
International in 1983, was the executive vice president of
Dynamic Control Corporation, a healthcare information systems
company. Mr. Laskey has been a licensed certified public
accountant since 1974 and is a member of the American and
Florida Institutes of Certified Public Accountants.
Thomas J. Martinson has been a director of the Company since
1986. He also was the Company's Chairman of the Board from 1986
until 1996 and Secretary from 1986 until 1994. Mr. Martinson
has been president of Martinson & Company, Ltd. of Wayzata,
Minnesota, an investment banking firm, since 1985. In March
1996, Mr. Martinson became the chairman of the board of
directors of Interventional Innovations Corporation of St. Paul,
Minnesota.
Bret R. Maxwell has been a director of the Company since May
1996. Mr. Maxwell is Vice Chairman of First Analysis
Corporation, a securities investment firm which he joined in
1982. Mr. Maxwell is also a director for numerous privately
held companies.
2
David M. Pomerance has been Chairman of the Board of Directors
since May 1996, Secretary of the Company since August 1994 and a
director since 1991. Mr. Pomerance served as Chief Executive
Officer of the Company from July 1994 to May 1996 and was
President from July 1994 through August 1994. He is the
managing general partner of Martin Magnetic Imaging, Ltd., a
magnetic resonance imaging (MRI) facility in Stuart, Florida.
From 1990 through 1994, and from 1985 through 1989, Mr.
Pomerance was a principal in various private businesses. During
1989 and 1990, Mr. Pomerance was the president of the Healthcare
Systems Division of UNISYS Corporation. From 1983 through 1985,
Mr. Pomerance was the president of the Dynamic Control Division
of Baxter International. From 1974 until its sale to Baxter
International in 1983, he was the president and controlling
shareholder of Dynamic Control Corporation, a healthcare
information systems company which he founded.
Daniel Raynor has been a director of the Company since May
1996. Mr. Raynor has been the president of a general partner of
The Argentum Group, a private investment firm, since November,
1987, and chairman of the general partner of Argentum Capital
Partners, L.P., a small business investment company, since its
organization in February 1990. Mr. Raynor is also a director
for numerous privately held companies.
Richard W. Truelick has been a director of the Company since
May 1996. Mr. Truelick is the sole owner of Truelick
Associates, a merger consulting and investment firm, where he
has been employed there since 1988. From 1979 through 1988, Mr.
Truelick was a partner in Adler-Truelick Associates, also a
merger consulting and investment firm. Mr. Truelick was vice
president corporate development for Beatrice Foods Company from
1968 through 1979.
The business of the Company is managed under the direction of
its Board. The Board of Directors meets periodically to review
significant developments affecting the Company and to act on
matters requiring its approval. The Board of Directors held
four meetings during 1996. The meetings were attended by all of
the directors with the exceptions of Mr. Richard Truelick, who
was unable to attend one meeting, and Mr. Kenneth Coon, who
attended only the two meetings held prior to last year's annual
meeting during which he was not nominated for re-election.
The Compensation and Incentive Stock Option Committee of the
Company's Board of Directors consists of Daniel Raynor, Thomas
J. Martinson and Bret Maxwell. Mr. Raynor is the Committee's
chair and joined the committee in May, 1996 to fill the vacancy
created when Mr. Carson left the committee. Mr. Maxwell also
joined the committee in May, 1996 to fill the vacancy created
when Mr. Coon left the committee. Mr. Martinson was a member of
the committee throughout 1996. The Committee's primary
responsibilities are to formulate and recommend to the Board of
Directors the compensation package for the Company's President
and Chief Executive Officer; to formulate and recommend to the
Board of Directors the terms of the Company's Management
Incentive Compensation Plan; to recommend approval of and
administer any other employee compensation and incentive plans;
and to periodically review and make recommendations on the
Company's general salary administration plan. The Committee
held three meetings during 1996, which were attended by all its
members.
The Audit Committee of the Company's Board of Directors
consists of Jerry L. Carson, Daniel Raynor and Richard Truelick.
Mr. Raynor and Mr. Truelick joined the Committee in May, 1996 to
fill the vacancies created when Mr. Coon and Mr. Martinson left
the Committee. Mr. Truelick is the Committee's chair. The
Audit Committee recommends to the Board of Directors the
appointment of the firm selected to be independent auditors for
the Company and monitors the performance of such firm; reviews
and approves the scope of the annual audit and evaluates with
independent auditors the Company's annual audit and annual
financial statements; reviews the status of internal accounting
controls with management; evaluates problem areas having a
potential financial impact on the Company which may be brought
to its attention by management, the independent auditors or the
Board of Directors; and evaluates all public financial reporting
documents of the Company. The Audit Committee held two meetings
in 1996. The first meeting was attended by all the Committee
members. The second meeting was attended by Mr. Carson and Mr.
Bret Maxwell, who served as chairman in the absence of Mr.
Truelick.
The Company's Board of Directors does not have a Nominating
Committee. The functions customarily attributable to a
Nominating Committee are performed by the Board of Directors as
a whole. The Board of Directors will consider nominees
recommended by security holders. For a security holder to
recommend a nominee to the Board, the security holder must
contact a member of the Board by mail in care of the Company and
supply the following information:
-- The security holder's name, address and phone number.
-- The number of shares of the Company's Common Stock held by
the security holder.
-- The name, address, phone number and brief biography of the
nominee recommended by the security holder.
-- A statement by the security holder as to why he or she
believes the recommended nominee should be nominated to stand
for election to the Company's Board of Directors.
3
The Board of Directors will consider any nominee recommended by
any security holder as long as such recommendation is received
at least six months, but no longer than twelve months, prior to
the next regularly scheduled annual meeting of shareholders.
COMPENSATION OF DIRECTORS
Under a policy established by the Company's Board of Directors,
"outside directors" are compensated at the rate of $500 plus
expenses for each Board meeting attended in person.
