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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
[ ] 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):
[X] $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:
[ ] 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.
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1
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 4, 1998, 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 by 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,
1998.
3. To vote on the proposal by the Board of Directors that
employer matching contributions related to 1998 employee
deferrals to the Dynamic Healthcare Technologies, Inc. 401(k)
plan, be made monthly in the form of Company common stock.
4. To vote on the proposal by the Board of Directors to amend
the Employee Stock Purchase Plan ("ESP Plan") to extend the
expiration date to December 31, 2003.
5. To vote on the proposal to ratify and confirm the Board of
Directors issuance of a special Stock Option Agreement in favor
of Mr. Mitchel J. Laskey.
6. To vote on the proposal by the Board of Directors to
increase the number of Board members to eight (8) and elect Guy
Rabbat as a member of the Board of Directors.
7. To vote on the proposal by the Board of Directors to amend
Article II, Section 2 of the Company's By-Laws.
8. 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 17, 1998, 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 17, 1998, 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,
Chief Financial Officer and Secretary
Dynamic Healthcare Technologies, Inc.
101 Southhall Lane, Suite 210
Maitland, Florida 32751
2
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS JUNE 4, 1998
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 4, 1998, 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 30, 1998.
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
eight (8) persons named herein as nominees for election to the
Board of Directors; (ii) "FOR" proposals 2, 3, 4, 5, 6, and 7;
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 shareholders of record at the close of business on April
17, 1998 ("Entitled Shareholders"), are entitled to execute
proxies or to vote at the annual meeting. As of March 31, 1998,
there were 18,034,260 shares of the Company's common stock, par
value $.01 per share (the "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. Abstentions and broker non-votes are counted as
shares eligible to vote at the Annual Meeting of Shareholders in
determining whether quorum is present, but do not represent
votes cast with respect to any proposal.
PROPOSAL NUMBER ONE (1) - ELECTION OF BOARD OF DIRECTORS
Seven (7) Directors are to be elected at the annual meeting to
serve until the 1999 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.
3
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
<TABLE>
Nominee and Director
Principal Occupation* Age Since Other Directorships Held
<S> <C> <C> <S>
Jerry L. Carson 57 1993 None
Executive Vice President and
Chief Financial Officer
Evans Enterprises
Mitchel J. Laskey, C.P.A. 48 1994 Alliance Bank,
President andChief Executive Officer a commercial bank
Dynamic Healthcare Technologies, Inc.
Thomas J. Martinson 48 1986 None
President
Martinson & Company, Ltd.
Bret Maxwell 39 1996 None
Vice Chairman
First Analysis Corporation
David M. Pomerance 53 1991 None
President
MMRI, Inc.
Daniel Raynor 38 1996 None
Managing Partner
The Argentum Group
Richard W. Truelick 57 1996 None
President
Truelick Associates
</TABLE>
*See also Proposal Number Six (6) by the Board of Directors to
increase the number of Board members to eight (8) and elect Guy
Rabbat as a member of the Board of Directors.
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 that he joined in
1982. Mr. Maxwell is also a director for numerous privately
held companies.
4
David M. Pomerance has been Chairman of the Board of Directors
since May 1996, and a director since 1991. Mr. Pomerance served
as Chief Executive Officer of the Company from July 1994 to May
1996, was President from July 1994 through August 1994 and
Secretary from August 1995 to July 1996. 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 that 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.
DYNAMIC HEALTHCARE TECHNOLOGIES, INC. BOARD OF DIRECTORS
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 1997, which were attended by all of the
directors.
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. 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 1997, which were attended by all its members.
The Audit Committee of the Company's Board of Directors
consists of Jerry L. Carson, Brett Maxwell, and Richard
Truelick. 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
during 1997. The first meeting was attended by Mr. Maxwell and
Mr. Truelick. The second meeting was attended by all of the
Committee's members.
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.
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.