Outside directors also receive a five year warrant for 25,500
shares of the Company's Common Stock. The warrant is issued on
the date of their first election to the Board of Directors and
the exercise price is equal to the average of the closing bid
and ask prices of the Company's Common Stock on the date of
issuance. Prior to June 14, 1995 these warrants vested
one-third upon issuance and one-third upon each of the first and
second anniversaries of the warrant. After June 13, 1995 these
warrants were issued to vest 40% upon issuance and 20% on each
anniversary date for three subsequent years. In addition,
annual warrants are issued to certain outside directors starting
at the beginning of that director's third consecutive term in
office as an outside director of the Company. Each annual
warrant is for 5,000 shares of the Company's Common Stock, has a
five year term and an exercise price equal to the average of the
closing bid and ask prices of the Company's Common Stock on the
date of issuance. Prior to June 14, 1995 these warrants vested
fully upon issuance. After June 13, 1995 these warrants were
issued to vest 40% upon issuance and 20% on each anniversary
date for three subsequent years. With certain exceptions, all
outside director warrants expire upon the termination of that
director's service to the Company as a director. Messrs.
Carson, Coon, Martinson, Raynor, Truelick, Maxwell, and
Pomerance (when an outside director) have all received warrants
for the Company's Common Stock under this Plan.
Mr. Martinson was Chairman of the Board through May 1996, at
which time Mr. Pomerance was elected. Mr. Martinson received
$6,000 in 1996 for his services as Chairman. Mr. Pomerance will
receive $18,000 annually for his services as chairman and
received $7,500 during 1996.
No director receives any additional compensation for services
to the Company as a member of any committee of the Board of
Directors.
EXECUTIVE OFFICERS
The names, ages and positions of the Company's executive
officers are:
Name Age Officer Position
David M. Pomerance 52 Chairman of the Board and Secretary
Mitchel J. Laskey 47 President, Chief Executive Officer,
Treasurer and Director
Nikhil A. Bhatt 44 Senior Vice President and
Chief Technical Officer
Paul S. Glover 38 Vice President - Finance and
Chief Financial Officer
See NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS for
David M. Pomerance and Mitchel J. Laskey.
Nikhil A. Bhatt has been Senior Vice President and Chief
Technical Officer of the Company since June 1996. From January
1989 to May 1996, Mr. Bhatt was senior vice president and chief
technical officer of IMNET Systems, Inc. Mr. Bhatt has more
than 20 years experience in the image processing industry,
specializing in software development, engineering and research
and development. Mr. Bhatt was directly responsible for the
design and development of the IMNET MegaSAR(registered) Microfilm
Jukebox and personally holds numerous patents, including 15 in image
processing and seven in biomedical engineering.
Paul S. Glover has been Vice President - Finance and Chief
Financial Officer of the Company since December 1994 and was
Director of Financial Operations from August 1994 through
December 1994. Mr. Glover was the executive vice president of
Uniprompt Microsystems, Inc. and president of its wholly owned
subsidiary, Unisoft, Inc., from August 1990 through July 1994.
Mr. Glover served as a certified public accountant with the
national firms of Main Hurdman and Company (now part of KPMG
Peat Marwick LLP), and Deloitte, Haskins and Sells (now part of
Deloitte & Touche LLP).
4
CERTAIN TRANSACTIONS
During the year ended December 31, 1996 the Company incurred
$21,800 of airline transportation charges from DDK Enterprises
LLC ("DDK") on terms which Management believes approximate fair
market value. DDK is majority owned by Mr. David Pomerance. In
addition, Mr. Pomerance is president of MMRI, Inc. which
provides financial consulting and advisory services to the
Company. The Company incurred $164,612 to MMRI, Inc. for these
services in 1996.
On August 16, 1996, Messrs. Pomerance and Laskey made unsecured
loans to the Company in the amount of $250,000 each, pursuant to
which the Company executed unsecured notes. The unsecured notes
provided for payment, in full, at the earlier of the completion
of a Common Stock offering or November 14, 1996, together with
interest at a rate of 13% per annum. The unsecured notes were
retired on October 2, 1996 upon completion of a Common Stock
offering.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March
10, 1997, with respect to each class of the Company's equity
securities beneficially owned by each director, director
nominee, by each person known to the Company to beneficially own
more than 5% of the Company's outstanding classes of voting
stock (i.e.. Common Stock), and by all officers and directors as
a group.
<TABLE>
Common Stock
Name and Address Amount and Nature of Percentage
of Beneficial Owner Beneficial Ownership (1) of Class
<S> <C> <C>
Walter Barandiaran (2) 1,892,850 10.02%
245 East 93rd Street, Apt. 26D
New York, NY 10128
Daniel Raynor (3) 1,840,550 9.76%
c/o The Argentum Group
405 Lexington Avenue, 54th Floor
New York, NY 10174
Bret R. Maxwell (4) 1,746,300 9.31%
233 South Wacker Dr., Suite 9500
Chicago, IL 60606
First Analysis Corporation (5) 1,710,200 9.12%
233 South Wacker Dr., Suite 9500
Chicago, IL 60606
Oliver Nicklin (6) 1,710,200 9.12%
233 South Wacker Dr., Suite 9500
Chicago, IL 60606
State of Wisconsin 960,000 5.64%
Post Office Box 7842
Madison, WI 53707
The Productivity Fund, III, LP 855,100 5.02%
233 South Wacker Dr., Suite 9500
Chicago, IL 60606
Environmental Private Equity Fund II, LP 855,100 5.02%
233 South Wacker Dr., Suite 9500
Chicago, IL 60606
Mitchel J. Laskey (7) 797,255 4.62%
1611 Talisia Court
Longwood, FL 32779
5
David M. Pomerance (8) 547,900 3.21%
2421 Southeast Bahia Way
Stuart, FL 34996
Thomas J. Martinson (9) 162,500 *
140 Barry Avenue North
Wayzata, MN 55391
Richard W. Truelick (10) 92,700 *
Truelick Associates
167 Regatta Drive
Jupiter, FL 33477
Jerry L. Carson (11) 40,500 *
3971 Gulfshore Blvd. North PH302
Naples, FL 33940
Paul S. Glover (12) 15,427 *
1624 White Dove Drive
Winter Springs, FL 32708
All Directors and Officers as a Group
(12 Persons) 5,481,973 26.69%
* Less than 1%
<FN>
(1) Shares not actually outstanding are deemed to be
beneficially owned by an individual if such individual has the
right to acquire the shares within 60 days.
(2) Includes 42,000 shares of stock owned by Mr. Walter
Barandiaran through his individual retirement account, and
42,000 shares of stock held by an individual retirement account
for the benefit of his spouse and controlled by Mr. Barandiaran
pursuant to a power of attorney. Additionally, by reason of Mr.
Barandiaran's status as controlling persons of Argentum Capital
Partners, LP ("ACP"), The Argentum Group ("TAG"), and the
general partner of Environmental Private Equity Fund II, LP
("EPEF"), the table includes indirect beneficial ownership by
him of 1,633,850 shares of stock owned by ACP and EPEF and
175,000 additional shares of Stock which may be acquired by TAG
upon the exercise of stock purchase warrants.
(3) Includes 10,200 shares of stock that Mr. Daniel Raynor may
acquire upon the exercise of stock purchase warrants.
Additionally, by reason of Mr. Raynor's status as controlling
person of ACP, TAG and the general partner of EPEF, the table
includes indirect beneficial ownership by him of 1,633,850
shares owned by ACP and EPEF, and 175,000 additional shares
which may be acquired by TAG upon the exercise of stock purchase
warrants.
(4) By reason of his status as the ultimate general partner of
The Productivity Fund III, LP ("PFIII") and EPEF, Mr. Bret
Maxwell may be deemed to be the indirect beneficial owner of
1,710,200 shares of the stock owned by PFIII and EPEF. Includes
10,200 shares of stock that Mr. Maxwell may acquire upon the
exercise of stock purchase warrants.
(5) By reason of its status as an ultimate general partner of
PFIII and EPEF, First Analysis Corporation ("FAC") may be deemed
to be the indirect beneficial owner of 1,710,200 shares of the
Company's stock owned by PFIII and EPEF.
(6) By reason of Mr. Oliver Nicklin's status as the majority
stockholder of FAC, the ultimate general partner of PFIII and
EPEF. Includes 1,710,200 shares of stock of PFIII and EPEF
attributed to Mr. Nicklin as the indirect beneficial owner.
(7) Includes 240,000 shares of stock that Mr. Mitchel J. Laskey
may acquire upon the exercise of stock purchase warrants.
(8) Includes 20,000 shares of stock that Mr. David M. Pomerance
may acquire upon the exercise of stock purchase warrants.
(9) Includes 10,000 shares held by Ms. Joan Martinson. Thomas
and Joan Martinson are husband and wife. Also includes 30,000
shares of stock that Mr. Thomas J. Martinson may acquire upon
exercise of stock purchase warrants.
6
(10) Includes 20,200 shares of stock that Mr. Richard W.
Truelick may acquire upon the exercise of stock purchase
warrants.
(11) Includes 35,500 shares of stock that Mr. Jerry L. Carson
may acquire upon the exercise stock purchase warrants.
(12) Includes 14,000 shares of stock that Mr. Paul Glover may
acquire upon the exercise of stock purchase warrants.
</FN>
</TABLE>
7
REPORTS BY INSIDERS UNDER SECTION 16
The following is a listing of the Company's directors, officers
or beneficial owners of more than 10% of the Company's Common
Stock ("reporting persons") who failed to file on a timely basis
reports required under Section 16(a) of the Exchange Act during
fiscal year 1996:
<TABLE>
Number Number of Number
Relationship to of Late Transactions of Forms
Name of Insider The Registrant Reports Reported Late Not Filed
<S> <C> <C> <C> <C>
Linda A. Moline V.P. Professional Services 1 1 0
Philip R. Kneeland V.P. Technical Operations 1 1 0
Richard W. Truelick Director 1 1 0
Jerry L. Carson Director 0 0 1
Walter Barandian 10% Shareholder 0 0 1
Oliver Nicklin 10% Shareholder 0 0 2
</TABLE>
The Company is aware of two (2) incorrect filings made by reporting persons.
A Form 5 filed by Jerry L. Carson failed to reflect his receipt of options
to purchase 5,000 shares of Common Stock at $1.97 per share, granted on
March 4, 1996.
A Form 4 filed by Daniel Raynor for October, 1996 failed to reflect the
sale of 11,150 shares of Common Stock at $5.38 per share by EPEF on
October 28, 1996.
EXECUTIVE COMPENSATION
Report of Compensation Committee
The Compensation Committee is charged with the formulation and
oversight of the Company's general compensation policies and
plans, including those for its executive officers. The
Committee consists of Daniel Raynor, its chair, Thomas J.
Martinson and Bret Maxwell, all of whom are independent members
of the Company's Board of Directors.
The Company's general compensation policies are designed to
attract and retain exceptional employees at all levels of the
organization. Specific policies exist for members of the
Company's sales organization to incent those people to increase
the Company's operating revenues. Additional policies for
certain of the Company's executives and other key employees
focus those employees' energies on the Company's long-term
strategies for growth, profitability and enhancement of
shareholder value. The principal elements of these policies are:
Base Salary: Base salaries are set for all employees through
the use of a compensation matrix which identifies ranges of
salaries for each job level as well as performance standards
within each level. The matrix is adjusted annually for changes
in the Consumer Price Index, and is designed to provide
employees receiving positive performance reviews with a base
salary approximating the 75th percentile among salaries for
similar positions within the Company's peer group. The
Committee annually reviews the salaries of executives in
relation to this matrix and in conjunction with the executives'
performance reviews and with the salaries suggested by the
President and CEO.