5
EXECUTIVE OFFICERS
The names, ages and positions of the Company's executive
officers are:
Name Age Officer Position
David M. Pomerance 53 Chairman of the Board
Mitchel J. Laskey 48 President, Chief Executive Officer, Treasurer
and Director
Scott E. Waldrop 54 Senior Vice President and Chief Operating Officer
Michael L. Carlay 55 Senior Vice President-Sales and Marketing
Paul S. Glover 39 Vice President - Finance, Chief Financial Officer,
and Secretary
See Nominees For Election To The Board Of Directors for David
M. Pomerance and Mitchel J. Laskey.
Scott E. Waldrop has been Senior Vice President and Chief
Operating Officer since January 1998 and has over 30 years
experience in healthcare information systems. From 1995 to 1997
Mr. Waldrop was Vice President, Information Systems Development
with Columbia/HCA Healthcare Corporation. Prior to that, Mr.
Waldrop operated as an independent consultant, and was Vice
President, Information Services for Saint Joseph Hospital in
Denver, Colorado from 1990 to 1994.
Michael L. Carlay has been Senior Vice President - Sales and
Marketing for the Company since July 1997. From 1995 to 1997
Mr. Carlay was Vice President of Sales and Marketing for AMISYS
Managed Care Systems (now HBOC). Mr. Carlay was Vice President
of Sales for IBAX Healthcare Systems (now HBOC) from 1991 to
1994. Mr. Carlay has more than 20 years information systems
experience.
Paul S. Glover has been Vice President - Finance and Chief
Financial Officer of the Company since December 1994, Secretary
since July 1996 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).
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March
10, 1998, 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), by executive officers, 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 9.52%
245 East 93rd Street, Apt. 26D
New York, NY 10128
Daniel Raynor (3) 1,845,650 9.29%
c/o The Argentum Group
405 Lexington Avenue, 54th Floor
New York, NY 10174
6
Bret R. Maxwell (4) 1,751,400 8.86%
233 South Wacker Dr., Suite 9500
Chicago, IL 60606
First Analysis Corporation (5) 1,710,200 8.66%
233 South Wacker Dr., Suite 9500
Chicago, IL 60606
Oliver Nicklin (6) 1,710,200 8.66%
233 South Wacker Dr., Suite 9500
Chicago, IL 60606
State of Wisconsin 1,550,000 8.59%
Post Office Box 7842
Madison, WI 53707
Mitchel J. Laskey (7) 1,111,755 5.99%
1611 Talisia Court
Longwood, FL 32779
David M. Pomerance (8) 562,900 3.12%
2421 Southeast Bahia Way
Stuart, FL 34996
Thomas J. Martinson (9) 162,500 *
140 Barry Avenue North
Wayzata, MN 55391
Richard W. Truelick (10) 97,800 *
Truelick Associates
167 Regatta Drive
Jupiter, FL 33477
Jerry L. Carson (11) 41,500 *
3971 Gulfshore Blvd. North PH302
Naples, FL 33940
Paul S. Glover (12) 45,141 *
1312 Winter Springs Boulevard
Winter Springs, FL 32708
All Directors and Officers as a Group
(19 Persons) 5,392,211 24.71%
</TABLE>
* Less than 1%
7
(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 Common Stock owned by Mr. Walter
Barandiaran through his individual retirement account, and
42,000 shares of Common 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 778,750 shares of Common Stock owned by ACP,
855,100 shares of Common Stock owned by EPEF and 175,000
additional shares of Common Stock which may be acquired by TAG
upon the exercise of Common Stock purchase warrants.
(3) Includes 15,300 shares of Common Stock that Mr. Daniel
Raynor may acquire upon the exercise of Common 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
778,750 shares owned by ACP, 855,100 shares of Common Stock
owned by EPEF, and 175,000 additional shares which may be
acquired by TAG upon the exercise of Common 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 R.