Sales Commissions: The Company provides direct sales
representatives and sales management personnel with commissions
in addition to their base salary. The commissions are paid on
the achievement of certain sales goals under the Company's Sales
Policy and Commission Plans which are administered by the
President and CEO.
Management Incentive Compensation: Executive officers and managers
of the Company are eligible to receive cash incentives under the Company's
Management Incentive Compensation (MIC) Plan which is
administered by the President and CEO under the direction of the
Compensation Committee. Awards under this Plan may be
recommended annually by the President and CEO, and require the
approval of the Compensation Committee.
8
The CEO's compensation for fiscal year 1996 was based on an
employment agreement entered into on August 23, 1994 which
provided a base salary plus annual increases based on the
Consumer Price Index. No portion of the CEO's compensation for
1996 was related to the Company's Management Incentive Compensation
Plan.
Incentive Stock Option Plan: As additional incentive for the
Company's executives and other key employees to build
shareholder value, stock options have been awarded under the
Company's 1983 and 1993 Incentive Stock Option Plans. Under
provisions of the Internal Revenue Code, options granted under
these Plans are considered "Incentive Stock Options". The
Compensation Committee functions as the Company's Incentive
Stock Option Committee and is responsible for approving all
awards under these Plans. Grants of options under the 1983 Plan
are no longer allowed as that Plan has expired. Grants under
the 1993 Plan, which was approved by the shareholders in 1993,
are permitted until 2003.
Officer and Director Stock Warrant and Option Plan: In order
to attract and incent directors and key managers of the Company,
options and warrants for the Company's Common Stock may be
granted under the Company's Officer and Director Stock Warrant
and Option Plan which was approved by the shareholders in 1993.
Grants under this Plan are made under the direction of the
Compensation Committee and are "non-qualified" as that term is
defined in the Internal Revenue Code.
Employee Stock Purchase Plan: The Company adopted the Employee
Stock Purchase Plan in 1993 for the purpose of encouraging full
time employees to become shareholders in the Company. Employees
pay for their shares through voluntary payroll deductions. This
Plan qualifies for favorable tax treatment to employees under
Section 421 and 423 of the Internal Revenue Code.
Dynamic Healthcare Technologies, Inc.
Compensation and Stock Option Plan Committee
Daniel Raynor, Chairman
Thomas J. Martinson
Bret Maxwell
9
Summary Compensation Table
The following table is a summary of the annual, long term, and other
compensation of the Company's Chief Executive Officer and each executive
officer and other corporate officer whose total salary and bonus during
the fiscal year ended December 31, 1996 exceeded $100,000.
<TABLE>
Long-Term Compensation
Annual Compensation Awards Payouts
Name and Restricted Securities All
Principal Other Annual Stock Underlying LTIP Other
Position Year Salary Compensation Awards Options/ Payouts Compensation
($) ($) ($) SARs(#) ($)(4) ($)(2)
<S> <C> <C> <C> <C> <C> <C> <C>
David M. 1996 $113,854 $12,050(1)(9) -- 50,000(5) -- $192,462(7)(8)
Pomerance 1995 $151,750 $ 7,800(1) -- -- -- $ 2,772
Chairman 1994 $ 73,365 $ 2,600(1) -- 250,000(10) -- $ 804
of the
Board,
Secretary
Mitchel J. 1996 $182,125 $15,000(1) -- 100,000(5) $50,000 $ 2,850
Laskey 1995 $151,750 $ 7,800(1) -- -- $50,000 $ 2,772
Director, 1994 $ 50,000 $ 2,600(1) -- 250,000(10) $20,833 $ 924
President
and CEO
Nikhil A. 1996 $ 90,417 $14,174(6) -- 150,000(3) -- $ 1,395
Bhatt
Senior V.P.
and Chief
Technical
Officer
Paul S. 1996 $101,875 $21,261(6) -- 60,000(5) -- $ 555
Glover 1995 $ 83,815 $ -- -- 25,000(5) -- $ --
V.P.- 1994 $ 29,141 $ -- -- -- -- $ --
Finance
and CFO
<FN>
(1) Includes amounts paid as car allowance, club dues and other
compensation travel related payments.
(2) Includes Company contributions to the individual employees'
401(k) Retirement Plan.
(3) Options awarded pursuant to employment agreement.
(4) Represents amounts paid under a deferred compensation agreement
with Mitchel J. Laskey assumed in connection with the acquisition
of Dynamic Technical Resources, Inc. and is payable in 7 remaining
monthly installments of $4,167 as of December 31, 1996.
(5) Options awarded under the Company's Incentive Stock Option Plan.
(6) Management bonuses paid in 1996.
(7) Includes consulting fees paid pursuant to 1996 Employment Agreement.
(8) Incentive compensation pursuant to revised employment agreement.
(9) Includes compensation for serving as Chairman of the Board.
(10) Options awarded during 1994 were additional compensation under
respective employment agreements.
</FN>
</TABLE>
10
OPTION GRANTS DURING 1996
The following table sets forth information relative to stock options granted
to the Named Officers during 1996. The Company has not granted any stock
appreciation rights.
<TABLE>
Potential Realizable
Value At Assumed Annual
Rates of Stock Price
Appreciation For
Individual Grants For Option Term
Number of Percent of
Securities All Options Exercise
Underlying Granted to Price
Options Employees Per Expiration
Name Granted In 1996 Share Date 5%($) 10% ($)
<S> <C> <C> <C> <C> <C> <C> <C>
David M.
Pomerance 50,000 (2) 6.1% $1.97 03/04/06 $ 61,946 $156,983
Mitchel J.
Laskey 50,000 (2) 6.1% $5.25 08/15/06 $165,084 $418,357
Mitchel J.
Laskey 50,000 (2) 6.1% $1.97 03/04/06 $ 61,946 $156,983
Nikhil A.
Bhatt 150,000 (1) 18.4% $4.81 05/16/01 $199,337 $440,483
Paul S.
Glover 10,000 (2) 1.2% $1.97 03/04/06 $ 12,389 $ 31,397
Paul S.
Glover 20,000 (2) 2.4% $5.00 06/20/06 $ 62,889 $159,374
Paul S.
Glover 30,000 (2) 3.7% $5.00 10/29/06 $ 94,334 $239,061
<FN>
(1) Employment contract options.
(2) Options awarded under the Company's Incentive Stock Option Plan.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES DURING 1996 FISCAL YEAR AND
YEAR END OPTION VALUES
The following table sets forth information relative to stock options
exercised by the Named Officers during 1996 and values of stock options
held by those officers that were outstanding at year end:
<TABLE>
Number of Number of
Securities Securities Value of Value of
Underlying Underlying Unexercised Unexercised
Number of Unexercised Unexerised In-The-Money In-The-Money
Shares Dollar Options Options Options Options
Acquired on Value At Year End At Year End At Year End At Year End
Name Excercise Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
David M.
Pomerance 25,500 $103,658 205,000 100,000 $764,063 $326,500
Mitchel J.
Laskey -- -- 200,000 150,000 $750,000 $326,500
Nikhil A.
Bhatt -- -- 60,000 90,000 -- --
Paul S.
Glover -- -- 10,000 75,000 $ 37,500 $ 84,050
</TABLE>
MANAGEMENT INCENTIVE COMPENSATION PLAN
The Company has a Management Incentive Compensation ("MIC")
Plan that is administered by the President and CEO under the
direction of the Compensation and Incentive Stock Option
Committee of the Board of Directors. Cash distributions may be
made annually and are based on the Company's overall
performance, the individual employee's performance plus a
discretionary amount determined by the Committee. Total
distributions may not exceed 20% of the Company's pre-bonus
income before income taxes and are allocated to Company executives
including directors and managers. Individual distributions from
the pool are determined by the Compensation and Incentive Stock
Option Plan Committee based on recommendations from the Company's
President and CEO.
No amounts were accrued or paid under the Plan based on the
Company's operating results in 1996. With respect to 1997, as
of March 31, 1997 the Board of Directors has established a
distribution pool of $901,000.
11
EMPLOYMENT CONTRACTS
In June 1996, the Company entered into an employment
agreement with Nikhil A. Bhatt to serve as the Company's
Senior Vice President and Chief Technical Officer. The
agreement is for a term of three years, which automatically
renews for successive three-year periods, unless terminated
by the Company not less than 60 days prior to the commencement
of any renewal period. The agreement provides for an annual
base salary of $155,000, which is to be reviewed annually by
the Board of Directors and is subject to increases based on
the Consumer Price Index. If the employment agreement is
terminated without cause, the Company fails to renew the
contract or Mr. Bhatt elects to terminate for "good reason,"
Mr. Bhatt is to receive on the termination date a lump sum
cash payment equal to one year of Mr. Bhatt's annual base salary,
in addition to all other benefits and other compensation to which
he would be entitled if he were an employee during the one-year
period. The agreement contains a covenant not to compete for a
period of 18 months after termination.
In August 1994, the Company entered into an employment
agreement with David M. Pomerance, which was amended effective
August 1, 1996. Pursuant to the amended agreement, Mr.
Pomerance serves as Chairman of the Board and a part-time
consultant to the Company. The agreement, as amended, is for a
term of one year commencing August 1, 1996 and automatically
renews for successive one-year periods unless terminated by
written notice from either party within 60 days prior to the
commencement of any renewal term. The agreement provides for a
one-time payment of approximately $10,000 on August 1, 1996,
monthly payments of $1,500 for his services as Chairman of the
Board and per diem payments of $2,500, with a noncumulative
minimum of five days per month, for his part-time services as a
consultant. The agreement, as amended, also provides that Mr.
Pomerance shall be reimbursed for all reasonable expenses
incurred by him in the performance of his duties. Mr. Pomerance
has waived participation in the MIC Plan and in all vacation and
sick day benefit programs. In consideration for Mr. Pomerance
entering into the amendment, the Company agreed (i) to pay Mr.
Pomerance a bonus of $12,500 per quarter for four calendar
quarters commencing August 1, 1996, and (ii) that certain
unvested options held by Mr. Pomerance to purchase an aggregate
of 50,000 shares of Common Stock be deemed vested as of August
1, 1996.
On October 1, 1996, the Company entered into an Employment
Agreement with Paul S. Glover, Vice President of Finance and
CFO. The term of the agreement is three (3) years and provides
for a base salary of $130,000 per annum, which is subject to
annual review by the Board of Directors and increases based on
the Consumer Price Index. The severance arrangement included in
the agreement provides that upon the occurrence of a triggering
event as defined in the agreement, employee will 1) receive
severance pay equal to one (1) times employee's highest base
salary plus the highest bonus and incentive payments received by
employee within the previous three (3) years, 2) have immediate
vesting of all stock options, warrants, and other stock
appreciation rights and 3) be provided with benefits for a
period of one (1) year following the triggering event or through
the expiration of employee's service period as provided by the
agreement.
On January 1, 1997, the Company entered into a new Employment
Agreement with Mitchel J. Laskey, President and CEO, which
supersedes and terminates the agreement dated August 23, 1994.