Maxwell may be deemed to be the indirect beneficial owner of
855,100 shares of the Common Stock owned by PFIII and 855,100
shares of Common Stock owned by EPEF. Includes 15,300 shares of
Common Stock that Mr. Maxwell may acquire upon the exercise of
Common 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 Common 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 Common Stock of PFIII and
EPEF attributed to Mr. Nicklin as the indirect beneficial owner.
(7) Includes 526,500 shares of Common Stock that Mr. Mitchel J.
Laskey may acquire upon the exercise of Common Stock purchase
warrants.
(8) Includes 35,000 shares of Common Stock that Mr. David M.
Pomerance may acquire upon the exercise of Common Stock purchase
warrants.
(9) Includes 10,000 shares held by Ms. Joan Martinson. Thomas
and Joan Martinson are husband and wife. Also includes 32,000
shares of Common Stock that Mr. Thomas J. Martinson may acquire
upon exercise of Common Stock purchase warrants.
(10) Includes 25,300 shares of Common Stock that Mr. Richard W.
Truelick may acquire upon the exercise of Common Stock purchase
warrants.
(11) Includes 11,000 shares of Common Stock that Mr. Jerry L.
Carson may acquire upon the exercise Common Stock purchase
warrants.
(12) Includes 23,000 shares of Common Stock that Mr. Paul Glover
may acquire upon the exercise of Common Stock purchase warrants.
8
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, and the Senior Vice President of Sales and
Marketing.
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.
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.
Director and Management 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 Director and Management 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.
401(k) Plan: The Company's 401(k) Plan authorizes the Board
of Directors to establish periodic employer matching
contributions to the accounts of employees making qualifying
elective deferrals. During 1998, the 401(k) Plan employer match
has been established by the Company's Board of Directors at 30%
of qualifying employee contributions. The Company's Board of
Directors has also recommended that shareholders approve payment
of this match in common stock of the Company (See also Proposal
Number Three (3) herein).
Dynamic Healthcare Technologies, Inc. Compensation and
Stock Option Plan Committee
Daniel Raynor
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
the Company's four most highly compensated executives other than
the Chief Executive Officer during 1997.
<TABLE>
Long-Term Compensation
Annual Compensation Awards Payouts
Securities
Name and Other Annual Underlying LTIP All Other
Principal Salary Bonus Compensation Options/SARs Payouts Compensation
Position Year ($) ($)(6) ($) (#) ($)(4) ($)(2)
<S> <C> <S> <C> <C> <C> <C> <C>
David M. 1997 -- -- $43,000(8) -- -- $159,263(7)
Pomerance 1996 $113,854 -- $37,050(1)(8) 50,000(5) -- $167,462(7)
Chairman 1995 $151,750 -- $ 7,800(1) -- -- $ 2,772
of the Board
Mitchel J. 1997 $275,000 $50,000 $15,000(1) 50,000(3) $29,169 $ 2,850
Laskey 1996 $182,125 -- $15,000(1) 100,000(5) $50,000 $ 2,850
Director, 1995 $151,750 -- $ 7,800(1) -- $50,000 $ 2,772
President
and CEO
Nikhil A. 1997 $ 69,725 $25,000 -- 25,000(5) -- $42,688(9)
Bhatt 1996 $ 90,417 $14,174 -- 150,000(3) -- $ 1,395
Senior VP
and Chief
Technical
Officer (10)
Michael L. 1997 $ 91,604 $ 7,500 -- 150,000(5) -- $ 563
Paul S. 1997 $135,000 $25,000 -- 20,000(5) -- $ --
Glover 1996 $101,875 $21,261 -- 60,000(5) -- $ 555
VP Finance 1995 $ 83,815 $ -- -- 25,000(5) -- $ --
</TABLE>
(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 agreements.
(4) Represents amounts paid under a deferred compensation
agreement with Mitchel J. Laskey assumed in connection with the
acquisition of Dynamic Technical Resources, Inc. Final
payments under this agreement were made during 1997.
(5) Options awarded under the Company's Incentive Stock
Option Plan.
(6) Includes management bonuses.