The term of the new agreement is three (3) years and shall
automatically renew for three (3) successive one-year periods
unless earlier terminated upon delivery of written notice by
either party not less than sixty (60) days prior to the end of
the initial term, or renewal term, as the case may be. The
agreement provides for a base salary of $250,000 per annum, for
the period January 1, 1997 through June 30, 1997 and $300,000
per annum thereafter which is subject to annual review by the
Board of Directors and such increases as the Board may
determine. The agreement grants to the employee options to
purchase 50,000 shares of the Company's Common Stock. The
options vest on January 1, 1998 and are subject to divestiture
pursuant to a formula if the Company's financial performance for
1997 is less than 100% of projections. This agreement also
provides employee incentives in the form of cash bonuses for
achievements of certain predefined objectives for fiscal year
1997. These objectives consist of 1) professional goals, 2)
Company net income target, and 3) Company actual performance
target, and they result in maximum bonus awards of $50,000,
$50,000 and $25,000, respectively. The severance provisions
included in the agreement provide that upon the occurrence of a
triggering event, as defined in the agreement, employee will 1)
receive severance pay equal to two (2) times employee's highest
base salary plus the highest bonus and incentive payments
received by employee within the previous three (3) years, 2)
have immediate vesting of all stock options, warrants, and other
stock appreciation rights and 3) be provided with benefits for
employee and his family for a period of one (1) year following
the triggering event or through the expiration of employees
service period as provided by the agreement.
12
OTHER COMPENSATION PLANS
1983 Incentive Stock Option Plan
The Company had an Incentive Stock Option Plan which expired
March 1993 ("1983 Plan"). The 1983 Plan allowed the Company, at
its discretion, as determined by a three member Stock Option
Plan Committee appointed from the members of the Board of
Directors who were not eligible to participate in the 1983 Plan,
to grant incentive stock options to employees determined by the
Committee, for the purchase of Common Stock of the Company.
Under the 1983 Plan as of March 31, 1997, there were unexpired
options outstanding and unexercised for shares totaling 5,000.
As of March 31, 1997, the market value for the shares underlying
these unexercised options was $34,063. The total proceeds the
Company would realize upon the exercise of all 1983 Plan options
outstanding at March 31, 1997, was $9,035. Options may be
exercised for periods up to ten years from date of grant or, in
the case of holders of 10% or more of the Company's Common
Stock, five years from date of grant. The expiration of the
1983 Plan does not effect the right of the holders to exercise
unexpired options under the Plan. The exercise price of the
options granted under the Plan may not be less than 100% of the
fair market value of the Company's Common Stock on the grant
date or, in the case of holders of 10% or more of the Company's
Common Stock, 110% of the fair market value of the Company's
Common Stock at grant date. Options may be exercised to acquire
40% of the shares subject to the option after one year, 30%
after two years and 30% after three years.
1993 Incentive Stock Option Plan
The Company adopted a similar Incentive Stock Option Plan in
1993 ("1993 Plan"). As of March 31, 1997, there were unexpired
options outstanding and unexercised for shares totaling 558,095
under the 1993 Plan. As of March 31, 1997, the market value for
the shares underlying these unexercised options was $3,802,022.
The total proceeds the Company would realize upon the exercise
of all 1993 Plan options outstanding at March 31, 1997, was
$1,733,392. The terms and vesting schedule of options granted
under both the 1983 and 1993 Plans are the same.
Options granted under both Plans are "Incentive Stock Options"
pursuant to Section 422A of the Internal Revenue Code.
Employees do not recognize income at the time of the grant or
exercise of an option. Employees will recognize capital gain or
loss, as the case may be, at the time of the subsequent sale of
the Common Stock issued upon the exercise of the option. The
Company will not recognize income at either the time of the
option grant or at the time of the exercise.
All full-time permanent Company employees are/were eligible to
participate under both Plans. Options may be exercised either
by payment of cash, or, at the discretion of the Committee, by
shares of the Company's Common Stock.
Director and Management Stock Warrant and Option Plan
The Company adopted the Director and Management Stock Warrant
and Option Plan in 1993 for the issuance of stock purchase
warrants and stock options to directors, officers and key
management employees of the Company. Grants under this Plan are
made under the direction of the Company's Compensation
Committee. The purpose of the Plan is to attract and retain
talented directors, officers and key management employees of the
Company.
The Company has reserved 250,000 shares of its Common Stock for
issuance upon the exercise of warrants and options granted under
the Plan. As of March 31, 1997, there were unexpired warrants
and options outstanding and unexercised for shares totaling
184,000. The market value for shares underlying these warrants
and options was 1,907,500 as of March 31, 1997. The total
proceeds the Company would receive upon the exercise of these
warrants and options was $1,234,800. Under the Plan, warrants
to directors are to be issued with an exercise price equal to
the average of the closing bid and ask prices of the Company's
Common Stock on the date of issuance. Options to employees and
officers are to be issued with an exercise price of no less than
85% of the fair market value of the Company's Common Stock on
the date of issuance.
This Plan does not qualify under Section 401(a) of the Internal
Revenue Code of 1986, as amended. As such, warrant holders and
optionees will not realize income at the time of the warrant or
option grant. They will recognize ordinary compensation income
at the time of the exercise of the warrant or option to the
extent of the difference of the exercise price and the fair
market value of the underlying Common Stock at the time of
exercise. Warrant holders and optionees will recognize either
a capital gain or capital loss at the time of the eventual sale
of the Common Stock received on exercise, computed as the
difference between the sale price of the Common Stock and its
fair market value on the exercise date.
13
Employee Stock Purchase Plan
The Company adopted the Employee Stock Purchase Plan in 1993
for the purpose of encouraging full-time employees to become
shareholders in the Company. The Company has reserved 200,000
shares of its Common Stock for issuance pursuant to purchases
under this Plan. Under this Plan as of March 31, 1997, 67,987
shares have been issued generating proceeds to the Company of
$139,467.
The price for stock purchased under this Plan will be the
lesser of 85% of the average bid and ask prices of the Company's
Common Stock at the beginning of and at the end of each six
month purchase period. Employees pay for the shares through
payroll deductions. This Plan qualifies for favorable tax
treatment to employees under Sections 421 and 423 of the
Internal Revenue Code.
STOCK PERFORMANCE
The following chart compares the cumulative total shareholder
return on the Company's Common Stock based on the closing bid
price of the Company's Common Stock for the last five years
("Company Index"), with the cumulative total returns for the
Center for Research and Security Prices ("CRSP") total return
index for the NASDAQ Stockmarket-U.S. Companies Index ("Market
Index") and the CRSP NASDAQ Computer and Data Processing
Services Stocks Index ("Peer Group") over the same period. The
comparison assumes $100 invested in the Company's Common Stock
and in each of the foregoing indices and assumes reinvestment of
dividends, if any. The stock price performance shown on the
chart is not necessarily indicative of future performance.
[GRAPH]
<TABLE>
DYNAMIC HEALTHCARE NASDAQ COMPUTER
TECHNOLOGIES, INC. NASDAQ US & DATA PROCESSING
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 51.85 116.38 107.59
1993 62.96 133.59 113.87
1994 29.63 130.59 138.24
1995 68.52 184.67 210.53
1996 140.74 227.16 259.90
</TABLE>
14
PROPOSAL NUMBER TWO (2) - ENGAGEMENT OF AUDITORS
The Board of Directors has appointed the firm of KPMG Peat
Marwick, LLP as the auditors of the Company for the fiscal year
ending December 31, 1997, subject to approval of such
appointment by stockholders at the Annual Meeting. KPMG Peat
Marwick, LLP has audited the Company's financial statements
since the Company's 1994 fiscal year.
A representative of KPMG Peat Marwick, LLP is expected to be
present at the Annual Meeting and will have an opportunity to
make a statement should he so desire and to respond to
appropriate questions.
An affirmative vote of at least a majority of the votes cast on
this proposal are required for approval. The Board of Directors
is recommending to the Company shareholders a vote "FOR"
Proposal Number Two (2) to engage KPMG Peat Marwick, LLP as
independent public accountants for the Company for the fiscal
year ending December 31, 1997.
PROPOSAL NUMBER THREE (3) - AMENDMENT TO
THE ARTICLES OF INCORPORATION
The Company's Articles of Incorporation (the "Articles"), as
currently in effect, provide that the Company is authorized to
issue 20,000,000 shares of Common Stock. The Board of Directors
has authorized an amendment to the Articles to increase the
authorized number of shares of Common Stock to 40,000,000
shares. The shareholders are being asked to approve at the
Annual Meeting such amendment to the Articles. Under the
proposed amendment, the first sentence of Article VI of the
Articles would be amended to read as follows:
"The total number of shares of common stock which the corporation
shall have the authority to issue is forty million (40,000,000),
and the par value of each of such shares is One Cent ($0.01)."
The Company currently has 20,000,000 authorized shares of
Common Stock. As of March 31, 1997, 17,064,853 shares of Common
Stock were issued and outstanding. In addition, as of March 31,
1997, 1,811,277 shares were reserved for future grant or for
issuance upon the exercise of outstanding options and warrants.
Purpose and Effect of the Amendment
The principal purpose of the proposed amendment to the Articles
is to authorize additional shares of Common Stock which will be
available in the event the Board of Directors determines that it
is necessary or appropriate to utilize such shares for any
appropriate business purpose. The Board of Directors has no
present plan, agreement, or arrangement to issue any of the
shares for which approval is sought. If the amendment is
approved by the shareholders, the Board of Directors does not
intend to solicit further shareholder approval prior to the
issuance of any additional shares of Common Stock, except as may
be required by applicable law.
The increase in authorized Common Stock will not have any
immediate effect on the rights of existing shareholders. To the
extent that the additional authorized shares are issued in the
future in a transaction other than in a stock split or stock
dividend, the existing shareholders' percentage equity ownership
will decrease and, depending on the price at which shares are
issued, could have the effect of diluting the earnings per share
and book value per share of outstanding shares of Common Stock.
The holders of Common Stock have no preemptive rights. The
increase in the authorized number of shares of Common Stock and
the subsequent issuance of such shares could have the effect of
delaying or preventing a change in control of the Company
without further action by the shareholders by diluting the stock
ownership or voting rights of a person seeking to obtain control
of the Company.
An affirmative vote of at least a majority of the votes cast on
this proposal are required for approval. The Board of Directors
recommends a vote "FOR" Proposal Number Three (3) adopting an
amendment to the Company's Articles of Incorporation increasing
the number of authorized shares of Common Stock to a total of
40,000,000.
15
PROPOSAL NUMBER FOUR (4) - AMENDMENT TO THE 1993
INCENTIVE STOCK OPTION PLAN
The Company adopted an incentive stock option plan in 1983 for
key employees whereby 400,000 shares of common stock were
reserved for issuance under the 1983 Plan. During 1993, the
shareholders approved and the Company adopted a new ten year
incentive stock option plan for employees whereby 100,000 shares
of common stock were reserved for issuance under the 1993 Plan.
Upon adoption of the 1993 Plan no new options were to be granted
under the 1983 Plan, although options then outstanding continued
to be exercisable subject to the terms of the 1983 Plan. During
1995, the shareholders approved and the Company adopted an
increase of total shares issuable under the Plan to 600,000. As
of March 31, 1997 the 400,000 common shares which were reserved
under the 1983 Plan, had resulted in 118,240 shares being
issued, 5,000 shares continue to be reserved for options
outstanding, and 276,760 shares have been released from reserve.
Under the 1993 Plan, as of March 31, 1997, the 600,000 shares
which were reserved under the Plan had resulted in 34,110 shares
being issued, 558,095 shares continue to be reserved for options
outstanding, and 48,045 shares have been released from reserve.
The Board of Directors believes this amendment to increase the
total issuable shares under the 1993 Plan to 1,500,000 from
600,000 is needed to replace the expiring 1983 Plan, to
encourage full time employees, including officers, to become
shareholders of the Company, thereby providing incentive to
remain in the Company's employ, to improve operations, to
increase profits and to contribute to the Company's success.
The Board of Directors is recommending to the Company's
shareholders a vote "FOR" Proposal Number Four (4) adopting an
amendment to the 1993 Incentive Stock Option Plan to increase
the total issuable shares pursuant to the 1993 Plan to a total
of 1,500,000. It will require the affirmative vote of a
majority of the shares represented at the meeting to adopt the
amendment to the 1993 Plan as set forth by Proposal Number (4).