(7) Includes consulting fees and incentive compensation paid
pursuant to a revised Employment Agreement.
(8) Includes compensation for serving as Chairman of the
Board.
(9) Includes taxable moving expense reimbursements.
(10) On March 26, 1998 the Company's Board of Directors
accepted the resignation of Mr. Bhatt, effective May 31, 1998.
10
OPTION GRANTS DURING 1997
The following table sets forth information relative to stock
options granted to the named officers during 1997. The Company
has not granted any stock appreciation rights.
<TABLE>
Potential Realizable
Value At Assumed
Annual Rates of Stock
Individual Grant Price Appreciation for
Number of Percent of Option Term
Securities All Options Exercise
Underlying Granted to Price Per Expiration
Options Employees Share Date 5%($) 10%($)
in 1997
<S> <C> <C> <C> <C> <C> <C>
Mitchel J.
Laskey 50,000(1) 8.2% $4.63 01/01/02 $ 63,949 $ 141,333
Nikhil A.
Bhatt 25,000(2) 4.1% $4.75 06/11/07 $ 74,681 $ 189,257
Michael L.
Carlay 150,000(2) 24.5% $4.25 07/16/07 $400,917 $1,016,009
Paul S.
Glover 20,000(2) 3.3% $4.75 06/11/07 $ 59,745 $ 151,405
</TABLE>
(1) Employment contract options.
(2) Options awarded under the Company's Incentive Stock Option
Plan.
AGGREGATED OPTION EXERCISES DURING 1997 FISCAL YEAR AND
YEAR END OPTION VALUES
The following table sets forth information relative to stock
options exercised by the Named Officers during 1997 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
Number of Underlying Underlying Unexercised Unexercised
Shares Unexercised Unexercised In-The-Money In-The-Money
Acquired Dollar Options at Options at Options at Options at
On Value Year-End Year-End Year-End Year-End
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
David M. 275,000 $1,301,563 20,000 30,000 $ 24,975 $37,463
Pomerance
Mitchel J. -- -- 290,000 60,000 $579,663 $37,463
Laskey
Nikhil A. -- -- 90,000 85,000 -- --
Bhatt
Michael L. -- -- -- 150,000 -- --
Carlay
Paul S. 21,500 $ 120,198 20,000 63,500 -- $24,133
Glover
</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 based on the Company's overall financial
performance, the individual employee's performance against
pre-determined objectives, and discretionary amounts determined
by the Committee. Company executives, directors and managers,
receive distributions from the pool which are determined by the
Compensation and Incentive Stock Option Plan Committee based on
recommendations from the Company's President and CEO.
Benefits paid to employees participating in the Plan during
1997 were $279,000 and were computed based only on each
employee's individual performance against pre-determined
objectives. As of March 31, 1998, the Board of Directors has
established a 1998 MIC Plan distribution pool of $931,000, 60%
based upon the Company's overall financial performance and 40%
based upon pre-determined individual objectives. No 1998 MIC
Plan financial performance distributions will be made if the
Company's pre-tax, operating income for 1998 is less than
$4,000,000.
11
EMPLOYMENT CONTRACTS
In October, 1996, the Company entered into an Employment
Agreement with Paul S. Glover to serve as Vice President -
Finance, and Chief Financial Officer. The term of the agreement
is (3) three years and provides for a current base salary of
$150,000 per annum, which is subject to annual review by the
Board of Directors and increases based on the Consumer Price
Index. The agreement contains a covenant not to compete for a
period of 18 months after termination. The severance
arrangement included in the agreement provides that upon the
occurrence of a triggering event as defined in the agreement
(including a change in control), Mr. Glover is entitled to
receive a lump-sum payment equal to compensation for one year
plus all stock options, warrants and stock appreciation rights,
if any.