PROPOSAL NUMBER FIVE (5) - AMENDMENT TO THE STOCK WARRANT AND
OPTION PLAN FOR DIRECTORS AND MANAGEMENT EMPLOYEES
During 1993, the shareholders approved and the Company adopted
a stock warrant and option plan for directors and management
employees ("D & M Plan"), whereby 250,000 shares of common stock
were reserved for issuance under the D & M Plan. The directors'
warrants are five year warrants which vest under varying terms
and are issued at an exercise price equal to the market price of
the Company's common stock on the date of grant. The management
employees' stock options are fully vested one year after date of
issuance and expire ten years after the first anniversary.
Employee options are issued at an exercise price of no less than
85% of the market price of the Company's common stock on the
date of grant. During 1995, the shareholders approved and the
Company adopted an amendment to the D & M Plan to conform the
terms of exercise to 40% upon grant plus 20% per year for each
of three years thereafter and to provide for early vesting upon
death or employment termination without cause for all future
options under the D & M Plan. As of March 31, 1997, the 250,000
shares which were reserved under the D & M Plan had resulted in
5,000 shares being issued, 280,000 shares continue to be
reserved for options outstanding, and no shares have been
released from reserve.
The Board of Directors believes this amendment to increase the
total issuable shares under the D & M Plan to 650,000 from
250,000 is needed to allow the Company to compete for key
employees and for experienced and dedicated people to serve on
its board. An affirmative vote of a least a majority of the votes
cast on this proposal are required for approval. The Board of
Directors recommends a vote "FOR" Proposal Number Five (5) to
amend the D & M Plan.
PROPOSAL NUMBER SIX (6) - AMENDMENT TO
THE EMPLOYEE STOCK PURCHASE PLAN
During 1993 the shareholders approved and the Company adopted
an Employee Stock Purchase Plan ("ESP Plan") effective for a
five year period beginning January 1, 1994. The Company
reserved 200,000 shares of common stock for issuance under the
ESP Plan. The Plan operates in one or more phases of six months
each and is open for enrollment by employees working at least 20
hours per week and who have completed at least five months of
service.
The Board of Directors believes this amendment to increase the
total issuable shares under the ESP Plan to 600,000 from 200,000
is needed to accommodate for the anticipated increase in
participation in the Plan due to an increasing employee base and
greater interest by employees for involvement in the Company's
growth. It will require the affirmative vote of a majority of
the shares represented at the meeting to adopt the amendment to
the ESP Plan. An affirmative vote of at least a majority of the
votes cast on this proposal are required for approval. The
Board of Directors recommends a vote "FOR" Proposal Number Six
(6) to amend the ESP Plan.
16
OTHER MATTERS
The Company knows of no other matters to be submitted at the
meeting. If any other matters properly come before the meeting,
the persons named in the accompanying form of Proxy will vote,
in their discretion, the shares they represent.
STOCKHOLDER PROPOSALS
Stockholder proposals are eligible for consideration for
inclusion in the proxy statement for the 1998 Annual Meeting if
they are received by the Company before the close of business on
December 31, 1997.
THE BOARD OF DIRECTORS
Dated: April 16, 1997
17
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints MITCHEL J. LASKEY and DAVID M.
POMERANCE, or either of them, as Proxies, each with the power to
appoint his substitute, and hereby authorizes them to represent
and to vote, as designated below, all the shares of Common Stock
of Dynamic Healthcare Technologies, Inc. held by record by the
undersigned on April 15, 1997, at the annual meeting of
shareholders to be held on June 3, 1997, or any adjournment
thereof.
1. ELECTION OF DIRECTORS
____ FOR all nominees listed below ____ WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.
JERRY L. CARSON; THOMAS J. MARTINSON; DAVID M. POMERANCE;
MITCHEL J. LASKEY; DANIEL P. RAYNOR; BRET R. MAXWELL; RICHARD W.
TRUELICK
2. To vote on the proposal of the Board of Directors that KPMG
Peat Marwick, LLP, independent public accountants, be engaged as
auditors for the Company for the fiscal year ending December 31, 1997.
____ FOR ____ AGAINST ____ABSTAIN
3. To vote on the proposal of the Board of Directors to increase
authorized shares of common stock to a total of 40,000,000
shares.
____ FOR ____ AGAINST ____ABSTAIN
4. To vote on the proposal of the Board of Directors to amend
the 1993 Incentive Stock Option Plan ("1993 ISO Plan") to
reserve an additional 900,000 shares for issuance under the plan.
____ FOR ____ AGAINST ____ABSTAIN
5. To vote on the proposal of the Board of Directors to amend
the Stock Warrant and Option Plan for Directors and Management
employees ("D & M Plan") to reserve an additional 400,000 shares
for issuance under the plan.
____ FOR ____ AGAINST ____ ABSTAIN
6. To vote on the proposal of the Board of Directors to amend
the Employee Stock Purchase Plan ("ESP Plan") to reserve an
additional 400,000 shares for issuance under the plan.
____ FOR ____ AGAINST ____ ABSTAIN
7. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner
directed by the undersigned shareholder. If no direction is
made, this proxy will be voted for Proposals 1 through 6.
The undersigned hereby revokes any proxies heretofore given by
him and confirms all that the Proxies may lawfully do by virtue
hereof.
Dated: _______________________, 1997 _______________________
Signature of Shareholder
PLEASE MARK, DATE, SIGN AND RETURN PROMPTLY. Please sign name exactly as
IF YOUR ADDRESS OR ZIP CODE IS INCORRECT, shown hereon. Executors,
PLEASE CORRECT THE SAME BEFORE RETURNING. Administrators, Trustees,
etc. should give titles as
such. If Shareholder is a
corporation, sign full
corporate name by duly
authorized officer.