In July, 1997, the Company entered into an employment
agreement with Michael L. Carlay to serve as the Company's
Senior Vice President of Sales and Marketing. The agreement is
perpetual and may be terminated at any time. The agreement
provides for an annual base salary of $150,000 which is to be
reviewed annually by the Board of Directors and is subject to
increases based on the Consumer Price Index. In addition to
base salary, Mr. Carlay is entitled to commissions on certain
sales contracts executed subsequent to his hire date. The
severance arrangement included in the agreement provides that
upon the occurrence of a triggering event as defined in the
agreement (including a change in control), employee will receive
a lump sum cash payment equal to one year of Mr. Carlay's annual
base salary plus all stock options, warrants, and stock
appreciation rights, if any.
On January 1, 1998, the Company entered into a 1998
Compensation Plan (the "1998 Plan") with Mitchel J. Laskey,
President and CEO, which expands the three (3) year Employment
Agreement entered into on January 1, 1997. The 1998 Plan is
effective for the 1998 calendar year and continues Mr. Laskey's
annual salary at $300,000. The 1998 Plan provides for Target
and Financial Bonuses. The Target Bonus is $50,000 and will be
earned by Mr. Laskey based on the achievement of goals and
objectives, set forth in the 1998 Plan. The maximum Financial
Bonus is $100,000 which is earned by Mr. Laskey when pre-tax
operating income is at least $5,000,000. No Financial Bonus is
paid if pre-tax operating income is less than $4,000, 000 and a
prorated bonus is earned for income between $4-$5 million. An
Override Bonus of 3-5% of pre-tax income in excess of $5,000,000
is paid when pre-tax operating income exceeds $5,000,000. The
1998 Plan also grants to Mr. Laskey special stock options to
acquire 400,000 shares. These options have a vesting schedule
identical to the options granted under the Company's Stock
Option Plan for Director's and Management Employees and exercise
prices significantly higher than the current market price (See
also Proposal Number Five (5) contained herein).
On January 2, 1998, the Company entered into an Employment
Agreement with Scott E. Waldrop to serve as Senior Vice
President and Chief Operating Officer. The term of the
agreement is (3) three years and provides for a base salary of
$200,000 per annum, which is subject to annual review by the
Board of Directors and increases based on the Consumer Price
Index. The agreement contains a covenant not to compete for a
period of 18 months after termination. The severance
arrangement included in the agreement provides that upon the
occurrence of a triggering event as defined in the agreement
(including a change in control), Mr. Waldrop is entitled to
receive a lump-sum payment equal to compensation for one year
plus all stock options, warrants and stock appreciation rights,
if any.
Mr. Nikhil A. Bhatt, the Company's Senior Vice President and
Chief Technical Officer announced his resignation in March 1998.
Pursuant to Mr. Bhatt's Employment Transition Agreement dated
March 6, 1998, Mr. Bhatt will be paid severance of $176,700 on
April 15, 1998. Mr. Bhatt will be transitioning his current
responsibilities through May 31, 1998 and will continue to serve
as an Executive Advisor to the Company on matters as may from
time to time be mutually determined, through May 31, 1999, on a
per diem basis.
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, 1998, there were unexpired
options outstanding and unexercised for an aggregate of 5,000
shares of Common Stock. As of March 31, 1998, the market value
for the shares underlying these unexercised options was $12,344.
The total proceeds the Company would realize upon the exercise
of all 1983 Plan options outstanding at March 31, 1998, 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% of the shares subject to the option after
two years and 30% of the shares subject to the option vesting
after three years.
1993 Incentive Stock Option Plan
The Company adopted an Incentive Stock Option Plan in 1993
("1993 Plan") which is similar to the 1983 Plan. The 1993 Plan
is managed by the Compensation Committee appointed from members
of the Board of Directors, who are not eligible to participate
in the 1993 Plan. As of March 31, 1998, under the 1993 Plan,
there were unexpired options outstanding and unexercised for
shares an aggregate of 1,222,447 shares of Common Stock. As of
March 31, 1998, the market value for the shares underlying these
unexercised options was $3,017,916. The total proceeds the
Company would realize upon the exercise of all 1993 Plan options
outstanding at March 31, 1998, was $4,475,127. The terms and
vesting schedule of options granted under both the 1983 Plan and
1993 Plan are the same.
Options granted under both the 1983 Plan and the 1993 Plan 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 eligible to
participate under both Plans. Options may be exercised by
payment of cash to the Company.
Director and Management Stock Warrant and Option Plan
The Company adopted the Director and Management Stock Warrant
and Option Plan ("D & M 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 the D & M
Plan are made under the direction of the Company's Compensation
Committee. The purpose of the D & M Plan is to attract and
retain talented directors, officers and key management employees
of the Company.
The Company has reserved 650,000 shares of its Common Stock for
issuance upon the exercise of warrants and options granted under
the D & M Plan. As of March 31, 1998, there were unexpired
warrants and options outstanding and unexercised for shares
totaling 268,449. The market value for shares underlying these
warrants and options was $662,857 as of March 31, 1998. The
total proceeds the Company would receive upon the exercise of
these warrants and options outstanding at March 31, 1998 were
$1,304,751. Under the D & M 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.
The D & M 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 600,000
shares of its Common Stock for issuance pursuant to purchases
under this Plan. Under this Plan as of March 31, 1998, 131,929
shares have been issued generating proceeds to the Company of $
361,032.
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.
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. Pomerance received $43,000 for his services as chairman of
the board during 1997. In addition, Mr. David Pomerance is
president of MMRI, Inc., which provides financial consulting and
advisory services to the Company. During the year ended
December 31, 1997 the Company paid $159,263 to MMRI, Inc. for
such services.
No director receives any additional compensation for services
to the Company as a member of any committee of the Board of
Directors.
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 1997:
Number of Number of
Relationship Number of Transactions Forms Not
Name of Insider to the Registrant Late Reports Reported Late Filed
Bret Maxwell Director 2 2 0
The Company is aware of two (2) incorrect filings made by
reporting persons during fiscal 1997. A Form 4 and a Form 5
filed by Steven J. Akerson, VP Corporate Operations, listed
options that were granted on June 13, 1996 as 500 instead of
5,000. An amended Form 5 for holdings on December 31, 1997 has
been filed to correct this clerical error.
14
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 AND DATA PROCESSING
<C> <C> <C> <C>
1992 100.00 100.00 100.00
1993 121.43 114.80 105.83
1994 57.14 112.21 128.53
1995 132.14 148.70 195.74
1996 264.29 195.19 241.54
1997 175.00 239.53 296.72
</TABLE>
15
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, 1998, 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 is 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, 1998.
PROPOSAL NUMBER THREE (3) - 1998 MATCHING CONTRIBUTIONS TO THE
401(K) PLAN
The Company maintains a 401(k) plan (the "Plan") for the
benefit of its employees. The Plan document provides the Board
of Directors with authorization to determine the amount and form
of annual employer matching contributions to the Plan, if any.
For 1998 the Company's Board of Directors authorized the Company
to make monthly matching contributions to the 401(k) Plan at the
rate of 30% of employee deferral amounts. Company matching
contributions were $85,216, $186,829 and $420,487 in 1995, 1996
and 1997, respectively. The Board also proposes to reserve
500,000 shares of Common Stock for distribution to employees
under matching contributions to the Company's 401(k) Plan
instead of cash. Under the proposal, the Employer match
contributions will be funded monthly in Common Stock of the
Company based on the months daily average high and low sales
prices reported by the NASDAQ for the month. The shareholders
are being asked to approve at the Annual Meeting the use of
Common Stock to fund the employer matching contributions to the
Plan.
The Board of Directors believes that providing the Plan
matching contribution in the form of Company Common Stock is
needed to encourage employees, including Officers, to become
shareholders of the Company, thereby providing incentive to
remain in the Company's employ, and further the objectives of
the Company to improve operations, to increase profits and to
contribute to the Company's success. In addition, it will
reduce the Company's cash commitments. An affirmative vote of
at least a majority of the votes cast on this proposal is
required for approval. The Board of Directors recommends a vote
"FOR" Proposal Number Three (3) to make 1998 matching
contributions to the Plan in the form of Company Common Stock.
PROPOSAL NUMBER FOUR (4) - 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. During 1997, the Board proposed and the shareholders
approved increasing to 600,000 the number of shares reserved for
issuance under the ESP Plan. It is open for enrollment by
employees working at least 20 hours per week and who have
completed at least five months of service. The ESP Plan
operates in one or more phases of six months each and expired on
March, 1998, with the final phase terminating on June 30, 1998.
The Board of Directors believes this amendment to extend the
expiration date of the ESP Plan to December 31, 2003 is needed
to encourage employees, including Officers, to become
shareholders of the Company, thereby providing incentive to
remain in the Company's employ, and further the objectives of
the Company to improve operations, to increase profits and to
contribute to the Company's success. An affirmative vote of a
majority of the shares represented at the meeting is required to
adopt the amendment to the ESP Plan. An affirmative vote of at
least a majority of the votes cast on this proposal is required
for approval. The Board of Directors recommends a vote "FOR"
Proposal Number Four (4) to amend the ESP Plan.
16
PROPOSAL NUMBER FIVE (5) - RATIFICATION OF SPECIAL STOCK OPTION AGREEMENT
On January 7, 1998 the Company entered into a Special Stock
Option Agreement with Mr. Mitchel J. Laskey, the Company's
President, CEO and Treasurer, in connection with his 1998
compensation package. The 1998 Compensation Package for Mr.
Laskey was approved unanimously by the Company's Board of
Directors upon review, approval, and recommendation by the
Board's Compensation Committee.
The options granted under the Special Stock Option Agreement
grant Mr. Laskey the option to acquire up to 400,000 shares of
the Company's Common Stock, $.01 par value, are exercisable
through December 31, 2002, are nontransferable, vest in
accordance with the vesting provisions currently in effect for
the Company's Director and Management Plan, and are summarized
as follows:
Number of Option Shares Exercise PricE
100,000 $6.00
100,000 $7.50
100,000 $9.00
100,000 $10.50
400,000
The Board of Directors believes the issuance of the Special
Stock Option Agreement is an important component of Mr. Laskey's
1998 compensation package and directly aligns the objectives of
Mr. Laskey to those of the Company's shareholders. An
affirmative vote of at least a majority of the votes cast on
this proposal is required for approval. The Board of Directors
recommends a vote "for" Proposal Number Five (5) to ratify and
confirm the issuance of the Special Stock Option Agreement in
favor of Mr. Mitchel J. Laskey.
PROPOSAL NUMBER SIX (6) - INCREASING THE NUMBER OF BOARD OF
DIRECTORS TO EIGHT
The Board of Directors has proposed increasing the number of
members of the Company's Board of Directors to eight, to
facilitate obtaining the services of Mr. Guy Rabbat as a
Director.
Guy Rabbat, Age 55, has been nominated to be a Director of the
Company. Mr. Rabbat is a Vice President of General Electric
Company ("GE") of Milwaukee, Wisconsin responsible for all
global GE medical products, information technology and services
and has been since 1996. Mr. Rabbat was Managing Director and
Executive Board Director of Rank Xerox Systems LTD and Rank
Xerox LTD, Welwyn, England from 1992 to 1996, and was
responsible for the systems operations in Europe, Africa and
Asia, and 1,125 employees. Mr. Rabbat has also been President,
CEO of Modular Computer Systems, Inc. of Fort Lauderdale,
Florida from 1987 to 1992, a Division Head of General Motors
Corporation, Detroit, Michigan from 1984 to 1987, and a Director
of IBM Corporation of Armonk, New York from 1972 to 1984. Mr.
Rabbat does not currently serve as a Director of any other
company, and has no beneficial ownership interest in the Company.
An affirmative vote of at least a majority of the votes cast on
this Proposal is required for approval. The Board of Directors
recommends a vote "FOR" Proposal Number Six (6) to increase the
number of members of the Company's Board of Directors to eight
and elect Guy Rabbat as a member of the Board of Directors.
PROPOSAL NUMBER SEVEN (7) - AMENDMENT TO THE BY-LAWS
The Board of Directors has proposed an amendment to the By-Laws
of the Company pursuant to Section 607.1020 of the Florida
Business Corporation Act and Article II of the By-Laws of the
Company, which relates to the number of Directors of the
Company, by deleting Article II, Section 2 in its entirety, and
replacing it with a new Article II, Section 2 as set forth below.
Current Article II, Section 2
Section 2, Number. The corporation shall have seven directors
initially. The number of directors may be increased or
decreased from time to time by the holders of a majority of the
outstanding shares of the corporation at any regular or special
meeting of shareholders, but no decrease shall have the effect
of shortening the term of an incumbent director (unless the
shareholders remove the director), nor shall there ever be less
than one director.
17
Proposed New Article II, Section 2
Section 2, Number. The corporation shall have seven (7)
directors initially. The number of directors may from time to
time hereafter be decreased to a minimum of five (5) directors
and increased to a maximum of nine (9) directors, as follows:
(i) at any regular, annual or special meeting of the Board of
Directors, by the vote of directors representing two-thirds
(2/3) of the entire Board of Directors; (ii) by written consent
of two-thirds (2/3) of the entire Board of Directors; or (iii)
by the vote of the holders of a majority of the issued and
outstanding shares present, in person or by proxy, at any annual
or special meeting of the shareholders, but in no event shall a
decrease in the number of directors have the effect of
shortening the term of an incumbent director, unless the
shareholders shall also approve the removal of such director.
The Board of Directors believes that approval of Proposal
Number Seven (7) will provide the Board with responsive
flexibility in attracting and retaining the services of
Directors. An affirmative vote of at least a majority of the
votes cast on this proposal is required for approval. The Board
of Directors recommends a vote "FOR" Proposal Number (7) to
amend Article II, Section 2 of the Company's By-Laws.
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 1999 Annual Meeting if
they are received by the Company before the close of business on
December 31, 1998.
THE BOARD OF DIRECTORS
Dated: April __, 1998
18
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 17, 1998, at the annual meeting of
shareholders to be held on June 4, 1998, or any adjournment
thereof.
1. ELECTION OF DIRECTORS
____ FOR all nominees listed below ____ WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees listed
below) 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 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,
1998.
____ FOR ____ AGAINST ____ ABSTAIN
3. To vote on the proposal by the Board of Directors that
employer matching contributions related to 1998 employee
deferrals to the Dynamic Healthcare Technologies, Inc. 401(k)
Plan, be made monthly in the form of Company common stock.
____ FOR ____ AGAINST ____ ABSTAIN
4. To vote on the proposal by the Board of Directors to amend
the Employee Stock Purchase Plan ("ESP Plan") to extend the
expiration date to December 31, 2003.
____ FOR ____ AGAINST ____ ABSTAIN
5. To vote on the proposal to ratify and confirm the Board of
Directors issuance of a special Stock Option Agreement in favor
of Mr. Mitchel J. Laskey.
____ FOR ____ AGAINST ____ ABSTAIN
6. To vote on the proposal by the Board of Directors to increase
the number of Board members to eight (8) and elect Guy Rabbat as
a member of the Board of Directors.
____ FOR ____ AGAINST ____ ABSTAIN
7. To vote on the proposal by the Board of Directors to amend
Article II, Section 2 of the Company's By-Laws.
____ FOR ____ AGAINST ____ ABSTAIN
8. 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 7.
The undersigned hereby revokes any proxies heretofore given by
him and confirms all that the Proxies may lawfully do by virtue
hereof.
Dated: ___________________, 1998 _________________________
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.
19
